What to Know about the Threats on Federal Funds Flowing to Minnesota

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January 18, 2026

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(Associated Press/KTAR) It’s not just about sending federal law enforcement officers into Minnesota. President Donald Trump’s administration is also lashing out at the state by threatening to withhold billions in federal money, much of it intended to help low-income families with food aid, health care and child care — and with a new lawsuit against the state.

Trump’s administration has struck out at Democratic-run states broadly, but it’s made a prime example of Minnesota, where the president last month called the state’s Somali population “garbage,” targeting it with actions not seen elsewhere.

The administration has not spelled out its exact plans in most cases, and it’s not clear if some of the money will actually stop flowing — or, if so, when.

Trump’s administration has unleashed a wave of threats to halt the flow of some federal funds to other states, too — including federal funds to “sanctuary cities” that limit cooperation with federal immigration officials and their states.

Minnesota has been singled out in some cuts as Trump repeatedly criticizes Gov. Tim Walz over fraud in federal programs. Walz, the 2024 Democratic vice presidential nominee and a high-profile Trump critic, ended his campaign this month for a third term, saying he couldn’t run a campaign while fending off the attacks and running the state.

Minnesota is pushing back in courts or otherwise.

Here’s a look at the planned freezes in Minnesota.

Agriculture Department grants suspended

The Agriculture Department said it’s freezing funding in the state and its largest city, Minneapolis — but without laying out many details. Agriculture Secretary Brooke Rollins said in a social media post Jan. 9 announcing the action: “No more handouts to thieves!”

In a letter to Walz and Minneapolis Mayor Jacob Frey, she cited a major fraud case involving a USDA-funded pandemic relief program that broke in 2022 in which 78 people have been charged — and 57 convicted.

Rollins said she was suspending all current and future awards to the city and state and told them to provide payment justifications for all transactions since Jan. 20, 2025, the day Trump returned to office. The justifications would be required to receive future money, too.

Rollins said the awards at risk total more than $129 million but did not specify which programs are included. Her department has not clarified whether the amount includes payments that go to individuals, or just those to government entities.

Based on the figure from Rollins, the freeze would not appear to include funds for the Supplemental Nutrition Assistance Program, which helps about 1 in 12 Minnesota residents buy groceries. Minnesota residents received more than $850 million through that program in 2024. Still, a Minnesota Department of Children, Youth and Families website says the department is analyzing any impacts to SNAP.

It also appears the National School Lunch Program, which provides and subsidizes school meals, is not included. Minnesota was expected to receive more than $240 million in that program in the budget year that ended Sept. 30.

The Agriculture Department also runs programs aimed at food producers, including disaster aid and price supports.

Minnesota Agriculture Commissioner Thom Peterson said at a news conference Wednesday that it’s not clear exactly which programs might lose funding, but the state has started receiving notices from some pauses, including to a poultry testing lab. He said that leaves uncertainty about who would pay if avian influenza is found at a farm and birds must be removed.

Minnesota appeals reduction in Medicaid payments

The Centers for Medicare and Medicaid Services also told Minnesota last week that it intends to withhold $515 million every three months from 14 Medicaid programs that were deemed high risk after rejecting a corrective action plan the federal government demanded because of fraud allegations.

The programs identified as high risk include adult companion services, residential treatment services and nonemergency medical transportation.

The amount to be withheld is equivalent to one-fourth of the federal money for those programs.

On a call with reporters Tuesday, state Department of Human Services said they were mounting an administrative appeal to the freeze.

They said the department has been emphasizing anti-fraud measures for more than a year and questioned the federal action, which they said is unlike anything they’ve found in 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,” Temporary Human Services Commissioner Shireen Gandhi said, adding that the state can’t find other examples of similar federal decisions.

“It’s not corrective action,” she said. “It’s a punitive action.”

Court pauses freeze on child care and other social services money

The U.S. Department of Health and Human Services told Minnesota in late December that it was freezing funds in the child Care and Development Block Grant, which subsidizes child care for low-income families, telling the state that it had to submit attendance records and other information before the money would flow again.

Last week, the Trump administration said it was halting payments of the child care money, along with temporary aid for Temporary Assistance for Needy Families, which provides job training and cash assistance, and the Social Services Block Grant, which funds a variety of social services, for Minnesota and four other states where Democrats lead the government.

The five states — along with Minnesota, California, Colorado, Illinois and New York — sued. Advocates and officials warned that stopping the childcare subsidy would put many daycare providers at risk of layoffs of closures. And those could put the families of all their clients in binds, not just those who rely on the subsidies.

Last week, a federal judge ruled that the administration cannot block the money for now.

Federal government launches lawsuit over government hiring practices

The federal administration on Wednesday unleashed another line of attack on the Minnesota state government.

The U.S. Department of Justice sued the state government in federal court over its affirmative action hiring requirements. The lawsuit seeks to end programs intended to diversify the government workforce, claiming “Minnesota requires its hiring managers to jump through additional hoops to hire employees with disfavored skin colors or sex chromosomes.”

The lawsuit also seeks money for employees and prospective employees who were impacted.

