LANSING, Mich. (Michigan News Source) – The Trump administration announced late last year that it would freeze federal Child Care and Development Fund payments to all 50 states unless they can prove that the money is being spent legitimately.

The sweeping freeze didn’t come out of nowhere. Federal officials have acknowledged that the move is tied to massive, well-documented fraud cases in Minnesota, where prosecutors have uncovered schemes involving daycare centers that allegedly billed the government for children who didn’t exist, services that weren’t provided, and hours that were wildly inflated.

No more blank checks.

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In addition to targeting Minnesota and five other states with investigations and additional compliance requirements, the administration has also decided to pursue a nationwide clampdown with the HHS (U.S. Department of Health and Human Services) saying that states will have to provide more data and verification about their programs to get their payments. A post by HHS Deputy Secretary Jim O’Neill on X explained, “I have activated our ‘defend the spend’ system for all ACF (Administration for Children and Families) payments. Starting today, all ACF payments across America will require a justification and a receipt or photo evidence before we send money to a state.”

Additionally, on Monday, HHS announced it is rolling back Biden-era child care payment policies by rescinding parts of the 2024 Child Care and Development Fund rule that let states pay providers based on enrollment rather than actual attendance and required upfront payments before services were delivered. Under the new policy, states can restore attendance-based billing, pay providers after care is provided, and regain greater flexibility with parent-directed vouchers instead of guaranteed contracts – moves officials say will strengthen oversight and reduce fraud.

What this means for Michigan families.

Michigan’s daycare owners and early childhood educators are predicting real-world pain if the funds are put on hold for too long. Providers in Grand Rapids told WOOD-TV that they could shut down without federal subsidies, especially those serving low-income families who rely on subsidies to keep programs running.

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The federal Child Care and Development Fund is the source of the federal subsidies being referred to. They are designed to help low-income working families afford child care for children under 13 while parents are on the job, in job training, or pursuing education. According to the most recent data, the program supports roughly 1.4 million children and approximately 871,000 families each month nationwide, operating under a $12 billion+ budget for fiscal year 2025.

For Michigan families, the message from Washington is clear: the era of “trust us” funding is over for everyone. Whether the state can quickly prove its child care dollars are being spent honestly will determine if subsidies keep flowing – or if working parents and providers end up paying the price for fraud committed hundreds of miles away.