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5 Questions to Ask When Addressing Childcare Subsidy Program Fraud


The “Wisconsin Shares” program is a program from Wisconsin’s Department of Children and Families that provides child care subsidies to low-income families. Unfortunately, daycare providers and some parents have hijacked the program to funnel subsidies to non-legitimate child care organizations.

boy on slideIn some cases, parents have claimed that their relatives are “child care providers” and are funneling Wisconsin Shares daycare subsidies to their relatives. In other cases, daycare centers have offered free rent, free gas, vacation getaways and $1,000 rebates to encourage parents to enroll kids in daycare instead of enrolling them in kindergarten. These fake providers and daycare centers receive $200 per week, or about $800 per month, for each enrolled Wisconsin Shares kid. As a result, at-risk children don’t attend kindergarten and have arrived in Wisconsin’s first-grade classrooms not knowing their names or even how to hold a pencil, according to reports published in the Milwaukee Journal-Sentinel.

Wisconsin Shares needs reform, and some of that task will fall to human services managers. Learning to provide cost-benefit analysis for social programs, including child care subsidy programs, is part of any Master of Human Services curriculum. To maintain the public trust, human services managers have to spend public money in ways that produce measurable positive results, but the solution for fraud can’t be more expensive than the fraud itself. Human services managers can use these five questions as a framework for reforming Wisconsin Shares.

How Have Child Care Subsidy Programs Addressed Fraud in the Past?

Wisconsin Shares should evaluate ways to reduce systemic fraud. In New York, the Child Care Time and Attendance (CCTA) program allows parents to check their children in and out of daycare using a password. It tracks attendance, calculates bills automatically and reduces reporting burdens for child care centers. In addition, New York’s Office of Children and Family Services has also allowed local services districts to stop subsidy payments when appropriate and has initiated enforcement actions against fraudulent child care providers.

Is Wisconsin Shares Structured to Provide Good Outcomes?

Child care subsidy programs do provide proven benefits, but those benefits depend on how the programs are structured. A study published in Early Childhood Research Quarterly found a link between enrollment in a child care center and better outcomes upon kindergarten entry. If Wisconsin Shares stopped subsidizing daycare provided by relatives and only subsidized center-based care, the program might produce better outcomes for children while also eliminating many instances of fraud.

Does Wisconsin Shares Benefit the Taxpayers?

Despite problems with fraud, Wisconsin Shares provides measurable cost savings for society. Students who do attend preschool, for example, are less likely to become teen parents. Teen childbearing alone costs taxpayers approximately $1,682 per year per teen pregnancy, and the fall in teen pregnancy rates between 1991 and 2010 saved taxpayers $12 billion. All of these factors indicate that investing in child care subsidies reduces the overall cost to society later, but Wisconsin Shares is lowering society’s ultimate cost savings by refusing to address fraud.

What Are the Cost-Benefit Ratios of Different Fraud Prevention Measure?

Reforming Wisconsin Shares would require human services managers to spell out the costs and benefits of each reform scenario. For example, if implementing a program like New York’s CCTA could cost more than the fraud itself, then CCTA would make it a poor investment for taxpayers. Instead, forbidding child care centers to offer enrollment incentives for Wisconsin Shares could curb fraud at a much lower cost.

How Much Fraud Could Really Be Eradicated?

Gov. Paul LePage (R-Maine) spent $1.4 million over two years investigating welfare fraud in his state. The governor’s office referred 45 people to law enforcement for welfare fraud. If each of those 45 households received Maine’s maximum benefit ($500) over the 24-month period, then LePage’s investigation recovered at most $540,000. LePage spent $2.59 for every $1 that he uncovered in welfare fraud.

Spending child care subsidies in a fraudulent manner robs taxpayers, and Wisconsin Shares has to address its fraud problems. However, Wisconsin has to question whether investigating individual fraud cases is a worthwhile investment of taxpayer money. Implementing deterrents, such as subsidizing only center care or giving local social service agencies authority to stop payments, might be more cost- effective than investigating individual cases. Human services managers have to ensure that the solution doesn’t cost more than the problem itself.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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