Alison Kuznitz
State House News Service

Auditor Diana DiZoglio warned a powerful legislative committee that her office has not received child care voucher fraud case referrals from a state agency in several years, piquing the interest of the House budget chief and touching off fresh sparring with the executive branch.

The Department of Early Education and Care told the News Service the drop-off is a result of the EEC taking the lead on fraud investigations, based on an updated procedure it discussed with the state auditor's office, according to an EEC spokesperson. DiZoglio's investigatory bureau chief fired back that the EEC is taking a "hostile" approach as the auditor's office seeks a change in state law to remedy a now simmering issue. 

In her testimony before the Joint Committee on Ways and Means last week, DiZoglio flagged that the EEC has not referred any potentially fraudulent child care subsidy cases to the OSA since 2023. 

"Certainly, you know, we don't believe there have been no cases where there's been allegations at least," DiZoglio told lawmakers. "And this is something that came to our attention over the last several weeks due to all the national issues being raised and the phone calls coming in."

Gov. Maura Healey's fiscal 2027 budget proposes $1.22 billion for child care financial assistance programs.

The Trump administration last month froze billions of dollars in child care and family assistance funds in California, Colorado, Illinois, Minnesota and New York, as officials cited "serious concerns about widespread fraud and misuse of taxpayer dollars in state-administered programs." In a tweet on Dec. 30, U.S. Health and Human Services Deputy Secretary Jim O'Neill said "blatant fraud" seemed "rampant" in Minnesota and across the country, writing: "You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade."

DiZoglio used her platform at the hearing to contextualize the issue within Massachusetts. The auditor also asked for a technical fix, saying current law enables the auditor's office to investigate public benefit fraud at the Department of Children and Families, which DiZoglio said formerly administered the child care vouchers.

DiZoglio said the auditor's office, under her predecessor Suzanne Bump, entered into a memorandum of agreement with the EEC, which currently administers the vouchers, to keep the fraud referrals flowing. The EEC made 31 referrals in 2021 and 17 referrals in 2022, DiZoglio said, but has not referred any cases to the auditor's office since 2023, the year DiZoglio took office.

Auditor's office spokesperson Alysha Garvin declined to share a copy of the memorandum, saying "sharing this investigatory process could jeopardize investigations."

EEC spokesperson Alana Davidson offered a different reason for the lack of case referrals to the OSA in recent years and said any "allegation that fraud and abuse in our child care system is not being thoroughly investigated is false."

"In consultation with the Auditor's office, in 2023, EEC updated our regulations and procedures so that investigations of alleged fraud are primarily conducted by EEC," Davidson told the News Service Tuesday. "Only cases that meet certain criteria, such as being likely to result in criminal prosecution or when EEC needs tax returns to be [sic] make a determination, are referred to the Auditor. This makes the process more efficient and allows us to investigate and recoup funds more quickly."

Gina Cash, director of the Bureau of Special Investigations in DiZoglio's office, said a snag in existing law is  hamstringing auditors' efforts. 

"EEC doesn't seem to realize that they are making our point — if folks want our office to be able to investigate fraud claims, the law needs to be updated to state that it is, in fact, EEC subsidy recipients that our office is authorized to investigate, not DCF," Cash said. "EEC would then also have to actually be willing to refer alleged fraud cases to our office, which seems unlikely given their rather hostile response to our requests for the law to be updated so that we can provide appropriate, external oversight as intended under the law."

Fraud cases typically revolve around eligibility concerns, according to Cash. 

The tussle between state offices represents the latest intra-government friction involving DiZoglio, who last week sued top lawmakers in her quest to audit the Legislature as permitted by a 2024 voter law. 

At the budget hearing, House Ways and Means Chair Aaron Michlewitz asked DiZoglio whether any legislation is filed to resolve the apparent issue with an outdated reference to DCF in statute. DiZoglio replied there's no pending bill, and requested lawmakers consider it in the fiscal 2027 budget "just even making that quick change, changing it from DCF to EEC."

"We're hopeful that if the law is updated and if conversations are had with Early Education and Care about the importance of ensuring these referrals are coming over to offices like ours, that that will help to increase the public's trust in the programs and ensure that people who are truly in need of these services are the ones getting them," DiZoglio told the News Service.

Since 2024, the EEC has identified 37 cases of potential fraud, Davidson said. Two cases were substantiated, with officials recouping $47,000 from families and caregivers.

"These levels are consistent with when those cases were sent to the Auditor's office," Davidson said. "Additionally, contrary to the Auditor's claims, EEC has administered child care subsidies since the agency’s creation in 2005."

Cash, in turn, emphasized the auditor's office has not received a single fraud referral from the early education and care department "since May 2022 under the prior administration."

In the past, the EEC had referred potential fraud cases to the auditor's office by email, occasionally sending eligibility paperwork from subsidy recipients, said OSA spokesperson Alysha Garvin. Beyond agency referrals, the bureau investigates allegations made by the public or from another public benefit program, she said.

"So, while a referral from EEC is not the only way BSI is able to investigate public benefit fraud, as we continue to receive referrals from other sources and generate them internally during investigations, it is concerning that we've received zero referrals from EEC for the last three years," Garvin said.