1.1A bill for an act1.2relating to education; postsecondary; establishing a budget for higher education; 1.3appropriating money to the Office of Higher Education, the Board of Trustees 1.4of the Minnesota State Colleges and Universities, the Board of Regents of the 1.5University of Minnesota, and the Mayo Clinic; regulating tuition increases; 1.6regulating bonus payments; establishing the Minnesota Discovery, Research, 1.7and InnoVation Economy funding program; providing statewide electronic 1.8infrastructure; modifying provisions related to student grants, awards, and 1.9aid, school registration, and licensure; requiring certain information to be 1.10provided in higher education budget proposals; modifying procedures related 1.11to terminating institutions from financial aid programs; establishing procedure 1.12for cancellation of required surety bond; repealing Higher Education Advisory 1.13Council;amending Minnesota Statutes 2012, sections 135A.031, subdivision 7; 1.14136A.101, subdivision 9; 136A.125, subdivisions 2, 4; 136A.233, subdivision 1.152; 136A.646; 136A.65, subdivision 8; 136A.653, by adding a subdivision; 1.16136F.40, subdivision 2; 137.027; 141.35; 299A.45, subdivision 4; proposing 1.17coding for new law in Minnesota Statutes, chapters 136A; 137; repealing 1.18Minnesota Statutes 2012, section 136A.031, subdivision 2; Minnesota Rules, 1.19parts 4830.0120; 4830.0130; 4830.0140; 4830.0150; 4830.0160; 4830.0170; 1.204830.0180; 4830.0190; 4830.0195.1.21BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.22ARTICLE 11.23HIGHER EDUCATION APPROPRIATIONS

1.24Section 1.  SUMMARY OF APPROPRIATIONS.

1.25    Subdivision 1.Summary By Fund.The amounts shown in this subdivision 1.26summarize direct appropriations, by fund, made in this article.

1.27SUMMARY BY FUND1.2820142015Total1.29General$1,336,854,000$1,378,282,000$2,715,136,0002.1Health Care Access2,157,0002,157,0004,314,0002.2Total$1,339,011,000$1,380,439,000$2,719,450,000

2.3    Subd. 2.Summary By Agency - All Funds.The amounts shown in this subdivision 2.4summarize direct appropriations, by agency, made in this article.

2.5SUMMARY BY AGENCY - ALL FUNDS2.620142015Total2.72.8Minnesota Office of Higher Education$196,512,000$196,197,000$392,709,0002.92.102.11Board of Trustees of the Minnesota State Colleges and Universities570,865,000597,865,0001,168,730,0002.122.13Board of Regents of the University of Minnesota570,283,000585,026,0001,155,309,0002.14Mayo Clinic1,351,0001,351,0002,702,0002.15Total$1,339,011,000$1,380,439,000$2,719,450,000

2.16Sec. 2. HIGHER EDUCATION APPROPRIATIONS.

2.17    The sums shown in the columns marked "Appropriations" are appropriated to the 2.18agencies and for the purposes specified in this article. The appropriations are from the 2.19general fund, or another named fund, and are available for the fiscal years indicated 2.20for each purpose. The figures "2014" and "2015" used in this article mean that the 2.21appropriations listed under them are available for the fiscal year ending June 30, 2014, or 2.22June 30, 2015, respectively. "The first year" is fiscal year 2014. "The second year" is fiscal 2.23year 2015. "The biennium" is fiscal years 2014 and 2015.

2.24APPROPRIATIONS2.25Available for the Year2.26Ending June 302.2720142015

2.282.29Sec. 3. MINNESOTA OFFICE OF HIGHER EDUCATION

2.30Subdivision 1.Total Appropriation$196,512,000$196,197,000

2.31The amounts that may be spent for each 2.32purpose are specified in the following 2.33subdivisions.

2.34Subd. 2.State Grants160,548,000160,214,000

3.1If the appropriation in this subdivision for 3.2either year is insufficient, the appropriation 3.3for the other year is available for it.3.4For the biennium, the tuition maximum is 3.5$10,488 in each year for students in four-year 3.6programs, and $5,808 in fiscal year 2014 3.7and $5,808 in fiscal year 2015 for students 3.8in two-year programs.3.9This appropriation sets the living and 3.10miscellaneous expense allowance at $7,000 3.11each year.3.12Notwithstanding section 136A.101, 3.13subdivision 5a, for the biennium ending June 3.1430, 2015, the assigned family responsibility 3.15for independent students without dependents 3.16other than a spouse is 53 percent of the 3.17student contribution, and the assigned family 3.18responsibility for independent students with 3.19dependents other than a spouse is 80 percent 3.20of the student contribution.

3.21Subd. 3.Child Care Grants6,684,0006,684,000

3.22Subd. 4.State Work-Study14,502,00014,502,000

3.23Subd. 5.Interstate Tuition Reciprocity3,250,0003,250,000

3.24If the appropriation in this subdivision for 3.25either year is insufficient, the appropriation 3.26for the other year is available to meet 3.27reciprocity contract obligations.

3.28Subd. 6.Safety Officer's Survivors100,000100,000

3.29This appropriation is to provide educational 3.30benefits under Minnesota Statutes, section 3.31299A.45, to eligible dependent children and 3.32to the spouses of public safety officers killed 3.33in the line of duty.4.1If the appropriation in this subdivision for 4.2either year is insufficient, the appropriation 4.3for the other year is available for it.

