Today the Office and the Legislative Auditor released its financial audit report on how the state ran the 2022 Frontline Worker Pay Program. A bipartisan, bicameral working group met to determine who would be eligible and establish the program. The program 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. Sen. Karin Housley (R- Stillwater) was the Vice Chair of the working group.
“People of Minnesota should be furious with the Democrats and their disrespect for our hard-earned dollars. Republicans had plenty of ideas for more oversight to ensure this money went to legitimate Frontline workers. But Governor Walz and Democrats wanted nothing to do with it, and now we end up with $200 million in fraud,” Housley said. “The program initially set the expectation of more than $1,000 for frontline workers who took enormous risk during the pandemic. However, based on so many applicants, and apparently many fraudulent applicants, that check was $487.
“At the end of the day, fraudsters once again took advantage of a state-run COVID program to enrich themselves. The real victims here are the people required to work in close proximity with others during a pandemic and got a smaller check than expected. They are the ones who were blatantly defrauded,” Housley concluded.
The report highlights just how easy it was to file a claim and get paid without minimal verification and eligibility checks. Signs of fraud included submitting multiple claims with initials in alphabetical order, using essentially the same “gmail.com” address with a period in different places (which isn’t recognized as a unique address by gmail servers) to trick the application system, multiple payments going to the same checking account, and claims submitted without basic income information.
“Our government must improve its oversight – immediately,” Sen. Mark Koran (R- North Branch) Vice Chair of the Legislative Audit Commission added. “There are recommendations here that don’t require action by the legislature, and I expect that they will be made as soon as possible. It’s not a good excuse to say, ‘Well, we were in a rush,’ when we did this. It should be an engrained culture of the Administration to stop fraud before it starts. They don’t need legislative action to be good stewards of public funds.”
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. The OLA report makes four key findings and nine recommendations for the Department of Labor and Industry (DLI), Revenue (DOR), and Minnesota Information Technology Systems (MN.IT), to provide better oversight including:
- DLI and DOR should determine whether those applicants whose eligibility could not be determined were actually eligible for a frontline worker payment,
- DOR should recoup payments made to ineligible applicants or made to applicants who received a payment using the identity of another individual,
- DOR should use additional methods to verify adjusted gross income,
- DLI and MN.IT should ensure data retention requirements are included in all contracts and is appropriately retained in accordance with contract provisions,
- DLI and MN.IT should ensure the state retains data necessary for making program decisions.
“This report is just more proof the Walz administration is far more worried with getting handouts out the door than bothering to check if that individual meets the needs of the program,” Senator Steve Drazkowski (R- Mazeppa) said. Drazkowski sits on the Legislative Audit Commission.
“It should be second nature of every agency employee to verify eligibility and put the integrity of taxpayers’ dollars first. It’s completely disrespectful to the taxpayer when time and time again we see fraud and abuse, and after the fact, no changes are made. Everyone can play a part in preventing fraud, and it appears that too many are willing to make excuses and shift blame for this lackadaisical effort,” he concluded.
During the hearing, Commissioners for the agencies defended their actions and tried to deflect blame on vendors or legislators because they were in a rush to pay applicants. “The lengths the different agencies went to in their defending unverifiable payments and in some cases outright fraud was simply astounding,” Sen. Cal Bahr (R- East Bethel) said. “In 2022 when the program was approved by the Legislature, the pandemic had passed. The need for accuracy of payment should have been a much higher priority than speed of payment.” Bahr also sits on the Legislative Audit Commission.
It’s not been a good week for Minnesota taxpayers impacted by fraud. On Friday five people were convicted of defrauding $49 million in covid meal reimbursements intended for hungry children. Seventy people have been similarly charged for more than $250 million in fraudulent payments; it is likely the largest COVID-related fraud in the nation. An OLA report on the concerns with Feeding our Future will be released on Thursday this week.