HHS to States: Prove Childcare Funds Being 'Spent Legitimately'

The Department of Health and Human Services is freezing federal childcare payments to all states, not just Minnesota, until they can prove the funds "are being spent legitimately."

HHS spokesman Andrew Nixon told ABC News on Wednesday that recipients of federal childcare funds who are not suspected of fraud must submit administrative data to the agency for review.

But Nixon said Minnesota recipients — along with any other recipients suspected of fraudulent activity — must provide additional records, including:

•  attendance logs
• licensing documentation
• inspection, monitoring and compliance reports
• complaint and investigation files

"It's the onus of the state to make sure that these funds, these federal dollars, taxpayer dollars, are being used for legitimate purposes," Nixon said.

HHS announced Tuesday that it froze all childcare payments to Minnesota following allegations that daycare operators were improperly collecting public funds.

Deputy HHS Secretary Jim O'Neill said the Administration for Children and Families is tightening payment requirements nationwide — including justifications for claims and proof such as receipts or photographic evidence, according to a post on social media.

O'Neill said the administration is responding to what he described as "blatant fraud" that appears widespread in Minnesota and elsewhere and called on Democrat Gov. Tim Walz to conduct a comprehensive audit of daycare centers spotlighted in a viral online video.

The crackdown follows a widely circulated online video posted by independent journalist Nick Shirley, who claims to have visited daycare sites in Minneapolis and found no children present despite the facilities allegedly receiving government funds.

Walz fired back on social media, accusing President Donald Trump's administration of using fraud as a pretext to undermine childcare programs.

"This is Trump's long game," Walz wrote on X. "We've spent years cracking down on fraudsters.

"It's a serious issue — but this has been his plan all along. He's politicizing the issue to defund programs that help Minnesotans."

According to Minneapolis-St. Paul affiliate KSTP, state Department of Children, Youth and Families Commissioner Tikki Brown said officials have concerns about the video's methods, including whether the filming occurred during open hours.

Brown also said children were present during unannounced state inspections.

After the video went viral, Homeland Security Secretary Kristi Noem said her department is conducting a "massive" investigation into childcare and other alleged fraud.

FBI Director Kash Patel said federal investigators have surged resources into Minnesota and suggested the issue could be far broader than what has already been uncovered.

• Minnesota Loses Federal Funding After Fraud Findings
• Trump: More Fraud in California Than Minnesota