Future of independent Office of Inspector General to fight fraud uncertain as Minnesota lawmakers clash over what it should look like

Republicans and Democrats alike in the Minnesota Legislature say fighting fraud in public programs is a top priority this session.

But one potential solution, an independent Office of Inspector General, faces an uncertain future as lawmakers clash over what the new watchdog agency should look like. 

The measure would create a nonpartisan OIG to investigate fraud, waste and abuse and empower it with subpoena authority and establish a law enforcement division within it. It passed the Senate with broad bipartisan support last year on a 60-7 vote, but did not clear the House before lawmakers adjourned. 

On Thursday, a House panel scheduled the bill for a hearing. DFL Rep. Matt Norris brought forward an amendment making changes to that initial Senate plan backed by House Democrats, including revisions that would change how the OIG is appointed and remove those law enforcement powers.

He said that would amount to duplicative work that the Bureau of Criminal Apprehension's Financial Crimes Division is already doing. 

"It just makes sense. While we're giving the OIG so many absolutely essential tasks to catch and prevent fraud across state government, why would we also task it with work other law enforcement is already doing," Norris said. 

Those changes ultimately failed in committee on a party-line vote after Republicans rejected them, leaving the bill in limbo for now. GOP lawmakers said they weren't consulted on the amendment and did not get a chance to see it before it was brought up in committee.

Republicans also have concerns that the updates would "water down" the OIG and nullify key parts that would make it effective.

Sen. Heather Gustafson, the lead Democrat author of the bipartisan plan in the Senate, said she wasn't involved in making the changes presented Thursday but noted that they "reflect ongoing differences about the structure of the Office of Inspector General" in the Legislature. 

She supports the original bill.

Her co-author, GOP Sen. Michael Kruen, described the law enforcement authority as a "critical" component of the legislation. He said he trusts the BCA to work with the OIG, but that independent law enforcement is imperative. 

"It was overwhelmingly supported by Republicans and Democrats. It's what puts the teeth into that office," Kruen said at a news conference. 

"It's for independence and this law enforcement division within the OIG, of course, should work hand in glove with the BCA, and our bill contemplates that. I would expect that to happen. But it needs to have its own independent law enforcement division," he added. 

He and Gustafson are both optimistic that the legislation will still advance in the House with bipartisan support. But they acknowledged that while the proposal might still be eligible for discussion this year, it is facing setbacks. 

House DFL Leader Zack Stephenson told reporters that he didn't think Republicans' characterizations of the Norris amendment — that it lacked teeth and "gutted" the original plan — are fair. 

He thinks there is still a path forward. 

"I think that's still a very impactful bill that has a lot of independence in it and has a lot of enforcement in it," Stephenson said. 

House Speaker Lisa Demuth noted that Gov. Tim Walz, in his State of the State address last year, asked lawmakers to send the OIG bill to his desk. Walz again earlier this week told reporters he would sign it if it came to his desk. 

"We're in a tied house and so it is literally up to Democrats if they want to pass this bill or not," she said.