5 blue states sue Trump admin over $10 billion child care funding freeze

The big picture: The states say HHS and the Administration for Children and Families abruptly cut off money for child care, cash assistance and social services programs without evidence, without due process and without legal authority.

• Filed in U.S. District Court for the Southern District of New York, the suit alleges that the freeze was triggered not by fraud findings but by viral misinformation, political rhetoric and public threats from President Trump and top officials.
• The funding freeze puts low-income families, kids and people with disabilities at immediate risk, they argue. The attorneys general are from California, Colorado, Illinois, Minnesota and New York.
• "Their transparent motivation is to punish 'Democrat-led' states who are disfavored by the Administration," they write.

The other side: Department of Health and Human Services officials have said they needed to cut off funding due to systemic fraud in the child care system.

• HHS general counsel Mike Stuart said on X that the agency stands by its decision "to take this action to defend" U.S. taxpayers.
• "It's unfortunate that these Attorney Generals from these Democrat-led states are less focused on reducing fraud and more focused on partisan political stunts," he said. "We identified serious concerns in these states that warranted immediate review and action."
• Stuart alleged the states had been "complicit" in "this perpetuation of this fraud and allowing it to happen," adding: "Waste, fraud, and abuse will not be tolerated in the Trump administration.

Between the lines: Democratic AGs have filed multiple lawsuits together against the Trump administration over the past year — over various policies, including immigration, tariffs and funding for education.

• The lawsuit is Colorado Attorney General Phil Weiser's 50th legal challenge against the administration since President Trump returned to the White House.

Zoom out: The funding freeze has sent child care providers scrambling at a time when costs are already rising and providers are scrambling to makeup for lost pandemic-era funding. Labor shortages are an increasing worry amid the fallout from increased immigration enforcement.

• That's already making it difficult for parents to find care for children — in turn, making it tougher to stay employed.

• Anecdotally, centers around the country are also reporting increased harassment in the wake of the Minnesota fraud scandal and a viral YouTube video.

Zoom in: Many child care centers serve a mix of families, some get subsidies and some pay privately.

• Providers rely on the stream of money to make the margins work, and warn that the funding freeze will imperil everyone who relies on child care, regardless of whether they receive subsidies.
• Mero Kaya, whose four metro Denver child care centers support nearly 300 kids from low-income families, told the Colorado Sun "all of them will shut down" if federal funding — the centers' primary revenue source — runs dry.
• "If the children we serve lose their tuition assistance, it will destabilize our entire budget," Christina Killion Valdez, a child care center director in Rochester, Minn., said at a press briefing Wednesday.

Nearly a dozen other child care providers contacted by Axios in Illinois either didn't respond or weren't comfortable offering comment at this time.

• "I think that there's going to be a huge ripple effect," Tina Vanderwarker of The Early Childhood Alliance tells Axios Chicago.
• "These are the families that depend on being able to work to pay their rent, to put food on their table and not having child care access, it will prevent one parent, at least, from working."

Editor's note: This article has been updated with comment from HHS general counsel Mike Stuart.