1.1 	A bill for an act
1.2 	relating to state government; creating the Office of the Inspector General; creating 
1.3 	an advisory committee; requiring reports; transferring certain agency duties; 
1.4 	appropriating money;amending Minnesota Statutes 2024, sections 3.971, by adding 
1.5 	a subdivision; 15A.0815, subdivision 2; 142A.03, by adding a subdivision; 
1.6 	142A.12, subdivision 5; 144.05, by adding a subdivision; 245.095, subdivision 5; 
1.7 	256.01, by adding a subdivision; proposing coding for new law as Minnesota 
1.8 	Statutes, chapter 15D; repealing Minnesota Statutes 2024, sections 13.321, 
1.9 	subdivision 12; 127A.21.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	ARTICLE 1
1.12 	OFFICE OF THE INSPECTOR GENERAL

1.13 	Section 1. Minnesota Statutes 2024, section 3.971, is amended by adding a subdivision 
1.14 	to read:
1.15 		Subd. 3b.Public reports of fraud and misuse. The legislative auditor must refer all 
1.16 	reports from the public about potential fraud or misuse, as those terms are defined in chapter 
1.17 	15D, to the inspector general. The legislative auditor may coordinate reviews and 
1.18 	investigations with the inspector general when coordination conserves resources and does 
1.19 	not compromise the reviews or investigations.

1.20 	Sec. 2. Minnesota Statutes 2024, section 15A.0815, subdivision 2, is amended to read:
1.21 		Subd. 2.Agency head salaries. The salary for a position listed in this subdivision shall 
1.22 	be determined by the Compensation Council under section 15A.082. The commissioner of 
1.23 	management and budget must publish the salaries on the department's website. This 
1.24 	subdivision applies to the following positions:
2.1 	Commissioner of administration;
2.2 	Commissioner of agriculture;
2.3 	Commissioner of education;
2.4 	Commissioner of children, youth, and families;
2.5 	Commissioner of commerce;
2.6 	Commissioner of corrections;
2.7 	Commissioner of health;
2.8 	Commissioner, Minnesota Office of Higher Education;
2.9 	Commissioner, Minnesota IT Services;
2.10 	Commissioner, Housing Finance Agency;
2.11 	Commissioner of human rights;
2.12 	Commissioner of human services;
2.13 	Commissioner of labor and industry;
2.14 	Commissioner of management and budget;
2.15 	Commissioner of natural resources;
2.16 	Commissioner, Pollution Control Agency;
2.17 	Commissioner of public safety;
2.18 	Commissioner of revenue;
2.19 	Commissioner of employment and economic development;
2.20 	Commissioner of transportation;
2.21 	Commissioner of veterans affairs;
2.22 	Executive director of the Gambling Control Board;
2.23 	Executive director of the Minnesota State Lottery;
2.24 	Executive director of the Office of Cannabis Management;
2.25 	Inspector general;
2.26 	Commissioner of Iron Range resources and rehabilitation;
2.27 	Commissioner, Bureau of Mediation Services;
3.1 	Ombudsman for mental health and developmental disabilities;
3.2 	Ombudsperson for corrections;
3.3 	Chair, Metropolitan Council;
3.4 	Chair, Metropolitan Airports Commission;
3.5 	School trust lands director;
3.6 	Executive director of pari-mutuel racing;
3.7 	Commissioner, Public Utilities Commission;
3.8 	Chief Executive Officer, Direct Care and Treatment; and
3.9 	Director of the Office of Emergency Medical Services.

3.10 	Sec. 3. [15D.01] OFFICE OF THE INSPECTOR GENERAL.
3.11 	(a) The inspector general serves as an independent entity responsible for ensuring 
3.12 	accountability, transparency, and integrity in the operations of state agencies and programs.
3.13 	(b) The inspector general must operate independently of all state executive branch 
3.14 	agencies and report directly to the chief administrative law judge under chapter 14. The 
3.15 	inspector general must not be subject to direction or interference from any executive or 
3.16 	legislative authority, other than the chief administrative law judge.
3.17 	(c) The inspector general shall direct an Office of the Inspector General.
3.18 	(d) The inspector general serves in the unclassified service.

