What We Know
On Friday, January 3rd, Governor Walz signed an executive order and proposed legislation to identify and stop the theft of public money from public programs. The executive order, which immediately goes into effect, creates a specific fraud unit at the state’s Bureau of Criminal Apprehension and gives state agencies greater authority to stop payments to entities if there is suspicion of fraudulent activity. Recent cases of alleged and confirmed fraud of state dollars were conducted by individuals tied to for-profit and nonprofit entities.
The Governor is also proposing a package of reforms, all of which would need to go through the legislature. There is very little information available on the specifics of these proposals, and we likely will not see specifics unless they are introduced as bills at the legislature. If any of the proposals is introduced, there will be opportunities to provide input throughout the legislative session, which starts January 14 and will end in May.
Components of the package include:
- Stiffer penalties for those convicted of fraud.
- Give the Attorney General additional investigative authority.
- Give the Department of Administration increased debarment authority to disallow an organization from receiving state funding from 3 years to 5 years.
- Create a pilot program to analyze data to better flag suspicious trends in payments.
- Expand capacity to ensure proper billing of state program dollars and prevent fraud.
More: Gov. Walz proposes stiffer penalties, using AI to fight fraud in Minnesota programs, Minnesota Reformer
MCN’s Reaction
The Minnesota Council of Nonprofits (MCN) is in full agreement that state funds must be used for their intended purpose. Any individuals who commit fraud, which MCN defines as willful intent to deceive the government for personal gain, should be prosecuted.
Nonprofits rely on public trust to carry out their charitable missions.
While MCN was given short notice these proposals were coming, we want to be clear that MCN has not seen or been consulted on the full details of the proposed legislation. Once it is released, we will be consulting with members, lawmakers, and nonprofits often marginalized to ensure these proposals are not a shortcut to undermine funding of critical services for people and communities most in need.
State grantmaking is not a handout, it is the state contracting for services in pursuit of broader shared goals. Nonprofits are a crucial part of state infrastructure and are called on to utilize their expertise and relationships to deliver key services on behalf of the state.
As we move forward, MCN will be grounding our analysis, response, and advocacy efforts in our values of ending disparities in power, money, access, and resources within the nonprofit sector and government decision-making. Data tells us current processes for state grantmaking results in inequitable funding outcomes, especially for communities of color, rural, and under-resourced organizations.
If nonprofits are not consulted in the development of new policies, inequities could get worse.
While details are still unclear, have confidence that MCN is monitoring the situation and is ready to advocate, collaborate, and center nonprofit voices in this shifting legislative landscape.
Stay tuned for updates.