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Though Minnesota Gov. Tim Walz announced Monday that he will not seek re-election, former House Speaker Kevin McCarthy insisted the state's fraud investigation is far from over.

"This is not the end of this story. Walz is trying to leave because he could not win," he said on "America's Newsroom."

"I think the entire Democrat administration is going to have to resign, because this will not be the end," he continued, crediting independent journalist Nick Shirley, whose viral video raised questions about daycare centers that appeared non-operational despite receiving public funds.

McCarthy speculated that the daycare centers could be the "next shoe to drop" in Minnesota and alleged that Democrats are using the money to fund campaigns.

FBI SURGES RESOURCES TO MINNESOTA AS PATEL CALLS $250M FRAUD SCHEME 'TIP OF ICEBERG'

Kevin McCarthy and Minnesota Gov. Tim Walz in a side-by-side split image

Former House Speaker Kevin McCarthy and Minnesota Gov. Tim Walz (Slaven Vlasic/Getty Images for The New York Times; Allison Bailey/AFP via Getty Images)

"Republicans have to be smart, and this is where I'd listen to Tom Emmer. Let's get the right candidate to run in Minnesota… [and] bring accountability back to this state," he continued.

"It's just another prime example of mismanaged states by Democrat liberal policies that get us into this mess."

Walz's announcement that he would not seek re-election came Monday as the scandal remains in the national spotlight.

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Quality Learning Center sign being corrected

Quality Learning Center in Minnesota was found at the center of an alleged childcare fraud scandal in the state following a viral video. (Madelin Fuerste/Fox News Channel)

In an X post, the governor wrote, "Minnesota has to come first – always." 

"Today, I’m proud of the work we’ve done to make Minnesota the best place to live and raise kids. I’ve decided to step out of the race and let others worry about the election while I focus on the work."

In a statement released Monday, Walz accused President Donald Trump and his allies of working to transform Minnesota into a "colder, meaner place" while blasting the administration for taking away tax dollars meant to "help families afford child care."

"For the last several years, an organized group of criminals have sought to take advantage of our state's generosity. And even as we make progress in the fight against fraudsters, we now see an organized group of political actors seeking to take advantage of the crisis…" he said.

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"Make no mistake: We should be concerned about fraud in our state government. We cannot effectively deliver programs and services if we can't earn the public's trust. That's why, over the past few years, we've made systemic changes to the way we do business," he continued.

He proceeded to list out the ways his state has taken action to combat and prevent fraud.