Rep. Kennedy Introduces Bill to Protect Millions in Federal Child Care Funds from Fraud and Abuse

Washington, D.C. - Congressman Mike Kennedy (UT-03) introduced the Stop Childcare Funding Fraud Act to restore accountability in the Child Care and Development Block Grant (CCDBG) - the $8 billion federal program that funds critical child care for working families across America. This legislation holds fraudsters accountable by requiring states to track and report improper payments, submit corrective action plans when error rates are too high, and face real funding cuts if they fail to fix the problem.

"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 Childcare 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."

Investigators found that in Minnesota, fraudsters exploited the Child Care and Development Block Grant (CCDBG) to siphon off tens of millions of dollars through fake or ineligible providers. But we know Minnesota is not an isolated case. The same structural weaknesses that enable that fraud exist across the country. Families depend on these funds to keep their kids in care. Under current law, states can misuse 1 in 10 federal child care dollars before they're required to submit so much as a correction plan. And even then, there are no financial penalties.

The Stop Childcare Funding Fraud Act fixes that with clear definitions, a stricter standard, real financial consequences, and full public transparency.

The Stop Childcare Funding Fraud Act:

• Defines fraud clearly. For the first time, the law explicitly defines what an "improper payment" is, including overpayments, underpayments, payments to ineligible recipients, and payments that can't be verified. States can no longer claim ambiguity.
• Cuts the fraud error rate from 10% to 6%, matching SNAP. Any state with an improper payment rate above 6% must immediately submit a corrective action plan to HHS detailing how they will bring their error rate down. The SNAP food assistance program already operates under this stricter standard. Child care should too.
• Creates a tiered penalty structure with real financial consequences. States that exceed the threshold don't just get a warning - they lose funding. Error rates of 6-8% trigger a 5% reduction in federal funds. Rates of 8-10% trigger a 10% cut. Rates at or above 10% trigger a 15% cut - until the state fixes the problem.
• Forces full public transparency, state by state. HHS will be required to publish a public, state-by-state breakdown of improper payment rates and the corrective action plans for every state that falls short. Every American will be able to see exactly how their state is managing federal child care dollars.

Read the full bill text here.