A recent audit by the New York State Comptroller’s Office found gaps in the oversight of Child Care Stabilization Grants administered by the Office of Children and Family Services (OCFS), revealing that more than 14 percent of the expenditures reviewed were inadequately documented or unbearable. These grants, funded through federal COVID-19 relief packages, were intended to stabilize New York’s child care sector by supporting providers with wage assistance, facility maintenance, and health and safety measures.

The audit, which covers January 2020 to November 2023, found that OCFS did not routinely require providers to submit receipts or documents to substantiate expense claims, relying largely on self-reported attestations from beneficiaries. Of the $2.6 million in expenses sampled, approximately $373,000 in expenses claimed by 20 providers did not have sufficient support. The audit also raised questions about the accuracy of OCFS grant funding methodology, noting significant discrepancies between the licensed capacity figures used to determine awards and the actual enrollment of children served.

Key findings indicate that OCFS’s reliance on provider attestations has led to inconsistencies, with some providers claiming expenses for unexpended items or failure to meet eligibility requirements. In one case, a provider that had been out of business since 2016 received nearly $4,200 in stabilization funds. In response, OCFS committed to improving monitoring procedures, including contracting outside auditors to review provider spending.

The audit also highlighted that while federal guidelines allowed OCFS flexibility in awarding grants, improvements could have been made in tailoring grants to the actual operating conditions of providers. This was particularly relevant to special education providers, who were often awarded funding based on licensing capacity rather than actual child care needs. By adopting a methodology that considers enrollment along with capacity, the audit suggests that OCFS could have allocated resources more efficiently.

Going forward, the Comptroller’s Office recommends that OCFS strengthen its controls for grant administration by reviewing documentation on a risk basis and increasing communication with providers. Efforts are ongoing to recover unspent or misallocated funds, with $9.9 million returned to date and additional recovery efforts underway.

OCFS responded to the audit findings by emphasizing the urgency of stabilizing the childcare sector during the pandemic. They pointed out that while the agency’s internal controls were extensive, new audit procedures are now being implemented to ensure that funds are fully aligned with program goals.

For more information about the audit findings and OCFS’s response, visit the New York State Comptroller’s website.

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