Child Care and Development Fund: Undercover Tests Show Five State Programs Are Vulnerable to Fraud and Abuse
Published: 2010-09-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Through the Child Care and Development Fund (CCDF), the U.S. Department of Health and Human Services (HHS) subsidizes child care for low-income families whose parents work or attend education or training programs. In fiscal year 2009, the CCDF budget was $7 billion. States are responsible for determining program priorities and overseeing funds. Providers--who range from child care centers to relatives--bill the state for caring for approved children. Unregulated relatives represent 12 percent of providers in the CCDF program. In response to program fraud and abuse, GAO (1) proactively tested selected states' fraud prevention controls, (2) examined closed case studies of fraud and abuse, and (3) interviewed parents waitlisted for child care about the effect of this lack of assistance on their families. To do this, GAO investigators posed as parents and unregulated relative providers in 10 scenarios in five states with no waiting lists that each received more than $100 million in CCDF funding for fiscal year 2009. These states did not require fingerprint criminal history checks or site visits. For case studies of past program fraud, GAO reviewed criminal court records and interviewed agency officials. GAO spoke with parents on waiting lists in six states for their perspectives on the effect of being unable to obtain childcare. Results cannot be projected beyond these states or unregulated relative providers.
section_title: What GAO Found
paragraphs: The five states GAO tested lacked controls over child care assistance application and billing processes for unregulated relative providers, leaving the program vulnerable to fraud and abuse. Posing as fictitious parents and relative providers, GAO successfully billed for $11,702 in child care assistance for fictitious children and parents. In most cases, states approved GAO's fictitious parents who used Social Security numbers of deceased individuals and claimed to work at nonexistent companies. One state also approved a fictitious child care provider with a deceased person's Social Security number, creating the possibility that a criminal using a stolen identity could obtain federal subsidies to care for children. In two other states, GAO successfully billed for hours exceeding those authorized without submitting proof of additional hours worked. One state successfully prevented both fictitious applicants from being accepted, but had weak payment controls. GAO identified five recent closed criminal cases in which parents and providers defrauded the CCDF program. These cases involved parents falsifying eligibility documentation, providers billing states for fictitious children, and collusion between parents and providers to obtain payment for services that were never provided. Fraudulent payments reduce program funds available for eligible parents who depend on child care assistance to maintain employment or attend education programs. In some states, waiting lists are 1 to 2 years long. Parents on waiting lists said that without child care, they contend with multiple hardships--facing financial difficulties, quitting their job or education program, and worrying about negative effects on their children's development. In response, many of the states tested noted that they have plans to implement new controls, but expressed concern about associated cost and legal implications. HHS officials commented they have recently taken actions to address issues of CCDF integrity, including issuing program guidance on verification procedures and conducting conference calls on program integrity.

section_title: Letter
paragraphs: The Child Care and Development Fund (CCDF) received $7 billion in fiscal  year 2009, including $2 billion from the American Recovery and  Reinvestment Act of 2009 (Recovery Act), primarily to help eligible low- income families pay for child care. Administered by the U.S. Department  of Health and Human Services (HHS) as a block grant to the states, the  CCDF subsidizes child care for low-income children under age 13 whose  parents work or attend educational or job training programs. After a  parent enrolls in the program, their chosen child care provider—a child  care center, an in-home provider, or a relative—bills the state for the care  provided and the state pays either the parent or provider directly. States  may contribute matching funds and are responsible for determining  program priorities and overseeing funds.  States share responsibility with  HHS for protecting the financial integrity of the CCDF program, but the  program can be administered by public or private sector entities, including  individual counties or nonprofits.
HHS estimated that the improper payment rate for CCDF in fiscal year  2008 was 11.9 percent. In addition, multiple parents and providers have  been convicted of fraudulently obtaining CCDF funds.  For example, there  is a recent case in which a Wisconsin child care provider was convicted of  stealing $361,000 by claiming to have cared for children who did not attend  her child care center.  Fraudulent payments reduce funds available for  qualified families that depend on CCDF-funded child care and prevent  other families from enrolling in the program. Given the risk of fraud and  abuse in the program, and the Comptroller General’s authority to  undertake work, we (1) proactively tested selected states’ fraud  prevention controls for CCDF eligibility and billing, (2) examined case  studies of fraud and abuse within the CCDF program, and (3) interviewed  parents waitlisted for child care about the effect that this lack of  assistance had on their families.
To proactively test selected states’ fraud prevention controls, we created  bogus child care providers to bill states for caring for fictitious children.  We identified six states that received more than $100 million in CCDF  funding for fiscal year 2009 and did not require providers to be  fingerprinted or undergo site visits.  Of these, we selected the five states  receiving the most American Recovery and Reinvestment Act funding to  develop 10 undercover cases.  We selected two counties in Illinois,  Michigan, New York, Texas, and Washington, states that had no waiting  lists, and, where possible, that included large cities.   We chose counties  that did not have waiting lists to ensure that we did not prevent real  families from obtaining assistance. We used only relatives as providers  because these providers are generally subject to less regulation than larger  child care centers, and did not require us to establish physical child care  centers or have our undercover investigators fingerprinted. As such, our  results cannot be applied to licensed child care providers, such as child  care centers, nor can our results be projected to all state CCDF programs.   We used commercially available hardware and software to counterfeit  identification and employment documents for fictitious parents, children,  and providers. Once accepted into a program, we billed the program for  care provided to the fictitious children, but voided and returned any  checks we received to program officials at the end of our investigation.  To select our five case studies of past program fraud, we identified  criminal convictions for child care assistance fraud nationwide using  online databases and other Internet resources. From these, we selected  cases involving a high dollar amount of fraud or containing other elements  of fraud, such as stolen identities. We reviewed court documents and  when possible interviewed investigators and prosecutors involved with the  selected cases to obtain additional details.  To examine the effect of being  unable to obtain child care on low-income families, we contacted 11 states  that had active waiting lists between November 2009 and March 2010.  We  obtained the names of parents on waitlists for child care assistance from  the agencies that administer the program in those states.  Starting from  the top of these lists, we selected a nonrepresentative sample of 166  parents to contact and interviewed the 41 who responded to our inquiries.  We did not attempt to verify the accuracy of the information that they  provided to us, and our results cannot be projected to the entire  population of families currently waiting for child care assistance. We  conducted our investigation from May 2009 through September 2010 in  accordance with the standards prescribed by the Council of the Inspectors  General on Integrity and Efficiency. A detailed discussion of our scope and  methodology is presented in appendix I.
subsections: section_title: Background
paragraphs: The CCDF is the primary federal funding source to help states subsidize  the cost of child care for low-income parents and to improve the quality of  care. For a parent to be eligible for CCDF funds, their children must be  younger than 13 years old and living with them; parents must be working,  or enrolled in school or training. States may design their programs and  establish work requirements, payment rates, family copayments, and other  program rules within the broad parameters outlined by the federal law and  regulations. States may add additional eligibility requirements, including  different income thresholds, but must set the maximum family income  eligibility requirement at or below 85 percent of the state median income  for families of the same size. Table 1 shows the eligibility thresholds  applicable to our fictitious families in the states we tested.
