Bill Summary
The "Stop Child Care Funding Fraud Act of 2026" aims to enhance transparency and accountability in the administration of federal child care funds provided to states. The legislation amends the Child Care and Development Block Grant Act of 1990 by requiring states to report on improper payments made with federal funds for child care services. Specifically, states must submit annual reports detailing the rate of improper payments and outline corrective actions to reduce these rates if they exceed 6%.
If a state's improper payment rate exceeds certain thresholds (6%, 8%, or 10%), the Secretary of Health and Human Services can impose financial penalties, reducing the state's future funding by 5%, 10%, or 15%, respectively, until the state implements a corrective action plan. This plan must include verified attendance documentation for subsidized child care services while ensuring that no personally identifiable information is disclosed.
Additionally, the Secretary is required to produce a report that includes a state-by-state breakdown of improper payment rates and the actions taken by each state, promoting greater accountability. The provisions of this Act will take effect one year after its enactment.
Possible Impacts
Here are three examples of how the "Stop Child Care Funding Fraud Act of 2026" could affect people:
1. **Increased Accountability for States**: The legislation mandates that states submit detailed reports on improper payments related to child care funding. As a result, states will be held accountable for how they manage federal funds. This could lead to improved financial oversight and reduced instances of fraud or misuse of funds, ultimately ensuring that more resources are directed toward eligible children and families who genuinely need child care assistance.
2. **Potential Reduction in Funding**: If a state reports an improper payment rate exceeding specified thresholds (6%, 8%, or 10%), it faces penalties in the form of reduced federal funds for subsequent program periods. This could directly impact child care programs within that state, potentially leading to fewer available services, increased fees for families, or even program closures. Families relying on these services may find it harder to access affordable child care.
3. **Enhanced Transparency for Families**: The bill requires states to submit corrective action plans if they identify high rates of improper payments. This process, along with the Secretary's requirement to report on state-specific data regarding improper payments, will promote transparency. Families and stakeholders can gain insights into how child care funds are being used, which can inform their choices about providers and foster greater trust in the system. Additionally, the disaggregation of data allows for better understanding of which states are effectively managing their child care programs.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7794 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 7794
To amend the Child Care and Development Block Grant Act of 1990 to
provide transparency and accountability in the administration of
Federal child care funds expended by the States.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 4, 2026
Mr. Kennedy of Utah introduced the following bill; which was referred
to the Committee on Education and Workforce
_______________________________________________________________________
A BILL
To amend the Child Care and Development Block Grant Act of 1990 to
provide transparency and accountability in the administration of
Federal child care funds expended by the States.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Child Care Funding Fraud Act of
2026''.
SEC. 2. AMENDMENTS.
(a) State Reports and Audits.--Section 658K of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9858i) is amended by
adding at the end the following:
``(c) State Improper Payments.--
``(1) State reports of improper payments.--Not later than
June 30 of the each program period referred to in section
658E(d), a State shall submit to the Secretary a report on the
rate of the improper payments made by such State with funds
received under this subchapter during such period and the a
breakdown of actions the State will take to lower such rate in
subsequent program periods.
``(2) Incentive penalties to reduce improper payments.--If
a State report submitted under paragraph (1) identifies a rate
of improper payments for program period referred to in section
658E(d) that--
``(A) exceeds 6 percent but is less than 8 percent,
then the Secretary shall reduce by 5 percent the
aggregate amount of funds such State would otherwise
receive under this subchapter for each subsequent
program period;
``(B) is at least 8 percent but is less than 10
percent, then the Secretary shall reduce by 10 percent
the aggregate amount of funds such State would
otherwise receive under this subchapter each subsequent
program period; and
``(C) equals or exceeds 10 percent, then the
Secretary shall reduce by 15 percent the aggregate
amount of funds such State would otherwise receive
under this subchapter for each subsequent program
period;
until the Secretary certifies that such State has implemented a
corrective action plan submitted under paragraph (3) and
submitted to the Secretary all data required under such plan.
``(3) State corrective action plans.--If for any such
period the State report submitted under paragraph (1)
identifies a rate of improper payments that exceeds 6 percent,
such State shall complete, and submit to the Secretary not
later than 60 days after submission of such report, a payment
corrective action plan to reduce the report such rate to not
more than 6 percent. Such plan shall contain verified child
attendance documentation for subsidized child care services
provided with funds received under this subchapter, in an
aggregated format that does not contain personally identifiable
information and that does not disclose identifiable child-level
data.
``(4) Definition.--For purposes of this subsection, the
term `improper payment' means a payment made under this
subchapter for child care services provided to a child, that
does not comply with this subchapter because--
``(A) such payment exceeds the amount that should
have been paid to provide such services to such child;
``(B) such payment is less than the amount that
should have been paid to provide such services to such
child;
``(C) such payment is made to provide such services
to such child who is not eligible to receive such
services; or
``(D) such payment is made for such services in an
amount that cannot be verified to be in compliance with
this subchapter.
``(5) Rule of construction.--Nothing in this subsection
shall be construed to prevent the Secretary from withholding
from a State funds such State would otherwise receive under
this subchapter if the Secretary determines such State has
violated a provision of this subchapter or a regulation issued
to carry out this subchapter.''.
(b) Report by Secretary.--The 1st sentence of section 658L(a) of
the Child Care and Development Block Grant Act of 1990 (42 U.S.C.
9858j) is amended--
(1) by inserting ``disaggregated by State'' after
``report''; and
(2) by inserting ``(including a State-by-State breakdown
showing the improper payment rate of each State and the actions
taken by each State to lower its improper payment rates)''
after ``analysis''.
SEC. 3. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect 1
year after the date of the enactment of this Act.
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