DATE: May 16, 2006
TO: Board of Supervisors
SUBJECT: Protecting the County from Welfare Fraud
SUMMARY:
Overview
Counties throughout California are becoming increasingly susceptible to
welfare fraud, specifically subsidized childcare scams. In an effort to
protect the County of San Diego from welfare fraud, State leadership is
needed to prevent fraud and abuse in all subsidized childcare programs.
Recommendations
SUPERVISOR JACOB:
- Direct the Chief Administrative Officer to draft a letter for the Chairman’s signature to the region’s State Delegation requesting that legislative action be taken for the State to specifically fund California Department of Education fraud investigation and program security activities throughout the State; as well as seeking legislative authority for the California Department of Social Services to allow the County to discontinue subsidies to an individual provider or parent who has committed fraud until such time repayment has been made.
- Direct the Chief Administrative Officer to add support for State funded fraud investigation and program security activities for subsidized childcare programs and authority for the California Department of Social Services to allow the County to discontinue subsidies to an individual provider or parent who has committed fraud until such time repayment has been made, to the County’s legislative program.
Fiscal Impact
There is no fiscal impact related to this proposal.
BACKGROUND:
The threat of welfare fraud is running rampant throughout the State of
California in counties such as Los Angeles, where investigators have opened
more that 800 cases involving subsidized childcare scams. These scams
typically involve welfare-to-work recipients who fabricate employers or
exaggerate work hours in order to qualify for taxpayer-financed childcare.
They then split the money with friends and relatives who claim to be caring
for the children. It is imperative that we, as a County, do everything
possible to protect ourselves from this type of fraud.
There are approximately 13,500 children in subsidized childcare in San
Diego County. Subsidized childcare is funded through two entities: the
California Department of Social Services (CDSS) and the California Department
of Education (CDE). The County’s Health and Human Services Agency
(HHSA) processes childcare payments for both CDSS and CDE programs.
Approximately 3,100 children receive childcare through CDSS, while CDE
funds childcare services for the remaining 10,400. The average childcare
payment is $457.09 per child per month. However, because childcare subsidies
can be larger dollar amounts than the entire public assistance grant,
it is critical that program security be maintained in these programs.
The CDSS childcare program is directly linked to CalWORKs and all associated
fraud investigation and prosecution costs are funded through the CalWORKs
allocation. Under the CalWORKs Memorandum of Understanding (MOU) between
HHSA and the District Attorney’s Office, Agency staff refers suspected
CDSS childcare fraud cases to the District Attorney’s Office in
the same manner that they refer suspected public assistance fraud cases.
In a recent 12-month period, the District Attorney completed 177 CDSS
childcare fraud investigations. Fraud was found in 51% of these cases,
with an estimated total fraud amount of $450,000.
In an effort to deter childcare fraud, CDSS has convened a Program Integrity
Steering Committee and a Child Care Program Integrity Work Group that
include representatives from San Diego County, to identify best practices
and the potential need for regulation changes. CDE is also reported to
be developing new regulations to tighten up their program rules, however,
CDE still does not allocate specific funding for program security, including
fraud investigation and prosecution.
HHSA has repeatedly approached CDSS with suggestions for program security
improvements, and has been involved with workgroups that are attempting
to engage CDE in program security efforts. In the interim, HHSA has instituted
practices to improve program security that are not utilized by other counties,
such as the use of attendance sheets that report daily time in/time out
details for each child that must be signed under penalty of perjury by
both the parent and the provider for all childcare programs, and the use
of a Provider Specialist to enroll all licensed childcare providers, enabling
verification of rates charged; existence of the provider; and existence
of a business at the reported location.
In spite of these efforts, program security problems exist that lie exclusively
under the control of the State. Because CDE does not provide funding specifically
for fraud investigations in their childcare programs, which represent
the bulk of the subsidized childcare caseload, the County is susceptible
to fraud. With adequate state funding, the District Attorney is willing
to provide enhanced investigations and prosecutions of CDE childcare fraud
cases.
Also, CDSS does not allow the County to discontinue subsidies to an individual
provider or parent if fraud has been discovered, as long as there is an
ongoing need for childcare services. This current practice does not discourage
fraudulent activities.
In addition, there is no dedicated funding provided for random quality
reviews by HHSA staff in the current CDSS and CDE subsidy programs. Quality
reviews involve face-to-face interviews and field visits on established
cases to re-verify eligibility elements. In the absence of a full fraud
investigation, random reviews of subsidized childcare cases could reveal
discrepancies that would support early fraud detection.
HHSA has maintained a strong relationship with the District Attorney’s
office to strengthen program security and customer accountability. With
CDE program security funding, a fraud referral system could be implemented
for the CDE childcare programs to identify potential fraud cases, leading
to eventual prosecution and sending a strong message that fraud is not
tolerated.
Today’s action directs the Chief Administrative Officer to draft
a letter for the Chairman’s signature to the region’s State
Delegation requesting that legislative action be taken for the State to
specifically fund California Department of Education fraud investigation
and program security activities throughout the State; as well as seeking
legislative authority for the California Department of Social Services
to allow the County to discontinue subsidies to an individual provider
or parent who has committed fraud until such time repayment has been made.
This action also directs the Chief Administrative Officer to add support
for State funded fraud investigation and program security activities for
subsidized childcare programs and authority for the California Department
of Social Services to allow the County to discontinue subsidies to an
individual provider or parent who has committed fraud until such time
repayment has been made, to the County’s legislative program.
I urge your support.
Respectfully submitted,
DIANNE JACOB
Supervisor, Second District
