Trump administration orders review of federal funding in more than a dozen Democratic states

By Hannah Rabinowitz, Phil Mattingly, Tami Luhby, CNN

(CNN) — The Trump administration has ordered a review of federal funding sent to more than a dozen Democratic-led states, according to multiple sources familiar with the matter.

The sweeping scale of the review is outlined in a budget data request that was sent Tuesday to all federal departments and agencies except for the Department of Defense and the Department of Veterans Affairs.

The Office of Management and Budget memo, which was reviewed by CNN, requests detailed spending information to “facilitate efforts to reduce the improper and fraudulent use of those funds.” Notably, the effort “does not involve withholding funds,” the memo says and is “part of a “data-gathering exercise.”

The request signals a dramatic escalation of the Trump administration’s increasingly aggressive strategy to target federal funding in blue states – an unprecedented policy approach triggered during last year’s government shutdown that has rapidly accelerated in the wake of sweeping fraud allegations in Minnesota.

OMB Director Russel Vought has run point on the effort after spending President Donald Trump’s past year in office re-engineering tools used by the agency, known as the federal government’s “nerve center,” to exert new authority and power over the federal spending process.

The memo directs agencies to include in their spending reports all grants, loans, contracts, subcontracts and “other monetary awards” provided to 13 states and Washington, DC. All of the states voted for Democratic nominee and former Vice President Kamala Harris in the 2024 election and 12 of the 13 states have Democratic governors. A fourteenth Democratic-led state has since been included in the review, according to a person familiar with the matter.

The request directs agencies to include funding data on the states as well as their localities, institutions of higher education and nonprofit organizations operating or performing award activities there. The administration’s plan to review the funding was first reported by RealClearPolitics.

The review is an expansion of an ongoing effort to build a full accounting of government spending in those states and will give the Trump administration options for how to address what they see as waste or abuse, according to multiple sources with direct knowledge of the matter.

That effort also includes options to counter blue-state policies that go against the administration’s priorities, most notably on funding related to so-called “sanctuary cities,” the people said.

It also comes as Trump officials focus on the Minnesota welfare fraud scandal, and as the Justice Department works to create a new division of prosecutors and investigators focused on national fraud enforcement. CNN has reported that the White House recently pushed the FBI to investigate political campaigns in Minnesota over whether they illegally benefited from the fraud.

Vice President JD Vance is scheduled to visit the state later today.

Federal agencies have until Monday to provide data on California, Colorado, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington state and Washington, DC, the budget data request shows.

Virginia wasn’t listed in the original memo, but has since been included in the review, according to a person familiar with the matter.

They are being asked to hand over data on all grants, loans, cooperative agreements, contracts and other financial awards including those made to colleges and universities, the request states. Information should cover fiscal years 2025 and 2026, as well as projected spending for 2027, the memo says.

Funding battles

With Minnesota’s scandals in the spotlight, the Trump administration has doubled down on its efforts to investigate fraud in federal support to states – particularly blue states – and often without evidence.

Earlier this month, the US Department of Health and Human Services announced it would freeze $10 billion in federal childcare and social assistance funding to five Democratic-led states – California, Colorado, Illinois, Minnesota and New York – suggesting the funds could have been subject to fraud. The states quickly sued, arguing the agency has not provided any evidence of fraud and saying the move would hurt many low-income families and children. A federal judge issued a temporary restraining order that is keeping the money flowing for now.

A federal judge has also temporarily halted the US Department of Agriculture’s recent demand that Minnesota re-certify the eligibility of more than 100,000 food stamp enrollees in four counties within 30 days or face steep penalties, including possible disqualification from the program and a halt of federal administrative funding. In a letter to the state in December, the agency cited a multimillion dollar fraud scheme involving a USDA Covid-19 pandemic child nutrition relief program.

HHS said earlier this month that it would freeze federal child care payments to Minnesota and require all states to justify their spending of HHS funding before the money is released.

Trump has also vowed to cut off funding to sanctuary cities, a longtime target of his ire.

“Starting February 1, we’re not making any payments to sanctuary cities or states having sanctuary cities because they do everything possible to protect criminals at the expense of American citizens,” Trump said last week in an economic speech in Detroit. “And it breeds fraud and crime and all of the other problems that come with it.”

His previous efforts to stop funding to these jurisdictions have been repeatedly halted by courts.

This story has been updated with additional information.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.