The administration of President Donald Trump is applying significant pressure on the state of Minnesota, moving beyond high-profile immigration crackdowns to threaten the flow of billions in crucial federal dollars. These funds support vital services for low-income families, including food assistance, healthcare, and childcare.
Multiple Federal Agencies Halt Funding Streams
While the Trump administration has clashed with several Democratic-led states, Minnesota has been singled out for particularly aggressive action. This follows President Trump's derogatory comments last month about the state's Somali population and his repeated criticism of Governor Tim Walz over alleged fraud in federal programmes.
The US Department of Agriculture (USDA) fired a significant shot on 9 January 2026. Secretary Brooke Rollins announced a freeze on all current and future awards to Minnesota and the city of Minneapolis, citing a major fraud case from 2022 involving a pandemic relief programme. In a social media post, Rollins declared, “No more handouts to thieves!” and demanded payment justifications for all transactions since 20 January 2025, the day Trump returned to office.
Rollins stated over $129 million is at risk, though specific programmes were not detailed. While core initiatives like the Supplemental Nutrition Assistance Program (SNAP), which provided over $850 million to Minnesota residents in 2024, and the National School Lunch Program appear excluded, the freeze has created widespread uncertainty. State Agriculture Commissioner Thom Peterson warned that pauses, including to a poultry testing lab, could complicate responses to disease outbreaks like avian influenza.
Healthcare and Social Services in the Crosshairs
Simultaneously, the Centers for Medicare and Medicaid Services informed Minnesota it intends to withhold $515 million every three months from 14 Medicaid programmes deemed high-risk. This amounts to a quarter of the federal funding for those services, which include adult companion and residential treatment services. If enacted, this would mean an annual loss exceeding $2 billion.
State officials, including Temporary Human Services Commissioner Shireen Gandhi, have called the move “punitive,” not corrective, and are mounting an administrative appeal. They argue the state has robust anti-fraud measures and that such a drastic federal action is unprecedented.
In late December, the US Department of Health and Human Services moved to freeze funds from the Child Care and Development Block Grant, which subsidises childcare for low-income families. This action was later expanded to include Temporary Assistance for Needy Families (TANF) and Social Services Block Grant funds for Minnesota and four other Democratic states: California, Colorado, Illinois, and New York.
The five states sued, and a federal judge has temporarily blocked the administration from withholding the childcare money, averting immediate crises for daycare providers and the families they serve.
Legal and Political Repercussions Mount
On 14 January 2026, the federal government launched a separate legal offensive. The US Department of Justice sued the Minnesota state government over its affirmative action hiring requirements, seeking to end programmes designed to diversify the public workforce. The lawsuit alleges the state creates “additional hoops” to hire people with “disfavoured skin colours or sex chromosomes” and seeks damages for affected individuals.
Governor Tim Walz, the 2024 Democratic vice-presidential nominee, recently ended his campaign for a third term, citing the difficulty of running the state while fending off these sustained federal attacks. Minnesota is now fighting back on multiple legal fronts, with the state's attorney general pledging to vigorously defend against the DOJ lawsuit.
The administration has not fully clarified its plans or timelines for most of these funding threats, leaving Minnesota in a state of financial and operational limbo. The coordinated assault represents a significant escalation in the use of federal spending power to pressure states politically, with Minnesota serving as a primary test case.
