Trump Administration Freezes $10 Billion in Child Care Funds for Five States Over Fraud Allegations

The Trump administration on Tuesday notified five blue states, including Minnesota, that it was freezing $10 billion in child care funds pending a “thorough review” amid concerns of “systemic fraud,” according to Axios.

Beyond Minnesota — where fraud has sparked concerns over a broader pattern of abuse — the Administration for Children and Families (ACF), a division of the Department of Health and Human Services, sent letters to New York, California, Illinois, and Colorado, suspending billions in funding across three programs: Temporary Assistance for Needy Families (TANF), the Child Care Development Fund (CCDF), and Social Services Block Grants (SSBG).

The letters require states to submit extensive data on all recipients of federal funds, including names, Social Security numbers, and birth dates, along with other detailed records going back years.

ACF stated in one letter to Illinois that recent federal prosecutions and additional allegations had raised concerns that “substantial portions of federal resources were fraudulently diverted away from the American families they were intended to assist.” The letter also alleged that Illinois was “illicitly providing illegal aliens with CCDF benefits intended for American citizens and lawful permanent residents.”

Independent journalist Nick Shirley recently posted a viral video showing Minneapolis-area day care operations that appeared to be beneficiaries of hundreds of millions of dollars in taxpayer funds despite having no legitimate business. Joe Moeller reported that at least one Minnesota day care center operated with its license revoked more than five years ago, and another, Intisar, lost its license in 2021 due to violations.

The funding freeze will delay payments to child care providers, potentially forcing closures and disrupting services across the five states. HHS spokesman Andrew Nixon stated that “we have a duty to the American people to ensure their hard-earned taxpayer dollars are being used for legitimate purposes.”

Funding remains suspended until the review is completed, with some programs facing a compliance deadline of January 20.

By Mark Swanson | Tuesday, 06 January 2026 11:02 PM EST