Office of Inspector General created, advisory committee created, conforming and technical changes made, interagency agreements provided, reports required, and money appropriated.

A bill for an act

relating to state government; creating the Office of the Inspector General; creating

an advisory committee; making conforming and technical changes; providing for

interagency agreements; requiring reports; appropriating money; amending

Minnesota Statutes 2024, sections 3.971, by adding a subdivision; 15A.0815,

subdivision 2; 127A.21, by adding subdivisions; 142A.03, by adding a subdivision;

142A.12, subdivision 5; 144.05, by adding a subdivision; 245.095, subdivision 5;

256.01, by adding a subdivision; 609.456, subdivision 2; Minnesota Statutes 2025

Supplement, section 10A.01, subdivision 35; proposing coding for new law as

Minnesota Statutes, chapter 15E.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

OFFICE OF THE INSPECTOR GENERAL

Section 1.

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[15E.10] OFFICE OF THE INSPECTOR GENERAL.

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(a) The inspector general serves as an independent entity in the executive branch

responsible for ensuring accountability, transparency, and integrity in the operations of state

agencies and programs.

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(b) In exercising the inspector general's powers and duties, the inspector general must

operate independently of all other state executive branch agencies and report directly to the

governor. Except as provided by law, the inspector general is not subject to direction or

interference from any executive or legislative authority.

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(c) The inspector general shall direct an Office of the Inspector General.

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(d) The inspector general serves in the unclassified service.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 2.

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[15E.15] DEFINITIONS.

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For purposes of this chapter, the following terms have the meanings given:

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(1) "agency program" means a program funded or administered by a state department

or agency, including grants and contracts;

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(2) "fraud" means an intentional or deceptive act, or failure to act, to gain an unlawful

benefit;

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(3) "investigation" means a review or inquiry conducted by the inspector general to

detect or prevent fraud or misuse;

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(4) "misuse" means improper use of authority or position for personal gain or to cause

harm to others, including the improper use of public resources or programs contrary to their

intended purpose;

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(5) "person" means a natural person, partnership, corporation, association, or other legal

entity; and

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(6) "personal gain" means a benefit to a person; to a person's spouse, parent, child, or

other legal dependent; or to an in-law of the person or the person's child.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 3.

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[15E.20] INSPECTOR GENERAL.

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Subdivision 1.

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Minimum qualifications.

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(a) To be eligible to be appointed as inspector

general, a candidate must:

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(1) have a bachelor's degree or higher in criminal justice, public administration, law, or

a related field;

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(2) have at least ten years of professional experience in auditing, investigations, law

enforcement, or a related area;

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(3) hold, or acquire within 15 months of appointment, a professional certificate from

the Association of Inspectors General, including Certified Inspector General or Certified

Inspector General Investigator; and

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(4) demonstrate a commitment to safeguarding the mission of public service and provide

a public disclosure of prior professional opinions, positions, or actions that may influence

the candidate's approach to the role.

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(b) Current or former commissioners, agency heads, deputy commissioners or agency

heads, governors, or legislators are not eligible to serve as inspector general within five

years of their service in those roles. A person elected to an office other than governor or

legislator is not eligible until ten years after the end of service in an elected position.

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Subd. 2.

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Appointment.

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The Legislative Inspector General Advisory Commission must

recommend candidates for inspector general after a competitive process from among eligible

applicants for the position of inspector general. To be recommended by the commission, a

candidate must be approved for recommendation by five of the eight members of the

commission. The commission must assess eligible candidates based on qualifications,

including experience in auditing, financial analysis, public administration, law enforcement,

or related fields. The inspector general is appointed by the governor, after consideration of

recommendations from the Legislative Inspector General Advisory Commission, with

confirmation by a vote of three-fifths of the senate. Section 15.066, subdivision 3, does not

apply. The governor may appoint a qualified applicant who was not recommended by the

commission.

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Subd. 3.

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Term.

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The inspector general serves a five-year term and may be appointed to

unlimited additional terms. An appointment to an additional term must be confirmed by a

vote of three-fifths of the senate.

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Subd. 4.

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Vacancy.

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The Legislative Inspector General Advisory Commission must provide

recommendations to the governor for appointment to fill a vacancy in the position of the

inspector general within 90 days of a vacancy occurring or within 60 days of being advised

by the inspector general that a vacancy is expected to occur. The governor must appoint an

inspector general within 30 days of receiving recommendations from the Legislative Inspector

General Advisory Commission or within 45 days of expiration of the 90-day or 60-day

period if the advisory commission does not provide recommendations within the time

allotted.

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Subd. 5.

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Disclosure.

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A candidate considered by the Legislative Inspector General

Advisory Commission or selected for appointment by the governor must disclose all political

affiliations, appointments, campaign work, or partisan activities prior to confirmation.

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Subd. 6.

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Nonpartisanship.

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The inspector general and all employees of the office must

perform duties of the office without regard to partisan preferences or influences. While

serving, the inspector general and all employees of the office may not engage in partisan

activities, campaign work, or public political speech, unless protected by the state or federal

constitution.

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Subd. 7.

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Removal.

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The inspector general may only be removed by the governor before

the expiration of the term for cause after a public hearing conducted by the governor and

with the approval of three-fifths of the senate and three-fifths of the house of representatives.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 4.

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[15E.25] DUTIES AND POWERS.

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Subdivision 1.

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Duties.

