Committee report: Management and Budget & Office of Grants Management

Minnesota Management and Budget & Office of Grants Management Hearing Date: Wednesday, January 21, 2026106

Background:

The Minnesota Management and Budget office (MMB), among other roles, has the authority and responsibility to oversee and ensure that executive branch agencies have adequate internal controls, follow those controls, and properly manage taxpayer money.

The Office of Grants Management (OGM) has the authority and responsibility to ensure that Minnesota’s grant programs are properly and efficiently run, and that fraud is prevented and detected in grant programs. When properly run, MMB and OGM hold the executive branch accountable for negligent and intentional actions related to fraud and mismanagement.

Over the last several years, the Office of the Legislative Auditor (OLA) has routinely found serious deficiencies in internal controls and grants management across executive branch agencies. The Committee wanted to hear directly from the MMB and OGM because they collectively have the statutory responsibility for maintaining internal controls and compliance in programs, contracts and grant agreements across all state agencies.

Weeks before the hearing, on January 6th, 2026, the OLA released a performance audit of the Behavioral Health Administration (BHA) grants administered by DHS.107 The report detailed widespread failures of internal controls, unreliable documentation, and, shockingly, falsification and backdating of documents by DHS employees.

The Committee heard testimony from the Commissioner of MMB and Deputy Commissioner of OGM about their response to this and other issues.

Finding: MMB has statutory responsibility for internal controls across executive branch agencies but has failed to enforce policies or exercise any actual oversight of state agencies. Instead, MMB relies on self-attestation from agency heads.

In 2009, the Minnesota Legislature enacted section 16A.057,108 which sets out the responsibilities MMB has to regulate the internal controls of all executive branch agencies. Pursuant to this statute, MMB is required to coordinate the design and implementation of a system of internal controls that accomplishes the following objectives:

(1) Safeguard public funds and assets and minimize incidences of fraud, waste, and abuse.

(2) Ensure that programs are administered in compliance with federal and state laws and rules.

106 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 1/21/2026. 107 Office of the Legislative Auditor, Department of Human Services: Behavioral Health Administration Grants, Performance Audit, Jan. 6, 2026. 108 Minnesota Statutes section 16A.057.

(3) Require documentation of internal control procedures over financial management activities, provide for analysis of risks, and provide for periodic evaluation of control procedures to satisfy the commissioner that these procedures are adequately designed, properly implemented, and functioning effectively.

MMB is then required to “take appropriate steps to address internal control problems” and report to the Governor and Legislative Auditor on issues with executive branch internal controls. In turn, MMB created the Internal Control and Accountability (ICA) unit, which is currently staffed by five internal control specialists and one Finance Services Director, to fulfill its statutory obligations.

In the Committee hearing, Chair Robbins asked the MMB Commissioner about its effectiveness in performing its fraud-prevention role:

Chair Robbins: “You create systems and rely on the agencies to manage those systems. We talked about how the agencies are required to do this sign off on internal controls. So, I wonder, if you’re setting up all the templates, all these processes, and then the agencies sign off on it, but within those agencies there is rampant fraud… when these agency heads sign off, and yet there's indictments, convictions, known fraud, what do you do to hold them accountable?”

Commissioner Campbell: “This is not an area we have delegated authority, we don’t have the stick that you’re referencing. What we do is work hard to support them, to provide them tools and resources, to set them up for success along the way.”

Chair Robbins: “So you view your role as supporting agencies to do their job, but not holding them accountable?”

Commissioner Campbell: “We do not have a tool to hold agencies responsible.”

Chair Robbins: “What would that tool be, what do you need? Because under statute that is your responsibility for internal control.”

Commissioner Campbell: “I know you’re asking the question of what do we need to hold agencies accountable. I would view that differently, and that would be to say what do we need for agencies to be successful in doing this.”

Finding: The MMB Commissioner misunderstands her statutory authority and responsibility.

Minn. Stat. 16A.057 requires MMB to oversee internal controls, train agencies, “take appropriate steps to address internal control problems” identified by the OLA, and report to the Governor and Legislative Auditor on issues with executive branch internal controls.

This is more than sufficient statutory authority to demand sufficient internal controls and hold the executive branch accountable. The Committee was shocked to hear that the primary way the Commissioner of MMB allegedly carries out her statutory responsibility for ensuring

adequate internal controls across all agencies was reliance on an annual certification process and use of the Control System Assessment Tool (CSAT).

Clearly, the MMB Commissioner’s limited view of her role has failed to prevent, detect, or document the theft of over $9 billion in taxpayer money at DHS and untold billions more in SNAP, CCAP, DEED and other programs. Robust internal controls, annual audits of each agency, thorough training, and comprehensive annual program reviews would have prevented or at least uncovered much of that fraud.

Finding: The annual certification process employed by MMB should require agencies to analyze the growth in spending, providers and recipients versus what had been anticipated by the fiscal note or budget projection. Any anomalies should be flagged and reported to the Governor, agencies, and committees of jurisdiction in the Legislature. Agencies should be held accountable for immediately investigating and taking appropriate action to stop fraud.

Unfortunately, all the Commissioner of MMB currently requires is self-attestation on forms.

Finding: The Office of Grants Management, which is responsible for oversight of the grant making process, has done next to nothing to prevent fraud.

The Office of Grants Management (OGM), which is part of the Department of Administration (DOA), was created in 2007 in response to oversight failures identified by an OLA report titled State Grants to Nonprofit Organizations, which outlined the poor oversight over the grant making process especially for legislatively-named grants.109 Minn. Stat. 16B.97 through 16B.991 gives OGM substantial oversight tools and responsibility over the grant making process.

