Management Letter 588-2025-07-01
The Audits Division investigated the Department of Early Learning and Care (DELC) after receiving a complaint through the
Government Accountability Hotline. Specifically, the complaint alleged waste and fraud in the Preschool Promise program.
Preschool Promise is an essential program that exists to expand the availability of high-quality preschool options for families in Oregon.
Auditors found DELC paid out $1.4 million in grants to Preschool Promise providers that we consider wasteful.
The U.S. Government Accountability Office defines waste as the act of using or expending resources carelessly, extravagantly, or to no purpose. Waste generally doesn’t involve abuse or illegal activity, but stems from mismanagement, inappropriate actions, and inadequate oversight. Auditors also identified an additional $1.5 million in improper payments that didn’t follow proper administrative procedures.
We issued 13 recommendations to DELC to strengthen controls in the Preschool Promise program that would improve program performance and prevent wasteful payments in the future.
What we found
We found
$1.4 million in payments and awards we believe to be wasteful. This includes:
- $679,836 tied to
low enrollment,
- $154,700 tied to
unopened sites, and
- $586,950 tied to
grant expansions in 2022-23.
Although this represents a small portion (about 1%) of all Preschool Promise payments during the time reviewed, this is a significant amount of public money. These funds could have provided child care for 100 additional children instead of the approximately 13 children actually served.
In addition, we found
over $1.5 million in improper payments because of inadequate oversight to one grantee who repeatedly submitted expense reports that didn’t meet the terms of the grant agreement. Since this grantee was providing services, these payments don’t constitute waste.
We also found management has strengthened controls in Preschool Promise since its transition to DELC in 2023. Our findings highlight additional opportunities to strengthen controls to better mitigate risks of waste and fraud as DELC continues to mature.
What we recommend
-
Document a policy for enhanced monitoring of any sites experiencing low enrollment, including those in rural areas. Detail conditions that would lead to terminating or adjusting those grants.
Agency response:
Partially agree
Target completion date: Adoption of grant continuation and enhanced monitoring policies & procedures: December 31, 2025
Implementation of enhanced monitoring: June 30, 2026 -
Establish clear guidelines for management overrides of committee recommendations and document the justification of those decisions.
Agency response:
Agree
Target completion date: December 31, 2025 -
Implement processes to increase oversight of Hubs when they fail to submit required reports or when providers in their region are facing low enrollment.
Agency response:
Agree
Target completion date: Internal process mapping: December 31, 2025
Coordinated enrollment redesign: March 31, 2026 -
Update administrative rule to change eligibility criteria for families experiencing high housing costs.
Agency response:
Agree
Target completion date: March 31, 2026 -
Enforce a standardized reporting frequency, with explicit due dates, and implement data input controls to ensure consistent and timely data for efficient monitoring and analysis.
Agency response:
Partially agree
Target completion date: Updated grantee guidance: December 31, 2025
Annual review of tools: June 30, 2026 -
Develop training so providers understand reporting requirements.
Agency response:
Agree
Target completion date: December 31, 2025 -
Implement additional monitoring controls to identify providers out of compliance or at higher risk of violating program rules, including by performing data analytics to flag improper payment risks.
Agency response:
Agree
Target completion date: June 30, 2027 -
Enhance ongoing reconciliations between draw data and state accounting records.
Agency response:
Agree
Target completion date: June 30, 2026 -
Implement controls to prevent, detect, and correct duplicative payments.
Agency response:
Partially agree
Target completion date: Review of fiscal monitoring: December 31, 2025
AMS updates phased implementation: June 30, 2027 -
Implement additional controls to ensure grantee data is reliable and services are delivered as intended, such as by collecting and monitoring child-level data across programs.
Agency response:
Partially agree
Target completion date: Enhanced monitoring policy and procedure adoption: December 31, 2025
Implementation of enhanced monitoring and comprehensive risk assessment: June 30, 2026
Design controls to mitigate associated risk: June 30, 2027 -
Leverage data analytics to improve grant monitoring and to inform granting decisions.
Agency response:
Agree
Target completion date: See recommendations 3, 7, and 10 -
Develop a set of specific, measurable, achievable, relevant, and timebound goals for the program supported by necessary data to evaluate the agency’s progress towards achieving them and inform decision-making. These goals should align with the agency’s strategic plan and program requirements, guide daily operations, and drive risk assessments to address threats such as improper payments or grantee performance issues.
Agency response:
Agree
Target completion date: December 31, 2025 -
13. Perform a comprehensive risk assessment for early childhood programs including an evaluation of improper payment risks, analyze identified risks on an ongoing basis, and use that analysis to design mitigating controls.
Agency response:
Agree
Target completion date: Comprehensive risk assessment: June 30, 2026
Design controls to mitigate associated risk: June 30, 2027
Agency Response
DELC agreed or partially agreed with all of our recommendations. The response can be found attached to the letter.
