Natasha Repp felt a sense of panic ripple through her after the news broke.
It was New Year’s Eve — a day typically characterized by optimism and possibilities for the year ahead.
But as Repp read the headlines, she worried about how cuts to federal funding would impact her business, her colleagues and families with young children across the country.
In response to allegations of child care fraud in Minnesota, the Trump administration announced it would pause federal child care funding nationwide until states could prove funds were being “spent legitimately.”
Such a freeze had the potential to send shockwaves through the child care industry.
Fortunately, Ohio didn’t experience any major federal funding freezes after Jan. 1 because it already had sufficient fraud prevention measures in place, according to Kara Wente, director of the Ohio Department of Children and Youth.
“The process did change and (the federal government) did require new justification. They wanted to make sure that you were ensuring that the children were served,” Wente explained.
“Our system was set up that way, but it did go through additional approvals at the federal level.”
Wente said there was a period when providers were getting paid a few days later than normal, but still within the required timeframe. There was one week with a longer delay, but it was due to a computer system issue, not noncompliance by ODCY.
But even slight disruptions in funding can be difficult for child care providers, who typically operate on low wages and thin profit margins, especially for smaller centers and home child care providers.
Repp, the owner of Clover Hill Early Learning Center in Ontario, said her monthly profit margin hovers between 2 and 3 percent — which doesn’t leave much wiggle room.
“I will never get above that, because my staff, my payroll, benefits, take 60% of my budget,” she said.
As discussions around prevent fraud reached a boiling point early in the year, ODCY ramped up its efforts to explain existing fraud prevention efforts to the public.
“There was a very strong and confident response from our state agency and the governor that, while program integrity can always be improved, they were doing everything in their power to ensure that every dollar got to kids and families and not to bad actors,” said Lynanne Gutierrez of Groundwork Ohio, a nonprofit advocacy organization focused on young children and families.
“I think that tempered the accusations that the fraud was widespread.”
What does ODCY do to prevent fraud?
Ohio spends around $969 million per year on publicly funded child care, a subsidy program for low-income parents who are working or in school.
Wente said preventing fraud has been a top priority for ODCY since the agency was created in 2023. But there was an uptick in interest — and accusations — after New Year’s Eve.
“We already had a fraud line. We had a button (on our website) that said ‘report fraud’
We were already working our program integrity cases,” she said.
“But after New Year’s Eve, the volume and the attention to it just drastically changed. People wanted to know what we were doing, how we were doing it and that when we found something, we acted,” she added. “We got a lot of opportunities to talk about (our fraud prevention efforts) over the last few months.”
Wente said ODCY monitors certain data points across multiple departments and uses analytics to complete risk-based and data-driven reviews.
Licensed child care providers are subject to both regular and unannounced inspections, regardless of whether or not they receive PFCC funds.
The agency also follows up on outside referrals of suspected fraud or other child care-related issues.
In the first five months of 2026, DCY received more than double the number of tips from the public, DCY licensing staff and county agencies than in all of calendar year 2025, according to a press release.
When it comes to verifying attendance for children on PFCC, a parent or guardian is required to enter a unique PIN number that providers don’t know every day when they drop their child off. Then a camera takes the adult’s picture. After reminding families last year not to share their PINs with providers, more than 7,500 were reset.
If ODCY discovers a provider has been overpaid, ODCY actively works to collect repayment for 45 days, according to its website. Funds not collected within 45 days are then certified to the Ohio Attorney General for further collection and action to pursue repayment until paid in full.
Data shows child care fraud is rare in Ohio
Less than half of one percent of providers who accept PFCC vouchers were found to be misusing funds in 2025, according to an analysis by the Ohio State University’s Crane Center for Early Childhood Research and Policy.
During the first week of January, the ODCY did a randomized surprise visit of 400 child care centers to check attendance records.
Based on the randomized trial, ODCY projected overpayments could represent around 1.6 percent of the state’s annual expenditures for publicly funded child care.
“We weren’t surprised that a majority of our providers were doing exactly what we wanted,” Wente said. “They were operating with attendance records and caring for our kids in a healthy, safe and quality way.”
After that sample, ten providers were terminated from the PFCC program due misuse of funds totaling more than $1 million.
An additional 12 programs had overpayments due to administrative errors or inconsistencies, totaling just over $130,000. An ODCY press release stated those errors were addressed “through technical assistance and additional follow-up.”
“We fight really hard to get the dollars for child care to be able to invest and serve as many kids as possible,” Wente said. “We think any dollar (misspent) is too much. But we do feel like we have safeguards in place.”
