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Audit finds potential fraud in state child care program

State auditors have found evidence of fraud and abuse in a $210 million-a-year program that helps cover child care costs for the poor.

The audit, scheduled for release today and obtained exclusively by The Atlanta Journal-Constitution, uncovered hundreds of instances of potential fraud and abuse involving parents and child care providers. It also found lax and inconsistent practices by government regulators, something state officials say they are moving swiftly to correct.

The report doesn’t venture a guess on how much might have been misspent in the program, which last year helped pay child care costs to more than 6,000 providers serving 84,000 children. But Bobby Cagle, the state agency head who took charge of the program last July, said he’s been told it’s likely in the $5 million to $10 million range.

The person in charge of the Childcare and Parent Services program was permanently reassigned this week as the result of audit findings, Cagle confirmed. CAPS helps low-income parents who otherwise couldn’t afford to go to work or school. The program also subsidizes child care for foster children after school and in the summer.

In one instance, the state paid $46,000 over five years to help pay day care costs for a working mother of two who claimed to be earning $17,680 a year. Auditors said the woman probably would not have been eligible for it if her caseworker had contacted her employer or looked at Labor Department records, which showed that, in at least one of those years, she earned $55,360.

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Widespread problems were found in the program that last year was funded with about $54 million in state money and the rest from the federal government.

For instance, 699 people received $2.4 million in combined child care subsidies in 2010-2011, even though each, according to records, was exceeding the income eligibility requirements by an average of $5,366.

Officials with the state Department of Audits and Accounts said they decided to closely examine Georgia’s CAPS program after a federal agency reported problems in similar programs in several states.

The AJC recently spent a year investigating the state’s oversight of day care facilities. The newspaper scrutinized the state’s management of two major day care subsidy programs, including CAPS. One article, published in March 2012, revealed that one-fourth of CAPS money — $217 million – had been given to substandard day cares over a four-year period.

In their report, state auditors found the CAPS program lacks a comprehensive system of internal controls to effectively identify improper payments, questionable eligibility, fraud or abuse.

Cagle said he expects the audit findings to result in further investigations and some criminal prosecutions. Some evidence has been sent to the state attorney general for review.

Efforts will be made to recoup any money that was improperly paid out, and a committee of up to 45 child care providers and advocates will be convened over the next few months to analyze existing policies and recommend any needed changes, Cagle said.

“There was absolutely not the level of performance we would expect,” said Cagle, commissioner of Bright from the Start: Georgia Department of Early Care and Learning.

The audit, which covers July 2007 to June 2011, raises questions about the potential for child care providers using the program to pull in extra profits. Auditors found 1,734 parents who participated in CAPS reported that they were employed by their child care provider. Having a job is a requirement to qualify for the subsidy.

In one case, a child care provider paid a person with five children $11,327 as an employee, but received $26,104 in subsidies for keeping the employee’s children, netting $14,776, the audit found.

Carolyn Salvador, executive director of the Georgia Child Care Association, called the audit “unflattering” at the “10,000-foot level.”

But, she said, “the transparency it puts on the program is the good thing.”

“Ultimately, the goal for the child care industry, DECAL, DHS [Department of Human Services] is to ensure that all families, no matter what their income level, have access to quality early learning,” Salvador said. “And we need to know where the fixes need to be made.”

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