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The inspector general must:

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(1) establish standards and best practices concerning the operation, investigations, and

fraud prevention processes of agency inspectors general and periodically review agency

compliance with these standards and best practices. Agencies must follow standards

developed by the inspector general under this clause;

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(2) support the work of agency inspectors general, as well as program integrity staff in

those agencies that do not have an agency inspector general. The inspector general may

conduct an inspection at the request of an agency, with priority given to agencies that do

not have an agency inspector general;

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(3) facilitate information sharing between agencies, including coordinating investigations

that involve multiple agencies and designating a lead agency, coordinating and assisting

agency identification and review of suspicious documents and data anomalies, and alerting

other agencies when a person suspected of committing fraud against any agency program

may also be participating in, or applying to participate in, a program administered by another

agency;

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(4) evaluate the performance of agency inspectors general and recommend improvements,

as needed, to the agency's commissioner or agency head and inspector general. A

commissioner or head that receives a recommendation under this clause must report annually

to the chairs and ranking minority members of the legislative committees with jurisdiction

over the agency regarding the agency's implementation of the inspector general's

recommendations until the inspector general notifies the agency's commissioner or agency

head and the chairs and ranking minority members that the recommendation was resolved

in a satisfactory manner;

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(5) establish appropriate prepayment review procedures for all agencies;

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(6) investigate, at the inspector general's discretion, any public or private entity that

receives public funds to ensure compliance with applicable laws, proper use of funds, and

adherence to program requirements;

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(7) conduct inspections, evaluations, and investigations of state executive branch agencies,

with a focus on publicly funded programs and services, to: (i) identify fraud and misuse;

(ii) recommend changes to programs to prevent fraud and misuse; and (iii) protect the

integrity of the use of public funds, data, and systems;

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(8) refer matters for civil, criminal, or administrative action to the Bureau of Criminal

Apprehension, the Office of the Attorney General, or other appropriate authorities;

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(9) recommend legislative or policy changes to improve program oversight;

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(10) publish reports upon completion of an investigation summarizing findings,

recommendations, and outcomes of the inspector general's activities;

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(11) submit an annual report summarizing the work of the office to the Legislative

Inspector General Advisory Commission and make the report publicly available by posting

the report on the inspector general's website;

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(12) alert relevant commissioners or agency heads when the inspector general has a

credible allegation that fraud or misuse is being committed, whether or not the inspector

general is conducting an investigation, as provided in subdivision 3; and

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(13) establish and maintain a current exclusion list, in a format readily accessible to

agencies, that identifies each program and individual for which the inspector general has

obtained a court order to freeze or cease distribution of funds or made a recommendation

under clause (12) to freeze or cease distribution of funds.

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Subd. 2.

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Relationship to powers and duties of other agencies.

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(a) The inspector general

has authority to investigate fraud and misuse of public funds across all programs administered

by state agencies. The inspector general may direct and evaluate an agency's review or

inquiry when the review or inquiry concerns suspected fraud or misuse.

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(b) The inspector general may perform the inspector general's duties and apply the

inspector general's authority without obtaining approval from another agency.

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(c) The Department of Human Services has primary responsibility to investigate fraud

in the Medicaid program, but the inspector general has authority to conduct independent

investigations related to the Medicaid program as necessary.

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(d) The Department of Children, Youth, and Families has primary responsibility to

investigate fraud in the child care assistance program and the great start compensation

support payment program, but the inspector general has authority to conduct independent

investigations related to the child care assistance program and the great start compensation

support payment program.

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(e) The Department of Health has primary responsibility to investigate fraud related to

women, infants, and children (WIC) and food support programs, but the inspector general

has authority to conduct independent investigations related to WIC and food support

programs.

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(f) The inspector general must refer all credible reports from the public about potential

fraud or misuse to the legislative auditor, and to the commissioner of human services for

reports related to Medicaid. The inspector general may coordinate investigations with the

legislative auditor, and the commissioner of human services for investigations related to

Medicaid, when coordination conserves resources and does not compromise an investigation.

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(g) The Department of Information Technology Services shall provide services to the

Office of the Inspector General under a managed services contract according to section

16E.016.

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(h) The commissioner or head of an agency with its own inspector general must obtain

written approval from the inspector general appointed under section 15E.20 before

discharging, demoting, or otherwise removing an individual from the position.

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Subd. 3.

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Alerting agency of issue; seeking a court order to freeze funds.

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(a) If the

agency does not have primary investigative authority under subdivision 2, the inspector

general shall investigate. If the inspector general has a credible allegation that fraud or

misuse is occurring, the inspector general may, at the inspector general's discretion, alert

the commissioner or agency head and seek a court order to freeze or cease distribution of

public funds, including any applicable due process and appeal rights. The inspector general

may work in cooperation with the agency when practical and when it would not jeopardize

an investigation.

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(b) If the agency has primary investigative authority under subdivision 2, but the inspector

general is not satisfied that the agency's internal investigation is adequate or proceeding

quickly enough, the inspector general may independently investigate. If the inspector general

has a credible allegation that fraud or misuse is being committed, the inspector general may

make a recommendation to the agency to freeze or cease distribution of funds and notify

the appropriate law enforcement agencies.

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(c) If a commissioner or agency head does not act on a recommendation to freeze or

cease distribution of funds as requested, after reasonable notice and consistent with any

applicable interagency agreements under section 15, unless prohibited by federal

requirements, the inspector general may, at the inspector general's discretion, seek a court

order to freeze or cease distribution of public funds, consistent with applicable due process

and appeal rights.

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(d) If public funds cease or are frozen pursuant to this subdivision, the inspector general,

working with and through the applicable state agency, must ensure that any person whose

support from public funds is interrupted and who is not implicated in the suspected fraud

or misuse receives notice of the person's rights related to continued receipt of the public

funds, services, or programs for which the person is eligible.

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Subd. 4.

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Exceptions for federal funding.

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The inspector general must not comply with

any provision under this section if compliance with the provision would prevent the state

from receiving federal financial participation for the medical assistance program or result

in a lower level of coverage or reduced access to coverage for medical assistance enrollees.

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EFFECTIVE DATE.

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Subdivisions 2, paragraph (c), and 3, paragraphs (b) and (c), are

effective January 1, 2027, or upon federal approval from the Centers for Medicare and

Medicaid Services, whichever is later. The commissioner of human services must notify

the revisor of statutes when the Centers for Medicare and Medicaid Services approve or

deny this section. The remainder of this section is effective January 1, 2027.

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Sec. 5.

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[15E.30] AUXILIARY POWERS.

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Subdivision 1.

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Subpoena power.

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In all matters relating to official duties, the inspector

general has the powers possessed by courts of law to issue and have subpoenas served.

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Subd. 2.

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Inquiry and inspection power; duty to aid inspector general.

