1.1                          A bill for an act 
  1.2             relating to legislature; prescribing the powers and 
  1.3             duties of the legislative audit commission and the 
  1.4             legislative auditor; making various technical changes; 
  1.5             amending Minnesota Statutes 1998, sections 3.97; 
  1.6             3.971; 3.974; 3.975; 6.74; 10.48; 16A.27, subdivision 
  1.7             2; 37.06; 37.07; 85A.02, subdivision 5c; 192.551; 
  1.8             352.03, subdivision 6; 353.03, subdivision 3a; 
  1.9             353A.05, subdivision 1; 354.06, subdivision 2a; 
  1.10            360.015, subdivision 19; and 609.456; repealing 
  1.11            Minnesota Statutes 1998, sections 3.973; 469.207; and 
  1.12            574.02. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 1998, section 3.97, is 
  1.15  amended to read: 
  1.16     3.97 [AUDIT POLICY; CREATION OF COMMISSION; TRANSFER OF 
  1.17  FUNCTIONS OF PUBLIC EXAMINER; DUTIES OF LEGISLATIVE AUDITOR; 
  1.18  ACCESS TO DATA.] 
  1.19     Subdivision 1.  Continuous legislative review of the effect 
  1.20  of grant-in-aid programs, the spending of public funds and their 
  1.21  financing at all levels of government is required in the public 
  1.22  interest to enable the enactment of appropriate legislation.  
  1.23     Subd. 2.  The legislative audit commission is created.  The 
  1.24  commission consists of: 
  1.25     (1) the majority leader of the senate and the president of 
  1.26  the senate or their designees; 
  1.27     (2) the chair of the senate committee on taxes or a 
  1.28  designee who is a member of the committee; 
  1.29     (3) the chair of the senate committee on governmental 
  2.1   operations and reform or a designee who is a member of the 
  2.2   committee; 
  2.3      (4) (3) the a chair of the a senate committee on 
  2.4   finance or a designee who is a member of the 
  2.5   committee designated by the majority leader; 
  2.6      (5) (4) five four members of the senate appointed by the 
  2.7   senate minority leader; 
  2.8      (6) (5) the speaker of the house and the chair of the house 
  2.9   committee on rules or their designees; 
  2.10     (7) the chair of the house committee on taxes or a designee 
  2.11  who is a member of the committee; 
  2.12     (8) (6) the chair of the house committee on governmental 
  2.13  operations and gaming or a designee who is a member of the 
  2.14  committee; 
  2.15     (9) (7) the chair of the house ways and means committee or 
  2.16  a designee who is a member of the committee; and 
  2.17     (10) (8) five four members of the house appointed by the 
  2.18  house minority leader.  
  2.19  The appointed members of the commission shall serve for a term 
  2.20  commencing upon appointment and expiring at the opening of the 
  2.21  next regular session of the legislature in the odd-numbered year 
  2.22  and until a successor is appointed.  A vacancy in the membership 
  2.23  of the commission shall be filled for the unexpired term in a 
  2.24  manner that will preserve the representation established by this 
  2.25  subdivision.  
  2.26     The commission shall meet in January of each odd-numbered 
  2.27  year to elect its chair and other officers as it may determine 
  2.28  necessary.  A chair shall serve a two-year term, expiring on 
  2.29  January 1 in the odd-numbered year following election, and until 
  2.30  a successor is elected.  The chair shall alternate biennially 
  2.31  between the senate and the house.  The commission shall meet at 
  2.32  the call of the chair or the executive secretary.  The members 
  2.33  shall serve without compensation but be reimbursed for their 
  2.34  reasonable expenses as members of the legislature.  The 
  2.35  commission may exercise the powers prescribed by section 3.153. 
  2.36     Subd. 3.  The department of public examiner is transferred 
  3.1   from the executive to the legislative branch.  
  3.2      Subd. 4.  The legislative auditor is the executive 
  3.3   secretary of the commission.  The legislative auditor shall be 
  3.4   appointed by the commission for a six-year term and serve in the 
  3.5   unclassified service.  When in office, the legislative auditor 
  3.6   shall may not at any time while in office hold any other public 
  3.7   office.  The legislative auditor shall may not be removed from 
  3.8   office before the expiration of the term of service except for 
  3.9   cause after public hearing.  
  3.10     Subd. 5.  The legislative auditor shall establish a 
  3.11  financial audits division and a program evaluation division to 
  3.12  fulfill the duties prescribed in this section.  Each division 
  3.13  shall must be supervised by a deputy auditor, appointed by the 
  3.14  legislative auditor, with the approval of the commission, for a 
  3.15  term coterminous with the legislative auditor's term.  The 
  3.16  deputy auditors may be removed before the expiration of their 
  3.17  terms only for cause.  The legislative auditor and deputy 
  3.18  auditors may each appoint a confidential secretary to serve at 
  3.19  pleasure.  The commission shall fix the salaries and benefits of 
  3.20  the legislative auditor, deputy auditors and confidential 
  3.21  secretaries shall be determined by the compensation plan 
  3.22  approved by the legislative coordinating commission.  The deputy 
  3.23  auditors may perform and exercise the powers, duties and 
  3.24  responsibilities imposed by law on the legislative auditor when 
  3.25  authorized by the legislative auditor.  The deputy auditors and 
  3.26  the confidential secretaries serve in the unclassified civil 
  3.27  service, but all other employees of the legislative auditor are 
  3.28  in the classified civil service.  While in office, a person 
  3.29  appointed deputy for the financial audit division must hold an 
  3.30  active license as a certified public accountant. 
  3.31     Subd. 6.  All the powers, duties, and responsibilities of 
  3.32  the department of public examiner relating to the state of 
  3.33  Minnesota, its departments and agencies as described in 
  3.34  Minnesota Statutes 1971, section 215.03, and any other law 
  3.35  concerning powers, duties, and responsibilities of the public 
  3.36  examiner not otherwise dealt with by Laws 1973, chapter 492, are 
  4.1   transferred to the legislative auditor.  Nothing in this 
  4.2   subdivision shall supersede the powers conferred upon the 
  4.3   commissioner of finance under section 16A.055.  
