Last December, Representative Josh Tanner and I sent Director Juliet Charron at the Department of Health and Welfare an urgent letter with one simple request: pause $14 million in childcare grant disbursements until fraud prevention measures were in place:

Because Minnesota had just uncovered one of the largest welfare fraud schemes in U.S. history. Their childcare subsidy program. Hundreds of millions stolen with fake providers billing for fake children. The whole thing was systematic looting under the guise of “helping families.”

And Idaho’s program was/is structurally identical.

So we asked for temporary suspension of disbursements, a comprehensive fraud prevention plan (e.g. enrollment verification, financial transparency, inspection protocols), review of prior disbursements to identify existing fraud, and a legislative briefing.

Pretty reasonable when you’re watching Minnesota burn, right?

Three months later, DHW’s response arrived.

Not a briefing. Not a fraud prevention plan – a bill.

This bill doesn’t pause anything, review past disbursements, or address our concerns about enrollment verification and financial transparency.

What it does do though is create a massive new vendor contract for “fraud detection” using AI and machine learning. And it authorizes that same vendor to create 600 new licensed childcare programs.

So we asked them to stop the bleeding and they handed us a bill to hire a contractor to build 600 more places to bleed from.

But wait… it gets worse.

Buried in Director Charron’s March 9th letter to the Joint Finance-Appropriations Committee is a confession that should terrify every taxpayer in Idaho:

According to here, the Idaho Child Care Program has been running… illegally.

Yes, IDHW has been administering a multimillion-dollar program with no statutory authority to do so.

Charron admits it plainly:

“DHW has determined that the authority in code we have historically relied upon for rulemaking is insufficient to sustain any of the ICCP rules.”

They’ve been operating on “general rulemaking authority” under a statute that doesn’t actually authorize childcare programs. Because the child care subsidy program isn’t found anywhere in Title 56 (or any other title in Idaho Code). No authority to promulgate rules.

So how long have they known this?

Charron doesn’t say. But she does threaten that if this legislation (or something substantially similar) isn’t enacted this session, DHW will have no choice but to eliminate the rules and wind down ICCP by the close of the fiscal year. Potentially earlier.

So wait… you’ve been running an “illegal” program. You know it’s “illegal.” And instead of pausing it immediately, you’re threatening to shut it down unless we pass your vendor-friendly bill?

That’s legislative hostage-taking.

And Charron’s legal logic creates some really awkward questions.

For instance, Idaho Code § 56-202 gives the DHW Director authority to “promulgate, adopt and enforce such rules and such methods of administration as may be necessary or proper to carry out the provisions of title 56, Idaho Code.”

Charron says this authority is insufficient for ICCP because childcare subsidies aren’t specifically mentioned in Title 56.

Okay. Taking her at her word.

But Title 56 is also the welfare code that contains public assistance programs like TANF, food stamps, and even Medicaid. A whole constellation of federal welfare programs that Idaho administers through administrative rules promulgated under that same general authority in § 56-202.

If ICCP rules are illegal because childcare subsidies aren’t explicitly enumerated in Title 56, then what about all the other federal welfare programs DHW administers through administrative rules?

Are those illegal too?

Either § 56-202 gives DHW authority to implement federal welfare programs through administrative rules (in which case ICCP is legal and this whole “we have no authority” argument is manufactured leverage), or it doesn’t (in which case DHW has been running multiple illegal programs for years).

Can’t have it both ways.

I’m not saying Charron is wrong about the law. I’m saying her legal conclusion creates questions about everything else DHW does. And the timing of this “legal discovery” is mighty convenient, right? We asked them to pause disbursements and prevent fraud. Three months later they suddenly discovered they’ve been operating “illegally” all along and oh by the way we need you to pass this bill that authorizes everything we’re already doing plus $30 million more.

So, let’s look at what they’re actually asking for in this new childcare bill S1374.

The bill creates a “fraud detection and remediation system” that must be implemented by July 1, 2027 (18 months from now). Meanwhile, the program keeps running. Money keeps flowing. No pause. No review of past fraud. Business as usual until the vendor’s AI system goes live.

Who writes sections like 56-2508 and 56-2509?

“The system shall assess relative risk using statistical and expert-defined analytical models to support the prioritization of cases.”

That’s a sales pitch. I bet the vendor wrote this bill and DHW carried it for them. The bill also prioritizes “child care services managed through vendors” for capacity-building funds. So the vendor gets paid to build the fraud detection system AND gets prioritized for grants to create new childcare programs.

Real convenient.

Remember what we asked for in December? Enrollment verification. Financial transparency. Inspection protocols.

They’re not in this bill.

The bill sets income eligibility at 155% of federal poverty guidelines (56-2504). The legislature originally approved 145%. Then DHW administratively raised it higher without legislative approval and the program went financially underwater. When Alex Adams was IDHW Director, he cut eligibility back to 130% and the program stabilized and costs became predictable.

