How Trump Is Harming Federal Childcare Funding
A court shut down his five-state freeze—for now—but his “defend the spend” policy is still a recipe for chaos.
LATE ON FRIDAY, a federal judge blocked the Trump administration’s funding freeze on federal childcare funding going to five large Democratic-led states. The judge’s order came in response to a lawsuit filed by the five affected states—California, Colorado, Illinois, Minnesota, and New York—and could be overturned either upon the resolution of the lawsuit or upon appeal, should the Trump administration choose to contest the decision.
Friday’s order does not affect another recent policy move by the administration relating to childcare: putting in place new administrative requirements with far tighter restrictions before funds can be disbursed, ostensibly as a way of combating fraud. In practice, though, this move will likely not noticeably reduce fraud but may cause delays in states getting childcare aid out the door. If one doesn’t understand how the U.S. childcare system works, that may not seem like such a big problem—but the harmful ripple effects will go far, far beyond the directly affected families.
Let’s start with some background. The high cost of childcare—families using licensed programs often pay over $10,000 a year per child—is a result of the fact that it takes many adults to care for young children. Adult-to-child ratios are kept low (often one adult for every six toddlers, with different ratios for different age groups), which means fixed personnel costs are high. Even with many staff members making poverty wages, childcare programs often operate with paper-thin margins and little to no financial cushion. At the same time, lower-income families cannot afford the fees; the families of some 1.4 million children rely on federal childcare subsidy vouchers.
This creates a precarious balance: When states have trouble getting voucher reimbursements out in a timely manner, or when subsidy funding is unavailable, childcare programs struggle to make payroll or pay rent and may have to close their doors. This scenario has played out in recent years in states like Illinois and Missouri, where technical glitches caused major delays in processing reimbursement payments.
Crucially, though, state-based programs that accept the federal subsidy aren’t serving only lower-income families. According to federal data, around half of childcare centers in the country receive some subsidy dollars, but only 6 percent have three-quarters of more of their children on subsidy. Meanwhile, a much larger percentage of childcare centers—22 percent—have at least one child on subsidy but have less than half of their enrollment made up of these children.
This means the negative effects of funding delays or freezes end up being widely felt. The same center may well be serving the child of a grocery store clerk and the child of a heart surgeon. Both jobs were called “essential” just a few years ago during the COVID pandemic. As the police chief of Montrose, Colorado—a small, conservative city in the western part of the state—said in a 2023 video about the city’s childcare struggles, breakdowns in care can even threaten public health and safety.
Which brings us back to the Trump administration’s recent actions. While a broader argument can be made that childcare access should be a universal right—and that the best way to avoid messes like this is by having a simple, publicly funded yet pluralistic system instead of one that runs on a pay-to-play basis—a bit of self-interest is all it takes to realize how foolhardy the administration’s current move is. The miner in Minnesota’s Iron Range, the chicken-plant worker in California or Tennessee, the rural firefighter, the teacher in your child or grandchild’s school: All of these individuals need childcare, and a great number of them use childcare providers that need federal subsidy dollars to keep the lights on. As the old saying goes, everyone—whether Democrat, Republican, or independent—relies on someone who relies on childcare.
The stated rationale for the Trump administration’s recent moves is a crackdown on fraud, with the proximate cause being the long-smoldering Minnesota scandal that recently blew up into a national story. Fraud is unacceptable, of course. As political scientist Ruy Teixeira recently pointed out, it dampens the public’s trust in the country’s fairness. That’s true whether it’s a childcare program run by immigrants or one run by the wife of the former Republican lieutenant governor (and gubernatorial candidate) in North Carolina. It’s as true when it’s happening in Mississippi as it is in Minnesota. That said, it’s worth noting that the overwhelming majority of childcare payments nationally—96 percent or more—have been shown to be proper according to ongoing federal monitoring.
Despite lacking any new factual cause beyond a highly questionable viral video, then, the Trump administration took two actions. First, for all fifty states, the administration activated its “defend the spend” system over the holidays. This idea, begun last year by the DOGE team, requires justifications for pretty much every expenditure an agency makes, a laborious, redundant process that has the effect of inhibiting federal programs. In this case, the Administration for Children and Families (ACF) is asking states for extra justifications and attestations they are “implementing strategies and controls to identify fraud and ensure program integrity.” Particularly given the hollowed-out capacity at ACF after widespread staffing cuts, significant delays in funding going out are almost certain.
This isn’t the first time the administration did this: Last spring, ACF briefly used (and then deactivated) “defend the spend” on childcare funding. The requirements for additional justifications led to numerous temporary program closures and staff layoffs, throwing many families into chaos.
This time around, the effects are likely to be felt starting soon. In Texas, childcare providers that receive government funding recently got an email warning them “payments to all [subsidy-accepting] providers could be delayed. We don’t yet know exactly how long the delays might be.” In Missouri, childcare providers are reportedly skipping paying their bills as they wait for delayed federal funding to come through.
The situation was far more fraught in the five Democratic-led states where the administration froze federal childcare funding altogether—the move blocked on Friday by Judge Arun Subramanian. Before the judge’s restraining order, those states were restricted from drawing down any funds until they provided reams of new data, threatening the very viability of those states’ childcare sectors. According to an analysis by the Century Foundation, such a funding freeze in those five states would directly affect some 300,000 children who rely on the subsidies—nearly one in four subsidy-receiving kids in the country—plus another 200,000 children whose childcare providers rely on the subsidies. Upwards of 150,000 working mothers might be pushed to leave the workforce because of lost childcare. If the courts ultimately rule that the Trump freeze can proceed, you can expect to see some of those effects.
These moves by the Trump administration may also have a chilling effect on providers choosing to participate in the subsidy program at all, further reducing options for lower-income families and the health of the childcare sector writ large.
There’s a long tradition, of course, of trying to score political points by punching down at the poor. In this case, however, the Trump administration may be counting on the fact that most Americans don’t understand how much they need a functional childcare system regardless of whether they have young kids of their own. For all its many flaws, the existing subsidy program has kept a finger in the dam. We may be about to find out what happens when leaders choose to let the deluge through.
Elliot Haspel is a senior fellow at the think tank Capita, culture of care fellow at the Better Life Lab in the think tank New America, and the author, most recently, of Raising a Nation: 10 Reasons Every American Has a Stake in Child Care For All (Oxford, 2025).
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