Congressman Mike Kennedy from Utah’s 3rd District has introduced the Stop Childcare Funding Fraud Act, a bill aimed at increasing accountability in the Child Care and Development Block Grant (CCDBG) program. The CCDBG is an $8 billion federal initiative that supports child care for working families across the United States.
The proposed legislation would require states to track and report improper payments within the program. If states have high error rates, they would need to submit corrective action plans and could face funding cuts if they do not address these issues.
“When fraud happens, it’s not just the taxpayers who lose, it is the kids and families these dollars were intended to help. Utah families work hard and pay their taxes expecting Washington to be good stewards of that money,” said Congressman Mike Kennedy. “The Stop Child care Funding Fraud Act makes certain that fraudsters face real consequences and brings transparency to how states are spending these funds. I will continue to fight to root out waste, fraud, and abuse wherever it exists — because every federal dollar meant for America’s children must reach America’s children.”
Investigations revealed that in Minnesota, fraudulent activity allowed individuals to siphon off tens of millions of dollars from CCDBG through fake or ineligible providers. The statement notes that similar weaknesses exist nationwide. Currently, states can misuse up to 10% of federal child care funds before being required to take corrective actions, with no financial penalties imposed even then.
The new bill seeks several changes:
– It provides a clear definition of what constitutes an “improper payment,” including overpayments, underpayments, payments made to ineligible recipients, or those lacking verification.
– The threshold for error rates would drop from 10% to 6%, aligning with standards set by the Supplemental Nutrition Assistance Program (SNAP). States exceeding this rate must immediately submit corrective plans.
– A tiered penalty system would be established: states with error rates between 6–8% would see a 5% reduction in federal funding; those between 8–10% would face a 10% cut; and rates at or above 10% would result in a 15% reduction until compliance is achieved.
– The bill also mandates full public transparency by requiring the Department of Health and Human Services (HHS) to publish state-by-state breakdowns of improper payment rates along with corrective action plans.
The full text of the bill can be accessed online.