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All public

officials and their deputies and employees, and all corporations, firms, and individuals

having business involving the receipt, disbursement, or custody of public funds, shall at all

times:

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(1) afford reasonable facilities for examinations by the inspector general;

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(2) provide returns and reports required by the inspector general;

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(3) attend and answer under oath the inspector general's lawful inquiries;

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(4) produce and exhibit all books, accounts, documents, data of any classification, and

property that the inspector general requests to inspect; and

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(5) in all things cooperate with the inspector general.

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Subd. 3.

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Penalties.

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(a) If a person refuses or neglects to obey any lawful direction of

the inspector general or the inspector general's deputy or assistant, or withholds any

information, book, record, paper, or other document called for by the inspector general for

the purpose of examination, after having been lawfully required by order or subpoena, upon

application by the inspector general, a judge of the district court in the county where the

order or subpoena was made returnable shall compel obedience or punish disobedience as

for contempt, as in the case of a similar order or subpoena issued by the court.

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(b) A person who swears falsely concerning any matter stated under oath is guilty of a

gross misdemeanor.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 6.

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[15E.35] IDENTIFICATION OF FRAUD REPORTING TOOL.

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(a) The commissioner or head of each executive branch agency must prominently

highlight on the agency's website the fraud reporting tools administered by the Office of

the Inspector General under this chapter and by the Office of the Legislative Auditor under

chapter 3.

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(b) As part of any grant agreement between the state and a nonprofit organization, the

agreement must require the nonprofit organization to prominently highlight on the

organization's website the fraud reporting tools administered by the Office of the Inspector

General under this chapter and by the Office of the Legislative Auditor under chapter 3.

The state agency administering the grant must regularly confirm and document the

organization's compliance with the requirement under this paragraph for the life of the grant

agreement.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 7.

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[15E.40] DATA PRACTICES.

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Subdivision 1.

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Definitions.

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(a) For purposes of this section, the following terms have

the meanings given.

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(b) "Confidential data on individuals" has the meaning given in section 13.02, subdivision

3.

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(c) "Government entity" has the meaning given in section 13.02, subdivision 7a.

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(d) "Nonpublic data" has the meaning given in section 13.02, subdivision 9.

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(e) "Not public data" has the meaning given in section 13.02, subdivision 8a.

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(f) "Private data on individuals" has the meaning given in section 13.02, subdivision 12.

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(g) "Protected nonpublic data" has the meaning given in section 13.02, subdivision 13.

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Subd. 2.

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Government Data Practices Act.

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The Office of the Inspector General is a

government entity and is subject to the Government Data Practices Act, chapter 13.

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Subd. 3.

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Access.

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In order to perform the duties under this chapter, the Office of the

Inspector General has access to data of any classification, including data classified as not

public data. It is not a violation of chapter 13 or any other statute classifying government

data as not public data if a government entity provides data pursuant to a subpoena issued

under this chapter.

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Subd. 4.

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Dissemination.

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The inspector general may disseminate data of any classification,

including not public data, to:

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(1) a government entity, other than a law enforcement agency or prosecuting authority,

if the dissemination of the data aids a pending investigation or administrative action;

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(2) a law enforcement agency or prosecuting authority if there is reason to believe that

the data are evidence of criminal activity within the agency's or authority's jurisdiction;

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(3) the legislative auditor; or

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(4) the commissioner of human services as provided in section 15E.25, subdivision 2,

paragraph (f).

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Subd. 5.

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Data classifications; civil investigations.

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(a) Notwithstanding any other law,

data relating to a civil investigation conducted under this chapter are confidential data on

individuals or protected nonpublic data while the investigation is active. Whether a civil

investigation is active shall be determined by the inspector general.

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(b) Data relating to a civil investigation conducted under this chapter become public

data upon the inspector general's completion of the investigation, unless:

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(1) the release of the data would jeopardize another active investigation by the Office

of the Inspector General or another government entity;

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(2) the inspector general reasonably believes the data will be used in litigation related

to any civil, criminal, or administrative actions, including reconsideration or appeal of any

such action; or

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(3) the data are classified as not public under another statute or paragraph (e).

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(c) Data subject to paragraph (b), clause (2), are confidential data on individuals or

protected nonpublic data and become public when the litigation has been completed or the

time period to appeal has expired or when the litigation is no longer being actively pursued.

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(d) Unless the data are subject to a more restrictive classification, upon the inspector

general's decision to no longer actively pursue a civil investigation under this chapter, data

relating to a civil investigation are private data on individuals or nonpublic data, except the

following data are public:

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(1) data relating to the investigation's general description, existence, status, and

disposition; and

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(2) data that document the inspector general's work.

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(e) Inactive civil investigative data on an individual supplying information for an

investigation that could reasonably be used to determine the individual's identity are private

data on individuals if the information supplied was needed for the investigation and would

not have been provided to the inspector general without an assurance to the individual that

the individual's identity would remain private.

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(f) Data relating to a civil investigation conducted under this chapter that are obtained

from an entity that is not a government entity have the same classification that the data

would have if obtained from a government entity.

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Subd. 6.

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Privileges.

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Nothing in this section or section 15E.30 requires the disclosure of

documents or information that is legally privileged under statute or other law, including

documents or information subject to section 13.393 or 595.02.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 8.

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[15E.45] RESOURCES.

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Subdivision 1.

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Staff.

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The inspector general may hire and manage staff as necessary and

in accordance with chapter 43A. The inspector general must employ and manage at least

one attorney to serve as legal counsel for the office and to advise the inspector general on

all legal matters relating to the office. Except for the inspector general, the staff in the Office

of the Inspector General serve in the classified civil service. Compensation for employees

of the inspector general in the classified service who are represented by an exclusive

representative is governed by a collective bargaining agreement negotiated between the

commissioner of management and budget and the exclusive representative. Compensation

for employees of the inspector general in the classified service who are not represented by

an exclusive representative is as provided in the nonrepresented employees compensation

plan under section 43A.18, subdivision 2, or the managerial plan under section 43A.18,

subdivision 3, depending on the employee's job classification.

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Subd. 2.

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Contracting.

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The inspector general may contract with external experts to

support the work of the office, subject to section 16C.08.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 9.

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[15E.50] REPORTING AND TRANSPARENCY.

