No Funds for Repeat Child Care Violations Act of 2026

If a state's improper payment rate stays above 5 percent for two years in a row, it would lose its child care funding. It could keep the money only by getting back under 5 percent or showing significant progress on an approved fix-it plan.

A day care found to have committed fraud could never again be paid with federal child care money. Families who use that day care would have to find another one that takes the subsidy.

Today the federal agency can choose whether to cut a provider off. Under the bill it would have to ban them permanently, once a fraud ruling is final and every appeal is used up or dropped.

The bill spells out what counts as fraud: lying about who attends, misrepresenting who owns or runs the program, spending the money improperly, running without a state license, or any other conduct that is fraud under federal or state law.

A provider banned from the child care block grant would also be banned from the federal program that pays for kids' meals, and the other way around. One ruling would close both doors for good.

Today the agency may withhold money from a state that does not substantially follow the program's rules. The bill changes 'may' to 'shall', so that penalty would no longer be a choice.

Right now a sanction placed on a state can be waived. The bill strikes that power, so a fraud sanction would stay in place once it is imposed.

The bill would add a plain duty: the federal agency must investigate fraud in child care assistance. The law it amends does not say that today.

Each state's child care plan would have to describe its internal controls, how it investigates and recovers fraudulent payments, how it penalizes families or providers who commit fraud, and how it checks who is eligible.

A state whose improper payment rate goes above 5 percent in a year would have to send in a plan to bring it back down, plus reports showing it is following that plan.

Every three years the federal agency would take a full look at how each state runs the program. States with repeat audit problems or unfixed noncompliance would be labeled high risk and watched more closely.

States would file a yearly report showing the dollars and percentage of improper payments, split into categories such as suspected fraud, verified fraud, overpayments, underpayments, and system errors. That rate is what triggers the 5 percent consequences.

The Government Accountability Office would study how well fraud is prevented in Head Start, the child meal program, and child care assistance. Its report to two congressional committees would be due within two years, with recommendations.