Minnesota paid bonuses to 290 dead, audit finds • Minnesota Reformer

According to a state tally released Tuesday, only 60% of the more than 1 million people who received $487.45 for service work in Minnesota during the Covid-19 pandemic clearly deserved the bonuses.

The Office of the Legislative Auditor estimates that 9% of recipients were ineligible for the payments, and for the rest, it was simply unclear whether they should have received the checks intended for nurses, first responders, prison guards, store clerks, janitors and other workers who could not stay home during the pandemic.

The auditor analyzed only a fraction of Minnesota Frontline Worker Pay Program recipients and found numerous payouts to suspicious applicants, including people who used the same identification numbers, people who listed out-of-state home and work addresses, and people who used “high-risk bank routing numbers.”

The auditors also found that 290 people had received payouts before they received a bonus, including one person who died two years before the application period began.

The report says the Department of Labor and Industry, which oversaw the program, did not adequately investigate obviously fraudulent claims or ensure that contractors retained enough data to evaluate payouts. The Treasury Department also did not verify the income of all applicants to ensure they were eligible.

About 85 percent of those who applied for a bonus received it, the report says.

“Remember, this program was designed as a zero-sum game, where a fixed amount of state funds – $500 million – was to be divided equally among all eligible applicants,” Legislative Auditor Judy Randall told the Legislative Audit Commission on Tuesday. “The more applicants were approved, the less each applicant received.”

When lawmakers passed the funding nearly unanimously, they assumed workers would receive $750.

Fraud and waste have become a defining element of pandemic relief programs, from the Paycheck Protection Program to the Federal Child Nutrition Program, as government agencies have been ordered to disburse billions of dollars in a hurry.

When it came to the frontline worker payroll program, a divided legislature didn’t approve funding until more than two years after the pandemic began and wanted to get the money into workers’ bank accounts as quickly as possible.

Randall said her office reported the findings to the FBI, the Attorney General’s Office and the Ramsey County District Attorney. The report also recommended that the state Department of Revenue try to recoup any erroneous payments.

The Office of the Legislative Auditor is part of the legislative branch and typically focuses its criticism on state agencies that report to the executive branch, but its report on the field workers’ pay program was a diplomatic rebuke to state lawmakers for the way the law was drafted.

For example, the program included requirements that were not easily verified, such as whether individuals worked in person and in close proximity to others, so the Department of Labor and Industry was essentially reliant on taking applicants at their word.

The auditors contacted the employers of a small sample of recipients to verify whether the workers actually worked in person and in close proximity to others for at least 120 hours between March 2020 and June 2021. However, in many cases, employers either did not respond or said “don’t know.”

“The overarching theme of the findings is that the problem lies with the program itself, not the way it was implemented,” DLI Commissioner Nicole Blissenbach told the Legislative Audit Commission on Tuesday.

Blissenbach also pointed out in her ministry’s response that the auditor revised its report after the agency had proven that some of the flagged applicants were actually entitled to the benefit. With a little more time, they might have been able to prove eligibility for other applicants as well.

Senator Ann Rest (DFL-New Hope) agreed that lawmakers share some of the blame and thanked the auditors for not taking an “apologetic stance” toward state agencies or lawmakers.

“Where did the negligence happen? It happened in the legislature,” Rest said.

But Randall said even a flawed law does not absolve government agencies of their responsibility.

“The law doesn’t say ‘fraud must be stopped at all costs,’ but I would expect that we all agree that we should try to stop fraud,” Randall said.