**Measuring Improper Payments in the Child Care Program:**

**A Pilot Project of the ACF Child Care Bureau**

**Final** **Report**

*Prepared for:*

Administration for Children and Families

Child Care Bureau

330 C Street, SW, Room 2046

Switzer Building

Washington, DC 20447

Attn: Moniquin Huggins, Task Order Officer

Mary Jo Thomas, Improper Payments Team Leader

*Prepared by:*

Walter R. McDonald & Associates, Inc.

12300 Twinbrook Parkway, Suite 310

Rockville, MD 20852

Under Contract Number 233--02--0093

Task Order Number 8

August 31, 2005

**TABLE OF CONTENTS**

**Executive Summary** *vii*

**I. INTRODUCTION 1**

Background... 1

Objective of the Study 3

Conceptual Framework 3

**II. METHODOLOGY 5**

Overview of the Process to Measure Improper Payments 5

Fieldwork Preparation 6

Generating the Sample 7

Developing Record Review Worksheets 10

Site Visits 10

Conducting Record Reviews 11

Computing Potential Error Rates 12

Case Error Rate 12

Payment Error Rate 13

Average Dollars Spent in Error per Ineligible Child 13

Telephone Discussions with Additional States 13

**III. MEARURING IMPROPER PAYMENTS IN NINE STATES** **15**

Improper Payments Process 15

Standards, Processes, and Procedures 16

Automation 17

**IV. FINDINGS AND NEXT STEPS** **21**

Arkansas 21

Results 22

Next Steps 22

Illinois 23

Results 23

Next Steps 24

Ohio 25

Results 26

Next Steps 26

Colorado 26

Phase I Administrative Error Results 27

Phase II (Provider Error) and Phase III (Client Error) Results 28

Next Steps 28

Conclusion 29

**V. RECOMMENDATIONS** **33**

**TABLE OF CONTENTS (continued)**

Appendix A. Arkansas A--1

Appendix B. Colorado B--1

Appendix C. Illinois C--1

Appendix D. Ohio D--1

Appendix E. Record Review Worksheet E--1

Appendix F. Data Entry Form F--1

Appendix G. Telephone Discussion Guide G--1

Appendix H. Arizona H--1

Appendix I. California I--1

Appendix J. Kansas J--1

Appendix K. Nebraska K--1

Appendix L. New Hampshire L--1

**LIST OF EXHIBITS**

Exhibit 1. Components of the Conceptual Framework 4

Exhibit 2. Site Visit Agenda 11

Exhibit 3. Summary of Study States 18

Exhibit 4. Arkansas Findings 22

Exhibit 5. Illinois Findings 24

Exhibit 6. Ohio Findings 26

Exhibit 7. Colorado Findings 27

Exhibit 8. Summary of Findings 30

Exhibit A--1. Arkansas Record Review Worksheet A--9

Exhibit B--1. Colorado Record Review Worksheet B--11

Exhibit C--1. Illinois Record Review Worksheet C--8

Exhibit D--1. Automation in Ohio D--6

Exhibit D--2. Ohio Record Review Worksheet D--10

**EXECUTIVE SUMMARY**

The Child Care and Development Fund (CCDF) is a block grant that
provides funds to States, territories, and tribes to support child care
subsidies for low-income working families. During Fiscal Year (FY) 2004
the CCDF, managed by the U.S. Department of Health and Human Services
(HHS), Administration for Children and Families (ACF), Child Care Bureau
(CCB) totaled \$8.5 billion. This includes \$4.8 billion in subsidized
child care funds and an additional \$3.7 billion in Temporary Assistance
for Needy Families (TANF) and Social Services Block Grant (SSBG)
transfer funds. During FY 2003, the Child Care Program served an average
of 1,751,300 children each month.

The CCDF block grant allows maximum flexibility for States to set
critical policies such as establish eligibility criteria, define
administrative structures that allow maximum choice for parents, and
establish fiscal management approaches. Because of the discretion given
to States, eligibility criteria, rates, regulation of child care
providers, and payment mechanisms vary widely among jurisdictions. This
flexibility makes it difficult to develop common approaches for
identifying and measuring improper payments.

During FY 2002, the CCB developed an Erroneous Payment Assessment plan.
The purpose of the plan was to identify and reduce improper payments in
relevant HHS programs in response to the Improper Payment Information
Act of 2002 and related Office of Management and Budget (OMB) guidance.
In July 2003, the CCB began preparation to conduct a pilot project to
determine whether there is a cost-effective approach or methodology for
estimating improper payment amounts or rates in the Child Care Program.

The CCB contracted with Walter R. McDonald & Associates, Inc. (WRMA) to
develop and pilot test a common methodology that States could use to
compute an error rate and work with States to validate existing
protocols or develop new approaches to address improper payments and
fraud. Specific requirements, including statistically valid sampling,
guided the conceptual design of this study. The CCB, in consultation
with a number of "partner States" chose to focus the analysis on
*eligibility error* to measure an element that is common to every State
and to mitigate some of the variation among State definitions
encountered during the Phase I pilot study. The methodology---conducted
in Arkansas, Colorado, Illinois, and Ohio---had four main components.

-   The study team assisted each State to select a random sample of up
    to 150 cases (children), using a sampling frame of all children in
    the State who received child care services during October 2004. The
    study team designed the sample size to produce a statistically valid
    estimate of erroneous payments.

-   States developed a Record Review Worksheet to reflect child care
    policies in the State. The State used this instrument to guide a
    record review of the sampled cases to identify administrative errors
    in eligibility determination. States collected data regarding the
    number of cases with errors and whether the errors led to an
    improper payment. Although all of the worksheets contained common
    elements, the definitions pertaining to those elements varied from
    State to State.

-   The study team conducted site visits and provided technical
    assistance to the State representatives who conducted record reviews
    and collected data. The study team computed the error rates using
    the data submitted by the States.

-   The study team also conducted telephone interviews, using a
    consistent protocol to gather additional information about improper
    payment activities in five States. These States were Arizona,
    California, Kansas, Nebraska, and New Hampshire.

Definitions of the error rates calculated for this study and the
relevant findings are as follows:

-   Percentage of Cases with a Potential Error---This percentage is
    based on the number of sampled cases with any administrative error
    divided by the total number of valid cases in the sample. The
    estimated percentage of sampled cases determined to contain
    administrative errors ranged from 12 percent to 38 percent.

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-   Percentage of Cases with a Potential Improper Payment---This
    percentage is based on the number of sampled cases with an
    administrative error that resulted in an improper payment divided by
    the total number of valid cases in the sample. The percentage of
    sampled cases with administrative errors that resulted in an
    improper payment ranged from 6 percent to 27 percent.

-   Percentage of Payments Potentially Made in Error---This percentage
    is based on the total amount of child care payments that were made
    in error divided by the total amount of child care payments for the
    sample. The estimated percentage of payments made in error in the
    four pilot States ranged from 4 percent to 14 percent.

An initial error rate measure provides both the States and the CCB with
a baseline against which to compare future findings. The pilot findings
confirm the value to States of regularly conducted compliance reviews to
improve administrative practice. The pilot methodology was also useful
for States to gain evaluative information on potential areas for
improvement in administrative policy. Administrative protocols dealing
with improper payments vary greatly from State to State. This is
particularly true with threshold amounts that are used in pursuing
recoupment. Within some States thresholds vary greatly from jurisdiction
to jurisdiction---for example, one State will pursue a debt of any
amount, while another requires a minimum of \$5,000. Improvements to
administrative practice, such as independently confirming employment and
training or reconfirming participation and attendance, can reduce
administrative error.

The four study States that participated in this pilot plan to reexamine
their monitoring processes, provide training, or clarify policy and
procedures in those counties where they identified problems or issues.
The CCB will gather and compile information from those States as they
continue to take action based on the pilot test findings. Colorado
extended its record review process to explore additional areas of error
and examined client and provider errors for a subset of the sample. This
small subset indicated that the study methodology could include an
external verification of both provider and client errors, both of which
are important areas of risk for mitigating improper payments.

This pilot study demonstrated and reinforced that improvements to
administrative practice to reduce administrative error can result in
preventing or deterring improper payments caused by clients as well as
providers. Independent confirmation of employment or training and
intermittent reconfirmation of participation, as well as comparing
attendance or sign-in and sign-out sheets with claim forms, can help
ensure that recipients participated in the activities for which services
were provided. As a result of this study, each State has planned action
steps or has implemented several new systematic changes to improve
monitoring or reduce improper payments.

> **I. INTRODUCTION**

During Fiscal Year (FY) 2002, the Child Care Bureau (CCB) developed an
Erroneous Payment Assessment plan. The purpose of the plan was to test
the feasibility of an approach to preventing, identifying, reporting,
reducing, and recovering improper payments in subsidized child care. The
CCB also planned to conduct a pilot project to determine the feasibility
of whether there is a cost-effective approach or methodology for
estimating improper payment amounts or rates in the Child Care Program.

The CCB initiated a pilot project with 11 partner States to determine
the feasibility of computing a child care improper payment error rate,
recommend methods to identify improper payments, define child care
payment error and fraud, and gather best practices information for
measuring and managing improper child care payments. These objectives
are particularly challenging due to widespread policy, programmatic, and
quality assurance variation among each of the States.

The CCB contracted with Walter R. McDonald & Associates, Inc. (WRMA) to
measure a child care error rate in four States and conduct telephone
discussions with five additional States to gather information on the
tools and strategies in place to manage improper payments.

Following a brief overview of the Child Care Program and background on
the Improper Payment Information Act, this chapter discusses the
objectives of the study and the conceptual framework for conducting the
error rate analysis. Succeeding chapters describe the methodology used;
provide basic information on nine States, establishing the background
for what a national approach might entail; present the error rate
findings of the four States that participated in the piloting of the
common methodology; and discuss potential next steps for implementing a
comprehensive approach to error measurement.

**BACKGROUND**

The Child Care and Development Fund (CCDF), managed by the CCB, is an
\$8.5 billion block grant---including funds transferred by the States
from the Temporary Assistance for Needy Families (TANF) block grant and
Social Services Block Grant (SSBG). The CCDF provides maximum
flexibility for States in setting critical policies such as establishing
eligibility criteria, defining administrative structures that allow
maximum choice for parents, and establishing fiscal management
approaches that best meet States' needs. Because of the discretion given
to States, critical policies concerning eligibility criteria, rates,
regulation of child care providers, and payment mechanisms vary widely
from jurisdiction to jurisdiction. This flexibility makes it difficult
to develop common approaches for identifying and measuring improper
payments.

The Improper Payment Information Act of 2002 (Public Law 107--300)
requires certain agencies and programs to report annually on both the
magnitude of erroneous or improper payments and the actions they are
taking to reduce them. This law defines payments as being made by a
Federal agency or representative of a Federal program and derived from
Federal resources. The term improper payment includes:

\(A\) Any payment that should not have been made or that was made in an
incorrect amount (including overpayments and underpayments) under
statutory, contractual, administrative, or other legally applicable
requirements; and

\(B\) Any payment to an ineligible recipient, any payment for an
ineligible service, any duplicate payment, payments for services not
received, and any payment that does not account for credit for
applicable discounts.[^1]^,^ [^2]

The Government Accountability Office (GAO) issued a report describing
the strategies implemented by 16 States to address improper payments in
the CCDF and TANF block grants systems. The GAO studied what States were
doing to manage improper payments and how the U.S. Department of Health
and Human Services (HHS), which oversees the TANF and CCDF programs,
helps States identify and address improper payments in these programs.
The GAO concluded that "HHS lacks adequate information to assess risk
and assist States in managing improper payments."[^3]

Improper payments in the CCDF and TANF programs are often related to the
eligibility of clients or providers as well as clerical errors and
fraud. GAO found that each of the 16 study States had made some effort
to assess these improper payments, including case reviews and fraud
investigations. However, the GAO also found that these results were not
comprehensive. The GAO recommended that HHS take two steps to address
improper payments in these programs---first, gather more information on
the State systems and secondly, work with States to identify and rectify
improper payments.

As noted previously, the CCB conducted a pilot project with 11 partner
States. In Phase I of its pilot project in FY 2004, the CCB visited six
States (Arkansas, Connecticut, Indiana, Ohio, Oklahoma, and Virginia)
and worked extensively with five additional partner States (Georgia,
Maryland, Oregon, South Carolina, and Wisconsin). Together, the CCB and
State partners gathered information on the range of strategies that
States use to prevent and identify errors and appropriate enforcement
actions taken when improper payments occur. Results revealed that
efforts varied extensively among States. Few States have implemented
systematic methodologies to estimate the amount of improper payments,
with the exception of California and Connecticut. Connecticut shared its
methodology for error rate calculation at the State Partners Meeting in
September 2004.

Following the collection of information during Phase I, the CCB
contracted with WRMA to develop a methodology to calculate child care
improper payment error rates in four States.[^4]

**OBJECTIVE OF THE STUDY**

The objective of this study was to develop and test a methodology to
compute child care error rates in four States---Arkansas, Colorado,
Illinois, and Ohio. Two of the States selected, Arkansas and Ohio,
participated in the CCB Phase I pilot project. The study States
represent varied administrative practices: Arkansas and Illinois are
State-administered and Colorado and Ohio are locally-administered. A
secondary objective of this study was to assess the feasibility of
measuring improper payments in additional States, including Arizona,
California, Kansas, Nebraska, and New Hampshire.

**CONCEPTUAL FRAMEWORK**

Specific requirements, including statistically valid sampling, guided
the conceptual design of this study. The CCB, in consultation with the
partner States, chose to focus the analysis on *eligibility error* to
measure an element that is common to every State and to mitigate some of
the variation in State definitions encountered during the Phase I pilot
study.

The conceptual design for this study focused on the computation of a
number of error rates using available data. The study team assisted each
State to select a statistically valid statewide random sample of up to
150 cases using a sampling frame of all subsidized children in the State
who received services during October 2004. State representatives
conducted record reviews and collected key pieces of information for
this period. The study team compiled the data and computed error rates
for each State. Exhibit 1 defines the components of the study's
conceptual framework. This table defines some basic concepts referred to
throughout this report and recommends definitions of each component
unique to this study.

The following chapter defines the sampling plan, each of the error
rates, and the methodology used to compute these error rates.

+-------+-------------------------+-----------------------------------+
| **    |                         |                                   |
| Exhib |                         |                                   |
| it 1. |                         |                                   |
| Compo |                         |                                   |
| nents |                         |                                   |
| of    |                         |                                   |
| the   |                         |                                   |
| Conce |                         |                                   |
| ptual |                         |                                   |
| F     |                         |                                   |
| ramew |                         |                                   |
| ork** |                         |                                   |
+-------+-------------------------+-----------------------------------+
| **C   | **Definition**          | **Discussion**                    |
| ompon |                         |                                   |
| ent** |                         |                                   |
+-------+-------------------------+-----------------------------------+
| **Pr  | An individual child is  | It was recommended that the child |
| imary | the primary sampling    | be the unit of analysis. If the   |
| Sam   | unit for the            | unit were the family, one child   |
| pling | computation of an error | may be eligible while another is  |
| U     | rate.                   | not.                              |
| nit** |                         |                                   |
+-------+-------------------------+-----------------------------------+
| **Sam | Sampling is a method of | All children served during        |
| ple** | choosing a              | October 2004 were listed and      |
|       | subpopulation from the  | grouped by county. October was    |
|       | universe. The sampling  | deemed a representative month,    |
|       | frame is the list of    | not as atypical as other months   |
|       | units (population or    | such as November or December. The |
|       | universe) from which a  | study team developed a method to  |
|       | sample (e.g., selected  | select a random sample of 150     |
|       | children) is drawn. The | children. The study team also     |
|       | sample size is the      | developed a random method to      |
|       | total children selected | obtain a sample of 20             |
|       | for study.              | "replacement" children for cases  |
|       |                         | that could not be reviewed for    |
|       |                         | valid reasons.                    |
+-------+-------------------------+-----------------------------------+
| **    | The error rate is the   | The rate is dependent upon the    |
| Error | calculation of the      | type of estimate that is being    |
| R     | number of cases per 100 | calculated. The rate most         |
| ate** | that are in error.      | commonly utilized in entitlement  |
|       |                         | program error rate analyses is    |
|       |                         | errors per 100 children receiving |
|       |                         | child care subsidies, from which  |
|       |                         | an amount of the total costs of   |
|       |                         | all errors can be estimated.      |
|       |                         | Multiple error rates may be       |
|       |                         | calculated.                       |
+-------+-------------------------+-----------------------------------+
| **Pe  | Percent error is        | The study team calculated         |
| rcent | calculated using the    | multiple types of percent errors  |
| Er    | number of cases in      | during this study, including      |
| ror** | error as the numerator  | percentage of payment spent in    |
|       | and the number of cases | error and percentage of children  |
|       | that meet the           | for whom there were one or more   |
|       | definition of the study | errors in eligibility             |
|       | sample as the           | determination.                    |
|       | denominator multiplied  |                                   |
|       | by 100.                 |                                   |
+-------+-------------------------+-----------------------------------+
| **    | The study period refers | Participating States reviewed     |
| Study | to the calendar dates   | records for a common              |
| Per   | that were targeted for  | period---October 2004.            |
| iod** | review.                 |                                   |
+-------+-------------------------+-----------------------------------+
| **R   | The review period is    | For this study, participating     |
| eview | the period of time      | States reviewed the sampled       |
| Per   | during which the record | October 2004 records during       |
| iod** | reviewers examined the  | April--June 2005.                 |
|       | records, following the  |                                   |
|       | study period.           |                                   |
+-------+-------------------------+-----------------------------------+
| **    | The total amount spent  | This number was used as a basis   |
| Study | on child care subsidy   | to estimate the total dollar      |
| P     | payments for all cases  | amount spent in error or the      |
| eriod | reviewed within each    | average amount of dollars spent   |
| Payme | agency.                 | in error per ineligible child.    |
| nts** |                         |                                   |
+-------+-------------------------+-----------------------------------+
| **E   | An error related to a   | Errors in eligibility could be of |
| ligib | family or child being   | three types: administrative       |
| ility | ineligible to receive   | (agency), client, or provider.    |
| Er    | any benefits during the | Each type is described below.     |
| ror** | review period.          |                                   |
+-------+-------------------------+-----------------------------------+
| *     | An error resulting from | This error is considered an       |
| *Admi | the miscalculation of   | agency error, where the worker    |
| ni-** | the appropriate subsidy | has made a mistake in             |
|       | for which the family or | interpreting the eligibility      |
| **str | child is eligible or a  | rules, resulting in an improper   |
| ative | failure to require      | payment.                          |
| Er    | necessary documentation |                                   |
| ror** | when determining        |                                   |
|       | eligibility.            |                                   |
+-------+-------------------------+-----------------------------------+
| **C   | An error resulting from | This type of error could occur    |
| lient | a family providing      | because the family or child was   |
| Er    | inaccurate or           | never eligible or because the     |
| ror** | fraudulent information  | family or child became ineligible |
|       | at the time of          | and it was not discovered and the |
|       | eligibility or          | subsidy continued.                |
|       | redetermination or      |                                   |
|       | failing to report a     |                                   |
|       | change in circumstances |                                   |
|       | that affects their      |                                   |
|       | eligibility.            |                                   |
+-------+-------------------------+-----------------------------------+
| **    | An error resulting from | One of the challenges of          |
| Provi | the child care provider | discovering this type of error is |
| der** | providing inaccurate or | that it may depend upon being     |
|       | fraudulent claims for   | able to check multiple sources of |
| **Er  | services rendered.      | data. For instance, attendance    |
| ror** |                         | records must be compared with     |
|       |                         | provider invoices. Some States    |
|       |                         | must monitor parent               |
|       |                         | sign-in/sign-out sheets to verify |
|       |                         | attendance.                       |
+-------+-------------------------+-----------------------------------+

**II. METHODOLOGY**

This chapter describes the various components of the study methodology
and the process that the States used to measure improper payments. The
chapter begins by providing an overview of the key components of the
error rate methodology, followed by a detailed description of how each
was implemented with the four pilot States. An additional area of
inquiry included telephone discussions with five additional
States---Arizona, California, Kansas, Nebraska, and New Hampshire. The
final section of this chapter describes the telephone conferences
conducted with these States.

**overview of the process to measure improper payments**

The process to measure improper payments for this study began with the
study team working with the pilot States to prepare for the collection
and analysis of data. The fieldwork preparation section of this chapter
describes a planning conference held with the four pilot States in
February 2005 followed by extensive telephone discussions to define
common units of analysis, design the sampling plan, develop procedural
definitions for the Record Review Worksheets, and prepare for the site
visits.

Following the planning conference, each pilot State worked with the
study team to select a statistically valid statewide random sample of
children who received a child care subsidy during October 2004. The next
section of this chapter describes the steps each State used to develop
the sampling frame and create the universe of cases. Using the sampling
frame provided electronically by each State, the study team randomly
selected the sample for study.

Via teleconferences, the study team worked with each State to develop
Record Review Worksheets, based on a template provided by the study
team, addressing the unique policies and standards of their State. The
section titled Developing Record Review Worksheets describes the process
used to develop these worksheets in each pilot State.

Following extensive fieldwork preparation, the study team visited the
four pilot States to learn about the State specific definitions and
procedures each would use to review records. The next section briefly
highlights the site visit agendas used in each State.

The record review process and error rate sections of this chapter
describe the data collection and analysis procedures. The record review
process section describes how the States reviewed each of the cases
selected through the random sampling plan and determined whether it had
been subject to an error and, if so, to determine whether the error
resulted in an improper payment. Each State recorded the results of the
review process on the Record Review Worksheets and summarized the error
findings on a Data Entry Form. Using this information, the study team
computed several error rates to measure improper payments in each of the
States.

The final section of this chapter describes the telephone discussions
held with five additional States to explore the feasibility of
implementing the error rate methodology.

**FIELDWORK PREPARATION**

To prepare for the record review to identify and measure improper
payments, State representatives attended a planning conference and
participated in several teleconferences with the study team. The Child
Care Bureau (CCB) held a planning conference during February 2005 and
provided an overview of the proposed research design and obtained
critical input from the participating States on record review
methodology and the proposed error rate measures.

The planning conference began with each State providing background
information about the State and explaining activities surrounding
improper payments within their State. The presentations included
definitions of improper payments as defined by State policy or
legislation; the extent of automation within the State child care
program; the availability of additional data sources to verify client
eligibility; client and provider contributions to improper payments; and
systems in place to prevent and detect improper payments. (Highlights of
these presentations are included in appendices A--D of this report.)

Participating States reviewed the research design developed by Walter R.
McDonald & Associates, Inc. (WRMA), and the CCB prior to the planning
conference. States were encouraged to contribute feedback on the design
in general, as well as regarding how it related to a particular State.
WRMA amended the research design to reflect the comments and suggestions
of the participating States. The major change to the research design was
the decision to limit the study to a focus on administrative error in
determining client eligibility.

The CCB elected to focus on the computation of an eligibility error rate
in the pilot study. However, States believed that errors in eligibility
could be of three types:

-   Client Error---Clients not reporting changes in circumstances that
    affect their eligibility or reporting inaccurate or fraudulent
    information at the time of eligibility or redetermination;

-   Administrative Error---Agency making a mistake in the calculation of
    the appropriate subsidy for which the family or child is eligible or
    failing to require necessary documentation when determining
    eligibility; and

-   Provider Error---Providers making improper or fraudulent billings.

An outcome of this planning conference was the decision that the study
would focus on administrative error as it pertains to determining
eligibility or redetermining eligibility. The States felt that this
focus can effectively serve as a benchmark and springboard for
additional improper payment activities. States reported that they
believed that client and provider error may create greater financial
loss; however, they recognized that gathering the verification
information required to measure client or provider error rates would be
too costly and difficult to accomplish during the short study timeframe.

Following the planning conference, the study team held teleconferences
with State representatives to finalize the sampling plan, provide
training to develop the States' Record Review Worksheets, and develop an
agenda for the site visit. To accomplish the study within the 3-month
timeframe, the first step was to assure that States selected their
sample to allow enough time to obtain records for the review.

**GENERATING THE SAMPLE**

The study team used a random sampling approach to select a sample for
review and provide a defensible basis for obtaining an unbiased estimate
of error rates. This approach also provided a statistical basis to
determine the level of confidence that this estimate would be within a
particular range of values (e.g., unbiased, best estimate value within
95% confidence limits).[^5] The study team based the sampling plan for
this study on several assumptions:

-   The goal would be to develop an approach to obtain State-level error
    rate estimates;

-   The entity for which the rate was calculated would be the population
    of children receiving subsidized child care;

-   It would be possible to obtain a complete list of the population for
    the sampling frame; and

-   The study team would base the estimate on a feasible systematic
    record review method.

The primary unit of measurement for this study was a child who received
child care services during the month of October 2004. This did not
include children who were denied or terminated, or were billed but not
served during October 2004.[^6]

The study team determined that reviewing a sample of 150 children per
State would be within the resources of the four States that volunteered
for this pilot effort. The Improper Payment Information Act recommends
using a formula to determine the sample size for calculating error rates
in Federally funded programs, leading to an error rate with a 90 percent
confidence interval of +/-2.5 percent.[^7] A sample of 150 children per
State yields an estimate with approximately

+/-6 percent confidence intervals with 90 percent confidence for each
State, adequate for the pilot study intended to establish feasibility
and estimate the cost of the methodology.

The study team offered two basic sampling techniques---a single-stage
random statewide sample and a two-stage random statewide sample. The
States selected the sampling method that would be most appropriate for
their circumstances. Arkansas, Illinois, and Ohio elected to use the
statewide random sample, while Colorado used the two-stage random
sampling approach. Colorado chose this approach to minimize the number
of counties selected for study, thereby decreasing the amount of travel
necessary to conduct record reviews, while still ensuring an equal
chance of selection for any child in the population.

Each State created a universe of children that met the criteria for the
primary unit of measurement, as described above. The States sent their
sampling frames, sorted by county and containing the following
information, to the study team:

(1) Sequential number;

(2) Child ID; and

(3) County of service.

Each State determined their own parameters for child IDs. Specifications
for the child ID were as follows.

-   Each child in the sampling frame received a unique ID. If there were
    several children within one family, case, or household, each child
    had a unique ID.

-   The ID could contain both letters and numbers with no size limit.

-   The unique ID did not contain identifying information; however, it
    was linked to a county or State data system so that the county or
    State could pull the record if the case were selected for the study.

Once the study team received the sampling frame from the States, the
study team randomly selected a sample of 150 children. In addition, a
20-case supplemental sample was randomly selected as record replacements
in Arkansas, Illinois, and Ohio. Because Colorado chose to use a random
two-stage sample, 30 records were needed for its supplemental random
sample. States used the replacement records only if the child selected
did not meet the study criteria for valid reasons.

To select a random statewide sample for Arkansas, Illinois, and Ohio,
the study team used the following sampling method.

-   The study team calculated a sampling interval based on the size of
    the sampling frame or universe of children served during
    October 2004. To do this, the study team divided the total number of
    children within the sampling frame (i.e., all children who received
    child care services during October 2004) by the number of children
    selected for the sample (i.e., 150). (For example, if the sampling
    frame included 15,000 children, the sampling interval was 15,000/150
    or 100---the study team selected every 100^th^ child.)

-   The study team consulted a random number table to determine a random
    starting point within the sampling frame. From that starting point,
    the study team selected cases within each sampling interval, as
    described above. (For example, if the random start was seven and the
    sampling interval was 100, then the study team selected the child
    listed 7^th^, the child listed 107^th^, the child listed 207^th^,
    and so on.)

-   After randomly selecting one child for each sampling interval, the
    sample included 150 children. The study team sent a list of the
    sample---including child ID and county of service---to the State
    representative.

To create the sample of 20 "replacement" children, the study team
removed the sample of

150 children from the overall sampling frame and used the methods
described above to select this second sample.

The sampling plan for Colorado followed a two-stage approach, as
follows:

-   Colorado provided a sampling frame that listed all children who
    received child care services during October 2004, grouped by county.
    The sampling frame was sorted by county size (defined as the number
    of children the county served during October 2004)---from largest to
    smallest counties.

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-   The first stage of the sampling approach was to select 15 counties
    from which to draw samples of 10 children (15 counties \* 10
    children = sample of 150 children). A first-stage sampling interval
    was determined by dividing the total number of children represented
    in the sampling frame by 15. The study team consulted a random
    number table to determine a random starting point within the
    sampling frame. From that starting point, the study team selected
    the counties within each sampling interval. (For example, if the
    total number of children listed in the sampling frame was 30,000,
    the sampling interval would be 30,000/15 or 2,000. If the random
    start was 7, the study team selected the county in which the child
    listed 7^th^ lived, the county in which the child listed 2,007^th^
    lived, the county in which the child listed 4,007^th^ lived, and so
    on.) Through this process, the study team selected counties from
    which subsamples of 10 children would be drawn during the second
    stage of the sampling approach. By this process, some large counties
    would be selected for at least one subsample of 10 children with
    certainty and in some cases a county could be selected for two or
    three subsamples of 10 children.[^8]

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-   The second stage of the sampling approach was a series of
    county-level random samples. For each of the counties selected in
    the first stage, the study team determined a unique sampling
    interval based on the number of children served by the county during
    October 2004 and the number of subsamples that would be selected
    from the county. (For example, a large county may have been selected
    2 times in the first stage, meaning that 2 subsamples of 10 children
    would be selected from this county. If the population of the county
    were 3,000 and 2 subsamples of 10 children (20) were selected, the
    sampling interval for that county would be 3,000/20 or 150. If the
    random start was 7, the study team selected the child listed 7^th^,
    the child listed 157^th^, and so on.) This process was repeated for
    every county selected in the first stage.

**developing record review Worksheets**

To determine errors based on standards contained in current statutes and
applicable regulations, the study team developed a Record Review
Worksheet template for States to customize. The initial version of the
worksheet was a composite of existing review sheets used by several
States to conduct Child Care, Food Stamps, and Temporary Assistance for
Needy Families (TANF) reviews. The study team presented a draft Record
Review Worksheet at the February 2005 planning meeting. Following
discussion of the worksheet, the study team and the States agreed that
it was a workable template to develop State-specific worksheets. The
Record Review Worksheet includes all of the major areas of concern, but
States made individual modifications so their worksheets would conform
to the specifics of their State plans. (See appendix E for a template of
the Record Review Worksheet.)

The Record Review Worksheet captured the detail for each element of
eligibility, the benefit calculation as documented by the agency, the
amount of the subsidy authorized for the review month, and any resulting
errors. The template worksheet consisted of four columns:

-   Column 1 listed the basic elements of eligibility and resulting
    computations;

-   Column 2 contained the findings of the record review and noted any
    pertinent facts, questions, or conflicts in information;

-   Column 3 provided a space for the reviewer to note the ultimate
    findings of the analysis and a summary of any error; and

-   Column 4 contained error coding---in the event that a review element
    contained more than one error, the largest dollar error was the one
    coded.

The States made several adjustments to the worksheet, primarily in
formatting. Colorado reformatted the worksheet to follow its workflow
more efficiently. Arkansas used the changes made by Colorado and added
some content modifications. Ohio reformatted the template and added a
column indicating the citation authority for each element. Illinois
created a "check-off" rather than a written summary of the record
material. Another common alteration was to include a section addressing
the review findings of the subsidy payment process. (See appendices A--D
for each State's Record Review Worksheet.)

