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Last year, childcare providers in Ohio secured a huge victory: After years of advocacy, state lawmakers included in the budget that put the state on a path to pay providers who accept government vouchers based on how many children are enrolled in their programs, not how many manage to show up each day, giving them more consistent revenue despite children鈥檚 unpredictable absences. It was a hard-fought win; providers lobbied lawmakers of both parties and a rally with hundreds of providers at the state capitol last year to demand the change.

But now, in the wake of a new focus among Ohio lawmakers on supposed fraud in the state鈥檚 childcare system, they are on the verge of ditching the idea altogether. A under consideration would require providers to be paid based on attendance rather than enrollment as they are by parents who pay out of pocket.

In December, conservative YouTuber Nick Shirley posted a video claiming to uncover widespread fraud in Minnesota鈥檚 childcare program, particularly among daycare centers run by Somali American residents. The video went viral and reached federal officials, and the Trump administration cited it as motivation to pursue an and various efforts to restrict federal childcare funding. Despite the video offering no verified evidence of fraud 鈥� and the fact that the state was several cases of fraud in its childcare system 鈥� some states have responded by intensifying their focus on supposed fraud. Texas Gov. Greg Abbott agencies to launch investigations into childcare fraud, while Idaho鈥檚 Department of Health and Welfare heightened reviews of funding. (The reviews found of providers guilty of any wrongdoing.)

Shirley鈥檚 video sparked an immediate reaction in Ohio, according to Tamara Lunan, a childcare organizer with the Ohio Organizing Collaborative. The state has the Somali American population, just behind Minnesota. in Columbus, Ohio claimed centers were receiving public funding for nonexistent children even though evidence at least two of those claims. According to , just 0.43% of all the providers who accept vouchers through the state鈥檚 publicly funded childcare program were found to be misusing funds in 2025. In a of 124 complaints sent to the state鈥檚 Department of Children and Youth last year, the agency found no evidence of fraud in 100 of them.

In January, Ohio lawmakers two proposals 鈥� House Bills 647 and 649 鈥� they said were aimed at combatting fraud in the state鈥檚 publicly funded childcare system.  

Marquita McClendon, who has operated a childcare program in Cincinnati since 2023, acknowledged that fraud exists. 鈥淏ut I feel like the systems that we already have in place already do the job necessary,鈥� she said. 鈥淲e鈥檙e changing laws over an unsubstantiated claim. It鈥檚 just beyond me.鈥�

The state made some changes ahead of implementing the new enrollment-based payment system that have led to sacrifices for providers. It a requirement for counties to use presumptive eligibility, which allows families to receive childcare vouchers if they already qualify for another program like food stamps, and allows parents to enroll immediately once they get a new job, rather than waiting weeks for their paperwork to be approved. Some providers accept children into their programs during that interim period anyway, Lunan said, but often aren鈥檛 paid for all of that time. The state also reimbursement rates for some types of in-home providers and increased the threshold for children to qualify as full time, which allows providers to be reimbursed at a higher rate. 

鈥淭here were things taken away from us,鈥� McClendon pointed out. With those reductions, she鈥檚 making $10,000 less each month, she said. 鈥淲e鈥檙e in the red.鈥� The loss of revenue has meant she can鈥檛 buy new equipment for the children in her care or do field trips this summer as she normally would. 鈥淚 can鈥檛 run an effective program,鈥� she said.

If providers were paid based on enrollment, it would help them weather children鈥檚 absences for illness or snowstorms, 鈥渢hings that providers can鈥檛 possibly be able to plan for when they鈥檙e making their budgets,鈥� Lunan said. It 鈥渨ould help to stabilize the programs.鈥� Instead, 鈥淧roviders are hemorrhaging income based on these changes,鈥� she said. 鈥淚t鈥檚 killing their bottom line.鈥�

Reversing the decision to pay based on enrollment is just one of the changes included in the legislative proposals Ohio lawmakers have put forward in the name of fighting fraud this year. Some others have since been toned down or removed. initially that would have given the state鈥檚 Department of Children and Youth the power to cut off funding or suspend a license for any provider merely suspected of fraud, waste or misuse of dollars without a hearing. That language has since from the bill; now those actions can be taken if 鈥渆vidence demonstrates鈥� that a provider knowingly engaged in fraud or misuse of funds. But providers remain concerned about lawmakers giving the attorney general more power to prosecute perceived fraud, which in the bill. 

鈥淲e don鈥檛 want to see childcare providers get penalized because the state made an overpayment to them,鈥� Lunan said. Both overpayments and underpayments are included when states calculate their payment error rates, and those can be due to the state government鈥檚 error, not providers acting with ill intent. Her organization is pushing for the state to create a committee made up of childcare providers that could distinguish between clerical errors and actual, intentional fraud. 

The original proposal for , introduced by Republican lawmaker Josh Williams, would have mandated the installation of cameras in all childcare programs that receive government funding to 鈥渁llow visual inspections in real time,鈥� . It would have given the Department of Children and Youth the ability to view the footage at any time. McClendon pointed out that she has diaper changing stations in her classrooms. 鈥淭here鈥檚 no way to protect my children鈥檚 privacy,鈥� she said, calling the idea 鈥渁 bit extreme.鈥�

While that idea has since been abandoned, lawmakers have adjusted the bill to facial recognition for children who attend programs that receive public funding. Such technology won鈥檛 work on young children, particularly infants, given how rapidly their faces are developing and changing, McClendon and Lunan pointed out. McClendon also noted the challenge of keeping kids still long enough to take a photograph. Lunan pointed out that there is already an existing mandate for programs to have an attendance system in place that takes pictures of parents when they sign children in.

An made to that bill the storing of photos of the children. But many parents are still opposed, Lunan said: a against mandating facial recognition has been signed by nearly 900 people. 

Lawmakers are also reducing the time given for allowing a child to be checked in retroactively, if their attendance was originally missed, from 30 days to seven. 鈥淭hat would be a tremendous hardship,鈥� Lunan said, on both providers and the parents who are the ones who have to go into the system and fix the problem.  

The legislation calls for spending up to over two years on data analytics to detect patterns of fraud or abuse. The facial recognition proposal alone would be 鈥渆xpensive for the state and providers, diverting scarce public dollars and provider time away from care itself and toward unnecessary surveillance infrastructure,鈥� said Ali Smith, senior project coordinator at Policy Matters Ohio, . Lunan agreed. 鈥淲e don鈥檛 need funds to come out of childcare,鈥� she said. What Ohio childcare providers need instead, she said, is more funding, not less. 鈥淧roviders are not defrauding the system. They are barely breaking even 鈥� most providers are in the red,鈥� she said. 鈥淭he conversation really needs to shift from fraud to funding.鈥�

The anti-fraud bills 鈥渨ould just destabilize childcare, or destabilize it further, because it鈥檚 already unstable,鈥� Lunan said. 

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