Safety issues, fraud uncovered in child-care and foster systems

In response to the tragic death of a child in foster care in Wisconsin, the state has moved aggressively to improve it's child-welfare system.   The state has also targeted fraud in its state-financed childcare system.

Stateline Midwest, a publication of the Midwestern Office of the Council of State Governments: Vol 19, No. 2: February 2010. 

Download the PDF version of this issue.

In November 2008, tragedy struck in Milwaukee, Wis., and sent shock waves throughout the state.
A 13-month-old boy, who had been placed by the state in the care of his aunt, was beaten to death. Christopher Thomas’ 2-year-old sister was also brutally abused, but survived.

The case rocked the state’s child-welfare system and sparked public outcry over how such a heinous
crime could occur on the state’s watch. At the same time, a brand-new state agency charged with coordinating child protection was responding to reports that a state-financed childcare system was riddled with fraud.

Sen. Robert Jauch, who has led the legislature’s response to the scandals, calls the situation a “perfect
storm” that has led to some much-needed reforms in both the child-care and foster-care systems.

Child’s death spurs new regulations
Christopher’s death spurred an investigation by the Department of Children and Families, which found that a caseworker had recently visited the home — but had failed to find any signs of abuse. Since the tragedy, DCF has made a number of reforms to help prevent such a mistake from happening again.

“As a result of [Christopher’s] death, the department requires routine physical exams for all children, making sure that kids in foster care are routinely being seen in the medical community,” Jauch says. “So you have a third party looking over and protecting the interest of those kids. A lot of good has come from a horrible situation.”

The DCF was forced to respond, too, to widespread public criticism in the crime’s aftermath. When news of Christopher’s death hit the media spotlight, state officials did not comment on the situation, fueling public indignation.

New legislation ( SB 299) approved in November implemented new disclosure laws that require the department to communicate basic information about a serious case of neglect or abuse within four days.  A more thorough report is now required within 90 days, including a review of the steps being taken to prevent another incident. In addition, SB 299 expands mandatory reporting to cases of egregious abuse or suicide.

“People were angry,” says Jauch, chair of the Senate Committee on Children and Families and Workforce Development. “Failure to divulge information upset the public as much as the incident itself.”

Audit reveals widespread fraud
Meanwhile, Jauch has also been working on legislation to overhaul the Wisconsin Shares program, which was designed to help low-income parents pay for child care. About 60 percent of child-care centers in the state receive Wisconsin Shares subsidies.

Last year, a series of articles by the Milwaukee Journal Sentinel spurred a statewide investigation
and audit of the $400 million program. The investigation found what Jauch calls a “large-scale pattern of abuse” of the program. Some child-care providers, for example, were claiming many more hours of work than they actually performed. In so-called “child care rings,” groups of parents were setting up fake day care centers — but instead keeping their children home and collecting payments from the state.  In some cases, state investigators visited addresses of purported child-care facilities, which
had been receiving state subsidies, only to find them shuttered.

A Legislative Audit Bureau found at least $22 million in improper payments in 2008. More than 100 providers have lost their licenses. The audit also suggested a number of steps the state could take to
improve accountability and reduce fraud in Wisconsin Shares, and lawmakers have worked on several bills to achieve those goals.

The state’s economic stimulus bill, passed early last year, created a team of five investigators
charged with tracking down fraud and abuse, as well as recovering overpayments. It also authorized
the state to launch an “automated attendance system,” which would provide parents with a swipe
card or other means of checking their children in and out of child care. The new system, expected to
be launched this year, would help the state more accurately keep track of how many hours providers
are working, as well as how many children they are caring for.

Lawmakers approved other administrative changes as part of the state’s budget bill, passed in June. Among other changes, the measure:

  • allows payments to be immediately suspended in cases of fraud or abuse;
  • prohibits providers’ or employees’ children and relatives from making up more than 40 percent
    of clients;
  • limits maximum hours of care to 12 per day, unless the parent provides documentation for
    needing longer care; and
  • provides for a better system for flagging irregularities in hours usage to ensure that providers
    are not overstating hours.

This fall, lawmakers worked on legislation (SB 280) that gives the state more authority to
recover payments of fraudulent claims by going after individual owners or employees who have at
least a 20 percent stake in the operation. Previous state law made it difficult for the state to collect
payments from businesses that had shut down.

Safety issues uncovered
While the financial fraud in Wisconsin Shares was alarming, some people were even more concerned by a number of safety-related issues brought up in the investigation. It was discovered, for example, that the state did not routinely cross-reference the names of people living in homes that served as child-care centers against the sex-offender registry. In September, four sex offenders were found to share an address with a child-care facility.

The audit also found eight cases in which convicted felons or people who had abused or neglected children were employed by or living in child-care facilities. In response, Jauch and his colleagues quickly got to work on laws aimed at better monitoring people with licenses to provide child care. SB 331, passed last year and signed by Gov. Jim Doyle in November, bars people who have
been convicted of certain offenses (such as murder or kidnapping) from being licensed to provide
child care. Less serious offenses require a waiting period after prison time and/or probation. In addition, background checks will now be conducted on child-care providers every three months, instead of every four years.

Jauch points out that the fraud occurring in the Wisconsin Shares program has been a wake-up
call, and that he doesn’t think his state is alone.

“I don’t believe the Wisconsin experience is much different than many other states with large
urban areas,” he says. He urges his colleagues in legislatures to consider taking “the same kind of aggressive steps we have taken to enact vigorous and aggressive oversight in cooperation with local law enforcement, the Office of Justice Assistance, and state and federal officials to identify and hold accountable those who are bleeding the system.”

Next: Focus on quality
Jauch would like to see the state focus on the quality of child care. “It is one thing to say you want to provide a safe environment … but you also want one that motivates the child, nourishes the child, enriches their intellect and their social skills, and really does help them grow,” he says.

Doyle has proposed a new rating system for child-care facilities in the state. Providers would be given anywhere from one to five stars, based on the education level of the staff, the strength of the curriculum, the business practices being used, and other criteria. Jauch supports the initiative, which must be approved by the Joint Finance Committee.