Five States Face $10 Billion Child Care Fund Freeze Over Alleged Systemic Fraud

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

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

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 spanning years. ACF stated in a letter to Illinois that it has “reason to believe” the state is illicitly providing benefits intended for American citizens and lawful permanent residents to illegal aliens.

Independent journalist Nick Shirley last month posted a viral video showing Minneapolis-area day care operations that received hundreds of millions of dollars in taxpayer funds despite lacking legitimate business justification for the influx of money. Newsmax correspondent Joe Moeller reported that at least one Minnesota daycare center operated after its license was revoked more than five years ago, and another facility lost its license in 2021 due to violations.

The funding freeze will delay payments to childcare providers, potentially forcing closures and disrupting services across the five states. “We have a duty to the American people to ensure their hard-earned taxpayer dollars are being used for legitimate purposes,” said HHS spokesman Andrew Nixon. Funding remains suspended until the review is completed, with some programs facing a January 20 compliance deadline.