Legislative auditor: Minnesota Department of Education ‘created opportunities for fraud’
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A strongly worded report by the state’s legislative auditor finds that "actions and inactions" by the Minnesota Department of Education opened the door for fraud in two taxpayer-funded child nutrition programs.
The report released Thursday comes in response to federal charges filed against dozens of people connected to the now defunct Twin Cities nonprofit Feeding Our Future.
Prosecutors say the defendants siphoned $250 million away from programs designed to feed children by exploiting rule waivers during the pandemic that had initially allowed restaurants, and not just child care centers and nonprofits, to participate in the programs.
The Minnesota Department of Education oversees the U.S. Department of Agriculture food programs on the state level. Among its findings, the Office of the Legislative Auditor report concluded:
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MDE failed to address limits to its oversight authority years before the pandemic and approved Feeding Our Future's meal site applications despite concerns about fraud.
MDE’s only administrative review of Feeding Our Future’s meal operations in 2018 “resulted in serious findings that required follow-up, but MDE never conducted a follow-up review.”
MDE’s “offsite monitoring of Feeding Our Future was limited” as COVID-19-related waivers allowed “alternative forms of oversight.”
The auditor called on state education officials to do more in the future to verify information around “high-risk applicants” and put a “greater emphasis on program integrity and risk-based monitoring” if oversight requirements are relaxed in the future.
"We didn't see evidence of intentional looking the other way, but what we did see evidence of was an agency that was not prepared to understand what they were seeing and then take action,” Legislative Auditor Judy Randall told lawmakers Thursday afternoon when asked if she’d found evidence of wrongdoing by MDE.
In a statement published along with the auditor’s report, Minnesota Education Commissioner Willie Jett said his department disputed the conclusion that program oversight was lax and said “MDE made effective referrals to law enforcement.”
Jett wrote that the department had independently moved to boost oversight, including the creation of an internal inspector general’s office and additional staff training around fraud-reporting policy.
He described the Feeding Our Future fraud as “a travesty — a coordinated, brazen abuse of nutrition programs that exist to ensure access to healthy meals for low-income children. The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters.”
Randall said the FBI first reached out to state education officials in February 2021 inquiring about Feeding Our Future. MDE official Emily Honer testified at the first Feeding Our Future trial last month that she went to the FBI in mid-2021 after not having any luck with the USDA’s inspector general.
It wasn’t until January 2022 that the millions in payouts stopped. That same month the FBI raided Feeding Our Future’s offices and a judge unsealed search warrants, making details of the investigation public.
Katherine Theisen, who directs reviews for the legislative auditor, told lawmakers Thursday afternoon that the Education Department repeatedly asked Feeding Our Future to investigate complaints against the nonprofit.
"We did not see any evidence that MDE took any investigatory steps, like reviewing records or visiting the sites to ensure kids were fed and that the food was nutritious and safe,” she said.
Among the red flags, Theisen said that at the peak of the operation, “MDE paid Feeding Our Future nearly $32 million for nearly 12 million meals and snacks served in April of 2021 alone. This is 87 times more than what MDE paid Feeding Our Future in April of 2020.”
Following the report’s release, Senate Republicans called MDE’s Feeding Our Future response a failure and said agency leaders should be held accountable.
“You can’t just let $250 million go out fraudulently and expect no consequences to happen,” said Senate Minority Leader Mark Johnson, R-East Grand Forks. “Commissioners usually lose jobs over this, and yet two commissioners have left MDE with glowing reviews.”