Recently the Office of the Legislative Auditor (OLA) released two reports detailing the fraud that has been taking place within state-and-taxpayer-sponsored programs: the 2022 Frontline Worker Pay Program, and the Feeding Our Future organization.
“These two cases are the most recent in a long line of fraud taking place in Minnesota, and taxpayers should be ashamed that this has been allowed to happen countless times,” said Senator Jeff Howe (R-Rockville). “Since the Walz Administration took office, Minnesota has experienced multiple claims of waste and fraud, all at the expense of taxpayers and their dollars. The cost of this fraud and mismanagement is over $500 million! This mismanagement has allowed rampant fraud that has gone unchecked for far too long. We must demand accountability.”
The first report from the OLA dissected how the state ran the 2022 Frontline Worker Pay Program, which was intended to provide checks to workers who met specific criteria during the COVID pandemic. The final agreement had Republicans setting the total amount of funds available, and Democrats determined eligibility requirements.
The OLA ran several projections based on individual applications and each time determined about 41% of payments were made to people not eligible to the program, resulting in about $205 million unverified payments. The OLA report cited key findings and recommendations for the Walz administration including the following:
- Determine whether those applicants whose eligibility could not be determined were actually eligible for a frontline worker payment
- Recoup payments made to ineligible applicants or made to applicants who received a payment using the identity of another individual
- Use additional methods to verify adjusted gross income
- Ensure data retention requirements are included in all contracts and is appropriately retained in accordance with contract provisions
- Ensure the state retains data necessary for making program decisions
The second OLA report reviewed the Minnesota Department of Education’s (MDE) oversight of the nonprofit Feeding our Future. The report found oversight of the program to be inadequate and that “MDE’s actions and inactions created opportunities for fraud.”
The OLA report highlighted three issues:
- A failure to act on warning signs known to the department prior to the onset of the COVID-19 pandemic and prior to the start of the alleged fraud
- A failure to effectively exercise its authority to hold Feeding Our Future accountable to program requirements
- Ill-preparation in responding to the issues encountered with Feeding Our Future
“MDE failed to investigate complaints, despite multiple red flags – plain as day,” continued Howe. “In 2022, Senate Republicans held hearings on this issue, in an attempt to get to the bottom of it. We knew then that there were clear issues with the program, but MDE denied wrongdoing, and we now know they completely failed to take ANY accountability measures. Their lack of oversight means that taxpayer money that was meant to feed hungry children actually went to lining the pockets of over 70 criminals. This is negligent, Governor Walz and his administration must both be held accountable for a total failure of leadership.”
These two reports are the latest in a long line of rampant fraud that has occurred under the Walz administration. Last year, an OLA report found $3.5 million in overpayments through the RentHelp program. In 2019, the OLA released a report regarding years-long claims of fraud within the Child Care Assistance Program (CCAP), which stated the fraud that occurred is over $5-6 million that was originally alleged, but they could not offer a “reliable estimate of how much fraud exists in the program.” DHS has also seen fraud through opioid treatment payments sent to Tribes throughout the state, in which expenditures were classified as “overpayments” and equated to about $29 million.
In tandem with the fraud, there have also been cases of extreme waste. In 2019, Minnesota’s Medicaid program paid $3.7 million for deceased enrollees, and DHS had $22 million in improper spending which had to be repaid to the federal government. In 2020, DHS again disclosed up to $29 million in improper payments for duplicate accounts. Since the Walz administration has taken over, there have been over 40 “scandals” involving agencies under his control.
“We’re seeing a pattern repeating itself – Governor Walz repeatedly claims that his administration has done everything possible to prevent these issues from occurring, yet they keep popping up and every OLA report is worse than the last. It’s time for Governor Walz and his Commissioners to be held accountable for these repeated abuses. There’s a blatant lack of transparency and a mismanagement of taxpayer dollars that should worry every single person in Minnesota,” finished Howe.
Notably, Howe authored legislation that would address the issue by requiring fraud identification to be included in current state statute. Though the bill was not heard in committee, Howe will be reintroducing it in the 2025-2026 biennium.