1.1                          A bill for an act 
  1.2             relating to health; providing for disposition of 
  1.3             tobacco settlement money; establishing the Minnesota 
  1.4             families foundation; creating health-related endowment 
  1.5             funds; appropriating money; proposing coding for new 
  1.6             law in Minnesota Statutes, chapters 10; 16A; 137; 144; 
  1.7             and 145. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [10.57] [MINNESOTA FAMILIES FOUNDATION.] 
  1.10     Subdivision 1.  [ESTABLISHMENT.] The legislature finds that 
  1.11  the Minnesota families foundation will foster a public-private 
  1.12  partnership that will provide improved services to clients, a 
  1.13  more effective coordination of services, and a more efficient 
  1.14  allocation of resources.  The Minnesota families foundation is a 
  1.15  nonprofit foundation established to support self-sufficiency and 
  1.16  reduce long-term dependency on government.  The foundation shall 
  1.17  operate as a supporting organization under the Internal Revenue 
  1.18  Code, section 509(a), and chapter 317A.  The foundation is not 
  1.19  subject to chapters 13, 14, 16A, 16B, 16C, 43A, and 179A. 
  1.20     Subd. 2.  [BOARD MEMBERSHIP.] The foundation shall be 
  1.21  governed by a 16-member board of directors consisting of: 
  1.22     (1) eight members, who are not state employees, appointed 
  1.23  by the governor; and 
  1.24     (2) eight members, who are not members of the legislature, 
  1.25  two of whom are appointed by the subcommittee on committees of 
  1.26  the senate committee on rules and administration, two of whom 
  2.1   are appointed by the senate minority leader, two of whom are 
  2.2   appointed by the speaker of the house of representatives, and 
  2.3   two of whom are appointed by the house minority leader.  
  2.4      Subd. 3.  [TERMS; COMPENSATION.] (a) The terms of the board 
  2.5   members shall be four years with the terms ending on the first 
  2.6   Monday in January.  All board members may serve until their 
  2.7   successors are appointed, but in no case later than July 1 in a 
  2.8   year in which a term expires unless reappointed.  A vacancy on 
  2.9   the board shall be filled for the unexpired portion of the term 
  2.10  in the same manner as the original appointment.  Removal of 
  2.11  board members is governed by section 15.0575, subdivision 4.  
  2.12     (b) Board members must not be paid a per diem, but must be 
  2.13  reimbursed for reasonable out-of-pocket expenses actually 
  2.14  incurred. 
  2.15     (c) Board members must disclose fully to the board of 
  2.16  directors whenever they may have a conflict of interest within 
  2.17  the meaning of section 317A.255, subdivision 2.  Liability of 
  2.18  board members shall be governed by section 317A.257. 
  2.19     Subd. 4.  [ORGANIZATION.] The board of directors shall 
  2.20  adopt bylaws necessary for the conduct of the business of the 
  2.21  foundation.  The board shall select a chairperson from its 
  2.22  members, and any other officers the board deems necessary.  
  2.23  Board meetings shall be open to the public, and all grants, 
  2.24  contracts, and meeting minutes of the foundation shall be 
  2.25  available to the public. 
  2.26     Subd. 5.  [EXECUTIVE DIRECTOR; EMPLOYEES OF THE 
  2.27  FOUNDATION.] (a) The board members appointed by the governor and 
  2.28  the legislature shall convene prior to January 1, 2000, and hire 
  2.29  an executive director.  The executive director shall serve at 
  2.30  the pleasure of the board of directors.  The executive director 
  2.31  shall serve as a nonvoting member of the board.  The executive 
  2.32  director's compensation shall be capped at 85 percent of the 
  2.33  governor's salary. 
  2.34     (b) The executive director shall oversee the daily 
  2.35  operations of the foundation, including the hiring of necessary 
  2.36  staff.  Employees of the foundation are not state employees. 
