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Start Strong PA shared information this week regarding what is known about the current status of federal and state child care funding after the U.S. Department of Health and Human Services announced it would freeze funding in five states.

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The federal government announced in early January that it would freeze $10 billion in federal funds to California, Colorado, Illinois, Minnesota, and New York. This was triggered by allegations of fraud at child care centers in Minnesota and was initially stated it would be applied nationwide.  However, a judge temporarily blocked the freeze on January 9 on the grounds that the states met a threshold “to protect the status quo” for at least 14 days while arguments were made in court. 

Start Strong PA and Pre-K for PA condemned this freeze on federal funds in a recent statement, saying, “The recent decision to freeze access to Child Care and Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grant funds for California, Colorado, Illinois, Minnesota and New York is a disproportionate and harmful reaction to alleged fraud confined to specific providers in Minnesota. Let us be clear: fraud within public systems is unacceptable and must be addressed with precision. However, we must also be clear that states have regular audits of these funds, many systems like Pennsylvania’s have robust program integrity measures, and federal oversight mechanisms are already in place to ensure accountability.”

To date, states have submitted quarterly financial reports to justify funds that are drawn monthly from their CCDF allocation. New rules would prevent states from accessing federal funds automatically. Every payment request would now require pre-approval with “justification and a receipt or photo evidence.” The immediate impact could be on state agencies, such as Pennsylvania’s Office of Child Development and Early Learning (OCDEL), that are responsible for providing the documentation.

Documentation or Payment Delivery

OCDEL has announced that there is no change in required documentation or in payment delivery for child care providers with Child Care Works contracts receiving reimbursement for subsidized child care.

Early Learning Resource Centers (ELRC) and child care providers should continue administering Child Care Works in accordance with existing OCDEL policy and procedures. Also, for parents, OCDEL has announced that there is no change in the type or frequency of required documentation.

“While fraud is absolutely unacceptable and must be addressed, this response is unjust and disproportionate,” a statement from Start Strong PA read. “It punishes providers, families, and children for the alleged actions of a few. Many states like Pennsylvania already have extensive program integrity measures and all states undergo regular federal reviews designed to prevent and catch fraud.”

Child Care Staff Recruitment and Retention Program 

The Child Care Staff Recruitment and Retention Program enacted in the 2025-26 state budget is not affected by the federal funding change and will continue accepting applications from eligible providers from qualified staff.

Providers must submit a completed application to their region ELRC by Thursday, January 29.

Impact on Pennsylvania

Start Strong PA said that the new federal rules would negatively affect the 93,300 children receiving Child Care Works if Pennsylvania’s federal child care funding is impacted in the future.

“Delaying or freezing payments would not only hurt the families receiving those subsidies, but could force child care programs to close and teachers to lose their jobs,” the Start Strong PA statement read. “These consequences are detrimental to families’ stability and children’s learning. This reaction is outside the norm – the federal government has already targeted legal and financial tools to recoup fraudulent funds without harming innocent families and small businesses.”