Washington Is the Third Blue State in Seven Months Where “Ghost Daycares” Bill for Kids Who Aren’t There. Auditors Flagged $37 Million. No One Has Been Charged.
For the third time in seven months, RedState investigative journalist Ward Clark has documented the same pattern in a different Democratic-run state: taxpayer-funded child-care subsidies flowing to daycare providers where neighbors, reporters, and even the state’s own auditors can’t confirm any children are actually being cared for. In December 2025 it was Minnesota’s Feeding Our Future network, which has produced more than 60 convictions. In June 2026 it was a single Michigan daycare in Clinton Township that collected $1.1 million with no children or staff found on repeated site visits. Now it’s Washington state.
Washington’s version isn’t a criminal case — not yet, and that distinction matters. What it is: a March 2026 state audit that flagged $37 million in “questionable” child-care payments statewide, a four-year run of federal dollars the state’s own Department of Children, Youth & Families (DCYF) could not fully document, specific home daycares that collected six figures over months while residents told reporters no children ever showed up, and a wall of official non-response from Washington’s Democratic leadership that has now stretched nearly seven months past the first reporting.
State Auditor Pat McCarthy (D) has been careful to say her office’s audit “did not conclude that fraud occurred.” That caveat is real, and this story keeps it front and center. What also isn’t in dispute: nearly half a billion dollars in federal child-care spending the state cannot fully account for, and a governor, an attorney general, and a state legislature that have so far met the questions with process talk instead of an open investigation.
- $37,000,000 — in “questionable” child-care payments flagged in Washington's FY2025 Single Audit — an extrapolation from a 59-provider sample, not a fraud finding, per State Auditor Pat McCarthy (D) · Source: Washington State Auditor's Office, Washington State Standard
- $415,000,000+ — in total federal Child Care Development Fund costs deemed unauditable across FY2021–FY2024 — DCYF could not produce provider-level documentation for four straight years · Source: Washington State Auditor's Office
- $229,000 / $223,247 — paid to a West Seattle home daycare (9 months) and a Federal Way home daycare (same window) despite residents repeatedly telling reporters no daycare operated at either address · Source: The Center Square
- 67% / 0 — of DCYF's own 2,228 internal provider audits found overpayments (about $2.2 million total); zero resulted in a criminal prosecution · Source: The Center Square, RedState
- $143,300,000 — in projected 2025–27 savings from the enrollment-based pay and attendance reform signed by Gov. Bob Ferguson (D-WA), effective April 1, 2026 — roughly $781 million over four years · Source: Washington State Legislature, Rep. Joshua Penner
- 0 — state fraud investigations opened by the Washington Attorney General's Office or DCYF in response to the media reporting, nearly seven months after The Center Square's investigation began · Source: The Center Square, KOMO News
Ward Clark’s reporting for RedState has now traced the same shape three times in three different states. In Minnesota, the Feeding Our Future scandal — centered on a network of Somali-run nonprofits and daycares billing state child-care and federal nutrition programs — has produced more than 60 convictions since federal prosecutors began unwinding it, one of the largest pandemic-era fraud cases in the country. In Michigan, Clark documented 1st Premier Learning Academy & Daycare in Clinton Township, which collected $1.1 million in reimbursements even as repeated site visits found no children and no staff present.
Washington is the third. And because Minnesota’s case became closely associated with Somali-run providers, some of the reporting cycle around Washington has carried that framing over. It’s worth stating plainly, up front: DCYF’s own data shows providers whose primary language is Somali hold roughly 2.6% of statewide child-care slots, and no individual Somali-American provider in Washington has been charged with anything. The pattern this story documents is about unaudited payments and a documentation gap across the entire program — not about any single ethnic community.
The Washington State Auditor’s Office released its FY2025 Single Audit on March 30, 2026, covering the federal dollars the state passes through its own agencies. Buried inside the broader report: auditors sampled 59 child-care providers, found 14 questioned payments totaling just $6,123 within that sample, and then extrapolated the error rate across the full $364 million in federal child-care dollars DCYF distributed to roughly 7,400 providers that year. The extrapolated result — $27.2 million in federal Child Care Development Fund payments plus $9.9 million in Temporary Assistance for Needy Families payments — is where the $37 million headline figure comes from.
