LOUISVILLE, Ky. (WDRB) — Day care facilities across the country could soon see interruptions in critical federal funding following newly announced changes introduced by the U.S. Department of Health and Human Services (HHS).

Tuesday, the department's deputy secretary Jim O'Neill said all states will now have to submit justification, receipts of photos to verify that Child Care Development Fund (CCDF) dollars are being distributed to real child care businesses. 

"I have activated our defend the spend system for all ACF child care payments across America," O'Neill wrote on X Tuesday. "Starting today, all ACF payments across America will require a justification and a receipt or photo evidence before we send money to a state."

CCDF dollars fund child care tuition assistance programs for low-income families and helps child care facilities meet payroll.

CCDF program federal funding is released to each state from the Administration for Children and Families' (ACF) Office of Child Care department. The federal CCDF funding is then matched by state funding. ACF is an agency under HHS.

The newly announced changes to the CCDF verification requirements come after a YouTube influencer shared a video claiming that child care providers in Minnesota were fraudulently using federal funds.

Although those allegations have not been confirmed or officially investigated, leaders from HHS have taken action, halting all CCDF payments to states.

HHS's press secretary Emily Hilliard wrote in an email to WDRB, "HHS has a clear duty to verify the proper use of taxpayer funds. The documentation process exists to rule out fraud and confirm that funds are supporting legitimate child care providers. These requirements help ensure the integrity of the program and protect both families and providers. The onus is on the state to provide additional verification, and until they do so, HHS will not allow the state to draw down their matching funds for the CCDF program."

According to the Office of Child Care's records, Kentucky received $224,426,398 in federal CCDF funds for grant year 2025. Indiana received $277,660,106 in federal CCDF funds.

Local day care provider Angela Huffman said without that funding, child care facilities across the state could be forced to close their doors.

"A lot of centers, that's how they get most of their income and how they pay their staff," Huffman said. "It could be just a rippling effect where parents won't have care. It'll be hard to retain staff more if payroll is coming in late or if you have to shorten payroll. Without the funding, a lot of parents couldn't put their kids in child care. They would be left at home with siblings or, sad to say, they would be left at home alone so that the parents could work and pay their bills." 

Huffman said some child care providers may have to turn families away if there are delays in the child care assistance funding families receive. 

She added that day care providers may have to increase tuition rates and reduce staff to make up for losses and shifts in enrollment.

Furthermore, Huffman said that interruptions in CCDF funding that supports the Child Care Assistance Program (CCAP) could result in state departments taking longer to approve applications for child care assistance, extending daycare waitlist as local departments work to process those applications. 

Huffman said overall, the changes have caused a wave of confusion, explaining that she has not received any official information about how to verify the legitimacy of her child care facilities with the state. 

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