  3.1      (c) The executive director shall prepare an annual budget 
  3.2   for the foundation for review and approval by the board of 
  3.3   directors. 
  3.4      (d) To the extent that the board of directors makes funds 
  3.5   available, the department of finance shall provide 
  3.6   administrative support to the foundation until June 30, 2000, 
  3.7   including but not limited to processing of payroll for the 
  3.8   executive director and foundation staff, payment of expenses to 
  3.9   board members, and payment of rent.  The board of directors 
  3.10  shall make up to $200,000 available to the department of finance 
  3.11  to cover payroll, expenses of board members, rent, and other 
  3.12  administrative expenses incurred to support the foundation in 
  3.13  fiscal year 2000. 
  3.14     Subd. 6.  [FOUNDATION FUNDS.] (a) The board of directors 
  3.15  shall be responsible for managing the investment of the 
  3.16  foundation funds as follows: 
  3.17     (1) all foundation fund assets, including income and 
  3.18  appreciation, shall be placed in a separate account; 
  3.19     (2) the foundation funds shall be audited annually by an 
  3.20  independent auditor; 
  3.21     (3) the foundation funds shall be invested and managed 
  3.22  according to rules applicable to trust investments, as provided 
  3.23  in the Minnesota Prudent Investor Act, sections 501B.151 and 
  3.24  501B.152; 
  3.25     (4) reasonable and necessary administrative and investment 
  3.26  expenses directly associated with the management and investment 
  3.27  of the foundation funds may be recovered from the foundation; 
  3.28  and 
  3.29     (5) according to limits established by the board and 
  3.30  consistent with the limitations in the Uniform Management of 
  3.31  Institutional Funds Act, sections 309.62 to 309.71, earnings on 
  3.32  foundation funds shall be expended to cover administrative 
  3.33  expenses of the foundation and grant awards under subdivision 7. 
  3.34     (b) The foundation may accept gifts from private donors.  
  3.35  Such gifts to the foundation must be accounted for and expended 
  3.36  in a manner consistent with this section. 
  4.1      Subd. 7.  [FOUNDATION GRANTS.] (a) Beginning in July 2000, 
  4.2   the foundation shall provide grants to nonprofit, 
  4.3   community-based organizations for activities that: 
  4.4      (1) are flexible and innovative and that close the gap 
  4.5   between dependence on government and independence from 
  4.6   government programs; 
  4.7      (2) support the efforts of working families and working 
  4.8   individuals to remain self-sufficient by building assets that 
  4.9   promote family stability; 
  4.10     (3) will ensure that core public sector efforts to 
  4.11  encourage self-sufficiency have every opportunity to succeed; 
  4.12     (4) focus resources in a way that can demonstrate impact on 
  4.13  a single goal or a single set of goals; and 
  4.14     (5) have demonstrated success in reducing future government 
  4.15  expenditures. 
  4.16     (b) All grantees must match funds received from the 
  4.17  foundation, dollar for dollar.  The match may include up to 25 
  4.18  percent in-kind.  The match cannot be made with federal, state, 
  4.19  or local government funds. 
  4.20     Subd. 8.  [REPORTS TO THE LEGISLATURE.] (a) The foundation 
  4.21  shall biennially report to the governor and the legislature on 
  4.22  January 15th of each odd-numbered year.  The report must include:
  4.23     (1) a financial report that details the foundation's 
  4.24  earnings; 
  4.25     (2) an expense report detailing the amounts and purposes 
  4.26  for which funds were expended; 
  4.27     (3) a list of grant awards; and 
  4.28     (4) a copy of the independent audit reports for the two 
  4.29  previous years. 
  4.30     (b) The initial report of the foundation shall include a 
  4.31  copy of the foundation's mission statement, bylaws, and policies 
  4.32  adopted by the board of directors. 
