Minnesota moves toward creating an independent fraud watchdog

How it would work: The nonpartisan office would have the authority to investigate allegations of fraud across all state agencies and develop best practices to prevent future misuse of public funds.

• Its leader, the inspector general, would be appointed by the governor following recommendations from legislators.

Zoom in: The legislation allows the office to create its own law enforcement agency to investigate financial crimes starting in 2028.

• Until then, it could work with the Bureau of Criminal Apprehension.

Follow the money: The legislation's price tag for launching the office is about $20 million over the first few years, though a fiscal analysis projects that the total cost across all state agencies would be even higher.

Friction point: Debates over who would pick the inspector general and how much power the position would have slowed the bill's journey through the tied House, even after a similar version cleared the DFL-majority Senate with broad bipartisan support last year.

What they're saying: DFL Rep. Matt Norris, a co-author of the bill, told Axios that the final product makes meaningful strides toward curbing future fraud and "encouraging confidence in the public that their tax dollars are being used responsibly."

• "This is a bill that all four caucuses are behind, and it's something that is greatly needed by Minnesota," Rep. Patti Anderson, the GOP co-author, added at a recent committee hearing.

Reality check: Not everyone thinks creating a singular new office will be a cure-all.

• "It seems like an impossible task, just being really candid here," Legislative Auditor Judy Randall told a committee recently, noting that the staff would need to develop expertise in thousands of programs to be effective.
• She and others have pointed out that some agencies, including the embattled Department of Human Services, already have their own inspector general.

Those roles will remain under the new law, Norris noted to Axios, and could work with the centralized OIG office.

State of play: The OIG bill is among several fraud-related bills moving through the Legislature.

• Another proposal that would give the Attorney General's Office more authority to investigate Medicaid fraud passed the Senate and is headed toward a floor vote in the House.

Yes, but: Others, including legislation giving state agencies more power to stop payments when fraud is suspected, have faced more resistance.

• Senate Majority Leader Erin Murphy (DFL-St. Paul) said last week that some members of her caucus are concerned about "due process" for legitimate providers under that bill, which sailed through the House.
• A separate DFL-backed proposal to prevent people who defraud the state from getting money from another agency stalled in a House committee due to opposition from Republicans, MPR News notes.

The intrigue: Thursday's vote follows last week's federal raids on over a dozen child care and autism centers, and another leadership shakeup at the Department of Human Services, which oversees many of the fraud-plagued programs.

• Gov. Tim Walz moved DHS commissioner Shireen Gandhi to another role on Monday, a day before her scheduled confirmation hearing.
• Multiple reports suggest she didn't have the votes to clear the DFL-controlled committee.
• John Connolly, the state's Medicaid director, will step in as interim commissioner when he returns from a leave related to cancer treatment next month.

What's next: If the bill passes the House, the Senate must approve the updated version by May 17. Walz has said he will sign it.

What we're watching: The bill calls for appointing an inspector general by February, with the office launching by September 2027.

• That means the next Legislature could have time to tinker with the plan before it gets off the ground.