A newly released report on what has been considered one of the most comprehensive programs focused on the well-being of Minnesota firefighters is raising concerns about how the program is managed.

Minnesota’s Office of the Legislative Auditor (OLA) released its special review report of the Hometown Heroes Grant program Thursday morning, saying its auditors “identified a number of concerning issues” during their review.

The program was created by state lawmakers in 2021 and started operating last year. Using $4 million per year, the program aims to ensure Minnesota firefighters have access to any education, prevention tools and care needed to properly deal with the health issues they face in their line of work. Studies have shown firefighters have a higher risk of cancer, sudden cardiac events and other health struggles than the general population.

While the Minnesota Department of Public Safety (DPS) oversees the grant, the nonprofit Minnesota Firefighter Initiative (MnFIRE) uses that money and administers the program. By law, the program is supposed to support firefighters who are diagnosed with a critical illness, offer a psychotherapy program to help firefighters experiencing emotional trauma and coordinate those sessions for firefighters who need them, and provide at least two hours of training on critical illnesses and emotional trauma to firefighters each year.

While MnFIRE started running the Hometown Heroes program last year, the organization had already been getting state funding since 2019 from the state’s Fire Safety Account, which gets surcharges from insurance policies. DPS also manages that account and is supposed to spend the funds in accordance with recommendations of the state’s Fire Service Advisory Committee.

From 2019 through 2023, MnFIRE received just over $2 million from the Fire Safety Account in addition to the $4 million it received for the Hometown Heroes program in each of the 2022 and 2023 fiscal years.

By law, DPS had to complete a risk assessment before awarding the first Hometown Heroes grant to MnFIRE. While that was done, OLA says the assessment failed to identify any concerns, even about MnFIRE’s ability to handle such a large program when its total revenue in 2020 was just $257,000 — 6% of the annual Hometown Heroes grant. That could have foreshadowed a situation last summer where MnFIRE asked for another $1 million because it otherwise wasn’t able to pay its bills, OLA’s report states. A more thorough risk assessment also could’ve led to more requirements for the nonprofit to ensure fewer issues.

In terms of actually managing the grant, OLA says DPS lacked proper oversight, especially in the first year of the program when it wasn’t clearly stated who was supposed to be reviewing MnFIRE’s payment requests and progress reports, leading to nobody actually requesting supporting documentation from the nonprofit. However, OLA adds that the state’s grant payment policy doesn’t even detail what documents agencies should review before authorizing grant payments.

“That’s why one of our recommendations to DPS is to conduct a complete and full audit of the expenditures so that it’s literally a line item down to every penny,” Minnesota Legislative Auditor Judy Randall said at a hearing of the Legislative Audit Commission about the report.

Perhaps unsurprising given those findings, OLA also reported finding instances where DPS reimbursed MnFIRE for expenses that weren’t allowed or were improperly justified under the Hometown Heroes grant agreement, and most payments in the first year were made as advance payments rather than reimbursements, as required by law.

When DPS transferred responsibility of the Hometown Heroes program from its Office of Justice division (OJP) to its State Fire Marshal Division (SFMD), OJP did complete a closeout evaluation but failed to convey any key issues to SFMD. OLA says that could have helped DPS catch the issue with advance payments vs. reimbursements and other key problems sooner.

“Paying for grant expenses on a reimbursement basis gives state agencies an important mechanism for ensuring that taxpayer funds are being used as the legislature intended,” said Katherine Theisen, the special reviews director in the Office of the Legislative Auditor.

The auditors also found that MnFIRE failed to comply with several procurement-related terms of the Hometown Heroes program, something the nonprofit should’ve been aware of but DPS also should’ve monitored and caught, OLA says. Mainly, that was a failure to open a bidding process for any vendors and then failing to sign contracts with those who were chosen.

“I take full responsibility for any of the faults presented here today,” MnFIRE President George Esbensen said at the hearing. “MnFIRE will continue to diligently revise our procedures to ensure our organization can continue to effectively serve Minnesota firefighters.”

While MnFIRE has implemented many parts of the Hometown Heroes program that are required by law, OLA’s report states that not all areas have been met. One of those areas that fell short was the annual training on critical illnesses and emotional trauma. OLA says MnFIRE’s records show that no more than 12% of the state’s firefighters received the training in 2022 and no more than 9% died so far this year.

There are more than 770 fire departments across the state — 97.2% of which are considered volunteer or mostly volunteer, which is above the national rate of 85.8% — and nearly 20,000 firefighters. Based on those percentages, that means less than 2,500 firefighters have gotten the training each year.

Additionally, OLA flagged ethical issues related to the program, as the state’s chief deputy fire marshal — who served as the interim fire marshal for four months earlier this year — has served as a paid trainer for MnFIRE in the past and was still at least indirectly overseeing the state’s grants to the nonprofit. That apparent lack of independence coupled with the fact she’s also been paid for training related to her state duties — albeit on her own time and apparently after it was signed off on by the previous state fire marshal — creates conflicts of interest, OLA says.

Because of all of its findings, OLA expanded its review from the Hometown Heroes program to the other funding MnFIRE has been getting from the state through its Fire Safety Account. Again, DPS has to follow the Fire Service Advisory Committee’s recommendations for spending that money, but OLA says it found no evidence that the committee followed any state policies for awarding grants — including for publicizing competitive grants, documenting possible conflicts of interest, or justifying single-source grants.

On top of that, DPS apparently hasn’t followed any grant oversight policies for the funds awarded from the Fire Safety Account, OLA says.

To address all of the concerns uncovered in its review, OLA presented DPS with a list of recommendations, ranging from making assessments and oversight more thorough and clarifying grant policies to conducting a full audit of MnFIRE’s payment requests. The office also suggested the chief deputy fire marshal and DPS resolve any ethical violations, possibly including having her pay back any money she received from MnFIRE for training sessions.

DPS Commissioner Bob Jacobson said in a response letter to OLA that the agency has already made several changes and had its oversight ability bolstered further by legislation this spring.

“DPS remains committed to working with the OLA to safeguard public funds and meet the needs and expectations of our public safety partners and all Minnesotans. As such, DPS has already taken corrective measures to address OLA findings prior to the release of this full report and we will continue to implement improvements that are in alignment with the discussed findings and recommendations,” Jacobson wrote in the response.

At the hearing, Jacobson said he would be accountable for implementing recommendations from the legislative auditor.

“DPS will continue to find and implement opportunities for improvement in the oversight and management of the Hometown Heroes grants,” he told lawmakers.

Esbensen of MnFIRE also wrote a response letter to OLA, saying the issues detailed in the review “validate our own challenging experience” and pointed to the transition in DPS oversight of the program from OJP to SFMD as a big reason for many of the problems.

“Today, we know we are in good hands with SFMD, and we are confident we have acted as diligent stewards of the funds provided by the state to improve firefighter health and wellness throughout this process. We will continue to adjust our policies and processes in order to achieve compliance and strengthen the overall program delivery,” Esbensen wrote.

Finally, Ed Hoffman and BJ Jungmann, the vice chair and past chair of the Frie Service Advisory Committee, wrote to OLA that, “The committee was not aware of the processes and requirements referenced in the report” and, after getting clarification, will be “implementing the appropriate changes to ensure compliance with state regulations.”

Click here to read OLA’s full report.