This bill aims to increase transparency and accountability in the use of federal child care funds by states under the Child Care and Development Block Grant Act. It specifically targets the issue of improper payments , mandating that states submit annual reports detailing their rates and outlining steps to reduce them. These measures are designed to ensure federal funds are administered effectively and appropriately. A key provision introduces incentive penalties for states with high improper payment rates. If a state's improper payment rate exceeds 6 percent, it will face reductions in future federal child care funding, ranging from 5 percent for rates between 6 and 8 percent, to 15 percent for rates at or above 10 percent. These reductions will continue until the state implements an approved corrective action plan and provides all required data. States with improper payment rates over 6 percent are required to submit a corrective action plan within 60 days, aiming to reduce the rate to 6 percent or less. These plans must include aggregated, non-personally identifiable verified child attendance documentation. Additionally, the Secretary is required to provide an annual report disaggregated by state, detailing improper payment rates and state actions to address them.