Trump Administration Halts Federal Childcare Funding to Minnesota Over Fraud Probe

[Twitter.com, screenshot, @AuronMacintyre]

The Trump administration has suspended all federal childcare payments to Minnesota amid an ongoing investigation into alleged widespread fraud in state-administered programs, according to the Department of Health and Human Services.

Deputy HHS Secretary Jim O’Neill announced Tuesday that the freeze affects hundreds of millions of dollars in annual funding and reflects heightened federal scrutiny of Minnesota’s social services system. The action follows renewed attention sparked by a viral online video alleging irregularities at several childcare centers in the Minneapolis area.

In a social media post and accompanying video, O’Neill said HHS has halted payments to Minnesota while imposing tougher nationwide rules on reimbursements through the Administration for Children and Families. Effective immediately, all such payments to any state will “require a justification and a receipt or photo evidence” before funds are released.

O’Neill, joined by ACF Assistant Secretary Alex Adams, also instructed Minnesota Gov. Tim Walz to provide detailed documentation for specific childcare facilities under review. The requested records include attendance logs, licensing information, complaint histories, prior investigations, and inspection reports.

HHS also announced the creation of a public hotline and email address to collect tips about suspected fraud.

The funding freeze follows a video posted last week by conservative YouTuber Nick Shirley, writes Axios. The citizen journalist visited multiple childcare sites and claimed they appeared inactive despite receiving public funds. The video gained rapid online attention and drew responses from federal officials, prompting stepped-up investigations by agencies including the FBI and the Department of Homeland Security.

Minnesota has been the subject of multiple federal fraud investigations in recent years. Authorities have described the “Feeding Our Future” case — involving misuse of pandemic-era child nutrition aid — as the largest fraud of its kind in U.S. history, with losses estimated at $250 million or more. Additional probes into housing assistance and other programs have resulted in dozens of criminal charges. One federal prosecutor recently suggested that theft across various state-run initiatives since 2018 could total several billion dollars.

Gov. Walz pushed back against the administration’s move, acknowledging the seriousness of fraud while accusing federal officials of acting for political reasons.

“This is Trump’s long game,” Walz said on Twitter Tuesday evening. “We’ve spent years cracking down on fraudsters.”

“It’s a serious issue – but this has been his plan all along,” he added. “He’s politicizing the issue to defund programs that help Minnesotans.”

Walz pointed to state actions that include referrals to law enforcement, the closure of problem programs, and audits of operations deemed high risk. Of course, today state officals today admitted they thought the “learing” center that was first discovered by Shirley was closed, but, according to The New York Post, “apparently the owners of the site — which has gotten up to $4 million in taxpayer funds and racked up dozens of inspection violations — didn’t get the memo.”

Critics of the funding suspension warn that a broad freeze could disrupt legitimate childcare providers and families with no connection to fraud, potentially straining services for low-income households that rely on subsidies.

HHS officials have not said when payments to Minnesota might resume, stating that funding will remain on hold pending the outcome of the federal review.

[Read More: Politico Reporter Appears To Suggest Youtuber Doing Investigating Could Be Shot]

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