Families may choose to purchase care from any legally operating child  care provider, which may include child care centers, home-based  providers, family members, neighbors, and after-school programs.  Providers must be approved by the state to receive CCDF subsidies. HHS  requires that states have licensing standards for child care providers, but  federal law does not determine these standards or which type of providers  they apply to. Some states require relative providers to undergo  background checks with fingerprints, criminal and sex-offender checks, or  home inspections, but other states have less stringent requirements.   According to HHS, in 2008, 58 percent of children in the program were  cared for in a licensed center-based child care facility, 13 percent were  cared for in a licensed or regulated home-based center, 12 percent by an  unregulated relative provider, and 17 percent in a variety of other  arrangements.
State and county CCDF agencies may pay child care providers or families  directly. Payments to families may be in the form of a child care certificate  that may be used only as payment or deposit for child care services. In  some states, providers can directly bill the state through automated  systems and have funds directly deposited into a personal bank account or  receive a check by mail. In addition, families are required to contribute to  the cost of care, in the form of a copayment, unless states exempt families  below certain income thresholds from this requirement. CCDF rules also  provide some guidance on establishing reimbursement rates for child care  providers and require that a specified portion of funds be set aside for  activities designed to enhance child care quality.
The Child Care and Development Block Grant Act of 1990 first authorized  block grants to be given to states for child care assistance and the  Personal Responsibility and Work Opportunity Reconciliation Act of 1996  further expanded the grants to states creating the current CCDF.  In  fiscal year 2009, $7 billion was expended for the CCDF block grants, of  which $2 billion was attributable to the passage of the Recovery Act in  2009. CCDF has discretionary, mandatory, and matching components.  In  order to receive the matching component, a state must meet a number of  spending requirements. programs from the Temporary Assistance for Needy Families (TANF) and  Social Services Block Grants.  Regarding Recovery Act funds provided to  states for CCDF, as of September 3, 2010, HHS reported that it had  disbursed to the states $1.2 billion of the $1.9 billion allo CCDF.
In order to receive these funds, a state must: (1) provide matching funds at the state’s  current Medicaid match rate; (2) obligate the federal and state share of matching funds in  the year in which the matching funds are awarded; (3) obligate all of its mandatory funds in  the fiscal year in which the mandatory funds are awarded; (4) obligate and expend its  maintenance of effort (MOE) funds in the year in which the matching funds are awarded.   (MOE means a state must continue to expend its own funds at the level it was matching the  former Aid to Families with Dependent Children-linked child care programs in fiscal year  1994 or fiscal year 1995, whichever was greater.) reported that they had performed some activities to assess the exten which their programs were at risk of improper payments, but these  activities often did not cover all payments that could be at risk.  Since that  report, HHS reported that it has engaged in several activities to help stat es  continue to focus on improving their internal controls. For example, in response to the recommendations in our 2004 report, HHS organized,  through the Child Care Bureau, a federal project team to draft an ap to address internal controls, using GAO’s report Internal Controls:  Internal Control Management and Evaluation Tool as a guide. effort included drafting tools for states to use to conduct internal con self-assessments, estimates of payment error rates, and guidance fo r  developing cost-benefit assessments of internal control processes;  identifying and sharing best practices among states for minimizing  improper payments; and taking actions to expand the system that matche state enrollment data across several programs to include CCDF.  We did  not review whether the states in our proactive tests and c steps to strengthen controls based on these initiatives.
section_title: Vulnerabilities Identified in Five States’ Fraud Prevention Controls
paragraphs: Our proactive testing revealed that CCDF programs in the 5 states we  tested were vulnerable to fraud because states did not adequately verify  the information of children, parents, and providers and lacked adequate  controls to prevent fraudulent billing. In 7 of 10 cases in four states, ou r  fictitious parents and children were admitted into the CCDF program  because states did not verify the personal and employment information  provided by the applicants.  Three of those states paid $11,702 in childcare subsidies to our fraudulent providers, and two states allowed the  providers to over bill for services beyond their approved limit. Only one  state successfully prevented our fictitious applicants from being admitte into the program, but officials from that state told us they perform only  limited background checks on providers and cannot immediately detect  over b illing. Table 2 provides information about each of our undercover  tests.
GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington,  D.C.: August 2001).
Parent was approved 3 weeks after completing a brief phone  interview without requesting the applicant’s employer pay  stubs. No identification documents were required for the  parent or children.
Department of Social and Health Services (DSHS) failed to  detect the Social Security number (SSN) of a deceased  individual used by the parent and the incorrect SSN used by  the children.  Officials told us that it is not a program  requirement to verify SSNs for beneficiaries of the program.
DSHS also did not perform any checks to determine that the  parent’s employer was fictitious.
DSHS initially denied the fictitious provider’s application  because the provider’s name and SSN did not match.   However, the provider was allowed to resubmit with the same  personal information and a different Social Security card with  a real SSN. Provider was approved within 12 days.
Parent and provider were able to bill for hours exceeding the  authorized amount by informing the caseworker that the  parent had worked an additional 20 hours that month. No  documentation was required.
Parent was approved 12 days after completing a brief phone  interview and submitting fabricated pay stubs and an  employment verification letter.
DSHS failed to detect the SSN of a deceased individual used  by the parent and the incorrect SSNs used by the children.   Officials told us that they are not required to verify  beneficiaries’ SSNs.
DSHS initially denied the fictitious provider’s application  because the provider’s name and SSN did not match.
Provider resubmitted using a different first name, SSN,  driver’s license photograph and birth date, but the same last  name, address and phone number.   Even though DSHS had  previously rejected a similar provider using the same address,  and both applications claimed only one person lived there,  DSHS failed to investigate the second application further.  The  application was approved within 7 days.
Provider successfully billed for 16 school holidays for each  school-aged child during a month of only 22 school days.   DSHS officials stated that any overbilling of holiday hours  would be caught during random audits that are conducted  monthly on some providers.   However, no audit was  conducted in this case.
