1.1                          A bill for an act 
  1.2             relating to the legislative auditor; requiring 
  1.3             procedures for the appointment process; clarifying 
  1.4             audit jurisdiction; protecting privacy of certain 
  1.5             audit data; clarifying responsible officers to 
  1.6             prosecute violations of law and recover public money; 
  1.7             granting rights to witnesses in audit investigations; 
  1.8             amending Minnesota Statutes 1994, sections 3.97, 
  1.9             subdivisions 4, 5, 9, and 11; 3.971; 3.972; 3.974; 
  1.10            3.975; 3.978; 10.48; 37.06; 37.07; 85A.02, subdivision 
  1.11            5c; 192.551; 256E.05, subdivision 3a; 268.12, 
  1.12            subdivision 8; 352.03, subdivision 6; 353.03, 
  1.13            subdivision 3a; 353A.05, subdivision 1; 354.06, 
  1.14            subdivision 2a; 360.015, subdivision 19; and 609.456; 
  1.15            Minnesota Statutes 1995 Supplement, section 16B.42, 
  1.16            subdivision 1; repealing Minnesota Statutes 1994, 
  1.17            sections 3.973; 136A.29, subdivision 19; 256B.04, 
  1.18            subdivision 11; 469.207, subdivision 1; 574.02; and 
  1.19            574.03. 
  1.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.21     Section 1.  Minnesota Statutes 1994, section 3.97, 
  1.22  subdivision 4, is amended to read: 
  1.23     Subd. 4.  The legislative auditor is the executive 
  1.24  secretary of the commission.  The legislative auditor shall be 
  1.25  appointed by the commission for a six-year term and serve in the 
  1.26  unclassified service.  Before making an appointment, the 
  1.27  commission shall establish procedures for the appointment 
  1.28  process.  The procedures must include, but need not be limited 
  1.29  to, provisions defining how and when public notices will be 
  1.30  given, how and when applications will be received and reviewed, 
  1.31  and how and when the appointment will be made.  The legislative 
  1.32  auditor shall not at any time while in office hold any other 
  2.1   public office.  The legislative auditor shall not be removed 
  2.2   from office before the expiration of the term of service except 
  2.3   for cause after public hearing.  
  2.4      Sec. 2.  Minnesota Statutes 1994, section 3.97, subdivision 
  2.5   5, is amended to read: 
  2.6      Subd. 5.  The legislative auditor shall establish a 
  2.7   financial audits division and a program evaluation division to 
  2.8   fulfill the duties prescribed in this section.  Each division 
  2.9   shall be supervised by a deputy auditor, appointed by the 
  2.10  legislative auditor, with the approval of the commission, for a 
  2.11  term coterminous with the legislative auditor's term.  With the 
  2.12  prior approval of the commission, the legislative auditor may 
  2.13  remove deputy auditors may be removed before the expiration of 
  2.14  their terms only for cause.  The legislative auditor and deputy 
  2.15  auditors may each appoint a confidential secretary to serve at 
  2.16  pleasure.  The commission shall fix the salaries of the deputy 
  2.17  auditors and confidential secretaries.  The deputy auditors may 
  2.18  perform and exercise the powers, duties and responsibilities 
  2.19  imposed by law on the legislative auditor when authorized by the 
  2.20  legislative auditor.  The deputy auditors and the confidential 
  2.21  secretaries serve in the unclassified civil service, but all 
  2.22  other employees of the legislative auditor are in the classified 
  2.23  civil service.  While in office, an individual appointed deputy 
  2.24  for the financial audit division shall hold an active license as 
  2.25  a certified public accountant.  
  2.26     Sec. 3.  Minnesota Statutes 1994, section 3.97, subdivision 
  2.27  9, is amended to read: 
  2.28     Subd. 9.  The legislative auditor is subject to the 
  2.29  government data practices act, chapter 13, and shall protect 
  2.30  from unlawful disclosure data classified by law as not public.  
  2.31  If data provided by the legislative auditor to the commission is 
  2.32  disseminated by the commission or its members or agents in 
  2.33  violation of section 13.05, subdivision 4, the commission is 
  2.34  subject to liability under section 13.08, subdivisions 1 and 3.  
  2.35     Sec. 4.  Minnesota Statutes 1994, section 3.97, subdivision 
  2.36  11, is amended to read: 
  3.1      Subd. 11.  "Audit" as used in this subdivision means a 
  3.2   financial audit, a program evaluation, a best practices review, 
  3.3   or an investigation.  Data relating to an audit are not public 
  3.4   or with respect to data on individuals are confidential until 
  3.5   the final report of the audit has been published released by the 
  3.6   legislative auditor or the audit is no longer being actively 
  3.7   pursued.  Upon release of a final report by the legislative 
  3.8   auditor, data relating to an audit are public, except data 
  3.9   otherwise classified by state statute or federal law as not 
  3.10  public. 
  3.11     (a) Data that support the conclusions of the report 
  3.12  and relating to an audit that the legislative auditor reasonably 
  3.13  believes will result be used in litigation are not public and 
  3.14  with respect to data on individuals are confidential until the 
  3.15  litigation has been completed or is no longer being actively 
  3.16  pursued.  
  3.17     (b) Data on individuals that could reasonably be used to 
  3.18  determine the identity of an individual supplying data for an 
  3.19  audit are private if the data supplied by the individual were 
  3.20  needed for an audit and the individual would not have provided 
  3.21  the data to the legislative auditor without an assurance that 
  3.22  the individual's identity would remain private, or the 
  3.23  legislative auditor reasonably believes that the subject would 
  3.24  not have provided the data expecting the subject's identity 
  3.25  would remain private. 
  3.26     (c) For purposes of this subdivision "proprietary data" 
  3.27  means the following data supplied to the legislative auditor if 
  3.28  public disclosure of the data would harm the economic interests 
  3.29  of the subject of the data: 
  3.30     (1) data on individuals who are not government employees or 
  3.31  officials; or 
  3.32     (2) data on organizations that are not agencies of the 
  3.33  state, a statewide system, or a political subdivision. 
  3.34     "Proprietary data" excludes data directly related to 
  3.35  financial transactions involving public money. 
  3.36     (d) Proprietary data are classified as private or nonpublic.
  4.1   If, before releasing an audit report, the legislative auditor 
  4.2   provides an individual with data relating to the audit for the 
  4.3   purpose of review and verification of the data, the individual 
  4.4   must protect the data from unlawful disclosure and be subject to 
  4.5   the penalties and liabilities provided in sections 13.08 and 
  4.6   13.09.  
  4.7      (e) The definitions of terms provided in section 13.02 
  4.8   apply for purposes of this subdivision. 
  4.9      Sec. 5.  Minnesota Statutes 1994, section 3.971, is amended 
  4.10  to read: 
  4.11     3.971 [POWERS AND DUTIES OF LEGISLATIVE AUDITOR.] 
