Audit shows fraud, waste in early learning programs

Jan 17, 2012

Florida’s Voluntary Pre-Kindergarten and School Readiness programs are designed to help children get ready for kindergarten.  In order to give them an educational jump-start, the state spends more than a billion dollars a year to educate them using private providers. But a recent audit reveals the state may be losing millions to potential fraud.  Lynn Hatter reports a House education committee heard a damaging audit report from state officials that includes charges of financial mismanagement and poor oversight.

Auditors found that background checks for providers aren’t being done or reported on time. They also found disparities in how payments are made, and turned up potential fraud in the system -- finding that more than 16-thousand people received school readiness money they may not have been eligible for.

Under state law, the school readiness money is only supposed to go to working parents for childcare with some exceptions. In a random sample of school readiness programs in the 2010-2011 fiscal year, more than 16,500 people received $40 million in school readiness money while collecting more than $50 million in unemployment benefits.  The report was presented to the House K-12 Appropriations Committee which includes Republican Representative Janet Atkins of Fernandina Beach.

 “When I look at the dollar amounts, 39.8 million and 54.2 million, it’s only over a snapshot of time. So I just remind the committee members that we need to multiply these numbers.”

Many of the worst audit findings come out of the state’s School Readiness program, which is run by an Independent state Office of Early Learning. The audit profiled nearly a third of the 31 Early Learning Coalitions and documented 32 common problems. Democratic Representative Gwendolyn Clark Reed even suggested going as far as merging the Office of Learning into the Department of Education’s existing program with the same name.

 “Do you feel the programs need to be under the control of DOE for monitoring purposes?”

Republican Representative Matt Gaetz called the audit “a parade of horribles”, and says if the amount of fraud is large enough, perhaps the state should consider scrapping its early learning model all together or having it administered by the Department of Education or an outside vendor.

 “If we were to do that, if were saving hundreds of millions of dollars, which, based on the percentage and the overall amount of what early learning coalitions get, we may, then that would seemingly justify that increase at DOE or the acquisition of a third-party administrator.”

Last year state lawmakers under the direction of Governor Rick Scott removed the School Readiness portion of the Office of Early Learning from the former Agency for Workforce Innovation. However, it didn’t give the agency much oversight in watching over providers, 70-percent of which are private businesses. The Office’s new director Mel Jurardo says she’d like to have greater authority to go after what she calls “bad actors.”

 “There are times when people don’t want to take the fraud cases further because its just such a few dollars, but we know those dollars add up. So our agency would really like the opportunity to really be able to aggressively pursue those that are fraudulent.”

Jurardo says the agency is already at work trying to address the audit findings. It has established a fraud unit and has recently hired an inspector general. But there’s a catch to that, as heard in this exchange between Jurardo, and state Republican Representative Ana  Logan of Miami.

Logan: “First of all, does your I-G have subpoena power?”

 Jurardo: “No.”

 Logan: “Well, that’s an interesting answer.”

 In order for the Inspector General to get subpoena powers there would need to be changes in state law.

The early learning office is also looking to update its record-keeping system. Right now, most of that information is paper-based, which, according to state auditors, is a contributing factor to the waste and mismanagement of the program, and makes it harder for Administrators to track potential mistakes. But the agency’s Jurardo says a new computer based system should help address those issues—and help control the fraud issues as well.

 “I find it difficult to find the words in my mind…every time I see a case of fraud I see two and three and four year olds not receiving the care they need because someone else has decided to perpetuate a misdeed.”

Out of the more than 16,000 potential cases of fraud, auditors have identified 26 individuals. In November,  14 of those who received more than 52,000 In improper school readiness money were referred for fraud investigations and nine others are still being reviewed by the Office of Early Learning.

As a result of the audit findings, the agency has now been labeled as “high-risk” according to the state. It will now undergo heavy monitoring by state officials and more frequent audits, including one set to begin later in the year.