The Trump administration announced December 30 it is freezing federal child care funding for Minnesota, citing allegations of widespread fraud at day care facilities following a viral video and ongoing federal investigations into the state’s social services programs.
Deputy Secretary of Health and Human Services Jim O’Neill announced the funding freeze in a statement posted to social media Tuesday, stating that blatant fraud appears rampant in Minnesota and across the country. The decision affects all payments from the Administration for Children and Families to the state.
“We have turned off the money spigot and we are finding the fraud,” O’Neill said in the statement.
Alex Adams, head of the Administration for Children and Families, said in an accompanying video that his office provides Minnesota with approximately $185 million in child care funds annually. The state receives hundreds of millions of federal dollars per year to support its Child Care Assistance Program, which subsidizes day care services. In the current fiscal year ending September 2026, the federal government’s share of the program was expected to total $218 million, with the state contributing $155 million, according to state projections.
Viral video prompts federal action
The funding freeze follows a video posted by conservative influencer Nick Shirley that alleged fraud in child care centers in Somali communities in Minneapolis. The 40-minute video, which received more than 2 million views, claimed to show day care facilities that have received public funds but appeared to have no children present when visited.
Vice President JD Vance and former Department of Government Efficiency leader Elon Musk shared the video on social media platforms. The video’s allegations have not been independently verified by major news organizations.
FBI Director Kash Patel stated Sunday that the bureau had surged resources to Minnesota to investigate claims of widespread fraud, insisting those steps were taken before Shirley’s video went viral. The FBI’s fraud investigation has largely targeted Somali immigrants in Minnesota, a frequent subject of President Donald Trump’s recent comments.
White House Press Secretary Karoline Leavitt called the investigation into alleged fraud a top priority for the administration during an appearance on Fox & Friends Wednesday morning.
New nationwide requirements implemented
In addition to freezing Minnesota payments, HHS announced it is implementing new requirements for child care payments across all states. Starting immediately, all payments from the Administration for Children and Families will require justification and receipt or photo evidence before funds are sent to states.
O’Neill also demanded that Minnesota Governor Tim Walz provide a comprehensive audit of the day care centers mentioned in the viral video, including attendance records, licenses, complaints, investigations and inspections. HHS has established a dedicated hotline and email address for reporting suspected child care fraud.
O’Neill indicated in subsequent social media posts that frozen funds will be released when states prove they are being spent legitimately.
State officials push back
Minnesota officials have disputed the allegations and expressed concerns about the federal government’s approach. Governor Walz responded to the funding freeze in a social media post Tuesday, stating the move represents politicization of fraud concerns.
“This is Trump’s long game,” Walz wrote. “We’ve spent years cracking down on fraudsters. It’s a serious issue, but this has been his plan all along. He’s politicizing the issue to defund programs that help Minnesotans.”
Tikki Brown, commissioner of the Minnesota Department of Children, Youth and Families, said Monday that while no fraud has been found at child day care centers in the state so far, her office is investigating the centers again in response to Shirley’s video.
“While we have questions about some of the methods that were used in the video, we do take the concerns that the video raises about fraud very seriously,” Brown said.
Minnesota officials noted that unrelated allegations of fraud have been under investigation by state officials dating back to the Biden administration.
Broader fraud investigations
The child care funding freeze comes amid wider federal scrutiny of Minnesota’s social services programs. Joe Thompson, assistant U.S. attorney for Minnesota, said at a press conference earlier in December it is possible that half or more of the $18 billion billed to 14 programs under the state’s Department of Human Services since 2018 is fraudulent.
The growing scandal has resulted in political pressure for Governor Walz, who in October ordered a third-party audit of 14 services, including the shuttered Housing Stabilization Services program. The governor also appointed Tim O’Malley earlier in December to serve as director of program integrity and investigate alleged fraud.
On December 18, Minnesota Attorney General Keith Ellison announced federal charges against numerous principals behind extensive fraud in the Housing Stabilization Services and Early Intensive Developmental and Behavioral Intervention programs. The charges resulted from a joint state-federal investigation.
“Today’s charges and guilty plea are an important step in combating fraud and protecting our tax dollars,” Attorney General Ellison said. “It boils my blood that fraudsters are taking advantage of that generosity, and my office and I will gladly partner with all those who are also committed to holding fraudsters accountable.”
Immigration enforcement connection
The HHS funding freeze announcement came one day after Department of Homeland Security agents visited dozens of sites in Minneapolis as part of what DHS Secretary Kristi Noem described as a massive investigation. Immigration and Customs Enforcement launched operations in the Minneapolis-St. Paul area to specifically target undocumented Somali immigrants, precipitated by revelations about alleged widespread fraud.
President Trump has made public comments stating he does not want Somalis in the country. The administration has indicated it is looking at revoking citizenship of Somali Americans in some cases.
The intersection of fraud allegations, immigration enforcement and federal funding cuts has created controversy in Minnesota, where officials maintain they have been actively addressing fraud concerns while questioning the federal government’s methods and motivations.
As federal and state authorities continue their investigations, approximately 23,000 Minnesota children from low-income families who depend on subsidized day care services remain affected by the frozen federal payments.
