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Auditor's Report Released

December 5, 2006 permalink

The Ontario Auditor-General's report on children's aid societies (pdf) is now available online (local copy).

Previous reports in the press have been limited to hot-button issues likely to catch the attention of reporters, such as SUV's for CAS management and Caribbean vacations reported as visits to children. Examination of the report shows some more serious structural problems.

A pie chart on page 59 shows that $652 million of annual expenditures of $1.218 billion, just over half, goes for two categories of foster care. Later a table appears classifying the types of care:

Figure 4: Per Diem Rates for Residential Care
Source of data: Individual Children's Aid Societies
Type of Care Low ($) High ($)
foster care — regular 26 41
foster care — specialized 29 53
foster care — treatment 40 70
Society-operated group home 180 416
Outside Purchased Institution — foster care 72 449
Outside Purchased Institution — group home 82 739

The documentation for classifying children in the various categories was deficient, and the classification may have been arbitrary. There was no indication in the report of how much of the allocated expenditures went to foster parents, and how much remained in the agencies for their own operations. Previous experience with children's aid shows many informal connections between persons in the system, for example marriages between social workers and police, and several cases of persons connected to the child protection system also being adoptive parents. In cases of collusion between CAS management and foster contractors, the higher foster care rates, up to $739 per day, could be lucrative.

On page 62 the auditor says:

The Ministry continued to fund the annual year-end expenditure deficits of Societies regardless of their entitlement under the funding framework. This contributed to significant differences in funding growth between Societies, and significantly higher overall program costs.

This is a problem we alluded to two years ago in the report Ontario Taxpayers Cover Prodigal CAS. Children's aid societies can overspend their budget, leaving a deficit in their bank account at the end of the year. Banks extend credit, because they know CAS is funded by the crown. The following year the ministry will increase funding to make up the deficit. This process allows CAS management to treat their agency as a personal piggy-bank. In government agencies with real fiscal control, there is no bank account. All contracts must be within budget limits, and invoices are paid by an office that checks each invoice for proper budgeting and delivery of goods and services before issuing a cheque on the government treasury.

The auditor suggests in recommendation 18:

Children's Aid Societies should ensure that additional remuneration paid to employees over and above their regular salary is in compliance with established policies and approved by senior management and the Board of Directors as appropriate.

A naive view of the problem. In the few discussions we have had with caseworkers, they are unaware of the financial incentives driving their own agency, instead believing that their actions are driven by the needs of children. The policies leading to financial waste originate with CAS management. The board of directors cannot act, because they are stooges under control of management.

Pages 76-77 deal with the complaints process. The auditor's report confirms the view of CAS critics that it is a sham.

The report never deals with the largest form of CAS waste, warehousing children in expensive foster care when their parents could better provide for them at no cost to the taxpayers.

While CAS management and foster contractors derive rich rewards for their services, children get short shrift. Social workers don't even check on their wards. From page 71:

The requirement to visit a child in care every 90 days was not met in 60% of the cases reviewed, and the visits were an average of 19 days late.

Another example of poor attention to children is the last item:

Serious Occurrences

All Child Welfare Service providers are required by Ministry policy to report any serious occurrences involving children in their care to the Ministry within 24 hours of the incident, with a written follow- up within seven days of the occurrence detailing corrective action taken. Examples of serious occurrences that would require this reporting are:

  • death, serious injury, or allegations of mistreatment of a child in care;
  • complaints made by or about a client that are considered serious in nature;
  • disasters such as fire on the premises where a service is provided; and
  • situations where a client is missing.

We examined the Serious Occurrence reporting process at the Societies we visited and found that 75% of the files we reviewed were not in compliance with the required Ministry policy and procedures. Issues included failure to meet timing requirements and a lack of documentation on the follow-up action taken as a result of the incident.

We noted similar concerns in our 2000 audit of the ministry Child Welfare Services Program.

The following sentence at the beginning of the report allows calculation of the level of waste — $414 million per year.

Total society expenditures net of society-generated funds more than doubled between the 1998/99 and 2004/05 fiscal years, rising from $541.7 million to $1.173 billion, while key service volumes, including the number of families served, increased by only about 40% over the same period.

A ministry response delivered the same day as the report deals with some of the hot-button issues, but not the more serious problems.

CPS luxury cartoon