Key Takeaways
- •Senator Cassidy (R-LA) announced he will introduce proposals to strengthen the Child Care and Development Block Grant Act to combat fraud, emphasizing the need for action and accountability.
- •Henry Wilde (Witness) shared Wisconsin's success in combating child care fraud by connecting licensing and subsidy data, using analytics, and linking payments to quality.
- •Senator Murray (D-WA) questioned witnesses on allowing unannounced strangers into centers for fraud checks; all witnesses, including Henry Wilde, stated they would not, citing safety concerns.
- •Republicans focused on preventing fraud and ensuring accountability for taxpayer dollars, while Democrats criticized the administration's funding freezes as political and harmful to families.
- •The committee will consider Senator Cassidy's (R-LA) upcoming legislative proposals to strengthen the Child Care and Development Block Grant Act, aiming to refine solutions for fraud prevention.
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Hearing Analysis
Overview
On February 12, 2026, the Senate Health, Education, Labor, and Pensions (HELP) Committee convened a hearing titled "Hearings to examine preventing fraud in child care assistance programs." Led by Chairman Bill Cassidy (R-LA), the hearing focused on the integrity of the Child Care and Development Block Grant (CCDBG) and the Child Care and Development Fund (CCDF). The session highlighted a sharp partisan divide regarding the Trump administration's recent decision to freeze $10 billion in child care funding to several states over fraud allegations, with Republicans emphasizing the need for fiscal accountability and Democrats decrying the freeze as "political retribution" that harms families and small businesses.
Chairman Cassidy opened the hearing by emphasizing that fraud undermines public support for safety-net programs. He cited a "wake-up call" in Minnesota, where the Office of the Legislative Auditor reported that nearly one in ten federal dollars for child care was misused or stolen. Cassidy argued that while some states like Mississippi have near-zero fraud rates, others like Oregon (35%) and Minnesota (9%) show systemic failures. He announced that the committee had launched a fraud task force and that he intended to introduce legislation to strengthen the Child Care and Development Block Grant Act to implement stricter oversight.
Ranking Member John W. Hickenlooper (D-CO) countered by focusing on the child care affordability crisis, noting that costs have outpaced inflation and that many families pay more for child care than for rent or college tuition. He specifically criticized the Trump administration for freezing funding in Colorado and other states, calling it "unlawful" and "catastrophic" for the 27,000 children in his state who rely on these subsidies. Hickenlooper argued that while fraud is unacceptable, punishing entire states is an indiscriminate and harmful response.
Key Testimony
The witness testimony provided diverse perspectives on how fraud occurs and how it can be prevented. Henry Wilde, Co-Founder and CEO of Acelero Learning and former Deputy Secretary of the Wisconsin Department of Children and Families, detailed a major fraud scandal in Milwaukee involving collusion between providers and parents. In these schemes, providers generated fake pay stubs and attendance records for care that never occurred, splitting the subsidy payments with parents. Wilde recommended three primary solutions: connecting child care licensing data with subsidy payment data, using data analytics to identify "anomalous patterns" (such as providers billing for more than 24 hours a day), and linking payments to objective quality measures.
Dr. Paula Polito, Owner and Director of Beary Cherry Tree Child Development Center in Louisiana, presented her state as a national model for program integrity. She highlighted Louisiana’s use of the Classroom Assessment Scoring System (CLASS) tool for rigorous, unannounced observations and the implementation of KinderConnect, which uses biometric and photo ID verification for attendance. Polito argued that these "layers of accountability" ensure that funds are tied to actual attendance and high-quality outcomes rather than just enrollment.
Industry Impact
Liz Denson, President and CEO of Early Connections Learning Centers in Colorado, spoke to the operational impact of funding uncertainty. She noted that 60% of the children her centers serve rely on the Colorado Child Care Assistance Program (CCCAP). Denson warned that prolonged funding freezes would force classroom closures and layoffs, as most providers are small businesses operating on razor-thin margins. She advocated for targeted enforcement against bad actors rather than broad freezes that destabilize the entire sector.