**SITE VISITS**

Following the fieldwork preparation stage of the study and after the
States had selected their study samples and developed their Record
Review Worksheets, the study team visited each of the four States. The
site visits generally lasted 2 days and followed the basic agenda
presented in exhibit 2 on the following page.

In three of the States, the site visit team also conducted a review of
several of the records included in the record review. This process
allowed for questions and clarifications concerning the tools and
definitions prior to beginning the actual review. This training process
increased interrater reliability and ensured greater consistency across
States regarding error interpretation. Because of time constraints and
pressures to complete the case review prior to undergoing conversion to
a new automated child care system, Arkansas completed their record
review process before the site visit in early June. The study team
provided technical assistance to the Arkansas Review Team Leader via
teleconference to develop the Record Review Worksheet. The study team
retrospectively reviewed the implementation of the record review
process. (See appendices A--D for detailed findings from the site
visits.)

  ----------------- -------------------------------------------------------------------
  **Exhibit 2. Site 
  Visit Agenda**    

  **DAY ONE**       

  Overview of       
  Project Goals and 
  Objectives        

  Overview of       
  Improper Payments 
  in Child Care     

                    How does your State define improper payments?

                    What automated systems are in place in your State?

                    What data sources does your State use to ensure accurate payments?

                    What steps does your State take to prevent and detect improper
                    payments?

                    How will your State utilize an error rate to improve payment
                    accuracy?

  Overview of State 
  Review Process    

  Overview of       
  Sampling Process  

                    Sampling frame and number per county sampled

                    Number of cases reviewed to date

                    Logistics of the review process

  Overview of the   
  Record Review     
  Process           

                    Record Review Worksheet criteria

                    Data sources for the Data Entry Form

  Demonstration of  
  the Record Review 
  Process with the  
  Record Review     
  Worksheet and     
  Data Entry Form   

  **DAY TWO**       

  Meet with         
  Reviewers and     
  Eligibility       
  Office Staff      

  Discuss the       
  Project Goals and 
  Objectives        

  Overview of State 
  Child Care        
  Program Operation 

                    Discussion of State/county/provider relationship

                    Potential improvements

                    Quality assurance and quality control processes

  Overview of the   
  Client            
  Eligibility       
  Process           

  Demonstration of  
  Client            
  Eligibility       
  Determinations    
  and               
  Redetermination   
  Processes         

                    Use of automation to determine eligibility

                    Relationship to TANF system

                    Interfaces with other State systems

                    Use of red flags to identify potential problems

                    Reports

                    Data warehouse

  Meet with         
  Additional Staff  
  (The States       
  identified        
  additional staff  
  who would add to  
  the understanding 
  of the Child Care 
  system---child    
  care payment or   
  fiscal staff or   
  other quality     
  control staff     
  from associated   
  programs such as  
  TANF or Food      
  Stamps.)          
  ----------------- -------------------------------------------------------------------

**CONDUCTING RECORD REVIEWS**

Using the Record Review Worksheet as a guide, the States conducted
record reviews of the random sample of 150 cases that received child
care during October 2004. The study team maintained ongoing
communication with the States during this process through scheduled
teleconferences. The following chapter presents each State's record
review process to evaluate administrative accuracy.

Colorado added two additional phases to its record review to verify
client documentation of employment or training and provider billing with
child attendance records. However, given the time necessary to complete
all phases of the evaluation and the limited resources available,
Colorado scaled back the provider and client portion of the review to a
subsample of 30 cases from the administrative review.

**COMPUTING Potential Error Rates**

The State review teams distilled findings from each of the 150 Record
Review Worksheets into a Data Entry Form. The form contained nine
fields:

-   State;

-   County of service;

-   Child ID;

-   Study period month (October 2004);

-   Date of data collection;

-   One or more administrative errors during study period;

-   Cause of improper payment;

-   Total amount of improper payments during review month; and

-   Total amount of payments during review month.

State teams sent copies of all Data Entry Forms and each Record Review
Worksheet to the study team. Using these data, the study team computed
three types of error rates---case error rate, payment error rate, and
average dollars spent in error per ineligible child. (See appendix F for
the Data Entry Form.)

**Case Error Rate**

The case error rate had two components:

(1) The percentage of cases with an error; and

(2) The percentage of cases with an improper payment.

The percentage of cases with an *erro*r was determined by dividing the
number of sampled cases with an administrative error by the total number
of valid cases in the sample. (For example, if a State had 50 records
with one or more administrative errors during October 2004, the
percentage of cases with an error would be 50/150 = 33%.)

The percentage of cases with an *improper payment* was determined by
dividing the number of sampled cases with an error that resulted in an
improper payment by the total number of valid cases in the sample. (For
example, if a State had 50 records with one or more administrative
errors during October 2004, but only 40 of those errors resulted in an
improper payment, the percentage of cases with an improper payment would
be 40/150 = 27%.)

**Payment Error Rate**

The payment error rate was the percentage of child care payment dollars
that were potentially paid in error. This rate was determined by
dividing the total amount of child care payments paid in error by the
total amount of child care payments for the sample. (For example, if the
sum of improper payments for the sample was \$5,000 and the sum of all
payments made for the sample was \$50,000, the payment error rate would
be \$5,000/\$50,000 = 10%.)

**Average Dollars Spent in Error per Ineligible Child**

The average dollars potentially spent in error per ineligible child was
determined by dividing the total dollar amount of child care payments
paid in error by the number of cases that had an administrative error.
In addition, the study team identified minimum and maximum amounts of
improper payments. (For example, if the sum of improper payments for the
sample was \$5,000 and 50 records had 1 or more administrative errors
during October 2004, the average dollars spent in error per ineligible
child would be \$5,000/50 = \$100. The minimum and maximum amounts of
improper payments would constitute the range within which the \$100
average falls.)

Chapter 4 summarizes the error rate findings for each of the four
States.

**TELEPHONE DISCUSSIONS WITH ADDITIONAL STATES**

WRMA conducted telephone discussions with representatives in Arizona,
California, Kansas, Nebraska, and New Hampshire to determine the
feasibility of implementing a methodology to measure improper payments
in each of these States. (See appendix G for telephone discussion
questions.)

The telephone discussions focused on the following topics:

-   Description of the organization and infrastructure of the State's
    child care program;

-   The States' experience with monitoring improper payments that result
    from erroneous eligibility determination;

-   Description of current process of monitoring improper payments;

-   Examples of strengths of current practices and services;

-   Examples of areas that need improvement; and

-   Use of automation.

Appendices H--L contain detailed findings from these discussions.

**III. MEASURING IMPROPER PAYMENTS IN NINE STATES**

The study team visited four pilot States---Arkansas, Colorado, Illinois,
and Ohio. The study team also conducted telephone discussions with five
additional States---Arizona, California, Kansas, Nebraska, and New
Hampshire---to gather information about the States' policies and
practices regarding child care improper payments. This chapter presents
a summary of the findings from the site visits and telephone
discussions. A more detailed discussion of each State is presented in
the appendices.

Exhibit 3, at the end of this chapter, provides a summary table of the
structure of the States selected for this study, as well as their
improper payments process and current level of automation for the child
care program.

**IMPROPER PAYMENTS PROCESS**

States identify improper payments in four primary ways:

-   Providers or the public notify the child care agency of suspected
    fraud;

-   Exception reports, produced on a regular basis from the State's
    automated child care tracking system, identify areas of potential
    improper payments;

-   Regular audits or reviews identify improper payments; and

-   Ad hoc studies or reviews identify improper payments.

An investigation typically begins after the State identifies potential
problems. However, the dollar threshold that determines whether the
States will investigate varies greatly among the States. For example, in
Arizona, overpayments of \$2,000 or less go to the Office of Accounts
Receivables and Collections. Overpayments exceeding \$2,000 go to the
Office of Special Investigations to determine if prosecution is
warranted. If warranted, the case goes to the Attorney General for
prosecution; if not, the case returns to the Office of Accounts
Receivables and Collections for collection. In Arkansas, the same system
applies; however, the dollar threshold is \$500.

Most States follow similar processes to identify and recover funds for
overpayments. The process proceeds in one of the following ways, listed
in order from least to most intensive action:

-   The State sends the person responsible for the overpayment a demand
    or similar notice informing them of the overpayment;

-   The State establishes a repayment schedule, if possible;

-   The State initiates judgments, liens, and garnishments if the
    participant does not voluntarily repay; and

-   The State will also initiate tax or lottery intercepts. This is a
    process where the State will intercept any tax refund or lottery
    winnings that would normally be paid to an individual and apply
    those monies to the overpayment amount.

**Standards, Processes, and Procedures**

The States indicated a trend toward establishing more formalized
standards, processes, and procedures. States suggested that this trend
came about, in part, by information shared during quarterly
teleconferences held by the Child Care Bureau (CCB) and information
shared at the State Advisory Meeting on improper payments.

Examples of the way States are formalizing their standards, processes,
and procedures are as follows.

***Pilot States***

-   The Arkansas Department of Human Services reorganized all child care
    services under the Division of Child Care and Early Childhood
    Education. This allows for a more efficient management of all child
    care within the State.

-   Colorado is working with a group of 12 counties to identify case
    profiles where potential fraud might occur. A major outcome expected
    from the pilot is developing error profiling and identifying what
    constitutes a data anomaly.

-   Illinois developed in excess of 25 exception reports that highlight
    areas of potential concern, which the State examines and, when
    necessary, does followup.

-   Ohio will retool its county monitoring process.

***Telephone Survey States***

-   Arizona uses exception reports to identify potential problem areas.
    There are audits conducted on provider records. Arizona also
    conducts monthly supervisory reviews and annual case reviews.

-   California is establishing a new review auditing process including
    creating and funding a team to conduct the record reviews. This
    process attempts to identify and remediate improper payments.
    California counties have been using small claims courts to collect
    overpayment, which has proven to be an effective vehicle for
    pursuing these dollars.

-   Kansas has an audit division and quality assurance unit. This unit
    conducted two child care quality assurance reviews during the past
    year. Kansas also uses exception reporting to identify problem
    areas.

-   Nebraska attempts to develop a repayment agreement for improper
    payments. If the case is active, the agency can deduct the amount
    from the next payment. Nebraska has better success at recouping
    overpayments by pursuing civil suits rather than criminal suits and
    has an attorney assigned to cover child care.

-   New Hampshire established a task force for improper payments that
    crosses program areas in the Department of Health and Human
    Services. They are developing rules within the Office of Special
    Investigations to cover improper payments. In addition, New
    Hampshire is formalizing its processes for dealing with improper
    payment and has hired a new staff person to take the lead on the
    effort.

Each State has a unit responsible for auditing improper payments;
however, most have no auditing staff dedicated to child care. As
mentioned earlier, California is establishing a new unit to audit child
care. New Hampshire used funds from the State's high performance bonus
and the program's cost allocation plan to fund the first-year salary for
a staff position to coordinate the improper payments activities of the
department. Colorado is working with counties to develop the capacity to
better audit improper payments at the county level. Ohio will begin to
audit child care on a continuous basis beginning this winter. Kansas
does not have specific funding to deal with improper payments due to
program deficits and hopes to address improper payments with existing
resources.

States indicated that funds recovered in the pursuit of improper
payments are not returned to the child care program, and are often
deposited to the State General Fund. Therefore, many States' child care
offices have little incentive to actively pursue recovery of improper
payments.

**Automation**

Six of the nine study States are State-administered---Arkansas, Arizona,
Kansas, Illinois, Nebraska, and New Hampshire. Three of the States are
county-administered---California, Colorado, and Ohio. All of the States
have a statewide automated system with the exception of the largest,
California. California does not receive client-specific or
provider-specific data, only aggregated data to meet Federal reporting
requirements. Most of the counties and providers in California have
their own automated systems. The other two locally-administered States,
Colorado and Ohio mandate that providers use the statewide system, which
is the system of record; however, most of the individual counties now
have their own systems.

Most of the systems are older, mainframe-based systems; however,
Arkansas and New Hampshire both recently implemented newer Windows-based
systems. Two of the systems, Nebraska and New Hampshire, closely
integrate with their other benefits programs, such as Temporary
Assistance for Needy Families (TANF) and Food Stamps. All of the State
systems achieve some interface with TANF, Food Stamps, Child Support,
and other systems. These interfaces vary from Arkansas' use of a split
screen and data transfer between systems to the more common overnight
batch interfaces used by others. Arizona, Colorado, and Ohio all intend
to migrate to new systems and have begun some design work. At this
point, Illinois intends to continue to modify and when possible utilize
newer Web interfaces, but they have no plans for a major upgrade to
their system.

<table>
<colgroup>
<col style="width: 8%" />
<col style="width: 11%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 10%" />
</colgroup>
<thead>
<tr class="header">
<th colspan="10"><strong>Exhibit 3. Summary of Study
States</strong></th>
</tr>
<tr class="odd">
<th rowspan="2"><strong>Summary Topic</strong></th>
<th colspan="4"><strong>States Participating in Pilot
Study</strong></th>
<th colspan="5"><strong>States Participating in
Discussions</strong></th>
</tr>
<tr class="header">
<th><strong>Arkansas</strong></th>
<th><strong>Colorado</strong></th>
<th><strong>Illinois</strong></th>
<th><strong>Ohio</strong></th>
<th><strong>Arizona</strong></th>
<th><strong>California</strong></th>
<th><strong>Kansas</strong></th>
<th><strong>Nebraska</strong></th>
<th><strong>New Hampshire</strong></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td><strong>State Structure</strong></td>
<td>State-administered</td>
<td>County-administered, State-supervised</td>
<td>State-administered</td>
<td>County-administered, State-supervised</td>
<td>State-administered</td>
<td>County-administered, State-supervised</td>
<td>State-administered</td>
<td>State-administered</td>
<td>State-administered</td>
</tr>
<tr class="even">
<td><strong>Improper Payment Defined</strong></td>
<td>Policy (Only misrepresentation in statute)</td>
<td>Policy</td>
<td>Policy</td>
<td>Policy (Only loosely defined)</td>
<td>Statute</td>
<td>Statute</td>
<td>Policy</td>
<td>Policy (Only IPV in statute)</td>
<td>State Plan</td>
</tr>
<tr class="odd">
<td><strong>Improper Payments Processes</strong></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Worker reviews</p></li>
<li><p>Supervisory reviews</p></li>
<li><p>Random provider reviews</p></li>
<li><p>Unannounced visits</p></li>
<li><p>Annual audits</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Counties investigate first</p></li>
<li><p>Office of Program Improvement involved if necessary</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Program Integrity and Quality Assurance Unit conducts
regularly-scheduled audits</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Some counties have regular supervisor reviews</p></li>
<li><p>Counties conduct monitoring reviews, State conducts
followup</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Monthly supervisory-level case reviews</p></li>
<li><p>Annual case reviews</p></li>
<li><p>Audits of provider records</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Improper Payment Unit established</p></li>
<li><p>Annual audits</p></li>
</ul></td>
<td><ul>
<li><p>Complaints from the public</p></li>
<li><p>Review attendance sheets in the field</p></li>
<li><p>Field staff review or complaints</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Issuance and Collection Center Unit audits child care</p></li>
</ul></td>
<td><ul>
<li><p>Complaints or calls to the agency</p></li>
<li><p>Task Force for Improper Payments established across program
areas</p></li>
</ul></td>
</tr>
<tr class="even">
<td><strong>Assessment of Risk</strong></td>
<td><ul>
<li><p>Compliance Review Team</p></li>
<li><p>Data mining</p></li>
<li><p>Benchmark reporting</p></li>
<li><p>Exception reporting</p></li>
</ul></td>
<td><ul>
<li><p>Office of Program Improve-ment</p></li>
<li><p>Ad hoc studies</p></li>
<li><p>Counties monitor improper payments first</p></li>
<li><p>Special studies</p></li>
</ul></td>
<td><ul>
<li><p>Reliance on exception reporting</p></li>
<li><p>Ongoing training</p></li>
</ul></td>
<td><ul>
<li><p>Office of Children and Families, Bureau of Child Care and
Development visit each county twice during a 15-month period</p></li>
<li><p>Incident Tracking system tracks circumstances of any injury to a
child in care</p></li>
</ul></td>
<td>Exception reports</td>
<td>Improper Payments Unit</td>
<td><ul>
<li><p>Exception reports generated from automated systems</p></li>
<li><p>Audits based on department request</p></li>
</ul></td>
<td><ul>
<li><p>Exception reports</p></li>
<li><p>Attorney is assigned to child care</p></li>
</ul></td>
<td><ul>
<li><p>Developing queries for error-prone profiling</p></li>
<li><p>Educating providers to encourage referrals</p></li>
<li><p>Establishing Internet billing</p></li>
<li><p>Developing automated exception reports</p></li>
</ul></td>
</tr>
<tr class="odd">
<td><strong>Automation</strong></td>
<td><ul>
<li><p>New system</p></li>
<li><p>Up-front edits</p></li>
<li><p>Interface with TANF, Food Stamps, child support</p></li>
</ul></td>
<td><ul>
<li><p>Mainframe statewide system that must be used</p></li>
<li><p>Most counties have own systems</p></li>
</ul></td>
<td><ul>
<li><p>Mainframe system</p></li>
<li><p>Interface with TANF, Food Stamps, child support</p></li>
<li><p>Up-front edits</p></li>
<li><p>Billing process is automated for CCR&amp;Rs and will soon be for
contract providers</p></li>
</ul></td>
<td><ul>
<li><p>Mainframe system</p></li>
<li><p>Interface with TANF, Food Stamps, child support</p></li>
<li><p>Up-front edits, but eligibility determination is not
automated</p></li>
</ul></td>
<td><ul>
<li><p>Mainframe system</p></li>
<li><p>Interface with TANF, Food Stamps, child support</p></li>
</ul></td>
<td><ul>
<li><p>No State automated system, only aggregate data collected to meet
Federal requirements</p></li>
<li><p>Many counties have their own automated systems</p></li>
</ul></td>
<td><ul>
<li><p>Mainframe system</p></li>
<li><p>Interface with TANF, Food Stamps, child support</p></li>
<li><p>Up-front edits, but eligibility determina-tion is not
automated</p></li>
<li><p>EBT for billing</p></li>
</ul></td>
<td><ul>
<li><p>Mainframe system</p></li>
<li><p>Integrated with TANF, Food Stamps, child support</p></li>
<li><p>Eligibility calculated off-line</p></li>
</ul></td>
<td><ul>
<li><p>New system</p></li>
<li><p>Up-front edits</p></li>
<li><p>System integrated with TANF, Food Stamps, child support</p></li>
<li><p>Interfaces to most other systems</p></li>
</ul></td>
</tr>
</tbody>
</table>

**IV. FINDINGS AND NEXT STEPS**

This chapter reviews findings from the record review process and error
rate analysis for the four pilot States---Arkansas, Illinois, and Ohio,
and Colorado. The review of findings for each State includes a brief
description of the record review process followed by a presentation of
the error rate findings. The findings include six measures computed for
each State as follows:

-   Percentage of Cases with a Potential Error---This percentage is
    based on the number of sampled cases with an administrative error
    divided by the total number of valid cases in the sample.

-   Percentage of Cases with a Potential Improper Payment---This
    percentage is based on the number of sampled cases with an
    administrative error that resulted in an improper payment divided by
    the total number of valid cases in the sample.

-   Percentage of Payments Potentially Made in Error---This percentage
    is based on the total amount of child care payments that were made
    in error divided by the total amount of child care payments for the
    sample.

-   Average Amount of Potential Improper Payment---The average dollars
    spent in error per ineligible child is the total amount of child
    care payments that were made in error divided by the number of cases
    that had an administrative error.

-   Minimum and Maximum Amounts of Potential Improper Payments---The
    minimum and maximum amounts constitute the range within which the
    average amount of improper payment falls.

Following the discussion of the error rate findings for each State, the
chapter outlines next steps taken by each of the pilot States following
participation in the pilot project. Colorado extended its review process
to include two additional phases of investigating client and provider
error by verifying external data sources. The findings from the
additional analyses are reviewed.

**ARKANSAS**

Pressures initiated by the State's conversion to a new automated
eligibility system in June 2005 dictated a short timeframe for the study
in Arkansas. Two program supervisors coordinated the record reviews and
selected a 10-member State review team that represented different
regions of the State. The supervisors modified the Record Review
Worksheet template to incorporate supervisory review checklists already
in use. Once the sample was drawn, the team convened in Little Rock for
a training session on the use of the Record Review Worksheet, the record
review process, and the documentation to use to determine record
accuracy. Each reviewer examined 15 records and completed the record
review process.

## Results

The data indicate that 18 records (or 12% of the sample) had one or more
administrative errors. In 15 of these records, the errors were due to
missing documentation. In three cases, while there was sufficient
documentation, the determination of eligibility was in error. Total
payments made during the study period were \$37,135.59 of which
\$5,211.47 were made as a result of potential error. These potential
errors resulted in overpayments equal to 14 percent of all payments made
for the sample, ranging from \$163.80 to \$405.30. (See exhibit 4.)

  --------------------------------------------------------- -------------
  **Exhibit 4. Arkansas Findings (N=150)**                  

  Percentage of cases with errors                           12%

  Percentage of cases with improper payments                12%

  Percentage of payments made in error                      14%

  Average amount of improper payment                        \$289.53

  Minimum amount of improper payment                        \$163.80

  Maximum amount of improper payment                        \$405.30
  --------------------------------------------------------- -------------

Missing documentation was the most common factor found to be in error in
the Arkansas sample. Due to differing documentation requirements used by
the Department of Human Services, Temporary Assistance for Needy
Families (TANF) staff to determine eligibility for Extended Support
Services child care assistance in October 2004, the errors in the
Extended Support Services cases required additional followup. The
Division of Child Care and Early Childhood Education (DCC/ECE) reviewers
may not have been familiar with the documentation that Transitional
Employment Assistance (TEA) and TANF cases require for eligibility
determination. In addition, much of the supporting documentation may
have been available for verification on the TANF automated eligibility
system, to which the reviewers had no access.

Following a case-by-case error review, the county office staff resolved
many of the potential errors. Results indicate that errors due to
missing documentation were equally divided between the 2 types of child
care cases---9 of 11 Extended Support Services cases and 6 of 7
Low-Income cases, despite different eligibility standards.

# **Next Steps**

Error rate findings revealed some shortcomings in administrative
management policies in Arkansas. The most commonly cited error was
missing documentation, which may not have resulted in client
ineligibility. Missing documentation may mean that while workers
followed policies to determine eligibility, the necessary documentation
was not present in the case file. However, for this study, Arkansas
failed the entire case and counted the entire subsidy amount as an
improper payment. This may have been a more rigorous application of
error as compared to other State interpretations or, alternatively, the
missing documentation was serious enough to render the case ineligible.

The review month (October 2004) occurred before the TEA, TANF, and
Extended Support Services cases transferred to the DCC/ECE and the State
converted to a new automated system---Arkansas anticipated some
administrative errors. Arkansas can reduce the error rates within the
next year with several system changes. The State will be conducting
training to clarify standards to document eligibility as part of new
staff positions in DCC/ECE to manage the increased caseload
responsibilities brought on by including the Transitional Employment
Assistance, TANF, and Extended Support Services cases. Planned system
enhancements include converting to a new automated system that has
up-front edits to prevent or decrease calculation errors and enhanced
monitoring to identify improper payments through the creation of
exception reports using a Decision Support System. Each of these
enhancements is briefly described below.

-   Over the past year, the Arkansas Department of Human Services
    reorganized all child care services under the DCC/ECE Family Support
    Unit. This unit received 26 new positions statewide with the
    transfer of the TEA and TANF cases.

-   Recognizing the limitations of its legacy automated system, KIDS
    (Key Information Delivery System), DCC/ECE designed and developed a
    new automated eligibility system called Keying in Day Care
    Accurately, Reliably, and Efficiently (KIDCare), to be fully
    operational as of July 2005. DCC/ECE designed KIDCare to determine
    eligibility based on program specific guidelines and has
    incorporated numerous edits to prevent inaccuracies from occurring
    on the front end of eligibility determination.

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-   Arkansas is also working to develop a Decision Support System. The
    purpose of this system is to provide management query and reporting
    capability utilizing data extracted and transformed from across all
    relevant data systems within the child care assistance network.
    Using benchmarking techniques, managers will be able to design
    reports to predict or identify potential sources of improper
    payments for monitoring and investigation.

    **ILLINOIS**

    The Program Integrity and Quality Assurance Unit conducted the
    record reviews for the current study. Because of the volume in the
    Cook County Child Care Resource and Referral (CCR&R) agency, the
    study team reviewed the client records for their largest CCR&R,
    Action for Children on site. The other CCR&R and site-administered
    programs sent their records to the Department of Human Services for
    review.

Illinois modified the Record Review Worksheet to closely mirror the
checklist that is currently in use for record reviews in Illinois.
During the site visit, the State review team selected several cases from
the Action for Children CCR&R and reviewed them with the study team. A
discussion of each item on the Record Review Worksheet took place using
an actual record to determine exactly what information would satisfy
each requirement. This process provided training and increased
interrater reliability on the required documentation.

**Results**

The data indicated that 36 cases (24%) in the sample had one or more
administrative errors. Only nine (6%) of the cases with errors resulted
in an improper payment. Total payments made during the study period were
\$37,044.74 of which \$1,355.99 were made as a result of potential
error. These potential errors resulted in overpayments equal to 4
percent of all payments made in the sample. The average amount of
potential payment error was \$150.64, ranging from \$21.66 to \$430.00.
The majority of errors in the Illinois sample were administrative errors
that did not result in an improper payment. The most common error
finding was missing documentation. (See exhibit 5.)

  --------------------------------------------------------- -------------
  **Exhibit 5. Illinois Findings (N=150)**                  

  Percentage of cases with errors                           24%

  Percentage of cases with improper payments                6%

  Percentage of payments made in error                      4%

  Average amount of improper payment                        \$150.64

  Minimum amount of improper payment                        \$21.66

  Maximum amount of improper payment                        \$430.50
  --------------------------------------------------------- -------------

**Next Steps**

While Illinois had a higher than expected number of records with an
administrative error, the majority of these did not result in an
improper payment. The Illinois data indicate a very low payment error
rate. Because of Illinois' routine auditing processes, State reviewers
followed consistent standardized procedures to interpret whether the
administrative error resulted in an overpayment.

Prior to this study, Illinois implemented several procedures at the
front end of service delivery to prevent improper payments:

-   The Child Care Tracking System has multiple front-end edits built
    into the eligibility, redetermination, and billing processes. These
    edits prevent inaccuracies in eligibility determination before
    authorization.

-   All additional databases and screens required to adequately check
    Social Security numbers, parentage, child support, employment status
    and wages, TANF, Food Stamps, and Medicaid receipt are available to
    the child care worker at the time of eligibility determination.
    Eligibility determination training requires the worker to follow a
    standardized sequence of steps to these other databases to authorize
    care for the client and payment for the provider.

-   Illinois developed a resource directory for workers to outline
    acceptable forms of documentation or verification needed to
    determine eligibility accurately. The guide provides clarification
    for workers to use with clients during the eligibility process when
    the client cannot produce the required documentation. A worker can
    place a case in a pending status while awaiting necessary
    documentation.

-   To eliminate payment errors, the State developed a policy regarding
    payments based on the number of days of care, called the 80 percent
    rule. To address the issue of decreased provider payments due to
    inconsistent CCAP client attendance, a policy of determining the
    number of days of care paid by providing an 80 percent rule was
    established. For licensed providers only, if a child has attended 80
    percent of the monthly days authorized, the provider will receive
    full 100 percent payment. If the child attends less than 80 percent
    of the days authorized, the provider receives payment for the actual
    amount of care.

Following service authorization, Illinois generates up to 26 improper
payment reports to highlight areas of potential problems or concern.
These exception reports can trigger one of several
responses---additional research on the identified discrepancy, a stop
payment, or overpayment letters sent to providers. Examples of these
reports include:

-   Multiple Providers with the Same Address---This report identifies
    multiple providers with the same address approved for active cases
    on the Child Care Tracking System. There may be situations when more
    than one provider is caring for multiple children at the same
    address, but often this is not the case.

-   Clients Who Are Also Providers---Recipients of a child care subsidy
    may also be providers, but this situation is not likely. This report
    provides the information necessary for the CCR&Rs to verify the
    legitimacy of the situation.

-   Client on Multiple Case Report by Name and Date of Birth---This
    report lists active cases that have the same case name and date of
    birth more than once.

-   List of Licensed-Exempt Provider Overcapacity---This report lists
    licensed-exempt providers approved for more than three children from
    more than one active case.

Illinois' strategies of up-front prevention and monitoring after service
authorization provide a comprehensive system of activities and programs
to reduce improper payments.

**OHIO**

# Four staff members completed the record reviews---one staff member from the child care monitoring unit and three from the quality control unit. The review staff members were familiar with program requirements, policy, and local procedures. Because of the number of records pulled from some of the large counties, the review team reviewed some records on site and in counties that were a distance to travel and had only one case as part of the sample these cases were reviewed at the central office in Columbus. All records received a second review as an additional level of quality control. When reviewers encountered errors in the records, counties received notification so that they could take corrective action.

Ohio modified the Record Review Worksheet to mirror existing policy. A
discussion of each item on the Record Review Worksheet took place using
an actual case file to determine exactly what information would satisfy
each requirement. This process provided training and increased rater
reliability on the required documentation.

As in most States, TANF recipients' cases pose a unique problem for the
child care program because the TANF staff handle the eligibility
determination.

# **Results**

The data indicate that 54 cases (44%) in the sample had one or more
administrative errors.[^9] Thirty two percent of the cases had errors
resulting in overpayments equal to 20 percent of all payments made in
the sample. Total payments made during the study period were \$37,716.13
of which \$7,576.78 were made as a result of potential error. The
average amount of potential payment error was \$197.24, ranging from
\$22.00 to \$675.00. (See exhibit 6.)

  --------------------------------------------------------- -------------
  **Exhibit 6. Ohio Findings (N=123)**                      

  Percentage of cases with errors                           44%

  Percentage of cases with improper payments                32%

  Percentage of payments made in error                      20%

  Average amount of improper payment                        \$194.28

  Minimum amount of improper payment                        \$22.00

  Maximum amount of improper payment                        \$675.00
  --------------------------------------------------------- -------------

Missing documentation as well as improper income or parental fee
calculation contributed most frequently to errors in eligibility. Ohio
discussed the findings with county staff who had the opportunity to
clarify and or produce additional documentation. Missing documentation
is a serious administrative shortcoming, but it does not necessarily
indicate that the family was ineligible. In some cases, however, the
missing documentation can be serious enough to cause an improper payment
or render the entire case ineligible.

**Next Steps**

During the study design phase, the States predicted that limiting the
focus of the error rate analysis to administrative errors would not
yield many improper payments. Ohio was surprised to learn the extent of
error in the records---staff stated that it "forced us to sit still and
look at our processes." As a direct result of the study, the State has
begun to retool its monitoring and technical assistance processes with
the county agencies, will be implementing a quality control process for
the child care program and has been examining policy for possible
revisions to strengthen and clarify procedures.

Prior to the study, the Research, Assessment, and Accountability
Division, Quality Control Unit did not review child care, believing that
child care program requirements were too vague. The study experience
demonstrated that the requirements for child care are adequate to
determine error in the ongoing monitoring process. The Division of Child
Care now realizes that there are serious flaws in existing child care
improper payment monitoring processes. The State is making changes in
the process to ensure that more effective monitoring will take place in
the future.

