The Department of Early Learning and Care (DELC) told the Joint Committee on Legislative Audits it accepts most of the Secretary of State's management-letter recommendations on the Preschool Promise program and is implementing changes to strengthen monitoring, reporting and controls.

"The Secretary of State found that $1,400,000 should be considered waste from 2021 to '23," interim director Carrie McCann said during the hearing; she added that the finding covers activity before DELC became an independent agency and that the four grantees tied to the waste findings are no longer contracted with the agency.

McCann and DELC staff also said the Secretary of State found $1,500,000 in improper payments tied to late reporting. DELC said grant agreements at the time did not explicitly require monthly or quarterly reports, which auditors characterized as implied. DELC emphasized that the program's design is "access-based" funding and that "braiding"—using multiple federal, state and local funding streams to cover different hours or services—is an intentional and federally supported practice, not necessarily an accounting error.

"Because Preschool Promise is one of this program mix, the division's approach to overlap programs was intentional, not considered a flaw," McCann said. DELC acknowledged braiding carries risk and outlined steps to mitigate duplicate payments, including improved reconciliations and analytics.

DELC outlined multiple reforms and timelines: a formalized management-override policy for Preschool Promise by the end of the year; updated grant reporting guidance and fiscal training for grantees by December; a reconciliation review of draw data and state accounting records by the following June; and agencywide and grantee-level risk assessments to be completed by June 2027. DELC said it has added two monitoring-related staff positions (one earlier this year and one funded in the 2025-27 biennium) but that statewide child-level data collection is not currently feasible given staffing and budget constraints.

Dorothy Spence, Early Learning Programs Director, summarized how Preschool Promise operates as a mixed-delivery model and why access-based funding requires maintaining environments and staffing even during periods of low enrollment. Spence said some low-enrollment findings relate to pandemic-era flexibilities used to stabilize the sector.

On questions about current enrollment and why some childcare sites remained open during COVID, DELC said the low-enrollment issues referenced by auditors were primarily pandemic-era and that current statewide enrollment is not at the same low levels. DELC also said it uses targeted request-for-application processes to reallocate slots and has updated continuation policies to set clearer standards for under-enrollment.

Whatcomes next: DELC will finalize several policies this fall and continue implementing its awards management upgrades and monitoring framework; the agency expects to report continued progress to the legislature and to the Secretary of State's office as the new controls and data systems come online.