HHS Halts Minnesota Child Care Funds Amid Unverified Fraud Claims

The U.S. Department of Health and Human Services (HHS) has suspended all federal child care payments to Minnesota following allegations that some Minneapolis day care centers defrauded public assistance programs, an agency official announced Tuesday.

Deputy HHS Secretary Jim O’Neill said on social media that the suspension is effective immediately and applies to money distributed through the Administration for Children and Families (ACF). O’Neill also outlined new nationwide safeguards requiring states to provide written justification as well as receipts or photographic proof before future ACF payments are released. The department is asking Minnesota Gov. Tim Walz to conduct a “comprehensive audit” of the centers identified in a viral video that triggered the action.

The video, posted last week by conservative commentator Nick Shirley, is 40 minutes long and claims certain child care providers serving Somali communities in Minneapolis received public funds despite appearing empty during unannounced visits. Shirley’s footage has not been independently verified, and Minnesota officials say the presentation omits key context, such as whether the facilities were recorded outside normal operating hours.

Walz responded on the social platform X, asserting that the freeze advances former President Donald Trump’s agenda to move federal dollars away from social programs. “We’ve spent years cracking down on fraudsters,” Walz wrote, adding that HHS is “politicizing the issue to defund programs that help Minnesotans.”

Minnesota authorities have publicly questioned the video’s conclusions. Tikki Brown, commissioner of the state Department of Children, Youth and Families, told reporters Monday that all facilities mentioned by Shirley had undergone at least one licensing inspection in the past six months, with additional unannounced visits taking place the day the video surfaced. “Children were present during every visit,” Brown said, while emphasizing that the state takes fraud concerns seriously.

The HHS decision arrives against a broader backdrop of federal scrutiny. Homeland Security Secretary Kristi Noem wrote on X that her department is pursuing a “massive investigation on childcare and other rampant fraud.” Separately, FBI Director Kash Patel stated that agents have been redirected to Minnesota, calling fraud already documented in other benefit programs “just the tip of a very large iceberg.” Patel cited the dismantling of a $250 million pandemic-era food aid scheme linked to the nonprofit Feeding Our Future, charges from which continue to advance in federal court.

Joe Thompson, a senior career prosecutor in the U.S. Attorney’s Office for Minnesota, offered a similar assessment during a December 18 press conference, remarking that “the magnitude of fraud in Minnesota cannot be overstated.” Earlier this month, President Trump criticized parts of the state’s Somali community at a cabinet meeting, referencing the still-unverified day care claims.

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Under the new HHS directive, Minnesota will receive no further federal child care disbursements until the state responds to the department’s audit demand and satisfies revised documentation rules. HHS did not specify how much money is currently being withheld, nor did it provide a timeline for possible reinstatement. According to the state’s most recent budget documents, Minnesota expected hundreds of millions of dollars in combined federal and state funding for early childhood programs during the current fiscal year.

A spokesperson for the Minnesota Department of Children, Youth and Families said the agency is reviewing O’Neill’s announcement and will work with federal partners to minimize disruptions for families. The department did not address whether it will commission the full audit requested by HHS.

In statements on X, O’Neill described the freeze as a necessary measure to counter “blatant fraud that appears to be rampant in Minnesota and across the country.” He did not provide additional evidence beyond the online video. HHS officials declined further comment when asked whether any formal investigations preceded the payment suspension.

While state and federal authorities debate the validity of Shirley’s allegations, child care providers await clarification on future funding. The policy shift also leaves other states on notice: all ACF reimbursements must now be supported by detailed documentation, a change O’Neill said will apply “without exception.” Additional guidance is expected to be issued on the Department of Health and Human Services website.

Crédito da imagem: ABC News