Work continues in St. Paul to terminate the Housing Stabilization Services program. This comes after federal authorities continue investigating fraud that is connected to the program.
WCCO political analyst Blois Olson says candidates across the state are likely to hear about this - and other cases of fraud - in the runup to next year's election.
"Republicans are going to keep this issue in the forefront," Olson says. "And I think that's one of the kind of preview questions for the next year is, how much is fraud a part of the 2026 election for the legislature and for statewide office? I don't know the answer yet, but it's one of those things we're watching."
State officials have already suspended payments to 77 Housing Stabilization Services providers.
Records show the Housing Stabilization Services program cost taxpayers less than $3 million a year, a price tag that ballooned to $104 million for last year alone.
"This kind of emerged out of the pandemic, but the thing about this particular program that should alarm people is that I think the legislature estimated it would need about $20 million in its first year," noted Olson. "That number grew to $100 million in the last biennium."
The Minnesota Department of Human Services says they want to "fix" the program, which could mean its elimination altogether.
Rep. Kristin Robbins (R- Maple Grove) is Chair of the House Fraud Prevention and State Oversight Policy Committee, and she released a damning statement after the announcement from Human Services Friday, which could serve as a preview of what Democrats are going to hear leading up to November of 2026.
"The Department of Human Services' decision to terminate the Housing Stabilization Services program is a stunning admission of just how deeply broken this program has become under the Walz administration's watch," says Robbins. "This was a program initially expected to cost taxpayer just $2.6 million a year, yet it ballooned to over $100 million, with fraud so rampant that the agency now admits it cannot guarantee basic program integrity."
Robbins also noted that since the Fraud Committee started hearings last winter, concerns about DHS were already being raised.
"This decision only strengthens the need for a federal audio of DHS," Robbins writes. "We sounded the alarm early, and sadly, those warnings were not heeded until millions had already been stolen."
The federal Centers for Medicare and Medicaid Services have received a request from state officials to end the program.
DHS says the do intend to redesign and relaunch the benefit.
"Toward that effort, DHS will work with the legislature, providers, community partners, and CMS to fully redesign the program with robust program integrity and service quality requirements to prevent bad actors from entering the program and enhance care," reads a statement from the Department of Human Services. "Once that work is complete, DHS will then work with CMS to submit a new program framework for approval."
“We take a zero-tolerance approach to fraud and will continue to take quick action to halt payments to any provider organizations we believe have been committing fraud in our HSS program,” Gandhi stressed. “Enough is enough.”