[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7726 Referred in Senate (RFS)]
<DOC>
119th CONGRESS
2d Session
H. R. 7726
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 4, 2026
Received; read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
AN ACT
To amend the Child Care and Development Block Grant Act of 1990 to
withhold funds from noncompliant States under such Act.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Child Care Scams Act of 2026''.
SEC. 2. STRENGTHENING THE AUTHORITY TO WITHHOLD FUNDS FOR FRAUD.
Section 658I(b)(2)(B) of the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9858g(b)(2)) is amended by striking ``Secretary
may'' and inserting ``Secretary shall''.
SEC. 3. PROGRAM INTEGRITY AND ACCOUNTABILITY.
Section 658E(c)(2) of the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9858c(c)(2)) is amended by adding at the end the
following:
``(W) Program integrity and accountability.--The
plan shall include a description of--
``(i) the State's internal controls to
ensure program integrity and accountability;
``(ii) the processes in place--
``(I) to investigate and recover
fraudulent payments; and
``(II) to impose sanctions on
clients or providers in response to
fraud; and
``(iii) the procedures in place to document
and verify eligibility.
Such description shall include how the State utilizes
data within and across other State and local agencies
that have oversight of child care providers that serve
children who receive assistance under this
subchapter.''.
SEC. 4. PREVENTING FRAUD IN THE CHILD CARE AND DEVELOPMENT BLOCK GRANT
PROGRAM.
Section 658I(b) of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858g(b)) is amended--
(1) by redesignating paragraph (3) as paragraph (4); and
(2) by inserting after paragraph (2) the following:
``(3) Determination of fraud.--
``(A) Investigation.--The Secretary shall
investigate fraud with respect to financial assistance
available under this subchapter.
``(B) Debarment.--In the case that the Secretary
makes, or finds that there has been, a final
determination of fraud against a child care provider
that received financial assistance available under this
subchapter, the Secretary shall permanently debar such
child care provider from receiving such financial
assistance.
``(C) Providers debarred from child and adult care
food program.--In the case that a child care provider
has been debarred from participating in the Child and
Adult Care Food Program under section 17 of the Richard
B. Russell National School Lunch Act (42 U.S.C. 1766)
in accordance with subsection (d)(5)(E)(i) of such
section, the Secretary shall permanently debar such
child care provider from receiving financial assistance
under this subchapter.
``(D) Final determination of fraud definition.--In
this paragraph, the term `final determination of fraud'
means a determination reached in an administrative
order or as part of a judicial decision, for which any
rights to review or appeal have been exhausted or
waived, that a child care provider--
``(i) knowingly submitted a false statement
or documentation to obtain financial assistance
available under this subchapter;
``(ii) misrepresented ownership of,
enrollment at, attendance at, or services
provided through a program of child care
services, or the eligibility of the provider to
provide such services, to obtain such financial
assistance;
``(iii) to obtain such financial
assistance, operated without the State
licensing described in section 658E(c)(2)(F)
and without receiving an exception to such
licensing;
``(iv) made a knowing and improper
expenditure of such financial assistance; or
``(v) engaged in any other conduct related
to such financial assistance that constituted
fraud under Federal or State law.''.
SEC. 5. IMPROPER PAYMENT RATE REQUIRING CORRECTIVE ACTION PLAN;
CONDITIONAL INELIGIBILITY.
Section 658J of the Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858h) is amended--
(1) by redesignating subsection (c) as subsection (e); and
(2) by inserting after subsection (b) the following:
``(c) Improper Payment Threshold Requiring Corrective Action
Plan.--If for a fiscal year the improper payment rate of a State is
more than 5 percent of the aggregate amount of payments made to carry
out this subchapter by such State for such fiscal year, then such State
shall submit to the Secretary--
``(1) for review and approval a corrective action plan to
reduce such rate to not more than 5 percent for each subsequent
fiscal year; and
``(2) such reports as the Secretary may require to show
that such State is complying with the requirements of such plan
as approved by the Secretary.
``(d) Conditional Ineligibility.--If for each of 2 consecutive
fiscal years the improper payment rate of a State determined under this
section is more 5 percent, then such State shall be ineligible to
receive funds under this subchapter unless such State demonstrates to
the satisfaction of the Secretary that such State for the next fiscal
year will--
``(1) reduce such improper payment rate to not more than 5
percent for the next fiscal year; or
``(2) make significant progress to comply with the
corrective action plan approved under subsection (c).''.
SEC. 6. CYCLICAL MONITORING OF STATE PERFORMANCE.
Section 658K of the Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858i) is amended by adding at the end the following:
``(c) Periodic Monitoring by the Secretary.--At 3-year intervals,
the Secretary shall conduct a comprehensive review of the performance
of each State that receives assistance under this subchapter. Based on
the results of such review, the Secretary shall designate as high risk
a State that has--
``(1) a high level of unresolved or repeated adverse audit
findings submitted under subsection (b);
``(2) a high level of unresolved issues under, or repeated
performance failures to carry out, corrective action plans
submitted by such State under section 659J(c); or
``(3) unresolved or repeat findings of noncompliance with
the State plan approved under section 658E(c).
