Minnesota’s Department of Employment and Economic Development recently added lengthy conflict of interest language to all its grant applications, a move that came after MinnPost revealed that the employer of state Sen. John Hoffman was in line to receive a grant that Hoffman had pushed through the Legislature.
After inquiries about the grant, DEED pulled the contract in November before it was finalized, citing a lack of conflict-of-interest language in its original solicitation of applications.
The purpose of the new language is to prevent anyone — from legislators and state employees to private citizens — from having any unfair advantage when applying for funding through the agency, which gives out millions of dollars in grants every two years.
In the new application, posted online Friday, DEED adds six new paragraphs to the grant applications, defining what constitutes a possible conflict and creating a new disclosure form. If a conflict is identified, applicants must submit a “conflict of interest avoidance or mitigation plan.” Ultimately, DEED makes the call whether a group should be disqualified for funding based on their potential or perceived conflict of interest.
During the 2016 session, part of the state’s supplemental budget bill included a proposal from Hoffman, DFL-Champlin, creating “day training and habilitation grants.” The proposal authorized a one-time, $800,000 appropriation in 2017 for grants to help people with disabilities find “innovative employment options,” money that was to be awarded through DEED.
The final bill eliminated any organization from consideration that had a special certification under the Fair Labor Standards Act to pay to workers with disabilities less than the federal minimum wage. That narrowed the eligible field of applicants from more than 100 down to less than a dozen in the state, including Hoffman’s part-time employer, Ally People Solutions.
In August, under the new law, Ally applied to DEED for a grant worth up to $175,000. The organization was selected as one of five finalists for funding before MinnPost began its reporting about the matter in early September. DEED said they pulled the contract from negotiations after the conflict was discovered.
At its most basic level, a conflict of interest is when someone can derive personal or financial benefit from actions taken in their official capacity. At the Minnesota Capitol, there are a lot of opportunities for conflicts.
Minnesota legislators are technically only part-time employees, meaning most lawmakers hold down a second job. That allows them to bring real-world experience back to the Capitol, but it also creates a lot of potential conflicts of interest. Such conflicts are supposed to be monitored via a disclosure form all legislators must fill out, and through self-reporting. If a legislator feels they have a personal or financial conflict on a proposal, they must report that to leadership and rescue themselves from voting. Hoffman did not report any potential conflict to leadership, and DEED was unaware of his connection to Ally when the organization applied for the grant funding.
According to the new language, DEED can also terminate a grant contract if a conflict of interest is discovered after the fact, as well as ban a group from future contracts if the agency feels they intentionally avoided disclosing possible conflicts.
Ally is eligible to apply for the re-issued grant, but the group must now disclose Hoffman’s role in the organization and in drafting the original legislation. Ally must also describe how they would mitigate that conflict.
“When a conflict of interest concerning state grant-making is suspected, disclosed, or discovered, transparency shall be the guiding principle in addressing it,” the new language reads.