[House Report 119-587]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 119-587
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COMBATING REGULATORY ABUSE, CLOSING KNOWN DEFICIENCIES, AND OVERSEEING
WASTE NATIONWIDE ACT OF 2026
_______
April 6, 2026.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Walberg, from the Committee on Education and Workforce, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 7721]
The Committee on Education and Workforce, to whom was
referred the bill (H.R. 7721) to amend the Child Care and
Development Block Grant Act of 1990 to implement an improper
payment threshold under such Act, having considered the same,
reports favorably thereon with an amendment and recommends that
the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Combating Regulatory Abuse, Closing
Known Deficiencies, and Overseeing Waste Nationwide Act of 2026'' or
the ``CRACKDOWN Act of 2026''.
SEC. 2. 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).''.
Purpose
The purpose of H.R. 7721, the CRACKDOWN Act, is to codify
an improper payment threshold for states administering the
Child Care and Development Block Grant (CCDBG) program. Under
current regulations, states are held to a 10 percent improper
payment threshold. States that exceed this threshold must
implement a corrective action plan to address excessive
improper payments. The CRACKDOWN Act lowers this threshold to 5
percent, codifies it in statute, and also makes states which
exceed the threshold for two consecutive fiscal years
ineligible for CCDBG funds.
Committee Action
119TH CONGRESS
First Session--Hearing
On June 24, 2025, the Committee on Education and Workforce
Subcommittee on Early Childhood, Elementary, and Secondary
Education held a hearing titled ``Child Care and the American
Workforce: Removing Barriers to Economic Growth.'' The purpose
of the hearing was to examine the CCDBG program as a worker
support program and to consider reforms that will support
existing child care providers, continue to provide high-quality
care to children, uphold the value and dignity of work to
parents, and make fiscally responsible choices, including
public-private partnerships. Testifying before the Subcommittee
were Mrs. Caitlin Codella Low, Managing Director of Human
Capital, Bipartisan Policy Center, Washington, D.C.; The
Honorable Todd D. Barton, Mayor, City of Crawfordsville,
Crawfordsville, Indiana; Dr. Ruth Friedman, Senior Fellow, The
Century Foundation, Washington, D.C.; and Ms. Celia Hartman
Sims, President and Founder, The Abecedarian Group, Houston,
Texas.
Second Session--Hearing
On January 13, 2026, the Committee on Education and
Workforce Subcommittee on Early Childhood, Elementary, and
Secondary Education held a hearing titled ``Who's Watching the
Kids? How Employers, Innovators, and Parents Are Solving
America's Child Care Crunch.'' The purpose of the hearing was
to examine the national child care landscape, including those
aspects governed by CCDBG, and consider fiscally responsible
ways to meet the American workforce's child care needs. At the
hearing, Representative Kevin Kiley (R-CA) stated, ``Protecting
the integrity of child care funding is essential. When bad
actors exploit the system, they divert resources from the
families these programs are meant to serve. Recent events
underscore the need for strong oversight and accountability at
every level.'' Testifying before the Subcommittee were Mr.
Haden Polseno-Hensley, President and Co-Founder, Red Rooster
Coffee Company, LLC, Floyd, Virginia; Ms. Alex Grover, Chief
Executive Officer, i2M, Mountain Top, Pennsylvania; Ms. Amy K.
Matsui, Vice President for Child Care and Income Security,
National Women's Law Center, Washington, D.C.; and Ms. Mary Lou
Burke Afonso, Chief Operating Officer, Bright Horizons, Newton,
Massachusetts.
Legislative Action
On February 26, 2026, Representative Glenn Grothman (R-WI)
introduced H.R. 7721, the CRACKDOWN Act. On March 5, 2026, the
Committee on Education and Workforce considered H.R. 7721 in
legislative session and reported it favorably, as amended, to
the House of Representatives by a recorded vote of 19-15. The
Committee considered the following amendments to H.R. 7721:
1. Representative Grothman offered an amendment in
the nature of a substitute to clarify that the bill
applies to all improper payments, not just
overpayments. The amendment passed by voice vote.
2. Ranking Member Robert C. ``Bobby'' Scott (D-VA)
offered an amendment to require the Secretary of Health
and Human Services (HHS) to supply social media posts
and other communications to states regarding ``Defend
the Spend'' practices affecting CCDBG to the Committee
on Education and Workforce. The amendment failed by a
vote of 15-19.
