WASHINGTON — The federal government has put the state of Minnesota on blast again — this time for failing to turn over information on $210 million in taxpayer funds allegedly being “misspent” on laid-off workers.
The US Department of Labor watchdog last month recommended Minnesota’s employment agency be flagged for “noncompliance” after repeatedly ignoring requests on how it was using 48 federal grants designed to help out-of-work adults get retrained and former prison inmates find work, among other programs.
Labor Inspector General Anthony D’Esposito accused Minnesota of “deliberate obstruction.”
“Our auditors and investigators are zeroing in on this failure, and we will enforce full accountability. Strong federal oversight is non-negotiable. We will not allow this defiance to enable fraud or to cheat American workers,” D’Esposito said in a statement.
The concerns about potentially misspending $210 million follow a year in which the Land of 10,000 Lakes has been in the crosshairs of the Trump administration for allowing fraudsters to bilk taxpayer-funded programs out of as much as $9 billion.
But the state told The Post, the feds “unprecedented” requests were too intrusive.
“OIG requested sensitive private information involving more than 30,000 Minnesota residents and workforce program participants,” the Minnesota Department of Employment and Economic Development (DEED) said in a statement.
While the state “takes seriously its responsibility to administer federal workforce programs and cooperate with appropriate oversight, we take equally seriously our responsibility to protect private information entrusted to us by Minnesotans.”
The Labor Department Office of Inspector General initiated an audit last April on 48 active federal grants from the Employment and Training Administration to the Minnesota state agency to ensure it had “accurately reported participants’ enrollment, services, and outcomes in accordance with federal requirements,” according to a September memo.
The audit covered the four dozen grants from October 1, 2023, through April 1, 2026, totaling around $253 million.
But four months after “numerous requests” for data on 26 of those grants amounting to $210,898,737, the Minnesota’s DEED failed to provide any.
“While DEED’s failure to provide the participant-focused data does not, by itself, establish that over $210 million was misspent, it raises significant concerns regarding its compliance with grant requirements and its stewardship of federal funds,” the memo stated.
“Given the magnitude of the funding involved and the continued lack of cooperation, the OIG has determined that this matter warrants ETA’s immediate attention.”
The federal funding went to adult programs, dislocated worker programs, youth activities, senior community service employment programs and a First Step Act Initiative that helps ex-convicts re-enter the workforce.
Without data, the IG’s office was unable to record whether “participants existed and were eligible for the programs,” “participants received the training and services reported,” “reported wages were accurate,” and “subrecipients properly documented program activity,” among other information.
The memo concluded: “Because we were unable to complete testing, the full extent of unsupported activity remains unknown. As such, there is a significant risk that inaccurate reporting, unsupported activity, or improper use of ETA funds could go undetected.”
D’Esposito added: “By withholding critical participant data, Minnesota is actively undermining vital workforce programs and risking depriving eligible people of the services they need. The DOL OIG will not tolerate this noncompliance. We are committed to protecting every taxpayer dollar and will take whatever steps are necessary to stop potential misuse of these funds. Minnesota’s defiance ends now.”
Reps for the DOL’s ETA didn’t immediately respond to a request for comment.
The highest-profile case of Minnesota welfare fraud, known as the Feeding Our Future scandal, involved Somali scammers made off with $250 million in taxpayer funding meant to provide meals for needy kids.
President Trump and his allies have accused Rep. Ilhan Omar (D-Minn.) of being aware of — and at times enabling — the fraudulent actions, which the congresswoman has denied.
Minnesota’s Democratic Gov. Tim Walz abruptly abandoned his re-election bid earlier this year amid the heightened scrutiny of federal dollars being sent to his state, citing his need to focus on “defending the people of Minnesota against the criminals who prey on our generosity” and not his own “political interests.”
