A federal judge has issued a temporary restraining order halting the Trump administration's freeze on billions in childcare and welfare funding to five blue states, following lawsuits. HHS rolls out stricter disbursement rules while critics highlight larger TANF misuse in states like Mississippi.
Following the January 6 announcement of a funding freeze for the Child Care and Development Fund (CCDF), Temporary Assistance for Needy Families (TANF), and Social Services Block Grants in California, Colorado, Illinois, Minnesota, and New York—totaling around $10 billion—the states sued, prompting a judge to issue a temporary restraining order that halted the action.
Allegations of fraud in Minnesota's childcare programs, dating back over a decade, served as a key trigger. These involved billing for non-attending children, with pandemic-era exploitations leading to charges against over a dozen individuals and centers. A right-wing influencer's visit to Somali-run centers revived scrutiny, prompting HHS to cite 'rampant fraud' in blue states.
HHS has now implemented a 'defend the spend' system requiring receipts and photos for CCDF funds, and rescinded Biden-era rules allowing enrollment-based and upfront payments. These changes, one Minnesota center in Missouri has already shuttered operations.
Additional measures target Minnesota: the Department of Agriculture blocked food stamps and school lunch funds, while the Small Business Administration cut borrower access. Officials, including SBA head Kelly Loeffler and HHS Deputy Secretary Jim O’Neill, signal more actions ahead.
Critics contrast this with TANF's broader issues post-1996 reforms, where only 21% of poor families receive aid (down from 68%). In Mississippi, just 5% of TANF goes to cash assistance; $77 million was misspent/stolen from 2016-2020, including $5 million for a university volleyball stadium linked to ex-Gov. Phil Bryant and Brett Favre. HHS demanded $101 million repayment in March but rescinded it in April. CCDF error rates remain low, under 4%.