Overview
The hearing featured several notable exchanges. Sen. Patty Murray (D-WA) challenged the legitimacy of the fraud claims used to justify the federal funding freeze, asking witnesses if they would ever allow "unannounced strangers" or "independent journalists" with iPhones to enter their centers to verify child attendance. The witnesses unanimously agreed they would call the police, with Murray arguing that "witch hunts" based on social media conspiracies are not a substitute for professional oversight. Sen. Tim Kaine (D-VA) expressed frustration that the committee was focusing on fraud among small child care providers while President Trump had recently pardoned high-profile fraudsters who owed millions in restitution.
Policy proposals discussed during the hearing included: 1. Transitioning from enrollment-based funding to attendance-based funding to reduce the risk of "ghost" billing. 2. Implementing biometric or photo-verified attendance systems (like Louisiana’s KinderConnect). 3. Mandating that state licensing and subsidy data systems "talk to each other" to flag discrepancies. 4. Increasing the frequency of unannounced monthly compliance visits. 5. Expanding the use of federally registered apprenticeship programs to address the workforce shortage, as described by Ms. Denson.
Policy Proposals
The industry impact of the discussed policies is significant, as 99% of child care providers are small businesses. Witnesses emphasized that any new federal mandates must not create "enormous new bureaucracy" for these small operators. Organizations mentioned during the proceedings included Acelero Learning, the Beary Cherry Tree Child Development Center, Early Connections Learning Centers, the Bipartisan Policy Center, and various state agencies like the Wisconsin Department of Children and Families and the Colorado Department of Early Childhood.
Overview
Chairman Cassidy concluded the hearing by reiterating his commitment to legislative reform, stating that the American people must know the government is a "wise steward" of their tax dollars. He set a deadline of February 27, 2026, for additional questions for the record. The next steps for the committee involve the formal introduction of Cassidy’s proposed amendments to the CCDBG Act and ongoing investigations by the newly formed fraud task forces.
Transcript
The Committee on Health, Education, Labor, and Pensions will please come to order. Now, my parents instilled in me the value of a dollar. They were, they grew up in the Depression, and they just knew that you worked hard for your money and if you lost a dollar it could actually make an impact upon your family. And you had to be wise how it was spent. And really the American people expect the same from the federal government. If my people back home in Louisiana have one request, if they are sending hard-earned dollars to Washington, that it be spent responsibly, making sure that those who deserve the dollars get the dollars, but those who are stealing the money are prosecuted. And they feel angry right now because of reports that money meant to support families in child care has been at best misspent and at worst stolen. And that seems to be what is happening in some child care programs and some other safety net programs, and this hearing is about that. Minnesota has been a wake-up call to a problem which runs deeper. By the way, if we're going to create support for such programs, nothing undermines support than people stealing from the program. Just to say that. If you believe in these programs, you should be the ones crying loudest for accountability, or otherwise fellow Americans have no belief in the support of the program. Minnesota's Office of the Legislative Auditor has been warning about fraud in their programs since 2018. This state, Minnesota, consistently with a high rate of misspent dollars. Almost one in every $10 spent on child care coming from the federal government in Minnesota has been stolen or misused, and billions more in federal dollars from nutrition, housing, autism programs, and Medicaid. Now, Minnesota was a catalyst to consider the problem, but let's be clear: this is more than a Minnesota problem. And let's be clear: it isn't a California, New York, Illinois, or Colorado problem. It is an American problem. Can I see that chart? Some states have done well, and some states shamefully. And this is what we need to look at. Now, it's not enough to be angry. We've got to have action, we've got to have accountability. We've got to stop the fraud, we've got to protect the taxpayers, we've got to allocate the resources where the resources need to be allocated for those families who actually have the need. As chairman of this committee, I can say on a bipartisan basis that we should not tolerate waste, fraud, and abuse stealing money in my state from the taxpayers of Louisiana, but it could be just as easily the taxpayer of any state represented here. And we can see what has worked. Mississippi, I mean they have their rate at zero. I think it's like 0.34 or something. Good for Mississippi. And compare that to Minnesota's 9 percent. And I hate to say it, I don't mean to embarrass Senator Murray, but Oregon's rate is 35 percent.
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