The required safeguards

What the rule required: Applicants to the Child and Adult Care Food Program (CACFP) had to meet three performance standards, which were financial viability, administrative capability, and program accountability. The state agency "must deny the applications of those new institutions that do not meet the standards." Sponsors in the Summer Food Service Program (SFSP) had to demonstrate "financial and administrative capability for Program operations." The state could not approve any sponsor identifiable as previously seriously deficient.

What the record shows happened: No waiver touched the denial duty. The Legislative Auditor found the Minnesota Department of Education (MDE) identified concerns in every annual Feeding Our Future application and approved them anyway. The auditor wrote, "It is difficult to understand how concerns serious enough to prompt administrative action in March 2021 were not serious enough to justify denying the organization’s CACFP application (or initiating a more timely serious deficiency process) in the fall of 2020."

What the rule required: Application procedures in the Child and Adult Care Food Program (CACFP) had to include "a pre-approval visit by the State agency to confirm the information in the institution’s application and to further assess its ability to manage the Program." State agencies in the Summer Food Service Program (SFSP) "shall conduct pre-approval visits" of all applicant sponsors that did not participate the prior year.

What COVID changed: The March 27, 2020 monitoring waivers let states that chose to use them do CACFP pre-approval visits from a desk instead of in person. A September 2020 SFSP waiver relaxed pre-approval visits through June 2021. The Legislative Auditor notes the waivers did not prohibit the Minnesota Department of Education (MDE) from visiting.

What the record shows happened: The Legislative Auditor found that MDE approved more than 1,100 Summer Food Service Program sites statewide, across all sponsors, in March and April 2020 alone, as pandemic-era sites multiplied.

What the rule required: For the Child and Adult Care Food Program (CACFP), the rule read, "The State agency must annually review at least 33.3 percent of all institutions." Sponsors of up to 100 facilities had to be reviewed at least once every three years, including 10 percent of their facilities, with meal counts compared against enrollment for five days. In the Summer Food Service Program (SFSP), every new sponsor had to be reviewed in its first year, every sponsor at least once every three years, and sponsors covering half the state’s meal reimbursements every year.

What COVID changed: The March 27, 2020 waivers let states that chose to use them do these reviews from a desk instead of in person, telling them to keep monitoring offsite "to the maximum extent practicable." Per the Office of the Legislative Auditor (OLA), an April 2020 waiver relaxed the review-frequency requirements themselves through September 2022.

What the record shows happened: The Minnesota Department of Education (MDE)’s only administrative review of Feeding Our Future’s CACFP operations, in December 2018, produced 22 findings and was never followed up. MDE cancelled visits scheduled for October through December 2020. Per the OLA, "MDE chose not to conduct these visits; applicable waivers in effect at the time did not prohibit MDE from conducting site visits."

What the rule required: Sponsors in the Child and Adult Care Food Program (CACFP) "must review each facility three times each year." At least two of those reviews had to be unannounced, at least one had to include watching a meal being served, one had to come within each new facility’s first four weeks, and no two could be more than six months apart. Sponsors in the Summer Food Service Program (SFSP) had to visit each site in its first week and review its food service within the first four weeks.

What COVID changed: The March 27, 2020 sponsor waivers cut CACFP reviews from three to two and dropped the unannounced and meal-observation requirements. They expressly kept the first-four-weeks review of new facilities (allowed as a desk audit). SFSP site visits could move offsite or be postponed.

What the record shows happened: The waivers did not create this problem. Here the sponsor checks its own sites, and the sponsor’s founder and employees are the people prosecutors charged. When the sponsor itself is running the scheme, as the indictments allege and as the trial and pleas established for the charged defendants, this check does nothing.

What the rule required: State claims processing "must include State agency edit checks." At a minimum, the state had to check "that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment times operating days times approved meal types." Sponsors had to run the same comparison for each facility before submitting each consolidated claim. They also had to certify every claim correct, with records available to support it.

