[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4959 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 4959
To amend the Child Care and Development Block Grant Act of 1990 to
require that States pay child care providers on the basis of
attendance, to allow States to pay the providers through reimbursement,
and to establish requirements relating to error reports, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 14, 2026
Mr. Cassidy (for himself and Mr. Tuberville) introduced the following
bill; which was read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Child Care and Development Block Grant Act of 1990 to
require that States pay child care providers on the basis of
attendance, to allow States to pay the providers through reimbursement,
and to establish requirements relating to error reports, and for other
purposes.
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 ``Strengthening Transparency and
Oversight to Prevent Child Care Fraud Act'' or the ``STOP Child Care
Fraud Act''.
SEC. 2. PAYMENT PRACTICES AND VERIFICATION.
(a) State Plan.--Section 658E of the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9858c) is amended--
(1) in subsection (c)(2)--
(A) subparagraph (K)(i)--
(i) in subclause (III), by striking ``and''
at the end;
(ii) in subclause (IV), by striking the
period and inserting ``, and''; and
(iii) by at the end the following:
``(V) require licensing inspectors
conducting an onsite inspection under
subclause (II) to conduct a brief
review of compliance with enrollment
requirements by the child care provider
involved;'';
(B) in subparagraph (N)(i), by adding at the end
the following:
``(III) Changes in income.--The
plan shall demonstrate that the State
requires a parent referred to in
subclause (I), who experiences a change
in the ongoing status of the parent as
working or attending a job training or
educational program or whose family
experiences a change in family income,
shall report the change involved to the
State not later than 90 days after the
change.'';
(C) in subparagraph (S), by striking clause (ii)
and inserting the following:
``(ii) an assurance that the State will,
notwithstanding clause (i), provide payment
under this subchapter to a child care provider
based on an eligible child's verified
attendance, but support the fixed costs of
providing child care services by delinking
provider payments from the child's occasional
absences by providing full payment if the child
is absent for 6 or fewer days in a month.'';
and
(D) by adding at the end the following:
``(W) Timing of billing and payment.--The plan
shall describe how the lead agency for the State will
establish payment practices that ensure timeliness of
billing by and payment of child care providers under
this subchapter by--
``(i) requiring that such a provider submit
a complete invoice within 9 months after the
date on which the provider delivers the
services involved; and
``(ii) paying within not more than 21
calendar days after the receipt of a complete
invoice for services.
``(X) Verification of eligibility.--
``(i) Verification.--The plan shall
describe how, if a parent seeks child care
assistance for a child under this subchapter,
the State will verify (without self-
certification) the eligibility of the child,
including verifying the income and assets of
the child's family, the size of the family
involved, the county or other political
subdivision in which the child resides (subject
to paragraph (3)(B)(i)), that the individual
for whom the parent seeks child care assistance
is the child of the parent, and whether the
parent and the child either are citizens or are
not ineligible for Federal public benefits
under title IV of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1601 et seq.).
``(ii) No presumptive eligibility.--The
plan shall include an assurance that, subject
to paragraph (6), the State will not consider a
child to be presumptively eligible, or allow
the child to receive a child care subsidy prior
to a full documentation and eligibility
determination, within the meaning of section
98.21(e) of title 45, Code of Federal
Regulations (as in effect on the day before the
date of enactment of the STOP Child Care Fraud
Act), subject to subparagraph (I)(i)(I) and
paragraph (3)(B)(i).
``(Y) Verification of attendance with electronic
authentication tools.--
``(i) Definition.--The term `electronic
authentication tool' means an electronic tool
that authenticates the identity of a parent or
other person dropping off or picking up a child
from a child care provider, such as a finger
imaging device or an interactive voice response
device.
``(ii) Use.--The plan shall describe how
the State will require a center-based eligible
child care provider receiving assistance, or a
center-based eligible child care provider that
receives a child care certificate, under this
subchapter to use electronic authentication
tools, including to verify attendance.
