The U.S. Department of Health and Human Services (HHS) has temporarily halted more than $10 billion in federal funding for child care subsidies, cash assistance to low-income families, and other social services in California, Colorado, Illinois, Minnesota, and New York, citing serious concerns over fraud, misuse of funds, and potential improper payments to ineligible recipients.
• Social Services Block Grant (SSBG) roughly $869 million, supporting services like child welfare and foster care.
In letters to the governors of the five states all led by Democrats HHS stated that access to these funds is restricted pending a review to ensure compliance with federal rules. Officials emphasized protecting taxpayer dollars, with Deputy HHS Secretary Jim O’Neill noting that 'families who rely on these programs deserve confidence that resources are used lawfully.' The agency highlighted recent fraud cases (notably in Minnesota involving alleged misuse in child nutrition and care programs) and concerns that benefits may have gone to non-citizens or others ineligible under law. HHS has required the states to submit detailed recipient data, justifications, and documentation before payments resume.
The move has drawn sharp criticism from state leaders and advocates, who argue it punishes vulnerable families without sufficient evidence of widespread wrongdoing in most of the affected states. California Attorney General Rob Bonta called the action unlawful and unconstitutional, while New York Governor Kathy Hochul described it as “cruel” and politically motivated. Illinois Governor JB Pritzker and others echoed concerns that low-income parents could lose child care access, potentially forcing them out of work amid rising costs.
On January 8, 2026, the attorneys general of the five states filed a joint lawsuit in U.S. District Court for the Southern District of New York, seeking to block the freeze. They alleged violations of the Administrative Procedure Act, separation of powers, and constitutional appropriations rules, claiming the broad demands for years of personal data on recipients were overly intrusive and lacked a factual basis.
A federal judge granted temporary relief on January 9, issuing a 14-day restraining order that halts the freeze and requires funding to continue while the case proceeds. The ruling aims to maintain the “status quo” and prevent immediate harm to families. HHS has indicated it will appeal and defend the action as necessary for program integrity.
This development follows broader Trump administration efforts to tighten oversight of federal welfare and child care programs, including rescinding certain Biden-era rules seen as weakening fraud prevention. Critics warn the freeze could disrupt support for hundreds of thousands of children and families in the targeted states, while supporters view it as a step toward accountability.
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