  4.12     Subdivision 1.  To perform financial audits The legislative 
  4.13  auditor shall postaudit and make a complete examination and 
  4.14  verification of all accounts, records, inventories, vouchers, 
  4.15  receipts, funds, securities, and other assets of annually audit 
  4.16  the financial statements required by section 16A.50 and, as 
  4.17  resources permit, shall also audit the University of Minnesota, 
  4.18  the Minnesota state colleges and universities, all state 
  4.19  departments, boards, commissions, courts, and other state 
  4.20  agencies at least once a year, if money and personnel permit, 
  4.21  and oftener if deemed necessary or as directed by the 
  4.22  legislature or the legislative audit commission.  The 
  4.23  legislative auditor shall also audit the state agricultural 
  4.24  society, Minnesota Technology, Inc., the agricultural 
  4.25  utilization research institute, the Minnesota historical 
  4.26  society, the labor interpretive center, the Minnesota state 
  4.27  armory building commission, the metropolitan sports facilities 
  4.28  commission, the metropolitan airports commission, and the 
  4.29  metropolitan mosquito control commission.  The legislative 
  4.30  auditor may also audit the financial records of any corporation, 
  4.31  firm, or organization that are related to the receipt, custody, 
  4.32  or disbursement of public funds subject to audit by the 
  4.33  legislative auditor.  Financial audits shall be conducted 
  4.34  according to generally accepted government auditing standards 
  4.35  and may include detailed checking of every transaction or test 
  4.36  checking as the legislative auditor deems best.  The books of 
  5.1   the state treasurer and commissioner of finance may be 
  5.2   examined monthly at any time.  
  5.3      Subd. 1a.  The legislative auditor shall see that 
  5.4   all determine whether provisions of law respecting the 
  5.5   appropriate and economic use of public funds are complied with 
  5.6   by all departments and agencies of the state government and by 
  5.7   any other organization subject to audit by the legislative 
  5.8   auditor. 
  5.9      A copy of all postaudits, reports, and results of 
  5.10  examinations made by the legislative auditor shall be deposited 
  5.11  with the legislative reference library. 
  5.12     Subd. 1b.  When the legislative auditor receives 
  5.13  information indicating that money, property, or other resources 
  5.14  of a public entity subject to audit by the legislative auditor 
  5.15  may not have been used in compliance with the law or that a 
  5.16  violation of section 43A.39, subdivision 2, may have occurred, 
  5.17  the legislative auditor shall review the information and 
  5.18  determine whether an investigation by the legislative auditor is 
  5.19  needed.  If the information being reviewed under this 
  5.20  subdivision was provided to the legislative auditor by a 
  5.21  complainant and the complainant's identity is known by the 
  5.22  legislative auditor, the legislative auditor shall report in 
  5.23  writing to the complainant the decision, and the basis for the 
  5.24  decision, on whether the legislative auditor will conduct an 
  5.25  investigation.  If the legislative auditor conducts an 
  5.26  investigation, the written report must be filed according to 
  5.27  section 3.974.  If the legislative auditor receives information 
  5.28  relating to the misuse of money, property, or other resources of 
  5.29  a public entity subject to audit by the state auditor, the 
  5.30  legislative auditor shall refer the information to the state 
  5.31  auditor, who shall review the information and determine whether 
  5.32  an investigation by the state auditor is needed.  
  5.33     Subd. 1c.  If the head of an agency reports to the 
  5.34  legislative auditor evidence of possible misconduct within the 
  5.35  agency and requests an audit or investigation and the 
  5.36  legislative auditor decides not to conduct an audit or 
  6.1   investigation, the legislative auditor shall inform the 
  6.2   legislative audit commission of the decision. 
  6.3      Subd. 2.  To perform program evaluation, The legislative 
  6.4   auditor shall conduct program evaluations to determine the 
  6.5   degree to which the activities and programs entered into or 
  6.6   funded by the state are accomplishing their goals and 
  6.7   objectives, including a critical analysis of goals and 
  6.8   objectives, measurement of program results and effectiveness, 
  6.9   alternative means of achieving the same results, and efficiency 
  6.10  in the allocation of resources.  The legislative auditor shall 
  6.11  recommend ways to reduce the cost of providing state services 
  6.12  and to eliminate services of one agency that overlap with or 
  6.13  duplicate the services performed by another agency.  At the 
  6.14  direction of the commission the legislative auditor may perform 
  6.15  program evaluations of any state department, board, 
  6.16  commission, or agency and, or any other organization in the 
  6.17  executive or judicial branches of state government; the 
  6.18  University of Minnesota; any metropolitan agency, board, or 
  6.19  commission created under chapter 473; or any program or activity 
  6.20  funded in whole or part by the state. 
  6.21     Subd. 3.  The legislative auditor, on a biennial schedule, 
  6.22  shall review agency performance reports to review and comment on 
  6.23  the appropriateness, validity, and reliability of the outcome 
  6.24  measures and data collection efforts.  The legislative auditor 
  6.25  shall report the findings to agencies, the governor, the speaker 
  6.26  of the house of representatives, and the president of the senate.
  6.27     Subd. 4.  (a) To perform best practices reviews, the 
  6.28  legislative auditor through the program evaluation division 
  6.29  shall examine the procedures and practices used to deliver local 
  6.30  government services, including municipalities and counties, 
  6.31  determine the methods of local government service delivery, 
  6.32  identify variations in cost and effectiveness, and identify 
  6.33  practices to save money or provide more effective service 
  6.34  delivery.  The legislative auditor shall recommend to local 
  6.35  governments, service delivery methods and practices to improve 
  6.36  the cost-effectiveness of services.  The legislative auditor and 
  7.1   the board of government innovation and cooperation shall notify 
  7.2   each other of projects being conducted relating to improving 
  7.3   local government services. 
  7.4      (b) The commission shall identify local government services 
  7.5   to be reviewed with advice from an advisory council whose 
  7.6   membership shall consist of: 
  7.7      (1) three representatives from the Association of Minnesota 
  7.8   Counties; 
  7.9      (2) three representatives from the League of Minnesota 
  7.10  Cities; and 
  7.11     (3) two representatives from the Association of 
  7.12  Metropolitan Municipalities; and 
  7.13     (4) three representatives from the Minnesota Association of 
  7.14  Townships.  
  7.15     (c) This subdivision expires June 30, 1999. 
  7.16     Sec. 6.  Minnesota Statutes 1994, section 3.972, is amended 
  7.17  to read: 
  7.18     3.972 [AGENCIES; AUDITS; DEFINITIONS AUDIT CONTRACTS.] 
  7.19     Subdivision 1.  [PUBLIC ACCOUNTANT.] For the purposes of 
  7.20  this section, "public accountant" means a certified public 
  7.21  accountant, certified public accounting firm, or a licensed 
  7.22  public accountant licensed by the board of accountancy under 
  7.23  sections 326.17 to 326.229.  