**COLORADO**

While the study methodology focused on administrative errors, Colorado
was the only study site that extended the examination to include client
and provider errors for a subsample of 35 children from all of the 12
counties in the sample. The record review included three phases. Phase I
focused on administrative error, including eligibility determination and
redeterminations as well as accuracy in determining the cost of care and
the parental fee. For the subsample of 35 cases, Phase II reviewed
provider error by verifying attendance information and amounts billed.
Phase III verified clients' employment or educational situation, as well
as whether changes to the clients' circumstances occurred and were
reported as required.

The State conducted the Phase I record review in Denver. The State
review team consisted of one staff person from the Department of Human
Services, the program director from the Division of Child Care, and two
auditing staff from the Office of Performance Improvement, Audit
Division.

**Phase I Administrative Error Results**

Phase I data from Colorado indicate that 52 cases (35%) in the sample
had one or more administrative errors. Twenty-five percent of the cases
sampled had errors that resulted in overpayments equal to 8 percent of
all payments made in the sample.[^10] Many of the cases reviewed had
administrative errors that did not result in an overpayment. Total
payments made during the study period were \$42,011.04 of which
\$3,292.54 were made as a result of potential error. The average amount
of potential payment error was \$88.99, ranging from

\$1.00--\$521.00. (See exhibit 7.)

  -------------------------------------------------- --------------------
  **Exhibit 7. Colorado Findings---Phase I (N=150)** 

  Percentage of cases with errors                    35%

  Percentage of cases with improper payments         25%

  Percentage of payments made in error               8%

  Average amount of improper payment                 \$88.99

  Minimum amount of improper payment                 \$1.00

  Maximum amount of improper payment                 \$521.00
  -------------------------------------------------- --------------------

The most frequently cited errors occurred in calculating income or
parental fee. The review team identified 30 cases with these types of
administrative errors or over one-half of all error cases. The total
dollar impact of these errors constituted the majority of the total
error dollars. The total dollar impact of the percentage of improper
payments was 8 percent of the total amount of sample subsidies.

This initial administrative error rate measure provided Colorado with a
baseline against which to compare Phase II and Phase III audit findings.
Additional improper payments were discovered in the extended review with
a subset of the sample. The pilot findings underscore the importance of
regularly conducted compliance reviews by the State to improve
administrative practice. The pilot methodology allowed Colorado to gain
evaluative information on potential areas for improvement in
administrative policy.

**Phase II (Provider Error) and Phase III (Client Error) Results**

A subset of 35 cases was selected from the original 150 sample for
further study. The subset was chosen at random. As part of phase II, the
Colorado review team directly contacted each provider within the
subsample and requested additional documentation, including attendance
rosters, billing records, and sign-in sheets for parents. If issues
arose, a team member contacted the provider to verify the information.
As part of phase III, the review team directly contacted the parent and,
if necessary the employer, to verify employment and work records.

Phase II provider errors yielded an additional \$1,113.45 (12%) in
improper payments.[^11] Examples of provider error included missing
sign-in sheets verifying if or when the child attended the child care
center and provider billings for more absences than allowed by policy.
Phase III client error yielded an additional \$1,252.35 (13%) in
improper payments.[^12] Examples of parent error included failure to
report a work change and allegedly falsifying employment verification.

## Next Steps

While the 25 percent case error rate indicates serious administrative
inaccuracies, almost one-third of the cases reviewed had policy errors
that did not result in a payment error. Colorado's further analysis of
parental and provider error via external verifications for discrepancies
uncovered additional error findings. This very small subset yielded
findings that indicate that there is a need in future reviews to
externally verify both provider and client documentation as an integral
piece of the case review process.

However, the small number of cases in error represents a small subset of
the entire sample---using the data from this study to determine the
causes of the errors should be viewed with some caution. Data from this
study should be evaluated against historical experiences with compliance
reviews and other input in developing recommendations for improvement.

In response to these findings, Colorado plans to take the following
actions:

-   Implement automatic income calculation into Colorado's automated
    Child Care Tracking System. The State has defined the requirements
    for several updates to the automated system, which are in process.

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-   Conduct training and feedback with all participating counties to
    address deficiencies identified in this study.

-   Share the results of the error rate analysis at the upcoming State
    child care conference.

-   Change statutory language to simplify access to other State
    databases such as those for new hires and unemployment compensation.
    This study identified the need for interfaces with other systems. It
    also pointed out deficiencies in some of the interfaces that are
    currently available. (Matching data between child care and Motor
    Vehicles only yielded a match for approximately two-thirds of the
    cases because the Motor Vehicles database is often out of date with
    address and residents only have to renew their license every 10
    years.)

-   Examine State policies to determine where changes may be necessary
    to provide more consistent application, particularly in the area of
    self employment.

Colorado's data can be interpreted and compared against the findings
from their prior provider study conducted in 2003. The 2003 study found
that there was often a lack of documentation available to support
payments made. Recommendations included the need for staff and provider
training, updates to automated systems, and development of error
profiles to assist the State in identifying areas for examination of
potential error. Because of the payment monitoring studies, the Division
of Child Care and the Office of Performance Improvement have initiated
several other actions, including:

-   Issuing a prevention CD-ROM to raise awareness about fraud;

-   Using data mining techniques to identify potential areas of concern
    with a new software tool, ACL, that assists in auditing, extracting
    financial data, analyzing data, and detecting fraud; and

-   Embarking upon a pilot program with 12 counties to identify case
    profiles where potential fraud would occur. A major outcome expected
    from the pilot is developing error profiling and identifying what
    constitutes a data anomaly.

Special studies continue to underscore the need to regularly measure
progress in the reduction of improper payments in the child care system.
Colorado plans to continue conducting periodic auditing processes, but
requires increased resources in the Office of Performance Improvement to
conduct child care audits on a more regular basis.

**CONCLUSION**

This study was an exploratory effort to develop and pilot a common
methodology that States could use to compute an error rate. This
exploratory study, based on an examination of administrative error,
yielded extremely useful findings.

As can be seen in the summary table below, the estimated percentage of
payments made in error in the four pilot States ranged from a low of 4
percent to a high of 20 percent. The estimated percentage of sampled
cases determined to contain administrative errors ranged from 12 percent
to 44 percent. However, the percentage of sampled cases with
administrative errors that resulted in an improper payment ranged from 6
percent to 32 percent. (See exhibit 8.)

[]{.mark}

  -------------------------- ------------ ------------ ----------- ------------
  **Exhibit 8. Summary of                                          
  Findings**                                                       

  **Measure**                **Arkansas   **Illinois   **Ohio      **Colorado
                             (N=150)**    (N=150)**    (N=123)**   (N=150)**

  Percentage of cases with   12%          24%          44%         35%
  errors                                                           

  Percentage of cases with   12%          6%           32%         25%
  improper payments                                                

  Percentage of payments     14%          4%           20%         8%
  made in error                                                    

  Average amount of improper \$289.53     \$150.64     \$194.28    \$88.99
  payment                                                          

  Minimum amount of improper \$163.80     \$21.66      \$22.00     \$1.00
  payment                                                          

  Maximum amount of improper \$405.30     \$430.50     \$675.00    \$521.00
  payment                                                          
  -------------------------- ------------ ------------ ----------- ------------

Because this was a pilot effort, the error findings are promising as a
baseline test of the methodology. The methodology was a good working
model for States to gain useful evaluative information on potential
areas for improvement in administrative policy. The findings did uncover
several potential sources of administrative error such as incomplete or
missing documentation and inaccurate calculation of income or parental
fee that merit further followup in each State. Using the data from this
study to determine the causes of the errors should be viewed with some
caution. Data from this study should be evaluated against historical
experiences with compliance reviews and other input in developing
recommendations for improvement.

States that have historical experience with compliance reviews suggest
that the more error-prone areas of eligibility are client or provider
caused. To explore this area of error estimation, Colorado extended its
record review process to include an examination of client and provider
errors. The purpose of this extended review was to use independent
sources of verification to determine a level of error that would be more
predictive of errors that could result in client ineligibility. This
very small subset indicated that the study methodology can be refined to
include an external verification of both provider and client errors that
are important areas of risk for improper payments.

This pilot study demonstrated that improvements to administrative
practice to reduce administrative error can result in preventing or
deterring improper payments caused by clients and providers as well.
Independent confirmation of employment or training and intermittent
reconfirmation of participation, as well as comparing attendance or
sign-in and sign-out sheets with claim forms, can help ensure that
recipients were participating in the activities for which services were
provided. As a result of this study, each State has planned action steps
or has implemented several new systematic changes to improve monitoring
or reduce improper payments. For example, Arkansas will conduct training
to clarify standards for documenting eligibility as part of new staff
positions in DCC/ECE to manage the increased caseload responsibilities
brought on by including the TEA, TANF, and Extended Support Services
cases.

While Illinois had a higher than expected number of cases with a policy
error, the majority of these administrative errors did not result in an
improper payment. The Illinois data indicate a very low payment error
rate. Because of Illinois' routine auditing processes, State reviewers
followed consistent standardized procedures for the interpretation of
whether the administrative error resulted in an overpayment.

Because of this study, the Ohio Division of Child Care now realizes that
there are serious flaws in its existing child care improper payment
monitoring processes. Changes to the process to ensure that more
effective monitoring will take place in the future. State staff will
begin auditing counties on a regularly scheduled basis beginning in
December 2005.

**V. RECOMMENDATIONS**

This pilot study was an exploratory effort to develop and test a
methodology that States can use to compute a statistically valid error
rate estimate. The methodology was successfully tested in four States,
representing both State- and locally-administered management structures.
This chapter outlines recommendations about the methodology for the
Child Care Bureau (CCB) to take under advisement.

A desired outcome of this study is to recommend a strategy that will
assist States in measuring the reduction of improper payments. Used as a
performance measure, an error rate can be part of an effective strategy
to monitor progress on error reduction. To reduce improper payments,
many States have invested administrative resources into the
infrastructure needed to design, evaluate, and monitor program
compliance, quality, and accountability. An error rate is a useful tool
for these States to assess progress toward the goal of reducing improper
payments.

For those States that have implemented error rate measurement, the
results have been instructive, prompting States to reexamine policy or
regulations, clarify procedure, and develop new business practices.[^13]
The four study States that implemented error rate measurement as part of
this pilot are planning to reexamine their monitoring processes, provide
training, or clarify policy and procedure in those counties where
problems or issues were identified.

The findings also reveal useful feedback regarding challenges
encountered in the pilot study of the methodology. For example, States
need a backup plan when cases from a participating county are
unobtainable. Thirty-eight cases from one county were removed from the
Ohio sample. That county was in the process of implementing imaging
technology and those cases could not be removed from the warehouse. The
study team could not select replacement cases within the study timeframe
to fix this problem with the study sample. Rather than penalize the
State by failing every missing case, the study team analyzed the results
without these missing cases, thus reducing the statistical validity of
the Ohio sample. Anticipating these types of problems prior to future
compliance reviews, States can avoid such large numbers of missing
records by giving counties sufficient notice prior to compliance reviews
so the cases can be retrieved in a timely manner.

Another challenge was the variation in the ways that States interpreted
the error findings. States need to standardize the interpretation of
error findings to have more reliability across raters and results that
are more consistent. For example, Illinois has defined the documentation
required for eligibility specifically enough that raters know exactly
how to interpret the missing data and whether it would constitute an
eligibility error. Each State could define hierarchies of errors, such
that certain types of errors constitute less concern or do not
necessarily result in an improper payment. The study team detected some
variation in the thresholds for what constituted an error from State to
State, but this was an expected outcome of this pilot effort. Each State
review team can provide very useful feedback for improvements to the
record review process to increase the reliability and consistency of
error interpretation.

As a result of increasing standardization of what constitutes an error,
States can begin to construct different hierarchies for different types
of errors. Evaluation of the data indicates that the most common error
found by reviewers involved a lack of sufficient documentation. This
result is consistent with the findings from the California error rate
analysis.[^14] However, the interpretation of what missing documentation
constituted ineligibility must be clearly defined by each State prior to
initiating the review process. The rigor in this interpretation may have
varied from State to State. For many cases the errors due to missing
documentation did not result in an improper payment. In some cases,
however, missing documentation resulted in the case being deemed
ineligible and the entire subsidy ruled an improper payment. States need
to standardize what missing documentation results in ineligibility and
how State reviewers should compute the resultant improper payment.

States that have historical experience with compliance reviews suggest
that the more error prone areas of eligibility are caused by clients or
providers. To explore this area of error estimation, Colorado extended
its record review process. This additional study yielded findings that
indicate that there is value in an extended study of both client and
provider caused error. The study methodology can be refined in future
reviews to include State-specific techniques of external verification of
both provider and client error. States may want to pilot these
additional areas in their error reviews, not limiting the review to
administrative error. However, extended reviews can be costly due to
travel, staff time, and related costs. States will need to customize
auditing techniques to pursue additional investigation of cases
identified as being problematic or at greatest risk for an improper
payment.

States can also implement improvements to administrative practice to
reduce administrative error. These improvements include independent
confirmation of employment or training and intermittent reconfirmation
of participation, as well as attendance or sign-in sheet comparison with
claim forms.

An initial error rate measure provides both the States and the CCB with
a baseline against which to compare future audit findings. The pilot
findings underscore the importance of regularly conducted compliance and
evaluative reviews by States to improve administrative practice. Federal
monitoring of improper payments compliance reviews would not have to
occur every year. Audits in some programs, such as title IV-E, are not
conducted on an annual basis. States could self-certify on the results
of regularly held compliance reviews, and reporting on the results of
improper payment monitoring could occur every 2 years as part of the
State Plan submission process.

While there is an emphasis on regularly conducted reviews to comply with
the Improper Payment Act, the study underscores the value of findings
derived from a smaller yet still statistically valid sample. The pilot
study used a sample to 150 cases per State, adequate for a pilot study
intended to establish feasibility and estimate the cost of the
methodology. However, to achieve the level recommended by the Office of
Management and Budget would mean selecting much larger sample sizes per
site. The burden on the States to implement a methodology that requires
a larger sample size would be much more costly than for the pilot study.

This study cannot address in a scientific manner the issue of costs to
conduct a statewide error rate analysis, but describes in a general way
the level of effort required by the States. However, the study did make
some estimates. The study team asked the participating States to track
the time spent reviewing each record. Time spent ranged from less than 1
hour to several hours.[^15] State review teams varied in size from 3 to
more than 10 reviewers. Regularly reviewing cases to monitor compliance
requires a significant investment in infrastructure at both the State
and local levels. One audit approach States may consider to avoid
unreasonable costs is to select a first sample and set a threshold that
if a certain number of cases "fail" then another sample is pulled. This
would prevent using a more intensive approach unless it is needed.

To support such a standardized methodology for error rate measurement,
the CCB has a strong group of committed States and stakeholders who can
provide additional feedback on improvements to the methodology to assure
that it can achieve the desired outcomes in each State. The importance
of involving the partner States in developing and shaping an error rate
methodology for all States cannot be underestimated. The contribution of
the four study States to demonstrating the feasibility of this
methodology for child care in the current study was exemplary.

**APPENDIX A.**

**ARKANSAS**

**SITE VISIT SUMMARY**

**Overview of the Child Care Assistance Program**

During 2005, the Arkansas Department of Human Services (DHS) reorganized
all child care services under the Division of Child Care and Early
Childhood Education (DCC/ECE). Previously, DHS Transitional Employment
Assistance (TEA) staff at county offices determined eligibility for
families receiving Temporary Assistance for Needy Families (TANF), while
the DCC/ECE Family Support Unit staff determined eligibility for the
low-income program and child care associated with foster care and child
protective services. As of July 2005, all types of child care fall under
the Family Support Unit of DCC/ECE, which received 26 new positions
statewide with the transfer of the TEA/TANF cases to the unit.

Other child care system units within DCC/ECE include Pre-K and Program
Development, the Special Nutrition Program, and Child Care Licensing.
The Pre-K and Program Development Unit is responsible for State
Accreditation Grants, Child Care Resource Centers, Training, teacher
licensure, monitoring and evaluation, and the Arkansas Better Chance for
School Success (ABCSS) Program. The Special Nutrition Program is
responsible for the U.S. Department of Agriculture's National School
Lunch, Summer Food Service, Child and Adult Care Food Program, and
special milk programs. The Child Care Licensing Unit handles the
licensing of Child Care Centers and Child Care Family Homes, voluntary
registration, and criminal record checks.

To be eligible for child care assistance in Arkansas, families must have
income less than

60 percent of the State median income, live in Arkansas, have children
younger than 13 years of age (or age 19 for special needs), and meet
citizen eligibility requirements. Eligible families receive the
following types of child care assistance.

-   Extended Support Services (ESS)---Child care assistance is provided
    to 14,000 children (7,000 families) meeting 3-year increasing
    employment and training requirements of 20 hours per week during the
    first year, 25 hours per week during the second year, and 30 hours
    per week during the third year. Specific eligibility requirements
    for this program include participation in the TANF program.

-   Transitional Employment Assistance (TEA)---Child care assistance is
    provided to 5,000 children (3,000 families) meeting TEA or TANF
    eligibility requirements. Recipients of this type of child care are
    transitioning out of the TANF program.

-   Low-Income---Child care assistance is provided to 11,000 children
    (7,000 families) in low-income families when the parents work or are
    in training or other educational activities for a minimum of 32
    hours per week. Eligibility is based on income, work or school
    hours, and pursuit of child support.

-   Foster and Protective Services---Child care assistance is provided
    to 1,200 children (600 families) in foster care and 149 children (90
    families) receiving protective services.

In State Fiscal Year (FY) 2004, Arkansas provided child care assistance
to 30,572 children in 17,555 families. Arkansas has 100 percent
licensure in 1,574 licensed child care centers,

952 child care family homes, and 118 registered or relative homes. The
total licensed capacity for all types of care is 135,850.

To apply for child care, families submit an application to their local
DHS office. The application is reviewed for basic eligibility
requirements. Upon application, families are categorized into priority
groups: teen parents, homeless, low-income without a fee, and low-income
with a fee. All applicants are approved, denied, or placed on the
waiting list within

45 days. The program goal is for a Child Care Specialist to see all
applicants on the waiting list within 30 days. Of the 75 counties in
Arkansas, the majority have fewer than 100 families on the waiting list,
with the most in Pulaski County, which has 15 percent of the child care
caseload. Prioritization for receipt of child care services is based on
county, priority code, and application date. The individual's
eligibility is effective for 12 months.

Verification of applications is conducted first with a check against
prior eligibility, then by checking with other systems (e.g., TEA/TANF,
Food Stamps, child support enforcement, Social Security Administration,
child welfare) as well as on-site visits by special nutrition or
licensing staff. Arkansas issues vouchers for all participants in the
subsidy program. Once the family is approved, the Child Care Specialist
keys in the authorization certificate for the chosen child care
provider. The family is authorized for 6 months of care. A
redetermination takes place at the end of 6 months.

Providers must be licensed and sign a Child Care System Participant
Agreement Form, which is valid for 2 years. This agreement states that
"the provider is responsible for all overpayments, fraud, or legal
proceedings against the provider for noncompliance" and that DCC/ECE
"reserves the right to recoup payments through current and subsequent
payments to the provider." Providers must agree to an annual audit if
they receive more than \$100,000 per year in Federal or State payments.
If fraud or a pattern of incorrect billing is suspected, audits are
mandatory. DCC/ECE also mandates biannual training for providers.

All providers must have a valid license or registration before the Child
Care Specialist issues a certificate. Approximately 36 percent of the
providers currently bill through the Internet, while the remainder use a
touch-tone telephone entry system for their billing. DCC/ECE processes
billing information three times each week. The preferred method of
payment is through direct deposit, but checks are still issued.

According to the 2004 "Building for the Future of Arkansas Children"
report, there were more than 181,585 children, under the age of 5,
living in Arkansas. More than 30 percent of those children lived in
poverty. During the 2000 school year, approximately 38 percent of
fourth-grade students scored below the basic test levels in math and
science. To address this, Arkansas developed the Arkansas Better Chance
for School Success (ABCSS) program in 2004, earmarking \$40 million
dollars to establishing quality pre-Kindergarten programs in areas where
there is low academic achievement. The program emphasizes school
readiness for children 3- and 4-years of age whose families are at or
below 200 percent of the Federal poverty level. The areas targeted
include:

-   Areas where 75 percent or more of the fourth-grade test results were
    below proficiency benchmarks;

-   School districts in academic distress as designated by the Arkansas
    Department of Education; and

-   Areas of the State where designated elementary schools are in the
    "improvement" status based on Federal No Child Left Behind
    standards.

More than 14,000 children participated in the ABCSS during 2004 and the
State's goal is to increase that number to 22,000 during 2005.

**Improper Payments Process**

DCC/ECE takes a preventive, systems-based approach to identify,
investigate, and resolve improper payments. To achieve this, DCC/ECE
established a Compliance Unit Team comprised of four staff from the
Office of Chief Council (OCC), two from the Overpayment Processing Unit,
the Assistant Director of Operations and Program Support for DCC/ECE,
and four Compliance Unit staff.

Improper payments can include fraud, intentional program violation,
overpayments, and underpayments. DCC/ECE defines the differences among
each.

-   Fraud is an attempt by a provider or client to receive services or
    payments to which they are not entitled by willfully making a false
    statement, misrepresentation, or impersonation. The Fraud Unit
    within the OCC investigates fraud.

-   An intentional program violation is making a false or misleading
    statement or misrepresenting, concealing, or withholding facts to
    receive services in an amount that exceeds \$500. The Fraud Unit
    within the OCC investigates intentional program violations. If there
    is an intentional program violation, several possible actions ensue,
    including parent or provider termination or exclusion, repayment in
    full or, if disputed, an administrative hearing.

-   Overpayments are any payment less than \$500 that the provider or
    client was ineligible to receive. If a parent or provider
    overpayment is less than \$500, it is referred to the Overpayment
    Processing Unit, which sends a demand or repayment notice.
    Overpayments greater than \$500 are referred to the OCC, which
    investigates to determine if there is evidence of an intentional
    program violation.

-   Underpayments occur when a provider or client does not receive all
    payments for all enrolled services.

# **Assessment of Risk**

DCC/ECE takes a multifaceted approach to identify overpayments and fraud
focused on both client and provider error. The approach includes
front-end strategies to obtain accurate information and documentation
for eligibility using a comprehensive automated system, as well as
back-end strategies such as auditing and exception reports that
highlight potential problems, errors, and fraud. Some of these
techniques are highlighted below.

***Case Worker Referrals***

-   Each worker must identify three suspected fraud and overpayment
    referrals each month as inconsistencies and problems typically arise
    at 6-month redetermination.

-   Supervisors review 35 cases per worker each quarter, with the
    requirement that they find less than 4 percent administrative error.

-   Child care providers and members of the public are encouraged to
    report suspected fraud.

***Billing Audits and Annual Audits***

-   The Compliance Unit Team reviews 3 months of billing information per
    quarter for 51 randomly-selected providers.

-   The Compliance Unit Team monitors provider annual audits for poor or
    inadequate documentation to develop corrective action plans.

-   The Compliance Unit Team terminates or takes exclusionary action if
    problems identified in these reviews are not corrected.

***Unannounced On-site Visits***

-   Licensing staff conduct unannounced on-site visits three to five
    times per year to monitor compliance with the State plan.

-   Licensing staff verify on-site observations against billing records
    to demonstrate compliance.

***Continuous Monitoring***

-   Licensing Staff and the Compliance Unit Team continuously monitors
    and closely cooperates with other partners to uncover issues with
    provider between and among programs.

***Data Mining and Benchmarking Techniques***

-   Data mining techniques include querying other systems to merge data
    to create exception reports that profile potential problems to be
    investigated.

-   Reports comparing benchmarks (e.g., days/hours open, number of
    children served, number of authorized hours) against the billing
    submitted.

-   Conceptual design and a prototype for a business intelligence
    system, Decision Support System (DSS), to be implemented during
    2005.

**Automation**

Since 1994, DCC/ECE has used Key Information Delivery System (KIDS), an
older mainframe, character-based system, to provide automated tracking
of child care assistance in Arkansas. KIDS is code-driven, making it
difficult to use and even more difficult for new workers to learn. For
example, there are no automated linkages between KIDS and ANSWER, the
TANF automated system. This requires the worker to exit one system to
query another. Recognizing the limitations of KIDS, DCC/ECE designed and
developed a new automated eligibility system called Keying in Day Care
Accurately, Reliably, and Efficiently (KIDCare), to be fully operational
as of July 2005. DCC/ECE designed KIDCare to determine eligibility based
on program-specific guidelines and has incorporated a number of edits to
prevent inaccuracies from occurring on the front end of eligibility
determination. These edits include:

-   Checking age against the type of care;

-   Requiring program approval if service authorization is older than 45
    days;

-   Checking services authorized against services rendered;

-   Calculating subsidy amount and copay based upon established
    criteria; and

-   Deobligating subsidy under certain predetermined conditions, such as
    exclusions, adverse actions against a provider, over 60 days, and
    termination.

Now that DCC/ECE is responsible for the TEA and ESS child care cases, a
prime feature of the new KIDCare system is that it interfaces with other
systems:

-   The TEA child care application cannot be authorized unless there is
    an open TEA case in the ANSWER (TANF) system;

-   TEA case closure in ANSWER automatically deobligates authorizations
    within KIDCare;

-   ESS child care authorization requires TEA case closure in ANSWER;

-   Automatic tracking of ESS case period of entitlement;

-   A split-screen feature displays data contained in ANSWER and KIDCare
    side by side, so that the worker can determine and update the most
    accurate demographic, income, and other information;

-   SSA enumeration validates Social Security numbers using name, date
    of birth, and sex; and

-   Interface deobligates authorizations when vendors are excluded and
    allows authorizations during the exclusion period.

The design of the new system also took into consideration the management
of the child care budget process. KIDCare allocates all child care funds
across counties, using an allocation formula. It allows prioritized
spending of funds and tracks allocated, obligated, available, billed,
and paid funds. The design of the system also ensures compatibility with
the State's accounting system, Arkansas Administrative Statewide
Information System (AASIS).

The second major initiative after KIDCare is the development of a
Decision Support System (DSS). The purpose of the DSS is to provide
management query and reporting capability utilizing data extracted and
transformed from all relevant data systems within the child care
assistance network. Using benchmarking techniques, managers will be able
to design reports to predict or identify potential sources of improper
payments for monitoring and investigation. DCC/ECE developed a prototype
DSS to begin to produce a set of comprehensive ongoing reports.

Information from the following systems will be part of the DSS:

-   ABCSS---The ABCSS program uses the Child Outcome Planning and
    Administration software for its data requirements. This data system
    contains information about the ABCSS, including children served,
    funding sources, staff credentials, and related information. This
    application is a Web-based solution.

-   CLEAN---This child care licensing system contains contractual
    information on all facilities and licensed providers. If a provider
    is under a corrective action agreement the record is "flagged," such
    that when the record is accessed an alert is issued with the
    pertinent information concerning the action. The child care rates
    from CLEAN will be automatically displayed within the new KIDCare
    system. The CLEAN system contains a comment screen to input
    explanations and a Complaints and Outcome section for both
    unlicensed and licensed providers. DHS developed CLEAN using Visual
    Basic 6 and a SQL Server 2000 database.

-   Child Care Billing System---Providers enter their billing
    information via the Internet or by using a touch-tone telephone
    system.

-   Exclusion---This database contains all of the information concerning
    providers subject to exclusions. It also interfaces with the CLEAN
    system. DCC/ECE developed the Exclusion system using Visual Basic 6
    and a SQL Server 2000 database.

-   Special Nutrition Program (SNP)---This database contains pertinent
    information concerning children in the Special Nutrition Programs.

-   The Recipient Overpayment Accounting System (ROAS)---Tracks client
    overpayment referrals across every category of service, including
    TANF, Food Stamps, and child care. This system tracks overpayment
    until resolution. DHS developed ROAS using Visual Basic 6 and a SQL
    Server 2000 database.

-   The Provider Overpayment Accounting System---This is an Excel
    spreadsheet rather than a structured database. DCC/ECE discussed
    upgrading this application into a full database.

-   DCC Tracker---This database tracks provider and client overpayment
    assessments. It is an ACCESS database.

-   KIDCare---The division developed this new child care eligibility
    system using Visual Basic 6 and a SQL Server 2000 database.

-   ANSWER---The TANF data will be matched against ages and number of
    children authorized, hours of care, provider and client Social
    Security numbers, and addresses.

-   Child Support---The child support data will be matched against the
    KIDCare system to determine if parent has good cause and is exempt
    or ineligible for services due to lack of cooperation.

System requirements for the DSS include:

-   Compatibility with Arkansas network and operations;

-   Integration with DHS production systems;

-   Minimal training for use and maintenance;

-   Data security;

-   Sufficient size and storage capacity; and

-   Frequent updating.

**Record Review Process**

Conversion to a new automated eligibility system during June 2005
dictated a very short timeframe for the record review process. Two
DCC/ECE supervisors coordinated the record review effort and selected a
10-member State Review Team, representing the different regions of the
State. The supervisors modified the Record Review Worksheet template to
incorporate supervisory review checklists already in use. Once the
sample was drawn, the team was convened in Little Rock for a training
session on the use of the Record Review Worksheet, the record review
process, and what documentation to use to determine record accuracy.
Each reviewer examined 15 records and together they completed the record
review process.

Because Arkansas completed its record reviews before the site visit, the
study team reviewed the process and examined the results of the record
review during the site visit. Records randomly selected for the review
were of 2 types: 65 low-income and 85 ESS cases. Preliminary results
indicated errors in both sets of records. The errors in the ESS cases
required additional followup due to different documentation requirements
used by the DHS TANF staff that determined eligibility for ESS child
care assistance in October 2004.

