Fraud Made Easier: a Study of Fraud Prevention and Eligibility Screening of CalWORKS

The Social Services Agency has not performed any meaningful analyses to deter- mine the cost effectiveness of its efforts to detect and deter fraud in the CalWORKS and food stamp programs. The only statistics that are used by the Social Services Agency, other than the number of applications, are those recorded and kept by the District Attorney's office as required by the state. Response: Disagrees partially with the finding. As recently as 2009, SSA fully participated in a California Bureau of State Audits (BSA) analysis of fraud detection and prevention activities in six counties. This analysis included site visits by State auditors, interviews and conference calls with key staff in SSA and the Office of the District Attorney (DA). State auditors reviewed 120 Orange County public assistance cases for the 2008 calendar year, various official and internal data reports, SSA fraud review staffing structures, DA fraud investigation staffing structure, fraud training practices, and SSA fraud referral and follow-up policies. Overall, the BSA report holds Orange County's welfare fraud system in high regard. Among its findings, the report states: ". . .the net savings for CalWORKs early fraud activities in Orange and San Diego counties significantly exceed the statewide average, as well as the savings of the other four counties we reviewed." This report recommends that the State Department of Social Services determine cost-effective efforts and seek to replicate the most cost-effective practices among all counties. Additionally, the Orange County processes, identified in the BSA report as contributing to SSA's success, continue in current policy. These processes include a policy to complete all early fraud activities on a case within 15 business days of receiving the referral; and co-locating fraud investigators with eligibility staff so that issues can be resolved quickly. SSA will continue to consider all cost-effective practices to maximize the available resources. In fiscal year 2008-09 SSA was required to implement wide-ranging budget cuts in order to operate within limited funding allocations. All budget reduction decisions, including the necessity to reduce funding for DA welfare fraud activities, were done with appropriate analyses considering federal and state mandates, impact to Agency goals and outcomes, cost benefits, and comparison to other counties' practices. SSA agrees that the fraud statistics utilized are those recorded and kept by the District Attorney's office. The compilation of fraud statistics is the responsibility of the District Attorney's office as the DA is the designated and funded welfare fraud investigative entity in Orange County. SSA is not required nor funded to compile welfare fraud statistics or to submit welfare fraud statistics to the State of California.

There is no structured cross-training or sharing between social workers and investigators with regard to the role each plays in the investigative process. Response: Disagrees wholly with the finding. SSA delivered Fraud Refresher Training electronically to all CalWORKs, Food Stamps, and General Relief staff in November and December 2009. This training included a segment entitled "Worker Responsibility" and a segment entitled "District Attorney - Public Assistance Division (DA-PAD) Responsibility." These segments provided information regarding the responsibilities of each party in the investigative process. SSA conducts induction training for new SSA employees. DA fraud investigators routinely attend selected training sessions. These opportunities provide comprehensive information on the roles of SSA staff, as well as technical information on SSA program elements. DA welfare fraud investigators and supervisors are co-located in SSA Regional Offices. Supervising investigators regularly attend Regional Program and supervisory meetings. This operational structure provides instant communication between SSA and DA staff and establishes an environment of interagency collaboration. Roles are often clarified and issues resolved in an informal and cooperative approach. Upper management staff from SSA and DA attend scheduled meetings to discuss welfare fraud activities and interagency issues. Discussions routinely involve Regional Office operational issues, major SSA programmatic issues, problem resolutions, as well as clarification of the roles of staff in both departments, as necessary. Decisions and clarifications from the SSAIDA coordination meetings are then communicated formally to appropriate staff.