  7.24     Subd. 2.  [AUDITS OF STATE AND SEMISTATE AGENCIES.] To 
  7.25  ensure accountability of public money, the legislative 
  7.26  auditor shall make a constant audit of all financial affairs of 
  7.27  all departments and agencies of the state, and of the financial 
  7.28  records and transactions of public boards, associations, and 
  7.29  societies supported, wholly or in part, by state funds.  Once in 
  7.30  each year, if funds and personnel permit, without previous 
  7.31  notice, the legislative auditor shall visit each state 
  7.32  department and agency, association or society and, so far as 
  7.33  practicable, may, for any department, agency, board, commission, 
  7.34  court, or other organization being audited:  
  7.35     (1) inspect the premises; 
  7.36     (2) thoroughly examine its books and financial records for 
  8.1   all accounts, verifying the funds, securities, and other assets, 
  8.2   and for all liabilities and debt; 
  8.3      (3) check the items of receipts and disbursements with its 
  8.4   voucher records supporting documentation for all revenue 
  8.5   collections and expenditures; 
  8.6      (4) ascertain the character of the official bonds for its 
  8.7   officers and the financial ability of the bonding institution; 
  8.8      (5) inspect its sources of revenue and the use and their 
  8.9   disposition of state appropriations and property; 
  8.10     (6) (5) investigate the methods of purchase and sale and 
  8.11  the character of contracts on public account; 
  8.12     (7) (6) ascertain proper custody and depository for its 
  8.13  funds and securities; 
  8.14     (8) (7) verify the inventory of public property and other 
  8.15  assets held in trust; and 
  8.16     (9) (8) ascertain that all financial transactions and 
  8.17  operations involving the public funds and property of the state 
  8.18  comply with the spirit and purpose of the law applicable 
  8.19  laws, are sound by modern adhere to appropriate and reasonable 
  8.20  standards of financial management and are for the best 
  8.21  protection of the public interest; 
  8.22     (9) examine the financial records of an organization or 
  8.23  individual authorized to raise money or collect a tax, fee, or 
  8.24  other revenue for the department, agency, board, commission, 
  8.25  court, or other organization being audited; and 
  8.26     (10) examine the financial records of any business or 
  8.27  individual paid with public money to provide goods or services 
  8.28  to the department, agency, board, commission, court, or other 
  8.29  organization being audited.  
  8.30     Subd. 3.  [AUDIT CONTRACTS.] For the purposes of this 
  8.31  subdivision, "public accountant" means a certified public 
  8.32  accountant, a certified public accounting firm, or a licensed 
  8.33  public accountant licensed by the board of accountancy under 
  8.34  sections 326.17 to 326.229.  Notwithstanding any other law, a 
  8.35  state department, board, commission, or other state agency an 
  8.36  organization or individual in the executive branch of state 
  9.1   government shall not negotiate a contract with a public 
  9.2   accountant for an audit, except a contract negotiated by the 
  9.3   state auditor for an audit of a local government, unless the 
  9.4   contract has been reviewed by submitted to the legislative 
  9.5   auditor for review at least ten working days before the 
  9.6   contract's effective date.  The legislative auditor shall not 
  9.7   participate in the selection of the public accountant but shall 
  9.8   may review and submit written comments on the proposed 
  9.9   contract within seven days of its receipt.  Upon completion of 
  9.10  the audit, the legislative auditor shall be given a copy of the 
  9.11  final report.  
  9.12     Sec. 7.  Minnesota Statutes 1994, section 3.974, is amended 
  9.13  to read: 
  9.14     3.974 [TO FILE WRITTEN REPORTS.] 
  9.15     For each audit done, evaluation, or review completed, the 
  9.16  legislative auditor shall file a written report with 
  9.17  the department, agency, society, or association concerned, 
  9.18  and organization or individual that was audited, evaluated, or 
  9.19  reviewed, the legislative audit commission for its consideration 
  9.20  and action, and the legislative reference library. 
  9.21     Each audit report shall set forth: 
  9.22     (1) whether all funds have been expended for the purposes 
  9.23  authorized in their appropriation; 
  9.24     (2) whether all receipts have been accounted for and paid 
  9.25  into the state treasury as required by law; 
  9.26     (3) all illegal and unbusinesslike practices, if any; 
  9.27     (4) an assessment of the financial control practices used 
  9.28  in the agency, a measurement of performance, and recommendations 
  9.29  for improved effectiveness; and 
  9.30     (5) other data, information, and recommendations as the 
  9.31  legislative auditor may deem advisable and necessary.  
  9.32     Sec. 8.  Minnesota Statutes 1994, section 3.975, is amended 
  9.33  to read: 
  9.34     3.975 [DUTIES WHEN VIOLATIONS ARE DISCOVERED.] 
  9.35     If a legislative auditor's examination discloses 
  9.36  malfeasance, misfeasance, or nonfeasance in office on the part 
 10.1   of an a public officer or employee or indicates that any 
 10.2   individual or business may have committed an illegal act, a copy 
 10.3   of the report shall be signed and verified, and it shall be the 
 10.4   duty of the legislative auditor to file the report with it to 
 10.5   the legislative audit commission and, the attorney general, and 
 10.6   the appropriate county attorney.  It shall be the duty of The 
 10.7   attorney general to institute and prosecute civil proceedings 
 10.8   against the delinquent officer or employee, or upon the 
 10.9   officer's or employee's official bond, or both, as appropriate 
 10.10  to secure to the state the shall obtain recovery of funds or 
 10.11  other assets misappropriated through civil proceeding, if 
 10.12  necessary.  The attorney general shall cause county attorney 
 10.13  shall bring criminal proceedings to be instituted by the proper 
 10.14  authorities as the evidence may warrant.  
 10.15     Sec. 9.  Minnesota Statutes 1994, section 3.978, is amended 
 10.16  to read: 
 10.17     3.978 [LEGISLATIVE AUDITOR; SUBPOENA POWERS; PENALTIES.] 
 10.18     Subdivision 1.  In all matters relating to official duties, 
 10.19  the legislative auditor has the powers possessed by courts of 
 10.20  law to issue and have subpoenas served.  
 10.21     Subd. 2.  All public officials and their deputies and 
 10.22  employees, and all corporations, firms, and individuals having 
 10.23  business involving the receipt, disbursement, or custody of 
 10.24  public funds shall at all times afford reasonable facilities for 
 10.25  examinations by the legislative auditor, make returns and 
 10.26  reports required by the legislative auditor, attend and answer 
 10.27  under oath the legislative auditor's lawful inquiries, produce 
 10.28  and exhibit all books, accounts, documents, and property that 
 10.29  the legislative auditor may desire to inspect, and in all things 
 10.30  aid the legislative auditor in the performance of duties.  If a 
 10.31  person refuses or neglects to obey any lawful direction of the 
 10.32  legislative auditor, a deputy or assistant, or withholds any 
 10.33  information, book, record, paper or other document called for by 
 10.34  the legislative auditor for the purpose of examination, after 
 10.35  having been lawfully required by order or subpoena, upon 
 10.36  application by the auditor, a judge of the district court in the 
 11.1   county where the order or subpoena was made returnable shall 
 11.2   compel obedience or punish disobedience as for contempt, as in 
 11.3   the case of a similar order or subpoena issued by the court.  
 11.4      Subd. 3.  Before taking a sworn statement from an 
 11.5   individual, the legislative auditor shall give the individual 
 11.6   written notice that the statement will be taken under oath and 
 11.7   that the individual may have an attorney or union 
 11.8   representative, or both, present during the statement, if the 
 11.9   attorney or union representative agrees to protect the statement 
 11.10  and all other not public data disclosed during the statement 
 11.11  from unlawful disclosure and be subject to the penalties and 
 11.12  liabilities provided for in sections 13.02 and 13.09.  A person 
 11.13  who swears falsely to the legislative auditor, a deputy, or 
 11.14  assistant, concerning any matter stated under oath is guilty of 
 11.15  a gross misdemeanor.  
