Fraud in the Chicago Public Schools’ free and reduced-lunch program is much more widespread than previously documented, the CPS inspector general concluded in a report released this week.

CBS2 and the Better Government Association first disclosed how CPS employees were gaming the $175 million taxpayer-funded program meant to provide food for poor students.

Now comes word that other CPS parents are playing the same games at taxpayer expense.

To qualify for a free or reduced lunch, parents have to fill out an application stating their family income and the number of household members.

CPS officials reviewed 1,000 cases of children enrolled in the program and found “an astonishing 707 recipients – nearly 71 percent – had their benefits decreased” because of misstatements or omissions by parents, according to the inspector general’s report.

“This overwhelmingly suggests that the fraud problem pervades the entire application process,” the report stated.

BGA President and CEO Andy Shaw described the findings as “a scam, a scandal and a rip-off of staggering proportions.”

As CBS2 first disclosed with the BGA in 2010, the children of school employees at North Grand High School were getting a free lunch by under-reporting their income.

Now, 55 employees have been cited, including principals and assistant principals, like a married couple whose combined CPS salaries of $230,000 weren’t listed on the application of their children.

The more children in the free and reduced-lunch program, the more federal and state money CPS gets, the IG noted.

What’s particularly interesting about the cases, the IG said, “is together they show that the lucrative federal and state benefits tied to the forms drive the fraud.”

“The [inspector general] has done its job,” Shaw said. “It’s up to CPS and the feds to swoop in, come up with a plan and punish the offenders.”

Most of the CPS employees who have been cited have resigned or have been otherwise disciplined. The question remains whether the U.S. Department of Agriculture, which regulates the meal program, will relax some of its regulations so CPS can cast a wider net.

The school system is limited as to how many of applications it can scrutinize each year.

This story was written and reported by CBS2’s Pam Zekman and the Better Government Association. To reach them, call (312) 821-9030 or email rherguth@bettergov.org.