SSA has also begun development of enhanced training curriculum as described in the response to Recommendation 3. R.5 Social Services Agency should develop a plan that maintains program integrity in fraud detection at the 2008 level or greater. Response: This recommendation will not be implemented because it is not warranted or is not reasonable. While SSA disagrees with the estimated $9.6 million paid out in fraudulent claims during the last six months of 2009, SSA agrees with the Bureau of States Audit finding that it is more cost-effective to allocate fraud prevention resources to the intake application process. The BSA report states, "Counties generally realize greater savings per dollar spent on early Paud activities than on ongoing investigations. This difference is due largely to the fact that according to the data that counties report, early fraud activities generally result in a much greater number of denials, discontinuances, and reductions of aid than ongoing investigations produce, and also because early fraud activities cost less. " SSA believes that it is providing the DA with adequate resources to complete their fraud detection and prevention responsibilities, including an emphasis on early fraud activities. The current welfare fraud staffing level in Orange County is 1 investigator/supervising investigator per 737 CalWORKs cases. This per staff caseload is approximately 26% less than the recommended ratio of at least one investigator for every 1,000 CalWORKs cases, per State regulation 20-007.1. The following table, based on information from other counties and collected in December 2008, provides a comparison of caseloads around the State. County Number of cases per investigator San Diego 694 Orange 73 7 State 1,000 Recommended Yo10 1,000 Riverside 1,003 Sacramento 1,260 Fresno 3,125 SSA notes that under the current DA structure, some funding that could be used for welfare fraud detection and prevention is currently being utilized by the DA for criminal prosecution to address a backlog of cases. While the DA is obligated by law to investigate and prosecute these criminal violations, State regulation 20- 007.3 enumerates the fraud investigators' funded authority and responsibility in relation to the prosecuting authority, as follows: .34 Prepare investigative reports on completed investigations in accordance with forms and procedures prescribed by the local CWD andlor the prosecuting authority. .35 Request issuance of criminal complaints from the prosecuting authority on all cases showing evidence of fraud or other criminal activity, providing the prosecuting authority with all records and reports pertinent to the case. Considering the State regulations and the BSA audit report, SSA will work collaboratively with the DA to evaluate that resources are effectively dedicated to fraud detection and prevention activities, including the program intake process. This will ensure that funding is dedicated to the most efficient and appropriate fraud detection activities. To this end, SSA will work with the DA to develop a plan and revise its memorandum of understanding, if necessary R.6 Social Services Agency should better utilize statistical records to assist them in management of the fraud detection and prevention program and evaluation of employee performance. Response: The recommendation has been implemented. SSA utilizes an abundance of management reporting tools that allow the Agency to effectively manage its programs and evaluate employee performance, as described in the response to Finding 6. R.7 Social Services Agency needs to restore fraud detection staffing to the 2008 level. Response: This recommendation will not be implemented because it is not warranted or is not reasonable. As noted above, SSA has maintained its dedication to program integrity and the delivery of accurate benefits per its fiduciary responsibilities. SSA has developed new and more efficient methods of identifying and deterring welfare fraud, including utilization of electronic data systems and engaging the expertise and skills of existing eligibility staff. SSA has also maintained cost-effective welfare fraud practices identified in a State audit as contributing to a successful system, including policies for a 15-day response time for early fraud referrals, and co- location of fraud investigator~w ith eligibility staff. SSA maintains a welfare fraud staffing level that exceeds the State recommended level. Further, as indicated in response to Recommendation 5, SSA believes that it is providing the DA with adequate resources to complete their fraud detection and prevention responsibilities, including an emphasis on early fraud activities. SSA intends to work collaboratively with the DA to evaluate that resources are effectively dedicated to fraud detection and prevention activities, including the program intake process. Attachment following statistical information: All applications received and dispositions taken All CalWORKs, Zero Parent and Welfare-To-Work active cases Staffing levels for all case-carwing and supervisow staff Attachment Type of Report Name andlor Number of Report Brief Description of Use or Content Customized Reports Daily Data Recording Sheet for Excel application used for tracking CalWORKs and Food Stamp Initial Services Workers applications and case dispositions including: Approvals, denials, withdrawals, transfers and pending applications Actions on Immediate Need