Audit Report - A-09-97-61002

Office of Audit

Audit of the County of Los Angeles’ Review to Identify and Report to SSA Past Deficiencies for Title II and Title XVI Children in Foster Care A-09-97-61002 - 8/11/97

This is the last of three reports to be issued in response to a request from the Social Security Administration (SSA) that we review operations of the Department of Children and Family Services (DCFS), County of Los Angeles, California. The objective of this audit was to determine if DCFS adequately reviewed its records to identify and report to SSA children who were no longer in its custody and children who received title XVI (Supplemental Security Income) benefits but had resources exceeding the program limit of $2,000. We found that DCFS performed an adequate review to identify and report these events to SSA.

BACKGROUND

In April 1996, the Deputy Commissioner for Programs, Policy, Evaluation, and Communications requested that the Office of the Inspector General review the representative payee (payee) activities of DCFS. Specifically, SSA asked us to determine if:

• changes made by DCFS were sufficient to permit SSA to continue relying on the agency as a payee;
• deficiencies in DCFS’ record keeping as representative payee for title II (Old-Age, Survivors and Disability Insurance) and title XVI beneficiaries were identified and corrected; and
• SSA’s instructions to DCFS regarding payee issues were adequate.

DCFS acts as payee for children who receive Social Security benefits and are in the County’s foster care program. In 1995, DCFS began an internal review of its operations. This review disclosed that SSA was not always informed when children were no longer in the County’s foster care program. When children leave the care and control of the program, the County is no longer providing for the living expenses of the children and, therefore, should not continue to receive Social Security benefits. Unless SSA is promptly notified, Social Security benefits paid for the care of these children are allowed to accumulate in the County’s bank account. SSA is unaware of when children leave the County’s program until either DCFS reports the information or new representative payees request to receive the children’s benefits. In addition, DCFS determined that account balances for children were not monitored. As a result, some children’s account balances exceeded the $2,000 resource limit under the title XVI program. Generally, children under title XVI with countable resources in excess of $2,000 are not entitled to benefits. Based on its internal review, DCFS voluntarily returned over $1 million to SSA, representing benefits received for children who were not in the County’s care and conserved funds in excess of the $2,000 title XVI resource limit.

We performed two other audits at DCFS. The first report concluded that the changes DCFS made to its operations allow SSA to rely on DCFS as a payee and that SSA’s instructions to DCFS were adequate. The second report concluded that DCFS adequately accounted for receipts and disbursements of Social Security benefits paid to children. However, we determined that DCFS did not credit children’s account balances with the interest earned on their funds. We also requested a legal opinion concerning the practice of depositing benefits into a pooled bank account as opposed to maintaining separate accounts for each beneficiary. The second report will be issued on receipt of the legal opinion.

SCOPE

We conducted our review in accordance with generally accepted government auditing standards. Our objective was to determine if DCFS performed an adequate review to identify and report to SSA, children who were not in its custody and title XVI beneficiaries who had resources in excess of the $2,000 program limit.

To determine if DCFS notified SSA of all the children that left its custody, we verified that all children for whom DCFS was the payee for Social Security benefits were in the County’s foster care program. These children were identified through an extract we obtained from SSA’s Master Beneficiary Record (title II) and Supplemental Security Income Record (title XVI). We used DCFS’ direct deposit account number to identify these children. This extract provided us with 1,197 records of children in current payment status as of August 1996 and 60 records of children in suspense payment status. The children were placed in suspense status between June 1991 and August 1996 and remained in that status through August 1996. We also identified one child for whom DCFS received benefits by check.

We obtained DCFS management information queries for all children that showed whether the children were in DCFS’ custody. These queries identified the custody of the children in current pay status as of November 1996 and the children in suspense status as of February 1997. For those children that were out of DCFS’ custody, we reviewed SSA’s management information queries and children’s case files at DCFS to determine if DCFS notified SSA of the events. We also discussed the whereabouts of children with DCFS and SSA officials.

To determine if DCFS notified SSA when title XVI beneficiaries’ resources exceeded the program limit of $2,000, we reviewed management information reports issued by DCFS for the month of February 1997 and discussed the procedures used to monitor the resource levels with DCFS officials.

The work was performed in the County of Los Angeles and Richmond, California. The field work was conducted from November 1996 through April 1997.

RESULTS OF AUDIT

Our review disclosed that DCFS had performed an adequate review to identify and report to SSA past events that should have been reported. DCFS notified SSA of all but 3 of 134 children who were no longer in its custody. In addition, DCFS reported all but one of the title XVI beneficiaries who had resources in excess of the program limit of $2,000. As a result of our audit, DCFS reported the four events to SSA. We have no recommendations.

David C. Williams

APPENDIX A

MAJOR CONTRIBUTORS TO THIS REPORT

Office of the Inspector General

Bill Fernandez, Director, Program Audits (West)
Jim Harris, (Acting) Team Leader
Jim Sippel, Senior Auditor
Carmen Chu, Auditor
Nellie Wong, Auditor