  4.33     Subd. 9.  [DISSOLUTION OF THE FOUNDATION.] On June 30, 
  4.34  2009, the foundation shall sunset and all remaining foundation 
  4.35  funds shall be returned to the tobacco settlement fund.  If the 
  4.36  legal status of the foundation or the foundation funds are 
  5.1   successfully challenged in state or federal court, the 
  5.2   foundation is automatically dissolved and the funds appropriated 
  5.3   to the foundation, along with any unspent earnings, revert to 
  5.4   the tobacco settlement fund. 
  5.5      Sec. 2.  [16A.86] [TOBACCO SETTLEMENT FUND.] 
  5.6      Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The tobacco 
  5.7   settlement fund is established and dedicated for the purposes of 
  5.8   sections 10.57, 137.44, 144.1461, and 145.076. 
  5.9      Subd. 2.  [DEPOSIT OF MONEY.] The commissioner shall 
  5.10  deposit all settlement payments received after July 1, 1998, as 
  5.11  defined in section IIB of the settlement document filed in State 
  5.12  v. Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 
  5.13  Second Judicial District), in the tobacco settlement fund.  All 
  5.14  other payments to the state resulting from the specified 
  5.15  litigation shall be deposited in the general fund. 
  5.16     Sec. 3.  [137.44] [HEALTH PROFESSIONAL EDUCATION AND 
  5.17  MEDICAL RESEARCH ENDOWMENT FUND.] 
  5.18     Subdivision 1.  [CONDITION; APPROPRIATION.] If the board of 
  5.19  regents accepts the appropriation under this subdivision, it 
  5.20  shall comply with this section.  $350,000,000 is appropriated 
  5.21  from the tobacco settlement fund to the board of regents for the 
  5.22  health professional education and medical research endowment 
  5.23  fund. 
  5.24     Subd. 2.  [ESTABLISHMENT; PURPOSE; ADMINISTRATION.] The 
  5.25  board of regents shall establish the health professional 
  5.26  education and medical research endowment fund solely to support 
  5.27  health professional education programs at the university 
  5.28  academic health center and medical research at the university 
  5.29  and the Mayo foundation.  The board of regents shall administer 
  5.30  the fund.  All earnings including income and appreciation of the 
  5.31  endowment fund must be credited to the fund.  
  5.32     Subd. 3.  [INVESTMENT MANAGEMENT.] (a) The board of regents 
  5.33  shall transfer the endowment fund money to the Minnesota medical 
  5.34  foundation, which shall be responsible for managing the 
  5.35  investment of the endowment fund according to this section. 
  5.36     (b) The Minnesota medical foundation shall manage the 
  6.1   investment of the endowment fund as follows: 
  6.2      (1) all endowment fund assets including income and 
  6.3   appreciation shall be placed in a separate account; 
  6.4      (2) the endowment fund shall be audited annually by an 
  6.5   independent auditor; 
  6.6      (3) the endowment fund shall be invested and managed 
  6.7   according to rules applicable to trust investments as provided 
  6.8   in the Minnesota Prudent Investor Act, sections 501B.151 and 
  6.9   501B.152; 
  6.10     (4) reasonable and necessary administrative and investment 
  6.11  expenses directly associated with the management and investment 
  6.12  of the endowment fund may be recovered from the endowment fund; 
  6.13  and 
  6.14     (5) the Minnesota medical foundation shall transfer assets 
  6.15  from the endowment fund for purposes consistent with this 
  6.16  section as directed by the board of regents, including the 
  6.17  return of the entire balance in the endowment fund on July 1, 
  6.18  2009, to the board of regents. 
  6.19     (c) The board of regents shall in its discretion establish 
  6.20  an annual appropriation from the endowment fund, not to exceed 
  6.21  five percent of the fair market value of all assets held in the 
  6.22  endowment fund as of the first day of the calendar year. 
  6.23     (d) The amount of the annual appropriation determined in 
  6.24  paragraph (c) shall be distributed as directed by the board of 
  6.25  regents for the purposes of the endowment fund according to 
  6.26  subdivision 2. 
