Problems Continue at Minnesota’s Department of Human Services

The other emerging problem involves at least $3.7 million paid to HMOs (health maintenance organizations) for at least 198 dead people.


Minnesota’s Department of Human Services (DHS) is engulfed in scandal. To name just a few issues, Democrat Governor Tim Walz still won’t explain why the guy he first appointed to head DHS—former commissioner Tony Lourey—resigned after only a few months on the job.

The agency has presided over a large welfare fraud involving Minnesota’s childcare benefit, totally tens of millions of dollars. Using federal money, DHS has also wrongly paid two Indian tribes, costing about $25 million, and wrongly paid substance abuse and mental health providers, costing about $50 million. And the feds want this money back.

All this is especially concerning given DHS’s size. The department runs about a third of Minnesota’s nearly $50 billion budget. Its so big, that it is likely that its overseers, including the governor, are unable to manage it. And legislators worry that they are unable to provide proper oversight, given how DHS is currently structured.

Now, two new stories are highlighting the ongoing problems at DHS.

One comes from concerned activists for the homeless. They point out that the State Legislature allocated $3 million to address the growing homelessness problem in Minnesota, but that DHS has yet to distribute those funds. Worse, none of this money will go toward shelter beds in the metro area, one of the biggest and most simple-to-address needs, according to activists. And DHS is refusing to answer any questions on where the money is being spent. 

That’s not a good look, especially for a department already plagued by problems.

The other emerging problem involves at least $3.7 million paid to HMOs (health maintenance organizations) for at least 198 dead people. The problem was discovered due to a federal audit, because the issue involved Medicaid, largely paid for by the federal government, but supplemented and run by the states.  

In a state audit, DHS also removed 23,000 people “who were no longer eligible,” though no dollar amount was given as to lost taxpayer dollars due to this group. 

The federal audit covered the years 2014-16, and used a sample of 100 cases to extrapolate the larger figures. DHS says that the problem was due to a faulty computer system that has since been fixed. 

Republican lawmakers, looking to make fundamental reforms at DHS, said DHS had fought efforts to conduct the aforementioned state, DHS-led audit. “We had to fight tooth and nail [to get them to conduct the audit],” said State Senator Michelle Benson (R-Ham Lake). 


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Willis Krumholz
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Willis L. Krumholz is a fellow at Defense Priorities. He holds a JD and MBA degree from the University of St. Thomas, and works in the financial services industry. The views expressed are those of the author only. You can follow Willis on Twitter @WillKrumholz.