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Subdivision 1.

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Reports.

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The inspector general must issue public reports detailing

completed investigations and any corrective actions taken.

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Subd. 2.

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Public tips.

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The inspector general must maintain a telephone line and website

for reporting fraud and misuse that allow the person making the report to remain anonymous.

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Subd. 3.

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Report; inactive investigations.

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By December 1, 2027, and each December

1 thereafter, the inspector general must submit a report to the legislative auditor and the

chairs and ranking minority members of the legislative committees with jurisdiction over

state government and data practices regarding all investigations the inspector general did

not open after receiving a tip or complaint or decided to no longer actively pursue for the

preceding calendar year. The report must include, at a minimum, summary data as defined

in section 13.02, subdivision 19, for:

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(1) all complaints or tips received;

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(2) the type of allegation;

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(3) if the complaint or tip was not frivolous, the reason the inspector general did not

open an investigation or decided to no longer pursue the investigation; and

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(4) referrals to other agencies or the legislative auditor.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 10.

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[15E.55] PROFESSIONAL STANDARDS AND REVIEW.

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(a) The inspector general's activities must adhere to professional standards as promulgated

by the Association of Inspectors General or other recognized bodies.

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(b) The governor may contract for an external quality assurance review of the inspector

general every three years and must make findings from the review public.

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EFFECTIVE DATE.

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This section is effective January 1, 2027.

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Sec. 11.

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[15E.60] LEGISLATIVE INSPECTOR GENERAL ADVISORY

COMMISSION.

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Subdivision 1.

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Membership.

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The Legislative Inspector General Advisory Commission

is comprised of:

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(1) two senators appointed by the majority leader of the senate;

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(2) two senators appointed by the minority leader of the senate;

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(3) two members of the house of representatives appointed by the speaker of the house

of representatives; and

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(4) two members of the house of representatives appointed by the minority leader of the

house of representatives.

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Subd. 2.

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Terms.

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Members serve at the pleasure of their appointing authority and each

member serves until a replacement is appointed.

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Subd. 3.

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Chair.

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The commission must select a chair after consideration of its members

by January 31 of each odd-numbered year. The chair serves until a successor is elected. The

chair must alternate biennially between the senate and the house of representatives.

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Subd. 4.

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Duties.

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The Legislative Inspector General Advisory Commission:

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(1) must consider applicants for and make recommendations to the governor for the

position of inspector general; and

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(2) may conduct hearings to review the work of the inspector general to ensure

impartiality, independence, and effectiveness.

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Subd. 5.

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Per diem; expense reimbursement.

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Members may be compensated for time

spent on commission duties and may be reimbursed for expenses according to the rules of

their respective bodies.

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Subd. 6.

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Meeting space; staff.

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The Legislative Coordinating Commission must provide

meeting space and staff to assist the commission in performing its duties.

new text end

new text begin

Subd. 7.

new text end

new text begin

Open meetings.

new text end

new text begin

The Legislative Inspector General Advisory Commission is

subject to the requirements in section 3.055.

new text end

new text begin

EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 12.

new text begin

[15E.65] INSPECTOR GENERAL COORDINATING COMMITTEE.

new text end

new text begin

Subdivision 1.

new text end

new text begin

Establishment; purpose.

new text end

new text begin

The Inspector General Coordinating Committee

is established to coordinate and strengthen the work of executive branch agencies in

safeguarding public resources through effective and efficient program integrity, auditing,

internal control, and related functions.

new text end

new text begin

Subd. 2.

new text end

new text begin

Membership.

new text end

new text begin

The Inspector General Coordinating Committee consists of the

following members:

new text end

new text begin

(1) the inspector general appointed under this chapter, who serves as chair;

new text end

new text begin

(2) the commissioner, or the commissioner's designee, of each agency that has an agency

inspector general whether by law or commissioner's order;

new text end

new text begin

(3) the superintendent of the Bureau of Criminal Apprehension in the Department of

Public Safety, or the superintendent's designee;

new text end

new text begin

(4) the commissioner of administration, or the commissioner's designee, representing

the Office of Grants Management in the Department of Administration; and

new text end

new text begin

(5) the commissioner of management and budget, or the commissioner's designee,

representing the Internal Controls and Accountability Unit in the Department of Management

and Budget.

new text end

new text begin

Subd. 3.

new text end

new text begin

Duties.

new text end

new text begin

The Inspector General Coordinating Committee must:

new text end

new text begin

(1) meet monthly to share investigative data, trends, and other information to better

prevent, detect, and investigate fraud and misuse in agency programs;

new text end

new text begin

(2) assist the inspector general in the development of data sharing methods, investigative

best practices, and program integrity review processes for agency programs; and

new text end

new text begin

(3) assist agencies in securing specialized internal audits, investigations, or other

necessary skills and tools.

new text end

new text begin

EFFECTIVE DATE.

new text end

new text begin

This section is effective January 1, 2027.

new text end

Sec. 13.
new text begin
OFFICE OF THE INSPECTOR GENERAL ESTABLISHMENT.
new text end

new text begin

Subdivision 1.

new text end

new text begin

Appointment.

new text end

new text begin

Notwithstanding Minnesota Statutes, section 15E.20,

subdivision 4, by January 1, 2027, the Legislative Inspector General Advisory Commission

must make recommendations for appointment of an inspector general under Minnesota

Statutes, section 15E.20. The governor must appoint an inspector general by February 1,

2027, unless the Legislative Inspector General Advisory Commission does not recommend

any candidates by January 1, 2027, in which case the governor must appoint an inspector

general by February 15, 2027.

new text end

new text begin

Subd. 2.

new text end

new text begin

Operational.

new text end

new text begin

By September 1, 2027, the Office of the Inspector General must

be fully operational.

new text end

new text begin

Subd. 3.

new text end

new text begin

Office space.

new text end

new text begin

The commissioner of administration must provide office space

for the Office of the Inspector General under Minnesota Statutes, chapter 15E, under a rental

agreement.

new text end

new text begin

EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 14.
new text begin
LEGISLATIVE INSPECTOR GENERAL ADVISORY COMMISSION;

