Substance abuse grants lack internal oversight for payments: Audit
Scrutiny over Minnesota fraud increases
Minnesota’s fraud scandal is back in the national spotlight centered around child care assistance programs after allegations of fraud throughout the state. FOX 9’s Soyoung Kim has the latest update.
(FOX 9) - A new report from the state’s nonpartisan Office of the Legislative Auditor's (OLA) Financial Audit Division outlines how the state agency tasked with overseeing grants for substance abuse disorders has lacked financial oversight to track how the money has been administered.
Minnesota substance abuse grants audit
What we know:
Released on Tuesday, the OLA report outlines an audit of the Department of Human Services (DHS) Behavioral Health Administration (BHA) grants between July 1, 2022, through Dec. 31, 2024, to determine the BHA’s level of financial oversight of grants administered.
The findings determined that of 71 audited grants awarded to 56 recipients, systemic issues were found with 63 of them — an 89% failure to comply rate.
The audit also found issues with 11 of 18 payments the BHA made to grantees stemming from "insufficient documentation, costs not incurred, costs incurred outside the reimbursement period, or costs inaccurately reported on reimbursement requests."
Throughout the audit period, 18 providers had grant percentage allocations increase during the audit period by more than 100% — with one grant recipient increasing from $600,000 to a final grant total of $5.6 million, or an 830% increase.
Dig deeper:
The audit reviewed 61 grant agreements issued to 21 grantees and determined that BHA could not demonstrate it conducted 27 out of 67 required monitoring tests.
During one audit, a grantee could not provide detailed invoices or program participant information to support a payment of $672,647.78 from BHA for a single month of work. The total grant agreement amount was $1.6 million.
The grant was said to have utilized 14 subcontractors, but when two were visited by OLA auditors, neither could provide sufficient documentation regarding how the funds were used.
The report alleges that one of the subcontractors said the grantee told them they did not need to keep detailed participant records, such as sign-up sheets. However, without such documentation, the OLA could not verify what they were paid for.
Further investigation found that the BHA grant manager who approved the payment left DHS a few days after its approval, and later started to provide consulting services to the grantee.
When asked, BHA did not have any documentation to show that it conducted any monitoring visits of this grantee until October 2024.
The report outlines the largest BHA grant recipient organizations as followed:
- Washburn Center for Children — $14.1 million
- Fernbrook Family Center — $9.4 million
- RS EDEN — $8.6 million
- African American Child Wellness Institute, Inc. — $7.3 million
- Comunidades Latinas Unidas En Servicio (CLUES) — $7 million
- Lutheran Social Service — $4 million
A detailed breakdown of the report and grant allocations can be found here:
What's next:
In response to the report, the BHA says it has begun implementing corrective actions to address the findings and recommendations, including the creation of the Central Grants Office (CGO) and restructuring of its leadership to "strengthen operational support and business functions, with particular emphasis on improving the oversight and management of contracts and grants."