The state attorney general’s office said it would respond in court. READ MORE

Over $120 Million in USDA Award Payments to Minnesota Suspended, Sec. Rollins Says (CBS News)
Trump administration suspends $129m in benefit payments to Minnesota -- USDA notified state’s governor of decision, citing inquiries into alleged fraud by local non-profits and businesses (The Guardian)
USDA suspends ‘federal financial awards’ to Minnesota in wake of fraud probe (The Hill/ABC4.com)
USDA Freezes $129M to Minnesota Amid Fraud Claims as Ag Leaders Convene (AgroLatam)
USDA freezes $129 million to Minnesota as top ag leaders gather (Agri-Pulse)

Excerpt from CBS News: U.S. Agriculture Secretary Brooke Rollins said on Friday that she is suspending payments on all active and future awards from the USDA to Minnesota amid the long-running fraud scandal in which the White House has alleged a misuse of federal funds.

In a letter addressed to Gov. Tim Walz and Minneapolis Mayor Jacob Frey, Rollins said the suspended payments, as of Friday evening, total just over $129 million.

As reasons for her suspension, she highlighted the alleged fraud schemes involving the nonprofit group Feeding Our Future, Minnesota's Housing Stabilization Services program, and claims of fraud at daycare centers around the state.

"Despite a staggering, wide-reaching fraud scandal, your Administrations refuse to provide basic information or take common sense measures to stop fraud," Rollins said in the letter, which she posted on social media.

She asked Walz and Frey to provide her agency with justification for all federal spending to the state from Jan. 20 of last year "to the present" within 30 days, and said that payments moving forward will "require such payment justification."

In a reply to Rollins' post, Minnesota Attorney General Keith Ellison said on social media, "I will not allow you to take from Minnesotans in need. I'll see you in court."

"We're communicating with State partners to understand the impacts of such a blanket cut to funding meant for residents most in need," the City of Minneapolis said in a statement. "What's abundantly clear is that Minneapolis is the latest target of the Trump administration -- willing to harm Americans in service to its perceived political gain." READ MORE

Excerpt from The Guardian: Minnesota’s attorney general, Keith Ellison, publicly responded to Rollins’s post, writing on X: “I will not allow you to take from Minnesotans in need. I’ll see you in court.”

The USDA’s announcement coincides with a federal ruling that the Trump administration cannot block federal money for childcare subsidies and other programs aimed at supporting low-income families with children from reaching five Democratic-led states, including Minnesota.

The Trump administration has targeted Minnesota over the past year over allegations of fraud, specifically going after the state’s Somali population. Federal prosecutors estimate as much as $9bn has been stolen across schemes allegedly linked to the state’s Somali population.

Trump ended legal protections for Somali immigrants in the state in November 2025, claiming that “Somali gangs are terrorizing the people of that great State, and BILLIONS of Dollars are missing. Send them back to where they came from.”

Shortly thereafter, Trump went off on both Somalis and Ilhan Omar, the Minnesota congressional representative who is from Somalia and is a US citizen, in a xenophobic rant during a cabinet meeting.

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A month later, in December 2025, the FBI announced that it was deploying additional investigative and personnel resources to “dismantle large-scale fraud schemes exploiting federal programs” in the state, according to its director, Kash Patel. Patel said the agency had already dismantled a $250m fraud scheme that stole federal food aid meant for vulnerable children during the Covid pandemic in a case that led to 78 indictments and 57 convictions.

Last week, Walz announced that he would not run for a third term as Minnesota’s governor, as his handling of the fraud has fallen under intense scrutiny from Trump and Republicans. In his announcement, Walz acknowledged that the president and his political allies have taken advantage of the crisis to sow further division in the state.

“I won’t mince words here,” Walz said. “Donald Trump and his allies – in Washington, in St Paul and online – want to make our state a colder, meaner place.” READ MORE

Excerpt from The Hill/ABC4.com: Rollins estimated that current federal funds from the USDA to programs in Minneapolis and Minnesota at large reach over $129.18 billion.

USDA’s decision to pull funds is only the latest in the fallout over the state’s fraud case.

After the Department of Human and Health Services announced a freeze of $10 billion in child care and family assistance payments to five Democratic-led states over concerns of widespread fraud, the states’ attorneys general sued. On Friday evening, a judge temporarily halted the freeze in funding while the lawsuit unfolds. READ MORE

Excerpt from AgroLatam: As the nation's top agriculture officials gather in Anaheim, California, the USDA's surprise decision to freeze $129 million in federal funds to Minnesota has thrown a political firestorm into an already tense policy week.

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The funding freeze has the potential to overshadow this week's scheduled discussions on the 2026 farm bill , ag labor , and commodity programs , especially with key Senate and House Agriculture Committee members speaking in Anaheim, including Sen. Amy Klobuchar and Rep. Angie Craig , both Minnesota Democrats.

Craig, currently running for the US Senate seat being vacated by Sen. Tina Smith , is expected to use the moment to push back on the funding freeze and defend Minnesota's ag programs. Klobuchar is also making headlines, reportedly considering a run for governor .

With Congress facing a compressed legislative calendar in an election year, agriculture stakeholders worry that mounting political distractions could derail efforts to pass a long-overdue five-year farm bill .

All eyes will be on Secretary Rollins Monday as she delivers remarks to the AFBF convention's closing session. Whether she addresses the growing backlash or pivots to long-term rural policy remains to be seen—but the freeze to Minnesota ensures her message will be under a national spotlight. READ MORE