OLYMPIA, Wash. — A day after a state audit estimated $37 million in questionable payments to subsidized child care providers, KOMO News is pressing for answers about which providers triggered the estimate and what happens next.
At the center of the audit is the Department of Children, Youth and Families, which distributes federal funds to child care providers.
The audit marked the first time in five years that state auditors were able to conduct a review using documentation they could track, though they again flagged oversight problems at the agency.
Auditors reviewed records from a “statistically valid sample of subsidized child care providers” and found weaknesses in the state’s system for detecting improper payments. Those issues contributed to an estimated $37 million in questionable payments in 2025.
RELATED: Washington auditors estimate $37M in questionable child care subsidy payments in 2025
“Seeing this come out is like putting a knife into a wound,” said Rep. Josh Penner, R-31st District. “It’s frustrating because we knew this was a problem. We didn’t even have to agree that fraud existed. We knew this black hole of billing was a problem, and it was not addressed.”
Penner said lawmakers worked with DCYF on legislation aimed at strengthening oversight of child care payments, including biometric attendance tracking and verification. However, House Bill 2253 died in the Senate earlier this month.
He said the bill would have addressed issues cited in the audit, including missing attendance records, overbilling for unsupported services and missing required signatures from parents or guardians.
The audit does not identify the providers tied to the questionable payments. KOMO News reviewed both the audit summary and full report and found no provider names. The station has requested that information from both the auditor’s office and DCYF. The auditor’s office said the data may be available through a public records request, which KOMO News has filed.
Auditors also noted that full annual audits of subsidized child care spending from 2021 through 2024 were not completed because a lack of documentation made it impossible. The agency described this as a failure to track spending at the level required by federal law.
As a result, auditors deemed all $413 million paid to providers in 2024 unauditable. The latest audit adds an estimated $37 million more in questionable payments.
“We don’t know whether fraud exists or not,” Penner said. “The auditor says it can’t conclude that fraud occurred, but there are red flags that need to be looked into. There could be fraud — there’s just not enough information.”
Auditors said they did not find evidence of fraud.
KOMO News asked DCYF whether any of the providers linked to questionable payments in the audit would be referred to the agency’s fraud unit for review. The agency said it would respond at a later time.
Penner said lawmakers plan to revisit the issue next session.
“House Bill 2253, sponsored by Rep. Adam Bernbaum and amended by several members, would have implemented many of the recommendations from the auditor’s office,” Penner said. “Those changes could have already been in place.”
