H.R. 7794: Stop Child Care Funding Fraud Act of 2026

This bill, titled the Stop Child Care Funding Fraud Act of 2026, aims to amend the Child Care and Development Block Grant Act of 1990 to improve transparency and accountability in how Federal child care funds are administered by the States. The main features of the bill include:

State Reports and Audits

• States are required to submit a report by June 30 for each program period that details the rate of improper payments made with Federal child care funds and describes the measures they will take to reduce this rate in the future.

Incentive Penalties to Reduce Improper Payments

If a State reports a rate of improper payments that meets certain thresholds, the following penalties may apply:

• If the rate exceeds 6% but is less than 8%: The State’s funding will be reduced by 5% for future periods.
• If the rate is at least 8% but less than 10%: The funding will be reduced by 10% for subsequent periods.
• If the rate equals or exceeds 10%: The funding will be reduced by 15% until the State implements a corrective action plan that is approved by the Secretary.

State Corrective Action Plans

For any reporting period where the improper payment rate exceeds 6%, States must:

• Submit a corrective action plan within 60 days, aiming to lower the improper payment rate to no more than 6%. This plan should include verified child attendance documentation for subsidized services.

Definition of Improper Payments

The bill defines improper payments as any payments made under the act that do not comply with its regulations, which can include:

• Overpayments for services.
• Underpayments for services.
• Payments for services to ineligible children.
• Payments that cannot be verified to comply with the act.

Report by Secretary

The Secretary of Health and Human Services is required to issue a report that includes:

• A breakdown of improper payment rates by State.
• Details of actions each State has taken to address its improper payment rates.

Effective Date

The amendments outlined in this bill will take effect one year after the bill is enacted.

Relevant Companies

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