4.4Subd. 7.Indian Scholarships1,850,0001,850,000

4.5The director must contract with or employ 4.6at least one person with demonstrated 4.7competence in American Indian culture and 4.8residing in or near the city of Bemidji to 4.9assist students with the scholarships under 4.10Minnesota Statutes, section 136A.126, and 4.11with other information about financial aid for 4.12which the students may be eligible. Bemidji 4.13State University must provide office space 4.14at no cost to the Minnesota Office of Higher 4.15Education for purposes of administering the 4.16American Indian scholarship program under 4.17Minnesota Statutes, section 136A.126. This 4.18appropriation includes funding to administer 4.19the American Indian scholarship program.

4.204.21Subd. 8.Intervention for College Attendance Program Grants671,000671,000

4.22For the intervention for college attendance 4.23program under Minnesota Statutes, section 4.24136A.861.4.25This appropriation includes funding to 4.26administer the intervention for college 4.27attendance program grants.

4.28Subd. 9.Student-Parent Information122,000122,000

4.29Subd. 10.Get Ready180,000180,000

4.30Subd. 11.Midwest Higher Education Compact95,00095,000

4.31Subd. 12.Minnesota Minority Partnership45,00045,000

4.324.33Subd. 13.United Family Medicine Residency Program351,000351,000

4.34Subd. 14.MnLINK Gateway and Minitex5,605,0005,605,000

5.1Subd. 15.Agency Administration2,491,0002,491,000

5.2Subd. 16.Balances Forward

5.3A balance in the first year under this section 5.4does not cancel, but is available for the 5.5second year.

5.65.75.8Sec. 4. BOARD OF TRUSTEES OF THE MINNESOTA STATE COLLEGES AND UNIVERSITIES

5.9Subdivision 1.Total Appropriation$570,865,000$597,865,000

5.10The amounts that may be spent for each 5.11purpose are specified in the following 5.12subdivisions.

5.135.14Subd. 2.Central Office and Shared Services Unit33,074,00033,074,000

5.15For the Office of the Chancellor and the 5.16Shared Services Division.

5.17Subd. 3.Operations and Maintenance533,676,000560,676,000

5.18This appropriation includes $25,500,000 in 5.19fiscal year 2014 and $52,500,000 in fiscal 5.20year 2015 for student tuition relief. The 5.21Board of Trustees may not set the tuition 5.22rate in any undergraduate degree-granting 5.23program for the 2013-2014 and 2014-2015 5.24academic years at a rate greater than the 5.252012-2013 academic year rate. The student 5.26tuition relief may not be offset by increases 5.27in mandatory fees, charges, or other 5.28assessments to the student. 5.29To the extent that appropriations under 5.30this subdivision are insufficient to meet 5.31obligations contained in a labor or program 5.32contract, the Board of Trustees shall fund 5.33those obligations through reductions in costs 5.34associated with central administration of 6.1the system and executive administration of 6.2individual campuses, or through reallocation 6.3of nonstate funds received by the system. 6.4These outstanding obligations may not be 6.5funded through reduction in any program or 6.6service that directly impacts students or that 6.7is newly-authorized by the legislature for the 6.82014-2015 biennium, or through increased 6.9fees or costs directly assessed to students.

6.10Subd. 4.Learning Network of Minnesota4,115,0004,115,000

6.116.12Sec. 5. BOARD OF REGENTS OF THE UNIVERSITY OF MINNESOTA

6.13Subdivision 1.Total Appropriation$570,283,000$585,026,000

6.14Appropriations by Fund6.15201420156.16General568,126,000582,869,0006.17Health Care Access2,157,0002,157,000

6.18The amounts that may be spent for each 6.19purpose are specified in the following 6.20subdivisions.

6.21Subd. 2.Operations and Maintenance506,538,000521,281,000

6.22This appropriation includes funding for 6.23operation and maintenance of the system.6.24This appropriation includes $14,200,000 in 6.25fiscal year 2014 and $28,400,000 in fiscal 6.26year 2015 for tuition relief for resident 6.27undergraduate students. Notwithstanding 6.28section 137.025, subdivision 1, the 6.29commissioner of management and budget 6.30may not distribute any appropriation provided 6.31under this subdivision until the Board of 6.32Regents certifies to the commissioner that 6.33it has established resident tuition rates for 6.34courses in all undergraduate degree-granting 6.35programs at a rate no greater than the rate 7.1charged for the 2012-2013 academic year, 7.2and that the student tuition relief is not offset 7.3by increases in mandatory fees, charges, or 7.4other assessments to the student. 7.5The Board of Regents of the University 7.6of Minnesota must transfer $645,000 in 7.7fiscal year 2014 and $645,000 in fiscal year 7.82015 from the appropriations made to it for 7.9operations and maintenance to the Hennepin 7.10County Medical Center for graduate family 7.11medicine education programs at Hennepin 7.12County Medical Center.7.13$9,000,000 in fiscal year 2014 and $9,000,000 7.14in fiscal year 2015 are for the Minnesota 7.15Discovery, Research, and InnoVation 7.16Economy (MnDRIVE) funding program.

7.17Subd. 3.Primary Care Education Initiatives2,157,0002,157,000

7.18This appropriation is from the health care 7.19access fund.

