Minnesota Senate advances bill establishing a new Office of Inspector General in wake of high-profile fraud scandals

A proposal to establish a new state government watchdog designed to fight fraud in public programs sailed through the Minnesota Senate on Thursday.

On a 60-7 vote, lawmakers approved establishing a new Office of Inspector General, an independent agency charged with investigating state agencies and private organizations that receive taxpayer money. 

The measure comes two-and-a-half years after federal prosecutors first announced the Feeding Our Future scheme, which they declared the “largest pandemic fraud in the United States.” Since then, two dozen people have been convicted for their role in stealing money intended to support feeding hungry children. 

Republicans and Democrats alike who worked on the legislation said they hope the new role will prevent theft of public funds in the future. 

“In a year where we are scrutinizing every dollar, let’s remember that fraud is expensive. Oversight is cheaper than scandal,” said Sen. Heather Gustafson, DFL-Vadnais Heights. “This bill is about prevention, accountability and protecting the public good.”

The inspector general would be barred from engaging in partisan or campaign work while in office and the bill grants the position subpoena power. A bipartisan selection commission of lawmakers would vet candidates and make recommendations to the governor to choose, subject to a two-thirds vote in the Senate. 

The office would also have a phone line and website for Minnesotans to anonymously report tips of fraud. 

As lawmakers look at spending cuts to stave off a $6 billion deficit in the future, this bill asks for $8.9 million in investment to get the agency off the ground and support its staff.

“It’s really a rather modest startup cost to get it off the ground and the savings and the opportunity to clamp down on fraud, I think it’ll pay for itself many, many, many times over,” said Sen. Michael Kruen, R-Blaine, who worked alongside Gustafson to advance it.

Seven Democrats voted against the measure. Some expressed concern that the jurisdiction of the office could endanger federal Medicaid funding. An amendment added on the floor made clear some provisions of the law would be subject to approval by the Centers for Medicare & Medicaid Services.

“This bill, although it’s a great front page of a newspaper article, is not ready for prime time,” said Sen. John Hoffman, DFL-Champlin.

DFL Gov. Tim Walz earlier this year pitched his own anti-fraud package but notably didn’t call for a similar independent agency. When asked Thursday if he supports the proposals in the Legislature, he said he is open to it, but stopped short of endorsing the plan.

“I’m not sure that that is the most efficient use of the resources to do it, but if the legislature can come to some type of conclusion, I said, I’m certainly open to it because I think I, amongst everyone else, the theft of public funds needs to be a top priority. It needs to be prosecuted,” he said. “I’m just not convinced among the experts that it is the most efficient way to get to what we’re trying to get at.”

The House has a slightly different approach for creating a new inspector general’s office, though that bill has not yet cleared the chamber yet. There has been work behind the scenes in the meantime: Lawmakers said they have been meeting weekly on a bipartisan, bicameral meeting to fine tune the details and prime it for end-of-session negotiations. 

“This has evolved into a bipartisan working group where we’ve essentially been doing conference committees for months over at the Senate every Tuesday,” said Rep. Patti Anderson, R-Dellwood, at a news conference earlier this week. 

The session must end May 19 or lawmakers will go into overtime to pass the next two-year budget.