Summary: The Trump administration, via an OMB memo, has ordered a broad collection of federal spending records for more than a dozen Democratic-led states and Washington, D.C. Agencies were asked to provide detailed data on grants, loans, contracts and other awards for FY2025–FY2026 and projected 2027 spending; Virginia was added after the initial list. Officials say the effort is a data-gathering exercise to detect fraud and waste, but it could inform policy responses, including actions tied to sanctuary cities. Recent HHS and USDA funding moves related to alleged Minnesota fraud have been temporarily blocked by courts.
Trump Administration Orders Broad Review Of Federal Funding To More Than A Dozen Democratic-Led States And D.C.
TOPSHOT - An aerial view of Minneapolis, Minnesota, on January 8. - Charly Triballeau/AFP/Getty Images
The Trump administration has ordered a wide-ranging review of federal funds sent to more than a dozen Democratic-led states and Washington, D.C., according to multiple people familiar with the matter. The request — laid out in an Office of Management and Budget (OMB) memo — seeks detailed spending records from nearly every federal department and agency to help detect improper or fraudulent use of federal awards.
Scope and Purpose: The budget-data request, sent Tuesday to all agencies except the Department of Defense and the Department of Veterans Affairs, asks for information on all grants, loans, contracts, subcontracts and other monetary awards provided to the listed jurisdictions. The memo emphasizes that the exercise is a data-gathering effort and "does not involve withholding funds," while also saying the data will "facilitate efforts to reduce the improper and fraudulent use of those funds."
Who Is Targeted
The memo initially named 13 states plus Washington, D.C., and a 14th state was later added. Agencies were given a near-term deadline to produce records covering fiscal years 2025 and 2026 and projected spending for 2027. The request covers awards to state governments as well as localities, institutions of higher education and nonprofit organizations operating or receiving funds in those jurisdictions.
Named Jurisdictions (as reported): California, Colorado, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington State, Washington, D.C., with Virginia added after the original memo.
Who Is Leading The Review
The effort has been led by OMB Director Russell Vought, who has retooled agency processes over the past year to give the administration more oversight and control over federal spending flows. Sources say the review expands an existing effort to build a full accounting of federal spending in those jurisdictions and to provide options for addressing perceived waste, abuse or policy conflicts.
Context And Related Actions
Officials say the initiative accelerated after high-profile fraud allegations in Minnesota and follows recent actions by agencies to scrutinize funding to Democratic-led states. Earlier this month, the Department of Health and Human Services (HHS) announced it would freeze roughly $10 billion in child-care and social assistance funds to five Democratic-led states — California, Colorado, Illinois, Minnesota and New York — citing potential fraud. The affected states sued and a federal judge issued a temporary restraining order keeping the funds flowing.
Separately, the Department of Agriculture (USDA) demanded that Minnesota re-certify the eligibility of more than 100,000 food-stamp enrollees in several counties, citing a multimillion-dollar fraud scheme tied to a Covid-19-era nutrition relief program; a judge temporarily blocked that demand as well.
The review is also described as a potential tool to counter state policies the administration opposes, such as protections for so-called "sanctuary cities," and comes as the Justice Department moves to build a new national fraud enforcement division. CNN and other outlets have reported that the White House has pressed federal law enforcement to investigate allegations tied to Minnesota political campaigns.
Political Fallout
President Trump has repeatedly pledged to cut federal funding to sanctuary jurisdictions. In a recent speech he said, "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." Prior attempts to withhold funds from sanctuary jurisdictions have been challenged and blocked in court.
The administration’s memo gives agencies a short window to produce comprehensive financial records. Officials say the compiled data will inform policy choices, enforcement actions and potential remedies — though the memo states it is not a direct funding cutoff.
This story has been updated with additional reporting.
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