Parent was approved for assistance after a 30 minute in- person interview where she presented photocopies of false  Social Security cards, birth certificates, a driver’s license, and  a death certificate for her spouse.
Department of Social Services (DSS) failed to detect the SSN  of a deceased person used by the parent and the incorrect  SSNs used by the children.
DSS accepted a fabricated letter as proof that the applicant  did not receive survivor benefits for her deceased spouse.
Provider passed the background check, even though she had  submitted an SSN that did not match her name. This creates a  risk that someone with a criminal background could steal an  identity to qualify for child care payments.  State officials told  us they are not legally permitted to verify SSNs, even for  relative child care providers.
Provider received payment for 2 months of child care.  We  ceased proactive tests and returned assistance checks after  media reports of county budget cuts in the child care  assistance program.
Parent was approved for assistance 4 weeks after applying by  mail using photocopies of fraudulent Social Security cards,  birth certificates, a utility bill, pay stubs, and a marriage  certificate.
Caseworker initially did not approve the application, which  contained fraudulent Social Security cards showing the same  SSN for the parent and one of her children.  However, the  caseworker accepted the parent’s explanation that the Social  Security Administration had issued her the wrong Social  Security card and approved her application when she  submitted a card bearing a different SSN.
Provider passed the background check, even though he had  submitted the SSN of a deceased person. This creates a risk  that someone with a criminal background could steal an  identity to qualify for child care payments.  State officials told  us they are not legally permitted to verify SSNs, even for  relative child care providers.
County workers used an electronic system to prevent over  billing by comparing hours billed to hours authorized and  hours worked. In one instance, the provider claimed to have  provided 140 hours of care to one child, but the parent’s pay  stubs showed she had worked only 60 hours during that time.
Caseworkers compared the billed hours to the pay stubs,  detected the discrepancy and reduced the payment to the  provider.  However, they still permitted him to bill for an extra  2.5 hours a day that the parent supposedly spent at lunch or  in transit, even though she worked just 10 minutes from the  provider’s house.
Department of Human Services (DHS) lost the fictitious  parent’s initial applications on two occasions, one by fax and  one by mail. Caseworker then discovered the faxed  application 2 months later.
On a third application attempt, parent was approved within 30  days after reapplying in person with photocopies of her  driver’s license, Social Security cards, and pay stubs.  Case  worker did not ask to see original documents.
DHS officials said they use state wage, employment, public  assistance and child support databases to verify applicant  information, and an SSA database to verify parent and child  SSNs.  Officials told us the system detected that the names  and SSNs of our fictitious applicants did not match, but a  caseworker inappropriately approved them for child care  assistance.
Provider was approved to receive payment for 3 months of  child care assistance.   State officials told us that a check was  issued, but was returned to DHS due to an error at the rental  mailbox store.
Using the online billing system, provider attempted to bill for  more hours than she was authorized to provide care.  The  system detected the discrepancy and successfully prevented  payment for these hours.
Department of Human Services lost the fictitious parent’s  faxed application.  When the parent resubmitted the  application by mail, a caseworker initially claimed that it had  not been processed, then said that the office’s mail was not  being forwarded from the post office.  The caseworker told her  that if she reapplied in person, it would take 30 days to  process the application.
The applicant reapplied in person, submitting photocopied  documents.  Case worker did not interview the applicant or  ask to see original documents.
DHS denied the first application 4 months after it had originally  been submitted and had no record of receiving our second  application.  However, the third application, which was  submitted by the parent in person, was processed within 6  days.
Applicant was denied because the identity of the parent and  children could not be verified.
Parent was approved for assistance after a 20 minute in- person interview where she presented photocopies of Social  Security cards, pay stubs, birth certificates, and a driver’s  license. Case worker did not ask to see original documents.
Provider was originally rejected for using an SSN that did not  match her name.  Case workers accepted her explanation that  the Social Security Administration had issued her the wrong  Social Security card and allowed her to reapply with a new  SSN.
Provider passed a background check; however, licensing staff  at the Texas Department of Family and Protective Services  (DFPS) became suspicious of her multiple addresses and out- of-state driver’s license.  The staff member requested that the  provider appear in person with all original documentation, at  which point we stopped our application.
Parent completed a 15 minute in-person interview where she  presented photocopies of Social Security cards, pay stubs,  birth certificates, and a driver’s license.  Case worker did not  ask to see original documents.
Texas Workforce Solutions (TWS) approved the parent for  assistance, even though she had used the SSN of a deceased  individual and her children had used incorrect SSNs.  TWS  also did not perform any checks to determine that the parent’s  employer was fictitious.
TWS officials told us that they do not have a system to verify  the parent and children’s SSNs.
DFPS had no record of receiving our initial provider  application.  Our second provider passed a background check  and was approved 13 days after he submitted an application,  but his operation was closed when DFPS could not reach him  by phone.
Parent’s initial application was denied 7 weeks after  caseworkers compared parent and child information against  state public assistance, wage and child support databases.   Caseworkers also used Internet resources to identify the  parent, provider, and employer addresses as nonexistent.
Parent resubmitted the application using the same personal  information with actual street addresses for her residence and  employer. Provider also submitted a new application with an  actual street address, valid SSN, and a fraudulent out-of-state  driver’s license.
New application was denied because caseworkers had put a  warning on the case file alerting staff to the previously  submitted fraudulent documentation.
Illinois officials told us they do not currently require relative  providers to undergo a sex offender check or a fingerprint  background check, but they plan to implement these  screenings in October 2010.
In addition, they do not require parents to submit pay stubs on  an ongoing basis, but rely on 6-month recertification to detect  changes in work hours.  This creates an opportunity for  providers to over bill.
Parent’s initial application was denied 3 months after she  applied.  Caseworkers compared parent and child information  against state public assistance, wage and child support  databases.  Caseworkers also used Internet resources to  identify the parent and provider’s home addresses as fictitious  and the employer as nonexistent.
Parent resubmitted the application using the same personal  information with actual street addresses for her residence and  employer. Provider also submitted a new application with a  valid SSN, a nonexistent street address, and a fraudulent out- of-state driver’s license.
Resubmitted application was denied when caseworkers read  the case file notes, which documented previous problems with  the parent and allowed the caseworker to identify  discrepancies between the applications.
Illinois officials told us they do not currently require relative  providers to undergo a sex offender check or a fingerprint  background check, but they plan to implement these  screenings in October 2010.
