On December 31, 2025, the U.S. Department of Health and Human Services (HHS) announced a freeze on federal child care payments to Minnesota, citing significant fraud allegations linked to daycare centers in the state. Deputy Secretary Jim O’Neill stated that the decision was prompted by claims of "blatant fraud" and the need for increased accountability in the use of taxpayer funds.

The freeze affects approximately $185 million in annual child care funding intended to support low-income families and their children. O’Neill indicated that all future payments from the Administration for Children and Families will require detailed justification, including receipts or photographic evidence, before funds are disbursed. Additionally, a hotline for reporting suspected fraud has been established.

This action follows a viral video by independent journalist Nick Shirley, which alleged that several daycare facilities in Minneapolis were receiving state funds while appearing inactive. Minnesota officials have disputed these claims, asserting that inspections of the facilities have shown compliance with operational standards.

Governor Tim Walz criticized the federal response as politically motivated, suggesting it undermines essential services for working families. He emphasized that the state has been actively addressing fraud issues and is committed to transparency and accountability in its programs.

The allegations have drawn national attention, particularly due to the involvement of the Somali community, which has been disproportionately affected by the scrutiny. U.S. Representative Ilhan Omar has cautioned against generalizing blame to the entire community based on the actions of a few individuals.

The freeze on funding is part of a broader investigation into alleged fraud within Minnesota's social services, which has reportedly resulted in significant financial losses. Federal prosecutors have indicated that the scale of the fraud could be as high as $9 billion, with numerous individuals charged in connection to these schemes.

As the situation develops, the implications for child care services and the families that rely on them remain a critical concern, highlighting the need for a balanced approach to addressing fraud while ensuring access to necessary support for vulnerable communities.