**Site Visit Participants**

  ------------ ---------------------------- ----------- ----------------------------------------------------------------
  **Name**     **Title**                    **Phone**   **Email Address**

  Charles      DCC/ECE Child Care           \(501\)     <Charles.arnold@arkansas.gov>
  Arnold       Eligibility Specialist       268--8696   

  Jeff Auten   NGIT Programmer              \(501\)     <Jeff.auten@arkansas.gov>
                                            682--9455   

  Samantha     DCC/ECE Administrative       \(501\)     <Samantha.Blair@arkansas.gov>
  Blair        Assistant                    682--0489   

  Rebecca      DCC/ECE Child Care           \(479\)     <Rebecca.brewster@arkansas.gov>
  Brewster     Eligibility Specialist       738--2161   

  Charlotte    Dallas Regional Office       \(214\)     <cbristow@acf.hhs.gov>
  Bristow                                   767--0164   

  Sheri        DCC/CCE Licensing Specialist \(479\)     <Sheri.buckner@arkansas.gov>
  Buckner                                   963--2783   

  Curtis Curry DCC/ECE SNP Administrator    \(501\)     [Curtis.curry@arkansas.gov](mailto:Curtis.curry@arkiansas.gov)
                                            682--8870   

  Carolyn Dean CCB                          \(202\)     <cdean@acf.hhs.gov>
                                            260--4985   

  Chris        NGIT Project Manager         \(501\)     <Chris.dollard@arkansas.gov>
  Dollard                                   682--8983   

  Michael      NGIT Data Architect          \(501\)     <Michael.dugas@arkansas.gov>
  Dugas                                     339--6083   

  Greg Fitch   NGIT Programmer              \(501\)     <Greg.fitch@arkansas.gov>
                                            682--8810   

  Dwain        DCC/CCE Family Support Unit  \(501\)     <Dwain.griffin@arkansas.gov>
  Griffin      Supervisor                   682--7909   

  Debra        DHS OPU                      \(501\)     <Debra.Holiman@arkansas.gov>
  Holiman                                   682--6502   

  Deniece      DCC/ECE Associate Director   \(501\)     <Deniece.honeycutt@arkansas.gov>
  Honeycutt                                 682--4836   

  Shirley      DCC/CCE Child Care           \(501\)     <Shirley.horton@arkansas.gov>
  Horton       Eligibility Specialist       682--9288   

  Janie        DHS Deputy Director          \(501\)     <Janie.huddleston@arkansas.gov>
  Huddleston                                682--8999   

  Moniquin     CCB                          \(202\)     <mhuggins@acf.hhs.gov>
  Huggins                                   690--8490   

  Ron Hunter   DHS OCC Senior Auditor       \(501\)     <Ron.hunter@arkansas.gov>
                                            682--6233   

  Debra        DCC/ECE Family Support Unit  \(501\)     <Debra.r.johnson@arkansas.gov>
  Johnson      Supervisor                   682--8947   

  Ray Jones    DCC/ECE Compliance Unit      \(501\)     <Ray.jones@arkansas.gov>
               Program Coordinator          683--2611   

  Joni Jones   DCO Director                 \(501\)     <Joni.jones@arkansass.gov>
                                            682--8377   

  Sam Lamey    DCC/ECE Asst Director CFO    \(501\)     <Sam.lamey@arkiansas.gov>
                                            683--0989   

  Tim Lampe    DCC/ECE Asst Director        \(501\)     <tim.lampe@arkansas.gov>
                                            683--4286   

  Paul Lazenby DCC/ECE Pre-K Administrator  \(501\)     <Paul.Lazenby@arkansas.gov>
                                            682--8587   

  Melissa      DCC/ECE Child Care           \(478\)     <Melissa.lunsford@arkansas.gov>
  Lunsford     Eligibility Specialist       637--4141   

  Tonji Mackey DCC/ECE Family Support Unit  \(501\)     <Tonji.mackey@arkansas.gov>
               Supervisor                   682--0489   

  Carol        WRMA                         \(310\)     <cpearson@wrma.com>
  Pearson                                   881--2590   

  Jeff Polich  CCB                          \(202\)     <jpolich@acf.hhs.gov>
                                            205--8696   

  Tonya        DCC/ECE Director             \(501\)     <Tonya.russell@arkansas.gov>
  Russell                                   682--4895   

  Mike Saxby   DCC/ECE Compliance Unit      \(501\)     <Mike.saxby@arkansas.gov>
               Administrator                682--8584   

  Willard      NGIT (BA)                    \(501\)     <Willard.Starlard@arkansas>.gov
  Starlard                                  683--0919   

  Melissa      DCC/ECE Child Care           \(870\)     <Melissa.taylor@arkansas.gov>
  Taylor       Eligibility Specialist       698--1876   

  Mary Jo      CCB                          \(202\)     <mthomas@acf.hhs.gov>
  Thomas                                    205--8345   

  Wayne        DCC/ECE Family Support Unit  \(870\)     <Wayne.Thornberry@arkansas.gov>
  Thornberry   Administrator                942--5151   

  Ellie        CCB                          \(202\)     <Ewagoner@acf.hhs.gov>
  Wagoner                                   205--8087   

  Patricia     DCC/ECE Child Care           \(501\)     <Patricia.williams@arkansas.gov>
  Williams     Eligibility Specialist       268--8696   

  Kim Wilson   DCC/ECE Child Care           \(870\)     <Kimberly.Wilson@arkansas.gov>
               Eligibility Specialist       998--2581   

  Larry Woods  WRMA                         \(412\)     <lwoods@wrma.com>
                                            344--5488   
  ------------ ---------------------------- ----------- ----------------------------------------------------------------

**RECORD REVIEW WORKSHEET**

The Record Review Worksheet used for this site is located on the
following pages.

  --------------- ------------- ------------- ------------- --------- ---------- ---------- ---------------
  **Application                                             **No      **Client   **Agency   **Notes**
  Process**                                                 Error**   Error**    Error**    

                  Applicant                   Client Name                                    
                  Information                                                               

                                              Residence                                      
                                              Address                                       

                                              Mailing                                        
                                              Address                                       

                                              Children                                       

                                                                                             

                                                                                             

                                                                                            

                                              Others (2nd                                   
                                              Parent)                                       

                  **Ref.                                                                    
                  Appendix A                                                                
                  100,300**                                                                 

                  Head of                     Have open                                      
                  Household                   child support                                 
                                              case                                          

                  ** **                       Meet semester                                 
                                              or quarter                                    
                                              hours w/                                      
                                              enrollment in                                 
                                              institution                                   
                                              of higher                                     
                                              learning                                      

                                              Number of                                     
                                              work hours                                    
                                              met                                           

                  **Ref                                                                     
                  Appendix                                                                  
                  400**                                                                     

                  Forms                                                                     

                                DCC-531                                                     
                                Notice for                                                  
                                Child Care                                                  

                                Assistance                                                  

                                DCC-513                                                     
                                Application                                                 

                                DCO-97                                                      
                                Earning                                                     
                                Statement                                                   

                                DCC-540                                                     
                                Citizenship                                                 
                                Form                                                        

                                DCC-576 Non                                                 
                                Custodial                                                   
                                Child                                                       

                                Support                                                     
                                Statement                                                   

                                DCC-552 Child                                               
                                Care                                                        
                                Arrangement                                                 
  --------------- ------------- ------------- ------------- --------- ---------- ---------- ---------------

+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          |            | * | * | ** | **Notes**    |
|     |        |   |          |            | * | * | Ag |              |
|     |        |   |          |            | N | C | en |              |
|     |        |   |          |            | o | l | cy |              |
|     |        |   |          |            | E | i | E  |              |
|     |        |   |          |            | r | e | rr |              |
|     |        |   |          |            | r | n | or |              |
|     |        |   |          |            | o | t | ** |              |
|     |        |   |          |            | r | E |    |              |
|     |        |   |          |            | * | r |    |              |
|     |        |   |          |            | * | r |    |              |
|     |        |   |          |            |   | o |    |              |
|     |        |   |          |            |   | r |    |              |
|     |        |   |          |            |   | * |    |              |
|     |        |   |          |            |   | * |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Veri     |            |   |   |    |              |
|     |        |   | fication |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | DCO-1413 |            |   |   |    |              |
|     |        |   | Work     |            |   |   |    |              |
|     |        |   | Requ     |            |   |   |    |              |
|     |        |   | irement/ |            |   |   |    |              |
|     |        |   | Lifetime |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Limit    |            |   |   |    |              |
|     |        |   | Noti     |            |   |   |    |              |
|     |        |   | fication |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | DCO-1414 |            |   |   |    |              |
|     |        |   | ESS      |            |   |   |    |              |
|     |        |   | Child    |            |   |   |    |              |
|     |        |   | care     |            |   |   |    |              |
|     |        |   | Earning  |            |   |   |    |              |
|     |        |   | Request  |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | (@     |   | DCO-1412 |            |   |   |    |              |
|     | each   |   | Notice   |            |   |   |    |              |
|     | au     |   | of Child |            |   |   |    |              |
|     | thoriz |   | Care     |            |   |   |    |              |
|     | ation) |   | Action   |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | (@     |   | DCO-1412 |            |   |   |    |              |
|     | cl     |   | Notice   |            |   |   |    |              |
|     | osure) |   | of Child |            |   |   |    |              |
|     |        |   | Care     |            |   |   |    |              |
|     |        |   | Action   |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | \(@clo |   | DCO-1404 |            |   |   |    |              |
|     | sure\) |   | Notice   |            |   |   |    |              |
|     |        |   | to       |            |   |   |    |              |
|     |        |   | provider |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 300**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Income |   |          | Work       |   |   |    |              |
|     |        |   |          | Income     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Non-Work   |   |   |    |              |
|     |        |   |          | Income     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Other      |   |   |    |              |
|     |        |   |          | Income     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A 100, |   |          |            |   |   |    |              |
|     | 320**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | C      |   | Reported | Low        |   |   |    |              |
|     | hanges |   | within   | Income-    |   |   |    |              |
|     |        |   | 10 days  | DCC-516    |   |   |    |              |
|     |        |   | of the   | Change     |   |   |    |              |
|     |        |   | change   | Report     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | ESS-       |   |   |    |              |
|     |        |   |          | DCO-234    |   |   |    |              |
|     |        |   |          | Change     |   |   |    |              |
|     |        |   |          | Report     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 100**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | *      |   |          | Income     |   |   |    |              |
|     | *Eligi |   |          | Calculated |   |   |    |              |
|     | bility |   |          | w/         |   |   |    |              |
|     | Guidel |   |          | a          |   |   |    |              |
|     | ines** |   |          | ppropriate |   |   |    |              |
|     |        |   |          | m          |   |   |    |              |
|     |        |   |          | ultipliers |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Income     |   |   |    |              |
|     |        |   |          | guidelines |   |   |    |              |
|     |        |   |          | for county |   |   |    |              |
|     |        |   |          | used       |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | \$100      |   |   |    |              |
|     |        |   |          | deduction  |   |   |    |              |
|     |        |   |          | given if   |   |   |    |              |
|     |        |   |          | eligible   |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 1      |   |          |            |   |   |    |              |
|     | 00,320 |   |          |            |   |   |    |              |
|     | ,400** |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Qual |   |          | Im         |   |   |    |              |
|     | ifying |   |          | munization |   |   |    |              |
|     | Chil   |   |          | Records    |   |   |    |              |
|     | dren** |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Is Care    |   |   |    |              |
|     |        |   |          | Requested? |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          |            | * | * | ** | **Notes**    |
|     |        |   |          |            | * | * | Ag |              |
|     |        |   |          |            | N | C | en |              |
|     |        |   |          |            | o | l | cy |              |
|     |        |   |          |            | E | i | E  |              |
|     |        |   |          |            | r | e | rr |              |
|     |        |   |          |            | r | n | or |              |
|     |        |   |          |            | o | t | ** |              |
|     |        |   |          |            | r | E |    |              |
|     |        |   |          |            | * | r |    |              |
|     |        |   |          |            | * | r |    |              |
|     |        |   |          |            |   | o |    |              |
|     |        |   |          |            |   | r |    |              |
|     |        |   |          |            |   | * |    |              |
|     |        |   |          |            |   | * |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Special    |   |   |    |              |
|     |        |   |          | Needs      |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Provider   |   |   |    |              |
|     |        |   |          | I          |   |   |    |              |
|     |        |   |          | nformation |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 330**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Sign   |   |          | Applicant  |   |   |    |              |
|     | atures |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | &      |   |          | Auth to    |   |   |    |              |
|     | Dates  |   |          | Release    |   |   |    |              |
|     |        |   |          | Info       |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Client |   |          | Signed and |   |   |    |              |
|     | Re     |   |          | Dated      |   |   |    |              |
|     | sponsi |   |          |            |   |   |    |              |
|     | bility |   |          |            |   |   |    |              |
|     | Agr    |   |          |            |   |   |    |              |
|     | eement |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 100**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Case   |   | Docum    |            |   |   |    |              |
|     | Notes  |   | entation |            |   |   |    |              |
|     |        |   | of       |            |   |   |    |              |
|     |        |   | action   |            |   |   |    |              |
|     |        |   | taken,   |            |   |   |    |              |
|     |        |   | commu    |            |   |   |    |              |
|     |        |   | nication |            |   |   |    |              |
|     |        |   | etc.     |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
| **R |        |   |          |            |   |   |    |              |
| e-d |        |   |          |            |   |   |    |              |
| ete |        |   |          |            |   |   |    |              |
| rmi |        |   |          |            |   |   |    |              |
| nat |        |   |          |            |   |   |    |              |
| ion |        |   |          |            |   |   |    |              |
| Pro |        |   |          |            |   |   |    |              |
| ces |        |   |          |            |   |   |    |              |
| s** |        |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Pr   |   | Name     | **Primary\ |   |   |    |              |
|     | imary\ |   |          | Parent**   |   |   |    |              |
|     | Pa     |   |          |            |   |   |    |              |
|     | rent** |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | R        |            |   |   |    |              |
|     |        |   | esidence |            |   |   |    |              |
|     |        |   | Address  |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Mailing  |            |   |   |    |              |
|     |        |   | Address  |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Children |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Others   |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 100    |   |          |            |   |   |    |              |
|     | ,300** |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Qual   |   | Meet     | Compare    |   |   |    |              |
|     | ifying |   | CCCAP    | reported   |   |   |    |              |
|     | Head   |   | De       | on appl.   |   |   |    |              |
|     | of     |   | finition | Vs. CHATS  |   |   |    |              |
|     | Hou    |   | of       |            |   |   |    |              |
|     | sehold |   | parent   |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Others     |   |   |    |              |
|     |        |   |          | (2nd       |   |   |    |              |
|     |        |   |          | Parent)    |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 300**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Qual   |   | Activity | Applicant  |   |   |    |              |
|     | ifying |   |          |            |   |   |    |              |
|     | Ac     |   |          |            |   |   |    |              |
|     | tivity |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Other      |   |   |    |              |
|     |        |   |          | Parent (if |   |   |    |              |
|     |        |   |          | app)       |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Schedule | Applicant  |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Other      |   |   |    |              |
|     |        |   |          | Parent (if |   |   |    |              |
|     |        |   |          | app)       |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          |            | * | * | ** | **Notes**    |
|     |        |   |          |            | * | * | Ag |              |
|     |        |   |          |            | N | C | en |              |
|     |        |   |          |            | o | l | cy |              |
|     |        |   |          |            | E | i | E  |              |
|     |        |   |          |            | r | e | rr |              |
|     |        |   |          |            | r | n | or |              |
|     |        |   |          |            | o | t | ** |              |
|     |        |   |          |            | r | E |    |              |
|     |        |   |          |            | * | r |    |              |
|     |        |   |          |            | * | r |    |              |
|     |        |   |          |            |   | o |    |              |
|     |        |   |          |            |   | r |    |              |
|     |        |   |          |            |   | * |    |              |
|     |        |   |          |            |   | * |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A 100, |   |          |            |   |   |    |              |
|     | 320**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Income |   | Work     | Documented |   |   |    |              |
|     |        |   | Income   | in File    |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Non-Work | Documented |   |   |    |              |
|     |        |   | Income   | in File    |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   | Other    | Disclosure |   |   |    |              |
|     |        |   | Income   |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A 400, |   |          |            |   |   |    |              |
|     | 410**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | C      |   | Changes  | Change in  |   |   |    |              |
|     | hanges |   | properly | ci         |   |   |    |              |
|     |        |   | reported | rcumstance |   |   |    |              |
|     |        |   | between  | for or     |   |   |    |              |
|     |        |   | Redit.   | contact    |   |   |    |              |
|     |        |   | Periods  | documented |   |   |    |              |
|     |        |   |          | with       |   |   |    |              |
|     |        |   |          | county     |   |   |    |              |
|     |        |   |          | worker     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 400**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Qual   |   |          | Qualified  |   |   |    |              |
|     | ifying |   |          | Child      |   |   |    |              |
|     | Ch     |   |          |            |   |   |    |              |
|     | ildren |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Im         |   |   |    |              |
|     |        |   |          | munization |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Schedule   |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Is Care    |   |   |    |              |
|     |        |   |          | Requested? |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Special    |   |   |    |              |
|     |        |   |          | Needs      |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        |   |          | Provider   |   |   |    |              |
|     |        |   |          | I          |   |   |    |              |
|     |        |   |          | nformation |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 330**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Sign   |   |          | Primary    |   |   |    |              |
|     | atures |   |          | Parent     |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | &      |   |          | Auth to    |   |   |    |              |
|     | Dates  |   |          | Release    |   |   |    |              |
|     |        |   |          | Info       |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Ref. |   |          |            |   |   |    |              |
|     | Ap     |   |          |            |   |   |    |              |
|     | pendix |   |          |            |   |   |    |              |
|     | A      |   |          |            |   |   |    |              |
|     | 100**  |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | Case   | D |          |            |   |   |    |              |
|     | Notes  | o |          |            |   |   |    |              |
|     |        | c |          |            |   |   |    |              |
|     |        | u |          |            |   |   |    |              |
|     |        | m |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | f |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | c |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | k |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
|     |        | , |          |            |   |   |    |              |
|     |        | c |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | m |          |            |   |   |    |              |
|     |        | m |          |            |   |   |    |              |
|     |        | u |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | c |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | c |          |            |   |   |    |              |
|     |        | . |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
| **A |        |   |          |            |   |   |    |              |
| uth |        |   |          |            |   |   |    |              |
| ori |        |   |          |            |   |   |    |              |
| zat |        |   |          |            |   |   |    |              |
| ion |        |   |          |            |   |   |    |              |
| Pro |        |   |          |            |   |   |    |              |
| ces |        |   |          |            |   |   |    |              |
| s** |        |   |          |            |   |   |    |              |
|     |        |   |          |            |   |   |    |              |
| **  |        |   |          |            |   |   |    |              |
| (** |        |   |          |            |   |   |    |              |
| **R |        |   |          |            |   |   |    |              |
| ef. |        |   |          |            |   |   |    |              |
| Ap  |        |   |          |            |   |   |    |              |
| pen |        |   |          |            |   |   |    |              |
| dix |        |   |          |            |   |   |    |              |
| A   |        |   |          |            |   |   |    |              |
| 340 |        |   |          |            |   |   |    |              |
| )** |        |   |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     | **Aut  | T |          |            |   |   |    |              |
|     | horiza | i |          |            |   |   |    |              |
|     | tion** | m |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | l |          |            |   |   |    |              |
|     |        | y |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | u |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | h |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | r |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | z |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | n |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        | C |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | r |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | C |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | d |          |            |   |   |    |              |
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|     |        | d |          |            |   |   |    |              |
|     |        | f |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | r |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | c |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | v |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | y |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+
|     |        | A |          |            |   |   |    |              |
|     |        | u |          |            |   |   |    |              |
|     |        | t |          |            |   |   |    |              |
|     |        | h |          |            |   |   |    |              |
|     |        | o |          |            |   |   |    |              |
|     |        | r |          |            |   |   |    |              |
|     |        | i |          |            |   |   |    |              |
|     |        | z |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | d |          |            |   |   |    |              |
|     |        | b |          |            |   |   |    |              |
|     |        | a |          |            |   |   |    |              |
|     |        | s |          |            |   |   |    |              |
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|     |        | d |          |            |   |   |    |              |
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|     |        | n |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | e |          |            |   |   |    |              |
|     |        | d |          |            |   |   |    |              |
+-----+--------+---+----------+------------+---+---+----+--------------+

+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        |          |   |            | * | * | ** | **Notes**    |
|     |        |          |   |            | * | * | Ag |              |
|     |        |          |   |            | N | C | en |              |
|     |        |          |   |            | o | l | cy |              |
|     |        |          |   |            | E | i | E  |              |
|     |        |          |   |            | r | e | rr |              |
|     |        |          |   |            | r | n | or |              |
|     |        |          |   |            | o | t | ** |              |
|     |        |          |   |            | r | E |    |              |
|     |        |          |   |            | * | r |    |              |
|     |        |          |   |            | * | r |    |              |
|     |        |          |   |            |   | o |    |              |
|     |        |          |   |            |   | r |    |              |
|     |        |          |   |            |   | * |    |              |
|     |        |          |   |            |   | * |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Parent   |   |            |   |   |    |              |
|     |        | Fee      |   |            |   |   |    |              |
|     |        | Ac       |   |            |   |   |    |              |
|     |        | curately |   |            |   |   |    |              |
|     |        | Assessed |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Accurate |   |            |   |   |    |              |
|     |        | Ter      |   |            |   |   |    |              |
|     |        | mination |   |            |   |   |    |              |
|     |        | dat      |   |            |   |   |    |              |
|     |        | e/reason |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | **Mu   | Docum    |   |            |   |   |    |              |
|     | ltiple | entation |   |            |   |   |    |              |
|     | provi  | of need  |   |            |   |   |    |              |
|     | ders** |          |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Au       |   |            |   |   |    |              |
|     |        | thorized |   |            |   |   |    |              |
|     |        | based on |   |            |   |   |    |              |
|     |        | need     |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | Case   | Docum    |   |            |   |   |    |              |
|     | Notes  | entation |   |            |   |   |    |              |
|     |        | of       |   |            |   |   |    |              |
|     |        | action   |   |            |   |   |    |              |
|     |        | taken,   |   |            |   |   |    |              |
|     |        | commu    |   |            |   |   |    |              |
|     |        | nication |   |            |   |   |    |              |
|     |        | etc.     |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
| *   |        |          |   |            |   |   |    |              |
| *Pr |        |          |   |            |   |   |    |              |
| ovi |        |          |   |            |   |   |    |              |
| der |        |          |   |            |   |   |    |              |
| Fis |        |          |   |            |   |   |    |              |
| cal |        |          |   |            |   |   |    |              |
| Pro |        |          |   |            |   |   |    |              |
| ces |        |          |   |            |   |   |    |              |
| s** |        |          |   |            |   |   |    |              |
|     |        |          |   |            |   |   |    |              |
| *   |        |          |   |            |   |   |    |              |
| *(R |        |          |   |            |   |   |    |              |
| ef. |        |          |   |            |   |   |    |              |
| Ap  |        |          |   |            |   |   |    |              |
| pen |        |          |   |            |   |   |    |              |
| dix |        |          |   |            |   |   |    |              |
| A   |        |          |   |            |   |   |    |              |
| 360 |        |          |   |            |   |   |    |              |
| )** |        |          |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | **     | Form     | C |            |   |   |    |              |
|     | Fiscal |          | u |            |   |   |    |              |
|     | Agree  |          | r |            |   |   |    |              |
|     | ment** |          | r |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | f |            |   |   |    |              |
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|     |        |          | r |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | s |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | p |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | r |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Provider | S |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | g |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | D |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Agency   | S |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | g |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
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|     |        |          | n |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | D |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | **E    | Provider | C |            |   |   |    |              |
|     | xempt: |          | o |            |   |   |    |              |
|     | Self   |          | m |            |   |   |    |              |
|     | -Assur |          | p |            |   |   |    |              |
|     | ance** |          | l |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | , |            |   |   |    |              |
|     |        |          | S |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | g |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | & |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | ** **  | Parent   | S |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | g |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | D |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | W-9    | Form     | C |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | m |            |   |   |    |              |
|     |        |          | p |            |   |   |    |              |
|     |        |          | l |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | , |            |   |   |    |              |
|     |        |          | S |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | g |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | & |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | KIDS   | Provider | K |            |   |   |    |              |
|     |        | open     | I |            |   |   |    |              |
|     |        | service  | D |            |   |   |    |              |
|     |        |          | S |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Exempt   | K |            |   |   |    |              |
|     |        |          | I |            |   |   |    |              |
|     |        |          | D |            |   |   |    |              |
|     |        |          | S |            |   |   |    |              |
|     |        |          | c |            |   |   |    |              |
|     |        |          | h |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | c |            |   |   |    |              |
|     |        |          | k |            |   |   |    |              |
|     |        |          | c |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | m |            |   |   |    |              |
|     |        |          | p |            |   |   |    |              |
|     |        |          | l |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
| **P |        |          |   |            |   |   |    |              |
| aym |        |          |   |            |   |   |    |              |
| ent |        |          |   |            |   |   |    |              |
| Pro |        |          |   |            |   |   |    |              |
| ces |        |          |   |            |   |   |    |              |
| s** |        |          |   |            |   |   |    |              |
|     |        |          |   |            |   |   |    |              |
| *   |        |          |   |            |   |   |    |              |
| *(R |        |          |   |            |   |   |    |              |
| ef. |        |          |   |            |   |   |    |              |
| Ap  |        |          |   |            |   |   |    |              |
| pen |        |          |   |            |   |   |    |              |
| dix |        |          |   |            |   |   |    |              |
| A** |        |          |   |            |   |   |    |              |
|     |        |          |   |            |   |   |    |              |
| **  |        |          |   |            |   |   |    |              |
| 420 |        |          |   |            |   |   |    |              |
| )** |        |          |   |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     | **B    | Received | T |            |   |   |    |              |
|     | illing | By       | i |            |   |   |    |              |
|     | Form** | County   | m |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | l |            |   |   |    |              |
|     |        |          | y |            |   |   |    |              |
|     |        |          | r |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | c |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | p |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        |          | T |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | m |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | l |            |   |   |    |              |
|     |        |          | y |            |   |   |    |              |
|     |        |          | p |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | y |            |   |   |    |              |
|     |        |          | m |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        |          | C |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | r |            |   |   |    |              |
|     |        |          | r |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | c |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | P |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | y |            |   |   |    |              |
|     |        |          | m |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+
|     |        | Su       | P |            |   |   |    |              |
|     |        | pporting | r |            |   |   |    |              |
|     |        | Docum    | o |            |   |   |    |              |
|     |        | entation | v |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | r |            |   |   |    |              |
|     |        |          | s |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | g |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | / |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | u |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | d |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | c |            |   |   |    |              |
|     |        |          | u |            |   |   |    |              |
|     |        |          | m |            |   |   |    |              |
|     |        |          | e |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | a |            |   |   |    |              |
|     |        |          | t |            |   |   |    |              |
|     |        |          | i |            |   |   |    |              |
|     |        |          | o |            |   |   |    |              |
|     |        |          | n |            |   |   |    |              |
+-----+--------+----------+---+------------+---+---+----+--------------+

  ------ ---------- ------------- ------------------------------------ --------- ---------- ---------- ---------------
                                                                       **No      **Client   **Agency   **Notes**
                                                                       Error**   Error**    Error**    

                                  Absence                                                              
                                  Documentation(allowed/non-allowed)                                   

                    Parent Fee    Timely Receipt                                                       

                                  Correct Amount                                                       

                    Billed/Paid   Overautorizaiton                                                     

                                  Under authorization                                                  

                                  Overpayment                                                          

                                  Underpayment                                                         

         **Ref.                   Registration, Activity,                                              
         Appendix A               Transportation fees correct payment                                  
         430**                                                                                         
  ------ ---------- ------------- ------------------------------------ --------- ---------- ---------- ---------------

**APPENDIX B.**

**COLORADO**

**SITE VISIT SUMMARY**

**Overview of the Colorado Child Care Program**

The Colorado Department of Human Services (DHS), Division of Child Care
administers the State-supervised, county-administered child care subsidy
system in Colorado. The State is comprised of 64 counties, with the 10
largest counties representing 85 percent of the children and 81 percent
of the overall child care budget. Most counties administer the program
through their local county departments of social services, although
three counties have contracted their programs out to private
agencies---Adams and Boulder Counties contract with Aspen Family
Services and El Paso County contracts with Goodwill Industries.
According to the latest information provided by the Division of Child
Care, 48,084 children and 26,342 families in the State receive child
care assistance at 4,300 family child care homes, 2,001 child care
centers (including preschools), and 883 school-age facilities.

Families who receive Temporary Assistance for Needy Families (TANF)
represent

22 percent of the child care population; the remaining 78 percent of
families receive services through the low-income program. Some counties
administer TANF and low-income child care with the same staff, while
others administer the programs through different locations, programs, or
agencies. Child care in Colorado is first come, first served; however,
counties can establish waiting lists. TANF recipients move directly to
low-income child care and not to a waiting list.

The Colorado Child Care Assistance Program (CCCAP) allocates funding
annually and utilizes a county- and State-approved formula. Counties
have the ability to transfer TANF dollars and utilize county-only
dollars to supplement their allocation. Counties also have
decision-making ability regarding local policies, can establish waiting
lists as needed, and must submit a child care plan for State approval
every 2 years. Counties are required to amend plans between submission
dates for all changes. The next county plan will include information on
how counties address improper payments.

To determine eligibility, clients must submit an application, provide
child support information, complete a client responsibility agreement,
and provide verification of employment and income. All counties must
enter child care subsidy information into the Child Care Automated
Tracking System (CHATS), which collects and tracks background
information, eligibility, redetermination, changes to eligibility, days
authorized, and days billed. CHATS automatically calculates eligibility
for households based upon the information entered. CHATS also tracks
provider payments and ensures that each provider has a unique
identifier, thus minimizing potential double-billing situations. In
addition, CHATS tracks nonpayment of fee closures and follows the parent
should they attempt to receive benefits in another county.

CHATS interfaces with another child welfare system, the Colorado Trails
System (Trails), for all provider information, including license status
and addresses. The system maintains separation of duties by county
eligibility staff maintaining client information, while the business
office enters billing data and issues the payments. The business office
cannot modify authorizations to raise the payment amounts; conversely,
eligibility staff cannot process and pay providers.

The parent fee is the first amount applied to the monthly cost of child
care. A parent pays the assessed fee to the provider and the provider
bills for the remainder of the cost of care based on the rate agreed
upon in the fiscal agreement. If the county CCCAP office receives
notification that a parent is not paying their fee and has not initiated
a schedule for paying the fee, the county can close the case within 30
days.

The provider submits the billing form by entering "units" onto a printed
billing form from the CHATS system. Payroll runs occur each Friday
night. Counties can choose to pay each Friday after the month of care
provided and are required to process payments by the second Friday prior
to the third Monday of the month. Funds are distributed through an
Electronic Fund Transfer on the following Monday. Colorado does not
allow for the processing of checks so providers must have direct deposit
or receive payment on an Electronic Benefits Transfer Card (Quest Card).
The CHATS system must have valid banking information prior to processing
any payment through the Electronic Fund Transfer.

Child care program options vary across counties, presenting a
labor-intensive process for State-level monitoring of improper payments
based on administrative error. Examples of this variation include the
following:

-   The State conducts a market rate survey every 2 years and publishes
    the 75^th^ percentile in an agency letter. Colorado publishes the
    75^th^ percentile based on rates for children younger than 2 years
    and children older than 2 years. Counties determine their rates
    based either on this information or on local information. Counties
    establish their own reimbursement and age range rates. To determine
    these rates, counties consider several factors, including local
    economies, child care availability, market prices and rates, and
    quality. Each county's rate represents the maximum amount they can
    pay for child care and is not to exceed a provider's private pay
    rate. Using the current daily rate information, for children younger
    than 2-years old in full-time center-based care, Routt County
    (resort economy of Steamboat Springs) has a rate of \$45.00 a day,
    while Dolores County (rural economy) has a rate of \$13.84 a day.

-   Families must live in the county in which they receive benefits. In
    metropolitan areas like Denver---which consists of multiple
    contiguous counties---a child may no longer be eligible for services
    if he or she moves to another county. This policy has the potential
    to impact access, as one county may pay different rates than
    another. In dual custody cases, both parents must apply for benefits
    regardless of where they reside. The county authorizes service based
    on the custody agreement and the location of the child.

-   Each county determines its own policy for reimbursement when a child
    is absent from care. Counties authorize up to 7 days of paid
    absences per month, the average being 3 days per month. Counties
    make exceptions based on documented anomalies, such as a
    physician-documented illness.

-   Documenting immunization schedules varies among counties. Some
    counties obtain immunization verification as part of the eligibility
    process and maintain them within the case record, while others
    require the child care providers to maintain the documentation with
    a plan to monitor the provider's collection of immunization
    information.

    -   Counties have the option to require cooperation with Child
        Support Enforcement as a condition of child care benefits. This
        option is not required statewide and some counties that
        implemented this have experienced a drop in the child care
        rolls; child support may increase household income enough to
        make families ineligible for services. This policy has also
        reduced erroneous reporting of household composition.

