HR7721-119

What This Bill Does

The CRACKDOWN Act of 2026 amends CCDBG improper payment rules. If a state's improper payment rate for a fiscal year is more than 5 percent of the aggregate amount of CCDBG payments made by that state, the state must submit a corrective action plan to the Secretary for review and approval. The plan must reduce the improper payment rate to not more than 5 percent in later fiscal years, and the state must provide compliance reports as the Secretary requires.

The bill also creates conditional ineligibility. If a state has an improper payment rate above 5 percent for two consecutive fiscal years, the state becomes ineligible for CCDBG funds unless it demonstrates to the Secretary that it will reduce the rate to not more than 5 percent in the next fiscal year or make significant progress under the approved corrective action plan.

Who Benefits and How

Federal taxpayers benefit from a stronger incentive for states to reduce improper CCDBG payments. HHS child care program staff benefit from corrective action plans and compliance reports when a state's improper payment rate exceeds 5 percent. Families eligible for child care assistance benefit if fewer improper payments preserve subsidy funds. States with strong payment controls benefit because the bill targets states above the threshold. Congressional oversight staff benefit from a clearer enforcement structure tied to a numeric threshold.

Who Bears the Burden and How

States with high improper payment rates must write corrective action plans, submit reports, and show progress. State child care agencies with two consecutive years above 5 percent risk losing CCDBG funds unless they demonstrate improvement. HHS child care program staff must review and approve plans and determine whether states are eligible. Child care providers and families in high-risk states may face administrative disruption if the state must change payment controls. State auditors and payment-integrity staff must document rates and progress.

Key Provisions

• Requires a corrective action plan when a state's CCDBG improper payment rate exceeds 5 percent.
• Requires Secretary review and approval of the corrective action plan.
• Requires compliance reports showing the state is following the approved plan.
• Makes states above 5 percent for two consecutive fiscal years conditionally ineligible for CCDBG funds.
• Allows continued eligibility if the state shows it will reduce improper payments to 5 percent or make significant progress.