Committee Views
INTRODUCTION
Child care is essential to helping working parents thrive
and to supporting the growth of local economies. CCDBG exists
to help working families access affordable child care, giving
them the freedom to remain in the workforce, increase their
economic opportunity, realize financial freedom, and move
beyond the need for a federal safety net--thriving independent
of government support. According to the National Center for
Education Statistics, there are approximately 12.6 million
children nationally who have nonparental care arrangements
during the week.\1\ Because CCDBG serves approximately 10
percent of children in that private-sector child care market,
all of whom come from low-income families, any waste, fraud,
and abuse in the program is untenable. The Committee considered
H.R. 7721 to deliver accountability and transparency in our
federal child care assistance program.
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\1\https://nces.ed.gov/fastfacts/display.asp?id=4.
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Waste, Fraud, and Abuse Unchecked at the State Level
On December 26, 2025, an independent journalist reported a
number of child care centers licensed by Minnesota were taking
federal funds through CCDBG without serving any children or
families. Certain administrative mismanagement of Minnesota's
child care program had been documented in an HHS Inspector
General report months prior\2\ and in an internal controls
review made by the Minnesota Office of the Legislative Auditor
in 2019.\3\ Essentially admitting responsibility, on February
26, 2026, Minnesota Governor Tim Walz announced a
``comprehensive anti-fraud package to fight fraud in state
programs''\4\ and the Minnesota Office of Program Integrity
released a related ``roadmap'' days earlier.\5\ In fact,
testifying at a House Committee on Oversight hearing on March
4, 2026, Governor Walz admitted that Minnesota had been aware
of fraud in its child care assistance program since 2012.
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\2\https://oig.hhs.gov/reports/all/2025/minnesota-could-better-
ensure-that-childcare-assistance-providers-comply-with-attendance-
requirements/.
\3\https://www.auditor.leg.state.mn.us/sreview/ccapic.pdf.
\4\https://mn.gov/governor/newsroom/press-releases/?id=1055-727986.
\5\https://kstp.com/wp-content/uploads/2026/02/Roadmap-to-Program-
Integrity-and-Fraud-Pre vention-2-23-2026.pdf.
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Since 2002, CCDBG has been identified as a program at risk
of significant improper payments. The Office of Management and
Budget first identified CCDBG as such following enactment of
the Improper Payment Act of 2002 (P.L. 107-300).\6\ A series of
subsequent measures aimed at waste, fraud, and abuse prevention
in programs across the federal government have failed to
eliminate improper payments in CCDBG.\7\ A 2020 report by the
Government Accountability Office estimated that improper
payments in CCDBG during the previous fiscal year (FY 2019)
totaled approximately $325 million.\8\ Extrapolating that
number out to include the current funding level and average
improper payment rates, CCDBG could be losing nearly $600
million each year to improper payments. Most recently, HHS
continued to include CCDBG on its list of ``risk susceptible''
programs in the agency's FY 2025 financial report.\9\
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\6\https://georgewbush-whitehouse.archives.gov/omb/circulars/a11/
2002/part2.pdf.
\7\Those include the Improper Payment Information Act of 2002 (P.L.
112-248), the Improper Payments Elimination and Recovery Act of 2010
(P.L. 111-204), the Improper Payments Elimination and Recovery
Improvement Act of 2012 (112-248), and the Payment Integrity
Information Act of 2019 (P.L. 116-117).
\8\https://www.gao.gov/assets/gao-20-227.pdf.
\9\https://www.hhs.gov/sites/default/files/fy-2025-hhs-agency-
financial-report.pdf.
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The Need for Sensible Reforms to Protect Taxpayer Dollars
The federal government is right to scrutinize state CCDBG
funds because of the risk that those dollars are being
fraudulently diverted from American families. States' failures
to ensure their programs are complying with statutory
requirements are harming our nation's families. We owe it to
our working families to exercise sufficient oversight and hold
fraudsters accountable.
Setting CCDBG improper payment rate standards is a common-
sense reform that demonstrates the best use of taxpayer
dollars. Most states operate above board, but when improper
payment rates rise above reasonable levels, that indicates
financial negligence to which a state should pay careful
attention. CCDBG regulations already set an improper payments
threshold which triggers a corrective action plan designed to
get a state back on track. But with a national average improper
payment rate around 5 percent, the current practice of a 10
percent threshold is too high to address small problems before
they spiral. H.R. 7721 would set a clear 5 percent improper
payments threshold to trigger the law's existing corrective
action plan tool. Thirty-eight states are already meeting this
lower threshold.
