Republicans have proposed a sweeping crackdown on illegal overbilling in Minnesota's publicly funded child-care assistance program while accusing DFL leadership of being soft on fraud in social service programs. Minnesota House Republicans on Monday proposed nearly 50 changes in state law intended to combat fraud in the Child Care Assistance Program following revelations that the program lacks adequate controls to prevent fraudulent providers from overbilling for millions of dollars.

The measures would increase civil and criminal sanctions for committing fraud, impose new record-keeping and other requirements on providers, and make it easier for prosecutors to bring criminal charges.

"We need better controls at the front-end to prevent fraud from occurring in the first place," Rep. Mary Franson, R-Alexandria, said at a news conference Monday. "Simply put, it is too easy for those who want to do wrong to defraud the Minnesota taxpayer."

The 45-page GOP proposal is a response to a legislative auditor's report released this month that found significant levels of fraud in the state-funded assistance program, as well as personal distrust between the program's fraud investigators and the inspector general at the Department of Human Services (DHS), who oversees fraud investigations across several branches of the agency.

The extensive package, which is spread among about a dozen bills, was introduced just days after Gov. Tim Walz's administration presented its own list of recommended changes designed to bolster program integrity. Taken together, the proposals would represent the broadest expansion of state oversight of the child-care assistance program since it was created nearly three decades ago, and would impose new regulatory burdens on the state's roughly 1,800 licensed day-care centers.

In response to the Republican proposal, Human Services Commissioner Tony Lourey issued a written statement calling the misuse of taxpayer dollars "unacceptable" and said he looked forward to working with lawmakers on both sides of the aisle "to address vulnerabilities in our programs."

Throughout the past five years, prosecutors have charged at least a dozen individuals and providers with defrauding the program, which distributed $254 million last year to 30,000 children in low-income families.

In some of the cases, parents received cash payments, or "kickbacks," from the child-care centers in return for enrolling their children. Day-care providers have also been caught on camera billing the state program for days when children were not in attendance, such as holidays, and then submitting falsified attendance records.

The Office of the Legislative Auditor, in its review, was unable to reach a reliable estimate of how much fraud exists in the program, but concluded that it was more than the $5 million to $6 million that prosecutors have been able to prove during the past several years. An independent consulting firm hired by DHS estimated that since 2013, about 7 percent of payments were made to centers that used fraudulent billing practices, totaling $72 million over five years, according to the consultant's report.

The consulting firm, PFM Group Consulting, also found that DHS lacked basic tools to detect and prevent fraud, including a real-time case management system. Without such a system, the state was severely limited in its ability to use data analytics to identify trends and predictors of fraudulent activity, the firm said in its report. Instead, the investigative unit within child-care program was largely reactive, responding to tips and referrals from the public.

At a politically charged news conference Monday, Reps. Franson and Nick Zerwas lashed out at DFL House members and DHS officials for not acting quickly enough when reports of widespread fraud in the program emerged last spring.

To date, they noted, House Democrats have declined to hold hearings on the legislative auditor's report, which was prompted last spring by a Fox 9 news report alleging that about $100 million was being stolen from the program, with some of the money used to fund terrorist activities overseas. The auditor's investigation did not substantiate those claims.

"Clearly, up to this point, [DFL members] are not taking this issue seriously," said Zerwas, a Republican from Elk River. "We are demanding that they show the public that they take the issue seriously, and not ask Minnesotans to pay more until they can demonstrate that they are at least trying to root out fraud."

The Republicans' package is designed to address concerns that, even when fraud in the child-care program is identified and convictions are obtained, the penalties may be insufficient to deter criminal activity. Among the provisions is one that would permanently disqualify fraudulent providers and recipients from eligibility for the program. Another would establish penalties for those who threaten to blackmail or coerce individuals into participating in schemes to defraud public assistance programs.

"It is clear that existing penalties are insufficient and are not serving a deterrent for those seeking to defraud the Minnesota taxpayer," Franson said.

Beyond the tougher sanctions, the GOP proposal would increase oversight of child-care providers that participate in the program. A bill introduced by Franson, for instance, would place tighter restrictions on providers that employ parents of children enrolled in the program, which can be an indicator of fraud. Under the Republican proposal, providers would also be required to maintain accurate attendance records and provide them immediately upon request. Currently, they are allowed to produce these records later, which makes it easier to engage in fraudulent billing.

Republican lawmakers are also seeking to make the Office of Inspector General a separate entity that is independent from DHS management, a recommendation that was in the legislative auditor's report.