Technical corrections only. The two versions of H.R. 7726 are substantively identical, with v4 reflecting the bill's procedural status after being passed by the House and referred to the Senate. No substantive policy changes were made between v3 and v4.
Stop Child Care Scams Act of 2026
- Sponsor
- Rep. Miller, Mary E. [R-IL-15]
- Committees
- Health, Education, Labor, and Pensions Committee (primary)
- Last action
- Jun 4, 2026
Bottom line
The 'Stop Child Care Scams Act of 2026' mandates stricter federal oversight and state-level fraud prevention measures for child care and nutrition programs, including permanent debarment for fraudulent providers and financial penalties for states with high improper payment rates.
What it actually does
This bill significantly strengthens federal enforcement and state accountability to combat fraud in the Child Care and Development Block Grant (CCDBG) program and the Child and Adult Care Food Program (CACFP). It mandates the Secretary to withhold CCDBG funds from non-compliant states and permanently debar child care providers found guilty of fraud from both programs. States are required to implement more robust internal controls, investigate and recover fraudulent payments, and submit corrective action plans if their improper payment rates exceed 5%.
Proponents argue
Proponents argue that this bill is essential for protecting taxpayer dollars by significantly enhancing program integrity and accountability within critical child care and nutrition programs. They contend that the mandatory withholding of funds, permanent debarment for fraud, and stringent state reporting requirements will deter fraudulent activities, ensure that funds reach eligible children and providers, and restore public trust in these vital services.
Opponents contend
Opponents might argue that while fraud prevention is important, the bill's stringent, mandatory measures could place an undue administrative and financial burden on states and legitimate child care providers. They may contend that permanent debarment, even for minor infractions or without sufficient due process, could reduce the availability of child care, particularly in underserved communities, and that states may struggle to meet the new improper payment thresholds without additional federal support.
The bill is relatively short and straightforward, allowing a reader to quickly grasp its core provisions and implications.
Section 2
Mandatory Withholding of Funds for Fraud
This section amends the Child Care and Development Block Grant Act of 1990 to change the Secretary's authority from 'may withhold funds' to 'shall withhold funds' from noncompliant states. This removes the Secretary's discretion, making the withholding of funds mandatory when a state fails to comply with the Act's requirements related to fraud.
Supporters argue
Supporters argue that making fund withholding mandatory ensures consistent enforcement and sends a strong message to states about the seriousness of compliance with fraud prevention measures, thereby protecting federal investments.
Critics contend
Critics might argue that removing the Secretary's discretion could lead to inflexible enforcement, potentially penalizing states for minor or unavoidable issues without considering unique circumstances, which could ultimately harm children and families.
Tradeoffs
The provision balances the desire for strict accountability and fraud deterrence against the need for flexibility in addressing state-specific challenges and avoiding unintended negative impacts on child care access.
Section 3
Enhanced State Program Integrity and Accountability Plans
This section requires state plans under the CCDBG Act to include a detailed description of their internal controls for program integrity, processes for investigating and recovering fraudulent payments, imposing sanctions on fraudulent clients or providers, and procedures for verifying eligibility. It also mandates how states utilize data across agencies for oversight.
Section 4
Permanent Debarment for Child Care Fraud
This section mandates the Secretary to investigate fraud in the CCDBG program and, upon a final determination of fraud, permanently debar the child care provider from receiving financial assistance. It also requires cross-debarment for providers already debarred from the Child and Adult Care Food Program (CACFP). The section provides a detailed definition of 'final determination of fraud'.
Section 5
Improper Payment Rate Threshold and Conditional Ineligibility for States
This section establishes a threshold where if a state's improper payment rate for CCDBG funds exceeds 5% for a fiscal year, the state must submit a corrective action plan to reduce this rate. If a state exceeds the 5% rate for two consecutive fiscal years, it becomes conditionally ineligible for funds unless it demonstrates significant progress or reduction in the rate for the next fiscal year.