The more alarming number sits one layer deeper. Auditors say DCYF has now failed, for four consecutive fiscal years — FY2021 through FY2024 — to produce adequate provider-level documentation to support its federal child-care spending, leaving more than $415 million in federal CCDF costs effectively unauditable. That’s not an allegation of theft; it’s an admission that the state cannot show its own work.
“They are probably the most risky of all of the departments in state government.”
State Auditor Pat McCarthy (D), on DCYF
McCarthy has repeated the underlying point in multiple venues: “We haven’t been able to get that information for the last four years.” She has also been explicit about what her office did and did not find. “Our audit did not conclude that fraud occurred,” she said — a distinction this story preserves throughout. What her audit did conclude is that Washington’s child-care payment system pays first and verifies later, and that the verification step has been broken for years.
Statewide extrapolations can feel abstract. The Center Square’s investigation, which RedState’s reporting draws on, made the pattern concrete with specific addresses. A home daycare in West Seattle received more than $229,000 in Washington Working Connections Child Care subsidies between July 2025 and March 2026 — nine months — despite residents at and near the address repeatedly telling reporters they had never seen a daycare operating there. A second home daycare in Federal Way collected $223,247 over the same window under the same pattern.
Some of these providers were billing the state at a pace exceeding $20,000 a month — more than many licensed, fully staffed child-care centers with dozens of enrolled children ever collect. The mechanism that makes this possible is structural, not exotic: DCYF pays providers based on enrollment before it reviews the supporting attendance documentation, relying on post-payment audits to catch problems after the fact. By the time any review happens, the money is typically already gone, and the provider has moved on to the next billing cycle.
DCYF does run its own internal oversight, and the numbers are worth sitting with. The agency has completed 2,228 provider audits, and 67% of them — roughly two out of every three — found overpayments, totaling about $2.2 million recovered or identified. Of those thousands of flagged cases, only 14 were referred to DCYF’s own Office of Fraud and Accountability. Zero have resulted in prosecution or conviction, as of this story’s publication.
DCYF Secretary Tana Senn (D), a former state representative from Mercer Island appointed by Gov. Ferguson in January 2025, oversees the agency McCarthy’s office has called the riskiest in state government. DCYF’s own public statement in response to the coverage stresses that Somali-primary-language providers hold only about 2.6% of statewide slots — a fact worth including for accuracy — but the statement does not dispute the audit’s core finding: four years of missing documentation and a payment system that verifies after, not before, the money goes out.
What the audit found: $37 million in questionable payments (extrapolated from a 59-provider sample) and $415 million-plus in unauditable spending across four years. State Auditor Pat McCarthy (D) said directly: “Our audit did not conclude that fraud occurred.”
What The Center Square separately documented: specific home-daycare addresses receiving six-figure payments over months while residents say no children were present — reported facts, not a court finding.
What hasn’t happened: no state fraud investigation opened by the Washington Attorney General’s Office or DCYF, no charges filed against any named provider, nearly seven months after the reporting began.
Asked directly by The Center Square in March whether he would commit to an investigation, Gov. Bob Ferguson (D-WA) said he’d “get back” to reporters — and, per that outlet’s reporting, never followed up. Ferguson has said, in general terms, “If there is fraud, you need to be held accountable, I don’t care who you are” — a statement of principle that has not yet translated into an announced inquiry into his own administration’s child-care payment system.
Attorney General Nick Brown (D-WA) has been more active publicly — but pointed his response at the journalists and citizens raising the questions rather than at the payment records themselves. Brown’s office directed people reporting on daycare site visits to the AG’s Hate Crimes & Bias Incident Hotline, and Brown said in a statement: “Showing up on someone’s porch, threatening, or harassing them isn’t an investigation.” No public statement from Brown’s office has announced a fraud investigation into the payments themselves.
Any state official who chills or threatens to chill a journalist's First Amendment rights will have some 'splainin to do.
Brown’s office has pushed back on the criticism, framing the coverage itself as the problem. The AG’s official account posted that daycare providers had been “harassed and accused of fraud with little to no fact-checking” by reporters and social-media accounts investigating the payments — a characterization Republican legislators and journalists covering the story have disputed.
Child care providers across our state have been harassed and accused of fraud with little to no fact-checking.
State Republicans have called the response inadequate given the scale of the numbers. WA GOP chair and state Rep. Jim Walsh (R) put it bluntly: “This is a failure of state government. Meanwhile, the FBI is investigating.” Rep. Joshua Penner (R-Orting) has made the same point in dollar terms: “We are talking about nearly half a billion dollars in spending that the state cannot fully account for. That is not just a bookkeeping error; it is a massive breach of the public trust.”
