After allegations of child care related fraud in Minnesota, the Trump administration, through the U.S. Department of Health and Human Services (HHS) and its Administration for Children and Families (ACF), has moved to tighten oversight of federal child care funding by pausing some payments and requiring additional verification before Child Care and Development Fund (CCDF) dollars are released.
On December 30, 2025, Deputy HHS secretary Jim O’Neill posted that HHS had frozen child care payments to Minnesota and activated a “Defend the Spend” approach that would require justification plus receipt or photo evidence before money is sent.[1]
Since then, the administration has signaled that the CCDF verification push is broader than Minnesota: HHS spokesperson Andrew Nixon told NPR that the agency was freezing CCDF funds “effective immediately” and would resume funding after states provided certain “administrative data,” while advocates and states have also described uncertainty about what, exactly, will be required and how quickly funds will flow. [2] Even amid that uncertainty, Pennsylvania’s Department of Human Services has reportedly said the state continues to receive federal child care funding (about $65 million so far in FY 2026), despite not yet receiving detailed guidance.[3]
Two additional, parallel actions are also underway. First, in early January 2026, HHS announced a separate, targeted action restricting access to certain child care and family assistance funds for five states, California, Colorado, Illinois, Minnesota, and New York, spanning three programs: the CCDF (nearly $2.4 billion), Temporary Assistance for Needy Families (TANF) ($7.35 billion), and the Social Services Block Grant (SSBG) ($869 million), totaling about $10.6 billion.[4] Second, HHS announced proposed changes, rolling back parts of the 2024 CCDF rule by restoring flexibility for attendance-based billing, allowing payment after care is delivered rather than requiring advance payments, and restoring voucher flexibility.[5]
[1.] Jim O’Neill (@HHS_Jim), post on X, December 30, 2025, https://x.com/HHS_Jim/status/2006136004294664464.
[2]. Kadin Mills, Sequoia Carrillo, and Nicole Cohen, “Amid fraud claims, Trump admin announces more changes to federal child care funding,” NPR, January 5, 2026, https://www.npr.org/2026/01/05/nx-s1-5667019/hhs-child-care-federal-funding.
[3]. Alton Northup, “Pennsylvania awaits direction as HHS says it will verify child care centers nationwide,” ABC27 News (WHTM-TV), published January 5, 2026, https://www.abc27.com/pennsylvania/pennsylvania-awaits-direction-as-hhs-says-it-will-verify-child-care-centers-nationwide/.
[4]. U.S. Department of Health and Human Services, “HHS Freezes Child Care and Family Assistance Grants to Five States Over Fraud Concerns,” press release, January 6, 2026, https://www.hhs.gov/press-room/hhs-freezes-child-care-family-assistance-grants-five-states-fraud-concerns.html.
[5]. U.S. Department of Health and Human Services, “HHS to Close Biden-Era Loophole That Let States Pay Child Care Providers Without Counting Attendance,” press release, January 5, 2026, https://www.hhs.gov/press-room/hhs-close-biden-era-loophole-states-pay-child-care-providers-without-counting-attendance.html.