  6.27     Subd. 4.  [ADVISORY BOARD.] (a) The board of regents shall 
  6.28  appoint an advisory board to consult with the senior 
  6.29  vice-president for health sciences in making budget 
  6.30  recommendations regarding the annual appropriation from the 
  6.31  endowment fund. 
  6.32     (b) The advisory board shall consist of seven members, one 
  6.33  of which shall be the commissioner of health.  The other members 
  6.34  shall be Minnesota residents, selected in equal number to 
  6.35  represent the interests of health care consumers and providers. 
  6.36     Subd. 5.  [BUDGETING ANNUAL APPROPRIATION.] (a) The board 
  7.1   of regents shall adopt an annual budget for the use of the 
  7.2   annual appropriation from the endowment fund.  In each year, 
  7.3   funds shall be specifically budgeted for the instructional costs 
  7.4   of health professional education programs at the university 
  7.5   academic health center and its affiliated teaching hospitals, 
  7.6   and for medical research at the University of Minnesota and the 
  7.7   Mayo foundation. 
  7.8      (b) Seventy-five percent of the annual appropriation from 
  7.9   the endowment fund shall be budgeted for the instructional costs 
  7.10  of health professional education programs of the university 
  7.11  academic health center and its affiliated teaching hospitals. 
  7.12     (c) 8.33 percent of the annual appropriation from the 
  7.13  endowment fund shall be budgeted for medical research costs at 
  7.14  the university and is available only if matched 
  7.15  dollar-for-dollar by nonstate funds. 
  7.16     (d) 8.33 percent of the annual appropriation from the 
  7.17  endowment fund shall be transferred annually by the board of 
  7.18  regents to the Mayo foundation for medical research costs and is 
  7.19  available only if matched dollar-for-dollar by nonstate funds. 
  7.20     (e) 8.34 percent of the annual appropriation from the 
  7.21  endowment fund shall be budgeted by the board of regents for the 
  7.22  purpose of collaborative medical research between the university 
  7.23  and the Mayo foundation and is available only if matched 
  7.24  dollar-for-dollar with nonstate funds.  Notwithstanding the 
  7.25  provisions of subdivision 4, paragraph (a), the board of regents 
  7.26  and the Mayo foundation shall jointly establish a collaborative 
  7.27  medical research committee to evaluate and select collaborative 
  7.28  research projects and award funds specifically budgeted for 
  7.29  collaborative medical research projects.  The collaborative 
  7.30  medical research committee shall consist of five members, one of 
  7.31  whom shall be the commissioner of health.  The board of regents 
  7.32  and the Mayo foundation shall each appoint two members to the 
  7.33  committee. 
  7.34     Subd. 6.  [ANNUAL REPORT.] (a) The board of regents in 
  7.35  consultation with the Mayo foundation shall annually prepare a 
  7.36  report detailing how the annual appropriation is budgeted and 
  8.1   the amounts and purposes for which it is expended. 
  8.2      (b) The board of regents shall include the following in the 
  8.3   biennial budget document submitted to the governor and 
  8.4   legislature: 
  8.5      (1) endowment fund annual reports for the two most recent 
  8.6   fiscal years completed; and 
  8.7      (2) a discussion of forecasted endowment fund income and 
  8.8   planned expenditures for the coming biennium. 
  8.9      Subd. 7.  [SUNSET.] The endowment fund expires July 1, 
  8.10  2009, at which time the board of regents shall return to the 
  8.11  tobacco settlement fund the balance in the endowment fund on 
  8.12  July 1, 2009. 
  8.13     Sec. 4.  [144.1461] [MEDICAL EDUCATION AND RESEARCH COSTS 
  8.14  ENDOWMENT.] 
  8.15     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The medical 
  8.16  education and research costs endowment fund is established as a 
  8.17  nonexpendable trust fund to support medical education and 
  8.18  research activities throughout the state.  The commissioner of 
  8.19  health shall administer the fund.  All earnings of the endowment 
  8.20  must be credited to the fund. 
