Audit finds Secretary of State's Office needs to boost oversight of grants

The Minnesota Secretary of State's Office didn't adequately monitor federal and state grants it disburses to cities and counties, according to a legislative auditor's report released Tuesday.

The report, which reviewed the department's operations from 2020 to 2022, recommended the Secretary of State's Office boost oversight by reviewing grant invoices, establishing polices for monitoring grants and making those requirements clear to grantees.

In a letter to the Legislative Auditor's office, Secretary of State Steve Simon said his department purchased a grants management system in May to track and review documents. The department won't complete grant reports until invoices or receipts are verified, he added.

The Legislative Auditor's Office regularly audits state divisions. In the performance audit of the Secretary of State's Office, auditors said the department passed every other measure they reviewed — from properly paying its 90 employees to overseeing gifts, including $20,000 from the Minnesota Vikings for personal protective equipment at polling places.

"We're really excited there was just one finding. That's very uncommon to only have one finding," said Cassondra Knudson, a spokeswoman for the Secretary of State's Office. "The piece about the grants is actually something we noticed before we had been audited and had already implemented a solution."

The audit found that the department needs to better monitor how grantees spend funds and have consistent invoice requirements. From 2020 to 2022, the Secretary of State's Office received $11 million in state and federal grants for cities, counties and townships for things like enhancing election technology and security, purchasing voting equipment and adding absentee ballot drop boxes.

Of 41 grant contracts auditors tested, 15 didn't have invoices or receipts, so the office couldn't determine if grantees spent money on eligible expenses or if their financial reports were accurate. Knudson said cities and counties are required to keep receipts, though. Doling out grants isn't a major part of the department's work, unlike other state departments, but it received an influx in federal funding during the pandemic, she added.

The Legislative Auditor's Office audited the Secretary of State's Office in 2017 and said four issues it found then have been resolved.

Government oversight of grants has gained increased public scrutiny in light of Feeding Our Future, a nonprofit at the center of a $250 million fraud investigation over federal money that passed through the state Education Department. Earlier this year, the Auditor's Office found that state agencies aren't properly overseeing state grants to nonprofits. Federal money that passes through state agencies, which is at the center of the Feeding Our Future case, wasn't part of that review.

The Legislative Auditor's Office is working on a review of the Education Department's oversight of Feeding Our Future, which is slated to be released in early 2024.