Minnesota faces new deadline to save millions in child care funds

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Minnesota officials are under pressure to provide detailed information about child care providers and families receiving federal assistance. The state has less than a week to comply with a federal demand or risk losing millions in funding, according to state leaders.

The Trump administration recently froze child care funds for Minnesota and other states due to allegations of fraud at day care centers, many of which are operated by Somali residents. This move followed claims made by a right-wing influencer about widespread abuses in the program, leading to increased federal scrutiny.

Why It Matters

In 2022, the Department of Justice uncovered welfare fraud in Minnesota through the Feeding Our Future scam, which is estimated to have cost taxpayers $250 million. To date, 57 defendants have been convicted, and 78 have been charged, according to The Associated Press (AP).

Further instances of alleged fraud have emerged since then. In mid-December, First Assistant U.S. Attorney Joe Thompson stated that $9 billion or more in federal funds allocated to 14 state-run programs since 2018 may have been stolen.

What To Know

The Administration for Children and Families, part of the U.S. Department of Health and Human Services (HHS), provides Minnesota with about $185 million annually through the Child Care and Development Fund, which helps low-income families afford child care. According to an email sent by Minnesota’s Department of Children, Youth, and Families to providers, the state must submit verification data by January 9 to avoid losing access to those funds.

The email, shared with The Associated Press by multiple providers, instructed child care centers and families to continue following licensing and certification requirements as usual. It did not indicate that recipients themselves need to take any immediate action.

“We recognize the alarm and questions this has raised,” the email said. “We found out about the freezing of funds at the same time everyone else did on social media.”

State officials said they did not receive formal notice from the federal government until late Tuesday night, after Health and Human Services Deputy Secretary Jim O’Neill posted about the freeze on X. All 50 states will now be required to provide additional verification and administrative data before receiving further funding.

The U.S. House Committee on Oversight and Government Reform plans to hold a hearing on January 7 to examine allegations of fraudulent use of federal child care funds in Minnesota. A spokesperson for HHS said a child care fraud hotline launched earlier this week has already received more than 200 tips.

Minnesota has faced criticism from Republicans and the Trump administration over previous fraud allegations. On Friday, Administration for Children and Families Assistant Secretary Alex Adams told Fox News that his agency sent Minnesota a letter last month requesting information on child care and other welfare programs by December 26 but did not receive a response. The state did not immediately comment.

Meanwhile, Small Business Administration Administrator Kelly Loeffler posted on X that her agency suspended 6,900 Minnesota borrowers of COVID-19-era loans because of suspected fraud. President Donald Trump has also targeted Minnesota’s Somali community with immigration enforcement actions and inflammatory remarks, calling them “garbage.”

Democrats in Minnesota, including Governor Tim Walz, accuse the Trump administration of playing politics and jeopardizing families and children. In a press release, the state’s Department of Children, Youth, and Families said inspectors conduct regular oversight of the child care program and noted that 55 related investigations remain open.

The funding freeze could have significant consequences for families and providers who rely on child care assistance. Maria Snider, director of a St. Paul child care center and vice president of the Minnesota Child Care Association, said providers typically receive payments at least three weeks after services are delivered. Any delay could strain budgets.

According to state data, about 23,000 children and 12,000 families receive funding from the program each month. Snider warned that any child attending a center with federally funded attendees could be affected.

The email from Minnesota’s Department of Children, Youth, and Families said HHS requested data covering 2022 through 2025, including identifying information for all recipients, a list of providers, payment amounts, and details on alleged fraud networks and oversight failures. It is unclear whether Minnesota already has the requested data.

HHS also said five child care centers receiving funds from the Child Care and Development Fund or Temporary Assistance for Needy Families must provide documentation such as attendance records, inspection reports, and assessments.

What People Are Saying

Snider told the Associated Press:

“For a lot of centers, we’re already running on a thin margin. Even centers where 10 to 15% of their kids are on childcare assistance, that’s a dip in your income.”

Calvin Jillson, a politics professor at Southern Methodist University, told:

“It appears that fraud has been rampant for years in Minnesota public service programs, including post-covid SBA business loan, child care and other social service programs. Some of these programs, such as the SBA loans, were federally funded and administered, while others like the child care programs were joint federal-state ventures. Investigations, prosecutions and convictions for the guilty clearly are warranted, but it appears that the federal crackdown in Minnesota, soon to be expanded to other states, is being exploited politically by the Trump administration. Hopefully, the focus can remain on cleaning up these programs and recovering lost public monies rather than suggesting that they are representative of broader blue state corruption.”

President Donald Trump wrote on Truth Social in November:

“Hundreds of thousands of refugees from Somalia are completely taking over the once great State of Minnesota. … Tim Walz, does nothing, either through fear, incompetence, or both.”

Governor Tim Walz’s office said in a previous statement to:

“The Governor has worked for years to crack down on fraud and asked the state legislature for more authority to take aggressive action. He has strengthened oversight—including launching investigations into these specific facilities, one of which was already closed. He has hired an outside firm to audit payments to high-risk programs, shut down the Housing Stabilization Services program entirely, announced a new statewide program integrity director, and supported criminal prosecutions.”

What Happens Next

Federal officials indicated they would provide Minnesota with more guidance by January 5, but the state agency said it remains uncertain about the scope of funding restrictions.

“Our teams are working hard to analyze the legal, fiscal, and other aspects of this federal action,” the email said. “We do not know the full impact.”

Updates: 1/2/26, 7:07 p.m. ET: This article was updated with new information and remarks. This article includes reporting by the Associated Press.

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