Texas Gov. Greg Abbott has volunteered the state to serve as a testing ground for a new federal initiative to root out fraud in affordable housing programs, part of a broader push to clamp down on alleged misuse of taxpayer dollars across multiple assistance programs.
In a letter dated January 12, 2026, Abbott told newly appointed U.S. Housing and Urban Development Secretary Scott Turner that Texas is ready to partner with the Trump administration on a pilot program aimed at eliminating fraud in federal housing assistance. The governor’s office announced the move as part of what appears to be a coordinated effort between Texas and federal officials.
“Taxpayers entrust government officials with the responsibility of administering programs efficiently and fulfilling clearly defined goals,” Abbott wrote in his letter. “We will gladly work with you to develop fraud-prevention measures that ensure federal taxpayer funds, like those in the rental-based assistance programs, are not taken advantage of by bad actors.”
Part of Broader Fraud Crackdown
The housing initiative comes just days after Abbott directed state agencies to investigate potential fraud in Texas child care funding programs. That directive, which followed revelations of alleged widespread fraud in Minnesota’s child care system, requires the Texas Workforce Commission and Health and Human Services Commission to submit comprehensive reports by February 27.
“Recently, the Trump Administration and independent journalists have uncovered potential systematic fraud in subsidized child care systems in states like Minnesota,” Abbott said last week. “Such fraud will never be tolerated in Texas.”
Why Texas? The state already boasts a relatively low improper payment rate of just 0.43 percent in its child care programs — significantly better than Minnesota’s approximately 11 percent error rate, according to reports.
Federal Funding Freeze
The moves in Texas align with dramatic steps at the federal level. The Trump administration has frozen more than $10 billion in federal funding to five Democrat-led states — California, Colorado, Illinois, Minnesota, and New York. Federal officials cited concerns that benefits were being fraudulently funneled to non-citizens through programs including the Child Care Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grant.
The Minnesota situation has proven particularly troubling. More than 90 people, primarily from the Somali community, have been charged since 2022 in connection with a massive COVID-era fraud scheme involving meal, housing, daycare, and Medicaid services. The potential losses are staggering — estimates range from $1 billion to as high as $9 billion in taxpayer funds.
Abbott’s letter to Secretary Turner explicitly references the administration’s broader agenda, concluding: “I look forward to working with you and President Trump in combatting fraud, increasing the integrity of these programs, and Making Housing Affordable Again.”
The Texas governor’s eagerness to participate in these anti-fraud initiatives positions the state as an early ally in what appears to be a cornerstone policy focus of the second Trump administration — tightening controls on federal assistance programs while targeting suspected misuse, particularly in states led by political opponents.