In addition, they do not require parents to submit pay stubs on  an ongoing basis, but rely on 6-month recertification to detect  changes in work hours.  This creates an opportunity for  providers to over bill.
Several common themes emerged from our proactive testing, showing the  specific vulnerabilities in the states’ CCDF programs.
Lack of Effective Controls to Verify Parent and Child Information:   Four states did not consistently verify the SSNs and addresses of our  fictitious parents and children, potentially allowing unscrupulous  providers to use nonexistent children to bill for additional subsidies. While  HHS policy does not permit states to require that parents or children  submit SSNs, all of the states we tested gave parents the option of  submitting this information.  However, we found that some states did not  verify this information when it was provided.  For example, Texas and  New York did not verify our fictitious parent and children’s SSNs, which  belonged to deceased people. Furthermore, 4 states accepted photocopies  of the parent’s driver’s license, the children’s birth certificates, and all  Social Security cards.  While there is no federal requirement preventing  states from accepting photocopies, they are much more difficult to identify  as fraudulent than originals.   In contrast to New York and Texas, Illinois,  Michigan, and Washington compared information provided by the parent  to data in state public assistance databases and, in Illinois and Michigan,  state child support databases.  In Michigan and Washington, caseworkers  found that the applicants were not in these databases but conducted no  further verification of their information.  In one case, a Michigan  caseworker also checked the applicants’ names and SSNs with the Social  Security Administration (SSA), but inappropriately enrolled the family in  the program even after the system identified their names and SSNs as  mismatched.  Michigan denied the other parent because they were not  able to verify her identity or that of her children.  Illinois denied both  fraudulent applications after the public assistance and child support  database matches found no record of the family, leading to further checks  that identified other inconsistencies in the applications.
Lack of Effective Controls to Verify Parent Income Eligibility: Four  states lacked effective controls to verify the parent’s income by contacting  the employer directly or comparing the parent’s income to state data,  instead accepting fabricated pay stubs as proof of income. Without  adequate verification of income, states cannot provide reasonable  assurance that only eligible parents are accepted into the program.   There  is no federal requirement for what income documentation states must  collect, but in all 5 states, parents were required to provide pay stubs and  asked to declare other sources of income, such as Social Security, TANF,  and/or child support.  Caseworkers in New York, Texas, and Washington  accepted photocopies of fabricated pay stubs from fictitious businesses  and did not have effective controls to verify the existence of the employer,  the validity of the company address, or the wages reported by the  applicants.  While officials in Michigan and Illinois told us they use state  employment data to verify income at the time of application, only Illinois  successfully prevented both our fictitious applicants from being accepted  into the program.   Illinois caseworkers said that when they saw that the  applicant’s employer did not appear in the state database, they attempted  to contact the business directly and were unable to reach a live employee.   Caseworkers then verified the fictitious address we provided for the  employer and discovered that it was in the middle of Lake Michigan, which  caused them to deny the application.
Lack of Effective Controls to Verify the Background of Relative  Child Care Providers: The five states we tested did not conduct  thorough provider background checks, generally failing to conduct  nationwide background checks, verify SSNs, or compare provider  information to sex offender registries.  Michigan, Texas, and Washington  conducted relative provider background checks using only state  conviction data, creating the possibility that a provider with a criminal  history in one state could be approved to care for children simply by  moving to another state. New York and Illinois officials said they do not  verify relative providers’ criminal background, instead matching provider  information against state child abuse databases and, in New York, against  the state sex offender registry.  SSNs are a key element in the verification  of a person’s identity, and all the states we tested required that providers  submit their SSNs.  However, there is no federal requirement that states  verify SSNs.  This creates the possibility that criminals, including  registered sex offenders, using stolen identities could obtain federal  subsidies to care for children.  We found that New York did not verify our  fictitious providers’ SSNs, approving two child care providers using SSNs  that did not match their names, one of which belonged to a deceased  person.  Michigan officials told us that they also do not verify provider  SSNs while officials in Illinois said they do not currently compare relative  provider information to lists of registered sex offenders, potentially  putting children at risk.  However, officials said they plan to implement  this screening in October 2010.  While we did not test states that require  fingerprinting, nationwide fingerprint background checks provide more  assurance of an applicant’s identity than background checks without  fingerprints. Our tests were limited to scenarios in which the provider was  an unlicensed relative; therefore, our results cannot be applied to licensed  child care providers, such as day care centers, which are typically subject  to greater regulation.
Lack of Effective Controls to Flag Suspicious Applications for  Further Review:  Three of four states did not have controls to flag  fictitious parents and providers who reapplied to the program after their  initial application had been identified as potentially fraudulent, creating  the risk that applicants rejected for fraud will be able to gain admittance  into the program simply by submitting slightly different information.  In  Washington, one fictitious provider’s application was initially rejected  because a query of a federal database found that his name and SSN did not  match.  We then created a new fictitious provider that shared the same last  name, mailing address, home address, and phone number as the rejected  provider, but had a different first name, SSN, driver’s license photograph,  and birth date.   Even though the Department of Social and Health  Services (DSHS) had previously rejected a similar provider using the same  address, and both applications claimed only one person lived there, DSHS  failed to investigate the second application further.  Instead, the  application was approved in 7 days. In the other Washington case and in  one Texas case, caseworkers questioned why the provider’s SSN did not  match her name but allowed her to submit a different SSN after she  claimed that the SSA had issued her the wrong card. A caseworker in  New York accepted the same explanation from a parent who initially used  a Social Security card bearing the same SSN as her daughter.  By contrast,  after rejecting both of our parent applications as fraudulent, Illinois  caseworkers added warnings to the case file notes to alert other staff to  the previously identified fraud.  When we submitted new applications with  slightly different information, caseworkers linked the new applications to  the rejected applications and prevented our fictitious parents from being  approved for child care assistance.
