SACRAMENTO — The federal government has launched a broad attack on social services in California, raising the specter of fraud and threatening to withhold billions of dollars of funding in areas including child care, a jolt to tens of thousands of working families.
In a trio of Jan. 6 letters addressed to Gov. Gavin Newsom, the U.S. Department of Health and Human Services said it was concerned there had been “potential for extensive and systemic fraud” in child care and other social services programs that rely on federal funding, and had “reason to believe” that the state was “illicitly providing illegal aliens” with benefits.
The letters did not detail evidence to support the claims. State officials immediately said the suggestions of fraud are unsubstantiated.
Health and Human Services said it would review how the funding had been used by the state, and was restricting access — at least temporarily — to additional money amid its inquiries. The federal government requested large volumes of administrative data and other files, including attendance documentation for child care. It also demanded beefed-up fiscal accountability requirements.
The Trump administration announced on Tuesday plans to freeze $10 billion in federal funds for similar programs in five Democrat-controlled states, including California. The others are Colorado, Illinois, Minnesota and New York.
Newsom and state Democratic leaders have accused President Trump of unleashing a political vendetta. Officials argued the president is using unsubstantiated claims to justify a move that could jeopardize child care and social services for low-income families.
“It is unconscionable for Trump and Republicans to rip away billions of dollars that support child care and families in need, and this has nothing to do with fraud,” said Robert Rivas (D-Hollister), speaker of the California Assembly, in a statement. “California taxpayers pay for these programs — period — and Trump has no right to steal from our hard-working residents. We will continue to fight back.”
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Trump has justified the action in comments posted on his social media platform Truth Social, where he accused Newsom of widespread fraud.
The governor’s office dismissed the accusation as “deranged.” The president’s announcement came amid his administration’s broader push to target Democrat-led states over alleged fraud in taxpayer-funded programs. It follows sweeping prosecutions in Minnesota, where federal officials allege that as much as half of the roughly $18 billion paid to 14 state-run programs since 2018 may have been fraudulent.
In California, it’s not clear when the funding freeze would begin. And elements of Trump’s effort in the state appear to have been hastily formulated. One letter to Newsom that announced the restrictions asked for data about Minnesota.
Several observers said they expect California to file a legal challenge over the freeze.
“These funds are not optional — they are critical lifelines for working families across California,” said Jason Montiel, a spokesperson for the California Department of Social Services. “The State of California aggressively investigates and prosecutes fraud. 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.”
The prospect of a funding collapse has jolted families and child-care providers, many of whom operate on thin margins and could be imperiled by even the temporary halting of payments.
“It could impact tens of thousands of families [locally] who are currently relying on assistance to pay for child care so they can maintain their employment,” said Donna Sneeringer, president of the Child Care Resource Center, a nonprofit that helps connect families in Southern California with child care and subsidies.
Trump claims
Trump posted on his social media site Truth Social on Tuesday that under Newsom, California is “more corrupt than Minnesota, if that’s possible???” In the post, Trump used a derogatory nickname for Newsom that has become popular with the governor’s critics, referring to him as “Newscum.”
“The Fraud Investigation of California has begun,” Trump wrote.
The president also retweeted a story by the New York Post that said his Department of Health and Human Services will freeze taxpayer funding from the Child Care Development Fund, the Temporary Assistance for Needy Families program, which is known as CalWORKS in California, and the Social Services Block Grant program.
“For too long, Democrat-led states and Governors have been complicit in allowing massive amounts of fraud to occur under their watch,” said Andrew Nixon, a department spokesperson. “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.”
The department announced last month that all 50 states will have to provide additional levels of verification and administrative data before they receive more funding from the Child Care and Development Fund after a series of fraud schemes at Minnesota day-care centers run by Somali residents.
“The Trump Administration is using the moral guise of eliminating ‘fraud and abuse’ to undermine essential programs and punish families and children who depend on these services to survive, many of whom have no other options if this funding disappears,” Kristin McGuire, president of Young Invincibles, a young-adult nonprofit economic advocacy group, said in a statement.
California pushes back
Newsom’s office has brushed off Trump’s post about fraud allegations, calling the president “a deranged, habitual liar whose relationship with reality ended years ago.” The governor said he welcomes federal fraud investigations in the state, adding in an interview on MS NOW that aired Monday night: “Bring it on. … If he has some unique insight and information, I look forward to partnering with him. I can’t stand fraud.”
However, Newsom said cutting off funding hurts hardworking families who rely on the assistance.
“You want to support families? You believe in families? Then you believe in supporting child care and child-care workers in the workforce,” Newsom told MS NOW.
In the current state budget, California’s child-care spending is $7.3 billion, of which $2.2 billion is federal dollars, said H.D. Palmer, a spokesperson for the California Department of Finance. According to the state’s Legislative Analyst’s Office, about $1.4 billion in federal child care funding would be frozen per the letters from Health and Human Services.
Newsom is set to unveil his budget proposal Friday for the fiscal year that begins July 1, which will mark the governor’s final spending plan before he terms out.
Palmer said while details about the potential threat to federal child-care dollars remain unclear, what is known is that federal dollars are not like “a spigot that will be turned off by the end of the week.”
“There is no immediate cutoff that will happen,” he said.
Since Trump took office, California has filed dozens of legal actions to block the president’s policy changes and funding cuts, and the state has prevailed in many of them.
What happened in Minnesota
Federal prosecutors say Minnesota has been hit by some of the largest fraud schemes involving state-run, federally funded programs in the country. Providers are accused of billing for services never delivered and diverting money for personal use.
The scale of the fraud has drawn national attention and fueled the Trump administration’s decision to freeze child-care funds while demanding additional safeguards before doling out money. Gov. Tim Walz has ordered a third-party audit and appointed a director of program integrity. Amid the fallout, Walz announced he will not seek a third term.
Outrage over the fraud reached a fever pitch in the White House after a video posted online by an influencer purported to expose extensive fraud at Somali-run child-care centers in Minnesota.
California officials have acknowledged fraud failures in the past, most notably at the Employment Development Department during the COVID-19 pandemic, when weakened safeguards led to billions of dollars in unemployment payments later deemed potentially fraudulent.
An independent state audit released last month found administrative vulnerabilities in some of California’s social services programs but stopped short of alleging widespread fraud or corruption.
The California state auditor added the Department of Social Services to its high-risk list because of persistent errors in calculating CalFresh benefits, which provides food assistance to those in need — a measure of payment accuracy rather than criminal activity — warning that federal law changes could eventually force the state to absorb billions of dollars in additional costs if those errors are not reduced.
What’s at stake locally
A funding freeze would be a big blow for Danielle Svihovec, who runs Woodbury Preschool Village in Altadena.
She is still struggling to get her child-care center on its feet after the Eaton fire ravaged her community last January. A quarter of the families enrolled at Woodbury Preschool Village rely on state subsidies, a percentage that has increased due to fire hardships.
“The families that lost their homes are struggling financially, and they need help,” Svihovec said. “We just keep getting one hit after another. We need a break.”
Where it once had a waitlist of one to two years, Woodbury Preschool is still struggling to reach capacity a year after the fires, she said. Losing low-income families would be an additional obstacle to those enrollment losses as well as those felt by the increased competition from California’s new grade, transitional kindergarten, she added.
“I don’t know how much more we can withstand,” Svihovec said.
Sequeira reports for The Times’ early childhood education initiative, focusing on the learning and development of California children from birth to age 5. For more information about the initiative and its philanthropic funders, go to latimes.com/earlyed.