LOFT finds gaps in Oklahoma child care subsidy safeguards
Oklahoma’s program is unlikely to experience large-scale coordinated fraud, but a legislative review identified weaknesses in attendance tracking, eligibility verification, unpaid copayments, and the state’s response when fraud occurs.
Read the findings↓Oklahoma’s child care subsidy program is unlikely to experience the kind of large-scale, coordinated fraud uncovered in Minnesota. A legislative review still found weaknesses in the safeguards protecting families, providers, and taxpayers.
The program helps low-income parents afford child care while they work, attend school, or participate in job training. Providers across Oklahoma currently serve more than 57,000 children through the program.
The Legislative Office of Fiscal Transparency report compared Oklahoma’s system with Minnesota’s, where fragmented oversight and limited provider verification contributed to widespread abuse.
Built differently from Minnesota
Oklahoma centralizes eligibility decisions, provider licensing, and subsidy payments within the Department of Human Services. Participating facilities must be licensed or permitted, meet minimum quality standards, and undergo monitoring and unannounced inspections.
Those structural differences make similar large-scale fraud unlikely in Oklahoma, LOFT concluded. The review identified narrower risks within the state’s existing controls.
Where the report found risk
Attendance
The phone-based system allows parents to check children into a facility remotely. Parents and providers also have 10 days to correct attendance records manually.
Eligibility
LOFT observed DHS employees only partially completing required verification steps when reviewing some families’ eligibility.
Copayments
DHS does not confirm that families pay their required share of child care costs directly to providers.
Enforcement
DHS generally seeks repayment when fraud is confirmed and rarely refers those cases for criminal prosecution.
In a review of 12 months of DHS investigations involving child care subsidy overpayments, LOFT identified $551,249 in improper payments. All but one of those cases involved parents intentionally reporting inaccurate information on an application.
Unpaid copayments create another pressure point. In a LOFT survey, 367 providers reported a combined $403,773 in outstanding family copayments. Ninety-five providers reported balances exceeding $1,000, including seven with balances above $10,000.
What LOFT recommended
The report recommended that DHS adopt a clear policy for pursuing fraud, submit substantiated cases to state or federal prosecutors before seeking only administrative repayment, and dedicate more personnel to investigations.
LOFT also called for stronger document-verification procedures, additional fraud-detection training, reviews of income-discrepancy alerts, and confirmation that required family copayments are being made.
Sen. Chuck Hall, R-Perry, said the state must protect public funds while recognizing the role child care plays in keeping parents in the workforce.
“There may be a few bad actors within the industry, but the vast majority of Oklahoma daycares offer top-notch child care that gives working parents peace of mind when they’re back at work,” Hall said.
The report gives lawmakers and DHS a list of specific safeguards to consider as they work to preserve assistance for eligible families and protect the public money supporting it.
