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OAN Staff Blake Wolf
5:09 PM – Wednesday, December 31, 2025
The Department of Health and Human Services (HHS) announced that the Trump administration is freezing federal child care funding to every single U.S. state after introducing a freeze on Minnesota’s program — in response to ongoing allegations and evidence of widespread fraud.
On Wednesday, HHS spokesperson Andrew Nixon told ABC News that states will receive the funds “only when states prove they are being spent legitimately.” Future payments now require prior justification, receipts, or photo evidence to verify legitimate spending before funds are released.
The announcement is in response to a report released by independent journalist Nick Shirley last week. Shirley claimed to have exposed $110 million in fraud during his investigation, after going to several daycare centers in Minneapolis, collecting millions in state and federal funds, only to find the locations desolate.
Nixon told the outlet that funding recipients “not suspected of fraudulent activity” are being instructed to send their “administrative data” to HHS for review.
“It’s the onus of the state to make sure that these funds, these federal dollars, taxpayer dollars, are being used for legitimate purposes,” he continued, noting that funding recipients “suspected of fraudulent activity” are obligated to provide the federal government with additional documentation such as “attendance records, licensing, inspection and monitoring reports, complaints and investigations.”
Wednesday’s announcement follows HHS Deputy Secretary Jim O’Neill’s Tuesday statement pausing all child care payments to the state of Minnesota.
O’Neill made the announcement in an X post, announcing three actions the department is taking to root out the “blatant fraud that appears to be rampant in Minnesota and across the country.”
Explaining the changes, O’Neill stated that all Administration for Children & Families (ACF) payments “across America will require a justification and a receipt or photo evidence before we send money to a state.”
O’Neill went on to demand a comprehensive audit of the Minnesota-based daycare centers, including “attendance records, licenses, complaints, investigations, and inspections.”
“We have launched a dedicated fraud-reporting hotline and email address at childcare.gov Whether you are a parent, provider, or member of the general public, we want to hear from you,” he added. “We have turned off the money spigot and we are funding the fraud.”
Alongside additional guardrails placed by HHS, the fraud is being investigated by the Department of Homeland Security (DHS) and the FBI, according to DHS Secretary Kristi Noem and FBI Director Kash Patel.
“Homeland Security Investigations are on the ground in Minneapolis right now conducting a massive investigation on childcare and other rampant fraud,” Noem wrote in an X post on Monday.
Patel also revealed that the bureau has “surged personnel and investigative resources to Minnesota to dismantle large-scale fraud schemes exploiting federal programs” on Sunday, going on to discuss the FBI’s work in securing indictments and convictions in connection to Minnesota’s $250 million Feeding Our Future fraud scheme.
“The FBI believes this is just the tip of a very large iceberg. We will continue to follow the money and protect children, and this investigation very much remains ongoing. Furthermore, many are also being referred to immigration officials for possible further denaturalization and deportation proceedings where eligible,” Patel added.
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