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SF 1436

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 02/28/2007

Current Version - as introduced

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10.32 10.33

A bill for an act
relating to state government; defining political subdivision for the purposes of
the chapter governing the state auditor; applying provisions for the state auditor
to all political subdivisions; amending Minnesota Statutes 2006, sections 6.47;
6.51; 6.54; 6.55; 6.551; 6.57; 6.59; 6.60; 6.62, subdivision 2; 6.63; 6.64; 6.65;
6.66; 6.67; 6.68; 6.70; 6.71; 6.76; 103D.355; proposing coding for new law in
Minnesota Statutes, chapter 6; repealing Minnesota Statutes 2006, section 6.56,
subdivision 1.

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

Section 1.

new text begin [6.465] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For the purposes of this chapter, the terms defined in
this section have the meaning given them.
new text end

new text begin Subd. 2. new text end

new text begin Political subdivision. new text end

new text begin "Political subdivision" means a county, home rule
charter or statutory city, town, school district, metropolitan or regional agency, public
corporation, political subdivision, or special district as defined in subdivision 3. "Political
subdivision" does not include a metropolitan or regional agency or a public corporation
audited by the legislative auditor.
new text end

new text begin Subd. 3. new text end

new text begin Special district. new text end

new text begin "Special district" means a public entity with a special
or limited purpose, financed by property tax revenues or other public funds, that is
not included in a city, county, or town financial report as a component of that local
government, that is created or authorized by law, and that is governed by (1) persons
directly elected to the governing board of the district, (2) persons appointed to the
governing board of the district by local elected officials, (3) local elected officials who
serve on the board by virtue of their elected office, or (4) a combination of these methods
of selection. Special district includes special taxing districts listed in section 275.066.
new text end

Sec. 2.

Minnesota Statutes 2006, section 6.47, is amended to read:


6.47 ACCOUNTING AND BUDGETING SYSTEMS; INVESTIGATION,
FORMS.

The state auditor shall inquire into the accounting and budgeting systems of all
deleted text begin local units of governmentdeleted text end new text begin political subdivisions new text end and shall prescribe suitable systems of
accounts and budgeting, and forms, books, and instructions concerning the same. At the
request of any deleted text begin local unit of governmentdeleted text end new text begin political subdivision new text end the state auditor may install
such systems. deleted text begin The state auditor shall recommend a form for order- and warrant-checks of
all local units of government which shall conform, so far as consistent with statutory and
charter requirements, to approved banking practice in order to facilitate handling of such
instruments by banks and other depositories.
deleted text end

Sec. 3.

Minnesota Statutes 2006, section 6.51, is amended to read:


6.51 deleted text begin SCHOOL DISTRICTS, TOWNS, AND STATUTORY CITIESdeleted text end new text begin OTHER
POLITICAL SUBDIVISIONS
new text end .

All powers and duties of the state auditor herein imposed and conferred with respect
to the supervision, inspection, and examination of books and accounts of cities in section
6.50 are herewith extended to all deleted text begin school districts, towns, and statutory citiesdeleted text end new text begin political
subdivisions
new text end of this state. A copy of the report of such examination shall be filed, subject
to public inspection, with the clerk new text begin or chief administrative officer new text end of the deleted text begin town, statutory
city, or school district
deleted text end new text begin political subdivision new text end receiving such examination, and an additional
copy with the county auditor of the county in which the administrative offices of deleted text begin such
town, statutory city, or school district
deleted text end new text begin the political subdivision new text end are located. If such report
disclose malfeasance, misfeasance, or nonfeasance in office, the state auditor shall file
such copy with the county attorney of the county in which the administrative offices of
deleted text begin such school district, town, or statutory citydeleted text end new text begin the political subdivision new text end are located, and the
county attorney shall institute such proceedings as the law and the public interest require.

Sec. 4.