CONCLUSION
No amount of fraud in public programs is acceptable. When
states administer federal programs, we expect a diligent effort
to execute what the law requires. Americans should have
confidence that their taxpayer dollars are funding critical
child care assistance for families in need, not enriching those
seeking to loot public programs for private gain. H.R. 7721
accomplishes this by lowering the threshold at which states
must implement corrective action plans regarding improper
payments and restricting funds to states that consistently
prove unable to meet that threshold in their child care
programs.
Weeding out waste, fraud, and abuse in federal child care
assistance will ensure public trust in CCDBG and allow for more
dollars, economic opportunity, and workforce participation
among America's families.
Summary
H.R. 7721 SECTION-BY-SECTION SUMMARY
Section 1. Short title
States that this Act may be cited as the CRACKDOWN
Act of 2026.
Section 2. Improper payment rate requiring corrective action plan;
conditional ineligibility
Amends section 658J of the Child Care and
Development Block Grant Act of 1990 to add a statutory 5
percent improper payment rate threshold at which states are
required to implement a corrective action plan.
Amends section 658J of the Child Care and
Development Block Grant Act of 1990 to make states whose
improper payment rates exceed the threshold for two consecutive
years ineligible for CCDBG funds until the state's improper
payment rate falls below 5 percent.
Explanation of Amendments
The amendments, including the amendment in the nature of a
substitute, are explained in the body of this report.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. H.R. 7721 lowers the threshold at which states must
implement corrective action plans regarding improper payments
and restricts funds to states that consistently prove unable to
eliminate improper payments from their child care programs.
H.R. 7721 applies only to HHS and does not apply to the
Legislative Branch.
Unfunded Mandate Statement
Pursuant to section 423 of the Congressional Budget and
Impoundment Control Act of 1974, Pub. L. No. 93-344 (as amended
by Section 101(a)(2) of the Unfunded Mandates Reform Act of
1995, Pub. L. No. 104-4), the Committee traditionally adopts as
its own the cost estimate prepared by the Director of the
Congressional Budget Office (CBO) pursuant to section 402 of
the Congressional Budget and Impoundment Control Act of 1974.
The Committee reports that because this cost estimate was not
timely submitted to the Committee before the filing of this
report, the Committee is not in a position to make a cost
estimate for H.R. 7721.
Earmark Statement
H.R. 7721 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House rule XXI.
Roll Call Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of General Performance Goals and Objectives
In accordance with clause (3)(c) of rule XIII of the Rules
of the House of Representatives, the goal of H.R. 7721 is to
codify an improper payment threshold for states administering
the Child Care and Development Block Grant (CCDBG) program.
Duplication of Federal Programs
No provision of H.R. 7721 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Statement of Oversight Findings and
Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the body of this report.
Required Committee Hearing
In compliance with clause 3(c)(6) of rule XIII of the Rules
of the House of Representatives, the following hearing held
during the 119th Congress was used to develop or consider H.R.
7721: On June 24, 2025, the Committee on Education and
Workforce Subcommittee on Early Childhood, Elementary, and
Secondary Education held a hearing titled ``Child Care and the
American Workforce: Removing Barriers to Economic Growth.''
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, a cost estimate was not made
available to the Committee in time for the filing of this
report. The Chairman of the Committee shall cause such estimate
to be printed in the Congressional Record upon its receipt by
the Committee.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 7721.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when, as with the present report,
the Committee has requested a cost estimate for the bill from
the Director of the Congressional Budget Office.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT OF 1990
* * * * * * *
TITLE VI--HUMAN SERVICES PROGRAMS
Subtitle A--Authorizations Savings for Fiscal Years 1982, 1983, and
1984
* * * * * * *
CHAPTER 8--COMMUNITY SERVICES PROGRAMS
* * * * * * *
Subchapter C--Child Care and Development Block Grant
* * * * * * *
SEC. 658J. PAYMENTS.
(a) In General.--Subject to the availability of
appropriations, a State that has an application approved by the
Secretary under section 658E(d) shall be entitled to a payment
under this section for each fiscal year in an amount equal to
its allotment under section 658O for such fiscal year.
(b) Method of Payment.--
(1) In general.--Subject to paragraph (2), the
Secretary may make payments to a State in installments,
and in advance or by way of reimbursement, with
necessary adjustments on account of overpayments or
underpayments, as the Secretary may determine.
(2) Limitation.--The Secretary may not make such
payments in a manner that prevents the State from
complying with the requirement specified in section
658E(c)(3).
(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).
[(c)] (e) Spending of Funds by State.--Payments to a State
from the allotment under section 658O for any fiscal year may
be obligated by the State in that fiscal year or in the
succeeding fiscal year.
