SF 2722

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/21/2025 09:46 a.m.

A bill for an act
relating to child care; establishing program integrity requirements in the child care
assistance program; directing the commissioner of children, youth, and families
to establish an electronic record-keeping system for child care enrollment; requiring
reports; appropriating money; amending Minnesota Statutes 2024, sections 13.461,
subdivision 28; 142A.03, subdivision 2; 142E.17, subdivision 9; proposing coding
for new law in Minnesota Statutes, chapter 142E.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 13.461, subdivision 28, is amended to read:

Subd. 28.

Child care assistance program.

new text begin (a) new text end Data collected, maintained, used, or
disseminated by the welfare system pertaining to persons selected as legal nonlicensed child
care providers by families receiving child care assistance are classified under section 142E.02,
subdivision 6, paragraph (a). Child care assistance program payment data is classified under
section 142E.02, subdivision 6, paragraph (b).

new text begin (b) Video footage of child care provider operations collected or maintained by the
commissioner of children, youth, and families is classified under section 142E.161,
subdivision 5.
new text end

Sec. 2.

Minnesota Statutes 2024, section 142A.03, subdivision 2, is amended to read:

Subd. 2.

Duties of the commissioner.

(a) The commissioner may apply for and accept
on behalf of the state any grants, bequests, gifts, or contributions for the purpose of carrying
out the duties and responsibilities of the commissioner. Any money received under this
paragraph is appropriated and dedicated for the purpose for which the money is granted.
The commissioner must biennially report to the chairs and ranking minority members of
relevant legislative committees and divisions by January 15 of each even-numbered year a
list of all grants and gifts received under this subdivision.

(b) Pursuant to law, the commissioner may apply for and receive money made available
from federal sources for the purpose of carrying out the duties and responsibilities of the
commissioner.

(c) The commissioner may make contracts with and grants to Tribal Nations, public and
private agencies, for-profit and nonprofit organizations, and individuals using appropriated
money.

(d) The commissioner must develop program objectives and performance measures for
evaluating progress toward achieving the objectives. The commissioner must identify the
objectives, performance measures, and current status of achieving the measures in a biennial
report to the chairs and ranking minority members of relevant legislative committees and
divisions. The report is due no later than January 15 each even-numbered year. The report
must include, when possible, the following objectives:

(1) centering and including the lived experiences of children and youth, including those
with disabilities and mental illness and their families, in all aspects of the department's work;

(2) increasing the effectiveness of the department's programs in addressing the needs of
children and youth facing racial, economic, or geographic inequities;

(3) increasing coordination and reducing inefficiencies among the department's programs
and the funding sources that support the programs;

(4) increasing the alignment and coordination of family access to child care and early
learning programs and improving systems of support for early childhood and learning
providers and services;

(5) improving the connection between the department's programs and the kindergarten
through grade 12 and higher education systems; and

(6) minimizing and streamlining the effort required of youth and families to receive
services to which the youth and families are entitled.

(e) The commissioner shall administer and supervise the forms of public assistance and
other activities or services that are vested in the commissioner. Administration and
supervision of activities or services includes but is not limited to assuring timely and accurate
distribution of benefits, completeness of service, and quality program management. In
addition to administering and supervising activities vested by law in the department, the
commissioner has the authority to:

(1) require county agency participation in training and technical assistance programs to
promote compliance with statutes, rules, federal laws, regulations, and policies governing
the programs and activities administered by the commissioner;

(2) monitor, on an ongoing basis, the performance of county agencies in the operation
and administration of activities and programs; enforce compliance with statutes, rules,
federal laws, regulations, and policies governing welfare services; and promote excellence
of administration and program operation;

(3) develop a quality control program or other monitoring program to review county
performance and accuracy of benefit determinations;

(4) require county agencies to make an adjustment to the public assistance benefits issued
to any individual consistent with federal law and regulation and state law and rule and to
issue or recover benefits as appropriate;

