The U.S. Department of Labor's Office of Inspector General has recommended that Minnesota's employment agency be flagged for "noncompliance" after failing to provide information on how more than $210 million in federal grants has been utilized. Labor Inspector General Anthony D’Esposito accused the state of "deliberate obstruction" in a statement, asserting that federal oversight is "non-negotiable" and that the department will "enforce full accountability."
The concerns stem from an audit initiated in April that examined 48 federal grants from the Employment and Training Administration (ETA) to the Minnesota Department of Employment and Economic Development (DEED). These grants, totaling approximately $253 million and covering programs for retraining laid-off workers, assisting former prison inmates, and supporting youth and seniors, were intended to be used in accordance with federal requirements.
According to a September memo from the Inspector General's office, after multiple requests over four months, DEED failed to supply requested data for 26 of these grants, amounting to $210,898,737. This lack of information prevented auditors from verifying participant eligibility, services rendered, accuracy of reported wages, and proper documentation by subrecipients. The memo stated that while the failure to provide data does not confirm misspent funds, it "raises significant concerns regarding its compliance with grant requirements and its stewardship of federal funds."
DEED defended its position, telling The Post that the Inspector General's requests were "unprecedented" and too intrusive, seeking "sensitive private information involving more than 30,000 Minnesota residents and workforce program participants." The department stated it takes its responsibility to administer federal programs and cooperate with oversight seriously, but also prioritizes protecting private information.
D’Esposito countered that Minnesota's "defiance" risks "depriving eligible people of the services they need" and that the DOL OIG is committed to stopping potential misuse of funds. The federal funding in question supports a range of programs, including those for adult and dislocated workers, youth activities, senior community service employment, and a First Step Act Initiative aimed at helping ex-convicts re-enter the workforce.
This situation follows a period of intense scrutiny for Minnesota regarding the management of federal funds. The state was previously criticized by the Trump administration for alleged widespread fraud in taxpayer-funded programs, with estimates of losses reaching as high as $9 billion. The Feeding Our Future scandal, involving an estimated $250 million in funds meant for children's meals, is a prominent example of such alleged fraud.
Minnesota's Democratic Governor Tim Walz had previously announced he was stepping down from his re-election bid to focus on addressing issues of fraud and protecting state residents, citing the need to combat criminals who prey on the state's generosity.