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The Trump administration has ordered a freeze of some federal safety-net funding flowing to California, Colorado, Illinois, Minnesota and New York, pausing money tied to child care subsidies, cash assistance and job training. The states sued, saying the government is treating them differently and that the pause would harm children and families while fraud questions are litigated. On Friday, U.S. District Judge Arun Subramanian halted the freeze for at least two weeks, without deciding the case’s merits.
Federal officials said the freeze followed “reason to believe” that each targeted state had provided benefits to “illegal aliens,” according to letters sent to the states. The administration said it is holding up funds while inspecting fraud allegations and implementing “strategies and program controls to identify fraud and ensure program integrity.”
HHS told the five states that money was frozen for the Child Care and Development Fund, which subsidizes child care for low-income families, as well as the Temporary Assistance for Needy Families program and the Social Services Block Grant. The states’ lawsuit said they receive more than $10 billion a year for the programs at issue.
The administration also demanded detailed information from the states, including the names and Social Security numbers and other personally identifying details of beneficiaries going back to at least 2022. It sought information about subcontractors and program providers dating back to 2019, and for child care, it requested attendance records but said without personal information for the children or their families. The administration’s approach reflects a push to collect and use similar beneficiary data across other federal programs.
Subramanian did not rule on whether the funding freeze was lawful, but said the five states had met a legal threshold to keep the “status quo” in place for at least 14 days while arguments proceed. The halt was at least partly designed to prevent changes to program funding and operations from becoming irreversible while the court considers the claims.
Ahead of the court fight, New York officials said the funding supports services including homeless shelters, adoption and child welfare investigations. They said the losses could create a budget hole of hundreds of millions this month, according to the AP report. The administration has said it is “implementing strategies and program controls” to address fraud, while the states contend their children are being harmed for political reasons.
Beyond the five states, the administration told the remaining 45 states that they would face new requirements to access their allotted child care funds. To obtain distributions through an online system, the states must first verify enrollment and attendance at child care centers and submit “a strong justification for the use of funds that aligns with” the purpose of the program. A think tank researcher said delays could create operational harm for providers even if the funds eventually flow, and said families also could be affected if centers close or reduce services.
Ruth Friedman, a senior fellow at The Century Foundation who oversaw child care programs during the Biden administration, said some of the information the federal government wants could be difficult to assemble because it is not currently required. She also said it was not clear how much evidence the administration wants states to enter to receive funds.
Minnesota saw the focus intensify in connection with social-media-fueled fraud allegations involving the state’s Somali residents in Minneapolis, with attention also drawn to earlier fraud claims involving Feeding Our Future. Federal prosecutors have said that 78 people were charged since 2022 and that 57 were convicted after prosecutors alleged the nonprofit group stole $250 million from a program meant to feed children during the COVID-19 pandemic, the AP report said.
In the most urgent step for Minnesota, officials were told their child care providers’ federal money was on hold and that they had to hand over records on child care providers, state oversight efforts and program finances by Friday. In a separate letter notifying Minnesota that social services block grant funds would be on hold, the administration asserted that the state had not demonstrated it had effective mechanisms to prevent fraud.
Minnesota Gov. Tim Walz defended his state’s response, saying it was taking aggressive action to prevent additional fraud. Separately, U.S. Agriculture Secretary Brooke Rollins announced Friday that the administration would freeze about $130 million a year in funding from her agency to Minnesota, again citing the state’s inability to stop fraud schemes, according to the AP report.