Objective

To assess the extent of implementation, as of June 2026, of the three recommendations included in our initial audit report, Child Care Stabilization Grants (Report 2022-S-44).

About the Program

The COVID-19 public health emergency put a spotlight on the critical role child care plays in supporting children, families, businesses, and the economy as a whole. It also highlighted the fragility of the child care system. Child care is essential for our communities to thrive, but according to the New York State Child Care Availability Task Force, the system’s current structure means many families cannot access or afford high-quality care, and the workforce is largely underpaid for skilled and valuable work. In response to the urgent need in the child care sector, the American Rescue Plan Act (ARPA) included approximately $24 billion for child care stabilization grants.

The Office of Children and Family Services’ (OCFS) mission is to serve New York’s public by promoting the safety, permanency, and well-being of our children, families, and communities. As part of its mission, OCFS’ Division of Child Care Services administers several child care grant programs, including child care workforce retention and child care stabilization. Between May and June 2021, OCFS received $1.8 billion from ARPA and an additional $469 million from the Coronavirus Response and Relief Supplemental Appropriations Act. OCFS used the money to fund several COVID-19 response programs, including over $1.4 billion to fund child care stabilization grant programs. OCFS awarded these grant programs in two separate rounds. The first round (Stabilization 1.0) focused primarily on stabilizing the child care sector. The second round (Stabilization 2.0) focused on stabilizing the child care workforce. OCFS awarded a total of $1.173 billion, including $893 million in Stabilization 1.0 funds and $280 million in Stabilization 2.0 funds.

The objective of our initial audit, issued in November 2024, was to determine whether OCFS had established and maintained adequate internal controls to enable it to oversee and monitor child care stabilization grantees to ensure proper use of child care stabilization grant funds; and to determine whether the grants met their intended purpose to stabilize child care operations to maintain care. The audit covered the period from January 2020 through November 2023.

The audit found that OCFS didn’t sufficiently monitor grantee expenses claimed under the programs to provide assurance that funds were used for allowable expenses. Specifically, OCFS did not, as a practice, request or review receipts (even on a sample basis) to support expenses claimed. Instead, OCFS relied primarily on providers' attestations and expense report claims to support payments. Of the $2.6 million in expenses we reviewed from 39 non-special education providers, $373,182 (14%) reported to OCFS by 20 providers was either inadequately supported or not supported at all. Additionally, while federal guidelines gave OCFS latitude in developing a grant funding methodology, the audit found that obtaining additional information that better reflects providers’ operating conditions and enrollment might have been useful in calculating grant amounts. There were stark differences between the licensed capacity information OCFS used to determine grant awards and child care providers’ actual enrollment, indicating that grant awards were not necessarily reflective of providers’ current or historical operations. This was especially glaring for special education providers. For the 16 special education providers we reviewed, award amounts would have been $1.09 million (18%) less had the State Education Department’s (SED) capacity information been used. Further, the audit questioned whether providers used all grant funds in line with the program's goals. For example, although Stabilization 2.0 focused on supporting the child care workforce—which, according to the New York State Child Care Availability Task Force, has been historically underpaid—of the expenses reviewed, the audit found four providers used $73,036 in Stabilization 2.0 funds for health care contributions, retirement contributions, and bonuses (totaling over $14,000) for executive staff.

Key Finding

OCFS officials have made progress in addressing the issues we identified in the initial audit. Of the initial report’s three recommendations, one was implemented, and two were partially implemented.

Key Recommendation

OCFS officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in the follow-up within 30 days of the report’s issuance.