What the record shows happened: No waiver touched the edit checks or claim certifications. Per the Office of the Legislative Auditor (OLA), the Minnesota Department of Education (MDE) "did not request the records necessary to validate even a sample" of the sites’ bundled claims for a year after the first waiver. During that year, in fall 2020, Feeding Our Future sites claimed roughly 2.9 million meals and snacks a month. The first desk audit of its claims began at the end of March 2021.

What the rule required: "Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities." The Summer Food Service Program (SFSP) rules add a duty to inform the regional office of the U.S. Department of Agriculture (USDA) of suspected fraud.

What the record shows happened: The Minnesota Department of Education (MDE) received at least 30 complaints involving Feeding Our Future or its sites between June 2018 and December 2021. Some were never investigated, and many drew no step beyond contacting the sponsor. At one point MDE asked Feeding Our Future to investigate complaints about itself.

What the rule required: Listed serious deficiencies, including false application information and "claiming reimbursement for meals not served," triggered written notice and a window to fix the problem that the state could not extend past 90 days. If the fix failed, the next step was proposed termination and disqualification. For the Summer Food Service Program (SFSP), the rule read, "The State agency shall terminate the Program agreement with any sponsor which it determines to be seriously deficient," after a reasonable chance to correct.

What the record shows happened: The Minnesota Department of Education (MDE) declared Feeding Our Future seriously deficient twice, in January 2021 (IRS nonprofit-status revocation and a missing federal audit) and in March 2021. It then withdrew the proposed termination in May and deferred the remaining deficiencies by June 4, 2021, per the Office of the Legislative Auditor (OLA) "without taking reasonable steps to ensure the organization implemented corrective actions." By June 10, 2021 it had approved the sponsor’s next summer application.

What the rule required: The U.S. Department of Agriculture’s Food and Nutrition Service (FNS) maintains the National Disqualified List. The rule reads, "No organization on the National disqualified list may participate in the Program as an institution," and no listed individual may serve as a principal. States could not approve an applicant with the institution or any principal on the list.

What the record shows happened: The list only catches people already terminated somewhere. The Minnesota Department of Education (MDE) said on the record that it checks the USDA list. None of the principals were on it, because no prior program had put them there.

What the rule required: This is the check that did not exist. Federal rule required only self-certification. Institutions certified that no principal had been convicted in the past seven years of any activity "that indicated a lack of business integrity" (fraud, theft, forgery, embezzlement, and similar), and listed their publicly funded program history. No criminal background check, fingerprinting, or record pull was required of anyone. The state’s duty to deny was tied to what it knew.

What the record shows happened: After the raids, the Minnesota Department of Education (MDE) said that background checks "are not part of the sponsor or site application process outlined by the federal program." What a check would have found is in the prior-records section of the safeguards page.

What the rule required: Any non-federal organization spending $750,000 or more in federal awards in a fiscal year "must have a single or program-specific audit conducted for that year," filed with the Federal Audit Clearinghouse. Child-nutrition audits follow 2 CFR part 200, subpart F.

What the record shows happened: Feeding Our Future’s missing audit was one basis for the January 2021 serious deficiency. The audit it then submitted did not meet basic audit standards, per the Office of the Legislative Auditor (OLA). The Minnesota Board of Accountancy later suspended and then revoked the auditor’s CPA certificate over the engagement.

What the rule required: States "shall provide FNS with full opportunity to conduct management evaluations" (FNS is USDA’s Food and Nutrition Service) and USDA’s inspector general with full opportunity to audit, with written corrective plans due within 60 days of each evaluation report. The regulation sets no evaluation frequency. FNS guidance sets it instead.

What the record shows happened: USDA evaluated the Minnesota Department of Education (MDE)’s management of the summer program in 2018 and the child-care program in 2019. Neither produced findings about MDE’s complaint handling. The Legislative Auditor notes the evaluation guidance directs reviewers to sample one or two complaints. When MDE escalated fraud concerns to USDA and its inspector general in 2020, the responses its officials described were verbal, slow, or absent.