Stop Child Care Scams Act of 2026
- Sponsor
- Sen. Moody, Ashley [R-FL]
- Committees
- Health, Education, Labor, and Pensions Committee (primary)
- Last action
- Jun 16, 2026
Bottom line
This bill aims to significantly enhance federal oversight and enforcement against fraud and improper payments within critical child care and nutrition programs by making penalties mandatory and strengthening state accountability.
What it actually does
This bill significantly strengthens fraud prevention and enforcement within the Child Care and Development Block Grant (CCDBG) program and the Child and Adult Care Food Program (CACFP). It mandates the withholding of federal funds from non-compliant states, introduces permanent debarment for child care providers found guilty of fraud, and requires states with high improper payment rates to implement corrective action plans. The bill also enhances state reporting requirements on program integrity and mandates periodic federal monitoring of state performance.
Proponents argue
Supporters argue that this legislation is crucial for protecting taxpayer dollars, ensuring that federal funds reach legitimate child care providers and children in need, and upholding the integrity of essential social programs. They contend it provides necessary tools to combat waste, fraud, and abuse that undermine public trust and divert resources from their intended purpose.
Opponents contend
Critics might argue that the bill's mandatory and permanent debarment provisions could be overly harsh, potentially impacting legitimate providers due to minor infractions or administrative errors, which could inadvertently reduce the supply of available child care. Concerns may also be raised about the increased administrative and financial burdens placed on states to comply with enhanced oversight and reporting requirements, potentially diverting resources from direct services.
The bill is relatively short and clearly structured, making it accessible for a quick read and evaluation of its core provisions.
Section 2
Mandatory Fund Withholding for Noncompliant States
This section amends the Child Care and Development Block Grant Act of 1990 to change the Secretary's authority from discretionary to mandatory when withholding funds from states that fail to comply with the Act's requirements. Previously, the Secretary 'may' withhold funds; this bill changes it to 'shall' withhold funds, making enforcement automatic.
Supporters argue
Supporters argue this provision ensures consistent and firm enforcement of program rules, preventing political or discretionary leniency and incentivizing states to prioritize program integrity.
Critics contend
Critics contend that removing the Secretary's discretion could lead to undue hardship for states facing minor or technical non-compliance issues, potentially disrupting child care services for vulnerable populations.
Tradeoffs
This provision balances the need for strict, consistent accountability with the desire for administrative flexibility to address unique state circumstances or minor infractions without imposing severe, potentially counterproductive, penalties.
Section 3
Enhanced State Plan Requirements for Program Integrity
This section requires state plans for the CCDBG program to include detailed descriptions of internal controls to ensure program integrity and accountability. States must outline processes for investigating and recovering fraudulent payments, imposing sanctions on fraudulent clients or providers, and verifying eligibility. It also mandates how states utilize data within and across other state and local agencies for child care provider oversight.
Section 4
Mandatory Debarment for CCDBG Fraud
This section mandates the Secretary to investigate fraud related to CCDBG financial assistance and permanently debar any child care provider found to have committed fraud from receiving such assistance. It also requires debarment for providers already debarred from the Child and Adult Care Food Program (CACFP). The bill defines 'final determination of fraud' to include knowingly false statements, misrepresentation, operating without a license (without exception), improper expenditure, or other fraud under federal or state law.
Section 5
State Corrective Action Plans and Conditional Ineligibility for High Improper Payment Rates
This section establishes that if a state's improper payment rate for the CCDBG program exceeds 5% of its total payments in a fiscal year, the state must submit a corrective action plan to the Secretary for approval. If a state's improper payment rate remains above 5% for two consecutive fiscal years, it becomes conditionally ineligible to receive CCDBG funds unless it demonstrates it will reduce the rate or make significant progress on its approved corrective action plan.
Section 6
Periodic Federal Monitoring and High-Risk Designation for States
This section requires the Secretary to conduct a comprehensive review of each state's CCDBG performance every three years. Based on these reviews, states with a high level of unresolved audit findings, repeated failures in corrective action plans, or unresolved noncompliance with their state plan will be designated as 'high risk' and subjected to additional monitoring by the Secretary.
Section 7
Mandatory Debarment for CACFP Fraud and Cross-Program Debarment
This section amends the Richard B. Russell National School Lunch Act to mandate permanent debarment for institutions or family/group day care homes terminated from the Child and Adult Care Food Program (CACFP) due to a final determination of fraud. It also requires debarment from CACFP for providers already debarred from the Child Care and Development Block Grant (CCDBG) program. The section defines 'final determination of fraud' specifically for CACFP.
Section 8
Elimination of Authority to Waive Sanctions
This section amends the Child Care and Development Block Grant Act of 1990 by removing language that allowed the Secretary to waive sanctions imposed upon a state. This change makes the application of sanctions for non-compliance mandatory once triggered, eliminating the Secretary's discretion in such cases.
Section 10
Enhanced Reporting on Improper and Fraudulent Payments
This section amends the CCDBG Act to explicitly include 'fraudulent payments' within the scope of overpayments that states must recover. It also requires states to submit an annual report identifying the dollar and percentage amount of improper payments, disaggregated by standardized payment categories, including suspected and verified fraudulent payments, non-fraudulent overpayments, underpayments, and technically improper payments.
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 data to identify fraud, and program integrity results for states that delegate CCDBG responsibilities. A report containing the study results and legislative/regulatory recommendations is due to Congress within two years.
Section 9
Why it matters:Including study mandates at the end of bills is standard legislative practice. It allows for future policy to be informed by research without immediately enacting new substantive changes.
Case for: Supporters argue that this study will provide valuable, independent data and insights to inform future legislative or regulatory actions, ensuring that fraud prevention measures are evidence-based and effective. It addresses a critical need for a comprehensive assessment of current practices.
Case against: Critics might argue that mandating a study can delay immediate action on known issues, or that the scope of the study might be too broad or narrow to yield the most actionable results quickly, potentially consuming resources without leading to timely reforms.
Estimated impact: The study will provide a comprehensive assessment of fraud prevention across several major federal programs, potentially leading to significant future policy changes and improved program integrity based on its findings and recommendations.