Washington projects $37M in bad child care payments from $6K found
Summary
Washington's State Auditor sampled 59 of the 397,102 monthly child care payments the state's child welfare agency made in fiscal year 2025, found $6,123 actually improper, and used statistical extrapolation to project $37 million in questioned costs system-wide. The same underlying finding -- that the agency doesn't review documentation before paying providers -- has now recurred in state audits every year since 2008.
How $6,123 becomes $37 million
Finding 2025-033⧉ covers payments from the federal Child Care and Development Fund (CCDF); a companion Finding 2025-025⧉ covers the same 59-payment sample's Temporary Assistance for Needy Families ()-funded share -- both are the same sample and the same 397,102-payment population, split only by which federal grant funded the payment. Of the 59 payments drawn at random -- covering licensed centers, licensed family homes, and licensed-exempt Family, Friends, and Neighbor providers -- 14 were noncompliant: providers who didn't submit attendance records, billed for unsupported services, or skipped required parent signatures.
Auditors' acceptance-sampling method carries 95% confidence in its compliance conclusion, per AU-C 530.05; the resulting dollar figures -- $27.18 million in likely questioned CCDF costs, plus $9.88 million in likely questioned costs -- are a statistical point estimate with no separately stated margin of error. The CCDF finding also separately estimates $2.14 million in likely questioned costs paid with state funds, which isn't counted in either federal total.
View data as table
| CCDF-funded payments | 27,175,817 | Likely questioned costs, extrapolated |
|---|---|---|
| TANF-funded payments | 9,878,930 | Likely questioned costs, extrapolated |
The department catches problems too -- just late, and not enough of them
DCYF isn't blind to the issue. Its own subsidy audit unit -- six provider auditors covering roughly 397,102 monthly payments a year -- completed 2,228 post-payment audits in fiscal year 2025 and found overpayments in 1,493 of them, totaling $2,185,753 -- counted item-by-item, not statistically extrapolated, though providers can still request an administrative hearing to have an identified overpayment reduced or removed. Those audits also ran consistently late: most landed six months to a year after the service was billed, and for four months of the year the unit reviewed only about 100 payments a month instead of the 240 called for in its own integrity plan. DCYF told auditors its oversight is limited to what six people can check against nearly 400,000 monthly payments, and that closing the gap would require either more staff or a system linking payments directly to providers' attendance records.
View data as table
| Found no overpayment | 735 | |
|---|---|---|
| Found an overpayment | 1,493 | 67% of audits completed |
The same finding, for 18 years
This isn't a new problem. The CCDF finding has now recurred in Washington's state audits every year since fiscal year 2008 -- 18 consecutive findings under an unbroken chain of prior finding numbers reaching back to '8-13.' The version has a shorter but still unbroken run, tracing back to fiscal year 2021. Each year, DCYF's explanation has been essentially the same one it gave the Auditor's Office⧉ this year: not enough staff to check documentation before the money goes out.
The takeaway
- $6,123 in confirmed bad payments became a $37.1 million estimate. Auditors sampled 59 of the same 397,102 monthly child care payments for both funding streams, found 14 noncompliant totaling $6,123, and used a 95%-confidence acceptance-sampling method to project $37.05 million in federal questioned costs -- a statistical point estimate with no separately stated margin of error, not a finding that $37 million actually went missing. (A further $2.14 million in questioned costs tied to state funds isn't included in that total.)
- DCYF's own detection work found real money -- late. The department's item-by-item post-payment audits identified $2,185,753 in overpayments in FY2025 (subject to reduction if providers successfully appeal), but those audits routinely land six months to a year after payment, and ran below the department's own staffing plan for a third of the year.
- The state has flagged this same gap for 18 straight years. The CCDF finding traces back to fiscal year 2008 without interruption; the department's stated cause -- insufficient staff to review documentation before paying providers -- hasn't changed either.
This piece reflects the state Auditor's official published findings from Washington's fiscal year 2025 federal Single Audit. The Auditor classifies the CCDF finding as a material weakness leading to material noncompliance, and the finding as a significant deficiency that did not lead to material noncompliance -- neither finding alleges fraud, and this piece does not claim any. DCYF agreed with all 14 exceptions identified and submitted them for recovery through the Department of Social and Health Services' Office of Financial Recovery.
Sources(3) ▾
- Office of the Washington State Auditor, Schedule of Federal Award Findings and Questioned Costs -- Finding 2025-033 (Child Care and Development Fund) (2026-03-30) — The State Auditor's official finding on DCYF's internal controls over CCDF-funded child care subsidy payments, part of Washington's fiscal year 2025 federal Single Audit. This piece draws on its sampling methodology, questioned-cost figures, DCYF's own post-payment audit statistics, and the finding's stated history back to fiscal year 2008. sao.wa.gov · original document
- Office of the Washington State Auditor, Schedule of Federal Award Findings and Questioned Costs -- Finding 2025-025 (Temporary Assistance for Needy Families) (2026-03-30) — The companion State Auditor finding covering the -funded share of the same DCYF child care payments, drawn from the identical 59-payment statistical sample as the CCDF finding. This piece draws on its questioned-cost figures and its own five-year prior-finding history. sao.wa.gov · original document
- Office of the Washington State Auditor, State audit shows overall improvement, recommends increased oversight of child care payments (2026-03-30) — The Auditor's Office's own plain-language summary of the fiscal year 2025 Single Audit, confirming the combined $37 million figure and the audit's overall scope ($23.7 billion in federal funds across 28 programs). Used only for framing context; all dollar figures in this piece are drawn from the underlying findings themselves. sao.wa.gov · original document
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Washington's Department of Children, Youth, and Families (DCYF) does not review supporting documentation before paying child care providers, according to the state Auditor's fiscal year 2025 federal Single Audit⧉. Auditors statistically sampled 59 of the department's 397,102 monthly child care payments, found $6,123 in confirmed improper payments among them, and used that sample to project $37 million in likely questioned costs system-wide -- a statistical estimate, not a claim that $37 million was actually misspent.