(5) delay or deny payment of all or part of the state and federal share of benefits and
administrative reimbursement according to the procedures set forth in section 142A.10;

(6) make contracts with and grants to public and private agencies and organizations,
both for-profit and nonprofit, and individuals, using appropriated funds; and

(7) enter into contractual agreements with federally recognized Indian Tribes with a
reservation in Minnesota to the extent necessary for the Tribe to operate a federally approved
family assistance program or any other program under the supervision of the commissioner.
The commissioner shall consult with the affected county or counties in the contractual
agreement negotiations, if the county or counties wish to be included, in order to avoid the
duplication of county and Tribal assistance program services. The commissioner may
establish necessary accounts for the purposes of receiving and disbursing funds as necessary
for the operation of the programs.

The commissioner shall work in conjunction with the commissioner of human services to
carry out the duties of this paragraph when necessary and feasible.

(f) The commissioner shall inform county agencies, on a timely basis, of changes in
statute, rule, federal law, regulation, and policy necessary to county agency administration
of the programs and activities administered by the commissioner.

(g) The commissioner shall administer and supervise child welfare activities, including
promoting the enforcement of laws preventing child maltreatment and protecting children
with a disability and children who are in need of protection or services, licensing and
supervising child care and child-placing agencies, and supervising the care of children in
foster care. The commissioner shall coordinate with the commissioner of human services
on activities impacting children overseen by the Department of Human Services, such as
disability services, behavioral health, and substance use disorder treatment.

(h) The commissioner shall assist and cooperate with local, state, and federal departments,
agencies, and institutions.

(i) The commissioner shall establish and maintain any administrative units reasonably
necessary for the performance of administrative functions common to all divisions of the
department.

(j) The commissioner shall act as designated guardian of children pursuant to chapter
260C. For children under the guardianship of the commissioner or a Tribe in Minnesota
recognized by the Secretary of the Interior whose interests would be best served by adoptive
placement, the commissioner may contract with a licensed child-placing agency or a
Minnesota Tribal social services agency to provide adoption services. A contract with a
licensed child-placing agency must be designed to supplement existing county efforts and
may not replace existing county programs or Tribal social services, unless the replacement
is agreed to by the county board and the appropriate exclusive bargaining representative,
Tribal governing body, or the commissioner has evidence that child placements of the county
continue to be substantially below that of other counties. Funds encumbered and obligated
under an agreement for a specific child shall remain available until the terms of the agreement
are fulfilled or the agreement is terminated.

(k) The commissioner has the authority to conduct and administer experimental projects
to test methods and procedures of administering assistance and services to recipients or
potential recipients of public benefits. To carry out the experimental projects, the
commissioner may waive the enforcement of existing specific statutory program
requirements, rules, and standards in one or more counties. The order establishing the waiver
must provide alternative methods and procedures of administration and must not conflict
with the basic purposes, coverage, or benefits provided by law. No project under this
paragraph shall exceed four years. No order establishing an experimental project as authorized
by this paragraph is effective until the following conditions have been met:

(1) the United States Secretary of Health and Human Services has agreed, for the same
project, to waive state plan requirements relative to statewide uniformity; and

(2) a comprehensive plan, including estimated project costs, has been approved by the
Legislative Advisory Commission and filed with the commissioner of administration.

(l) The commissioner shall, according to federal requirements and in coordination with
the commissioner of human services, establish procedures to be followed by local welfare
boards in creating citizen advisory committees, including procedures for selection of
committee members.

