Tim Walz Pressed On Federal Probe Of State Fraud Allegations
Days after launching his bid for a third term, Minnesota Gov. Tim Walz is under renewed fire over his administration’s handling of a state housing program that ballooned in cost and collapsed amid widespread fraud allegations.
The state’s Department of Human Services (DHS) has now asked federal officials to help terminate the Medicaid-funded Housing Stabilization Services program, citing “credible allegations of fraud” and “exponential growth in spending.” The program was originally designed to help seniors and people with disabilities find stable housing — but spending exploded from $2.6 million in 2017 to $107 million in 2024, according to the Star Tribune.
The scandal comes as Walz touts his record on fiscal oversight and government efficiency on the campaign trail.
Just 45 minutes before a legislative hearing on the issue Wednesday, Walz announced a new executive order creating a statewide Inspector General Coordinating Council, led by the Bureau of Criminal Apprehension. Critics say the timing was no coincidence.
Republican lawmakers on the House Fraud Prevention and State Agency Oversight Policy Committee questioned DHS officials over how the fraud went unchecked for so long — and whether Walz’s executive order was meant to distract from mounting criticism.
Rep. Kristin Robbins (R-Maple Grove), the committee chair and a GOP candidate for governor, blasted the move, calling it “a distraction, not a solution.”
“Releasing this executive order just before today’s House hearing appears more like a distraction than a solution,” Robbins said in a statement. “Our committee will continue pressing for accountability and real reforms to protect taxpayers and ensure state programs serve those truly in need.”
Walz defended his administration’s record, saying Minnesota is cracking down on fraud and improving interagency coordination.
“If you’re going to commit these crimes in Minnesota, you are going to get caught,” Walz told WCCO. “We have no tolerance for fraud in this state.”
He also pointed to new anti-fraud tools, including the appointment of an inspector general within DHS and expanded data-sharing.
“I wish we would have gotten a little more,” he added, referencing artificial intelligence tools that could help detect suspicious activity.
Still, critics argue the reforms come too late, following a string of major fraud scandals under Walz’s watch — including the Feeding Our Future scandal, abuses in autism therapy programs, and now, housing assistance fraud that has triggered FBI raids.
At Wednesday’s hearing, DHS Inspector General James Clark told lawmakers that payments to 115 providers in the Housing Stabilization Services program had been suspended, after the state paid out roughly $100 million over six years. Clark said DHS is now taking a more “aggressive” approach by halting payments immediately when fraud is suspected — a sharp departure from the past practice of continuing payments to avoid tipping off suspects.
DHS Commissioner Shireen Gandhi said the department has already removed the assistant commissioner who oversaw the program and confirmed the agency is working to formally end the program by October 20, pending federal approval.
Republicans say the timing of the action — and the governor’s new task force — shows state agencies only moved after media investigations exposed the scope of the problem.
“This is part of a larger pattern,” Robbins said. “Taxpayer dollars keep disappearing, and the administration only acts once the FBI or the press gets involved.”