WASHINGTON — The Department of Health and Human Services has warned Minnesota it could have to repay hundreds of millions in federal dollars if the state keeps refusing to hand over child care center records amid a widening fraud scandal.
In a pair of letters dated Jan. 15, HHS administrators notified Minnesota Department of Children, Youth, and Families commissioner Tikki Brown of her failure to provide the Trump administration “with information and documentation, requested and required under regulation, in a timely manner.”
Alex Adams, the assistant secretary of HHS’ Administration for Children and Families, which provided $184,928,081 in taxpayer funding to Minnesota youth services in fiscal year 2025, told Brown her department had 60 days to fork over the records.
“In early December, HHS asked Minnesota for data on their child care program participants, enrollment, attendance records, inspection records — things that would confidence to the American taxpayers that child care dollars are going to actual children,” Adams said in a Friday statement. “Minnesota has still not sent that information. We are no longer asking; we are now demanding.”
HHS Assistant Secretary Jim O’Neill also affirmed that HHS “will pursue full penalties under the law against the state” if officials don’t provide records and other information by March 16.
Under federal regulations, those penalties would include forcing Minnesota to pay back past money received from HHS, as well as disqualification from receiving future funds, Adams told The Post.
“An amount equal to or less than the improperly expended funds will be deducted from the administrative portion of the State allotment for the following fiscal year,” the regulations state.
The HHS Office of Inspector General and the Minnesota Office of the Legislative Auditor have both uncovered evidence that child care centers in receipt of federal block grants failed to maintain daily attendance records and lacked “adequate financial controls.”
Funding for the youth facilities comes primarily from HHS’ Child Care and Development Fund (CCDF), the third-largest US block grant program.
Minnesota is one of five Democrat-run states — along with New York, California, Colorado and Illinois — that had more than $10 billion in funding from HHS block grant programs paused and put under review earlier this month.
On Jan. 9, a federal judge temporarily blocked the freeze of CCDF, Temporary Assistance for Needy Families (TANF) and the Social Services Block Grant (SSBG) monies.
Since then, O’Neill and Adams have been on the ground in the Land of 10,000 Lakes speaking with whistleblowers and state officials about the fraud allegations.
More than 500 tipsters have reached out, according to Adams.
The Minnesota scandal has been fueled by outrage over a Dec. 26 viral video in which almost a dozen child care centers receiving taxpayer funds appeared to be closed or inoperable — as well as remarks from the state’s former top federal prosecutor suggesting that the scheme bilked as much as $9 billion from taxpayers since 2018.
Much of the frustration has been focused on Somali-run child care centers in the Twin Cities, whose operators were targeted in a 2022 federal prosecution for stealing more than $250 million and spending their ill-gotten gains on luxury cars and real estate holdings in Turkey and Kenya.
The scandal erupted amid Minnesota Gov. Tim Walz’s run for a third term, which he ended on Jan. 5.
HHS officials expressed confidence that the process to initiate repayments and other penalties for non-compliance wouldn’t get jammed up in the courts.
As of Friday, more than a month after the initial warning, Minnesota has yet to provide “any of the attendance records, inspection records or other information, Adams said.
“The only responses we’ve gotten in writing,” he added, “are delaying or deferring.”
In a separate Jan. 15 letter to Brown, Deputy Assistant Secretary for Early Childhood Development Laurie Todd-Smith wrote that inspections of Minnesota’s CCDF-funded program would take place on Thursday and Friday of this week.
“This oversight visit will include an in-depth examination of your Lead Agency’s policies, procedures, and implementation practices related to fraud prevention, internal controls, accountability measures, and subrecipient monitoring and provider inspections,” Todd-Smith told Brown.
“We look forward to further understanding and learning about your implementation of the CCDF program, and your processes for program integrity measures that protect taxpayer dollars, ensure resources reach eligible families, and safeguard children through proper oversight of child care providers.”
Reps for Minnesota’s Department of Children, Youth, and Families did not immediately respond to requests for comment.
