Minnesota Just Published Proof That the Failures Behind Feeding Our Future Are Still Happening
A January 2026 state audit reveals the same control gaps — in a different agency, with $425M at stake.
The Feeding Our Future prosecution closed with convictions and a $250 million price tag. The natural assumption — the comfortable one — is that the failures that enabled it were specific to that program, that agency, that moment in time. A pandemic-era anomaly, unlikely to recur. That assumption just collapsed.
In January 2026, the Minnesota Office of the Legislative Auditor published a performance audit of the Department of Human Services' Behavioral Health Administration grants — $425 million in grant funds across 830 agreements from July 2022 through December 2024. The conclusion, stated with the kind of plainness that only auditors achieve: "The Behavioral Health Administration did not comply with most requirements we tested and did not have adequate internal controls over grant funds."
Different agency. Different program. The same structural gaps that turned Feeding Our Future into the largest pandemic fraud prosecution in American history — sitting wide open, with nearly half a billion dollars running through them.
Thirteen Findings, Four of Them Repeats
The auditors tested every major grant management control — competitive bidding, agreement execution, payment processing, progress reporting, monitoring visits, financial reconciliations, performance evaluations — and BHA failed on virtually all of them. Four of the thirteen findings were repeat findings from a prior audit. BHA was told about these problems. They were given time to fix them. They didn't.
Financial Reconciliations That Never Happened
Of 71 grant agreements tested, 63 failed financial reconciliation requirements. For 25 of those, BHA couldn't produce any documentation that a reconciliation ever occurred. For 37 more, the documentation was so sparse the auditors couldn't assess whether the work had been meaningful. When surveyed, only 19% of BHA grant managers said they "completely understood" how to conduct a financial reconciliation. Twenty-seven percent said they didn't understand at all.
This was a repeat finding. The prior audit flagged the same problem. The gap remained.
Monitoring Visits — Real and Fabricated
BHA was required to conduct 67 monitoring visits during the audit period and couldn't demonstrate that 27 of them happened. For three visits to one particular grantee, BHA did produce documentation — but the grant manager created it in February 2025, after the audit had already begun, for visits that supposedly occurred months earlier. No notes, no emails, no calendar entries to corroborate them. Also a repeat finding.
Money Moving Before Ink Dries
BHA paid $915,540 to six grantees for work performed before the grant agreements were even signed. State law and policy draw a clear line here — no payments before execution — and BHA crossed it without realizing it had. The agency didn't report these violations because it didn't know they were happening.
Meanwhile, $13 million went to grantees with missing or overdue progress reports. For 29 of 51 agreements tested, the required reports were either late or absent entirely. BHA paid anyway. Seven grant agreements didn't even include a reporting requirement — $2.1 million disbursed with no obligation to demonstrate that the money accomplished anything at all. Another repeat finding, still unresolved.
The $672,000 Red Flag
This finding deserves its own space, because the details read like a case study in everything that grant oversight exists to prevent.
The auditors visited eight grantees. One couldn't provide detailed invoices or participant data to support a $672,648 payment — a single month of work under a $1.6 million grant agreement. That grantee had 14 subcontractors. Every single one billed exactly $40,000, despite claiming different numbers of "service units" at different rates. Neither the grantee nor the two subcontractors the auditors visited could explain how the rates were determined. One subcontractor said the grantee told them they didn't need to keep participant records.
The BHA grant manager who approved the $672,648 payment left DHS a few days later — and began providing consulting services to the same grantee. BHA had no documentation of any monitoring visit to this organization until October 2024, four months after the grant agreement had already ended.
Fourteen subcontractors billing the exact same amount. No participant records. No monitoring visits. And the approving official crossed over to the grantee's payroll days after signing the check. If this isn't fraud, it is the most fraud-shaped legitimate activity the state has ever documented.
Competitive Bidding as Theater
State policy requires competitive bidding when more than one entity can meet a grant's purpose. BHA issued single-source grants in 14 of 24 cases tested — including one where the agency identified 100 eligible entities and awarded the grant to a single organization, citing "time constraints." In another case, BHA awarded $1.6 million in federal funds to one grantee, claiming the organization was named in the federal spending plan. The auditors reviewed the spending plan. The grantee wasn't in it. The staff member who made the decision had left BHA, and management couldn't explain it.
The Legislature itself contributed to the problem, appropriating $1.85 million to two specific organizations but calling the disbursements "payments" instead of "grants." Because the statute didn't use the word "grant," DHS determined these entities weren't subject to Office of Grants Management policy. No monitoring visits. No financial reconciliations. No performance evaluations. $1.85 million in public funds with zero oversight, by legislative design.
The Structural Echo
In Feeding Our Future, the fraud succeeded because new entities received massive funding within days of formation, because nobody mapped the network of shell companies and shared officers, because nobody cross-referenced claimed meal counts against demographic reality, and because financial oversight was functionally nonexistent. The system processed applications in isolation, and a coordinated network exploited that isolation for years.
The BHA audit documents the same architecture of failure — grants awarded without competitive bidding to entities with prior relationships, reconciliations so deficient they're meaningless, monitoring visits fabricated after the fact, payments flowing before agreements are signed, staff who lack the training to perform the oversight they're responsible for, and no systems to flag anomalous patterns in the data. The only difference between Feeding Our Future and the BHA audit is that in one case, someone was actively exploiting these gaps. In the other, the gaps are simply sitting open — a $425 million invitation waiting for someone to accept it.
The Architecture Problem
Seventy-three percent of BHA grant managers told auditors they weren't trained before they started managing grants. One employee reported being instructed not to complete financial reconciliations when a grantee was leaving the program. Staff described being hired as clinicians and then assigned grant management duties they weren't qualified to perform. This is not a problem that better training solves. Eight hundred and thirty grant agreements cannot be managed with manual processes, unstandardized templates, and no reconciliation technology. The volume exceeds human capacity for oversight, and the result is exactly what the audit documents — a system that processes transactions rather than monitoring them.
Feeding Our Future was detected by federal investigators, not by state systems. The BHA audit was conducted by the state's own legislative auditor — and what they found was a program with virtually no functioning controls over nearly half a billion dollars in public funds.
The pattern is legible now. State oversight systems are not designed to catch fraud. They are designed to process transactions. When someone exploits that gap deliberately, you get a $250 million prosecution. When nobody's exploiting it yet, you get a $425 million audit full of findings that everyone agrees are serious and nobody has the tools to fix.
The BHA audit is not an outlier. It is a window into how state grant programs actually operate across the country. And the question it poses to every state administrator is a simple one: do you know whether your programs have these same gaps? Would you find out before the auditors do — or before the fraudsters do?
Sources: OLA Audit Report · DOJ Press Release