Minnesota’s nonpartisan Legislative Auditor recently issued reports investigating the Walz administration’s bungled handling of two taxpayer-funded programs: the Feeding our Future child nutrition fraud scheme and the Frontline Worker Pay program. The findings outlined in the reports confirmed an alarming trend of inadequate management, insufficient oversight, and an inability to protect tax dollars from fraud and abuse.
“Despite glaring evidence of fraud, Gov. Walz and legislative Democrats made the deliberate decision to look the other way allowing the flagrant theft of taxpayer dollars to continue,” said State Senator Eric Lucero (R-Saint Michael). ”Tens-of-millions of dollars could have and should have been used to lower taxes and help hardworking Minnesotans but instead ended up in the pockets of fraudsters due to pervasive Democrat malpractice.”
FEEDING OUR FUTURE FRAUD TIMELINE AND AUDIT RESULTS
The Feeding Our Future scandal began and then escalated rapidly with the onset of the Covid pandemic, when the organization claimed to feed thousands of children daily. By mid-2020, serious concerns emerged about potential fraud, with allegations of a “fraud ring” surfacing in October 2020. By the end of 2021, Feeding Our Future had received a staggering $198 million in federal funds, a sharp rise from $3.4 million just two years earlier. Estimates suggest over $250 million, potentially up to $500 million, was stolen through grossly inflated meal reporting claims. By January 2022, the FBI was conducting raids, uncovering significant discrepancies in the nonprofit’s operations. The first round of guilty verdicts were delivered on June 10.
The Feeding Our Future audit revealed severe lapses in oversight and accountability by the Minnesota Department of Education (MDE). MDE’s inadequate monitoring and failure to address multiple red flags enabled the theft of over $250 million of taxpayer dollars intended to feed needy children. Despite receiving complaints and finding non-compliance issues, MDE repeatedly approved applications. And even after identifying serious deficiencies on two occasions, MDE failed to take corrective action, allowing the fraud to continue unabated.
In 2022, Senate Republicans held three hearings to get to the bottom of the Feeding Our Future scheme, and issued a report with essentially the same three findings as the OLA: MDE did not follow related state and federal law; MDE practiced questionable business practices that would seldom survive in a work environment that provided real accountability; MDE lacked administrative direction and seems divorced from reality and what was demanded of it.
The OLA report vindicated GOP concerns and the assessment that MDE failed to do even the most basic of accountability measures to protect taxpayers’ dollars and ensure food meant to feed children reached the children who needed it.
FRONTLINE WORKER PROGRAM FRAUD TIMELINE AND AUDIT RESULTS
Minnesota launched the $500 million Frontline Worker Pay Program in 2022 to provide compensation of up to $1,500 to individuals who worked frontline roles during the COVID-19 pandemic. Because Democrats set such wide parameters for eligibility, the maximum benefit was reduced to $487 per individual.
The auditor’s report revealed severe flaws in the management of the program. Alarmingly, 41% of those who received payments were either ineligible or could not be verified. The Department of Labor and Industry (DLI) relied on self-attestation from applicants, failing to verify crucial eligibility criteria. DLI also ignored clear fraud indicators, such as high-risk bank information and dummy email addresses. The Department of Revenue (DOR) did not verify the adjusted gross income for over 27,000 applicants. And critical data, including identity verification information, was not consistently retained, making it difficult to verify applicant eligibility.
The Department of Labor and Industry (DLI) failed to follow program administration requirements. The Department of Revenue didn’t verify applicants’ incomes as they should have. Minnesota Information Technology Services didn’t help prevent the fraud. Each agency had a role, and each one failed in some way.
Republicans favored a narrower group of eligible workers and larger checks, while Democrats favored a larger group of eligible workers and lower checks. As part of the compromise agreement, Republicans set the total amount of funding available for frontline workers and Democrats determined which workers would qualify.