Oklahoma continues to save more than $15 million annually in inadvertent child-care subsidy overpayments with an evolving electronic card reader program in day-care facilities statewide.

Called eChildCare (eCC), the swipe card point-of-sale system provides real-time data on the day-care attendance of children whose care the state helps subsidize. The electronic system replaced a paper-based reporting method years ago that led to inaccurate distribution of funding and in some cases, fraud on the part of providers.

In 2010, the system was updated with a Web access portal for providers to manually adjust the swipe history of users who forgot their card on a particular day, or missed swiping when they picked up their child. The advancement increased data accuracy and helped day-care administrators keep closer tabs on their centers’ bottom lines.

Developed and patented jointly between the Oklahoma Department of Human Services (OKDHS) and Xerox, eCC is installed in approximately 4,500 day-care facilities and homes in the state. Parents and guardians swipe the card when dropping children off and repeat the swipe when picking them up. The system records the swipes, making attendance data available immediately to the state and facility administrators.

The real-time data stream improved the speed at which providers received funding from the state. Previously day-care facilities would tally child attendance over the course of a month and send a calendared invoice to the OKDHS. The process disrupted both the cash flow for providers and built up a paperwork backlog for the financial personnel at the OKDHS.

“Since it was so manually intensive, my accounts payable folks would take from a few days to a few weeks to get the entire batch of invoices from the providers processed,” recalled Phil Motley, chief financial officer of the department. “Then it went to the state treasurer for [check] processing, delivered back to DHS and then it was mailed internally.”

But the real-time data collection changed the ballgame.

“We reconcile [payments] on a weekly basis so the providers get paid somewhere in the neighborhood of two to three weeks earlier than they used to,” Motley said, adding that the more frequent pay cycle assists larger centers that maintain staff and payroll.

According to Motley, the system also goes a long way to stopping fraud. He explained that the OKDHS suspected fraud among providers when attendance reporting was manual. But instead of conducting exhaustive investigations, the state chose instead to develop a robust secure data system that would help pay providers quicker, fostering a better relationship between the parties.

The state was confident that if any fraud was occurring, eCC would make it difficult to continue because of the automation and information flowing to the state.

When the system was first rolled out in the early 2000s, the point-of-sale equipment and deployment cost approximately $6 million. But according to Motley, the investment has easily paid for itself over the years, particularly as the subsidies for child care have grown in the past decade.

He explained that back in 2001, Oklahoma would pay out roughly $95 million in subsidies. But currently the program provides about $140 million. Motley extrapolated that if the OKDHS and day-care providers were still processing payments manually, the amount of money lost on overpayments and fraud might now tally as much as $20 million per year.

To ensure that inefficiency remains in the past, the OKDHS continues to work with Xerox to discuss further refinements to the eCC system. While nothing imminent is on the horizon, Motley hinted that mobile technology has been brought up in conversations.

Specifically, the OKDHS is looking at having a point-of-sale card swipe device that is mobile. This way, if a provider moves to a new residence, getting the technology reinstalled wouldn’t be an issue. Motley added that a mobile version of the card readers would also be available for day-care centers that drop and pick-up children from school.

Brian Heaton  |  Senior Writer

Brian Heaton is a senior writer for Government Technology. He primarily covers technology legislation and IT policy issues. Brian started his journalism career in 1998, covering sports and fitness for two trade publications based in Long Island, N.Y. He's also a member of the Professional Bowlers Association, and competes in regional tournaments throughout Northern California and Nevada.