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Minnesota’s Child Care Oversight Under Scrutiny Following Viral Fraud Allegations
MINNEAPOLIS – Minnesota’s child care network has been thrust into the national spotlight after a viral video ignited widespread allegations of fraud within the state’s Child Care Assistance Program (CCAP). While a recent YouTube video sparked immediate public attention, records indicate that the struggle to improve oversight of the CCAP payment system has been ongoing for over a decade.
The controversy erupted the day after Christmas, when YouTuber Nick Shirley released a video accusing nearly a dozen Minneapolis child care centers of receiving government assistance without providing actual services. The video primarily features Shirley and a man identified only as “David” visiting various centers, demanding entry or information, and then claiming the facilities were empty.
Shirley’s central assertion is that these day cares are billing CCAP for children who are not actually present. However, WCCO investigations found that the video’s broad claims are not definitively proven.
Federal and state investigators are now examining each of the centers highlighted in Shirley’s video. This renewed scrutiny comes as past audits, spanning the last ten years, have consistently pointed to Minnesota’s perceived lack of robust mechanisms to properly vet attendance records and proactively pursue potential fraudsters.
A May 2025 audit by the federal Office of the Inspector General (OIG) reviewed 200 randomly selected CCAP payments from 2023. The OIG discovered that in 38 instances, “Minnesota did not comply with requirements related to attendance and payment for services.” This led auditors to estimate that the state was making at least one error in 11% of payments to the 1,155 centers operating in 2023.
“Minnesota’s limited oversight of attendance documentation at childcare centers resulted in overpayments to providers,” the audit stated. It warned that “A lack of oversight to ensure accurate and complete attendance documentation could increase the risk of fraud, waste and abuse to the CCAP program.”
The OIG recommended strengthening Minnesota’s monitoring program to include routine reviews of CCAP attendance records for accuracy. In response, the Department of Health and Human Services (DHS) agreed with these recommendations, noting its expansion of the “Early and Often Program.” This initiative aims to ensure new child care centers meet CCAP requirements through increased monitoring of attendance record-keeping and compliance with state statutes.
Months prior, in January 2025, Department of Children, Youth and Families Commissioner Tikki Brown acknowledged existing gaps in their fraud detection system concerning accurate attendance numbers. “We certainly need to investigate that more thoroughly to ensure that agencies do have as broad authority as possible to investigate fraud and act on all aspects of fraud. I don’t know that that’s fully present,” Brown stated.
A 2019 report by the Office of the Legislative Auditor (OLA) detailed the Minnesota Department of Human Services’ establishment of an investigatory team in 2013 to target child care providers suspected of fraud. The OLA reviewed significant fraud claims from 2013 to 2018, finding that prosecutors were able to “prove” between $5 million and $6 million in fraud during that period.
Over a dozen Minnesotans faced state and federal charges, though not all were convicted. The OLA, unable to provide an exact estimate, believed the true extent of the fraud was greater than $6 million and noted that prosecutors sometimes encountered issues with the quality of evidence gathered by DHS.
The OLA’s 2019 audit had a “limited scope,” as it did not fully evaluate CCAP or comprehensively assess the state’s efforts to prevent, detect, and investigate CCAP fraud.
A consistent recommendation across both the OIG and OLA reports is the implementation of electronic attendance gathering tools. These tools aim to record attendance in real-time, thereby reducing opportunities for centers to report false numbers.
DFL Rep. Carlie Kotyza-Witthuhn announced at a recent rally that these systems are expected to be operational this summer.
However, some providers at the same rally expressed skepticism about the ease of defrauding the current system. Maria Snyder, a St.
Paul area provider, recounted receiving consistent surprise visits and rigorous attendance record audits from state inspectors, noting that citations can be issued for technicalities. “Imagine my surprise at this narrative that it’s so easy to scam child care assistance,” Snyder remarked.
At a February 2025 meeting of the House Fraud Prevention and State Agency Oversight Policy Committee, officials reported that DHS employs a team of four investigators dedicated to CCAP. Since 2020, this team has recovered approximately $2.4 million and, on average, referred five cases annually for criminal investigations since 2021. During the same timeframe, DHS has halted payments to 79 CCAP providers.
Of the day cares visited by Shirley in his video, CBS News confirmed that all but two are licensed. State inspectors have visited each of the licensed centers within the past six months, issuing citations for violations related to issues like safety and staff training, but not fraud. Inspectors from both the federal Department of Homeland Security and the state have since visited all the day cares featured in Shirley’s video.
One day care, which provided security footage to WCCO that owners claim proves children were present on the day Shirley visited, stated that DHS requested two months’ worth of attendance records. The results of these ongoing investigations have not yet been made public.