Stop Child Care Scams Act of 2026

Key Points

• The bill changes federal law so that the Secretary of Health and Human Services must withhold funds from states that fail to comply with child care program rules, replacing the current optional authority. This shifts enforcement from discretionary to mandatory.
• Child care providers found guilty of fraud after a final determination will be permanently banned from receiving federal child care subsidies and food program funds. The ban also applies across programs, so a provider debarred from one program is automatically debarred from the other.
• States with improper payment rates above 5% must submit a corrective action plan. If they exceed 5% for two consecutive years, they risk losing federal child care funding unless they can demonstrate they are making significant progress.
• Every three years, the federal government will conduct a comprehensive review of each state's child care program performance. States with unresolved audit findings or repeated failures can be designated as high risk and subjected to additional monitoring.
• States must submit annual reports breaking down improper payments into specific categories including suspected fraud, verified fraud, non-fraudulent overpayments, underpayments, and system errors. The GAO is also required to study fraud prevention across Head Start, the Child and Adult Care Food Program, and CCDBG within two years.