Trump administration halts child care funds to 5 Democrat-led states: report

The Trump administration is moving to freeze more than $10 billion in federal child care and social services funding to five Democratic-led states over concerns that taxpayer dollars are being improperly diverted to noncitizens, according to a report.

Officials reportedly said New York Post The Department of Health and Human Services (HHS) will freeze funds from the Child Care Enhancement Fund (CCDF), Temporary Assistance for Needy Families (TANF) program, and Social Services Block Grant affecting California, Colorado, Illinois, Minnesota, and New York over concerns that benefits are being fraudulently transferred to noncitizens, the Department of Health and Human Services (HHS) said.

More than $7.3 billion in TANF funding will be cut from five states, with nearly $2.4 billion from the CCDF and $869 million from the Social Services Block Grant.

The funding pauses were expected to be announced in letters sent to government officials on Monday over concerns that aid was being improperly directed to non-U.S. citizens.

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A. 2019 audit The Department of Health and Human Services Office of Inspector General found that New York State improperly sought $24.7 million in federal reimbursements for child care subsidies paid to New York City that did not comply with program rules.

The audit attributed the overbilling to system errors and oversight failures, not criminal fraud, and state officials agreed to return the funds and implement corrective controls, according to the report.

After details about the potential funding freeze were released, New York Democrats harshly criticized the Trump administration’s move, arguing it would harm families in need of child care assistance.

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Sen. Kirsten Gillibrand, D-Y., accused the administration of using the issue for political retaliation and warned it would hurt children and low-income families across the state.

“Trump is threatening to freeze child care funding in New York and target our children for political revenge. This is immoral and indefensible,” he wrote in a post on X. “I demand that the administration abandon any plans to freeze this funding and stop harming families in New York.”

In addition to her post, Gillibrand also shared a press release regarding the freezing of funds.

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Sen. Kirsten Gillibrand (DY) spoke after the Trump administration moved on January 5, 2026, to freeze billions of dollars in federal child care and social service funding for many blue states. (Getty Images)

“My faith guides my life and my public service. It is our job to serve the people 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,” he said. “Using the power of government to harm the neediest Americans is immoral and indefensible.

“This has nothing to do with fraud and everything to do with political punishment punishing poor kids who need help,” Gillibrand added. “I demand that President Trump release this funding and stop this brazen attack on our children.”

The NY Post first reported in December that HHS sent letters to Walz and Minneapolis Mayor Jacob Frey seeking information on whether billions of dollars of taxpayer funds were illegally helping “fuel illegal and mass immigration.”

These requests were followed by investigations launched by the Treasury Department and the House Oversight Committee into a growing fraud scandal involving several nonprofit organizations affiliated with the Somali community in the Twin Cities.

As of 2023, an estimated 130,000 illegal immigrants lived in Minnesota; that number is nearly 40,000 more than in 2019 and represents roughly 2% of the state’s population. Pew Research Center. The state’s Somali diaspora exceeds 100,000 people, many of whom live in Minneapolis-St. Paul area.

Monday’s news came the same day that Minnesota Gov. Tim Walz announced he was withdrawing his bid for a third term as governor amid harsh criticism over his handling of the state’s massive benefits fraud scandal.

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GOP lawmakers in Minnesota are calling on Gov. Tim Walz to resign over the exploding fraud crisis. (Getty Images)

Walz launched his bid for a third four-year term as Minnesota governor in September, but in recent weeks he has faced a barrage of political fire from President Donald Trump, Republicans and some Democrats over the large-scale theft in a state that has long prided itself on good governance.

More than 90 people, mostly from Minnesota’s large Somali community, have been charged in what has been described as the nation’s largest Covid-era scheme since 2022.

It still tabulates how much money was stolen through money laundering operations involving fraudulent food and housing programs, daycares and Medicaid services. But the scope of the fraud could exceed $1 billion and go as high as $9 billion, the U.S. attorney in Minnesota said.

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The Quality Learning Center in Minnesota was at the center of the state’s alleged child care fraud scandal. (Madelin Fuerste / Fox News Channel)

Prosecutors said some of the dozens of people who pleaded guilty in the case used the money to buy luxury cars, real estate, jewelry and international vacations, with some of the funds sent abroad and potentially falling into the hands of Islamist terrorists.

Trump addressed Walz’s announcement that he would be leaving the race in a post on Truth Social on Monday. “Minnesota’s Corrupt Governor will probably leave office before his term is up, but either way he won’t be running again because he was caught and arrested along with Ilhan Omar and other Somali friends stealing Tens of Billions of Dollars from Taxpayers,” the President said. he wrote. “I am confident that the truth will come out and they will expose a seriously unscrupulous and rich group of ‘SLIMEBALLS’.

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“Governor Walz destroyed the State of Minnesota, but others like Governor Gavin Newscum, JB Pritzker, and Kathy Hochul have done an even more dishonest and incompetent job, in my opinion,” Trump added. “NO ONE IS ABOVE THE LAW!”

Fox News Digital’s Paul Steinhauser and Andrew Mark Miller contributed to this report.