Puerto Rico's Controls for Its Child Care and Development Program Claims Were Not Effective

Not all of the Commonwealth of Puerto Rico's Department of the Family's (State agency) controls for provider and client eligibility determinations were effective. Specifically, all of the provider eligibility controls we tested for provider background checks, required provider forms, and provider rate agreements were not effective. Of the client eligibility controls we tested, we determined that the State agency's controls for family income and need-for-service eligibility were not effective. Although we found that the State agency's controls for verifying clients' citizenship were effective, we identified that the State agency was not implementing Federal law regarding client eligibility. Specifically, the State agency was not considering qualified aliens eligible for childcare services. Finally, the State agency's controls for client age and claim processing that we tested were effective.

The State agency lacked sufficient written policies and procedures and sufficient staff to effectively oversee licensed providers, and it lacked adequate procedures to monitor nonlicensed providers in relation to its Child Care and Development Fund (CCDF) Program. As a result, the program is vulnerable to fraud, waste, and abuse and places the health and safety of children at risk.

Of the 100 voucher claims that we reviewed, we determined that 99 claims showed evidence of ineffective controls for provider and client eligibility. On the basis of our sample results, we estimated that $16.2 million of the CCDF Program's paid claims could have had one or more of the control deficiencies we identified. We also found that the State agency improperly claimed $83,000 in fiscal year (FY) 2012 CCDF funds for childcare services provided during FY 2011. This occurred because the State agency did not have procedures to properly identify and assign childcare funds to voucher payments in accordance with obligation requirements established by Federal criteria.

We recommended that the State agency improve its controls for provider and client eligibility determinations and for processing claims to ensure that payments for the CCDF Program are made only for eligible clients and to eligible providers. Our report contains procedural recommendations for achieving these goals. In addition, we recommended that the State agency return to the Federal Government $83,000 for unallowable obligations and establish policies and procedures to ensure that childcare funds are identified and assigned to voucher payments in compliance with obligation requirements. The State agency concurred with our procedural recommendations and described steps it has taken to implement them. The State agency also described why it made unallowable obligations but did not indicate whether it planned to return the funds. In a follow-up email dated December 20, 2016, the State agency indicated that it agreed to return these funds to the Federal Government.