7.20Subd. 4.Special Appropriations

7.21(a) Agriculture and Extension Service42,922,00042,922,000

7.22For the Agricultural Experiment Station and 7.23the Minnesota Extension Service:7.24(1) the agricultural experiment stations 7.25and Minnesota Extension Service must 7.26convene agricultural advisory groups to 7.27focus research, education, and extension 7.28activities on producer needs and implement 7.29an outreach strategy that more effectively 7.30and rapidly transfers research results and best 7.31practices to producers throughout the state;7.32(2) this appropriation includes funding for 7.33research and outreach on the production of 7.34renewable energy from Minnesota biomass 8.1resources, including agronomic crops, plant 8.2and animal wastes, and native plants or trees. 8.3The following areas should be prioritized and 8.4carried out in consultation with Minnesota 8.5producers, renewable energy, and bioenergy 8.6organizations:8.7(i) biofuel and other energy production from 8.8perennial crops, small grains, row crops, 8.9and forestry products in conjunction with 8.10the Natural Resources Research Institute 8.11(NRRI);8.12(ii) alternative bioenergy crops and cropping 8.13systems; and8.14(iii) biofuel coproducts used for livestock 8.15feed;8.16(3) this appropriation includes funding 8.17for the College of Food, Agricultural, and 8.18Natural Resources Sciences to establish and 8.19provide leadership for organic agronomic, 8.20horticultural, livestock, and food systems 8.21research, education, and outreach and for 8.22the purchase of state-of-the-art laboratory, 8.23planting, tilling, harvesting, and processing 8.24equipment necessary for this project;8.25(4) this appropriation includes funding 8.26for research efforts that demonstrate a 8.27renewed emphasis on the needs of the state's 8.28agriculture community. The following 8.29areas should be prioritized and carried 8.30out in consultation with Minnesota farm 8.31organizations:8.32(i) vegetable crop research with priority for 8.33extending the Minnesota vegetable growing 8.34season;9.1(ii) fertilizer and soil fertility research and 9.2development;9.3(iii) soil, groundwater, and surface water 9.4conservation practices and contaminant 9.5reduction research;9.6(iv) discovering and developing plant 9.7varieties that use nutrients more efficiently;9.8(v) breeding and development of turf seed 9.9and other biomass resources in all three 9.10Minnesota biomes;9.11(vi) development of new disease-resistant 9.12and pest-resistant varieties of turf and 9.13agronomic crops;9.14(vii) utilizing plant and livestock cells to treat 9.15and cure human diseases;9.16(viii) the development of dairy coproducts;9.17(ix) a rapid agricultural response fund for 9.18current or emerging animal, plant, and insect 9.19problems affecting production or food safety;9.20(x) crop pest and animal disease research;9.21(xi) developing animal agriculture that is 9.22capable of sustainably feeding the world;9.23(xii) consumer food safety education and 9.24outreach;9.25(xiii) programs to meet the research and 9.26outreach needs of organic livestock and crop 9.27farmers; and9.28(xiv) alternative bioenergy crops and 9.29cropping systems; and growing, harvesting, 9.30and transporting biomass plant material; and9.31(5) by February 1, 2015, the Board of 9.32Regents must submit a report to the 9.33legislative committees with responsibility 10.1for agriculture and higher education finance 10.2on the status and outcomes of research and 10.3initiatives funded in this section.

10.4(b) Health Sciences4,854,0004,854,000

10.5$346,000 each year is to support up to 12 10.6resident physicians in the St. Cloud Hospital 10.7family practice residency program. The 10.8program must prepare doctors to practice 10.9primary care medicine in rural areas of the 10.10state. The legislature intends this program 10.11to improve health care in rural communities, 10.12provide affordable access to appropriate 10.13medical care, and manage the treatment of 10.14patients in a more cost-effective manner. 10.15The remainder of this appropriation is for 10.16the rural physicians associates program, the 10.17Veterinary Diagnostic Laboratory, health 10.18sciences research, dental care, and the 10.19Biomedical Engineering Center.

10.20(c) Institute of Technology1,140,0001,140,000

10.21For the Geological Survey and the talented 10.22youth mathematics program.

10.23(d) System Special5,181,0005,181,000

10.24For general research, the Labor Education 10.25Service, Natural Resources Research 10.26Institute, Center for Urban and Regional 10.27Affairs, Bell Museum of Natural History, and 10.28the Humphrey exhibit.10.29Of this amount, $125,000 in fiscal year 2014 10.30and $125,000 in fiscal year 2015 are added 10.31to the base for the Labor Education Service.

10.3210.33(e) University of Minnesota and Mayo Foundation Partnership7,491,0007,491,000

10.34Subd. 5.Academic Health Center

11.1The appropriation for Academic Health 11.2Center funding under Minnesota Statutes, 11.3section 297F.10, is estimated to be 11.4$22,250,000 each year.

11.5Sec. 6. MAYO CLINIC

11.6Subdivision 1.Total Appropriation$1,351,000$1,351,000

11.7The amounts that may be spent for the 11.8purposes are specified in the following 11.9subdivisions.