  8.21     Subd. 2.  [APPROPRIATION.] Beginning in fiscal year 2000, 
  8.22  the accrued earnings of the medical education and research costs 
  8.23  endowment fund, not to exceed $5,000,000, is annually 
  8.24  appropriated to the commissioner of health for distribution 
  8.25  according to section 62J.69.  Notwithstanding the provisions of 
  8.26  section 62J.69, money that is appropriated under this section 
  8.27  may be used by the commissioner for grants to support medical 
  8.28  research, including medical research activities that are 
  8.29  conducted in a noneducational setting by a Minnesota-based 
  8.30  nonprofit organization. 
  8.31     Subd. 3.  [REVIEW.] The purpose of the endowment fund shall 
  8.32  be reviewed in the governor's budget each biennium. 
  8.33     Sec. 5.  [145.076] [LOCAL PUBLIC HEALTH ENDOWMENT FUND.] 
  8.34     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The local public 
  8.35  health endowment fund is established as a nonexpendable trust 
  8.36  fund for the purpose of assuring active community involvement 
  9.1   and coordination of community resources in addressing locally 
  9.2   identified public health needs.  The commissioner of health 
  9.3   shall administer the fund.  All earnings of the endowment fund 
  9.4   must be credited to the fund. 
  9.5      Subd. 2.  [APPROPRIATION OF EARNINGS.] The accrued earnings 
  9.6   of the local public health endowment fund, not to exceed five 
  9.7   percent of the account balance, is annually appropriated to the 
  9.8   commissioner of health for distribution to community health 
  9.9   boards under section 145A.13. 
  9.10     Subd. 3.  [REPORT.] On January 15 of each odd-numbered 
  9.11  year, the commissioner of health shall report to the legislature 
  9.12  on the activities of community health boards under chapter 145A. 
  9.13     Subd. 4.  [REVIEW.] The purpose of the endowment fund shall 
  9.14  be reviewed in the governor's budget each biennium. 
  9.15     Sec. 6.  [INITIAL APPOINTMENTS.] 
  9.16     Minnesota Statutes, section 15.0575, subdivision 2, applies 
  9.17  to initial appointment of board members for the Minnesota 
  9.18  families foundation under section 1. 
  9.19     Sec. 7.  [TRANSFER OF MONEY.] 
  9.20     (a) The commissioner of finance shall transfer $100,000,000 
  9.21  from the tobacco settlement fund to the medical education and 
  9.22  research costs endowment fund. 
  9.23     (b) The commissioner of finance shall transfer $100,000,000 
  9.24  from the tobacco settlement fund to the local public health 
  9.25  endowment fund in fiscal year 2001; $38,450,000 in fiscal year 
  9.26  2002; and $121,550,000 in fiscal year 2003. 
  9.27     Sec. 8.  [APPROPRIATION.] 
  9.28     (a) The appropriations in clauses (1) to (3) are made to 
  9.29  the commissioner of finance for the Minnesota families 
  9.30  foundation from the tobacco settlement fund: 
  9.31     (1) $253,350,000 is appropriated in fiscal year 2000; 
  9.32     (2) $142,550,000 is appropriated in fiscal year 2001; and 
  9.33     (3) $204,100,000 is appropriated in fiscal year 2002. 
  9.34     (b) The commissioner shall transfer the appropriated funds 
  9.35  to the Minnesota families foundation when the board of directors 
  9.36  establishes an account, as required in Minnesota Statutes, 
 10.1   section 10.57, subdivision 6. 
 10.2      Sec. 9.  [EFFECTIVE DATES.] 
 10.3      Sections 1, 2, and 6 are effective the day following final 
 10.4   enactment.  Sections 3 to 5, 7, and 8 are effective July 1, 1999.