STOP Child Care Fraud Act
- Sponsor
- Sen. Cassidy, Bill [R-LA]
- Committees
- Health, Education, Labor, and Pensions Committee (primary)
- Last action
- Jul 14, 2026
Bottom line
This bill aims to reduce fraud and improve accountability in the federal Child Care and Development Block Grant program by tightening payment, eligibility, and reporting requirements for states and child care providers.
What it actually does
This bill significantly amends the Child Care and Development Block Grant Act of 1990 to enhance fraud prevention and oversight. It mandates that states pay child care providers based on verified attendance, with an allowance for up to six absent days per month to support fixed costs. The bill also requires states to implement electronic authentication tools for attendance verification, conduct more rigorous eligibility checks without self-certification, and integrate data systems for fraud detection. Furthermore, it establishes stricter reporting requirements for improper payments and creates a federal database of child care providers disqualified for fraud.
Proponents argue
Proponents argue that this bill is essential to protect taxpayer dollars by preventing waste, fraud, and abuse within the Child Care and Development Block Grant program. They contend that stricter verification, attendance-based payments, and advanced data analytics will ensure funds are directed to legitimate child care services for eligible families, thereby improving program integrity and accountability.
Opponents contend
Opponents might argue that the bill's stringent new requirements, such as mandatory electronic authentication and non-self-certification eligibility, could create significant administrative burdens and costs for states and child care providers, potentially leading to delays in access to care for vulnerable families or even reducing the overall supply of child care. They may also raise concerns about privacy implications and the potential for disproportionate penalties on states.
The bill is relatively concise, but its detailed amendments to existing law and the implications for state-level program administration require careful reading to fully grasp its operational and fiscal impacts.
Sec. 2(a)(1)(A), amending 42 U.S.C. 9858c(c)(2)(K)(i)
Enhanced Enrollment Compliance Review during Inspections
This provision requires licensing inspectors, during their routine onsite inspections of child care providers, to also conduct a brief review of the provider's compliance with enrollment requirements. This adds an additional layer of oversight to ensure that providers are accurately tracking and reporting child enrollments.
Supporters argue
Proponents argue this measure will help prevent fraud by ensuring that providers are adhering to proper enrollment procedures, thereby reducing the likelihood of billing for children who are not actually enrolled.
Critics contend
Critics might contend that this adds another task to already busy licensing inspectors, potentially increasing the time and resources required for each inspection without a clear demonstration of significant fraud prevention benefits.
Tradeoffs
The provision balances increased oversight for fraud prevention against the potential for increased administrative burden on state licensing agencies and inspectors.
Sec. 2(a)(1)(B), amending 42 U.S.C. 9858c(c)(2)(N)(i)
90-Day Reporting Requirement for Parents
This provision mandates that parents receiving child care assistance must report any changes in their ongoing work or educational program status, or any changes in their family income, to the State within 90 days of the change occurring. This ensures that eligibility information remains current.
Sec. 2(a)(1)(C), amending 42 U.S.C. 9858c(c)(2)(S)
Attendance-Based Provider Payments with Fixed Cost Support
This provision requires states to pay child care providers based on a child's verified attendance. However, to help providers cover fixed costs, it allows for full payment even if a child is absent for up to six days in a month. This aims to balance fraud prevention with financial stability for providers.
Sec. 2(a)(1)(D) - (W), adding 42 U.S.C. 9858c(c)(2)(W)
Standardized Billing and Payment Timelines
This provision establishes clear timelines for the billing and payment process. It requires child care providers to submit a complete invoice within nine months after delivering services and mandates that state lead agencies pay those invoices within 21 calendar days of receipt. This aims to streamline financial transactions.
Sec. 2(a)(1)(D) - (X), adding 42 U.S.C. 9858c(c)(2)(X)
Non-Self-Certification Eligibility Verification
This provision requires states to verify a child's eligibility for child care assistance without relying on self-certification. This includes verifying family income and assets, family size, residency, the parent-child relationship, and citizenship status. It also explicitly prohibits presumptive eligibility, meaning a child cannot receive a subsidy before full documentation and eligibility determination, with limited emergency exceptions.
Sec. 2(a)(1)(D) - (Y), adding 42 U.S.C. 9858c(c)(2)(Y)
Mandatory Electronic Authentication for Attendance
This provision requires center-based child care providers receiving federal assistance or certificates to use electronic authentication tools, such as finger imaging devices or interactive voice response systems, to verify child attendance. This aims to create an unalterable record of when children are dropped off and picked up.
Sec. 2(a)(1)(D) - (Z), adding 42 U.S.C. 9858c(c)(2)(Z)
Integrated Data Systems for Fraud Analytics
This provision requires states to integrate data from various systems, including records on child care providers (licensing, subsidies, eligibility) and employment records. States must then use data analytics to clean, analyze, and interpret this integrated data to identify anomalous patterns that could indicate potential fraud by child care providers.
Sec. 3(a)(4), adding 42 U.S.C. 9858e(a)(4)
Dedicated Funding for Quality and Compliance Activities
This provision mandates that states set aside 3% of the funds reserved for quality improvement activities under the Child Care and Development Block Grant for specific activities. These activities include improving child care quality and meeting state requirements for inspection, monitoring, and licensing of child care providers receiving federal funding.
