Legislative update

Dear Neighbor

Greetings from the House, where this week started off with a bang in the Fraud Prevention and State Agency Oversight Policy Committee. Here’s a look at that and more recent developments at theCapitol:

Treatment Center Fraud

On Monday, the Fraud Prevention and State Agency Oversight Policy Committee questioned the Department of Human Services (DHS) leadership about rampant fraud occurring under the agency’s watch. In particular, we zeroed in on addiction treatment centers such as Evergreen Recovery, NUWAY and the Refocus Recovery/Kyros partnership that have been the subjects of investigative reports highlighting misuse of tax dollars. As I mentioned during the hearing, one treatment staffer billed 203 hours in one day. This is egregious.

We need to crack down on Medicaid fraud and the bad actors must face serious consequences. House Republicans continue working on legislation to make this happen. Click the above image for news coverage of this hearing.

Exorbitant non-profit salaries

My last newsletter touched on the important oversight role the Subcommittee on Employer Relations (SER) played in Minnesota before Democrats gutted it. I’d like to get into that subject a bit more today, with real-life examples.

Let’s start with Second Harvest Heartland, which paid its CEO more than $721,000 in 2022, the most recent year for which data is available. Its top 10 staffers all receive larger salaries than the governor’s $127,629 salary that year (above image).

Page 9 of this of this report shows Second Harvest Heartland get $6,093,617 from government grants, which is 2.67% of their cash revenue, and 2.34% of their total revenues (including noncash contributions and earnings).

One thing that strikes me is that Second Harvest Heartland has nearly as much total revenue ($260 million, pictured at right) in one year as the Department of Agriculture’s all funds (general fund + dedicated revenue) budget for two years ($272 million). Yet House Democrats are bemoaning the fact we are looking at trimming $450,000/year from their $1.7 million/year base funding at a time the state faces a $6 billion shortfall.

The House Ways and Means Committee discussed Second Harvest Heartland on Monday as we examined the agriculture section of the state’s budget. I addressed the exorbitant Second Harvest Heartland salaries and you can click on the below image for that clip.

But, wait, Second Harvest Heartland is not the only non-profit with out-of-line salary structure. There are plenty of others. For example, in examining their most recently available audited financial statements from 2022, I learned Lutheran Social Services (LSS), gets 87% of its revenue from state government, aka taxpayers. Meanwhile, the organization’s president made $420,000 that year. In all, 10 LSS employees once again earned more than the governor.

Here is a pie chart showing SLL revenue vs. expenses:

And here are audited financials showing revenue sources and the salary structure for SLL:

Another interesting point of information: LSS spends $200,000 a year counseling people who are defaulting on student loans – less than half of what the organization is paying its president.

Officials from the Office of the Legislative Auditor indicated during a recent meeting of the Fraud Prevention and State Agency Oversight Policy Committee that Minnesota has 2,500 nonprofits similar to LSS that receive taxpayer funds. The OLA also broke down how many nonprofits are funded by more than one state agency, revealing LSS receives money from 10 – TEN! – state agencies.

It is outrageous to me that an outfit receiving nearly all its funding from taxpayers has such a bloated salary scale. How big is this problem? Who knows, but Democrats spent or they gave nonprofits $2.4 billion when they were in full control of the Capitol, with almost a complete absence of accountability like this.

Nobody in any of the committees I've served on in my 13 years at the legislature has taken a real look at 990s and audited financials that provide the key information about what nonprofit executives are being paid and what percentage is coming from taxpayer sources. Until now.

I addressed this subject during a Higher Education Finance and Policy Committee meeting this week and House Democrats were falling all over themselves defending nonprofits paying huge salaries. I’m sure LSS does some good work, but this isn’t exclusively about that organization. They are just one example of a larger, systemic issue that is draining Minnesota taxpayers.

Let’s stop with the excuses and acknowledge our state needs to provide nonprofits with stronger oversight. That’s where the old SER comes into play because it used to have a salary caps for all government employees. Whether you were local government or state government, you had to get an exemption from the legislature in order to pay anybody more than the governor.

I am working to draft a bill so we can restore oversight power to the SER to protect taxpayers.

Whistleblower Bill passes

A House Republican bill providing whistleblower protections for state employees who report government fraud and the misuse of state or federal funds recently passed the House 133-0. This legislation reinforces transparency and accountability in state government by ensuring public employees can report misconduct without fear of retaliation. This is just one more angle we can take to crack down on fraud, waste and abuse in Minnesota.

Monticello Water Project

Thank you to the Capital Investment Committee for having a hearing on legislation I have authored to help Monticello mitigate manganese contamination in its city water. The city previously received $11 million for this work and my bill requests another $10 million to help defray the local cost of this $45 million project. My bill was well received and thank you to Monticello City Administrator Rachel Leonard (pictured above) and Monticello Public Works Director/City Engineer Matt Leonard for coming to St. Paul and sharing more about this important local infrastructure/public safety project. Click the above image for committee video.

Bill to Tighten Immigration Laws

House Republicans had a press conference this week to discuss legislation (H.F. 16) requiring illegal immigrants suspected of violent crimes be reported to U.S. Immigrations and Customs Enforcement (even if charges are not filed).

This is Minnesota’s version of the Laken Riley Act, which President Trump recently enacted. In addition to the aforementioned reporting requirements, the federal version also prohibits state and local governments from obstructing immigration enforcement efforts. That last part is important because Minneapolis and St. Paul recently joined a sanctuary city lawsuit against the president. And Minneapolis has a city ordinance prohibiting officers from “detecting the presence of undocumented persons.”

Minnesotans want stronger enforcement of our immigration laws. This bill is a step in the right direction by making sure illegal immigrants are held accountable if they commit violent crimes.

Supporting Women and Children

Two House Republican bills supporting women and children came to the House floor on Thursday. House Democrats voted them down. The measures include:

• The Supporting Women Act (HF 25) restores a grant that started in 2005 called Positive Alternatives, which Democrats defunded in 2023. The bill appropriates $8 million per biennium to women’s pregnancy centers and maternity homes.
• The Born Alive Rollback (HF 24) extends legal protections to infants who are born alive after an abortion procedure. This bill would require that doctors protect the lives of infants under these adverse circumstances in the same way that they protect infants born under normal conditions.

Please Contact Me

As always, if you need assistance on an issue pertaining to state government or have concerns or ideas about legislation, my office is available to you. You can e-mail at rep.marion.rarick@house.mn.gov or call my office at 651-296-5063. You can also write a letter to me. My office address at the 2nd Floor Centennial Office Building, 658 Cedar Street, St. Paul, MN 55155.