Hearings to examine preventing fraud in child care assistance programs.

The Committee on Health, Education, Labor, and Pensions will please come to order. Now, my parents instilled in me the value of a dollar. They were, they grew up in the Depression, and they just knew that you worked hard for your money and if you lost a dollar it could actually make an impact upon your family. And you had to be wise how it was spent. And really the American people expect the same from the federal government. If my people back home in Louisiana have one request, if they are sending hard-earned dollars to Washington, that it be spent responsibly, making sure that those who deserve the dollars get the dollars, but those who are stealing the money are prosecuted. And they feel angry right now because of reports that money meant to support families in child care has been at best misspent and at worst stolen. And that seems to be what is happening in some child care programs and some other safety net programs, and this hearing is about that. Minnesota has been a wake-up call to a problem which runs deeper. By the way, if we're going to create support for such programs, nothing undermines support than people stealing from the program. Just to say that. If you believe in these programs, you should be the ones crying loudest for accountability, or otherwise fellow Americans have no belief in the support of the program. Minnesota's Office of the Legislative Auditor has been warning about fraud in their programs since 2018. This state, Minnesota, consistently with a high rate of misspent dollars. Almost one in every $10 spent on child care coming from the federal government in Minnesota has been stolen or misused, and billions more in federal dollars from nutrition, housing, autism programs, and Medicaid. Now, Minnesota was a catalyst to consider the problem, but let's be clear: this is more than a Minnesota problem. And let's be clear: it isn't a California, New York, Illinois, or Colorado problem. It is an American problem. Can I see that chart? Some states have done well, and some states shamefully. And this is what we need to look at. Now, it's not enough to be angry. We've got to have action, we've got to have accountability. We've got to stop the fraud, we've got to protect the taxpayers, we've got to allocate the resources where the resources need to be allocated for those families who actually have the need. As chairman of this committee, I can say on a bipartisan basis that we should not tolerate waste, fraud, and abuse stealing money in my state from the taxpayers of Louisiana, but it could be just as easily the taxpayer of any state represented here. And we can see what has worked. Mississippi, I mean they have their rate at zero. I think it's like 0.34 or something. Good for Mississippi. And compare that to Minnesota's 9 percent. And I hate to say it, I don't mean to embarrass Senator Murray, but Oregon's rate is 35 percent.

Oh, I'm sorry. She reminded me she's from Washington state. You know, sometimes I...

Call me the Seahawks fan.

[Laughter.] Many apologies. Now, by the way, Louisiana's about 6 percent. We used to be better, we're not as good now. I am told that there are regular, unannounced inspections of child care providers, and we share how well each provider performs with parents online. And in the past there was greater improvement by verifying improvement with biometric verification of attendance. But during the COVID pandemic that system was eliminated and the error rate has gone up. But I'm just pointing out, there are systems which can eradicate essentially fraud if they are implemented. The Child Care and Development Fund is only able to serve about 1.4 million low-income working families out of the 8 million eligible. Every dollar misspent or stolen is a dollar not going to that working family, which is by the way the constituents we are here to serve. And when we say federal funds, let's not be abstract. We're talking about our money. If you're watching this, your money, your neighbor's money, money that could have been used to plan for your child's future, could have been used for a night on the town on your anniversary, could have been used to buy a little bit of a better home, instead going to tax dollars which are stolen. And by the way, could have been used to provide child care support for a family that otherwise could not afford, but because of a long waiting list cannot get in. We've got to clean it up, we've got to do it fast, and that's why this committee launched a fraud task force last month to expose fraud around the country. I thank Senators Moody and Marshall for leading the health task force, Tuberville and Husted for leading the education, and Mullin and Scott for leading the labor and pensions task forces. Both sides and past administrations have failed to curb this fraud. The American people rightly want it stopped. And the only way it stops is if Congress, not the administration, enacts new laws. Specifically, the members of this committee must lead. In the coming weeks I'll be putting forward proposals to strengthen the Child Care and Development Block Grant Act to stop the fraud. Today's hearing is an important step in refining those solutions. I look forward to hearing from our witnesses: from my home state, Dr. Paula Polito, home of the Beary Cherry Tree Child Development Center from Jefferson Parish, which I had the pleasure to visit a few years ago, and we're talking about how that kind of, wow, nice to meet you Dr. Polito, has turned into her being here. Thank you for being here, ma'am. Mr. Wilde will speak to the fraud that plagued Wisconsin's child care system previously and the successful, as he said, painful efforts to overhaul. And I think, and we'll have a Democratic witness which I'll allow Senator Hickenlooper to, but thank you for being here Ms. Denson. And thank you all. I think we are united in knowing that this is an important program which has to be protected, just like the good people of Washington state seek to protect it. With that I yield to Senator Hickenlooper.

Thank you, Mr. Chair. And let me also thank our witnesses for being here this morning. Appreciate how busy you are and take a day or two out of your schedule for us. I think pretty much any expert in child development will tell us the same thing, that the first five years of a child's life are the most important for their intellectual and emotional development. We believe that every child in America should be allowed and entitled to receive a high-quality early education. And I think we all believe that we should do more to make that a reality. Between 2020 and 2024 the cost of child care has increased by nearly $3,000, outpacing inflation during the same period. In America today families pay more for child care than they pay for rent, than they pay for mortgage payments, in-state college tuition in most states. Half the families in America live in a child care desert. We also know that early childhood educators, people that are teaching in early childhood centers, are never compensated at appropriate levels considering the value they provide. According to researchers at UC Berkeley, early childhood educators rank at the bottom 3 percent for annual wages. That means 97 percent of other workers, of all other workers, make more than those who work educating our children. And that is shameful. It's no wonder that communities are struggling to hire and retain early educators and child care staff. Child care providers are doing their best to stay in business as they face razor-thin margins, increasing expenses. In many cases they're losing money from month to month and figuring out how to get back on the, above the fold. According to Small Business Administration, 99 percent of child care providers are indeed small businesses. And I know firsthand from almost 20 years of experience how difficult it is to run a small business and to make the finances work and make sure that you're able to deal with today but be ready for tomorrow at the same time, to be able to comply with all the rules and regulations and in this case still focus on caring for young children. It ain't easy. And it's clear that we have a child care crisis and that that crisis needs addressing. A crisis is certainly not helped by actions to freeze child care funding for entire states, such as Colorado and what's happening there. The unlawful freezing of $10 billion in funding for child care and other social services leaves kids and providers as the collateral damage for often what is no more than political retribution. In Colorado this freeze imperils more than 27,000 children who attend thousands of child care facilities across the state. And this is not a child's game, this is people's lives. And let me be very clear and I agree 100 percent with Senator Cassidy that fraud is unacceptable in any form, especially when it takes money away from children and working-class families. But what the president's been doing by freezing funding for entire states is political retribution at its worst and it's harming parents, children, and child care providers in the process. I think he's got it this time backwards. The federal government should support access to child care, not create unnecessary chaos and stress for working-class families and those workers in child care. Many states including Colorado have robust fraud controls and program integrity measures in place to mitigate risk to federal funding. If there is more action Congress should take to improve program integrity, I'm all ears and I think there's being able to look at this in an objective, dispassionate form is essential. But indiscriminately punishing kids and families and teachers is certainly not the answer. I'm looking forward to hearing from today's witnesses, all child care providers, about how we can support their efforts and give them what they need to make sure that we do a better job of caring for our next generation of children. Thank you, Mr. Chair.

