Modernizing CCDF: Improving Transparency & Accountability While Supporting Families

Why Transparency in Child Care Oversight Matters for Families

The Child Care and Development Fund (CCDF) supports access to child care for more than one million children and families each month, playing a critical role in workforce participation. Despite bipartisan funding increases over the past decade, the program still reaches only a fraction of eligible families. A 2025 Bipartisan Policy Center and partner analysis estimated that roughly 4.2 million children nationwide lack access to child care, with that gap carrying a measurable economic cost, a potential 10-year impact of $329 billion.

Given the program’s finite resources, how child care dollars are administered and protected has direct consequences for families’ ability to remain employed and maintain access to stable care. Allegations of fraud in CCDF have drawn increased attention to the program’s oversight framework. Erroneous payments, whether due to substantiated fraud or administrative error, divert limited resources away from families in need, further constraining a system already operating under significant resource limitations. For providers, funding interruptions can upend business operations and have downstream effects on local labor markets. To avoid these adverse consequences, policymakers should pursue targeted, data-driven improvements to CCDF oversight that strengthen accountability while maintaining stable access to child care for families.

Understanding Improper Payments in CCDF

Allegations of fraud in CCDF often hinge on a term with a specific and frequently misunderstood meaning under federal law: improper payments. The Payment Integrity Information Act (PIIA) of 2019, defines improper payments across federal programs as those that should not have been made or were made in an incorrect amount under program rules; this includes overpayments, underpayments, and fraudulent payments. Improper payments are an umbrella category that can reflect administrative error, documentation or timing issues, system misalignment, and in some cases, fraud.

The latest Administration for Children and Families payment integrity scorecard review indicates that CCDF improper payment rates are historically well below the 10% PIIA threshold for high-risk programs, with the most recent national rate under 5%. This rate refers to payment errors identified within the CCDF program under its required review process. While these estimates provide an important benchmark, because the rate does not distinguish between administrative error and intentional misconduct, it is impossible to draw firm conclusions about the drivers and types of improper payments.

The Government Accountability Office (GAO) has identified persistent weaknesses related to gaps across eligibility determination and payment processes, including administrative processing errors, misalignment between eligibility and payment systems, and complex or inconsistently applied policy guidance in CCDF. These findings reflect operational challenges in administering a jointly governed program, rather than evidence of widespread intentional wrongdoing. Addressing those system gaps is essential to reducing vulnerabilities and strengthening program integrity, including reducing fraudulent payments.

In practice, fraudulent payments are a subset of broader program integrity challenges. Fraud involves intentional deception, such as knowingly falsifying information to receive benefits or billing for services not rendered. While any instance of fraud warrants response, current reporting requirements do not allow policymakers to determine the share of improper payment estimates attributed to fraud within CCDF’s reported improper payment rate. Treating all improper payments as fraud obscures root causes and risks blunt policy responses that can destabilize care for families. Distinguishing between fraud, administrative error, and other compliance issues is essential to designing integrity systems that are targeted, effective, and proportionate to the type and scale of the problem. In a program with the size and complexity of CCDF, oversight systems must continuously improve to ensure resources are used effectively.

Existing Safeguards and Where Modernization is Needed

CCDF already operates within a layered oversight framework that includes state and federal audits, improper payment reporting, and federal data and plan submission requirements. The question is not whether oversight exists but whether it surfaces issues early and accurately, while protecting families’ stable access to care.

CCDF modernization efforts should focus on improving how information is collected, shared, and used across the program. This means strengthening state data systems, expanding risk-based oversight that allows states and the Administration for Children and Families to target areas of elevated risk, and aligning data definitions and reporting practices to improve transparency and cross-state comparability. Investments in digital attendance tracking through interoperable child care management systems can reduce reliance on manual documentation vulnerable to error or manipulation. States could also deploy anomaly-detection tools capable of catching billing or enrollment patterns that fall outside program norms, such as providers billing consistently at or near full licensed capacity across all days of operation. Earlier identification of anomalies could prevent administrative errors from compounding in ways that ultimately disrupt care for eligible families.

Expanded unannounced site visits by Lead Agencies across licensed providers during all hours of operation can strengthen verification that services billed align with care delivered. These targeted oversight tools direct resources where concerns are elevated, rather than applying blanket measures that burden compliant providers or disrupt care for families.

CCDF program integrity is shaped by how oversight responsibilities, information flow, and accountability mechanisms are structured across federal and state partners. In a jointly governed program, effective safeguards depend on systems that work together and clear accountability across providers, states, federal agencies, and congress. CCDF is designed to balance state flexibility with shared federal standards. When data systems or reporting structures are misaligned, issues are harder to detect and address in a proportional, effective, and timely way. Over time, insufficiently disaggregated and inconsistently reported data have made it harder to distinguish administrative errors from more serious problems and respond effectively. Addressing these challenges requires clearer statutory expectations, aligned oversight roles, and stronger data infrastructure. More robust longitudinal data systems could also improve policymaker and oversight agencies’ understanding of who the program is reaching, how providers participate over time, and where gaps in access persist, strengthening both integrity oversight and overall program effectiveness.

A Family-Centered Path Forward

Strengthening program integrity, understood as both reducing improper payments and ensuring effective administration and efficient delivery, should be a core goal in CCDF. Program integrity and access are mutually reinforcing goals in CCDF. Systems that identify problems early, distinguish administrative error from intentional fraud, and respond proportionately are more likely to protect families’ access to care and support sustained workforce participation. Overly blunt enforcement actions can interrupt care and destabilize providers, while delayed or imprecise oversight weakens public confidence.

Modernization should also account for structural pressures shaping the broader child care market. Sustained investments in supply-building strategies, including facilities funding to address infrastructure gaps; reimbursement rates that reflect the largest driver of child care costs, labor; and innovative public-private partnership models, can help stabilize provider participation and reduce system vulnerabilities. Paired with improved data transparency and oversight tools, these investments can strengthen both accountability and market durability.

Reauthorization of the Child Care and Development Block Grant (CCDBG) provides an opportunity to revisit these design questions, reinforce oversight authorities, and modernize systems that support program integrity. Policymakers can modernize CCDF in a way that protects both program integrity and economic stability for working families by investing in modern data infrastructure, clarifying oversight roles, reinforcing proportionate monitoring approaches, and supporting market conditions that promote stable, high-quality supply.

Achieving these improvements at scale will require sustained investment in state administrative capacity to implement data modernization, risk-based monitoring, and system upgrades effectively. Done well, modernization can reinforce transparency, strengthen accountability, and sustain a child care ecosystem that works for families, providers, and taxpayers alike.

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