HUNT VALLEY, Md. (WBFF) — An explosive FOX45 News investigation has uncovered internal audits from the Maryland State Department of Education that show, between 2023 and 2025, more than $66 million in overpayments were sent to childcare providers statewide. That money should have been returned to the state.
But Project Baltimore found the state mismanaged the process and failed to recoup your tax dollars.
On September 10, 2025, the Maryland State Department of Education hosted a virtual townhall to respond to concerns from childcare providers statewide. State Superintendent of Schools Dr. Carey Wright and Assistant State Superintendent Sarah Neville-Morgan led the conversation, which centered on two key topics.
Topic one: Maryland’s Child Care Scholarship Program was expanding rapidly –
fueled by the recent addition of hundreds of millions of new taxpayer dollars.
Topic two: As Annapolis added funding to the program, MSDE failed to properly monitor the money.
“We didn’t have all the proper systems to track or correct overpayments,” explained Neville-Morgan during the virtual meeting.
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Project Baltimore interviewed a licensed Maryland childcare provider who was on that call. The provider asked not to be identified for fear of retaliation from state officials.
“It was an uproar,” explained the provider. “The state made a mistake and paid us. But we got to keep it.”
Maryland’s Child Care Scholarship Program is administered through MSDE. The program offers cash assistance to families of income eligible children younger than 13, or children between 13-19 with a qualifying disability.
Over the past five years, the programs funding has soared more than 300%, growing from $132M in 2022 to $560M in 2026, an increase of about $430 million annually.
As the Child Care Scholarship Program surged in funding, MSDE internal audits began to find millions of your tax dollars were being misspent.
Project Baltimore obtained an email sent internally to MSDE officials on September 9, 2025, which showed internal state audits had identified a total of $66.5 million in overpayments.
“Some providers were being paid for the same kid twice,” the provider explained. “They found that other providers just never turned in their invoices, but they were paid for it.”
By 2023, as internal state audits began to show millions in overpayments, MSDE started to recoup some of the money. FOX45 News obtained a MSDE spreadsheet which shows between January 2023 and September 2025 the “Amount Paid” back to MSDE for childcare overpayments was $4.1 million. An email obtained by FOX45 shows another $433,429 was received in physical checks for overpayments.
By September 2025, with a total of $66.5 million identified in overpayments, and MSDE seeking reimbursement, some childcare providers statewide pushed back.
“This money has already been spent. We don’t have it to return. And people fought for the providers to be able to keep these funds,” stated Project Baltimore’s source.
In the September 2025 townhall, childcare providers were told MSDE decided not to recoup the $66.5 million in overpayments, Neville-Morgan said, “MSDE has decided not to move forward with the broad recoupments of past payments that you received.”
On September 10, 2025, the Maryland State Department of Education hosted a virtual townhall to respond to concerns from childcare providers statewide (WBFF)
And the millions of dollars already paid back by providers would be returned to the providers, according to documents obtained by FOX45 News.
“When you heard taxpayers were not going to get their money back. What did you think?” Papst asked the confidential source.
Over the past five years, the programs funding has soared more than 300%, growing from $132M in 2022 to $560M in 2026, an increase of about $430 million annually (WBFF)
“Free money. We are getting free money,” remarked the childcare provider. “We do not have to pay it back. We did not earn it. We did not provide the service for it.”
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But by law, it appears taxpayers should get their money back. According to Maryland code, under the section titled, “Payments for Child Care Services”, “overpayments are collected” when providers “fail to correctly report information.” Much of the $66.5 million MSDE found in overpayments in the internal audits was due to childcare providers who could not, or did not correctly report information.
In a statement to FOX45 News, MSDE does not dispute Project Baltimore’s findings in this report. The state explained, “Our goal is to protect public funds while ensuring child care providers are not asked to repay money solely because of system limitations or processes that did not align with program requirements.” The state added it is working to, “improve payment reviews, clarify program requirements, and strengthen oversight to ensure responsible funds management.”
Maryland’s Child Care Scholarship Program is administered through MSDE (WBFF)
“This is free money,” Project Baltimore’s source stated. “We are getting free money.”
MSDE told Project Baltimore it is working to verify the numbers in its own audits that appear in this report and explained it has recouped overpayments determined to be fraud, but MSDE could not provide Project Baltimore with how much money had been recouped.
Follow Project Baltimore’s Chris Papst on X and Facebook. Send news tips to cjpapst@sbgtv.com
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