Audit finds Minnesota IT agency improperly managed funding account

Minnesota IT Services — the state agency that bungled the rollout of the state's vehicle licensing system — is at the center of another controversy, this time over improper management of funding for information and telecommunications projects.

The Minnesota Office of the Legislative Auditor released an audit Thursday saying the agency failed to adequately oversee projects funded through the state's Information and Telecommunications Account.

Lawmakers created the Information and Telecommunications Account in 2006 as a way to invest more in information technology projects for state agencies, the report states. If there was extra money left over at the end of a biennial budget, an agency could put that funding into the account to be used on projects instead of letting the funds expire.

The audit reviewed dozens of projects, which ranged from a $3,000 database system enhancement for the Board of Podiatric Medicine to a nearly $4.5 million modernization of a management system that collects and tracks corrections data about offenders.

"Minnesota IT Services' internal controls over the Information and Telecommunications Account were generally not adequate. For the projects and legislative report we tested, Minnesota IT Services generally did not comply with significant legal requirements, including Minnesota statutes and its own policies and procedures," the audit states.

Some specific issues included failing to verify that agencies submitted completed and authorized project requests, which puts Minnesota IT Services — also known as MNIT — at risk of approving ineligible projects to get the money. MNIT also did not ensure state agencies did proper planning before allowing them to use money from the account, inadequately monitored the projects and did not properly oversee whether projects funded by the account were completed, the audit says.

MNIT approved 209 projects for funding through the account between 2007 and 2017. Of those projects, 95 had not been completed as of March 2018, the audit found.

The state agency has to regularly submit reports to the Legislature on the status of projects paid for through the account, but the audit found MNIT left projects out of reports and understated some project budgets and expenditures.

The audit recommended that the Legislature provide clarity in state law about what must be reported, as well as clarify how MNIT should handle money remaining from older projects.

MNIT Commissioner Johanna Clyborne said in a statement that the agency takes the report seriously and will use it to continue improving the agency's operations. But she said oversight of the account, widely known as the Odyssey Investment Fund, has been strengthened in recent years.

"More work remains to ensure consistent compliance with these strengthened policies, and we are committed to doing just that through implementation of the auditor's recommendations," Clyborne's statement said.

State lawmakers spent a lot of time during the past legislative session digging into problems with the agency's work on the Minnesota Licensing and Registration System (MNLARS).

Rep. Sarah Anderson, R-Plymouth, chairwoman of the House State Government Finance Committee, was one of the leaders of the MNLARS review. In a statement Thursday, she said she would draft legislation, based on this audit, to bring accountability to how the account is used.

"MNIT's Odyssey Account represents yet another slush fund of the Dayton Administration and reveals the agency's mismanagement of taxpayer dollars and failure to oversee projects," Anderson said in a statement.

Jessie Van Berkel • 651-925-5044