Auditor report: Minnesota child care program ripe for fraud
ST. PAUL — A program to help low-income Minnesota families afford child care is at high risk for fraud and error, and human services agencies need to do more to address it, according to the state legislative auditor.
The Office of the Legislative Auditor released a second report Wednesday, April 10, reviewing controls for the Minnesota Child Care Assistance Program, or CCAP.
The program and Department of Human Services that supervises it have faced scrutiny after a 2018 news report included allegations of widespread fraud to the tune of $100 million annually. A previous report in March did not substantiate the allegation, though auditors suggested the extent of fraud in the program is likely higher than the $5 million to $6 million prosecutors have been able to prove in recent criminal cases.
“We understand the sensitivity of these issues, not only for taxpayers but for people who need this program,” Legislative Auditor James Nobles said Wednesday to subcommittee members of the Legislative Audit Commission.
The report had two conclusions: DHS internal controls are insufficient to prevent, detect and investigate fraud in CCAP, and that the department and local human services agencies around the state need to step up efforts to identify and respond to fraud.
“We at the department take state investments in children and families seriously,” DHS Commissioner Tony Lourey said. In a letter responding to the report, Lourey wrote that his department generally agrees with the recommendations by the legislative auditor’s office.
Among the recommendations is for lawmakers to direct DHS to expand the use of independent data sources to validate eligibility for CCAP, for example a caseworker using the internet to verify the legitimacy of an employer on pay stubs submitted by applicants.
The report further recommends an electronic child care attendance system to prevent overbilling by providers and to document possible collusion between providers and parents.
DHS has begun work to improve child care attendance recording and issued a request for information for an electronic attendance system, DHS Deputy Commissioner Charles Johnson said.
He added that Gov. Tim Walz’s budget proposal for human services includes efforts to improve CCAP oversight, such as funding for additional licensing staff and a case management system to track investigations.
Republican lawmakers on Wednesday questioned putting more funds into the program.
State Sen. Jim Abeler, R-Anoka, revealed a proposal that would keep CCAP going next year while freezing funding in fiscal year 2021 while the program is restructured.
“It’s an intervention,” Abeler said of the proposal. “The first thing when you have a problem, you have to admit you have a problem. And then you have to get after it.”
State Rep. Nick Zerwas, R-Elk River, said he does not favor scrapping CCAP, “But this audit shows clearly that it probably is time to hit the pause button. It probably is time to take a time-out and make the department show that it can have true program integrity before we would move forward.”
CCAP is supervised and administered by the state, with some functions delegated to local agencies. It provides monetary support for child care services so parents can work or attend school.
The program served 30,000 children with $254.1 million in state and federal funds for fiscal year 2018, according to DHS.