Trump Admin Expands Funding Freeze Beyond Minnesota Amid Nationwide Child Care Fraud Review
the U.S. Department of Health and Human Services has frozen all federal child-care payments to Minnesota while it investigates allegations of widespread fraud in the state’s child-care subsidy system and is expanding a nationwide review to identify improper use of funds. Deputy Secretary Jim O’Neill said the move responds to reporting and evidence of providers receiving taxpayer dollars without serving children; HHS officials warn freezes could extend to other states. Viral videos and reports highlighted reportedly empty or problematic daycare centers, and one Minnesota provider was cited for dozens of violations. Minnesota Gov.Tim Walz condemned the action as political retaliation and said the state has worked to address fraud, while President Trump claimed even greater fraud exists in other states such as California. State employees and prosecutors have pursued cases and some whistleblowers allege retaliation; HHS has emphasized its duty to verify that federal funds support legitimate providers.
The Trump administration is widening a federal freeze on child care funding beyond Minnesota as the U.S. Department of Health and Human Services ramps up a nationwide review aimed at rooting out fraud.
Deputy HHS Secretary Jim O’Neill announced Tuesday that the agency froze all federal child care payments to Minnesota as officials investigate allegations of widespread fraud in the state’s subsidy system.
We have frozen all child care payments to the state of Minnesota.
You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade.
Today we have taken three actions… pic.twitter.com/VYbyf3WGop
— Deputy Secretary Jim O’Neill (@HHS_Jim) December 30, 2025
The funding freeze will extend to other states as federal officials review how taxpayer dollars are used, according to multiple reports.
“HHS has a clear duty to verify the proper use of taxpayer funds,” spokesman Andrew Nixon said in a statement, as reported by the New York Post. “The documentation process exists to rule out fraud and confirm that funds are supporting legitimate child care providers.
Minnesota Gov. Tim Walz pushed back after the Trump administration moved to freeze federal child care funding in the state, accusing the White House of using fraud concerns to justify the action.
This is Trump’s long game.
We’ve spent years cracking down on fraudsters. It’s a serious issue – but this has been his plan all along.
He’s politicizing the issue to defund programs that help Minnesotans. https://t.co/7ByWjeXxu0
— Governor Tim Walz (@GovTimWalz) December 31, 2025
“This is Trump’s long game. We’ve spent years cracking down on fraudsters. It’s a serious issue – but this has been his plan all along. He’s politicizing the issue to defund programs that help Minnesotans,” Walz wrote.
President Donald Trump said that investigators expect to uncover large-scale abuse elsewhere, including in California.
“There is more FRAUD in California than there is in Minnesota, if that is even possible,” Trump wrote on . “When you add in Election Fraud, then they are tied for first. Two Crooked Governors, two Crooked States!”
Donald J. Trump Post 10:15 AM EST 12/31/25 pic.twitter.com/F78kdhgHm2
— Commentary Donald J. Trump Posts From (@TrumpDailyPosts) December 31, 2025
The move follows viral footage that YouTuber Nick Shirley posted Friday showing several purported Somali-run daycare centers in Minnesota that appeared to have no children present during his visits, despite receiving state funds. KSTP reported that the Quality “Lerning” Center accumulated 95 violations cited by a Minnesota agency between 2019 and 2023.
Several state employees have accused Walz of retaliating against whistleblowers who flagged the schemes and as federal prosecutors pursued multiple cases, saying Walz bore responsibility for the fraud and rejected early warnings. Walz later acknowledged the problem during a Nov. 30 appearance on Meet the Press, saying Minnesota “attracts criminals.”
The HHS did not immediately respond to the Daily Caller News Foundation’s request for comment.
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