Weak Controls to Prevent Fraudulent Billing:  All three states in  which we tested billing procedures had some controls to prevent  overbilling, but vulnerabilities in two states allowed providers to obtain  payment for more hours than they were authorized to provide care. In  Washington, the automated billing system prevented providers from  claiming more than their authorized hours for regularly scheduled care,  but allowed them to bill for additional “school holiday” hours without any  documentation.  Exploiting this vulnerability, both providers billed for  excessive holiday hours; one provider successfully billed for 30 school  holiday hours for each of the two children she cared for, even though she  was not authorized to provide care during school hours.  Furthermore, the  same provider obtained payment for an additional 20 hours of care by  having the parent tell her caseworker that she had worked extra hours  that month.  The caseworker did not require the parent to submit any  documentation before authorizing the additional hours. New York required  one parent to submit her pay stubs as proof of hours worked and used an  electronic system to compare these to the hours billed by the provider.   When our provider attempted to bill for 140 hours in April 2010, but the  parent’s pay stubs showed she had worked only 60 hours, caseworkers  identified the discrepancy and reduced the provider’s payment.  However,  they allowed the provider to bill for an extra 2.5 hours each day for time  that the parent spent at lunch or in transit, even though she worked just 10  minutes from the provider’s house.  Michigan used an automated system  in which parents and providers separately reported the number of hours of  care provided.  The system compared these two reports to each other and  to the hours of care authorized, detected that the provider had over billed  by 5 hours every 2 weeks and reduced the payment to the authorized  amount.  We were not able to test controls over unauthorized billing in  Illinois and Texas, but officials told us that parents are not required to  submit pay stubs on an ongoing basis, and provider bills are compared  only to the number of hours the provider is authorized to provide care.  If  a parent began working fewer hours but did not report the schedule  change, a provider could continue to bill at the authorized level until 3 to 6  months later, when the parent submitted pay stubs as part of the  recertification process.
Delays in Processing Applications:  In three counties in three states, 3  months or more elapsed between the date our fictitious applicants  submitted their application and the date an agency first responded to the  application.  Parents applying to CCDF programs have a reasonable  expectation of a timely decision on their applications.  While there is no  federal standard for timeliness, some states we tested established program  standards for response times.  For example, Michigan program  requirements state that a decision be rendered within 45 days and  Washington requires that a decision be made within 30 days.  In our  proactive tests, approval time frames for parent applicants ranged from  the same day to over 4 months, with an average of 42 days to render a  decision. In three cases, 3 months elapsed from the date a parent or  provider submitted an application to the date the agency first responded.   For example, one agency in Illinois received the parent’s application on  September 3, 2009, but did not begin verifying the parent’s eligibility until  November 16, 2009, finally issuing a denial letter on December 2, 2009.   During this time, our undercover investigators repeatedly tried to call the  agency, but frequently received a voicemail stating that calls would not be  accepted due to the volume of calls and paperwork.  Program officials told  us that at the time of our application, that office was backlogged, but that  normally, an applicant would receive a final determination within 45 days.   Despite Michigan’s program standard of a response within 45 days, DHS  denied our parent’s first application 4 months after it was originally  submitted and lost her second application.  However, her third application,  which was submitted months later, was processed within 6 days. Michigan  officials told us that at the time of our first two applications, both counties  were in the process of adopting a new software program.   The review  process for one provider in Texas took 4 months.   In the other case, the  agency had no record of the first provider application and rendered a  decision on the second within 13 days.  By contrast, both counties in  Washington approved parent and provider applications within 2 months of  receipt. Table 3 shows the vulnerabilities we identified in our ten  undercover tests of the CCDF programs by state.
To prevent fraud, waste, and abuse, it is essential for states to have a well- designed system that includes preventive controls, detection and  monitoring, and investigations, according to GAO’s fraud prevention  model.  Preventative controls in a program like CCDF would involve  comparing applicant-provided information to government or third-party  data and establishing controls to prevent the payment of unauthorized  bills.  Detection and monitoring would involve data mining for fraudulent  applicant information and suspicious billing transactions, while  investigation and prosecution of those caught committing fraud in the  CCDF would serve as a deterrent to others contemplating defrauding the  program.  However, the CCDF regulations do not require states to  implement specific measures to prevent or detect fraud, resulting in  application processes and requirements that vary considerably by location.   For example, in Washington, one of our fictitious parents was approved  after giving a caseworker her information over the phone interview and  having a woman, purporting to be her employer, call DSHS to verify her  work schedule.  In a New York county, the parent was required to provide  photocopies of birth certificates and Social Security cards for all  household members, a death certificate for the deceased spouse, pay  stubs, a form signed by her landlord, a driver’s license, and a letter from  SSA stating that she did not receive survivors’ benefits.
section_title: Case Studies Indicate That Child Care Assistance Programs Are Vulnerable to Fraud
paragraphs: Similar to our fictitious applications, we identified five closed criminal  cases in which parents and providers defrauded the CCDF program. The  parents and providers in these cases used similar methods to our proactive  testing including falsifying documentation to claim eligibility, billing the  state for fictitious children, and colluding to obtain payment for services  that were never provided. Table 4 provides a detailed summary of cases in  which individuals were convicted of fraudulently obtaining CCDF funds; a  more detailed narrative on each case follows the table.
Case 1: Two providers fraudulently billed Indiana for $150,310 worth of  CCDF funds and operated a child care facility in a home where a convicted  felon lived. According to the investigator’s report, the fraud began even  before the pair opened their first home-based child care facility, when the  provider who held the child care license (license holder) failed to disclose  that her stepfather, a twice-convicted drug offender, lived in the home.  The stepfather had access to CCDF funds through joint bank accounts  with both providers, according to investigators, who also observed him  transporting children for child care operations. A parent of one child  enrolled in the child care home even told investigators that she was  instructed not to mention the stepfather to investigators because “he  wasn’t supposed to be there.”
Once the child care home opened, the unlicensed provider (operator) led  its day-to-day operations. As part of the scheme, she began requesting  electronic access cards from parents of children enrolled at the child care  home, according to the investigator’s report. These electronic access cards  recorded the hours a child spent in a child care facility, allowing the  operator to inflate the number of hours she billed the state for child care.   Several parents interviewed by investigators acknowledged that they  freely gave the operator their electronic access cards but one parent said  the operator threatened to take away her spot if she did not provide the  access card. Many parents acknowledged to investigators that the cards  had been fraudulently swiped at times when care could not have been  provided for a variety of reasons including the parent having a conflicting  work schedule, the child having been moved to another child care facility,  or the child being in another state at the time. While some parents claimed  their electronic access cards were used without their knowledge, the  investigator found that others were aware of the scheme or actively  participating in it. For example, one parent provided her swipe card to the  operator in exchange for cash payments every 2 weeks.
Several parents also alleged that the provider mistreated their children,  and the investigator observed that the child care facility was dirty and  possibly unsafe.  For example, several parents said that their children  were not being fed all day, even though the child care home received  subsidies from a federal nutrition program.  Parents also alleged that  their infants’ diapers were not changed, resulting in rashes.  One parent  claimed that the operator put her two children, ages 10 and 12, in a closet  as punishment. In addition to the alleged mistreatment, several parents  told the investigator that the operator attempted to extract additional  payment from them by charging cash co-payments in excess of the amount  permitted by the state, or by convincing them to buy her groceries using  their electronic access cards to the Supplemental Nutrition Assistance  Program (SNAP).