Thank you. Let me first introduce Mr. Wilde, Henry Wilde, founder and CEO of Acelero Learning. He previously served as the first deputy secretary of the Wisconsin Department of Children and Families, instrumental in developing Wisconsin's child care programs including the creation of the state's quality rating and improvement systems. He received his bachelor's and master's of business administration from Harvard. Thank you, sir, for being here.

Thank you for having me, Senator Cassidy. As Senator Cassidy said, I serve as the co-founder and CEO at Acelero Learning, where we provide full-day preschool for nearly 5,000 low-income children ages birth to five across six states and 61 centers, with every child funded through a combination of the Head Start program, the Child Care Development Block Grant, the Child and Adult Care Food Program, and public pre-K programs. Through our Shine Early Learning division, we also provide support and services to child care providers, states, and municipalities to enable the implementation of high-quality early childhood programs in 30 states impacting more than 250,000 children annually. Our foundational belief is that every child, regardless of socioeconomic status, is capable of succeeding at the highest level and deserves the opportunity to achieve their full potential. Publicly funded programs like CCDBG and Head Start are not just work supports for families. 50 years of research have demonstrated that high-quality early childhood education can change the trajectory of low-income children's lives and close the income-based achievement gap before they enter kindergarten. This is Acelero's North Star, and external evaluations of child outcomes conducted by researchers at Brown University, MDRC, and the National Institute for Early Education Research have repeatedly demonstrate superlative child outcome gains in our programs. Operating child care centers or family child care homes for low-income children is challenging, even for high-quality providers with the expertise and infrastructure required to braid multiple funding streams. The fragmented early childhood system is severely underfunded, and headwinds are even stiffer when annual cost-of-living adjustments for programs like Head Start and CCDBG fail to keep pace with inflation. The inevitable consequences are teacher labor shortages, foregone learning gains, and lost economic productivity for parents who cannot find care. This context highlights the imperative that investment in the CCDBG program not be compromised by fraud. I believe child care fraud is extremely rare. The vast majority of providers make personal and economic sacrifices because they're committed to serving children and families. And the existence of bad actors should not obscure the fundamental reality that Head Start and CCDBG need greater investment. I also believe that to safeguard and expand this essential program, states must implement common-sense measures to ensure CCDBG funding reaches its intended beneficiaries. In 2008 Governor Jim Doyle established the Wisconsin Department of Children and Families, merging child care licensing and subsidy functions into a single organizational unit for the first time. DCF Secretary Reggie Bicha and I were asked to launch this new department. And in our early listening sessions with staff, we heard consistently that child care licensors found that there was an implausibly high number of child care providers in the city of Milwaukee, while our very small child care subsidy unit said that they were overwhelmed by processing nearly $350 million in payments every year and they lacked the capacity to meaningfully investigate the concerns that were raised. Soon after we created the department, Raquel Rutledge of the Milwaukee Journal Sentinel published the first story in what became a Pulitzer Prize-winning series on child care fraud in the state of Wisconsin, which proved to be well beyond the scope of what we could have imagined. Her reporting validated the concerns that licensors expressed and succinctly outlined the mechanism. In some ways the scam is simple. All it takes is three players: an employer, a child care provider, and a parent. The fraud we found relied on collusion. Parents needed an eligible work activity and work schedule that was demonstrated via pay stubs to be approved by a state or county worker to receive a subsidy authorization. Once approved, as long as the provider produced documentation that children regularly attended the program, payments were made. In Wisconsin, fraudulent providers would recruit parents of young children, generate fake pay stubs to verify employment and hours either at the center itself or at a fictitious employer, and fake attendance records to verify participation. But no work was performed and no care was provided. The provider would collect the subsidy payments and pay the parent a share of the proceeds. This method of defrauding the state became so well understood and prevalent in Milwaukee that by the time we intervened, dozens of fraudulent providers had taken advantage over the course of a decade and millions of dollars had been stolen. I would offer three things, and I'll happily speak more about this in the question and answer. We found three things most effective. Number one: connecting the dots between child care licensing and child care subsidy. Child care licensing were our eyes and ears on the ground, and if they went to a center that had 50 child care authorizations and they saw three children, it was not in their purview to find that concerning or suspicious. The disconnect was compounded by the fact that much of this fraud was attributed to second and third shift care. The second thing we did was to use data in ways that hadn't been used before, using data in existing systems to identify patterns that suggested that there could be fraud at individual centers. And finally, the third thing we do is to link payments to quality. It was very possible to meet minimum licensing standards, much more difficult to meet objective quality measures. And we added criteria to the child care subsidy system where higher-quality providers were paid more. I'd just share that an important conclusion from this process: the program did shrink if you look at the trend line after 2010. We know that centers closed and that there were less families that were actually accessing subsidy. But really important in Wisconsin, we never had a waitlist with both Republican and Democratic governors and Republican and Democratic legislatures continued to invest in child care. And in the last 10 years, after 20 years of almost flat rates, the rates have almost doubled in our child care subsidy program. Thank you.

Thank you. Next I'm pleased to introduce Dr. Paula Polito, the owner and director of the Beary Cherry Tree Child Development Center. It's a little bit like Sally sells seashells, whatever, in Jefferson Parish, Louisiana, which she purchased in 1999 and has operated for over 26 years, continuing a three-generation family legacy in early childhood education. Today the Beary Cherry Tree serves over 230 Jefferson Parish families through high-quality early care and education programming. And she serves as chair of the Louisiana Department of Education Early Childhood Advisory Board, where she is recognized as the state's classroom assessment scoring system expert. She's also a contract trainer for Teachstone and the 2026 chair of the Jefferson Chamber of Commerce, making her the first child care provider to lead this organization in its history. She earned her PhD in urban studies and her MBA from the University of New Orleans while operating her business and raising three children, demonstrating her commitment to practice and scholarship in the field. Please, Dr. Polito.

Thank you so much, Chairman Cassidy and members of the committee. I come from a three-generation family legacy in early childhood education. For 26 years I have witnessed firsthand the transformative potential of quality early learning. Today I want to share how Louisiana has built a system that is a national exemplar worthy of preservation and investment. What sets Louisiana apart is partnership. Louisiana currently serves over 55,000 children ages birth to five who are economically disadvantaged through more than 1,700 licensed child care centers. But these numbers tell only part of the story. Every publicly funded child care center, Head Start program, and school serving young children receives a performance profile that includes a rating based on rigorous classroom observations using the CLASS tool, the Classroom Assessment Scoring System. As someone who has worked extensively with CLASS as both a practitioner and as the state's CLASS expert, I can tell you this: it is not a paperwork compliance, this is about understanding how teacher-child interactions drive learning and development. Performance profiles include information on best practices, use of ongoing assessment, high-quality curriculum, teacher credentials, and program investments in high levels of individual attention for children. Providers like me partner with the Louisiana Department of Education to facilitate two classroom observations each year, ensuring consistency and accountability. These results speak for themselves. Over 95 percent of Louisiana centers are rated proficient or above, and over 70 percent are rated high proficient or excellent. This didn't happen by accident. It happened because Louisiana chose to build a system rooted in collaboration rather than top-down mandates. Direct service providers, state agencies, and community stakeholders work together toward shared goals. This is the kind of partnership that creates lasting change. Louisiana has also demonstrated leadership in attendance verification, a critical accountability component. Daily licensing inspections are conducted statewide, with 25 to 30 percent of centers receiving unannounced monthly compliance visits. In 2023 Louisiana began transitioning to KinderConnect, offering multiple validated attendance methods, from tablets with photo ID verification to secure mobile apps. This modernization promotes consistency, strengthens fraud prevention, and simplifies operations without compromising security. From my perspective as both a provider and a business leader, Louisiana's early childhood education system represents the kind of infrastructure investment our nation needs. This is not a social service, this is economic infrastructure. At Beary Cherry Tree, my teachers average 12 years of tenure. We maintain exceptional student-teacher ratios, we create the conditions where children thrive and families can work. And we do this within a system that supports quality through meaningful accountability, professional development, and genuine partnership. Through my work with the Chamber of Commerce, I've seen firsthand how business leaders understand what many policymakers are still learning: quality early childhood education is workforce development infrastructure. When working parents can't find reliable high-quality care, businesses can't retain employees. When children don't receive quality early learning experiences, we pay the price in remediation costs throughout their K-12 education and beyond. Louisiana has built a system where quality is defined not by inputs alone, but by outcomes, where providers are treated as professional partners rather than vendors to be managed. This approach has created a network of programs that are accountable, effective, and continuously improving. What Louisiana has built took decades of intentional partnership. It required state leadership willing to invest in infrastructure, data systems, professional development, and genuine collaboration with providers. It required providers willing to be held accountable and to continuously improve. And it required a shared understanding that early childhood education, it's not just child care, it is the foundation of all learning that follows. This system is worthy of preservation and growth. As federal policymakers consider investments in early childhood education, I urge you to look at models like Louisiana's, systems that are built on partnership, focused on quality outcomes, and designed to support both children and the providers who serve them. The infrastructure is already here. The partnerships are in place. The accountability system works. What we need now is the sustained federal investment to expand and strengthen what works. Thank you for your time.

