Legislative auditor: 53% of examined recommendations implemented under House File 3 follow-up

ST. PAUL — Legislative Auditor Judy Randall told the House State Government Finance and Policy Committee on April 7 that the office’s first annual recommendation-update, required by House File 3, shows agencies implemented about 53% of the recommendations the auditors examined, partially implemented 28% and had not implemented 19%.

Randall described the report as a rolling review that combines findings from financial audits and program evaluations and said the legislative change authorizing the follow-up added two full-time positions to allow independent verification, including sampling agency records to confirm claims of implementation.

"We reach out to agencies, ask them to report back on recommendations and then independently test a sample," Randall said, describing categories used in the report: implemented, partially implemented, not implemented, not applicable, and work needed to determine. She said the office is still building the process and will expand the look-back each year until it covers the five-year period required by law.

Committee members asked about several recurring issues raised in the update. Representative Kraft asked whether some unimplemented recommendations were impossible to satisfy because of statutory constraints; Randall said, based on a preliminary skim, she had not found any recommendations agencies said were impossible to implement, though implementation can be delayed by contract cycles or timing.

Representative Anderson and others pressed about limitations caused by the new office’s startup schedule and staffing, noting auditors could not begin hiring and field work until mid-summer; Randall said those constraints limited how deeply the office could test some items this cycle and that some topics might require full re-evaluations beyond the follow-up scope.

Several members urged auditors to add context and risk prioritization to future reports so legislators can better distinguish low-risk partial implementations from serious control gaps. Representative Honor pointed out apparent duplication where the same operational shortfall appears as separate recommendations across multiple agencies (for example, software capability gaps), and asked that the office flag related items and assess relative risk.

The deputy legislative auditor for program evaluations, who appeared to address grant management examples, said the office found progress reports often lacked detail or were not submitted and that monitoring visits were sometimes conducted by phone. The office recommended requiring on-site monitoring for larger grants and clearer standards for progress reports.

Representatives also discussed federal versus state grant requirements. The auditor said federal rules can be more detailed about allowable administrative costs and reclaiming misspent funds, but cautioned that imposing federal-style controls on state-only grants would need a nuanced approach.

Members requested clearer accounting rules in the report (for instance, whether recommendations addressed to more than one agency should be counted once or multiple times) and asked for better documentation when an agency believes it has achieved a recommendation’s intent by different means. Randall said counts in this cycle reflect agency responsibilities and that future editions could better note when the "spirit" of a recommendation is met through alternative practices.

Agency officials represented by the deputy commissioner for Minnesota Management and Budget said they value the coordination and the added scrutiny, and that the follow-up reports can help focus agency efforts and inform budget deliberations.

The committee discussion also flagged specific control examples in the report — including an unrecovered vendor overpayment highlighted by Representative Joyce — as instances that warrant follow-up. Randall and committee members agreed the report is a work in progress that should be refined to provide clearer priorities and more accessible context for legislators.

The committee did not take formal action on the report and adjourned after the discussion. The auditor said future reports will roll forward another year of recommendations until the statutory five-year look-back is completed.