Audit Finds Minnesota DHS Produced False Documents in Behavioral Grant Program

Audit Finds Minnesota DHS Produced False Documents in Behavioral Grant Program

The Office of the Legislative Auditor (OLA) found massive problems and a lack of oversight concerning the Department of Human Services’ Behavioral Health Administration (BHA) grant program.

The grants provide “prevention, treatment, and recovery services for individuals with mental health conditions or substance use disorders.”

These problems include failing to use a competitive bidding process, producing false documents, lacking authority to administer grants, and backdating documents to meet requirements.

“The Behavioral Health Administration used single source grants when they were not justified and did not always sufficiently document its reasons for using single source grants,” according to the office.

Judy Randall, the legislative author, told Minnesota lawmakers that she has never seen a “systemic effort” like this in her three decades with the office.

The office found too many “instances of what appeared to be an attempt to fabricate documentation that didn’t previously exist.”

The office investigated the period from July 1, 2022, to December 31, 2024.

DHS awarded $425 million in grants to 830 organizations, 590 of which are nongovernmental organizations (NGOs).

The investigation included 71 audited grants given to 56 recipients.

They found issues with 63 of those grants: no documentation, limited documentation, and reconciliations completed after final payments.

For example, one grantee and two subcontractors raised serious concerns about a grant agreement of $1.6 million:

• The grantee could not provide us detailed invoices or program participant data to support a payment of $672,647.78 from BHA for a single month of work. It was the first payment DHS made under the agreement with this grantee. The total grant agreement amount was $1.6 million.

• The grantee subcontracted with 14 subcontractors. We visited two of these subcontractors and neither could provide sufficient documentation regarding who they served with the money they received from the grantee. One of the subcontractors said the grantee told them they did not need to keep detailed participant records, such as sign-up sheets. Without that documentation, we could not determine whether subcontractors provided the services for which they were paid.

• The BHA grant manager who approved the $672,647.78 payment left DHS a few days after approving it and later started to provide consulting services to the grantee. We asked BHA management whether they questioned such a large reimbursement request for just one month of work. BHA management said that due to limited information in the grant management system and the grant manager no longer being available, they could not answer this question.

BHA also performed only a few required visits. BHA provided documentation showing it conducted three visits for one grantee.

Except:

However, the grant manager created the documentation in February 2025, which was after we started our audit and after visits supposedly occurred in May 2024, October 2024, and January 2025. The grant manager explained that they conducted monitoring visits on time, but they did not document it. The grant manager could not provide any notes, email communication, or calendar schedules to show that these monitoring visits occurred.

Um, WHAT!?

One grantee received $101,210.40. The OLA discovered that the grantee did not date the services or indicate who received them. Any descriptions of the services were vague, mainly “consulting fees.” Those salaries only totaled $22,623.20.

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