(m) The commissioner shall allocate federal fiscal disallowances or sanctions that are
based on quality control error rates for the aid to families with dependent children (AFDC)
program formerly codified in sections 256.72 to 256.87 or the Supplemental Nutrition
Assistance Program (SNAP) in the following manner:

(1) one-half of the total amount of the disallowance shall be borne by the county boards
responsible for administering the programs. For AFDC, disallowances shall be shared by
each county board in the same proportion as that county's expenditures to the total of all
counties' expenditures for AFDC. For SNAP, sanctions shall be shared by each county
board, with 50 percent of the sanction being distributed to each county in the same proportion
as that county's administrative costs for SNAP benefits are to the total of all SNAP
administrative costs for all counties, and 50 percent of the sanctions being distributed to
each county in the same proportion as that county's value of SNAP benefits issued are to
the total of all benefits issued for all counties. Each county shall pay its share of the
disallowance to the state of Minnesota. When a county fails to pay the amount due under
this paragraph, the commissioner may deduct the amount from reimbursement otherwise
due the county, or the attorney general, upon the request of the commissioner, may institute
civil action to recover the amount due; and

(2) notwithstanding the provisions of clause (1), if the disallowance results from knowing
noncompliance by one or more counties with a specific program instruction, and that knowing
noncompliance is a matter of official county board record, the commissioner may require
payment or recover from the county or counties, in the manner prescribed in clause (1), an
amount equal to the portion of the total disallowance that resulted from the noncompliance
and may distribute the balance of the disallowance according to clause (1).

(n) The commissioner shall develop and implement special projects that maximize
reimbursements and result in the recovery of money to the state. For the purpose of recovering
state money, the commissioner may enter into contracts with third parties. Any recoveries
that result from projects or contracts entered into under this paragraph shall be deposited
in the state treasury and credited to a special account until the balance in the account reaches
$1,000,000. When the balance in the account exceeds $1,000,000, the excess shall be
transferred and credited to the general fund. All money in the account is appropriated to the
commissioner for the purposes of this paragraph.

(o) The commissioner has the authority to establish and enforce the following county
reporting requirements:

(1) the commissioner shall establish fiscal and statistical reporting requirements necessary
to account for the expenditure of funds allocated to counties for programs administered by
the commissioner. When establishing financial and statistical reporting requirements, the
commissioner shall evaluate all reports, in consultation with the counties, to determine if
the reports can be simplified or the number of reports can be reduced;

(2) the county board shall submit monthly or quarterly reports to the department as
required by the commissioner. Monthly reports are due no later than 15 working days after
the end of the month. Quarterly reports are due no later than 30 calendar days after the end
of the quarter, unless the commissioner determines that the deadline must be shortened to
20 calendar days to avoid jeopardizing compliance with federal deadlines or risking a loss
of federal funding. Only reports that are complete, legible, and in the required format shall
be accepted by the commissioner;

(3) if the required reports are not received by the deadlines established in clause (2), the
commissioner may delay payments and withhold funds from the county board until the next
reporting period. When the report is needed to account for the use of federal funds and the
late report results in a reduction in federal funding, the commissioner shall withhold from
the county boards with late reports an amount equal to the reduction in federal funding until
full federal funding is received;

(4) a county board that submits reports that are late, illegible, incomplete, or not in the
required format for two out of three consecutive reporting periods is considered
noncompliant. When a county board is found to be noncompliant, the commissioner shall
notify the county board of the reason the county board is considered noncompliant and
request that the county board develop a corrective action plan stating how the county board
plans to correct the problem. The corrective action plan must be submitted to the
commissioner within 45 days after the date the county board received notice of
noncompliance;

(5) the final deadline for fiscal reports or amendments to fiscal reports is one year after
the date the report was originally due. If the commissioner does not receive a report by the
final deadline, the county board forfeits the funding associated with the report for that
reporting period and the county board must repay any funds associated with the report
received for that reporting period;

(6) the commissioner may not delay payments, withhold funds, or require repayment
under clause (3) or (5) if the county demonstrates that the commissioner failed to provide
appropriate forms, guidelines, and technical assistance to enable the county to comply with
the requirements. If the county board disagrees with an action taken by the commissioner
under clause (3) or (5), the county board may appeal the action according to sections 14.57
to 14.69; and

(7) counties subject to withholding of funds under clause (3) or forfeiture or repayment
of funds under clause (5) shall not reduce or withhold benefits or services to clients to cover
costs incurred due to actions taken by the commissioner under clause (3) or (5).

