MINNESOTA – A new report from Minnesota’s nonpartisan Office of the Legislative Auditor (OLA) is putting Governor Tim Walz’s administration under fresh pressure. The audit, released earlier this month, reviewed the Department of Human Services (DHS) Behavioral Health Administration (BHA) and found that state staff created and backdated documents during the audit process.
Auditors say the records appear to have been made to cover for weak oversight and questionable grant payments tied to more than $425 million in taxpayer funds.
The report adds to a growing list of concerns around fraud and waste in Minnesota social services. Walz announced on January 5, 2026, that he will not run for re-election. Many critics link that decision to the string of scandals and investigations that have followed his administration.
Major Problems With Grant Oversight
The OLA report runs about 70 pages and focuses on behavioral health grants paid out from July 2022 through December 2024. Auditors listed 13 key findings, including several problems flagged in earlier reviews. The report described repeated breakdowns, such as:
- Missing required progress reports from grantees
- Payments were approved even when the paperwork was late or incomplete
- Weak monitoring, including site visits that were not done or not documented
- Heavy use of non-competitive single-source grants without clear support for the decision
Over the period reviewed, BHA awarded more than $425 million to about 830 organizations, mostly outside government. The money was meant to support mental health care and substance use disorder services. Auditors said BHA lacked basic internal controls to track performance and confirm proper use of funds, which increased the risk of fraud and misuse.
One example in the audit drew sharp criticism. A grant manager approved a payment of nearly $680,000 to a single grantee for one month of work, and the file did not show proof that the services were delivered. The employee left state service days later and took a consulting job with the same organization. That sequence raised serious conflict-of-interest concerns.
Audit Says Walz Staff Fabricated and Backdated Documents
The most serious finding involved the audit itself. Legislative Auditor Judy Randall said the office saw signs of a “systemic effort” to alter the record, something she described as unheard of during her 27 years with OLA.
Auditors found cases where records were created after the audit began and then dated to look older. In one example, documents claimed monitoring visits happened in May 2024, October 2024, and January 2025. Auditors concluded those records were actually created in February 2025, after the audit was already underway and information requests were out.
Randall called the practice unacceptable and said it damaged trust in the review process. The report suggests the altered paperwork was used to make long-running oversight problems look fixed after the fact, instead of addressing them in real time.
Part of a Larger Wave of Fraud Claims
The DHS audit lands during a broader crackdown on alleged fraud in Minnesota’s public programs. Federal and state investigators have been looking into suspected wrongdoing that could add up to billions of dollars across Medicaid, child care, housing stabilization, and nutrition assistance programs. More than 1,000 current and former workers have come forward as whistleblowers, alleging retaliation, deleted data, and pressure to stay quiet about fraud reports.
Congress has also taken an interest. The U.S. House Committee on Oversight and Government Reform, led by Rep. James Comer (R-Ky.), has expanded its review of Minnesota’s handling of these programs. Comer has publicly blamed Walz for ignoring warning signs and has called on Walz and Attorney General Keith Ellison to testify in February 2026. He has also pushed for cooperation with document requests.
Minnesota Republicans, including Rep. Kristin Robbins, say the state ignored auditor warnings and whistleblower complaints for years, with some concerns dating back to 2009.
DHS Response and Growing Calls for Accountability
Acting DHS Commissioner Shireen Gandhi said she was alarmed by the findings about backdated records and promised a full internal review. She also said DHS plans to tighten training, supervision, and internal controls.
Critics say those steps should have happened long ago. House Speaker DeMuth described the report as proof of a culture marked by fraud, negligence, and deception, and called for immediate reforms and possible prosecutions. Some federal lawmakers have warned that funding could be at risk if the state cannot show stronger accountability.
Walz has defended his administration in past disputes by pointing to third-party audits, paused payments in higher-risk areas, and new anti-fraud efforts. Still, the latest audit raises hard issues about who knew what, who allowed weak controls to continue, and whether anyone will face criminal charges for falsifying public records.
What This Means for Public Trust
This audit is not just about paperwork problems. It goes to public trust in the state government. The grants were meant to help Minnesotans dealing with mental illness and addiction. Auditors say the funds went out without strong safeguards, and when oversight finally arrived, staff allegedly tried to recreate a paper trail to show compliance.
With investigations still active at the state and federal levels, the fallout could shape the final chapter of Walz’s time as governor. For many Minnesotans, the biggest issue is simple: they want clear answers, real consequences, and proof that taxpayer dollars will be protected going forward.