11.10Subd. 2.Medical School665,000665,000

11.1111.12Subd. 3.Family Practice and Graduate Residency Program686,000686,000

11.13ARTICLE 211.14HIGHER EDUCATION POLICY11.15    Section 1. Minnesota Statutes 2012, section 135A.031, subdivision 7, is amended to 11.16read:11.17    Subd. 7. Reports. (a) Instructional and noninstructional expenditure data and 11.18enrollment data must be submitted in the biennial budget document under section 11.19135A.034. This report must include a description of the methodology for determining 11.20instructional and noninstructional expenditures and estimates of inflation in higher 11.21education and the methodology or index used to determine the inflation rate. The 11.22University of Minnesota and the Minnesota State Colleges and Universities systems shall 11.23include in their biennial budget proposals to the legislature: 11.24    (1) a five-year history of systemwide expenditures, reported by:11.25    (i) functional areas, including instruction, research, public service, student financial 11.26aid, and auxiliary services, and including direct costs and indirect costs, such as 11.27institutional support, academic support, student services, and facilities management, 11.28associated with each functional area; and11.29    (ii) objects of expenditure, such as salaries, benefits, supplies, and equipment;11.30    (2) a five-year history of the system's total instructional expenditures per full-year 11.31equivalent student, by level of instruction, including upper-division undergraduate, 11.32lower-division undergraduate, graduate, professional, and other categories of instructional 11.33programs offered by the system;12.1    (3) a five-year history of the system's total revenues by funding source, including 12.2tuition, state operations and maintenance appropriations, state special appropriations, other 12.3restricted state funds, federal appropriations, sponsored research funds, gifts, auxiliary 12.4revenue, indirect cost recovery, and any other revenue sources; 12.5    (b) By February 1 of each even-numbered year, the Board of Regents of the University 12.6of Minnesota and the Board of Trustees of the Minnesota State Colleges and Universities 12.7must submit a report to the chairs of the legislative committees with jurisdiction over 12.8higher education policy and finance. The report must describe the following:12.9    (1) (4) an explanation describing how state appropriations made to the system in 12.10the previous odd-numbered year biennium were allocated and the methodology used to 12.11determine the allocation;12.12    (2) (5) data describing how the institution reallocated resources to advance the 12.13priorities set forth in the budget submitted under section 
         135A.034 and the statewide 12.14objectives under section 
         135A.011. The information must indicate whether instruction 12.15and support programs received a reduction in or additional resources. The total amount 12.16reallocated must be clearly explained;12.17    (3) (6) the tuition rates and fees established by the governing board in each of the 12.18past ten years and comparison data for peer institutions and national averages;12.19    (4) (7) data on the number and proportion of students graduating within four, five, 12.20and six years from universities and within three years from colleges as reported in the 12.21integrated postsecondary education data system. These data must be provided for each 12.22institution by race, ethnicity, and gender. Data and information must be submitted that 12.23describe the system's plan and progress toward attaining the goals set forth in the plan 12.24to increase the number and proportion of students that graduate within four, five, or six 12.25years from a university or within three years from a college;12.26    (5) (8) data on, and the methodology used to measure, the number of students 12.27traditionally underrepresented in higher education enrolled at the system's institutions. 12.28Data and information must be submitted that describe the system's plan and progress 12.29toward attaining the goals set forth in the plan to increase the recruitment, retention, and 12.30timely graduation of students traditionally underrepresented in higher education; and12.31    (6) (9) data on the revenue received from all sources to support research or 12.32workforce development activities or the system's efforts to license, sell, or otherwise 12.33market products, ideas, technology, and related inventions created in whole or in part by 12.34the system. Data and information must be submitted that describe the system's plan and 12.35progress toward attaining the goals set forth in the plan to increase the revenue received 13.1to support research or workforce development activities or revenue received from the 13.2licensing, sale, or other marketing and technology transfer activities by the system.13.3    (c) Instructional expenditure and enrollment data (b) Data required by this 13.4subdivision shall be submitted by the public postsecondary systems to the Minnesota 13.5Office of Higher Education and the Department of Management and Budget and included 13.6in the biennial budget document. The specific data shall be submitted only after the 13.7director of the Minnesota Office of Higher Education has consulted with a data advisory 13.8task force to determine the need, content, and detail of the information. Representatives 13.9from each system, in consultation with the commissioner of management and budget 13.10and the director of the Office of Higher Education, shall develop consistent reporting 13.11practices for this purpose.13.12    (c) To the extent practicable, each system shall develop the ability to respond to 13.13legislative requests for financial analyses that are more detailed than those required by this 13.14subdivision, including but not limited to analyses that show expenditures or revenues by 13.15institution or program, or in multiple categories of expenditures or revenues, and analyses 13.16that show revenue sources for particular types of expenditures.13.17    Sec. 2. Minnesota Statutes 2012, section 136A.101, subdivision 9, is amended to read:13.18    Subd. 9. Independent student. "Independent student" has the meaning given it in13.19 under Title IV of the Higher Education Act of 1965, United States Code, title 20, section 13.201070a-6 as amended, and applicable regulations.13.21    Sec. 3. [136A.104] INSTITUTION TERMINATION.13.22    (a) The office shall have the authority to terminate a postsecondary institution's 13.23eligibility to participate in state student aid programs if the institution meets one of the 13.24following criteria:13.25    (1) violates a provision of Minnesota Statutes, Minnesota Rules, or administrative 13.26policies governing student aid programs and fails to correct the violation and reimburse 13.27the office for audit findings within the time frame specified in the audit report or other 13.28notice furnished by the office;13.29    (2) has a consistent pattern of noncompliance with Minnesota Statutes, Minnesota 