Stop Child Care Scams Act of 2026

The bill would amend the Child Care and Development Block Grant Act of 1990 to strengthen fraud and accountability rules. It would change the Secretary's authority to withhold funds from noncompliant states from discretionary ("may") to mandatory ("shall"), require states to describe their internal fraud-prevention controls in their state plans, and require the Secretary to investigate fraud and permanently debar providers found to have committed it, including providers already debarred from the related Child and Adult Care Food Program. States with improper-payment rates above 5% would have to submit corrective action plans, and states exceeding that rate for two consecutive years could lose program funding. The bill also eliminates the Secretary's authority to waive sanctions, adds periodic high-risk state monitoring, and requires an annual state report on improper and fraudulent payments. It also directs a GAO study and report, within two years, on fraud prevention across federal early childhood, child care, and nutrition programs. The bill does not create new federal child care funding or benefits; it focuses on tightening compliance, sanctions, and reporting within the existing block grant structure.

State agencies that administer child care subsidies under the Child Care and Development Block Grant program, child care providers and family or group day care homes receiving federal assistance, the Administration for Children and Families, and low-income working families who rely on subsidized child care could be affected if state funding is disrupted by sanctions.

States found substantially noncompliant would face mandatory rather than discretionary sanctions, and providers found to have committed fraud would face permanent, non-waivable debarment. States with persistent high improper-payment rates risk losing program funding entirely, which could affect the child care assistance available to low-income families if state administration falters.

The Administration for Children and Families would enforce mandatory sanctions and permanent debarment for confirmed fraud, drawing on new state plan disclosures about internal controls and fraud investigation processes. States exceeding a 5% improper-payment rate would submit corrective action plans for Secretary approval and file compliance reports; two consecutive years above that threshold could trigger loss of funding unless the state shows sufficient progress. The Secretary would conduct three-year performance reviews, designate high-risk states for added monitoring, and require annual state reports disaggregating improper and fraudulent payments. GAO would study cross-program fraud prevention and report findings and recommendations to congressional committees within two years.