Thank you. And now I defer to Senator Hickenlooper to introduce Ms. Denson.

Thank you, Mr. Chair. As you noted, our final witness is Liz Denson from Colorado. Ms. Denson is the president and CEO of Early Connections Learning Centers, a nationally accredited early education organization serving approximately 300 children each day across four child care centers in El Paso County. Ms. Denson also serves in roles at the state and local level. In 2025 she was appointed to serve on the state of Colorado's Early Childhood Leadership Commission. Locally she serves as co-chair of Alliance for Kids, sits on the executive committee of the Early Childhood Business Council, and co-chairs the Sustainable Funding Committee for Colorado Springs' Family Friendly City Initiative. I don't know how she has time to do her other work. Welcome, Ms. Denson.

Thank you so much, Senator Hickenlooper. Chairman Cassidy, Senator Hickenlooper, and members of the committee, thank you for allowing me to join you here this morning. My name is Liz Denson, and as the senator said, I serve as the president and CEO of Early Connections Learning Centers in Colorado Springs, Colorado. I'm also a working mom of a four-year-old. And I'm here both as a child care provider and as a parent whose life was also shaped by having access to child care. I was raised by a hardworking family. Without affordable, reliable child care, my mother would not have been able to work, and I likely would not be here with you this morning. Child care isn't a luxury. It is an essential infrastructure for families, employers, and our economy. Early Connections is celebrating 129 years of providing services to Colorado families. We operate four centers, partner with family child care homes, and participate in Early Head Start and Head Start, Colorado's Universal Preschool Program, and the Child Care and Development Fund through Colorado's Child Care Assistance Program, or CCCAP. My testimony focuses on what CCDF looks like on the ground and what happens when that funding is disrupted. Child care is foundational to workforce participation. Parents cannot work without safe, reliable care. In Colorado, more than half the state lives in a child care desert, and only about 7 percent of eligible families receive assistance. The result is an estimated $3.1 billion in lost income each year because parents cannot work, advance, or pursue training without child care. To make this real, I'd like to share a brief story of one family we serve. A young couple in our community said yes to an emergency foster placement of two siblings, including an infant. Saying yes also meant figuring out how to keep working while supporting children in crisis. Because of CCDF-funded child care, they were able to do both: maintain their full-time jobs and follow their hearts to support children who desperately needed a safe and stable family. This is what child care assistance does. It allows families to say yes and prevents crises rather than reacting to them later. At Early Connections, we serve about 300 children on a typical day, and approximately 60 percent rely on CCCAP to access care. For providers, CCDF funding isn't supplemental, it's structural. If Early Connections were to lose the funding that supports those children, the impact would be catastrophic. A short delay might be survivable, but a prolonged loss would force classroom closures, layoffs of teachers and support staff, and the elimination of hundreds of child care slots in our community. And this isn't unique to us. Across Colorado, 2,462 providers accept access to CCCAP. Most serve a mix of subsidized and privately paying families, and many would be unable to remain open without CCCAP funding. If providers lose all of their CCCAP children, many would lose a large share of their enrollment. And in many communities, there are simply not enough families who can afford to pay private tuition to fill those seats. When providers close, it affects everyone, including families who pay privately, because the overall supply of child care shrinks for the entire community. This brings me to program integrity. Accountability matters, and providers like Early Connections take stewardship of public funds seriously. We operate under multiple layers of oversight, including audits, real-time attendance tracking, county eligibility verification, twice-daily parent verification using their fingerprints. These safeguards are real, and they work. Responses to misuse must be targeted and proportional. Broad funding freezes place the burden of enforcement on children, families, and responsible providers, destabilizing care and making long-term system improvements more difficult. The real challenges in child care are affordability, access, and quality. In Colorado, infant care averages about $20,000 per year, well more than in-state college tuition, at a time when families are likely earning the least. Providers cannot... ...expand access, improve quality, or raise teacher wages without predictable public investment. Child care is essential economic infrastructure. When it is stable, parents work, businesses retain employees, and children thrive. When it is disrupted, the consequences ripple for years and across generations. As you consider CCDF policy, I urge a balanced approach: protecting public funds without destabilizing the system families and employers rely on. The path forward is increased investment, effective oversight, and a shared commitment to affordability, access, and quality. Thank you for the opportunity to be here, and I welcome your questions.

Thank you. Thank you. For the first question, I'll defer to Senator Husted.

Thank you, Mr. Chairman. I appreciate everybody. I appreciate what all of you had to say. I agree with what each of you talked about. It is so important that we have quality, affordable, accessible child care. I've worked on this issue for many years, and I remember as a parent, first time I dropped every one of my little ones off at child care so I could go to work. You just wonder like, is this going to be good? Is my child going to flourish here? And sometimes, you know, the quality of some of these places are not very good. And it is hard to afford. It is as expensive as college, particularly if you have, you know, two, three children in child care. When you send your children off to school for the first time after they're out of child care, it's like you got a pay raise, that's how expensive it is. And that's why I'm glad that we did in the Working Families Tax Cut Plan a $2,200 per child tax credit. We did more to help employers provide child care. And I know that at the state level, I'm looking into this fraud issue because we have a responsibility to do that. If you're stealing money away from child care, you're depriving people of access to those resources and undermining confidence in that system. In Ohio, we put in place a strong licensing program, as Mr. Wilde talked about. We have a star rating system so that people know what kind of quality that they have. We have a payment system based on attendance, not enrollment, where you have a PIN number or a photo ID or a QR code that you register your child at that child care facility. And I'm sure we can get better. But I know this: HHS says we have a 0.77 percent improper payment rate in Ohio, and the national rate is 4.93 percent. In Minnesota, they paid on enrollment, not on attendance. I don't believe that they did all of these things that Mr. Wilde talked about. And if you look at those numbers, if you take the national number, 4.93 percent versus 0.77 percent, and you assume that we have $30 billion a year that we use for subsidized child care at the federal level, that's $1.48 billion of improper payments. At that rate, it would be much, much less if we were to lower the rate to the same rate that Ohio had. It would actually provide, just eliminating that fraud, access for 1.5 million more children to receive subsidized child care in this country based on the current appropriation that we have. And so, how do we do all that, right? That's our challenge. And I would like you, Mr. Wilde, if you would, to just talk a little bit more in depth about this licensing process and the accountability processes that you, from your experience, that we can do to make sure we achieve all those goals: quality, affordable, accessible child care, but eliminate the fraud.

