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By Khaleda Rahman
National Correspondent
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An audit has found significant problems in the oversight of behavioral health grants by the Minnesota Department of Human Services.
The Office of the Legislative Auditor (OLA) said in a report released on Tuesday that the Minnesota Department of Human Services' Behavioral Health Administration (BHA) "did not comply with most requirements we tested and did not have adequate internal controls over grant funds."
Newsweek has contacted the department for comment via an email sent outside regular business hours.
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Why It Matters
Minnesota is under scrutiny for fraud in its social services programs, a scandal that has led Governor Tim Walz to end his bid for a third term. The state has been under the spotlight over a series of fraud cases, including one involving the nonprofit Feeding Our Future, which the Department of Justice says stole $250 million during the pandemic. Prosecutors have said fraud schemes targeting Minnesota-run programs could have led to more than $9 billion in losses.
The case has become politically fraught, as many but not all of the defendants are of Somali descent. President Donald Trump has seized on that to target the Somali community in Minnesota, though Somali Americans have warned against stigmatizing the entire community based on the actions of some members.
Meanwhile, other fraud cases are under investigation, including new allegations focused on child care centers.
What To Know
The audit examined a sample of behavioral health grants issued between July 1, 2022, and December 31, 2024. In that period, the BHA distributed more than $426 million in grants to 830 recipients.
The report said auditors found numerous issues, including these:
- Missing or past-due progress reports for more than half of the grant agreements that auditors reviewed.
- The BHA could not demonstrate that it had conducted 27 of 67 required monitoring visits. For 24 monitoring visits involving 11 grantees, the agency could not provide any documentation that it completed the visits.
- Issues with financial reconciliations in 63 of the 71 grant agreements that were reviewed.
Legislative Auditor Judy Randall said in a meeting with lawmakers on Tuesday that auditors had also identified a number of documents that BHA "either backdated or created" after the audit began.
She added that such action interferes with the OLA's ability to do its work and "undermines the integrity of the audit itself," as well as the agency's "ability to have a clear insight into how it's operating."
The report also said a grant manager who had approved a grant worth about $672,000 left the agency a few days later and began to provide consulting services to the grant recipient.
According to the report, a survey of employees at the agency found that 73 percent of respondents said they did not receive sufficient training to fulfill their responsibilities managing grants.
What People Are Saying
Legislative Auditor Judy Randall told lawmakers during a meeting of the Legislative Audit Commission on Tuesday: "Because we identified a number of different documents that again have been created in response to our requests for documentation or that had actually been created and then backdated, we do have some questions about the validity of the documentation we were provided. … It is frankly unacceptable for the agencies we audit to do this type of activity."
She added: "Without knowing the true extent of the gaps in oversight, without having the accurate documentation, BHA and DHS is not able to make the improvements that it might need to help mitigate the risks and to minimize the existing vulnerabilities."
Shireen Gandhi, the temporary commissioner of the Minnesota Department of Human Services, said during the meeting on Tuesday: "With respect to the audit report, while it's upsetting that DHS has findings in areas we have placed concerted effort, the OLA's report highlights the importance of the grant compliance work already underway at the department. And the findings provide us with a road map for our focus going forward to continue strengthening oversight and integrity of behavioral health grants. I take the report seriously, I accept responsibility for the findings, and I will ensure that DHS closes the findings."
State Senator Mark Koran, a Republican and member of the Legislative Audit Commission, said in a statement: "Minnesotans deserve integrity from state agencies. Fabricating evidence after an audit begins is unacceptable. It obstructs the OLA's work and prevents DHS from correcting its failures. The finding that a DHS manager approved a large grant and later became a paid consultant for that same grantee is a blatant conflict of interest. This kind of misconduct erodes public trust and undermines the effectiveness of grant programs."
Koran added: "The audit makes clear that DHS leadership has failed at every level. Employees were not properly trained, oversight was ignored, and accountability was missing, from Governor Walz, to Temporary DHS Commissioner Gandhi, to BHA managers. DHS needs a full reset, starting with leadership, training, ethics, and oversight."
State Representative Elliott Engen, a Republican running for state auditor, wrote on X: "The MN Department of Human Services is actively forging and manipulating documents for audits. Shireen Gandhi should be fired today and prosecuted tomorrow."
What Happens Next
Gandhi said the Department of Human Services would work to implement the recommendations presented in the report.
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