WASHINGTON, January 6, 2026 – The Trump administration announced Tuesday that it is freezing approximately $10 billion in federal funding for social services and child care programs in five Democratic-led states—California, Colorado, Illinois, Minnesota, and New York—citing concerns over widespread fraud and misuse of taxpayer dollars.
The Department of Health and Human Services (HHS) will withhold roughly $7 billion allocated to the Temporary Assistance for Needy Families (TANF) program, $2.4 billion from the Child Care Development Fund (CCDF), and about $870 million from the Social Services Block Grant, programs that provide cash assistance, child care subsidies, and support services primarily for low-income families and children.
HHS spokesperson Andrew Nixon defended the decision in a statement, saying, "For too long, Democrat-led states and Governors have been complicit in allowing massive amounts of fraud to occur under their watch. Under the Trump Administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money."
The move expands on a prior action last week, when HHS paused child care funding specifically to Minnesota amid ongoing investigations into alleged fraud in public-assistance programs there. That state has been at the center of a long-running scandal involving the Feeding Our Future nonprofit, accused of stealing over $250 million from federal child nutrition programs during the COVID-19 pandemic. Federal prosecutors have charged more than 70 individuals in connection with the scheme, with many convictions secured, and estimates suggest broader fraud in Minnesota's social services could total billions.
However, multiple reports note that the administration has not provided specific evidence of comparable large-scale fraud in California, Colorado, Illinois, or New York. Some officials have referenced concerns that benefits were improperly directed to noncitizens or cited older, resolved cases, but no sweeping schemes akin to Minnesota's have been publicly detailed for the other states.
President Donald Trump has amplified the rhetoric, particularly targeting California Governor Gavin Newsom. In a Truth Social post on Tuesday, Trump wrote, "California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun." The president has not elaborated on specific allegations in California, though allies have pointed to past unemployment insurance fraud during the pandemic.
Democratic leaders and lawmakers sharply criticized the funding freeze as politically motivated retribution against blue states. New York Senator Kirsten Gillibrand called it "political retribution that punishes poor children in need of assistance," stating, "This has nothing to do with fraud and everything to do with political retribution." New York Governor Kathy Hochul described it as a "frontal assault" on children.
Colorado and Illinois officials reported not receiving formal notifications of the freeze, while spokespeople for affected governors accused the administration of weaponizing federal funds. A spokesperson for Governor Newsom dismissed Trump's claims, calling him "a deranged, habitual liar" and highlighting efforts to combat fraud in California.
The decision follows a pattern of the Trump administration scrutinizing spending in Democratic-led jurisdictions. During the 2025 government shutdown, billions in infrastructure, climate, and disaster preparedness grants to blue states and cities were paused or slashed. Analysts suggest the current action could disrupt services for hundreds of thousands of low-income families, potentially forcing child care centers to close or families to forgo assistance amid ongoing affordability challenges.
Supporters of the freeze, including some Republican lawmakers and conservative commentators, argue it is necessary to root out waste and ensure funds reach legitimate recipients, especially in light of Minnesota's documented issues and broader concerns about oversight in federally funded programs.
The HHS has indicated that funding could resume pending audits and additional verification from the states. Federal investigations into Minnesota continue, with surges of agents deployed there in recent weeks. As probes potentially expand, the freeze underscores escalating tensions between the Trump administration and Democratic governors over fiscal accountability and federal-state relations.
This developing situation highlights ongoing debates about fraud prevention in social safety net programs, which distribute tens of billions annually nationwide. While Minnesota's Feeding Our Future case remains one of the largest COVID-era fraud schemes prosecuted, experts note that isolated incidents do not necessarily indicate systemic issues across multiple states.
