The child care industry has been thrown into choppy waters as the Trump administration seeks to cut federal funding to multiple states amid fraud allegations in Minnesota.
A judge has temporarily halted President Trump’s funding freeze to five blue states, but programs operating on razor-thin margins may be forced to close or raise prices if it moves forward.
Meanwhile, facilities say the political spotlight is opening them up to harassment.
The recent political flare-up began after an independent journalist posted a video that went viral accusing day cares in Minnesota that received federal money of having no children at their facilities.
Opponents said no concrete proof was established, but the Trump administration moved quickly and paused funding for child care and other family assistance programs in Minnesota, California, Colorado, Illinois and New York.
The states the administration is targeting, particularly New York and California, are of grave concern to Zero to Three, an early child care advocacy group that found in an unpublished analysis that 55 percent of children on Temporary Assistance for Needy Families, a government child care program, reside in those two states.
“Parents are stressed about finding care. And so, with these kinds of provisions, you’re not punishing fraudsters, you’re punishing babies. And that’s, I think, the actual scandal,” said Melissa Boteach, chief policy officer for Zero to Three.
The administration is also looking to require more documentation and photo evidence for federal payments, conduct audits of centers accused of fraud and set up a hotline to report suspected fraud by these programs.
The White House also wants to rescind Biden-era measures that based federal payments on enrollment, not attendance, and focused on paying providers in advance.
Susan Gale Perry, CEO of Child Care Aware, defended the current setup by comparing it to gym membership, saying you don’t pay for how often you attend but for enrollment, because the facility has to pay to keep the doors open whether you show up or not.
“Families are typically paying for their child care up front, in advance of the month, and they’re paying not based on the days their child actually attends, but for the entire month. And that’s because that child care business is keeping that service open for them every day. It’s staffing it with teachers. It’s paying for, again, the facilities and the rent and all of their regular costs,” Perry said.
Trump also wants to lift a rule that capped child care payments at 7 percent of a family’s income.
Reached for comment, a spokesperson for the Department of Health and Human Services said, “For too long, Democrat-led states and Governors have been complicit in allowing massive amounts of fraud to occur under their watch. Under the Trump Administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money.”
While advocates stress addressing fraud is important and tax dollars shouldn’t be wasted, they say the proposed changes will do little to address the issue.
Child care experts say many states already have strict reporting requirements to root out cases of fraud — and that threats to pull funding could in fact undermine the mechanisms in place to catch those abusing the system.
And the federal Office of Child Care that deals with fraud issues has been decimated by layoffs under Trump.
“When you’re looking at implementing new changes, it’s typically the Office of Child Care that provides help to states, that answers questions to states, and there’s just significantly less staff. So, at one hand, [the Trump administration is] saying that they really care about program integrity, but they’ve also laid off the federal workers that ensure that program integrity, which leaves less support for states to implement any changes that the administration is considering implementing,” said Casey Peeks, senior director for early childhood policy at the Center for American Progress.
The federal government spends around $30 billion per year on child care.
In a House hearing focused on child care Tuesday, there was bipartisan agreement on the importance of the programs but a split on how widespread fraud is in the system and if private innovation could offer solutions to some of the troubles plaguing the field.
“My colleagues on the other side continue to rely on that very same failed playbook today, calling on Congress to pour billions of more taxpayer dollars into failed child care programs that deepen the problem, weakens accountability and invites fraud. I mean, we’re seeing the consequences of that approach play out right before our eyes in Minnesota. … I believe state and local governments, along with the private sector, are best equipped to meet the unique child care needs of their communities,” Rep. Mark Harris (R-N.C.) said during the hearing.
The increased scrutiny on child care facilities is also leading to increased harassment against them.
Other people have now also gone up to facilities with cameras demanding to see and record children inside, with states launching their own investigations into centers.
The increased stress is hitting a sector that already has difficulties with employee retention and pay.
“Child care providers are getting people knocking on the door. They’re getting a lot of harassing phone calls. We’ve heard about a provider in Minnesota who experienced this and vandalism and a break-in, so it’s really scary for them,” said Amy Matsui, vice president of income security and child care at the National Women’s Law Center.