The U.S. Department of Health and Human Services (HHS) has taken significant steps to dismantle a child care funding policy put in place during the Biden administration. This initiative allowed states to dispense federal dollars to child care providers based solely on enrollment figures, without verifying if children were truly receiving care. The resulting allegations of fraud, particularly in Minnesota, have drawn serious concern.
HHS, under new leadership, is repealing certain provisions of the 2024 Child Care and Development Fund (CCDF) rule implemented during Biden’s presidency. HHS Secretary Robert F. Kennedy Jr. emphasized the mission of this funding: “Congress appropriated this funding to support working families and ensure children have safe places to grow and learn.” He pointed out that loopholes allowed funds to fall into the hands of fraudulent providers instead of supporting families genuinely in need.
One of the most controversial aspects of the previous policy was its focus on enrollment rather than actual attendance. This approach led to alarming situations where daycare centers received payments without having children present. “Paying providers upfront based on paper enrollment instead of actual attendance invites abuse,” said Deputy Secretary Jim O’Neill, highlighting the vulnerability in the system.
The Biden administration’s method, which mandated upfront payments to providers and favored contracts with care providers over parental choice, is now being rolled back. Under the new rule, states will be required to verify that children are actually attending daycare before funds are distributed. Payments will occur only after services are rendered, and parental choice is being restored with vouchers preferred over contracts.
Data from HHS reveals that between 2021 and 2024, more than $91.8 billion was allocated from the CCDF. This massive funding included $56 billion during 2021, a time when the need for child care was paramount due to the COVID-19 pandemic. However, concerns over these expenditures were amplified by a freeze on all future CCDF funding last week until states can confirm the absence of fraud.
The ramifications of the previous administration’s looseness are particularly evident in Minnesota. Reports indicate that daycare centers there collected hundreds of millions of dollars for children that didn’t exist or weren’t in attendance. As of late December 2025, there have been over 245 reports of suspected fraud linked to these providers. Health and Human Services Deputy Secretary Jim O’Neill stated, “In Minnesota, we’ve seen credible and widespread allegations of fraudulent daycare providers who were not caring for children at all.”
A viral report on YouTube, featuring Nick Shirley, underscored the severity of the issue, alleging that several Minnesota centers received substantial federal funds while showing no attendance records. The allegations suggest that millions of taxpayer dollars may be in jeopardy due to systemic flaws in oversight.
In response to the rampant fraud, HHS has instituted key measures: all payments must now be justified by proof, including photo evidence, and a comprehensive review has been initiated across the country. The trend of billing for non-existent children must be curbed, restoring accountability and ensuring taxpayer money is used as intended.
This shift in policy represents a significant move to rectify what many have considered a costly disaster from the prior administration. The new rules intend to uphold not only the integrity of child care funding but also to protect families and taxpayers from further exploitation. The administration’s commitment to these reforms runs deep, establishing a framework that prioritizes legitimate service delivery.
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