-   Counties complete a redetermination every 6 months. Three months of
    pay stubs are required at redetermination, but counties sometimes
    request them for 6 months, depending upon the individual's income
    consistency and regularity.

Certain client eligibility policies and procedures are similar across
counties, allowing for systematic monitoring of administrative error.
These eligibility procedures include the following:

-   Clients are required to report any change that influences
    eligibility such as employment, household composition, schedule, or
    income. Clients can report these changes by phone, but most counties
    request changes in writing with supporting documentation as needed.
    The State is considering reducing the time limit to report changes
    from 3 days for some changes and 30 days for others, to a standard 7
    days for all changes.

-   A full-time rate means that more than 5 hours of child care are
    provided per day, while part-time daily rates are less than 5 hours
    of child care provided per day. The average number of care days per
    month is 22.

Legally-exempt providers---usually family, friends, or neighbors---must
be at least 18-years old and must sign contracts and self-assurances
with the county to provide care. Legally-exempt providers are registered
but not licensed, and may not provide services to more than one
household at the same time without a license. However, a legally-exempt
provider can serve one client in the morning and another in the
afternoon providing there is no overlap. Provisions allow relatives to
care for more than one relative's children (e.g., a grandmother caring
for her grandchildren from two of her children). A family child care
home or child care center receives a license following a background
check and licensing procedures as outlined in Colorado's Child Care
Licensing Act.

**Improper Payments Process**

The Office of Performance Improvement (OPI), Audit Division, is
responsible for fiscal oversight of all DHS programs. OPI auditors
investigate fraud and improper payments in several ways. Typically, a
referral from a worker, provider, or the general public will prompt a
review of a provider or client. Due to staffing constraints---the
staffing for this division was recently reduced by 50 percent---few
investigations are conducted. A large number of corrections or
adjustments of over and underpayments are handled through the Division
of Child Care. If OPI identifies an overpayment, it can initiate a
repayment schedule, reduce a payment, or refer to the State's legal
office. In an attempt to become more proactive, OPI staff began working
with a new auditing and financial data extraction, data analysis, fraud
detection, and continuous monitoring tool referred to as ACL. The ACL
software allows OPI to explore a variety of data mining techniques to
identify potential areas of concern and records that would warrant
further investigation.

County auditors occasionally audit child care as part of the single
audit testing and some counties have implemented their own auditing and
monitoring procedures. Although child care in the past did not receive
auditing attention by the DHS Audit Division, concerns about payment
monitoring in the child care program prompted a special study of the
program in 2003. The *Child Care Provider Study* found that
documentation to support payments made was often lacking.
Recommendations included the need for staff and provider training
updates to automated systems, as well as the need to develop error
profiles to identify areas of potential error.

OPI issued a CD-ROM about prevention to raise awareness about fraud in
all its forms. The Division of Child Care and OPI distributed the CD-ROM
at the Colorado Counties, Inc., and Region VIII meetings. In addition,
the State embarked upon a pilot program with the counties in July 2005
to identify case profiles where fraud could occur. Eight of Colorado's
largest counties and four smaller ones are involved in this pilot. The
State purchased the ACL software for the pilot counties and is providing
technical assistance during the pilot. While pilot results are not yet
available, a major expected outcome is the development of error
profiling and identification of what constitutes a data anomaly.

***Payment and Overpayment Process***

The payment process at the county level begins with the receipt of a
bill following a month of care. A county billing clerk processes the
bills and generates payments based on the amount authorized. The billing
office staff does not have the authority to update an approved
authorization; the responsibility lies with the county workers who
authorize care. If the billed amount is greater than the authorized
amount, workers rectify the conflict and the provider is sent payment.
Counties set policies regarding how to resolve billing and authorization
conflicts, which may include clients using more child care than
authorized, absences, or use of full-time care when the authorization
was for part-time care. The most common conflict in Jefferson County was
consecutive absences without prior authorization.

An investigation by the Division of Child Care of a facility's improper
payment is precipitated by a complaint, a tip, or a worker. Both the
State and counties will pursue child care overpayments. The incidence of
counties initiating and completing more indepth investigations of
potential fraud varies across the State. Some counties are very active
while others are not, which is often based on staffing rather than the
willingness to investigate fraud.

State regulation requires counties, upon discovery of an error, to
recover any improper payments from the parent or the provider.
Implementation of this regulation varies by county and depends on
staffing and workload. Counties are required to work with the local
District Attorney's (DA) office. Coordination with the DA's office
varies, with some requiring a recovery minimum or threshold prior to
accepting a case. In some counties, the threshold is as high as \$5,000.
OPI staff have conducted multiple training sessions at conferences and
meetings to educate, problem solve, and promote recovery efforts.
Recovery of client overpayments occurs through county-established
repayment plans, as well as the intercept of State Income Tax refunds.
Tracking of recoveries occurs through CHATS and Colorado Accounts
Receivable System. The State typically recovers up to \$250,000 each
year.

The State tracks and classifies recoveries by error reason, including
agency error, client error, and fraud, as well as the reason for the
recovery. Currently, there is no distinction between intentional and
unintentional overpayment and there are no consequences for intentional
and fraud overpayments, although the State is working with counties to
identify reasonable consequences for the program. In the case of a
provider recovery, workers have the ability to recover from future
payments through an adjustment process in CHATS. If the county is no
longer paying that provider, recoveries are more challenging.
Repercussions for provider recoveries and fraud are the discontinuance
of the county's contract with that provider. Any fraud committed by a
provider does not currently affect that provider's license.

In past years, child care has shared a tax intercept license with other
programs in DHS. If a client is identified who owes money to more than
one program, these programs are refunded before child care. Therefore,
child care receives fewer dollars from the intercepts due to this
established hierarchy for intercept distribution. The hierarchy
continues to exist, but the Division of Child Care expects that having
an independent intercept license will result in greater dollars
recovered. During State Fiscal Year (SFY) 2004, the State recovered
\$70,000 through tax intercepts. To date, in SFY 2005, the State has
recovered \$45,000--\$50,000. Of the 740 records sent to the Department
of Revenue, 100 resulted in successful intercepts. Overall, more than
\$1.2 million in total child care recoveries exist and are due to the
State. The Colorado Welfare Fraud Council, an organization dedicated to
fraud and recovery issues, has initiated a discussion to propose
legislation to enable recovery of funds through the intercept of
unemployment compensation and workers' compensation benefits.

Recovered funds are deposited into the county's general fund rather than
a fund earmarked for child care. Counties have indicated frustration
with the lack of incentives in child care that exist for other public
assistance programs. The incentives received by other programs often
fund staff to pursue recoveries and increase a county's ability to
actively pursue improper payment cases.

**Assessment of Risk**

Determining eligibility for self-employed clients presents many
problems. Establishing a meaningful employment schedule is often
difficult because the individual may work different hours on different
days. Counties struggle with receiving enough verification information
to determine the client's eligibility, while limiting documentation
requirements that may deter people from applying for benefits. County
policy is that the parent must make a profit of at least \$1 through
self-employment, they must prove their self-employment tax status, and
they must maintain a calendar of work appointments and money earned
through these appointments. The county conducts a crosscheck of the
provider's calendar against the number of hours billed at the end of the
month or at redetermination. TANF recipients must earn minimum wage,
even if they are self-employed, to qualify for care. This criterion is
not relevant for low-income families who are not on TANF.

**Automation**

Colorado is county-administered and State-supervised, with the counties
having great latitude in the administration of their county-specific
child care programs. All counties must use the CHATS, administered and
maintained by State staff, to track eligibility, case management,
authorization, payment, and provider maintenance.

The design of the CHATS system allows the worker to determine
eligibility and redetermination online. The worker does not need to
independently calculate and enter eligibility information. The CHATS
system has in place a number of edits and safeguards to minimize errors.
Examples of the edits and safeguards include:

-   Household income is at or below the county-set income eligibility
    level;

-   Parents are participating in eligible activities;

-   Income inclusions and exclusions are added or subtracted from the
    household income;

-   The child requesting service is at or below the age limit;

-   Each person has a unique identifier called the State ID, which is
    utilized across all assistance programs;

-   A case is open and eligible for each month and year that the care is
    authorized; and

-   Provider reimbursement rates are at or below the county-specific
    rate ceiling for the provider type, child age, special need, and
    type of care.

The CHATS system is an older, mainframe, character-based system that has
some limitations, including: the inability to issue seasonal
authorizations, such as before- and after-school care from September to
June or full-day, full-time care during the summer; and the inability to
automatically adjust parental fees for those same families when care
changes from part-time during the school year to full-time during the
summer.

An additional shortcoming in the current CHATS system involves accurate
authorization of care. Workers have difficulty accurately authorizing
care when the appropriate child schedule varies daily or weekly. For
example, a parent may need 2 days of part-time and 3 days of full-time
care one week, 3 days of part-time and 2 days of full-time care the
next, and 5 days of full-time care the third week. To deal with this
situation, some staff authorize 22 full-time and 22 part-time days per
month. The State recognizes that while this may be an attempt to ensure
flexibility, it is a potential source of error on the part of parents
and providers. The State is working on changes to CHATS to accommodate
this issue.

Counties may obtain access to the Colorado Unemployment Benefits System
(CUBS) in the Department of Revenue, which allows for verification of
employer status and Social Security numbers. Counties also have access
to the Automated Child Support Enforcement System (ACSES) to verify
reporting of child support. In addition to this access, the State
recently began providing all counties a monthly child support report
which compares data known to both the CHATS and ACSES systems. Some
counties also have the ability to check addresses and other household
member information through the Department of Motor Vehicles.

CHATS tracks 28,000--30,000 active authorizations in any given month.
Twice per month, the system validates each authorization by examining
case eligibility, child eligibility, and provider status and
reimbursement rates. Anomalies raise "red flags" in the system, which do
not automatically close the case in most instances, allowing the county
to review and verify case status and information. The parent, provider,
and caseworker receive notification of any action taken.

The CHATS system generates multiple reports and data extracts at the
county and State levels. The Division of Child Care uses this
information to track program information, identify trends, and identify
error or the propensity for error. The State-sponsored pilot project
will utilize some of the same data and extracts to develop profiles and
identify anomalies not already identified by the current system.

Colorado is pursuing the option of replacing the CHATS system and has
completed the first phase by conducting a replacement feasibility study,
which gave multiple stakeholders the opportunity to identify system
requirements including those that will reduce risk of improper payments.
The State evaluated the current system and other options for automation
as part of the feasibility study.

# **County Site Visit---Jefferson County**

Jefferson County, an urban county located on the western edge of the
Denver Metropolitan area, contracts with 600 providers in licensed
centers, licensed homes, and legally exempt homes. Jefferson County
administers both TANF child care and low-income child care cases.

As a county option, Jefferson County implemented a waiting list
beginning March 2002. Recently, the waiting list in the county has been
reduced from 800 to approximately

440 families. Clients must call every 3 months to confirm that they wish
to remain on the waiting list and provide any updates to their address
and telephone number. Placement on the waiting list is generally
first-come, first-served. Three exceptions exist and these cases receive
services first: client is a teen parent earning a GED or actively
attending high school or junior high school; client is a TANF recipient;
or a caretaker is a relative of a child on TANF. Other counties that
have waiting lists have established similar policies or have used a
weighted priority for their waiting lists.

Parents who live in Jefferson County and who are interested in receiving
child care assistance must first attend a group orientation. Once
they've completed the orientation, parents have 30 days to schedule an
intake with a caseworker to have a formal determination of eligibility.
Two attempts are made to contact the individual and complete an intake.
If an intake is not scheduled, the parent will be placed at the bottom
of the waiting list. The date of application is the date the application
is signed, not the date of the orientation session and there is a 30-day
verification period.

Jefferson County implements State policies in the following ways:

-   As per State regulation, parents are responsible for paying the
    parental fee to the provider, not to the county. The parent pays the
    fee to the provider and the county pays the provider, up to the
    allowed amount, for the remainder of the cost of care. The provider
    is responsible for notifying the county if a parent fails to pay the
    parental fee.

-   The county, per State regulation, allows parents 30 days per rolling
    calendar year to look for a job while the child is in care. The
    parent must meet certain requirements in terms of making contacts
    for a job and the parent must speak with a county employment
    counselor. To facilitate this process, Jefferson County Workforce
    Center staff are colocated with child care.

-   Teen parents earning a GED or high school diploma are eligible for
    child care assistance; however, at this time in Jefferson County,
    those working toward their Bachelor's degree are not eligible.
    Counties across the State have the ability to offer training or
    education as an eligible activity for up to 48 months. Each county
    makes the determination on whether to offer training or education
    and the number of months covered.

State licensing staff, as outlined in the State's licensing regulation,
license providers. Legally exempt providers receive certification at the
county level to provide care. Legally exempt providers are usually
family, friends, or neighbors and are 18 years or older. They sign a
contract with the county that includes a self-assurance form to provide
care. Colorado uses a large number of legally exempt providers.

All providers must sign a contract or fiscal agreement with each county
for whom they will provide childcare. This presents a challenge for some
providers who provide care for children from multiple counties, such as
in the Denver Metropolitan area, when rates and policies differ county
by county. In instances when the licensed provider's rate is greater
than the county approved rate, the provider must not charge more than
the contracted county rate.

As part of the Consolidated Child Care Pilot, Jefferson County received
a State waiver enabling them to work with self-employed workers more
extensively than State guidelines. This additional flexibility allows
the county to require a self-employed individual to document work
activities on a calendar or a log to verify the number of hours worked.

**Record Review Process**

Colorado chose to centralize record reviews and use a team of State
staff. A stratified random sampling methodology was used to select
records for review. While the study methodology focused on
administrative errors, Colorado extended its examination to include
client and provider errors for a subsample of 35 children from the 12
counties in the sample. In Colorado, the record review process included
three phases:

-   Phase I focused on administrative error, including eligibility
    determination and redeterminations, as well as accuracy in
    determining the cost of care and the parental fee, if applicable.
    This Phase I review was achieved within the study timeline.

-   Phase II reviewed for provider error through verifying if attendance
    information supports amounts billed.

-   Phase III verified the client's employment or educational situation,
    as well as the client's circumstances to determine if changes have
    been reported as required.

The record review process focused on administrative error, including
eligibility determination and redeterminations, as well as accuracy in
determining the cost of care and the parental fee, if applicable. The
study team spent considerable time training the State review team on the
methodology to select the sample and conduct the record review process.
The training on the record review process examined the process, Record
Review Worksheet, and interrater reliability of the team that would
conduct the full record review. During the course of the record review,
the State review team questioned whether an error that did not result in
an improper payment was an error---this error would apply to the case
error rate as compared to the payment error rate. The definition of an
error was less clear around issues of timely processing and adequate
notice of termination.

The State conducted the record review in Denver. The State review team
consisted of Anne Keire (CDHS, Division of Child Care, Project Team
Leader), Charissa Hammer (CDHS, Audit Division), and Leslie Hanssen
(CDHS, OPI, Audit Division). All have expert policy and audit
experience. Several counties are using imaging as part of their
automated system. This entails scanning all supporting documentation and
linking it to the eligibility record. Those counties submitted
approximately 30 cases on CD to Denver where the team reviewed them
electronically. The team indicated that these records were easier to
review and tended to be more complete.

The State review team raised the issue of the finding would be if a
nonsampled child in the same household had an error. It was decided that
this additional information would be sent to the county but that the
finding was outside the scope of this review. The State agreed that some
form of review summary would go to the county for any error found in the
record review so that the county could take whatever corrective action
was necessary.

The full study team reviewed one low-income case and one TANF case. TANF
cases are included as part of the sample even though their eligibility
is under the control of the TANF staff in some counties, rather than the
Division of Child Care.

**Site Visit Participants**

  -------------- ------------------- ------------ -----------------------------------------------------
  **Name**       **Title and         **Phone**    **Email Address**
                 Organization**                   

  Mike Ambrose   CCB                 \(202\)      [mambrose@acf.hhs.gov](mailto:mambrose@acf.hss.gov)
                                     690--6782    

  Michael        CDHS ITS            \(303\)      <Michael.anderson@state.co.us>
  Anderson                           866--5644    

  Renae Blume    Jefferson County    \(303\)      <rblume@jeffco.us>
                                     271--4700    

  Leslie Bulicz  CDHS DCC            \(303\)      <Leslie.bullicz@state.co.us>
                                     866--4556    

  Dana DeHerrea  Jefferson County    \(303\)      <ddeherre@jeffco.us>
                                     271--4607    

  Peter Edelman  Admin Intern/ELP                 <Peter.edelman@hhs.gov>

  Mike Factor    ACF Region VII      \(816\)      <mfactor@acf.hhs.gov>
                                     426--2232    

  Leslie Hanssen CDHS Audit Division \(303\)      <Leslie.hansen@state.co.us>
                                     866--7333    

  Charissa       CDHS Audit Division \(303\)      <Charissa.hammer@state.co.us>
  Hammer                             866--7324    

  Stephen        CDHS, DCC           \(303\)      <Stephen.heiling@state.co.us>
  Heiling                            866--5943    

  Anne Keire     CDHS DCC            \(303\)      <Anne.keire@state.co.us>
                                     866--3960    

  Sara Leonard   Jefferson County    \(303\)      <lleonard@jeffco.us>
                                     271--4627    

  Valeri Limes   CDHS ITS            \(303\)      <Valeri.limes@state.co.us>
                                     866--5093    

  Art Marcotte   WRMA                \(410\)      <arcotte@intergate.com>
                                     876--1360    

  Jeannie        Jefferson County                 
  Moffett                                         

  Karen-Knoll    EC Lead ACF Region  \(303\)      <kknollmoran@acf.hss.gov>
  Moran          VIII                844--1164    

  Sarah Potter   CCB                 \(202\)      <spotter@acf.hhs.gov>
                                     205--8388    

  Jenise May     CDHS, OCYFS         \(303\)      <Jenise.may@state.co.us>
                                     866--2773    

  Mary Jo Thomas CCB                 \(202\)      <mthomas@acf.hhs.gov>
                                     205--8345    

  Larry Woods    WRMA                \(412\)      <lwoods@wrma.com>
                                     344--5488    
  -------------- ------------------- ------------ -----------------------------------------------------

**RECORD REVIEW WORKSHEET**

The Record Review Worksheet used for this site is located on the
following pages.

**Exhibit B--1. Colorado Record Review Worksheet**

  ------------------- ---------------- ----------------- -------------------- --------- --------- --------- -----------
  **Application                                                               **Phase   **Phase   **Phase   **Notes**
  Process**                                                                   I**       II**      III**     

                      Demographics     Applicant         Name                                                
                                       Information                                                          

                                                         Residence Address                                   

                                                         Mailing Address                                     

                                       Household Members Children                                            

                                                         Others (2nd Parent)                                 

                                                         Children                                            
                                                         Citizen/Documented                                 

                      **Ref. Appendix                                                                       
                      A 100,300**                                                                           

                      Qualifying Head  Meet CCCAP        Compare reported on                                 
                      of Household     Definition of     appl. Vs. CHATS                                    
                                       parent                                                               

                                                                                                             

                      **Ref. Appendix                                                                       
                      A 300**                                                                               

                      Qualifying       Activity          Applicant                                           
                      Activity                                                                              

                                                         Other Parent (if                                    
                                                         app)                                               

                                       Schedule          Applicant                                           

                                                         Other Parent (if                                    
                                                         app)                                               

                      **Ref. Appendix                                                                       
                      A 100, 320**                                                                          

                      Income           Work Income       Documented in File                                  

                                       Non-Work Income   Documented in File                                  

                                       Other Income      Disclosure                                          

                      **Ref. Appendix                                                                       
                      A 100, 320,                                                                           
                      410**                                                                                 

                      Changes          Changes properly  Change in                                           
                                       reported between  circumstance for or                                
                                       REDIT. Pds        contact documented                                 
                                                         with county worker                                 

                      **Ref. Appendix                                                                       
                      A 400**                                                                               

                                                         Income falls within                                 
                                                         county Guidelines                                  

                      **Ref. Appendix                                                                       
                      A 400**                                                                               

                      Qualifying                         Immunization                                        
                      Children                                                                              

                                                         Schedule                                            

                                                         Is Care Requested?                                  

                                                         Special Needs                                       

                                                         Provider Information                                

                      **Ref. Appendix                                                                       
                      A 330**                                                                               

                      Signatures                         Applicant                                           

                      & Dates                            Auth to Release Info                                

                                                                              **Phase   **Phase   **Phase   **Notes**
                                                                              I**       II**      III**     

                      **Ref. Appendix                                                                       
                      A 100**                                                                               

                      Client                             Signed and Dated                                    
                      Responsibility                                                                        
                      Agreement                                                                             

                      **Ref. Appendix                                                                       
                      A 100**                                                                               

                      Case Notes       Documentation of                                                     
                                       action taken,                                                        
                                       communication                                                        
                                       etc.                                                                 

  **Redetermination                                                                                         
  Process**                                                                                                 

                      Form             Redetermination   Received timely                                    
                                       form                                                                 

                      Demographics     Primary parent    Name                                               

                                                         Residence Address                                  

                                                         Mailing Address                                    

                                       Household Members Children                                           

                                                         Children                                           
                                                         Citizen/Documented                                 

                      **Ref. Appendix                                                                       
                      A 100,300**                                                                           

                      Qualifying Head  Meet CCCAP        Compare reported on                                 
                      of Household     Definition of     appl. Vs. CHATS                                    
                                       parent                                                               

                                                         Others (2nd Parent)                                

                      **Ref. Appendix                                                                       
                      A 300**                                                                               

                      Qualifying       Activity          Applicant                                          
                      Activity                                                                              

                                                         Other Parent (if                                   
                                                         app)                                               

                                       Schedule          Applicant                                          

                                                         Other Parent (if                                   
                                                         app)                                               

                      **Ref. Appendix                                                                       
                      A 100, 320**                                                                          

                      Income           Work Income       Documented in File                                 

                                       Non-Work Income   Documented in File                                 

                                       Other Income      Disclosure                                         

                      **Ref. Appendix                                                                       
                      A 400, 410**                                                                          

                      Changes          Changes properly  Change in                                          
                                       reported between  circumstance for or                                
                                       redit. Pds        contact documented                                 
                                                         with county worker                                 

                      **Ref. Appendix                                                                       
                      A 400**                                                                               

                      Qualifying                         Qualified Child                                    
                      Children                                                                              

                                                         Immunization                                       

                                                         Schedule                                           

                                                         Is Care Requested?                                 

                                                         Special Needs                                      

                                                         Provider Information                               

                      **Ref. Appendix                                                                       
                      A 330**                                                                               

                      Signatures                         Primary Parent                                     

                      & Dates                            Auth to Release Info                               

                      **Ref. Appendix                                                                       
                      A 100**                                                                               

                      Case Notes       Documentation of                                                     
                                       action taken,                                                        
                                       communication                                                        
                                       etc.                                                                 
  ------------------- ---------------- ----------------- -------------------- --------- --------- --------- -----------

+----+----------+------------+---------------+-----+-----+------+---+
| *  |          |            |               | *   | *   | **P  | * |
| *A |          |            |               | *Ph | *Ph | hase | * |
| ut |          |            |               | ase | ase | I    | N |
| ho |          |            |               | I** | I   | II** | o |
| ri |          |            |               |     | I** |      | t |
| za |          |            |               |     |     |      | e |
| ti |          |            |               |     |     |      | s |
| on |          |            |               |     |     |      | * |
| P  |          |            |               |     |     |      | * |
| ro |          |            |               |     |     |      |   |
| ce |          |            |               |     |     |      |   |
| ss |          |            |               |     |     |      |   |
| (  |          |            |               |     |     |      |   |
| Re |          |            |               |     |     |      |   |
| f. |          |            |               |     |     |      |   |
| Ap |          |            |               |     |     |      |   |
| pe |          |            |               |     |     |      |   |
| nd |          |            |               |     |     |      |   |
| ix |          |            |               |     |     |      |   |
| A  |          |            |               |     |     |      |   |
| 34 |          |            |               |     |     |      |   |
| 0) |          |            |               |     |     |      |   |
| ** |          |            |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Autho    | Timely     |               |     |     |      |   |
|    | rization | aut        |               |     |     |      |   |
|    |          | horization |               |     |     |      |   |
|    |          | (7 day     |               |     |     |      |   |
|    |          | rule)      |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Care Coded |               |     |     |      |   |
|    |          | for        |               |     |     |      |   |
|    |          | activity   |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Authorized |               |     |     |      |   |
|    |          | based on   |               |     |     |      |   |
|    |          | need       |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Parent Fee |               |     |     |      |   |
|    |          | Accurately |               |     |     |      |   |
|    |          | Assessed   |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Accurate   |               |     |     |      |   |
|    |          | T          |               |     |     |      |   |
|    |          | ermination |               |     |     |      |   |
|    |          | d          |               |     |     |      |   |
|    |          | ate/reason |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Multiple | Doc        |               |     |     |      |   |
|    | p        | umentation |               |     |     |      |   |
|    | roviders | of need    |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Authorized |               |     |     |      |   |
|    |          | based on   |               |     |     |      |   |
|    |          | need       |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Case     | Doc        |               |     |     |      |   |
|    | Notes    | umentation |               |     |     |      |   |
|    |          | of action  |               |     |     |      |   |
|    |          | taken,     |               |     |     |      |   |
|    |          | com        |               |     |     |      |   |
|    |          | munication |               |     |     |      |   |
|    |          | etc.       |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
| ** |          |            |               |     |     |      |   |
| Pr |          |            |               |     |     |      |   |
| ov |          |            |               |     |     |      |   |
| id |          |            |               |     |     |      |   |
| er |          |            |               |     |     |      |   |
| Fi |          |            |               |     |     |      |   |
| sc |          |            |               |     |     |      |   |
| al |          |            |               |     |     |      |   |
| P  |          |            |               |     |     |      |   |
| ro |          |            |               |     |     |      |   |
| ce |          |            |               |     |     |      |   |
| ss |          |            |               |     |     |      |   |
| ** |          |            |               |     |     |      |   |
|    |          |            |               |     |     |      |   |
| *  |          |            |               |     |     |      |   |
| *( |          |            |               |     |     |      |   |
| Re |          |            |               |     |     |      |   |
| f. |          |            |               |     |     |      |   |
| Ap |          |            |               |     |     |      |   |
| pe |          |            |               |     |     |      |   |
| nd |          |            |               |     |     |      |   |
| ix |          |            |               |     |     |      |   |
| A  |          |            |               |     |     |      |   |
| 36 |          |            |               |     |     |      |   |
| 0) |          |            |               |     |     |      |   |
| ** |          |            |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Fiscal   | Form       | Current for   |     |     |      |   |
|    | A        |            | test period   |     |     |      |   |
|    | greement |            |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Provider   | Signed and    |     |     |      |   |
|    |          |            | Dated         |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Agency     | Signed and    |     |     |      |   |
|    |          |            | Dated         |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Exempt:  | Provider   | Complete,     |     |     |      |   |
|    | Self-A   |            | Signed &      |     |     |      |   |
|    | ssurance |            | dated         |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Parent     | Signed and    |     |     |      |   |
|    |          |            | Dated         |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | W-9      | Form       | Complete,     |     |     |      |   |
|    |          |            | Signed &      |     |     |      |   |
|    |          |            | dated         |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Trails   | Provider   | TRAILS        |     |     |      |   |
|    |          | open       |               |     |     |      |   |
|    |          | service    |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Exempt     | TRAILS check  |     |     |      |   |
|    |          |            | complete      |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
| *  |          |            |               |     |     |      |   |
| *P |          |            |               |     |     |      |   |
| ay |          |            |               |     |     |      |   |
| me |          |            |               |     |     |      |   |
| nt |          |            |               |     |     |      |   |
| P  |          |            |               |     |     |      |   |
| ro |          |            |               |     |     |      |   |
| ce |          |            |               |     |     |      |   |
| ss |          |            |               |     |     |      |   |
| ** |          |            |               |     |     |      |   |
|    |          |            |               |     |     |      |   |
| *  |          |            |               |     |     |      |   |
| *( |          |            |               |     |     |      |   |
| Re |          |            |               |     |     |      |   |
| f. |          |            |               |     |     |      |   |
| Ap |          |            |               |     |     |      |   |
| pe |          |            |               |     |     |      |   |
| nd |          |            |               |     |     |      |   |
| ix |          |            |               |     |     |      |   |
| A  |          |            |               |     |     |      |   |
| 4  |          |            |               |     |     |      |   |
| 20 |          |            |               |     |     |      |   |
| )  |          |            |               |     |     |      |   |
| ** |          |            |               |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    | Billing  | Received   | Timely        |     |     |      |   |
|    | Form     | By County  | receipt       |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          |            | Timely        |     |     |      |   |
|    |          |            | payment       |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          |            | Correct       |     |     |      |   |
|    |          |            | Payment       |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Supporting | Provider sign |     |     |      |   |
|    |          | Doc        | in/out        |     |     |      |   |
|    |          | umentation | documentation |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          |            | Absence       |     |     |      |   |
|    |          |            | Document      |     |     |      |   |
|    |          |            | ation(allowed |     |     |      |   |
|    |          |            | /non-allowed) |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+
|    |          | Parent Fee | Timely        |     |     |      |   |
|    |          |            | Receipt       |     |     |      |   |
+----+----------+------------+---------------+-----+-----+------+---+

+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      |                         | *   | **    | *   | * |
|    |     |      |                         | *Ph | Phase | *Ph | * |
|    |     |      |                         | ase | II**  | ase | N |
|    |     |      |                         | I** |       | II  | o |
|    |     |      |                         |     |       | I** | t |
|    |     |      |                         |     |       |     | e |
|    |     |      |                         |     |       |     | s |
|    |     |      |                         |     |       |     | * |
|    |     |      |                         |     |       |     | * |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      | Correct Amount          |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     | Bil  | Overautorizaiton        |     |       |     |   |
|    |     | led/ |                         |     |       |     |   |
|    |     | Paid |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      | Under authorization     |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      | Overpayment             |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      | Underpayment            |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | **R |      |                         |     |       |     |   |
|    | ef. |      |                         |     |       |     |   |
|    | Ap  |      |                         |     |       |     |   |
|    | pen |      |                         |     |       |     |   |
|    | dix |      |                         |     |       |     |   |
|    | A   |      |                         |     |       |     |   |
|    | 430 |      |                         |     |       |     |   |
|    | **  |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | **  |      | Registration, Activity, |     |       |     |   |
|    |  ** |      | Transportation fees     |     |       |     |   |
|    |     |      | correct payment         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | **R |      |                         |     |       |     |   |
|    | ef. |      |                         |     |       |     |   |
|    | Ap  |      |                         |     |       |     |   |
|    | pen |      |                         |     |       |     |   |
|    | dix |      |                         |     |       |     |   |
|    | A   |      |                         |     |       |     |   |
|    | 430 |      |                         |     |       |     |   |
|    | **  |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
| *  |     |      |                         |     |       |     |   |
| *C |     |      |                         |     |       |     |   |
| al |     |      |                         |     |       |     |   |
| cu |     |      |                         |     |       |     |   |
| la |     |      |                         |     |       |     |   |
| ti |     |      |                         |     |       |     |   |
| on |     |      |                         |     |       |     |   |
| of |     |      |                         |     |       |     |   |
| E  |     |      |                         |     |       |     |   |
| rr |     |      |                         |     |       |     |   |
| or |     |      |                         |     |       |     |   |
| ** |     |      |                         |     |       |     |   |
|    |     |      |                         |     |       |     |   |
| *  |     |      |                         |     |       |     |   |
| *( |     |      |                         |     |       |     |   |
| Re |     |      |                         |     |       |     |   |
| f. |     |      |                         |     |       |     |   |
| Ap |     |      |                         |     |       |     |   |
| pe |     |      |                         |     |       |     |   |
| nd |     |      |                         |     |       |     |   |
| ix |     |      |                         |     |       |     |   |
| A  |     |      |                         |     |       |     |   |
| 43 |     |      |                         |     |       |     |   |
| 0) |     |      |                         |     |       |     |   |
| ** |     |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | One |      |                         |     |       |     |   |
|    | or  |      |                         |     |       |     |   |
|    | m   |      |                         |     |       |     |   |
|    | ore |      |                         |     |       |     |   |
|    | el  |      |                         |     |       |     |   |
|    | igi |      |                         |     |       |     |   |
|    | bil |      |                         |     |       |     |   |
|    | ity |      |                         |     |       |     |   |
|    | err |      |                         |     |       |     |   |
|    | ors |      |                         |     |       |     |   |
|    | dur |      |                         |     |       |     |   |
|    | ing |      |                         |     |       |     |   |
|    | st  |      |                         |     |       |     |   |
|    | udy |      |                         |     |       |     |   |
|    | per |      |                         |     |       |     |   |
|    | iod |      |                         |     |       |     |   |
|    | re  |      |                         |     |       |     |   |
|    | cor |      |                         |     |       |     |   |
|    | ded |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | Ca  |      |                         |     |       |     |   |
|    | use |      |                         |     |       |     |   |
|    | of  |      |                         |     |       |     |   |
|    | Im  |      |                         |     |       |     |   |
|    | pro |      |                         |     |       |     |   |
|    | per |      |                         |     |       |     |   |
|    | P   |      |                         |     |       |     |   |
|    | aym |      |                         |     |       |     |   |
|    | ent |      |                         |     |       |     |   |
|    | (i  |      |                         |     |       |     |   |
|    | ncl |      |                         |     |       |     |   |
|    | ude |      |                         |     |       |     |   |
|    | all |      |                         |     |       |     |   |
|    | ty  |      |                         |     |       |     |   |
|    | pes |      |                         |     |       |     |   |
|    | of  |      |                         |     |       |     |   |
|    | err |      |                         |     |       |     |   |
|    | or) |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | To  |      |                         |     |       |     |   |
|    | tal |      |                         |     |       |     |   |
|    | Amo |      |                         |     |       |     |   |
|    | unt |      |                         |     |       |     |   |
|    | of  |      |                         |     |       |     |   |
|    | Im  |      |                         |     |       |     |   |
|    | pro |      |                         |     |       |     |   |
|    | per |      |                         |     |       |     |   |
|    | P   |      |                         |     |       |     |   |
|    | aym |      |                         |     |       |     |   |
|    | ent |      |                         |     |       |     |   |
|    | dur |      |                         |     |       |     |   |
|    | ing |      |                         |     |       |     |   |
|    | rei |      |                         |     |       |     |   |
|    | vew |      |                         |     |       |     |   |
|    | mo  |      |                         |     |       |     |   |
|    | nth |      |                         |     |       |     |   |
|    | (   |      |                         |     |       |     |   |
|    | val |      |                         |     |       |     |   |
|    | ue) |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      | Total Improper Payment  | \$  | \$    | \$  |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    | To  | M    | Minus N/A               | To  | E     | Er  |   |
|    | tal | inus |                         | tal | rrors | ror |   |
|    | Fie | Tanf |                         | For | Ident | %   |   |
|    | lds |      |                         | t   | ified |     |   |
|    |     |      |                         | est |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+
|    |     |      |                         |     |       |     |   |
+----+-----+------+-------------------------+-----+-------+-----+---+

**APPENDIX C.**

**ILLINOIS**

**SITE VISIT SUMMARY**

**Overview Illinois's Child Care Program**

The Illinois Department of Human Services Bureau of Child Care and
Development (IDHS/BCCD) administers the Child Care Assistance Program
(CCAP) in the 102 counties and 22 municipalities (populations greater
than 30,000) that comprise the State of Illinois. In Federal Fiscal Year
(FFY) 2004 the CCAP provided childcare assistance to over 300,000
children, 151,000 families, and 91,000 providers.