  4.4      Subd. 7.  In addition to the legislative auditing duties 
  4.5   concerning state financial matters, the legislative auditor 
  4.6   shall also exercise and perform duties prescribed by rule of the 
  4.7   legislature or either body of it or by the commission.  The 
  4.8   legislative auditor shall review department policies and 
  4.9   evaluate projects or programs requested by the commission.  Any 
  4.10  standing legislative committee having legislative jurisdiction 
  4.11  may request the commission to review projects or programs.  
  4.12     Subd. 8.  The legislature may, by rule, provide to the 
  4.13  legislative auditor the testimonial powers that are conferred by 
  4.14  law on legislative standing commissions or committees. 
  4.15     Subd. 9.  The legislative auditor is subject to the 
  4.16  Government Data Practices Act, chapter 13, and shall protect 
  4.17  from unlawful disclosure data classified as not public.  If data 
  4.18  provided by the legislative auditor to the commission is 
  4.19  disseminated by the commission or its members or agents in 
  4.20  violation of section 13.05, subdivision 4, the commission is 
  4.21  subject to liability under section 13.08, subdivisions 1 and 3.  
  4.22     Subd. 10.  Members of the commission have access to data 
  4.23  that is collected or used by the legislative auditor and 
  4.24  classified as not public or as private or confidential only as 
  4.25  authorized by resolution of the commission.  The commission 
  4.26  shall may not authorize its members to have access to private or 
  4.27  confidential data on individuals collected or used in connection 
  4.28  with the collection of any tax.  
  4.29     Subd. 11.  (a) "Audit" as used in this subdivision means a 
  4.30  financial audit, a review, program evaluation, a best practices 
  4.31  review, or an investigation.  Data relating to an audit are not 
  4.32  public or with respect to data on individuals are confidential 
  4.33  until the final report of the audit has been published released 
  4.34  by the legislative auditor or the audit is no longer being 
  4.35  actively pursued.  Upon release of a final audit report by the 
  4.36  legislative auditor, data relating to an audit are public except 
  5.1   data otherwise classified as not public.  
  5.2      (b) Data that support the conclusions of the related to an 
  5.3   audit but not published in the audit report and that the 
  5.4   legislative auditor reasonably believes will result be used in 
  5.5   litigation are not public and with respect to data on 
  5.6   individuals are confidential until the litigation has been 
  5.7   completed or is no longer being actively pursued.  
  5.8      (c) Data on individuals that could reasonably be used to 
  5.9   determine the identity of an individual supplying data for an 
  5.10  audit are private if the data supplied by the individual were 
  5.11  needed for an audit and the individual would not have provided 
  5.12  the data to the legislative auditor without an assurance that 
  5.13  the individual's identity would remain private, or the 
  5.14  legislative auditor reasonably believes that the subject would 
  5.15  not have provided the data.  
  5.16     (d) The definitions of terms provided in section 13.02 
  5.17  apply for purposes of this subdivision.  
  5.18     Subd. 11a.  If, before releasing a report, the legislative 
  5.19  auditor provides a person with data relating to the audit for 
  5.20  the purpose of review and verification of the data, the person 
  5.21  must protect the data from unlawful disclosure or be subject to 
  5.22  the penalties and liabilities provided in sections 13.08 and 
  5.23  13.09. 
  5.24     Subd. 12.  The commission shall periodically select topics 
  5.25  for the legislative auditor to evaluate.  Topics may include any 
  5.26  agency, program, or activity established by law to achieve a 
  5.27  state purpose, or any topic that affects the operation of state 
  5.28  government, but the commission shall give primary consideration 
  5.29  to topics that are likely, upon examination, to produce 
  5.30  recommendations for cost savings, increased productivity, or the 
  5.31  elimination of duplication among public agencies.  Legislators 
  5.32  and legislative committees may suggest topics for evaluation, 
  5.33  but the legislative auditor shall only conduct evaluations 
  5.34  approved by the commission. 
  5.35     Sec. 2.  Minnesota Statutes 1998, section 3.971, is amended 
  5.36  to read: 
  6.1      3.971 [POWERS AND DUTIES OF LEGISLATIVE AUDITOR.] 
  6.2      Subdivision 1.  To perform financial audits The legislative 
  6.3   auditor shall postaudit and make a complete examination and 
  6.4   verification of all accounts, records, inventories, vouchers, 
  6.5   receipts, funds, securities, and other assets of audit the 
  6.6   financial statements of the state of Minnesota required by 
  6.7   section 16A.50 and, as resources permit, shall audit Minnesota 
  6.8   state colleges and universities, the University of 
  6.9   Minnesota, all state agencies, departments, boards, commissions, 
  6.10  courts, and other state agencies at least once a year, if money 
  6.11  and personnel permit, and oftener if deemed necessary or as 
  6.12  directed by the legislature or the legislative audit 
  6.13  commission.  Audits may include detailed checking of every 
  6.14  transaction or test checking as the legislative auditor deems 
  6.15  best.  The books of the state treasurer and commissioner of 
  6.16  finance may be examined monthly. organizations subject to audit 
  6.17  by the legislative auditor, including the state agricultural 
  6.18  society, agricultural utilization research institute, Minnesota 
  6.19  Technology, Inc., Minnesota historical society, labor 
  6.20  interpretive center, Minnesota partnership for action against 
  6.21  tobacco, metropolitan sports facilities commission, metropolitan 
  6.22  airports commission, and metropolitan mosquito control 
  6.23  district.  Financial audits must be conducted according to 
  6.24  generally accepted government auditing standards.  The 
  6.25  legislative auditor shall see that all provisions of law 
  6.26  respecting the appropriate and economic use of public funds are 
  6.27  complied with by all and may, as part of a financial audit or 
  6.28  separately, investigate allegations of noncompliance by 
  6.29  employees of departments and agencies of the state 
  6.30  government and the other organizations listed in this 
  6.31  subdivision.  