13.30Rules, or administrative policies governing student aid programs as documented by the 13.31office or lacks administrative capability to successfully administer student financial aid 13.32programs on campus based on factors including, but not limited to:13.33    (i) adequacy of financial aid staffing levels, experience, training, and turnover of key 13.34financial aid staff;14.1    (ii) adequate checks and balances in its system of internal controls;14.2    (iii) maintenance of records required for programs; or14.3    (iv) the ability to participate in the electronic processes used for program 14.4administration;14.5    (3) refuses to allow inspection of or provide information relating to financial aid 14.6records, after written request by the office;14.7    (4) misappropriates student aid program funds;14.8    (5) falsifies information or engages in misleading or deceptive practices involving 14.9the administration of student financial aid programs;14.10    (6) no longer meets institutional eligibility criteria in section 136A.103 or 136A.155, 14.11or additional criteria for state grant participation in Minnesota Rules, part 4830.0300, 14.12subparts 1 and 2; or14.13    (7) is terminated from participating in federal financial aid programs by the United 14.14States Department of Education, if such termination was based on violation of laws, 14.15regulations, or participation agreements governing federal financial aid programs.14.16    Sec. 4. [136A.1041] TERMINATION PROCEDURE.14.17    The office shall provide written notice of its intent to terminate an institution's 14.18eligibility to participate in student financial aid programs if the institution meets any of 14.19the criteria for termination in section 136A.104. The office shall send the institution 14.20written notification of the termination which is effective 90 days from the date of the 14.21written notification. The office shall also provide an institution an opportunity for a 14.22hearing pursuant to chapter 14.14.23    Sec. 5. [136A.1042] REQUEST FOR HEARING.14.24    An institution may request a hearing pursuant to chapter 14 regarding its termination 14.25of eligibility to participate in a student aid program. The request must be in writing and 14.26must be received by the director within 30 days of the date on the written notification of 14.27termination sent by the office. Within ten days of receipt of the request for hearing, the 14.28office shall contact the Office of Administrative Hearings to arrange a hearing date.14.29    Sec. 6. [136A.1043] RESTRICTION ON AWARDS DURING TERMINATION 14.30PERIOD.14.31    After the notice of termination and until such time as the termination becomes 14.32effective, the office reserves the right to withhold further financial aid disbursements to the 14.33institution. During this period, the institution may not make any new awards to students 15.1but may use any remaining student aid program funds on campus to make disbursements 15.2to any students awarded funds prior to the notice of termination.15.3    Sec. 7. [136A.1044] FINAL DECISION; ORDERS.15.4    The director shall render a decision and order in writing following receipt of the 15.5report issued by the administrative law judge after the hearing. The final decision of the 15.6director shall take into consideration the hearing record and the report of the administrative 15.7law judge. The order of the director is the final decision in the termination of the 15.8institution's eligibility to participate in a student aid program administered by the office.15.9    Sec. 8. [136A.1045] REINSTATEMENT OF ELIGIBILITY.15.10    An institution terminated from participating in student financial aid programs 15.11may submit a request for reinstatement of eligibility. The institution must wait at least 15.1212 consecutive months from the effective date of the termination to submit a request 15.13for reinstatement. A request for reinstatement must be in writing and submitted to the 15.14director. If the institution is initially denied reinstatement, the institution must wait at 15.15least 90 days from the date of denial of reinstatement to resubmit a subsequent request 15.16for reinstatement. If an institution's eligibility is reinstated after the start of the academic 15.17term, eligible students shall receive payment retroactively to the beginning of the term 15.18during which the institution was reinstated.15.19    Sec. 9. [136A.1046] REINSTATEMENT REQUIREMENTS.15.20    An institution's reinstatement request must include:15.21    (1) written documentation specifying changes the institution has made to 15.22successfully address the reasons for termination, as outlined in the termination notice;15.23    (2) permission for the office's staff to conduct a reinstatement audit and to evaluate 15.24systems put in place to address the reasons for termination;15.25    (3) evidence of full repayment to the office of student aid program funds the 15.26institution improperly received, withheld, disbursed, or caused to be disbursed;15.27    (4) new participation agreements with the office for all student aid programs in 15.28which the institution wishes to participate; and15.29    (5) if applicable, documentation of the institution's eligibility to participate in 15.30federal financial aid programs.15.31    Sec. 10. [136A.1047] RESPONSE TO REINSTATEMENT REQUEST.16.1    Within 60 days of receiving the institution's reinstatement request, the office shall 16.2conduct a reinstatement audit and either:16.3    (1) place the institution on probationary status for a period of one year; or16.4    (2) deny the request based on the institution meeting one or more of the termination 16.5criteria in section 136A.104.16.6    Sec. 11. [136A.1048] PROBATIONARY PERIOD.16.7    During the probationary period, the office may audit the institution's records without 16.8notice. If, while on probation, the institution violates a condition under section 136A.104, 16.9as documented by the office's audit staff, the office must remove the institution from 16.10probationary status and deny the request for reinstatement. If the institution fails to 16.11successfully complete the probationary period, termination is final and effective within 30 16.12days of written notice of the denial of the reinstatement request.16.13    Sec. 12. [136A.1049] REINSTATEMENT.16.14    If an institution no longer violates a condition under section 136A.104 and 16.15successfully completes the probationary period, the office must reinstate the institution's 16.16eligibility to participate in student financial aid programs effective the last date of the 16.17probationary period.16.18    Sec. 13. [136A.105] STUDENT AWARDS AFTER TERMINATION.16.19    If an institution is terminated from participating in student financial aid programs 16.20during a payment period, and a student at the institution was eligible for an award other 16.21than a Student Educational Loan Fund loan before the effective date of the institution's 16.22termination, the office must issue a payment for that payment period, as long as the student 16.23will not receive a payment for the same payment period from another institution and the 16.24student continues to meet the program's eligibility requirements.16.25    Sec. 14. Minnesota Statutes 2012, section 136A.125, subdivision 2, is amended to read:16.26    Subd. 2. Eligible students. (a) An applicant is eligible for a child care grant if 16.27the applicant:16.28    (1) is a resident of the state of Minnesota;16.29    (2) has a child 12 years of age or younger, or 14 years of age or younger who is 16.30disabled as defined in section 
