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Just a few months after state funding was restored to child care centers across the commonwealth following a lengthy budget impasse, leaders worry they could lose federal funding.
Earlier this month, the U.S. Department of Health and Human Services froze the Child Care Development Fund, Temporary Assistance for Needy Families (TANF), and Social Services Block Grant to five states: California, Colorado, Illinois, Minnesota and New York, totaling about $10 billion. These funds are distributed to states to support families with children, including assistance with child care costs and other essential services. The freeze in funds come after allegations of fraud at child care centers in Minnesota went viral on social media. Shortly thereafter, Gov. Tim Walz announced he would end his reelection campaign, saying he needs to give fraud allegations in the state his full attention.
HHS is now requiring these five states to “submit a justification and receipt documentation” before any federal payment is released. A spokesperson with the U.S. Department of Health and Human Services said in an email statement that for states not suspected of fraud, there is “still additional verification,” though it is less extensive than that required for states with centers suspected of fraudulent activity. They said additional documents for suspected centers include attendance and inspection records, internal state discrepancies, and complaints that the center received.
Many of these documents are already required to be reported to the state in Pennsylvania, according to Jen DeBell, executive director of the Pennsylvania Association for the Education of Young Children.
“There's extensive information you need to provide to the state [to receive federal funding for a subsidy program],” DeBell said. “What are your payment rates? What days are you closed? And then you need to provide information about the children you're caring for. There's also a strong connection between the health and safety inspections and the subsidy system, so that if a provider is put on a provisional license, for instance, the subsidy system's alerted so that they could stop payment.”
DeBell said there is additional monitoring by the state for programs not only seeking to achieve a higher rating but also to maintain it. Early learning programs in Pennsylvania can earn a quality rating score from a Star 1 to a Star 4. They also face an annual inspection by the state Office of Child Development and Early Learning (OCDEL) to renew their license. This inspection includes checks on health, safety, and regulatory compliance, alongside separate audits for subsidy programs.
Potential fraud can be reported to and investigated by the state Office of the Inspector General.
“If there is fraud, it is unacceptable because it takes resources away from those who need it,” DeBell said. “I think what's also unacceptable is to delay or halt child care payments as a whole that help children and families… and support the programs and educators who serve them. A targeted approach makes sense instead of one that puts the entire child care system in jeopardy.”
Federal and state funding supports Pennsylvania’s early learning and child care system, which serves more than 300,000 children annually across the Commonwealth, including about 94,000 who access care through Pennsylvania’s subsidized Child Care Works program. Other state-funded programs include Pre-K Counts and Head Start Supplemental Assistance Program.
State funding for Pre-K Counts and Head Start was on pause for over five months last year, as state lawmakers continued to negotiate the 2025-2026 budget.
While Uniontown-based Duck Hollow Discovery Learning Center does not receive federal funding directly, Fiscal Manager Mary Belski said the center is concerned that funding for free and reduced-price meals—supported by both federal and state sources—could be frozen.
“We have students that are eligible for either free lunch and snack or reduced lunch and snack,” Belski said. “These are very important programs that benefit the people that need it the most.”
Belski said the center, which has a Star 4 rating, spends about $10,000 each year to have an auditor assess their finances in preparation for passing their license inspection.
“It’s the one thing I can say about Pennsylvania. Anytime we are given money, we have to account for it,” Belski said.
Pennsylvania is awarded approximately $400 million in federal Child Care and Development Fund funding each federal fiscal year, with about $375 million used to administer the Child Care Works program. The remaining $25 million funds child care administration and provider professional development. So far for federal fiscal year 2026, the Commonwealth has received $65 million in federal funding, according to the State Department of Human Services.
In federal fiscal year 2025 (October 1, 2024-September 30, 2025), DHS was awarded $717.125 million in federal Temporary Assistance for Needy Families funds, a portion of which Pennsylvania uses to support the Child Care Works program.
“Rooting out waste, fraud and abuse is nothing new for Governor Shapiro – he cracked down on fraud and public assistance benefit theft as Pennsylvania's Attorney General, charging dozens of people who stole millions in taxpayer dollars,” Alex Peterson, spokesperson for Gov. Josh Shapiro, said in a statement to the Pittsburgh Media Partnership Newsroom. “Across Commonwealth programs and initiatives, the Shapiro administration has strict guidelines in place, as well as additional internal checks, to ensure taxpayer money is used for its intended purpose.”
The state DHS also said that OCDEL is audited by the federal Office of Child Care every three years. The last audit took place in March 2024, and the next is scheduled for this spring.
“[The Minnesota fraud investigation] is a cloud that hangs over [child care providers’] ability to conduct business and for families to earn income,” said Diane Barber, executive director of the Pennsylvania Child Care Association. “What’s next? A possible federal freeze on funding and for child care providers, this is not something that they can float.”
Barber said the funding freeze for five states may dissuade people from entering the child care workforce. Pennsylvania’s child care industry currently has 3,000 unfilled jobs, according to the Governor’s office.
“It took 30 years to get a recruitment and retention line item in the [state] budget,” Barber said. “Dollars being frozen and on top of an extended budget impasse, will be detrimental to the system and the support that families and children need and the economy here in Pennsylvania.”
State representatives Jill Cooper and Kate Klunk issued a memo earlier this month for plans to introduce legislation to check for fraud related to child care. To report public benefits fraud, you can fill out an online form through the Office of the Inspector General.
Erin Yudt is a reporter with the Pittsburgh Media Partnership Newsroom, part of the Center for Media Innovation at Point Park University. She most recently was a multimedia content producer and digital reporter at WKBN in Youngstown and is a graduate of Point Park University. Reach her at erin.yudt@pointpark.edu.
The PMP Newsroom is a regional news service that focuses on government and enterprise reporting in southwestern Pennsylvania. Find out more information on foundation and corporate funders here.