The state Board on Aging failed in several ways to provide meaningful oversight of the Senior Nutrition Program that provides meals to some 40,000 Minnesotans, according to a legislative auditor's report released Monday.

Among the most glaring problems: The board didn't monitor activities or contracts for the nutrition program and the seven area aging agencies underneath the board didn't conduct required site visits to providers and subcontractors.

The Office of Legislative Auditor's performance report provided a list of nine shortcomings ranging from a failure to provide documentation on how meal reimbursements are calculated to a lack of valid contracts with direct service providers and a failure to review contracts and make site visits.

In response, state board Executive Director Kari Benson said the agency generally agreed with the recommendations aimed at better oversight and acknowledged the board had struggled to meet state guidelines.

But she said context is important as the state agency struggled in 2022 "to administer the significantly increased funding level that Minnesota received during the pandemic."

The senior meals audit explored the federal Senior Nutrition Program that provides meals to those 60 or older in their homes, group centers, senior centers or restaurants. The state Board on Aging and its seven area agencies oversee the program.

The program received $11 million in federal funding in 2022 and $2.7 million from the state. About one-third of the cost of the program is for administrative costs.

To run the program, the state contracted with the seven area agencies which, in turn, contracted with 17 service providers which oversaw 131 subcontractors last year. The program provided more than 3 million meals to some 40,000 recipients, the performance audit said.

Independent boards in each of the seven area agencies were expected to review and approve the contracts. In addition, the state board contracts with the Minnesota Indian Area Agency on Aging to oversee the program at Bois Forte, Grand Portage and Leech Lake bands and White Earth Nation.

The audit found that neither the state board nor the Indian Area Agency could provide sufficient documentation on how meal reimbursement rates are set for tribal service providers. "Without this information, we could not determine whether the rates were reasonable and only included allowable costs," the report said.

One of the providers had a reimbursement rate of $30 per meal, a high-end outlier. The next highest meal reimbursement rate was just under $12 for a Twin Cities provider. The remainder of the highs were no more than $9 per meal.

All four tribal service providers said the Indian Area Agency on Aging set the rates. A state board representative said they prioritized delivery of the services and did not question the reasonableness of the rates.

The audit said the "rates may contain unallowable costs and could be inflated. Without knowing budgeted or anticipated costs, it is difficult to determine if funding allocated to these service providers is the appropriate amount."

The audit recommended the state board insist on proper documentation from tribal providers to ensure the rates are properly set.

Another recommendation was that the state ensure that all subcontractors have valid contracts.

Across the state, the audit found that some service providers didn't have valid agreements with subcontractors. The contracts are required to be renewed annually and cannot exceed five years, but neither the state board nor the area agencies reviewed or approved many of the contracts with subcontractors before they were used, the audit said.

The audit noted that without contracts, there is an increased risk that subcontractors may charge inappropriate rates, serve meals that don't meet nutritional requirements, stop serving meals without notice or serve meals to ineligible recipients. "Furthermore, without valid contracts, there is no way to hold the subcontractors accountable," the audit said.

The majority of the subcontractors that participated in the Senior Nutrition Program in 2022 were for-profit entities, such as restaurants, grocery stores and nursing facilities, the audit found.

The audit said the state board or the area agencies should review and approve all contracts. In response, Benson agreed, saying the agency would consult with the Attorney General's Office regarding review of pending contracts and compliance.

The auditors also identified 338 locations that served communal and/or home meals in 2022 that were still providing meals in June 2023. Auditors visited 16 sites and found no concerns, the audit said.

The audit found, however, that the oversight agencies need to update the database on recipients and to perform their own site visits.

The federal program has existed since 1965, but Benson said the state had administered it with very little federal help until recently. Federal funding doubled in 2022, she said.

She also noted that in December 2021, the state board assumed authority for the Minnesota Indian Area Agency on Aging "due to a history of administrative deficiencies." The state board is continuing to work with the Indian Area Agency as it transitions to a new entity in 2024, Benson wrote.

Overall, Benson said the state agency has been making strong progress in addressing the issues in the report, including using pandemic funding to hire an outside contractor to review gaps in processes and procedures.