Minnesota Statutes 2006, section 6.54, is amended to read:


6.54 EXAMINATION OF deleted text begin COUNTY AND MUNICIPALdeleted text end new text begin POLITICAL
SUBDIVISION
new text end RECORDS PURSUANT TO PETITION.

new text begin Subdivision 1. new text end

new text begin Petition of voters for audit. new text end

The registered voters in a deleted text begin county or
home rule charter or statutory city
deleted text end new text begin political subdivision other than a town or school district
new text end or the electors at an annual or special town meeting of a town may petition the state
auditor to examine the books, records, accounts, and affairs of the deleted text begin county, home rule
charter or statutory city, town,
deleted text end new text begin political subdivision new text end or of any organizational unit, activity,
project, enterprise, or fund thereof; and the scope of the examination may be limited by the
petition, but the examination shall cover, at least, all cash received and disbursed and the
transactions relating thereto, provided that the state auditor shall not examine more than
the six latest years preceding the circulation of the petition, unless it appears to the state
auditor during the examination that the audit period should be extended to permit a full
recovery under bonds furnished by public officers or employees, and may if it appears to
the auditor in the public interest confine the period or the scope of audit or both period and
scope of audit, to less than that requested by the petition. In the case of a deleted text begin county or home
rule charter or statutory city
deleted text end new text begin political subdivision other than a town or school districtnew text end , the
petition shall be signed by a number of registered voters at least equal to 20 percent of
those voting in the last presidential election.

new text begin Subd. 2. new text end

new text begin School districts. new text end

The eligible voters of any school district may petition the
state auditor, who shall be subject to the same restrictions regarding the scope and period
of audit, provided that the petition shall be signed by at least ten eligible voters for each 50
resident pupils in average daily membership during the preceding school year as shown on
the records in the office of the commissioner of education. In the case of school districts,
the petition shall be signed by at least ten eligible voters.

new text begin Subd. 3. new text end

new text begin Certifications required. new text end

At the time it is circulated, every petition shall
contain a statement that the cost of the audit will be borne by the deleted text begin county, city, or school
district
deleted text end new text begin political subdivision new text end as provided by law. Thirty days before the petition is
delivered to the state auditor it shall be presented to the appropriate deleted text begin city or school districtdeleted text end
clerk new text begin or chief administrative officer of the political subdivision new text end and the county auditor.
The county auditor shall determine and certify whether the petition is signed by the
required number of registered voters or eligible voters as the case may be. The certificate
shall be conclusive evidence thereof in any action or proceeding for the recovery of the
costs, charges, and expenses of any examination made pursuant to the petition.

Sec. 5.

Minnesota Statutes 2006, section 6.55, is amended to read:


6.55 EXAMINATION OF RECORDS PURSUANT TO RESOLUTION OF
GOVERNING BODY.

The governing body of any deleted text begin city, town, county or school district,deleted text end new text begin political subdivision
new text end by appropriate resolution may ask the state auditor to examine the books, records,
accounts and affairs of their government, or of any organizational unit, activity, project,
enterprise, or fund thereof; and the state auditor shall examine the same upon receiving,
pursuant to said resolution, a written request signed by a majority of the members of the
governing body; and the governing body of any deleted text begin public utility commission, or of any
public corporation having a body politic and corporate
deleted text end new text begin political subdivisionnew text end , or of any
instrumentality joint or several of any deleted text begin city, town, county, or school districtdeleted text end new text begin political
subdivision
new text end , may request an audit of its books, records, accounts and affairs in the same
manner; provided that the scope of the examination may be limited by the request, but
such examination shall cover, at least, all cash received and disbursed and the transactions
relating thereto. Such written request shall be presented to the clerk, deleted text begin ordeleted text end recording officernew text begin ,
or chief administrative officer
new text end of deleted text begin such city, town, county, school district, public utility
commission, public corporation,
deleted text end new text begin the political subdivision new text end or instrumentality, before
being presented to the state auditor, who shall determine whether the same is signed
by a majority of the members of such governing body and, if found to be so signed,
shall certify such fact, and the fact that such resolution was passed, which certificate
shall be conclusive evidence thereof in any action or proceedings for the recovery of the
costs, charges and expenses of any examination made pursuant to such request. Nothing
contained in any of the laws of the state relating to the state auditor, shall be so construed
as to prevent any deleted text begin county, city, town, or school districtdeleted text end new text begin political subdivision new text end from employing
a certified public accountant to examine its books, records, accounts, and affairs. For the
purposes of this section, the governing body of a town is the town board.