3.19 	EFFECTIVE DATE. This section is effective January 1, 2026.

3.20 	Sec. 4. [15D.02] DEFINITIONS.
3.21 	For the purposes of this chapter, the following terms have the meanings given:
3.22 	(1) "agency program" means a program funded or administered by a state agency, 
3.23 	including grants and contracts;
3.24 	(2) "fraud" means an intentional or deceptive act or failure to act to gain an unlawful 
3.25 	benefit;
3.26 	(3) "investigation" means an audit, review, or inquiry conducted by the inspector general 
3.27 	to detect or prevent fraud or misuse;
4.1 	(4) "misuse" means improper use of authority or position for personal gain or to cause 
4.2 	harm to others, including the improper use of public resources or programs contrary to their 
4.3 	intended purpose; and
4.4 	(5) "personal gain" means a benefit to a person; to a person's spouse, parent, child, or 
4.5 	other legal dependent; or to an in-law of the person or the person's child.

4.6 	EFFECTIVE DATE. This section is effective January 1, 2026.

4.7 	Sec. 5. [15D.03] INSPECTOR GENERAL.
4.8 		Subdivision 1.Minimum qualifications. (a) To be eligible to be appointed as inspector 
4.9 	general, a candidate must:
4.10 	(1) have a bachelor's degree in criminal justice, public administration, law, or a related 
4.11 	field;
4.12 	(2) have at least ten years of professional experience in auditing, investigations, law 
4.13 	enforcement, or a related area;
4.14 	(3) hold a professional certificate from the Association of Inspectors General, including 
4.15 	Certified Inspector General or Certified Inspector General Investigator; and
4.16 	(4) demonstrate a commitment to safeguarding the mission of public service and provide 
4.17 	a public disclosure of prior professional opinions, positions, or actions that may influence 
4.18 	the candidate's approach to the role.
4.19 	(b) Current or former commissioners, agency heads, deputy agency heads, governors, 
4.20 	or legislators are not eligible to serve as inspector general within five years of their service 
4.21 	in those roles.
4.22 		Subd. 2.Appointment. The Legislative Inspector General Advisory Commission will 
4.23 	recommend candidates for inspector general after a competitive process from among eligible 
4.24 	applicants for the position of inspector general. To be recommended by the commission, a 
4.25 	candidate must be approved for recommendation by five of the eight members of the 
4.26 	commission. The commission must assess eligible candidates based on qualifications, 
4.27 	including experience in auditing, financial analysis, public administration, law enforcement, 
4.28 	or related fields. The chief judge of the Office of Administrative Hearings will appoint an 
4.29 	inspector general from the recommendations provided by the Legislative Inspector General 
4.30 	Advisory Commission.
4.31 		Subd. 3.Term. The inspector general serves a five-year term and may be appointed to 
4.32 	two terms. The inspector general may only be removed for cause by the chief judge of the 
5.1 	Office of Administrative Hearings after a public hearing conducted by the Legislative 
5.2 	Inspector General Advisory Commission.

