WASHINGTON — The U.S. Department of Health and Human Services froze access on Jan. 6 to certain federal child care and family assistance funds for California, Colorado, Illinois, Minnesota and New York following serious concerns about widespread fraud and misuse of taxpayer dollars in state-administered programs.
“Families who rely on child care and family assistance programs deserve confidence that these resources are used lawfully and for their intended purpose,” said Deputy Secretary Jim O’Neill. “This action reflects our commitment to program integrity, fiscal responsibility, and compliance with federal requirements.”
The action applies to three programs overseen by HHS’s Administration for Children and Families (ACF) — Child Care and Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grant. In letters sent to the governors of the five states, ACF notified them that access to these funding streams is now restricted pending further review, which impacts the following totals:
- Child Care and Development Fund (CCDF): nearly $2.4 billion
- Temporary Assistance for Needy Families (TANF): $7.35 billion
- Social Services Block Grant (SSBG): $869 million
TANF and SSBG are meant to be used by states to support families with children, including assistance with child care costs and other essential services. ACF has also identified concerns that these benefits intended for American citizens and lawful residents may have been improperly provided to individuals who are not eligible under federal law.
The funding freeze amplifies ACF’s recent nationwide activation of its Defend the Spend system, and will now require these five states to submit a justification and receipt documentation before any federal payment is released. ACF has also launched a dedicated fraud reporting portal at childcare.gov to allow parents, providers and community members to report suspected fraud and program misuse.
“We have a responsibility to protect taxpayer dollars and ensure these programs serve the families they were created to help,” said Assistant Secretary for Children and Families Alex J. Adams. “When there are credible concerns about fraud or misuse, we will act.”
Funds will remain frozen in this fashion until ACF completes a review and determines that states are in compliance with federal requirements.
Impact on Orange County, CA residents
The January 6, 2026, federal funding freeze on $10 billion in child care and social services will directly affect thousands of vulnerable residents in Orange County who rely on state-administered, federally funded programs.
The potential local impacts include:
1. Disruption of CalWORKs (TANF) Benefits
The freeze targets $7.3 billion in Temporary Assistance for Needy Families (TANF), known as CalWORKs in California.
- Cash Assistance: Low-income Orange County families who receive monthly cash grants for basic necessities like food and housing are at risk of benefit delays or reductions.
- Employment Support: CalWORKs also funds job training and placement services that help local residents transition into the workforce.
2. Child Care Crisis for Working Parents
Orange County parents relying on $2.4 billion from the Child Care and Development Fund (CCDF) face significant instability.
- Loss of Subsidies: Working parents who use vouchers to afford local child care may lose access, potentially forcing them to choose between working and caring for their children.
- Center Closures: Local child care providers and home-based workers, many represented by Child Care Providers United, could face delayed payments, leading to potential facility closures or staff layoffs.
- Waitlists: Even if temporary, the freeze is expected to lengthen existing waitlists for subsidized care in Orange County.
3. Reduced Support for Seniors and Disabled Residents
The freeze includes $869 million from the Social Services Block Grant (SSBG), which supports a wide range of local services.
- In-Home Services: Funding for programs that help seniors and people with disabilities live independently may be jeopardized.
- Vulnerable Populations: Local non-profits and county agencies that receive SSBG funds for foster care support and child abuse prevention may see immediate budget shortfalls.
4. Local Government Fiscal Strain
The Orange County Social Services Agency (SSA) manages these programs on behalf of the state.
- Budget Impact: Federal funds make up a significant portion of the county’s safety-net budget. If the state cannot replace these lost federal dollars immediately, local agencies may be forced to reduce services.
- Increased Demand for Other Services: As primary assistance programs are frozen, local residents may increasingly turn to county-funded emergency services, such as food banks or homeless shelters, putting additional strain on local resources.
Status as of January 7, 2026: While the freeze has been announced by the federal government, California state officials are monitoring the situation and have not yet issued formal guidance to local agencies like the Orange County SSA. California is expected to take legal action to challenge the freeze.