Day Care Received State Funds While Closed for Violations

A day care shuttered by the City of St. Louis for building code violations continued to receive subsidies from Missouri’s Department of Social Services (DSS) while it was banned from caring for children. DSS’ failure to end these payments calls into question the department’s ability to protect taxpayer funds from waste and fraud in the child care subsidy program, which is meant to help low-income families afford day care services.

Kidz in Action day care received over $56,000 in tuition subsidies from June to August 2013, despite the fact that St. Louis City had closed the center for 10 weeks during this time. The facility was not open at all in July, but it reported caring for 70 children and received over $22,000 from the state. DSS did not revoke Kidz in Action’s contract until July 2014, and as of September 21, the center was still operating pending an appeal.

It is unclear whether or not the state will ever be able to recoup all of the improper payments. Kids in Action also claimed child care subsidies for 10 days when its power was shut off and billed the state for food while the center was banned from serving meals.

DSS’ “pay and chase” system of letting waste occur and then trying to collect misused money is inefficient and rarely effective. Rather than using more state resources to recoup improper payments, state agencies should to take responsibility for preventing abuse and fraud.

At the September 29 joint Budget and Appropriations – Health, Mental Health, and Social Services oversight hearing, the committees questioned DSS and the Department of Health and Senior Services (DHSS), which inspects day cares, about the inappropriate payments to Kidz in Action. DSS told the committee that its policy had been to not revoke a child care center’s contract or end payments until it received notice from DHSS.

To avoid such long delays in the future, the two departments have agreed to increase collaboration. DSS will now be notified when DHSS suspends a provider, puts them on probation, or is in the process of revoking their license. DSS will be able to evaluate the situation and determine more quickly whether or not to end payments. The department has also asked to be notified whenever St. Louis City takes action against a day care facility. In order to help prevent future child care fraud, DSS is considering implementing an electronic time and attendance system to track how many children are actually cared for at a facility.

These policies are steps in the right direction, but DSS is still reactively solving problems instead of proactively bettering its programs. The legislature has seen too many instances in which DSS and other departments only institute solutions after being questioned about an issue by the press or a committee. In the future, departments should not wait for a scandal to break in the news or in a hearing before implementing procedures to protect taxpayer funds. State agencies are responsible for efficiently allocating their budgets, and they should constantly work to improve their operations so the state can avoid, and not just patch up, incidents of wasteful spending.