Minnesota Daycare Providers Under Federal Investigation Received $67 Million in State Subsidies

Nine Minnesota daycare providers that were subject to federal raids last week received more than $67 million in public subsidies through the state’s Child Care Assistance Program (CCAP) over the past eight years, according to a recent investigation by local news outlet KSTP.

The investigation revealed a troubling trend: payments to these centers more than doubled in the final two years of publicly available data, jumping from approximately $8 million in 2023 to over $16 million in 2025, despite serving roughly the same number of children.

Federal agents executed 22 search warrants at daycare and autism centers across Minnesota last week. While authorities have not released a comprehensive list of the raided facilities, public records confirm that several were recipients of CCAP subsidies. No charges have been filed yet, making it unclear how much of the $67 million may involve fraudulent activity.

“I think voters are very frustrated with the entire situation. I don’t think it’s Republican or Democrat — they’re just frustrated,” said Phil Krinkie, a former state lawmaker and member of the Taxpayer League of Minnesota, in an interview with KSTP.

The raids come amid growing political tensions over program oversight. The Minnesota House Republican Caucus noted on social media that “Democrats killed a bill to increase oversight and fraud penalties for child care providers receiving high amounts of CCAP funding, like these nine providers.”

Former Minnesota Attorney General Lori Swanson, who oversaw several Medicaid fraud prosecutions during her tenure, told KSTP that the scope of the search warrants suggests investigators are examining whether the centers provided the services they billed for.

“Whether it’s a business, a school, a nonprofit — if something grows that much, you know, makes sense to ask why is it growing that much and how could it grow so fast,” Swanson said. “These are federally and state-funded programs. The question is, ‘were services billed to the government that weren’t rendered?'”

The Child Care Assistance Program is administered by Minnesota’s Department of Children, Youth, and Families (DCYF) and provides financial assistance to low-income families who cannot afford childcare. The program has been under scrutiny before, raising questions about the state’s ability to prevent fraud in publicly funded services.

KSTP’s investigation faced challenges when attempting to gather information. The news outlet reported that DCYF ignored their public records request, forcing them to seek assistance from state Rep. Kristin Robbins, chair of the House Fraud Prevention and State Agency Oversight Committee. When Robbins made the same request, DCYF provided the records, documents, and data.

This case follows other high-profile fraud investigations in Minnesota, including a scandal involving the nonprofit Feeding Our Future, where partners were accused of defrauding the federal government of millions of dollars.

Federal authorities have been tight-lipped about the current investigation. When contacted, the FBI, Department of Justice, and the U.S. Attorney’s Office in Minnesota did not provide comments. Only the Department of Health and Human Service’s Association of Children and Families responded, stating they “do not comment on ongoing litigation.”

As the investigation unfolds, questions remain about oversight mechanisms and whether Minnesota’s public assistance programs have adequate safeguards against fraud. The dramatic increase in payments to the facilities under investigation has raised concerns about the effectiveness of current monitoring systems and the potential misuse of taxpayer funds meant to help vulnerable families access childcare services.