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Is the latest DHS scandal really about DHS? Or even a scandal?

MinnPost photo by Peter Callaghan
Senate Republicans questioned leaders of the Department of Human Services at a hearing on Wednesday.

Senate Republicans hauled leaders of the Department of Human Services to the Capitol on Wednesday to ask why the embattled agency reported hundreds of violations of contract policy in the last year.

State Sen. Michelle Benson
State Sen. Michelle Benson
Before the hearing, however, state officials released data showing the Department of Employment and Economic Development (DEED) had more than double the amount of infractions that DHS did. At the same time, Myron Frans, commissioner of the Minnesota Management and Budget agency (MMB), downplayed the violations at both agencies, saying they’re mostly technical mistakes — state money was not actually spent before contracts were finalized or purchases were approved, he said.

The state data shows DEED had 584 violations in the last year, compared to 219 at the much larger Department of Human Services. Two other agencies — the Department of Health and Corrections — had more than 100 violations in the last year.

Even so, at the hearing state Sen. Michelle Benson, a Ham Lake Republican, said DEED has “compliance and accountability issues” and should get scrutiny even though it’s a smaller agency. “The takeaway from this is it’s not just DHS,” she said.

Past administrations faced same issues

The recent focus on contracting began last week, when the Star Tribune reported DHS had violated state law more than 200 times in the last year by committing money without proper documentation. While state officials contend the infractions break financial policy but aren’t illegal, the story brought a fresh round of criticism to DHS, which has faced a series of scandals under Gov. Tim Walz that include fraud in the state’s child care assistance program and overpayments to tribal governments for opioid treatments. 

Many of the violations involved DHS letting grant-winners and vendors perform work before contracts had been finalized or employees buying products without adequate permission. The violations were reported by DHS staff on forms known as 16A/16C. A tally of those forms across state government was released by the Walz administration on Wednesday.

But while Frans and other state leaders say the violations should be prevented, they also maintain that the agency reports actually show a functioning state government — with financial systems that identify wrongful payments. At the hearing, Senate DFLers also said past administrations faced the same issues.

“I don’t know why this is a scandal,” said Sen. Chris Eaton, a DFLer from Brooklyn Center. The violations represented a small fraction of overall transactions, she added. “We’re doing a pretty good job of managing a bureaucracy that has to fill the needs of people.”

Frans said DEED’s infractions aren’t a surprise since the agency administers a wide swath of grant money and other spending. About 140 of the violations were on purchases of less than $100, Frans said. And 339 of the problems come from purchases made by people enrolled in programs for those who are blind or have disabilities, Frans said. All told, the 584 violations were on transactions worth $17 million.

Commissioner Myron Frans
Commissioner Myron Frans
Blake Chaffee, the deputy commissioner of operations at DEED, told MinnPost the state often buys things for clients or reimburses them, transactions that have a prescribed legal process to get approved and finalized by state government. But Chaffee said sometimes a client will mistakenly skip ahead, buying something like a textbook that DEED intends to spend money on, but hasn’t been fully authorized. “Under state law that constitutes a purchasing violation,” he said.

Chaffee said clients are often “low-income, vulnerable adults” who have trouble finding work. When problems are found, they’re fixed and the payments are approved by senior officials, he said. “The thing that I really want folks to understand is that no money is spent until these things are corrected,” Chaffee said.

Another source of violations has been slow payments from the federal government. In one recent instance, programs getting awards for youth workforce development services were supposed to start April 1, but the state didn’t receive promised federal money intended for grantees until more than a week later. Chaffee said his agency can either tell programs to stop serving at-risk youth, or continue on and get paid when the federal cash surfaces and contracts are finalized. DEED has chosen the latter.

“What we do is we say, ‘Do your work, we’ll pay you when we get the money,’” Chaffee said. “The money comes in, but we have to process that as a violation.”

Not ‘waste, fraud or abuse’

The Senate hearing on Wednesday did not delve into DEED’s violations, though Benson said she was frustrated at grants being given out by DHS “without paperwork being ticked and tied,” even if it risked halting services. She said it reflected an agency that tries to circumvent rules meant to protect taxpayer money.

“At some point you just need to say, ‘Stop,’ so people will take this seriously,” she said.

