HHS Launches Review of Minnesota’s $8.6 Billion Federal Social Service Funding Amid Fraud Allegations
ST. PAUL, Minn. — The U.S. Department of Health and Human Services (HHS) has initiated a comprehensive review of Minnesota’s use of more than $8.6 billion in federal social service funds distributed between fiscal years 2019 and 2025. The inquiry, prompted by emerging allegations of fraud and mismanagement, demands detailed administrative records from Governor Tim Walz’s administration and other state entities, according to letters obtained by the New York Post.
Alex Adams, assistant secretary for the Administration for Children and Families (ACF), sent the letters on December 15 to Governor Walz, Minneapolis Mayor Jacob Frey, and a nonprofit involved in administering Head Start programs. Adams emphasized the department’s commitment to “accountability for American taxpayers” and expressed concerns that federal safety-net funds may have been misused or diverted, potentially even facilitating illegal and mass migration into Minnesota.
Between 2019 and 2025, Minnesota received over $8.6 billion in ACF funding through more than 1,000 federal grants, with more than $690 million allocated for safety-net programs in fiscal year 2025 alone under the Biden administration, according to federal spending records reviewed by the Post. The requested data includes comprehensive lists of all state entities receiving ACF funding, along with recipient names, addresses, dates of birth, Social Security numbers, and immigration A-numbers where applicable.
Adams cited recent fraud investigations and whistleblower allegations involving the Minnesota Department of Human Services (DHS) as the basis for the review. Public reports indicate that hundreds of DHS employees warned about fraud concerns that were allegedly ignored, with some whistleblowers facing retaliation. The department’s probe follows high-profile fraud cases, including the Feeding Our Future scandal, where federal prosecutors charged dozens for diverting more than $250 million intended for child nutrition programs toward luxury purchases.
Governor Walz has maintained that Minnesota is a “prosperous state, a well-run state,” even as the federal scrutiny intensifies. Meanwhile, Minnesota’s House Speaker Lisa Demuth has described the $1 billion welfare fraud case as potentially “the tip of the iceberg,” highlighting the depth of the issue.
The review aligns with broader federal efforts to ensure integrity in the use of taxpayer dollars, especially in programs overseen by the Administration for Children and Families. The department’s investigation also follows the announcement by the U.S. Department of Labor of a specialized “strike team” dispatched to Minnesota to investigate rampant fraud.
Mayor Jacob Frey has yet to publicly comment on the HHS inquiry. The unfolding situation underscores the challenges states face in managing vast sums of federal aid amid increasing demands for transparency and accountability.
For more information on federal social service funding and oversight, visit the Department of Health and Human Services and the Office of Family Assistance. Updates on ongoing fraud investigations can be found through the U.S. Department of Justice and the HHS Office of Inspector General.
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