         125A.02, and who is receiving or will receive care on a 16.31regular basis from a licensed or legal, nonlicensed caregiver;17.1    (3) is income eligible as determined by the office's policies and rules, but is not a 17.2recipient of assistance from the Minnesota family investment program;17.3    (4) has not earned a baccalaureate degree and has been enrolled full time less than 17.4eight semesters or the equivalent;17.5    (5) is pursuing a nonsectarian program or course of study that applies to an 17.6undergraduate degree, diploma, or certificate;17.7    (6) is enrolled at least half time in an eligible institution; and17.8    (7) is in good academic standing and making satisfactory academic progress.17.9    (b) A student who withdraws from enrollment for active military service or for a 17.10major illness, while under the care of a medical professional, that substantially limits the 17.11student's ability to complete the term is entitled to an additional semester or the equivalent 17.12of grant eligibility and will be considered to be in continuing enrollment status upon return.17.13    Sec. 15. Minnesota Statutes 2012, section 136A.125, subdivision 4, is amended to read:17.14    Subd. 4. Amount and length of grants. (a) The amount of a child care grant 17.15must be based on:17.16    (1) the income of the applicant and the applicant's spouse;17.17    (2) the number in the applicant's family, as defined by the office; and17.18    (3) the number of eligible children in the applicant's family.17.19    (b) The maximum award to the applicant shall be $2,600 $2,800 for each eligible 17.20child per academic year, except that the campus financial aid officer may apply to the 17.21office for approval to increase grants by up to ten percent to compensate for higher market 17.22charges for infant care in a community. The office shall develop policies to determine 17.23community market costs and review institutional requests for compensatory grant 17.24increases to ensure need and equal treatment. The office shall prepare a chart to show the 17.25amount of a grant that will be awarded per child based on the factors in this subdivision. 17.26The chart shall include a range of income and family size.17.27    Sec. 16. Minnesota Statutes 2012, section 136A.233, subdivision 2, is amended to read:17.28    Subd. 2. Definitions. For purposes of sections 
         136A.231 to 
         136A.233, the words 17.29defined in this subdivision have the meanings ascribed to them.17.30    (a) "Eligible student" means a Minnesota resident enrolled or intending to enroll at 17.31least half time in a degree, diploma, or certificate program in a Minnesota postsecondary 17.32institution.17.33    (b) "Minnesota resident" means a student who meets the conditions in section 17.34136A.101, subdivision 8
         .18.1    (c) "Financial need" means the need for financial assistance in order to attend a 18.2postsecondary institution as determined by a postsecondary institution according to 18.3guidelines established by the Minnesota Office of Higher Education.18.4    (d) "Eligible employer" means any eligible postsecondary institution, any nonprofit, 18.5nonsectarian agency or state institution located in the state of Minnesota, a disabled person 18.6or a person over 65 who employs a student to provide personal services in or about the 18.7person's residence, or a private, for-profit employer employing a student as an intern in a 18.8position directly related to the student's field of study that will enhance the student's 18.9knowledge and skills in that field.18.10    (e) "Eligible postsecondary institution" means any postsecondary institution eligible 18.11for participation in the Minnesota state grant program as specified in section 
         136A.101, 18.12subdivision 4
         .18.13    (f) "Independent student" has the meaning given it in under Title IV of the Higher 18.14Education Act of 1965, United States Code, title 20, section 1070a-6 as amended, and 18.15applicable regulations.18.16    (g) "Half time" for undergraduates has the meaning given in section 
         136A.101, 18.17subdivision 7b
         , and for graduate students is defined by the institution.18.18    Sec. 17. Minnesota Statutes 2012, section 136A.646, is amended to read:18.19136A.646 ADDITIONAL SECURITY.18.20    (a) In the event any registered institution is notified by the United States Department 18.21of Education that it has fallen below minimum financial standards and that its continued 18.22participation in Title IV will be conditioned upon its satisfying either the Zone Alternative, 18.23Code of Federal Regulations, title 34, section 668.175, paragraph (f), or a Letter of Credit 18.24Alternative, Code of Federal Regulations, title 34, section 668.175, paragraph (c), the 18.25institution shall provide a surety bond conditioned upon the faithful performance of all 18.26contracts and agreements with students in a sum equal to the "letter of credit" required by 18.27the United States Department of Education in the Letter of Credit Alternative, but in no 18.28event shall such bond be less than $10,000 nor more than $250,000.18.29    (b) In lieu of a bond, the applicant may deposit with the commissioner of 18.30management and budget:18.31    (1) a sum equal to the amount of the required surety bond in cash; or18.32    (2) securities, as may be legally purchased by savings banks or for trust funds, in an 18.33aggregate market value equal to the amount of the required surety bond.19.1    (c) The surety of any bond may cancel it upon giving 60 days' notice in writing to 19.2the office and shall be relieved of liability for any breach of condition occurring after 19.3the effective date of cancellation.19.4    Sec. 18. Minnesota Statutes 2012, section 136A.65, subdivision 8, is amended to read:19.5    Subd. 8. Disapproval of registration appeal.(a) If a school's degree or use of a 19.6term in its name is disapproved by the office, the school may request a hearing under 19.7chapter 14. The request must be in writing and made to the office within 30 days of the 19.8date the school is notified of the disapproval.19.9    (b) (a) The office may refuse to renew, revoke, or suspend registration, approval of 19.10a school's degree, or use of a regulated term in its name by giving written notice and 19.11reasons to the school. The school may request a hearing under chapter 14. If a hearing is 19.12requested, no revocation or suspension shall take effect until after the hearing.19.13    (c) (b) Reasons for revocation or suspension of registration or approval may be 19.14for one or more of the following reasons:19.15    (1) violating the provisions of sections 
