H.R. 7794 — Stop Child Care Funding Fraud Act of 2026

This section amends the Child Care and Development Block Grant Act of 1990 to require states receiving child care subsidy funds to annually report their improper payment rates (i.e., overpayments, underpayments, payments for ineligible children, or unverifiable payments) by June 30 of each program period and the actions they will take to reduce such rates. It further (1) imposes funding reductions for subsequent program periods of 5 percent if the rate exceeds 6 percent but is less than 8 percent, 10 percent if at least 8 percent but less than 10 percent, or 15 percent if 10 percent or more, until the Secretary certifies implementation of a corrective action plan that includes aggregated verified child attendance documentation; and (2) requires the Secretary's annual report to include a state-by-state breakdown of improper payment rates and state actions to lower them. (Thus, high improper payments in the program—which subsidizes child care for low-income working families—may result in reduced block grant allotments to noncompliant states.)