  6.32     A copy of all postaudits, reports, and results of 
  6.33  examinations made by the legislative auditor shall be deposited 
  6.34  with the legislative reference library.  
  6.35     Subd. 2.  To perform program evaluation, The legislative 
  6.36  auditor shall conduct program evaluations to determine the 
  7.1   degree to which the activities and programs entered into or 
  7.2   funded by the state are accomplishing their goals and 
  7.3   objectives, including a critical analysis of goals and 
  7.4   objectives, measurement of program results and effectiveness, 
  7.5   alternative means of achieving the same results, and efficiency 
  7.6   in the allocation of resources.  The legislative auditor shall 
  7.7   recommend ways to improve the effectiveness of the programs, 
  7.8   reduce the cost of providing state services, and to eliminate 
  7.9   services of one agency that overlap with or duplicate the 
  7.10  services performed by another agency.  At the direction of the 
  7.11  commission the legislative auditor may perform conduct program 
  7.12  evaluations of any state department, board, commission, or 
  7.13  agency and any metropolitan agency, board, or commission created 
  7.14  under chapter 473; or any program or activity established or 
  7.15  funded, in whole or in part, by the state.  After an evaluation 
  7.16  report has been released, the legislative auditor may 
  7.17  periodically conduct a follow-up review to assess what changes 
  7.18  have occurred. 
  7.19     Subd. 4.  (a) To perform best practices reviews, The 
  7.20  legislative auditor through the program evaluation division 
  7.21  shall conduct best practices reviews that examine the procedures 
  7.22  and practices used to deliver local government 
  7.23  services, including those of municipalities and counties, 
  7.24  determine the methods of local government service delivery, 
  7.25  identify variations in cost and effectiveness, and identify 
  7.26  practices to save money or provide more effective service 
  7.27  delivery.  The legislative auditor shall recommend to local 
  7.28  governments service delivery methods and practices to improve 
  7.29  the cost-effectiveness of services.  The legislative auditor and 
  7.30  the board of government innovation and cooperation shall notify 
  7.31  each other of projects being conducted relating to improving 
  7.32  local government services. 
  7.33     (b) The commission shall identify approve local government 
  7.34  services to be reviewed with advice from an advisory council 
  7.35  appointed by the legislative auditor and consisting of: 
  7.36     (1) three representatives from the Association of Minnesota 
  8.1   Counties; 
  8.2      (2) three representatives from the League of Minnesota 
  8.3   Cities; 
  8.4      (3) two representatives from the Association of 
  8.5   Metropolitan Municipalities; 
  8.6      (4) one representative from the Minnesota Association of 
  8.7   Townships; and 
  8.8      (5) one representative from the Minnesota Association of 
  8.9   School Administrators.  
  8.10     (c) This subdivision expires June 30, 1999. 
  8.11     Sec. 3.  Minnesota Statutes 1998, section 3.974, is amended 
  8.12  to read: 
  8.13     3.974 [TO FILE WRITTEN REPORTS.] 
  8.14     For each audit done, evaluation, or other review completed, 
  8.15  the legislative auditor shall file provide a written report with 
  8.16  to the department, agency, society, or association 
  8.17  concerned, organization or individual audited, evaluated, or 
  8.18  reviewed; the legislative reference library; and the legislative 
  8.19  audit commission for its consideration and action.  
  8.20     Each audit report shall set forth: 
  8.21     (1) whether all funds have been expended for the purposes 
  8.22  authorized in their appropriation; 
  8.23     (2) whether all receipts have been accounted for and paid 
  8.24  into the state treasury as required by law; 
  8.25     (3) all illegal and unbusinesslike practices, if any; 
  8.26     (4) an assessment of the financial control practices used 
  8.27  in the agency, a measurement of performance, and recommendations 
  8.28  for improved effectiveness; and 
  8.29     (5) other data, information, and recommendations as the 
  8.30  legislative auditor may deem advisable and necessary.  
  8.31     Sec. 4.  Minnesota Statutes 1998, section 3.975, is amended 
  8.32  to read: 
  8.33     3.975 [DUTIES WHEN VIOLATIONS MISUSE OF PUBLIC MONEY OR 
  8.34  OTHER RESOURCES ARE DISCOVERED.] 
  8.35     If a legislative auditor's examination discloses 
  8.36  malfeasance, misfeasance, or nonfeasance in office on the part 
  9.1   of an officer or employee, a copy of the report shall be signed 
  9.2   and verified, and it shall be the duty of misuse of public money 
  9.3   or other public resources, the legislative auditor to shall file 
  9.4   the a report with the legislative audit commission and, the 
  9.5   attorney general, and the appropriate county attorney.  It shall 
  9.6   be the duty of The attorney general to institute and prosecute 
  9.7   civil proceedings against the delinquent officer or employee, or 
  9.8   upon the officer's or employee's official bond, or both, as 
  9.9   appropriate to secure to the state the shall seek recovery of 
  9.10  funds or money and other assets misappropriated resources as the 
  9.11  evidence may warrant.  The attorney general county attorney 
  9.12  shall cause criminal proceedings to be instituted by the proper 
  9.13  authorities as the evidence may warrant.  
  9.14     Sec. 5.  Minnesota Statutes 1998, section 6.74, is amended 
  9.15  to read: 
  9.16     6.74 [INFORMATION COLLECTED FROM LOCAL GOVERNMENTS.] 
