What Congress Gets Wrong About Child Care Fraud

By Hannah Valdiviejas Cohn, policy analyst, early childhood education 

On June 4, the House of Representatives passed the Stop Child Care Scams Act of 2026 (H.R. 7726), a package of bills intended to combat fraud in federally funded child care programs. The legislation reflects a growing narrative in Congress that fraud is a defining challenge within the child care system. Yet, evidence suggests otherwise: Existing safeguards already provide significant oversight of federal child care funding, and there is little documentation of widespread fraud. Plus, research from Child Trends Latino Families Flourishing (LFF) project suggests the primary challenges Latino families face in accessing early childhood programs are not related to fraud or misuse, but to affordability, availability, transportation and information barriers that make participation increasingly difficult. Supporters of this bill package argue the legislation is necessary to improve accountability and protect taxpayer dollars. Inarguably, every publicly funded program should include safeguards to prevent fraud, recover improper payments and ensure public funds are used appropriately. But unfolding in Congress reveals a troubling disconnect between the issues some lawmakers are focused on and the actual challenges families are facing. Rather than addressing the affordability and access barriers families consistently identify as the real problem, Congress is proposing to reshape a critical support system around an issue that does not exist at the scale implied by the legislation. 

This is a public policy failure that elevates isolated allegations of fraud over evidence of how the child care system actually functions, and using those incidents to justify blanket restrictions that will be felt most acutely by working families, immigrant communities and the providers who serve them. 

No Evidence of Widespread Fraud 

 The Child Care and Development Fund, which helps low-income families afford child care while parents work or pursue education or training, is already governed by extensive federal oversight requirements, including audits, quarterly financial and case-level reporting, internal controls, error-rate reviews, and federal monitoring. States must verify eligibility, monitor providers, investigate suspected fraud, conduct audits and comply with significant federal reporting obligations. Existing federal law already contains mechanisms for identifying misuse and recovering improperly spent funds. 

As the Center for Law and Social Policy (CLASP) notes, there is no evidence of widespread fraud within the CCDF program. Sometimes, improper payments do occur, but improper payments are not synonymous with fraud; many stem from administrative errors, documentation issues or eligibility timing discrepancies rather than intentional misuse. 

Every major public program experiences some level of administrative error. The relevant policy question is not whether errors exist, but whether those errors justify fundamentally restructuring the program.  

• At the center of this debate is a narrowing definition of program integrity. Increasingly, integrity is being equated with preventing improper payments. But true program integrity is much more complex and should ensure: Families can access care when they need it.  

• Providers are paid in ways that allow them to operate sustainably.  

• Children are in safe, stable and nurturing environments.  

• Public dollars are used effectively.  

These goals are interconnected; undermining one weakens the others. 

This becomes particularly clear when examining the distinction between fraud and improper payments. Many improper payments are the result of administrative complexity, documentation gaps or eligibility timing issues — not intentional misuse. The improper payment rate for CCDF remains relatively low, at approximately 3.55%. 

Yet, current legislative proposals overzealously respond by tightening allowable error thresholds and increasing penalties for states. In doing so, they risk pushing systems toward compliance strategies that prioritize avoiding penalties over ensuring access to child care. Integrity, in this framing, becomes less about whether the system works to serve families and more about whether it can withstand audit scrutiny. 

Latino Families Need Affordable Child Care, Not More Administrative Barriers  

 According to AP-OD and UnidosUS 2026 National Latino Family Survey of over 1,300 Latino families with children under 5 years old, 43% of Latino parents identified access to affordable, high-quality child care as one of the most important child well-being issues policymakers should address. Nearly all respondents, 97%, said expanding access to quality affordable child care and early learning opportunities is important. Parents are not demanding more audits; they are demanding more access. 

The survey also found that nearly half of Latino parents with young children report their financial situation has worsened over the past year, while more than half have less than $1,000 in savings. When families are already struggling to absorb unexpected expenses, find stable child care arrangements, plus balance work and caregiving responsibilities, additional administrative barriers can have real consequences. While Congress is treating child care as a fraud problem, families are experiencing it as an affordability problem. 

UnidosUS regularly holds listening sessions with Affiliates to understand the lived experiences of Latino families.. In these sessions, consistent themes emerge: the rising costs of living, lack of affordable child care and dearth of safe spaces for children. What parents describe bears little resemblance to the debate currently unfolding in Congress. 

Parents raise concerns about social isolation and the desire for stronger support networks. They talk about safety, including their fears shaped by the unique experience of raising children in communities with increased immigration enforcement presence that upends everyday routines. 

The rise of “Defend the Spend” is more than a set of policy proposals. It reflects a shift in how child care is valued. When public investment is framed primarily as something to protect from misuse, policy begins to prioritize restriction over access, surveillance over support and short-term cost containment over long-term stability. 

For Latino families, this shift compounds existing inequities: they already rely heavily on relational networks for information; they navigate systems that are not always culturally or linguistically responsive; and they face barriers that extend beyond eligibility on paper. 

