Auditors find registered felons living at childcare locations; funding not getting to families

By: - September 20, 2022 6:11 pm

Montana Department of Public Health and Human Services (Photo by Eric Seidle for the Daily Montanan).

The Montana Legislative Audit Division released a report Tuesday that analyzed the state’s Department of Public Health and Human Service’s work in childcare funding and found that department had instances where people convicted of sexual or violent offenses were living at the same place as childcare facilities.

The performance audit also determined the department lacked goals or data about how it distributed funds, leading to inconsistent or problematic treatment of some Montana communities and residents.

The performance audit, completed by the Montana Legislative Audit Division, is a routine report that looks at the objectives, goals, policies and law regarding how specific programs in state departments operate, and details those reports for members of the Legislature.

Emails and phone calls to the department were not returned on Tuesday. However, in the past, the department has declined to comment until after it appears before the Legislative Audit Committee, the lawmaking body charged with overseeing the audit process and receiving the results.

Also, in a response letter to the audit written by DPHHS Director Charlie Brereton, he concurred with all the findings of the report.

Offenders living at the same address

The auditors also compared the childcare location addresses against the sexual or violent offenders database of addresses and found three instances where the addresses matched. In those cases, the audit revealed that there was disagreement about how such cases should be handled within the department, ranging from taking little action to responding immediately.

State rules say a sexual or violent offender living at the same address is grounds for removing or denying a childcare license, according to the report.

The rule states:

“The department shall deny or suspend a license upon finding that the applicant or licensee or a member of the applicant’s or licensee’s household or any person staying in the facility on a regular or frequent basis has a conviction for a serious crime, such as but not limited to homicide, sexual intercourse without consent, sexual assault, aggravated assault, assault on a minor, assault on an officer, assault with a weapon, kidnapping, aggravated kidnapping, prostitution, robbery or burglary.”


In two of the cases, the department found that the providers whose addresses matched were no longer licensed to provide child care in Montana. However, during the time they were registered, a person on the registry was residing at the same address where the care was being provided. The third provider had renewed their license and was still providing childcare.

The DPHHS also said it had not contacted the license holders and added that the department “had not received an ‘official complaint’ about the situation, and they can only follow up when they receive an official complaint.”

The auditors also found disagreement among management whether the agency needed a complaint to investigate, or whether it could initiate an investigation on its own.

No goals or objectives

The bulk of the audit focused on how the Child Care and Development Fund operates, finding that there are few stated goals and few ways to measure the program’s effectiveness. In addition to problems with getting information from the department, auditors also noted that DPHHS management does not distribute the funds according to a county’s need, leading to questions of equity.

The report summarized the findings:

“The distribution of child care subsidy funding is not based on need as identified through analysis of widely available demographic information. We found the department does not routinely review such demographic information in a documented and structured way, instead collecting and sharing information in an ad-hoc manner. Our work found a county’s indication of need for child care assistance did not always match the level of funding received. Basing decisions on need is a common process used in the private sector and across all levels of government.”


Furthermore, the department found that even after the state distributed child care funds, the majority of which are paid on behalf of lower income residents who use the subsidies to afford childcare, DPHHS has no measurement tools to gauge whether the money is effectively spent or if the programs are helping families.

“The department also has not identified goals regarding making childcare in Montana more accessible, affordable and safe,” the audit said. “Consequently, the department is unable to demonstrate its distribution of the fund is being done effectively.”

Child Care Program expenditures for Fiscal Year 2020 totaled more than $41 million.

Auditors noted a lack of goals and data that helped determine whether the programs were successful or fair.

“Our surveys revealed a variety of unmet needs related to child care, most of which depend on where a family is living,” the audit said.

However, one of the most persistent concerns parents and auditors noted was that parents cannot access their choice of childcare because there are no available slots in many communities. Almost all of the seven child care resource and referral regions across the state show that more than half of the parents said they cannot access a provider they prefer because of availability, including two-thirds of parents in the Butte region saying they could not. And, about the half the parents statewide said they were told no openings were available at providers they contacted more than five times before finding childcare.

Affordability continues to be a challenge for parents and providers, auditors said, and the surveys were done before the COVID-19 pandemic. Even then, auditors found that the majority of rates were increasing in five of the seven regions, with Havre and Butte regions showing a mix of rising rates with ones that were not increasing.

“For parents, inability to pay for child care they do have access to is the same as not having access to child care,” the report said. “Currently, less than 30 percent of families estimated to be eligible for the program are participating in the subsidies program.”

Auditors broke down demographic data throughout Montana to reveal that more than 60 percent of kids aged 0-11 (the ages most in need of childcare) are located in six of the largest counties – Yellowstone, Gallatin, Flathead, Missoula, Cascade and, Lewis and Clark.

Population of children 0-11 by county

Source: Legislative Audit Division

County                 Kids 0-11      % of State pop.

Yellowstone       24,566                   16.3
Gallatin               15,044                   10
Flathead              14,907                   9.9
Missoula              14,491                   9.6
Cascade               12,374                   8.2
Lewis & Clark     9,961                     6.6

Auditors also pointed out that another demographic not considered by the department was median income, which provides a very different look at need.

“Lower median income counties will likely have more people qualifying for assistance,” the report said. “(The report) indicates a difference of more than $35,000 separates the highest median household income in Gallatin County at $73,731 from Roosevelt County at $38,409.”

