Three Republican senators want to shut off the spigot that turned federal childcare funding into what they call an open ATM for criminals.
Sens. Ted Cruz (R-Texas), Mike Lee (R-Utah), and Rick Scott (R-Fla.) are introducing the Payment Integrity Act, legislation that would require states to distribute federally funded childcare dollars based on verified attendance — not mere enrollment claims. The bill takes direct aim at what Cruz describes as "mass fraud" in Minnesota's childcare funding system, and it would reverse a 2024 Biden-era rule that required states to pay providers *before* verifying that children actually showed up.
Read that again: the Biden administration mandated that states cut checks to childcare providers before confirming a single child walked through the door.
According to Fox News, Cruz led a Senate Judiciary Subcommittee hearing last week that zeroed in on Minnesota's childcare fraud allegations. During the hearing, he gestured toward a photo of the "Quality Learning Center" in Minneapolis — an alleged fraudulent childcare provider he called "emblematic" of the crisis.
"Programs in Minnesota for welfare and childcare were designed to channel resources into protecting vulnerable children but were treated like an open ATM by criminals."
Journalist David Hoch and blogger Nick Shirley both visited sites in Minnesota claiming to be Somali daycare centers. The details of what they found weren't elaborated, but the visits drew enough concern to bring Hoch before the subcommittee.
Cruz didn't mince words about where this was happening — not in some failed state or overlooked corner of the bureaucracy, but, as he put it during the hearing, in "the heart of America's Midwest."
The Payment Integrity Act would amend the Child Care and Development Block Grant Act, originally signed into law by former President George H.W. Bush. That law created the framework for federal childcare funding distributed through the states. The new bill would codify into statute a Health and Human Services rule from January that established attendance-based billing procedures — ensuring the reform can't be undone by the next administration's pen stroke.
The bill's key provision is blunt:
"Nothing in this subchapter shall be construed to require a lead agency to make a payment to a child care provider prior to the provision of child care services."
In plain English: no kids, no check.
This is the kind of reform that shouldn't require legislation. It should be obvious. But the Biden administration's 2024 rule moved in the opposite direction, demanding that states pay first and verify later — a framework practically engineered for abuse. The Payment Integrity Act doesn't just reverse that rule. It locks the door behind it.
Jim O'Neill, deputy to HHS Secretary Robert F. Kennedy Jr., signaled that the department is already acting on its own authority:
"We've seen credible and widespread allegations of fraudulent daycare providers who were not caring for children at all. The reforms we are enacting will make fraud harder to perpetrate."
The January HHS rule establishing attendance-based billing was a strong first step. But administrative rules are fragile — one election, one new appointee, and they vanish. Codifying the standard in federal law means the next Democratic administration can't quietly revert to a pay-first model through regulatory fiat.
Cruz's sharpest moment came when he framed what the fraud actually steals:
"There are few crimes more morally repugnant than stealing from vulnerable children. Every dollar stolen is a meal not eaten, a doctor's visit missed and a future diminished."
This is the part that should haunt the politicians who built and maintained a system this porous. Every dollar siphoned by a fraudulent provider is a dollar that didn't reach a child who needed it. The victims aren't abstract line items in a federal budget — they're kids in families that depend on these programs functioning honestly.
Cruz went further, pointing to the structural incentive that allowed the problem to metastasize:
"The mass fraud in Minnesota shows that American taxpayers can no longer rely on local and state politicians to prevent abuses because those politicians often have electoral and partisan incentives to look the other way."
That's not a throwaway line. It's an indictment of a political ecosystem where higher enrollment numbers mean more federal dollars flowing into a state, which means more constituents served — on paper — which means more political capital for the officials overseeing the system. The incentive to scrutinize is inversely proportional to the incentive to claim success. Nobody gets reelected by shrinking the rolls, even when the rolls are padded with phantom children.
The Payment Integrity Act faces the usual legislative gauntlet, but the political terrain favors it. Opposing a bill that says "verify kids are actually present before sending taxpayer money" is not a position anyone wants to defend publicly. The Biden-era rule it reverses was an under-the-radar regulatory move — the kind of policy that thrives in obscurity and wilts under sunlight.
The broader pattern here matters. Federal money flows to states through block grants. States distribute it to providers. Providers self-report. Nobody checks. When the inevitable fraud emerges, federal officials blame state oversight, state officials blame provider dishonesty, and the cycle resets with a new appropriation. The Payment Integrity Act inserts a basic verification step into that chain — one that every private business in America already applies before paying an invoice.
The federal government required attendance records before paying. Then it stopped requiring them. Fraud followed. Now three senators want to require them again. This shouldn't be controversial. The fact that it requires an act of Congress tells you everything about the system it aims to fix.