(TNND) — Health and Human Services Deputy Secretary Jim O’Neill announced his agency has frozen all childcare payments to Minnesota to root out fraud in the state.
Federal officials say their efforts are targeted specifically at bad actors to protect both taxpayers and kids.
But the move has cast a shadow of doubt over even legitimate providers that are unsure when they’ll get the federal dollars vital to their operations.
O’Neill announced Tuesday that they’ve “turned off the money spigot” amid suspicions of extensive fraud in the state.
Assistant Secretary Alex Adams, who oversees the Administration for Children & Families, an operating division of HHS, said his office provides Minnesota $185 million in childcare funds each year.
“Let me be crystal clear, ACF expects every state to uphold the highest standards of oversight, monitoring, and accountability for federal dollars. Minnesota is no exception,” Adams said in a video alongside O’Neill.
The crackdown comes days after YouTube personality Nick Shirley posted a video that’s gone viral, allegedly showing Somali-run childcare centers that are pulling in big bucks from the government without actually serving any children. The allegations in the video haven’t been proven.
O’Neill said he’s asking Minnesota Gov. Tim Walz to conduct comprehensive audits of the childcare centers featured in Shirley’s video.
He said HHS has activated an accountability initiative, “defend the spend,” for all ACF payments across the country. They’ll require a justification, receipt or photo evidence before sending money to a state.
And HHS launched a hotline for people to report childcare fraud.
Minnesota is embroiled in ongoing fraud investigations beyond just the childcare sector. People have been accused, charged and even convicted of defrauding the government out of money meant to feed children, house vulnerable citizens and more.
Authorities have flagged 14 high-risk Medicaid programs they suspect of being defrauded for billions of dollars in Minnesota.
The announcement of frozen childcare payments to Minnesota has advocates concerned.
Jodie Riek, the president of the Minnesota Association for the Education of Young Children and an associate professor in early childhood development at the University of Minnesota Duluth, said freezing the funds will have a real impact on good childcare centers.
She expects all childcare centers receiving federal dollars to see delays in payment, not just those accused of fraud.
“I don’t think anyone is saying let’s endorse fraud. No one’s saying that. It is a concern, and we want the money to be going to the right spaces, for sure,” Riek said. “I just don’t think that this is the right way to address the issue.”
Riek said it feels like HHS is throwing out a wide net to catch the narrow group of childcare operators that are causing the problems.
“The challenge with that is that most childcare services operate on a really razor-thin margin,” she said. “So, while those payments are being delayed, while they prove their legitimacy, those services still need to meet payroll and pay rent and keep classrooms staffed. And that, at the moment, is a struggle in itself.”
Clare Sanford, government relations chair for the Minnesota Child Care Association, a statewide association representing licensed childcare centers, said providers are concerned that they won’t get their funds in a timely manner.
And Sanford said confusion reigns supreme in the sector for now.
“I have had multiple meetings with the (state’s) Department of Children, Youth, and Families at this point, and they have no answers yet,” Sanford said. “We have asked, I have asked, very pointed questions. How much federal funding does Minnesota already have on hand? How long could that last with business as usual? What are we looking at? When might disruption start and for whom? And they cannot answer any of those questions yet.”
Sanford, too, said it feels like good childcare operators are getting swept up in the crackdown.
“If a doctor commits malpractice, you don’t shut down the entire emergency room and refuse care for people who need it,” she said. “And that’s what this feels like right now, because we don’t know what’s going on.”
HHS spokesman Andrew Nixon said Wednesday that the crackdown is meant to stop just suspected fraudsters.
The payments being frozen come from the Child Care and Development Fund.
Nixon said suspicious childcare operators will go through extra layers of verification before new funds are released. HHS is asking the state for details like attendance records, licensing, inspections, monitoring reports, complaints and more.
“The ones that are suspected of committing fraud in Minnesota would have a much higher level of verification to meet than a center that is not suspected of committing fraud,” Nixon said.
Sanford said she’s concerned that already vulnerable families served by Minnesota’s federally assisted childcare centers won’t be able to weather a disruption in funding.
“Something needs to be figured out so that the providers who have nothing to do with any potential fraud are not affected by this, because that’s the vast majority of providers, who are operating ethically, and hardworking families who are just trying to go to work and make sure their kids are safe and educated,” she said.
National Headline
