House passes bill to rein in child care fraud after $325M in waste exposed

WASHINGTON — House lawmakers passed legislation aimed at cracking down on an $8.83 billion federal child care grant that was once estimated to have had $325 million worth of improper payments.

The No Funds for Repeat Child Care Violations Act cleared the House in a 217-207 vote Wednesday, with all Republicans and only four Democrats backing the bundle of anti-fraud measures targeting the Child Care and Development Block Grant (CCDBG) program.

“We know the GAO [Government Accountability Office] estimated improper payments at $325 million, but we know a handful of Minnesota fraudsters scammed at least that amount of money from the program,” Rep. Bob Onder (R-Mo.), who authored one of the measures in the bill, told The Post.

“We need to crack down on waste and fraud, and in that way, preserve that program for the children and families who really need assistance with childcare.”

Six years ago, the GAO found that improper payments in CCDBG for 2019 were as high as $325 million. If the same percentage of improper payments in the program existed today, it would be about $600 million annually.

CCDBG is a grant program that marshals billions to states to assist low-income households with child care costs.

It has been known to be riddled with improper payments since at least 2002 and was listed on Health and Human Services’ list of “risk susceptible” initiatives in the department’s financial report last year.

Onder wrote a provision in that legislative bundle that would require HHS to audit each state CCDBG program every three years.

“That’s been in regulation for some time, but we want to make sure to put that in statute, so that regularly we take a close look at these programs to monitor for fraud,” he explained. “Three years seems to be the interval that’s practical.”

The bill also has other provisions requiring HHS to take corrective steps against improper payments and be more proactive in combating them.

It instructs the HHS secretary to determine “high risk” states for fraud and to subject those states to heightened scrutiny.

“I think it’s being done right now under the Trump administration, but it’s important to do this sort of thing in statute, and require it, because otherwise you know, under, for instance, the Biden administration, this has flourished,” Onder said.

“Minnesota would obviously be a high-risk state, but as a general rule, it tends to be some of the Democrat-led states where they just are happy to take the federal money and have no desire whatsoever to root out fraud and abuse,” he added.

The legislative bundle was inspired by YouTuber Nick Shirley’s viral coverage of potential fraud in Minnesota last year, including the infamous “Quality Learing Center,” which raised questions about federal funds flowing to fraudulent child care centers.

Other provisions in the bill include efforts to improve data sharing between agencies, instruct the GAO to come up with recommendations to remedy improper payments, prevent the feds from waiving sanctions against fraudulent programs, cut off states that had repeated violations from funding, and more.

The anti-fraud bill now heads to the Senate, where it likely faces hurdles in becoming law due to Democratic resistance in the House.