Federal funding for Minnesota’s child care system has been frozen after Health and Human Services declared an alleged fraud investigation — a decision that could shutter centers serving 19,000 children and threaten the livelihoods of thousands of providers.
Minnesota receives approximately $185 million annually in federal child care funding, supporting care for 19,000 children through programs that help low-income families afford routine child care so parents can work or attend school. The state Department of Health and Human Services says this funding covers essential services for thousands of families each month.
But on Tuesday, Deputy Secretary of HHS Jim O’Neill announced that federal payments would be halted until states prove funds are being spent legitimately. “Funds will be released only when states prove they are being spent legitimately,” O’Neill said. No alternate plan exists for families affected by the freeze.
This pause has triggered immediate panic among child care providers and families who rely on these funds. Deko Nor, a medical student and parent, told reporters she depends on child care to attend school. “If child care is cut, I’m unable to go to work, or go to school,” she said before becoming too emotional to continue.
The crisis stems from a viral video posted by Nick Shirley, a conservative content creator, claiming widespread fraud at Somali-run day care centers. Shirley’s video, which amassed over 100 million views, showed him demanding proof of enrollment from center staff — footage that sparked outrage across the state.
Child care providers interviewed at the Minnesota State Capitol Wednesday expressed solidarity with Somali providers but condemned the political nature of the freeze. Amanda Schillinger, director of Pumpkin Patch Childcare & Learning Center, said, “The truth is Minnesota has guardrails in place to make defrauding the child care system extremely difficult.” She added, “Cutting off child care funding to everyone in the state is not the answer, and it’s not acceptable.”
Minnesota’s Twin Cities host the nation’s largest population of Somalis — a community recently targeted by heightened immigration enforcement and disparaging remarks from President Donald Trump. The state’s Department of Children, Youth, and Families responded to Shirley’s claims by stating that centers featured in his video were operating normally during inspections.
“Fraud is never acceptable; but cutting off child care funding to everyone in the state is not the answer,” Schillinger said. “We can’t afford to continue to operate if we lose 75% of our enrollment.” Her center relies heavily on federal funding — nearly three-quarters of her students qualify for assistance.
Providers Face Existential Threat
Many providers operate on razor-thin budgets. Mary Solheim, a child care worker with over four decades of experience, said her facility has operated for more than 40 years but now faces closure if funding stops. “If that money is late, which sometimes it is, it may be a four-week wait after we’ve provided care (until we’re paid),” she said. Last month, their furnace failed during frigid temperatures — forcing them to replace it and wiping out their last reserves. “If all funds are cut off, we are at about two to four weeks before we have to close,” she warned.
The freeze follows a broader initiative launched by the US Department of Government Efficiency Service known as “Defend the Spend,” which began in early 2025. Under this policy, HHS requires grantees — including certain child care programs — to justify every transaction with administrative data and photographic evidence. This requirement has since been expanded across Administration for Children and Families programs.
Minnesota Attorney General Keith Ellison called the freeze “a hasty, scorched earth-attack” and vowed to explore legal options to protect critical childcare services. “This is not just wrong, it may well be illegal,” he said in a statement. Governor Tim Walz echoed this sentiment, calling the move “Trump’s long game” designed to defund public programs that assist Minnesotans.
Somali Communities Targeted Amid Rising Tensions
The backlash against Somali-run centers has escalated into physical attacks. Nasrulah Mohamed, manager of Nokomis Daycare Center in Minneapolis — not featured in Shirley’s video — reported a break-in earlier this week. “As we walked around the day care, we saw that our office door was broken into,” he said. “Important documentation, enrollment records, and employee files were stolen.”
Shortly after the break-in, Mohamed received hateful messages online. “This is frightening and exhausting,” he said. “I want to say that there are hundreds of Somali day cares that are out there, and we all help our children and everyone in our community. I want to say no intimidation is going to stop us.”
A parent whose child attends the daycare said she feels unsafe. “Being a Somali American, I was always told that it is safe here and that you are welcome here, and this is no longer the story that I feel and my kids feel,” she said through an interpreter.
What Happens Next?
State officials convened Wednesday to assess potential impacts and timing of the funding freeze. Clare Sanford, chair of government relations for the Minnesota Child Care Association, explained that families typically qualify for assistance after providing job information like tax records and pay stubs. Once enrolled, providers bill counties biweekly with attendance records — funded roughly half by federal dollars.
O’Neill’s demand for receipts and photo evidence applies to all providers — regardless of whether they are suspected of fraud. “These requirements help ensure the integrity of the program and protect both families and providers,” HHS spokesperson Andrew Nixon said. But critics argue this policy targets vulnerable communities without evidence of wrongdoing.
Minnesota’s Department of Children, Youth, and Families doubled down on its commitment to preventing fraud while emphasizing the need to safeguard families and providers. “The distribution of unvetted or deceptive claims can interfere with investigations, create safety risks, and contribute to harmful discourse,” the agency warned.
Meanwhile, Maria Snider, director of the Rainbow Child Development Center, described federal funding as “a crucial piece of survival” for many families. “Many of the families at my center are one paycheck away from becoming homeless — I’m not exaggerating,” she said. “I’m generally scared for what happens next if funding is stopped.”
Snider’s mother opened the center in 1998. “We believe that every child deserves access to high-quality early learning,” Snider said. “We want kids to be able to come to our centers. I have no problem complying with anything that they want.”
Minnesota leaders and child care advocates remain united in their opposition to the freeze. They argue that the threat to 19,000 children and tens of thousands of providers represents more than an economic issue — it is a moral and political reckoning.
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