Minnesota Forum

January 6, 2026
Members

Legislative Audit Commission
Shireen Gandhi, Temporary Commissioner Department of Human Services

This report presents the results of our performance audit of the Department of Human Services
(DHS) Behavioral Health Administration (BHA) grants for the period July 1, 2022, through December 31, 2024. The objectives of this audit were to determine if BHA had adequate internal controls and complied with significant finance-related requirements related to oversight of grants.

This audit was conducted by Valentina Stone, CPA (Audit Director), Holly Runia (Audit Team Lead), and auditors Jonathan Brandtner, Nicole Heggem, Erick Olsen, Cary Sumague, Zakeeyah Taddese, and Emily Wiant, with assistance from Jodi Munson Rodriguez (Deputy Legislative Auditor, Program Evaluation Division) and Caitlin Zanoni-Wells (Principal Program Evaluator).

We received the full cooperation of staff from DHS and BHA while performing this audit.
However, during the course of our audit, we identified a number of documents that BHA either backdated or created after our audit began. Generally accepted government auditing standards require auditors to obtain "sufficient, appropriate evidence to provide a reasonable basis for addressing the audit objectives and supporting their findings and conclusions."' The standards further state, "evidence is not sufficient or appropriate when using the evidence carries an unacceptably high risk that it could lead auditors to reach an incorrect or improper conclusion." As a result, we could not fully rely on this documentation.

Judy - Legislative Auditor And
Lori - Deputy Legislative Auditor

And this:


OLA audit finds widespread failures, fabricated documentation at DHS' Behavioral Health Administration

Conclusion
The Behavioral Health Administration did not comply with most requirements we tested and did not have adequate internal controls over grant funds.

ST. PAUL - The Office of the Legislative Auditor (OLA) today released a performance audit of the Department of Human Services' (DHS) Behavioral Health Administration (BHA) grant programs, finding widespread failures in oversight and internal controls. The OLA found that BHA *did not comply with most requirements tested for mental health and substance use disorder grants and did not have adequate internal controls over grant funds."
Legislative Auditor Judy Randall noted systemic issues, including documents created by BHA only after the audit began and backdated in response to document requests.

Senator Mark Koran (R-North Branch), a member of the Legislative Audit Commission, issued the following statement:
"The OLA report shows a complete breakdown in how DHS's Behavioral Health Administration manages hundreds of millions in taxpayer-funded grants," said Sen. Koran. "BHA failed to verify that grantees were providing the services they were paid for, failed to put basic financial controls in place, and then created documentation after the fact to mislead auditors.

"The audit makes clear that DHS leadership has failed at every level. Employees were not properly trained, oversight was ignored, and accountability was missing, from Governor Walz, to Temporary DHS Commissioner Gandhi, to BHA managers. DHS needs a full reset, starting with leadership, training, ethics, and oversight."

Key findings from the OLA report include:
• Between July 1, 2022, and December 31, 2024, DHS distributed more than $425 million in grants to 830 grantees, 590 of them nongovernmental organizations.
• Missing or past-due progress reports for 27 of 51 grant agreements.
• BHA could not demonstrate that it completed 27 of 67 required monitoring visits.
• For 24 visits involving 11 grantees, BHA could provide no documentation.
• For three visits to one grantee, documentation was created in February 2025, after the audit began, despite the visits supposedly occurring in May 2024, October 2024, and January 2025.
• Incomplete financial reconciliations for 63 of 71 grant agreements.
• A grant manager approved $672,647.78 in payments and later left BHA to work for the grantee.
• An internal employee survey showed deep concerns within BHA:
• 73% of respondents said they did not receive sufficient training to manage grants.
• Survey response from BHA employee: "Executive leadership has repetitively shown staff that they won't take the staff's concerns or questions seriously until something serious happens or it makes the news."
The full OLA report can be viewed here, and the commission hearing can be viewed here.