Comparison of actual expenditures in forecasted programs to projected spending from prior forecasts required, notice to legislative auditor when actual expenditures deviate required, other budget oversight and accountability provisions modified, and money appropriated.

A bill for an act

relating to human services; requiring comparison of actual expenditures in

forecasted programs to projected spending from prior forecasts; requiring notice

to the legislative auditor when actual expenditures deviate from projected spending

by a specified amount; establishing contingent cancellation of certain forecasted

programs and services if actual expenditures deviate from projected spending by

a specified amount; providing direction to the commissioner of management and

budget regarding how to account for contingent cancellations of forecasted

programs and services when preparing certain forecasts; requiring notice to certain

committees; appropriating money; amending Minnesota Statutes 2024, sections

3.972, subdivisions 2a, 2b, by adding a subdivision; 16A.103, by adding a

subdivision; 142A.03, by adding subdivisions; 256.01, by adding subdivisions.

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

Section 1.

Minnesota Statutes 2024, section 3.972, subdivision 2a, is amended to read:

Subd. 2a.

Audits of Department of Human Services.

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(a)
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To ensure effective legislative

oversight and accountability, the legislative auditor shall give high priority to auditing the

programs, services, and benefits administered by the Department of Human Services. As

resources permit, the legislative auditor shall track and assess expenditures throughout the

human service delivery system, from the department to the point of service delivery, and

determine whether human services programs, services, and benefits are being provided

cost-effectively and only to eligible individuals and organizations in compliance with

applicable legal requirements.

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(b) As resources permit, the legislative auditor shall audit the programs and services

identified by the commissioner of human services in the commissioner's notice to the

legislative auditor under section 256.01, subdivision 45, and shall determine the causes of

the deviation in actual expenditures from projected expenditures. The legislative auditor

may forgo an audit and accept the explanation of the deviation provided by the commissioner

if the legislative auditor determines that the commissioner's explanation reasonably explains

the entire deviation.

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Sec. 2.

Minnesota Statutes 2024, section 3.972, subdivision 2b, is amended to read:

Subd. 2b.

Audits of managed care organizations.

(a) The legislative auditor shall audit

each managed care organization that contracts with the commissioner of human services to

provide health care services under sections
256B.69
,
256B.692
, and
256L.12
. The legislative

auditor shall design the audits to determine if a managed care organization used the public

money in compliance with federal and state laws, rules, and in accordance with provisions

in the managed care organization's contract with the commissioner of human services. The

legislative auditor shall determine the schedule and scope of the audit work and may contract

with vendors to assist with the audits. The managed care organization must cooperate with

the legislative auditor and must provide the legislative auditor with all data, documents, and

other information, regardless of classification, that the legislative auditor requests to conduct

an audit. The legislative auditor shall periodically report audit results and recommendations

to the Legislative Audit Commission and the chairs and ranking minority members of the

legislative committees with jurisdiction over health and human services policy and finance.

(b) For purposes of this subdivision, a "managed care organization" means a

demonstration provider as defined under section
256B.69, subdivision 2
.

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(c) As resources permit, the legislative auditor shall audit each managed care organization

to determine the cause of the deviation in actual expenditures from projected expenditures

for the services identified by the commissioner of human services in the commissioner's

notice to the legislative auditor under section 256.01, subdivision 45. The legislative auditor

may forgo an audit and accept the explanation of the deviation provided by the commissioner

if the legislative auditor determines that the commissioner's explanation reasonably explains

the entire deviation. For audits conducted under this paragraph, the requirements of paragraph

(a) apply.

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Sec. 3.

Minnesota Statutes 2024, section 3.972, is amended by adding a subdivision to

read:

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Subd. 2e.

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Audits of Department of Children, Youth, and Families.

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As resources

permit, the legislative auditor shall audit the programs and services identified by the

commissioner of children, youth, and families in the commissioner's notice to the legislative

auditor under section 142A.03, subdivision 36, and determine the causes of the deviation

in actual expenditures from projected expenditures. The legislative auditor may forgo an

audit and accept the explanation of the deviation provided by the commissioner if the

legislative auditor determines that the commissioner's explanation reasonably explains the

entire deviation.

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Sec. 4.

Minnesota Statutes 2024, section 16A.103, is amended by adding a subdivision to

read:

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Subd. 1k.

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Contingent expenditure reductions.

