The Trump administration has frozen $10 billion in federal childcare and social services funding to California, Colorado, Illinois, Minnesota, and New York over allegations of widespread fraud, though officials have not provided evidence for all five states.
The Department of Health and Human Services announced Tuesday that it would withhold approximately $7.35 billion in Temporary Assistance for Needy Families (TANF) funding, nearly $2.4 billion from the Child Care Development Fund, and $869 million from Social Services Block Grants.
The affected states must submit justification and documentation before the freeze can be lifted. HHS also indicated it is reviewing childcare funding allocations nationwide and may extend the freeze to additional states, according to The Guardian.
Andrew Nixon, a spokesperson for HHS, stated that "Democrat-led states and Governors have been complicit in allowing massive amounts of fraud to occur under their watch," adding that the administration is "ensuring that federal taxpayer dollars are being used for legitimate purposes."
A senior Trump administration official cited "rampant fraud" and concerns about "giving money to illegals" as reasons for the freeze. The administration has not released a formal report detailing specific fraud allegations in California, Colorado, Illinois, or New York.
Fraud Claims Vary Across States
The funding freeze follows investigations into alleged fraud schemes at Minnesota daycare centers, particularly within Somali communities, DW News reported. Federal prosecutors have dismantled a $250 million COVID-era fraud scheme involving the nonprofit Feeding Our Future, which allegedly stole federal food aid meant for vulnerable children. However, HHS has not cited evidence of similar widespread fraud in the other four states.
Democratic governors sharply criticized the action. New York Governor Kathy Hochul called it political retaliation, asking, "Why is there such a frontal assault on children in this nation from this administration?" California Governor Gavin Newsom's office noted his administration has blocked more than $125 billion in fraud and protected taxpayers from scams.
Minnesota Governor Tim Walz, who withdrew from his reelection campaign Monday amid the controversy, defended his state's anti-fraud efforts while criticizing Republicans for "playing politics."
Several states said they had not received official notification of the freeze as of Tuesday. Colorado and Illinois officials have pledged to cooperate with federal investigations and provide documentation of their childcare oversight procedures.
Impact on Families and Childcare Providers
Child care advocates warn that the funding suspension could force provider closures and leave thousands of low-income families unable to afford care, with approximately 1.4 million children nationwide relying on federal childcare subsidies.
Industry groups estimate that without the frozen funds, many providers will be forced to raise costs or cease operations within weeks. The freeze comes as the Trump administration reviews multiple federal programs for potential fraud and misuse of taxpayer funds, as per Axios.
