HOUSEHOLD APPLICATIONS.

SEC. 105. HOUSEHOLD APPLICATIONS. (a) In General.—Section 9(b) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)) (as amended by section 104(a)(2)(B)) is amended by striking paragraph (3) and inserting the following: “(3) Household applications.—“(A) Definition of household application.—In this paragraph, the term ‘household application’ means an application for a child of a household to receive free or reduced price school lunches under this Act, or free or reduced price school breakfasts under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), for which an eligibility determination is made other than under paragraph (4) or (5). “(B) Eligibility determination.—“(i) In general.—An eligibility determination shall be made on the basis of a complete household application executed by an adult member of the household or in accordance with guidance issued by the Secretary.“(ii) Electronic signatures and applications.—A household application may be executed using an electronic signature if—“(I) the application is submitted electronically; and “(II) the electronic application filing system meets confidentiality standards established by the Secretary.“(C) Children in household.—“(i) In general.—The household application shall identify the names of each child in the household for whom meal benefits are requested. “(ii) Separate applications.—A State educational agency or local educational agency may not request a separate application for each child in the household that attends schools under the same local educational agency. “(D) Verification of sample.—“(i) Definitions.—In this subparagraph:“(I) Error prone application.—The term ‘error prone application’ means an approved household application that—“(aa) indicates monthly income that is within $100, or an annual income that is within $1,200, of the income eligibility limitation for free or reduced price meals; or “(bb) in lieu of the criteria established under item (aa), meets criteria established by the Secretary. “(II) Non-response rate.—The term ‘non-response rate’ means (in accordance with guidelines established by the Secretary) the percentage of approved household applications for which 118 STAT. 739 verification information has not been obtained by a local educational agency after attempted verification under subparagraphs (F) and (G). “(ii) Verification of sample.—Each school year, a local educational agency shall verify eligibility of the children in a sample of household applications approved for the school year by the local educational agency, as determined by the Secretary in accordance with this subsection. “(iii) Sample size.—Except as otherwise provided in this paragraph, the sample for a local educational agency for a school year shall equal the lesser of—“(I) 3 percent of all applications approved by the local educational agency for the school year, as of October 1 of the school year, selected from error prone applications; or“(II) 3,000 error prone applications approved by the local educational agency for the school year, as of October 1 of the school year. “(iv) Alternative sample size.—“(I) In general.—If the conditions described in subclause (IV) are met, the verification sample size for a local educational agency shall be the sample size described in subclause (II) or (III), as determined by the local educational agency.“(II) 3,000/3 percent option.—The sample size described in this subclause shall be the lesser of 3,000, or 3 percent of, applications selected at random from applications approved by the local educational agency for the school year, as of October 1 of the school year.“(III) 1,000/1 percent plus option.—“(aa) In general.—The sample size described in this subclause shall be the sum of—“(AA) the lesser of 1,000, or 1 percent of, all applications approved by the local educational agency for the school year, as of October 1 of the school year, selected from error prone applications; and“(BB) the lesser of 500, or ½ of 1 percent of, applications approved by the local educational agency for the school year, as of October 1 of the school year, that provide a case number (in lieu of income information) showing participation in a program described in item (bb) selected from those approved applications that provide a case number (in lieu of income information) verifying the participation.“(bb) Programs.—The programs described in this item are—“(AA) the food stamp program established under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.); 118 STAT. 740“(BB) the food distribution program on Indian reservations established under section 4(b) of the Food Stamp Act of 1977 (7 U.S.C. 2013(b)); and“(CC) a State program funded under the program of block grants to States for temporary assistance for needy families established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995.“(IV) Conditions.—The conditions referred to in subclause (I) shall be met for a local educational agency for a school year if—“(aa) the nonresponse rate for the local educational agency for the preceding school year is less than 20 percent; or“(bb) the local educational agency has more than 20,000 children approved by application by the local educational agency as eligible for free or reduced price meals for the school year, as of October 1 of the school year, and—“(AA) the nonresponse rate for the preceding school year is at least 10 percent below the nonresponse rate for the second preceding school year; or“(BB) in the case of the school year beginning July 2005, the local educational agency attempts to verify all approved household applications selected for verification through use of public agency records from at least 2 of the programs or sources of information described in subparagraph (F)(i).