* * * * * * *
MINORITY VIEWS
INTRODUCTION
H.R. 7721, the Combatting Regulatory Abuse, Closing Known
Deficiencies, and Overseeing Waste Nationwide Act (CRACKDOWN)
Act of 2026, introduced by Rep. Glenn Grothman (R-WI), would
require a state participating in the Child Care Development
Block Grant (CCDBG) program to enter into a corrective action
plan if it had an improper payment rate of more than five
percent in any fiscal year. In addition, if the participating
state maintained an improper payment rate greater than five
percent for two consecutive years, then it would be barred from
participation in the CCDBG program altogether. H.R. 7721 would
triple some state reporting requirements in current law,
increasing their administrative costs. The bill would punish
states if they could not meet the bill's deliberately high
standard. Further, the bill would give the Secretary of Health
and Human Services (HHS) unlimited power to determine what a
state barred from the CCDBG program for high improper payment
rates must do to regain eligibility. In the hands of the Trump
Administration, H.R. 7721 could open states up to invasive,
excessive, and inequitable oversight. That would be consistent
with steps this Administration has already taken without any
evidence of widespread fraud in federal child care programs.
Safeguarding the integrity of CCDBG is critical. But making
changes to the current program reporting requirements under the
guise of allegedly fighting fraud while in reality exacerbating
the current child care crisis is unacceptable.
REPUBLICANS REFUSE TO FOCUS ON THE CHILD CARE CRISIS ACTUALLY AFFECTING
AMERICAN FAMILIES
Child care is a necessity for millions of American
families.\1\ In many parts of the country, the cost of child
care, when families can find it, can be as much as, or more
than their rent or mortgage payments.\2\ In many communities,
child care simply does not exist in sufficient supply to meet
demand.\3\ As a direct result, our economy loses an estimated
$122 billion in earnings, productivity, and revenue every
year.\4\ This is not a personal failure on the part of parents
or providers--it is a market failure that demands a policy
response. The Child Care and Development Block Grant (CCDBG) is
a federal program designed to provide child care assistance to
low-income families and is administered through block grants to
states.\5\ CCDBG funds, along with other federal funds not
under the jurisdiction of this Committee, make up the Child
Care Development Fund (CCDF), the largest federal source of
child care funding.\6\ Yet, according to the most recent
publicly available information, federal child care funds cover
only about 15 percent of federally eligible children.\7\
Assuming that Congress provided sufficient resources cover the
remaining 85% of eligible children, that would still leave many
families--who are not eligible for the program--with the burden
of unaffordable or unavailable child care.
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\1\Fact Sheet: Child Care and the Economy, First Five Years Fund
(Mar. 6, 2026), https://www.ffyf.org/2024/03/06/fact-sheet-child-care-
and-the-economy/.
\2\Child Care Aware of America, ``Annual Child Care Landscape
Analysis'', https://www.childcareaware.org/price-landscape24/ (last
visited Jan. 28, 2026).
\3\See U.S. Child Care Deserts, Ctr. for Am. Prog., https://
childcaredeserts.org/ (last visited Mar. 13, 2026).
\4\How a Lack of Affordable Child Care Impacts the Economy, First
Five Years Fund (Mar. 13, 2025), https://www.ffyf.org/resources/2025/
03/how-a-lack-of-affordable-child-care-impacts-the-economy/.
\5\Nina Chien, Estimates of Child Care Subsidy Eligibility &
Receipt for Fiscal Year 2021, Off. of Hum. Svcs Pol'y (Sep. 11, 2024),
https://aspe.hhs.gov/sites/default/files/documents/
a91fd97aa80b53fa52a52d38cd323509/cy2021-child-care-subsidy-
eligibility.pdf.
\6\Rebecca Daugherty, Child Care and Development Fund: CCDBG and
CCES, Explained,
Bipartisan Pol'y Ctr. (Feb. 24, 2025) https://bipartisanpolicy.org/
explainer/child-care-and-develop ment-fund-ccdbg-cces/.
\7\Chien, supra note 5, at 1.
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In response to this reality, Committee Democrats have
championed legislation focused on increasing the federal
investment in child care. Specifically, this Congress, Ranking
Member Robert C. ``Bobby'' Scott (D-VA) re-introduced H.R.
4418, the Child Care for Working Families Act.\8\ The Child
Care for Working Families Act would tackle the child care
crisis head-on: ensuring families can afford the child care
they need, expanding access to more high-quality options,
stabilizing the child care sector, and helping ensure child
care workers taking care of our nation's kids are paid livable
wages. The bill provides grants to states to help expand the
supply and capacity of eligible child care providers and aims
to provide working families a range of high-quality, affordable
child care options, in a variety of settings, that meet their
unique needs, with no family paying more than seven percent of
their income for child care costs.