Policies that ignore these realities do not create stronger systems for working families; They simply make it harder to access and maintain support systems. Across UnidosUS’s Affiliate Network of nearly 300 community-based organizations, reports consistently identify this challenge. Providers and family-serving organizations are spending increasing amounts of time helping families understand changing program requirements and navigate uncertainty rather than focusing on supporting children’s development and family well-being. 

Families who already face barriers — language access, nontraditional work schedules, limited transportation or complex immigration dynamics — are the most likely to experience disruptions. Providers serving these communities operate under tight financial margins and rely on stable funding structures to remain viable. When those structures are weakened, they are often forced to reduce capacity or exit subsidy systems altogether. 

Babies and toddlers are particularly vulnerable;. Infant and toddler care is among the most expensive and difficult forms of child care to secure because providers face higher operating costs and stricter staffing requirements than programs serving older children. When providers face instability, infant slots are often the first to go. At precisely the moment when early development matters most, access becomes even more fragile. 

Participation in Public Programs Is Low Due to Fears and Unjust Policy 

For Latino and immigrant families, administrative burden often intersects with broader concerns about trust, government systems and immigration enforcement. The 2026 National Latino Family Survey found that 1 in 5 Latino parents may avoid applying for public benefits because of the current immigration climate, underscoring how fear can deter families from accessing support even when they may be eligible. An additional 18% reported they may avoid enrolling their children in school or early childhood programs because of immigration-related concerns.For many Latino families, participation in public programs is already shaped by concerns that extend beyond their eligibility. Families are navigating language barriers, the ever-changing policy environments, and, in some cases, shifting fears about how personal information shared with government systems may be used against them. When policymakers layer additional verification requirements and enforcement mechanisms into those systems, the burden is not experienced equally. Families who already face the greatest barriers to access are often the first to disengage. This is one reason why enforcement-first approaches can have consequences that extend far beyond the individuals they are intended to target. 

One UnidosUS affiliate reported an incident in which a father was detained by immigration authorities while dropping off his child at a child care center. Events like this rarely are isolated incidents. Families share information through relatives, neighbors and trusted community networks, and experiences like these become part of the collective understanding of what it means to interact with public systems. When fear begins to shape those conversations, otherwise eligible families may decide that the perceived risks of seeking assistance outweigh the potential benefits. 

Proposals that rely heavily on surveillance, verification and enforcement deserve public scrutiny. Policymakers often assume these measures only affect individuals engaging in wrongdoing. In reality, they frequently affect families who are already eligible for services but become reluctant to engage with systems they perceive as risky to their safety and the health and well-being of their families. The result is not less fraud, but fewer children receiving services they need. 

A Public Policy Failure 

The fundamental flaw in the current public policy debate is that it confuses visibility with prevalence: Fraud cases are rare but visible. They generate headlines, congressional hearings and political attention. But visibility does not always equate to the defining challenge facing a particular system. 

The actual evidence points to the child care sector’s most pressing problems: affordability, access, workforce shortages, provider instability and family economic insecurity.  

Still, Congress is dedicating substantial legislative attention to a problem that existing oversight systems are already designed to address. 

The current approach to equitable child care is a public policy failure. It directs resources, political capital and public attention toward a relatively limited problem while leaving larger structural challenges unresolved. In doing so, Congress risks creating new and often insurmountable barriers for families who are already struggling to access the care they need. 

A Better Path Forward Requires a Balanced Approach 

When public benefits are governed by suspicion, families are forced to prove their need and eligibility at all costs. That failed system does not create accountability; it puts working families seeking the support they are entitled to receive under a microscope. 

Accountability and access should not be competing goals. A strong child care system should have robust safeguards against fraud. But it should also ensure that eligible families can access care, providers can remain financially viable and children can benefit from stable early learning environments. 

• Accountability matters, but a balanced approach would be designed to support — not undermine — the system it governs: Maintain strong fraud detection and oversight mechanisms.  

• Preserve payment structures that reflect how child care providers operate.  

• Avoid punitive funding cuts that reduce state capacity to serve families.  

• Streamline eligibility processes to reduce unnecessary administrative burden.  

• Ensure that families do not lose access due to complexity of system navigation rather than ineligibility.  

Most importantly, a balanced approach would recognize that program integrity is not just about preventing misuse; it is about ensuring that the system works for the families it’s intending to serve. Lawmakers must recognize that the greatest challenge facing the child  care system today is not widespread fraud; it is the growing gap between what families need and what the system is able to provide. 

If Congress wants to support children and families, it must spend less time searching for fraud crises and more time addressing the affordability and access crises families have been experiencing for years. The federal government cannot expect the trust of the American people while treating them as inherently untrustworthy. The strength of a public investment is, therefore, not measured by how many audits it generates or how many sanctions it imposes. It is measured by how it helps families access care, whether it supports providers in serving their communities, and if it adequately gives all children the stable environment they need to thrive.