 11.16     Sec. 10.  Minnesota Statutes 1994, section 10.48, is 
 11.17  amended to read: 
 11.18     10.48 [EXPENSE REPORTS.] 
 11.19     The house of representatives and senate shall by rule 
 11.20  require detailed quarterly reports of expenditures by the house 
 11.21  of representatives and senate to their respective committees on 
 11.22  rules and legislative administration.  Each constitutional 
 11.23  officer, the district courts, court of appeals, and supreme 
 11.24  court shall submit detailed quarterly reports of their 
 11.25  expenditures to the legislative auditor.  These reports are 
 11.26  public information. 
 11.27     Sec. 11.  Minnesota Statutes 1995 Supplement, section 
 11.28  16B.42, subdivision 1, is amended to read: 
 11.29     Subdivision 1.  [COMPOSITION.] The intergovernmental 
 11.30  information systems advisory council is composed of (1) two 
 11.31  members from each of the following groups:  counties outside of 
 11.32  the seven-county metropolitan area, cities of the second and 
 11.33  third class outside the metropolitan area, cities of the second 
 11.34  and third class within the metropolitan area, and cities of the 
 11.35  fourth class; (2) one member from each of the following groups:  
 11.36  the metropolitan council, an outstate regional body, counties 
 12.1   within the metropolitan area, cities of the first class, school 
 12.2   districts in the metropolitan area, school districts outside the 
 12.3   metropolitan area, and public libraries; (3) one member each 
 12.4   appointed by the state departments of children, families, and 
 12.5   learning, human services, revenue, and economic security, and 
 12.6   the office of strategic and long-range planning, and the 
 12.7   legislative auditor; (4) one member from the office of the state 
 12.8   auditor, appointed by the auditor; (5) the assistant 
 12.9   commissioner of administration for the information policy 
 12.10  office; (6) one member appointed by each of the following 
 12.11  organizations:  league of Minnesota cities, association of 
 12.12  Minnesota counties, Minnesota association of township officers, 
 12.13  and Minnesota association of school administrators; and (7) one 
 12.14  member of the house of representatives appointed by the speaker 
 12.15  and one member of the senate appointed by the subcommittee on 
 12.16  committees of the committee on rules and administration.  The 
 12.17  legislative members appointed under clause (7) are nonvoting 
 12.18  members.  The commissioner of administration shall appoint 
 12.19  members under clauses (1) and (2).  The terms, compensation, and 
 12.20  removal of the appointed members of the advisory council are as 
 12.21  provided in section 15.059, but the council does not expire 
 12.22  until June 30, 1997. 
 12.23     Sec. 12.  Minnesota Statutes 1994, section 37.06, is 
 12.24  amended to read: 
 12.25     37.06 [SECRETARY; LEGISLATIVE AUDITOR; DUTIES; REPORT.] 
 12.26     The secretary shall keep a complete record of the 
 12.27  proceedings of the annual meetings of the state agricultural 
 12.28  society and all meetings of the board of managers and any 
 12.29  committee of the board, keep all accounts of the society other 
 12.30  than those kept by the treasurer of the society, and perform 
 12.31  other duties as directed by the board of managers.  On or before 
 12.32  December 31 each year, the secretary shall report to the 
 12.33  governor for the fiscal year ending October 31 all the 
 12.34  proceedings of the society during the current year and its 
 12.35  financial condition as appears from its books.  This report must 
 12.36  contain a full, detailed statement of all receipts and 
 13.1   expenditures during the year.  
 13.2      The books and accounts of the society for the fiscal year 
 13.3   must be examined and audited annually by the legislative 
 13.4   auditor.  The cost of the examination must be paid by the 
 13.5   society to the state legislative auditor and credited to the 
 13.6   legislative auditor's revolving general fund.  
 13.7      A summary of this examination, certified by the legislative 
 13.8   auditor, must be appended to the secretary's report, along with 
 13.9   the legislative auditor's recommendations and the proceedings of 
 13.10  the first annual meeting of the society held following the 
 13.11  secretary's report, including addresses made at the meeting as 
 13.12  directed by the board of managers.  The summary, 
 13.13  recommendations, and proceedings must be printed in the same 
 13.14  manner as the reports of state officers.  Copies of the report 
 13.15  must be printed annually and distributed as follows:  to each 
 13.16  society or association entitled to membership in the society, to 
 13.17  each newspaper in the state, and the remaining copies as 
 13.18  directed by the board of managers. 
 13.19     Sec. 13.  Minnesota Statutes 1994, section 37.07, is 
 13.20  amended to read: 
 13.21     37.07 [MONTHLY STATEMENTS BY SECRETARY; PURCHASES, 
 13.22  EXPENDITURES.] 
 13.23     The secretary of the state agricultural society shall 
 13.24  prepare a signed statement each month summarizing receipts and 
 13.25  expenditures for the preceding month, which must be approved by 
 13.26  the president or a vice-president of the board of managers.  The 
 13.27  secretary's affidavit must be attached to this statement.  The 
 13.28  affidavit must state:  
 13.29     (1) that all articles were purchased by or under the 
 13.30  secretary's direction, and that to the secretary's best 
 13.31  information and belief, all articles purchased by the board of 
 13.32  managers were purchased at a fair cash market value and received 
 13.33  by the society, and that all services charged for were actually 
 13.34  provided; 
 13.35     (2) that neither the secretary nor any person in the 
 13.36  secretary's behalf, or the board of managers, to the secretary's 
 14.1   best information and belief, had any pecuniary or other interest 
 14.2   in any purchase made or services rendered, or received any 
 14.3   pecuniary or other benefit from the purchases or services, 
 14.4   directly or indirectly, by commission, percentage, deduction, or 
 14.5   otherwise; and 
 14.6      (3) that the articles specified conformed in every respect 
 14.7   to the goods ordered, in both quality and quantity.  
 14.8      The report must also show the amount of money in the hands 
 14.9   of the treasurer of the society.  
 14.10     Copies of the secretary's monthly report must be furnished 
 14.11  to the commissioner of finance and the office of the legislative 
 14.12  auditor and to each member of the board of managers no later 
 14.13  than the tenth of the month following the month's activities 
 14.14  reported.  
 14.15     The board of managers shall designate one or more national 
 14.16  or state banks, or trust companies authorized to do a banking 
 14.17  business, as official depositories for the society's money, and 
 14.18  shall then require the treasurer to deposit all or part of that 
 14.19  money in the designated bank or banks.  The designation must be 
 14.20  in writing and must set forth all the terms and conditions upon 
 14.21  which the deposits are made, and it must be signed by the 
 14.22  president and secretary and made a part of the minutes of the 
 14.23  board.  Any bank or trust company designated must qualify as a 
 14.24  depository by furnishing a corporate surety bond or collateral 
 14.25  as required by section 118.01, and must, as long as any of the 
 14.26  society's money is on deposit with it, maintain the bond or 
 14.27  collateral in the amounts required by that section.  No bond or 
 14.28  collateral is required to secure any deposit if it is insured 
 14.29  under federal law, as provided in section 118.10.  
