Audit: Washington paid too much for child care

Providers in state program overpaid by $2.6 million

By Kathie Durbin, Columbian staff writer

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A new state audit finds that the state of Washington made more than $2.6 million in overpayments to child care providers employed by the Working Connections Child Care Program between July 1, 2009, and June 30, 2010.

In addition, the state Auditor’s Office questioned the legitimacy of more than $241,000 in other payments and concluded that the agencies that administer Working Connections have inadequate controls to detect fraud and report errors.

Working Connections is administered by the Department of Early Learning and the Department of Social and Health Services. It helps low-income families pay for child care while they work, look for work or attend job training as required by WorkFirst, a state public assistance program.

In 2010, approximately 60,000 children were enrolled in the program for either full-day or half-day care. That year, the program paid more than $300 million to nearly 19,000 providers, including 7,400 who were licensed or certified by the Department of Early Learning.

Auditors compared daily child care attendance records with paid invoices for 146 providers, including one provider in Clark County who received a $95 overpayment.

Overpayments resulted from a variety of mistakes, including providers’ failure to keep records, theft of records, and too many days claimed by providers. Some records were missing a parent signature or contained invalid signatures.

Eight providers had more children in their homes than they were licensed to care for, and 41 had records that showed children signing in and out at the same time every day instead of reporting their actual arrival and departure times.

The audit found weak controls by the two departments. For example, neither department had timely access to child care attendance records. In most cases, they gave providers 15 days to produce the records rather than require that they be produced on demand.

The review also found that current laws and regulations do not give the agencies authority to remove original records from child care centers or homes for review. Investigators have only limited authority to review records or perform on-site visits of licensed care centers.

The audit also found that the process for reporting suspected billing fraud is spread across many state agencies, and neither DEL nor DSHS clearly states how people can report suspected fraud.

The audit released this week was not the first to find fault with Working Connections.

In June 2010, a separate audit by the legislative branch concluded that the Department of Early Learning did not routinely notify DSHS when it found providers had not complied with attendance record requirements.

In September 2010, the U.S. Government Accountability Office announced that its own undercover operation had revealed that the state lacked adequate controls over applications and billing. Posing as parents and providers, GAO staff members successfully billed the state $4,717 in child care assistance for fictitious children and parents. Investigators found state workers had approved services after brief phone interviews and had failed to detect that some applicants used the Social Security numbers of dead people.

Also in December 2010, a former DSHS financial technician was sentenced in U.S. District Court for misappropriating funds from the Working Connections program and ordered to pay $156,729 in restitution.

The 2011 Legislature passed a law establishing the Office of Fraud and Accountability within DSHS to curb such abuses. But the auditor’s report said legal obstacles still prevent the new office from investigating fraud and abuse of child care subsidies. It recommends that the agency focus on identifying and pursuing providers who are being overpaid, and that it use a risk-based selection method, rather than random samples, when choosing which providers to monitor.

Mindy Chambers, spokeswoman for the auditor’s office, said both departments have been informed of the audit’s findings and are committed to implementing its recommendations.