  9.17     The state auditor, or a designated agent, shall collect 
  9.18  annually from all city, county, and other local units of 
  9.19  government, information as to the assessment of property, 
  9.20  collection of taxes, receipts from licenses and other sources, 
  9.21  the expenditure of public funds for all purposes, borrowing, 
  9.22  debts, principal and interest payments on debts, and such other 
  9.23  information as may be needful.  The data shall be supplied upon 
  9.24  blanks prescribed by the state auditor, and all public officials 
  9.25  so called upon shall fill out properly and return promptly all 
  9.26  blanks so transmitted.  The state auditor or assistants, may 
  9.27  examine local records in order to complete or verify the 
  9.28  information.  Copies of all reports so received shall be 
  9.29  forwarded by the state auditor to the legislative auditor.  
  9.30     Sec. 6.  Minnesota Statutes 1998, section 10.48, is amended 
  9.31  to read: 
  9.32     10.48 [EXPENSE REPORTS.] 
  9.33     The house of representatives and senate shall by rule 
  9.34  require detailed quarterly reports of expenditures by the house 
  9.35  of representatives and senate to their respective committees on 
  9.36  rules and legislative administration.  Each constitutional 
 10.1   officer, the district courts, court of appeals, and supreme 
 10.2   court shall submit detailed quarterly reports of their 
 10.3   expenditures to the legislative auditor.  These reports are 
 10.4   public information. 
 10.5      Sec. 7.  Minnesota Statutes 1998, section 16A.27, 
 10.6   subdivision 2, is amended to read: 
 10.7      Subd. 2.  [DAILY REPORT.] By 9:00 a.m. every business day, 
 10.8   a depository holding a total of over $100,000 in 
 10.9   non-interest-bearing state deposits shall report the balances as 
 10.10  of the close of the last business day to the treasurer and the 
 10.11  commissioner.  The commissioner shall record the balances, and 
 10.12  send a copy of them to the legislative reference library, and 
 10.13  report them monthly to the legislative audit commission.  
 10.14     Sec. 8.  Minnesota Statutes 1998, section 37.06, is amended 
 10.15  to read: 
 10.16     37.06 [SECRETARY; LEGISLATIVE AUDITOR; DUTIES; REPORT.] 
 10.17     The secretary shall keep a complete record of the 
 10.18  proceedings of the annual meetings of the state agricultural 
 10.19  society and all meetings of the board of managers and any 
 10.20  committee of the board, keep all accounts of the society other 
 10.21  than those kept by the treasurer of the society, and perform 
 10.22  other duties as directed by the board of managers.  On or before 
 10.23  December 31 each year, the secretary shall report to the 
 10.24  governor for the fiscal year ending October 31 all the 
 10.25  proceedings of the society during the current year and its 
 10.26  financial condition as appears from its books.  This report must 
 10.27  contain a full, detailed statement of all receipts and 
 10.28  expenditures during the year.  
 10.29     The books and accounts of the society for the fiscal year 
 10.30  must be examined and audited annually by the legislative 
 10.31  auditor.  The cost of the examination must be paid by the 
 10.32  society to the state and credited to the legislative auditor's 
 10.33  revolving general fund.  
 10.34     A summary of this examination, certified by the legislative 
 10.35  auditor, must be appended to the secretary's report, along with 
 10.36  the legislative auditor's recommendations and the proceedings of 
 11.1   the first annual meeting of the society held following the 
 11.2   secretary's report, including addresses made at the meeting as 
 11.3   directed by the board of managers.  The summary, 
 11.4   recommendations, and proceedings must be printed in the same 
 11.5   manner as the reports of state officers.  Copies of the report 
 11.6   must be printed annually and distributed as follows:  to each 
 11.7   society or association entitled to membership in the society, to 
 11.8   each newspaper in the state, and the remaining copies as 
 11.9   directed by the board of managers. 
 11.10     Sec. 9.  Minnesota Statutes 1998, section 37.07, is amended 
 11.11  to read: 
 11.12     37.07 [MONTHLY STATEMENTS BY SECRETARY; PURCHASES, 
 11.13  EXPENDITURES.] 
 11.14     The secretary of the state agricultural society shall 
 11.15  prepare a signed statement each month summarizing receipts and 
 11.16  expenditures for the preceding month, which must be approved by 
 11.17  the president or a vice-president of the board of managers.  The 
 11.18  secretary's affidavit must be attached to this statement.  The 
 11.19  affidavit must state:  
 11.20     (1) that all articles were purchased by or under the 
 11.21  secretary's direction, and that to the secretary's best 
 11.22  information and belief, all articles purchased by the board of 
 11.23  managers were purchased at a fair cash market value and received 
 11.24  by the society, and that all services charged for were actually 
 11.25  provided; 
 11.26     (2) that neither the secretary nor any person in the 
 11.27  secretary's behalf, or the board of managers, to the secretary's 
 11.28  best information and belief, had any pecuniary or other interest 
 11.29  in any purchase made or services rendered, or received any 
 11.30  pecuniary or other benefit from the purchases or services, 
 11.31  directly or indirectly, by commission, percentage, deduction, or 
 11.32  otherwise; and 
 11.33     (3) that the articles specified conformed in every respect 
 11.34  to the goods ordered, in both quality and quantity.  
 11.35     The report must also show the amount of money in the hands 
 11.36  of the treasurer of the society.  
 12.1      Copies of the secretary's monthly report must be furnished 
 12.2   to the commissioner of finance and the office of the legislative 
 12.3   auditor and to each member of the board of managers no later 
 12.4   than the tenth of the month following the month's activities 
 12.5   reported.  
 12.6      The board of managers shall designate one or more national 
 12.7   or state banks, or trust companies authorized to do a banking 
 12.8   business, as official depositories for the society's money, and 
 12.9   shall then require the treasurer to deposit all or part of that 
 12.10  money in the designated bank or banks.  The designation must be 
 12.11  in writing and must set forth all the terms and conditions upon 
 12.12  which the deposits are made, and it must be signed by the 
 12.13  president and secretary and made a part of the minutes of the 
 12.14  board.  Any bank or trust company designated must qualify as a 
 12.15  depository by furnishing a corporate surety bond or collateral 
 12.16  as required by section 118A.03, and must, as long as any of the 
 12.17  society's money is on deposit with it, maintain the bond or 
 12.18  collateral in the amounts required by that section.  No bond or 
 12.19  collateral is required to secure any deposit if it is insured 
 12.20  under federal law, as provided in section 118A.03.  
