Seattle, WA – Over $1.3 billion in Washington state childcare spending across four fiscal years has been deemed unauditable by the Washington State Auditor's Office (SAO) due to significant oversight failures by the Department of Children, Youth and Families (DCYF). This revelation stems from the SAO's annual Single Audit, which highlighted the agency's inability to maintain adequate records for federal childcare funds distributed between 2021 and 2024. The Post Millennial initially reported on the issue, stating, > "Over $1.3 BILLION in Washington childcare spending 'unauditable' as oversight failures mount."
The audit, released on March 30, reviewed $23.7 billion in federal funds across 28 programs, noting overall improvements in compliance but flagging critical weaknesses in the state's childcare subsidy payment oversight. State Auditor Pat McCarthy clarified that while the funds were unauditable, the audit did not conclude that fraud occurred. Instead, the issues point to a lack of proper documentation and internal controls within DCYF.
Specifically, the SAO reported an estimated $37 million in questionable childcare subsidy payments for 2025 alone. These payments were identified due to issues such as providers not responding to record requests, overbilling for services, or lacking required parent/guardian signatures. The audit found that for four consecutive years, auditors could not determine if subsidized childcare funds were spent appropriately, leading to a disclaimer opinion for the fiscal year 2024 audit, which alone involved over $413 million in unauditable federal funding.
DCYF has acknowledged the findings and stated its commitment to strengthening internal controls and resolving outstanding issues. The agency emphasized that federal audits have consistently shown it meets grant management requirements and have not identified any misuse of funds. DCYF officials also pushed back on how some findings were characterized, noting that large figures cited as "questionable payments" were projections, not direct evidence of fraud, and that auditors questioned only 14 payments totaling $6,123 due to missing documentation.
State Auditor Pat McCarthy stressed the need for DCYF to "trust but verify" when distributing funds and to strengthen oversight. Republican State Representative Michael Baumgartner has called for a federal review, drawing parallels to large-scale fraud uncovered in Minnesota's childcare programs. Despite the concerns, McCarthy noted that DCYF is on a "trajectory to make the appropriate improvements," having reduced the number of findings from the previous year.