 14.30     Sec. 14.  Minnesota Statutes 1994, section 85A.02, 
 14.31  subdivision 5c, is amended to read: 
 14.32     Subd. 5c.  [FINANCIAL REPORT.] The board shall employ a 
 14.33  certified public accountant to audit and examine its financial 
 14.34  records each year.  The board shall submit to the legislative 
 14.35  auditor a report of the accountant's examination or audit.  The 
 14.36  legislative auditor shall review the report and accept it or may 
 15.1   make additional examinations if these would be in the public 
 15.2   interest.  The working papers of the certified public accountant 
 15.3   relating to the board must be made available to the legislative 
 15.4   auditor on request.  
 15.5      Sec. 15.  Minnesota Statutes 1994, section 192.551, is 
 15.6   amended to read: 
 15.7      192.551 [ARMY REGULATIONS TO APPLY.] 
 15.8      All money and property received from any source for the 
 15.9   military forces shall be kept, disbursed, and accounted for as 
 15.10  prescribed by army regulations, where applicable, otherwise as 
 15.11  prescribed by state rules.  All such accounts shall be examined 
 15.12  and audited at least once annually by officers of the military 
 15.13  forces detailed by the adjutant general as military auditors.  
 15.14  The adjutant general shall file a copy of the report of every 
 15.15  such examination with the legislative auditor.  This shall not 
 15.16  preclude other examinations of such accounts by the legislative 
 15.17  auditor as authorized by law.  The legislative auditor may 
 15.18  appoint any military auditor as an assistant examiner, with all 
 15.19  the powers incident thereto, in connection with the examination 
 15.20  of such accounts.  The provisions of the state civil service act 
 15.21  shall not be applicable to such appointments. 
 15.22     Sec. 16.  Minnesota Statutes 1994, section 256E.05, 
 15.23  subdivision 3a, is amended to read: 
 15.24     Subd. 3a.  [DEMONSTRATION PROJECT.] (a) The commissioner 
 15.25  may establish demonstration projects to test alternatives to 
 15.26  existing state requirements.  
 15.27     (b) At least one demonstration project may be developed to 
 15.28  demonstrate alternative methods of social services planning.  
 15.29  For the purposes of this demonstration project, the commissioner:
 15.30     (1) shall allow participating counties to combine all 
 15.31  social services plans into one comprehensive plan unless a 
 15.32  separate plan is necessary to comply with federal regulations or 
 15.33  maintain federal financial participation; 
 15.34     (2) may waive social service program maintenance of effort 
 15.35  requirements not required to comply with federal regulations or 
 15.36  maintain federal financial participation, at the request of a 
 16.1   county or counties participating in the planning process; 
 16.2      (3) may exempt counties participating in the planning 
 16.3   demonstration from fiscal sanctions for noncompliance with 
 16.4   social services requirements in state statute, provided the 
 16.5   county proposal includes a schedule of fines for noncompliance 
 16.6   approved by the commissioner; 
 16.7      (4) may establish a county match requirement for social 
 16.8   services.  If the county has spent or obligated all of its state 
 16.9   and federal social services funds and the required matching 
 16.10  funds, the county must be considered to be making reasonable 
 16.11  efforts to comply with all state social services requirements as 
 16.12  required in section 256E.081, subdivision 2, and is not required 
 16.13  to provide social services beyond the services included in the 
 16.14  county's amended community social services plan; and 
 16.15     (5) shall require participating counties to describe the 
 16.16  system to be used to evaluate performance under the combined 
 16.17  county plan.  
 16.18     (c) At least one demonstration project may be developed to 
 16.19  test alternative methods of delivering services to persons with 
 16.20  developmental disabilities or persons with mental illness.  
 16.21     (d) Up to six demonstration projects may be established to 
 16.22  test alternatives to existing requirements that maintain or 
 16.23  enhance services but reduce administrative burdens, eliminate 
 16.24  unnecessary or excessive paperwork, simplify or consolidate 
 16.25  requirements, or otherwise reduce administrative costs and 
 16.26  complexity of social services programs.  
 16.27     (e) The commissioner shall consult with county staff, 
 16.28  service providers, and service recipients or their advocates in 
 16.29  the selection of the proposals for the demonstration projects.  
 16.30     (f) In selecting the demonstration projects, the 
 16.31  commissioner may give preference to proposals submitted by two 
 16.32  or more counties.  
 16.33     (g) During the duration of the demonstration projects, the 
 16.34  commissioner may waive administrative rule requirements in the 
 16.35  demonstration counties if the proposal demonstrates that the 
 16.36  needs the requirements were developed to address can be met 
 17.1   using an alternative approach.  The commissioner shall not waive 
 17.2   rule requirements which affect an individual's eligibility for 
 17.3   services or right to due process.  
 17.4      (h) If the county fails to meet the conditions in the 
 17.5   demonstration project proposal as approved by the commissioner, 
 17.6   the commissioner may rescind the waiver of the rule requirements.
 17.7      (i) The demonstration projects must be completed by July 1, 
 17.8   1995.  
 17.9      (j) The legislative auditor shall evaluate the results of 
 17.10  the demonstration projects.  
 17.11     (k) If the results of the demonstration projects indicate 
 17.12  that the needs the administrative rule requirements were 
 17.13  developed to address can be met by means that are less costly 
 17.14  and less prescriptive, and that give counties greater 
 17.15  flexibility when providing social services, the commissioner may 
 17.16  amend or repeal the appropriate social services rule requirement 
 17.17  under chapter 14.  If the requirement is specified in statute, 
 17.18  the commissioner shall recommend legislative changes in the 
 17.19  biennial state plan under section 256E.04, subdivision 1. 
 17.20     Sec. 17.  Minnesota Statutes 1994, section 268.12, 
 17.21  subdivision 8, is amended to read: 
 17.22     Subd. 8.  [RECORDS; REPORTS.] (1) Each employing unit shall 
 17.23  keep true and accurate records for such periods of time and 
 17.24  containing such information as the commissioner may prescribe.  
 17.25  For the purpose of determining compliance with this chapter, or 
 17.26  for the purpose of collection of any amounts due under this 
 17.27  chapter, the commissioner or any authorized representative of 
 17.28  the commissioner has the power to examine, or cause to be 
 17.29  examined or copied, any books, correspondence, papers, records, 
 17.30  or memoranda which are relevant to making these determinations, 
 17.31  whether the books, correspondence, papers, records, or memoranda 
 17.32  are the property of or in the possession of the employing unit 
 17.33  or any other person or corporation at any reasonable time and as 
 17.34  often as may be necessary. 
 17.35     (2) The commissioner or any other duly authorized 
 17.36  representative of the commissioner may cause to be made such 
 18.1   summaries, compilations, photographs, duplications, or 
 18.2   reproductions of any records, reports, or transcripts thereof as 
 18.3   the commissioner may deem advisable for the effective and 
 18.4   economical preservation of the information contained therein, 
 18.5   and such summaries, compilations, photographs, duplications or 
 18.6   reproductions, duly authenticated, shall be admissible in any 
 18.7   proceeding under this chapter, if the original record or records 
 18.8   would have been admissible therein.  Notwithstanding any 
 18.9   restrictions contained in section 16B.50, except restrictions as 
 18.10  to quantity, the commissioner is hereby authorized to duplicate, 
 18.11  on equipment furnished by the federal government or purchased 
 18.12  with funds furnished for that purpose by the federal government, 
 18.13  records, reports, summaries, compilations, instructions, 
 18.14  determinations, or any other written matter pertaining to the 
 18.15  administration of the Minnesota economic security law. 