 12.21     Sec. 10.  Minnesota Statutes 1998, section 85A.02, 
 12.22  subdivision 5c, is amended to read: 
 12.23     Subd. 5c.  [FINANCIAL REPORT.] The board shall employ a 
 12.24  certified public accountant to audit and examine its financial 
 12.25  records each year.  The board shall submit to the legislative 
 12.26  auditor a report of the accountant's examination or audit.  The 
 12.27  legislative auditor shall review the report and accept it or may 
 12.28  make additional examinations if these would be in the public 
 12.29  interest.  The working papers of the certified public accountant 
 12.30  relating to the board must be made available to the legislative 
 12.31  auditor on request.  
 12.32     Sec. 11.  Minnesota Statutes 1998, section 192.551, is 
 12.33  amended to read: 
 12.34     192.551 [ARMY REGULATIONS TO APPLY.] 
 12.35     All money and property received from any source for the 
 12.36  military forces shall must be kept, disbursed, and accounted for 
 13.1   as prescribed by army regulations, where applicable, otherwise 
 13.2   as prescribed by state rules.  All such accounts shall must be 
 13.3   examined and audited at least once annually by officers of the 
 13.4   military forces detailed by the adjutant general as military 
 13.5   auditors.  The legislative auditor may appoint any military 
 13.6   auditor as an assistant examiner, with all the powers incident 
 13.7   thereto, in connection with the examination of such accounts.  
 13.8   The provisions of the state Civil Service Act shall not be 
 13.9   applicable to such appointments also audit those activities of 
 13.10  the accounts that are subject to state law or rule. 
 13.11     Sec. 12.  Minnesota Statutes 1998, section 352.03, 
 13.12  subdivision 6, is amended to read: 
 13.13     Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 
 13.14  management of the system is vested in the director, who is the 
 13.15  executive and administrative head of the system.  The director 
 13.16  shall be advisor to the board on matters pertaining to the 
 13.17  system and shall also act as the secretary of the board.  The 
 13.18  director shall: 
 13.19     (1) attend meetings of the board; 
 13.20     (2) prepare and recommend to the board appropriate rules to 
 13.21  carry out this chapter; 
 13.22     (3) establish and maintain an adequate system of records 
 13.23  and accounts following recognized accounting principles and 
 13.24  controls; 
 13.25     (4) designate an assistant director with the approval of 
 13.26  the board; 
 13.27     (5) appoint any employees, both permanent and temporary, 
 13.28  that are necessary to carry out the provisions of this chapter; 
 13.29     (6) organize the work of the system as the director deems 
 13.30  necessary to fulfill the functions of the system, and define the 
 13.31  duties of its employees and delegate to them any powers or 
 13.32  duties, subject to the control of the director and under 
 13.33  conditions the director may prescribe.  Appointments to exercise 
 13.34  delegated power must be by written order and shall be filed with 
 13.35  the secretary of state; 
 13.36     (7) with the advice and consent of the board, contract for 
 14.1   the services of an approved actuary, professional management 
 14.2   services, and any other consulting services as necessary and fix 
 14.3   the compensation for those services.  The contracts are not 
 14.4   subject to competitive bidding under chapter 16C.  Any approved 
 14.5   actuary retained by the executive director shall function as the 
 14.6   actuarial advisor of the board and the executive director, and 
 14.7   may perform actuarial valuations and experience studies to 
 14.8   supplement those performed by the actuary retained by the 
 14.9   legislative commission on pensions and retirement.  Any 
 14.10  supplemental actuarial valuations or experience studies shall be 
 14.11  filed with the executive director of the legislative commission 
 14.12  on pensions and retirement.  Professional management services 
 14.13  may not be contracted for more often than once in six years.  
 14.14  Copies of professional management survey reports must be 
 14.15  transmitted to the secretary of the senate, the chief clerk of 
 14.16  the house of representatives, and the legislative reference 
 14.17  library as provided by section 3.195, and to the executive 
 14.18  director of the commission and to the legislative auditor at the 
 14.19  time as reports are furnished to the board.  Only management 
 14.20  firms experienced in conducting management surveys of federal, 
 14.21  state, or local public retirement systems are qualified to 
 14.22  contract with the director; 
 14.23     (8) with the advice and consent of the board provide 
 14.24  in-service training for the employees of the system; 
 14.25     (9) make refunds of accumulated contributions to former 
 14.26  state employees and to the designated beneficiary, surviving 
 14.27  spouse, legal representative, or next of kin of deceased state 
 14.28  employees or deceased former state employees, as provided in 
 14.29  this chapter; 
 14.30     (10) determine the amount of the annuities and disability 
 14.31  benefits of employees covered by the system and authorize 
 14.32  payment of the annuities and benefits beginning as of the dates 
 14.33  on which the annuities and benefits begin to accrue, in 
 14.34  accordance with the provisions of this chapter; 
 14.35     (11) pay annuities, refunds, survivor benefits, salaries, 
 14.36  and necessary operating expenses of the system; 
 15.1      (12) certify funds available for investment to the state 
 15.2   board of investment; 
 15.3      (13) with the advice and approval of the board request the 
 15.4   state board of investment to sell securities when the director 
 15.5   determines that funds are needed for the system; 
 15.6      (14) prepare and submit to the board and the legislature an 
 15.7   annual financial report covering the operation of the system, as 
 15.8   required by section 356.20; 
 15.9      (15) prepare and submit biennial and annual budgets to the 
 15.10  board and with the approval of the board submit the budgets to 
 15.11  the department of finance; and 
 15.12     (16) with the approval of the board, perform other duties 
 15.13  required to administer the retirement and other provisions of 
 15.14  this chapter and to do its business. 
