Federal child care funding for Minnesota has been frozen under an order led by RFK Jr. This has intensified a political conflict over fraud claims that state officials say are being used as a weapon, despite ongoing investigations lasting years.
The freeze was imposed by the Department of Health and Human Services, which RFK. Jr heads. This action followed the Trump administration’s assertion of widespread fraud linked to federally funded programs. The Guardian first reported the news, prompting immediate backlash from Minnesota leaders who warned that child care providers and families might suffer.
In a video statement announcing the freeze, HHS Deputy Secretary Jim O’Neill said the administration had effectively “turned off the money spigot” to Minnesota while federal officials review how funds are distributed. He presented the move as a measure to prevent fraud, stating that payments will not resume without further justification and documentation.
Although Kennedy did not appear in the video, the freeze is directly under his authority as HHS head. Since taking office, RFK Jr. has focused on eliminating waste and corruption in federal health and social service programs. This approach has resonated with conservative allies but alarmed Democratic officials in states facing funding cuts.
We have frozen all child care payments to the state of Minnesota.
You have probably read the serious allegations that the state of Minnesota has funneled millions of taxpayer dollars to fraudulent daycares across Minnesota over the past decade.
Today we have taken three actions… pic.twitter.com/VYbyf3WGop
— Deputy Secretary Jim O’Neill (@HHS_Jim) December 30, 2025
According to The Guardian, the renewed scrutiny partly arose from viral social media posts highlighting previous fraud cases in Minnesota, especially those linked to federally funded nutrition and child care programs during the COVID-19 pandemic. These cases date back several years and began under the Biden administration, not the current one.
Federal prosecutors made significant indictments in 2022, accusing dozens of individuals of exploiting pandemic-era programs in a scheme that totaled about $250 million. In the most notable case, 57 people were convicted related to fraud involving the nonprofit Feeding Our Future. Minnesota officials have stated that these prosecutions are ongoing and that the state has cooperated closely with federal authorities.
The Guardian reported that a federal prosecutor recently claimed that up to half of the nearly $18 billion in federal funds going to Minnesota programs since 2018 may have been stolen. State leaders argue that this claim is exaggerated and misleading. Many defendants in these cases are Somali Americans, a reality that has sparked political controversy and accusations of scapegoating.
President Donald Trump has repeatedly referenced the Minnesota fraud cases to critique refugee programs and target Ilhan Omar, who represents a district with a large Somali American population. Omar has urged the public to avoid blaming an entire community for the actions of a few individuals.
Minnesota Gov. Tim Walz reacted strongly to the funding freeze, arguing that the state has already spent years improving oversight and prosecuting fraud. While he acknowledged that fraud is a serious issue, Walz accused the Trump administration and HHS leadership under Kennedy of using it as a reason to undermine programs that help working families.
Under the new HHS guidelines, payments through the Administration for Children and Families will now need extra documentation, including receipts or photos, before funds are released. The department has also set up a national fraud reporting hotline and email address.
For Minnesota child care providers, the immediate concern is the practical effect of the funding freeze. Many operate on tight budgets and depend on steady federal support to cover staffing, rent, and tuition help for low-income families. They warn that a prolonged freeze could lead to closures or reduced availability, regardless of the fraud investigations’ outcomes.
As RFK Jr. reshapes HHS policy around fraud enforcement, the Minnesota freeze has become an early test of how far this approach will reach and how much collateral damage states and families may suffer while federal officials differentiate between allegations and facts.
