Final rule. This final rule amends the reporting and recordkeeping requirements under the National School Lunch Program (NSLP) and School Breakfast Program (SBP) relating to the verification of applications for free and reduced price meal benefits under the NSLP and the SBP. In spite of the efforts of school food authorities and State agencies to ensure the accuracy of free and reduced price applications, data indicate that the number of children certified as eligible to receive free meals exceeds the number of children who are eligible to receive those meals, given other poverty indicators. This rule requires school food authorities to report verification activity and results to their respective State agencies and requires State agencies to analyze and act on these data and to report school food authority level data to the Food and Nutrition Service (FNS) beginning with the school year which starts on July 1, 2004. School food authorities and State agencies are encouraged to begin to collect and report verification data prior to the required implementation date. Recordkeeping requirements will be revised consistent with the reporting requirements. Submission of these data on a school food authority basis will enable State agencies and FNS to improve and target oversight activities.