The Trump administration says it is freezing $10 billion in funds for child care and poor families in five blue states, the Office of Management and Budget confirmed to Axios Monday.
Why it matters: The White House is pointing to reports of social services fraud in Minnesota to threaten funding for child care around the country.
- Child care providers are bracing for a slowdown in funds and the possibility of cuts that threaten their ability to operate. That could create wider issues, as millions of parents rely on child care to get to their jobs.
Where it stands: Funds are being suspended for California, Colorado, Illinois, Minnesota and New York, according to the New York Post, which earlier reported the news.
- The hold on funds is due to fraud and giving money to undocumented immigrants, per an OMB official.
- The official shared links to reports of fraud in a few of these states from the past few years, many of which have already been prosecuted or charged.
Zoom in: Funding for the Child Care Development Fund and Temporary Assistance for Needy Families (TANF) will be held back.
- The child care money is used to subsidize care for low-income families, and TANF is monthly cash assistance for very poor people.
- More than $7 billion of the funds were meant for TANF.
- 1.4 million children around the country are supported by federal child care funding.
The big picture: A YouTube video claiming to show empty child care centers in Minnesota — posted the day after Christmas — has spurred the administration to action.
- Spending freezes may extend beyond blue states. Already, Texas child care centers have been warned over potential delays, according to a local news report. And providers in West Virginia are also reportedly on edge.
- Last week, officials from the Department of Health and Human Services (HHS) said in an announcement posted on X that it was freezing child care payments to Minnesota and adopting a "defend the spend" system for child care funding to the states.
Zoom out: A spokesman for HHS tells Axios that with "defend the spend," it is now requesting more "administrative data" from all 50 states before they can tap funds for child care and TANF.
- And the five states named on Monday will also be asked to provide additional information, including attendance records, inspection reports and complaints from parents.
- Why those states? "That's where our highest suspicion is," says the spokesman, Andrew Nixon.
- Certain child care centers in Minnesota will face even more requirements, he says.
- The agency will work to process the additional information quickly to avoid delays. "We're not here to hinder the flow of funding for the centers operating legitimately."
Between the lines: Day care centers operate on shoestring budgets and significant delays in getting funds can cause programs to close, says Elliot Haspel, a senior fellow at the think tank Capita and a child care advocate.
- "If we start seeing widespread delays, it's going to have negative ripple effects up and down the economy," he says.
What they're saying: A representative from the Illinois Department of Human Services said it hasn't yet heard from the administration on a funding freeze.
- "This is yet another politically motivated action by the Trump Administration that confuses families and leaves states with more questions than answers," the Illinois representative said.
Axios Chicago's Carrie Shepherd contributed reporting.
Editor's note: This story has been updated with additional details.
