A New England school district has taken drastic measures to recoup lost lunch fees from families unable to pay for their students’ lunches. The Cranston School District has enlisted the services of a collection agency to chase down meal debts as small as $20, reports the local NBC affiliate.
In a letter to parents obtained by NBC 10 News, Raymond Votto Jr., chief operating officer of Cranston Public Schools, said the district has previously tried to collect outstanding lunch bills “without much success.”
“In an effort to reduce our unpaid balance, the District has retained the services of a collection agency. The company is Transworld Systems and they will begin their collection efforts effective January 2, 2019,” the letter said.
The district, which serves about 10,400 students in 25 schools, is located just southwest of Providence. Votto, Jr. says the current lunch debt for this academic year is $45,859—which comes out to about $4.40 per student. Further, the COO says the district wrote off a combined $95,508 for the 2016-17 and 2017-18 academic years—that comes out to less than $4.60 per student, per year. Votto, Jr. insisted in the letter that “the District lunch program cannot continue to lose revenue.”
In an interview with the Providence Journal on Thursday, Votto explained how these debts are created.
Votto said students are running up balances when they don’t have sufficient funds in accounts accessed with a pin number.
Some students spend money allocated to the account by their parents early in the week and run deficits after that. Other students who never had money in the first place, run up balances.
Students who have no cash with them at lunch, said Votto, are able to eat the meal that’s served — but not additional items, such as potato chips — even if they lack the funds in their accounts.
The COO did clarify that no student will be denied food; the district also provides students with a free breakfast each day. At least there’s that.
The decision caught Cranston Mayor Allen Fung unaware, according to a Wednesday interview with GoLocal Providence. He was not aware the district had escalated the debt to an agency.
And what an agency it is. While Votto, Jr. claims he ordered Transworld Systems to go “soft” on the parents—merely harassing them by mail, rather than by phone—the district has actually unleashed quite a problematic company on the families it’s sworn to serve. In September 2017, Transworld was ordered to pay $2.5 million in fines for improperly collecting private student loans.
The federal Consumer Financial Protection Bureau on Monday fined the National Collegiate Student Loan Trusts and their debt collector, Transworld Systems of Fort Washington, a combined $21.6 million in connection with illegal student-loan debt-collection lawsuits.
The two companies sued consumers for private student-loan debt the companies could not prove was owed or was too old to sue over in lawsuits relying on the filing of false or misleading legal documents, the CFPB said in a statement.
According to the CFPB complaint, Transworld, formerly known as NCO Systems, forced employees to push through inaccurate paperwork “for fear of losing their jobs,” the New York Times reports.
The hasty review process obscured defects. More than 800 cases involved apparent time travel: In those instances, Transworld employees swore that borrowers’ loans had been purchased by investors on dates that were months or even years before the loans were actually made.
Despite its problematic past, Transworld won the collections contract in Cranston through a formal Request for Proposals process, according to an email that Votto, Jr. sent to GoLocal.
“The School Committee asked us to put out an RFP (Request for Proposals) to assist with the collection of the unpaid balances. I am not in my office so I do not have the exact date, but the School Committee awarded the bid to a company a few months ago which called for the implementation of a professional collection program that is to begin on January 2nd.”
Cranston, of course, isn’t the first district to try this bully tactic to recoup lunch money from families who can’t pay; a low-income district in Georgia made national headlines as far back as 2010 for enlisting an agency to collect less than half of what Cranston seeks. That district, and that agency, however, charged parents an additional interest fee.
Officials of the cash-strapped Brantley County School District insist the new policy is the best way to recoup losses and prove to auditors that the debt would not simply be foisted on taxpayers.
“We got to try all ways of trying to recover the debt,” said Van Herrin, vice chairman of the Brantley County Board of Education.
“At the end of the day, the taxpayers are going to be picking up the bill for whatever’s left,” Herrin said. “But we’ve got to show to the auditors that we’ve tried every other way.”
Indebted parents will be charged 40 percent interest on their childrens’ school lunch tab, which the district will use to pay the collection agency.
It’s unclear if Cranston will also be charging parents interest. If so, the district will have effectively made school lunches even more expensive for the families who already can’t afford to feed their children.