Chaffee said the contract violations are an “area of focus” for the agency. DEED has a training on the subject Friday for staff and leadership. But he said people should not characterize it as “waste, fraud and abuse.” The agency made 33,921 transactions in the last year.

“This is us either catching our mistakes or when something does go sideways as it relates to the timing of funding or our interaction with clients,” Chaffee said. “To me it’s an effort of accountability.”

Comments (21)

  1. Submitted by Joel Stegner on 11/14/2019 - 12:02 pm.

    If there is a scandal to investigate, it is why Senate Republicans failed to act of an insulin pricing bill. When people are forced to ration insulin when they are being price gouged by big pharma, they get sick and in some documented cases. Technical violations are one thing – deaths are another. And of course, the most famous recent case of negligence was the I35W bridge collapse during the Pawlenty administration. During that time, Pawlenty traded lower taxes for booting people off Medicaid and insufficient road and bridge maintenance, as well as raiding the tobacco fund to cover general budget expenses, defunding tobacco prevention efforts. Since that time, we have a resurgence of tobacco use in the form of vaping among teens, which also has deaths connected with it.

    The money we spend on healthcare to defeat mental health and addiction issues has paybacks in less criminal activity and better health status, with less use of medical services. Wise government is spending money to get tangible quality life improvements with financial benefits.

    If rigid regulations are getting in the way, you would think anti-regulation Republicans would be the first to want to simplify regulations to not unduly prevent cost effective service provision. Tough regulations impacting the poor simply do not make sense, given the challenges they face and the money that can be saved if their needs don’t become chronic.

    • Submitted by Bob Petersen on 11/14/2019 - 01:22 pm.

      Yep – point it at the Republicans but don’t mention anything about the problems mentioned.

      • Submitted by Al Andresen on 11/15/2019 - 06:48 am.

        Democrats are nothing if not people who believe that it’s business (and business people) that are evil and that the “mission” of government supercedes any malfeasance that may have been committed.

    • Submitted by lisa miller on 11/14/2019 - 04:09 pm.

      However there is the issue of 29 million overpays and the child care issue as well. This is money we could use for programs for those in need. Again, these programs are complicated and its not always what it seems, but DHS has shown a clear pattern of money issues as well as lack of clarity in some programs about realistic goals/services and mandates given to counties. We need to ask about effectiveness and goals. And its true for many administrations. We can’t keep taking people to death and then having money go missing.

    • Submitted by Greg Smith on 11/15/2019 - 07:51 am.

      That is rigbt, nothing to see here move along.
      Yet more examples.of .poor .leadersnip.under Dear Leader. Dayton

      • Submitted by Julie Stroeve on 11/17/2019 - 08:59 am.

        according to Ornstein’s piece, these timing and other issues occur under every administration. certainly nothing to pinpoint on former Governor Dayton. what is Michelle Benson’s point anyway?

  2. Submitted by Meeche Miller on 11/14/2019 - 12:12 pm.

    I find it absolutely disgusting that these many departments in the State of Minnesota are corrupt – that is the only word for all the mismanagement that is going on and has been going on – The legislature needs to clean house and find some competent people to run these departments and stop all the finger pointing and blaming each other – it is sickening that there are so many qualified people who could be holding down these jobs and doing a better job and yet these people who can’t seem to be doing their jobs – remain on the job – Stop falling for their excuses and fire them all – Their mismanagement has cost taxpayers millions of dollars and it has to stop – It just gets covered up and forgotten – You people will all be voted out if you don’t do your job and clean house in everyone of these departments

    • Submitted by Don Casey on 11/14/2019 - 12:46 pm.

      If not corrupt, inept.

    • Submitted by Josh Lease on 11/14/2019 - 05:04 pm.

      strange definition of corruption. the 584 violations at DEED represent less than 2% of their total transactional output. and as noted most were a matter of timing as they tried to take care of their customers (aka The People of the State of Minnesota)

      Care to pick a Fortune 500 company and see how they do in following their own regs and a much less burdensome regulatory environment.

      Sure, there’s work to be done, but this is a tempest in a teacup.

    • Submitted by Dave Paulson on 11/14/2019 - 08:08 pm.