         136A.61 to 
         136A.71;19.16    (2) providing false, misleading, or incomplete information to the office;19.17    (3) presenting information about the school which is false, fraudulent, misleading, 19.18deceptive, or inaccurate in a material respect to students or prospective students; or19.19    (4) refusing to allow reasonable inspection or to supply reasonable information after 19.20a written request by the office has been received.19.21    (c) Any order refusing, revoking, or suspending a school's registration, approval of a 19.22school's degree, or use of a regulated term in the school's name is appealable in accordance 19.23with chapter 14. The request must be in writing and made to the office within 30 days of the 19.24date the school is notified of the action of the office. If a school has been operating and its 19.25registration has been revoked, suspended, or refused by the office, the order is not effective 19.26until the final determination of the appeal, unless immediate effect is ordered by the court.19.27    Sec. 19. Minnesota Statutes 2012, section 136A.653, is amended by adding a 19.28subdivision to read:19.29    Subd. 5.Free educational courses.A school providing exclusively free training or 19.30instructional programs or courses where no tuition, fees, or any other charges are required 19.31for a student to participate is exempt from the provisions of sections 136A.61 to 136A.71.19.32    Sec. 20. [136A.89] STATEWIDE ELECTRONIC INFRASTRUCTURE; 19.33PORTFOLIO SOLUTIONS.20.1    Subdivision 1.Collaborative infrastructure.(a) The Department of Employment 20.2and Economic Development, the Department of Education, the Office of Higher 20.3Education, the University of Minnesota, and the Minnesota State Colleges and Universities 20.4shall collaborate to implement an electronic infrastructure, maintained under the direction 20.5and control of the Office of Higher Education, to support academic and workforce success 20.6statewide. The infrastructure shall first utilize existing assets, tools, and services, including 20.7but not limited to efolioMinnesota and GPS LifePlan. To facilitate implementation of this 20.8section, the Minnesota State Colleges and Universities shall transfer hosting, support, help 20.9desk responsibilities, software maintenance, and its intellectual property rights associated 20.10with efolioMinnesota and GPS LifePlan to the Office of Higher Education.20.11(b) To the extent possible, the basic electronic infrastructure shall be available at no 20.12charge to all state residents and to all students attending Minnesota educational institutions.20.13    Subd. 2.Goals; programs.The office may enhance the efolioMinnesota platform 20.14to allow, at a minimum, implementation of:20.15(1) a portfolio-based individual learning plan solution that includes comprehensive 20.16academic and life planning instruments, to support student transitions to postsecondary 20.17school or to work; and20.18(2) a student-owned proficiency portfolio solution to support student transitions to 20.19the workplace and employers seeking first-day-work-ready employees.20.20    Subd. 3.Resources; accountability reports.(a) The office may seek and accept 20.21contributions from individuals, businesses, and other organizations to support the goals 20.22required by this section. The parties listed in subdivision 1 are not required to contribute. 20.23All contributions received are appropriated to the office and shall be administered as 20.24directed by the office.20.25(b) The director of the Office of Higher Education shall submit, no later than January 20.2615 of each year, a report to the governor and legislature on the progress of the office's 20.27activities related to implementation of this section.20.28    Sec. 21. Minnesota Statutes 2012, section 136F.40, subdivision 2, is amended to read:20.29    Subd. 2. Contracts. (a) The board may enter into a contract with the chancellor, 20.30a vice-chancellor, or a president, containing terms and conditions of employment. The 20.31terms of the contract must be authorized under a plan approved under section 
         43A.18, 20.32subdivision 3a
         .20.33(b) Notwithstanding section 
         43A.17, subdivision 11, or other law to the contrary, a 20.34contract under this section may provide a liquidated salary amount or other compensation 20.35if a contract is terminated by the board prior to its expiration.21.1(c) Notwithstanding section 
         356.24 or other law to the contrary, a contract under 21.2this section may contain a deferred compensation plan made in conformance with section 21.3457(f) of the Internal Revenue Code.21.4(d) Notwithstanding any provision of the plan approved under section 43A.18, 21.5subdivision 3a, a contract under this section must not authorize or otherwise provide for a 21.6discretionary or mandatory bonus or other performance-based incentive payment.21.7EFFECTIVE DATE.This section is effective the day following final enactment 21.8and applies to contracts entered into on or after that date.21.9    Sec. 22. Minnesota Statutes 2012, section 137.027, is amended to read:21.10137.027 APPROPRIATION; FRINGE BENEFITS.21.11(a) Direct appropriations to the University of Minnesota include money to pay 21.12the employer's share of Social Security, state retirement, and health insurance. Money 21.13provided for these purposes shall be expended only for these purposes and any amounts in 21.14excess of the employer's share shall be returned to the state treasury.21.15(b) Unless otherwise explicitly provided for in law, direct appropriations to the 21.16University of Minnesota do not include, and may not be used to pay, any mandatory or 21.17discretionary bonus or other performance-based incentive payment provided for in an 21.18employment contract with the president or vice-presidents, chancellors, provosts, vice 21.19provosts, deans, or directors of individual programs.21.20    Sec. 23. [137.71] MINNESOTA DISCOVERY, RESEARCH, AND INNOVATION 21.21ECONOMY FUNDING PROGRAM.21.22    Subdivision 1.Establishment.