DHS is in trouble yet again

Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.

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Like all state agencies, the Minnesota Department of Human Services has been under intense pressure to perform due to the pandemic. That said, the department's excuses for poor financial oversight are wearing thin at this point.

This time the issue is more than $130 million in grants to local governments and nonprofit organizations. The grants provide support services for disadvantaged populations: the homeless, mentally ill, those on public assistance and runaways who often are targets for exploitation. Every dollar of that amount and far more is desperately needed to assist those who have few other places to turn.

Nevertheless, once again the Office of the Legislative Auditor (OLA) found serious deficiencies in how money was handled. Among the findings: DHS did not document decisions regarding which providers should receive COVID-19 emergency funds or even the amounts given.

DHS could not demonstrate that proper review was given before payments were made and did not consistently document potential conflicts of interest. It failed to assess the financial stability of entities receiving the grants and did not ensure that grantees submitted required progress reports. DHS also failed to perform required monitoring visits and, the report found, may not have collected all of the unspent funds and did not perform closeout evaluations of certain grantees as required.

In a statement after the auditor's report was released, DHS Commissioner Jodi Harpstead said the findings should be considered in the context of the pressures faced by her agency to rapidly deliver assistance during the pandemic. Harpstead, who was appointed in 2019, also stated that the agency has been "working diligently for three years to improve its grant processes."

It's not the first time OLA has found problems in the books at DHS.

To recap, a 2021 auditor's report found that DHS had handed out $58 million in grants for mental health and drug abuse over three years without proper oversight. The same issues were found, including failure to document potential conflicts of interest and inability to evaluate grantees properly. At the time, the department said it was "aggressively addressing" the issues and would be implementing better training and oversight.

A 2019 audit found that DHS had overpaid tribal providers by $29 million for opioid treatment medications and failed to track progress. Former Legislative Auditor Jim Nobles called it "inexcusable dysfunction," noting that "it's astounding that you can make a decision like this to spend millions of dollars and you don't know who made the decision."

In 2018, an OLA review could not calculate the amount lost to fraud in the Child Care Assistance Program. At the time, Nobles testified at a hearing that "Fraud is a serious problem in the CCAP program." The internal controls, he said, "are so lacking that it really isn't that hard to steal money from that program if that's your intent." And in 2016, an OLA report found that up to $271 million may have been lost by DHS' failure to check eligibility requirements for subsidized health care.

Each time problems have surfaced, the department has lamented the findings and promised to do better. But the poor practices persist.

In this latest instance, DHS received an unprecedented wave of state and federal funds to combat homelessness during the pandemic, prompting the agency to put speed above process. It is possible, though, that if the department had well-established vetting procedures, it could have moved with more alacrity while still ensuring the funds were spent correctly.

These programs can be lifesavers for those in need. But it also is vital that the department provide proper oversight, lest public confidence be further eroded and those truly in need denied.

The Legislative Audit Commission will hold a hearing on the audit at 1:30 p.m. Thursday. The bipartisan commission should do its utmost to hold the agency accountable for its performance and ensure that the pattern of shoddy financial practices stops once and for all.