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\8\H.R. 4418, 119th Cong. (2025).
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H.R. 4418 would promote the stability of the child care
sector by providing a source of stable funding to eligible
child care providers to help offset their operating expenses.
It would support sustained and increased wages for early
childhood educators or other staff eligible providers, in order
to stabilize and grow the child care workforce. It would
support access to child care services for communities facing a
particular shortage of child care options, including child care
services for infants and toddlers, child care services during
nontraditional or extended hours, and inclusive child care
services for children with disabilities. Language similar to
H.R 4418 was included in the Build Back Better Act, which
passed the House in November 2021.\9\
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\9\H.R. 5376 Sec. 23001, 117th Cong. (as passed by House, Nov. 19,
2021).
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Instead of working to fix the child care supply and demand
issue, the Trump Administration's actions have only created
additional uncertainty for the child care sector, parents, and
children.\10\ Almost immediately after President Trump took
office in January 2025, the Office of Management and Budget
announced that it was directing federal agencies to
``temporarily pause all activities related to obligation or
disbursement of all Federal financial assistance ...''.\11\
This funding pause was later rescinded,\12\ but it initially
caused significant confusion and consternation among federal
fund recipients in the child care community. These recipients
are overwhelmingly non-profit organizations which generally
operate with no more than a few days of reserve funds.\13\
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\10\Hailey Gibbs & Casey Peeks, Trump's Attack on Child Care
Funding Undermines Early Educators, Shortchanges Children, and
Increases Costs for Families, Ctr. for Am. Prog. (Jan. 12, 2026),
https://www.americanprogress.org/article/trumps-attack-on-child-care-
funding-undermines -early-educators-shortchanges-children-and-
increases-costs-for-families/.
\11\Read the Memo Pausing Federal Grants and Loans, N.Y. Times
(Jan. 27, 2026), https://www.nytimes.com/interactive/2025/01/27/us/omb-
memo.html.
\12\New Administration Highlights: Freeze on Federal Funds
Rescinded, and Trump Signs Law to Ease Path to Deportations, N.Y.
Times, https://www.nytimes.com/live/2025/01/29/us/trump-
federal-freeze-funding-news?smid=url-share#federal-freeze-grants (last
updated Nov. 18, 2025).
\13\Press Release, Child Care Aware of America, Child Care Aware of
America Reacts to Federal Funding Pause (Jan. 28, 2026), https://
info.childcareaware.org/media/child-care-aware-of-america-reacts-to-
federal-funding-freeze.
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Further, the Trump Administration has undermined Department
of Health and Human Services staff, specifically those
responsible for administering CCDF and providing support to
states administering CCDBG and related programs. As the Center
for Law and Social Policy summarized the issue,
[p]robationary staff at the Office of Head Start
(OHS) and the Office of Child Care (OCC) were laid off
in February, resulting in a reduction of approximately
20 percent of staff. This was followed by the mass
layoffs announced on April 1, resulting in an overall
reduction of 40-50 percent of staff in OHS and OCC and
the closure of five regional offices, which provided
training and technical assistance, administrative
support in ensuring grants reached facilities, and
served as a liaison between program administrators and
the federal government. These offices in Boston,
Chicago, New York, San Francisco, and Seattle oversaw
grantees in 23 states and five territories, and
comprised half of the total regional offices across the
country.\14\
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\14\Shira Small, Federal Cuts to Child Care and Head Start are an
Attack on Families with Low Incomes, Ctr. on L. & Soc. Pol'y (Apr. 23,
2025), https://www.clasp.org/blog/federal-cuts-child-care-head-start/.
Regrettably, the Majority has followed this
Administration's lead. Instead of considering bills to help
address the crisis by increasing the supply of child care,
making child care more affordable, or increasing the wages of
child care workers, the Committee considered H.R. 7721 and
seven other bills to address alleged and unproven widespread
fraud in the child care sector.\15\ None of these bills will
create one more additional child care slot. Instead, these
bills complement each other by throwing sand into the gears of
CCDF, increasing the chances that states will be capriciously
disqualified from federal child care assistance not due to
widespread fraud, but non-compliance with red tape.
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\15\H.R. 7720, the Child Care Payment Integrity and Fraud
Accountability Act, H.R. 7721, Combating Regulatory Abuse, Closing
Known Deficiencies, and Overseeing Waste Nationwide (CRACKDOWN) Act,
H.R. 7722, Child Care Integrity Monitoring Act, H.R. 7723, Safeguarding
Taxpayer Dollars in Child Care Act, H.R. 7724, No Waivers for Fraud
Act, H.R. 7725, Stop Child Care Fraud Act, H.R. 7677, Closing the
Provider Fraud Gap Act, and H.R. 7726, No Funds for Repeat Child Care
Violation Act Before the H. Comm. on Educ. & Workforce, 119th Cong.