About a year after they opened their first child care home, the license  holder received a license for a second child care home. Like the first  facility, the new child care home was run primarily by the operator with  assistance from the license holder and provided additional opportunities  for fraudulent billing.  For example, the second facility was not always  open during its regular hours and the two child care facilities did not have  enough staff to cover all of the shifts for which they were supposedly  open.  When questioned by investigators, the operator claimed she was  covering both sites by working “24 hours a day and 7 days a week.”
The scheme was discovered when a caseworker noted that the operator’s  own children were receiving subsidies to attend the child care home  where she worked. Furthermore, several clients referred to the operator as  the owner of the child care home, even though she was not licensed. In  March 2009, the license holder pled guilty to welfare fraud, a class D  felony, and the operator made the same plea in July 2009. Both were  sentenced to 2 years in a state department of corrections jail.
Case 2: The owner of a Missouri child care center fraudulently billed the  state for over $112,242 in CCDF funds, neglected some children in her  care, and operated a second unlicensed child care center from her home.  Over 6 years, the child care center’s owner fraudulently obtained CCDF  funds by falsifying invoices and attaching altered or forged attendance  sheets as support for her claims, according to the plea agreement.  For  example, the owner forged parent signatures and attendance times, in  some cases incorrectly spelling parents’ names on the attendance sheets.  Several parents admitted to the investigator that they never signed any  sign attendance sheets for the child care center but others said that when  they first enrolled their children in the child care center, the owner had  them sign blank attendance sheets. One of these parents signed a single  attendance sheet her first month and the owner told her she would “take  care of everything for (the parent) after that.”  Using these falsified  attendance sheets, the owner billed full time hours for children who  attended part time and billed for children who never attended her child  care center or children who had left the child care center.
In addition to financial fraud, investigators uncovered instances of neglect  during their interviews with parents. For example, one parent said she  went to pick up her children at the child care center, but found them at the  owner’s house locked in a car. Another parent said that when she arrived  at the facility one day, no one could tell her where her daughter was. The  parent found her daughter outside unattended.  The investigators also  found that the owner illegally billed the state for care provided at an  unlicensed child care center that she ran out of her apartment. For  example, one parent paid cash for child care provided at the unlicensed  home, even though the owner billed for care supposedly provided to the  same child at the licensed child care center. The parent confirmed that she  was not eligible to receive CCDF funds and that her child was too young to  be enrolled in the licensed facility. Furthermore, a former employee  testified that she watched as many as 25 children at one time in the  apartment. Investigators noted that the owner moved children from the  licensed facility to her apartment in the evenings to avoid exceeding the  required worker-to-child ratio at her licensed facility.
The owner attempted to obstruct the investigation into her child care  center, according to the investigator’s report. She encouraged parents to  lie to investigators about the forged signatures, told one parent to ignore  interview requests and harassed another parent by threatening to have her  fired. Despite her attempts, the owner was charged and pled guilty to mail  fraud in December 2008.  She received 15 months in prison, and was  required to pay $112,242 in restitution.
Case 3: An Oregon couple created fictitious child care providers using  falsified documents and stolen Social Security numbers in order to  fraudulently obtain $122,616 in CCDF funds.  The scam started when each  parent claimed to be living at a separate address with the children,  according to the investigator’s report.  The husband applied for the CCDF  program using a relative’s address in Lake Oswego, Oregon, even though  he lived in Portland with his wife and children. The husband began  receiving child care benefits in June 1998 and the wife began receiving  separate benefits for the same children just one month later.  Investigators  later determined that the husband was the children’s caregiver, which  should have disqualified the family from the program.
To collect the CCDF funds, the couple created fictitious child care  providers who supposedly cared for their children out of their private  residences, according to the investigator’s report. Using a fraudulently  obtained Social Security number, a fake name, and the address of a  commercial mailbox store in Vancouver, Washington, the husband applied  to become a child care provider. Once the fictitious provider was accepted  into the program, the husband submitted a monthly bill showing the  number of hours of care provided and used the mailbox to receive checks  from the state, which he cashed using the fictitious provider’s identity. The  couple created a different fictitious provider to collect the wife’s child care  subsidies using the same method.  In this case, however, the husband stole  the Social Security number and birth date of his half brother, who lived in  Washington and had never worked in Oregon.
The investigators found that in order to maintain eligibility for the CCDF  program, the husband falsified employment records to show that he was  working. He provided pay stubs similar to those sold at office supply  stores that showed his employer as “Ablazed and Mystifying Women,”  which he described as a warehouse. In fact, there was no such business in  Vancouver, no government agency had any records of the business, and  the investigator was unable to find the building when she drove to the  address. Furthermore, the husband’s alleged home address was a 30  minute drive from his supposed employer, but he had a suspended driver’s  license and no vehicles registered in his name. However, he did have a  driver’s license and three vehicles illegally registered in the name of one of  the fictitious child care providers.
A caseworker referred the husband for investigation because his  employment records looked false, according to the investigator’s report.   When the couple became aware of the investigation, they attempted to  disrupt the investigation. The wife requested that the investigator not call  her anymore and the husband claimed to have a series of family  emergencies that prevented him from meeting with investigators. The  father pled guilty to two counts of theft, five counts of identity theft, three  counts of aggravated theft, and two counts of theft by deception and was  then sentenced to 8 years in prison and $137,215 of restitution. The mother  pled guilty to one count of unlawfully obtaining public funds, one count of  forgery, two counts of identity theft, and two counts of theft by deception  and was then sentenced to 3.5 years in prison.
Case 4: Five women colluded to fraudulently bill Washington for $8,806 in  CCDF funds and in some cases, assisted others in illegally obtaining child  care licenses. For approximately 6 years, the five women received funds  from the CCDF program and the food reimbursement program as child  care providers, according to the indictment.  The five women billed for  fictitious children and children who attended school during the hours the  women claimed to be caring for them. One woman billed for the same  child twice, using the child’s real name and identifying information and  also using a false name with the child’s real identifying information.
Two of the women assisted others in applying for child care provider  licenses using false identities even though the women had reason to  believe the individuals were ineligible due to criminal history or  immigration status, according to the indictment.  One of the women  provided one applicant with a fake name and Social Security number, and  provided another applicant the name and Social Security number of one of  the children under her care. Two other women provided fake references  for the ineligible applicants’ false identities.
