ST. PAUL — Minnesota Senate Republicans on Wednesday, Nov. 13, blasted state agency officials following the release of a report showing departments in the last year flagged several instances of violations of state contract laws.
A report compiled for the Senate Finance Committee showed that between Nov. 7, 2018 and Nov. 6, 2019, Minnesota agencies on 1,900 occasions ran afoul of state contract laws when state employees committed to spend money on services or supplies before they got state approval or greenlighted vendors or grantees to start work before their contracts had been signed.
The payments first came to light last week when media reports highlighted more than 200 such violations at the Department of Human Services. Lawmakers then scheduled a hearing to assess the violations and to grill department heads about how they were allowed to occur.
But ahead of the hearing Wednesday, the St. Paul Pioneer Press released information about the problem payments that occurred across various state agencies. The list detailed thousands of additional violations that occurred across state departments.
Republicans frustrated that they had to learn about the violations in a news report said the probe showed that problems in state government spanned farther than they'd initially thought. And they committed to digging into the bureaucratic culture that allowed the violations to persist.
"And I'm very very upset about this," Sen. Julie Rosen, R-Vernon Center, said, noting her concern about the press getting data before committee members did and that top agency heads weren't able to attend due to scheduling conflicts. "What is going on in our agencies and this blatant dismissive way of handling contracts and procurement?"
The violations were mostly technical in nature and didn't allow for improper spending, officials from DHS, the Department of Administration and Minnesota Management and Budget said. And at DHS, the department's chief financial officer said she follows up on each one after speaking with the employee who made a payment before they got approval or greenlighting the start of a vendor's work before a contract was completed.
While the improper filing is a violation of state law and is recorded as such, it can be determined to be valid later if an agency head approves it. And the agency officials at the hearing told lawmakers the Walz administration was aiming to streamline the process to prevent violations.
"I take my role as a steward of taxpayer dollars very seriously," Alex Kotze, DHS's chief financial officer, said. "No payments were made on these contracts and no payments were made on any of the executed things until forms were signed, until all of the contracts were executed."
Kotze said the programs that get funded by the grant dollars approved before the state obtains them often have to do with crucial services, which could be suspended without rapid action.
But Sen. Michelle Benson, R-Ham Lake, and other Republican members of the committee raised concerns about the number of times the payments had been flagged and about a lack of employee terminations following the reports.
“At some point, you just need to say stop so people will take this seriously,” Benson said. “At some point, you just stop handing out money and people pay attention.”
DHS has come under scrutiny in recent months for approving overpayment of Medicaid funds to the tune of $29 million to two tribes for medication-assisted substance abuse treatment. And Kotze aimed to distinguish the violations from overpayments of Medicaid funds administered by the state.
Sen. Chris Eaton, DFL-Brooklyn Center, said the reports, which make up about 2% of the department's annual spending on goods and services, seemed to indicate the agencies were doing the work they need to do.
“I think this is an example of the system working," Eaton said. “We’re doing a pretty good job of handling a bureaucracy that has to meet human needs."