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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
Los Angeles County Grand Jury
• 2005-2006
Millions of TAX Dollars Lost to Child Care Fraud
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 18 findings
F1
Page 260
Although the child care payment amount is based on an approved number of child care hours, DPSS does not verify the actual number of attendance hours and does not require the APPs in the current contracts to verify the number of hours provided.
F2
Page 260
Although DPSS procedures require original documents from parents and child care providers, copies are often accepted.
F3
Page 260
Although the CalWORKS California-administered Stage 2 and 3 child care programs require sign-in and sign-out sheets for children in day care, the County of Los Angeles-administered child care Stage 1 program has no such requirement.
F4
Page 260
Signatures of the parent or child care provider on forms being processed by the APPs are not always matched to other documents in the file.
F5
Page 261
Agreements between the APPs and the child care providers may not stipulate all the requirements of DPSS and the State-required child health and safety issues.
F6
Page 261
A Contract Monitoring Project and a Contract Monitoring Division Report, both completed by the County of Los Angeles Auditor/Controller, cited the following: • A parent reported that neither she nor her child had received services from the child care provider for which the County was billed $12,400. • A parent case file did not contain a copy of the day care provider’s current business license, taxpayer identification number, or Social Security number as required by the contract. • Child care payments were made to child care providers for parents who were not qualified or enrolled in any activity which qualified them for benefits. • DPSS was billed twice for the same retroactive services.
F7
Page 261
The APP child care outreach marketing program lacks County of Los Angeles direction. We are not aware of documentation as to the effectiveness of this program, the reach of the marketing, media used, or responses.
F8
Page 262
DPSS and the APPs communicate primarily through the GAIN Employment Activity and Reporting System (GEARS) computer system which is maintained by DPSS. The APPs report that when the system is down, data communication with DPSS ends. The GEARS system is supposed to provide the APPs with correct and current information. However, we are told the data on the GEARS system may be out of date by as much as one to two weeks.
F9
Page 262
Some personnel of DPSS and APPs advise that changes in employment, job training, or school hours are entered into the GEARS system by DPSS only at the beginning of the month. If any of these hours of attendance change on the 2nd of the month or thereafter, the full payment for child care continues until the end of the month.
F10
Page 262
The DPSS process requires that the parent report their attendance at school or training. APP personnel and DPSS investigators indicate that self-certification is not always reliable.
F11
Page 262
Any changes in the parent’s schedule that would affect child care hours are reported by the parent on a Quarterly Report (QR7) form supplied by DPSS.
F12
Page 262
Not all DPSS forms specify that the parent or child care provider is signing under penalty of perjury.
F13
Page 263
Alleged child care fraud is referred by the APPs to the DPSS Welfare Fraud Prevention Section. This section checks the referral to ensure that all pertinent documents are attached to the referral. DPSS investigates the allegations of fraud and may refer the case to the County of Los Angeles District Attorney for prosecution. The Civil Grand Jury is concerned that in a one year period hundreds of referrals from the APPs to the DPSS Welfare Fraud Section resulted in only ten referrals to the District Attorney’s office. Some DPSS Welfare Fraud Prevention Section personnel have inadequate training to detect evidence of fraud. .
F14
Page 263
Misrepresentation of employment is a major source of welfare fraud: • Some parents in the welfare to work program earn very little income - a few hundred dollars per month - but are reimbursed thousands of dollars per month for miles driven and child care expenses. • The same person (child care provider) who is paid by the County to provide child care services may also be receiving In Home Support Services (IHSS) from the County. The IHSS worker is provided to individuals to assist them in activities of daily living. A CalWORKS participant/parent could be employed to provide IHSS services to the same person (child care provider) providing their child care. There is no cross check. • Fictitious names of employers and places of employment have been “verified” by phone calls made to co-conspirators. • Some parents work as aides with the IHSS Program and receive thousands of dollars in mileage. • Some parents claim to work for relatives. • Some parents conspire with friends or relatives to fraudulently claim child care benefits and split the money. • Some parents claim to provide tutoring during the hours the child is in school. • Some child care providers claim hours for care during the hours the child is in school. 2005-2006 County of Los Angeles Civil Grand Jury 248
F15
Page 264
DPSS has stated that: “There is no limit, currently, to the number of hours allowed to the parent for paid child care per day”.
F16
Page 264
Trustline Registry Form: this form “….was created by the California Legislature to offer parents, employment agencies, Child Care Resource and Referral Programs (APPs and DPSS), and child care providers access to a background check conducted by the California Department of Social Services (CDSS) which includes checks of the California Criminal History System and Child Abuse Central Index (CACI) at the DOC and FBI records.” This form is processed for DPSS by the appropriate State licensing department and the State advises that it may take six weeks or more to complete.