After they became aware of an investigation into their activities, the five  women met twice with a potential witness for the grand jury and tried to  convince her to lie to investigators. A federal investigation led to an  indictment by the U.S. Attorney’s Office in August 2007 charging all five  women with conspiracy to make a false statement relating to a health care  program and theft of public funds. Four of the women pled to conspiracy  to make a false statement and one pled to theft of public funds. Each  woman was sentenced to three years of probation along with restitution  for the amount stolen from the program.
Case 5: Two providers operating a large child care center in Wisconsin  obtained over $360,000 in CCDF funds by colluding with parents to help  them fraudulently qualify for child care assistance, then offered free  housing and kickbacks to parents in exchange for enrolling their children  in the child care center.  One of the women held the child care license  from the state, while the other operated the child care center. According  to the prosecutor, the operator had previously run licensed child care  centers, but these were closed and her license revoked due to improper  billing. However, no charges were filed against her. Having lost her  license, the operator went into business with her daughter, who obtained a  child care license from the state in her name. Court transcripts note that at  first, the child care center operated out of various private residences and  served a small number of children.  Later, it expanded into a new facility  that was licensed to serve 64 children per shift, with three shifts each day.
According to the complaint filed by the prosecutor, the operator solicited  mothers to register their children at the child care center, particularly  those with large numbers of children.  She then charged the state for full- time care for each child, about $200 per week, even though some children  did not attend the child care center at all and others only attended  sporadically. To help these women meet the eligibility requirements for  the CCDF program, she forged documentation showing that they were  employed at her child care center. Some of these women never worked at  the child care center while others worked for a limited period of time. In at  least one case, the operator used CCDF funds to pay a kickback to one  woman whose children were enrolled at the center.
To generate more income, the prosecutor said that the operator and  license holder used funds from the CCDF program to buy several rental  properties, which the operator offered as rent-free housing to parents who  enrolled their children in her child care center. As part of this agreement,  the operator provided the parents with proof of employment that allowed  them to apply for rental assistance from the city of Milwaukee. According  to the prosecutor, the operator received the rental subsidy for those  families accepted into the program and did not charge them any rent, a  violation of the rental subsidy program’s policy.
In April 2009, the operator pled guilty to theft by fraud and was sentenced  to 5 years in jail followed by 12 years of extended supervision and  $300,000 in restitution payments to the state. The license holder pled guilty  to a computer crime for giving her mother access to the child care billing  system and was sentenced to 30 days at the house of correction followed  by probation. During the daughter’s sentencing, the judge noted that the  program “was a joke with little if any oversight.”
section_title: Eligible Children May Not Receive Child Care Services in Some States Because of Significant Waitlists
paragraphs: Not all eligible families that want to receive CCDF assistance are currently  able to receive it for a variety of reasons, and fraud and abuse in the  program may further reduce the availability of CCDF funds. This lack of  child care assistance forces some families to cut back on spending for  daily needs, working hours, and education. Of the 41 waitlisted parents we  interviewed, 16 described multiple hardships—facing financial difficulties,  quitting their job or education program, and worrying about negative  impacts on their children’s development.  Twenty-four parents said they  had budget problems which forced some to cut back on spending for daily  essentials such as groceries, clothing, gasoline, electricity, car payments,  health insurance, or their child’s lunch money. Some parents told us they  had taken out loans or depleted family savings to pay for child care.  Twenty-four parents reported problems maintaining stable employment or  enrollment in education, in some cases having to turn down or quit jobs  that did not pay enough to cover child care expenses.  Nine parents also  told us that a lack of child care caused a variety of negative effects on their  children, including one parent who reported having to send her child to an  unlicensed relative who does not offer the educational activities that a  high-quality child care center might. Another parent said that her two  developmentally disabled children would receive better care at a child  care center than they currently receive from their elderly grandparents.  See table 5 for the experiences of 10 applicants we contacted. These  applicants expressed issues common to many of the parents we  interviewed. We did not attempt to verify the applicants’ statements.
According to state program administrators, Recovery Act funds for the  CCDF program have enabled some states to reduce or eliminate waiting  lists or expand CCDF eligibility to cover additional families, but many  eligible families remain without child care assistance. States’ CCDF  implementation plans for fiscal years 2008 to 2009 identified 25 states that  have processes to maintain some type of waiting list when demand  exceeds available funds. We contacted 11 states that had active waiting  lists between November 2009 and March 2010. Mississippi used Recovery  Act funds to process all of the children on their waiting list, eliminating  7,000 individuals from the waiting list in April 2009.  Arkansas also  eliminated its waiting list but later reinstated it due to an increase in new  applications. In Florida, officials used Recovery Act funding to allow  children to stay in the program for longer periods.  In North Carolina,  officials told us Recovery Act funds allowed them to respond to the state’s  high unemployment rate by expanding eligibility to unemployed parents  who needed child care to search for a job. However, California told us that  Recovery Act funds have not had a noticeable impact on the size of its  waiting list of 134,880 families. Furthermore, New Hampshire had to  institute a waiting list due to the increase in demand, though program  officials acknowledged that Recovery Act funds delayed the  implementation of the waiting list. In one of the counties we tested in New  York, cuts to the child care budget during our undercover tests eliminated  1,091 children from the program. However, due to the low-income  fraudulently reported by the parents, their fictitious children would have  continued to receive assistance if we had not withdrawn them from the  program.
section_title: Corrective Action Briefing
paragraphs: Between July 16 and September 10, 2010, we briefed HHS officials and  CCDF program officials in Illinois, Michigan, New York, Texas, and  Washington on the results of our work. We suggested a number of actions  that HHS and states should consider to reduce fraud and abuse in CCDF  programs, including:     Require applicants, household members, and providers to submit Social  Security numbers in order to receive child care assistance.
Evaluate the feasibility of validating applicant and family member identity  information with SSA.
Establish more stringent verification requirements for eligibility, including  validating applicant-provided information using state databases of wage,  employment, public assistance, and child support information; contacting  employers directly to verify employment; and using Internet resources to  verify address information.  Implement a system to alert staff to child care applications previously  rejected for fraud to prevent the applicant from resubmitting in the same  county or another county.
Evaluate the feasibility of requiring all providers, including relative  providers, to undergo national fingerprint criminal history checks and  screenings against the national sex offender registry and state child abuse  databases.
Establish more stringent verification of bills submitted by child care  providers, including requiring program staff to verify that the number of  reported hours of child care correspond to the number of hours worked by  the parent; denying unsupported claims for extra hours worked; and  restricting the number of hours that a provider can bill over the authorized  amount without documentation.