Sec. 6.

Minnesota Statutes 2006, section 6.551, is amended to read:


6.551 EXAMINATION OF GRANTEES AND CONTRACTORS OF deleted text begin LOCAL
GOVERNMENTS
deleted text end new text begin POLITICAL SUBDIVISIONSnew text end .

The state auditor may examine the books, records, documents, and accounting
procedures and practices of a contractor or grantee of a deleted text begin local governmentdeleted text end new text begin political
subdivision
new text end pursuant to section 16C.05, subdivision 5. The examination shall be limited to
the books, records, documents, and accounting procedures and practices that are relevant
to the contract or transaction with the deleted text begin local governmentdeleted text end new text begin political subdivisionnew text end .

Sec. 7.

Minnesota Statutes 2006, section 6.57, is amended to read:


6.57 COST OF EXAMINATION, COLLECTION.

On July deleted text begin first,deleted text end new text begin 1new text end of each year, the state auditor shall certify all uncollected claims for
the examination of any deleted text begin county, city, town, or school district whichdeleted text end new text begin political subdivision
that
new text end have remained unpaid for a period of three months from the date of such claim. The
auditor shall forthwith notify the clerk, deleted text begin ordeleted text end recording officer, new text begin or chief administrative officer
new text end of each deleted text begin county, city, town, or school districtdeleted text end new text begin political subdivision new text end against which the state
has a claim that, if the same is not paid, with interest at the rate of six percent per annum
from the date of the claim, within 90 days, the full amount thereof will be certified to the
county auditor of the county having such examination, or to the county auditor for the
county or counties in which deleted text begin such city, town, or school districtdeleted text end new text begin the political subdivisionnew text end is
situated, for collection by special tax levy, as herein provided. Such notice shall be served
by certified mail and the deposit thereof in the United States mail shall constitute due and
legal service thereof upon the deleted text begin county, city, town, or school districtdeleted text end new text begin political subdivisionnew text end .

Sec. 8.

Minnesota Statutes 2006, section 6.59, is amended to read:


6.59 CLAIM OF STATE FOR COST OF EXAMINATION, CONTEST.

On or before September deleted text begin firstdeleted text end new text begin 1 of each year,new text end following service of the notice, any deleted text begin such
county, city, town, or school district
deleted text end new text begin political subdivisionnew text end may serve notice, in writing,
upon the attorney general that it desires to contest the legality of the state's claim, and
the attorney general shall forthwith file with the court administrator of the district court
of the county having such examination, or in which deleted text begin such city, town, or school districtdeleted text end new text begin
the political subdivision
new text end , or major part thereof, is situated, a verified statement of the
state's claim, duly itemized and serve upon the auditor deleted text begin ordeleted text end new text begin ,new text end clerknew text begin , or chief administrative
officer
new text end of deleted text begin such county, city, town, or school districtdeleted text end new text begin the political subdivisionnew text end , by certified
mail, a copy of such statement. deleted text begin Such county, city, town, or school districtdeleted text end new text begin The political
subdivision
new text end may file with the court administrator of such district court, within ten days
after the service of such statement upon it, verified objections to the state's claim, and such
district court shall thereupon summarily, in or out of term, hear and determine the amount
due the state, if any, for such examination, at a time and place fixed by the court therefor.
The court administrator of court shall certify to the county auditor of the county having
such examination, or to the county auditor of the county or counties in which deleted text begin such city,
town, or school district
deleted text end new text begin the political subdivisionnew text end is situated, the amount so determined
by the court to be due to the state, if any.

Sec. 9.

