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A report released Monday found that the state Department of Human Services gave out millions in mental health and substance abuse grants without adequate oversight for nearly three years. (House Photography file photo)

The Minnesota Department of Human Services gave out millions in mental health and substance abuse grants without adequate oversight for nearly three years, according to a report released Monday from the Office of the Legislative Auditor.

The legislative oversight agency found issues at nearly every step of the grantmaking process in the 140-person Behavioral Health Division, from failing to document and mitigate potential conflicts of interest to insufficient evaluation of grant recipients. The report spanned July 2017 to March 2020, during which the agency gave out $58 million in contract grants.

The Department of Human Services said it’s “aggressively addressing” the problems with improved training and new oversight policies.

The report by the Legislative Auditor is a follow-up to a 2019 audit that identified “significant management problems” in the Behavioral Health Division. Health care providers were overpaid roughly $29 million for some opioid treatment medications, the 2019 report found.

State agencies that give out grants are required to evaluate the risk of fraud, waste and legal noncompliance; establish policies to ensure they follow laws; and keep records of grant management. Behavioral Health Division management didn’t have adequate policies to ensure staff tracked grants, or make sure staff had the right training to handle grants assigned to them, according to the report.

The Behavioral Health Division also didn’t fully comply with laws intended to make sure grants are administered fairly and consistently. In a review of 25 grants and requests for proposals, 21 had no documentation related to potential conflicts of interest as required by state law, and the remaining four had inadequate documentation. Nearly $7.9 million in grants were given out without proper conflict of interest documentation, the report says.

State law requires agencies to track the progress of organizations that receive grants. The Behavioral Health Division had inadequate progress reports or no progress reports at all for 20 of 25 grants reviewed, the Legislative Auditor found. In some cases, grant recipients were still paid despite submitting insufficient progress reports. In all, the agency gave out more than $8.8 million in grants without properly tracking recipients’ progress.

The Department of Human Services conducted an internal audit and launched several efforts to improve its practices while the Office of the Legislative Auditor was working on the report, Commissioner Jodi Harpstead wrote in a response to the report.

By 2022, the Behavioral Health Division will roll out new procedures to make sure grantmaking complies with legal requirements and conflict of interest policies. The agency will also hire staff for more oversight and quality improvement and establish a system to track grant administration and documentation.

“A future rollout to all of DHS will complete this approach, strengthening, hardwiring and institutionalizing strong process controls for our grants contracts for years to come,” Harpstead wrote in the response.

Senate Health and Human Services Committee Chair Sen. Michelle Benson, R-Ham Lake, said in a statement that it’s a “disservice to taxpayers” to award grants without adequate oversight and accountability.

“Leadership changes from Commissioner Harpstead are a start, but we need to see a culture of change from managers, accountability measures as part of the standard operations, and total transparency with the legislature to fix the problems that plague DHS,” Benson said in the statement.

Rilyn Eischens is a data reporter with the Minnesota Reformer.

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