Minnesota Department of Education Slammed for Inadequate Oversight in Feeding Our Future Fraud Scheme

(KNSI) – The Office of the Legislative Auditor issued a report slamming the Minnesota Department of Education and its handling of the fraud that ran rampant within the federally funded child nutrition programs during the COVID-19 pandemic.

The MDE oversaw the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP). They reimburse meals and snacks at child-care centers, afterschool programs, summer camps, and adult day care centers. However, taxpayer funds meant to support these programs were allegedly misused by 70 individuals for personal gain. The federal government identified the Minnesota nonprofit organization Feeding Our Future at the center of this $250 million scheme.

Until early 2022, Feeding Our Future sponsored the CACFP and the SFSP. Sponsors, including school districts, child care programs, and nonprofits like Feeding Our Future, manage sites where meals and snacks are served.

Federal regulations tasked MDE with monitoring and enforcing compliance with program requirements for Feeding Our Future. This included providing guidance and training to staff and terminating participation if necessary. However, the OLA’s findings revealed that MDE’s oversight was inadequate, potentially facilitating the fraud.

The report says the MDE ignored warning signs before the COVID-19 pandemic and the start of the alleged fraud. They are also accused of failing to hold Feeding Our Future accountable to program requirements. The OLA says officials with the education department, including Commissioner Willie Jett, were unprepared to address the organization’s issues.

Under federal law, the MDE is responsible for regularly overseeing sponsors participating in the CACFP and the SFSP. Key oversight activities include reviewing and approving annual sponsor applications and conducting monitoring visits and compliance reviews, known as “administrative reviews.” In 2018, MDE conducted its only administrative review of Feeding Our Future’s CACFP operations, which resulted in serious findings requiring follow-up. However, the MDE never conducted a follow-up review.

COVID-19 pandemic-related waivers modified monitoring requirements for state agencies and sponsors, encouraging offsite reviews and alternative oversight forms. However, MDE’s offsite monitoring of Feeding Our Future was limited. The OLA says the MDE should emphasize program integrity and risk-based monitoring if oversight requirements are waived again in the future.

Between June 2018 and December 2021, the MDE received at least 30 complaints involving Feeding Our Future or its sites. Despite their frequency or seriousness, the MDE is accused of not investigating some complaints about Feeding Our Future, and when it did, the investigations were inadequate. The report says many of MDE’s complaint investigation procedures and practices were inappropriate or of limited usefulness, especially given the context of the alleged fraud.

Although the MDE had written complaint investigation procedures, their limited scope and failure to address critical issues undermined effective investigative practices. Additionally, MDE inappropriately asked Feeding Our Future to investigate complaints about itself. By law, state agencies must promptly investigate complaints or irregularities related to the CACFP and the SFSP.

If MDE finds a sponsor noncompliant with federal law in administering CACFP or SFSP, it must declare the sponsor “seriously deficient.” This process allows sponsors to correct deficiencies, but if a sponsor is unwilling or unable to do so, MDE can terminate the sponsor’s participation in the programs. However, the OLA says the MDE’s failure to strengthen and exercise its authority to deny applications compromised the integrity of the programs. MDE did not address perceived limits to its authority well before the COVID-19 pandemic. Despite unresolved concerns and not always verifying statements made by Feeding Our Future, the MDE approved the program applications anyway.

MDE found Feeding Our Future seriously deficient on two occasions but deferred all serious deficiencies without ensuring the organization implemented corrective actions.

In a letter dated June 7th, 2024, Commissioner Jett addressed concerns about the MDE’s oversight. He stated, “MDE disputes the OLA’s characterization regarding the adequacy of MDE’s oversight – MDE’s oversight of these programs met applicable standards and MDE made effective referrals to law enforcement.” Commissioner Jett added, “What happened with Feeding Our Future was a travesty – a coordinated, brazen abuse of nutrition programs that exist to ensure access to healthy meals for low-income children. The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters.”

Between September 2022 and February 2024, the U.S. Department of Justice charged 70 individuals with various financial crimes related to their roles in the scheme. Late last week, five of seven defendants were found guilty on several charges.

Commissioner Jett emphasized MDE’s commitment to program integrity and strong fiscal oversight. He noted that the department has “independently implemented changes to strengthen oversight,” including the establishment of an Office of Inspector General, the addition of a General Counsel’s Office, staff training on updated fraud-reporting policies, and contracting with a firm to conduct financial reviews of certain sponsors, among other measures.

The OLA says the MDE cooperated fully with the review and appreciated their assistance.

Read the full report here.

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