Fraud becomes major campaign issue in Minnesota (

State lawmakers and candidates for office have seized on the scandal and two OLA reports to criticize Gov. Walz for allowing waste, fraud, and abuse to proliferate under his watch.

A new report has found that a department in Gov. Tim Walz’s administration failed to comply with various state requirements for avoiding conflicts of interest, properly awarding grants, and correctly performing financial reconciliations.

On Wednesday the nonpartisan Office of the Legislative Auditor (OLA) released its “performance audit” on the Minnesota Department of Health’s (MDH) COVID-related grants. The audit investigated the MDH’s handling of roughly $200 million of state money awarded to health care providers during the pandemic.

The report stated that the failure to abide by the conflict of interest requirements in particular “leaves the state open to potential fraud and waste.” In response, MDH said state employees correctly filed conflict of interest disclosures, but did not retain electronic records of these disclosures, blaming it in part on the “[transition] from a paper-based system” during the outbreak of the COVID pandemic.

Health Commissioner Jan Malcolm defended the department in a Wednesday statement, saying that it had “adequate internal controls” and there was “no evidence” of “misspent, awarded inappropriately, wasted, or unaccounted” grant money from early in the pandemic.

Although the OLA auditors determined that the MDH’s internal controls were “generally adequate,” they also found identifiable weaknesses.

“Similarly, the department generally complied with the finance-related legal requirements we tested, but there were some instances of noncompliance related to grant awarding and grant monitoring,” the report added.

State Sen. Paul Utke, who serves on the chamber’s Health and Human Services Committee, accused the Walz administration of “hiding once again behind the challenges of COVID to deflect sloppy oversight and failed internal controls.”

“The taxpayers deserve better than yet another audit showing poor oversight and lazy accountability,” Utke said. “Senate Republicans will continue to hold government bureaucrats accountable to the highest standard.”

The OLA’s report is the second one in as many months. The nonpartisan office determined late last month that the Minnesota Department of Human Services (DHS) poorly managed its own grant money during the pandemic. DHS Commissioner Jodi Harpstead appeared before a Senate committee Tuesday to defend the notoriously embattled agency.

That same day, 47 Minnesotans were indicted for allegedly scheming $250 million out of the federal government as part of the Feeding Our Future scandal. Sen. Roger Chamberlain, chair of the Senate Education Committee, has repeatedly accused the Minnesota Department of Education, which oversees the programs Feeding Our Future participated in, of failing to do its job.


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