 18.16     (3) Notwithstanding any inconsistent provisions elsewhere, 
 18.17  the commissioner may provide for the destruction or disposition 
 18.18  of any records, reports, transcripts, or reproductions thereof, 
 18.19  or other papers in the commissioner's custody, which are more 
 18.20  than two years old, the preservation of which is no longer 
 18.21  necessary for the establishment of contribution liability or 
 18.22  benefit rights or for any purpose necessary to the proper 
 18.23  administration of this chapter, including any required audit 
 18.24  thereof, provided, that the commissioner may provide for the 
 18.25  destruction or disposition of any record, report, or transcript, 
 18.26  or other paper in the commissioner's custody which has been 
 18.27  photographed, duplicated, or reproduced. 
 18.28     (4) Notwithstanding the provisions of the Minnesota State 
 18.29  Archives Act the commissioner shall with the approval of the 
 18.30  legislative auditor destroy all benefit checks and benefit check 
 18.31  authorization cards that are more than two years old and no 
 18.32  person shall make any demand, bring any suit or other proceeding 
 18.33  to recover from the state of Minnesota any sum alleged to be due 
 18.34  on any claim for benefits after the expiration of two years from 
 18.35  the date of filing such claim. 
 18.36     Sec. 18.  Minnesota Statutes 1994, section 352.03, 
 19.1   subdivision 6, is amended to read: 
 19.2      Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 
 19.3   management of the system is vested in the director, who is the 
 19.4   executive and administrative head of the system.  The director 
 19.5   shall be advisor to the board on matters pertaining to the 
 19.6   system and shall also act as the secretary of the board.  The 
 19.7   director shall: 
 19.8      (1) attend meetings of the board; 
 19.9      (2) prepare and recommend to the board appropriate rules to 
 19.10  carry out this chapter; 
 19.11     (3) establish and maintain an adequate system of records 
 19.12  and accounts following recognized accounting principles and 
 19.13  controls; 
 19.14     (4) designate an assistant director with the approval of 
 19.15  the board; 
 19.16     (5) appoint any employees, both permanent and temporary, 
 19.17  that are necessary to carry out the provisions of this chapter; 
 19.18     (6) organize the work of the system as the director deems 
 19.19  necessary to fulfill the functions of the system, and define the 
 19.20  duties of its employees and delegate to them any powers or 
 19.21  duties, subject to the control of the director and under 
 19.22  conditions the director may prescribe.  Appointments to exercise 
 19.23  delegated power must be by written order and shall be filed with 
 19.24  the secretary of state; 
 19.25     (7) with the advice and consent of the board, contract for 
 19.26  the services of an approved actuary, professional management 
 19.27  services, and any other consulting services as necessary and fix 
 19.28  the compensation for those services.  The contracts are not 
 19.29  subject to competitive bidding under chapter 16B.  Any approved 
 19.30  actuary retained by the executive director shall function as the 
 19.31  actuarial advisor of the board and the executive director, and 
 19.32  may perform actuarial valuations and experience studies to 
 19.33  supplement those performed by the actuary retained by the 
 19.34  legislative commission on pensions and retirement.  Any 
 19.35  supplemental actuarial valuations or experience studies shall be 
 19.36  filed with the executive director of the legislative commission 
 20.1   on pensions and retirement.  Professional management services 
 20.2   may not be contracted for more often than once in six years.  
 20.3   Copies of professional management survey reports must be 
 20.4   transmitted to the secretary of the senate, the chief clerk of 
 20.5   the house of representatives, and the legislative reference 
 20.6   library as provided by section 3.195, and to the executive 
 20.7   director of the commission and to the legislative auditor at the 
 20.8   time as reports are furnished to the board.  Only management 
 20.9   firms experienced in conducting management surveys of federal, 
 20.10  state, or local public retirement systems are qualified to 
 20.11  contract with the director; 
 20.12     (8) with the advice and consent of the board provide 
 20.13  in-service training for the employees of the system; 
 20.14     (9) make refunds of accumulated contributions to former 
 20.15  state employees and to the designated beneficiary, surviving 
 20.16  spouse, legal representative, or next of kin of deceased state 
 20.17  employees or deceased former state employees, as provided in 
 20.18  this chapter; 
 20.19     (10) determine the amount of the annuities and disability 
 20.20  benefits of employees covered by the system and authorize 
 20.21  payment of the annuities and benefits beginning as of the dates 
 20.22  on which the annuities and benefits begin to accrue, in 
 20.23  accordance with the provisions of this chapter; 
 20.24     (11) pay annuities, refunds, survivor benefits, salaries, 
 20.25  and necessary operating expenses of the system; 
 20.26     (12) certify funds available for investment to the state 
 20.27  board of investment; 
 20.28     (13) with the advice and approval of the board request the 
 20.29  state board of investment to sell securities when the director 
 20.30  determines that funds are needed for the system; 
 20.31     (14) prepare and submit to the board and the legislature an 
 20.32  annual financial report covering the operation of the system, as 
 20.33  required by section 356.20; 
 20.34     (15) prepare and submit biennial and annual budgets to the 
 20.35  board and with the approval of the board submit the budgets to 
 20.36  the department of finance; and 
 21.1      (16) with the approval of the board, perform other duties 
 21.2   required to administer the retirement and other provisions of 
 21.3   this chapter and to do its business. 
 21.4      Sec. 19.  Minnesota Statutes 1994, section 353.03, 
 21.5   subdivision 3a, is amended to read: 
 21.6      Subd. 3a.  [EXECUTIVE DIRECTOR.] (a)  [APPOINTMENT.] The 
 21.7   board shall appoint, with the advice and consent of the senate, 
 21.8   an executive director on the basis of education, experience in 
 21.9   the retirement field, and leadership ability.  The executive 
 21.10  director shall have had at least five years' experience in an 
 21.11  executive level management position, which has included 
 21.12  responsibility for pensions, deferred compensation, or employee 
 21.13  benefits.  The executive director serves at the pleasure of the 
 21.14  board.  The salary of the executive director is as provided by 
 21.15  section 15A.081, subdivision 1. 
