House oversight panel targets child care fraud after reports of misuse

Members on both sides of the political aisle agree that any fraud in the state’s child care system is unacceptable.

Department of Human Services’ officials agree.

What the department does now, and would like to do, was the focus of the House Fraud Prevention and State Agency Oversight Policy Committee Monday. No action was taken.

“We want to have a partnership with the agency to make sure that Minnesotans have care, have the slots available, but also more than the slots, that it’s a safe environment,” said Rep. Kristin Robbins (R-Maple Grove), the committee chair.

She later added: “We want to put things in statute that really strengthen your ability to enforce and provide for child care in Minnesota.”

Shireen Gandhi, who has been temporary commissioner at the Department of Human Services for less than a month, provided a presentation of what the department does regarding oversight of licensed day care facilities receiving Child Care Assistance Program funding and fraud prevention efforts.

[MORE: Child care assistance Fiscal Year 2024 facts and figures]

The department has again come under fire following a January 2025 KSTP-TV report that showed millions of dollars in program funding being sent to centers with serious safety and program violations.

“Fraud in these programs is unacceptable, it is not a victimless crime,” Gandhi said. “People who steal and misuse public dollars should be held accountable to the fullest extent of the law.”

A Child Care Audits & Investigations Unit was created in 2013. Four investigators have recovered about $2.4 million since 2020, an average of five cases per year have been referred to law enforcement for criminal investigation since 2021, and the department has stopped payments to 79 providers since 2021.

Licensing violations alone don’t necessarily mean there is fraud but can cause the investigators to look more closely, Gandhi said.

But how to further investigate?

The department’s budget proposal proffered by Gov. Tim Walz includes $7.24 million in the 2026-27 biennium “to better detect, prevent and address fraud, waste and abuse in human service programs.”

Additional investigative staffing for the department’s program integrity oversight operations is sought to better investigate fraud.

“For every dollar we spend on an investigator, we have an average return on investment of $1.89,” Gandhi said.

Also in the proposal is better sharing of investigative data across agencies; expanding authority to immediately suspend a program license if a controlling individual, not just the license holder, is criminally charged with fraud or theft; and expanded authority for payment withholds and program suspensions. Current statute allows the department to use payment withholds if there is a credible allegation of fraud and a pending investigation.