Median income by county

Source: Legislative Audit Division

Top five counties

Gallatin                 $73,731
Jefferson             $70,929
Richland               $69,095
Stillwater             $68,186
Lewis & Clark     $66,075

Lowest five counties

Glacier                  $41,808
Deer Lodge         $41,780
Liberty                  $41,240
Golden Valley    $40,469
Roosevelt            $38,409

More than any one statistic or reference points, auditors criticized DPHHS for not using available and common demographics for making decisions on allocating aid, characterizing the department’s approach as inconsistent and “ad hoc.”

“Population, median income, and other demographic information are not precise indicators of where the need for child care subsidies is highest, but taken together, they can provide insight to situations on the ground for families across the state that is not be accessed currently by the department,” the audit said.

Auditors acknowledged that just using one statistic, like median income, may skew results in one direction. For example, they noted that Gallatin County is a prime example of the need to use multiple data points to make a decision.

“Lower income families are making wages necessary to live in Bozeman, but this wage level also disqualifies them from child care assistance like Best Beginnings Scholarships,” the report said. “This phenomenon is well known, but it is not currently being addressed. Without routinely reviewing demographic data like this, it is not possible for the department to understand child care needs at the local level.”

Some of the data auditors presented even indicated the aid for childcare subsidies may be disproportionately distributed unevenly. For example, looking at the number of students who qualify for free or reduced lunch programs in public schools can give an indication if funds are going to the correct counties.

“It is reasonable to expect counties with a lot of kids eligible for free lunch to also receive substantial child care assistance, as free eligibility is an accepted indicator of poverty,” the report said.

Auditors compared the percentage of children who receive those benefits with the portion of child care funding the counties receive from the state.

Five counties received a greater portion of childcare subsidy funding than percentage of children who are eligible for free lunch, while many others show a deficit.

Comparison of free lunch eligibility and subsidy funding

Source: Legislative Audit Division

Counties with the largest margins

County                 Free lunch           Subsidy funding                Difference
Yellowstone       17.3%                    31.7%                                    -14.4%
Missoula              4.9%                      12.5%                                    -7.7%
Cascade               9.4%                      13.2%                                    -3.8%
Silver Bow           3.4%                      6.3%                                      -2.9%
Lewis & Clark     5.2%                      6.8%                                      -1.6%

Hill                        3.2%                      1.5%                                      1.7%
Flathead              8.3%                      5.6%                                      2.6%
Roosevelt            3.3%                      0.2%                                      3.1%
Big Horn               4.2%                      1.0%                                      3.2%
Glacier                  3.7%                      0.3%                                      3.4%

Auditors looking at the change of child care subsidy funding and the change of demographics throughout Montana found an inconsistent approach to funding. For example, auditors noted Gallatin County experienced an increase of 9 percent in the children ages 0 to 11 from 2014 to 2020, but saw funding cut by 40 percent. Meanwhile, Flathead County’s children in the same age group during the same time increased six percent and the county saw a six percent increase in funding.

No goals, no problems?

The auditors also said that in addition to inconsistently distributing funds, DPHHS has no stated goals so the Legislative Audit Division struggled to say whether DPHHS is meeting its obligations to the programs or funding.

“We found the department could not demonstrate meaningful outcomes in the distribution of (childcare) funding,” the audit said. “To be clear, this is not to say there are no meaningful outcomes to CCDF funding; there may or may not be. However, without measurable benchmarks for defining success and a structure identifying how the distribution of CCDF funding is aimed at reaching that success, the department cannot demonstrate the multi-million CCDF-funded programs are efficiently meeting the needs of Montanans.”

DPHHS Director Brereton’s response letter said DPHHS would develop and monitor “measurable goals based on the observable county-level risk assessment data,” and planned on completing those goals by December.

Difficulty in obtaining information

The auditors also qualified their opinions to a certain extent, noting having problems getting information from DPHHS staff. In the report, auditors explained that they needed to obtain feedback from families participating in the Best Beginnings program, likely through a survey, as a part of the audit process.

However, DPHHS would not give contact information to auditors, saying it violated privacy rules and wasn’t a public record. The department suggested several alternatives, according to the report, but they “would not have allowed us to independently verify the accuracy and completeness of the information in accordance with ‘Government Auditing Standards.”

After consulting with the Attorney General’s Office, the DPHHS then stated it could not provide email addresses to the auditors due to the age of the computer systems. Yet when auditors worked within the system, they were able to obtain email addresses, but caused a delay of five months.

“During this time, we could not determine whether the underlying data or any other system attributes were altered,” the report said. “As a result, we had limited ability to test the reliability of the data. We ultimately elected to use the available data as part of our survey methodology, but the delay in providing us access constitutes a scope limitation, of which users of this report should be aware.”

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Darrell Ehrlick
Darrell Ehrlick

Darrell Ehrlick is the editor-in-chief of the Daily Montanan, after leading his native state’s largest paper, The Billings Gazette. He is an award-winning journalist, author, historian and teacher, whose career has taken him to North Dakota, Minnesota, Wisconsin, Utah, and Wyoming. With Darrell at the helm, the Gazette staff took Montana’s top newspaper award six times in seven years. Darrell's books include writing the historical chapters of “Billings Memories” Volumes I-III, and “It Happened in Minnesota.” He has taught journalism at Winona State University and Montana State University-Billings, and has served on the student publications board of the University of Wyoming.