Report will examine Minnesota Department of Education’s oversight of money in Feeding Our Future case

A report is expected to be released Thursday reviewing the state’s oversight of federal funds that were allegedly stolen in the Feeding Our Future case. It comes a week after five defendants were convicted in the case’s first trial.

The report will examine the Minnesota Department of Education’s (MDE) performance in monitoring Feeding Our Future’s participation in federal food aid programs and evaluate if the agency could or should have done more to stop the fraud.

Federal prosecutors allege that 70 defendants stole $250 million in federal funds that were designated to feed underserved children during the COVID-19 pandemic.

The report will be released at 9 a.m. Thursday and presented to the Legislative Audit Commission at 1 p.m.

The Office of the Legislative Auditor began its report on MDE’s oversight in September 2022, according to special reviews director Kathleen Theisen. The special review unit does not require a request from lawmakers to commission a report. The unit typically audits cases examining whether state agencies properly complied with legal requirements involving public dollars.

“It took a lot of resources to get it out across the finish line,” Theisen said.

Jurors in federal court convicted five defendants on June 7 of crimes connected to defrauding the federal nutrition programs. Two other defendants were acquitted in the joint trial. That case, which was the first to go to trial, is one of several rings of suspects allegedly falsifying the number of children they reportedly fed in order to receive reimbursement from the federal government.

The first batch of defendants in the case were indicted in September 2022 , and others followed. Eighteen defendants have pleaded guilty in the case and await sentencing.

The Minnesota Department of Education (MDE) serves as the state administrator for federal food-aid programs and distributes funds to sponsor organizations like Feeding Our Future and Partners in Quality Care. The sponsor organizations then disperse those funds to food vendors and food sites, which were supposed to provide ready-to-eat meals to local children.

Several organizations in the Feeding Our Future case reported serving thousands more meals than they actually did — or simply never served any meals at all — in order to receive more federal funds, prosecutors say.

Prosecutors credited MDE with alerting the FBI and federal agencies about Feeding Our Future. But several Republican state legislators criticized MDE for not visiting food sites during the pandemic to put an end to the fraud sooner. Federal regulations require MDE to visit some food sites as part of how it monitors the food program, but the regulations were waived during the pandemic. Instead, MDE conducted audits remotely during this time, and maintains that it caught the fraud this way.

Emily Honer, director of nutrition program services at MDE, testified for three days at the recent seven-week trial, detailing the department’s efforts to flag and stop suspicious sites sponsored by Feeding Our Future. Honer testified that she first suspected fraud in April 2020, and subsequently reported Feeding Our Future and Partners in Quality to the U.S. Department of Agriculture that summer and to the FBI the following spring.

Public school districts typically accessed both federal food-aid programs to feed children. School shutdowns during the COVID-19 pandemic, however, created an opening for more independent after school programs and daycare organizations to access the programs. Feeding Our Future received $3.4 million in federal food-aid money in 2019, $43 million in 2020 and $198 million in 2021.

In March 2021, MDE attempted to clamp down on Feeding Our Future, finding “serious deficiencies” in their applications from food sites seeking to participate in federal food programs. But Feeding Our Future sued the state to keep funds flowing. Ramsey County District Court Judge John Guthmann ruled in favor of Feeding Our Future in July 2021, and held MDE in contempt for failing to process applications in a prompt manner. Guthmann fined the state more than $47,000.

The Minnesota Senate education committee released its own report on MDE’s oversight in September 2022 , which faulted the department for not following state and federal laws in administering food-aid programs.

Staff writer Joey Peters contributed to this report.

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