To be eligible for child care assistance, families must have income less
than 50 percent of State Median Income (SMI) and live in Illinois, with
children under the age of 13 years (or age 19 for special care needs)
and be either employed or in an approved education and training
activity, including teen parents. In Fiscal Year (FY) 2004, all eligible
families applying for CCAP received services. There were no waiting
lists in Illinois for FY 2004.

CCAP allows families the choice to select the childcare provider that
best meets their needs. Parents may use licensed centers, licensed
family childcare homes, and group homes as well as license exempt
centers and homes. License exempt family childcare includes care
supplied by relatives and friends that meet basic legal qualifications.

There are three provider reimbursement rate structures in the State. The
rates have not increased in more than 4 years, and a recently conducted
market rate survey may result in a rate increase in 2005 subject to
budgetary considerations.

IDHS/BCCD contracts with 17 Child Care Resource and Referral (CCR&R)
agencies that provide administrative service to more than 90 percent of
CCAP clients. The CCR&R agencies are responsible for determining
customer eligibility for CCAP and processing provider billings. CCR&R
services also include outreach, information and referrals to families
and providers, processing eligibility applications, determining
eligibility and copayments, and processing provider payments.

One of the CCR&R's, the McHenry County CCR&R, provides only resource and
referral services to clients. The Community Coordinated Child Care CCR&R
in DeKalb County processes applications, redeterminations, and
certificates for their service delivery area.

The remaining ten percent of CCAP clients are serviced through the CCAP
Site Administered program, which includes contracts with 90 agencies,
including the City of Chicago's Department of Children and Youth
Services, to supply both administrative and direct services. Site
Administered Program contractors provide slots for children of
low-income families in licensed centers and homes, determine family
eligibility, and calculate family copayments. Site Administered Program
providers submit payment information to DHS for processing.

**Improper Payment Process**

CCR&Rs, Site Administered and State staff may identify inconsistencies
when initially determining eligibility during the application process,
or at the time of the redetermination. (Redetermination can occur at
every 3, 6, or 12 months depending on the case, or at anytime the CCR&R
is aware of changes in the case status). IDHS/BCCD developed a Resource
Guide to Determining Family and Provider Eligibility to provide
assistance to staff in the determination of eligibility for difficult
and challenging cases. Parents, neighbors, or the public will often
notify the CCR&R or the State with an allegation of a suspected client
or provider program violation. Reports generated from the Child Care
Tracking System (CCTS) may also trigger a review or investigation of a
client or provider. After investigation and supervisory review,
referrals are made to IDHS/BCCD of any identified overpayments.

If client or provider overpayments occur, IDHS will pursue them through
a variety of methods, including demand letters, tax intercepts,
reductions in the CCAP payment for providers, and collection agencies.
When a provider overpayment occurs, the IDHS notifies the provider and
tries to arrange a repayment schedule. This can be a one-time repayment
or, if the amount is too large, a negotiated repayment schedule.

The Program Integrity and Quality Assurance Unit monitors the CCAP
program through regularly scheduled audits of the CCR&R CCAP units and
the contracted Site Administered Program Providers.

CCAP's automated computer program, the Child Care Tracking System
(CCTS), generates numerous reports that can trigger further inquiry into
a site or program. (A further explanation of these reports is contained
later in this summary). The CCR&Rs are responsible for monitoring the
performance of the providers that provide the actual childcare.

# **Assessment of Risk**

CCAP identifies overpayments and potential fraud both preventatively
before services are authorized and after careful monitoring of services
rendered. To minimize improper payments, approval for eligibility is
performed at the front end of service delivery:

-   CCTS has multiple front-end edits built into the eligibility,
    re-determination, and billing processes. These edits prevent
    inaccuracies in eligibility determination before authorization.

-   All additional databases and screens required to adequately check
    social security numbers, parentage, child support, employment status
    and wages, TANF (Temporary Assistance for Needy Families), Food
    Stamps, and Medicaid receipt are available to the child care subsidy
    specialist staff at the time of eligibility determination from their
    terminal screen. Based upon policy found in the Child Care Program
    Manual, eligibility determination procedures requires the worker to
    go through a standardized sequence of steps or toggles through the
    linkages to these other databases to authorize care for the customer
    and the payment for the provider. Staff must use available State
    data- bases to verify information received in accordance with the
    IDHS/BCCD developed IPACS Training Manual. This information includes
    social security numbers, parentage, child support, employment status
    and wages, TANF, Food Stamps, and Medicaid. If the information
    contained in any State database is not consistent with the
    information received from the client, additional documentation is
    required.

-   IDHS/BCCD developed a resource directory for workers, *A Resource
    Guide for Determining Family and Provider Eligibility for the
    Illinois Child Care Assistance Program*, which clearly outlines all
    acceptable forms of documentation or verification needed for
    accurate determination of eligibility. The guide uses examples for
    clarification so workers can use the guide as a tool with the
    customer during the eligibility process when the client cannot
    produce the required documentation. A worker can place a case in a
    pended status while awaiting necessary documentation.

-   To address the issue of decreased provider payments due to
    inconsistent CCAP client attendance, a policy of determining the
    number of days of care paid by providing an 80 percent rule was
    established. For licensed and licensed-exempt center providers only,
    as long as the child has attended 80 percent of the monthly days
    authorized for the client, the provider will receive the full 100
    percent payment for the total number of days of care. If the child
    attends less than 80 percent of the days of care authorized, the
    provider receives payment for the total number of days of care
    actually provided. (The Center can use a combined total of eligible
    days for children in all IDHS-funded programs.)

> After services are authorized, IDHS/BCCD regularly generates up to 26
> exception type (Improper Payment) reports to highlight areas of
> potential problems or concern. These exception reports can trigger one
> of several responses: additional research on the identified
> discrepancy, a stop payment, or over payment letters to be sent to
> providers or clients. Examples of these reports include:

-   Multiple Providers with the Same Address---Multiple providers with
    the same address approved for active cases on the CCTS. There can be
    situations where more than one provider may legitimately be caring
    for multiple children at the same address, but in many cases, this
    should not be the case.

-   Clients who are also Providers---Again, this is a possible
    situation, but not likely and the report provides the information
    necessary for the CCR&Rs to verify the legitimacy of the situation.

-   Head of Household Multiple Case Report---This report is a listing of
    multiple active cases that have the same SSN for the head of
    household.

-   Client on Multiple Case Report by Name and DOB---This report is a
    listing of multiple active cases that have the same case name and
    date of birth more than once.

-   Providers that did not clear the Child Abuse and Neglect Tracking
    System (CANTS)---This report is a listing of active cases for
    providers that did not clear CANTS.

-   List of Licensed-Exempt Providers Over Capacity---This report lists
    licensed-exempt providers approved for more than three children from
    more than one active case.

> **Case Review Process**
>
> Monitors of the Program Integrity and Quality Assurance Unit as well
> as other BCCD staff conducted the case record review for the current
> study. Because of the volume in the Cook County CCR&R, Action for
> Children, the team reviewed the cases on-site. Action for Children is
> the largest CCR&R in Illinois, comprising over 60 percent of the child
> care caseload. The other CCR&Rs and site administered programs sent
> their records to IDHS/BCCD for review centrally.
>
> Illinois modified the template worksheet so that it closely mirrored
> the checklist type format that is currently in use for case record
> review in Illinois. During the site visit, the State Review Team
> selected several cases from the Action for Children CCR&R, which were
> reviewed with the study team. A discussion of each item on the Record
> Review Worksheet took place using an actual case record to determine
> exactly what information would satisfy each requirement. This process
> provided training and increased inter-rater reliability on the
> required documentation.

**Automation**

A key underpinning of the Illinois childcare system is the Child Care
Tracking System. The Illinois Child Care Tracking System is an older
mainframe based system; originally developed in 1990, however, Illinois
keeps the system up-to-date, with new edits and enhancements.
Information Systems staff from the IDHS IT Team are assigned to work
closely with BCCD staff to develop and maintain the CCTS. The BCCD and
the IT staff develop new reports and enhancements on an on-going basis.

The CCTS runs on an IBM mainframe computer using DB2 as the database.
COBOL is the programming language used for the system. The new Web
application uses JAVA Script. The system uses a secure HTTP(s)
connection for security. The CCTS provides CCR&R subsidy specialist as
well as all BCCD and TANF Program staff with a large database of
information including as example; provider payment status, approval
status, eligibility period and status, reason for childcare, and parent
co-pay amount.

All CCR&Rs utilize the DHS CCTS. Training on the system is continuous.
Processing of cases proceeds in a standardized format for all sites.
Real time tracking of eligibility, authorization and timely payment
processing occurs within the CCTS.

CCR&R staff enter not only the eligibility, re-determination, and other
supporting administrative information into the CCTS; they also enter all
of the billing information for payment into the CCTS. The system has
multiple edits built into the eligibility and re-determination
processes. Eligibility determination and re-determination checks are an
automated function, as is the evaluation of client income eligibility
and the assessment of co-pay which are on a sliding scale based upon
family size, monthly income, amount of care provided during a month, the
number of children in care, and the number of hours in care. A worker
will not process an application if the provider is not properly licensed
or if there is a record of an unregulated provider not operating legally
in the system. In addition, during the payment process, the billing
cannot complete the cycle unless the provider is recorded as a licensed
or a legally unregulated provider in the system. The Illinois Office of
the Comptroller must also certify the Provider's Tax Identification
Numbers.

For the IDHS Site Administered Provider Program, the 90 contracted
providers complete all of their eligibility determination and
re-determination functions, as well as the billing forms, and submit the
records to a CC&D unit in the Springfield, Illinois office. That unit
inputs all of the case information data as well as the billing
information into the CCTS. In July, the contracted providers will begin
using a new Web-based application that will allow them to input the
billing information for automated billing. The legally unregulated
providers can use an Integrated Voice Response (IVR) touch-tone
automated telephone system to enter monthly billing information.

Any activity pertinent to the case can be input as a case note in the
CCTS. The system automatically generates certain notices and alerts,
which are then sent via mail to the customer and/or provider.

The system also utilizes the Illinois Public Aid Communication System
(IPACS) database containing TANF, as well as some non-TANF client
information in order to insure accurate eligibility determination for
efficient service delivery. IPACS facilitates an interface with several
other systems. Although an older mainframe technology, the system allows
the worker to toggle between systems with relative ease and a minimum of
key strokes; however, the older technology does not allow an easy flow
of information between the different mainframe databases. The issue of
SSN's came up during the site visit, and when the SSN is not available,
it makes the cross systems checks much more difficult but still possible
with name searches. The CCTS interfaces with the following systems for
verifications:

-   Automated Client Information Database (ACID)---Contains TANF, Food
    Stamp and Medicaid information including: address, Case ID, SSN,
    TANF Grant Amount, Number Living Together, Income types/amounts,
    Assistance Unit members, relationships, Parent Status, and
    Responsibility and Service Plan (RASP) confirmation;

-   Automated Wage Verification System (AWVS)---Contains SSN/Name,
    employers/wages per quarter, unemployment compensation benefits.

-   Public Aid State Data Exchange (PASDX)---Interfaces with the Social
    Security Administration and yields SSI and SSA Income.

-   Key Information Delivery System (KIDS)---This exchange is with the
    Child Support & Enforcement system and includes Child Support court
    orders, Child Support payments, Relationships and Paternity
    information.

> **CCR&R Site Visit: Action for Children**

Action for Children is the largest CCR&R in Illinois, and is responsible
for the administration of the child care program in Cook County,
including the city of Chicago, and provides childcare subsidies for 60
percent of the CCR&R CCAP population. No other CCR&R exceeds 6 percent
of the CCAP population. Action for Children has four sites within the
Cook County/Chicago area and according to 2004 Illinois Child Care
Report; there were an average of 55,403 CCAP families with 108,314
children served monthly in Cook County/Chicago.

> Clients can communicate with Action for Children in three basic ways.
> The most common way is to mail in their application for childcare,
> however, they can also fax their application in or they can walk in
> and have their application taken in person. There are 175 subsidy
> specialist staff that process all of the eligibility determinations
> and re-determinations for the agency. Staff members manage all
> applications and information gathering using state-of-the-art call
> center technology, including faxed applications. There is also
> additional supervisory and support staff at the agency.
>
> Once a month each supervisor conducts a file audit of three to four
> records per worker. This is one way for the agency to work on quality
> control issues. Action for Children also has private contracts;
> however, the CCAP portion of the agency keeps the entities separate.
> The agency offers an extensive professional development program to its
> staff. This includes two Professional Associates on staff and an
> extensive catalog of courses offered to staff. Courses offered include
> Health & Safety, Physical & Intellectual Development, Social &
> Emotional Development, Relationships with Families, and Leadership,
> amongst others.
>
> State-of-the-art technologies allow for much needed efficient
> management of the more than 50,000 active childcare subsidy cases in
> Chicago/Cook County. The agency employs a number of technological
> solutions geared to effectively managing the volume of mail, calls,
> and walk-ins. Some examples of these efficiencies are; File Room
> advanced records management, and Mailroom, Fax, and Call center
> technologies:

-   File Room---All relevant documentation and communication about the
    case goes to the case file, which is bar-coded by location. The use
    of bar code technology allows staff to efficiently track and
    organize thousands of files. Upon file creation, a bar code is also
    established and attached to the file folders, which are color-coded
    for ease of retrieval and replacement. When a record is removed from
    or returned to the file room, the file is scanned and logged out or
    in, before re-filing. Any file that is not returned to the file room
    is tracked. This technology minimizes record loss and maximizes
    critical documentation location and retrieval.

-   Mail Room---All mail comes to a central mailroom in the agency. The
    mailroom is utilized for processing incoming mail by date stamping,
    sorting and routing it to the appropriate workers.

-   Fax---All faxes are routed to a single database, so that customers
    need only send faxes to one phone number. Faxes can be new
    applications, billing certificates, questions, or supporting
    documentation from a previous application. Two staff members
    electronically sort and route all faxes to the appropriate subsidy
    specialist staff. Through this technology, AFC handles hundreds of
    faxes per week and can route the time sensitive information to the
    subsidy specialist staff quickly and efficiently.

-   Call Center---Call center technology allows staff to give a timely
    and accurate response to customer's calls and questions. Managers
    monitor statistics on call volume, length of time and customer
    service. Because efficiency and timeliness are critical to accurate
    certification, staff training is continuous. Managers also monitor
    live or taped calls for quality and customer service standards.

**Illinois Site Visit Participants**

  -------------- ---------------------- ----------------- -----------------------------------------------------
  **Name**       **Title**              **Phone**         **Email Address**

  Mike Ambrose   Dep. Assoc. Comm. CCB  \(202\) 690--6782 [mambrose@acf.hhs.gov](mailto:mambrose@acf.hss.gov)

  Deborah        Monitor                \(312\) 793--1476 <Dhsd6033@dhs.state.il.us>
  Anderson                                                

  Marva Arnold   Director               \(312\) 793--5260 <Marva.arnold@dhs.state.il.us>

  Veronica       Director of Process    \(773\) 328--8309 <cacallarov@actforchildren.org>
  Cavallaro      Improvement                              

  Shannon        Assoc. Comm. CCB       (202)690--6782    <schristian@acf.hhs.gov>
  Christian                                               

  Leonette       Chief Program Officer  \(773\) 769--8029 <coatesl@actforchildren.org>
  Coates                                                  

  Jacquelyn      FR Director            (773)-481--6524   <dortchj@actforchildren.org>
  Dortch                                                  

  Julie Gray     COO                    \(773\) 769--8005 <grayj@actforchildren.org>

  Claire Gueye   FR Manager             \(773\) 481--6651 <gueyec@actforchildren.org>

  Roselyn Harris MOA II                 \(312\) 793--3615 <Dhsd6018@dhs.state.il.us>

  Mike Jones     Training               \(312\) 793--0008 <Dhsd6005@dhs.state.il.us>

  Kim Kerbrat    FR Manager             \(773\) 481--6574 <kerbratk@actforchildren.org>

  Deborah Levi   Mgr. Program           \(312\) 793--3610 <Dshe061@dhs.state.il.us>
                 Operations                               

  Francisco      Monitor                \(312\) 793--3610 <Dhsd6028@dhs.state.il.us>
  Lopez                                                   

  Richard Martin Supervisor             \(312\) 793--3610 <dhs9d48@dhs.state.il.us>

  Kathleen Penak Liaison, ACF Region V  \(312\) 353--3270 <kpenak@acf.hhs.gov>

  Zack Poimboeuf CCB                    \(202\) 205--3572 <zpoimboeuf@acf.hhs.gov>

  Shannon        CCB Director Technical \(202\) 205--8051 <srudisill@acf.hhs.gov>
  Rudisill       Asst.                                    

  Linda          Bureau Chief           \(217\) 785--2559 <Linda.saterfield@dhs.state.il.us>
  Saterfield                                              

  Mario          Fraud/Overpayments     \(312\) 793--3610 <Dhsd6098@dhs.state.il.us>
  Serritella                                              

  Stacy Splain   PSA                    \(217\) 557--1325 <Dhsd6006@dhs.state.il.us>

  Vasudev        Monitor                \(312\) 793--3610 <dhsd6028@dhs.state.il.us>
  Thakkar                                                 

  Mary Jo Thomas CCB                    \(202\) 205--8345 <mthomas@acf.hhs.gov>
  \*                                                      

  Robert Vogit   ACF Region V           \(312\) 886--4927 <rvogit@acf.hhs.gov>

  Maria Whelan   President Action for   \(773\) 769--8011 <whelanm@actforchildren.org>
                 Children                                 

  Andrew         CCB                    \(202\) 401--4795 <awilliams@acf.hhs.gov>
  Williams                                                

  Larry Woods \* WRMA                   \(412\) 344--5488 <lwoods@wrma.com>

  \* Indicates                                            
  that the                                                
  person                                                  
  participated                                            
  both days                                               
  -------------- ---------------------- ----------------- -----------------------------------------------------

**RECORD REVIEW WORKSHEET**

The Record Review Worksheet used for this site is located on the
following pages.

+------------------------+-----------------+----------------+---+------+
| **CLIENT ID#**         | **STATE:**      | **COUNTY:**    | * |      |
|                        |                 |                | * |      |
|                        |                 |                | D |      |
|                        |                 |                | A |      |
|                        |                 |                | T |      |
|                        |                 |                | E |      |
|                        |                 |                | : |      |
|                        |                 |                | * |      |
|                        |                 |                | * |      |
+========================+=================+================+===+======+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **ELEMENTS OF          | **ANALYSIS OF   | **FINDINGS     | * |      |
| ELIGIBILITY & PAYMENT  | CASE RECORD     | (3)**          | * |      |
| DETERMINATION (1)**    | (2)**           |                | R |      |
|                        |                 |                | E |      |
|                        |                 |                | S |      |
|                        |                 |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
|                        |                 |                | ( |      |
|                        |                 |                | 4 |      |
|                        |                 |                | ) |      |
|                        |                 |                | * |      |
|                        |                 |                | * |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **SECTION I. STATE     |                 |                |   |      |
| CHILD CARE PROGRAM     |                 |                |   |      |
| FORMS**                |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **100 APPLICATION      | \_\_\_\_\_ 0    |                | 1 |      |
| FORMS**                | \_\_\_\_\_ 1    |                | 0 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Determine presence,    |                 |                | 0 | No   |
| date, and completeness |                 |                |   | E    |
| of required            |                 |                |   | rror |
| eligibility forms, may |                 |                |   |      |
| include                |                 |                |   |      |
|                        |                 |                |   |      |
| \(1\) signed and dated |                 |                |   |      |
| application            |                 |                |   |      |
| form\-\-\-\-\          |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(2\) child care       |                 |                |   |      |
| agreemen               |                 |                |   |      |
| t\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(3\) voucher or       |                 |                |   |      |
| certificate\           |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(4\) provider         |                 |                |   |      |
| invoice. Specify       |                 |                |   |      |
| conditions of dollar   |                 |                |   |      |
| error, including       |                 |                |   |      |
|                        |                 |                |   |      |
| \(1\) form             |                 |                |   |      |
| expired\-\-\-\-\-\-\   |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(2\) no application   |                 |                |   |      |
| form\-\-\-\-\-\-\-\-\  |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(3\) no documentation |                 |                |   |      |
| of income and work     |                 |                |   |      |
| hours.\-\-\-\-\-\-\--  |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **SECTION II. PRIORITY |                 |                |   |      |
| GROUP PLACEMENT**      |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **200 PRIORITY GROUP   | \_\_\_\_\_ 0    |                | 2 |      |
| PLACEMENT**            | \_\_\_\_\_ 1    |                | 0 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Determine if client    |                 |                | 0 | No   |
| meets criteria of      |                 |                |   | E    |
| State-designated       |                 |                |   | rror |
| priority groups, e.g., |                 |                |   |      |
|                        |                 |                |   |      |
| \(1\) teen parent in   |                 |                |   |      |
| high                   |                 |                |   |      |
| school,\-\-\-\         |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(2\) TANF recipients  |                 |                |   |      |
| in eligible work       |                 |                |   |      |
| activities,\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(3\) working parents  |                 |                |   |      |
| on TANF                |                 |                |   |      |
| \-\-\-\-\              |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(4\) foster parents   |                 |                |   |      |
| etc.\-\-\-\-\          |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **SECTION III. GENERAL |                 |                |   |      |
| PROGRAM REQUIREMENTS** |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **300 QUALIFYING HEAD  | \_\_\_\_\_ 0    |                | 3 |      |
| OF HOUSEHOLD**         | \_\_\_\_\_ 1    |                | 0 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Determine if client    |                 |                | 0 | No   |
| meets parent           |                 |                |   | E    |
| definition (parent     |                 |                |   | rror |
| means a parent by      |                 |                |   |      |
| blood, marriage or     |                 |                |   |      |
| adoption and also      |                 |                |   |      |
| means a legal          |                 |                |   |      |
| guardian, or other     |                 |                |   |      |
| person standing in     |                 |                |   |      |
| loco parentis), e.g.,  |                 |                |   |      |
|                        |                 |                |   |      |
| \(1\)                  |                 |                |   |      |
| parent\-\-\-\-\-\-\-\  |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(2\)                  |                 |                |   |      |
| step-parent\-\         |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(3\) legal            |                 |                |   |      |
| guard                  |                 |                |   |      |
| ian\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(4\) needy caretaker  |                 |                |   |      |
| r                      |                 |                |   |      |
| elative\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(5\) spouse of same.  |                 |                |   |      |
| Child(ren) must be     |                 |                |   |      |
| citizen(s)             |                 |                |   |      |
| .\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+

+------------------------+-----------------+----------------+---+------+
| **310 RESIDENCY**      | \_\_\_\_\_ 0    |                | 3 |      |
|                        | \_\_\_\_\_ 1    |                | 1 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Determine if           |                 |                | 0 | No   |
|                        |                 |                |   | E    |
| client is a resident   |                 |                |   | rror |
| of the State and for   |                 |                |   |      |
| what                   |                 |                |   |      |
| d                      |                 |                |   |      |
| uration\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| client is a resident   |                 |                |   |      |
| of the county and for  |                 |                |   |      |
| what                   |                 |                |   |      |
| duration\-\-\-\-\-\    |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| There is an agreement  |                 |                |   |      |
| regarding eligibility  |                 |                |   |      |
| among                  |                 |                |   |      |
| coun                   |                 |                |   |      |
| ties.\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+

+------------------------+-----------------+----------------+---+------+
| **320 HOUSEHOLD        | \_\_\_\_\_ 0    |                | 3 |      |
| MEMBERS**              | \_\_\_\_\_ 1    |                | 2 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
+------------------------+-----------------+----------------+---+------+
| To receive services a  |                 |                | 0 | No   |
| child\'s parent or     |                 |                |   | E    |
| parents must be        |                 |                |   | rror |
|                        |                 |                |   |      |
| Workin                 |                 |                |   |      |
| g\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| attending a job        |                 |                |   |      |
| training or            |                 |                |   |      |
| educational            |                 |                |   |      |
| program.\-\-\          |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **330 QUALIFYING       | \_\_\_\_\_ 0    |                | 3 |      |
| CHILD**                | \_\_\_\_\_ 1    |                | 3 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Determine if child     |                 |                | 0 | No   |
| (ren) is eligible for  |                 |                |   | E    |
| services, including    |                 |                |   | rror |
|                        |                 |                |   |      |
| \(1\) younger than 13  |                 |                |   |      |
| ye                     |                 |                |   |      |
| ars\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(2\) younger than 19  |                 |                |   |      |
| years and physically   |                 |                |   |      |
| or mentally incapable  |                 |                |   |      |
| of                     |                 |                |   |      |
|                        |                 |                |   |      |
| caring for himself or  |                 |                |   |      |
| herself, or under      |                 |                |   |      |
| court                  |                 |                |   |      |
| supervis               |                 |                |   |      |
| ion\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(3\) in foster care   |                 |                |   |      |
| when defined in the    |                 |                |   |      |
| State                  |                 |                |   |      |
| Plan.\-\               |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **340 QUALIFYING       | \_\_\_\_\_ 0    |                | 3 |      |
| CARE**                 | \_\_\_\_\_ 1    |                | 4 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
+------------------------+-----------------+----------------+---+------+
| Determine hours and    |                 |                | 0 | No   |
| type of care           |                 |                |   | E    |
| authorized.            |                 |                |   | rror |
| \-\-\-\-\              |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| Determine required     |                 |                |   |      |
| number of hours of     |                 |                |   |      |
| care during authorized |                 |                |   |      |
| sche                   |                 |                |   |      |
| dule.\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **350 QUALIFYING       | \_\_\_\_\_ 0    |                | 3 |      |
| PROVIDER ARRANGEMENT** | \_\_\_\_\_ 1    |                | 5 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Determine if services  |                 |                | 0 | No   |
| are provided within a  |                 |                |   | E    |
|                        |                 |                |   | rror |
| center-based child     |                 |                |   |      |
| care                   |                 |                |   |      |
| provider\              |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| group home child care  |                 |                |   |      |
| provider\-\-\          |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| family child care      |                 |                |   |      |
| provi                  |                 |                |   |      |
| der\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| an in-home child care  |                 |                |   |      |
| provider\-\-\-\        |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| other provider of      |                 |                |   |      |
| child care services    |                 |                |   |      |
| for compensation that  |                 |                |   |      |
| Is                     |                 |                |   |      |
|                        |                 |                |   |      |
| licensed, regulated,   |                 |                |   |      |
| or registered under    |                 |                |   |      |
| applicable State or    |                 |                |   |      |
| local law. Is informal |                 |                |   |      |
| care                   |                 |                |   |      |
| included?\-\-\-\       |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **360 PROVIDER         | \_\_\_\_\_ 0    |                | 3 |      |
| REQUIREMENTS**         | \_\_\_\_\_ 1    |                | 6 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        |                 |                | E |      |
|                        |                 |                | S |      |
|                        |                 |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
+------------------------+-----------------+----------------+---+------+
| Determine if           |                 |                | 0 | No   |
| regulatory             |                 |                |   | E    |
| requirements are met.  |                 |                |   | rror |
| Regulatory             |                 |                |   |      |
| requirements means     |                 |                |   |      |
| requirements necessary |                 |                |   |      |
| for a provider to      |                 |                |   |      |
| legally provide child  |                 |                |   |      |
| care services in a     |                 |                |   |      |
| State or locality,     |                 |                |   |      |
| including registration |                 |                |   |      |
| requirements           |                 |                |   |      |
| established under      |                 |                |   |      |
| State, local, or       |                 |                |   |      |
| tribal                 |                 |                |   |      |
| law.\-\-\-\-\-\        |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+

