Child Care Subsidy Crackdown: Families and Providers Brace for Changes

Fri Jan 09 2026 01:58:06 GMT+0200 (Eastern European Standard Time)

As federal scrutiny increases around child care subsidies, families reliant on these funds fear instability in their care arrangements, potentially impacting working parents and child care providers.

The Trump administration is tightening regulations on the $12 billion Child Care and Development Fund meant for low-income families, raising concerns among the 1.4 million children it supports. Families like Charity Pallum's, who benefited from federal subsidies, fear job disruptions if they lose access to assistance amid allegations of fraud and increased documentation requirements for states. Child care providers, already dealing with extensive regulations, face an uncertain future marked by potential funding cuts and administrative strain.

Even with two incomes, Charity Pallum said she and her husband would not be able to afford child care for their 1-year-old twins. But because of federal child care subsidies, both Pallum, a teacher, and her husband, who works at a car dealership, are able to work full-time.

Now, the Trump administration is increasing the reporting burdens for states to access the money. If Pallum’s family were to lose that support, her husband might have to stop working, putting a pinch on their family budget.

“I guess our plans are, ’We’re just going to see how this goes,’” said Pallum, a teacher living in Ada, Minnesota.

The Trump administration’s crackdown on the $12 billion Child Care and Development Fund, which subsidizes care for 1.4 million children from low-income households, has rattled child care providers and families who rely on this aid. Citing unspecified allegations of fraud, administration officials are requiring states to provide extra documentation before receiving the money.

While it's uncertain when or if the impact of these changes will hit families, some states, like Minnesota, invest additional state resources into child care programs, which may buffer families against adverse effects.

Child Care Centers Brace for Increased Scrutiny

The administration announced that state officials now must submit additional information to access federal funds. Recently, the U.S. Department of Health and Human Services declared a “freeze” that subjects five Democratic-led states to stricter documentation rules.

These states include California, Colorado, Illinois, Minnesota, and New York. The freeze affects other federal safety net funding, including support for low-income families with children.

The fraud allegations behind these rules remain undisclosed, but HHS voiced concerns about benefits potentially going to ineligible individuals.

“Child care centers are always living on the margins... any hit to our reimbursements is going to be a house of cards,” said Jeanie Harris, executive director at First Learning in New York.

Providers Already Face Heavy Regulations

Dawn Uribe, who runs Mis Amigos Preschool in Minnesota, stated that existing regulations already involve significant oversight and delays in receiving payments.

"There’s already so much oversight that goes into this so I don’t really understand how much more they can do," she said, highlighting how difficult it can be to accept children who require subsidy assistance.

Pallum noted that losing the childcare subsidy would risk skipped paychecks for her family. “We want to maintain both our responsibilities to our families and to our work.”