Stop Child Care Funding Fraud Act of 2026
Summary
What This Bill Does
The Stop Child Care Funding Fraud Act requires each state receiving Child Care and Development Fund assistance to report by June 30 after every program period. The report must state the state's improper-payment rate and actions taken to reduce improper payments. Improper payments include overpayments, underpayments, payments for an ineligible child, and payments whose proper amount cannot be verified.
If the rate is greater than 6 percent but less than 8 percent, the state loses 5 percent of its funding in each subsequent program period. A rate from 8 percent through less than 10 percent produces a 10 percent reduction, and a rate of at least 10 percent produces a 15 percent reduction. An exact 6 percent rate does not trigger the listed penalty. The reduction continues until the Secretary certifies that the state implemented an approved corrective plan and submitted required data.
A state above 6 percent must submit a corrective action plan within 60 days. The plan must aim to bring the rate to 6 percent or below and use verified attendance information in aggregate form that is not personally identifiable and does not contain child-level data. The text ties restoration to plan implementation and data submission; it does not expressly require a later measured rate below 6 percent before certification.
The Secretary must publish a federal report disaggregated by state, including rates and corrective actions. Existing authority to withhold funds remains available. All amendments take effect one year after enactment.
Who Benefits and How
Taxpayers, eligible families, compliant child-care providers, and program-integrity officials gain stronger incentives, comparable state data, and corrective-action requirements. Privacy interests gain limits on attendance information used in corrective plans.
Who Bears the Burden and How
States with elevated rates lose 5 to 15 percent of later program funding and must report, investigate, plan, and submit data. Reduced aggregate funds can affect eligible families and providers even when they did not cause an improper payment. HHS must validate rates, review plans, certify recovery, and publish state-level results. Providers may face tighter attendance verification and scrutiny.
Key Provisions
- Requires annual state improper-payment reports.
- Defines improper payments to include overpayments and underpayments.
- Requires corrective plans for rates above 6 percent.
- Reduces funding by 5 percent for rates above 6 and below 8 percent.
- Reduces funding by 10 percent for rates from 8 to below 10 percent.
- Reduces funding by 15 percent for rates of at least 10 percent.
- Continues reductions until corrective-plan certification.
- Protects attendance data from personal and child-level disclosure.
- Requires a state-disaggregated federal report.
- Preserves existing withholding authority.
- Delays the amendments for one year.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Requires annual state and federal reporting on Child Care and Development Fund improper payments, mandates corrective plans above 6 percent, and reduces subsequent state funding by 5, 10, or 15 percent when measured rates exceed specified thresholds, effective one year after enactment.
Key Policy Areas
Child Care Subsidies, Improper Payments, State Grant Penalties, Program Integrity, Federal Reporting
Primary Purpose
Requires annual state and federal reporting on Child Care and Development Fund improper payments, mandates corrective plans above 6 percent, and reduces subsequent state funding by 5, 10, or 15 percent when measured rates exceed specified thresholds, effective one year after enactment.
Policy Domains
Sections 2 through 4 reporting, thresholds, corrective plans, penalties, and effective date
Identified Gains
- Taxpayers financing child-care assistance
- Eligible families awaiting accurate subsidies
- Compliant child-care providers
- Federal program-integrity officials
- State auditors investigating payments
- Children protected from identifiable reporting
- Congressional child-care oversight staff
Identified Costs
- States with elevated improper-payment rates
- State child-care subsidy administrators
- Eligible families in penalized states
- Child-care providers in penalized states
- Providers supplying attendance verification
- HHS corrective-plan reviewers
- State data-privacy staff
Sponsors
Legislative Progress
In CommitteeReferred to the House Committee on Education and Workforce.
Introduced in House
Mr. Kennedy of Utah introduced the following bill; which was …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
State auditors investigating payments, State child-care subsidy administrators, State data-privacy staff
Positive-direction: State auditors investigating payments
Negative-direction: State child-care subsidy administrators, State data-privacy staff, State grant budgets awaiting certification, States with elevated improper-payment rates
Child-care providers in penalized states, Child-care providers receiving subsidies, Compliant child-care providers
Positive-direction: Compliant child-care providers, Eligible families awaiting accurate subsidies
Negative-direction: Child-care providers in penalized states, Eligible families in penalized states, Providers supplying attendance verification
Congressional child-care oversight staff, Federal program-integrity officials, HHS corrective-plan reviewers
Positive-direction: Congressional child-care oversight staff, Federal program-integrity officials
Negative-direction: HHS corrective-plan reviewers
Children protected from identifiable reporting, Families using subsidized child care, Taxpayers financing child-care assistance
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "state"
- → State agency receiving child-care assistance
- "family"
- → Eligible family using subsidized child care
- "provider"
- → Child-care provider receiving subsidy payments
- "reviewer"
- → Program-integrity official validating payments and attendance
- "secretary"
- → HHS Secretary reviewing rates and corrective plans
Note: {'scope_ids': ['child_care_improper_payment_controls'], 'description': 'An exact 6 percent rate triggers neither the listed plan nor penalty; restoration is textually tied to implemented corrective measures and submitted data rather than an express later rate test, and aggregate state cuts can reach compliant providers and eligible families.'}
Key Definitions
Terms defined in this bill
A 5, 10, or 15 percent reduction in subsequent state assistance based on a measured improper-payment rate above 6 percent.
A state plan due within 60 days that aims for a rate of 6 percent or below and uses privacy-protected verified attendance information.
An overpayment, underpayment, payment for an ineligible child, or payment whose correct amount cannot be verified.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology