Oklahoma Audit Questions $39M in Child Care Subsidy Spending
Summary
Oklahoma's federally mandated Single Audit for the year ended June 30, 2023 found the Department of Human Services paid $27,167,400 in child care 'quality rating' incentives it cannot show were spent properly, and questioned $11,942,325 more in a separate grant program meant to open new day cares in child care deserts. In that second program, the single largest award, $2,165,000, went to an after-school program whose director was married to the state official overseeing the grant. A quarter of the sampled recipients had shut down entirely within about two years, having kept $2 million in first-round money. The Department of Human Services disagreed with both findings.
A quality rating no one checked
In 2022, began rolling out a new Quality Rating and Improvement System branded 'Stars,' and offered every licensed day care in the state a cash incentive -- $2,500 for requesting a one-star rating, up to $15,000 for requesting five stars⧉ -- just for submitting an application before a November 2022 deadline. Auditors tested 60 of the 2,218 incentive payments made, together worth $730,000 out of the $27,167,400 total⧉, and could not confirm a single one had been spent on anything that actually improved child care quality. , the audit found, never asked providers for supporting documentation in the first place, and by the time auditors came looking, most of the employees who had built the incentive program were no longer with the department⧉.
The audit also found routinely granted the requested star level -- the one that sets the incentive payment -- even when its own outreach staff had flagged repeated licensing violations at the same facility during the same review. A five-star rating pays the biggest incentive check, and it also unlocks the largest ongoing subsidy payments and pandemic-era stabilization grants, so the rating a day care requests, not necessarily the care it actually provides, drives how much public money reaches it.
View data as table
| QRIS 'Stars' quality incentive payments | 27,167,400 | Paid to 2,218 daycares; DHS could not show any of a 60-payment sample was spent on an allowable activity. |
|---|---|---|
| Childcare Desert Grant program | 11,942,325 | Out of $43.7M awarded to 348 providers; a 73-provider sample found overpayments, missing records, and unallowable spending. |
A grant meant for child care deserts, tested and mostly found wanting
The second finding concerns 's Childcare Desert Grant program⧉, which pays new or expanding day cares up to $10,000 per licensed child to open in counties without enough licensed capacity. The program awarded $43,725,000 to 348 providers; auditors sampled 73 of them, covering $16,180,000 of that money. What they found in the sample: 11 awards calculated wrong, producing $1,945,000 in confirmed overpayments; 23 providers (31.5% of the sample) that produced no records at all for auditors to check; and, among the 50 providers that did produce records, 47 had spent money on activities the grant doesn't allow ($6,413,783) and 36 had spending with no receipts or invoices behind it ($1,068,542).
View data as table
| Overpayments -- award miscalculated (11 of 73 providers) | $1,945,000 |
|---|---|
| No records provided at all (23 of 73 providers) | $2,515,000 |
| Unallowable activities (47 of 50 providers with records) | $6,413,783 |
| Inadequate documentation (36 of 50 providers with records) | $1,068,542 |
The largest award went to the program administrator's spouse
The single largest Desert Grant award in the first funding round, $2,165,000, went to after-school programs run at two public schools -- which provided the space for free, so the recipient had none of the facility costs a real day care carries, yet was paid the same per-child rate as a full-service infant-through-school-age provider. The award's size was based on the schools' physical capacity, not on any actual demonstrated need. The audit notes the recipient's spouse was, at the time, the director of the very CCDF program awarding the money⧉ -- auditors questioned the full amount of both awards. Separately, one provider blew past the program's $350,000 cap on minor remodeling by $146,122.50 after approved the construction plans without reviewing what they would actually cost.
By March 2025, 20 of the 73 sampled providers -- more than a quarter -- had stopped operating altogether, according to 's own child care locator listings. Between them they had kept $2 million in first-round Desert Grant money, awarded on the promise of new, sustained child care capacity that in more than one in four sampled cases never materialized for long.
DHS disagrees
told auditors it did not agree with either finding. On the Stars incentive payments, the department's position, as recorded in the audit, was that the money went to the day cares as beneficiaries, not directly to -- implying the state's oversight duty ends at disbursement. The auditor's written rebuttal rejected that framing: regardless of who counts as the 'beneficiary,' it is 's statutory responsibility to confirm the providers it funds actually spend the money to improve child care quality, and the office says it still has no evidence that happened for the sampled payments.
- Oklahoma's FY2023 federal Single Audit questioned $39,109,725 combined across two child care programs -- $27,167,400 in 'Stars' quality-rating incentive payments to 2,218 day cares, and $11,942,325 in Childcare Desert Grant awards -- because the state could not verify the money was spent as the programs required.
- In the small sample auditors actually tested, the failure rate was severe: 0 of a $730,000 Stars-incentive sample could be confirmed as spent on an allowable purpose, and $11.94 million of the $16.18 million (73.8%) in Desert Grant awards auditors examined was found deficient in some way -- miscalculated, undocumented, or spent on disallowed activities.
- The single largest Desert Grant award, $2,165,000, went to a program run at two public schools for free -- while its director's spouse ran the state office awarding the money -- and 20 of 73 sampled providers (27.4%) had shut down entirely by March 2025, having kept $2 million in first-round funding meant to build lasting child care capacity.
- disagreed with both findings, and the audit's own sample covered only about 37% of the Desert Grant program's total dollars and a fraction of a percent of the Stars incentive payments -- meaning the $39.1 million in questioned costs is very likely a floor, not a ceiling, on what the two programs actually misspent.
The dollar figures here are the audit's own reported "questioned costs" -- money auditors could not confirm was spent lawfully, not a proven finding that it was stolen or wasted, and disputes both findings outright. The Desert Grant category breakdown (overpayments, missing records, unallowable spending, inadequate documentation) is the audit's own itemization; the audit notes some providers appear in more than one category, so the four figures should be read as the audit's own accounting of what went wrong, not as four mutually exclusive buckets of dollars. Because auditors sampled only 73 of 348 Desert Grant providers and 60 of 2,218 Stars incentive payments, the $39.1 million figure describes what a partial test found, not a full accounting of either program.
Sources(1) ▾
- Oklahoma Office of the State Auditor and Inspector (Cindy Byrd, CPA), State of Oklahoma Single Audit Report, For the Fiscal Year Ended June 30, 2023 (2025-08-27) — The state's federally mandated Single Audit (Uniform Guidance, 2 CFR Part 200) covering compliance testing of every major federal award program administered by Oklahoma state agencies in SFY2023, prepared by the independently elected State Auditor and Inspector. Findings 2023-103 and 2023-104 (pp.149-155 of the Schedule of Findings and Questioned Costs) cover two Department of Human Services child-care programs funded by the American Rescue Plan Act's Child Care and Development Fund (CCDF) supplement. Read directly via pdftotext -layout after direct download from the publisher (no login required). Wayback's Save Page Now returned a repeated 520 error on the one attempt made this iteration; capture points to the same direct publisher URL as url. sai.ok.gov · original document
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Oklahoma's federally mandated Single Audit for the fiscal year ended June 30, 2023⧉, released by State Auditor and Inspector Cindy Byrd on August 27, 2025, questioned $27,167,400 the state's Department of Human Services () paid to child care providers under its 'Stars' quality-rating incentive program -- and found could not verify that any of a sampled $730,000 in payments went toward an allowable purpose. A separate program meant to open new day cares in so-called child care deserts drew another $11,942,325 in questioned costs, out of $16.18 million in awards auditors actually tested.