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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.