ACF Steps Up Scrutiny of Child Care Subsidies Amid Minnesota Fraud Allegations

Health and Human Services Assistant Secretary Alex Adams, who oversees the Administration for Children and Families (ACF), said on Wednesday that funds will be sent to states only when they can justify the payment.

Adams noted that the $9 billion welfare fraud scandal in Minnesota has impacted all Americans.

“One of the programs under investigation is called the Child Care Development Fund,” Adams said. “American taxpayers are sending $185 million to Minnesota each year for child care support and to help individuals get into the workforce.”

“When that money is not going to children, if it is taken by fraudsters, it’s not going to its purpose,” Adams added. “Americans deserve accountability for those dollars.”

ACF has implemented multiple steps to ensure payments are not stolen, including a tip line at childcare.gov for reporting fraud, waste, and abuse. In the first few hours of operation, over 75 reports from multiple states were received.

The agency also launched the “Defend the Spend” initiative, which requires photo evidence or receipts—such as payroll records or attendance documentation—to justify payments before funds are released to states.

Adams stated that ACF sent a letter to Minnesota requesting licensing inspection reports and internal fraud investigation records for specific daycares suspected of misconduct.

“We asked specifically for licensing inspection reports,” Adams said. “We asked for internal records of potential fraud that has been investigated.”

Adams criticized Minnesota Governor Tim Walz, saying he is not taking action on the alleged fraud.

“He isn’t going to take action,” Adams said. “We’ll certainly take it seriously and take action.”

Previously, letters had been sent to the state requesting information about subsidy allocations but received no response. ACF then sent a follow-up letter and temporarily froze payments until sufficient documentation was provided.