and Expedited Services requests and . issuances Welfare-To- Work active cases Food Stamp Tracking Summary Monthly summary of Food Stamp Applications, Expedited Service Requests, and case dispositions Approvals, denials, withdrawals Expedited Services issuances and timeframes FSS Staffing and Caseload Monthly Analysis of Caseload Averages, Supervisory Ratios and Bilingual Analysis needs Initial Services Caseload Analysis Monthly list of all Initial Services caseloads listing the following: Number of applications received Number of applications approved, denied Number of active CalWORKs cases Number of Welfare-To-Work cases Quality Control Food Stamp Report Report includes: Food Stamp Rolling Error Rate for State and Federal Case Reviews Food Stamp Error Causes with Findings Food Stamp Case review Summary by'District Child Care/Ancillary/Transportation Actual expenditures in Orange County by Month Expenditures ES CSLD Employment Services (ES) Caseload (CSLD) report includes: WTW report has individuals who are 18 years old or older. Cal-Learn (CL) report has individualswho are 14 years old or older. Both reports have Case#, Name, Lang, Phone#, ES Status, CW Status, & CW CSLD. CL also has Age & Address FSS Mutual Clients by Csld No I FSS LinkageslMutual Clients Tracking List by Caseload Number IR egion I Office IS ummary IW TWDASU Summary IW TWDASU FSS ESHOUR ES Not Meeting 32135 Hour Requirement report gathers activity attendance for all individuals in the reporting month and all open activities OC - MRM192R ES Caseload Report - Employment Services Caseload Report - East/N orthlSouthNVest East/N orthlSouthNVest Special Indicators Special Indicators 1 CalWlN Special Indicators Codes Supportive Services Supportive Services Extract IT his report contains supportive services expenditures for WTW and Cal-Learn participants 18-years and older, sorted by Region; Service Type; and Authorized level by caseload TemWExmpt Temporary WTW Exemptions IL ist of individuals who meet temporary WTW exemption criteria based on care of a young child TOAl 01 TOAlOl IC alWORKS Recipients Approaching Time Clock Limits Work Participation Case Review Work Participation Case Review Data IM onthly reports of Work Data 'Participation Case review data CalWORKs (CW) W Master The C W WM aster Report is produced monthly by ResearchlEvaluation Report Unit, FSS Support Team, is presented as an Excel File, and contains a wide range of statistics concerning FSS programs. The Excel File has Monthly worksheets. Public Assistance Investigations District Attorney Welfare Fraud tracking of early detectionlprevention Division Early Detectionilprevention statistics by region and month. Statistics Welfare Fraud Convictions Report Listing of convictions for welfare fraud for CalWORKs and Food Stamp programs. Welfare Fraud Caseload Statistics Public Assistance Division case work statistical report Attachment Type of Report Name andlor Number of Report Brief Description of Use or Content Customized Reports (cont.) Monthly Sanction List For active CalWORKs cases, this monthly reports displays sanctions from both the Data Collection and ES subsystems, reinvestigation information, and Time On Aid information. Information is separated into detailed case information by caseload, and summarized information by Unit, Region, and Division. CARS Reports Accuracy Trend Provides information on the number of reviews completed, the review accuracy rate, and the paymentlbenefit accuracy rate for a six-month period of time. CalWlN System Error Detail Provides a list of the number and type of CalWlN errors cited, grouped by Division, Region, Supervisor and Worker CalWlN System Error Summary Provides a summary of CalWlN system errors. Case Accuracy Detail Provides information for each worker on the total cases reviewed and the number and percentage of cases that have an overall status of Correct and Incorrect. Case Accuracy Summary Indicates the number and percentage of those reviews that have an overall status of Incorrect or Correct. Case Count Summary Provides a summary of full, non-full and total case reviews by Review Class. Case Reviews Provides the basic case review data for each review. Causal Factor Summary For each eligibility element provides the total number of: Reviews, Not Applicable, lncorrect and Causal Factors. - Comments Eligibility Elements Provides a list of element comments, case numbers and causal factors. Comments - Program Specific Provides a list of program specific comments and case numbers. Eligibility Element Overview Summarizes the total reviews for each Eligibility Element and the number and percentage of those reviews that have an Eligibility Element status of Correct or lncorrect. Also provides the total number of Eligibility Elements Reviewed, Total Eligibility Elements lncorrect and the overall Eligibility Element Accuracy. Eligibility Element Overview Trend Summarizes the total reviews for each Eligibility Element and the number and percentage of those review that have an Eligibility Element status of Correct for a six month time period. Eligibility Element Summary For the selected Eligibility Element provides the total number of cases reviewed and indicates the number and percentage of those cases that has an Eligibility Element status of Correct and Incorrect. Employee History For the selected employee, provides the total cases reviewed, total correct cases, case accuracy rate, benefits at review, difference, and