Data Mining Solution (DMS) for CalWORKs Stage 1 Child Care Program Fraud Detection

Overview

The Data Mining Solution (DMS) is a fraud-detection and case-prioritisation system used by the Los Angeles County Department of Public Social Services (DPSS) in the CalWORKs Stage 1 Child Care Program. CalWORKs (California Work Opportunity and Responsibility to Kids) provides child care subsidies to welfare recipients so they can attend work or training. The DMS was implemented with SAS technology under Los Angeles County Agreement 77217 and is described in county, trade-press, and vendor-adjacent materials as a data-mining platform for surfacing suspicious cases for investigator review. The system was developed by SAS Institute and customised for DPSS, with the initial development and implementation costing approximately $2.4 million, not counting additional operational and maintenance fees. The software and hardware components, along with cloud-based hosting, are handled by SAS.

Publicly available reporting indicates that the system combines anomaly screening, rules-based checks, and social-network-style link analysis across programme case records. Using complex algorithms, the system generates risk scores derived from behavioural anomalies in child-care service usage, similar in concept to a credit score, which alert investigators to suspicious activities. The social network analysis component maps connections between similar names, phone numbers, bank accounts, and other data links between individuals who may be involved in a large fraud operation, allowing investigators to visualise these relationships graphically. The system integrates approximately 150 different data sources to find linkages between them. Documented fraud cases include false employment claims of nonexistent employees, heads of fraud rings colluding with recipients who falsely declare their children are attending nonexistent child care centres, and criminals declaring false or shorter work schedules than the time actually claimed.

The project originated from a 2007 Board of Supervisors vote to study data-mining technologies following published reports detailing widespread fraud in federal, state, and local government health and welfare programmes. A pilot phase conducted in 2008-2009 identified collusive fraud rings with a reported 85 percent hit rate and generated an estimated $6.8 million in cost avoidance, which supported a larger implementation contract with SAS. The Board of Supervisors approved the full DMS contract in December 2009. The system went live officially around 2011, and in its first ten months of operation generated 197 additional child-care fraud referrals and 67 additional non-child-care referrals.

Operationally, DMS sits upstream of human investigation rather than replacing it. The system produces alerts and link-analysis outputs that are reviewed by designated county staff, who decide whether to refer a matter to fraud investigators for formal inquiry. County investigators use the probability scores to help prioritise their caseload. Investigators from DPSS were involved in design sessions for the system from the outset, providing developers with precise detail on how to construct a user-friendly interface. The system also includes a mapping utility that helps investigators get an early look at unfamiliar areas they need to travel to for a case. Investigators, not the system, determine whether fraud occurred and whether any benefit, recovery, or enforcement action should follow.

The public record indicates that by 2012 DMS had delivered more than 200 total fraud referrals, with approximately 10 to 15 cases per month being referred and more than 40 percent of those referrals proving positive for fraud. Social network analysis uncovered two conspiracy rings comprising 16 cases significantly earlier than traditional methods would have surfaced them. The DMS concept was also extended beyond child care into In-Home Supportive Services, supported by a $10 million state funding allocation approved in October 2009 for IHSS fraud prevention. However, the most clearly documented and attributable operational record in the retained source pack remains the CalWORKs Stage 1 child care deployment.

Classification

Programme Details

CalWORKs (California Work Opportunity and Responsibility to Kids) Stage 1 Child Care Program provides subsidised child care to welfare recipients in Los Angeles County to enable participation in work or training activities. This case focuses on the DMS integrity-screening deployment documented around the child care programme, rather than trying to comprehensively document later anti-fraud extensions in other county programmes.

Implementation Details

Risk & Oversight

Deployment & Outcomes

Sources

1. SRC-001-USA-006 County of Los Angeles DPSS / Office of the CIO (2012) 'Approve Amendment Number Two to Agreement 77217 with SAS Institute Inc. for Data Mining Solution (DMS)', CIO Analysis Report CIO 12-07. Los Angeles: County of Los Angeles. Available at: https://file.lacounty.gov/SDSInter/bos/supdocs/68310.pdf (Accessed: 23 March 2026 – connection error).
   https://file.lacounty.gov/SDSInter/bos/supdocs/68310.pdf
2. SRC-002-USA-006 GovTech (2012) 'Los Angeles County Uses Analytics to Stop Child-Care Fraud', Government Technology, 16 May. Available at: https://govtech.com/health/Los-Angeles-County-Uses-Analytics-to-Stop-Child-Care-Fraud.html (Accessed: 23 March 2026).
   https://govtech.com/health/Los-Angeles-County-Uses-Analytics-to-Stop-Child-Care-Fraud.html
3. SRC-003-USA-006 GovTech / SAS (2015) 'LA County Department of Public Social Services uses analytics to fight child care benefits fraud', Industry Insider California, 3 December. Available at: https://insider.govtech.com/california/sponsored/la-county-department-of-public-social-services-uses-analytics-to-fight-child-care-benefits-fraud.html (Accessed: 23 March 2026).
   https://insider.govtech.com/california/sponsored/la-county-department-of-public-social-services-uses-analytics-to-fight-child-care-benefits-fraud.html
4. SRC-005-USA-006 SAS Institute (2012) 'Social Network Analysis and the government fraudster', SAS State and Local Government Blog, 20 September. Available at: https://blogs.sas.com/content/statelocalgov/2012/09/20/social-network-analysis-and-the-government-fraudster/ (Accessed: 23 March 2026).
   https://blogs.sas.com/content/statelocalgov/2012/09/20/social-network-analysis-and-the-government-fraudster/
5. SRC-004-USA-006 Whittier Daily News (2009) 'Data mining catches welfare cheats', Whittier Daily News, 27 December. Available at: https://www.whittierdailynews.com/2009/12/27/data-mining-catches-welfare-cheats/ (Accessed: 23 March 2026).
   https://www.whittierdailynews.com/2009/12/27/data-mining-catches-welfare-cheats/