F17
Page 264
The County of Los Angeles Administrative Memorandum Number 00- 10, dated 5-22-00, defines a license-exempt provider’s own children in the following way: “The definition of a license-exempt child care provider’s own children include all grandchildren, nieces, nephews, and first cousins for whom child care services are being provided. These children are considered immediate family members and there is no limitation on the number that may be cared for. In addition, the license-exempt provider may also provide child care services for the children of one other family. Child care payments may be authorized during the same time period for all of the children whose parents are participating in CalWORKS welfare-to-work activities or working.” This broad, unlimited definition of license-exempt provider’s own children encourages fraud and abuse of the system.
F18
Page 265
DPSS contracts with outside agencies to provide services for the GAIN case management in two new GAIN regional offices to perform vital steps in the CalWORKS process. These contract worker positions include case workers, supervisors, and clerk typists.
Recommendations 18
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R1Page 260There should be random and unannounced visits at least once every ninety days to the child care sites to verify the childrens’ presence. This verification should be done either by DPSS or be required by the APPs in revised DPSS-APP contracts.
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R2Page 260DPSS should require the APPs to accept only original documents or copies that have been seen and annotated by DPSS.
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R3Page 260DPSS should require by incorporation in the APP contract daily parental sign-in and sign-out sheets.
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R4Page 260DPSS should ensure by monthly file reviews that signatures on signature cards in files match the signatures of the parent and child care provider. The Auditor-Controller and contracts department of DPSS must also have access to these records for audits. These requirements must also be included in the APP contract. 2005 – 2006 County of Los Angeles Civil Grand Jury 245
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R5Page 261DPSS should review the DPSS-APP contracts and agreements to ensure that child health and safety requirements are addressed by both the APPs and child care providers.
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R6Page 261Each step of the DPSS process should be verified, and APP contracts and files should be monitored and audited: to prevent paying for child care not provided, to ensure that parents are eligible for child care support, to eliminate double billing, and to ensure that documentation required by the contract is in place through random reviews of APP files. DPSS has the primary responsibility for verification and should request assistance as needed from the Auditor-Controller, District Attorney and Chief Administrative Office.
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R7Page 261Marketing of the APP CalWORKS child care outreach program should be regularly evaluated by DPSS to determine its effectiveness. 2005-2006 County of Los Angeles Civil Grand Jury 246
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R8Page 262DPSS should designate staff and a contact phone number for the APPs to call for case information when the GEARS data system is down and circulate a memo to all APPs with this information. DPSS should ensure that participant data is entered into the GEARS system daily.
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R9Page 262Any changes in attendance should be entered daily on the GEARS system by DPSS to eliminate overpayment.
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R10Page 262The school or the training site should send to DPSS a monthly attendance verification based on records which are retained by the school or training site and made available to county auditors.
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R11Page 262Any changes in the parent’s schedule that would affect child care hours should be reported monthly instead of quarterly and verified by DPSS to eliminate overpayment for child care. This monthly report and the record of its verification should also be available to county auditors.
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R12Page 262DPSS should require that all forms are signed under penalty of perjury. 2005 – 2006 County of Los Angeles Civil Grand Jury 247
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R13Page 263DPSS should develop and implement an enhanced welfare fraud detection and investigation training program for employees in the Welfare Fraud Prevention Section in conjunction with the Los Angeles County District Attorney and receive periodic State and local training. Personnel trained and employed by this program should be compensated commensurate with their increased responsibilities.
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R14Page 264If the parent is working for cash or for relatives, the payer should sign, under penalty of perjury, certifying the hours, the amount paid, and the work accomplished. A cross check between child care provider services and IHSS services, requiring copies of tax returns, and random field checks at the employment location should be mandatory. DPSS should eliminate child care allowance if employment legitimacy cannot be determined.
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R15Page 264Any paid child care in excess of ten hours per day for 5 days per week or 12 hours per day for 4 days per week should be monitored and verified on site by DPSS.
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R16Page 264Trustline Registry Form background check must be approved and received by DPSS prior to any authorization for child care (including License-exempt and Trustline Exempt). DPSS should work with the State to expedite the Trustline Registry Form.
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R17Page 264The definition of “own children” should be limited to only the biological or legally adopted children of the child care provider. A limit should be placed on the number of children cared for by one child care provider, based on the capacity of the provider and the site, to provide safe and healthy child care. 2005 – 2006 County of Los Angeles Civil Grand Jury 249
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R18Page 265Contract agency employees should be required by DPSS to undergo the same background checks required of DPSS employees in the same job category.