Nelson, Senate Republicans announce comprehensive plan to hold government accountable for stopping waste, fraud, and abuse

Minnesota State Senator Carla Nelson (R-Rochester) and Minnesota Senate Republicans announced a comprehensive plan to hold government accountable to stop waste, fraud, and abuse of taxpayers’ dollars.   

The plan is part of the group’s Minnesotans First agenda for the 2025 legislative session.  

“Minnesota has a long and frustrating history, especially in state grant programs,” Senator Nelson said. “Even US Attorney Andy Luger has acknowledged that Minnesota has a fraud problem. This is unacceptable. People work hard for their money, they expect their government to be good stewards of their tax dollars, and right now our state is a fraud leader. That should concern every Minnesotan, and it demands an all-hands-on-deck moment. We must stop the fraud before another scandal steals even more taxpayer money.” 

The eight bills in the fraud prevention package cover everything from empowering the nonpartisan Office of the Legislative Auditor to creating a state Office of Inspector General, a state grants administrator, a central grant system, increased oversight of grant recipients, and additional accountability, training, and whistleblower protections for state employees.   

Two of the bills are still being drafted by the revisor’s office and therefore do not have senate file numbers yet. 

STATE GRANT REFORM 

Since a significant amount of fraud in Minnesota has occurred through grants distributed by state agencies to nonprofits, there are three proposals to overhaul how this funding is managed.  

  • Reforming Grant Management Practices (SF 981): A key element of the fraud prevention plan is a bill authored by Senator Nelson to strengthen state grant management practices. In response to a 2023 OLA report on widespread noncompliance in state grant administration, this bill enforces stricter financial audits for state-funded organizations, conflict-of-interest rules, and background checks to keep criminals out of grant-funded nonprofits. 
  • Statewide Grant Oversight and Fraud Prevention (SF 538): A bill proposes creating a Grant Administrator position and a centralized grants database to track and prevent fraud across multiple agencies. The bill would create a clearinghouse to determine if fraudulent actors are stealing or abusing funds in more than one agency.
  • Strengthening Grant Compliance and Oversight (SF 1123): A proposed bill adds stricter oversight and compliance checks, including surprise site visits, financial reconciliation requirements, and the authority to withhold funds from noncompliant organizations.

OVERSIGHT 

Tackling fraud begins with better oversight of state employees and funding recipients.   

  • Stronger Penalties for State Employees (SF TBA) The prevention proposal also includes a bill that increases penalties for state employees who fail or refuse to report suspected waste, fraud, or abuse as required by law. Payments must be temporarily halted when fraud is suspected. Current law requires employees to report fraud to the OLA, but the Feeding Our Future scandal was cited by the OLA as an example where state employees failed to do so.
  • If a commissioner fails to report fraud, the agency’s operating budget (salaries, expenses, benefits) will be frozen for two years. The bill aims to create a shared database of individuals and entities barred from receiving government payments, modeled after the federal “do not pay” list. 
  • Whistleblower Protections (SF 475): The fraud prevent proposal would strengthen protections for state employees who report fraud, expanding who they can report to and addressing retaliation concerns. There are concerns, especially in the Department of Human Services, about retaliation against those trying to fight fraud from the inside. Current law has not been sufficient to protect them.
  • State OIG (SF TBA): The plan recommends creating a state Office of Inspector General (OIG) to oversee compliance, training, and fraud prevention policies across state government. 

TRANSPARENCY  

Finally, the fraud prevention package aims to improve transparency in state government.   

  • Restoring Transparency in the Attorney General’s Office (SF 730): The  bill aims to reinstate public access to data on closed investigations involving non-individuals — information that was publicly available for over 40 years before a 2022 court ruling allowed the AG’s office to withhold it, severely limiting the public’s access to information on fraud cases being investigated, prosecuted, or settled.
  • Holding Agencies Accountable for OLA Recommendations (SF 263): A proposed bill pushes House and Senate Committees to hold hearings where the OLA reviews agency compliance with its recommendations, ensuring action is taken to address fraud, waste, and abuse instead of being ignored. Too often, the OLA’s recommendations are met with no meaningful action by commissioners or agency staff.