H.R. 7726: Stop Child Care Scams Act of 2026

This bill, known as the Stop Child Care Scams Act of 2026, aims to amend the Child Care and Development Block Grant Act to enhance accountability and reduce fraud in child care programs. Here’s a breakdown of what the bill does:

1. Fund Withholding Authority

The Secretary of Health and Human Services will be required to withhold funds from states that do not comply with certain regulations regarding child care program integrity. The bill changes the language from "may" to "shall," making fund withholding mandatory in cases of noncompliance.

2. Program Integrity Requirements

States will be required to provide detailed plans that outline their internal controls to prevent fraud, how they investigate and recover fraudulent payments, and the sanctions imposed on clients or providers for fraud. This includes validating eligibility for financial assistance and utilizing data from various agencies overseeing child care providers.

3. Investigating Fraud

The Secretary is mandated to investigate instances of fraud involving financial assistance for child care. If fraud is identified, the Secretary has the power to permanently debar the fraudulent child care providers from receiving future assistance. This also applies to providers already debarred from the Child and Adult Care Food Program due to fraud.

4. Corrective Actions for Improper Payments

If a state’s improper payment rate exceeds 5% for two consecutive years, it will be ineligible for funding unless it submits an acceptable corrective action plan to reduce this rate in the following years.

5. Performance Monitoring

The Secretary will conduct periodic reviews of state performance every three years. States designated as "high risk" will undergo more stringent monitoring if they exhibit unresolved issues from audits or fail to comply with required corrective actions.

6. Additional Fraud Prevention Measures

The bill includes provisions to amend the Richard B. Russell National School Lunch Act to allow for the debarment of institutions or daycare homes that have been fraudulently terminated from child care programs, mirroring the debarment under the Child Care and Development Block Grant program.

7. Enhanced Monitoring of Fraud

A study will be required from the Comptroller General regarding current fraud prevention measures in federal early childhood education, child care, and nutrition programs. This study will evaluate the effectiveness of these measures and include recommendations for improvement.

8. Annual Reporting

States will be required to submit annual reports detailing the nature and extent of fraudulent payments in their child care programs, categorizing them by type and cause. This aims to improve transparency and accountability in state-managed child care assistance programs.

Relevant Companies