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

The Trump administration is seeking to freeze more than $10 billion in federal funding for child care and social services for five Democratic-led states amid concerns that taxpayer money is being improperly transferred to noncitizens, according to a report.

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

More than $7.3 billion in TANF funding would be withheld from the five states, along with nearly $2.4 billion from the CCDF and another $869 million from the Social Services Grant.

The funding halt was expected to be announced in letters sent to state officials on Monday, citing concerns that benefits were being improperly directed to non-U.S. citizens.

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An audit by the Department of Health and Human Services’ Office of Inspector General in 2019 found that New York state improperly claimed $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 refund the funds and implement corrective controls, according to the report.

After details surrounding the potential funding freeze became public, New York Democrats sharply criticized the Trump administration’s move, arguing it would hurt families who rely on child care assistance.

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

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

Along with her post, Gillibrand also shared a public statement regarding the funds freeze.

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Sen. Kirsten Gillibrand, D-N.Y., spoke after the Trump administration moved on Jan. 5, 2026, to freeze billions in federal child care and social services funding for several blue states. (Getty Images)

“My faith guides my life and my public service. Our mission is to serve the people most in need and most at risk — no matter what state they live in, the political party their family belongs to, or their elected representatives,” she said. “Using government power to harm Americans most in need is immoral and indefensible.

“This has nothing to do with fraud, and everything to do with political revenge that punishes poor children who need help,” Gillibrand added. “I call on President Trump to unfreeze this funding and stop this brazen attack on our children.”

The New York Post first reported that in December, the Department of Health and Human Services sent letters to the mayor of Falls and Minneapolis, Jacob Frey, seeking information about whether billions in taxpayer money had illegally helped “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 connected to the Twin Cities’ Somali community.

An estimated 130,000 undocumented immigrants were living in Minnesota as of 2023 — about 40,000 more than in 2019 and about 2% of the state’s population — according to the Pew Research Center. The state’s Somali diaspora numbers more than 100,000 people, most of them concentrated in the Minneapolis-St. Paul area.

The news Monday came on the same day that Minnesota Gov. Tim Walz announced he would abandon his bid for a third term as governor amid harsh criticism for his handling of the state’s massive welfare aid fraud scandal.

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Minnesota GOP lawmakers 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 coming from President Donald Trump and Republicans, and some Democrats, over widespread theft in a state that has long prided itself on good governance.

More than 90 people — most of them from Minnesota’s large Somali community — have been charged since 2022 in what has been described as the country’s largest scheme of the coronavirus era.

The amount of money stolen through alleged money laundering operations involving fraudulent meal and housing programs, day care centers and Medicaid services is still being tabulated. But the US Attorney in Minnesota said the scope of the fraud could exceed $1 billion and reach $9 billion.

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The Center for Quality Education in Minnesota has been found at the center of an alleged child welfare fraud scandal in the state. (Madeleine Foresti/Fox News Channel)

Some of the dozens who have already pleaded guilty in the case used the money to buy luxury cars, real estate, jewelry and international vacations, with some of the money also sent abroad and potentially into the hands of Islamic terrorists, prosecutors said.

Trump addressed Walz’s announcement of leaving the race on Monday, in a post on the Truth Social website. “The corrupt governor of Minnesota will likely leave office before his term is up, but in any case, he will not run again because he, along with Ilhan Omar and others of his Somali friends, were caught stealing tens of billions of taxpayer dollars,” the president wrote. “I’m sure the facts will come out, and they will expose a rich and unscrupulous group of ‘Slimebballs.’

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“Governor Walz has destroyed Minnesota, but others, like Governor Gavin Newscomb, JB Pritzker, and Kathy Hochul, have done, in my opinion, an even more dishonest and incompetent job,” Trump added. “No one is above the law!”

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