Minnesota’s Economic News — W/E 10/29/21
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Senator Mary Kiffmeyer, chair of the Legislative Audit Commission Audit Subcommittee, sounded a consistent theme this morning, “Fraud hides. It does not say ‘Here I am.’ ”
The Commission heard testimony this morning from the Office of Legislative Auditor (OLA) and the Department of Human Services (DHS) on the issue of fraud in the Child Care Assistance or “CCAP” program. The CCAP program, according to both the OLA and DHS, has substantial fraud and administrative problems.
In fiscal year 2018, Minnesota paid out $254 million in CCAP subsidies to about 30,000 children in about 13,000 families. The money comes from a combination of county, state and federal taxpayer dollars.
The OLA report was unable to substantiate earlier allegations of fraud, noting that this is “extremely difficult.” But the OLA report pointed to a large-scale fraud problem within CCAP and also an absence of internal controls within the CCAP program. It also documented a breakdown between the investigative units within DHS and the office of Inspector General at DHS, calling it “a serious rift.” The OLA also highlighted that the “DHS Inspector General lacks independence from DHS management.”
The OLA summary suggests that to the extent that CCAP program is being defrauded, it is due to mismanagement by the state:
Based on state, county, and federal investigations, Minnesota prosecutors have charged several individuals in recent years with CCAP fraud. Those cases showed that CCAP fraud schemes are relatively simple, but proving CCAP felony theft “beyond a reasonable doubt” is extremely difficult. Both investigators and prosecutors believe this results largely from the way the state administers the program. (page 5)
The OLA report, which was limited in scope, reported the following:
In that August email, Swanson estimated that the top 100 child care providers were paid 54% of the CCAP funds, and the top 150 were paid 67% of the funds. “Investigators in this unit believe that auditors and elected officials should be very concerned about the high number of the highest paid child care centers that display indictors of fraud.”
DHS officials at the hearing indicated that they were planning to get all the “stakeholders” together to improve the management of the CCAP program, moving for example from paper attendance records that are not required to be submitted with the billing requests from child care providers, to an electronic system. There is a provision in the governor’s budget for an electronic billing system that would require child attendance records to be submitted with billing requests.
Senator Michelle Benson cautioned her colleagues that many legitimate child care providers are very small home-based centers, with one or two CCAP eligible children rather than large centers with many CCAP children, and that a solution should keep those providers in mind.
DHS officials also stressed that they wanted to meet the “diverse” needs of Minnesota families, and indicated they would be hiring an equity coordinator, and others with “cultural competencies” while setting up an “community advisory group.” None of the commissioners asked questions about this response to allegations of fraud, but Rep. Tina Liebling made comments about the allegations of fraud being focused on the Somali immigrant community.
Members of the Somali community protested the OLA report this morning at the Capitol.
DHS officials said they were releasing their own report today. It was unavailable as of 2:00 pm today.
The OLA report can be found here. The OLA is currently reviewing the administration of the CCAP program, and the controls or lack thereof in place at DHS to determine if “DHS’s oversight of CCAP was adequate to safeguard financial resource of the program.” That report is due in April of 2019.