The Trump administration has decided to freeze all childcare funding to Minnesota, and is calling for a sweeping audit of the state's day care centers as a rapidly expanding, billion-dollar fraud scandal grips the state's human services department.
"We have frozen all child care payments to the state of Minnesota," Deputy Health and Human Services Secretary Jim O'Neill announced on X on Tuesday afternoon, days after a viral investigative video spotlighting alleged fraud at day care centers drew national attention. So far this year, Minnesota has received $185 million in child care funding from the Trump administration, according to Alex Adams, assistant secretary of HHS' Administration for Children and Families.
No More Funding
However, officials made clear the money will remain on hold, saying the funds will only be released once states can demonstrate they are being used properly and lawfully.
O'Neill accused Minnesota of having "funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade," and said the department has taken three specific steps aimed at stopping the flow of funds that could be exploited.
The first step would require states to provide "a receipt or photo evidence" for any payments distributed through the U.S. Administration for Children and Families.
O'Neill also said he has "demanded" that Minnesota Governor Tim Walz carry out a "comprehensive audit" of the day care centers identified in the investigation.
"This includes attendance records, licenses, complaints, investigations, and inspections," he writes.
Attempt to Streamline Everything
He pointed directly to a video published Friday by YouTuber Nick Shirley, who toured day care centers across Minneapolis that were receiving millions in state funding despite appearing to be closed or no longer operating.
As a third measure, HHS has set up a dedicated hotline and email address through ChildCare.gov to allow people to report suspected fraud.
"Whether you are a parent, provider, or member of the general public, we want to hear from you," he said.
"We have turned off the money spigot and we are finding the fraud."
Authorities say at least $1 billion in fraudulent activity has already been confirmed, with 92 people charged so far. According to the U.S. Attorney's Office, 82 of those charged are Somali immigrants.
Prosecutors have warned, however, that the true scale of the fraud could be far larger, potentially reaching as much as $9 billion.
