MINNEAPOLIS (CBS) — Advocates and providers are warning that if federal funding is withheld, legitimate day cares in Minnesota won’t be able to survive.
At risk is $185 million issued under the Child Care Assistance Program (CCAP). The annual funding is used to subsidize services for about 23,000 children from low-income families; the Trump Administration is pledging to freeze this funding after YouTuber Nick Shirley alleged that about ten day cares in Minneapolis are committing fraud by taking millions in government assistance without actually providing a day care service in return.
“We have turned off the money spigot, and we are finding the fraud,” Deputy Department of Health and Human Services Secretary Jim O’Neill said.
While some of the day cares included in the now viral video are pushing back against accusations of fraud, other providers are worried that their businesses will go under as a result of the blanket freeze on funding. Dozens rallied at the Minnesota State Capitol in St. Paul on Wednesday, including Monique Stumon, the director of School Readiness in Minneapolis. Her day care has been open since 2009; no one is accusing her of fraud, she said. But she explained that without CCAP funding, she wouldn’t be able to keep the doors open for more than a month.
“When you get people that are being devastated that had nothing to do with it, how is that right?” Stumon asked, “it is affecting my staff, it is affecting my families. They have to go to work. If we’re not open, what are they gonna do?”
Providers said it’s not clear when exactly the money would stop flowing in, explaining that the money is approved on a 21-day cyclical basis.
DFL Minnesota State House Representative and Children and Families Committee Co-Chair Carlie Kotyza-Wittuhn was involved with the rally, condemning the Trump Administration for responding to alleged fraud with a blanket policy that would hurt clean operations.
“Fraud prevention is about policy. It’s about solutions and not spectacle. But everything we’ve seen from the federal government this week is about politics,” Kotyza-Wittuhn said.
Carin Mrotz, a member of the Minnesota Attorney General’s Office appearing on behalf of AG Keith Ellison, took questions and read a statement attributed to Ellison himself, who said that the funding freeze “may well be illegal.”
“The Trump administration is threatening funding for the essential childcare services that countless families across Minnesota rely on — apparently all on the basis of one video on social media. To say I am outraged is an understatement,” the statement reads in part, “Fraud is unacceptable and individuals responsible for it should be prosecuted. I’ve been holding fraudsters and scammers accountable for years and I will continue to do so.”
Republican Rep. Nolan West, who co-chairs the Children and Families Committee with Rep. Kotyza-Wittuhn, is placing the blame for the potential fallout with Gov. Tim Walz and state Democrats.
“Minnesotans are rightfully angry and fed up with the massive fraud in our public assistance programs. Billions of tax dollars meant to help people have been lost to fraudsters. Despite repeated warnings from nonpartisan auditors, Governor Walz and the Democrats did not adequately address these concerns. Now we face the consequences of their inaction,” West said in a statement to WCCO, “We want those who truly need assistance to get it. I hope the Walz administration finally cooperates with the federal government—rather than fighting it—to process payments quickly for legitimate providers.”
Shirley’s video reached top members of the Trump Administration, with people like Vice President J.D. Vance and FBI Director Kash Patel responding to his work on social media. O’Neill referenced the video in the announcement on the CPAP funding freeze, stating that the agency has identified the centers mentioned in the video and demanded that the state carry out a “comprehensive audit” of them, including “attendance records, licenses, complaints, investigations and inspections.”
CBS News conducted its own analysis of the day care centers mentioned by Shirley. All but two have active licenses, according to state records, and all active locations were visited by state regulators within the last six months. The analysis found dozens of citations for safety, cleanliness and other issues, but no recorded evidence of fraud. Some of the day care centers featured in Shirley’s video have pushed back against the fraud allegations. One of the facilities, ABC Learning Center, shared surveillance videos with WCCO that showed parents dropping children off on the same day as Shirley’s visit.
According to providers at Wednesday’s rally, license inspectors with the state will show up randomly. Those visits will include questions about attendance records as inspectors look to see if rules revolving around safety and individual child care plans are being followed. What’s still unclear is how often the state is asking fraud-specific questions of day cares who receive funding.
The Department of Homeland Security made visits to each of the day cares in Shirley’s video on Monday. The state said that it did the same; the results of both of those sweeps are not yet public.
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