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home : news : news
April 23, 2019

3/21/2019 2:21:00 PM
Child Care Program audit released; Senator calls for investigative supervisor resignation

The recently-released audit investigating allegations of fraud in the state’s child care assistance program has local state Senator Mark Koran calling for the official who’s been running the program’s investigative arm to resign.  

A related report on what needs to be improved as far as internal controls within this department, isn’t due out until early April;  but Sen.  Koran cited “significant distrust” described in this first audit, between the Inspector General and those doing the investigations, as the basis for issuing his statement last week.

Koran pointed to a recommendation in the audit that the Legislature adopt a state law establishing an Inspector General for the Department of Human Services who is independent from DHS management.  He said, “I will be authoring legislation in the Minnesota Senate that does just that, so we can have uncompromised  reviews of DHS programs that benefit not only good government but every Minnesota taxpayer.”

The 64 page audit sadly concludes that even though the extreme level of actual financial fraud lawmakers heard testimony about in 2018 capitol hearings,  is not substantiated; the program is on the whole, a disappointment.

The audit was commissioned after it was reported in metro media and witnesses stated at legislative hearings last year that the child care assistance program was 50 percent fraud-ridden.  

There are 1,740 licensed daycare centers in Minnesota and $250 million in payments to assist families with child care while they were actively acquiring jobs or entering the process of becoming employed.

The just released audit concluded fraud activity was more like  $5 to $6 million-- not the $100 million widely cited in 2018.  And, there has been no evidence found that ill-gotten assistance has been funneled to terrorist groups oversees.

But, audit director James Nobles, summarizing the findings, wrote, “One could reach the conclusion the entire amount paid to a (violating) center is fraud...  neither the taxpayer nor the children receive what’s being paid for.”

Senator Koran, R-North Branch, explained that the Inspector General failed to communicate to employees in her office who were to be ferreting out fraud, Koran added,  “...has proven she is incapable of fulfilling the basic duties of her job. If she refuses to resign, Governor Walz should terminate her for cause,” Koran concluded.

The audit report included a look at several prosecutions (none in Chisago County) and schemes to get state and federal aid for children who are not served at the daycare center. The audit report concluded, average was 24 children per day  statewide,  funded by the Child Care Assistance Program, who were not actually enrolled.

The audit found there were even a few large daycares that claimed every child enrolled was eligible for the CCAP subsidy.  

Centers also gave kick-backs to parents who could bring in numbers of children and make the center look extra busy.

Extensive  steps were taken to make it seem children were on-site when they were not.  Investigators had to make videotapes of arrival and exit of specific known children and do surveillance of daycare sites almost around the clock.

Investigative on-site visits revealed some programs were not what they claimed to be. Some sites offer no discernible pre-school level education, or don’t have sufficient equipment,  toys or materials to run a program.  In some investigations the staff are made-up using ficticious names and faked payroll stubs.

There are recommendations in the first audit report detailing what needs attention in program policy and implementation.  

The report on internal controls recommendations is due in a few weeks.

The supervisor of the Chisago County childcare licensing division told the Press that cases investigated locally have consisted of parents acting fraudulently, not the providers or centers.  Chisago has 12 centers and nine receive CCAP monies. No total amounts were available.

The county licenses in-home daycare centers only, not the larger businesses.

The supervisor also said the county has a childcare worker who reviews the programs and operations in all cases of CCAP funding.  A billing person provides a second set of eyes on the program. The county has a fraud investigator who reviews any suspected cases of fraud.

The Child Care Assistance Program (CCAP) was designed to make child care affordable for families at-risk and where parents are trying to provide children a good start.  

Summarizing the audit findings Legislative Auditor James Nobles wrote that this was geared toward serving a population of children who would benefit the most, and they are not.

 





 










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