(Mar. 5, 2026).
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THE MAJORITY SEEKS TO UPEND THE EXISTING CHILD CARE SYSTEM OVER
UNPROVEN ALLEGATIONS OF WIDESPREAD FRAUD
National Attention on Alleged Widespread Fraud in Child Care
In late December 2025, a publicly posted video surfaced
that purported to show ``proof'' that several day care centers
in Minnesota were committing fraud. The video alleged these
centers were taking federal child care funds, administered
through the state, without actually caring for children.\16\
Despite the fact that the Minnesota agency administering CCDF
found that the child care centers were operating as expected at
the time of the video,\17\ some media outlets and Republican
officials brought national attention to the story.\18\ The
Trump Administration then announced an immediate freeze on all
child care funds to Minnesota\19\ and engaged its ``Defend the
Spend'' system nationwide--requiring grantees to provide
detailed documentation and proof of payment before receiving
reimbursement for all funds distributed through the
Administration for Children and Families at the Department of
Health and Human Services (HHS).\20\ Soon thereafter, HHS
announced suspension of five states' access to nearly $10
million through CCDF, the Temporary Assistance for Needy
Families, and the Social Services Block Grant.\21\ HHS provided
no evidence of fraud in these five states--California,
Colorado, Illinois, Minnesota, and New York--beyond the fact
they are led by Democratic Governors. HHS claims this action
was taken due to ``concerns about widespread fraud and misuse
of taxpayer dollars in state-administered programs'' and
concerns that these funds may have gone to those not eligible
due to their immigration status.\22\ Thankfully, courts have
blocked this funding freeze\23\ but it is extremely concerning
that the Administration sought to punish states without proof
of such allegations.
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\16\Ken Bensinger & Ernesto Londono, An Intense White House
Response From a Single Viral Video, N.Y. Times (Dec. 31, 2025), https:/
/www.nytimes.com/2025/12/31/business/media/trump-conservatives-videos-
viral-loop.html.
\17\Phil Helsel & Julia Ainsley, Minnesota department finds child
care centers targeted in viral video operating normally, NBC News (Jan.
2, 2026), https://www.nbcnews.com/news/us-news/minnesota-department-
finds-child-care-centers-targeted-viral-video-ope-rcna252013.
\18\Bensinger & Londono, supra note 16.
\19\Id.
\20\Sakshi Venkatraman & Max Matza, Trump administration says it's
withholding childcare funds from Minnesota amid fraud allegations, BBC
(Dec. 30, 2025), https://www.bbc.com/news/articles/c75xnndvlyko.
\21\Press Release, U.S. Dep't of Health & Hum. Svcs., HHS Freezes
Child Care and Family Assistance Grants in Five States for Fraud
Concerns (Jan. 6, 2026), https://www.hhs.gov/press-room/hhs-freezes-
child-care-family-assistance-grants-five-states-fraud-concerns.html.
\22\Id. (emphasis added).
\23\Minho Kim & Zach Montague, Judge Extends Block on Trump
Officials Slashing Funds to Democratic States, N.Y. Times (Feb. 6,
2026), https://www.nytimes.com/2026/02/06/us/politics/blue-states-
trump-funding-lawsuit.html.
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Unfortunately, it is under the same unproven allegations
and general theories of ``widespread fraud'' that the Majority
chose to consider eight bills purporting to address fraud in
CCDBG.\24\ Like the Administration, the Majority did not
produce any evidence of widespread fraud in the program,
presenting only vague and unfounded allegations. Similarly, the
Majority has chosen not to engage with (or even meaningfully
acknowledge) the processes HHS already has in place, as
required by law, charging states to prevent and catch fraud.
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\24\Press Release, Committee on Education & Workforce Republicans,
Chairman Walberg Delivers Opening Statement at Markup to Crackdown on
Child Care Fraud (Mar. 5, 2026), https://edworkforce.house.gov/news/
documentsingle.aspx?DocumentID=413157.
