A new road map to fix the child care system in Minnesota

After a second investigative deep dive into Minnesota's Child Care Assistance Program (CCAP), the state's top watchdog again faulted the agency responsible for oversight for "insufficient" efforts to prevent fraud.

In a report released Wednesday, the Office of the Legislative Auditor (OLA) blamed a lack of oversight by the state Department of Human Services (DHS) for false billing, doctored records and kickbacks.

Legislative Auditor James Nobles and his team of investigators produced a 44-page report, the second related analysis this spring, that documents troubling flaws in the program, which allocated $254 million in child care assistance in 2018. Nobles also provided a list of recommendations, some of which will require additional funding from the Legislature.

Auditors found that DHS and county agencies did not sufficiently use independent data sources to verify program eligibility or validate provider billings. The auditor also reported that the program did not consistently find errors and recover improper payments, nor did it properly carry out licensing of child care providers.

CCAP provided child care subsidies for 30,000 children from low-income families last year. The OLA did not report a definitive estimate on the dollar amount of fraud in the program. However, it reported that it was more than the $5 million to $6 million that county prosecutors have proved in cases during the past several years.

An independent consultant commissioned by DHS estimated that about 7 percent of payments were made to centers that used fraudulent billing practices, totaling $72 million over five years.

The first OLA report confirmed that poor oversight exists. The study released Wednesday offers recommendations about fixes.

While there is agreement that CCAP/DHS problems exist, plans to fix them vary between legislators of the two political parties. Senate Republicans are calling for a freeze on funding and programs until the agency demonstrates that better oversight is in place. Democratic leaders in the administration and DFL-majority House have legislative proposals that would tighten oversight and add more than $3 million in new staff for investigations.

In response to the OLA report, newly appointed DHS Commissioner Tony Lourey wrote that he agrees with most of the findings. He said his agency has expanded staffing but needs more funding and time to meet federal inspections requirements beginning in fiscal year 2020.

"We need the Legislature to act by giving us the resources and authority to implement changes," Lourey said.

Gov. Tim Walz's original budget request called for eight more staff members for the licensing division and additional funding for a program that has a waiting list of more than 2,000 children.

Stealing from or abusing public-assistance programs is a particularly egregious crime. It takes precious dollars away from those who need it most, and it erodes public confidence in government's ability to spend taxpayer dollars effectively.