Thank you, Senator Husted. And I appreciate your reflections on your own experience getting child care, and congratulations to the state of Ohio. I think that one thing I'd just start is to differentiate a little bit between improper payments and fraud. Fraud is a subset of improper payments, but a lot of improper payments are actually mistakes. And for child care providers who are at the same time the substitute teacher and the backup cook and the clerk and the CEO and the CFO and the director of human resources, mistakes happen. And so I just set aside in terms of improper payments. What we found in Wisconsin was more like organized crime, in that there were children who literally weren't there. And so I think at the time, I can't remember exactly, but that we had a good improper payment rate because the fraud that we didn't see wasn't something that would have been captured in improper payments.

Yeah, there's both.

Yes, exactly. And from what we experienced, the kind of fraud that we saw is, if you think about just to use easy numbers, a child is, a voucher's worth $10,000 a year, and you have a provider who has 20 children who are not actually there or not actually attending, you realize how quickly that number gets higher and higher. And when there's five providers or eight providers, how quickly that rises. Again, I would differentiate that between mistakes and fraud. What we did in Wisconsin was that we recognized we had people who were going to centers all the time. They were doing unannounced visits. They were showing up there to look at child health and safety. And when they were there, they would look to see are the outlets covered or are there sharp edges on the playground, but what they wouldn't do is to have a list of the subsidized kids who were there. And so providers understood that this was not what they were looking for. And as a result, the people who were the eyes and ears weren't actually looking to see how taxpayer dollars were spent. So the first thing we did was to connect those dots, to say when you go out to do a site visit, also know how many kids have child care subsidies in this building, and if you see some huge disparity, make sure that you're flagging that. The second thing is, and I think it's really important in fighting fraud, not to create enormous new bureaucracy that providers who are small businesses have to deal with.

And once you establish there's analytics that you can be able to use to know, like to check for signs and then send the inspectors out when you see that.

That's exactly it, is that I think fraud detection and pursuing fraud should be very focused and use data. So I mentioned the on-site data you get from a licensor. I think in the context of using data that a state data system already captures, we found examples like we had our child care regulation and our child care subsidy...

The Chairman would like you to suspend your great answer.

Apologies.

Thank you, Mr. Chairman.

I was very soft with that time thing, but at some point, Senator Hickenlooper.

[Inaudible.]

Well, thank you very much. I appreciate that. And thank you, Chair Cassidy, for having this hearing today. But I got to say, no one wants our child care system to work more than me as a former preschool teacher. And if my colleagues know anything about me, they know that this is one of my top priorities, and we're really working to solve the child care crisis that we do have in America. And it is a crisis. We do not have enough providers. They're not paid a living wage. They're barely keeping their doors open, and parents can hardly find, let alone afford, child care today. So we have to solve that. And I'd love to have a hearing about that specific framework, Mr. Chairman. But if we do want to solve the child care crisis, that does mean we're going to have to make some very serious federal investments. And we are going to have to make the most of those investments. We can't afford to have this work delayed or derailed by fraud. So let me be unequivocal here: I will always champion transparency and accountability. I want high-quality programs, not for-profit money grabs. But accountability has to be a tool to bolster child care, not a ruse to distract from solutions or a pretext to target programs that families do rely on. Serious oversight involves prosecuting specific cases based on solid evidence, like the Biden administration did, not issuing a blanket freeze on funding for entire states based on conspiracies or politics, like Trump has done. Apparently, if some right-wing YouTube account posts a video about fraud, that means that the Trump administration is going to jump to attention and block child care funding for an entire state. That is wrong. We need to get real for a second. We can't just assume a child care center is committing fraud because they won't let any random person show up, shout with a camera, and come in and demand to see the kids. Do we really want child care centers to let in any weirdo if they yell loud enough? Of course not. That is very dangerous. Still, President Trump is treating conspiracy like gospel today, and blind accusations are not accountability. Witch hunts are not oversight. Instead of more accountability, what we are seeing is more harassment of child care providers as self-appointed vigilantes. They show up with cameras, they bang on the door, they peep through the windows, and demand to see kids. That to me is deeply alarming. We do need accountability, absolutely. But that goes for everyone, including the President and everyone who's fanning the flames of conspiracy. Mr. Wilde, let me start with you. You have overseen child care and Head Start programs at both the state and federal level. You understand the oversight tools built into our current law, including audits, monitoring, and the ability to recover misspent funds. Based on your experience, is a statewide funding freeze necessary to evaluate claims of fraud?

Thank you, Senator Murray, and thank you for your commitment and service in Head Start, which I super appreciate. I don't think it makes sense to have a statewide freeze. I think it punishes the vast, vast majority of providers who are absolutely committed to children and doing the right thing every day. I think program integrity is crucial, but it should be done in a way that's focused and targeted and doesn't affect all providers. I'd say when you shut down payments, three different groups are hurt. The first is low-income working parents whose centers might be closed and thus they can't go to work. The second is the child care providers themselves. In my experience, child care providers, when something like this happens, they first stop paying themselves, but then...

Absolutely cut back. And I want to get on because I just have a few seconds. But I do want to hear from each of our witnesses. Have you ever let in an unannounced stranger into one of your child care centers, someone who claims they're an independent journalist or holding an iPhone or asking to see proof of kids, any one of you, yes or no? Mr. Wilde?

No.

Dr. Polito?

None of us. And we would call the police, right?

Of course not. No one would. That is not a serious or legitimate way to uncover fraud. It is a serious way to put our children into harm's way. If someone had come knocking on my preschool classroom door when I was teaching to try to record my kids, I would have called the police. So we've got to be real, Mr. Chairman. We want to make sure there's no fraud, but we should not draft child care policy based off a right-wing YouTube so-called investigation, and we shouldn't put our children in jeopardy, and we should not put our states in jeopardy over these wild claims that we're hearing. Thank you.

Senator Collins.

Thank you, Mr. Chairman. First of all, I want to thank each of our witnesses for doing an excellent job of outlining just why quality child care is so vitally important, and it's from the entire family's perspective. I've been a strong supporter of federal programs ranging from the Child Care Development Block Grant to tax credits to workforce legislation to try to strengthen our network of child care centers and providers, but we're still falling woefully short, particularly in a lot of rural areas. I want to point out that I agree with the Senator from Ohio when he reminds us that every dollar that's lost to fraud is a dollar that could be used to provide quality child care to another child. And I think that's why this hearing is so important. So Dr. Polito, you mentioned in your testimony that the state of Louisiana does daily licensing inspections. This was something that Mr. Wilde also mentioned. And I think you said that 35 percent of centers receive unannounced monthly compliance visits. So I think that's very different from what Senator Murray is talking about. We're not talking about any random person going into a child care center. You're talking about state inspectors, is that correct?

