Audit of Minnesota DHS grant programs finds widespread failures in oversight

A state audit by the Office of the Legislative Auditor found the Minnesota Department of Human Services' Behavioral Health Administration did not comply with many grant requirements and lacked adequate internal controls; the department distributed more than $425 million to 830 grantees between July 1, 2022, and Dec. 31, 2024.

An audit by the Office of the Legislative Auditor found widespread oversight failures in the Minnesota Department of Human Services' Behavioral Health Administration. The report says the administration did not comply with most requirements tested for mental health and substance use disorder grants and lacked adequate internal controls. The department distributed more than $425 million to 830 grantees between July 1, 2022, and Dec. 31, 2024. The audit was released as broader federal investigations into alleged fraud in state programs continue. Key findings: - The Office of the Legislative Auditor reported noncompliance and inadequate internal controls over behavioral health grant funds. - Of 51 grant agreements reviewed, more than half of progress reports were missing or past due, and records could not confirm many required monitoring visits. - Auditors said some documents were created after the audit began and backdated; they identified at least two overpayments and payments for costs that were not properly supported or that preceded fully executed agreements. - A staff survey found 73% of Behavioral Health Administration respondents said they did not receive sufficient training to manage grants, and some employees reported leadership did not act on concerns. Summary: The audit raises questions about accountability for hundreds of millions in taxpayer-funded grants and describes gaps in recordkeeping, monitoring, and financial controls. Temporary DHS commissioner Shireen Gandhi said she was shocked, accepted responsibility for the findings, and said the department has compliance work underway to strengthen oversight. Federal authorities have also been conducting investigations into alleged fraud in related state programs, and those inquiries remain active.