CRACKDOWN Act of 2026

If this passes, states with overpayment rates above 5% will face mandatory federal compliance oversight. States with rates above 5% for two consecutive years risk losing federal child care funding entirely, which would force reductions in child care subsidies to low-income families. In states like Louisiana, Illinois, and other jurisdictions that have historically reported child care improper payment rates above 5%, eligible families could lose access to subsidized care. Analogous payment integrity thresholds in other federal programs (Medicaid improper payment targets, SNAP payment accuracy rules) have required states to implement costly administrative changes; states struggling to meet thresholds have sometimes imposed stricter eligibility verification that reduced enrollment. The bill creates financial leverage but does not provide additional federal funding to help states build compliant systems.