“(v) Additional selected applications.—A sample for a local educational agency for a school year under clauses (iii) and (iv)(III)(AA) shall include the number of additional randomly selected approved household applications that are required to comply with the sample size requirements in those clauses.“(E) Preliminary review.—“(i) Review for accuracy.—“(I) In general.—Prior to conducting any other verification activity for approved household applications selected for verification, the local educational agency shall ensure that the initial eligibility determination for each approved household application is reviewed for accuracy by an individual other than the individual making the initial eligibility determination, unless otherwise determined by the Secretary. 118 STAT. 741“(II) Waiver.—The requirements of subclause (I) shall be waived for a local educational agency if the local educational agency is using a technology-based solution that demonstrates a high level of accuracy, to the satisfaction of the Secretary, in processing an initial eligibility determination in accordance with the income eligibility guidelines of the school lunch program.“(ii) Correct eligibility determination.—If the review indicates that the initial eligibility determination is correct, the local educational agency shall verify the approved household application. “(iii) Incorrect eligibility determination.—If the review indicates that the initial eligibility determination is incorrect, the local educational agency shall (as determined by the Secretary)—“(I) correct the eligibility status of the household; “(II) notify the household of the change; “(III) in any case in which the review indicates that the household is not eligible for free or reduced-price meals, notify the household of the reason for the ineligibility and that the household may reapply with income documentation for free or reduced-price meals; and “(IV) in any case in which the review indicates that the household is eligible for free or reduced-price meals, verify the approved household application. “(F) Direct verification.—“(i) In general.—Subject to clauses (ii) and (iii), to verify eligibility for free or reduced price meals for approved household applications selected for verification, the local educational agency may (in accordance with criteria established by the Secretary) first obtain and use income and program participation information from a public agency administering—“(I) the food stamp program established under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.); “(II) the food distribution program on Indian reservations established under section 4(b) of the Food Stamp Act of 1977 (7 U.S.C. 2013(b)); “(III) the temporary assistance for needy families program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); “(IV) the State medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.); or “(V) a similar income-tested program or other source of information, as determined by the Secretary. “(ii) Free meals.—Public agency records that may be obtained and used under clause (i) to verify eligibility for free meals for approved household applications selected for verification shall include the most recent available information (other than information 118 STAT. 742 reflecting program participation or income before the 180-day period ending on the date of application for free meals) that is relied on to administer—“(I) a program or source of information described in clause (i) (other than clause (i)(IV)); or “(II) the State plan for medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) in—“(aa) a State in which the income eligibility limit applied under section 1902(l)(2)(C) of that Act (42 U.S.C. 1396a(l)(2)(C)) is not more than 133 percent of the official poverty line described in section 1902(l)(2)(A) of that Act (42 U.S.C. 1396a(l)(2)(A)); or “(bb) a State that otherwise identifies households that have income that is not more than 133 percent of the official poverty line described in section 1902(l)(2)(A) of that Act (42 U.S.C. 1396a(l)(2)(A)). “(iii) Reduced price meals.—Public agency records that may be obtained and used under clause (i) to verify eligibility for reduced price meals for approved household applications selected for verification shall include the most recent available information (other than information reflecting program participation or income before the 180-day period ending on the date of application for reduced price meals) that is relied on to administer—“(I) a program or source of information described in clause (i) (other than clause (i)(IV)); or “(II) the State plan for medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) in—“(aa) a State in which the income eligibility limit applied under section 1902(l)(2)(C) of that Act (42 U.S.C. 1396a(l)(2)(C)) is not more than 185 percent of the official poverty line described in section 1902(l)(2)(A) of that Act (42 U.S.C. 1396a(l)(2)(A)); or “(bb) a State that otherwise identifies households that have income that is not more than 185 percent of the official poverty line described in section 1902(l)(2)(A) of that Act (42 U.S.C. 1396a(l)(2)(A)). “(iv) Evaluation.—Not later than 3 years after the date of enactment of this subparagraph, the Secretary shall complete an evaluation of—“(I) the effectiveness of direct verification carried out under this subparagraph in decreasing the portion of the verification sample that must be verified under subparagraph (G) while ensuring that adequate verification information is obtained; and “(II) the feasibility of direct verification by State agencies and local educational agencies. 