H.R. 7726

[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.