Minnesota’s Office of the Legislative Auditor has identified significant oversight failures in the state’s Behavioral Health Administration, raising concerns about fraud risk and mismanagement of grant funds. An audit spanning July 2022 to December 2024 found that the division, which administers grants supporting mental health and substance abuse treatment programs, lacked adequate internal controls over disbursements and did not comply with grant requirements.
During the audit period, the Behavioral Health Administration managed 830 unique grant agreements distributing $426 million in state and federal funding. Among the critical findings: BHA paid nearly $1 million to grantees for work performed before completing grant agreements; a majority of surveyed grant recipients had missing or past-due progress reports; and one grantee could not provide detailed invoices supporting a nearly $700,000 payment for a single month of work. That grant manager later went to work for the same recipient organization.
Compliance failures and response
The audit also found BHA paid nearly $300,000 to 11 grantees for unsupported costs and reimbursement requests with errors, and was unable to demonstrate it had conducted required site visits to monitor grant funding. Auditor Judy Randall reported that staff were not provided sufficient training to manage grants. Most troublingly, Randall noted that “in the 27 years I’ve been with OLA, I have never seen this before”—referring to documents BHA either backdated or created after the audit began.
DHS temporary commissioner Shireen Gandhi acknowledged the findings and stated the agency is implementing recommendations to strengthen oversight and integrity of behavioral health grants. The audit comes amid broader scrutiny of Minnesota’s social service programs, following fraud allegations in child care centers that led Governor Tim Walz to announce he would not seek a third term.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://www.duluthnewstribune.com/news/minnesota/minnesota-ola-audit-finds-weak-oversight-fraud-risk-in-dhs-grants