Inspections performed by the Minnesota Department of Health from September 1986 to July 1987 found numerous serious health and safety violations in the homes. For a brief period, Governor Rudy Perpich transferred the administration of the veterans homes to the Department of Human Services by Reorganization Order No. 149.
In August of 1987, Governor Perpich appointed a blue-ribbon commission to study operations and governance of the homes as well as the long-term health care needs of Minnesota veterans. The commission issued its report on February 12, 1988, and on February 18, Governor Perpich issued Executive Order No. 88-3 creating a transitional board of directors for the Minnesota Veterans Home to plan and manage the transition of the Minnesota veterans homes from the Department of Human Services to a permanent board of directors in the Department of Veterans Affairs.
In 1988 the Legislature reassigned veterans home administration to the Department of Veterans Affairs, and created a new nine-member Veterans Home Board of Directors to oversee operations (see Laws of Minn. 1988, chap. 699).