Office of the Revisor of Statutes
SF 2578
Introduction - 94th Legislature (2025 - 2026)
Posted on 06/11/2025 09:44 a.m.
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A bill for an act
relating to state government; changing grants management provisions; amending
Minnesota Statutes 2024, sections 16B.97, subdivision 1; 16B.98, subdivisions 1,
4; 16B.981, subdivision 4; 16B.991, subdivision 2.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2024, section 16B.97, subdivision 1, is amended to read:
Subdivision 1.
deleted text begin Grant agreementdeleted text end new text begin Definitionsnew text end .
(a) new text begin For the purposes of this section, the
following terms have the meanings given:
new text end
deleted text begin A grant agreement isdeleted text end new text begin (1) "grant agreement"new text end new text begin meansnew text end a written instrument or electronic
document defining a legal relationship between a granting agency and a grantee when the
principal purpose of the relationship is to transfer cash or something of value to the recipient
to support a public purpose authorized by law instead of acquiring by professional or technical
contract, purchase, lease, or barter property or services for the direct benefit or use of the
granting agencydeleted text begin .deleted text end new text begin ; and
new text end
new text begin
(2) "grantee" means a potential or current recipient of a state-issued grant.
new text end
(b) This section does not apply to general obligation grants as defined by section 16A.695
deleted text begin anddeleted text end new text begin ,new text end capital project grants to political subdivisions as defined by section 16A.86new text begin , or capital
project grants otherwise subject to section 16A.642new text end .
Sec. 2.
Minnesota Statutes 2024, section 16B.98, subdivision 1, is amended to read:
Subdivision 1.
Limitation.
(a) As a condition of receiving a grant from an appropriation
of state funds, the recipient of the grant must agree deleted text begin to minimizedeleted text end new text begin thatnew text end administrative costsnew text begin
must be necessary and reasonablenew text end . The granting agency is responsible for negotiating
appropriate limits to these costs so that the state derives the optimum benefit for grant
funding.
(b) This section does not apply to general obligation grants as defined by section 16A.695
and also capital project grants to political subdivisions as defined by section 16A.86new text begin , or
capital project grants otherwise subject to section 16A.642new text end .
Sec. 3.
Minnesota Statutes 2024, section 16B.98, subdivision 4, is amended to read:
Subd. 4.
Reporting of violations.
A state employee who discovers evidence of violation
of laws or rules governing grants is deleted text begin encourageddeleted text end new text begin requirednew text end to report the violation or suspected
violation to the employee's supervisor, the commissioner or the commissioner's designee,
or the legislative auditor. The legislative auditor shall report to the Legislative Audit
Commission if there are multiple complaints about the same agency. The auditor's report
to the Legislative Audit Commission under this section must disclose only the number and
type of violations alleged. An employee making a good faith report under this section has
the protections provided for under section 181.932, prohibiting the employer from
discriminating against the employee.
Sec. 4.
Minnesota Statutes 2024, section 16B.981, subdivision 4, is amended to read:
Subd. 4.
Agency authority to not award grant.
(a) If, while performing the required
steps in subdivision 2 and pursuant to sections 16B.97, 16B.98, and 16B.991, the agency
requires additional information to determine whether there is a substantial risk that the
potential grantee cannot or would not perform the required duties of the grant agreement,
the agency must give the grantee deleted text begin 30 businessdeleted text end new text begin 15 calendarnew text end days within which the grantee
can respond to the agency for the purpose of satisfying the agency's concerns or work with
the agency to develop a plan to satisfy the concerns.
(b) If, after performing the required steps in subdivision 2 and pursuant to sections
16B.97, 16B.98, and 16B.991, and after reviewing any additional requested information
from the grantee, the agency still has concerns that there is a substantial risk that a potential
grantee cannot or would not perform the required duties under the grant agreement, the
agency must either create a plan to satisfy remaining concerns with the grantee or must not
award the grant.
(c) If, pursuant to paragraphs (a) and (b), the agency does not award a competitive,
single-source, or sole-source grant, the agency must provide notification to the grantee and
the commissioner of administration of the determination. The notification to the grantee
must include the agency's reason for postponing or forgoing the grant, including information
sufficient to explain and support the agency's decision, and notify the applicant of the process
for contesting the agency's decision deleted text begin with the agency and the applicant's optionsdeleted text end under
paragraph (d). deleted text begin If the applicant contests the agency's decision no later than 15 business days
after receiving the notice, the agency must consider any additional written information
submitted by the grantee. The agency has 15 business days to consider this information,
during which the agency may reverse or modify the agency's initial decision to postpone
or forgo the grant.
deleted text end
(d) The final decision by an agency under paragraph (c) may be challenged as a contested
case under chapter 14. The contested case proceeding must be initiated within 30 deleted text begin businessdeleted text end new text begin
calendarnew text end days of the date of written notification of a final decision by the agency.
(e) If, pursuant to paragraphs (a) and (b), the agency does not award a legislatively named
grant, the agency must delay award of the grant until adjournment of the next regular or
special legislative session for action from the legislature. The agency must provide
notification to the potential grantee, the commissioner of administration, and the chairs and
ranking minority members of the Ways and Means Committee in the house of representatives
and the chairs and ranking minority members of the Finance Committee in the senate. The
notification to the grantee must include the agency's reason for postponing or forgoing the
grant, including information sufficient to explain and support the agency's decision and
notify the applicant of the process for contesting the agency's decisionnew text begin under paragraph (d)new text end .
deleted text begin If the applicant contests the agency's decision no later than 15 business days after receiving
the notice, the agency must consider any additional written information submitted by the
grantee. The agency has 15 business days to consider this information, during which the
agency may reverse or modify the agency's initial decision to postpone or forgo the grant.deleted text end
The notification to the commissioner of administration and legislators must identify the
legislatively named potential grantee and the agency's reason for postponing or forgoing
the grant. After hearing the concerns of the agency, the legislature may reaffirm the award
of the grant or reappropriate the funds to a different legislatively named grantee. Based on
the action of the legislature, the agency must award the grant to the legislatively named
grantee. If the legislature does not provide direction to the agency on the disposition of the
grant, the funds revert to the original appropriation source.
Sec. 5.
Minnesota Statutes 2024, section 16B.991, subdivision 2, is amended to read:
Subd. 2.
Authority.
A grant agreement must by its terms permit the commissioner to
unilaterally terminate the grant agreement prior to completion if the commissioner determines
that further performance under the grant agreement would not serve agency purposes or
new text begin performance under the grant agreement new text end is not in the best interests of the state.