Minnesota frontline worker checks went to applicants who may not have been eligible: Audit

A legislative audit released Tuesday found that two Minnesota state agencies failed to follow vetting requirements when issuing checks for the state's pandemic frontline worker bonus program.

• As a result, $487 payments were sent to applicants who shouldn't have qualified or whose eligibility couldn't be independently determined.

Why it matters: The findings raise questions about whether taxpayer dollars meant for pandemic heroes were misspent.

Plus: Because the $500 million that lawmakers set aside for the program was set to be split evenly among qualified Minnesotans, issuing payments to ineligible applicants reduced the total check size for the workers they were trying to help.

Catch up fast: The Minnesota Frontline Worker Pay Program, approved by the state Legislature in 2022, was meant for people who worked at least 120 hours in essential, in-person jobs that put them close to others.

• Top state lawmakers, including Gov. Tim Walz, hailed the law as a way to thank Minnesotans who risked their health to keep crucial sectors and services running.

What happened: The state received 1,210,008 applications — more than double the initial projected eligible worker pool— and approved payments of $487 for just over 1 million workers.

Yes, but: An Office of the Legislative Auditor (OLA) review of applications found that 40% of those approved either didn't meet the criteria set in state law or couldn't be independently verified as eligible for the cash.

Zoom in: The OLA's report details missteps by the Department of Labor and Industry and the Department of Revenue, including greenlighting applications that "contained fraud indicators" and failing to use state tax records to verify whether workers met income requirements.

• The audit found examples of applicants using the same identification number twice to receive duplicate payments and listing employers outside the state.
• Thousands of dollars in the OLA's sample went to applicants who submitted on behalf of people who were already dead.

The other side: Labor Commissioner Nicole Blissenbach disputed some of the audit's findings in a written response, saying the agency "implemented an extensive fraud prevention program that deterred, identified, and prevented payments to fraudulent applicants."

Between the lines: Defenders also pushed back on OLA's use of an employer survey as part of its audit, arguing that those responses shouldn't trump applicants' claims about factors like whether they were allowed to telework.

• DFL Rep. Emma Greenman said at a hearing that lawmakers designing the program were working quickly to get the aid out and trying to balance preventing fraud by creating a process that limited barriers for eligible workers.

What they're saying: House GOP Leader Lisa Demuth condemned a "blatant acceptance of fraud" and blasted Democrats for rejecting GOP-proposed amendments to prevent misuse of the funds.

• DFL Sen. Ann Rest also criticized the program's implementation, saying that turmoil does not excuse basic due diligence, like checking tax records for income requirements.

What we're watching: The OLA recommended that agencies review all the applications flagged as containing fraud indicators and try to recoup money from recipients who shouldn't have been eligible.

• It said lawmakers should weigh "the amount of risk the state is willing to accept when establishing programs quickly."