Federal childcare funding could face major structural changes under a new bill introduced by U.S. Senator Ashley Moody. The Stop Child Care Scams Act aims to insert tough new oversight measures into the Child Care and Development Block Grant program by directly penalizing states that let taxpayer dollars slip through the cracks.
The bill’s core mechanism shifts federal policy from optional enforcement to mandatory financial penalties. Specifically, it requires the Administration for Children and Families, an agency within the Department of Health and Human Services (HHS), to withhold block grant funds from any state that fails to comply with anti-fraud requirements.
“Federal childcare assistance should help working families afford safe and reliable care—not fatten the pockets of fraudsters. As a mom, I know how important it is for parents to trust that these programs are serving children and families, not wasting taxpayer dollars. This bill strengthens oversight, targets waste, mandates consequences for fraud, and ensures these funds go where they are needed most,” said Senator Ashley Moody.
The legislation outlines several specific provisions to tighten accountability at the state level. Any state found to have an improper childcare payment rate climbing above 5% will be legally required to submit a detailed corrective action plan to HHS.
The bill also establishes new program integrity planning mandates and requires a top-to-bottom performance review of all block grant initiatives, allowing federal regulators to flag high-risk states for extra monitoring. To close existing loopholes, the bill strips the Administration for Children and Families of its current authority to waive sanctions for offending states or participants.
On an individual level, the consequences for bad actors are definitive. The Act requires the permanent debarment of any provider convicted of childcare fraud, banning them for life from participating in both the Child Care and Development Block Grant and the Child and Adult Care Food Program.
Additionally, the bill commissions a formal study into advanced fraud prevention techniques and grants HHS the authority to adjust state funding packages based on those findings.
The legislative push is already gaining momentum across Capitol Hill. Representative Mary Miller (R-IL-15) introduced the companion version of the bill in the House of Representatives, where it recently passed the floor. The policy has also secured formal backing from outside conservative policy organizations, including Heritage Action and the America First Policy Institute.
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