Unit Charged With Investigating Welfare Fraud Has Little Accountability, Placing Millions of Tax Dollars at Risk
Recoveries by Division Cannot be Substantiated Because of Abysmal Recordkeeping, Significant Delays by Division
ERIE COUNTY, NY—Today, Erie County Comptroller Mark Poloncarz released the findings of an audit of the Erie County Department of Social Services (“DSS”), Special Investigations Division (“SID”) for the period of January 1, 2008, through December 31, 2009. SID is charged with identifying and preventing welfare fraud before it occurs and recovering funds after fraud has occurred.
The Audit’s primary goals were to determine the effectiveness and efficiency of SID operations, in general, and to determine the accuracy behind DSS claims to have collectively obtained more than $45 million in repayments for 2008 and 2009. However, because of abysmal recordkeeping, much of the information requested by auditors for testing could not be produced by SID and it was impossible to make any such determinations.
“To say SID’s data filing system is outdated would be an understatement,” said Poloncarz. “Throughout the course of our audit, we requested basic reports and other documentation and were met with the same response—we don’t have that information. SID is in charge of investigating and recovering from welfare recipients the fraudulent expenditure of county tax dollars. Unfortunately, they can’t even identify how much money they’ve already recovered or how much money can be potentially collected.”
Although SID’s primary claim and payment record is the New York State Cash Management System (“CAMS”), inherent limitations with CAMS requires the use of a separate filing system to keep track of all client cases. Until very recently, SID did not employ use of a computer database for the collection and storage of all information related to SID clients. Instead they maintained the more than 10,000 client cases in hard copy on 8 ½ x 11 note cards, making it virtually impossible to reconcile information with CAMS or synthesize any reports based on stored data. While SID initiated the development of this computer database for new over-grant claims in late 2010, information summarizing all prior cases still cannot be provided.
Poloncarz continued, “SID’s inability to provide basic information for their cases indicates there is no internal control structure and no accountability over any of their operations. This 19th century recordkeeping is absolutely unacceptable and, unfortunately, putting millions of dollars of potential recoveries at risk.”
For example, the audit report noted:
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SID could not produce a listing of all client cases as identified by the paper cards;
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SID does not maintain a log of cases showing which cases were sent to its internal collections unit;
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SID was unable to provide auditors requested accounts receivable balances, collection totals, and write-off amounts for the Medical Assistance and Public Assistance programs. SID was able to provide only the receivable balances and collection totals for the Food Stamp program;
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SID could not provide write-off amounts for any of the above-described programs, even though the New York State Office of Temporary Disability Assistance noted that all written-off claims for the period should be on file with DSS;
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SID has no reconciliation of client cases and little accountability over individual account balances;
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Due to the extremely lax record keeping, auditors were unable to determine the exact amount of uncollected excess amounts paid out to clients (“over-grants”), but several million dollars appears to be at risk; and,
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Though DSS claims total gross repayments of $45,100,000 during the 2 year period, and said sum may have been recovered, auditors were unable to ascertain what of that amount was attributable to the recovery efforts of SID because of the absence of relevant account documentation.
Furthermore, during the course of the audit, requests for meetings, documentation or information were met with substantial delays, which impeded auditors from completing fieldwork and the final report in an expeditious manner. As a result, auditors lost 77 man-days waiting for SID responses.
Poloncarz added, “We’ve been told over and over again that Erie County is being run like a business. If SID is an example of this, it’s the most ineffective and inefficient business I’ve ever seen and it won’t be long before we are out-of-business.”
SID is contained within DSS’ Division of Legal Affairs and investigates consumer welfare fraud complaints and prepares fraud packages for the District Attorney and State Welfare fraud prosecutors. SID is comprised of four distinct sections that include Collections, Investigations, Front-End Detection, and Resources.
Since 2006, the comptroller’s office has conducted more than 50 major audits and reviews of Erie County’s departments, related entities and issues facing residents, which have identified more than $27 million in cost savings. Under Poloncarz’s leadership, the Audit Division has been shaped into an Inspector General-style organization that stops and prevents waste, fraud and abuse of county taxpayers’ dollars and was honored by the Association of Local Government Auditors with their prestigious Knighton Award for small audit departments in 2007.