March 13, 2019 10:18 PM
Minnesota Legislative Auditor James Nobles released a new audit Wednesday and testified before the State Senate Human Services Committee outlining his findings.
"There is a big problem and state fraud investigators believe it could be as much as $108 million," said Nobles. "That is their belief and I am not saying we can substantiate their beliefs, but I can tell you that 14 investigators came to us, individually, under oath and that is what they said."
Nobles told lawmakers the investigators, all of whom work for the Minnesota Department of Human Services, testified that there are more than 100 child daycare centers that are either outright committing fraud or they are not delivering adequate daycare services.
"They are telling us that the daycare centers in question are terribly dysfunctional," said Nobles. "They're not saying the $108 million is direct, financial fraud by transactions, but an accumulation of things such as no proper daycare services, or no proper paperwork to follow."
DHS Deputy Commissioner Chuck Johnson told 5 EYEWITNESS NEWS the agency hired an independent auditing firm and did not uncover more than $100 million in fraud.
"We define fraud a little differently," said Johnson. "We believe it is actual financial transactions using deception, or manipulation, to gain money that is not intended for the program and we just did not find that level of fraud by our definition."
The Child Care Assistance Program (C-CAP) provides public money to qualified child daycare centers so they can give adequate daycare to low-income families in need.
DHS said there are 30,000 children who are in the C-CAP program with 13,000 families enrolled and several thousand more on the waiting list for the program.
Johnson told KSTP that DHS is not doing anything actively with the 100 daycare centers in question but that could change very soon after Wednesday's Senate hearing.
"We have not talked about how we are going to handle the 100 centers and what we are going to do with them," said Johnson. "We need to work with our investigators and figure out what the next step will be."
DHS said there are 4,953 Minnesota daycare centers that qualify for the C-CAP program and the total cost of the program for the fiscal year 2018 was $254 million.
Nobles told KSTP he had met with federal investigators, but could not comment on whether they were investigating any of the daycare centers.
Some of the C-CAP money comes through the federal government and that is why the Legislative Auditor touched base with federal investigators about his findings.
Updated: March 13, 2019 10:18 PM
Created: March 13, 2019 08:15 PM
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