Federal officials moved Monday to halt more than $10 billion in social services and child care funding to several Democrat-led states, citing concerns that taxpayer dollars were improperly diverted to non-citizens, according to administration sources, the NY Post reports.
The funding freeze affects California, Colorado, Illinois, Minnesota, and New York, with the Department of Health and Human Services set to pause distributions from three major federal programs: the Child Care Development Fund, Temporary Assistance for Needy Families, and the Social Services Block Grant.
The largest portion of the freeze involves TANF, with approximately $7.35 billion slated to be withheld from the five states. An additional $2.4 billion in CCDF funding will also be blocked, along with roughly $869 million from the Social Services Block Grant program.
Administration officials said the decision would be formally communicated through letters sent Monday to each state, outlining concerns that benefits were fraudulently provided to non–U.S. citizens.
The action follows earlier scrutiny of state-administered programs. More than six years ago, the HHS Office of Inspector General determined that New York City improperly charged the federal government over $24.7 million for child care subsidies.
Minnesota has been a particular focus of federal investigations. In December, HHS sent letters to Gov. Tim Walz and Minneapolis Mayor Jacob Frey questioning whether billions in taxpayer funding had unlawfully helped “fuel illegal and mass migration,” a development first reported by The Post. Those inquiries were followed by investigations launched by the Treasury Department and the House Oversight Committee into a growing fraud scandal involving nonprofits tied to the Somali community in the Twin Cities.
According to the Pew Research Center, Minnesota was home to about 130,000 illegal migrants as of 2023, up roughly 40,000 from 2019 and accounting for about 2% of the state’s population. The state’s Somali diaspora exceeds 100,000 people, most concentrated in the Minneapolis–St. Paul area.
Federal prosecutors have already obtained dozens of convictions connected to a $250 million fraud scheme involving Feeding Our Future, a Somali-linked organization accused of using stolen funds to buy luxury vehicles and real estate. First Assistant Minnesota U.S. Attorney Joe Thompson has alleged the scope of the fraud is far larger, claiming as much as $9 billion may have been skimmed.
“What we see in Minnesota is not a handful of bad actors committing crimes. It’s staggering, industrial-scale fraud,” Thompson told reporters in a Dec. 18 news conference.
Public attention intensified after YouTuber Nick Shirley visited about 10 child care centers that collectively received $111 million in taxpayer funds. Subsequent reporting by the Minnesota Star Tribune found that fewer than half of those facilities appeared to be operating.
Gov. Walz addressed the issue Monday during a press conference in which he also announced he was ending his bid for a third term.
“We cannot effectively deliver programs and services if we can’t earn the public’s trust,” the Minnesota Democrat said, before criticizing President Trump and his “allies in Washington.”
“We’ll win the fight against the fraudsters, but the political gamesmanship we’re seeing from Republicans is only making that fight harder,” he added.
President Trump responded with a Truth Social post later Monday, accusing Walz and others of massive corruption.
“Minnesota’s Corrupt Governor will possibly leave office before his Term is up but, in any event, will not be running again because he was caught, REDHANDED, along with Ilhan Omar, and others of his Somali friends, stealing Tens of Billions of Taxpayer Dollars,” Trump wrote.
“I feel certain the facts will come out, and they will reveal a seriously unscrupulous, and rich, group of ‘SLIMEBALLS,’” the president added.
“Governor Walz has destroyed the State of Minnesota, but others, like Governor Gavin Newscum, JB Pritzker, and Kathy Hochul, have done, in my opinion, an even more dishonest and incompetent job. NO ONE IS ABOVE THE LAW!”
Democratic lawmakers sharply criticized the funding freeze. Sen. Kirsten Gillibrand of New York denounced the move as politically motivated.
“To use the power of the government to harm the neediest Americans is immoral and indefensible,” Gillibrand said in a statement. “This has nothing to do with fraud and everything to do with political retribution that punishes poor children in need of assistance. I demand that President Trump unfreeze this funding and stop this brazen attack on our children.”
Officials in several affected states said they had not yet received formal notification. A spokesperson for Colorado Gov. Jared Polis said “the state has not been officially notified of any changes to these funding sources,” adding that if accurate, “it would be awful to see the federal government targeting the most needy families and children this way.”
A representative for California Gov. Gavin Newsom’s administration likewise said the state had not been given guidance on funding changes, but emphasized that California is “committed to safeguarding the integrity of all child care subsidy payments and takes any potential misuse of funds seriously.”
{Matzav.com}