The Committee heard testimony from Dept. of Administration leadership. In her presentation, Commissioner Gronvall stated that Minnesota’s grant management system is decentralized, with agency heads responsible for the grants they create.

Using an example from a recent OLA report on Behavioral Health Administration (BHA) grants,110 which found that DHS employees had falsified and backdated documents, Chair Robbins questioned how OGM manages their oversight responsibilities:

Chair Robbins: “You have a policy against falsifying documents, so when that policy was violated in this instance what are you doing about it?”

Deputy Commissioner Christensen: “If there is a policy violation, similar to what MMB was discussing, there is not an enforcement mechanism that the Department of Administration has.”

Chair Robbins: “So what kind of enforcement mechanism do you need?”

109 Office of the Legislative Auditor, State Grants to Nonprofit Organizations, Evaluation Report, Jan. 2007. 110 https://www.auditor.leg.state.mn.us/fad/pdf/fad2601.pdf

Deputy Commissioner Christensen: (No response.)

Chair Robbins: “To me this is the crux of the problem. We have one agency responsible for grants, one agency responsible for all the other finances of the state. And in both cases you have a lot of policies, a lot of procedures, but when they are violated nobody does anything."

Similar to the OMB, the DOA Commissioner and Deputy Commissioners misunderstand their statutory authority and responsibilities. Minn. Stat. 16B.97 provides significant and sufficient power to the DOA to hold executive agencies accountable.111 In 16B.97, the Commissioner has the power to:

administration

improvements”

three years”

And, in Section 16B.97, Subd. 2, the Commissioner is given the following authority:

Sub. 2. Grants governance. The commissioner shall provide leadership and direction for policy related to grants management in Minnesota in order to foster more consistent, streamlined interaction between executive agencies, funders, and grantees that will enhance access to grant opportunities and information and lead to greater program accountability and transparency. The commissioner has the duties and powers stated in this section. Executive agencies shall fully cooperate with the commissioner in the creation, management, and oversight of state grants and must do what the commissioner requires under this section. The commissioner may adopt rules to carry out grants governance, oversight, and management.”

Despite these broad and comprehensive grants of authority, the Deputy Commissioner stated that “there is not an enforcement mechanism that the Department of Administration has.” This is obviously incorrect and a dereliction of duty.

The Commissioner and Deputy Commissioner’s failure to understand their roles and conduct proper oversight has cost the state untold amounts of money.

Finding: The Office of Grants Management employs a grant manager who is also an owner of a tax-payer funded sober home, which is facing fraud allegations and is run by associates of a convicted fraudster.

The Committee received multiple whistleblower reports concerning a taxpayer-funded Substance Use Disorder (SUD) treatment facility called Access Healing Center. After investigating, the

111 Minnesota Statutes section 16B.97

Committee determined that the whistleblower complaints were credible, and that one of the owners is Lul Osman, a grant manager at OGM.

The Committee found that the three owners of the facility had ties to other concerning individuals and businesses, as well as to convicted fraudster Mukhtar Shariff. Two of the owners, Hibat Sharif and Musab Abdulkadir, were mentioned in a Kare 11 investigation of an Adult Rehabilitative Mental Health Services (ARMHS) provider called Community Care Partners.

Sharif and Abkulkadir appeared on purchasing documents provided by the company’s previous owner. The Kare 11 report detailed allegations from an individual claiming the company billed her without providing services.112 One of the owners, Hibat Shariff, also worked with Mukhtar Shariff to found Somali North American Business and Professionals (SNABPI), an association of Somali business owners that holds conferences across the world. The third owner was Lul Osman, who has been a grant manager for the Office of Grants Management since 2019.

Our investigation made similar findings regarding Access Healing Center as did Kare 11.113 It found whistleblower tips that alleged abuse, poor programing, falsified billing records, and attempts to dissuade a client to not contact DHS regarding maltreatment in the facility. Access Healing Center also has ties to the non-profit Greater Minneapolis Council of Churches for which Sharif is employed as a program director.

The Committee reached out to the Department of Administration with questions about Ms. Osman’s employment and what grants she is responsible for overseeing. OGM did respond to our initial request, and we are continuing our investigation. Ms. Osman and Access Healing Center have not been charged with any crimes, but the questions raised by whistleblowers, our investigation and the KARE 11 story raise a number of red flags that mirror previous patterns we have seen.

We hope DHS and our federal partners are thoroughly investigation all of the interconnected businesses for additional anomalies in billing, ensuring those billed are actually receiving services, and verifying ownership.

112 A.J. Lagoe, “KARE 11 Investigates: Company Billed Medicaid for Client It Never Met,” KARE 11, Nov. 6, 2025. 113 A.J. Lagoe, “KARE 11 Investigates: Hidden Ownership Ties, Millions in Medicaid Billing, Allegations of Fraud,” KARE 11, Apr. 22, 2026.

Summary

The Legislature created the Management and Budget Office (MMB) and Office of Grants Management (OGM) to provide oversight of executive branch agencies and minimize the risk of fraud. In so doing, it gave MMB and OGM substantial authority to oversee and direct executive branch actions. Given the significant expansion in the number of programs and the growth in the state budget under the Walz Administration, these roles are a critical part of Minnesota’s defense against fraudsters.

Unfortunately, the leaders of MMB and the Dept. of Administration, where OGM is housed, have utterly failed in their duties to the citizens of Minnesota. They viewed their role as supportive consultants, rather than providing actual oversight of internal controls in state agencies and grant programs.

This is willful neglect of their statutory responsibilities, and Minnesotans have suffered as a result.