Stop Child Care Scams Act of 2026

Key Points

• The bill changes the Secretary's authority from optional to mandatory when it comes to withholding funds from states that don't comply with child care program rules. This means the federal government must act against noncompliant states rather than just having the option to do so.
• Child care providers found guilty of fraud will be permanently banned from receiving federal child care money. The bill also cross-references the Child and Adult Care Food Program, so providers banned from either program are automatically banned from the other.
• States where improper payments exceed 5% of total child care spending must submit a corrective action plan. If the problem continues for two straight years, the state could lose eligibility for federal child care funding entirely unless it shows meaningful progress.
• Every three years, the Secretary must review each state's performance. States with repeated audit problems or unresolved compliance issues will be labeled "high risk" and subjected to additional monitoring.
• States must submit annual reports breaking down improper payments into specific categories like suspected fraud, non-fraudulent overpayments, underpayments, and system errors. This gives the federal government a clearer picture of why money is being lost.
• The GAO must study fraud prevention across federal child care and early childhood programs, including Head Start, the Child and Adult Care Food Program, and the Child Care and Development Block Grant program, and report back to Congress within two years.

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