Thank you for the question, Senator Collins. And yes, that is exactly correct. So 25 to 30 percent of Louisiana's licensing visits are unannounced. And I think that is critical because every day child care centers should be doing what is right for children, not just on the days that licensing is scheduled to step in. But I'd also add that in Louisiana, we have a robust accountability system that also has visits that are unannounced. And these visits are not simply looking at are our light switch is covered. These observers are coming in, they're counting each child, they're looking at publicly funded children to ensure that the interactions that are happening between our teachers and children are quality interactions. So I would argue it's layers of accountability. It's our licensing inspections, it's unannounced inspections, it's observations because again, as everyone up here has echoed, it is about preparing children for success later on in life, not about babysitting.

Thank you. Thank you for that excellent clarification. So could you further describe what kinds of information are the centers expected to provide to the state inspectors during those visits? You've talked about they're going to be observing the interactions, but give us a little more detail on what kind of information.

Sure, my pleasure. So we're looking at two different things here. We're looking at licensing inspections. In Louisiana, our licensing is guided by Bulletin 137, 39 pages of health and safety, ratios, teacher qualifications, child care criminal background checks, things of that nature. What I'm referring to as far as the class observations is a research-based tool that has been proven that when we do this with intentionality and consistency, we are getting children ready for kindergarten. So this is above and beyond really what sets Louisiana apart is this transformative system that was put in place in 2012, the implementation of Act 3. We want all providers who are offering federally funded children high-quality early care and education. It's not just is this color, what color is this, what number is this. We want children really thinking deeply about what's going on. It is a wonderful tool that we implemented in 2012. So again, it's that additional layer of quality where we're looking at children's interactions between our teachers' interactions between teachers and children, so those daily interactions because again, it's not just about the health and safety, while that is important, it is also about this class tool that prepares children for kindergarten, which when we talk about accountability allows for an additional layer of that.

Thank you. Thank you, Mr. Chairman.

Senator Hickenlooper is deferring to Senator Hassan.

Which I appreciate very much. Thank you, Senator Hickenlooper, and thank you, Chair Cassidy, for this hearing and to our witnesses not only for being here today but for what you do. I strongly support federal investments in child care programs which help hardworking families remain in the workforce and set children up for success. Taxpayers also rely on us to safeguard their dollars, and we have to take seriously our obligation to root out fraud and close gaps in oversight that bad actors can exploit. Any reports of waste, fraud, and abuse have to be investigated, and then the perpetrators have to be prosecuted to the fullest extent of the law. But let me be clear: the administration's chaotic attempt to take away child care funding for some states entirely harms families who rely on child care to go to work. It harms employers who may lose key employees and harms children who may lose access to really high-quality care and early education. So I look forward to learning from all of you today about how you've used taxpayer dollars to provide critical services to families. So Mr. Wilde, let me start with you. I understand that you took several steps to protect against fraud when establishing Wisconsin's Department of Children and Families, and you've talked about some of that. As a child care provider that operates in multiple states, you've seen the different approaches that states take to program monitoring and compliance. From your experience, what strategies have been most effective at addressing fraud in child care programs? Are there steps the federal government could take to better support those kinds of efforts?

Thank you for the question, Senator Hassan. I think that, you know, as I shared before, I think states doing unannounced visits is critical, that the way that you are going to get information is by looking at what's happening in a center. And other senators have mentioned in some states they use electronic systems. My colleague mentioned Kinder systems where you can enter attendance electronically and actually have real-time access to how many children are supposed to be there. In different states we've seen different kinds of audits of attendance, so looking at written records, comparing them to what's been submitted electronically. And again, I think that it's critical that states are using data effectively. So to the degree that there are multiple data systems that a state has that actually produce information that can give you an indication of is someone working at a center and thus should have a child care authorization, or is the license capacity of this center make sense given the number of kids who have subsidy. Using data in that way doesn't create extra burdens for providers, but it does give a roadmap to be able to do prioritized, focused program integrity efforts as opposed to creating a policing function that high-quality providers have to do more work as well.

Thank you, that's very helpful. Miss Denson, your organization has nearly 130 years of experience as a child care provider and has developed an operational model that delivers for families and your community. I also recognize that running a successful child care center is no easy feat, with many providers facing workforce shortages and operating costs that continue to increase. What role do federal child care investments have in your ability to operate and serve hardworking families who otherwise wouldn't be able to afford the care?

Thank you so much for that question, Senator. I think that when we think about how federal investment impacts providers like Early Connections serving hundreds of children for over 130 years almost, it's a critical piece of our funding mix. We are a nonprofit organization and we're able to utilize other funding streams in order to support the full cost of care. But I want to be really clear that even with the federal dollars that are currently being received, they don't cover the full cost of high-quality care. Parents also can't pay for the full cost of high-quality care. And so we're already so woefully underfunded that we're blending and braiding and clawing it together to support the families who need us the most as much as we possibly can, but it's also at the expense of what we're able to pay our teachers and where we're able to spend our time and effort to ensure we're providing the highest quality services for those families.

That too is very helpful. There is more we can do and we should do. Thank you, really critical. Thank you. And Dr. Polito, ensuring that working families have access to safe and reliable child care is obviously really essential to maintaining a strong workforce. Yet we know that far too many parents lack access to quality care, especially those who work non-traditional hours like night shifts and weekends. Senator Young and I have a bipartisan bill called the After Hours Child Care Act which would help to expand access to care for these families. So what recommendations do you have for building better child care systems that serve families who work non-traditional hours?

What a great question, and something that we did years ago. So my mother, when I took over, we were open seven days a week. We were open until midnight. We partnered with a local hospital because nurses and doctors needed that care. It's incredibly difficult to do, and one of the most complex businesses to run. We talked about the razor-thin margins that we're working with, paying teachers a livable wage. To try to tie that into extended hours is incredibly difficult. Working to maybe increase the payment during those hours would be helpful. You know, we did a shift right after COVID to really focus on high-quality early care and education. When you think about what happens after 6:00 or 7:00 PM, most of the time children are sleeping. And so we really became laser-focused on that high-quality care, yet there is still a need. So I would think that by increasing some reimbursements to child care centers might be an option to extend those after-hour opportunities.

Well, I really appreciate that. Thank you all again for your work and your expertise, and thank you, Mr. Chair.

Thank you, Senator Hassan. And now Senator Banks.

Mr. Wilde, what are the most common fraud schemes in child care assistance programs?

Well, I think that the most common fraud scheme that we experienced was, and I can only speak to Wisconsin and my experience there, was that child care providers would work with parents to effectively create a job which wasn't a real job. The parent would get the child care authorization, the provider would be paid, but they wouldn't ever see the child, nor would they require that parent to come to work. So in Wisconsin, what we saw was this repeated, and it became a scheme that was sort of well-known and replicated. What I would say is that in Wisconsin, this was incredibly concentrated. So it was not, we have 72 counties, almost 100 percent of the fraud was in a single county. So I think critical is that the fraud wasn't pervasive, wasn't statewide, and at the same time, once it was discovered, it was really critical to dig in on those providers who had again figured out this scheme.

Indiana just launched the Council on Fraud Detection and Prevention, and its purpose is to identify fraud, waste, and abuse in child care and other federally funded programs. Based on your experience in Wisconsin in combating fraud, what should Indiana be looking for?

I think that Indiana should be looking for anomalous patterns, that in trying to identify if there is fraud, the provider is who is receiving the funds. So if there's fraud, the provider is the one who's literally receiving the state funding. I think that the best way to identify it is to identify anomalies. Are there circumstances where it doesn't seem possible that a provider would bill at this level? Are we seeing instances where when a licensor shows up and we know that there are 50 child care authorizations, there are only three kids present? So I think it's really using data, both in-person observations but also data that's collected by the state to find those anomalies, and then have a program integrity unit that looks more closely at those.