Each of the states we tested already had some of these controls in place or  has plans to implement some of them in the near future.  For example,  Illinois, Washington, and Michigan conduct some verification of applicant  information against state child support and public assistance databases.   Several counties in New York use an electronic system to compare hours  worked on parents’ pay stubs to the hours billed by providers, and officials  told us they plan to put the system into use state wide.  Texas officials told  us that they intend to implement a new, electronic billing system that will  include controls to prevent over billing.  However, in some cases, officials  cited concerns about the cost and legal implications of increased  verification.  For example, Texas expressed concern that conducting  fingerprint criminal history checks on providers would impose additional  costs on the program.  Some states noted that they are not permitted to  require parents to submit SSNs, while New York state officials told us they  do not have the legal authority to verify SSNs submitted by parents or  providers. HHS did not respond to issues surrounding the collection and  verification of SSNs at the time of our briefing.   Recognizing that  preventing fraud often involves additional costs, some of our suggested  corrective actions allow for HHS and states to evaluate the feasibility of  control activities.
Responding to our findings, HHS commented that they have recently taken  actions to address issues of CCDF integrity.  For example, HHS officials  said that program guidance issued in August 2010 discussed recommended  documentation and verification procedures, including data matching with  wage and employment databases; data matching with other public  assistance databases; and background checks and training for providers.   The guidance also highlighted on-site visits to providers to review  attendance and enrollment records.  Officials noted that an electronic  system, the Public Assistance Reporting Information System, uses an SSN  match across states to identify red flags of individuals enrolled in benefit  programs in multiple states.   Only eight states currently use this system  for CCDF, but officials said the August 2010 program guidance encouraged  more states to join.  In addition, officials said that HHS has an ongoing  conference call series on program integrity, which has covered promising  practices on how to use data mining and automated reports to highlight  cases that need further scrutiny.
HHS officials also commented on upcoming initiatives related to fraud  prevention.  For example, officials said that state CCDF applications for  fiscal years 2012-2013 will have a stronger focus on integrity, including  questions on the verification of eligibility information, and procedures for  identifying, investigating, and recovering fraudulent payments.  In the  coming year, HHS’s Self-Assessment Instrument for Internal Controls &  Risk Management will be revised and piloted in more states, and will  include fiscal and program evaluation and stricter controls to prevent over  billing.
We are sending copies of this report to the Secretary of Health and Human  Services and the child care program offices of Illinois, Michigan, New  York, Texas, and Washington.  In addition, the report is available at no  charge on the GAO Web site at http://www.gao.gov.
Please contact me at (202) 512-6722 or kutzg@gao.gov if you have any  questions concerning this report. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report.  GAO staff who made major contributions to this report are  listed in appendix II.
section_title: Appendix I: Scope and Methodology
paragraphs: To proactively test selected states’ fraud prevention controls, we identified  26 states that received more than $100 million from the Child Care and  Development Fund (CCDF) for fiscal year 2009.  From these states, we  identified six that did not require providers to be fingerprinted or undergo  site visits and selected the five states receiving the most American  Recovery and Reinvestment Act (Recovery Act) funding.  We focused on  these criteria because fingerprint checks could have identified our  investigators as federal employees and site visits would have required us  to maintain a physical address for our fictitious child care operator. In  addition, we selected counties within the five states that contained large  cities, where possible, and did not have waiting lists for assistance to  ensure that we did not prevent real families from obtaining assistance.  We  tested two counties in Illinois, Michigan, New York, Texas, and  Washington to develop our 10 undercover tests.
Though all types of providers are potentially able to commit fraud, we  chose to test cases in which a relative is paid to provide care because  these providers are generally subject to less regulation than larger child  care centers. Relative providers cared for 12 percent of children in the  CCDF program in 2008, while other types of providers accounted for the  rest. As such, our results cannot be applied to licensed child care  providers, such as child care centers, nor can our results be projected to  all state CCDF programs. We used commercially available hardware and  software to counterfeit identification and employment documents for  bogus parents, children, and providers. Once accepted, we billed the  program for care provided to the fictitious children. We provided  fraudulent pay stubs showing the hours worked by parents and reported  those hours through automated systems or completed invoices we  submitted to the state or county for payment.  We received several child  care assistance checks, which we did not cash and returned to program  officials at the end of our investigation. During our tests, media reports  indicated that the child care assistance budget in one county had been  reduced.  We immediately ended our undercover test in this county and  returned the voided check.
To select our case studies, we identified criminal convictions of child care  assistance fraud nationwide using online databases and internet resources  to identify closed cases. As part of the selection process, we focused on  cases involving a high dollar amount of fraud or containing other elements  of fraud such as stolen identities. Ultimately, we selected 5 cases from  Indiana, Missouri, Oregon, Washington, and Wisconsin.  We reviewed  applicable court documents for each case. When possible, we also  interviewed investigators and prosecutors in charge of the selected cases  to obtain additional case details.
To examine the impact of being unable to obtain child care on low-income  parents, we contacted officials in states and counties with active child care  assistance waiting lists to obtain names of parents currently eligible for  child care assistance. States’ CCDF implementation plans for fiscal year  2008 to 2009 identified 25 states that have processes to maintain some type  of waiting list when demand exceeds available funds. However, these  waiting lists fluctuate over time and we could not identify a centralized list  of all states with active waiting lists. We confirmed active waiting lists in  11 of the states from November 2009 through March 2010. Of these 11  states, Alabama, Indiana, Massachusetts, Minnesota, North Carolina, and  Texas provided us with contact information for individuals on state  waiting lists, which we used to contact parents directly. Starting from the  top, we selected a nonrepresentative sample of 166 parents to contact and  interviewed the 41 who responded to our inquiries. We collected  information such as the number and ages of children and the parents’ job  title and income to determine demographic information. However, we did  not attempt to verify the accuracy of the information that they provided to  us. Our results are not representative of the entire population of families  currently in need of child care assistance.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the individual named above, the following individuals made  key contributions to this report: Cindy Brown-Barnes, Assistant Director;  Andrew O’Connell, Assistant Director; Joshua Bartzen; Gary Bianchi; Eric  Charles;  Grant Fleming;  Matthew D Harris; Christine Hodakievic; Aaron  Holling; Jason Kelly;  Barbara Lewis; Jeffrey McDermott;  Andrew  McIntosh;  Sandra Moore; George Ogilvie; Kimberly Perteet; Gloria Proa;  Lerone Reid; Ramon Rodriguez;  Timothy Walker; and John Wilbur.