This is a failure of state government.
The legislature’s own process has drawn scrutiny too. Sen. Lisa Wellman (D-Mercer Island) pre-filed SB 5926, a bill that would expand public-records exemptions for licensed child-care providers — timing WA GOP chair Jim Walsh called “suspicious” given it landed as the payment-records reporting was gaining attention. Separately, Rep. Travis Couture (R-Allyn) says Sen. Claire Wilson (D-30th LD), who chairs the Senate Human Services Committee, stripped a House-passed amendment that would have barred providers convicted of fraud from holding a license again. “One of the amendments was simply saying that if you got caught doing fraud as a daycare provider, that you couldn’t have a license to be a daycare provider anymore,” Couture said. “She wanted to strip that out.”
- →Gov. Bob Ferguson (D-WA) — Told The Center Square in March he'd “get back” to reporters on an investigation, then didn't
- →AG Nick Brown (D-WA) — Directed harassment-complaint traffic to the Hate Crimes & Bias Incident Hotline; no public fraud inquiry announced
- →State Auditor Pat McCarthy (D) — Flagged the payments as “questionable” and DCYF as the state's riskiest agency, but says the audit didn't find fraud
- →DCYF Secretary Tana Senn (D) — Appointed by Ferguson, Jan. 2025; agency has failed to document four straight years of federal spending
- →Sen. Lisa Wellman (D-Mercer Island) — Pre-filed SB 5926, expanding provider public-records exemptions, amid the reporting
- →Sen. Claire Wilson (D-30th LD) — Chairs Senate Human Services Committee; per Rep. Couture, stripped a licensing-ban amendment for fraud-convicted providers
The non-response isn’t confined to Olympia. Seattle Mayor Katie Wilson (D), a Democratic Socialist elected in November 2025, told KOMO News on May 30, 2026 that she has no plans to open a local investigation into the daycare fraud claims within city limits: “No. This whole issue is not really about fraud. It’s about dividing and conquering… an immigrant community a target.” It’s one more data point in a pattern where the officials closest to the money have been the least willing to look at it directly.
Washington did pass legislative reform, even without an announced fraud investigation. SHB 2689 — moving the payment system to enrollment-based pay with electronic attendance verification and broader rate reform — was signed by Gov. Ferguson and took effect April 1, 2026. State fiscal projections put its savings at $143.3 million for the 2025–27 biennium, and roughly $781 million over four years, largely by closing the pay-first-verify-later gap that let the West Seattle and Federal Way payments continue unchecked for months.
Related accountability provisions were carried separately by Rep. Penner and Rep. Couture, announced Feb. 19, 2026, though the precise bill-numbering relationship between that package and SHB 2689 wasn’t fully resolved in this reporting — the two efforts are related pieces of the same legislative push, not necessarily one bill.
“Fraud depletes the resources meant for the most vulnerable children in our state. Every dollar stolen through ghost billing or lost to mismanagement is a dollar that doesn't go to a child in need.”
Rep. Travis Couture (R-Allyn)
The savings projection is real and the payment-timing fix addresses the specific mechanism that made ghost billing possible. What the reform doesn’t address, according to Couture, is accountability for providers already flagged: he says the licensing-ban amendment Sen. Wilson stripped would have kept fraud-convicted providers from simply reopening under a new name — and that gap remains open.
Three states, seven months, one recurring shape: a state child-care subsidy program that pays providers before it verifies them, a post-payment audit process too slow or too limited to catch the gap in real time, and — in Washington’s case specifically — a state auditor willing to flag the hole in the books while stopping well short of alleging fraud. That precision from McCarthy’s office is itself notable; it means the $37 million figure and the $415 million-plus unauditable figure can be cited confidently as documented findings, without overstating them into a criminal case Washington does not yet have.
What Washington does have: specific addresses collecting six-figure sums with no visible children, a governor who didn’t follow up on his own promise to look into it, an attorney general’s office that pointed its public response at the people asking questions, and a legislature that passed a real payment-timing fix while stripping a proposed licensing ban for providers already caught. The enrollment-based pay reform taking effect this spring should close the specific loophole that let ghost billing continue for months at a time. Whether anyone answers for the years of missing documentation that came before it is still an open question — and, per the officials themselves, still nobody’s stated priority.
