Gov. Tim Walz said he paused funding to dozens of housing stabilization recipients on Monday citing concerns about potential misuse of the money.
Walz told reporters at an unrelated event that about 50 of the largest recipients of Medicaid funding aimed at helping people get and keep stable housing would not get paid as a result.
The move comes after FBI investigators raided several providers earlier this month, citing suspected widespread fraud in the program. Minnesota was the first state to adopt the program and since 2020, costs have ballooned far beyond what lawmakers initially expected.
Walz said new laws allowing state agencies to stop grant funding when they detect potential fraud allowed him to pause the payments. It wasn’t immediately clear how long they’d be on hold if organizations were found to be in good standing.
“The payments that were scheduled to go today are not going out to them,” Walz said. “I fully expect some of those folks will sue the state of Minnesota, but I think we’re in a position right now is a trust but verify that we want you to get in the program.”
The governor thanked acting U.S. Attorney for Minnesota Joe Thompson for investigating misuse of the program. And he said those who’d engaged in fraud with government dollars would face consequences.
He also said the program had an important purpose but bad actors were pulling funding away from those in need.
“I think all of us are going to candidly recognize there is going to be legitimate organizations and legitimate need for people in good programs that are going to just have to be a little bit slower and a little more barriers put in place, because it's proven right now, the folks can find the loopholes,” he said. “Because there’s good folks using these programs and making a difference, but there are folks who are defrauding them.”
Fraud was a key issue that legislators sought to address this year. And Republican legislators have said they would hone in on the improper payments and government waste as part of the 2026 campaign.
