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Friends of the Fourth
District:
The Los Angeles County Grand Jury recently released its annual
report and among the concerns the report highlighted was the very
real problem of fraud in state-subsidized child care programs –
programs that provide low-income families with money to pay for
child care.
Depending on their level of income, Los Angeles County residents
eligible for child care funding get those funds from one of three
sources; Stage 1, Stage 2 or Stage 3. The Stage 1 program is for
families on welfare and is administered directly by the County.
Stage 2 is for families transitioning off of welfare but still rely
on a certain level of assistance. Stage 3 is designed for the
working poor; families with incomes that leave them barely above the
poverty line. Both Stages 2 and 3 are funded and administered
directly by the State of California. Over 62,000 children in Los
Angeles County benefit from these three programs, which last year
totaled more than $357 million. Of that total, $235 million was
contained in Stage 2 and Stage 3.
As the Grand Jury correctly pointed out, there are serious problems
of people defrauding the child care funding system. We have heard
the stories of recipients making up children that don’t exist,
falsified employment records, collusion and worse. We know and
acknowledge that this fraud is happening. I believe that the Grand
Jury did correctly point out some current challenges with Stage 1,
but I also believe they missed the much larger picture.
What the Grand Jury’s report did not capture is that a vast majority
of child care fraud is occurring in the state-controlled Stage 2 and
Stage 3. The state has absolutely no program to combat or detect
fraud in these two programs. The County of Los Angeles, however, has
a highly-successful program for attacking fraud in the Stage 1
portion under our control.
The County’s successful efforts at reducing fraud are the results of
a unique partnership between multiple agencies. Our Department of
Public Social Services has a welfare fraud prevention unit that
works closely with the Los Angeles County District Attorney, to
detect, prevent and prosecute all welfare fraud. Last year alone,
this partnership tracked down over $2 million in Stage 1 child care
fraud in Los Angeles County, and investigators are currently
following up on over 800 child care fraud investigations. Our local
efforts have saved several million dollars by stopping fraudulent
payments at the door through innovative early detection systems, and
it also provides a significant deterrence to cheaters through highly
publicized arrests.
As successful as our local efforts have been, we can only address
fraud in Stage 1. The sad result is that a majority of child care
funding – nearly $235 million of the $357 million given out locally
under Stage 2 and 3 – is left wide open to fraud.
So how can we begin to solve this massive oversight that allows
fraud to occur in the state-controlled Stage 2 and Stage 3? The
answer is found in our own backyard. We know that Los Angeles
County’s fraud prevention program works. The state needs a similar
program modeled after our local success. It is a simple solution I
have tried bringing to the attention of state legislators in the
form of Senate Bill 1421 – which I sponsored and was introduced by
Senator Bob Margett (R-Glendora) in March.
SB 1421 would address fraud in Stage 2 and 3 head-on. It would
incorporate the best practices and procedures we have learned in Los
Angeles County into a state-level fraud monitoring program. The bill
calls for the process to begin with a $2.4 million, two-year pilot
project. If our local program could save taxpayers several million
dollars already, imagine the savings that could be accomplished on
the statewide level if this bill became a reality.
Unfortunately, SB 1421 is in legislative limbo. It sped through
several policy committees but came to a dead stop when it reached
the Appropriations Committee, where it remains today. While the
thinking of the committee members remains their own, I do not
believe we should wait for another scathing Grand Jury report to
tell us we have a substantial problem.
The local success in Los Angeles County can easily become the
solution the state desperately needs to address the portion of child
care fraud it has the ability to combat. But to do this will require
the leadership of the State Senate to pull SB 1421 out of mothballs.
After all, isn’t $2.4 million a small price to pay if the impact of
the investment ends up saving California’s taxpayers tens of
millions of dollars a year?
DON KNABE
Supervisor, Fourth District
County of Los Angeles
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