(p) The commissioner shall allocate federal fiscal disallowances or sanctions for audit
exceptions when federal fiscal disallowances or sanctions are based on a statewide random
sample in direct proportion to each county's claim for that period.

(q) The commissioner is responsible for ensuring the detection, prevention, investigation,
and resolution of fraudulent activities or behavior by applicants, recipients, and other
participants in the programs administered by the department. The commissioner shall
cooperate with the commissioner of education to enforce the requirements for program
integrity and fraud prevention for investigation for child care assistance under chapter 142E. new text begin
By January 15 each year, the commissioner must publish a report on the department's website
that summarizes the actions the department took in the previous calendar year to comply
with this paragraph and provides the results of the department's actions, disaggregated by
program.
new text end

(r) The commissioner shall require county agencies to identify overpayments, establish
claims, and utilize all available and cost-beneficial methodologies to collect and recover
these overpayments in the programs administered by the department.

(s) The commissioner shall develop recommended standards for child foster care homes
that address the components of specialized therapeutic services to be provided by child
foster care homes with those services.

(t) The commissioner shall authorize the method of payment to or from the department
as part of the programs administered by the department. This authorization includes the
receipt or disbursement of funds held by the department in a fiduciary capacity as part of
the programs administered by the department.

(u) In coordination with the commissioner of human services, the commissioner shall
create and provide county and Tribal agencies with blank applications, affidavits, and other
forms as necessary for public assistance programs.

(v) The commissioner shall cooperate with the federal government and its public welfare
agencies in any reasonable manner as may be necessary to qualify for federal aid for
temporary assistance for needy families and in conformity with Title I of Public Law 104-193,
the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and successor
amendments, including making reports that contain information required by the federal
Social Security Advisory Board and complying with any provisions the board may find
necessary to assure the correctness and verification of the reports.

(w) On or before January 15 in each even-numbered year, the commissioner shall make
a biennial report to the governor concerning the activities of the agency.

(x) The commissioner shall enter into agreements with other departments of the state as
necessary to meet all requirements of the federal government.

(y) The commissioner may cooperate with other state agencies in establishing reciprocal
agreements in instances where a child receiving Minnesota family investment program
(MFIP) assistance or its out-of-state equivalent moves or contemplates moving into or out
of the state, in order that the child may continue to receive MFIP or equivalent aid from the
state moved from until the child has resided for one year in the state moved to.

(z) The commissioner shall provide appropriate technical assistance to county agencies
to develop methods to have county financial workers remind and encourage recipients of
aid to families with dependent children, the Minnesota family investment program, the
Minnesota family investment plan, family general assistance, or SNAP benefits whose
assistance unit includes at least one child under the age of five to have each young child
immunized against childhood diseases. The commissioner must examine the feasibility of
utilizing the capacity of a statewide computer system to assist county agency financial
workers in performing this function at appropriate intervals.

(aa) The commissioner shall have the power and authority to accept on behalf of the
state contributions and gifts for the use and benefit of children under the guardianship or
custody of the commissioner. The commissioner may also receive and accept on behalf of
such children money due and payable to them as old age and survivors insurance benefits,
veterans benefits, pensions, or other such monetary benefits. Gifts, contributions, pensions,
and benefits under this paragraph must be deposited in and disbursed from the social welfare
fund provided for in sections 256.88 to 256.92.

(bb) The specific enumeration of powers and duties in this section must not be construed
to be a limitation upon the general powers granted to the commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [142E.161] INSPECTIONS; VIDEO MONITORING.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms defined in this
subdivision have the meanings given.
new text end

new text begin (b) "Facility" means the indoor and outdoor space in which child care is provided that
is owned, leased, or operated by the provider.
new text end

new text begin (c) "Video monitoring" means the ability for the commissioner to see recorded video of
all public and shared areas of the provider's facility any time the provider has children on
the premises.
new text end

new text begin Subd. 2. new text end

new text begin General requirements. new text end

new text begin (a) The commissioner must conduct inspections and
video monitoring of providers that receive funding under this chapter in accordance with
this section.
new text end

