Oregon Just Sent 25% of Its Preschool Providers to Investigation Over a 1% Error Rate

Oregon just referred up to 25% of its preschool providers for criminal investigation. The Secretary of State's audit revealed a 1% error rate in the Preschool Promise budget, but sent 53 child care programs to the Small Business Administration’s Office of Inspector General, citing concerns over PPP Funds and he also referred an undisclosed number to the Oregon Department of Justice. The investigation itself found no fraud — yet these providers now face potential criminal prosecution.

These providers weren't stealing money. They were navigating inconsistent guidance, pandemic instability, and agency handoffs with little support. This isn't accountability. It's a warning shot. And providers heard it loud and clear.

What the Audit Found (and Didn’t)

• $1.4M in "wasteful" payments (~1% of budget)

• $1.5M in improper disbursements, mostly due to late paperwork

• 53 providers referred to federal investigators — 25% of total participants

• An undisclosed number referred to the Oregon DOJ

  Here's what makes this even more troubling: The audit found no instances of fraud in the program. None. Yet providers still received criminal referrals.

  We don't know exactly what happened in each case. However, we know this: if 25% of providers had issues serious enough to trigger criminal referrals, and the total financial impact was only about 1%, that suggests a systemic problem — not a criminal one.

  53 providers were referred to the DOJ because they received both PPP loans and Preschool Promise funds during the pandemic — a potential technical violation, not theft.

  That's not proportional. That's not systemic correction. That's a chilling message to the very people Oregon needs to make universal child care possible.

This Isn’t About Accountability. It’s About Responsibility.

This isn't about pointing fingers. It's about asking: what conditions were in place that made compliance so difficult? What support was missing? What could have been done differently?

Accountability means asking those hard questions:

• What made compliance so difficult?

• Why wasn't support offered before escalation?

• How do we fix the systemic breakdowns that led to this?

• Why was the agency administering the program inadequately funded and staffed?

The facts suggest something went wrong — not with a few bad actors, but with how the system functioned as a whole. The problems primarily occurred when the program was managed by Oregon Department of Education (2021-2023), during pandemic chaos and agency transitions.

Instead, child care providers — many of whom are small, rural, or BIPOC-led — were penalized for errors made in a chaotic, high-pressure public program. These were not fraud schemes. These were educators trying to keep their doors open amid shifting rules, underfunded systems, and the fallout from the pandemic. Receiving both PPP loans and program funds during a pandemic isn't criminal intent — it's survival.

This is not about blame. It's about asking: what do both the agency and the providers need to make this work next time?

What Happens When the Narrative Turns on You?

Let's be clear: this wasn't about protecting public dollars. It was about controlling public narrative.

The real damage isn't the audit. It's the fear. The loss of trust. The silence in the wake of those DOJ letters.

When 1% of a budget leads to 25% of providers being referred for criminal investigation, the math isn't wrong — the system is. And when we criminalize providers instead of helping them, we don't protect public trust. We shred it.

What We Should Have Done

If Oregon were serious about building universal child care, we would have:

• Offered training, onboarding, and direct support

• Built clear accountability loops that include agencies and providers

• Paused referrals while context was understood

• Responded to confusion with clarity, not criminalization

• Recognized that the agency administering the program lacked adequate funding and staff

We would have recognized that you don't build public systems by punishing the people upholding them. You build them by resourcing them. With money. With clarity. With respect.

The Ask

To Treasurer Read: Pause the referrals. Reflect on what systems need strengthening. Invest in technical assistance, not intimidation.

To lawmakers and funders: Ask yourself: What story are you repeating? And what system are you reinforcing?

Because Oregon doesn't just need more child care, we need a better story — and a better system — to build it in.

Remember: This program serves over 5,300 low-income children across Oregon. When we criminalize the providers keeping these programs alive, we don't protect children — we abandon them.

Stacy Chamberlain is a strategist, coalition facilitator, and founder of Flower Street Strategies. She has over 20 years of experience helping leaders and organizations clarify purpose, build trust, and reimagine public systems with care.

update and corrected July 28, 2025.