``(d) Required Additional Monitoring.--If a State is designated as
high risk under subsection (a), then the performance of such State
shall be subject to additional monitoring, as determined by the
Secretary.''.
SEC. 7. PREVENTING FRAUD IN THE CHILD AND ADULT CARE FOOD PROGRAM.
Section 17(d)(5) of the Richard B. Russell National School Lunch
Act (42 U.S.C. 1766(d)(5)) is amended--
(1) by redesignating subparagraph (E) as subparagraph (F);
and
(2) by inserting after subparagraph (D) the following:
``(E) Termination due to fraud.--
``(i) Debarment.--In the case that the
participation of an institution or family or
group day care home under the program is
terminated due to a final determination of
fraud, the Secretary shall permanently debar
such institution or family or group day care
home from participating in the program.
``(ii) Providers debarred from child care
and development block grant program.--In the
case that an institution or family or group day
care home has been debarred from receiving
financial assistance under the Child Care and
Development Block Grant Act of 1990 (42 U.S.C.
9857 et seq.) in accordance with section
658I(b)(3)(B) of such Act, the Secretary shall
permanently debar such institution or family or
group day care home from participating in the
program.
``(iii) Final determination of fraud
definition.--In this subparagraph, the term
`final determination of fraud' means a
determination reached in accordance with the
procedures and requirements of this section,
for which any rights to review or appeal have
been exhausted or waived, that an institution
or family or group day care home--
``(I) knowingly submitted a false
statement or documentation to obtain
funds disbursed under subsection
(f)(1)(A);
``(II) misrepresented ownership,
enrollment, attendance, or services in
connection with the operation of the
program by such institution or family
or group day care home, or the
eligibility of such institution or
family or group day care home to
operate the program, to obtain such
funds;
``(III) made a knowing and improper
expenditure of such funds; or
``(IV) engaged in any other conduct
related to such funds that constituted
fraud under Federal or State law.''.
SEC. 8. ELIMINATING AUTHORITY TO WAIVE SANCTIONS.
Section 658I(c) of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858lg(c)) is amended--
(1) in paragraph (1) by striking ``or sanctions imposed
upon a State in accordance with subsection (b)(2)'';
(2) in paragraph (2)--
(A) in subparagraph (A) by striking ``sanction
or''; and
(B) in subparagraph (B) by striking ``sanction
or'';
(3) in paragraph (3) striking ``sanction or''; and
(4) in paragraph (7) by striking ``sanction(s) or''.
SEC. 9. GAO STUDY AND REPORT ON PROVIDER-RELATED FRAUD.
(a) Study.--The Comptroller General of the United States shall
conduct a study regarding fraud prevention measures in Federal early
childhood education, child care, and child nutrition programs that
shall include an analysis of--
(1) the effectiveness of procedures and measures to prevent
fraud carried out by providers of services under such programs;
(2) whether the data the Federal Government receives in
connection with such programs (including through audits and
reporting requirements) is--
(A) sufficient to successfully identify fraud
carried out under such programs; and
(B) used effectively by the Federal Government to
identify potential fraud carried out under such
programs; and
(3) with respect to the Child Care and Development Block
Grant program established under the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9857 et seq.)--
(A) the program integrity results for States that
have delegated responsibilities related to program
management and administration to counties, local
municipalities, or other entities; and
(B) whether any corrective action plans have been
implemented by States to improve program integrity
results, including any measurable outcomes from
implementing such a corrective action plan.
(b) Report.--Not later than 2 years after the date of enactment of
this section, the Comptroller General of the United States shall submit
to the Committee on Education and Workforce of the House of
Representatives and the Committee on Health, Education, Labor, and
Pensions of the Senate a report containing--
(1) the results of the study conducted under subsection
(a); and
(2) any regulatory or legislative recommendations to
improve fraud prevention measures in Federal early childhood
education, child care, and child nutrition programs.
(c) Federal Early Childhood Education, Child Care, and Child
Nutrition Programs Defined.--For the purposes of this section, the term
``Federal early childhood education, child care, and child nutrition
programs'' includes--
(1) Head Start programs (including Early Head Start
programs) carried out under the Head Start Act (42 U.S.C. 9831
et seq.);
(2) the Child and Adult Care Food Program under section 17
of the Richard B. Russell National School Lunch Act (42 U.S.C.
1766); and
(3) the Child Care and Development Block Grant program
established under the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9857 et seq.).
SEC. 10. FRAUDULENT PAYMENTS.
Section 658J(b) of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858h(b)) is amended--
(1) in paragraph (1) by inserting ``(including fraudulent
payments)'' after ``overpayments''; and
(2) by adding at the end the following:
``(3) Report.--The State shall submit to the Secretary an
annual report that identifies the dollar and percentage amount
of improper payments made by the State, disaggregated as
specified by the Secretary by standardized payment categories
(including suspected and verified fraudulent payments, non-
fraudulent overpayments, underpayments, and technically
improper payments (e.g., system error payments)).''.
Passed the House of Representatives June 3, 2026.
Attest:
KEVIN F. MCCUMBER,
Clerk.