 21.16     (b)  [DUTIES.] The management of the association is vested 
 21.17  in the executive director who shall be the executive and 
 21.18  administrative head of the association.  The executive director 
 21.19  shall act as adviser to the board on all matters pertaining to 
 21.20  the association and shall also act as the secretary of the 
 21.21  board.  The executive director shall: 
 21.22     (1) attend all meetings of the board; 
 21.23     (2) prepare and recommend to the board appropriate rules to 
 21.24  carry out the provisions of this chapter; 
 21.25     (3) establish and maintain an adequate system of records 
 21.26  and accounts following recognized accounting principles and 
 21.27  controls; 
 21.28     (4) designate, with the approval of the board, up to two 
 21.29  persons who shall serve in the unclassified service and whose 
 21.30  salary is set in accordance with section 43A.18, subdivision 3, 
 21.31  appoint a confidential secretary in the unclassified service, 
 21.32  and appoint employees to carry out this chapter, who are subject 
 21.33  to chapters 43A and 179A in the same manner as are executive 
 21.34  branch employees; 
 21.35     (5) organize the work of the association as the director 
 21.36  deems necessary to fulfill the functions of the association, and 
 22.1   define the duties of its employees and delegate to them any 
 22.2   powers or duties, subject to the control of, and under such 
 22.3   conditions as, the executive director may prescribe; 
 22.4      (6) with the approval of the board, contract for the 
 22.5   services of an approved actuary, professional management 
 22.6   services, and any other consulting services as necessary to 
 22.7   fulfill the purposes of this chapter.  All contracts are subject 
 22.8   to chapter 16B.  The commissioner of administration shall not 
 22.9   approve, and the association shall not enter into, any contract 
 22.10  to provide lobbying services or legislative advocacy of any 
 22.11  kind.  Any approved actuary retained by the executive director 
 22.12  shall function as the actuarial advisor of the board and the 
 22.13  executive director and may perform actuarial valuations and 
 22.14  experience studies to supplement those performed by the actuary 
 22.15  retained by the legislative commission on pensions and 
 22.16  retirement.  Any supplemental actuarial valuations or experience 
 22.17  studies shall be filed with the executive director of the 
 22.18  legislative commission on pensions and retirement.  Copies of 
 22.19  professional management survey reports shall be transmitted to 
 22.20  the secretary of the senate, the chief clerk of the house of 
 22.21  representatives, and the legislative reference library as 
 22.22  provided by section 3.195, and to the executive director of the 
 22.23  commission and to the legislative auditor at the same time as 
 22.24  reports are furnished to the board.  Only management firms 
 22.25  experienced in conducting management surveys of federal, state, 
 22.26  or local public retirement systems shall be qualified to 
 22.27  contract with the director hereunder; 
 22.28     (7) with the approval of the board provide in-service 
 22.29  training for the employees of the association; 
 22.30     (8) make refunds of accumulated contributions to former 
 22.31  members and to the designated beneficiary, surviving spouse, 
 22.32  legal representative or next of kin of deceased members or 
 22.33  deceased former members, as provided in this chapter; 
 22.34     (9) determine the amount of the annuities and disability 
 22.35  benefits of members covered by the association and authorize 
 22.36  payment of the annuities and benefits beginning as of the dates 
 23.1   on which the annuities and benefits begin to accrue, in 
 23.2   accordance with the provisions of this chapter; 
 23.3      (10) pay annuities, refunds, survivor benefits, salaries, 
 23.4   and necessary operating expenses of the association; 
 23.5      (11) prepare and submit to the board and the legislature an 
 23.6   annual financial report covering the operation of the 
 23.7   association, as required by section 356.20; 
 23.8      (12) prepare and submit biennial and annual budgets to the 
 23.9   board for its approval and submit the approved budgets to the 
 23.10  department of finance for approval by the commissioner; 
 23.11     (13) reduce all or part of the accrued interest payable 
 23.12  under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 
 23.13  subdivision 5, upon receipt of proof by the association of an 
 23.14  unreasonable processing delay or other extenuating circumstances 
 23.15  of the employing unit.  The executive director shall prescribe 
 23.16  and submit for approval by the board the conditions under which 
 23.17  such interest may be reduced; and 
 23.18     (14) with the approval of the board, perform such other 
 23.19  duties as may be required for the administration of the 
 23.20  association and the other provisions of this chapter and for the 
 23.21  transaction of its business.  
 23.22     Sec. 20.  Minnesota Statutes 1994, section 353A.05, 
 23.23  subdivision 1, is amended to read: 
 23.24     Subdivision 1.  [COMMISSION ACTIONS.] Upon initiation of 
 23.25  consolidation as provided in section 353A.04, the executive 
 23.26  director of the commission shall direct the actuary retained by 
 23.27  the commission to undertake the preparation of the actuarial 
 23.28  calculations necessary to complete the consolidation.  
 23.29     These actuarial calculations shall include for each active 
 23.30  member, each deferred former member, each retired member, and 
 23.31  each current beneficiary the computation of the present value of 
 23.32  future benefits, the future normal costs, if any, and the 
 23.33  actuarial accrued liability on the basis of the existing relief 
 23.34  association benefit plan and on the basis of the public 
 23.35  employees police and fire fund benefit plan.  These actuarial 
 23.36  calculations shall also include for the total active, deferred, 
 24.1   retired, and benefit recipient membership the sum of the present 
 24.2   value of future benefits, the future normal costs, if any, and 
 24.3   the actuarial accrued liability on the basis of the existing 
 24.4   relief association benefit plan, on the basis of the public 
 24.5   employees police and fire fund benefit plan, and on the basis of 
 24.6   the benefit plan which produced the largest present value of 
 24.7   future benefits for each person.  The actuarial calculations 
 24.8   shall be prepared using the entry age actuarial cost method for 
 24.9   all components of the benefit plan and using the actuarial 
 24.10  assumptions applicable to the fund for the most recent actuarial 
 24.11  valuation prepared under section 356.215, except that the 
 24.12  actuarial calculations on the basis of the existing relief 
 24.13  association benefit plan shall be prepared using an interest 
 24.14  rate actuarial assumption during the postretirement period which 
 24.15  is in the same amount as the interest rate actuarial assumption 
 24.16  applicable to the preretirement period.  The actuarial 
 24.17  calculations shall include the computation of the present value 
 24.18  of the initial postretirement adjustment anticipated by the 
 24.19  executive director of the state board as payable after the 
 24.20  effective date of the consolidation from the Minnesota 
 24.21  postretirement investment fund under section 11A.18.  
 24.22     The chief administrative officer of the relief association 
 24.23  shall, upon request, provide in a timely manner to the executive 
 24.24  director of the commission and to the actuary retained by the 
 24.25  commission the most current available information or documents, 
 24.26  whichever applies, regarding the demographics of the active, 
 24.27  deferred, retired, and benefit recipient membership of the 
 24.28  relief association, the financial condition of the relief 
 24.29  association, and the existing benefit plan of the relief 
 24.30  association.  
 24.31     Upon completion of the actuarial calculations required by 
 24.32  this subdivision, the actuary retained by the commission shall 
 24.33  issue a report in the form of an appropriate summary of the 
 24.34  actuarial calculations and shall provide a copy of that report 
 24.35  to the executive director of the commission, the executive 
 24.36  director of the public employees retirement association, the 
 25.1   chief administrative officer of the relief association, the 
 25.2   chief administrative officer of the municipality in which the 
 25.3   relief association is located, and the state auditor, and the 
 25.4   legislative auditor. 
 25.5      Sec. 21.  Minnesota Statutes 1994, section 354.06, 
 25.6   subdivision 2a, is amended to read: 
 25.7      Subd. 2a.  [DUTIES OF EXECUTIVE DIRECTOR.] The management 
 25.8   of the association is vested in the executive director who shall 
 25.9   be the executive and administrative head of the association.  