payment accuracy rate for each position that the employee has occupied in the case Participation Hours Provides the total number of cases reviewed, the total number that do not have sufficient participation hours -the number for single parent households and the number for two parent households. Participation Hours Case List Provides the Review ID, Case Number, Case Name, Household Type, and Total Participation hours for all reviews in which participation hours are coded as not being met. Payment Accuracy Detail Provides total number of reviews for each worker, the number incorrect, the benefit amount at review, benefit difference and the payment accuracy rate. Payment Accuracy Summary Reviewed, the number incorrect, the benefit amount reviewed, the benefit difference, and the payment accuracy rate. Performance Standards Error Provides the total number of cases reviewed and the number and Summary percentage of those cases that had a Performance Standard Error. Re-Review Accuracy Summary Provides the total number of cases Re-Reviewed for each reviewer and indicates the number and percentage of those cases that has an overall status of lncorrect or Correct. Re-Reviewer Case Accuracy Detail Provides the total number of cases Re-Reviewed for each reviewer grouped by re-reviewer and indicates the number and percentage of those cases that has an overall status of lncorrect or Correct Re-Reviewer Case Accuracy Provides the total number of cases Re-Reviewed for each reviewer Summary grouped by re-reviewer and indicates the number and percentage of those cases that has an overall status of lncorrect or Correct. . Attachment Type of Report Name andlor Number of Report Brief Description of Use or Content CARS Reports (cont.) Response Due Detail Provides the Review ID, Case Number, Case Name, Days Allowed for Response, and the number of Days Remaining or Past Due for all cases that have been submitted to worker, and have a pending status in the Response Due Summary Summarizes the number of cases that are past due or pending and provides the total of past due and pending cases. Reviewer Case Count Based on the reviewer field, provides the total number of reviews completed and breaks it down into full and focused reviews. Reviewer Case Status Provides the total number of case reviews completed by each reviewer and ind~catesth e number and percentage of those cases that has an overall status of Correct and Incorrect. Reviewer Compliance By Provides the number of case reviews per supervisor required by the Supervisor agency, the total reviews completed for each worker, the total number of reviews completed by the supervisor, and the compliance percentage. Supervisor Compliance Report Measures the extent to which supervisors are in compliance with the agency's case review requirements. Support Services Payment Provides total number of cases reviewed for each worker, the number Accuracy Detail incorrect, the benefit amount at review, benefit difference and the payment accuracy rate. ORANGE COUNTY BOARD OF SUPERVISORS MINUTE ORDER July 27,2010 i Submitting Agency/Department: County Executive Office Approve proposed response to 2009-10 Grand Jury Report "Fraud Made Easier: A Study of Fraud Prevention and Eligibility Screening of CalWORKS Recipients." - All Districts he follo/wing is action taken by the Board of Supemisors: APPROVED AS RECOMMENDED rn OTHER 0 rn Unanimous (1) NGUYEN: Y (2) MOORLACH: Y (3) CAMPBELL: Y (4) NELSON: Y (5) BATES: Y Vote Key: Y=Yes; N=No; A=Abstain; X=Excused; B.O. =Board Order Documents accompanying this matter: Item No. Special Notes: Copies sent to: CEO CEO - Kathleen Long Superior Court Grand Jury, L 1 certify that the foregoing is a true and correct copy of the Minute Order adopted by the Board of Supervisors, Orange County, State of California. D+ENE,J. BLOOM, Clerk of the Board By: MEETING DATE: 07/27/10 LEGAL ENTITY TAKING ACTION: ' Board of Supervisors BOARD OF SUPERVISORS DISTRICT(S): All Districts SUBMITTING AGENCYLDEPARTMENT: County Executive Office (Approved) DEPARTMENT CONTACT PERSON(S): Kathleen Long 714-834-74 10 Michelle Aguirre 7 14-834-41 04 SUBJECT: Grand Jury Response: "Fraud Made Easier-CalWORKS" CEO CONCUR COUNTCYO UNSERLE VIEW CLERKO F THE BOARD Concur N/A Discussion 3 Votes Board Majority Budgeted: N/A Current Year Cost: N/A Annual Cost: N/A Staffing Impact: No # of Positions: Sole Source: N/A Current Fiscal Year Revenue: N/A Funding Source: N/A Prior Board Action: N/A RECOMMENDED ACTION(S): 1. Approve proposed response to 2009-10 Grand Jury Report titled "Fraud Made Easier: A Study of Fraud Prevention and Eligibility Screening of CalWORKS Recipients." 2. Direct the Clerk of the Board to forward this ASR with exhibits to the Presiding Judge of the Superior Court and the Foreperson of the Grand Jury. SUMMARY: Approve proposed response to the 2009-10 Grand Jury Report titled "Fraud Made Easier: A Study of Fraud Prevention and Eligibility Screening of CalWORKS Recipients." BACKGROUND INFORMATION: In May 2010 the Grand Jury released a report titled "Fraud Made Easier: A Study of Fraud Prevention and Eligibility Screening of CalWORKS Recipients." This report directed Findings and

The fiduciary responsibility to protect tax funds from abuse should not be mitigated by budget cuts. It is the responsibility of the Social Services Agency to ensure the integrity of the fiaud detection and prevention program. Response: Agrees with the finding.

