ST. PAUL, Minn. — The Department of Health and Human Services has frozen federal childcare funding to Minnesota, escalating a high-profile fraud investigation that state officials and providers say could jeopardize thousands of low-income families’ access to child care.
Federal officials confirmed this week that new payments under the Child Care Assistance Program (CCAP) have been halted nationwide, with Deputy HHS Secretary Jim O’Neill singling out Minnesota amid ongoing investigations into alleged billing fraud. CCAP subsidizes care for roughly 23,000 children in the state, primarily from economically vulnerable households.
O’Neill said the administration would not resume funding to Minnesota until it is “confident there is no fraud,” citing concerns raised by federal probes and demanding comprehensive audits of certain daycare centers. The move follows months of criticism by President Donald Trump, who has accused Democratic Gov. Tim Walz of failing to address large-scale fraud within state-administered programs.
Minnesota officials say they learned of the freeze through social media and received no formal federal guidance until days later. The state has been given a Jan. 9 deadline to submit attendance records, inspection reports, and internal communications related to providers flagged by federal officials.
Childcare advocates warn the funding halt could force centers to close, triggering job losses and destabilizing families who rely on subsidized care. Providers emphasized that most centers already undergo regular audits and inspections and say withholding funds from compliant operators risks punishing children and families rather than targeting bad actors.
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