The Wall Street Journal editorial board contrasted Minnesota with Indiana, and I like that contrast in many different ways. But Minnesota ignored obvious fraud in their Medicaid home care and child care programs even as their Medicaid spending went up over 60 percent in six years. At the same time, Indiana saved hundreds of millions of dollars by preventing excessive billing and checking eligibility. Why didn't Minnesota have the same type of common sense controls that we did?

I am not familiar enough with what Minnesota has done. Minnesota is Wisconsin's greatest rival, so I'm not sure, don't feel comfortable speaking to.

Okay, that's fair. How important is it for child care assistance programs to verify that children were cared for, or home care programs to check that care was actually provided, and nutrition assistance programs to confirm that meals were actually served? Would the state of Wisconsin have let a program get away with not actually doing those things?

No, I think it's critical to ensure that kids are actually receiving those services. I also think that there are systems in place. I'm not familiar with every state, but certainly there are systems in place to make sure that those things occur. For child and adult care food program, we have both audits and visitors to see that we are serving meals. For Head Start programs, we have regular reviews. For state programs, we have regular licensing visits. And I think it's doing the right things when those regulatory bodies are actually spending time in centers and homes that gets to the result that states...

Dr. Polito, what is direct contracting versus attendance-based funding in child care assistance programs? What's the difference?

So I'm going to need clarification. Direct contract, I believe you're referring to the contract between the state and the center themselves, which is not necessarily something we have started to do. But I'm happy to speak on enrollment versus attendance.

How about attendance-based funding? Is that a concept that you can explain?

Yeah. So we look at attendance-based funding versus enrollment. I would argue that enrollment is the better benefit for a child care provider who is, as we've referred to multiple times, working off of razor-thin margins. When you think about most school systems, they get paid on a seat. They don't get paid on how many days...

I'm out of time, but do you think that attendance-based funding models reduce risk of fraud?

I think we need layers of protection, but enrollment's better.

Thank you. I yield back.

Thank you. Senator Kaine.

Thank you, Mr. Chair, and thanks to the witnesses. I'm so glad that we're having this hearing because child care affordability, accessibility is such a key issue. This is the first time that the HELP Committee has had a child care hearing in 988 days. May 31, 2023. Almost 1,000 days. And so when I heard we were having a child care hearing, I thought it was going to be let's deal with the crisis of the lack of affordable child care. And the good news is you are perfectly able and have given good... ...answers. But the the hearing that we're having after 988 days is about fraud. And I'm kind of just struck by that. Like, fraud in child care is horrible. Anything fraud dealing with kids is is horrible. Anything dealing with seniors is horrible, and we ought to take it seriously. And I'm glad that all of you take the position that statewide freezes of funds are a bad way to deal with fraud. You need to go after fraudsters. But I just got a note kind of to compare that according to NBC, President Trump has used his pardon power to commute nearly $300 million in fines, restitutions, and other punishments tied to fraud-related offenses just in the last year. He's pardoned 23 fraudsters who each owed more than $100,000 for their crimes of fraud. It's been calculated that the total amount of restitution forgiven by President Trump's pardons and commutations across both of his terms total to nearly $1.4 billion. And I'm just going to give one example because I'd take up 20 minutes if I gave all that I could. TV personalities Julie and Todd Chrisley. They defrauded more than $36 million from community banks by faking records to get personal loans while also evading income tax. They bought luxury cars, real estate, luxury clothes using new loans to repay old loans, then conveniently filed for bankruptcy and walked away with more than $20 million. They were convicted of bank and tax fraud offenses in 2022, but President Trump granted them both full pardons in May of 2025. I mean, are we interested in fraud? I mean, is that really what the the issue is? I mean, if there was really a concern about fraud, we'd have an awful lot to talk about. But for the first time in a thousand days, we're having a hearing about the child care crisis, and instead of it focusing really on the crisis, we're focusing on the fraud of these small players in the child care world while we're letting fraudsters out of jail and pardoning them and forgiving the restitution that they've been ordered to pay to the court system and their victims. I do not I do not get it. I do not get it. In Virginia, annual child care for two kids, if you assume an infant and then a four-year-old, a toddler, in a center costs on average $30,000, $30,688. Housing is $24,920. College tuition is $15,663. This is the crisis. It's that people can't afford child care. And as each of you have mentioned also, we've got these really dedicated child care workers, and nobody becomes a child care worker to pay but a whole for pay, but a whole lot of people leave the profession for pay. So the only question that I really want to ask each of you is tell me something interesting that you've done or are doing to try to attract the child care workforce that the nation needs, and I'll start with you, Mr. Wilde.

Yeah. So we serve publicly funded programs, so critical to us is trying to blend those funding sources. Part of the reason the early childhood market for low-income children is so complicated is that there are three siloed funding sources: public pre-K, the CCDBG, and the Head Start program. And so it is only providers with, again, sophistication and infrastructure that can figure out how do these three complicated things fit together. We try to do that so we can we can pay teachers better. I think without more funding, it would be impossible.

Dr. Polito, tell me something interesting you're doing in the workforce space that we can learn from.

Thank you for the question. It actually speaks to my dissertation. It's about creating culture, culture in each center. It is very important. People come into this industry because they love what they do. They're nurturers. And so it's a network of providers that come together and feel safe and protected. And so I would say that's what I do.

And finally, Ms. Denson, and I'm the parent of one of my adult kids is a pre-K classroom aide, so this really matters a lot to me.

I love that. And you know, I so appreciate the workforce question, and it's a problem that we at Early Connections identified a handful of years ago. And in reaction to that, because people weren't coming into the field, they weren't going to our local community college to start the classes to get into the certifications they needed. So we built our own on-the-job Child Development Associate credential program. We will hire you as a teacher assistant. If you come to us with a passion for kids, we want you in our classrooms. They come to us, they earn their CDA on the job, paid training with incremental raises across that system. And actually, just last year, I'm really proud to announce that we have now transitioned that into a federally registered apprenticeship program. So as a provider, providing this pathway from our local high school students to working at Early Connections, earning those hours they need, earning their local college credits at our local community college, and then moving into UCCS, our state college, to earn their bachelor's. So an incredible system for us, and our retention on that program is somewhere in the 60 percent range, which is also a little bit unheard of when you look at teaching assistants in early childhood.

My staff will reach out. I'd like to learn more about that. Thank you.

I'd love to share with you.

Senator Kaine, I'm proud to say that this committee has held the first hearing in a thousand days. You weren't here when my opening remarks. We don't have jurisdiction over those other pardons of fines and restitution, but I can tell you we're not going to be able to generate more support for this issue unless we address what the American people perceive as a problem with the current level of support. And I think this hearing is a predicate for addressing bigger issues, but it's a predicate demanded by the American people. So I'm with you that we need to do more. We have to make sure the American people know that we're being wise stewards. I say that not to argue, but just to point out. I'll defer to Senator Baldwin.

