Auditors with the Secretary of State found $1.4 million in potentially wasteful payments within the Preschool Promise Program, Secretary of State Tobias Read announced today.
“As a dad, I know quality child care is hard to find, much less afford, which is why it’s frustrating when programs like this aren’t delivering as much as they can,” said Secretary of State Tobias Read. “Accountability for Preschool Promise and maximizing that program is about doing right by our kids. Oregonians are depending on us to step up and take action.”
Auditors began investigating the program after receiving a tip through the Government Accountability Hotline of potential waste and fraud.
Preschool Promise exists to expand the availability of high-quality preschool options for families in Oregon. Child care providers are provided with grant funding through the Department of Early Learning and Care (DELC) that pays for “slots” in preschool programs to serve eligible children. In turn, providers are expected to maintain a minimum percentage of enrollment to continue receiving grant funds.
Much of the auditors’ work focused on the time when Preschool Promise was managed by the Oregon Department of Education. After the program moved to DELC in 2023, agency management took steps to strengthen the program’s controls, but auditors still found more improvements are needed to better mitigate the risk of fraud and improper payments.
Auditors found $1.4 million in grants paid out to Preschool Promise providers that were deemed wasteful. Auditors also identified $1.5 million in improper payments that didn’t follow the terms of the grant agreement.
Specifically:
- Almost $700,000 in payments went to providers even though they had chronically low enrollment and the grant requires a minimum percentage of enrollment.
- For example, one provider was awarded funds to maintain 36 slots, but only enrolled a single child. The next year, that same provider was awarded additional funds for 10 slots, but only served two children. ODE could have saved $311,484 by reducing the grant award or terminating the grant, and the children could have been served by other providers within a five-mile radius that had vacancies.
- $150,000 in grant awards went to sites for months they weren’t even open.
- Over $500,000 in grant awards went to providers to expand their programs even though their enrollment levels were low.
- One grantee averaged 47% enrollment one year, serving about 4 kids. The next year, they received more money to increase their slots from 9 to 32, but served less than 9 children on average after their slots were increased.
- Poor controls in the program increase the risk for fraud or other improper payments.
- Grantees are required to submit monthly or quarterly payroll, tax and other expense data for reimbursement. The State paid almost $1.5 million to a provider hub over three years in which the hub didn’t submit any timely expense reports. Reports were submitted after required deadlines and prevented the agency from providing proper oversight.
Auditors have 13 recommendations for how DELC can strengthen internal controls. For example, DELC could implement controls to prevent duplicative payments and leverage data analytics and monitoring controls to detect providers who aren’t in compliance with program requirements. The agency must make these changes in a timely fashion, because waste in this program would come at the expense of other children and families who could use it.
“My team and I will closely follow progress on these recommendations because Preschool Promise can and must do more for Oregon families,” saidSecretary of State Tobias Read.
Read the hotline letter on the Secretary of State website.