new text begin (b) The video monitoring system must:
new text end

new text begin (1) be turned on and recording at all times the licensed child care center has children on
the premises;
new text end

new text begin (2) record and display the accurate date and time;
new text end

new text begin (3) have a display resolution of 720p or higher; and
new text end

new text begin (4) have a frame-per-second rate of 15 or higher.
new text end

new text begin Subd. 3. new text end

new text begin Inspections. new text end

new text begin (a) If a provider receives $500,000 or more under this chapter in
a calendar year, the commissioner must conduct two unannounced inspections of the
provider's facility in the year following the receipt of the funding.
new text end

new text begin (b) If a provider receives $1,000,000 or more under this chapter in a calendar year, the
commissioner must conduct four unannounced inspections of the provider's facility in the
year following the receipt of the funding.
new text end

new text begin (c) Inspections required under this section must be in addition to any licensing inspections
required under chapter 142B.
new text end

new text begin Subd. 4. new text end

new text begin Video monitoring. new text end

new text begin (a) A provider that receives $1,000,000 or more under this
chapter in a calendar year is subject to video monitoring by the commissioner for one year
following the receipt of the funding.
new text end

new text begin (b) A provider subject to video monitoring under this subdivision is required to:
new text end

new text begin (1) install video cameras or other devices that capture or record video in all public and
shared areas of the provider's facility within a time frame determined by the commissioner;
and
new text end

new text begin (2) notify all parents and legal guardians who apply for placement or enroll a child in
the program that the program is subject to video monitoring by the commissioner.
new text end

new text begin (c) If the commissioner requests recordings or copies of a provider's operation during
certain times and dates and the provider fails to produce recordings or copies for any of the
requested times and dates, the commissioner may use that failure as prima facie evidence
that the provider cared for zero children during the missing times and dates.
new text end

new text begin Subd. 5. new text end

new text begin Department data practices. new text end

new text begin Video footage collected or maintained by the
commissioner under this section is classified as protected nonpublic data, as defined by
section 13.02, subdivision 13.
new text end

new text begin Subd. 6. new text end

new text begin Retention, dissemination, and disposal of recordings. new text end

new text begin (a) A licensed child
care center must retain video monitoring recordings required under this section for 90
calendar days after the date of the recording. Except as provided under paragraph (b), a
licensed child care center must dispose of video monitoring recordings required under this
section after 90 calendar days.
new text end

new text begin (b) A licensed child care center that receives notice from a law enforcement official of
a suspected crime committed against a child at the center may not dispose of any video
monitoring recordings required under this section until the law enforcement investigation
of the suspected crime is complete.
new text end

new text begin (c) A licensed child care center must adhere to additional requirements issued by the
commissioner regarding the retention and disposal of video monitoring recordings required
under this section.
new text end

new text begin (d) A licensed child care center may not sell, share, transmit, or disseminate a video
monitoring recording required under this section to any person except as authorized by this
section.
new text end

new text begin (e) A child care center may disseminate a video monitoring recording required under
this section pursuant to a valid court order, search warrant, or subpoena in a civil, criminal,
or administrative proceeding, including an investigation by the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective September 1, 2025.
new text end

Sec. 4.

Minnesota Statutes 2024, section 142E.17, subdivision 9, is amended to read:

Subd. 9.

Provider payments.

(a) A provider shall bill only for services documented
according to section 142E.16, subdivision 7. The provider shall bill for services provided
within ten days of the end of the service period. new text begin A provider must sign each bill and declare,
under penalty of perjury as provided in section 609.48, that the information in the bill is
true and correct. new text end Payments under the child care fund shall be made within 21 days of
receiving a complete bill from the provider. Counties or the state may establish policies that
make payments on a more frequent basis.

