Lack of grant oversight led to $1.4 million in wasteful Preschool Promise payments, report finds

Published 1:12 am Thursday, July 24, 2025

An investigation by the Secretary of State’s Office found grants were misappropriated due to lack of oversight at Oregon’s education and early learning departments

A state grant program to provide free preschool to kids from low-income families sent more than a million dollars in “potentially wasteful” payments to preschool providers between 2021 and 2024, a new report from the Oregon Secretary of State’s Office finds.

The report published Wednesday was spurred by a tip to the Secretary of State Office’s Government Accountability Hotline. Auditors determined the cause of the misappropriated funds was “inadequate oversight” at the Oregon Department of Education and the Department of Early Learning and Care that administered the grants over the years.

Auditors found $1.4 million in grant payments that should likely not have gone to providers who failed to meet minimum enrollment requirements, and to some providers during months when they were not open. It also found $1.5 million paid to one provider, who repeatedly submitted late expense reports over the four years studied. Because that recipient provided the services required to receive the grant, the auditors did not deem this as waste but flagged the expense reporting for poor agency oversight.

Alyssa Chatterjee, director of the Department of Early Learning and Care, wrote to the Secretary of State’s Office in response to the report that her agency has for years not received adequate funding to hire oversight staff. Lawmakers cut $45 million from the agency’s budget for the two years beginning July 1.

The $1.4 million of misappropriated grant money is less 1% of the program’s more than $200 million biennial budget. It could have been used to provide child care for roughly 100 more kids, according to the auditors.

More than 200 preschool programs in Oregon receive funding through the program to serve more than 5,300 kids, according to data from the early learning department.

“Accountability for Preschool Promise and maximizing that program is about doing right by our kids. Oregonians are depending on us to step up and take action,” Oregon’s secretary of state, Tobias Read, said in a news release.

The promise

The nearly 10-year-old Preschool Promise program provides free preschool for kids ages 3 and 4 from low-income households. That means kids who qualify come from two-member households where earnings are $40,880 or less and four-member households where earnings are $62,400 or less.

Preschool providers participating in the program — including private and home-based preschools — get grant funding from the Department of Early Learning and Care and are expected to maintain a minimum percentage of enrollment to receive the money. They must also provide the same number of school hours annually as a kindergarten.

The report primary focus was on grants awarded between late 2021 and early 2023, when the program was being managed by the Oregon Department of Education. In July 2023, it officially moved to the newly formed Department of Early Learning and Care, and the new managers of that agency took steps to strengthen the program’s controls, according to the Secretary of State’s Office.

Nonetheless, auditors found that between 2021 and 2024, nearly $700,000 worth of grants went to providers who did not meet the obligation to uphold the minimum enrollment requirements. One provider identified received more than $300,000 of grant funding over two years to support 46 kids from low-income households, but enrolled just two.

More than half a million dollars went to providers who committed to expanding their programs even though their enrollment levels continued to remain low, and $150,000 in grants went to sites during months when they weren’t open.

Making changes

Auditors recommended far greater oversight of the grant program, including more agency staff reviewing monthly and quarterly reports, enforcing penalties when providers submit poorly done or late paperwork and training providers to submit required reports.

“My team and I will closely follow progress on these recommendations because Preschool Promise can and must do more for Oregon families,” Read said.

Chatterjee, the early learning department’s director, blamed a lack of adequate state funding and staff to properly administer the program, which doubled in size after 2019.

The $45 million the Legislature voted to cut from the agency’s budget cuts funding for four programs, including Preschool Promise, by 10%. Under that budget, Chatterjee said will be able to hire just one additional person for quality assurance.

“While this is an important step, one position is not adequate to fully monitor a statewide, mixed-delivery, early learning system with braided funding streams.”