President Donald Trump’s administration announced Tuesday that it is freezing federal child care funding to Minnesota and demanding audits of certain day care centers following multiple fraud schemes tied to government programs in recent years. The decision marks an escalation in federal oversight of Minnesota programs that receive child care assistance and comes amid broader investigations into misuse of public funds.
Deputy Secretary of Health and Human Services Jim O’Neill said on the social platform X that the funding freeze was prompted by what he described as “blatant fraud that appears to be rampant in Minnesota and across the country.” According to O’Neill, the administration is moving to stop payments while authorities work to identify improper activity within the system.
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Federal and State Officials Clash Over Fraud Response
Minnesota Gov. Tim Walz responded publicly, also on X, disputing the administration’s framing of the issue. Walz said fraud is a serious problem that Minnesota officials have been addressing for years, but argued that the funding freeze fits into what he called “Trump’s long game.”
“He’s politicizing the issue to defund programs that help Minnesotans,” Walz said.
O’Neill pointed to claims made by a right-wing influencer who posted a video Friday alleging that day care centers operated by Somali residents in Minneapolis were involved in as much as $100 million in fraud. In response, O’Neill said he has demanded that Walz provide an audit of those centers, including attendance records, licensing documentation, complaints, investigations, and inspection reports.
“We have turned off the money spigot and we are finding the fraud,” O’Neill said.
The announcement followed activity by U.S. Homeland Security officials, who were in Minneapolis one day earlier conducting a fraud investigation. Officials visited unidentified businesses and questioned workers as part of that inquiry, though further details about those visits were not publicly released.
Background of Large-Scale Fraud Investigations in Minnesota
Minnesota has been the focus of multiple high-profile fraud investigations in recent years. Among them was a $300 million pandemic-era food fraud scheme involving the nonprofit Feeding Our Future, for which 57 defendants in the state have been convicted. Federal prosecutors said the organization was at the center of the largest COVID-19-related fraud case in the country, with defendants exploiting a state-run, federally funded program intended to provide meals for children.
Earlier this month, a federal prosecutor alleged that half or more of approximately $18 billion in federal funds supporting 14 Minnesota programs since 2018 may have been stolen. Those programs included child nutrition, housing services, and autism-related services. According to the U.S. Attorney’s Office for Minnesota, most defendants charged in those schemes are Somali Americans.
O’Neill, who is also serving as acting director of the Centers for Disease Control and Prevention, said in his Tuesday post that payments nationwide through the Administration for Children and Families, an agency within the U.S. Department of Health and Human Services, will now require “justification and a receipt or photo evidence” before funds are released. He added that the department has launched a fraud-reporting hotline and an email address to collect tips.
Impact on Child Care Funding and Ongoing Oversight
The Administration for Children and Families provides Minnesota with about $185 million annually in child care funding, according to Assistant Secretary Alex Adams. Adams said those funds are intended to support approximately 19,000 children across the state.
“That money should be helping 19,000 American children, including toddlers and infants,” he said in a video posted on X. “Any dollar stolen by fraudsters is stolen from those children.”
Adams also said he spoke Monday with the director of Minnesota’s child care services office, who was unable to say “with confidence whether those allegations of fraud are isolated or whether there’s fraud stretching statewide.” The uncertainty, he said, underscored the administration’s decision to pause payments pending further review.
Trump has repeatedly criticized Walz’s administration over the fraud cases, using them to highlight concerns involving the state’s Somali diaspora, which is the largest Somali population in the United States. Walz, who was the 2024 Democratic vice presidential nominee, has said an audit expected by late January should clarify the full scope of the fraud. He has maintained that his administration is taking aggressive steps to prevent further misuse of funds and has defended its past responses to the issue.
Minnesota’s most prominent Somali American elected official, Democratic U.S. Rep. Ilhan Omar, has urged the public not to hold an entire community responsible for the actions of a small number of individuals.
Minnesota Child Care Funding Freeze
The Trump administration’s decision to freeze child care funding to Minnesota places renewed national attention on fraud prevention and oversight within federally funded programs. As audits and investigations continue, state and federal officials remain at odds over responsibility, scope, and the potential impact on families who rely on child care assistance.