(b) If a provider has received an authorization of care and been issued a billing form for
an eligible family, the bill must be submitted within 60 days of the last date of service on
the bill. A bill submitted more than 60 days after the last date of service must be paid if the
county determines that the provider has shown good cause why the bill was not submitted
within 60 days. Good cause must be defined in the county's child care fund plan under
section 142E.09, subdivision 3, and the definition of good cause must include county error.
Any bill submitted more than a year after the last date of service on the bill must not be
paid.

(c) If a provider provided care for a time period without receiving an authorization of
care and a billing form for an eligible family, payment of child care assistance may only be
made retroactively for a maximum of three months from the date the provider is issued an
authorization of care and a billing form. For a family at application, if a provider provided
child care during a time period without receiving an authorization of care and a billing form,
a county may only make child care assistance payments to the provider retroactively from
the date that child care began, or from the date that the family's eligibility began under
section 142E.10, subdivision 7, or from the date that the family meets authorization
requirements, not to exceed six months from the date that the provider is issued an
authorization of care and a billing form, whichever is later.

(d) The commissioner may refuse to issue a child care authorization to a certified,
licensed, or legal nonlicensed provider; revoke an existing child care authorization to a
certified, licensed, or legal nonlicensed provider; stop payment issued to a certified, licensed,
or legal nonlicensed provider; or refuse to pay a bill submitted by a certified, licensed, or
legal nonlicensed provider if:

(1) the provider admits to intentionally giving the county materially false information
on the provider's billing forms;

(2) the commissioner finds by a preponderance of the evidence that the provider
intentionally gave the county materially false information on the provider's billing forms,
or provided false attendance records to a county or the commissioner;

(3) the provider is in violation of child care assistance program rules, until the agency
determines those violations have been corrected;

(4) the provider is operating after:

(i) an order of suspension of the provider's license issued by the commissioner;

(ii) an order of revocation of the provider's license issued by the commissioner; or

(iii) an order of decertification issued to the provider;

(5) the provider submits false attendance reports or refuses to provide documentation
of the child's attendance upon request;

(6) the provider gives false child care price information; or

(7) the provider fails to report decreases in a child's attendance as required under section
142E.16, subdivision 9.

(e) For purposes of paragraph (d), clauses (3), (5), (6), and (7), the commissioner may
withhold the provider's authorization or payment for a period of time not to exceed three
months beyond the time the condition has been corrected.

(f) A county's payment policies must be included in the county's child care plan under
section 142E.09, subdivision 3. If payments are made by the state, in addition to being in
compliance with this subdivision, the payments must be made in compliance with section
16A.124.

(g) If the commissioner suspends or refuses payment to a provider under paragraph (d),
clause (1) or (2), or sections 142E.50 to 142E.58 and the provider has:

(1) a disqualification for wrongfully obtaining assistance under section 256.98,
subdivision 8, paragraph (c);

(2) an administrative disqualification under section 142E.51, subdivision 5; or

(3) a termination under section 142E.51, subdivision 4, paragraph (c), clause (4), or
142E.55;

then the provider forfeits the payment to the commissioner or the responsible county agency,
regardless of the amount assessed in an overpayment, charged in a criminal complaint, or
ordered as criminal restitution.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2025.
new text end

Sec. 5. new text begin STATEWIDE ELECTRONIC RECORD-KEEPING SYSTEM.
new text end

new text begin By July 1, 2026, the commissioner of children, youth, and families must establish and
implement a statewide electronic records system for the child care assistance program
(CCAP) to improve the program's integrity and internal controls. The system must provide
the commissioner, county agencies, and Tribal Nations that administer CCAP with real-time
access to electronic attendance records to verify children's enrollment in CCAP.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6. new text begin APPROPRIATION.
new text end

new text begin $3,778,000 in fiscal year 2026 and $1,115,000 in fiscal year 2027 are appropriated from
the general fund to the commissioner of children, youth, and families for inspections under
Minnesota Statutes, section 142E.161, and to establish and implement a statewide electronic
records system for the child care assistance program. The base for this appropriation is
$1,115,000 in fiscal year 2028 and beyond.
new text end