The Department of Health and Human Services has frozen all child care payments to the state of Minnesota following allegations that millions of taxpayer dollars were funneled to fraudulent daycare centers over the past decade, according to HHS Deputy Secretary Jim O’Neill.
O’Neill said HHS has taken immediate action to address rampant fraud in Minnesota and nationally, including activating the department’s “defend the spend” system for all Administration for Children and Families payments. Under the change, every ACF payment nationwide now requires written justification along with receipts or photo documentation before funds are released to any state.
O’Neill also said he and Alex Adams have identified individuals referenced in reporting by Nick Shirley and formally demanded that Governor Tim Walz conduct a comprehensive audit of the implicated childcare centers. The requested audit includes attendance records, licensing documentation, complaints, investigations, and inspection histories.
In addition, HHS has launched a dedicated fraud reporting hotline and email address through childcare.gov, encouraging parents, providers, and members of the public to report suspected fraud.
“We have turned off the money spigot and we are finding the fraud,” O’Neill said.
HHS Deputy Secretary Jim O’Neill on X
