Audit: Value, quality of oversight questioned in $2B childcare industry

(The Center Square) – Compliance and clarity to the spirit of division policy on scheduling at the county level, and management accountability on the state level are recommendations following a North Carolina audit of childcare services.

The performance audit of the Division of Child Development and Early Education Child Care Centers Oversight in the state Department of Health and Human Services by the state auditor’s office evaluated oversight and monitoring of licensed childcare centers. Families pay an estimated $1.3 billion to the more than 213,000 statewide, with $506.8 million in federal subsidies and $216.9 million in state taxpayer dollars supplying the rest of the $2 billion in annual costs.

In the report to first-term Democratic Gov. Josh Stein, the General Assembly, Health Department Secretary Dr. Devdutta Sangvai, and Division of Child Development and Early Education Director Candace Witherspoon, first-term Republican state Auditor Dave Boliek and staff recommended:

“ • Clarify and enforce scheduling policy. Clarify the current policy to make annual compliance visits less predictable, including those occurring in the same week or on the same day of the week as the prior year. Since Division policy provides a 60-day window within which visits must be conducted, the Division should use that 60-day window to disrupt, not perpetuate, repeat scheduling patterns (as allowed by policy).

“ • Implement monitoring of scheduling patterns. Establish a documented monitoring process to identify repeat timing patterns in annual compliance visits before the schedules of those who complete the compliance visits are finalized to ensure scheduling practices align with the intent of Division policy.

“ • Monitor repeat scheduling patterns at the caseload and county level. Track repeat-timing metrics across multiple years at the caseload and county levels and incorporate these metrics into routine management reporting.

“ • Assign management accountability. Designate explicit responsibility within Division management for reviewing scheduling trends and ensuring alignment with the policy’s intent.”

In a response signed by Jill Simmerman for Deputy Secretary Michael Leighs from the Stein administration, the Division of Child Development and Early Education disagreed with the auditor finding “repeat scheduling patterns that reduced the unpredictability of annual compliance visits.”

The audit said from fiscal year 2024 to 2025, 16.2% (667 visits) occurred during the same calendar week as the prior year’s visit, and 4.6% (197 visits) were on the same day of the same week. Additionally, 21 of the state’s 100 counties had at least 25% of the annual compliance visits “follow a predictable pattern, and in five counties, more than two-thirds of visits followed similar patterns.”

“Unannounced visits are intended to capture typical operating conditions,” Boliek wrote in the audit summary and recommendations. “When the timing of visits is predictable, it reduces the likelihood that those completing the visit will observe those conditions and weakens the oversight value of the division’s monitoring activities.”

Boliek said that’s particularly relevant for observation of food storage and handling, storage of medications and hazardous products, sanitation, and being a smoke-free facility.