INITIAL APPOINTMENTS AND FIRST MEETING.
new text end

new text begin

Subdivision 1.

new text end

new text begin

Initial appointments.

new text end

new text begin

Appointing authorities must make appointments

to the Legislative Inspector General Advisory Commission by August 1, 2026.

new text end

new text begin

Subd. 2.

new text end

new text begin

First meeting.

new text end

new text begin

The senate majority leader must designate one member of the

Legislative Inspector General Advisory Commission to convene the first meeting of the

Legislative Inspector General Advisory Commission by September 15, 2026.

new text end

new text begin

Subd. 3.

new text end

new text begin

Chair.

new text end

new text begin

The Legislative Inspector General Advisory Commission must elect a

chair from among its senate members at its first meeting. The first chair shall serve until a

successor is selected at the start of the next biennium as provided in Minnesota Statutes,

section 15E.60, subdivision 3.

new text end

new text begin

EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 15.
new text begin
INTERAGENCY AGREEMENTS.
new text end

new text begin

(a) By December 31, 2027, the Office of the Inspector General must enter into an

interagency agreement with the Department of Human Services. The agreement must not

preclude the agency from performing, or give the inspector general authority to take actions

that would interfere with the agency's ability to perform, duties required as a condition for

securing or maintaining federal funding. The interagency agreement must include a clause

on cost sharing for investigations that may require multiagency coordination and a clause

that details what process must be followed if a joint investigation is required. The interagency

agreement must not limit the inspector general's authority or authorized powers and

responsibilities. The agency and the inspector general may coordinate investigative efforts

as necessary or practical, but an interagency agreement must not diminish, delay, or restrict

the inspector general's ability to investigate fraud and misuse when an independent

investigation is pursued.

new text end

new text begin

(b) By December 31, 2027, the Office of the Inspector General must enter into an

interagency agreement with the Department of Children, Youth, and Families. The

interagency agreement must include a clause on cost sharing for investigations that may

require multiagency coordination and a clause that details what process must be followed

if a joint investigation is required. The interagency agreement must not limit the inspector

general's authority or authorized powers and responsibilities. The agency and the inspector

general may coordinate investigative efforts as necessary or practical, but an interagency

agreement must not diminish, delay, or restrict the inspector general's ability to investigate

fraud and misuse when an independent investigation is pursued.

new text end

new text begin

(c) By December 31, 2027, the Office of the Inspector General must enter into an

interagency agreement with the Department of Health. The interagency agreement must

include a clause on cost sharing for investigations that may require multiagency coordination

and a clause that details what process must be followed if a joint investigation is required.

The interagency agreement must not limit the inspector general's authority or authorized

powers and responsibilities. The agency and the inspector general may coordinate

investigative efforts as necessary or practical, but an interagency agreement must not

diminish, delay, or restrict the inspector general's ability to investigate fraud and misuse

when an independent investigation is pursued.

new text end

new text begin

(d) By December 31, 2027, the Office of the Inspector General must enter into an

interagency agreement with the Department of Education. The interagency agreement must

include a clause on cost sharing for investigations that may require multiagency coordination

and a clause that details what process must be followed if a joint investigation is required.

The interagency agreement must not limit the inspector general's authority or authorized

powers and responsibilities. The agency and the inspector general may coordinate

investigative efforts as necessary or practical, but an interagency agreement must not

diminish, delay, or restrict the inspector general's ability to investigate fraud and misuse

when an independent investigation is pursued. Nothing in Minnesota Statutes, chapter 15E,

authorizes any sanction by the commissioner of education or inspector general that reduces,

pauses, or otherwise interrupts state or federal aid to a school district; charter school;

cooperative unit as defined in Minnesota Statutes, section 123A.24, subdivision 2; or any

library, library system, or library district defined in Minnesota Statutes, section 134.001.

new text end

new text begin

EFFECTIVE DATE.

new text end

new text begin

Paragraph (a) is effective January 1, 2027, or upon federal approval

from the Centers for Medicare and Medicaid Services, whichever is later. The commissioner

of human services must notify the revisor of statutes when the Centers for Medicare and

Medicaid Services approve or deny this section. The remainder of this section is effective

January 1, 2027.

new text end

Sec. 16.
new text begin
APPROPRIATIONS.
new text end

new text begin

(a) $859,000 in fiscal year 2027 is appropriated from the general fund to the commissioner

of administration to establish the Office of the Inspector General. The base for this

appropriation is $859,000 in fiscal year 2028 and $0 in fiscal year 2029 and each fiscal year

thereafter.

new text end

new text begin

(b) $229,000 in fiscal year 2027 is appropriated from the general fund to the commissioner

of children, youth, and families to coordinate with the Office of the Inspector General as

required under this act. This appropriation is available until June 30, 2028. The base for

this appropriation is $246,000 in fiscal year 2029 and each fiscal year thereafter.

new text end

new text begin

(c) $487,000 in fiscal year 2027 is appropriated from the general fund to the commissioner

of health to coordinate with the Office of the Inspector General as required under this act.

new text end

new text begin

(d) $467,000 in fiscal year 2027 is appropriated from the general fund to the commissioner

of human services to coordinate with the Office of the Inspector General as required under

this act. The base for this appropriation is $542,000 in fiscal year 2028 and each fiscal year

thereafter.

new text end

new text begin

(e) $21,000 in fiscal year 2027 is appropriated from the general fund to the executive

director of the Legislative Coordinating Commission to support the Legislative Inspector

General Advisory Commission. The base for this appropriation is $7,000 in fiscal year 2028

and each fiscal year thereafter.

new text end

new text begin

(f) $3,034,000 in fiscal year 2027 is appropriated from the general fund to the Office of

the Inspector General for purposes of this act. The base for this appropriation is $6,432,000

in fiscal year 2028 and $6,439,000 in fiscal year 2029. The commissioner of administration,

in consultation with the commissioner of management and budget, may transfer amounts

in fiscal year 2027 to the commissioner of administration for office build-out, cost of space,

office equipment, and other costs directly related to the establishment of the office.

new text end

ARTICLE 2

CONFORMING ITEMS AND REPEALERS

Section 1.

