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State child  care fraud forces costly fix

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By Andrew J. Tobias, Staff Writer 8:30 PM Thursday, February 9, 2012

An overhaul for a $600 million taxpayer-subsidized day care program will be less susceptible to abuse than the old paper billing system, state officials say, but some JFS directors say it doesn’t go far enough to stop fraud.

In January, the Ohio Department of Job and Family Services launched a $6 million electronic system to better track children in the government-subsidized day care program. The system requires parents or family members to swipe an ID card and punch in a pin number when they drop off and pick up their children at government-licensed day care providers.

Federal funding has been available since the welfare-to-work initiatives of the 1990s to subsidize day care costs for low-income working parents. The program in 2010 paid $600 million for Ohio families to day care providers.

But until last month, the old billing method had providers submit paper bills with hand-written times. It was largely based on the honor system. Those bills were time-consuming to process and easy to fake, according to critics.

Counties took paper statements from providers and turned them over to the state, with as much as a 60-day processing delay before payment.

Each child now has a unique ID card and the parent swipes when the child is dropped off or picked up. The system cost $6 million to install statewide. With the change, day care visits can be tracked in real time and the state can more easily monitor for suspicious billing activity, said ODJFS spokesman Ben Johnson.

The new electronic system will also be cheaper to run, county JFS directors said.

“We should be devoting fewer resources (three staff members instead of eight following layoffs) toward the processing of payments,” said Butler County JFS Director Jerome Kearns.

Five people in Lima were indicted last month after prosecutors allege they faked $170,000 in annual paper bills since 2004 claiming children had attended a bogus day care facility. They face charges including racketeering, theft and forgery.

State investigators conducted surveillance on two homes and saw no children coming or going.

Lynn Shock, the director of Allen County Job and Family Services, said she had received complaints about the homes years ago, but she didn’t have the resources for a time-consuming stakeout. She said the state did not prioritize fraud detection and investigation.

“I don’t think they care there’s fraud involved. They say they do, but I don’t think so,” Shock said.

Providers are not supposed to touch the new cards but Shock said the swipe cards may just streamline fraud.

“If the provider is less than honest and says to the client ‘give me your card and keep it here,’ then that’s a problem,” Shock said. The electronic system will do nothing to prevent parents and providers who are working together to rip off the system.

Ohio JFS directors prefer a system that would read a child and parent’s fingerprint or palm print to prove a child is actually there, said Joel Potts with the Ohio Department of Job and Family Services Directors’ Association.

But the state nixed that idea over cost concerns. There would also likely be concerns from parents over fingerprinting their children, Johnson said.

“The swipe card provides the same benefit at a much lower cost to taxpayers,” Johnson said.

News reporter Josh Sweigart contributed to this report

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