Governor Tim Walz is ending his bid for a third term amid intense scrutiny over a growing fraud scandal in Minnesota’s state agencies that he says he has been trying to combat for years. 

Mr. Walz, who was the Democratic Party’s 2024 vice presidential nominee, announced in September that he would run for a third term as governor. However, he has come under immense pressure over whether he failed to find or head off widespread social services fraud in his state.

In a statement on Monday, Mr. Walz, arguing that he is hamstrung because of partisan criticism, said he reconsidered his decision to seek a third term over the holidays after coming “to the conclusion that I can’t give a political campaign my all.”

“Every minute I spend defending my own political interests would be a minute I can’t spend defending the people of Minnesota against the criminals who prey on our generosity and the cynics who prey on our indifferences,” he said. “So I’ve decided to step out of the race and let others worry about the election while I focus on the work.”

Last month, federal prosecutors estimated that more than half of $18 billion in federal Medicaid funds sent to the state since 2018 — the year Mr. Walz was elected to the state’s highest office — may have been stolen. At least 92 people have been charged with fraud schemes in Minnesota, 89 percent of them Somali Americans. The assistant U.S. attorney for the District of Minnesota, Joe Thompson, told reporters that the “magnitude” of the fraud “cannot be overstated.”

A 23-year-old YouTuber, Nick Shirley, helped fuel questions about Minnesota’s management of state funds when he posted a roughly 40-minute video that appeared to show several would-be daycare centers owned by Somali Americans were shuttered and not providing services to any children. 

After the video was posted, several federal agencies announced they were freezing funds to Minnesota. The House Oversight Committee also scheduled a hearing on the allegations. Several state lawmakers are expected to testify. Republican House lawmakers have warned Mr. Walz about failing to appear. 

The chairman of the Oversight Committee, James Comer, told Fox Business last week that he believes Mr. Walz is the person who should be “most concerned” about multiple federal investigations because “he was, by all accounts, warned of this fraud, but yet didn’t want to do anything to offend the Somali voting population.” On Sunday, he said failure to appear would be an “admission of guilt.”

On Monday, Mr. Walz pushed back on criticism of his response to concerns about fraud, saying that his administration went to the state legislature “time and again to get more tools to combat fraud.” 

“We’ve fired people who weren’t doing their jobs. We’ve seen people go to jail for stealing from our state. We’ve cut off whole streams of funding in partnership with the federal government,” he said. However, he added, Republican “political gamesmanship” is “making that fight harder to win.”

“We’ve got Republicans here in the legislature playing hide-and-seek with whistleblowers. We’ve got conspiracy theorist right-wing YouTubers breaking into daycare centers and demanding access to our children. We’ve got the President of the United States demonizing our Somali neighbors and wrongly confiscating childcare funding that Minnesotans rely on. It is disgusting. And it is dangerous,” he said. 

Mr. Walz said that he “cannot abide the actions of the political leadership in Washington” and claimed that the Trump administration and Republican lawmakers have “no intention of helping us solve the problem,” but rather have “every intention of profiting off of it.”

With Mr. Walz’s decision not to seek reelection, speculation is circulating that a Democratic senator, Amy Klobuchar, will run for her party’s nomination for governor.

Meanwhile, roughly a dozen Republicans are vying for their party’s nomination ahead of the August primary.