Social Services Agency does not effectively utilize statistical records that would assist in management of the program and evaluating employee performance. Response: Disagrees wholly with the finding. SSA utilizes a wide variety of data reports, including State-mandated reports, systems generated reports, and custom designed reports that are utilized for program management and employee performance evaluation. Attachment 1 to this response document provides a wide example of such statistical reports. Copies of reports are available upon request.

In the last half of 2009, Social Services Agency cut the fraud detection and prevention function by $900,000 in staffing, resulting in an estimated $9.6 million paid out in fraudulent claims during the last six months of 2009. Response: Disagrees partially with the finding. SSA agrees that as a part of comprehensive, Agency-wide budget cuts necessitated by funding reductions, SSA reduced the financial agreement with the DA for fiaud services by approximately $900,000 in 2009. However, SSA disagrees that this budget reduction resulted in $9.6 million paid out in fraudulent claims. It is noted that Chart 9 of the Grand Jury report supports Finding 7 and is based on the District Attorney's Public Assistance Investigations Division Early DetectionPrevention Statistics report. While the "cost avoidance" figures are based on State-provided formulas, these formulas include several assumptions that have not been or cannot be quantified, including: An assumption that a case is actually denied, discontinued, or reduced based on the fraud investigator's recommendation. At times the investigators' recommendations may not be consistent with eligibility rules and therefore cases remain eligible, while the DA statistics on this report reflect the recommended actions of the investigators. An assumption that a case would have stayed on assistance for an established period of time at an established benefit amount. At times the periods of assistance are, shorter and the benefit amounts lower than the established levels in the cost avoidance formula. The DA's cost avoidance statistical report is used for internal purposes only and is not requested by or submitted to the State as a part of official reporting. The official required report submitted to the State is the Fraud Investigation Activity Report (DPA 266) which is completed and submitted by the District Attorney's office. When comparing the same time period as Chart 9, Line 21 of the DPA 266 reports more identified fraud overpayments/issuances in the 2009 period than in the 2008 period as follows: July-08 $ 43,164 July-09 $ 46,908 August-08 $ 9,279 August-09 $ 54,307 September-08 $ 1,669 September-09 $ 77,430 October-08 $ 12,431 October-09 $ 15,897 November-08 $ 26,707 November-09 $ - December-08 $ 33,551 December-09 $ 36,042 Total $ 126,801 Total $ 230,584 Difference $ 103,783 According to this data from an official State-mandated report, identified fraud overpayments/issuances actually increased from 2008 to 2009. Further, in its letter to the Governor regarding the Bureau of State Audits report on the California Department of Social Services' oversight of counties' antifraud efforts, the State Auditor writes, "Our calculations do not include any savings from the fraud that these activities may deter because there is no way to measure deterrence with any certainty." SSA agrees with the State Auditor's assessment of cost avoidance formulas and believes that it would be contrary to its fiduciary responsibilities to formulate comprehensive policy changes based on the estimated $9.6 million cost avoidance identified in this finding. Responses to Recommendations: R.l through R.7 R.l Social Services Agency should include in its Mission Statement references to fraud detection, prevention, prosecution and the roles such efforts will play in the overall strategy of the agency. Response: This recommendation will not be implemented because it is not warranted or is not reasonable. SSA's Mission Statement is "To deliver quality services that are accessible and responsive to the community, encourage personal responsibility, strengthen individuals, preserve families, and protect vulnerable adults and children." SSA successfully operates under its mission statement which is a clear and succinct representation of the Agency's purpose. It incorporates socially meaningful concepts and is based on the concepts addressed in the County of Orange Mission Statement: "Making Orange County a safe, healthy, and fulfilling place to live, work, and play, today and for generations to come, by providing outstanding, cost-effective regional public services." SSA believes that the term 'quality' in its Mission Statement is representative of the concept of benefit accuracy and program integrity, and includes making appropriate referrals for fraud investigations as case circumstances dictate. Among SSA's stated Core Values are: Integrity, Thoroughness, and Efficiency. These emphasized values speak to SSA management's dedication to accurate distribution of public assistance which includes making appropriate referrals for fraud investigations as case circumstances dictate.