In civics class, we taught that federalism is a division of labor. Washington writes the checks, the states often cut them, and somewhere in between the public is supposed to get what it paid for.
That is the theory. The practice looks messier. Senate Health, Education, Labor and Pensions Committee Chair Bill Cassidy has now broadened a childcare fraud probe that began in Minnesota to include three more states: New York, Michigan, and Oregon.
The backstory matters. Cassidy initially trained his investigation on Minnesota Gov. Tim Walz and demanded Walz provide receipts for a range of childcare-related grants and federal funding tied to the Minnesota fraud scandal. Now, he is asking other governors for similar documentation.
This expansion can be read as more than a political widening of the net. It also puts an old federalism problem back on the table: when federal money is administered locally and the numbers go sideways, who owns the failure and who fixes it?
Why these states
Cassidy’s new letters, first obtained by Fox News Digital, go to Democratic governors Kathy Hochul (New York), Gretchen Whitmer (Michigan), and Tina Kotek (Oregon). His stated premise is straightforward: the states he picked either lead or have led the nation in improper payments in state-administered childcare assistance programs.
He points to U.S. Department of Health and Human Services data showing:
- New York had a payment error rate of over 17% in fiscal year 2024.
- Michigan’s rate was over 12% in fiscal year 2025.
- Oregon had an error rate of over 35% in fiscal year 2024.
A careful note on terminology: “error rate” can include paperwork failures, eligibility mistakes, and overpayments that are not always criminal fraud. Still, high error rates are rarely just trivia. They are an indicator that eligibility and payment systems may not be consistently verifying who qualifies and what services were actually delivered.
What Cassidy is asking for
Cassidy is not asking for a broad statement of principles. He is asking for program mechanics and documentation, the unglamorous details that allow oversight to be more than a headline.
Among the information requested:
- How often the state conducted on-site monitoring, inspections, or investigative visits to childcare facilities receiving federal dollars.
- A history of improper payment rates between fiscal years 2016 and 2025, with explanations for any significant changes.
- What anti-fraud measures have been enacted since 2016.
- Action plans to prevent fraud, verify eligibility, and ensure payments align with actual services provided.
- Details on audits and investigations conducted since 2016, including whether fraud or improper payments were found.
- Information on how federal funding is being used, how the state is verifying childcare providers, and how providers receiving subsidies are being monitored.
He set a deadline of March 30 for responses.
In one line that captures his argument, Cassidy wrote: Error rates of this magnitude raise significant concerns about both fraud prevention and access to child care for the families these programs are intended to serve and highlight the need for strengthened program monitoring, improved internal controls, and greater transparency in how these programs are administered.
Not just about dollars
When lawmakers say “fraud,” the public usually hears one story: criminals stealing money. Sometimes that is exactly what happens. But the governing problem is wider than the most sensational case.
Childcare assistance sits in the overlap between federal spending and state administration. Congress appropriates. Federal agencies set guardrails. States build the systems, certify providers, determine eligibility, and process payments. That arrangement is normal. It can also produce accountability fog.
If money is misspent or misrouted, each layer has incentives to point up or down.
- States can argue federal rules are complex and resources are limited.
- Federal officials can argue states control the day-to-day decisions.
- Families can end up waiting while agencies tighten processes, pause payments, or recheck eligibility.
That is why error rates matter as a practical signal. They can suggest a system that is not consistently matching eligibility and payments to real services, and a system that may need tighter monitoring.
Oversight and limits
Here is the tension hiding inside a spreadsheet. Congress has broad authority to investigate how federal funds are used. That oversight function is not written as a single tidy clause, but it is rooted in Congress’s legislative power and its control over appropriations. If lawmakers cannot ask where the money went, they cannot responsibly write the next bill.
At the same time, federalism means states are not field offices of the U.S. Senate. When a senator demands “receipts” from a governor, it can look like accountability. It can also be dismissed as politics if the process stops at letters and headlines rather than leading to hearings, reforms, or measurable changes.
The real test is whether this probe clarifies responsibility or simply adds another layer of blame.
The hard question
In my old classroom, I would have written the question on the board and let it sit there: If a federal program is administered by the state, and the state’s controls are weak, who failed, the state or the federal government?
The honest answer is usually “both,” but our politics prefers a single culprit and a single speech.
Cassidy frames the issue in terms of public trust, writing, Ensuring the integrity of child care assistance programs is critical not only for protecting taxpayer dollars, but also for maintaining public confidence in programs designed to support children and families.
That confidence is easy to lose. And when it breaks, the risk is not just reputational. It can translate into stricter rules, heavier administrative burdens, and political pressure to rethink funding itself. The families who play by the rules are often the first to feel any disruption.
What to watch
The next phase is not rhetorical. It is procedural.
- Do the governors respond by March 30, and do they provide monitoring logs, audit findings, and verification details, or mostly general explanations?
- Does the committee follow up with hearings, additional document requests, or referrals?
- Do states change internal controls, including provider verification and on-site oversight, in ways that can be measured rather than promised?
- Does Congress change conditions attached to funds, tightening requirements or shifting administrative burdens?
Federalism is a mirror. This moment reflects not only whether fraud exists, but whether our layered system of government can answer a basic democratic demand: show the public where the money went, and show that the program serves the people it was meant to serve.