Thank you, Mr. Chairman. So welcome to all of our panelists and a particularly warm Wisconsin welcome to Mr. Wilde. I have the honor of serving as the lead Democrat on the Appropriations Subcommittee that oversees the federal child care programs. And I'm going to be not the first in this room, but I will say it too, that we must root out and prevent waste, fraud, and abuse in any of these programs. Our federal investments in child care help ensure that children have a safe place to learn and grow so that their parents can go to work or school without having to worry about the care of their children. Mr. Wilde, I am glad that you are here to highlight the work Wisconsin has done to combat and prevent fraud in our child care programs. Nearly two decades ago, in response to exposure of widespread child care fraud, our state had to make some serious reforms to our child care subsidy system. In your testimony, you highlighted some of the many steps Wisconsin has taken to safeguard these programs. So Mr. Wilde, you served as Deputy Secretary of the Wisconsin Department of Children and Families at the time. It is clear from your testimony that Wisconsin took exposure of fraud very seriously. I know that Senator Murray asked you about how cutting off funds would impact providers and families, and I'd like you to dig a little bit more into that. I'd like to do that with you. Is it possible that legitimate programs would have had to close their doors in Wisconsin had funds been completely frozen? And what alternative options would have been available for Wisconsin families lawfully enrolled in those programs?

Absolutely, child care centers in Wisconsin who serve predominantly low-income kids would have shut down. I think that these are small businesses. They're not sitting on millions of dollars of rainy day funds such that if you're serving entirely low-income kids, and mission-driven providers all over the state of Wisconsin are focused on serving low-income kids, without the ability to pay those pay their bills, pay their rent, pay their mortgage, pay their employees, there's no way they could continue to operate. In those situations, families have to try to find something that's safe for their kids so they can so they can go to work, and that's incredibly, incredibly difficult to do. Anybody who's had a kid in child care and had a child care center close even for a day struggles with that difficult, difficult circumstance, and the result is kids aren't in enriching circumstances, potentially not safe environments. So absolutely critical to keep child care centers open.

Yeah. Thank you. While not the focus of this hearing, I wanted to highlight the critical role that local journalism played in detecting fraud. The issues in Wisconsin came to light due to a Pulitzer Prize-winning investigative report done by the Milwaukee Journal Sentinel. And I think this story is proof that local journalism provides a critical public benefit and is an essential component of safeguarding taxpayer dollars. I highlight this example particularly for my Republican colleagues who last year voted to cut funding for local journalism by defunding the Corporation for Public Broadcasting. Because if we're serious about catching and stamping out fraud and corruption in all levels of government, we really do have to support local local journalism. Now, Head Start programs have been undercut by funding uncertainty and bureaucratic hurdles since the start of this second Trump administration. From day one, the Trump administration has repeatedly delayed, withheld, and threatened funding for Head Start programs. Mr. Wilde, your company operates 11 Head Start centers across Wisconsin. From the perspective of a provider on the ground, what impact has this had on centers and the families that they serve?

Well, I will just say we're very fortunate. Our centers at no point did we have payment stopped, and at no point did we have to to close our centers to to kids and families, which I am appreciative of. I'm appreciative to members of Congress who we reached out to when we were concerned and to folks at the Office of Head Start who responded to our concerns. What I'd say is the challenge we have had is in some of the defend-the-spend requests. We received requests that it wasn't clear what information was being asked for, and I think more difficult was unclear on when we would get responses on that information. And so we were at one point in a situation where we were asked for information, and I would just say we are thrilled to provide information. We are an open book in terms of how we spend federal funds. We are audited and reviewed regularly, and we welcome that. But without clarity about the timeframe on which information would be looked at or what exact information was required, we went through a period where the time to be to be reimbursed or to be paid, excuse me, was eight times longer than the typical time. And in that situation, again, we were ultimately we ultimately did have access to the funds, so I'm grateful that we did not shut down, but did think that we were very, very close to a situation where we might have to furlough staff.

Thank you.

Thank you, Senator Baldwin. Dr. Polito, Louisiana used to have the TOTS program, which was a biometric way of detecting fraud. And I'm told when that program came into place statewide, like all of a sudden there was like hundreds of thousands of kids who were no longer registered. Turns out they were never registered. Now, that may be hearsay, but I guess I guess I use that as an intro. And by the way, thanks to my state for introducing that. They're serious about detecting fraud. But how was the biometric system received? I'm sure there was always concerns regarding privacy. Was that able to be safeguarded? You've been in business 26 years. Please tell your experience of that.

Certainly. So in previous years, we did use what was called the TOTS system, so a simple finger image in. I'm going to use this word a lot: layers. So in Louisiana, it is also critical to use a computer software program. So our center uses a Procare software program. So parents sign in a secure site with a secure number in that Procare system, then they follow up with right now the move to the KinderConnect is a face image. So they will face image in as opposed to the old system of a finger image in. So again, I think it's just an additional means of security for them and for the state and accountability.

But it's well tolerated, no complaints?

No, no complaints.

Now, Mr. Wilde, I like your name better Wild, but that's your call. You know what I'm saying? So...

So would my wife.

[Laughter.] Mr. Wilde, you mentioned, and I'm not quite sure I follow this, but you mentioned how the agency with primary jurisdiction began to ask the folks who had accreditation authority to report something suspicious to the people that were in charge of making sure that they were doing they had proper they had attendance, which seems commensurate with that which they were requesting money for. And my staff tells me, and I think Ms. Denson, you may refer to this, there's not always a single clear line of authority, everybody checking in on a particular daycare center reporting to a single line. But if you have that single entity responsible for hearing getting reports from everybody, it sounds like it is layer upon layer of accountability that is just waiting to be implemented. Am I following this correctly?

Well, I'd say every state has its own structure in terms of how cabinet agencies are organized. And in Wisconsin, prior to the Department of Children and Families being created, there's a Department of Workforce Development, a Department of Health and Human Services. And so yes, they came up sort of through separate verticals and not to the same accountability.

So but we're going to be looking at reforms. And so if there is a reform requiring all to report, and the way you've worked it out in Wisconsin apparently, that would be something that maybe we would be the senators would want to encourage implementation as a best practice. Or a biometric. Or what Louisiana is doing, the unannounced. A set of best practices, I think, is what this committee would be interested in, learning from the states. So you're not aware of what other of let me ask Ms. Denson. In Colorado, is there a mechanism by which there's a single entity to which everybody visiting a particular center would report back to on key findings even if it's otherwise outside their purview?

Yes, sir. Just a few years ago, the state stood up the Colorado Department of Early Childhood. Previously, pieces were kind of in between different departments, Health and Human Services and that kind of thing. But now licensing, CCCAP oversight, all of those things fall within the Department of Early Childhood's purview. So there is that upper single point of oversight with multiple layers between.

And so and your fraud rate is pretty low, very low?

Yes, sir.

Now, Mr. Wilde, one more thing. You may have implied this. Is it possible that fraud is not being detected because the inappropriate a lack of an of an adequate analysis? Did you say earlier that it wasn't until this report that Senator Baldwin referred to that the fraud just wasn't recognized?

I couldn't say at all that fraud isn't being detected. I again think that fraud is very rare. But I do think that every state should put in place measures to analyze data that suggests could there be fraud happening? So again, I think that fraud is rare, and there are bad actors.

No, but going back to Wisconsin prior to your efforts. Was there more fraud than you had discovered because of lack of appropriate analysis?

There was much more fraud than we thought was even possible. And absolutely, it was because of inappropriate analysis. So just as an example, we had providers in the state of Wisconsin at the time who were billing for more than 24 hours a day, seven days a week. Our two data systems, one which had licensing capacity in the data system, the other which captured child care subsidy, weren't talking to each other. So if they had been, we most definitely would have caught defying the space-time continuum, and we didn't. So I think that yes, every state should have mechanisms by which data that right now could exist in multiple different systems is connected and asking critical questions: is it possible that X, or are there is 1 percent of providers outliers that really require further attention?

Gotcha. Thank you. Senator Hickenlooper.