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Existing Program Integrity Requirements
Generally, federal agencies must protect against improper
payments in grant programs. The Payment Integrity Information
Act of 2019 (PIIA) requires Executive Branch agencies to
determine if improper payment rates for programs have exceeded
significant thresholds.\25\ Agencies are considered
noncompliant if any relevant program has an ``improper payment
rate'' of more than 10 percent.\26\ Improper payments include
any payment made for an incorrect amount, to an ineligible
recipient, or for an ineligible service. In the context of
federal child care funds, an example of an improper payment
would be a payment to a provider that was made in an incorrect
amount (overpayment or underpayment) or that should not have
been made at all.\27\ However, the term ``improper payments''
does not automatically denote ``fraud''. As stated in a
Government Accountability Office Q&A report to the House
Appropriations Committee, ``[w]hile all fraudulent payments are
considered improper, not all improper payments are due to
fraud.''\28\ PIIA directs federal agencies to, at least every
three years, assess their programs to consider factors that may
increase the risk of improper payments, including their
susceptibility to fraud.\29\
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\25\31 U.S.C. Sec. 3352. The statute defines significant as either
$10 million and 1.5 percent of total program outlays or $100 million
overall. Id.
\26\31 U.S.C. Sec. 3351.
\27\See, e.g., 45 C.F.R. Sec. 98.100(d).
\28\U.S. Gov't Accountability Off., GAO-24-107482, Improper
Payments: Key Concepts and Information on Programs with High Rates or
Lacking Estimates 5 (2024), https://www.gao.gov/
assets/gao-24-107482.pdf.
\29\31 U.S.C. Sec. 3352.
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HHS generally assesses states' compliance with law and
regulations through its review and approval of a state's CCDF
plan, which ``serves as the Lead Agency's [the agency in a
state or territory that administers the CCDF program]
application for a three-year cycle of CCDF funds and is the
primary mechanism OCC uses to determine Lead Agency compliance
with the requirements of CCDBG and its regulations''.\30\ In
its review of the plan, HHS can identify places where a state
is out of compliance and provides a state with the opportunity
to address the particular issue or face penalties.\31\
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\30\FY 2025-2027 Child Care and Development Fund (CCDF) Plan for
States and Territories, Off. of Child Care, https://acf.gov/occ/policy-
guidance/fy-2025-2027-ccdf-plan-states-and-territories -ccdf-acf-pi-
2024-01 (last updated July 15, 2024).
\31\Id.
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More specifically, the CCDBG Act and its regulations
already provide HHS with enforcement authority to ensure that
states are complying with the program's requirements. For
example, the law gives HHS the authority to ensure states
``comply substantially'' with the law.\32\ Further, ``after
reasonable notice to a State and opportunity for a hearing'',
HHS may disallow improperly spent funds, deduct improperly
spent funds from subsequent allotments, take some combination
of the actions, or impose other sanctions.\33\ Regulations make
clear HHS ability to monitor these programs for compliance with
law and addresses the process HHS and states may take when a
``review or investigation reveals evidence'' that a state's
child care agency or ``an entity providing services under
contract or agreement with'' a lead agency has ``failed to
substantially comply'' with the law, regulations, or provisions
and requirements set out in the state's plan.\34\ It is also
worth noting that law and regulation require states to arrange
independent audits of their programs and require states to
repay the federal government for funds that are found to be
misspent or HHS can deduct these amounts from future payments
to the state.\35\ These are examples of ways the law and
regulation aim to provide for program integrity.
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\32\E.g., 42 U.S.C. Sec. 9858g(b)(2).
\33\Id.
\34\45 C.F.R. Sec. 98.90.
\35\CCDBG Act Sec. 658K(b), 42 U.S.C. Sec. 9858i; 45 C.F.R.
Sec. 98.65.
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Additionally, as the Government Accountability Office (GAO)
noted in 2020, ``[the Office of Child Care (OCC) at HHS]
oversees states'' improper payment risks through a process that
includes a requirement for states to submit corrective action
plans (CAP) when they estimate their annual payment error [or
improper] rates are at or above 10 percent.''\36\ Additionally,
OCC conducts on-site monitoring reviews of each state for each
three-year period.\37\ HHS recently began the practice of
posting oversight reports resulting from these visits.\38\
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\36\U.S. Gov't Accountability Off., GAO-20-227, Office of Child
Care Should Strengthen Its Oversight and Monitoring of Program-
Integrity Risks, (2020), https://www.gao.gov/assets/gao-20-227-
highlights.pdf.
\37\FFY 2025-2027 CCDF Federal Onsite Monitoring & Oversight
Visits, Off. of Child Care, https://acf.gov/occ/report/ffy-2025-2027-
monitoring-reports-oversight-visits (last updated Mar. 2, 2026).
\38\Id.
