From Rep. Samantha Kerkman's Capitol Insight
This was certainly a busy week both in Madison and in the 66th Assembly District, which prompted me to draft a special edition of Capitol Insight to keep you better informed on what took place. First of all, the Joint Legislative Audit Committee, on which I serve, held a public hearing this week to review the initial audit findings of the Wisconsin Shares program. The audit was launched early in the spring by the Legislative Audit Bureau, with additional support provided by the Department of Children and Families (DCF).
You may recall the Milwaukee Journal Sentinel investigation back in January that ultimately revealed cases of fraud detected within Wisconsin Shares. The newspaper's investigative reporter uncovered child care "rings" in which participants who were related to each other provided care to each other's children while falsely claiming employment on their enrollment papers and other documents required by the program. Combined with other cases of fraud, these particular participants and providers cost Wisconsin taxpayers more than $13.7 million in subsidized child care overpayments during the past couple of years.
In response to the Milwaukee Journal Sentinel investigation, my colleagues and I on the Joint Legislative Audit Committee instructed the Legislative Audit Bureau to conduct a full-scope audit of the Wisconsin Shares program in two separate phases. The first phase, intended to identify cases of fraud and other loopholes within Wisconsin Shares, was completed in June and the results were presented to us by the bureau during this week's public hearing. Throughout the duration of the audit, it was discovered that in 2008 alone, between $16.7 and $18.5 million in improper subsidized child care payments were made to providers. The recipients of these payments included ineligible participants, participants with no recorded wages, and participants in possession of inadequate documentation of self-employment (such as "owning" their own daycare business). Additionally, the case reviews conducted as part of the audit's first phase determined the statewide error rate within Wisconsin Shares to be 11%, based on a random sample of 400 child care providers.
The first phase of the audit also included an in-depth analysis of the October 2008 attendance records for 50 child care providers within Wisconsin Shares. This review found 21 of the providers to be in receipt of excess payments for care they never provided while another 22 providers had submitted fabricated documents, yet were still paid by the state. The remaining five providers simply refused to submit any of their records for the audit. It is estimated that these 50 providers alone cost the taxpayers $4.0 million in improper subsidized child care payments in 2008.
The second phase of the audit is underway and should be completed by December 1, 2009. This phase will closely examine improvements currently being implemented to deter further incidents of fraud and abuse within the Wisconsin Shares program, and what further adjustments need to be made. The improvements were passed earlier this year as provisions of both 2009 Wisconsin Act 2 (the state's stimulus bill) and 2009 Wisconsin Act 28 (the state's 2009-2011 biennial budget). The adjustments we on the audit committee are looking at right now include improving provider and participant compliance with the program's requirements and improving the overall process of employment and wage verification in determining the eligibility status of prospective enrollees.
Following the enactment of 2009 Wisconsin Act 2, the Department of Children and Families created a Program Integrity Unit comprised of five staff members to monitor and detect cases of fraud within Wisconsin Shares. This unit provided integral assistance during the first phase of the audit. Upon the enactment of 2009 Wisconsin Act 28, the reimbursement rates for child care providers within Wisconsin Shares were frozen, DCF began developing a Quality Ratings System for participating child care centers, and new restrictions were placed on providers and participants of the program.
Moving forward, the Joint Legislative Audit Committee will hold another hearing on Wisconsin Shares upon the completion of the second phase of the Legislative Audit Bureau's audit of the program. At that time, I am hopeful my colleagues and I can work together in developing a reform plan that will hold Wisconsin Shares participants and providers accountable for their record-keeping and quality of child care. We need to make sure that everyone involved with Wisconsin Shares is providing accurate and truthful information when enrolling into the program and when filling out additional paperwork for taxes and other purposes. We also need to have well-trained staff monitor the program and follow a standard protocol of reporting any hint of fraud when they see it. Then, there needs to be a tough penalty issued to the individuals who are caught trying to scam the system. At a time when Wisconsin taxpayers are struggling to make ends meet in this economy, we cannot tolerate any further abuse of their hard-earned money like that which we have seen in recent years with Wisconsin Shares.