Labor Department Inspector General Questions $210 Million in Minnesota Job Grants After State Agency Withholds Data
The U.S. Department of Labor’s Office of Inspector General has questioned more than $210 million in federal job-training grants to Minnesota as “unsupported costs” after the state’s employment agency did not turn over the data auditors asked for, according to an alert memo the office issued last month.
The memo, dated Sept. 29 and addressed to the Labor Department’s Employment and Training Administration (ETA), says the Minnesota Department of Employment and Economic Development (DEED) did not provide participant-level data for 26 grants totaling $210,866,865, despite “numerous requests over nearly 4 months.” The inspector general’s office closed the audit as a result, but said it could reopen it if the data is provided.
The memo is careful about what that means. “While DEED’s failure to provide the participant-focused data does not, by itself, establish that over $210 million was misspent,” auditors wrote, “it raises significant concerns regarding its compliance with grant requirements and its stewardship of federal funds,” the memo says.
WHY THE MINNESOTA DEED AUDIT WAS CLOSED
According to the memo, the inspector general’s office notified DEED on March 26 that it was auditing 48 grants active between Oct. 1, 2023, and April 1, 2026, worth about $253 million in all. The grants fund programs for adults, laid-off workers, young people and older workers, among others.
DEED provided data for nine employer-focused grants, the memo says, but none for the 26 participant-focused grants. Auditors wrote that they needed that data to check whether reported participants existed and were eligible, whether they received the training and services reported, and whether reported jobs and wages were accurate.
The memo says DEED officials wanted to confirm the inspector general’s legal authority and make sure the data would be protected. DEED sent a draft data-sharing agreement on June 25, according to the memo, and answered the inspector general’s feedback on July 24 with “another round of edits and questions” instead of a signed agreement or the data. The inspector general’s office says no such agreement is required under federal law.
Auditors also questioned a separate $31,871 grant for a fidelity bonding program, saying DEED did not keep documents supporting the eligibility of the people it served. The memo also cites a 2025 report by Minnesota’s Office of the Legislative Auditor that found weaknesses in how DEED managed state workforce grants.
WHAT MINNESOTA AND THE LABOR DEPARTMENT SAY
DEED told the New York Post the requests were too intrusive. “OIG requested sensitive private information involving more than 30,000 Minnesota residents and workforce program participants,” the agency said in a statement to the Post. It said it “takes seriously its responsibility to administer federal workforce programs and cooperate with appropriate oversight,” but takes “equally seriously our responsibility to protect private information entrusted to us by Minnesotans.”
Labor Inspector General Anthony D’Esposito accused Minnesota of “deliberate obstruction,” the Post reported. “We will not allow this defiance to enable fraud or to cheat American workers,” he said in a statement quoted by the Post.
The inspector general recommended that ETA formally find Minnesota in noncompliance and recover or verify the money. In its written response, included in the memo, ETA agreed that states must give auditors access to their data and said it held conversations with senior DEED leadership on Sept. 14 and 16.
But ETA also pushed back on the size of the problem. “Current evidence does not substantiate blanket misspending of $210,866,865,” the agency wrote, adding that more evidence of noncompliance or unsupported costs would be needed before it considers remedies.
Sources: U.S. Department of Labor Office of Inspector General alert memo, report no. 02-26-002-03-391 (Sept. 29, 2026), including the Employment and Training Administration’s response; New York Post (Oct. 16, 2026). https://www.oig.dol.gov/public/reports/oa/2026/02-26-002-03-391.pdf ; https://nypost.com/2026/10/16/us-news/labor-department-watchdog-concerned-minnesota-employment-agency-misspent-210m/
Comments