GAO Reports Reveal Fraud and Waste in Head Start and other Children's Programs

Two reports issued by the Government Accountability Office this September offered few surprises. The first report notes that the Head Start program is potentially rife with fraud and abuse. The other report notes that other related child care programs are as well.

Let’s begin with Head Start – the minimally effective social program that is the darling of the social interventionists. And, why wouldn’t it be? In 2008, Head Start appropriations reached $7.1 billion, and the program received an additional $2.1 billion in funding in 2009 through the American Recovery and Reinvestment Act.

That money supports an army of interventionist bureaucrats, many of whom draw down handsome salaries courtesy of the federal government. Would that their programs were even minimally effective, I might support them. I have, however, come to prefer empirical evidence over the child saving rhetoric that makes it so easy for the bureaucrats in the poverty industry to pick the taxpayers’ pocket.

What does nearly $9 billion dollars annually expended on Head Start produce? “Though children are making some progress, clearly few children perform as poorly as children who enter and leave the Head Start program,” admits the U.S. Department of Health and Human Services in a study issued in 2003. The study also notes that: “Children in Head Start are not getting what they need to succeed in school,” and that “most children enter and leave Head Start with below-average skill and knowledge levels,” and that “disadvantaged children lag behind throughout the school years.”

A follow-up study of low-income preschoolers issued in 2005 revealed that Head Start had no effect on preschoolers in half of the 30 measured categories. Four-year-olds showed improvement only in six of the 30 categories measured, and showed no effect on behavior, the Washington Times reported.

Lindsey M. Burke of the Heritage Foundation closely examined early intervention programs in Oklahoma and Georgia, concluding that: “More than a decade after offering students universal preschool, neither Oklahoma nor Georgia has shown impressive progress in students’ academic achievement, as measured by the National Assessment of Educational Progress. In fact, in Oklahoma, fourth-grade reading test scores have declined since 1998 when the state first implemented universal preschool.” Her thorough analysis of early intervention programs such as Head Start is a must-read both for proponents and detractors alike.

To be sure, the Head Start program is expensive. Children First for Oregon proudly boasts of the legislative victory that it supported in 2007, particularly that: “$39 million in new revenue will mean 3,000 more children around the state will have access to the highly successful Head Start program.” Successful or not, that $39 million in new revenue for the Head Start program amounted to a cost of $13,000 per child.

The darlings of the social service programs are early intervention programs, child protective services, and foster care. These are social programs that range from, at best, minimally effective to, at worst, harmfully destructive – often even fatal to the populations that they ostensibly were established to serve. All are rife with corruption.

Part of the reason that they are as rife with corruption as they are because without “clients” to “serve,” their funding would dry up. Child protective services doesn’t have this problem, because if they run low on clients, they simply invade the homes of innocent families to produce new ones. Head Start, on the other hand, is a voluntary social program. And, as in any other social program, it all boils down to maximizing revenue while minimizing costs. One of the gimmicks used by Head Start – whose funding is tied to a 100 percent occupancy rate – is to qualify otherwise ineligible families for purposes of drawing down revenue. To this end, as the Government Accountability Office explains:

In 8 out of 13 eligibility tests, our families were told they were eligible for the program and instructed to attend class. In all 8 of these cases, Head Start employees actively encouraged our fictitious families to misrepresent their eligibility for the program. In at least 4 cases, documents we later retrieved from these centers show that our applications were doctored to exclude income information for which we provided documentation, which would have shown the family to be over-income. Employees at seven centers knowingly disregarded part of our families’ income to help make over-income families and their children appear to actually be under-income. This would have had the effect of filling slots reserved for under-income children with over-income children. At two centers, staff indicated on application forms that one parent was unemployed, even though we provided documentation of the parents’ income. A Head Start employee at one center even assured us that no one would verify that the income information submitted was accurate.

There you have it. Doctored records, fraudulent misrepresentation, and the knowing disregard of facts to “fill slots.” And, all of this with assurances that no one would bother to verify the information. Welcome to the field of human services.

But there is more in the GAO report. Falsified records in the form of backdated invoices. No, this isn’t child protective services where we have come to expect that sort of thing, rather this is Head Start. As the GAO report continues on to explain:

An individual we spoke with alleged that the grantee had purchased supplies and materials for the Head Start centers and during this process had asked the vendor to back-date invoices in order to make the expenditure appear as though it had taken place in a previous grant year. We substantiated that the grantee requested the backdating of certain invoices. We obtained documents showing grantee employees requesting via facsimile the backdating of these invoices. We requested that the vendor of these supplies and materials provide us with information related to these purchases. The vendor declined to provide GAO with copies of these records; therefore we could not investigate the allegation further.

Another social program is the Child Care and Development Fund, administered by the U.S. Department of Health and Human Services. It 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.

Once again, GAO officials went undercover – this time in five states. What do you suppose that they found? According to the report:

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.

The report continues on to explain: “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.”

The problem with all of this is not so much that the federal government is being defrauded, although that is certainly something that should be of concern to the taxpayers who foot the bill for these expensive social programs. Rather, the problem is that those less fortunate among our working poor are the ones who are injured.

As the GAO explains: “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.”

The fraud, the waste, and the abuse in federally subsidized social programs remains a major concern, and the totals amount to the billions over the course of recent years. A report issued in June of 2008 revealed similar problems in the Indian Health Services, noting that: “Millions of dollars worth of IHS property has been lost or stolen over the past several years.” The report continues on with some startling illustrations. Among the items missing in action:

  • IHS identified over 5,000 lost or stolen property items, worth about $15.8 million, from fiscal years 2004 through 2007. These missing items included all-terrain vehicles and tractors; Jaws of Life equipment; and a computer containing sensitive data, including social security numbers.
  • GAO’s physical inventory identified that over 1,100 IT items, worth about $2 million, were missing from IHS headquarters. These items represented about 36 percent of all IT equipment on the books at headquarters in 2007 and included laptops and digital cameras. Further, IHS staff attempted to obstruct GAO’s investigation by fabricating hundreds of documents.
  • GAO also estimates that IHS had about 1,200 missing IT equipment items at seven field office locations worth approximately $2.6 million. This represented about 17 percent of all IT equipment at these locations.

By no means am I suggesting that social programs that provide genuine benefits to people be eliminated. Indeed, anyone familiar with my writings knows full well that I am extremely sympathetic to Native American and Aboriginal populations – and particularly so when it comes to the thorny issue of their continued exploitation by child welfare authorities.

The federal government should require, as a condition for funding, that adequate controls be set in place to assure taxpayers that corruption in federally funded programs is rapidly detected and eliminated.

Empirically validated studies should be implemented to ensure that social programs are indeed as effective as their proponents claim them to be. A cost/benefit analysis should be conducted on all social programs – including foster care – and those programs that fail to provide demonstrable benefits to the clients they are ostensibly intended to serve should be eliminated from the budget.

Those programs that thereafter remain should be further examined to see what reductions in personnel may be made to streamline operations and reduce the federal budget, as doing so would trim those enormous “administrative expenses” that state agencies typically charge to TANF, SSI, Title IV-E, and to other programs intended to provide genuine aid to citizens who are down on their luck through no fault of their own.

The Annie E. Casey Foundation conservatively estimates that the human services workforce is in the range of 3 million individuals. Many of these people are sitting in comfortable nooks and crannies in their respective industries while pulling in handsome salaries for do-nothing jobs. Perhaps the time has come to end workfare for the executive bureaucrats in the human services field as well.