 15.15     Sec. 13.  Minnesota Statutes 1998, section 353.03, 
 15.16  subdivision 3a, is amended to read: 
 15.17     Subd. 3a.  [EXECUTIVE DIRECTOR.] (a)  [APPOINTMENT.] The 
 15.18  board shall appoint, with the advice and consent of the senate, 
 15.19  an executive director on the basis of education, experience in 
 15.20  the retirement field, and leadership ability.  The executive 
 15.21  director shall have had at least five years' experience in an 
 15.22  executive level management position, which has included 
 15.23  responsibility for pensions, deferred compensation, or employee 
 15.24  benefits.  The executive director serves at the pleasure of the 
 15.25  board.  The salary of the executive director is as provided by 
 15.26  section 15A.0815. 
 15.27     (b)  [DUTIES.] The management of the association is vested 
 15.28  in the executive director who shall be the executive and 
 15.29  administrative head of the association.  The executive director 
 15.30  shall act as adviser to the board on all matters pertaining to 
 15.31  the association and shall also act as the secretary of the 
 15.32  board.  The executive director shall: 
 15.33     (1) attend all meetings of the board; 
 15.34     (2) prepare and recommend to the board appropriate rules to 
 15.35  carry out the provisions of this chapter; 
 15.36     (3) establish and maintain an adequate system of records 
 16.1   and accounts following recognized accounting principles and 
 16.2   controls; 
 16.3      (4) designate, with the approval of the board, up to two 
 16.4   persons who shall serve in the unclassified service and whose 
 16.5   salary is set in accordance with section 43A.18, subdivision 3, 
 16.6   appoint a confidential secretary in the unclassified service, 
 16.7   and appoint employees to carry out this chapter, who are subject 
 16.8   to chapters 43A and 179A in the same manner as are executive 
 16.9   branch employees; 
 16.10     (5) organize the work of the association as the director 
 16.11  deems necessary to fulfill the functions of the association, and 
 16.12  define the duties of its employees and delegate to them any 
 16.13  powers or duties, subject to the control of, and under such 
 16.14  conditions as, the executive director may prescribe; 
 16.15     (6) with the approval of the board, contract for the 
 16.16  services of an approved actuary, professional management 
 16.17  services, and any other consulting services as necessary to 
 16.18  fulfill the purposes of this chapter.  All contracts are subject 
 16.19  to chapter 16C.  The commissioner of administration shall not 
 16.20  approve, and the association shall not enter into, any contract 
 16.21  to provide lobbying services or legislative advocacy of any 
 16.22  kind.  Any approved actuary retained by the executive director 
 16.23  shall function as the actuarial advisor of the board and the 
 16.24  executive director and may perform actuarial valuations and 
 16.25  experience studies to supplement those performed by the actuary 
 16.26  retained by the legislative commission on pensions and 
 16.27  retirement.  Any supplemental actuarial valuations or experience 
 16.28  studies shall be filed with the executive director of the 
 16.29  legislative commission on pensions and retirement.  Copies of 
 16.30  professional management survey reports shall be transmitted to 
 16.31  the secretary of the senate, the chief clerk of the house of 
 16.32  representatives, and the legislative reference library as 
 16.33  provided by section 3.195, and to the executive director of the 
 16.34  commission and to the legislative auditor at the same time as 
 16.35  reports are furnished to the board.  Only management firms 
 16.36  experienced in conducting management surveys of federal, state, 
 17.1   or local public retirement systems shall be qualified to 
 17.2   contract with the director hereunder; 
 17.3      (7) with the approval of the board provide in-service 
 17.4   training for the employees of the association; 
 17.5      (8) make refunds of accumulated contributions to former 
 17.6   members and to the designated beneficiary, surviving spouse, 
 17.7   legal representative or next of kin of deceased members or 
 17.8   deceased former members, as provided in this chapter; 
 17.9      (9) determine the amount of the annuities and disability 
 17.10  benefits of members covered by the association and authorize 
 17.11  payment of the annuities and benefits beginning as of the dates 
 17.12  on which the annuities and benefits begin to accrue, in 
 17.13  accordance with the provisions of this chapter; 
 17.14     (10) pay annuities, refunds, survivor benefits, salaries, 
 17.15  and necessary operating expenses of the association; 
 17.16     (11) prepare and submit to the board and the legislature an 
 17.17  annual financial report covering the operation of the 
 17.18  association, as required by section 356.20; 
 17.19     (12) prepare and submit biennial and annual budgets to the 
 17.20  board for its approval and submit the approved budgets to the 
 17.21  department of finance for approval by the commissioner; 
 17.22     (13) reduce all or part of the accrued interest payable 
 17.23  under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 
 17.24  subdivision 5, upon receipt of proof by the association of an 
 17.25  unreasonable processing delay or other extenuating circumstances 
 17.26  of the employing unit.  The executive director shall prescribe 
 17.27  and submit for approval by the board the conditions under which 
 17.28  such interest may be reduced; and 
 17.29     (14) with the approval of the board, perform such other 
 17.30  duties as may be required for the administration of the 
 17.31  association and the other provisions of this chapter and for the 
 17.32  transaction of its business.  
 17.33     Sec. 14.  Minnesota Statutes 1998, section 353A.05, 
 17.34  subdivision 1, is amended to read: 
 17.35     Subdivision 1.  [COMMISSION ACTIONS.] Upon initiation of 
 17.36  consolidation as provided in section 353A.04, the executive 
 18.1   director of the commission shall direct the actuary retained by 
 18.2   the commission to undertake the preparation of the actuarial 
 18.3   calculations necessary to complete the consolidation.  