Thank you, Mr. Chair, and thank you for calling this illuminating meeting. Let me start out with Ms. Denson. You know, currently a federal judge has granted the request of states to provide a preliminary injunction to this freeze from the from the White House that's preventing it from going into effect. In Colorado, the funding freeze would be catastrophic for the more than 27,000 children and their families who depend on it. If the freeze goes into effect, roughly in Colorado $300 million in federal funds for child care, food assistance, other services are all going to be withheld and redirected. Services that families and the children and providers rely on. This freeze is a temporary solution. How is the uncertainty and the chaos of this announced freeze, how has that impacted your centers and the families that you're serving?

Yes, sir, absolutely. I joke with some of my colleagues in Colorado that January was kind of hijacked in dealing and and ensuring that we're communicating with our families, our children, our staff, and our community of donors. As we think about transparency at Early Connections, it goes both ways for us. We want to be transparent with our licensing and everything above us and then everyone that interacts with our organization, our community, and our families. When I think about what the impact of a statewide immediate freeze of these funds would be on our organization, it absolutely would be catastrophic for us but also for our entire state. As I've mentioned and as we've all mentioned, child care is a critical piece of economic infrastructure, and without it, our entire state's economy would crumble. Parents would not be able to work, and it would just continue to ripple outward even beyond the lines of our state or any state whose funds were abruptly frozen.

Right. I think it's fair to say that the interruption of funding for something as important as what you're all doing would be as harmful as, you know, I'm always amazed at school shootings. They basically make kids scared to go to school. There's no way you could harm our society more than to support shootings and to support the interruptions of funding. Mr. Wilde, when you were in Wisconsin, who was the director there then?

Reggie Bicha.

The Reggie Bicha?

The Reggie Bicha, indeed.

The Reggie Bicha that I stole away when I first came in as governor and worked for for eight years. I wonder where he got those bad habits from, so...

[Laughter.]

He's a remarkable person, certainly. In your testimony, you spoke about your success in enacting reforms in Wisconsin to address the program integrity issues with child care funding. And we've talked about this, that fraud's unacceptable. This is not about fraud in so many cases when you have major stops to funding. But I think it's worth saying again and again that fraud that takes from children and child care providers is one of the worst types of fraud you can imagine. So when you're working on these on all the reforms in Wisconsin, did you guys ever consider freezing funding while you were doing your investigations of fraud?

We did not. Again, I think that an important thing, an important conclusion despite despite what the Journal Sentinel found was that the fraud was incredibly localized. It was in one of our 72 counties. And so the notion of freezing funds that would have affected child care providers all over the state who are doing their best every day to provide high-quality care for low-income working families would have been incredibly, incredibly harmful both to families, to providers, and to employers. So no, we would we would not have considered that.

So you were able to move forward putting in systems to prevent fraud even as you were providing child providing child care assistance to working families and providers.

That's correct. And I think, again, really importantly in Wisconsin, in a very bipartisan state with Republican governors and Democrat governors since, Republican and Democrat legislatures, we've never put in place a waitlist. The state didn't respond to this fraud by tightening income regulations. To the contrary, when we put in place program integrity metrics, the program has been invested in more, and rates over the course of the last 10 years have actually doubled in the state of Wisconsin, I think a reflection of the fact that the legislature and the governor feel confident in the program integrity of of the CCDBG program.

Great. I appreciate that. I think I'm out of time. I hate when you start tapping the gavel, so I will not I will not ask another question, but I will just thank you all again for your time and your effort on behalf of our children.

Senator Markey.

Yeah. Thank you, Mr. Chairman. And you know, this hearing is on quote, "restoring integrity and preventing fraud." So preventing fraud is an issue I think we can all support. I for one would like to stop by investigating President Trump, the fraudster-in-chief, who built his career on cheating his workers and abusing the system to his financial benefit, and he's allowing fraud to take place across our entire national structure right now. But maybe that'll be for another day. We'll have hearings on all that fraud. But it seems to me that the president is only concerned when fraud is something he can use as an excuse to wreak havoc on children, families, and small businesses. Last month, the Trump administration abruptly froze $10 billion in federal child care funding to five states due to unproven allegations of fraud. This freeze impacted more than half a million children and left small child care businesses between a rock and a hard place. Most child care businesses hover below a 1 percent profit margin, and child care worker wages average only a little more than $15 an hour. Ms. Denson, can you please speak to the impact of sudden funding freezes and delays on the operations of small child care businesses and the families which they serve?

Absolutely, and thank you for the question. You know, the month of January was challenging for our organization. We went from status quo operating as usual to our funding 60 percent for 60 percent of our children might disappear overnight. And that raised a lot of questions across our community, across our state, of course, and with our children and families asking if they would continue to have care past this date or this date. And living on a day-to-day basis or a week-to-week basis as it was created a lot of uncertainty for our families, a lot of uncertainty for our organization and for my board of directors. And understanding what the impact of that could be on our organization was an exercise in frustration, of course, but also in catastrophe management. What could we possibly do in order to to get through such a situation? And and bringing it all back down to the children who would lose access to those funds immediately, lose access to high-quality care, and their families who'd be unable to work would be catastrophic.

So Mr. Wilde, same question. How does it impact children, operators, the entire system, this federal unpredictability?

Yeah. I think that if if payments were we haven't experienced frozen payments, but if parents if if payments were frozen, we would immediately be in a situation where we were unable to to continue to operate. In early care and education, 75 percent of expenses are personnel. When you can't pay, that immediately affects people, whether it's furloughs or layoffs or people can't can't have employment. And so if there were to be a a freeze in in payments, it would immediately have an impact on on our work.

Thank you. And I'm the lead Democrat on the Small Business Committee, and 99 percent of small of child care firms are small businesses. And I can tell you that these mom-and-pop businesses that rely on predictable funding streams to serve the families in their community and to keep their doors open. In Massachusetts, federal child care funding lowers costs for many families by over $24,000 a year, and without that funding, child care would be out of reach for thousands of families just in Massachusetts alone. So Ms. Denson, how would increased funding for federal child care programs allow your business and small child care businesses across the country to better serve children, families, and child care workers?

Senator Markey, I love this question. Thank you so much for directing it to me. Increased federal funding for child care would result in immediate opportunities for those who work in the child care industry. You mentioned how low early educators are paid. We have systematically undervalued teachers in the early education field. Giving the opportunity to fund and pay these teachers what they're worth when they're investing so much into a most critical brain development time of a child's life would be an incredible opportunity. I could also see increased funding creating opportunity for increased quality. A lot of quality measures can be expensive, and if a center isn't really dedicated to making sure that happens, it can be a hard choice between paying your staff and paying for quality measures. So I would see an almost immediate increase in teacher wages and definitely some outcomes related to increased quality with early childhood education.

Okay, great. Now, thank you for coming here and giving us your testimony. Thank you, Mr. Chairman.

Thank you, Senator Markey. And now Senator Hickenlooper, you have something?

Yeah. I wanted to ask unanimous consent to enter into the record a letter from 244 state legislators from all 50 states opposing the Trump administration's child care funding freeze. Stories from 19 families and providers in 12 states elevating the harms of the funding freeze.

Without objection. And I ask for unanimous consent to enter a letter from the Bipartisan Policy Center into the record. It outlines their recommendations to improve program integrity and oversight in the CCDF program, and that's approved without objection. For any senator wishing to ask additional questions, questions for the record will be due 5:00 PM Friday, February 27. Thanks again to the witnesses. We stand adjourned. [Gavel sounds.]