The Trump administration announced this week that it will cut up to $10 billion in federal childcare and social services funding from five Democratic-led states, citing fraud uncovered in Minnesota as justification for a sweeping action that advocates and Democratic lawmakers say will punish families with no connection to the misconduct.
The U.S. Department of Health and Human Services confirmed that New York, California, Colorado, Minnesota, and Illinois will be affected by the funding freeze. The cuts include reductions to major programs that provide cash assistance and childcare support to low income families, even as federal officials have not presented evidence that four of the five states engaged in fraudulent activity.
According to HHS, approximately $7 billion in funding for the Temporary Assistance for Needy Families program will be impacted. TANF provides cash assistance to families with children living in poverty. In addition, the five states will collectively lose nearly $2.4 billion from the Child Care and Development Fund, which helps working parents afford childcare, as well as $870 million in social services grants for children.
The administration has pointed to a fraud scandal in Minnesota as the basis for the broader funding cuts. Dozens of individuals have been convicted of stealing public money through Minnesota’s social services system. In response, the Trump administration previously suspended $185 million in annual aid to childcare centers in the state and announced a pause on childcare funding nationwide until states could provide verification data on how funds were being used.
Deputy HHS Secretary Jim O’Neill described the situation as involving “blatant fraud that appears to be rampant in Minnesota and across the country.”
Despite those claims, the administration has not identified evidence of fraud in the social services programs of New York, California, Colorado, or Illinois. Nevertheless, HHS officials said the funding freeze would move forward.
Andrew Nixon, a spokesperson for HHS, told CNN that the administration’s actions were necessary because “for too long, Democrat-led states and governors have been complicit in allowing massive amounts of fraud to occur under their watch. Under the Trump administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money.”
Advocates have strongly disputed that rationale. Kristen Crowell, executive director of the advocacy group Fair Share America, said the decision reflects a broader policy pattern rather than a targeted response to wrongdoing.
“Rather than an isolated decision, this is part of a clear and dangerous pattern,” Crowell said.
Crowell pointed to cuts to Medicaid and the Supplemental Nutrition Assistance Program included in the Republican-backed One Big Beautiful Bill Act passed last year, arguing that the childcare funding reductions fit into a wider agenda.
“These policies amount to a coordinated attack on working families,” she said.
Crowell warned that the immediate impact of the funding cuts would fall on parents trying to remain employed while caring for their children.
“In the case of the childcare funding cuts, the administration’s decision will mean higher costs, fewer slots, and more families forced into impossible choices between caring for their children and keeping a job,” Crowell said.
She added that the consequences would ripple through the broader economy.
“Beyond the immediate human harm, this agenda undermines foundational elements of our economy: the care infrastructure that makes work possible and the purchasing power of the working class,” Crowell said. “When parents can’t afford childcare, when families lose health coverage, when hunger rises, our workforce shrinks, productivity falls, families are forced to go without. This is not fiscal responsibility. It’s economic sabotage, paid for by America’s kids.”
Democratic lawmakers have accused the Trump administration of using the Minnesota fraud scandal as a pretext to punish Democratic-run states. Senate Minority Leader Chuck Schumer accused President Donald Trump of “playing politics with our children’s lives.”
Representative Brittany Pettersen of Colorado suggested that her state was once again being targeted in retaliation for its prosecution of a former county clerk involved in efforts to overturn the 2020 election results.
State officials in the affected states have begun preparing legal challenges. New York Governor Kathy Hochul said the state would fight the cuts in court if formally notified by the federal government.
“This is a fight we’re going to have to take on if we get that notification,” Hochul said during a press conference Tuesday. “It’s vindictive. I believe that we’ll be successful in court. We’ll be having a litigation strategy. We’ll fight this with every fiber of our being because our kids should not be political pawns.”
California Attorney General Rob Bonta said the funding freeze could become the latest in a series of legal challenges to Trump administration policies.
“If it’s unlawful, if we can challenge it in court and be effective, like we have 80 percent of the time, and block it, then we will,” Bonta told Politico. “But right now, we’re in the assessment period to make sure that we know what we’re dealing with.”
The childcare funding cuts come as Trump has expanded his response to the Minnesota scandal beyond welfare policy. Trump has cited the controversy as justification for intensifying immigration enforcement and has placed blame on Minnesota’s Somali community, which numbers about 80,000 people. Members of the Somali diaspora have been charged with defrauding the state government.
Trump said Sunday that “every one of them should be forced to leave this country,” referring to all Somalis, and has deployed thousands of federal agents to Minnesota to intensify immigration operations.
On social media, some commentators have pointed to the right wing policy blueprint Project 2025 as evidence that the administration ultimately aims to dismantle federally supported childcare programs. One commentator wrote, “It’s not about fraud. It’s about defunding childcare.”
Federal officials confirmed to Politico that letters notifying California, Illinois, New York, Minnesota, and Colorado of the funding freeze would be sent Tuesday. HHS Deputy Secretary Jim O’Neill and HHS Assistant Secretary for the Administration for Children and Families Alex Adams also released a video proposing new guidelines for how childcare funds may be used going forward.
As states prepare for court challenges and families face uncertainty over access to childcare and cash assistance, advocates warn that the scope of the cuts raises questions about whether fraud enforcement is being used to justify partisan punishment and about the long term consequences for the nation’s childcare system.
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