Legislature Takes Action To Begin The Fight Against Fraud And Improper Payments In Child Care Programs

California’s child care programs, which issue over $1.2 billion in taxpayer dollars each year, have been increasingly vulnerable to fraudulent activity and improper payments, due to a gap in appropriate oversight at the State level. Los Angeles County Supervisor Don Knabe is pleased that the State Legislature has taken action to require the State to examine this problem and develop ways to prevent it.

A 2005 report to the Legislature indicated that fraud could exist in up to 7 percent of all child care payments statewide. The report also estimated that 6.2 percent of all child care payments are erroneously issued, as a result of inconsistent practices and policies.

Supervisor Knabe has continually advocated in Sacramento for decisive action on this issue. In 2006, he sponsored Senate Bill 1421 (Margett) to address fraudulent activity in child care programs. This spurred a bipartisan dialogue, which led to the passage of Senate Bill 84 (Ducheny) by the Legislature last week, and signed into law by Governor Schwarzenegger as part of the new State budget.

The Legislature’s action calls for a best-practices study, which is due back by September 2008. It will report on the best practices for the prevention, detection, and investigation of improper payments and fraud in all subsidized child care programs. Local efforts across California, such as the highly-effective fraud mitigation and prevention activities in Los Angeles County, which last year prevented over $50 million in erroneous child care payments from occurring, will be reviewed as part of the study.

"This is a great beginning of what will be a very productive collaborative process, said Supervisor Knabe. Over the next twelve months, I will be watching this closely to ensure that the momentum continues and a strong plan of action to mitigate child care fraud emerges from the study. I want to thank Senator Bob Margett, Senate President Pro Tem Don Perata, and Assembly Speaker Fabian Nunez for their leadership on this important issue, as well as Governor Schwarzenegger for his continued support."