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Changes have been made over the years to improve program
integrity. For example, in 2020, GAO published a report
entitled ``Child Care and Development Fund: Office of Child
Care Should Strengthen Its Oversight and Monitoring of Program-
Integrity Risks'' that explained the need for HHS to assess
fraud risks to the fund and highlighted nine recommendations to
better protect the integrity of the fund.\39\ GAO later
indicated that HHS had addressed all nine of these
recommendations.\40\ However, regardless of any recent
improvements that have been made, the Trump Administration's
reductions-in-force in 2025 did nothing to improve program
integrity as fewer staff were now available to help monitor the
program.
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\39\U.S. Gov't Accountability Off., supra note 36.
\40\Id.
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Cases of Actual Fraud Should Be Addressed, Not Politicized
Fraud in child care should be taken seriously, not
politicized. The Majority have proposed bills--including H.R.
7721, the CRACKDOWN Act of 2026--that could have the overall
effect of upending the child care system to address a problem
that has not been proven to exist. These changes could cause
states to spend more of their child care funds on
administrative and oversight costs, reducing the supply of
child care available to families, and punishing states and
child care providers for unintentional administrative and human
errors.
H.R. 7721 WILL EXACERBATE THE CHILD CARE CRISIS
H.R. 7721, the CRACKDOWN Act of 2026, would make states
ineligible for CCDBG funds for having an improper payment rate
of more than five percent for as few as two consecutive years,
unless the HHS Secretary of determines that state's improvement
progress under a corrective action plan is acceptable. Stated
more plainly, this would give the Trump Administration
unchecked power over an issue they have already sought to
politicize against states led by Democratic administrations.
The Child Care for Every Family Network described H.R. 7721 as
giving ``Trump's HHS the power to freeze 100% of a state's
child care funds based on an arbitrary standard that isn't
about fraud and without any due process for the states.''\41\
Such requirements would further increase administrative costs
for states to operate the program and reduce the amount of
funds available to provide support for families in need of
child care. Instead of increasing states' administrative costs
to address an unproven allegation of widespread fraud, Congress
should be working to help states ensure that the majority of
federal CCDBG funding goes to families and toward the goal of
ensuring that there is an ample supply of child care providers.
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\41\Letter from the Child Care for Every Family Network to
Interested Parties (Mar. 4, 2026), https://democrats-
edworkforce.house.gov/imo/media/doc/
child_care_for_every_family_network_opposes_hr7726.pdf.
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DEMOCRATIC AMENDMENTS OFFERED DURING MARKUP OF H.R. 7721
Ranking Member Scott put forward an amendment to require
the HHS Secretary to provide information to Congress regarding
its current efforts to fight fraud to ensure whatever actions
Congress takes are not duplicative or overburdensome. This
request for information includes but is not limited to
information on the ``Defend the Spend'' program, and the
attempted freezing of funds for California, Colorado, Illinois,
Minnesota, and New York. HHS has provided little information to
Congress on either the planning process leading to the
announcement of these efforts or their implementation. As a
coalition of civil rights groups commented on their Freedom of
Information Act request to HHS nearly one week after the
markup, ``[t]he new restrictions have already caused and
threaten to cause additional payment delays to child care
providers, placing enormous strain on families and caregivers
who depend on these programs to remain in the workforce and
keep their children in safe, reliable care.''\42\ The amendment
was rejected by the Committee Republicans on a party line vote.
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\42\Press Release, Am. C.L. Union, Civil Rights Groups File FOIA
Request Seeking Records
on Politically and Racially Motivated Child Care Funding Restrictions
(Mar. 11, 2026), https://www.aclu.org/press-releases/civil-rights-
groups-file-foia-request-seeking-records-on-politically-and-racially-
motivated-child-care-funding-restrictions.
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CONCLUSION
There has been no evidence presented of the Majority's
allegations of widespread fraud in CCDBG. There is no evidence
that the current system fails to ensure program integrity and
that the Secretary needs additional power to provide
accountability mechanisms to address bad actors. As such, H.R.
7721 overly complicates state administration of CCDBG, creating
uncertainty for well-meaning providers. While it is important
to address instances of fraud with federal funds designed to
support child care programs, this bill would hurt the very
program it purports it wishes to help. For the reasons stated
above, Committee Democrats unanimously opposed H.R. 7721 when
the Committee on Education and Workforce considered it on March
5, 2026. We urge the House of Representatives to do the same.
Robert C. ``Bobby'' Scott,
Ranking Member.
Joe Courtney,
Frederica Wilson,
Suzanne Bonamici,
Mark DeSaulnier,
Jahana Hayes,
Ilhan Omar,
Summer Lee,
Adelita Grijalva,
Members of Congress.
[all]