Passed
217 Yea207 Nay6 Not voting1/2 required
HR-7726-119
Received in the Senate and Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Sponsored by Mary Miller (R-IL)
What it does
This bill would require (rather than merely permit) the Secretary of Health and Human Services to withhold funds from states that fail to comply with Child Care and Development Block Grant requirements, and would mandate permanent debarment of child care providers found to have committed fraud. It would also require states with improper payment rates above 5% to submit corrective action plans, make states ineligible for funding after two consecutive years above that threshold absent sufficient progress, require periodic high-risk monitoring of state performance, add new fraud-reporting and program-integrity requirements to state plans, eliminate the Secretary's authority to waive certain sanctions, and require a GAO study on fraud prevention across federal child care and nutrition programs.
Who benefits
Families relying on legitimate child care subsidies who could benefit from reduced diversion of program funds to fraudulent providers; taxpayers generally; state agencies with strong compliance systems; and the Child and Adult Care Food Program, which gains coordinated debarment authority. Investigators and oversight bodies (HHS Secretary, GAO) gain expanded authority and mandates.
Who is hurt
States with weaker administrative or data systems, which could face funding cutoffs even absent intentional fraud if improper payment rates (including technical errors) exceed 5%; child care providers accused of fraud who face permanent debarment with limited waiver flexibility once determinations are final; low-income families served by providers or states that lose funding or are debarred, who may face reduced access to subsidized care; and state agencies that must build new data-sharing and reporting infrastructure, incurring administrative costs.
Supporters argue
Supporters argue that converting discretionary withholding authority to a mandatory requirement closes a loophole that has allowed noncompliant states to continue receiving funds despite known problems, and that permanent debarment for proven fraud protects taxpayer dollars and vulnerable children from providers who falsify enrollment or licensing to collect subsidies. They contend that mandatory corrective action plans and high-risk monitoring create accountability structures that other major federal programs already use, and cite the risk of scarce child care dollars being diverted from families who need them.
Opponents argue
Opponents argue that eliminating the Secretary's discretion to waive sanctions removes flexibility needed to account for extenuating circumstances, such as states making good-faith progress or providers facing technical errors rather than intentional fraud, since the improper payment threshold captures underpayments and system errors alongside genuine fraud. They contend that automatic funding ineligibility for states exceeding the 5% threshold for two years could ultimately harm the low-income families the program serves by cutting off subsidies to entire state systems over administrative shortcomings rather than targeting bad actors directly.
Constitutional context
This bill operates under Congress's Spending Clause authority (Article I, Section 8) to attach conditions to federal grants to states, similar to conditional funding schemes upheld in South Dakota v. Dole (1987), which requires conditions to be related to program purposes and not unduly coercive. The permanent debarment provisions raise due process considerations under the Fifth Amendment, since providers are entitled to notice and an opportunity to be heard before losing eligibility, though the bill's "final determination" requirement (post-appeal) appears designed to satisfy this concern.
Checks and balances
The bill shifts discretion from the executive branch (HHS Secretary) toward mandatory action, narrowing the Secretary's flexibility to waive sanctions, while states retain the ability to contest funding determinations through administrative and judicial review processes.
Historical precedent
Similar mandatory withholding and debarment mechanisms exist in other federal grant programs, such as the Supplemental Nutrition Assistance Program and Medicaid, which condition continued state funding on compliance and program integrity standards.
Passed