 18.4      These actuarial calculations shall include for each active 
 18.5   member, each deferred former member, each retired member, and 
 18.6   each current beneficiary the computation of the present value of 
 18.7   future benefits, the future normal costs, if any, and the 
 18.8   actuarial accrued liability on the basis of the existing relief 
 18.9   association benefit plan and on the basis of the public 
 18.10  employees police and fire fund benefit plan.  These actuarial 
 18.11  calculations shall also include for the total active, deferred, 
 18.12  retired, and benefit recipient membership the sum of the present 
 18.13  value of future benefits, the future normal costs, if any, and 
 18.14  the actuarial accrued liability on the basis of the existing 
 18.15  relief association benefit plan, on the basis of the public 
 18.16  employees police and fire fund benefit plan, and on the basis of 
 18.17  the benefit plan which produced the largest present value of 
 18.18  future benefits for each person.  The actuarial calculations 
 18.19  shall be prepared using the entry age actuarial cost method for 
 18.20  all components of the benefit plan and using the actuarial 
 18.21  assumptions applicable to the fund for the most recent actuarial 
 18.22  valuation prepared under section 356.215, except that the 
 18.23  actuarial calculations on the basis of the existing relief 
 18.24  association benefit plan shall be prepared using an interest 
 18.25  rate actuarial assumption during the postretirement period which 
 18.26  is in the same amount as the interest rate actuarial assumption 
 18.27  applicable to the preretirement period.  The actuarial 
 18.28  calculations shall include the computation of the present value 
 18.29  of the initial postretirement adjustment anticipated by the 
 18.30  executive director of the state board as payable after the 
 18.31  effective date of the consolidation from the Minnesota 
 18.32  postretirement investment fund under section 11A.18.  
 18.33     The chief administrative officer of the relief association 
 18.34  shall, upon request, provide in a timely manner to the executive 
 18.35  director of the commission and to the actuary retained by the 
 18.36  commission the most current available information or documents, 
 19.1   whichever applies, regarding the demographics of the active, 
 19.2   deferred, retired, and benefit recipient membership of the 
 19.3   relief association, the financial condition of the relief 
 19.4   association, and the existing benefit plan of the relief 
 19.5   association.  
 19.6      Upon completion of the actuarial calculations required by 
 19.7   this subdivision, the actuary retained by the commission shall 
 19.8   issue a report in the form of an appropriate summary of the 
 19.9   actuarial calculations and shall provide a copy of that report 
 19.10  to the executive director of the commission, the executive 
 19.11  director of the public employees retirement association, the 
 19.12  chief administrative officer of the relief association, the 
 19.13  chief administrative officer of the municipality in which the 
 19.14  relief association is located, and the state auditor, and the 
 19.15  legislative auditor. 
 19.16     Sec. 15.  Minnesota Statutes 1998, section 354.06, 
 19.17  subdivision 2a, is amended to read: 
 19.18     Subd. 2a.  [DUTIES OF EXECUTIVE DIRECTOR.] The management 
 19.19  of the association is vested in the executive director who shall 
 19.20  be the executive and administrative head of the association.  
 19.21  The executive director shall act as advisor to the board on all 
 19.22  matters pertaining to the association and shall also act as the 
 19.23  secretary of the board.  The executive director shall: 
 19.24     (1) attend all meetings of the board; 
 19.25     (2) prepare and recommend to the board appropriate rules to 
 19.26  carry out the provisions of this chapter; 
 19.27     (3) establish and maintain an adequate system of records 
 19.28  and accounts following recognized accounting principles and 
 19.29  controls; 
 19.30     (4) designate an assistant executive director in the 
 19.31  unclassified service and two assistant executive directors in 
 19.32  the classified service with the approval of the board, and 
 19.33  appoint such employees, both permanent and temporary, as are 
 19.34  necessary to carry out the provisions of this chapter; 
 19.35     (5) organize the work of the association as the director 
 19.36  deems necessary to fulfill the functions of the association, and 
 20.1   define the duties of its employees and delegate to them any 
 20.2   powers or duties, subject to the director's control and under 
 20.3   such conditions as the director may prescribe; 
 20.4      (6) with the approval of the board, contract and set the 
 20.5   compensation for the services of an approved actuary, 
 20.6   professional management services, and any other consulting 
 20.7   services.  These contracts are not subject to the competitive 
 20.8   bidding procedure prescribed by chapter 16C.  An approved 
 20.9   actuary retained by the executive director shall function as the 
 20.10  actuarial advisor of the board and the executive director and 
 20.11  may perform actuarial valuations and experience studies to 
 20.12  supplement those performed by the actuary retained by the 
 20.13  legislative commission on pensions and retirement.  Any 
 20.14  supplemental actuarial valuations or experience studies shall be 
 20.15  filed with the executive director of the legislative commission 
 20.16  on pensions and retirement.  Copies of professional management 
 20.17  survey reports must be transmitted to the secretary of the 
 20.18  senate, the chief clerk of the house of representatives, and the 
 20.19  legislative reference library as provided by section 3.195, and 
 20.20  to the executive director of the commission and to the 
 20.21  legislative auditor at the same time as reports are furnished to 
 20.22  the board.  Only management firms experienced in conducting 
 20.23  management surveys of federal, state, or local public retirement 
 20.24  systems are qualified to contract with the executive director; 
 20.25     (7) with the approval of the board, provide in-service 
 20.26  training for the employees of the association; 
 20.27     (8) make refunds of accumulated contributions to former 
 20.28  members and to the designated beneficiary, surviving spouse, 
 20.29  legal representative, or next of kin of deceased members or 
 20.30  deceased former members, under this chapter; 
 20.31     (9) determine the amount of the annuities and disability 
 20.32  benefits of members covered by the association and authorize 
 20.33  payment of the annuities and benefits beginning as of the dates 
 20.34  on which the annuities and benefits begin to accrue, under this 
 20.35  chapter; 
 20.36     (10) pay annuities, refunds, survivor benefits, salaries, 
 21.1   and necessary operating expenses of the association; 
 21.2      (11) prepare and submit to the board and the legislature an 
 21.3   annual financial report covering the operation of the 
 21.4   association, as required by section 356.20; 
 21.5      (12) certify funds available for investment to the state 
 21.6   board of investment; 
 21.7      (13) with the advice and approval of the board, request the 
 21.8   state board of investment to sell securities on determining that 
 21.9   funds are needed for the purposes of the association; 
 21.10     (14) prepare and submit biennial and annual budgets to the 
 21.11  board and with the approval of the board submit those budgets to 
 21.12  the department of finance; and 
 21.13     (15) with the approval of the board, perform such other 
 21.14  duties as may be required for the administration of the 
 21.15  association and the other provisions of this chapter and for the 
 21.16  transaction of its business.  The executive director may: 
 21.17     (i) reduce all or part of the accrued interest and fines 
 21.18  payable by an employing unit for reporting requirements under 
 21.19  section 354.52, based on an evaluation of any extenuating 
 21.20  circumstances of the employing unit; 
 21.21     (ii) assign association employees to conduct field audits 
 21.22  of an employing unit to ensure compliance with the provisions of 
 21.23  this chapter; and 
 21.24     (iii) recover overpayments, if not repaid to the 
 21.25  association, by suspending or reducing the payment of a 
 21.26  retirement annuity, refund, disability benefit, survivor 
 21.27  benefit, or optional annuity under this chapter until the 
 21.28  overpayment, plus interest, has been recovered. 
