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Technology-driven approach being developed to help counties detect and combat fraudulent activity

Millions of dollars lost each year to parents and providers submitting false or inaccurate claims

RENSSELAER, NY – The New York State Office of Children and Family Services (OCFS) today announced that it is taking another step in its continued efforts to reduce taxpayer dollars lost to child care subsidy fraud and waste by seeking a technology-based solution to help local districts see that government funds are spent appropriately, accurately, and for their intended purpose.

To accomplish this goal following the issuance of a Request For Proposals, OCFS awarded a five-year, $1 million contract to Controltec, Inc. and IBM, which are tasked with developing an automated technical solution that will use date mining and predictive analytics to identify potential cases of child care subsidy fraud and rank them based on risk indicators. This will allow county child care and OCFS staff to quickly prioritize potential fraud cases for investigation.

Child care subsidy fraud occurs when parents or providers misrepresent their circumstances to receive undeserved, publicly-funded dollars. Such fraud takes an enormous toll on state and local governments. National estimates of loses due to child care subsidy fraud range from ten to 40 percent of each dollar allocated.

“OCFS is continuing its work to stop child care subsidy fraud before it starts,” said Gladys Carrión, who was the OCFS commissioner when the contract was awarded. “Those committing this type of fraud are stealing from taxpayers and reducing funds available for eligible families who rely on subsidies to pay for child care. Providing healthy and safe care for all of New York’s children who need it and by cutting down on fraud, we are able to give more families the child care services they need.”

The system will help detect and prevent subsidy fraud by:
• Implementing a tool that will analyze and integrate data from the various data systems with New York State child care subsidy data;
• Running data against various predictors or red flags identified as highly indicative of fraudulent activity;
• Focusing investigations on cases that have a higher propensity of fraudulent activity.

OCFS has been diligently and systematically combatting fraud for several years, equipping individual counties and departments with the tools necessary to pre-empt possible fraud, saving untold millions of dollars collectively.
• In October 2010, OCFS launched a multi-faceted anti-fraud initiative to detect, investigate, and prosecute child care subsidy fraud. Several plans resulted, including implementing new fraud regulations, deploying a statewide automated Child Care Time and Attendance (CCTA) System, among other initiatives.
• In October 2011, OCFS revised child care subsidy regulations to give local social services districts more authority to stop child care payments where appropriate, and initiate enforcement actions against providers found to be engaging in fraud.
• In March 2012, OCFS gave more than $1 million in Child Care Fraud Prevention and Detection Incentive grants to 20 county Departments of Social Services (DSS) to fight child care fraud. Some counties used the funds to launch detection and prevention programs, and others expanded upon progress by creating task forces or educating the public about how they could help, with much success. For example, in just one year, Nassau County protected taxpayers from $1 million in welfare fraud thanks to a $100,000 grant.

The OCFS Child Care Subsidy Program Integrity Team, which has worked to implement these measures, was honored this year by the State Academy for Public Administration with the Public Service Award of Merit. The team is a collaboration between the OCFS Division of Child Care Services (DCCS), Legal Affairs, and the State Office of Information Technology Services.