+------------------------+-----------------+----------------+---+------+
| **SECTION IV. INCOME   |                 |                |   |      |
| AND PAYMENTS**         |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **400 INCOME\          | \_\_\_\_\_ 0    |                | 4 |      |
| **                     | \_\_\_\_\_ 1    |                | 0 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        | \_\_\_\_\_ 0    |                | E |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                | U |      |
|                        |                 |                | L |      |
|                        | \_\_\_\_\_ 0    |                | T |      |
|                        | \_\_\_\_\_ 1    |                | S |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
|                        |                 |                |   |      |
|                        | \_\_\_\_\_ 0    |                |   |      |
|                        | \_\_\_\_\_ 1    |                |   |      |
|                        | \_\_\_\_\_ 2    |                |   |      |
+------------------------+-----------------+----------------+---+------+
| Describe income        |                 |                | 0 | No   |
| documentation          |                 |                |   | E    |
| verification for each  |                 |                |   | rror |
| member of the          |                 |                |   |      |
| household. Specify     |                 |                |   |      |
| time period and all    |                 |                |   |      |
| income to be           |                 |                |   |      |
| considered, e.g.,      |                 |                |   |      |
| based on 4 weeks prior |                 |                |   |      |
| to application:        |                 |                |   |      |
| Collect the following  |                 |                |   |      |
| data:                  |                 |                |   |      |
|                        |                 |                |   |      |
| \(1\) head of          |                 |                |   |      |
| household employment   |                 |                |   |      |
| i                      |                 |                |   |      |
| ncome\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(2\) spouse           |                 |                |   |      |
| employment             |                 |                |   |      |
| income\-\              |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(3\) any changes in   |                 |                |   |      |
| income                 |                 |                |   |      |
| r                      |                 |                |   |      |
| eported\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(4\) income during    |                 |                |   |      |
| job training for       |                 |                |   |      |
| parent/caregive        |                 |                |   |      |
| r\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(5\) child support,   |                 |                |   |      |
| if included as part of |                 |                |   |      |
| income\-\-\-\-\-\      |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(6\) Food Stamps, if  |                 |                |   |      |
| included as part of    |                 |                |   |      |
| income\-\-\-\-\        |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
|                        |                 |                |   |      |
| \(7\) loss of income   |                 |                |   |      |
| during eligibility     |                 |                |   |      |
| period                 |                 |                |   |      |
| .\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **410 INCOME           | \_\_\_\_\_ 0    |                | 4 |      |
| ELIGIBILITY**          | \_\_\_\_\_ 1    |                | 1 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        |                 |                | E |      |
|                        |                 |                | S |      |
|                        |                 |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
+------------------------+-----------------+----------------+---+------+
| Determine if household |                 |                | 0 | No   |
| income meets State     |                 |                |   | E    |
| requirements (e.g.,    |                 |                |   | rror |
| family gross income    |                 |                |   |      |
| must be within 50% of  |                 |                |   |      |
| State\'s median        |                 |                |   |      |
| income).               |                 |                |   |      |
| \-\-\                  |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **420 PAYMENTS,        | \_\_\_\_\_ 0    |                | 4 |      |
| GENERAL**              | \_\_\_\_\_ 1    |                | 2 |      |
|                        | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        |                 |                | E |      |
|                        |                 |                | S |      |
|                        |                 |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
+------------------------+-----------------+----------------+---+------+
| Determine if payments  |                 |                | 0 | No   |
| were made. A sliding   |                 |                |   | E    |
| fee scale based on     |                 |                |   | rror |
| income and the size of |                 |                |   |      |
| the family and may be  |                 |                |   |      |
| based on other factors |                 |                |   |      |
| as                     |                 |                |   |      |
| appropriate.\-\-\      |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
| **430                  | \_\_\_\_\_ 0    |                | 4 |      |
| P                      | \_\_\_\_\_ 1    |                | 3 |      |
| AYMENTS/COMPUTATIONS** | \_\_\_\_\_ 2    |                | 0 |      |
|                        |                 |                | R |      |
|                        |                 |                | E |      |
|                        |                 |                | S |      |
|                        |                 |                | U |      |
|                        |                 |                | L |      |
|                        |                 |                | T |      |
|                        |                 |                | S |      |
+------------------------+-----------------+----------------+---+------+
| Determine difference   |                 |                | 0 | No   |
| in dollar amount of    |                 |                |   | E    |
| child care benefits    |                 |                |   | rror |
| authorized versus the  |                 |                |   |      |
| amount that should     |                 |                |   |      |
| have been              |                 |                |   |      |
| authorized\--indicate  |                 |                |   |      |
| if it is an            |                 |                |   |      |
| overpayment or         |                 |                |   |      |
| underpayment.\         |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-\ |                 |                |   |      |
| -\-\-\-\-\-\-\-\-\-\-- |                 |                |   |      |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 1 | Cl   |
|                        |                 |                |   | ient |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+
|                        |                 |                | 2 | Ag   |
|                        |                 |                |   | ency |
|                        |                 |                |   | E    |
|                        |                 |                |   | rror |
+------------------------+-----------------+----------------+---+------+

**APPENDIX D.**

**OHIO**

**SITE VISIT SUMMARY**

**Overview of Ohio's Child Care Program**

Child care is provided through several service options in the State of
Ohio, including:

-   Child care centers;

-   In-home aides;

-   Type A providers, which are family home providers who serve 7--12
    children, 4--12 children at one time, and 4 or more of those
    children are younger than 2 years of age; and

-   Type B providers, which are subsidized family home providers who
    serve one to six children at one time, in which no more than three
    children are under the age of 2 years at one time.

Ohio's child care program is a State-supervised, county-administered
system. The Ohio Department of Job and Family Services, Office for
Children and Families, Bureau of Child Care and Development administers
the child care program. The department is responsible for licensing,
monitoring, and inspecting child care centers and type A providers for
basic health and safety regulation compliance. The 88 County Departments
of Job and Family Services are responsible for providing subsidized
child care, including eligibility determination, certification, and
monitoring. The counties are also responsible for the inspection of type
B providers and in-home aides, as well as payments to providers.

Four counties---Cuyahoga, Defiance, Fulton, and Henry---have contracted
out some portion of their child care program. Cuyahoga County maintains
eligibility determination, but uses a private nonprofit agency to
conduct the certification of type B providers. Defiance, Fulton, and
Henry Counties enter into contracts with nonprofit agencies to assume
the eligibility determination responsibilities, as well as the
certification process. The remaining 84 counties in Ohio directly
administer the eligibility determination for child care.

The largest counties in Ohio are Cuyahoga, Franklin, Hamilton, Summit,
Lucas, and Montgomery, which represent 61 percent of the State's child
care cases and approximately

80 percent of the overall child care budget. According to statewide
statistics provided by the department, as of January 2005 there were
80,322 children receiving subsidized child care; 47,312 families
received a monthly subsidy, totaling \$29,130,746. More than 13,000
certified home providers and 4,000 centers and type A homes were part of
the system.

As with most States, Ohio pays for some child care with Temporary
Assistance for Needy Families (TANF) pass-through funds. In addition,
approximately 100 cases receive funding through the Social Services
Block Grant for special needs and protective services.

**Improper Payments Process**

Because Ohio is a State-supervised, county-administered State, counties
conduct their own monitoring reviews to determine eligibility accuracy.
Eligibility staff, providers, and members of the community can make
fraud referrals. In some counties, cases are also subject to review by
unit supervisors. When overpayments occur, counties refer the cases for
collection, prosecution, or both.

Staff from the Office of Children and Families, Bureau of Child Care and
Development visit each county twice during a 15-month period. The
State-level reviews cover all areas of eligibility, notification, and
documentation. Each visit includes reviews of 10--15 cases for
eligibility and redetermination. When the reviewer encounters a
discrepancy between data in the record and State and county policy, the
county receives notification and is given time to respond. The State
then conducts followup to review any action taken. The second visit also
covers a review of the Family Child Care Certifications for type B
family homes certified by the county.

Discovery of most overpayments occurs at redetermination, by complaint,
or the worker questioning a situation. When these circumstances occur,
the county will investigate and take the appropriate action.

**Assessment of Risk**

Policy requirements established by the State can vary by county
resulting in variations in interpretation. This can present a major
challenge to State-level monitoring of improper payments in Ohio. The
following are examples of this variation:

-   Ohio allows both face-to-face and mail-in applications for child
    care. There is debate over the level of risk each poses to the
    program. A mail-in application can take longer than face-to-face
    application due to the time required to gather the proper
    documentation. It is also possible that staff would apply a looser
    standard of documentation to mail-in applications because of the
    difficulty of obtaining the documentation.

-   Counties have the flexibility to require additional documentation
    for eligibility. This variation in documentation can lead to uneven
    results in eligibility determination across counties.

-   A client's eligibility is valid for 12 months. At the sixth month of
    eligibility, the County Departments of Job and Family Services
    conduct a review of the client's income; however, a full
    redetermination does not take place until a full year has elapsed.
    Increases to the copay occur only at the 6-month review, but copays
    can decrease as circumstances warrant. Conducting a redetermination
    only for copay at 6 months creates the potential opportunity for
    improper payments to not be determined until the full review is
    conducted at the end of the year. On the other hand, the staff
    resources to conduct a full review every 6 months could mean the
    counties would need to hire more staff, which would thus increase
    the cost of the program.

Most counties contract with their child care providers; however, some
counties (such as Cuyahoga) do not contract, and instead use a
Memorandum of Understanding. A Memorandum of Understanding may not carry
the same weight as an actual contract, but can afford additional
flexibility to both the State and the contractor.

Certain client eligibility policies and procedures are similar across
counties, allowing for systematic monitoring of administrative error
throughout the State. These eligibility procedures include the
following:

-   Most counties have a 90-day delay between service month and the
    actual payment.

-   Ohio has an income limit for applicants. If the client's income
    increases during the 6-month period, the copay remains until the
    6-month mark to avoid a "cliff effect." For example, an applicant
    obtains a job that requires child care, and then receives a raise.
    Without a limit, the increase could cause the applicant to lose
    their care. The copay can increase only at the 6-month review or
    12-month redetermination, but the county can reduce the client's
    copay whenever the client demonstrates a reduction in income
    sufficient to warrant a reduction in copay.

-   Clients are required to report any changes that influence
    eligibility, such as employment, household size, or income within 10
    days.

-   Full-time daily rates are for periods of time greater than 5 hours,
    while part-time daily rates are for periods less than 5 hours. The
    average number of care days per month is 22.

-   A parent pays the assessed copayment to the provider first, then the
    provider bills for the remainder of the cost of care up to the limit
    set by the county. It is the provider's responsibility to collect
    the parental fee. If notified that a parent is not paying the fee
    and has not initiated a schedule to pay the fee, the county can
    close the case within 30 days.

-   Counties provide payments to child care providers. Providers submit
    attendance forms that are reconciled prior to payment. This process
    is less costly, but it does not eliminate error.

-   A single system tracks all providers and ensures that each provider
    has a unique identifier, thus minimizing potential double-billing
    situations. County staff maintain client and provider information in
    the system. While the business office is responsible for issuing the
    payments, it cannot raise the payment amount.

-   A provider receives a license after going through a process of
    background checks and other licensing procedures. Unlicensed
    providers, usually family, friends, and neighbors aged 18 years or
    older, must undergo limited certification criteria and sign
    contracts with the county to provide care. Ohio uses a large number
    of certified unlicensed providers.

**Automation**

The child care program uses several statewide systems including the 3299
system, Injury and Incident Tracking System, and Licensing Systems.
These systems are mainframe, character-based systems that all counties
must utilize. Although each of these systems contains information
pertaining to some aspect of the child care program, these systems do
not interrelate.

The 3299 system is Ohio's child care system. It captures all child care
activity, including eligibility and redetermination, cost of care, and
copay information. It also maintains the authorized days of care and
service days. All of the counties are required to maintain their child
care data by entering data into the 3299 system.

The Injury and Incident Tracking System maintains information on any
injury to a child while in child care and it also tracks the
circumstances of the injury. For example, the system tracks that a child
suffered a bruise on his forehead after he fell while running to greet
his mother at the end of the day. The child care division compiles
reports from this system to determine the types of injuries that occur,
how they occur, why they occur, and when they occur. The division shares
this information with the centers and home so that they can minimize the
circumstances when most of the injuries occur. Using the previous
example, the sites can take steps to monitor more closely the entering
and exiting of the children to prevent them from running, minimizing the
opportunity for accidents, and provide training to staff on steps to
prevent such injuries.

The Licensing System maintains data on all licensed centers and type A
providers. This information helps satisfy the provider requirement
section of the study; thus, the State will complete part of the review
outside of the actual case record. Such files provide efficiencies in
the review process by eliminating redundant efforts of the review staff.
Although workers can enter incorrect provider ID's, the efficiencies
gained are considerable. With accurate licensing information available
when conducting a record review, a reviewer can ensure that the provider
was licensed for the service authorized.

An additional data source that is useful for the child care system is
Ohio's CRIS-E system, which is the State system that supports the Food
Stamps, TANF, and Medicaid programs. This system is more comprehensive,
but does not include or interface with the 3299 system. The CRIS-E
system calculates eligibility based on TANF and Food Stamps rules. It
also performs an automated check between programs, excluding child care
because the rules are too dissimilar and were not fully integrated.
Workers in the child care program can check the CRIS-E system to see if
clients are also receiving TANF or Food Stamps benefits; however, as
there is no interface, the user must move back and forth between
systems. In addition, because the systems are older mainframe systems,
their technology does not allow data to transfer easily between system
and common Microsoft Windows techniques, such as "cut and paste," which
are not possible with the CRIS-E system.

The State plans to modify the CRIS-E system and include the child care
3299 system into the modified design. Plans also include the use of
imaging as a part of the overall upgrade. Imaging is the process of
scanning all documentation that applies to the record, including signed
application and pay stubs, and electronically indexing the documents to
the application or redetermination. When the case is accessed any time
after this process, all documentation is then available on the screen.
Imaging can increase accountability by avoiding loss of documentation
and it cuts down on photocopying and storage costs. Additional
information about automation in Cuyahoga and Summit Counties is included
in sections below.

Most of the large counties and some of the smaller counties have
developed or purchased their own automation systems. These range from
full eligibility systems to smaller tracking systems that do not feature
automated eligibility determination. This situation creates a high
potential for inaccuracies because the county staff first enter all of
the information into the county system and then reenter the required
information into the 3299 system. Approximately 12 counties interface
data from their individual county-based systems and upload the data to
the 3299 system.

A number of counties use a commercial software product, the Automated
Budgeting and Claims Updating System (ABACUS) as their claims system.
Its purpose is to calculate and act as an accounts receivable system for
overpayments. Approximately 20--30 counties in the State utilize the
ABACUS system and meet regularly as part of a users' group. These
counties download State utilization data necessary for counties to
complete their payments to providers. The download occurs overnight,
keeps the systems out of sync for at least 1 day, and requires that
county workers enter eligibility information into both the county and
the State 3299 systems.

The State produces a number of child care reports and publishes them to
a fileserver called Control-D. Counties can access this server to
retrieve these reports. The division also publishes information on
center and type A provider inspections to a database call MAPS. This
database is available to the counties and sites through the Internet.
The counties also enter fiscal data into the State's COR-e system, which
is a file server that houses the county fiscal and billing data.

The State uses data from its various systems to meet Federal reporting
requirements. In addition, data from the various State systems feed a
data warehouse. The State uses COGNOS, a data warehousing software, to
manipulate the data to produce reports not only from the unique systems
but also across systems. (See exhibit 1 for a diagram of automation in
Ohio.)

# **County Site Visit---Cuyahoga County**

The visit to Cuyahoga County included a demonstration of the
county-developed Calculator System. The system does more than basic
mathematical eligibility calculations; it collects, manages, and
captures all of the relevant information needed for either an initial
child care application or a redetermination. It also automatically
calculates the eligibility determination

**Exhibit D--1. Automation in Ohio**

![](media/image1.wmf){width="1.1458333333333333in"
height="1.073611111111111in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.073611111111111in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.073611111111111in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.0194444444444444in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.0194444444444444in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.073611111111111in"}![](media/image2.wmf){width="1.125in"
height="1.104861111111111in"}![](media/image1.wmf){width="1.0840277777777778in"
height="0.46805555555555556in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.073611111111111in"}![](media/image1.wmf){width="1.1458333333333333in"
height="0.46805555555555556in"}![](media/image1.wmf){width="1.1458333333333333in"
height="1.073611111111111in"}

and copay. A Cuyahoga County eligibility worker initially developed the
calculator as an Excel spreadsheet to help eliminate basic math errors
in subsidy calculations. The systems staff in the county expanded the
Calculator System logic to create notices and capture case history and
household demographics. The current Calculator System utilizes Visual
Basic and a SQL database using Windows technology, including drop-down
menus to assist the eligibility and redetermination process.

The Calculator System includes parent income and work schedule
information. The system helps to match the schedules with provider
billing records, identifying potential improper payments. It links to an
independent imaging system, the Electronic Record Information Management
System (eRIMS). The eRIMS works with several other county systems, such
as TANF and Food Stamps. It collects scanned images of all
documentation, indexes the forms, and attaches them to the proper
record. When accessing a record, all supporting documentation is
available on-line. In the TANF and Food Stamps system, once the
application is completed, the eRIMS system application allows the client
to sign the electronic application using a stylus and touch
screen-signing pad. The county plans this functionality for the child
care program in the future.

The county estimates a paper reduction of 45 percent with the advent of
eRIMS. The intention of the study team was to look closely at these
technology efforts on the selected cases; however, these technologies
were not in effect during October 2004, the study period.

The eRIMS system went live in April 2005 and the county is diligently
working to scan the backlog into the system, particularly the older
cases. The county keeps the scanning equipment that it currently owns in
use for a full 8 hours a day and is looking at purchasing additional
scanners to cut down on the backlog. It is too early to tell at this
point how well the new technology will meet the county's expectation.

County eligibility staff who conduct interactive interviews with clients
use the Calculator System. The client can view the results of the
determination, including any assessed copay. Hard copy documents
necessary for determining eligibility are scanned and indexed. All other
electronic documentation that exists for other programs will display for
the worker to use during the eligibility determination. To date, the
county has not experienced delays or backlogs and states that it takes
the same amount of time doing the interactive interview as it does
without using the Calculator System. Cuyahoga County conducts all
walk-in interviews, approximately 15 percent, using the interactive
interview method; the remainder of the applications are mailed in.

The Calculator System and eRIMS house the documents for 7 days before
actual production to give the worker time to make any additional
changes. The system produces local forms on demand and contains an
online policy manual and worker guide. Currently, double data entry is
still necessary so that the county can provide the needed data for the
State's 3299 system for voucher issuance. The State and county are
working to develop an interface between the Calculator System and the
3299 system.

There is some form of eligibility review on every case in the nonTANF
caseload. Every application is subject to review as are a random number
of recertifications. The supervisors conduct the reviews. In addition,
the county clears each application with the State CRIS-E system to
determine if the client in question is receiving another benefit in
another program.

Four county examiners and 35 investigators in the county deal with
improper payments in all of their programs. The county conducts most of
the reviews in the TANF and Food Stamps area, but the examiners are
beginning to work more in child care.

**County Site Visit---Summit County**

Summit County uses ABACUS as their claims system. Its purpose is to
calculate and act as an accounts receivable system for overpayments. The
county also uses a Paradox System for tracking child care. The State
prohibits any standalone system from transferring or sharing information
with their income maintenance system, CRIS-E, which means double entry.
However, a reverse interface moves State data into the ABACUS system.
Workers in Summit County must calculate the eligibility independently
and then enter it into the Paradox System. After completing their
eligibility work in the Paradox System, the workers must also enter the
information into the State 3299 system.

Each county must have a fraud plan and Summit County is a leader in the
State for its improper payments and fraud programs. The county has
dedicated considerable resources to fraud identification.

Child care centers and group homes receive licenses through the State
while the county certifies family homes and limited care. Every year the
eligibility unit supervisors conduct regular record reviews of all child
care centers. They review 3 months of billing records for 10 percent of
the children receiving service. If warranted, the county will review all
records. The county receives most complaints anecdotally and these
complaints can trigger an investigation. The county investigates
overpayments of \$1,200 in-house, while overpayments in excess of the
\$1,200 threshold are sent to the Sheriff's office for investigation by
the Prosecutor.

One unit controls provider overpayments and three field investigators
investigate cases of suspected client fraud. Prosecution is a common
outcome. The department possesses the authority to issue charges and
warrants.

**Record Review Process**

After representatives from the State completed their version of the
Record Review Worksheet, four staff persons completed the record
reviews---one staff person from the child care monitoring unit and three
from the quality control unit. (See the following section for the Ohio
Record Review Worksheet.) The reviewer who conducted the review in
Cuyahoga County was from the child care unit and worked with Cuyahoga
County on a regular basis. The review for Cuyahoga County intended to
pay particular attention to those records scanned into the county eRIMS
system, but due to the review period of October, 2004, these records are
not yet scanned into the system. The county is focusing on current
records and scanning history as time permits. The review staff were
familiar with program requirements, policy, and local procedures.
Because of the number of records pulled from some of the large counties,
the review team reviewed some records on-site and others at the central
office in Columbus.

A subsample of the records received a second review as an additional
level of quality control. When reviewers encountered errors in the
records, counties received notification so correction action could be
taken.

As in most States, TANF recipients' cases pose a unique problem for the
child care program because the income maintenance staff handle the
eligibility determination. The record review looked at the CRIS-E
documentation as well as the hard copy case record to determine if other
services impact the child care services being provided.

**Site Visit Participants**

+-----------+-------------+----------+--------------------+-----------+
| **Name**  | **Title and | *        | **Email**          | **Sites   |
|           | Org         | *Phone** |                    | Visited** |
|           | anization** |          |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Michelle  | Program     | \(614\)  | <albastm@          | Columbus  |
| Albast    | Ad          | 4        | odjfs.state.oh.us> |           |
|           | ministrator | 66--7762 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| David     | Management  | \(614\)  | <bastind@          | Columbus  |
| Bastian   | Analyst     | 4        | odjfs.state.oh.us> |           |
|           |             | 46--7767 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Pat Cain  | Benefit     | \(740\)  | <cainp@            | Columbus  |
|           | Recovery    | 7        | odjfs.state.oh.us> |           |
|           | Specialist  | 97--7927 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Michael   | Quality     | \(614\)  | <Caygiln@          | Columbus  |
| Caygill   | Assessment  | 3        | odjfs.state.oh.us> |           |
|           |             | 87--0464 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Tom       | MIS Manager | \(216\)  | <Dresct01@         | Cuyahoga  |
| Drescher  |             | 9        | odjfs.state.oh.us> |           |
|           |             | 87--8299 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Roger     | Program     | \(614\)  | <edensr@           | Columbus  |
| Edens     | Developer   | 4        | odjfs.state.oh.us> |           |
|           |             | 66--7762 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Sandy     | Child Care  | \(216\)  | [Fostes01          | Cuyahoga  |
| Foster    | Ce          | 9        | @odjfs.state.oh.us |           |
|           | rtification | 87--8462 | ](mailto:Foster01@ |           |
|           | Manager     |          | odjfs.state.oh.us) |           |
+-----------+-------------+----------+--------------------+-----------+
| Karen     | Center      | \(216\)  | <fuseck@           | Cuyahoga  |
| Fuseck    | Manger      | 9        | odjfs.state.oh.us> |           |
|           | Health Care | 87--6929 |                    |           |
|           | Resources   |          |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Terrie    | BCCD Bureau | \(614\)  | <haret@            | Columbus  |
| Hare      | Chief       | 6        | odjfs.state.oh.us> |           |
|           |             | 44--1043 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Mary A.   | Asst.       | \(330\)  | [Harpe             | Summit    |
| Harper    | Deputy      | 6        | m@odjfs.state.oh.u |           |
|           | Director    | 43--7140 | s](mailto:Harperm@ |           |
|           |             |          | adjfs.state.oh.us) |           |
|           | Admin.      |          |                    |           |
|           | Services    |          |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Matt      | MIS         | \(216\)  | <herinw@           | Cuyahoga  |
| Hering    |             | 9        | odjfs.state.oh.us> |           |
|           |             | 87--6689 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Michelle  | Chief,      | \(614\)  | <hornm@            | Columbus  |
| Horn      | Bureau of   | 4        | odjfs.state.oh.us> |           |
|           | Program     | 66--7737 |                    |           |
|           | Integrity   |          |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Moniquin  | CCB         | \(202\)  | <mhu               | Columbus  |
| Huggins   |             | 6        | ggins@acf.hhs.gov> |           |
|           |             | 90--8490 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Art       | WRMA        | \(240\)  | <                  | Cuyahoga, |
| Marcotte  |             | 7        | Art.Marcotte@montg | Summit,   |
|           |             | 77--4088 | omerycountymd.gov> | Columbus  |
+-----------+-------------+----------+--------------------+-----------+
| Carla     | Case        | \(614\)  | <millsc@           | Columbus  |
| Mills     | Management  | 9        | odjfs.state.oh.us> |           |
|           | Analyst     | 95--3755 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Rich      | Assistant   | \(330\)  | [owensr            | Summit    |
| Owens     | Director    | 6        | 03@odjfs.state.oh. |           |
|           | Asst.       | 43--7329 | us](mailto:owensr@ |           |
|           | Director,   |          | odjfs.state.oh.us) |           |
|           | Admin. &    |          |                    |           |
|           | Finance     |          |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Fred      | ODJFS       | \(216\)  | <phillf@           | Cuyahoga, |
| Phillips  |             | 7        | odjfs.state.oh.us> | Summit    |
|           |             | 87--3600 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| John      | Program     | \(330\)  | <Robinj09@         | Summit    |
| Robinson  | Manager     | 6        | odjfs.state.oh.us> |           |
|           | Admin.      | 43--7445 |                    |           |
|           | Services    |          |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Dave      | Case        | \(614\)  | <Sizemd01@         | Columbus  |
| Sizemore  | Management  | 6        | odjfs.state.oh.us> |           |
|           | Analyst     | 44--7705 |                    |           |
+-----------+-------------+----------+--------------------+-----------+
| Barbara A | Field       | \(330\)  | [Sommeb01          | Summit    |
| S         | Inv         | 6        | @odjfs.state.oh.us |           |
| ommerfelt | estigations | 43--7002 | ](mailto:Sommob01@ |           |
|           | Supervisor  |          | odjfs.state.oh.us) |           |
+-----------+-------------+----------+--------------------+-----------+
| Diana     | Accts.      | \(330\)  | [straighd          | Summit    |
| Straight  | Receivable  | 6        | @odjfs.state.oh.us |           |
|           | Supervisor  | 43--7150 | ](mailto:straighd@ |           |
|           |             |          | odjsf.state.oh.us) |           |
+-----------+-------------+----------+--------------------+-----------+

  ------------- ---------------- ------------ ------------------------------ ------------
  **Name**      **Title and      **Phone**    **Email**                      **Sites
                Organization**                                               Visited**

  Mary Jo       CCB              \(202\)      <mthomas@acf.hhs.gov>          Columbus
  Thomas                         205--08345                                  

  Martha        Program Manager  \(330\)      <Tomasm@odjfs.state.oh.us>     Summit
  Tomasik       EAC-Finance      643--7521                                   

  Larry Woods   WRMA             \(412\)      <lwoods@wrma.com>              Cuyahoga,
                                 344--5488                                   Summit,
                                                                             Columbus

  Gene Wyne     Child Care       \(330\)      <wynee@odjfs.state.oh.us>      Summit
                Eligibility      643--7881                                   
                Supervisor                                                   

  Hich Yamagata Region V Child   \(312\)      <hyamagata@acf.hhs.gov>        Columbus
                Care Specialist  353--5165                                   

  Steve         Deputy Director  \(330\)      <Zimmes02@odjfs.state.oh.us>   Summit
  Zimmerman                      643--7119                                   
  ------------- ---------------- ------------ ------------------------------ ------------

**RECORD REVIEW WORKSHEET**

The Record Review Worksheet used for this site is located on the
following pages.

