Trump Administration Freezes Federal Child Care Funds to Minnesota Over Fraud Probe

The administration of former US President Donald Trump has frozen all federal child care payments to the state of Minnesota, citing large-scale fraud in taxpayer-funded programmes and ordering sweeping audits and stricter oversight measures.

Federal officials said the decision follows long-standing concerns that child care funds were diverted to fraudulent daycare operators over several years. The freeze applies to all child care-related payments routed through the Administration for Children and Families, effectively halting federal disbursements to the state until further review.

As part of the crackdown, the US Department of Health and Human Services has ordered a comprehensive audit of daycare centres across Minnesota. New safeguards have also been introduced under a “defend the spend” system, requiring states to submit written justifications along with receipts or photographic evidence before any federal payments are released.

Federal authorities have additionally directed a detailed review of daycare centres flagged in earlier investigations, including scrutiny of licensing records, attendance data, complaints, inspection reports and prior enforcement actions. A dedicated fraud-reporting hotline and email channel have been launched to encourage parents, providers and the public to report suspected misuse of funds.

The move comes in the backdrop of multiple high-profile fraud investigations in Minnesota, including the Feeding Our Future case, described by prosecutors as one of the largest COVID-19-related fraud schemes in the United States. The case involved misuse of funds meant to provide meals for children, with dozens of convictions already secured.

Prosecutors have also alleged that a significant portion of nearly $18 billion in federal funds distributed across multiple programmes in Minnesota since 2018 may have been misappropriated, intensifying scrutiny of state-level oversight mechanisms.

Minnesota Governor Tim Walz said his administration would continue cooperating with federal agencies and stressed that fraud would not be tolerated. He added that a state audit expected by late January would help determine the full extent of the problem.

Democratic leaders from Minnesota urged authorities to pursue accountability without unfairly targeting entire communities, even as federal officials signalled that enhanced monitoring and enforcement would remain in place nationwide.