118 STAT. 743“(v) Expanded use of direct verification.—If the Secretary determines that direct verification significantly decreases the portion of the verification sample that must be verified under subparagraph (G), while ensuring that adequate verification information is obtained, and can be conducted by most State agencies and local educational agencies, the Secretary may require a State agency or local educational agency to implement direct verification through 1 or more of the programs described in clause (i), as determined by the Secretary, unless the State agency or local educational agency demonstrates (under criteria established by the Secretary) that the State agency or local educational agency lacks the capacity to conduct, or is unable to implement, direct verification. “(G) Household verification.—“(i) In general.—If an approved household application is not verified through the use of public agency records, a local educational agency shall provide to the household written notice that—“(I) the approved household application has been selected for verification; and “(II) the household is required to submit verification information to confirm eligibility for free or reduced price meals. “(ii) Phone number.—The written notice in clause (i) shall include a toll-free phone number that parents and legal guardians in households selected for verification can call for assistance with the verification process.“(iii) Followup activities.—If a household does not respond to a verification request, a local educational agency shall make at least 1 attempt to obtain the necessary verification from the household in accordance with guidelines and regulations promulgated by the Secretary. “(iv) Contract authority for school food authorities.—A local educational agency may contract (under standards established by the Secretary) with a third party to assist the local educational agency in carrying out clause (iii). “(H) Verification deadline.—“(i) General deadline.—“(I) In general.—Subject to subclause (II), not later than November 15 of each school year, a local educational agency shall complete the verification activities required for the school year (including followup activities). “(II) Extension.—Under criteria established by the Secretary, a State may extend the deadline established under subclause (I) for a school year for a local educational agency to December 15 of the school year.“(ii) Eligibility changes.—Based on the verification activities, the local educational agency shall make appropriate modifications to the eligibility 118 STAT. 744 determinations made for household applications in accordance with criteria established by the Secretary. “(I) Local conditions.—In the case of a natural disaster, civil disorder, strike, or other local condition (as determined by the Secretary), the Secretary may substitute alternatives for—“(i) the sample size and sample selection criteria established under subparagraph (D); and “(ii) the verification deadline established under subparagraph (H). “(J) Individual review.—In accordance with criteria established by the Secretary, the local educational agency may, on individual review—“(i) decline to verify no more than 5 percent of approved household applications selected under subparagraph (D); and “(ii) replace the approved household applications with other approved household applications to be verified.“(K) Feasibility study.—“(i) In general.—The Secretary shall conduct a study of the feasibility of using computer technology (including data mining) to reduce—“(I) overcertification errors in the school lunch program under this Act; “(II) waste, fraud, and abuse in connection with this paragraph; and“(III) errors, waste, fraud, and abuse in other nutrition programs, as determined to be appropriate by the Secretary.“(ii) Report.—Not later than 180 days after the date of enactment of this paragraph, the Secretary shall submit to the Committee on Education and the Workforce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report describing—“(I) the results of the feasibility study conducted under this subsection; “(II) how a computer system using technology described in clause (i) could be implemented; “(III) a plan for implementation; and “(IV) proposed legislation, if necessary, to implement the system.”.(b) Conforming Amendments.—Section 1902(a)(7) of the Social Security Act (42 U.S.C. 1396a(a)(7)) is amended—(1) by striking “connected with the” and inserting “connected with—“(A) the”;(2) by adding “and” after the semicolon; and(3) by adding at the end the following:“(B) at State option, the exchange of information necessary to verify the certification of eligibility of children for free or reduced price breakfasts under the Child Nutrition Act of 1966 and free or reduced price lunches under the Richard B. Russell National School Lunch Act, in accordance with section 9(b) of that Act, using data standards and formats established by the State agency;”.118 STAT. 745(c) Evaluation Funding.—(1) In general.—On October 1, 2005, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary of Agriculture to conduct the evaluation required by section 9(b)(3)(F)(iv) of the Richard B. Russell National School Lunch Act (as amended by subsection (a)) $2,000,000, to remain available until expended. (2) Receipt and acceptance.—The Secretary of Agriculture shall be entitled to receive, shall accept, and shall use to carry out this section the funds transferred under paragraph (1), without further appropriation.