00:00Thank you, Secretary Azar.
00:01We appreciate your appearance here in front of the committee.
00:04The Federal Child Care and Development Block Grant Program aims to foster, as you know,
00:09healthy childhood development by improving the quality and access to low-income families
00:15for child care.
00:16Now, it provides states some flexibility to develop these policies to meet these needs
00:20at the various states.
00:22The programs include requirements as well, though, for states to monitor providers that
00:26receive federal funds.
00:28Now, unfortunately, there's been a situation in my home state of Minnesota where we've
00:32got a number of day care providers that are openly violating federal and state laws and
00:37regulations, taking money for personal use, using the money to set up a fraudulent child
00:43care client, and then providing a kickback has been reported.
00:47This is a major issue.
00:48There are allegations that, well, not just several, you've got 23 child care or day care centers
00:54either closed or under investigation.
00:56The fraud may go as high as $100 million.
00:59Now, think about that.
01:00In fiscal year 2018, Minnesota received $120 million in federal funding.
01:05The state contributed about $50 million in matching and maintenance funds.
01:09And we may have a fraud case of nearly $100 million in this state, with money then being transferred
01:14out of the country via MSP Airport.
01:17This is a big issue in my home state of Minnesota.
01:19Can you share with me what your agency is doing to investigate this?
01:23Congressman, thank you for raising that important issue.
01:26We actually are integrated with the Minnesota Department of Human Services on the issue that
01:30you have raised regarding these allegations of fraud committed by child care providers.
01:36These do involve allegations of child care providers serving families that are receiving
01:42subsidies from the Child Care Development Fund.
01:45The DHS, the Minnesota DHS, has agreed us to provide information as they conduct their
01:50work.
01:51And after they've completed their work, an ongoing investigation.
01:53We'll certainly be taking any steps necessary to protect the federal side of this.
01:57So, thank you.
01:58We are very much connected with Minnesota on this important issue.
02:00This latest occurrence is not the first.
02:03Unfortunately, there was another HHS program not long ago, the Community Service Block Grant
02:08Federal Program, providing funds to something called the Community Action Agency in Minnesota
02:13as well, and find out that that was used to pay for holiday trips to the Bahamas, Vegas,
02:18personal vehicles, rounds of golf, and so forth.
02:21You know, there's an old adage, Secretary, that which the government subsidizes, it may regulate.
02:27And I'm just wondering if we could not come up with some form of stricter enforcement to
02:33monitor the states that are receiving these funds to make certain that there's some sort
02:37of oversight here.
02:38This is happening with too great a frequency.
02:41And that's actually one of the reasons and the faults that we have with the Community
02:45Services Block Grant is the tremendous flexibility given to states and grantees there.
02:50And that's one of the reasons why, as we face a tough fiscal environment, we've suggested
02:54to Congress that that program should be eliminated.
02:57Mr. Secretary, thank you for your testimony today.
02:59I yield back.
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