(a) The Minnesota Discovery, Research, and 21.23InnoVation Economy (MnDRIVE) funding program is established to discover new 21.24knowledge through scientific research that will:21.25(1) advance the state's economy;21.26(2) leverage opportunities and establish priorities in sectors of state strength and 21.27comparative advantage;21.28(3) improve the health and wellbeing of Minnesota's citizens;21.29(4) advance the capacity and competitiveness of existing and emerging food- and 21.30manufacturing-related science and technology industries; and21.31(5) build a better Minnesota by driving progress and advancing the common good.21.32(b) The MnDRIVE funding program shall establish priorities by investing in 21.33scientific research that promotes:22.1(1) programs that can position Minnesota as a leader in engineering, science, 22.2technology, and food-related solutions;22.3(2) initiatives that support the growth of targeted industry clusters and the 22.4competitiveness of existing Minnesota engineering, science, technology, and food 22.5companies in developing new products and services;22.6(3) initiatives that can result in creating new Minnesota-based companies;22.7(4) initiatives that can improve the quality of life of Minnesota's citizens, decrease 22.8the incidence of disease, and transform how we prevent, treat, and cure diseases; and22.9(5) initiatives that can secure a safer environment, seek sustainable energy solutions, 22.10and prevent, diagnose, and treat environmental problems associated with Minnesota 22.11industry.22.12    Subd. 2.Funding requests.The Board of Regents of the University of Minnesota, 22.13acting alone or in partnership with other public or private entities, is requested to submit 22.14investment proposals consistent with the goals and objectives of the MnDRIVE funding 22.15program as part of the Board of Regents biennial budget request to the legislature. The 22.16Board of Regents must give consideration to investments in existing scientific research 22.17programs that meet these guidelines but may require additional resources in order to 22.18preserve or accelerate Minnesota into a national or global leadership position. The 22.19governor shall submit a recommendation to the legislature regarding funding requests 22.20submitted by the Board of Regents.22.21    Subd. 3.Reporting.By March 1 of each odd-numbered year, the Board of Regents 22.22of the University of Minnesota must provide to the chairs and ranking minority members 22.23of the legislative committees with primary jurisdiction over higher education policy and 22.24finance a summary report of investments and accomplishments related to funds received 22.25from the state under subdivision 2 from the prior biennium.22.26EFFECTIVE DATE.This section is effective the day following final enactment.22.27    Sec. 24. Minnesota Statutes 2012, section 141.35, is amended to read:22.28141.35 EXEMPTIONS.22.29    Sections 
         141.21 to 
         141.32 shall not apply to the following:22.30    (1) public postsecondary institutions;22.31    (2) postsecondary institutions registered under sections 
         136A.61 to 
         136A.71;22.32    (3) schools of nursing accredited by the state Board of Nursing or an equivalent 22.33public board of another state or foreign country;23.1    (4) private schools complying with the requirements of section 
         120A.22, subdivision 23.24
         ;23.3    (5) courses taught to students in a valid apprenticeship program taught by or 23.4required by a trade union;23.5    (6) schools exclusively engaged in training physically or mentally disabled persons 23.6for the state of Minnesota;23.7    (7) schools licensed by boards authorized under Minnesota law to issue licenses 23.8except schools required to obtain a private career school license due to the use of 23.9"academy," "institute," "college," or "university" in their names;23.10    (8) schools and educational programs, or training programs, contracted for by 23.11persons, firms, corporations, government agencies, or associations, for the training of their 23.12own employees, for which no fee is charged the employee;23.13    (9) schools engaged exclusively in the teaching of purely avocational, recreational, 23.14or remedial subjects as determined by the office except schools required to obtain a private 23.15career school license due to the use of "academy," "institute," "college," or "university" in 23.16their names unless the school used "academy" or "institute" in its name prior to August 23.171, 2008;23.18    (10) classes, courses, or programs conducted by a bona fide trade, professional, or 23.19fraternal organization, solely for that organization's membership;23.20    (11) programs in the fine arts provided by organizations exempt from taxation 23.21under section 
         290.05 and registered with the attorney general under chapter 309. For 23.22the purposes of this clause, "fine arts" means activities resulting in artistic creation or 23.23artistic performance of works of the imagination which are engaged in for the primary 23.24purpose of creative expression rather than commercial sale or employment. In making 23.25this determination the office may seek the advice and recommendation of the Minnesota 23.26Board of the Arts;23.27    (12) classes, courses, or programs intended to fulfill the continuing education 23.28requirements for licensure or certification in a profession, that have been approved by a 23.29legislatively or judicially established board or agency responsible for regulating the practice 23.30of the profession, and that are offered exclusively to an individual practicing the profession;23.31    (13) classes, courses, or programs intended to prepare students to sit for 23.32undergraduate, graduate, postgraduate, or occupational licensing and occupational 23.33entrance examinations;23.34    (14) classes, courses, or programs providing 16 or fewer clock hours of instruction 23.35that are not part of the curriculum for an occupation or entry level employment except 24.1schools required to obtain a private career school license due to the use of "academy," 24.2"institute," "college," or "university" in their names;24.3    (15) classes, courses, or programs providing instruction in personal development, 24.4modeling, or acting;24.5    (16) training or instructional programs, in which one instructor teaches an individual 24.6student, that are not part of the curriculum for an occupation or are not intended to prepare 24.7a person for entry level employment; and24.8    (17) schools with no physical presence in Minnesota, as determined by the office, 24.9engaged exclusively in offering distance instruction that are located in and regulated by 24.10other states or jurisdictions; and24.11    (18) schools providing exclusively free training or instructional programs or courses 24.12where no tuition, fees, or any other charges are required for a student to participate.24.13    Sec. 25. Minnesota Statutes 2012, section 299A.45, subdivision 4, is amended to read:24.14    Subd. 4. Renewal. Each award must be given for one academic year and is 24.15renewable for a maximum of eight semesters or the equivalent. A student who withdraws 24.16from enrollment for active military service or for a major illness, while under the care 24.17of a medical professional, that substantially limits the student's ability to complete the 24.18term is entitled to an additional semester or the equivalent of grant eligibility. An award 24.19must not be given to a dependent child who is 23 years of age or older on the first day of 24.20the academic year.24.21    Sec. 26.  REPEALER.24.22(a) Minnesota Statutes 2012, section 136A.031, subdivision 2, is repealed.24.23(b) Minnesota Rules, parts 4830.0120; 4830.0130; 4830.0140; 4830.0150; 24.244830.0160; 4830.0170; 4830.0180; 4830.0190; and 4830.0195, are repealed.