Minnesota audit finds $425M grant program failures, missing oversight
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A major state audit of Minnesota by the nonpartisan Legislative Auditor’s Office found widespread failures and internal control problems in the Department of Human Services’ Behavioral Health Administration grant program, reaffirming concerns about major fraud problems.
reportThe report, released Monday, found that between July 1, 2022, and Dec. 31, 2024, DHS distributed more than $425 million in grants to 830 organizations, mostly nonprofits, and in many cases failed to exercise proper oversight of taxpayer funds intended to help those with addiction and mental health issues.
The audit found missing progress reports and found BHA had failed to demonstrate that it had completed all required monitoring visits and had no documentation for some.
Additionally, auditors discovered outdated or newly created documents that did not exist prior to the audit; This suggested an effort to retroactively prepare paperwork to demonstrate compliance.
WALZ’S LONG-TERM FORGERY SCANDAL PUT HARRIS CAMPAIGN DECISION UNDER REVIEW
Minnesota Governor Tim Walz in St. Minnesota on January 5, 2026. He announced at a news conference at the State Capitol in St. Paul that he would not seek reelection. (Minnesota Star Tribune via Jerry Holt/Getty Images)
In one example, the report found that a grant administrator approved payments of more than $600,000 and then left the government agency to work for the grantee.
“The OLA report provides a complete breakdown of how DHS’s Behavioral Health Administration managed hundreds of millions of dollars in taxpayer-funded grants,” Republican State Senator Mark Koran said in a speech. Press release. “BHA failed to verify that grantees were providing the services for which they were paid, failed to put in place basic financial controls, and then produced documents to mislead auditors.
“Minnesotans deserve integrity from government agencies. Fabricating evidence once an audit has begun is unacceptable. It hinders OLA’s work and prevents DHS from correcting its mistakes. Finding that a DHS administrator approved a large donation and then became a paid consultant for the same donor is a clear conflict of interest. Such abuses erode public trust and undermine the effectiveness of grant programs.”
Critics Warn MINNESOTA LAW NOW IN EFFECT IS PREPARING THE ‘NEXT BILLION DOLLAR FRAUD’
The sun is shining on the Minnesota State Capitol. (Steve Karnowski/Associated Press)
The audit also found that when employees were surveyed, 73% of employees said they had not received the necessary training to properly manage grants, with one employee saying: “Executive leadership has repeatedly demonstrated to staff that they will not take staff concerns or questions seriously until something serious happens or it becomes news.”
Minnesota’s government agencies are already under intense scrutiny over a fraud scandal that prosecutors say could total as much as $9 billion and has forced Gov. Tim Walz to abandon his re-election bid.
“Today’s shocking report from the Legislative Auditor shows a widespread culture of fraud, negligence and deception,” Republican House Speaker DeMuth said. in question about the report.
“We need immediate answers about the apparent backdating and possible falsification of documents found during the audit… It is now time to clean house and restore integrity and accountability in government institutions.”
Ultimately, the report concluded that the state government “failed to comply with many of the testing requirements for mental health and substance use disorder grants and did not have adequate internal controls over grant funds.”
“The audit makes clear that DHS leadership failed at every level. Employees were not properly trained, oversight was ignored, and accountability was lacking, from Governor Walz to Interim DHS Commissioner Gandhi to BHA administrators. DHS needs a complete reset, starting with leadership, training, ethics, and oversight,” Koran said in the news release.
The report was addressed immediately social mediaIncluding an account at X run by hundreds of anonymous DHS personnel.
“Yes, MN DHS will falsify documents and data. At worst, they do this to the state legislature to demand more state funding.” Minnesota Employee Fraud Reporting Commentary Published on X. “And yes, MN DHS lied to the federal government. So… fire Shireen Gandhi.”
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“Minnesota’s Legislative Auditor dropped a bombshell,” Townhall columnist Dustin Gage said Published on X. “Tim Walz’s DHS used fabricated records, had zero internal controls, and employees ignored oversight on more than $400 MILLION in donations. Fraud and corruption continue.”
Fox News Digital has reached out to Minnesota DHS and Walz’s office for comment.
Gandhi, the acting DHS commissioner, said in a statement Monday that “the findings provide us with a road map to focus on continuing to strengthen the oversight and integrity of behavioral health grants.”
“I take the report seriously and accept responsibility for the findings.”
