Federal audit of Minnesota child care finds payment flaws up to $231 million

FOX 9 Minneapolis-St. Paul reports on a federal audit of Minnesota’s child care assistance program that uncovered significant payment compliance failures. The investigation examined whether the state properly monitored whether child care centers were actually serving the number of children they were licensed for while receiving taxpayer funding.

According to FOX 9 Minneapolis-St. Paul, the audit reviewed data from 2023 and concluded that Minnesota did not comply with federal and state attendance documentation requirements for some payments made under its child care assistance program. Auditors examined 200 randomly selected assistance payments and found attendance-related issues with 38 of those payments. Based on this sample, the federal auditors estimated that 11% of all payments were likely to have some flaw.

In the video, FOX 9 Minneapolis-St. Paul identifies the scope of the problem: approximately $231.4 million in child care claims going to more than 1,150 providers allegedly contained errors. The station highlights specific types of attendance documentation failures that auditors discovered, according to FOX 9 Minneapolis-St. Paul. These include instances where attendance records for particular children were unavailable at the center site, sign-in or sign-out times were missing or included inaccurate dates, and cases where a child was marked absent by the provider but this was not reflected in the government billing system.

FOX 9 Minneapolis-St. Paul notes the audit included three key recommendations for state improvement. First, the state should collect overpayments that the review exposed. Second, Minnesota should provide better oversight of its child care assistance program, including routine reviews of attendance records. Third, the state should continue automating attendance records through real-time electronic reporting for child care providers.

According to FOX 9 Minneapolis-St. Paul, the state responded in writing and agreed to follow up on all three recommendations. The video also references attention on child care facilities featured in a viral video, questioning whether the state was properly monitoring centers receiving taxpayer-funded assistance.

This audit matters because it reveals substantial gaps in how Minnesota verifies that publicly-funded child care assistance actually reaches children in care. With over $231 million in potentially flawed payments identified, the findings underscore the importance of robust attendance documentation and real-time verification systems. The federal audit’s recommendations—particularly around automating electronic reporting—suggest that manual verification processes have proven insufficient to prevent errors and ensure accountability in the program.

In FOX 9 Minneapolis-St. Paul’s Own Words

“Minnesota did not comply with federal and state attendance documentation requirements for some payments made under its child care assistance program.”

“By their math, the Fed’s estimated 11% of all payments were likely to have some flaw.”

“A child was marked absent by the provider, but that was not reflected in the government billing system.”