      Filing to follow complex and inhibitory rules <5% of the time bu tnot resulting in loss of taxpayers money is NOT corruption. It is bureaucratic overload.

      If they were giving money to friends or themselves, or advancing political operatives – THAT would be corruption.

      • Submitted by Dave Paulson on 11/14/2019 - 08:18 pm.

        failing, not filing

      • Submitted by Barbara Skoglund on 11/15/2019 - 01:31 pm.

        I could fill a wall with the process to take a $100 training class. One step was missed in hundreds and my boss had to do a 16a. The class was approved multiple times, in multiple ways, but one step got missed! Not fraud, not theft, not incompetence, not abuse, not corruption, no scandal here.

        • Submitted by John Hoffman on 11/17/2019 - 07:58 am.

          Rules designed to make the spending of even the smallest expenditures a burdensome bureaucratic exercise. Sand in the gears. These rules have turned professional rehabilitation counselors into paper pushing / electronic file managers. Most of whom would agree their actual duties have become a far cry from what motivated them to get into the field of helping people with disabilities gain meaningful employment opportunities. The micromanaging is stifling and unhelpful.

    • Submitted by Donna Koren on 11/15/2019 - 04:28 am.

      Didn’t actually read the article, did ya? The examples described are technical, paperwork “violations;” no fraud, no abuse, no lost monies – just state staff prioritizing continuity of service and care for our fellow Minnesotans over ensuring every last sign-off. I applaud them for that.

      Where there are real problems, such as with the vehicle licensing system/MnLARS, it’s absolutely right to call them out. But the situations described in this article reflect reasonable friction resulting from administering programs that serve thousands of Minnesotans, statewide. To turn these technicalities into something more than that is just cynical, government-bashing overreaction. It’s so unhelpful when people, particularly legislators, lose sense of proportion, or obfuscate it.

  3. Submitted by Richard Bonde on 11/14/2019 - 01:25 pm.

    The current brouhaha started with a report on KMSP in the twin cities. The report claimed that cheating was rampant in the child care facilities who were being paid for children that weren’t there. The estimates of the fraud were between $30 and $100 million. DHS didn’t seem to know how to find out the extent of the fraud. Have the questions been answered?

  4. Submitted by Edward Blaise on 11/14/2019 - 02:06 pm.


    How can Michelle Benson run for Governor if she can’t stomp her feet and complain loudly about something?

    Front running politicians, D or R doing their all to keep their jobs or move up to the next one are the single biggest problem in government, not DDE or DHS…

  5. Submitted by Mark Voorhees on 11/14/2019 - 03:02 pm.

    Bringing the DHS problems to light is actually a good thing. It’s been going on for while now and most assuredly with other departments. This is a great opportunity to put forth changes that’ll correct systemic issues across all departments. Possibly putting more auditors or auditing strps within the process. But all in all, this is a negative issue that can be turned into a positive with long term benefits.

  6. Submitted by Ron Gotzman on 11/14/2019 - 04:15 pm.

    One of the most amazing “spin” articles ever featured on the pages of MinnPost.

  7. Submitted by Dane Smith on 11/15/2019 - 06:51 am.

    Best piece I’ve seen providing context on “violations” that really are minor bookkeeping irregularities, and truly not the stuff of “scandal.” The discovery was possible because the agencies themselves kept track and made records public. Conservatives love to bash government for rigidity around bureaucratic rules and regulations, and when public servants apply some common-sense flexibility to bend the rules, they get bashed for breaking the law. I’ve worked many years in private and non-profit sector and can report that similar “violations” of both accounting rules and institutional policies happen all the time.

  8. Submitted by Krista Boston on 11/15/2019 - 05:41 pm.

    Which one is that? …where they destroyed the lives of people with disabilities (Mnchoices), where they refused to accommodate employees with disabilities? Or where they destroyed the lives of good hard working employees raising questions about the pointless need to charge parents with kids in foster care? Sorry I am missing which one you are referring to…ol Chuck johnson over saw all of it as the deputy. More is coming I have no doubt. Poor reputation. Floodgates open. Not good.

  9. Submitted by cory johnson on 11/19/2019 - 08:28 am.

    Incompetent management isn’t anything new in the public sector. Neither is lack of accountability (see MNLARS). Oh well. It’s only money. Bring on the Socialism!

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