``(Z) Integration and analysis of data from data
systems.--The plan shall describe how the State will--
``(i) integrate data from different data
systems, including records on child care
providers (including on licensing of child care
providers, subsidies for child care providers,
and eligibility for those subsidies), and
employment records;
``(ii) use data analytics to clean,
analyze, and interpret the data described in
clause (i), particularly to identify anomalous
patterns indicative of potential fraud by child
care providers; and
``(iii) analyze the robustness of the data
integration described in clause (i).'';
(2) by adding at the end of subsection (c) the following:
``(6) Exceptions to prohibition on presumptive
eligibility.--The Secretary may determine or specify that
States may determine exceptions, for emergency situations, to
the requirements in paragraph (2)(X)(ii) relating to
presumptive eligibility and full documentation and eligibility
determinations.''; and
(3) by adding at the end the following:
``(e) Posting State Plans and Related Documents.--Each State that
receives a payment for the program carried out under this subchapter
shall post, on a publicly available website, each State plan or State
plan amendment proposed by the State or approved under this section for
the State, and each corrective action plan issued for the State due to
State noncompliance with this subchapter (including any failure
described in section 658I(b)(2)(A)).
``(f) Regulations on Attendance Verification.--Not later than 1
year after the date of enactment of the STOP Child Care Fraud Act, the
Secretary shall issue regulations that specify the manner in which a
State shall verify attendance for purposes of subsection (c)(2)(S)(ii),
including the manner in which the State will require the use of
electronic authentication tools to verify that attendance under
subsection (c)(2)(Y). Such regulations shall take effect 1 year after
the date of issuance.''.
SEC. 3. ACTIVITIES TO IMPROVE QUALITY.
Section 658G of the Child Care and Development Block Grant Act of
1990 (42 U.S.C. 9858e) is amended--
(1) in subsection (a), by inserting at the end the
following:
``(4) Portion for quality and compliance activities.--Of
the funds reserved under paragraph (2)(A), the State shall set
aside 3 percent of the funds described in paragraph (1) to
carry out activities under subsection (b)(10).'';
(2) in subsection (b)--
(A) by redesignating paragraph (10) as paragraph
(11); and
(B) by inserting after paragraph (9) the following:
``(10) Carrying out activities designed to improve the
quality of child care services, in accordance with State
priorities, and activities to meet State requirements for
inspection, monitoring, and licensing of child care providers
receiving funding under this subchapter.''; and
(3) in subsection (d)(2), by inserting ``and in particular
the activities carried out with funds set aside under
subsection (a)(4)'' before the semicolon.
SEC. 4. REVIEW OF COMPLIANCE.
Section 658I(b) of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858g(b)) is amended--
(1) by striking paragraph (1) and inserting the following:
``(1) Review of compliance.--
``(A) In general.--Not less often than once every 3
years, the Secretary shall review and monitor State
compliance with this subchapter, including with the
plan approved under section 658E(c) for the State.
``(B) Heightened monitoring.--States designated as
high-risk under subparagraph (C) shall be subject to
monitoring, of that State compliance, that is more
frequent than the monitoring required under
subparagraph (A), with the frequency determined by the
Secretary.
``(C) High-risk.--The Secretary shall designate as
high-risk any State with--
``(i) unresolved or repeated audit findings
under section 658K(b);
``(ii) an improper payment rate that
exceeds 6 percent, as reflected in 2
consecutive reports described in section
658K(a)(3)(A)(i); or
``(iii) an improper payment rate that
exceeds 9 percent, as reflected in such a
report.'';
(2) in paragraph (2)--
(A) in subparagraph (B)--
(i) by striking ``Secretary may'' and
inserting ``Secretary shall''; and
(ii) by striking ``subchapter, and'' and
inserting ``subchapter, withholding of funds or
a percentage reduction of funds from the State
allotment for the following fiscal year, or'';
and
(B) in subparagraph (C), by striking ``additional
sanction being imposed under subparagraph (B)'' and
inserting ``additional sanction or penalty being
imposed under subparagraph (B) or (C)'';
(3) by redesignating paragraph (3) as paragraph (5); and
(4) by inserting after paragraph (2) the following:
``(3) Penalties.--If the Secretary determines that an
amount shall be reimbursed, deducted, recouped, withheld, or
reduced under subparagraph (A) or (B) of paragraph (2) for a
State, the Secretary shall increase that amount by adding a
penalty equal to 5 percent of the amount against the State.