Minnesota Statutes 2006, section 6.60, is amended to read:


6.60 STATE AUDITOR, CERTIFICATION OF AMOUNTS DUE.

On October deleted text begin first,deleted text end new text begin 1new text end of each year, the state auditor shall certify the respective amounts
due the state from the various deleted text begin counties, cities, towns, and school districtsdeleted text end new text begin political
subdivisions
new text end , including interest computed to July first, following, to the county auditor of
the county having such examination, or to the county auditor of the county in which any
deleted text begin such city, town, or school districtdeleted text end new text begin political subdivision new text end is, in whole or in part, situated. The
county auditor, upon receiving a certificate from the state auditor, or a certificate from the
court administrator, as provided in section 6.59, shall include the amount of the state's
claim, with 25 percent added, in the tax levy for general revenue purposes of the deleted text begin county or
municipality
deleted text end new text begin political subdivision new text end liable therefor, and such additional levy shall not be
within any limitation imposed by law upon the amount of taxes which may be levied for
revenue purposes. Upon completion of the June tax settlement following such levy the
county treasurer shall deduct from the amount apportioned to the deleted text begin county or municipalitydeleted text end
new text begin political subdivision new text end for general revenue purposes, the amount due the state, including
interest, and remit the same to the commissioner of finance.

Sec. 10.

Minnesota Statutes 2006, section 6.62, subdivision 2, is amended to read:


Subd. 2.

Cost of postaudit.

The amount of said levy shall be the amount of the
claim or claims submitted by the state auditor for such services or the auditor's estimate of
the entire cost, and said amount shall be certified by the governing body, after the request
or petition for the audit has been filed, to the county auditor, along with amounts requested
for other governmental purposes. If such levy has been made in excess of statutory
limitations, and if the request or petition is withdrawn after the amount of the levy has
been certified but the levy cannot be canceled because it has been spread on the tax lists,
the governing body shall cause the proceeds of such levy to be transferred to the general
fund and reduce the succeeding year's levy for general purposes accordingly. Provided,
however, deleted text begin counties, cities, and other governmental unitsdeleted text end new text begin political subdivisions new text end whose
financial affairs are required by statute or charter to be audited at regular intervals may
levy annually or biennially in anticipation of the audit expense, without the presentment of
such claim or estimate by the state auditor.

Sec. 11.

Minnesota Statutes 2006, section 6.63, is amended to read:


6.63 APPLICATION.

The units of government set forth in sections deleted text begin 6.56,deleted text end new text begin 6.465, new text end 6.57, 6.59, 6.60, and 6.62
shall be construed, where applicable, to include, in addition to those therein specifically
named, public utility commissions, public corporations, and instrumentalities.

Sec. 12.

Minnesota Statutes 2006, section 6.64, is amended to read:


6.64 COOPERATION WITH PUBLIC ACCOUNTANTS; PUBLIC
ACCOUNTANT DEFINED.

There shall be mutual cooperation between the state auditor and public accountants
in the performance of auditing, accounting, and other related services for deleted text begin counties, cities,
towns, school districts, and other public corporations
deleted text end new text begin political subdivisionsnew text end . For the
purposes of sections 6.64 to 6.71 new text begin and section 6.756, new text end the term public accountant shall have
the meaning ascribed to it in section 412.222.

Sec. 13.

Minnesota Statutes 2006, section 6.65, is amended to read:


6.65 MINIMUM PROCEDURES FOR AUDITORS, PRESCRIBED.

The state auditor shall prescribe minimum procedures and the audit scope for
auditing the books, records, accounts, and affairs of deleted text begin counties and local governmentsdeleted text end
new text begin political subdivisions new text end in Minnesota. The minimum scope for audits of all deleted text begin local
governments
deleted text end new text begin political subdivisions new text end must include financial and legal compliance audits.
Audits of all school districts must include a determination of compliance with uniform
financial accounting and reporting standards. The state auditor shall promulgate an
audit guide for legal compliance audits, in consultation with representatives of the state
auditor, the attorney general, towns, cities, counties, school districts, and private sector
public accountants.

Sec. 14.