 25.10  The executive director shall act as advisor to the board on all 
 25.11  matters pertaining to the association and shall also act as the 
 25.12  secretary of the board.  The executive director shall: 
 25.13     (1) attend all meetings of the board; 
 25.14     (2) prepare and recommend to the board appropriate rules to 
 25.15  carry out the provisions of this chapter; 
 25.16     (3) establish and maintain an adequate system of records 
 25.17  and accounts following recognized accounting principles and 
 25.18  controls; 
 25.19     (4) designate an assistant executive director in the 
 25.20  unclassified service and two assistant executive directors in 
 25.21  the classified service with the approval of the board, and 
 25.22  appoint such employees, both permanent and temporary, as are 
 25.23  necessary to carry out the provisions of this chapter; 
 25.24     (5) organize the work of the association as the director 
 25.25  deems necessary to fulfill the functions of the association, and 
 25.26  define the duties of its employees and delegate to them any 
 25.27  powers or duties, subject to the director's control and under 
 25.28  such conditions as the director may prescribe; 
 25.29     (6) with the approval of the board, contract and set the 
 25.30  compensation for the services of an approved actuary, 
 25.31  professional management services, and any other consulting 
 25.32  services.  These contracts are not subject to the competitive 
 25.33  bidding procedure prescribed by chapter 16B.  An approved 
 25.34  actuary retained by the executive director shall function as the 
 25.35  actuarial advisor of the board and the executive director and 
 25.36  may perform actuarial valuations and experience studies to 
 26.1   supplement those performed by the actuary retained by the 
 26.2   legislative commission on pensions and retirement.  Any 
 26.3   supplemental actuarial valuations or experience studies shall be 
 26.4   filed with the executive director of the legislative commission 
 26.5   on pensions and retirement.  Copies of professional management 
 26.6   survey reports must be transmitted to the secretary of the 
 26.7   senate, the chief clerk of the house of representatives, and the 
 26.8   legislative reference library as provided by section 3.195, and 
 26.9   to the executive director of the commission and to the 
 26.10  legislative auditor at the same time as reports are furnished to 
 26.11  the board.  Only management firms experienced in conducting 
 26.12  management surveys of federal, state, or local public retirement 
 26.13  systems are qualified to contract with the executive director; 
 26.14     (7) with the approval of the board, provide in-service 
 26.15  training for the employees of the association; 
 26.16     (8) make refunds of accumulated contributions to former 
 26.17  members and to the designated beneficiary, surviving spouse, 
 26.18  legal representative, or next of kin of deceased members or 
 26.19  deceased former members, under this chapter; 
 26.20     (9) determine the amount of the annuities and disability 
 26.21  benefits of members covered by the association and authorize 
 26.22  payment of the annuities and benefits beginning as of the dates 
 26.23  on which the annuities and benefits begin to accrue, under this 
 26.24  chapter; 
 26.25     (10) pay annuities, refunds, survivor benefits, salaries, 
 26.26  and necessary operating expenses of the association; 
 26.27     (11) prepare and submit to the board and the legislature an 
 26.28  annual financial report covering the operation of the 
 26.29  association, as required by section 356.20; 
 26.30     (12) certify funds available for investment to the state 
 26.31  board of investment; 
 26.32     (13) with the advice and approval of the board, request the 
 26.33  state board of investment to sell securities on determining that 
 26.34  funds are needed for the purposes of the association; 
 26.35     (14) prepare and submit biennial and annual budgets to the 
 26.36  board and with the approval of the board submit those budgets to 
 27.1   the department of finance; and 
 27.2      (15) with the approval of the board, perform such other 
 27.3   duties as may be required for the administration of the 
 27.4   association and the other provisions of this chapter and for the 
 27.5   transaction of its business.  The executive director may: 
 27.6      (i) reduce all or part of the accrued interest and fines 
 27.7   payable by an employing unit for reporting requirements under 
 27.8   section 354.52, based on an evaluation of any extenuating 
 27.9   circumstances of the employing unit; 
 27.10     (ii) assign association employees to conduct field audits 
 27.11  of an employing unit to ensure compliance with the provisions of 
 27.12  this chapter; and 
 27.13     (iii) recover overpayments, if not repaid to the 
 27.14  association, by suspending or reducing the payment of a 
 27.15  retirement annuity, refund, disability benefit, survivor 
 27.16  benefit, or optional annuity under this chapter until the 
 27.17  overpayment, plus interest, has been recovered. 
 27.18     Sec. 22.  Minnesota Statutes 1994, section 360.015, 
 27.19  subdivision 19, is amended to read: 
 27.20     Subd. 19.  [KEEP BOOKS AND RECORDS.] The commissioner shall 
 27.21  keep accurate and complete books of account of such character as 
 27.22  may be prescribed by the legislative auditor, the same to show 
 27.23  in detail itemized receipts and disbursements of the airports 
 27.24  fund.  The books shall show, and it shall be the duty of the 
 27.25  legislative auditor to so prescribe, the following facts, among 
 27.26  others: 
 27.27     (a) The expenses of maintaining the department, including 
 27.28  the salaries and expenses of the individual members thereof; 
 27.29     (b) The amounts of money expended in each county of the 
 27.30  state for the construction or maintenance of airports or 
 27.31  restricted landing areas, when, where, and upon what airport or 
 27.32  restricted landing area expended, so that the cost for each such 
 27.33  airport or restricted landing area can be easily ascertained; 
 27.34     (c) The amount of equipment and materials purchased and 
 27.35  when, where, and from whom purchased; these books shall show the 
 27.36  price paid for each item; the original invoice shall form a part 
 28.1   of the permanent files and records in the department and shall 
 28.2   be open to public inspection. 
 28.3      Sec. 23.  Minnesota Statutes 1994, section 609.456, is 
 28.4   amended to read: 
 28.5      609.456 [REPORTING TO STATE AUDITOR REQUIRED.] 
 28.6      Subdivision 1.  [STATE AUDITOR.] Whenever a public employee 
 28.7   or public officer of a political subdivision discovers evidence 
 28.8   of theft, embezzlement, or unlawful use of public funds or 
 28.9   property, the employee or elected official officer shall, except 
 28.10  when to do so would knowingly impede or otherwise interfere with 
 28.11  an ongoing criminal investigation, promptly report in writing to 
 28.12  the state auditor a detailed description of the alleged incident 
 28.13  or incidents. 
 28.14     Subd. 2.  [LEGISLATIVE AUDITOR.] Whenever a public employee 
 28.15  or public officer of the state, the University of Minnesota, or 
 28.16  any other public entity subject to audit by the legislative 
 28.17  auditor discovers evidence of theft, embezzlement, or unlawful 
 28.18  use of public funds or property, the employee or officer shall, 
 28.19  except when to do so would knowingly impede or otherwise 
 28.20  interfere with an ongoing criminal investigation, promptly 
 28.21  report in writing to the legislative auditor a detailed 
 28.22  description of the alleged incident or incidents. 
 28.23     Sec. 24.  [REPEALER.] 
 28.24     Minnesota Statutes 1994, sections 3.973; 136A.29, 
 28.25  subdivision 19; 256B.04, subdivision 11; 469.207, subdivision 1; 
 28.26  574.02; and 574.03, are repealed.