``(4) Corrective action plans.--
``(A) Submission.--If the Secretary finds under
paragraph (2) that a State has made an improper
expenditure of funds, and the Secretary does not
disqualify the State under that paragraph from
receiving financial assistance, then the Secretary
shall require the State to submit to the Secretary for
approval, not later than the date that is 60 days after
that finding, a corrective action plan with an
implementation date.
``(B) Failure to submit.--
``(i) Extension of submission date.--A
State may request from the Secretary an
extension of the submission date determined by
the Secretary under paragraph (1).
``(ii) Withholding.--If the State fails to
submit the plan by that submission date
(including any extension granted under clause
(i)), the Secretary shall withhold funds for
the program carried out under this subchapter
for that State until the State submits the
plan.
``(C) Failure to implement.--
``(i) In general.--Subject to clause (ii),
if the Secretary determines that the State
fails to implement the corrective actions in
the plan by that implementation date, the
Secretary shall withhold funds for the program
carried out under this subchapter for that
State until the Secretary determines that the
State has implemented those corrective actions.
``(ii) Good faith exception.--If the
Secretary determines that the State is acting
in good faith to implement the corrective
actions as soon as is practicable, the
Secretary may elect not to withhold funds, or
to postpone that withholding, under clause
(i).''.
SEC. 5. REPORTS AND AUDITS.
(a) Error Report Requirements.--
(1) In general.--Section 658K(a) of the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9858i(a)) is
amended by adding at the end the following:
``(3) Error reports.--
``(A) Rulemaking.--The Secretary shall issue
regulations to, at a minimum--
``(i) ensure that, in calculating,
preparing, and submitting reports of errors,
under subpart K of part 98 of title 45, Code of
Federal Regulations (or a successor
regulation), in the administration of grant
funds appropriated or made available under this
subchapter, States include suspected and
verified cases of fraud as improper payments;
``(ii) require any State with an improper
payment rate that exceeds 6 percent, as
reflected in a report described in clause (i),
to submit to the Secretary for approval a
comprehensive corrective action plan, as well
as submitting to the Secretary subsequent
reports describing progress in implementing the
plan; and
``(iii) require each State to conduct case
reviews and submit reports described in clause
(i) to the Department of Health and Human
Services according to a staggered 2-year cycle
established by the Secretary such that each
State will be selected once, and only once, in
every 2 years, notwithstanding subchapter IV of
chapter 33 of title 31, United States Code.
``(B) Availability.--The Secretary, on receiving a
report described in subparagraph (A), shall post the
report on a publicly available website. The Secretary
shall also post on that website any corrective action
plan that is described in this subchapter and approved
for a State that is described in section 658E(e).
``(C) GAO review.--The Comptroller General of the
United States shall--
``(i) review fraud and improper payments
that--
``(I) involve funds described in
subparagraph (A)(i);
``(II) are committed at the State,
local or regional level, as
appropriate; and
``(III) are covered in sources
including reports described in
subparagraph (A)(i) and corrective
action plans submitted to the Secretary
by States; and
``(ii) offer recommendations to the
Inspector General of the Department of Health
and Human Services and to the Secretary for
additional oversight.
``(D) State.--In this paragraph, the term `State'
means any of the 50 States, the District of Columbia,
and the Commonwealth of Puerto Rico.''.
(2) Interim final rule.--Not later than 1 year after the
date of enactment of this Act, the Secretary shall promulgate
an interim final rule amending sections 98.100 through 98.102
of title 45, Code of Federal Regulations, as in effect on
January 12, 2026, to promulgate the regulations required under
section 658K(a)(3)(A) of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858i(a)(3)(A)), as added by
paragraph (1).
(b) Audits.--Section 658K(b) of the Child Care and Development
Block Grant Act of 1990 (42 U.S.C. 9858i(b)) is amended--
(1) by striking paragraph (3) and inserting the following:
``(3) Submission of audit report and corrective action
plans.--
``(A) Appeal of audit findings.--
``(i) Filing.--Not later than 60 days after
the State receives the independent auditor's
report under paragraph (2), the State may file
with the Secretary an appeal of the audit
findings contained in the report.