Section 6
Cyclical Monitoring and High-Risk Designation for States
This section mandates the Secretary to conduct comprehensive reviews of state performance under the CCDBG Act at 3-year intervals. Based on these reviews, states can be designated as 'high risk' if they have unresolved audit findings, repeated failures in corrective action plans, or persistent noncompliance with their state plan. High-risk states will then be subject to additional monitoring.
Section 7
Permanent Debarment for Child and Adult Care Food Program Fraud
This section mirrors the CCDBG fraud provisions by amending the Richard B. Russell National School Lunch Act to mandate permanent debarment from the Child and Adult Care Food Program (CACFP) for institutions or family/group day care homes found guilty of fraud. It also requires cross-debarment for entities debarred from the CCDBG program and provides a specific definition of 'final determination of fraud' for CACFP.
Section 8
Eliminating Authority to Waive Sanctions
This section removes the Secretary's authority to waive sanctions imposed upon a state in accordance with the CCDBG Act's provisions related to non-compliance. It strikes language that previously allowed for such waivers, making the imposition of sanctions mandatory once triggered.
Section 9
GAO Study on Provider-Related Fraud Prevention
This section mandates the Comptroller General of the United States (GAO) to conduct a study on fraud prevention measures in federal early childhood education, child care, and child nutrition programs. The study will analyze the effectiveness of current procedures, the sufficiency and use of federal data to identify fraud, and specific program integrity results and corrective actions within the CCDBG program. A report with findings and recommendations is due to Congress within two years.
Section 10
Disaggregated Reporting of Improper Payments
This section amends the CCDBG Act to require states to submit an annual report identifying the dollar and percentage amount of improper payments, disaggregated by standardized categories. These categories must include suspected and verified fraudulent payments, non-fraudulent overpayments, underpayments, and technically improper payments (e.g., system errors).
These subsections provide a detailed, multi-part definition of 'final determination of fraud' for both the Child Care and Development Block Grant program and the Child and Adult Care Food Program. This definition outlines specific actions that constitute fraud, such as knowingly submitting false statements, misrepresenting eligibility or services, operating without proper licensing, or making improper expenditures.
Section 4(3)(D) and Section 7(E)(iii)
Why it matters:Defining key terms is standard legislative practice to ensure legal clarity and consistent application. However, the specific elements of this definition are critical for understanding the scope and trigger of the bill's most severe penalties.
Case for: Supporters argue that a clear and comprehensive definition of fraud is essential to ensure fairness and consistency in enforcement, providing explicit grounds for debarment and protecting against arbitrary decisions.
Case against: Critics might argue that the breadth of the definition, particularly clauses like 'any other conduct related to such financial assistance that constituted fraud under Federal or State law,' could be interpreted broadly, potentially ensnaring providers in permanent debarment for actions that may not be intentional or severe.
Estimated impact: This definition directly governs the application of permanent debarment for child care providers and institutions, affecting potentially thousands of entities over time.
This subsection outlines the specific criteria for designating a state as 'high risk' during the Secretary's periodic monitoring reviews. These criteria include a high level of unresolved or repeated adverse audit findings, unresolved issues or repeated performance failures under corrective action plans, or unresolved or repeat findings of noncompliance with the state plan.
Section 6(c)
Why it matters:Detailing specific criteria is necessary for administrative implementation and consistency. However, these specific triggers for 'high risk' status are crucial for states to understand their compliance obligations.
Case for: Supporters argue that clear, objective criteria for 'high risk' designation ensure transparency and provide states with actionable targets for improvement, promoting accountability.
Case against: Critics might argue that the criteria, particularly 'high level of unresolved or repeated adverse audit findings,' could be subjective or difficult for states to fully control, potentially leading to unfair 'high risk' designations that impose additional burdens without sufficient justification.
Estimated impact: This provision directly impacts state governments by determining when they will be subject to additional federal scrutiny and monitoring, potentially affecting their administrative resources and public perception.