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In preparing a February forecast during

the first fiscal year of a biennium under subdivision 1, notwithstanding the continuation of

current law assumption under subdivision 1a, the commissioner must not include estimates

of the expenditure reduction that would result beginning July 1 of the second year of the

biennium (1) from actions taken by the commissioner of human services under section

256.01, subdivision 46; or (2) from actions taken by the commissioner of children, youth,

and families under section 142A.03, subdivision 37. For the purposes of subsequent forecasts,

the commissioner must treat actions taken by the commissioner of human services under

section 256.01, subdivision 46, or by the commissioner of children, youth, and families

under section 142A.03, subdivision 37, in the same manner as an act finally enacted after

a February forecast.

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Sec. 5.

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

read:

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Subd. 36.

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Forecast trend analysis and notice.

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(a) Beginning January 15, 2027, and by

the 15th calendar day following the end of each quarter thereafter, the commissioner must

provide an accounting of actual expenditures in all forecasted programs for the prior quarter,

itemized by service. The commissioner must update the accounting of actual expenditures

from prior quarters as necessary. The commissioner must post the quarterly actual

expenditures on the department's website.

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(b) With each quarterly accounting of actual expenditures, the commissioner must

compare the actual expenditures by service to the forecasted expenditures from the four

most recent February forecasts, after accounting for any increases attributable to changes

in law that may have occurred between the February forecasts. The commissioner must post

the comparison of actual expenditures to the four most recent February forecasts on the

department's website and include data visualizations of the comparisons using data

visualization best practices. The commissioner must also include at least ten years of

historical actual expenditures by program and by service.

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(c) If in any given quarter the actual expenditures for a program or service exceed the

projected spending for that program or service in the most recent February forecast by more

than five percent, after accounting for any increases attributable to changes in law during

intervening legislative sessions, the commissioner must note the deviation from projected

spending on the department's website, provide notice of the deviation to the chairs and

ranking minority members of the legislative committees with jurisdiction over the program

or service, and provide notice of the deviation to the legislative auditor.

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(d) For an expenditure deviation described in paragraph (c), the commissioner may

include with the posted accounting of actual expenditures a narrative providing the

commissioner's explanation of the deviation from the projected expenditures. The

commissioner may also include the narrative in the commissioner's notice to the chairs and

ranking minority members of the relevant legislative committees and in the commissioner's

notice to the legislative auditor.

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(e) If an accounting of actual expenditures released in January of the first fiscal year of

a biennium reveals that since the most recent February forecast, after accounting for any

increases attributable to changes in law during intervening legislative sessions, the actual

expenditures for a program or service exceeded the projected expenditures for that program

or service by more than ten percent, the commissioner must provide special notice of the

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

jurisdiction over the program or service, the chair and ranking minority member of the

senate Finance Committee, the chair and ranking minority member of the house of

representatives Ways and Means Committee, and the majority and minority caucus leaders

of both legislative bodies. Before March 31 in a year in which the commissioner sends a

special notice under this paragraph, the commissioner must provide a second special notice

to the same individuals to whom the commissioner sent the first special notice. In the second

special notice, the commissioner must detail the consequences that will result from the

commissioner's actions under subdivision 37 in the event the legislature does not act to

prevent the commissioner from taking those actions.

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Sec. 6.

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

read:

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Subd. 37.

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Contingent program and service terminations and modifications.

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(a)

Except as otherwise provided in this subdivision, if an accounting of actual expenditures

prepared according to subdivision 36 and released in January of the first fiscal year of a

biennium reveals that since the most recent February forecast the actual expenditures for a

program or service, after accounting for any increases attributable to changes in law during

intervening legislative sessions, exceeded the projected spending for that program or service

by more than ten percent, the commissioner must terminate the program or service effective

July 1 of the second year of the biennium. If the termination of the program or service

requires federal approval, the commissioner must initiate the process to seek federal approval

by March 31.

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(b) This subdivision does not apply if a finally enacted act explicitly directs the

commissioner not to take the actions required under this subdivision.

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Sec. 7.

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

read:

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Subd. 45.

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Forecast trend analysis and notice.

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(a) For purposes of this subdivision, the

following terms have the meanings given:

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(1) "demonstration provider" has the meaning given in section 256B.69, subdivision 2;

and

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(2) "service," when used in the context of the medical assistance program, means any

service listed in section 256B.0625, any service defined in a home and community-based

waiver plan, and any service available through a 1115 demonstration waiver.

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(b) Beginning January 15, 2027, and by the 15th calendar day following the end of each

quarter thereafter, the commissioner of human services must provide an accounting of actual

expenditures in all forecasted programs for the prior quarter, itemized by service. The

commissioner must include aggregate demonstration provider spending by service and

merge aggregate demonstration provider spending for each service with the aggregate

fee-for-service spending for the same service. The commissioner must update the accounting

of actual expenditures from prior quarters as necessary. The commissioner must post the

quarterly actual expenditures on the department's website.

