The Trump administration has moved to freeze or withhold hundreds of millions of dollars in federal funding to Minnesota, targeting programs that provide food assistance, health care, and child care to low-income families, while filing a civil lawsuit against the state over its government hiring practices, the Associated Press reported Wednesday.
The actions represent an escalating federal pressure campaign against Minnesota, which the Trump administration has singled out more sharply than most Democratic-led states, repeatedly citing Gov. Tim Walz over alleged fraud in federally funded programs — a conflict that Walz said this month led him to drop his campaign for a third term.
The administration has not spelled out its exact plans in most cases, and it remains unclear whether all of the threatened freezes will take effect or when.
Agriculture funding suspended
Agriculture Secretary Brooke Rollins announced January 9 the suspension of all current and future Department of Agriculture awards to Minnesota and its largest city, Minneapolis, citing a fraud case involving a USDA-funded pandemic relief program that broke in 2022. In a letter to Walz and Minneapolis Mayor Jacob Frey, Rollins cited the case in which 78 people have been charged and 57 convicted.
“No more handouts to thieves!” Rollins said in a social media post announcing the action.
Rollins said the awards at risk total more than $129 million but did not specify which programs are included. The freeze does not appear to cover the Supplemental Nutrition Assistance Program, through which Minnesota residents received more than $850 million in 2024 — reaching about 1 in 12 Minnesota residents. The National School Lunch Program, for which Minnesota was expected to receive more than $240 million in the budget year ending September 30, also appears not to be included.
Minnesota Agriculture Commissioner Thom Peterson said at a news conference Wednesday that it is not clear exactly which programs may lose funding. He said the state has already received pause notices for some programs, including a University of Minnesota poultry testing lab, and added that the uncertainty leaves open the question of who would pay if avian influenza is detected at a farm.
Medicaid payments targeted
The Centers for Medicare and Medicaid Services told Minnesota last week that it intends to withhold $515 million every three months from 14 Medicaid programs the agency identified as high risk, after rejecting a corrective action plan it had demanded of the state. The $515 million quarterly figure represents one-fourth of the federal money for those programs.
The programs identified as high risk include adult companion services, residential treatment services, and nonemergency medical transportation.
Minnesota’s Department of Human Services said it has mounted an administrative appeal. On a call with reporters Tuesday, department officials said they have been emphasizing anti-fraud measures for more than a year and questioned the federal action, which they said is unlike anything they have found applied to other states.
“Minnesota cannot absorb the loss of more than $2 billion in annual funding for these programs without catastrophic consequences for the people we serve,” said Temporary Human Services Commissioner Shireen Gandhi.
“It’s not corrective action,” she said. “It’s a punitive action.”
Child care freeze blocked in court
The U.S. Department of Health and Human Services notified Minnesota in late December that it was freezing funds from the Child Care and Development Block Grant, which subsidizes child care for low-income families, requiring the state to submit attendance records and other documentation before money would flow again.
The Trump administration later extended the freeze to Temporary Assistance for Needy Families, which provides job training and cash assistance, and the Social Services Block Grant, applying the action to Minnesota along with California, Colorado, Illinois, and New York.
The five states sued. Advocates and officials warned that halting child care subsidies would put daycare providers at risk of layoffs or closures, in turn affecting all families relying on those providers — not only those receiving the subsidies. A federal judge ruled last week that the administration cannot block the money for now.
DOJ sues over hiring practices
The U.S. Department of Justice filed suit in federal court Wednesday against Minnesota over the state’s affirmative action government hiring requirements. The lawsuit seeks to end programs intended to diversify the government workforce, claiming that “Minnesota requires its hiring managers to jump through additional hoops to hire employees with disfavored skin colors or sex chromosomes.” The suit also seeks monetary relief for employees and prospective employees who were affected.
The state attorney general’s office said it would respond in court.
Political backdrop
Walz, the 2024 Democratic vice presidential nominee and a high-profile Trump critic, announced earlier this month that he would not seek a third term as governor, saying he could not run a campaign while simultaneously fending off federal attacks and running the state.
Trump has targeted Democratic-led states broadly, including those that limit local cooperation with federal immigration enforcement. State and local officials have said Minnesota has faced actions not found in other states, and the state has been pushing back in courts and through administrative channels.