A blistering state audit in Minnesota found widespread failures, weak controls and troubling documentation issues inside the Department of Human Services\u2019 Behavioral Health Administration, fueling fresh concerns over massive fraud across state government.<\/p>\n\n\n\n
The nonpartisan Office of the Legislative Auditor said in a report released Monday that DHS handed out more than $425 million in behavioral health grants between July 1, 2022, and Dec. 31, 2024, with little evidence the money was properly monitored. The funds went to 830 organizations, most of them nongovernmental, and were intended to support mental health and addiction services.<\/p>\n\n\n\n
Auditors found missing progress reports, incomplete monitoring visits and, in some cases, no documentation at all showing required oversight had occurred.<\/p>\n\n\n\n
Even more alarming, the audit flagged records that appeared to be backdated or newly created during the review process, raising concerns that paperwork was retroactively produced to show compliance that did not previously exist.<\/p>\n\n\n\n
In one case, the report found a grant manager approved more than $600,000 in payments and later left DHS to work for the same organization that received the funds.<\/p>\n\n\n\n
\u201cThe OLA report shows a complete breakdown in how DHS\u2019s Behavioral Health Administration manages hundreds of millions in taxpayer-funded grants,\u201d Republican state Sen. Mark Koran said in a statement.<\/p>\n\n\n\n
\u201cBHA failed to verify that grantees were providing the services they were paid for, failed to put basic financial controls in place, and then created documentation after the fact to mislead auditors.<\/p>\n\n\n\n
\u201cMinnesotans deserve integrity from state agencies. Fabricating evidence after an audit begins is unacceptable. It obstructs the OLA\u2019s 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.\u201d<\/p>\n\n\n\n
The audit also found deep internal dysfunction. Nearly three-quarters of employees surveyed said they lacked proper training to administer grants. One employee told auditors, \u201cExecutive leadership has repetitively shown staff that they won\u2019t take the staff\u2019s concerns or questions seriously until something serious happens or it makes the news.\u201d<\/p>\n\n\n\n
The report lands as Minnesota government faces mounting scrutiny over a broader fraud scandal prosecutors say could reach as high as $9 billion and has already driven Gov. Tim Walz to abandon his 2026 re-election bid.<\/p>\n\n\n\n
\u201cToday\u2019s shocking report by the Legislative Auditor shows a culture of pervasive fraud, negligence, and deception,\u201d Republican House Speaker Lisa Demuth said.<\/p>\n\n\n\n
\u201cWe need answers immediately about the apparent backdating and potential falsification of documents found during the audit\u2026It\u2019s time to clean house and restore honesty and accountability in state agencies.\u201d<\/p>\n\n\n\n
Auditors ultimately concluded that the state \u201cdid not comply with most requirements tested for mental health and substance use disorder grants and did not have adequate internal controls over grant funds.\u201d<\/p>\n\n\n\n
\u201cThe 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,\u201d Koran said.<\/p>\n\n\n\n
The report ignited immediate backlash online, including from an anonymous X account claiming to represent DHS employees.<\/p>\n\n\n\n
\u201cYes, MN DHS will falsify documents and data. Worst of all, they do it to state legislature to demand more state funding,\u201d Minnesota Staff Fraud Reporting Commentary posted. \u201cAnd yes, MN DHS has lied to federal government. So.. fire Shireen Gandhi.\u201d<\/p>\n\n\n\n