On December 26, 2025, Jim O’Neill, Deputy Secretary of the Department of Health and Human Services (HHS), announced a significant policy shift affecting child care funding in Minnesota. The Trump administration has enacted an immediate freeze on all federal child care payments to the state, responding to allegations of widespread fraud within the state’s social services programs.
This decision follows the release of a viral video by independent videographer Nick Shirley, which has garnered over 128 million views. The footage highlights numerous child care facilities purportedly operating in Minnesota, yet appearing to be unoccupied, with closed doors and poorly labeled signage. These establishments reportedly received substantial taxpayer funding while not providing any actual child care services.
In light of these revelations, O’Neill noted that the administration had taken several actions to combat what they described as “blatant fraud” in Minnesota and across the United States. One of the primary measures introduced is the activation of stricter guidelines for the Administration for Children and Families (ACF) payments. Starting immediately, all ACF payments to states will now necessitate verifiable justification, including receipts or photographs, before funds are disbursed.
Moreover, O’Neill has tasked Assistant Secretary for ACF Alex Adams with identifying the daycares featured in Shirley’s video, including notably the “Quality Learning Center.” The administration has called for a thorough audit of these facilities by Governor Tim Walz’s office.
O’Neill has been transparent about the seriousness of these actions. “We believe the state of Minnesota has allowed scammers and fake daycares to siphon millions of taxpayer dollars over the past decade,” he stated in a video message.
In addition to these steps, the HHS has established a hotline and email address dedicated to reporting suspected instances of fraud in child care services. This initiative allows concerned citizens to report questionable activities across all states, further enhancing accountability within child care programs.
The ongoing investigation has expanded beyond financial audits, with the Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE) launching door-to-door inquiries in Minneapolis. These efforts aim to shed light on the extent of fraudulent operations using taxpayer funds.
With this funding freeze, questions arise about the broader implications it may have on federal child care policies and accountability measures nationwide. As FBI Director Kash Patel remarked, the issues arising in Minnesota may represent only the “tip of a very large iceberg.” The administration’s commitment to uncovering fraud and holding accountable those involved reflects an overarching initiative to fortify the integrity of social service funding across the United States. The response from federal and state officials will likely influence future oversight frameworks, shaping the landscape of child care funding moving forward.
