In a move targeting lifeline benefits for at least a million American families, the U.S. Department of Health and Human Services announced late Tuesday it had frozen roughly $10 billion in funding for social services, child care and cash aid in five Democratic-led states.
The federal action follows recent criminal convictions in a massive public benefits fraud scheme in Minnesota, but the Trump administration has yet to specify the alleged fraud or evidence that prompted the dramatic new funding threat to the four additional states.
An agency press release said it has “now restricted pending further view” $7.35 billion in funding for the Temporary Assistance for Needy Family Program from going to California, Colorado, Illinois, Minnesota, and New York. Also withheld is another $2.4 billion for the Child Care and Development Fund, and nearly $870 million in Social Services Block Grant funding.
A spokesperson for the federal health agency described the rationale in an email released earlier on Tuesday.
“For too long, Democrat-led states and governors have been complicit in allowing massive amounts of fraud to occur under their watch,” said Andrew Nixon, deputy assistant secretary for media relations at the U.S. Department of Health and Human Services. “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.”
The federal agency did not respond to further questions. Its press release noted that the agency had “identified concerns that these benefits intended for American citizens and lawful residents may have been improperly provided to individuals who are not eligible under federal law.”
The three targeted federal funding streams serve the most vulnerable families in the five affected states, including children and families in the foster care system.
On Tuesday morning, Gov. Kathy Hochul characterized the administration’s targeting of the programs as “vindictive,” but also called it a “pending threat” that can be defeated in court if it comes to pass.
“We’ll be having a litigation strategy,” she said in response to an Associated Press reporter’s question. “We’ll fight this with every fiber of our being because our kids should not be political pawns in a fight that Donald Trump seems to have with blue state governors.”
Illinois Gov. J.B. Pritzker’s office referred questions to the state’s Department of Human Services, which provided a statement describing the freeze as “yet another politically-motivated action by the Trump Administration that confuses families and leaves states with more questions than answers.” But, the unsigned statement continued, the state has not received “any official communication or notification on impacts to federal funding.”
State officials in California and Colorado said they also had not received communication about a potential funding freeze as of midday Tuesday. Minnesota officials did not respond to requests for comment by press time.
In addition to assistance for low-income, working families, the programs in question are central to foster care-related services. The five states use between 4% and 40% of their Social Services Block Grant on “child welfare/youth at risk,” according to an unpublished 2023 federal report obtained by The Imprint. New York spent at least $79 million of its federal Temporary Assistance for Needy Families funds on child welfare or foster care in 2023, federal data show.
The funding freeze announced this week follows national uproar over ongoing criminal prosecutions for welfare fraud in Minnesota — one of the largest such schemes in history. Federal prosecutors have alleged billions in taxpayer funds may have been misused, with some defrauded dollars going toward luxury cars and real estate instead of meals, therapy and other services for needy children and adults in Minnesota.
Although the overwhelming majority of Somalis in Minnesota are law-abiding American citizens, the scandal has fueled President Trump’s long-running accusations that non-citizens misuse public welfare programs. He has targeted Somali immigrants and Somalia for broader criticism that has been widely condemned as xenophobic.
In the past several weeks, his administration — and its allies in conservative media — have continued to hammer Minnesota with accusations of fraud, beyond the criminal cases already prosecuted. In December, Alex Adams, assistant secretary for the Administration for Children and Families, sent letters to Gov. Tim Walz and other Minnesota state officials demanding detailed citizenship information for kids and families in the child welfare system and related government programs.
And last week, Adams and Health and Human Services Deputy Secretary Jim O’Neill announced new oversight requirements for child care funding nationwide and a freeze on $185 million in annual aid to Minnesota’s day care centers. That action was apparently taken in response to unsubstantiated accusations of day care center fraud spread by a MAGA-aligned YouTube content creator in a Dec. 26 video that went viral.
Democrats and some child care providers and parents have accused President Trump and his allies of exploiting Minnesota’s fraud crisis to take away vital services for eligible families.
Maria Snider, director of a St. Paul child care center founded by her mother in 1998, spoke in defense of Minnesota’s federal child care funding at an emotional rally last week because, she said, many others are afraid to come forward.
“Many of the families at my center are one paycheck away from becoming homeless. If child care assistance is turned off, children can’t come to care, that means their parents can’t go to work,” she said. “I’m genuinely scared for what can happen next if funding is stopped. I can’t help but think this is part of a larger designed plan and strategy to cut public funding.”
Jeremy Loudenback, Susanti Sarkar and Hana Ikramuddin contributed to this report.