``(ii) Decision.--Not later than 120 days
after the filing of the appeal, the Secretary
shall issue a decision on the appeal,
specifying whether any audit findings shall be
removed from the report and, if so, which
findings. The State shall use the updated
auditor's report, after making the removals
specified by the Secretary, for purposes of
subparagraphs (B) and (C).
``(B) Submission of report and plan.--Not later
than 30 calendar days after the State receives the
independent auditor's report under paragraph (2) or, in
the event of an appeal under subparagraph (A), not
later than 90 calendar days after the Secretary's
decision is issued on the appeal, the State shall
submit--
``(i) to the legislature of the State and,
if applicable, to the Indian tribe or tribal
organization involved--
``(I) a copy of the auditor's
report; and
``(II) for approval, a corrective
action plan to address each negative
audit finding included in the auditor's
report for the current reporting; and
``(ii) to the Secretary, a copy of the
auditor's report and (for approval by the
Secretary) the corrective action plan.
``(C) Contents of corrective action plan.--The
corrective action plan shall include the name of the
contact person responsible for the corrective action,
the corrective action to be taken, and the anticipated
completion date, which shall be not later than 1
calendar year after the State received the independent
auditor's report under paragraph (2). If the State does
not agree with 1 or more audit findings in the report
or believes corrective action is not required, the
corrective action plan shall include a detailed
explanation of the reasons.''; and
(2) by adding at the end the following:
``(5) Inspector general report.--Not less often than every
2 years, the Inspector General of the Department of Health and
Human Services shall prepare and submit to the Secretary a
report on States that fail audits under this subsection, and
shall include recommendations for States that need additional
monitoring and technical assistance.''.
(c) Database on Providers.--Section 658K of the Child Care and
Development Block Grant Act of 1998 (42 U.S.C. 9858i) is amended by
adding at the end the following:
``(c) Database on Providers Under Administration for Children and
Families.--
``(1) State reports.--If a State, or providers in a State,
receive Federal funding through a program administered by the
Administration for Children and Families, the State shall
provide annual reports to the Assistant Secretary of the
Administration for Children and Families. Each such report
shall name the individuals who served as providers under such a
program but are disqualified by the State from receiving
Federal funding through the program because the providers were
found by a court to have committed fraud in carrying out the
program.
``(2) Database.--The Secretary, acting through the
Assistant Secretary of the Administration for Children and
Families, shall maintain a database of the providers named in
such a report. The Secretary shall list a provider in the
database for the period of the provider's disqualification by
the State.
``(3) Prohibition on funding listed providers.--The
Secretary shall, when approving an application for Federal
funding under such a program--
``(A) from a State, prohibit the State from using
any of the Federal funding for a provider listed in the
database; and
``(B) from a provider, prohibit the provider from
receiving the Federal funding if listed in the
database.''.
SEC. 6. ELIGIBILITY.
Section 658P(4) of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858n(4)) is amended--
(1) by striking subparagraph (B) and inserting the
following:
``(B) whose family assets do not exceed $500,000
(as determined by the State involved), excluding the
net value of a family farm described in subparagraph
(B), or a commercial fishing business and related
expenses described in subparagraph (D), of section
480(f)(2) of the Higher Education Act of 1965 (20
U.S.C. 1087vv(f)(2)); and''; and
(2) by striking subparagraph (C) and inserting the
following:
``(C) who--
``(i) resides in a family that is headed by
a person who is the child's parent, who is
working or attending a job training or
educational program, and that has a family
income that does not exceed 85 percent of the
State median income for a family with the same
number of children headed by a person, based on
the most recent data that is published by the
Bureau of the Census;
``(ii) resides in a family that is headed
by two persons who are the child's parents, and
who work a combined total of at least 40 hours
per week, with a family income that does not
exceed 85 percent of the State median income
for a family with the same number of children
headed by two persons, based on the most recent
data that is published by the Bureau of the
Census; or
``(iii) is receiving, or needs to receive,
protective services and resides with a parent
or parents not described in clause (i) or
(ii).''.
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