Audit report details fraud, mismanagement among state agencies

A new report from the Minnesota legislative auditor’s officedetails a “troubling lack of financial oversight” among nine state agencies, state Rep. Ryan Winkler, DFL-Golden Valley, said Friday.

Winkler said poor internal controls within Gov. Tim Pawlenty’s administration have led to “widespread fraud and mismanagement” in handling state and federal money and have cost taxpayersmillions in lost or unaccounted for revenues.

The federal compliance auditsdetail problems in all nine agencies: the Department of Education (five findings), the Department of Employment and Economic Development (seven findings), the Office of Enterprise Technology (one finding), the Department of Finance (two findings), the Department of Health (six findings), the Department of Human Services (10 findings), the Department of Natural Resources (six findings), the Department of Public Safety (five findings) and the Department of Transportation (one finding).
Each agency wascited for poor oversight and mismanagement of state and federal funds. The report consistently points to a lack of compliance with federal audit requirements, and what Winkler called a “troubling trail”of undocumented, unanswered questions as to where and how state resources are spent.

Winkler said the report leads to questions aboutwhether $9.1 billion in federal stimulus money can be managed “responsibly without immediate, significant reform.”

“You need more than a website and a prayer to manage the state’s business,” Winkler said.

“Minnesotans expect better, responsible government. When billions of federal dollars are coming to Minnesota to rebuild our infrastructure and kick-start Minnesota’s economy, we need to make certain every dime is well-spent and accounted for.”

Based on a host ofnegative auditor’sfindings over the last several months, Winkler said he is skeptical aboutPawlenty’s current system for distributing federal recovery funds in Minnesota. Pawlentyappointed Finance Commissioner Tom Hanson as the sole overseer of allstimulus money coming into the state, and Winkler is concerned that handling a $36 billion budget, a $6.4 billion budget deficit and more than $9 billion in federal funds may be too much for just one person.
Hanson too is skeptical of his agency’s ability to manage the project. Having eliminated all internal auditors at the Department of Financebecause ofa 30 percent budget cut over the lastseven years, Hanson’s agency is understaffed and underprepared to properly handle incoming federal recovery funds.

“We are faced with an unprecedented challenge of spending a lot of federal money quickly,” Hanson said in an interview this week. “And I think as we go forward we will need some additional financial assistance with our agency in order to meet the federal reporting requirements.”
Winkler is calling for a comprehensive restructuring of how federal recovery funds are accounted for and delivered in the state.
He said other states have established stronger, more accountable systems to ensure that federal moneyis well-spent in their efforts for economic recovery. A comprehensive list of those systems in comparison to Minnesota can be found on the National Conference of State Legislatures website.