Colorado is facing a “devastating” freeze in federal funds meant for the state’s poorest families as part of a broader swipe the Trump administration took at five Democratic-led states Tuesday.
The announced it has frozen more than $10 billion in total funds meant to help with child care, social services and low-income families in Colorado, Minnesota, New York, California and Illinois, citing concerns about “widespread fraud and misuse of taxpayer dollars.”
The Trump administration did not offer any specific allegations of fraud in Colorado.
“Families who rely on child care and family assistance programs deserve confidence that these resources are used lawfully and for their intended purpose,” Deputy HHS Secretary Jim O’Neill said in . “This action reflects our commitment to program integrity, fiscal responsibility and compliance with federal requirements.”
Colorado had not yet received an official notice of the funding freezes, Shelby Wieman, a spokesperson for Gov. Jared Polis, said earlier Tuesday. The freeze, on Monday, could sow havoc for the lowest-income Coloradans, and the lack of guidance from the Trump administration left officials trying to gauge the full ripples of the funding loss.
“Beyond reports in the media, the state has not been officially notified of any changes to these funding sources,” Wieman said in a statement. “These resources support families in need and help them access food and much more. If true, it would be awful to see the federal government targeting the most needy families and children this way.”
HHS officials said the withheld funds come from three programs overseen by the agency’s .
The targeted programs provide lifelines to some of the neediest Americans:
- , or TANF, ($7.35 billion in cuts to the five states) provides cash assistance and job training so that parents in poverty can afford diapers and clothes and earn paychecks so they won’t need public assistance
- The (nearly $2.4 billion in cuts) subsidizes day care for low-income households, enabling parents to work or go to school
- The ($869 million in cuts) supports several different social service programs
The money will remain frozen until the Administration for Children and Families determines whether the five states are complying with federal rules, HHS officials said.
Gov. Kathy Hochul said New York is prepared to go to court, as Democratic-led states have scores of times now, to block the administration.
“We’ll fight this with every fiber of our being, because our kids should not be political pawns in a fight that Donald Trump seems to have with blue state governors,” she said.
Millions in withheld funding
The amount of federal money at risk would limit Colorado’s options for making up the difference in the flushest of budget years. An ongoing budget crisis driven by rocketing Medicaid costs in Colorado limits the state’s options even more.
Colorado receives about $135.5 million annually in TANF block grants from the federal government, and about $16.1 million in TANF contingency funds, according to spokesperson Haysel Hernandez.
“These resources support Colorado families in need and help them access job training, financial support, child care and other important social services on the road to self-sufficiency,” Hernandez said in a statement. “Should these funding sources change, we remain committed to supporting our families in Colorado and will continue to advocate for the appropriate programs and services to help our families thrive.”
The TANF funds help support about 47,000 Colorado children living in families in “deep poverty,” meaning they have incomes of less than $15,000 in most cases, said Riley Kitts, chief policy and research officer at the .
The state also receives about $138 million in Child Care and Development funding, which pays for care for about 27,600 children from roughly 18,000 low-income working families, according to the .
The state has received about $71 million and would normally expect to take in about $67 million more to pay child care providers, department spokeswoman Chynna Roberts said.
After accounting for unused funds the department can pull forward, it would face a roughly $26.4 million gap, she said, without elaborating on how the state might respond.
“We are closely monitoring external reports and will share updates if and when official information becomes available,” she said in a statement.
The federal government hasn’t made clear if it intends to freeze all of that funding, but if child care providers aren’t getting paid, parents of small children won’t be able to do their jobs, creating problems for their own finances and their employers, Kitts said.
“When those families can’t go to work, that’s devastating,” he said.
Both block grants are reserved for parents who are working or in an approved education or training program, so families could lose cash assistance and funding for their kids’ care at the same time, Kitts said.
“Families enrolled in TANF are probably taking a double hit,” he said.
‘Devastating for families across the state’
State Rep. Emily Sirota, a Denver Democrat and chair of the Joint Budget Committee, said she’s still working to get a better sense of what the freeze will mean for Colorado.
Because the administration hasn’t made a formal announcement — though President Donald Trump about the freeze on social media — it’s hard to decipher the immediate effects, she said. The unknowns include when the money being frozen was supposed to arrive in the state and when it is supposed to go out to providers.
She called the move “incredibly cruel and wildly irresponsible.”
“Obviously, the loss of $300 million would be devastating for families across the state, our most vulnerable families in particular,” Sirota wrote in a text message, citing a figure given to by an OMB official. “It would devastate child care providers.”
The freeze follows a viral video alleging rampant child care fraud in Minnesota and a series of other fraud cases. More than 50 people in Minnesota have been convicted in a slew of schemes to steal from assistance programs. Federal prosecutors have identified more than $1 billion in taxpayer dollars that were stolen, .
There have been no similar allegations in Colorado. A spokesperson for the federal Department of Health and Human Services said that fraud concerns led to the freeze in the other states, but he did not identify any cases affecting Colorado.
“For too long, Democrat-led states and governors have been complicit in allowing massive amounts of fraud to occur under their watch,” Andrew Nixon, the spokesperson, said in a statement. “Under the Trump Administration, we are ensuring that federal taxpayer dollars are being used for legitimate purposes. We will ensure these states are following the law and protecting hard-earned taxpayer money.”
Kristin McGuire, president and CEO of the left-leaning group , called the funding freeze “a reckless mistake” that will challenge families struggling with the cost of child care.
“The Trump administration is using the moral guise of eliminating ‘fraud and abuse’ to undermine essential programs and punish families and children who depend on these services to survive, many of whom have no other options if this funding disappears,” she said in a statement. “This is yet another ideologically motivated attack on states that treats millions of families as pawns in a political game.”
Colorado does have some TANF reserve funds that it could tap, assuming the federal government doesn’t penalize states for backfilling the funds, as it threatened to when nutrition assistance lapsed during the shutdown this fall, Kitts said.
But ultimately, the state needs to take a broader look at how it will fund the safety net when the federal government is increasingly unreliable, he said. The temporary funding measure that reopened the government expires Jan. 30, meaning another shutdown could be looming.
“This is just another hit. What’s the next hit going to be?” he said.
The Associated Press contributed to this report.