Now S1374 proposes 155% – higher than what the legislature originally approved and way higher than the 130% that actually works. So in a bill supposedly about fraud prevention, they’re expanding eligibility beyond levels that already proved financially unsustainable.

S1374 creates rules about “reasonable suspicion” and “intentional program violations” and gives DHW massive enforcement powers too. But it doesn’t require the basic anti-fraud measures that would have prevented Minnesota’s disaster in the first place.

Provider attestation isn’t verification. And AI risk scoring? That’s not inspection.

This bill is bureaucratic theater designed to look like fraud prevention while actually just creating new contracts.

Minnesota’s actual problem? They allowed providers to self-report attendance. No verification or spot checks. Just “trust us.” So of course fraudsters created fake childcare centers and enrolled fake children. Of course they billed for services they never provided. And billions disappeared because nobody was checking if the kids actually existed.

Idaho’s “solution” in S1374?

Provider-reported attendance verified through a fraud detection system that analyzes… provider-reported data.

Yes, the bill requires providers to document “proof of attendance each day with authentication” but that authentication is still coming from the provider.

But if providers are lying about attendance in the first place, analyzing their lies won’t catch them.

This is building Minnesota in Idaho.

We’re not just talking about fraud in an existing program. We’re talking about expanding a program DHW now claims is “illegal.” A program even its own administrators admit they have no authority to run.

And the finance commitee (JFAC) just appropriated $30 million in federal funds to expand childcare capacity. Charron’s letter complains the intent language is too restrictive. She’s upset that JFAC wants to exclude providers who have been investigated for fraud “even if the provider was subsequently cleared.” She’s upset that “publicly funded entities” might be excluded. Notes that “all ICCP providers receive public funds as a mere fact of being enrolled.”

Wait… you want us to give you $30 million to expand a program you’ve been running “illegally?” You want minimal restrictions on who can get that money? And you’re threatening to shut the whole thing down if we don’t pass your vendor-written bill?

How about… NO.

Instead, what if families raise their own children? Or how about private childcare businesses operate in a competitive market with minimal regulation and zero subsidies?

Because at the end of the day, the government shouldn’t be paying for childcare. And creating capacity for 600 NEW daycares (like 1374 does) through subsidies and vendor contracts just builds a fraud machine (any means-tested welfare program has the same problem).

Minnesota didn’t fail because they had insufficient fraud detection technology.

Minnesota failed because they created a massive pot of money with minimal oversight and incentivized fraudsters to steal it.

The fraud was inevitable given the program’s structure.

And Idaho is about to make the same mistake (just with AI this time).

Did you know that S1374 includes language about “relative child care” as a priority for capacity-building funds? Know what that is? It’s paying someone to watch their own grandchild, niece, nephew, or sibling.

We’re going to build 600 new licensed childcare programs and prioritize ones where Aunt Sally gets paid by the state to watch her sister’s kids:

This isn’t helping families.

This is subsidizing arrangements that would happen anyway and creating new opportunities for fraud.

Because once you start paying Aunt Sally, you need to verify she’s actually providing care. You need to verify the kids actually exist. You need to verify the hours being claimed. You need a fraud detection system. You need five employees to run the fraud detection system. And you need a vendor to build the technology platform.

Pretty soon you’ve spent $30 million in federal funds to create a jobs program for bureaucrats and contractors while Aunt Sally gets $21 an hour to do what she would have done for free.

Also, according to 1374, eligible children must be in the country legally, but there’s no such requirement for parents or providers. So we’d be paying illegal immigrant providers to watch their own relatives’ kids. The bill prioritizes relative care. The bill has no meaningful fraud prevention.

This is everything wrong with modern conservatism in one piece of legislation.

We talk about fiscal responsibility while appropriating $30 million for a program IDHW claims is “illegal.” We talk about fighting fraud while creating new vendor contracts instead of basic verification systems. We talk about family values while subsidizing arrangements that undermine family formation and community bonds.

Real conservatism?

Government shouldn’t be in the childcare business. Period.

If Idaho families need help affording childcare, the solution is economic growth that raises wages and lowers costs. Or reduce regulations that drive up provider costs. Remove barriers to entry for new small providers.

Welfare programs aren’t the answer. Government subsidies to providers just create more problems. And paying some vendor to create 600 licensed facilities?

That’s the opposite of what we need.

S1374 isn’t the answer. ICCP should be wound down properly if it’s actually illegal. And expanding childcare capacity through government spending? That’s how you get Minnesota.

Don’t build Minnesota in Idaho.

Charron says if we don’t pass this bill, DHW will wind down the ICCP program?

Fine. Do it.

If you genuinely believe you’ve been running it illegally anyway, shut it down properly. Review the disbursements for fraud. Prosecute anyone who stole taxpayer dollars. Come back with a clean bill that just provides statutory authority for whatever minimal program the legislature decides to maintain.

But don’t threaten us with program shutdown while simultaneously demanding we pass an expansion bill written by vendors.

That’s what we asked for in December.

That’s what we’re still asking for today.