The Washington State Auditor’s Office is finalising an audit of a $770 million child care subsidy programme managed by the Department of Children, Youth and Families, examining payments to over 7,400 child care providers statewide.
The audit, which began before recent allegations of potential fraud surfaced, comes as federal investigations in Minnesota have created heightened scrutiny of Somali-run daycare centres accused of defrauding taxpayers.
State Auditor Pat McCarthy emphasised the importance of transparency and accountability, stating: “Our work is independent, it is objective, and I encourage anyone who is interested in this issue to read our report when it is finished.”
McCarthy also addressed prejudice in commentary regarding child care subsidies, noting that some Somali Americans have been charged with fraud in Minnesota.
“I want to be clear that prejudice and discrimination have no place in our public life,” she said.
Requests for an interview with DCYF to discuss potential fraud investigations and how providers are selected for review have gone unanswered.
Former State Auditor Brian Sonntag commented on the situation, saying: “The public is asking these questions. Citizens are asking these questions. They deserve answers.”
DCYF provided a link to a report revealing 1,372 overpayments totalling $2,092,513 from July 1, 2024, to June 30, 2025.
Most overpayments were linked to missing attendance records and overbilled hours or days according to the report.
The report attributed 265 overpayments to a lack of attendance records and 21 per cent due to overbilled hours or days.
The Office of Fraud and Accountability reported one criminal conviction for child care fraud in fiscal year 2025, with restitution set at $20,474.
The exact language reads: “OFA efforts resulted in one criminal conviction of consumers and zero providers for child care fraud in FY25. The total restitution for this conviction is $20,474. OFA writes overpayments on behalf of DCYF when the case circumstances do not meet the threshold for criminal prosecution. OFA submits overpayments to OFR for recovery.”
The Office of Financial Recovery is handling collections, but DCYF has not yet responded to inquiries about recovered funds.
The state audit findings are expected in late March.
The $770 million programme size represents substantial taxpayer investment in helping low-income families afford child care. The subsidy programme provides payments directly to child care providers on behalf of eligible families who couldn’t otherwise afford care.
The 7,400 providers receiving payments include family home daycares, larger daycare centres, preschools, and other licensed facilities across Washington. The programme’s scale makes comprehensive fraud detection challenging.
The audit beginning before fraud allegations surfaced means it wasn’t triggered by the Minnesota controversy but rather represents routine oversight. However, the timing ensures the audit will receive heightened public scrutiny given current concerns.
McCarthy’s statement about prejudice and discrimination addresses the elephant in the room: fraud investigations in Minnesota disproportionately affecting Somali-run daycare centres have created suspicion toward all Somali providers nationwide.
The $2,092,513 in overpayments across 1,372 instances represents roughly 0.27 per cent of the $770 million programme, suggesting either the problem is relatively small or detection mechanisms catch only a fraction of actual fraud.
The overpayments attributed to missing attendance records and overbilled hours could represent honest mistakes, sloppy record-keeping, or intentional fraud. Without attendance documentation, DCYF can’t verify children actually attended care during billed hours.
The 265 overpayments lacking attendance records means nearly 20 per cent of overpayments involved no documentation whatsoever that care was provided. This represents the most serious form of billing error, where payments went out without proof of service.
The 21 per cent overbilling for hours or days suggests providers claimed more care time than children actually attended. Whether this stems from confusion about billing rules or deliberate inflation determines whether it’s fraud.
The single criminal conviction for child care fraud in fiscal year 2025 with $20,474 restitution seems remarkably low given over $2 million in overpayments detected. This suggests most overpayments don’t meet criminal prosecution thresholds.
The conviction being of a “consumer” rather than a provider means a parent or guardian defrauded the system, not a daycare operator. Zero provider convictions despite numerous overpayments raises questions about whether providers are being held accountable.
The Office of Fraud and Accountability writing overpayments as losses when cases don’t meet criminal prosecution thresholds means taxpayers may not recover most of the $2 million. Criminal prosecution requires proving intentional fraud, not just billing errors.
The Office of Financial Recovery handling collections suggests civil debt recovery processes rather than criminal restitution. However, DCYF not responding about recovered funds leaves unclear how much money has been recouped.
DCYF repeatedly declining interview requests about fraud investigations and provider selection creates transparency concerns. When agencies managing hundreds of millions in taxpayer funds won’t explain their oversight processes, public scepticism grows.
Former Auditor Sonntag’s comment that “citizens deserve answers” captures frustration with DCYF’s silence. Taxpayers funding child care subsidies have legitimate interest in knowing how their money is monitored and whether fraud is being addressed.
The late March expected audit findings will provide independent assessment of DCYF’s management of the programme, potentially revealing whether current oversight is adequate or systemic weaknesses enable fraud.
