Report 2015-503 Recommendation 4 Responses

Report 2015-503: Follow-Up—California Department of Social Services: It Has Not Corrected Previously Recognized Deficiencies in Its Oversight of Counties' Antifraud Efforts for the CalWORKs and CalFresh Programs (Release Date: June 2015)

Recommendation #4 To: Social Services, Department of

To ensure that all counties consistently gauge the cost-effectiveness of their early fraud detection activities and ongoing investigation efforts for the CalWORKs and CalFresh programs, Social Services should develop a formula to regularly perform a cost-effectiveness analysis using information that the counties currently submit. Specifically, this formula should measure the savings that a county achieves for each dollar spent on antifraud efforts.

Annual Follow-Up Agency Response From November 2020

At the recommendation of the California State Auditor (CSA), CDSS published a revised cost-effectiveness analysis formula to all California County Welfare Departments (CWDs) on December 11, 2019. The cost savings and effectiveness formula and guidance were issued via an All County Information Notice (ACIN) ACIN I-75-19. The guidance, as recommended by CSA, specifically included a formula that measures the savings that a county achieves for each dollar spent on antifraud efforts. Additionally, the newly revised formula provides a statistical formula to derive cost savings and effectiveness in the CalFresh program.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From November 2019

CDSS has disseminated a draft Fraud Cost Savings and Effectiveness ACIN to stakeholders. A final letter will be published by March 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2018

To ensure the accuracy of overpayments that counties have collected for the CalFresh program, the Program Integrity Bureau/IEVS Review Unit has developed a series of scenarios that counties must show from the time an overpayment/overissuance was calculated, collection efforts, and the reporting of such activities. Counties are now required as part of their routine IEVS review to provide cases in the following scenarios:

1. Cases that have been terminated or previously reactivated terminated debt (debt previously written as uncollectable).

2. Cases that posted as "closed" when a final payment is received.

3. Cases that a previously established claim was changed from one category to another because of a hearing or court determination.

4. Cases that had Treasury Offset Program (TOP) reversals.

5. Cases with repayments due to bankruptcy notification.

6. Cases where a refund was made due to overcollection.

7. Cases where EBT benefits are returned as payment and credited to the client's account.

IEVS reviews with this component began in October 2018.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

This recommendation has been outstanding since the release of the original audit in November 2009. The response that Social Services provided is unrelated to our recommendation.

Annual Follow-Up Agency Response From November 2018

CDSS' Program Integrity Bureau is working closely with fiscal staff to examine savings assumptions and county cost data. County cost codes are currently under evaluation to determine if they can be used in a cost-savings methodology or if changes are needed. CDSS is also analyzing the ongoing CalWORKs and CalFresh benefits and county administrative savings part of the cost-savings methodology to determine if and how the methodology should change. Anticipated completion date of the analysis is March 31, 2019. If the analysis determines new savings assumptions should be used, CDSS will revise the methodology and disseminate to all counties via an All County Information Notice by June 2019.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

This recommendation has been outstanding since the release of the original audit in November 2009. We are hopeful that Social Services is serious in its stated intent to address this recommendation by June 2019.

Annual Follow-Up Agency Response From December 2017

Due to 1) limited resources and Federal changes in reporting, 2) much more time being needed than originally estimated for the county cost code analysis, and 3) validating the current savings formula distributed in All County Information Notice (ACIN) I-81-09, the Anticipated Implementation Date has been changed from March 2017 to June 2019. CDSS will analyze the ongoing CalWORKs and CalFresh benefits and county administrative savings part of the cost-savings methodology to determine if and how the methodology should change. County cost codes also will be further evaluated to determine if they can be used in a cost-savings methodology or if changes are needed. This analysis should be complete by December 2018. If the analysis determines new savings assumptions should be used, CDSS will revise the methodology and disseminate to all counties via an ACIN by June 2019.

In 2017, CDSS implemented a change in the Department's reporting of fraud activities to meet the new requirements of its Federal partners. CDSS will be analyzing the newly required information, which includes hours spent on investigating, prosecuting, and conducting administrative hearings regarding potential fraud and the service dollars associated with these activities. CDSS will identify county cost codes along with its new data and convene a statewide workgroup by July 2018 to develop a formula to measure the savings that a county receives for the dollars spent in fraud detection and prevention. In addition, CDSS is decommissioning the Statewide Fingerprint Imaging System no later than June 30, 2018. The Department's future plans include use of a Knowledge Based Authentication (KBA) service to ensure the identity of people applying remotely for benefits. This service is expected to facilitate client applications while also streamlining administration of additional notes the CalFresh program will be evaluating the overpayment collection threshold during 2018.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2016

CDSS will convene a work group no later than January 30, 2017, in order to improve the accuracy of county codes (CCs). The work group can improve the accuracy of CCs by developing a better definition for each one, ensure CCs address early fraud or ongoing fraud for one program, and develop new CCs for unrelated activities currently claimed with one CC. CDSS also intends to revisit the savings formula distributed in All County Information Notice (ACIN) I-81-09. If, based on the assessment of CDSS staff that the assumptions of time on aid and other parts of the savings formula have to change, then the new assumptions will be used and new savings formula will be shared with the counties through a new ACIN.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The California Department of Social Services (CDSS) is completing its assessment of cost data to determine if it is sufficient for inclusion in the cost savings methodology. The assessment includes a recommendation on how to use the cost data to update the cost savings methodology. The proposed revised methodology will be shared with stakeholders for review and comment and formally transmitted in an All County Letter (ACL). This process will take approximately three months.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

CDSS gathered sample counties available cost data and is analyzing the data to determine if it is sufficient for inclusion in the cost savings methodology.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

CDSS has selected sample counties whose available data will be reviewed to initiate the Departments' assessment.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2015-503

Agency responses received are posted verbatim.