Oklahoma State Auditor and Inspector Cindy Byrd presents an audit of state agency compliance in spending federal dollars at the state Capitol on Aug. 27, 2025. (Photo by Emma Murphy/Oklahoma Voice)
OKLAHOMA CITY — Despite the Oklahoma Department of Human Services spending hundreds of millions on child care using pandemic funds, not all of the investments had a lasting impact, a state official said.
State Auditor and Inspector Cindy Byrd on Wednesday said the state Department of Human Services did not provide the oversight needed to ensure federal grants had the greatest impact across the state. Her remarks followed the release of a 330 page audit of how state agencies used federal dollars during the 2023 budget year.
Beginning in March 2020, Oklahoma Human Services received $791 million through the federal Child Care Development Grant, which was intended to cover normal operating expenses and prevent the permanent closure of day cares during pandemic lockdowns, Byrd said. The Department of Human Services was also allowed to use the funds to create programs tailored to the needs of the state, she said.
This included programs like Oklahoma’s Child Care Desert Startup Grant program, which was intended to provide funding for new child care businesses located in areas that don’t have enough providers to meet demand. In 2022, over half of Oklahomans lived in a child care desert.
“There’s no better example of DHS financial mismanagement of child care development than the Child Care Desert Grant Program, an initiative meant to expand access to child care in counties that could not meet the demand,” Byrd said. “In theory, the program would provide crucial start-up money for new day cares, or expanding day cares to cover things like minor construction projects.”
The current director of Oklahoma Human Services, Jeffrey Cartmell, in October requested an audit of the program, which expended over $43.7 million to providers. At the time, he cited concerns of “disallowable expenses.”
“At Oklahoma Human Services, our commitment to serving communities is rooted in continuous growth and improvement,” Cartmell said in a statement Thursday. “We value the financial analysis and review provided by our state partners on these COVID-era child care programs. Their feedback informs strategic planning and drives program improvements, allowing us to provide top-tier services to Oklahomans.”
Of the 73 grant recipients who were sampled in the audit, 20 were no longer operating by March 2025. These recipients were awarded a total of $2 million in federal funds to start businesses that have now shut their doors.
Byrd said some “bad actors” used federal grant money for “unallowable” expenditures like major remodeling projects. Others failed to provide documentation of their expenditures or misappropriated the funding for large purchases unrelated to child care, operating other businesses or “excessive” payroll costs.
Another applicant who received $2.1 million in federal funding used the money to run an afterschool program, she said. The applicant is married to a former Oklahoma Human Services director of child care services, but both are unnamed in the audit because of an ongoing investigation, Byrd said.
Byrd said in an interview with the applicant, her office was told the after school programs will not continue once desert grant funds run out. Byrd was unsure if the business had closed as of Thursday.
“The federal government sent this money to the states and gave great leeway to the states in terms of how they deployed it,” Byrd said. “DHS did not put strong guidelines on how day cares were to use the funds, nor did it conduct any financial monitoring of child care development. As a result, bad actors were able to game the system at taxpayers’ expense.”
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