WASHINGTON — The Minnesota day care scandal has been years in the making.
An audit released nearly a decade before the Trump administration targeted the Land of 10,000 Lakes revealed that nearly one-fifth of all taxpayer money meant for child care centers in the state — roughly $16 million — was being misappropriated.
The Department of Health and Human Services Office of Inspector General (HHS-OIG) report — released in July 2016 — found that at least 18.91% of all federal payments to Minnesota child care centers in fiscal year 2012 were flagged as “improper.”
Notably, Minnesota did not disclose to HHS-OIG auditors how many organizations receiving the erroneous payments had been flagged by state officials — or referred to law enforcement — for violations.
State officials also did not disqualify any of the suspected fraudsters from getting more taxpayer dollars — despite not having “[c]hecked for multiple providers that are billing for the same child at the same time” or conducted “on site” visits to sub-recipients of the funds, the report noted.
In total, HHS-OIG found roughly $311 million in “improper payments” were made nationwide from its Child Care Development Fund (CCDF), the third-largest US block grant program behind HHS’ Temporary Assistance for Needy Families (TANF) and the Department of Housing and Urban Development’s Community Development Block Grants (CDBG).
In fiscal year 2015, CCDF reimbursed more than $85.5 million in child care expenses to Minnesota, meaning nearly $16.2 million in erroneous payments were made if the 2012 percentage was accurate.
Ten years later, the state was slated to get more than $185 million, despite reported enrollment dropping by nearly half.
That contrast is why Minnesota is at at the center of a political firestorm after being accused of allowing fraudsters to bilk taxpayers out of billions more dollars meant for child care and other federally subsidized social service programs.
“The red flags are obvious,” Republican Minnesota state Rep. Kristin Robbins told NewsNation’s Rich McHugh in a recent interview. “It’s multiple services by one provider, and it’s an easier barrier to entry, not a lot of checks on the providers.”
YouTuber Nick Shirley ignited the national conversation by posting a more than 40-minute video of his visits to child care centers that took $111 million of taxpayer dollars — but appeared to be closed or without children inside.
Of the 10 day cares Shirley visited, just four had children inside their facilities when follow-up checks were made this week by reporters from the Minnesota Star Tribune.
First Assistant Minnesota US Attorney Joe Thompson alleged earlier this month that since 2018, fraudsters have skimmed at least $9 billion of taxpayer cash meant for child care, nutrition, health care, housing and other services in 14 state-run programs.
“The magnitude cannot be overstated,” said Thompson at a Dec. 18 news conference in Minneapolis. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s staggering, industrial-scale fraud.”
President Trump, members of his administration like Treasury Secretary Scott Bessent, and Republicans in Congress have also targeted the state, launching multiple investigations into Minnesota social service agencies via records requests to officials and Democratic Gov. Tim Walz.
Since Walz assumed office in January 2019, Minnesota has received more than $2.1 billion in CCDF and TANF money alone, per HHS data reviewed by The Post.
HHS has since frozen all funding to Minnesota until officials can prove fraudulent payments aren’t taking place.
Other states are also being reviewed for potentially fraudulent payments — and won’t receive further funding until they can provide proof the schemes have been rooted out.
For fiscal year 2025, which ended this past Sept. 30, CCDF had appropriated more than $11.6 billion in funding for state child care services nationwide — more than double the amount set aside a decade ago.
Minnesota’s more than $185 million cut had been slated for distribution to roughly 4,000 centers serving 23,000 kids statewide — a ratio of one center for every five or six children.
At the time of the HHS-OIG audit released in 2016, the centers took care more than 47,000 kids — but received $100 million fewer taxpayer dollars.
Minnesota was one of just nine states that ran afoul of a 10% threshold for erroneous payments in the 2016 report, requiring the feds to mandate “onsite visits” to ensure future compliance.
“The most common reason these States cited for not recovering improper payments was that the overpayments identified in the error rate reviews were due to caseworker or agency error, not to fraud,” the IG report stated.
“Given the CCDF program’s susceptibility to fraud and improper payments, as well as recent health and safety concerns, it is critical for ACF and States to employ effective measures to ensure the integrity of their CCDF programs.”
Reps for Minnesota’s Department of Children, Youth and Families did not immediately respond to a request for comment.
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