Minnesota Statutes 2006, section 6.66, is amended to read:


6.66 CERTAIN PRACTICES OF PUBLIC ACCOUNTANTS AUTHORIZED.

Any public accountant may engage in the practice of auditing the books, records,
accounts, and affairs of deleted text begin counties, cities, towns, school districts, and other public
corporations which
deleted text end new text begin political subdivisions that new text end are not otherwise required by law to be
audited exclusively by the state auditor.

Sec. 15.

Minnesota Statutes 2006, section 6.67, is amended to read:


6.67 PUBLIC ACCOUNTANTS; REPORT OF EVIDENCE POINTING TO
MISCONDUCT.

Whenever a public accountant in the course of auditing the books and affairs of a
deleted text begin county, city, town, school district, or other public corporations,deleted text end new text begin political subdivision new text end shall
discover evidence pointing to nonfeasance, misfeasance, or malfeasance, on the part of
an officer or employee in the conduct of duties and affairs, the public accountant shall
promptly make a report of such discovery to the state auditor and the county attorney of
the county in which the deleted text begin governmental unitdeleted text end new text begin political subdivision new text end is situated and the public
accountant shall also furnish a copy of the report of audit upon completion to said officers.
The county attorney shall act on such report in the same manner as required by law for
reports made to the county attorney by the state auditor.

Sec. 16.

Minnesota Statutes 2006, section 6.68, is amended to read:


6.68 STATE AUDITOR MAY ASSIST PUBLIC ACCOUNTANT IN AUDIT.

Subdivision 1.

Request to governing body.

If in an audit of a deleted text begin county, city, town,
school district, or other public corporation,
deleted text end new text begin political subdivision new text end a public accountant has
need of the assistance of the state auditor, the accountant may obtain such assistance
by requesting the governing body of the deleted text begin governmental unitdeleted text end new text begin political subdivision new text end being
examined to request the state auditor to perform such auditing or investigative services, or
both, as the matter and the public interest require.

Subd. 2.

Auditor's report; payment.

The state auditor shall work in close
cooperation with the public accountant in rendering the services so requested and the
state auditor shall make such report of findings to the county attorney as is required by
law to be made of nonfeasance, misfeasance, and malfeasance discovered by the state
auditor. The deleted text begin governmental unitdeleted text end new text begin political subdivision new text end shall be liable for the payment of
such services so performed by the state auditor in the same manner as if it had requested
the services pursuant to section 6.55.

Sec. 17.

Minnesota Statutes 2006, section 6.70, is amended to read:


6.70 ACCESS TO REPORTS.

The state auditor and the public accountants shall have reasonable access to each
other's audit reports, working papers, and audit programs concerning audits made by each
of deleted text begin counties, cities, towns, school districts, and other public corporationsdeleted text end new text begin the political
subdivisions
new text end .

Sec. 18.

Minnesota Statutes 2006, section 6.71, is amended to read:


6.71 SCOPE OF AUDITOR'S INVESTIGATION.

Whenever the governing body of a deleted text begin county, city, town, or school districtdeleted text end new text begin political
subdivision
new text end shall have requested a public accountant to make an audit of its books and
affairs, and such audit is in progress or has been completed, and registered voters or
electors petition or the governing body requests or both the state auditor to make an
examination covering the same, or part of the same, period, the state auditor may, in the
public interest, limit the scope of the examination to less than that specified in section
6.54, but the scope shall cover, at least, an investigation of those complaints which are
within the state auditor's powers and duties to investigate.

Sec. 19.

new text begin [6.756] SPECIAL DISTRICTS; INFORMATION REQUIRED TO BE
FILED WITH STATE AUDITOR; AUDITS.
new text end

new text begin Subdivision 1. new text end

new text begin Governance documents must be filed. new text end

new text begin Each special district must
file with the state auditor, within 60 days of adoption, any document relating to the
governance of the district, including articles of incorporation, bylaws, or agreements,
and any amendment to these documents.
new text end

new text begin Subd. 2. new text end

new text begin Audit requirements. new text end

new text begin (a) A special district with total annual revenue
greater than the threshold amount for cities under section 412.591, subdivision 3,
paragraph (b), must provide for an annual audit of the district's financial affairs by the
state auditor or a public accountant in accordance with minimum auditing procedures
prescribed by the state auditor.
new text end