**Exhibit D--2. Ohio Record Review Worksheet**

+------------+---+-------------------+------------+-----------+-----------+
| *          | * |                   | **         | **        | *         |
| *ELEMENT** | * |                   | ANALYSIS** | FINDING** | *RESULT** |
|            | A |                   |            |           |           |
|            | U |                   |            |           |           |
|            | T |                   |            |           |           |
|            | H |                   |            |           |           |
|            | O |                   |            |           |           |
|            | R |                   |            |           |           |
|            | I |                   |            |           |           |
|            | T |                   |            |           |           |
|            | Y |                   |            |           |           |
|            | * |                   |            |           |           |
|            | * |                   |            |           |           |
+------------+---+-------------------+------------+-----------+-----------+
| A          | J |                   |            |           |           |
| pplication | F |                   |            |           |           |
|            | S |                   |            |           |           |
|            | 1 |                   |            |           |           |
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|            |   |                   |            |           |           |
|            | J |                   |            |           |           |
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|            | 4 |                   |            |           |           |
|            | 0 |                   |            |           |           |
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|            | 6 |                   |            |           |           |
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|            | & |                   |            |           |           |
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+------------+---+-------------------+------------+-----------+-----------+
| Priority   | D |                   |            |           |           |
| Group      | i |                   |            |           |           |
|            | s |                   |            |           |           |
|            | p |                   |            |           |           |
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+------------+---+-------------------+------------+-----------+-----------+
| Caretaker  | P |                   |            |           |           |
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+------------+---+-------------------+------------+-----------+-----------+
| Residency  | P |                   |            |           |           |
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+------------+---+-------------------+------------+-----------+-----------+
| Household  | P |                   |            |           |           |
| Members    | a |                   |            |           |           |
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|            | 3 |                   |            |           |           |
|            | 8 |                   |            |           |           |
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|            | 6 |                   |            |           |           |
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|            | C |                   |            |           |           |
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|            | D |                   |            |           |           |
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+------------+---+-------------------+------------+-----------+-----------+
| Qualifying | P |                   |            |           |           |
| Child      | a |                   |            |           |           |
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|            | 1 |                   |            |           |           |
|            | o |                   |            |           |           |
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|            | 2 |                   |            |           |           |
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|            | J |                   |            |           |           |
|            | F |                   |            |           |           |
|            | S |                   |            |           |           |
|            | 1 |                   |            |           |           |
|            | 1 |                   |            |           |           |
|            | 3 |                   |            |           |           |
|            | 8 |                   |            |           |           |
|            |   |                   |            |           |           |
|            | D |                   |            |           |           |
|            | o |                   |            |           |           |
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|            | u |                   |            |           |           |
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|            | n |                   |            |           |           |
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|            | d |                   |            |           |           |
|            |   |                   |            |           |           |
|            | 2 |                   |            |           |           |
|            | - |                   |            |           |           |
|            | 1 |                   |            |           |           |
|            | 6 |                   |            |           |           |
|            | - |                   |            |           |           |
|            | 3 |                   |            |           |           |
|            | 0 |                   |            |           |           |
|            | ( |                   |            |           |           |
|            | E |                   |            |           |           |
|            | ) |                   |            |           |           |
|            | ( |                   |            |           |           |
|            | J |                   |            |           |           |
|            | ) |                   |            |           |           |
|            |   |                   |            |           |           |
|            | r |                   |            |           |           |
|            | u |                   |            |           |           |
|            | n |                   |            |           |           |
|            | n |                   |            |           |           |
|            | i |                   |            |           |           |
|            | n |                   |            |           |           |
|            | g |                   |            |           |           |
|            | r |                   |            |           |           |
|            | e |                   |            |           |           |
|            | c |                   |            |           |           |
|            | o |                   |            |           |           |
|            | r |                   |            |           |           |
|            | d |                   |            |           |           |
|            | s |                   |            |           |           |
|            |   |                   |            |           |           |
|            | F |                   |            |           |           |
|            | A |                   |            |           |           |
|            | C |                   |            |           |           |
|            | S |                   |            |           |           |
|            | I |                   |            |           |           |
|            | S |                   |            |           |           |
+------------+---+-------------------+------------+-----------+-----------+
| Qualifying |   | JFS 1138          |            |           |           |
| Care       |   |                   |            |           |           |
|            |   | Documentation     |            |           |           |
|            |   | such as pay       |            |           |           |
|            |   | stubs, letter     |            |           |           |
|            |   | from employer,    |            |           |           |
|            |   | school schedule,  |            |           |           |
|            |   | travel time.      |            |           |           |
|            |   |                   |            |           |           |
|            |   | County            |            |           |           |
|            |   | authorization     |            |           |           |
|            |   | form              |            |           |           |
|            |   |                   |            |           |           |
|            |   | 2-16-30(F)        |            |           |           |
+------------+---+-------------------+------------+-----------+-----------+

+-------------+-------------------+------------+-----------+-----------+
| **ELEMENT** | **AUTHORITY**     | **         | **        | *         |
|             |                   | ANALYSIS** | FINDING** | *RESULT** |
+-------------+-------------------+------------+-----------+-----------+
| Qualifying  | Disposition page  |            |           |           |
| Provider    | of JFS 1138       |            |           |           |
| Arrangement |                   |            |           |           |
|             | County            |            |           |           |
|             | authorization     |            |           |           |
|             | form billed/paid  |            |           |           |
|             | correctly, ask    |            |           |           |
|             | for fiscal        |            |           |           |
|             | information for   |            |           |           |
|             | each              |            |           |           |
|             |                   |            |           |           |
|             | 2-16-44(A)        |            |           |           |
+-------------+-------------------+------------+-----------+-----------+
| Provider    | Disposition page  |            |           |           |
| R           | of JFS 1138       |            |           |           |
| equirements |                   |            |           |           |
|             | County            |            |           |           |
|             | authorization     |            |           |           |
|             | form              |            |           |           |
+-------------+-------------------+------------+-----------+-----------+
| Income      | 2-16-34           |            |           |           |
|             | (C)(D)(F)(G)(H)   |            |           |           |
|             |                   |            |           |           |
|             | Supporting        |            |           |           |
|             | documentation in  |            |           |           |
|             | case record       |            |           |           |
|             |                   |            |           |           |
|             | Agency            |            |           |           |
|             | calculation       |            |           |           |
|             | showing method    |            |           |           |
|             | used to arrive at |            |           |           |
|             | gross monthly     |            |           |           |
|             | income.           |            |           |           |
+-------------+-------------------+------------+-----------+-----------+
| Income      | CCMTL #55A,       |            |           |           |
| Eligibility | copayment 150% &  |            |           |           |
|             | 165% of 2003 FPL  |            |           |           |
|             |                   |            |           |           |
|             | CCMPL #9, 150%    |            |           |           |
|             | and 165% of the   |            |           |           |
|             | 2004 FPL.         |            |           |           |
|             |                   |            |           |           |
|             | Pay source        |            |           |           |
|             | code342           |            |           |           |
|             |                   |            |           |           |
|             | Franklin 185%,    |            |           |           |
|             | code 899          |            |           |           |
+-------------+-------------------+------------+-----------+-----------+
| Payments    | JFS 1224 Contract |            |           |           |
|             |                   |            |           |           |
|             | 2-16-01(N)(O)     |            |           |           |
|             |                   |            |           |           |
|             | 2-16-             |            |           |           |
|             | 41(A)(B)(D)(E)(F) |            |           |           |
+-------------+-------------------+------------+-----------+-----------+
| Copayment   | CCMTL #55A        |            |           |           |
| C           | Copayment table   |            |           |           |
| omputations | effective 6/9/03  |            |           |           |
|             |                   |            |           |           |
|             | County            |            |           |           |
|             | authorization     |            |           |           |
|             | form              |            |           |           |
+-------------+-------------------+------------+-----------+-----------+
| Payment     | Days and hours of |            |           |           |
| C           | care authorized   |            |           |           |
| omputations | by the county vs. |            |           |           |
|             | days and hours of |            |           |           |
|             | em                |            |           |           |
|             | ployment/training |            |           |           |
|             | of the parent     |            |           |           |
|             |                   |            |           |           |
|             | Pay stubs and     |            |           |           |
|             | school schedule   |            |           |           |
+-------------+-------------------+------------+-----------+-----------+

**APPENDIX E.**

**RECORD REVIEW WORKSHEET**

  -------------------------------------------------------------------------------------
  **CLIENT ID#**            **STATE:**          **COUNTY:**        **DATE:**   
  ------------------------- ------------------- ------------------ ----------- --------
                                                                               

  **ELEMENTS OF ELIGIBILITY **ANALYSIS OF CASE  **FINDINGS (3)**   **RESULTS   
  & PAYMENT DETERMINATION   RECORD (2)**                           (4)**       
  (1)**                                                                        

                                                                               

  **SECTION I. STATE CHILD                                                     
  CARE PROGRAM FORMS**                                                         

  **100 APPLICATION FORMS**                                        100 RESULTS 

  Determine presence, date,                                        0           No Error
  and completeness of                                                          
  required eligibility                                                         
  forms, may include (1)                                                       
  signed and dated                                                             
  application form, (2)                                                        
  child care agreement, (3)                                                    
  voucher or certificate,                                                      
  and (4) provider invoice.                                                    
  Specify conditions of                                                        
  dollar error, including                                                      
  (1) form expired, (2) no                                                     
  application form, and (3)                                                    
  no documentation of                                                          
  income and work hours.                                                       

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **SECTION II. PRIORITY                                                       
  GROUP PLACEMENT**                                                            

  **200 PRIORITY GROUP                                             200 RESULTS 
  PLACEMENT**                                                                  

  Determine if client meets                                        0           No Error
  criteria of                                                                  
  State-designated priority                                                    
  groups, e.g., (1) teen                                                       
  parent in high school,                                                       
  (2) TANF recipients in                                                       
  eligible work activities,                                                    
  (3) working parents on                                                       
  TANF, and (4) foster                                                         
  parents etc.                                                                 

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **SECTION III. GENERAL                                                       
  PROGRAM REQUIREMENTS**                                                       

  **300 QUALIFYING HEAD OF                                         300 RESULTS 
  HOUSEHOLD**                                                                  

  Determine if client meets                                        0           No Error
  parent definition (parent                                                    
  means a parent by blood,                                                     
  marriage or adoption and                                                     
  also means a legal                                                           
  guardian, or other person                                                    
  standing in loco                                                             
  parentis), e.g., (1)                                                         
  parent, (2) step-parent,                                                     
  (3) legal guardian, (4)                                                      
  needy caretaker relative,                                                    
  or (5) spouse of same.                                                       
  Child(ren) must be                                                           
  citizen(s).                                                                  

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **310 RESIDENCY**                                                310 RESULTS 

  Determine if client is a                                         0           No Error
  resident of the State and                                                    
  for what duration, if                                                        
  client is a resident of                                                      
  the county and for what                                                      
  duration, and whether                                                        
  there is an agreement                                                        
  regarding eligibility                                                        
  among counties.                                                              

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **320 HOUSEHOLD MEMBERS**                                        320 RESULTS 

  To receive services a                                            0           No Error
  child\'s parent or                                                           
  parents must be working                                                      
  or attending a job                                                           
  training or educational                                                      
  program.                                                                     

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **330 QUALIFYING CHILD**                                         330 RESULTS 

  Determine if child(ren)                                          0           No Error
  is eligible for services,                                                    
  including (1) younger                                                        
  than 13 years, (2)                                                           
  younger than 19 years and                                                    
  physically or mentally                                                       
  incapable of caring for                                                      
  himself or herself, or                                                       
  under court supervision,                                                     
  and (3) in foster care                                                       
  when defined in the State                                                    
  Plan.                                                                        

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **340 QUALIFYING CARE**                                          340 RESULTS 

  Determine hours and type                                         0           No Error
  of care authorized.                                                          
  Determine required number                                                    
  of hours of care during                                                      
  authorized schedule.                                                         

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **350 QUALIFYING PROVIDER                                        350 RESULTS 
  ARRANGEMENT**                                                                

  Determine if services are                                        0           No Error
  provided within a                                                            
  center-based child care                                                      
  provider, a group home                                                       
  child care provider, a                                                       
  family child care                                                            
  provider, an in-home                                                         
  child care provider, or                                                      
  other provider of child                                                      
  care services for                                                            
  compensation that Is                                                         
  licensed, regulated, or                                                      
  registered under                                                             
  applicable State or local                                                    
  law. Is informal care                                                        
  included?                                                                    

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **360 PROVIDER                                                   360 RESULTS 
  REQUIREMENTS**                                                               

  Determine if regulatory                                          0           No Error
  requirements are met.                                                        
  Regulatory requirements                                                      
  means requirements                                                           
  necessary for a provider                                                     
  to legally provide child                                                     
  care services in a State                                                     
  or locality, including                                                       
  registration requirements                                                    
  established under State,                                                     
  local, or tribal law.                                                        

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

  **SECTION IV. INCOME AND                                                     
  PAYMENTS**                                                                   

  **400 INCOME\                                                    400 RESULTS 
  **                                                                           

  Describe income                                                  0           No Error
  documentation                                                                
  verification for each                                                        
  member of the household.                                                     
  Specify time period and                                                      
  all income to be                                                             
  considered, e.g., based                                                      
  on 4 weeks prior to                                                          
  application: Collect the                                                     
  following data: (1) head                                                     
  of household employment                                                      
  income, (2) spouse                                                           
  employment income, (3)                                                       
  any changes in income                                                        
  reported, (4) income                                                         
  during job training for                                                      
  parent/caregiver, (5)                                                        
  child support, if                                                            
  included as part of                                                          
  income, (6) Food Stamps,                                                     
  if included as part of                                                       
  income, and (7) loss of                                                      
  income during eligibility                                                    
  period.                                                                      

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **410 INCOME                                                     410 RESULTS 
  ELIGIBILITY**                                                                

  Determine if household                                           0           No Error
  income meets State                                                           
  requirements (e.g.,                                                          
  family gross income must                                                     
  be within 50% of State\'s                                                    
  median income).                                                              

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **420 PAYMENTS, GENERAL**                                        420 RESULTS 

  Determine if payments                                            0           No Error
  were made. A sliding fee                                                     
  scale based on income and                                                    
  the size of the family                                                       
  and may be based on other                                                    
  factors as appropriate.                                                      

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error

                                                                               

  **430                                                            430 RESULTS 
  PAYMENTS/COMPUTATIONS**                                                      

  Determine difference in                                          0           No Error
  dollar amount of child                                                       
  care benefits authorized                                                     
  versus the amount that                                                       
  should have been                                                             
  authorized\--indicate if                                                     
  it is an overpayment or                                                      
  underpayment.                                                                

                                                                   1           Client
                                                                               Error

                                                                   2           Agency
                                                                               Error
  -------------------------------------------------------------------------------------

**APPENDIX F.**

**DATA ENTRY FORM**

+------------------------------------------------+---------------------+
| **VARIABLE**                                   | **VALUE**           |
+------------------------------------------------+---------------------+
| **State \[STATE\]**                            |                     |
+------------------------------------------------+---------------------+
| **County \[COUNTY\]**                          |                     |
+------------------------------------------------+---------------------+
| **Child ID \[ID\]**                            |                     |
+------------------------------------------------+---------------------+
| **Study Period Month (October 2004)            |                     |
| \[PERIOD\]**                                   |                     |
+------------------------------------------------+---------------------+
| **Date of data collection \[DATE\]**           |                     |
+------------------------------------------------+---------------------+
| **One or more eligibility errors during study  |                     |
| period \[ERROR\]**                             |                     |
|                                                |                     |
| **0 =no errors, 1 = one or more errors**       |                     |
+------------------------------------------------+---------------------+
| **Cause of improper payment \[CAUSE\]**        |                     |
|                                                |                     |
| **0 =no errors, 1 = client, 2 = agency**       |                     |
+------------------------------------------------+---------------------+
| **Total amount of improper payments during     |                     |
| review month \[TIMP\]**                        |                     |
+------------------------------------------------+---------------------+
| **Total amount of payments during review month |                     |
| \[AMPAY\]**                                    |                     |
+------------------------------------------------+---------------------+
|                                                |                     |
+------------------------------------------------+---------------------+
| Note: The terms in brackets represent the      |                     |
| variables names in the WRMA-maintained         |                     |
| database.                                      |                     |
+------------------------------------------------+---------------------+

**APPENDIX G.**

**TELEPHONE Discussion Guide**

1.  How are improper payments defined in legislation and/or policy in
    your State? Is the definition consistent from jurisdiction to
    jurisdiction?

2.  Please check all of the topics or activities listed below for which
    your State has policies or regulations in place for the program.

    -   The definition of an improper payment (includes overpayments, in
        which a client is paid more than he or she is entitled to)

    -   Steps involved in [identifying]{.underline} a potential improper
        payment

    -   Steps involved in [verifying]{.underline} an improper payment

    -   Establishing claims for underpayments

    -   Collecting overpayments, including, for example, the authority
        to reduce payments to recover overpayments

    -   Distribution of recovered improper payments

    -   Sources of funding for addressing improper payments

    -   Other (specify)

3.  What child care automated systems do you have in
    place---eligibility, family data, provider data, licensing,
    payments/authorizations (including EBT), attendance?

4.  For each data source listed below:

-   Indicate whether your agency or State utilizes the data source to
    better ensure accurate payments under the program.

-   If your State utilizes the data source, indicate when in the process
    the source is used (prior to or following issue of payment) and
    indicate how often that source is used.

  --------------------------------- ------------ ------------ ------------
  Data source                       Is the       When in the  How often is
                                    source used? process is   source used?
                                                 source used? 

  a\. Income Eligibility                                      
  Verification System (IEVS)                                  

  b\. Other human services programs                           
  in your agency/State                                        

  c\. State department of labor or                            
  employment security                                         

  d\. State directory of new hires                            

  e\. State department of motor                               
  vehicles                                                    

  f\. Public Assistance Reporting                             
  Information System (PARIS)                                  

  g\. State data (from other                                  
  states) on length of TANF receipt                           

  h\. State data (from other                                  
  states) on potential concurrent                             
  TANF receipt                                                

  i\. State data (from other                                  
  states) on client or provider                               
  debarment from benefits, for                                
  fraud or other infraction                                   

  j\. Lottery agencies                                        

  k\. Prisons and criminal justice                            
  agencies at State level                                     

  l\. National Criminal Information                           
  Center (NCIC)                                               

  m\. Local jails                                             

  n\. Credit bureaus                                          

  o\. Financial institutions                                  

  p\. State tax intercepts                                    

  q\. Immigration and                                         
  Naturalization Service                                      

  r\. K-12 school systems                                     

  s\. Community colleges                                      

  t\. Other providers of services,                            
  education, training                                         

  u\. Child support                                           

  v\. Social Security                                         
  Administration (SSA) form W-2                               
  (wage statements)                                           

  w\. SSA Social Security number                              
  verification                                                

  x\. SSA Supplemental Security                               
  Income (SSI) data                                           

  y\. SSI death information                                   

  z\. Other *(Please specify:)*                               
  --------------------------------- ------------ ------------ ------------

To what extent, if any, have the following factors contributed to
improper payments in your State over the past 2 fiscal years for the
program?

+-------------------------------------+-----+-------+-----+-----+-----+
| Factors contributing to improper    | Gr  | Mod   | Lit | No  | Do  |
| payments                            | eat | erate | tle | ext | n't |
|                                     | ext | e     | ext | ent | k   |
|                                     | ent | xtent | ent |     | now |
+-------------------------------------+-----+-------+-----+-----+-----+
| # Related to clients                |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| b\. Nonreporting/underreporting of  |     |       |     |     |     |
| income                              |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| c\. Client receiving payment in     |     |       |     |     |     |
| more than one jurisdiction          |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| d\. Incorrect reporting of          |     |       |     |     |     |
| household size                      |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| e\. Incorrect citizenship or        |     |       |     |     |     |
| immigration status                  |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| f\. Incorrect information on        |     |       |     |     |     |
| client's compliance with program    |     |       |     |     |     |
| requirements, such as participating |     |       |     |     |     |
| in required activity                |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| g\. Other *(Please specify):*       |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| # Related to providers              |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| h\. Overstating performance         |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| i\. Claiming for services not       |     |       |     |     |     |
| rendered                            |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+
| j\. Other *(Please specify):*       |     |       |     |     |     |
+-------------------------------------+-----+-------+-----+-----+-----+

**APPENDIX H.**

**ARIZONA**

Arizona is a centralized, State-administered child care program.
Fourteen administration offices take applications, determine
eligibility, and provide services for all of the assistance programs.
Arizona provides Child Care Resource and Referral through Child and
Family Resources, Inc., which provides training, technical assistance,
and matches parents seeking child care with resources.

**Improper Payments Process**

Arizona defines improper payments in revised statute, 46--213B:

> *If a recipient is overpaid for whatever reason, the recipient is
> liable for the amount of the overpayment. The Department with the
> concurrence of the Department of Law shall determine the method of
> securing repayment which is most appropriate to the particular
> situation. If there are insufficient assets or resources to justify
> collection, if the recipient has not obtained assistance or services
> by intentional misrepresentation, or if the overpayment was due to an
> error on the part of the Department, the Department may waive a
> repayment by the recipient. The Department with the assistance of the
> Department of Law may institute appropriate court proceedings to
> recover overpayments.*

The definition of improper payments in policy reads:

> *Payment of funds to a provider on behalf of a client who was not
> eligible for assistance, does not have an eligible activity or need,
> use more assistance they were eligible for, or payment were made for
> days/hours, in which they were not in attendance with the child care
> provider. Overpayments may be client, provider, or agency caused.*

Arizona identifies improper payments through a variety of methods,
including:

-   Complaints or calls to the agency;

-   Monthly supervisory-level case reviews;

-   Annual case reviews;

-   Inconsistent information at redetermination;

-   Computerized exception reports; and

-   Audits of provider records.

Examples of exception reports include reports that identify providers
for billing for the maximum number of units every month or identify
clients for whom the income varies more than 20 percent when child care
data are compared with unemployment insurance.

Arizona has thresholds for overpayment referrals. Overpayments of
\$2,000 or less go to the Office of Accounts Receivables and
Collections. Overpayments exceeding \$2,000 go to the Office of Special
Investigations to determine if prosecution is warranted. If warranted,
the case goes to the Attorney General for prosecution; if not, the case
returns to the Office of Accounts Receivables and Collections for
collection.

**Automation**

The Arizona Child Care Administration Tracking System (AzCCATS) consists
of modules for eligibility, family data, provider data, certification,
contract monitoring, and payments and authorizations. The system
interfaces with Temporary Assistance for Needy Families (TANF) and Food
Stamps. The system is a mainframe system that was transferred from Utah
in 1988. It is supported internally and has been modified extensively.
Providers can access the AzCCATS system to directly input their billing,
or they can submit paper billing requests to the Payment Processing
Unit.

**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.

**APPENDIX J.**

**KANSAS**

Kansas has a State-administered child care program. There are 105
counties with 6 regional offices and 39 county offices. The Kansas
Association of Child Care Resource and Referral agencies has 16 members.

**Improper Payment Process**

Kansas does not define improper payments through statute, but through
the *Kansas Economic and Employment Support Manual*, Section 11000,
Incorrect Benefits. Definitions of errors are defined as follows:

Agency error is defined as:

> *Instances of agency error which may result in a claim include, but
> are not limited to, the following: The provider\'s time sheet was
> incorrectly keyed into Kansas Cares or the provider was otherwise
> assigned an incorrect payment; Payments continued to be made to a
> provider after the termination date or end date of the purchase of
> service agreement; Misapplication of policy.*

Provider error is defined as:

> *Instances of provider error which may result in a claim include, but
> are not limited to, the following: Nonwillful withholding of
> information from a failure on the part of a provider to report a
> change which affects eligibility for payment and/or the amount of
> payment when: The worker has reason to believe that the provider did
> not understand responsibilities; and there was no oral or written
> misstatement by the provider, or Willful withholding of information
> such as: Misstatement (oral or written) made by the provider in
> response to oral or written questions from the agency; Consistent
> failure by the provider to report a change which affects eligibility
> and/or amount of payments; Failure by the provider to report the
> receipt of a payment which he knows, or should know, represents an
> incorrect issuance.*

Fraud error is defined as:

> *A fraud error is a willful error which has been found to be fraud in
> accordance with the provisions in 11200. If the provider is found
> guilty of civil or criminal child care fraud by a court of appropriate
> jurisdiction, recoupment, which may include debt set-off, will be
> initiated by the local Fraud Unit.*

No specific funding is available at this time for further development of
the improper payments monitoring process and the State is looking to
address improper payments with existing resources. Kansas identifies
improper payments through a variety of methods, including:

-   Notification or complaints from the public;

-   Exception reports generated from automated systems;

-   Review of attendance sheets in the field; and

-   Audits based on department request, field staff review, or
    complaints.

The State has an audit division and quality assurance unit. The State
did two child care quality assurance reviews during the past year. One
focused on in-home care because it was believed to be more error prone
than other types of care. The review did not support this belief. The
second focused on field staff adhering to State policy and procedures in
the area of social services child care. Results are in process at this
time.

**Automation**

Kansas Cares is a mainframe system, transferred from Wyoming during the
late 1980s or early 1990s. Kansas made extensive modifications and it
has some sharing of information with the Temporary Assistance for Needy
Families and Food Stamps system and the licensing system. Kansas Cares
processes some of the eligibility determination automatically, but
workers perform most of the eligibility calculations off-line and enter
the results into the system. However, Kansas Cares computes rates to
ensure accuracy. The system will pay the lesser rate between the
provider maximum, State, and private pay rates.

Kansas is installing a new Electronic Benefits Transfer (EBT) system
that will handle all aspects of billing. Given that the providers will
no longer be sending in the attendance sheets, Kansas will establish a
system of random audits of providers.

**APPENDIX K.**

**NEBRASKA**

Nebraska is State-administered and has 93 counties. Some Resource and
Referral agencies exist in Nebraska, but they do not receive State
funds. Nebraska has approximately 6,000 child care providers with
contracts to provide care; however, the State does not pay for slots,
but arranges for care on a case by case basis.

**Improper Payments Process**

Nebraska does not define improper payments in statute or policy.
Nebraska revised statute, 81--3109, defines intentional program
violations as:

> *Any action by an individual to intentionally make a statement either
> verbally or in writing to obtain benefits to which they are not
> entitled, to conceal information to obtain benefits to which they are
> not entitled, to alter one or more documents to obtain benefits to
> which they are not entitled.*

Nebraska identifies improper payments primarily through monthly
exception reports, including computer generated lists of top-paid
providers in the State, copay lists, and lists of high daily and hourly
rates. The Issuance and Collection Center Unit is responsible for
auditing Temporary Assistance for Needy Families (TANF), Food Stamps,
child care, and foster care. Four auditors conduct the child care
audits. Most audit referrals fall into one of two categories:

-   Overcapacity---Providers identified as serving more children than
    their licensed capacity. Auditors identify providers by compiling a
    spreadsheet for the provider's daily attendance for both title XX
    billings and the food program. From these data, they are able to
    determine if the provider is caring for more children than allowed.

-   Inaccurate Billings---Providers identified as billing out of the
    authorization, padding billings with additional attendance, making
    inaccurate calculations, or other regulation violations. Auditors
    identify problems by compiling monthly charts that provide an easy
    comparison between attendance billed by the provider and the
    authorized days of care.

Following an investigation, the State determines the amount of the
overpayment and who is responsible for the overpayment. For each
overpayment, the auditor will write a report of audit findings that
summarizes the details of the case, how the amount was determined, and
who was responsible for the overpayment. The overpayments will either be
internal, which are charged to the billing documents, or external, where
the overpayment may go to civil court. Clients and providers have 45
days to appeal an audit decision. Nebraska takes action on every
improper payment and has no threshold.

The agency attempts to develop a repayment agreement of up to 50
percent. If the case is active, the agency can deduct from the next
payment. The State has had better success at recouping overpayments by
pursuing civil suits rather than criminal suits. The letters requesting
repayment are issued by the attorney assigned to Child Care and sent to
the clients and providers. The State believes that letters coming from
the legal office are more effective than other types of communication.

**Automation**

The Nebraska system, developed approximately 5--8 years ago, uses a
home-grown, mainframe-based automated system that serves TANF, Food
Stamps, and Child Care. Because all of the major programs use the same
system, the automated system determines if the client is receiving the
service and where. Child care eligibility is not automated and the
eligibility must be performed manually and entered into the system.

**APPENDIX L.**

**NEW HAMPSHIRE**

New Hampshire is a highly centralized, State-administered State with 12
district offices. These offices take applications, determine
eligibility, and provide services for all of the assistance programs.
New Hampshire contracts with 36 centers, which are monitored once every
2 years, unless a problem arises.

**Improper Payments Process**

New Hampshire has a task force for improper payments that crosses
program areas in the Department of Health and Human Services. The task
force began after the State's chief policy staff attended the State
Advisory Meeting in 2004. The State is developing rules within the
Office of Special Investigations to cover improper payments, but does
not feel that the statutes that are in effect apply specifically to
child care, but apply more generally. The State plan does have a
definition for improper payments: "Improper Payments are defined as
payments that should not have been made and payments that were made for
the incorrect amount under statutory, contractual, administrative, or
other legally applicable requirements." Fraud is defined as "intentional
improper billing or payment."

Current policies and practices to identify and verify improper payments
are being formalized. Information on improper payments comes from a
variety of sources:

-   Educating the provider community to encourage referrals;

-   Conducting a front-end prevention effort to identify training needs;

-   Establishing Internet billing to reduce error and potential fraud in
    the provider billing process;

-   Developing queries of the automated system for error-prone
    profiling; and

-   Developing automated exception reports to identify potential areas
    where improper payments may be occurring.

Funding to address improper payments comes from the State's high
performance bonus and the program's cost allocation plan to pay for an
Improper Payments Coordinator for the department.

An adjustment process for both underpayments and overpayments allows the
client or provider to return the check, write a reimbursement check, or
deduct the amount out of the next check. Recovered improper payments are
returned to the General Fund and are not returned to the program.

**Automation**

The New Heights system is a Windows-based system activated in 2000 that
integrates all programs in the Division of Family Assistance, including
Temporary Assistance for Needy Families, Food Stamps, Medicaid, and
child care agencies. The system captures family data and automatically
determines eligibility. The case file is fully integrated and a single
query can determine if a client is receiving services in another
program.

Currently, licensing is not integrated with the New Heights system.
Providers and payments are housed within the Statewide Automated Child
Welfare Information System, New Hampshire Bridges. This system is a
transfer system and has undergone considerable modification. The New
Heights system uses the New Hampshire Bridges provider number when
authorizing service for a child within the New Heights system. The
information is passed through the interface during a nightly batch run,
which initiates and completes the process.

[^1]: Improper Payment Information Act of 2002, Pub. L. No. 107--300, §
    2, 116 Stat. 2350.

[^2]: Office of Management and Budget. (2003). The Improper Payment
    Information Act, Public Law No: 107--300 \[On-line\]. Available:
    <http://www.whitehouse.gov/omb/memoranda/m03-13-attach.pdf>.

[^3]: Government Accountability Office. (June 2004.) *TANF and child
    care programs: HHS lacks adequate information to assess risk and
    assist states in managing improper payments.* (GAO Publication No.
    GAO--04--723). Washington, DC: U.S. Government Printing Office.

[^4]: Child Care Bureau. (2004). *Measuring improper payments in the
    child care program: A pilot project of the ACF Child Care Bureau*.
    Working papers for discussion distributed at the State Partners
    Meeting, September 28--29, 2004 \[On-line\]. Available:
    <http://www.acf.hhs.gov/programs/ccb/ta/ipi/findings1.htm>.

[^5]: To illustrate the use of confidence limits, one must make two
    assumptions: (1) the eligibility error rate variable is the percent
    of clients who exhibit an eligibility error during the study period,
    and (2) 100 clients are sampled and 30 percent show an eligibility
    error. The confidence limits are calculated as follows: \[m =
    2(SQRT(p(1-p)/n))\], where m is the 95 percent confidence limit (or
    interval), SQRT is the square root, n is the sample size, and p is
    the proportion of the sample found to be in error. Following the
    assumptions, the confidence interval would be calculated as \[m =
    2(SQRT(.3(.7)/100) = .0917 (or 9.17%)\]. The 95 percent confidence
    interval can be described in two ways: (1) with 95 percent
    confidence, the error rate for this sampled population is between
    20.83 percent and 39.17 percent, or (2) with 95 percent confidence,
    30 percent of the population is in error with a margin of error for
    this estimate of +/- 9.17 percent.

[^6]: For the purposes of this study, a child randomly selected for
    study is referred to as a record.

[^7]: The Improper Payment Information Act, Public Law No: 107-300, § 2,
    116 Stat. 2350.

[^8]: Some counties served 10 or fewer children during October 2004. The
    study team grouped into clusters counties that served fewer than 25
    children, such that at least 25 children were in the cluster. (For
    example, if county A served 6 children in October 2004 and county B
    served 19 children, together they served 25 children in that month.
    If this cluster were selected via the random process, a subsample of
    10 children would be selected randomly from among the 25 children in
    the cluster. This process ensured that an entire county would not be
    included in a subsample due to its small size.)

[^9]: In Cuyahoga County, many of the records had been moved to a locked
    warehouse and documents to verify eligibility had not yet been
    scanned into the automated system. The State was unable to gain
    access to these records. Because there were 27 unobtainable records,
    the sample size for Ohio was reduced to 123 valid obtainable records
    for the pilot project review process.

[^10]: This rate was determined by dividing the total amount of child
    care payments that were made in error in the Phase I review by the
    total amount of child care payments for the subsample.

[^11]: This rate was determined by dividing the total amount of child
    care payments that were made in error in the Phase II review by the
    total amount of child care payments for the subsample.

[^12]: This rate was determined by dividing the total amount of child
    care payments that were made in error in the Phase III review by the
    total amount of child care payments for the subsample.

[^13]: California and Connecticut are the only States known to the study
    team to date that regularly use error rate as a performance
    indicator in the child care subsidy program.

[^14]: CalWORKS and Alternative Payment Child Care Programs Error Rate
    Study Report Required by Chapter 229, Statutes of 2004, (Senate Bill
    1104, Committee on Budget and Fiscal Review) April, 2005, p.2.

[^15]: Colorado incurred the longest review times, but they did reduce
    the amount of time spent on case reviews over the duration of the
    study and they did conduct a more detailed analysis with a sub
    sample of cases.