Auditor chastises child-care managers for bogus records

The State Auditor's Office rebuked state child-care managers yesterday for distributing subsidies to child-care operators with bogus Social Security numbers, falsified records and, in one case, a felony conviction.

A special investigation of the farming community of Mattawa, Grant County, also found many child-care providers who serve low-income families lacked working smoke detectors and child immunization records.

Auditors, after reviewing records of Mattawa's 50 child-care providers, estimated that the Department of Social and Health Services might have overpaid by $2 million.

"In a program like this, regard has to be in two places — to serve children and, equally, to account for the public's money," said State Auditor Brian Sonntag. "It's a worry that they miss on both counts. This puts the whole program in question."

Washington's $300 million child-care program, which is financed by the state and federal funds, subsidizes the child-care bills of low-income families.

Private child-care providers who contract with the state must submit child attendance records to receive government funds.

DSHS officials disputed the auditor's findings, saying there is no evidence that Mattawa providers billed for "phantom kids."

The agency said providers who used bogus or stolen Social Security numbers aren't automatically disqualified from state subsidies because DSHS had not been required to verify identification documents until May 17.

Since nearly $840,000 of the auditor's estimated amount of overpayment is based on fraudulent documentation, DSHS considers the auditor's $2 million estimate inflated.

But state auditors said they found that at least a third of the Mattawa providers submitted bogus attendance records.

In addition, 13 of the town's providers included on their license application Social Security numbers "assigned to other people," and one provider had an outstanding felony warrant that didn't show up on a criminal background check because it was from another state.

DSHS said it is trying to tighten oversight of child-care billings with a new computerized system, but that project is years away from being launched.

The review was launched after auditors saw news reports about potential fraud in Mattawa. One Mattawa child-care provider has been convicted of theft and identity theft, and the Grant County Sheriff's Office is investigating 10 more cases.

Jonathan Martin: 206-464-2605 or jonathanmartin@seattletimes.com