RACINE COUNTY - An audit released Friday confirmed suspicions that people are taking advantage of Wisconsin Shares, a state program that pays low-income people for child care so they are better able to find work.

The state Legislative Audit Bureau identified problems like illegal immigrants receiving compensation and fudged child care logs that cost the state more than $20 million in 2008, in addition to other situations where people received money for watching family members' children.

The audit bureau reviewed 400 randomly chosen participants. For 43 of those participants, or about 11 percent, auditors found problems with eligibility, including inaccurate documentation and using the program while ineligible, according to the report.

The audit bureau concluded this meant the state improperly paid up to $18.5 million in 2008.

"They had cases where workers knew the person applying was not eligible," said state Rep. Robin Vos, R-Caledonia, who independently investigated the fraud allegations. "One percent of the people in the program were illegal immigrants."

Because of such problems Vos recommends better, mandated training for program employees.

"They must enforce the rules whether or not they like them," he said.

The state's audit bureau also investigated 50 child care providers they suspected of violations. Of those, 45 returned attendance records for October 2008. An analysis of those records shows numerous problems, including 21 providers that were paid for care they did not provide or were not authorized to provide, costing the state $4 million, according to the report.

This is because child care providers are paid based on child attendance, which is self-reported. Vos said this creates an incentive to lie - in some cases attendance logs were not signed by parents and listed a child as arriving at exactly the same time every day, which is unlikely. Problems like this could be fixed through an independent verification system, like fingerprint scanners, Vos said.

The audit bureau further identified a "significant problem" with program rules that lets providers care for each other's children and hire parents of children they care for, essentially creating "child care rings." Such rings were specifically found in Milwaukee and Dane counties, the report said.

For example, in one instance four sisters were paid to care for each other's children, something permitted under current state rules.

The audit bureau has recommended the state change the rules to ensure such abuses not happen in the future. They also suggest the Department of Children and Families, which administers the program, strengthen eligibility and wage verification processes.

Vos will take the audit bureau's recommendations to the Assembly floor in coming days as an amendment to the state budget. He would also like to amend the budget to include more money for investigating welfare fraud, which he said Gov. Jim Doyle plans to cut.

The audit was ordered by the Joint Legislative Audit Committee.

"When instances of alleged fraud within the program came to light, it was a priority for the committee to move quickly to call for this audit to understand the scope of the problems within the program in order to rectify them," said state Rep. Peter Barca, D-Kenosha, committee co-chairman.

These problems have led to changes in Racine County, which runs the program locally. Officials had Sheriff's Department investigators look into welfare fraud investigations, created a welfare fraud coordinator and started monthly unannounced visits to care providers.

The county performed 21 visits in March and 28 in April. May figures were unavailable Friday, according to Geoff Greiveldinger, the county's chief of staff.

The county is also charging several individuals with fraud involving Wisconsin Shares and investigations are ongoing by the Sheriff's Department in 50 other cases, county District Attorney Michael Nieskes said Friday.

"This is not a failure on the part of Racine County," Greiveldinger said. "You've got a very complicated system that permits people to do some things that perhaps some folks might not find a wise use of public money."

By the numbers

Racine County

Number of Children in Program: 2,565

Number of Program Participants: 1,450

Number of Providers: 294

Subsidy Payments to Providers: $1,010,300

Source: Wisconsin Legislative Audit Bureau, December 2008 analysis