 21.29     Sec. 16.  Minnesota Statutes 1998, section 360.015, 
 21.30  subdivision 19, is amended to read: 
 21.31     Subd. 19.  [KEEP BOOKS AND RECORDS.] The commissioner shall 
 21.32  keep accurate and complete books of account of such character as 
 21.33  may be prescribed by the legislative auditor, the same accounts 
 21.34  to show in detail itemized receipts and disbursements of the 
 21.35  airports fund.  The books shall show, and it shall be the duty 
 21.36  of the legislative auditor to so prescribe, the following facts, 
 22.1   among others: 
 22.2      (a) The expenses of maintaining the department, including 
 22.3   the salaries and expenses of the individual members thereof; 
 22.4      (b) The amounts of money expended in each county of the 
 22.5   state for the construction or maintenance of airports or 
 22.6   restricted landing areas, when, where, and upon what airport or 
 22.7   restricted landing area expended, so that the cost for each such 
 22.8   airport or restricted landing area can be easily ascertained; 
 22.9      (c) The amount of equipment and materials purchased and 
 22.10  when, where, and from whom purchased; these books shall show the 
 22.11  price paid for each item; the original invoice shall form a part 
 22.12  of the permanent files and records in the department and shall 
 22.13  be open to public inspection. 
 22.14     Sec. 17.  Minnesota Statutes 1998, section 609.456, is 
 22.15  amended to read: 
 22.16     609.456 [REPORTING TO STATE AUDITOR AND LEGISLATIVE AUDITOR 
 22.17  REQUIRED.] 
 22.18     Subdivision 1.  [STATE AUDITOR.] Whenever a public employee 
 22.19  or public officer of a political subdivision discovers evidence 
 22.20  of theft, embezzlement, or unlawful use of public funds or 
 22.21  property, the employee or elected official shall, except when to 
 22.22  do so would knowingly impede or otherwise interfere with an 
 22.23  ongoing criminal investigation, promptly report in writing to 
 22.24  the state auditor a detailed description of the alleged incident 
 22.25  or incidents. 
 22.26     Subd. 2.  [LEGISLATIVE AUDITOR.] Whenever an employee or 
 22.27  officer of the state, University of Minnesota, or other 
 22.28  organization listed in section 3.971, subdivision 1, discovers 
 22.29  evidence of theft, embezzlement, or unlawful use of public funds 
 22.30  or property, the employee or officer shall, except when to do so 
 22.31  would knowingly impede or otherwise interfere with an ongoing 
 22.32  criminal investigation, promptly report in writing to the 
 22.33  legislative auditor a detailed description of the alleged 
 22.34  incident or incidents. 
 22.35     Sec. 18.  [REVISOR INSTRUCTION.] 
 22.36     The revisor of statutes shall renumber each section of 
 23.1   Minnesota Statutes listed in column A with the number listed in 
 23.2   column B.  The revisor shall make necessary cross-reference 
 23.3   changes consistent with the renumbering.  The revisor shall 
 23.4   provide appropriate section and subdivision headnotes in 
 23.5   Minnesota Statutes, sections 3.97, 3.971, and 3.979. 
 23.6         Column A                      Column B 
 23.7         3.97, subd. 4                 3.971, subd. 1       
 23.8         3.97, subd. 5                 3.971, subd. 2       
 23.9         3.97, subd. 6                 3.971, subd. 3a      
 23.10        3.97, subd. 7                 3.971, subd. 4      
 23.11        3.97, subd. 8                 3.971, subd. 5      
 23.12        3.97, subd. 9                 3.979, subd. 1      
 23.13        3.97, subd. 10                3.979, subd. 2      
 23.14        3.97, subd. 11                3.979, subd. 3      
 23.15        3.97, subd. 11a               3.979, subd. 4       
 23.16        3.97, subd. 12                3.97, subd. 3a
 23.17        3.971, subd. 1                3.971, subd. 6
 23.18        3.971, subd. 2                3.971, subd. 7
 23.19        3.971, subd. 4                3.971, subd. 8
 23.20     Sec. 19.  [REPEALER.] 
 23.21     Minnesota Statutes 1998, sections 3.973; 469.207; and 
 23.22  574.02, are repealed. 
 23.23     Sec. 20.  [EFFECTIVE DATE.] 
 23.24     The amendments made to Minnesota Statutes 1998, section 
 23.25  3.97, subdivision 2, in section 1, are effective January 1, 
 23.26  2001.  The remainder of the act is effective the day following 
 23.27  final enactment.