new text begin (b) A special district with total annual revenue that is equal to or less than the
threshold amount for cities under section 412.591, subdivision 3, paragraph (b), must
provide for an audit of the district's financial affairs by the state auditor or a public
accountant in accordance with minimum audit procedures prescribed by the state auditor
at least once every five years. The audit must be for a one-year period to be determined
at random by the person conducting the audit. The audited financial statement must be
prepared in a form prescribed by the state auditor similar to the reporting requirements for
cities under 2,500 in population. For any year in which a special district is not audited,
the district must prepare a financial statement in a form prescribed by the state auditor
similar to the reporting requirements for cities reporting on a cash basis and file that
statement with the state auditor.
new text end

new text begin (c) This subdivision does not apply to a special district subject to financial auditing
and reporting requirements under other law.
new text end

new text begin Subd. 3. new text end

new text begin Presentation to governing board; filing with state auditor. new text end

new text begin Except as
provided by other law, financial statements and audits must be completed, presented to the
district's governing board, and filed with the state auditor within 180 days after the end of
the district's fiscal year.
new text end

Sec. 20.

Minnesota Statutes 2006, section 6.76, is amended to read:


6.76 deleted text begin LOCAL GOVERNMENTALdeleted text end new text begin POLITICAL SUBDIVISION
new text end EXPENDITURES FOR LOBBYISTS.

(a) On or before January 31 of each year, all deleted text begin counties, cities, school districts,
metropolitan agencies, regional railroad authorities, and the Metropolitan Council
deleted text end new text begin political
subdivisions
new text end shall report to the state auditor, on forms prescribed by the auditor, their
estimated expenditures paid for the previous calendar year to a lobbyist as defined in
section 10A.01, subdivision 21, except payments to associations of deleted text begin local governmentsdeleted text end
new text begin political subdivisions new text end that are reported under paragraph (b), and to any staff person not
registered as a lobbyist, over 25 percent of whose time is spent during the legislative
session on legislative matters.

(b) Associations of deleted text begin local governmentsdeleted text end new text begin political subdivisions new text end subject to this section
shall report annually, on or before January 31, to the state auditor and the association's
members the proportionate amount of each member's dues spent for lobbying purposes.

new text begin (c) For purposes of this section, "political subdivision" has the meaning given in
section 6.465, but also includes a metropolitan or regional agency or a public corporation
audited by the legislative auditor.
new text end

Sec. 21.

Minnesota Statutes 2006, section 103D.355, is amended to read:


103D.355 ANNUAL AUDIT.

Subdivision 1.

Requirement.

The managers must have an annual audit completed
of the books and accounts of the watershed district. The annual audit may be made by
a new text begin private certified new text end public accountant or by the state auditor. deleted text begin The annual audit must be
made by a certified public accountant or the state auditor at least once every five years, or
when cumulative district revenues or expenditures exceed an amount established by the
board in consultation with the state auditor.
deleted text end

Subd. 2.

Audit by state auditor.

(a) deleted text begin If the annualdeleted text end new text begin An new text end audit deleted text begin is to be madedeleted text end by the
state auditordeleted text begin , the audit mustdeleted text end new text begin may new text end be initiated by a petition of the resident owners of the
watershed district or resolution of the managers of the watershed district. The petition
must request an annual audit pursuant to the authority granted municipalities under
sections 6.54 and 6.55.new text begin The state auditor may conduct such examinations of accounts and
records as the state auditor may deem the public interest to demand.
new text end

(b) If the audit new text begin or examination new text end is made by the state auditor, the watershed
district receiving the examination must pay the state the total cost and expenses of the
examination, including the salaries paid to the examiners while actually engaged in
making the examination. The general fund must be credited with all collections made
for examinations under this subdivision.

Subd. 3.

Reports for state auditor.

The managers must make and submit reports
demanded by the state auditor.

Sec. 22. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 6.56, subdivision 1, new text end new text begin is repealed.
new text end