Mismanagement of child-care subsidies costing city: audit

"Major lapses" in the administration of child-care subsidies to Ottawa families costs the city more than $1.5 million per year and prevents some families from accessing affordable care for their kids, according to auditor general Ken Hughes.

The city is supposed to review a family's eligibility for a child-care subsidy at least once per year. But the reviews were halted in 2014 and only resumed in 2016, leaving a backlog of 2,810 cases.

Obviously the most needy people needed to get these subsidies, and that didn't happen.- Coun. Diane Deans

That meant some families kept receiving subsidies even after they stopped qualifying for them, while other families that actually needed the money went without.

The findings are in a report presented to the city's audit committee Thursday by auditor general Ken Hughes.

"I think this is really regrettable, because obviously the most needy people needed to get these subsidies and that didn't happen," said Coun. Diane Deans, chair of the city's community and protective services committee.

The auditor's team found the backlog costs the city $1.5 million per year in unnecessary subsidies.

Overpayments not recovered

According to city policy, families that receive more money than they're qualified to get are supposed to pay it back. But because of the backlog, staff have been treating the overpayments as administrative errors and letting the families keep the money.

The auditor's team also found some families that are eligible for the subsidy have been pushed down the wait list and haven't been receiving money.

City manager Steve Kanellakos said the decision to halt the eligibility reviews in 2014 was made at the "most senior levels of the corporation," and noted the decision-makers are no longer with the city. 

31 recommendations

The audit also shows the city continued to place children in spaces even after the city spent its budgeted $64.4 million. In January 2016, the department expected to overspend by $3.5 million, but still kept handing out subsidies.

Managers planned to take the extra money from the city's child-care reserve fund, but found there was no money available in that fund, so the deficit was covered by the city's general reserve instead.

City management agreed to all of the auditor's 31 recommendations to improve the way the city handles child-care services, including the implementation of quality control and management review in the fee subsidy monitoring process.

The auditor also recommended the city allow parents to electronically submit documents, which the department will study in 2018.

Other findings:

• The number of children on the wait list, 244, was overstated by 55 children because of errors in manually entered data.
• There has not been a cost/benefit analysis of the 11 city-run child-care sites. City documents tabled at city council suggested a review was completed in 2015, but none has been done so far, potentially costing the city millions per year.
• There is no comparison of the city's performance to provincial standards when it comes to spending the city's $89 million child-care budget.