Phase II Findings: Error Rate Methodology Pilot
Executive Summary, I. Introduction, II. Methodology, III. Measuring Improper Payments in Nine States, IV. Findings and Next Steps, V. Recommendations, Appendices: Appendix A: Arkansas, Appendix B: Colorado, Appendix C: Illinois, Appendix D: Ohio, Appendix E: Record Review Worksheet, Appendix F: Data Entry Form, Appendix G: Telephone Discussion Guide, Appendix H: Arizona, Appendix I: California, Appendix J: Kansas, Appendix K: Nebraska, Appendix L: New Hampshire
Appendix I: California
California is a State-supervised, county-administered State, with 89 different agencies providing child care. Of the 89, 15 are school districts, 15 are child welfare agencies, and the remainder are private contract agencies.
California delivers child care through the CalWORKS welfare program. There are three stages of the CalWORKS program—Stage 1 is traditional Temporary Assistance for Needy Families (TANF) child care; Stage 2 is transitional child care; and Stage 3 is low-incomes child care when the child migrates out of transitional care. California also has alternative payment providers that provide child care for nonwelfare, low-income cases.
Each county has the discretion to establish when TANF benefits end, when transitional benefits begin, and the duration of transitional benefits. It is estimated that 30 percent of those receiving transitional child care benefits are also receiving some TANF benefits. In addition, 32 of the counties contract out their TANF services to former alternative payment providers. Of the remaining 26 counties, 15 operate all of the programs, while the remainder operates parts of the program.
Improper Payments Process
California legislation and statute define child care eligibility requirements, while the California State Department of Education, Child Development Division defines improper payments as any deviation from those policies or statutes that would constitute an erroneous payment.
The legislature, through Senate Bill 1113, allocated $530,000 for 5.5 staff positions to establish a new unit to deal with improper payments. In addition, the Child Care Division is adding 2.5 staff positions to this unit, for a total of eight staff positions. As stipulated by statute, this new unit will conduct a yearly audit of provider records to determine compliance rates, identify instances of misallocation of resources, and estimate the amount of funds expected to be recovered from instances of both potential fraud and overpayment when no intent to defraud is suspected. The areas of examination include family fee determinations, income eligibility, rate limits, and basis for hours of care.
In California, each county District Attorney’s office establishes its own dollar threshold for pursuing improper payments.
Automation
The State does not have a statewide automated child care system. The State does not receive any client or provider-specific data, only aggregate data to meet Federal reporting requirements.
Most agencies that deliver child care within the counties have automated systems. Some of the systems are proprietary. Two systems are the most widely used—the NoHo system, developed during the 1980s by North Hollywood for eligibility and payment; and Kindertrack, which is used by many large agencies. Kindertrack is a newer system with a more user-friendly interface. One of the county welfare offices is moving to an imaging system so that they can have a paperless office. The State believes that the automated system could reduce the number and severity of errors; however, the human element of data entry and the basic decision process still allow for the introduction of error, even with the automated systems.
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