Washington state's child care subsidy system sent an extrapolated $37 million (£28 million) in questionable payments to providers in a single fiscal year, a new audit has found, after four consecutive years in which auditors couldn't trace where hundreds of millions in taxpayer dollars went.
$27 Million From Child Care Funds, $9.9 Million From Welfare
The Washington State Auditor's Office released its annual Single Audit on 30 March, reviewing $23.7 billion (£18 billion) in federal funds across 28 programmes.
Auditors estimated that the Department of Children, Youth and Families (DCYF) made $27.2 million (£21 million) in questionable payments using federal Child Care Development Funds and another $9.9 million (£7.5 million) through Temporary Assistance for Needy Families (TANF).
The problem is structural. The department pays providers before verifying paperwork and relies on after-the-fact reviews to catch errors. Critics call this a 'pay and chase' model. DCYF's own internal reviews back up that concern. Of more than 2,200 audits conducted over the past year, 67% identified overpayments. Roughly 22% of payments examined were overpayments, totalling $2.2 million (£1.6 million) across 1,372 cases.
Four Years of Missing Records and $416 Million in Limbo
For fiscal years 2021 through 2024, auditors said it was 'impossible' to trace payments to individual providers because DCYF failed to maintain adequate documentation. That gap led auditors to question $416 million (£314 million) in programme spending over those four years. The fiscal year 2024 audit received a disclaimer opinion, the most severe classification available, meaning the programme's finances could not be verified at all.
State Auditor Pat McCarthy said the new audit marked progress, as it was the first time in years her office could track payments to specific providers. 'Our audit did not conclude that fraud occurred,' McCarthy said. 'What you can conclude is that there are issues, red flags that need to be followed up.'
Reform Bill Passed the House but Died in the Senate
Republican state Representative Travis Couture, who helped draft House Bill 2253 to tighten child care oversight, said the audit confirmed long-standing concerns. 'It's kind of like they give money and maybe ask questions later, maybe audit later,' Couture told Washington State Standard. The bill passed the state House with near-unanimous support but stalled in the Senate.
US Representative Michael Baumgartner has also called on the Department of Health and Human Services and the Department of Agriculture to review Washington's benefit programmes. Baumgartner warned that systems with 'weak front-end controls and lax enforcement' are especially prone to fraud, pointing to Minnesota's ongoing child care scandal as a cautionary example.
Political Pushback Versus Audit Evidence
The audit comes after months of heated debate. In a December 2025 statement, Attorney General Nick Brown called fraud allegations against child care providers 'unsubstantiated'. In a January interview with KOMO News, Brown described people showing up at daycares as 'random vigilante people' and said some of the rhetoric was 'racist'.
DCYF pushed back on the $37 million (£28 million) figure, calling it a statistical projection. The department noted that of 59 payments auditors sampled from nearly 400,000 transactions, only $6,123 (£4,623) was specifically flagged for missing paperwork. The Office of Fraud and Accountability secured just one criminal conviction for child care fraud in the 2025 fiscal year.
But with nearly half a billion dollars in spending questioned over five years and a reform bill stuck in legislative limbo, the gap between political reassurances and audit evidence continues to grow. McCarthy's message was direct. 'That's basically what we need to have happen,' she said of strengthening controls. 'Trust but verify.'
