The Trump administration moved to end a Biden-era rule on Monday it said created a fraud-friendly environment for daycare providers seeking federal funds. 
The Department of Health and Human Services proposed a new rule that will reverse regulations that required agencies to distribute government funds to daycare providers based on enrollment, not attendance, and before any care was delivered. HHS said the rule opened up the door for widespread fraud, including the kind currently under investigation in Minnesota. 
“Congress appropriated this funding to support working families and ensure children have safe places to grow and learn,” <a href="https://www.hhs.gov/press-room/hhs-close-biden-era-loophole-states-pay-child-care-providers-without-counting-attendance.html">said</a> HHS Secretary Robert F. Kennedy, Jr. “Loopholes and fraud diverted that money to bad actors instead. Today, we are correcting that failure and returning these funds to the working families they were meant to serve.”
Last week, HHS paused all childcare payments to the state of Minnesota while it investigates allegations that millions of taxpayer dollars have been funneled to fraudulent daycares across the state throughout the past ten years. 
“Paying providers upfront based on paper enrollment instead of actual attendance invites abuse,” HHS Deputy Secretary Jim O’Neill said. “In Minnesota, we’ve seen credible and widespread allegations of fraudulent daycare providers who were not caring for children at all. The reforms we are enacting will make fraud harder to perpetrate.”
The proposed rule from HHS will reverse <a href="https://www.federalregister.gov/documents/2024/03/01/2024-04139/improving-child-care-access-affordability-and-stability-in-the-child-care-and-development-fund-ccdf">changes</a> made to the Child Care and Development Fund under President Joe Biden that required agencies “to pay providers prospectively and based on child enrollment.&#8221;
The New York Post, which <a href="https://nypost.com/2026/01/05/us-news/trumps-hhs-rescinds-biden-child-care-funding-loopholes/?utm_source=chatgpt.com">first reported</a> on the new rule, noted that about $19 billion was paid out under the Biden rules.
The new rule will allow states to make payments based on attendance data, make payments after care is delivered, and allow more parental direction over how the funds are distributed. 
The new proposal from Kennedy will reverse these changes and take effect after a 30-day comment period. 
The Child Care and Development Fund is a partnership program funded by both the federal government and the states that gives financial assistance to low-income families to provide care for their kids while they work or attend school. 
The Trump administration has multiple ongoing investigations into suspected fraud throughout Minnesota, including at daycare centers and other government-funded programs.

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Trump Admin Reverses Biden ‘Loophole’ That Invited Fraud, ‘Abuse’ At Daycares

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Trump Admin Reverses Biden ‘Loophole’ That Invited Fraud, ‘Abuse’ At Daycares