A sweeping audit by Minnesota’s nonpartisan Office of the Legislative Auditor (OLA) has identified systemic failures inside the Department of Human Services’ Behavioral Health Administration (BHA), concluding that the agency lacked basic oversight and internal controls while distributing hundreds of millions of dollars in public grant funding.
Per FOX News, the report, released Monday, examined BHA’s management of mental health and substance use disorder grants between July 1, 2022, and Dec. 31, 2024.
During that period, DHS awarded more than $425 million to 830 organizations—most of them nongovernmental—without sufficient mechanisms to ensure the funds were properly monitored or used for their intended purposes.
Auditors documented widespread gaps in compliance, including missing progress reports and incomplete monitoring records. In several cases, BHA was unable to demonstrate that required oversight visits had taken place, and in others, no documentation existed at all.
A sweeping audit by Minnesota’s nonpartisan Office of the Legislative Auditor (OLA) has identified systemic failures inside the Department of Human Services’ Behavioral Health Administration (BHA), concluding that the agency lacked basic oversight and internal controls while distributing hundreds of millions of dollars in public grant funding.
Per FOX News, the report, released Monday, examined BHA’s management of mental health and substance use disorder grants between July 1, 2022, and Dec. 31, 2024.
During that period, DHS awarded more than $425 million to 830 organizations—most of them nongovernmental—without sufficient mechanisms to ensure the funds were properly monitored or used for their intended purposes.
Auditors documented widespread gaps in compliance, including missing progress reports and incomplete monitoring records. In several cases, BHA was unable to demonstrate that required oversight visits had taken place, and in others, no documentation existed at all.
More troubling, the audit uncovered evidence suggesting that some records were created or altered only after the audit began.
Auditors described documentation that appeared to be backdated or newly generated, raising concerns that paperwork was retroactively produced to give the appearance of compliance.
The report also detailed at least one instance in which a DHS grant manager authorized more than $600,000 in payments before later leaving the agency to work for the organization that received the funding.
“The OLA report shows a complete breakdown in how DHS’s Behavioral Health Administration manages hundreds of millions in taxpayer-funded grants,” Republican State Sen. Mark Koran said in a press release.
“BHA 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.
“Minnesotans deserve integrity from state agencies. Fabricating evidence after an audit begins is unacceptable. It obstructs the OLA’s 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.”
The audit further highlighted internal workforce issues. In a survey of employees, 73% reported they had not received adequate training to properly manage grants.
One respondent wrote, “Executive leadership has repetitively shown staff that they won’t take the staff’s concerns or questions seriously until something serious happens or it makes the news.”
The findings land amid heightened scrutiny of Minnesota’s state agencies following a broader fraud investigation that prosecutors estimate could reach as much as $9 billion—an unfolding scandal that has already led Gov. Tim Walz to abandon a re-election bid.
“Today’s shocking report by the Legislative Auditor shows a culture of pervasive fraud, negligence, and deception,” Republican House Speaker DeMuth said.
“We need answers immediately about the apparent backdating and potential falsification of documents found during the audit…It’s time to clean house and restore honesty and accountability in state agencies.”
In its conclusions, the OLA stated that the state “did not comply with most requirements tested 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 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,” Koran said.
Reaction to the audit spread rapidly online. An account on X run by anonymous DHS staff members amplified the findings, writing, “Yes, MN DHS will falsify documents and data.
Worst of all, they do it to state legislature to demand more state funding. And yes, MN DHS has lied to federal government. So.. fire Shireen Gandhi.”
“Minnesota’s Legislative Auditor just dropped a BOMBSHELL,” Townhall columnist Dustin Grage posted on X. “Tim Walz’s DHS fabricated records, had zero internal controls, and employees ignored oversight on more than $400 MILLION in grants. The fraud and corruption continues.”
Responding to the report, acting DHS Commissioner Shireen Gandhi said Monday that the findings would guide reforms moving forward.
“The findings provide us with a roadmap for our focus going forward to continue strengthening oversight and integrity of behavioral health grants,” Gandhi said. “I take the report seriously, I accept responsibility for the findings.”
THE THIRD FORCE
Adapted From: FOX News
