WA had $37 million in ‘questionable payments’ for child care in 2025, audit says
The Washington State Auditor’s Office on Monday announced that it had found weaknesses in the system the state uses to identify improper child-care subsidy payments.
In 2025, that contributed to about $37 million in “questionable payments,” according to the office.
This comes as the auditor published its yearly Single Audit on March 30 that analyzed, across 28 programs, $23.7 billion in federal funds. The report covers whether state agencies followed federal requirements for using federal funds. Overall, auditors determined that compliance with federal requirements had improved. Auditors found 50 findings, according to the March 30 release. That’s down from 82 findings in the previous year.
The State Auditor’s Office notes that it had fielded questions from lawmakers, the public and the media about the possibility of subsidized child-care fraud. Such concerns recently reached a fever pitch nationally after a YouTuber alleged he found more than $110 million in day-care fraud in Minnesota, as reported by NPR.
Officials in other states, including Washington, faced similar questions about potential child-care fraud from the media this year.
State Auditor Pat McCarthy told KOMO News on Monday that the just-released audit “did not conclude that fraud occurred.”
“What you can conclude is that there are issues — red flags that need to be followed up,” she added.
Auditors looked into a sample of subsidized child care providers and estimated that the Department of Children Youth and Families (DCYF) made questionable payments with federal Child Care Development Funds totaling $27.2 million, according to a March 30 news release.
In addition, they found some $9.9 million in questionable payments made to providers with funds from the federal Temporary Assistance for Needy Families program.
“I want to acknowledge the commitment to accountability the governor and his team have shown in improving operations,” McCarthy said in the release. “Audits may surface challenging issues for agencies, but they are critical to maintaining public trust.”
Among the problems that the office cited: Certain providers didn’t reply to attendance-record requests made by auditors, according to the release. Some were believed to have “overbilled for services not supported by attendance records,” and some didn’t provide required parent/guardian signatures, the release said.
The office is recommending that DCYF improve its system to uncover overpayments, according to the news release. DCYF relies on its own audits done after payment to see if providers had the necessary documentation to justify the dollar amount they received; it doesn’t look over that documentation ahead of making those payments, the release said.
The auditor’s office encouraged the department to boost its oversight until the installation of “robust pre-payment controls.”
On Tuesday morning, DCYF told McClatchy in a written statement that it is committed to resolving the findings and “strengthening internal controls.” It said that federal audits of agency programs have not determined any fund misuse, and that DCYF has worked with McCarthy’s office on changes allowing for a full Working Connections Child Care program audit, on top of that program’s federal oversight.
In addition, DCYF stated that as part of this audit, the State Auditor’s Office reviewed 59 samples and questioned 14 payments coming to $6,123 because of missing documentation.
“The amount described in the SAO’s release as ‘questionable’ is SAO’s own projections based on those 14 payments and does not indicate fraud or actual improper payments,” the statement continued.
DCYF says it will work to address issues identified in the audit, and that fraud concerns are shared with the Office of Fraud and Accountability.
The auditor’s office noted that, since fiscal year 2021, it hasn’t been able to examine the state’s use of the federal Child Care Development Fund.
A spokesperson for the auditor’s office, Adam Wilson, told McClatchy via email that for four years, the department was making significant accounting adjustments at a high level that interrupted the chain of traceability.
“We could not determine whether individual payments were funded with state or federal dollars, and therefore could not conduct an audit of Washington’s use of the federal money,” the spokesperson continued.
Because DCYF in fiscal year 2025 made fewer accounting adjustments, the auditor’s office said it could link individual payments to their funding source.
“The State Auditor’s Office was quite concerned when we were unable to conduct audits of the child care development fund, and we said so at the time,” Wilson wrote. “It was a significant step forward this year to be able to conduct a full audit, and we appreciate the engagement of the Department of Children, Youth and Families in that regard.”
Editor’s note: This story has been updated with comment from the Department of Children, Youth and Families.
This story was originally published March 31, 2026 at 3:26 PM.
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