Legislative auditor finds Minnesota poverty aid review gaps

Updated: 10:40 a.m. | Posted: 9:37 a.m.

Minnesota's legislative auditor identified weaknesses Friday in how several state agencies monitored poverty assistance routed through two dozen nonprofit organizations in recent years.

A report by the Office of Legislative Auditor James Nobles didn't identify misspending by 26 community action agencies similar to the lapses that led to the abrupt closure and criminal charges at Community Action of Minneapolis.

But the review found that some state agencies failed to annually monitor big grant recipients as the law requires. One Department of Human Services division didn't conduct those visits for one-third of the grants exceeding $250,000 and up to $3 million. Other divisions in the agency were better at keeping up but still had some shortcomings.

Oversight or bookkeeping flaws were also found at the Iron Range Resources and Rehabilitation Board, the Department of Employment and Economic Development, the Department of Commerce and the Department of Corrections.

The community action groups depend on state grants to help low-income households by distributing heating aid, child care assistance and much more. The audit reviewed three years and $235 million worth of grants.

State agency leaders responded to the audit with letters detailing their plans to close oversight gaps or fix accounting problems.

Nobles' review began after Community Action of Minneapolis was found to have misspent hundreds of thousands of state and federal grant dollars, some on questionable expenses for board members and executive staff. Former chief executive officer Bill Davis was indicted on several federal fraud counts and is due to go on trial next year. The Minneapolis entity is no longer in operation and its clients are served by nearby organizations.