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Trump administration The government is set to freeze more than $10 billion in federal funding for child care and social services in five Democratic-led states amid concerns that taxpayer money was improperly diverted to noncitizens, according to a report.
Officials reportedly said New York Post that the Department of Health and Human Services (HHS) would freeze funding from the Child Care Development Fund (CCDF), the Temporary Assistance for Needy Families (TANF) program, and the Social Services Block Grant, affecting California, Colorado, Illinois, Minnesota, and New York, due to concerns that benefits were fraudulently transferred to noncitizens.
More than $7.3 billion in TANF funding would be withheld from five states, as well as nearly $2.4 billion from the CCDF and another $869 million from the social services block grant.
The funding freeze is expected to be announced in letters sent to government officials on Monday, citing concerns that the benefits were misdirected to non-U.S. citizens.
ABBOTT ORDERS COMPREHENSIVE INVESTIGATION INTO TEXAS CHILD FUND FRAUD AFTER MINNESOTA SCANDAL
The Department of Health and Human Services (HHS) will freeze funding for the Child Care Development Fund (CCDF), the Temporary Assistance for Needy Families (TANF) program, and the Human Services Block Grant, affecting California, Colorado, Illinois, Minnesota and New York due to concerns that benefits were fraudulently transferred to noncitizens, according to the report. (Kayla Bartkowski/Getty Images)
A audit 2019 The Department of Health and Human Services Office of Inspector General found that New York State improperly claimed $24.7 million in federal reimbursement for child care subsidies paid New York which does not comply with the program rules.
The audit attributed the overbilling to system and oversight errors rather than criminal fraud, and government officials agreed to return the funds and take corrective action, according to the report.
After details of the potential funding freeze were released, New York Democrats sharply criticized the Trump administration's move, arguing it would harm families who rely on child care assistance.
Sep. Kirsten GillibrandDN.Y., accused the administration of using the issue for political retribution and warned it would harm children and low-income families across the state.
“Trump threatens freeze funding child care in New York and targeting our children for political retribution. This is immoral and indefensible,” she wrote in a post on X. “I demand the administration abandon any plans to freeze this funding and stop hurting New York families.”
Along with her post, Gillibrand also shared a public statement about the funds freeze.
HHS CUTS CHILD CARE BENEFITS IN MINNESOTA DUE TO ALLEGED CHILD FRAUD SCHEME
Sen. Kirsten Gillibrand, D-N.Y., spoke out after the Trump administration decided on Jan. 5, 2026, to freeze billions of dollars in federal funding for child care and social services in several blue states. (Getty Images)
“My faith guides my life and public service. Our job is to serve the people who are most in need and most at risk—no matter what state they live in or what political party their families or elected representatives belong to,” she said. “Using the power of government to harm the neediest Americans is immoral and unjustifiable.
“This has nothing to do with fraud and everything to do with political retribution that punishes poor children who need help,” Gillibrand added. “I demand that President Trump unfreeze this funding and stop this brazen attack on our children.”
The NY Post first reported that HHS sent letters to Walz and Minneapolis Mayor Jacob Frey in December asking for information on whether billions in taxpayer funds may have illegally helped “fuel illegal and mass migration.”
Those requests followed an investigation launched by the Treasury Department and the House Oversight Committee into a growing fraud scandal involving several nonprofits with ties to the Somali community in the Twin Cities.
There were about 130,000 undocumented migrants living in Minnesota as of 2023—about 40,000 more than in 2019 and about 2% of the state's population, according to Minnesota data. Pew Research Center. The state's Somali diaspora exceeds 100,000 people, most of whom are concentrated in the Minneapolis–St. Louis area. Polovskaya Square.
Monday's news came the same day Minnesota's governor announced it. Tim Waltz announced he was abandoning his bid for a third term as governor amid intense criticism of his handling of the state's massive welfare fraud scandal.
GOP lawmakers in Minnesota are calling on Gov. Tim Walz to resign amid a growing fraud crisis. (Getty Images)
Walz has filed for a third four-year term. Governor of Minnesota in September, but in recent weeks he has faced a barrage of political criticism from President Donald Trump, Republicans and some Democrats over large-scale theft in a state that has long prided itself on good governance.
Since 2022, more than 90 people — most from Minnesota's large Somali community — have been charged in what has been called the nation's largest. COVID era diagram.
How much money was stolen in the alleged money laundering operations, which included fraudulent food and housing programs, day care centers and Medicaid services, is still being tallied. But the U.S. Attorney in Minnesota said the fraud could exceed $1 billion and will reach $9 billion.
Minnesota fraud scandal intensifies debate over citizenship stripping
The Minnesota Center for Quality Learning is at the center of an alleged child care fraud scandal in the state. (Madeleine Fuerste/Fox News Channel)
Prosecutors said some of the dozens of people who have already pleaded guilty in the case used the money to buy luxury cars, real estate, jewelry and foreign vacations, with some of the funds also sent abroad and potentially falling into the hands of Islamic terrorists.
Trump addressed Walz's announcement of withdrawal from the race on Monday in a post on Truth Social. “The corrupt governor of Minnesota may leave office before his term ends, but he won't run again anyway because he was caught red-handed with Ilhan Omarand his other Somali friends who stole tens of billions of taxpayer dollars,” the president wrote. “I am confident that the facts will come out and they will expose the seriously unscrupulous and wealthy SLIMEBALLS group.
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“Governor Walz destroyed the state of Minnesota, but others like Gov. Gavin Newscum, J.B. Pritzker and Kathy Hochul“have done, in my opinion, an even more dishonest and incompetent job,” Trump added. “NO ONE IS ABOVE THE LAW!”
Fox News Digital's Paul Steinhauser and Andrew Mark Miller contributed to this report.
