Audit Report on the Administration for Children’s Services’ Controls over Adoption Subsidies

Executive Summary

The Administration for Children’s Services (ACS) is responsible for protecting and promoting the safety and well-being of New York City’s children by providing child welfare, juvenile justice, and early care and education services. ACS, as a Local Department of Social Services for the City of New York (the City), oversees adoption subsidy payments in the City. Adoption subsidies are monthly maintenance payments to support children’s needs and to facilitate and encourage adoption.

ACS calculates adoption subsidy payments based on the daily rates set by the NYS Office of Children and Family Services (OCFS). The rates are classified as basic, special, or exceptional, and are determined based on each child’s: placement history; if applicable, handicap; individual needs; and age. From July 2017 through January 2020, ACS paid a daily rate for children with basic needs that ranged from $20.38 to $29.31; for children with special needs, the pay rate ranged from $43.49 to $45.48; and for children with exceptional needs, the pay rate ranged from $65.32 to $67.31.

ACS, on a yearly basis, must notify adoptive parents that they are required to submit a certification attesting that they are currently providing support to the adoptees. If the parents fail to respond, additional follow-up by ACS is allowed to verify that the adoptive parents continue to provide support to the adopted child.

The City’s Financial Management System (FMS) reflects that ACS spent $237 million, $224 million, and $213 million in adoption subsidies in Fiscal Years 2018, 2019, and 2020, respectively.

Audit Findings and Conclusion

Our audit found that ACS did not exercise adequate controls over adoption subsidy payments. Specifically, we identified adoption subsidy payments made to or in the names of adoptive parents who were no longer eligible to receive them, including instances where we provisionally determined that the adoptive parents or the adopted children had died, based on various death records, including those maintained by the U.S. Social Security Administration (SSA).^[1] The audit also found that ACS did not recover overpayments made on behalf of adoptive parents and adopted children reported as deceased to ACS by sources other than this audit. In addition, we found that ACS did not take any action when adoptive parents failed to submit required annual certifications attesting that they were providing support to the adoptees. Finally, ACS made duplicate adoption subsidy payments in cases involving changes of guardianship of adopted children.

As a result of these deficiencies, we provisionally estimate that ACS issued inappropriate payments totaling at least $3,462,482 to individuals who were not entitled to them. Of that amount, $1,401,182 was paid during our scope period, and we estimate that the remaining $2,061,300^[2] was inappropriately paid prior to our scope period.

Audit Recommendations

To address the issues raised by this audit, we make seven recommendations to ACS. They include the following.

ACS should:

• Review and recover the inappropriate payments referenced in this report.
• Investigate cases in which adoptive parents or adopted children may have died and stop payments issued to or in the names of adoptive parents found to be: (a) deceased; (b) no longer legally responsible for the adopted children; or (c) no longer providing support for the adopted children.
• Recover duplicate payments, including those made to the original adoptive parent or guardian after a new guardian legally takes custody of the adopted child.
• Develop internal procedures to actively check whether adoptive parents and adopted children are alive rather than depend solely on notifications of deaths from external sources. Actively use the annual certification process as a form of internal control to ensure the well-being of adopted children and prevent fraud, waste, and abuse by: (a) ensuring that requests for certification letters are sent to all adoptive parents; (b) following up in every case in which adoptive parents do not submit the certification letters when requested; and (c) ensuring that all active adoption cases have current annual certification letters readily available in their case files.

Agency Response

In its response, ACS agreed with four recommendations and partially agreed with the remaining three recommendations. Specifically, ACS agreed to implement recommendations #1 through 4 that it: (#1) review and recover the inappropriate payments referenced in this report; (#2) investigate cases in which adoptive parents or adopted children may have died and stop payments issued to or in the names of adoptive parents found to be: (a) deceased; (b) no longer legally responsible for the adopted children; or (c) no longer providing support for the adopted children; (#3) upon confirmation of the death of a sole adoptive parent or an adopted child, recover payments made to or in the names of deceased adoptive parents or on behalf of a deceased adopted child after the relevant date of death; and (#4) recover duplicate payments, including those made to the original adoptive parent or guardian after a new guardian legally takes custody of the adopted child. ACS stated in its response regarding these recommendations that it will review and investigate the cases referenced in this audit and where it has confirmed that the payments are inappropriate it will attempt to recover the overpayments.

In addition, ACS agreed to implement, in part, our recommendations that it (1) develop internal procedures (recommendation #5); and (2) consider utilizing services such as the U.S. Treasury Department’s Do Not Pay service or others offered by commercial and nonprofit vendors to actively check whether adoptive parents and adopted children are alive and to prevent, recoup, and take appropriate follow-up action concerning improper payments to ineligible persons (recommendation #6). For those two recommendations, ACS stated it “will revisit with our State oversight agency the feasibility of OCFS engaging in a deceased match on a national level which would provide the most complete and accurate information for all counties in New York State.” ACS also partially agreed with our recommendation (#7) to actively use its annual certification process as a form of internal control. In response to that recommendation, ACS stated, “In order to strengthen processes and controls, ACS will further develop internal procedures including follow up on certification documents, but ACS cannot ensure the outcome that all active adoption cases have current annual recertification letters submitted.”

[1] Our determinations that specific adoptive parents or adopted children may have died are identified as “provisional” because, for the reasons detailed in this report, they require further investigation and verification by ACS of the adoptive parents’ and the children’s deaths.

[2] We used the pay rate during our scope period and calculated from the date of death until the audit scope start date.