Minnesota Statutes 2024, section 3.971, is amended by adding a subdivision

to read:

new text begin

Subd. 3b.

new text end

new text begin

Public reports of fraud and misuse.

new text end

new text begin

Notwithstanding the classification of

data as not public, the legislative auditor must refer all credible reports from the public

about potential fraud or misuse, as the terms are defined in chapter 15E, to the inspector

general. The legislative auditor must coordinate reviews and investigations with the inspector

general when coordination conserves resources and does not compromise the reviews or

investigations.

new text end

Sec. 2.

Minnesota Statutes 2025 Supplement, section 10A.01, subdivision 35, is amended

to read:

Subd. 35.

Public official.

"Public official" means any:

(1) member of the legislature;

(2) individual employed by the legislature as secretary of the senate, legislative auditor,

director of the Legislative Budget Office, chief clerk of the house of representatives, revisor

of statutes, or researcher, legislative analyst, fiscal analyst, or attorney in the Office of

Senate Counsel, Research and Fiscal Analysis, House Research, or the House Fiscal Analysis

Department;

(3) constitutional officer in the executive branch and the officer's chief administrative

deputy;

(4) solicitor general or deputy, assistant, or special assistant attorney general;

(5) commissioner, deputy commissioner, or assistant commissioner of any state

department or agency as listed in section
15.01
or
15.06
, or the state chief information

officer;

(6) member, chief administrative officer, or deputy chief administrative officer of a state

board or commission that has either the power to adopt, amend, or repeal rules under chapter

14
, or the power to adjudicate contested cases or appeals under chapter
14
;

(7) individual employed in the executive branch who is authorized to adopt, amend, or

repeal rules under chapter
14
or adjudicate contested cases under chapter
14
;

(8) executive director of the State Board of Investment;

(9) deputy of any official listed in clauses (7) and (8);

(10) judge of the Workers' Compensation Court of Appeals;

(11) administrative law judge or compensation judge in the State Office of Administrative

Hearings or unemployment law judge in the Department of Employment and Economic

Development;

(12) member, regional administrator, division director, general counsel, or operations

manager of the Metropolitan Council;

(13) member or chief administrator of a metropolitan agency;

(14) director of the Division of Alcohol and Gambling Enforcement in the Department

of Public Safety;

(15) member or executive director of the Health and Education Facilities Authority;

(16) member of the board of directors or president of Enterprise Minnesota, Inc.;

(17) member of the board of directors or executive director of the Minnesota State High

School League;

(18) member of the Minnesota Ballpark Authority established in section
473.755
;

(19) citizen member of the Legislative-Citizen Commission on Minnesota Resources;

(20) manager of a watershed district, or member of a watershed management organization

as defined under section
103B.205, subdivision 13
;

(21) supervisor of a soil and water conservation district;

(22) director of Explore Minnesota Tourism;

(23) citizen member of the Lessard-Sams Outdoor Heritage Council established in section

97A.056;

(24) citizen member of the Clean Water Council established in section
114D.30
;

(25) member or chief executive of the Minnesota Sports Facilities Authority established

in section
473J.07
;

(26) district court judge, appeals court judge, or supreme court justice;

(27) county commissioner;

(28) member of the Greater Minnesota Regional Parks and Trails Commission;

(29) member of the Destination Medical Center Corporation established in section

469.41
;
deleted text begin
or
deleted text end

(30) chancellor or member of the Board of Trustees of the Minnesota State Colleges

and Universities
deleted text begin
.
deleted text end
new text begin
; or
new text end

new text begin

(31) inspector general appointed under chapter 15E, or individual employed by the Office

of the Inspector General.

new text end

Sec. 3.

Minnesota Statutes 2024, section 15A.0815, subdivision 2, is amended to read:

Subd. 2.

Agency head salaries.

The salary for a position listed in this subdivision shall

be determined by the Compensation Council under section
15A.082
. The commissioner of

management and budget must publish the salaries on the department's website. This

subdivision applies to the following positions:

Commissioner of administration;

Commissioner of agriculture;

Commissioner of education;

Commissioner of children, youth, and families;

Commissioner of commerce;

Commissioner of corrections;

Commissioner of health;

Commissioner, Minnesota Office of Higher Education;

Commissioner, Minnesota IT Services;

Commissioner, Housing Finance Agency;

Commissioner of human rights;

Commissioner of human services;

Commissioner of labor and industry;

Commissioner of management and budget;

Commissioner of natural resources;

Commissioner, Pollution Control Agency;

Commissioner of public safety;

Commissioner of revenue;

Commissioner of employment and economic development;

Commissioner of transportation;

Commissioner of veterans affairs;

Executive director of the Gambling Control Board;

Executive director of the Minnesota State Lottery;

Executive director of the Office of Cannabis Management;

new text begin

Inspector general;

new text end

Commissioner of Iron Range resources and rehabilitation;

Commissioner, Bureau of Mediation Services;

Ombudsman for mental health and developmental disabilities;

Ombudsperson for corrections;

Chair, Metropolitan Council;

Chair, Metropolitan Airports Commission;

School trust lands director;

Executive director of pari-mutuel racing;

Commissioner, Public Utilities Commission;

Chief Executive Officer, Direct Care and Treatment; and

Director of the Office of Emergency Medical Services.

Sec. 4.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to

read:

new text begin

Subd. 8.

new text end

new text begin

Limits on receiving public funds; prohibition.

new text end

new text begin

(a) This subdivision does not

authorize any action that reduces, pauses, or otherwise interrupts state or federal aid to a

school district; charter school; cooperative unit as defined in section 123A.24, subdivision

2; or any library, library system, or library district defined in section 134.001.

new text end

new text begin

(b) For purposes of this subdivision, "program participant" includes individuals or persons

who have an ownership interest in, control of, or the ability to control a program participant

in a department program.

new text end

new text begin

(c) If a program participant is excluded from a department program, the commissioner

may:

new text end

new text begin

(1) prohibit the excluded program participant from enrolling in, receiving grant money

from, or registering in any other program administered by the commissioner; and

new text end

new text begin

(2) disenroll or disqualify the excluded program participant from any other program

administered by the commissioner.

new text end

new text begin

(d) If a program participant enrolled, licensed, or receiving funds under any contract or

program administered by a Minnesota state agency or federal agency is excluded from that

program, the inspector general shall notify the commissioner who may:

new text end

new text begin

(1) prohibit the excluded program participant from enrolling in, becoming licensed,

receiving grant money from, or registering in any other program administered by the

commissioner; and

new text end

new text begin

(2) disenroll or disqualify the excluded program participant from any other program

administered by the commissioner.

new text end

new text begin

(e) The duration of a prohibition, disenrollment, revocation, suspension, or

disqualification under paragraph (c) must last for the longest applicable sanction or

disqualifying period in effect for the program participant permitted by state or federal law.

