Audit: Slow processing, some overpayments marred RentHelpMN success
A new report highlights some of the successes and shortcomings of a program that was created to help Minnesotans with paying their rent during the COVID-19 pandemic.
Minnesota’s Office of the Legislative Auditor (OLA) released its report on the RentHelpMN program Thursday morning, noting it helped more than 58,000 Minnesotans during a critical time of need but also had some struggles with processing applications in a timely manner and making accurate payments.
RentHelpMN was created by the Minnesota Housing Finance Agency to run the state’s Emergency Rental Assistance program after Congress provided around $598.3 million in federal funds to the state in 2020 for emergency rental help. Its goal was to prevent homelessness and maintain housing stability. The program started accepting applications in April 2021 and stopped accepting applications in January 2022.
To be eligible for the assistance, Minnesota renters had to show they experienced a COVID-19 hardship, didn’t exceed 80% of the Area Median Income for their area and were behind on paying rent. Those approved then typically had their payments sent directly to their landlord or utility companies.
Under the program, approved applicants could receive up to 18 months of help with rent, utilities and other housing-related expenses.
Altogether, the program says it provided $428 million in emergency rental assistance to 58,600 Minnesota households and, on average, gave around nine months of help and $7,300 per household.
OLA was tasked with reviewing the program in April 2022, specifically looking into processing speed, payment accuracy and how well the agency applied eligibility criteria to provide recommendations in case Minnesota Housing creates a similar program in the future.
The auditors noted that Minnesota Housing was still processing some appeals and making some payment adjustments in 2023, more than a year after the program had stopped accepting applications. Part of that is because, according to OLA’s report, Minnesota Housing staff found $3.5 million (0.8% of its total payouts) in inadvertent overpayments as of last September. Of that total, just over $1.3 million was believed to be just an accidental overpayment while the other $2.1 million was suspected fraud.
A few weeks after RentHelpMN stopped accepting new applications, it started increasing its efforts to recoup overpayments. However, OLA noted that, by that time, some of the overpayments were already more than eight months old.
The agency had recouped about $500,000 of the overpayments that weren’t suspected of being fraudulent, as of September, but had only gotten back $206,429 of the suspected fraudulent payments at that time. Staff members were told to refer overpayment cases to the Minnesota Attorney General’s Office if participants didn’t return the overpayment in a timely manner and to local law enforcement if criminal activity was suspected, which resulted in 352 referrals between July 2021 and June 2022, OLA’s report states. The agency is also working with the Minnesota Bureau of Criminal Apprehension and the attorney general’s office for potentially fraudulent cases.
However, it’s important to note that the 630 overpayments that staff found, totaling $3.5 million, don’t account for all overpayments, such as those that were voluntarily returned before staff reached out or overpayments that weren’t identified by staff. OLA’s report notes that its auditors found another 13 cases of suspected fraud during their review that staff hadn’t yet found.
That’s money that could’ve gone to other applicants in need, the auditors wrote in their report.
The other main drawback of the program was the processing speed.
OLA noted that Minnesota Housing was slow to distribute RentHelpMN funds in its first four months but then considerably improved its speed. However, applicants still waited an average of 87 days to have their applications processed.
It’s worth noting, as Minnesota Housing Commissioner Jennifer Ho detailed her in response to OLA’s report, that RentHelpMN was created and tasked with providing critical help to thousands of people during a pandemic in just months. Some issues were likely inevitable and certain trade-offs were made.
However, the slow processing times also put real stress on applicants, the auditors noted. Overall, though, OLA says that RentHelpMN was a little slower than its counterparts in other states when it first started, as two-thirds of other states had distributed their first payments by the end of April 2021. RentHelpMN’s first payment was sent out on May 13, 2021. As time went on, though, RentHelpMN got faster and, by the end of 2021, had overtaken most other state programs in payment distribution speed.
OLA recommended Minnesota Housing establish standards for how quickly applications should be processed in the future.
Other areas that could improve, according to OLA’s report, include collecting more documentation and implementing proper procedures to ensure accurate payment and cut down on fraud. The agency could also use comprehensive policies for recouping overpayments to address those in a more timely manner, and should just have more clear policies so all staff know what is expected.
“Minnesota Housing agrees that in a world with adequate time and funding and not during a global pandemic, we would have addressed the issues in the findings and recommendations,” Ho wrote in part in her response to the report. “However, many of the recommendations are based on operating standards that are appropriate for an existing, mature program or a new program with sufficient time and resources to design, launch and operate. The standards are not reasonable for creating and standing up a brand-new, large-scale, emergency program from scratch in just four months with a limited administrative budget. The work required and the short time period to do the work was unprecedented.”
In a separate statement to 5 EYEWITNESS NEWS on Thursday, Ho said, “I am proud of the dedication and professionalism of Minnesota Housing’s staff and the agency’s partners to effectively deliver much-needed funds to maintain the housing stability of Minnesota renters who were concerned about their ability to pay their rent during a global pandemic. Treasury’s multiple reallocations of tens of millions of dollars to RentHelpMN was a vote of confidence in the agency’s and our partners’ work.”
To read OLA’s full report, which also includes a more detailed response from Ho, click here.