Trump Administration Freezes Child Care Funds to Minnesota Amid Fraud Probe
Federal officials halt Minnesota’s child-care dollars after uncovering a massive fraud scheme, leaving tens of thousands of families scrambling for options.
Story of the Freeze
It began with a single spreadsheet line: a suspiciously large reimbursement to a Minneapolis day-care center that, on paper, cared for 120 toddlers but, on Google Street View, looked like an abandoned laundromat. Within weeks, federal auditors uncovered what they describe as a $100 million-plus fraud ring stretching from the Twin Cities to the rural Iron Range.
The Administration’s Move
On Tuesday evening—without the customary press release— the Department of Health & Human Services quietly froze Minnesota’s entire $150 million Child Care and Development Block Grant, money that normally keeps 30,000 low-income kids in safe classrooms while parents work double shifts.
“We will not subsidize fraud,” said HHS Secretary Robert F. Kennedy Jr. in a terse statement. “Minnesota must clean house before another federal dime flows.”
What Parents Are Feeling
At the Little Sprouts center in St. Paul, director Maria Alvarez spent Wednesday morning calling 42 families to say she may close next month. “One mom cried—she’s a nurse, can’t work nights without care,” Alvarez said. “These kids didn’t commit fraud.”
State Leaders Respond
- Governor Tim Walz vowed to replace the lost funds with state reserves—but only through December.
- Attorney General Keith Ellison opened a criminal grand-jury probe, promising indictments by Labor Day.
- Senate Republicans urged a special session to tighten provider background checks and require biometric check-ins for children.
Inside the Alleged Scam
Investigators say shell companies billed the state for ghost children, then laundered proceeds through luxury car purchases and Lake Minnetonka condos. Federal agents have already seized 28 properties and 112 bank accounts.
What Happens Next
The freeze is indefinite; HHS will re-evaluate once Minnesota submits a “corrective-action plan.” Meanwhile, child-care advocates warn that without swift resolution, up to 2,000 centers could shut statewide, pushing an estimated 55,000 parents out of the workforce.