The duration of a prohibition, disenrollment, revocation, suspension, or disqualification

under paragraph (d) may last up until the longest applicable sanction or disqualifying period

in effect for the program participant as permitted by state or federal law.

new text end

Sec. 5.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to

read:

new text begin

Subd. 9.

new text end

new text begin

Notice.

new text end

new text begin

Within five days of taking an action against a program participant under

subdivision 8, paragraph (c) or (d), the commissioner must send notice of the action to the

program participant. The notice must state the:

new text end

new text begin

(1) basis for the action;

new text end

new text begin

(2) effective date of the action;

new text end

new text begin

(3) right to appeal the action; and

new text end

new text begin

(4) requirements and procedures for reinstatement.

new text end

Sec. 6.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to

read:

new text begin

Subd. 10.

new text end

new text begin

Appeal.

new text end

new text begin

(a) Upon receipt of a notice under subdivision 9, a program participant

may request a contested case hearing, as defined in section 14.02, subdivision 3, by filing

with the commissioner a written request of appeal. The appeal request must be received by

the commissioner no later than 30 days after the date the notification was mailed to the

program participant.

new text end

new text begin

(b) The appeal request must specify:

new text end

new text begin

(1) each disputed item and the reason for the dispute;

new text end

new text begin

(2) the authority in statute or rule upon which the program participant relies for each

disputed item;

new text end

new text begin

(3) the name and address of the person or entity with whom contacts may be made

regarding the appeal; and

new text end

new text begin

(4) other information required by the commissioner.

new text end

new text begin

(c) Unless a timely and proper appeal is received by the commissioner, the action of the

commissioner shall be considered final and binding on the effective date of the action as

stated in the notice under subdivision 9, clause (2).

new text end

Sec. 7.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to

read:

new text begin

Subd. 11.

new text end

new text begin

Withholding of payments.

new text end

new text begin

(a) This subdivision does not authorize withholding

of payments that reduces, pauses, or otherwise interrupts state or federal aid to a school

district; charter school; cooperative unit as defined in section 123A.24, subdivision 2; or

any library, library system, or library district defined in section 134.001.

new text end

new text begin

(b) Except as otherwise provided by state or federal law, the inspector general shall

notify and recommend to the commissioner to withhold payments to a program participant

in any program administered by the commissioner, who shall have the authority to withhold

such payments to the extent permitted under federal law, if the inspector general determines

there is a credible allegation of fraud or misuse for which an investigation is pending for a

program administered by the department, a Minnesota state agency, or a federal agency.

new text end

new text begin

(c) Allegations are considered credible when they have indicia of reliability and the

inspector general has reviewed the evidence and acts on a case-by-case basis. A credible

allegation of fraud is an allegation that has been verified by the commissioner from any

source, including but not limited to:

new text end

new text begin

(1) fraud hotline complaints;

new text end

new text begin

(2) claims data mining; and

new text end

new text begin

(3) patterns identified through provider audits, civil false claims cases, and investigations.

new text end

new text begin

(d) The commissioner must send notice of the withholding of payments within five days

of taking such action. The notice must:

new text end

new text begin

(1) state that payments are being withheld according to this paragraph;

new text end

new text begin

(2) set forth the general allegations as to the reasons for the withholding action, but need

not disclose any specific information concerning an ongoing investigation;

new text end

new text begin

(3) state that the withholding is for a temporary period and cite the circumstances under

which withholding will be terminated; and

new text end

new text begin

(4) inform the program participant of the right to submit written evidence for

consideration by the commissioner.

new text end

new text begin

(e) The withholding of payments shall not continue after the inspector general determines

there is insufficient evidence of fraud by the program participant or after legal proceedings

relating to the alleged fraud are completed, unless the commissioner has sent notice under

subdivision 5 of the intention to take an additional action related to the program participant's

participation in a program administered by the commissioner. If the inspector general

determines there is insufficient evidence of fraud by the program participant or after legal

proceedings relating to the alleged fraud are completed, the inspector general shall notify

the commissioner within ten days of the determination.

new text end

new text begin

(f) The withholding of payments is a temporary action and shall not be subject to appeal

under this subdivision or chapter 14.

new text end

Sec. 8.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to

read:

new text begin

Subd. 12.

new text end

new text begin

Office of the Inspector General; reports.

new text end

new text begin

The commissioner must submit

final investigative reports to the inspector general, serving under chapter 15E, for any

investigation conducted by the commissioner into fraud or misuse, as the terms are defined

in section 15E.15, within a program administered by the commissioner.

new text end

Sec. 9.

Minnesota Statutes 2024, section 142A.03, is amended by adding a subdivision to

read:

new text begin

Subd. 36.

new text end

new text begin

Office of the Inspector General; reports.

new text end

new text begin

The commissioner must submit

final investigative reports to the inspector general, serving under chapter 15E, for any

investigation conducted by the commissioner into fraud or misuse, as the terms are defined

in section 15E.15, within the child care assistance program.

new text end

Sec. 10.

Minnesota Statutes 2024, section 142A.12, subdivision 5, is amended to read:

Subd. 5.

Withholding of payments.

(a) Except as otherwise provided by state or federal

law, the commissioner may withhold payments to a provider, vendor, individual, associated

individual, or associated entity in any program administered by the commissioner if the

commissioner determines there is a credible allegation of fraud for which an investigation

is pending for a program administered by a Minnesota state or federal agency.

