Trump Pauses Funding to Child Care, CalWORKS in California Over Alleged Fraud

The Trump administration said it’s freezing more than $10 billion in federal funds for child care subsidies, social services and cash aid for low-income families in California and four other blue states until tighter restrictions are met.

In letters sent late Tuesday to Gov. Gavin Newsom and the leaders of Minnesota, New York, Illinois and Colorado, officials from the Administration for Children and Families said the department would restrict access to three funds — including one that helps pay for CalWORKs, California’s welfare program for families — because it “has reason to believe” the benefits were fraudulently going to noncitizens. The letters did not outline evidence of fraud.

The administration demanded that the states submit documentation, like attendance records at child care programs, and justify their spending before they could access the funds.

It may take some time to see any potential impact because the funds are rolled out incrementally, and California outmatches federal dollars to pay for its child care programs. In the current state budget, $2.2 billion in federal dollars go towards California’s $7.3-billion spending on child care, according to H.D. Palmer, a spokesperson for the state’s Department of Finance.

Nonetheless, representatives from the California Department of Social Services said the funds are critical lifelines to low-income parents to help them afford safe, reliable child care so they can go to work.

“The state of California aggressively investigates and prosecutes fraud,” department spokesman Jason Montiel said. “Using unsupported allegations to withhold child care funding only from states that didn’t vote for the president doesn’t stop fraud — it harms struggling moms and dads, President Trump claims to be fighting for.”

Max Arias, leader of a union representing some 70,000 in-home child care providers in California, said he feared any loss of funding could hobble an already unstable child care system.

“Sudden changes to child care access caused by freezes have the potential to ravage our economy and force employers to face unpredictable workforce shortages,” Arias, chairperson of Child Care Providers United, said in a statement.

The funding freeze stems from a video from a conservative influencer claiming without evidence that child care centers operated by Somali residents in Minnesota committed fraud. The allegation prompted the ACF to suggest tightening rules around how federal child care funds get distributed, like paying child care programs based on attendance instead of enrollment.

Last year, a similar funding freeze to Head Start grantees caused payment delays to dozens of local programs.

Advocates said they were alarmed that the federal administration would pause funding to programs that assist children and families over an unsubstantiated video.

“We do not believe this is a responsible way to govern, and we expect California leaders to stand up for our kids, families and providers,” said Stacy Lee, a child care policy expert at Children Now.

Meanwhile, the leader of a Bay Area nonprofit that provides subsidized child care to about 4,000 low-income families in the Bay Area said he won’t let the funding freeze disrupt services.

“Our families can rely on us, our staff can rely on us to be there,” Scott Moore, CEO of Kidango, told KQED in a phone interview on Tuesday. He mentioned that state workers were just in his office to audit enrollment files as part of their routine inspections.

“This is one way that the state ensures that we’re following all the regulations,” he said, adding that Kidango has a staff dedicated to meeting enrollment and attendance standards.

“While we always put children first, we also ensure that the public money that goes to supporting low-income, working families is well spent and it’s protected,” Moore said.

Editor’s Note: This story was updated on Thursday, Jan. 8, 2026, to reflect additional information provided by California’s Department of Finance.