Stop Child Care Funding Fraud Act of 2026

Increased Accountability for State Funds: The bill requires States to submit a report on the rate of improper payments and a breakdown of actions to lower that rate (Section 2(a)(1)). This ensures that officials are held responsible for how child care funds are managed.

Financial Incentives to Reduce Errors: The bill creates a system where States face fund reductions if improper payments exceed certain percentages (Section 2(a)(2)). This provides a direct incentive for States to correct errors, such as payments that exceed the correct amount, are less than the correct amount, are made to ineligible children, or cannot be verified (Section 2(a)(4)).

Improved Transparency through Reporting: The Secretary must provide a report that is disaggregated by State, showing each State's improper payment rate and the actions taken to lower them (Section 2(b)). This allows for better public oversight of how the funds are being used across the country.

Reduction in State Funding: States that fail to manage improper payments effectively will face a reduction in their aggregate funds, ranging from 5 percent to 15 percent depending on the rate of improper payments (Section 2(a)(2)). This could reduce the total amount of money available for child care services in those States.

Mandatory Corrective Action Requirements: States with improper payment rates exceeding 6 percent are required to complete and submit a payment corrective action plan within 60 days (Section 2(a)(3)). This plan must include verified child attendance documentation in an aggregated format (Section 2(a)(3)).