Sec. 4(1), amending 42 U.S.C. 9858g(b)(1)
Risk-Based State Monitoring
This provision requires the Secretary to designate states as 'high-risk' if they have unresolved or repeated audit findings, an improper payment rate exceeding 6% in two consecutive reports, or an improper payment rate exceeding 9% in any single report. High-risk states will then be subject to more frequent monitoring by the Secretary.
Sec. 4(2), amending 42 U.S.C. 9858g(b)(2)(B)
Mandatory Withholding or Reduction of Funds
This provision changes the language from 'Secretary may' to 'Secretary shall' when referring to the withholding or percentage reduction of funds from a state's allotment for non-compliance with the Child Care and Development Block Grant Act. This makes financial sanctions for non-compliance mandatory rather than discretionary.
Sec. 4(4), adding 42 U.S.C. 9858g(b)(3)
Financial Penalty for Improper Expenditures
This provision imposes an additional 5% penalty on states for any amount that the Secretary determines must be reimbursed, deducted, recouped, withheld, or reduced due to improper expenditures of Child Care and Development Block Grant funds. This penalty is added on top of the original amount.
Sec. 4(4), adding 42 U.S.C. 9858g(b)(4)
Mandatory Corrective Action Plans
This provision requires states found to have made improper expenditures to submit a corrective action plan to the Secretary for approval within 60 days. Failure to submit the plan or to implement the corrective actions by the specified date will result in the withholding of funds, though a good faith exception for implementation is allowed.
Sec. 5(a)(1), adding 42 U.S.C. 9858i(a)(3)
Enhanced Error Reporting and Fraud Inclusion
This provision mandates that states include suspected and verified cases of fraud as improper payments in their error reports for the Child Care and Development Block Grant program. It requires states with improper payment rates exceeding 6% to submit comprehensive corrective action plans and establishes a staggered 2-year reporting cycle for all states. These reports and corrective action plans must be posted on a publicly available website.
Sec. 5(c), adding 42 U.S.C. 9858i(c)
Federal Database of Fraud-Disqualified Providers
This provision requires states to annually report individuals who served as child care providers under federal programs administered by the Administration for Children and Families but were disqualified by a court for committing fraud. The Secretary must maintain a federal database of these disqualified providers and prohibit any federal funding from going to providers listed in this database.
Sec. 6(1), amending 42 U.S.C. 9858n(4)(B)
$500,000 Family Asset Cap
This provision establishes a new eligibility criterion for child care assistance: a family's assets cannot exceed $500,000. However, it explicitly excludes the net value of a family farm or a commercial fishing business and related expenses from this asset calculation, referencing existing definitions in the Higher Education Act.
Sec. 6(2), amending 42 U.S.C. 9858n(4)(C)
Stricter Work/Education Requirements for Eligibility
This provision revises the work and education requirements for child care assistance eligibility. For single-parent families, the parent must be working or attending a job training or educational program. For two-parent families, both parents must work a combined total of at least 40 hours per week. Eligibility for children receiving protective services remains unchanged.
The bill explicitly prohibits states from considering a child presumptively eligible for child care subsidies or allowing them to receive a subsidy prior to a full documentation and eligibility determination. This directly overturns a previous regulatory allowance for presumptive eligibility.
Sec. 2(a)(1)(D)(ii), referencing section 98.21(e) of title 45, Code of Federal Regulations
Why it matters:This is standard legislative practice to amend or clarify existing regulatory frameworks by direct reference, rather than re-stating the entire regulation.
Case for: Supporters argue that eliminating presumptive eligibility closes a significant loophole that could be exploited for fraud, ensuring that all recipients are fully vetted before receiving federal funds.
Case against: Critics might contend that eliminating presumptive eligibility creates immediate barriers for families in urgent need of child care, potentially disrupting employment or education while they await a lengthy full eligibility determination.
Estimated impact: Eliminates a pathway for immediate child care access for families, potentially increasing wait times for subsidies and administrative burden for states to conduct full upfront verification.
While establishing a $500,000 family asset limit for child care assistance eligibility, the bill explicitly excludes the net value of a family farm or a commercial fishing business and related expenses from this calculation. This exclusion is defined by cross-referencing a specific provision from the Higher Education Act.
Sec. 6(1), referencing section 480(f)(2) of the Higher Education Act of 1965 (20 U.S.C. 1087vv(f)(2))
Why it matters:This is standard legislative drafting practice to avoid re-writing definitions or exclusions that already exist in federal law, promoting consistency across statutes.
Case for: Supporters argue that this exclusion protects family-owned agricultural and fishing businesses from being unfairly penalized, recognizing that such assets are often illiquid and essential for the family's livelihood, not readily available for child care expenses.
Case against: Critics might argue that this creates a specific carve-out that could be seen as preferential treatment for certain industries, potentially allowing families with substantial wealth tied up in these assets to qualify for subsidies while other asset-rich families are disqualified.
Estimated impact: Exempts a specific class of assets from the new eligibility cap, potentially allowing some families with high net worth in these sectors to qualify for child care assistance.