‘It's just stupid:' MNLARS review shows Minnesota spent $100 million on broken system

ST. PAUL, Minn. (FOX 9) - Two state agencies made repeated failures that resulted in Minnesota’s broken $100 million drivers’ license and registration system, a special review released Thursday has found.

The nonpartisan legislative auditor’s office found that the costs ballooned over a nine-year period as an outside vendor and state employees struggled to build the Minnesota Licensing and Registration System, or MNLARS. The report was released as Gov. Tim Walz and lawmakers are deciding how much money the system still needs.

Ever since the state launched MNLARS in 2017, drivers have faced frustrating delays to get licenses and transfer license plates and vehicle titles. The special review put the blame on the Department of Public Safety and Minnesota Information Technology Services.

“The project’s total amount of funding (more than $100 million) and time (nine years leading up to the 2017 release) should have been sufficient to successfully complete this project,” the legislative auditor’s report said.

The two state agencies fought with Hewlett-Packard, which won a contract to build MNLARS in 2012. Minnesota fired the company two years later after finger-pointing, $18 million in costs, and little completed work.

State officials decided to bring the work in-house, but neither DPS nor MNIT had enough staffing or oversight and the agencies rushed the system to completion, the auditor found. 

“In all my experiences, there was never a clear understanding of who was in charge, who would set the priorities, who would set the tone and direction,” one MNLARS project member told the legislative auditor, according to the report.

“I felt that I was being shut down anytime I brought anything up,” said a MNLARS project manager.

On Monday, the state released its latest upgrade to MNLARS that is designed to allow people to transfer specialty license plates to new cars.

Thursday, Gov. Tim Walz headed to a motor vehicle office in Faribault with Republican state Sen. John Jasinski to watch two people try to transfer vanity plates. 

Steve Erickson said he’s had the same vanity plate since 1994, but hasn’t been able to transfer it to his new Ford pickup since MNLARS rolled out in July 2017.

“It’s just stupid. It’s just stupid, the way it worked,” Erickson told reporters after successfully transferring his plates Thursday as Walz watched. “It was a glitch in the program that they couldn’t do it, so I had to get other plates (in the meantime).”

The governor is asking lawmakers for $15.7 million in stopgap funding to make more changes before the state’s fiscal year ends June 30.

“It’s a very hard vote to ask them for more money when their constituents hear about this,” Walz told reporters. “There needs to be an absolute commitment that this is the best buy for the money.”

State Sen. Scott Newman, the Republican chairman of the Senate Transportation committee, said he expects Walz to ask for an additional $50 million to $100 million in MNLARS funding in his two-year budget proposal due next week.

“That is what we’re struggling with,” Newman said, when asked how he’d vote. “It’s a conundrum. Do we stop funding it after all this time and start over?”

Jasinski, R-Faribault, said deputy registrars, many of whom are private operators that contract with the state, will need up to $10 million in reimbursements for costs they’ve incurred because of MNLARS’ failures.

MNLARS dates back to 2008, when state officials began replacing a more than 30-year-old system that posed security risks. Most of the work happened during former Gov. Mark Dayton’s administration, and Walz inherited the issues when he took office in January.

Thursday, concerns surfaced about the license plate transfer update rolled out three days earlier. Newman said about 30 deputy registrars told him during a meeting Thursday morning that the update was only partially successful.

“The governor’s staff has given very glowing reports of this most recent rollout,” Newman said. “Most of (the registrars) said it was sort of successful.”

The Minnesota Office of the Legislative Auditor formally presented the findings to Minnesota lawmakers on the Legislative Audit Commission Thursday night.

"We are the ones that are responsible to the public and yet we have this disconnect," said Rep. Tina Liebling, DFL-Rochester.