St. Paul, Minnesota — Gov. Tim Walz on Thursday unveiled an 18-part anti-fraud package for the 2026 legislative session while sharply criticizing the Trump administration’s decision to cut $259 million in federal Medicaid funding to Minnesota.
At a Capitol press briefing, Walz proposed reforms including banning legislators from directing funds to specific nonprofits and creating a centralized Office of Inspector General to oversee state spending. A similar Office of Inspector General proposal passed the Senate in 2025 but stalled in the House. Disputes remain over whether the office should include its own law enforcement arm and who would appoint its leader.
The proposal follows ongoing scrutiny of Medicaid oversight. According to data from the Centers for Medicare and Medicaid Services, Minnesota’s improper payment rate is 2.1%, below the national average of 6.1%. Federal officials said the $259 million reduction targets 14 Medicaid services flagged for “questionable variances.”
Minnesota’s Medicaid budget totals about $18 billion, with roughly 60% funded by the federal government. The state has 60 days to defend the disputed claims and is separately appealing a $2 billion federal withholding tied to the same services.
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