Minnesota Democrats Criticized for Not Taking Child Care Fraud ‘Seriously’ After Release of Second Report

A second report released last week by the non-partisan Office of the Legislative Auditor (OLA) found that the Minnesota Department of Human Services’ “program integrity controls are insufficient to effectively prevent, detect, and investigate fraud” in the state’s Child Care Assistance Program (CCAP).

In March, the OLA released its first report on the issue, which found “pervasive” fraud in the program and confirmed that millions of dollars in government payments went to fraudulent child care centers. After the release of the report, DHS Inspector General Carolyn Ham (pictured, left) was placed on “investigate leave.”

The OLA’s second report, released Wednesday, focused more specifically on the “internal controls” in place within DHS to prevent fraud. The 44-page report produced five key findings, including:

  1. DHS and county agencies did not sufficiently leverage independent, external data sources to verifying recipient eligibility for CCAP.
  2. DHS had weak processes to validate that CCAP provider billings aligned with actual child care provided.
  3. Among other functions, MEC² (the payment system for CCAP) was developed to accurately process provider billings and payments; however, MEC² lacked some key controls to identify errors to inhibit, track, and recover improper payments.
  4. DHS did not implement sufficient program integrity controls for licensing child care providers.
  5. DHS did not adequately identify and analyze the risk of fraud in CCAP and had weak processes to coordinate investigations statewide.

House Republicans blasted their Democratic colleagues for “pretending this problem doesn’t exist” in response to the report.

“Minnesotans want fraud in our public programs taken seriously – they work hard for their money, and expect that government will protect their tax dollars,” said Rep. Mary Franson (R-Alexandria) (pictured, right). “Democrats in the House have refused to hold hearings on the previous OLA report, blocked efforts to bring the Inspector General in to testify, and have offered few solutions that would crack down on pervasive fraud in the child care program.”

According to a press release from House Republicans, Democrats voted twice to block motions to bring Ham in for questioning, while giving a hearing to just one fraud prevention bill.

“The Department of Human Services owes Minnesotans and legislators an explanation on why they have failed to put measures in place to prevent fraud and protect Minnesotans’ tax dollars,” Rep. Nick Zerwas (R-Elk River) added. “If Democrats refuse to pass fraud prevention legislation, I expect the Department will do everything in their power to put fixes in place that will address the numerous issues identified in this audit report, and show Minnesotans they take this issue seriously.”

Rep. Steve Drazkowski (R-Mazeppa) of the New House Republican Caucus suggested that Gov. Tim Walz’s administration is “in denial about daycare fraud.”

“DHS and the Office of the Inspector General displayed an astonishing lack of accountability, leadership, and professionalism in their core functions, which are to ensure only eligible people receive benefits and that state and federal laws and guidelines are followed in these child care welfare programs,” he said.

Walz did take some steps to intervene in March after he had Deputy DHS Commissioner Chuck Johnson deliver a set of recommendations on the issue, but was criticized for proposing “equity and implicit bias training” for CCAP licensors.

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Anthony Gockowski is managing editor of Battleground State News, The Ohio Star, and The Minnesota Sun. Follow Anthony on Twitter. Email tips to [email protected].







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