The Trump administration has paused child care payments to multiple Minnesota day cares following allegations that they improperly collected millions of federal dollars, the latest federal action against the state as it grapples with investigations into widespread fraud in its social welfare system.
The Department of Health and Human Services also announced stricter verification measures for states trying to collect payments for day cares from its Administration for Children & Families, which funds child care for families with low incomes. HHS Deputy Secretary Jim O’Neill said in a Tuesday evening X post that the measures were taken to stop “blatant fraud that appears to be rampant in Minnesota and across the country.”
O’Neill also tweeted that “we have frozen all childcare payments to the state of Minnesota.” HHS spokesman Andrew Nixon told The Washington Post that payments are only frozen for the day care centers suspected of fraud and that other centers in Minnesota will be subject to the extra verification requirements as in other states.
ACF provides $185 million in child care funds to Minnesota each year, officials said Tuesday.
The move was spurred by a viral video by conservative YouTuber Nick Shirley visiting 10 Minnesota day care facilities funded by public dollars and alleging they weren’t caring for children. Nixon said HHS didn’t carry out its own investigation before freezing the funds but will refer the matter for investigation by the agency’s inspector general.
The office of Minnesota Gov. Tim Walz (D) said in a statement that the governor had referred some of the cases to law enforcement before the viral video and asked the state legislature for more authority to take aggressive action.
The action comes amid state and federal fraud investigations of 14 Minnesota-run safety net programs, including for child nutrition, housing and autism assistance. Federal prosecutors said earlier this month that half or more of roughly $18 billion in federal funds since 2018 for social services may have been stolen.
The U.S. attorney’s office for Minnesota has said Somali Americans make up 82 of the 92 defendants in the fraud investigations. Trump has seized on the fraud allegations to slam Somali immigrants. He said in a Cabinet meeting this month that he doesn’t want Somali immigrants in the United States and referred to them as “garbage.” Rep. Tom Emmer (Minnesota), a member of House GOP leadership, called for “the denaturalization and deportation of every Somali engaged in fraud in Minnesota” in an X post Tuesday.
The Department of Homeland Security and the FBI have recently stepped up immigration and law-enforcement operations in the state. Republicans have criticized Walz, who was Kamala Harris’s running mate in the 2024 presidential election, for his handling of the social services fraud.
On Tuesday, Walz said on X that Trump is politicizing the issue to “defund programs that helps Minnesotans.”
“We’ve spent years cracking down on fraudsters. It’s a serious issue — but this has been his plan all along,” Walz wrote.
HHS has not released details of how the new “defend the spend” process for child care funding would work for states, which draw down ACF funds through a federal payment system to reimburse child care providers. Nixon said states will have to release “administrative data” but didn’t clarify what that includes. States are required to submit plans every three years on how they will run their child care programs funded by ACF and comply with federal regulations.
“If ACF stops all payments to the state of Minnesota for any extended period of time, that will mean thousands of parents will lose access to child care and won’t be able to go to their jobs,” said Ruth Friedman, a senior fellow at the Century Foundation, a progressive think tank, who directed the office of child care at ACF under the Biden administration. “It will be terrible for American families.”
The commissioner of the state’s Department of Children, Youth and Families, Tikki Brown, said at a news conference on Monday said that state regulators had visited each facility at least once during the past six months as part of routine inspections, according to local media reports. She said children were present at the facilities during those visits.
The department did not respond to requests for comment from The Post on Tuesday night.
Hannah Knowles contributed to this report.
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