DCYF child care subsidy system — 4-year audit gap, FY2024 $413M disclaimer opinion, FY2025 $37M questioned payments

For four consecutive years — FY2021 through FY2024 — Washington State auditors could not form any opinion at all on $413 million of federal child care funds at DCYF, issuing disclaimer opinions because the agency lacked sufficient provider-level data. The FY2025 audit, the first full federal review in four years, then produced a $37 million extrapolated questioned-payments figure, with six of seven findings being repeats from prior years.

What happened

The Washington State Auditor’s Office (SAO) FY2024 Single Audit, released in March 2025, issued a disclaimer opinion on DCYF’s Child Care Development Fund (CCDF) program — meaning auditors could not form any opinion whatsoever on approximately $413 million in federal child care expenditures. A disclaimer opinion is not a qualified finding or a flag; it is the auditor’s declaration that the underlying records are so insufficient that an audit opinion cannot be expressed. This was the fourth consecutive year — FY2021, FY2022, FY2023, and FY2024 — that the CCDF program at DCYF was effectively unauditable due to missing provider-level data.

The FY2025 Single Audit, released March 30, 2026, was the first audit in four years that broke through and produced measurable findings. Auditors reviewed a sample of 59 monthly payments out of approximately 400,000 and found 14 with noncompliance issues or overpayments totaling $6,123 in the actual sample. Extrapolating from that sample to the full payment pool produced the headline figure: $37 million in “questioned payments.” That number is a statistical projection — not a confirmed loss.

Six of the seven findings in the FY2025 audit were repeats from prior years — meaning the same deficiencies that prevented auditing in FY2021–FY2024 persisted into FY2025, the year auditors finally obtained enough data to document them.

What the primary source says

The FY2025 Single Audit states explicitly that the SAO “did not conclude that fraud occurred.” The problems identified were operational: child care providers not responding to attendance-record requests, alleged overbilling for services not reflected in attendance records, and missing parent and guardian signatures on required forms.

DCYF disputed the $37 million characterization, stating that federal audits have not identified misuse of funds. DCYF’s position is that the SAO’s extrapolation overstates the actual scope of the problem.

Status

FY2024 audit findings (disclaimer opinion on $413M) are public as of March 2025. FY2025 audit findings ($37M questioned payments) are public as of March 30, 2026. No criminal investigation has been opened. DCYF disputes the scope of the FY2025 finding. This record reflects both audits as published; no enforcement action has been announced.

Why it’s in the registry

The $37M headline figure is a projection. The $413M disclaimer opinion is the structural fact. A state agency responsible for distributing federal child care funds went four consecutive years without being able to produce the records an auditor needs to say whether the money was spent correctly. That is not a data gap — it is a governance failure at regime scale, and the multi-year blackout means there is no way to know what happened to those funds in the intervening years. When auditors finally obtained sufficient data in FY2025, six of seven findings were repeats, confirming the underlying system had not changed.

Reform implication

The four-year gap in federal audit coverage is the central concern. A system requiring real-time matching of provider attendance records against payment records — rather than after-the-fact sampling — combined with mandatory federal-audit readiness certification, would prevent both the payment irregularities and the multi-year oversight gap. See [reform: subrecipient_monitoring] and [reform: program_outcome_auditing].