(b) For purposes of this subdivision, "credible allegation of fraud" means an allegation

that has been verified by the commissioner from any source, including but not limited to:

(1) fraud hotline complaints;

(2) claims data mining;

(3) patterns identified through provider audits, civil false claims cases, and law

enforcement investigations;
deleted text begin
and
deleted text end

(4) court filings and other legal documents, including but not limited to police reports,

complaints, indictments, informations, affidavits, declarations, and search warrants
deleted text begin
.
deleted text end
new text begin
; and
new text end

new text begin

(5) information from the inspector general, including information listed on the inspector

general's exclusion list under section 15E.25, subdivision 1, clause (13).

new text end

(c) The commissioner must send notice of the withholding of payments within five days

of taking such action. The notice must:

(1) state that payments are being withheld according to this subdivision;

(2) set forth the general allegations related to the withholding action, except the notice

need not disclose specific information concerning an ongoing investigation;

(3) state that the withholding is for a temporary period and cite the circumstances under

which the withholding will be terminated; and

(4) inform the provider, vendor, individual, associated individual, or associated entity

of the right to submit written evidence to contest the withholding action for consideration

by the commissioner.

(d) If the commissioner withholds payments under this subdivision, the provider, vendor,

individual, associated individual, or associated entity has a right to request administrative

reconsideration. A request for administrative reconsideration must be made in writing, state

with specificity the reasons the payment withholding decision is in error, and include

documents to support the request. Within 60 days from receipt of the request, the

commissioner shall judiciously review allegations, facts, evidence available to the

commissioner, and information submitted by the provider, vendor, individual, associated

individual, or associated entity to determine whether the payment withholding should remain

in place.

(e) The commissioner shall stop withholding payments if the commissioner determines

there is insufficient evidence of fraud by the provider, vendor, individual, associated

individual, or associated entity or when legal proceedings relating to the alleged fraud are

completed, unless the commissioner has sent notice under subdivision 3 to the provider,

vendor, individual, associated individual, or associated entity.

(f) The withholding of payments is a temporary action and is not subject to appeal under

section
256.0451
or chapter 14.

Sec. 11.

Minnesota Statutes 2024, section 144.05, is amended by adding a subdivision to

read:

new text begin

Subd. 9.

new text end

new text begin

Office of the Inspector General; reports.

new text end

new text begin

The commissioner must submit

final investigative reports to the inspector general serving under chapter 15E for any

investigation conducted by the commissioner into fraud or misuse, as the terms are defined

in section 15E.15, within the special supplemental nutrition program for women, infants,

and children.

new text end

Sec. 12.

Minnesota Statutes 2024, section 245.095, subdivision 5, is amended to read:

Subd. 5.

Withholding of payments.

(a) Except as otherwise provided by state or federal

law, the commissioner may withhold payments to a provider, vendor, individual, associated

individual, or associated entity in any program administered by the commissioner if the

commissioner determines there is a credible allegation of fraud for which an investigation

is pending for a program administered by a Minnesota state or federal agency.

(b) For purposes of this subdivision, "credible allegation of fraud" means an allegation

that has been verified by the commissioner from any source, including but not limited to:

(1) fraud hotline complaints;

(2) claims data mining;

(3) patterns identified through provider audits, civil false claims cases, and law

enforcement investigations;
deleted text begin
and
deleted text end

(4) court filings and other legal documents, including but not limited to police reports,

complaints, indictments, informations, affidavits, declarations, and search warrants
deleted text begin
.
deleted text end
new text begin
; and
new text end

new text begin

(5) information from the inspector general, including information listed on the inspector

general's exclusion list under section 15E.25, subdivision 1, clause (13)

new text end

(c) The commissioner must send notice of the withholding of payments within five days

of taking such action. The notice must:

(1) state that payments are being withheld according to this subdivision;

(2) set forth the general allegations related to the withholding action, except the notice

need not disclose specific information concerning an ongoing investigation;

(3) state that the withholding is for a temporary period and cite the circumstances under

which the withholding will be terminated; and

(4) inform the provider, vendor, individual, associated individual, or associated entity

of the right to submit written evidence to contest the withholding action for consideration

by the commissioner.

(d) If the commissioner withholds payments under this subdivision, the provider, vendor,

individual, associated individual, or associated entity has a right to request administrative

reconsideration. A request for administrative reconsideration must be made in writing, state

with specificity the reasons the payment withholding decision is in error, and include

documents to support the request. Within 60 days from receipt of the request, the

commissioner shall judiciously review allegations, facts, evidence available to the

commissioner, and information submitted by the provider, vendor, individual, associated

individual, or associated entity to determine whether the payment withholding should remain

in place.

(e) The commissioner shall stop withholding payments if the commissioner determines

there is insufficient evidence of fraud by the provider, vendor, individual, associated

individual, or associated entity or when legal proceedings relating to the alleged fraud are

completed, unless the commissioner has sent notice under subdivision 3 to the provider,

vendor, individual, associated individual, or associated entity.

(f) The withholding of payments is a temporary action and is not subject to appeal under

section
256.045
or chapter 14.

Sec. 13.

Minnesota Statutes 2024, section 256.01, is amended by adding a subdivision to

read:

new text begin

Subd. 45.

new text end

new text begin

Office of the Inspector General; reports.

new text end

new text begin

The commissioner must submit

final investigative reports to the inspector general, serving under chapter 15E, for any

investigation conducted by the commissioner into fraud or misuse, as the terms are defined

in section 15E.15, within the Medicaid program.

new text end

Sec. 14.

Minnesota Statutes 2024, section 609.456, subdivision 2, is amended to read:

Subd. 2.

Legislative auditor
new text begin
and inspector general
new text end
.

Whenever an employee or officer

of the state, University of Minnesota, or other organization listed in section
3.971, subdivision

6
, discovers evidence of
new text begin
fraud,
new text end
theft, embezzlement, or
new text begin
other
new text end
unlawful use of public funds

or property, the employee or officer shall
deleted text begin
, except when to do so would knowingly impede

or otherwise interfere with an ongoing criminal investigation,
deleted text end
promptly report in writing to

the legislative auditor
new text begin
or inspector general
new text end
a detailed description of the alleged incident or

incidents.