North Dakota Human Services audit finds 'significant errors' with child care licensing

BISMARCK--An audit of the North Dakota Department of Human Services found child care providers were allowed to continue operating while the state's largest agency was aware of instances of illegal drug use and "inappropriate touching from adults....

BISMARCK-An audit of the North Dakota Department of Human Services found child care providers were allowed to continue operating while the state's largest agency was aware of instances of illegal drug use and "inappropriate touching from adults."

That's one finding included in the 49-page report, which was completed by the State Auditor's office and covered the biennium that ended June 30, 2015. It was sent to Gov. Jack Dalrymple, members of the North Dakota Legislature and Maggie Anderson, the DHS executive director, according to a July 13 letter signed by State Auditor Robert R. Peterson.

The report included several concerns over early childhood services licensing, for which county licensors act as the authorized agent for DHS, the audit said. County licensors make recommendations to DHS regional supervisors for issuing licenses.

The audit said the department's "monitoring procedures performed by the central and regional offices are ineffective." Its early childhood services administrator and regional supervisors review county licensor activities, it added.

"The significant errors identified in our testing of child care provider licensing indicate these reviews are clearly ineffective at identifying material weaknesses and inconsistencies," the audit adds. "These situations include failure to identify incomplete application requirements, improperly licensed providers, nonperformance of unannounced inspections, backdated licenses, lack of monitoring of corrective orders, non-imposed sanctions, and lack of documented notification to parents for serious safety concerns."


The report added there is an "improper balance between ensuring safe quality of child care and supporting child care providers to become licensed or continue operating without meeting minimum requirements."

DHS said in a response included in the report it "is revising (an) administrative rule, considering policy updates, and updating state forms to ensure all work performed is properly documented and North Dakota Administrative Code and department policies are being followed."

Debra McDermott, DHS chief financial officer, said the operational audit is conducted every two years.

"The department always looks at issues that are brought forward by the auditor's office and considers all aspects, and looks into doing what we can to make sure we're in compliance with Century Code and our policies," she said.

MOU agreements

In one finding, the audit said DHS "is not properly monitoring or suspending providers and notifying parents after confirmed knowledge of activities that jeopardize the health and safety of children."

Providers have been allowed to continue operating under memorandum of understanding agreements, but there are no state laws or administrative rules governing those MOUs. The report adds "no action was taken by the department to perform further oversight of providers operating under MOU agreements and the department did not notify parents with enrolled children."

Rebecca Eberhardt, early childhood services administrator at DHS, said the department follows a section of state law that states DHS shall notify parents "upon the conclusion and disposition of the investigation." Moreover, DHS "interprets the authority of (state law) to suspend licenses to be limited to very specific circumstances," the audit states.


In its review of 58 child care provider licenses, the auditors said two MOU agreements "were noted," while an additional 11 MOUs outside of those 58 licenses "were identified related to providers' care, reported concerns, and required corrections." The report did not specify investigation details because reports of child abuse and neglect are confidential under state law.

"Providers were allowed to continue operating under MOU agreements while the department was aware of activities including illegal drug use by the provider, restricted persons being present at the facility, inappropriate touching from adults, inappropriate sexual play between children, and other concerns of supervision and discipline," the audit states. Allison Bader, the auditor in charge of the report, said DHS records indicated "substantiated evidence."

The auditors recommended DHS further oversee providers to ensure their compliance with MOU agreements, "suspend providers when children are found to be at risk of harm," and "directly notify parents immediately after confirmed knowledge of activities that jeopardize the health and safety of children."

In a response included in the audit, DHS said it would "update policy to include further oversight of providers by the county licensors to ensure compliance with memorandum of understandings." It will also suspend providers in accordance with state law.

"Department policy regarding MOUs and suspensions, including notification to parents, will be reviewed and changes will be made as needed," the response adds.

Eberhardt said the department issues MOUs "with the goal of supporting good child care practices" and to "support a restricted license, to enter into an agreement on a method of correction of violation or for other assurances."

Providers are supposed to receive at least two visits a year, one being an announced review and the other an unannounced one, Eberhardt said. Any time the county social service office or the department receives a complaint about a provider, the county licensor is required to investigate, she added.

For a license to be suspended, child protection services and law enforcement need to be involved and children must be in imminent danger, Eberhardt said.


"The department relies on law enforcement and child protection service professionals to help to determine if imminent danger or if abuse and neglect as defined by law occurred," she said.

There were 965 child protection cases that had a "services required" determination in fiscal year 2015 in North Dakota, DHS spokeswoman Heather Steffl said. Of those cases, only three involved licensed child care providers.

Parents with a concern or complaint about a licensed child care provider should contact their county social service office child care licensor, Eberhardt said. But law enforcement should be called if a child is in imminent danger.

Other findings

The audit also found DHS policies allow child care licenses to be effective before background checks are performed by a DHS regional supervisor. Of 58 licenses that were tested, 25 were dated effective before the date of the regional supervisor's review.

Those policies are intended to allow for a delay in application review due to employee absences at the county and regional offices, but "the department has not sufficiently considered the risk of providers and staff operating a child care facility without proper background checks," the audit report said.

DHS said it has been working on administrative rule revisions based on recommendations from the Governor's Advisory Committee on Child Care Licensing Process.

"If approved, this rule would be effective July 2017 and will ensure the effective date of the license will not occur until all documentation is received and reviewed by the regional office," the response states. "State forms have already been updated to ensure background check procedures are properly documented."

The DHS response also said Dalrymple's budget for the current biennium included three additional full-time equivalent employees for regional supervisors due to an increased workload, as well as 1.5 FTEs "to ensure background checks were completed within the timelines required by the Child Care and Development Block Grant of 2014." Those 4.5 FTEs and associated funding were removed from the DHS appropriation during the 2015 legislative session, the department said.

Another finding said nine of the 58 tested provider licenses had been backdated to be effective before all licensing materials were received. One provider was issued a license after testing positive for illegal drugs, the audit said, and another had health and sanitation deficiencies that were not corrected until after the license effective date.

A 5-year-old girl drowned last year in Velva while her child care provider's license was expired, the state Bureau of Criminal Investigation said. Charges filed against a McHenry County social worker alleged she asked that the license to be backdated to conceal it was expired at the time of the drowning.

Criminal charges against Anderson, the DHS director, related to the Velva case were dismissed earlier this month.

Eberhardt said the nine licenses included in the audit were issued incorrectly because of incomplete and delayed documentation. DHS issues licenses based on the date paperwork is turned in to the county licensor, she added.

"Once department staff became aware of the missing documentation, they took appropriate action including issuing MOUs, correction orders, and obtaining needed documentation," Eberhardt wrote in an email.

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