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(c) With each quarterly accounting of actual expenditures, the commissioner must

compare the actual expenditures by service to the forecasted expenditures from the four

most recent February forecasts, after accounting for any increases attributable to changes

in law that may have occurred between the February forecasts. The commissioner must post

the comparison of actual expenditures to the four most recent February forecasts on the

department's website and include data visualizations of the comparisons using data

visualization best practices. The commissioner must also include at least ten years of

historical actual expenditures by program and by service.

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(d) If in any given quarter the actual expenditures for a program or service exceed the

projected spending for that program or service in the most recent February forecast by more

than five percent, after accounting for any increases attributable to changes in law during

intervening legislative sessions, the commissioner must note the deviation from projected

spending on the department's website, provide notice of the deviation to the chairs and

ranking minority members of the legislative committees with jurisdiction over the program

or service, and provide notice of the deviation to the legislative auditor.

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(e) For an expenditure deviation described in paragraph (d), the commissioner may

include with the posted accounting of actual expenditures a narrative providing the

commissioner's explanation of the deviation from the projected expenditures. The

commissioner may also include the narrative in the commissioner's notice to the chairs and

ranking minority members of the relevant legislative committees and in the commissioner's

notice to the legislative auditor.

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(f) If an accounting of actual expenditures released in January of the first fiscal year of

a biennium reveals that since the most recent February forecast, after accounting for any

increases attributable to changes in law during intervening legislative sessions, the actual

expenditures for a program or service exceeded the projected expenditures for that program

or service by more than ten percent, the commissioner must provide special notice of the

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

jurisdiction over the program or services, the chair and ranking minority member of the

senate Finance Committee, the chair and ranking minority member of the house of

representatives Ways and Means Committee, and the majority and minority caucus leaders

of both legislative bodies. Before March 31 in a year in which the commissioner sends a

special notice under this paragraph, the commissioner must provide a second special notice

to the same individuals to whom the commissioner sent the first special notice. In the second

special notice, the commissioner must detail the consequences that will result from the

commissioner's actions under subdivision 46 in the event the legislature does not act to

prevent the commissioner from taking those actions.

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Sec. 8.

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

read:

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Subd. 46.

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Contingent program and service terminations and modifications.

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(a)

Except as otherwise provided in this subdivision, if an accounting of actual expenditures

prepared according to subdivision 45 and released in January of the first fiscal year of a

biennium reveals that since the most recent February forecast the actual expenditures for a

program or service exceeded the projected expenditures for that program or service by more

than ten percent, after accounting for any increases attributable to changes in law during

intervening legislative sessions, the commissioner must terminate the program or service

effective July 1 of the second year of the biennium. If the termination of the program or

service requires federal approval, the commissioner must initiate the process to seek federal

approval by the last day of March.

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(b) Paragraph (a) does not apply to mandatory medical assistance benefits. If the

commissioner determines that actual expenditures for a mandatory medical assistance benefit

exceed the projected spending for that program or service in the most recent February

forecast by more than ten percent, after accounting for any increases attributable to changes

in law during any intervening legislative sessions, the commissioner must, in the aggregate,

prospectively reduce payment rates effective July 1 of the second year of the biennium for

medical assistance providers of the service to eliminate any additional growth in actual

expenditures for the mandatory benefit. If the payment reductions require federal approval,

the commissioner must initiate the process to seek federal approval by the last day of March.

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(c) This subdivision does not apply if a finally enacted act explicitly directs the

commissioner not to take the actions required under this subdivision.

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Sec. 9.
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APPROPRIATION; EVALUATION OF DEVIATIONS FROM PROJECTED

SPENDING.
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$....... in fiscal year 2027 is appropriated from the general fund to the legislative auditor

for evaluations of deviations from projected spending under Minnesota Statutes, section

3.972, subdivisions 2a, 2b, and 2e.

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Sec. 10.
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APPROPRIATION; CHILDREN, YOUTH, AND FAMILIES FORECAST

TREND ANALYSIS.
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$....... in fiscal year 2027 is appropriated from the general fund to the commissioner of

children, youth, and families for forecast trend analyses under Minnesota Statutes, section

142A.03, subdivision 36.

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Sec. 11.
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APPROPRIATION; HUMAN SERVICES FORECAST TREND ANALYSIS.
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$....... in fiscal year 2027 is appropriated from the general fund to the commissioner of

human services for forecast trend analyses under Minnesota Statutes, section 256.01,

subdivision 45.

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