On Thursday, The Minnesota Office of the Legislative Auditor (OLA) released a report following an audit of state agencies’ compliance with the Office of Grants Management (OGM) policies. The report, titled Grant Award Processes, shows that the Department of Human Services’ (DHS’) Behavioral Health Division (BHD) has failed to keep records regarding conflicts of interest where the reviewer might benefit from a grant being awarded to a certain applicant.

The OLA had similar findings in a 2021 audit, suggesting these issues are pervasive and often go unaddressed.

“This is not a surprise. For years, we have been calling out the overwhelming need for more oversight in the state’s grants processes.” said Senator Mark Koran (R-North Branch). “With millions of state dollars going out the door each year in grants, it’s our job to hold both government and non-profits accountable in order to prevent any misuse of these funds.”

“I look forward to further discussing the OLA’s recommendations with the Legislative Audit Commission,” Senator Koran continued. “We will aim to provide great clarity around our expectations for foundational documentation requirements to ensure the prevention of any conflicts of interest.”

Additionally, the report found:

• OGM policy does not establish sufficient standards for single/sole source grant justification.
• In the absence of statewide requirements, state agencies have used a variety of approaches to form grant review panels.
• BHD did not comply with the state’s pre-award risk assessment requirements for more than 40 percent of grants reviewed. Minnesota State Arts Board (MSAB) did not complete pre-award risk assessments for the few grants it awarded without a competitive process.