5.3 	EFFECTIVE DATE. This section is effective January 1, 2026.

5.4 	Sec. 6. [15D.04] POWERS AND DUTIES.
5.5 		Subdivision 1.Authorized powers and responsibilities.  The inspector general is 
5.6 	authorized and responsible to:
5.7 	(1) conduct inspections, evaluations, and investigations of state executive branch agencies 
5.8 	and programs according to professional auditing standards to: (i) identify fraud and misuse; 
5.9 	(ii) make recommendations for changes to programs to prevent fraud and misuse; and (iii) 
5.10 	protect the integrity of the use of public funds, data, and systems;
5.11 	(2) refer matters for civil, criminal, or administrative action to the Bureau of Criminal 
5.12 	Apprehension, the attorney general's office, or other appropriate authorities;
5.13 	(3) recommend legislative or policy changes to improve program efficiency and 
5.14 	effectiveness;
5.15 	(4) publish reports on completion of an audit or investigation summarizing findings, 
5.16 	recommendations, and outcomes of the inspector general's activities;
5.17 	(5) investigate any public or private entity that receives public funds to ensure compliance 
5.18 	with applicable laws, proper use of funds, and adherence to program requirements;
5.19 	(6) submit an annual report summarizing the work of the office to the Legislative 
5.20 	Inspector General Advisory Commission and make the report publicly available by posting 
5.21 	the report on the inspector general's website;
5.22 	(7) at the inspector general's discretion, seek a court order to freeze or stop distribution 
5.23 	of public funds, or alert relevant commissioners or heads of agencies on an emergency basis 
5.24 	before an investigation is concluded that the inspector general has a reasonable suspicion 
5.25 	that fraud or misuse is being committed, with a recommendation to freeze or cease 
5.26 	distribution of funds, with notice to the appropriate law enforcement agencies; and
5.27 	(8) establish and maintain a current exclusion list in a format readily accessible to 
5.28 	agencies that identifies each program and individual for which the inspector general has 
5.29 	obtained a court order to freeze or cease distribution of funds or made a recommendation 
5.30 	under clause (7) to freeze or cease distribution of funds.
6.1 		Subd. 2.Relationship to powers and duties of other agencies. (a) The inspector general 
6.2 	has authority to investigate fraud and misuse of public funds across all programs administered 
6.3 	by state agencies.
6.4 	(b) The inspector general may perform the inspector general's duties and apply the 
6.5 	inspector general's authority without obtaining approval from another agency.
6.6 	(c) The Department of Human Services has primary responsibility to investigate fraud 
6.7 	in the Medicaid program, but the inspector general has authority to conduct independent 
6.8 	investigations related to Medicaid fraud as necessary.
6.9 	(d) The Department of Children, Youth, and Families has primary responsibility to 
6.10 	investigate fraud in the child care assistance program, but the inspector general has authority 
6.11 	to conduct independent investigations related to the child care assistance program.
6.12 	(e) The Department of Health has primary responsibility to investigate fraud related to 
6.13 	women, infants, and children (WIC) and food support programs, but the inspector general 
6.14 	has authority to conduct independent investigations related to WIC and food support 
6.15 	programs.
6.16 	(f) The inspector general has concurrent authority over general compliance reviews, 
6.17 	information technology security audits, or administrative program integrity assessments 
6.18 	that are related to fraud or misuse.
6.19 	(g) The inspector general must refer all reports from the public about potential fraud or 
6.20 	misuse to the legislative auditor. The inspector general may coordinate investigations with 
6.21 	the legislative auditor when coordination conserves resources and does not compromise an 
6.22 	investigation.

6.23 	EFFECTIVE DATE. This section is effective January 1, 2026.

6.24 	Sec. 7. [15D.042] AUXILIARY POWERS.
6.25 		Subdivision 1.Subpoena power. In all matters relating to official duties, the inspector 
6.26 	general has the powers possessed by courts of law to issue and have subpoenas served.
6.27 		Subd. 2.Inquiry and inspection power; duty to aid inspector general. All public 
6.28 	officials and their deputies and employees, and all corporations, firms, and individuals 
6.29 	having business involving the receipt, disbursement, or custody of public funds shall at all 
6.30 	times:
6.31 	(1) afford reasonable facilities for examinations by the inspector general;
6.32 	(2) provide returns and reports required by the inspector general;
7.1 	(3) attend and answer under oath the inspector general's lawful inquiries;
7.2 	(4) produce and exhibit all books, accounts, documents, data of any classification, and 
7.3 	property that the inspector general requests to inspect; and
7.4 	(5) in all things cooperate with the inspector general.
7.5 		Subd. 3.Penalties. (a) If a person refuses or neglects to obey any lawful direction of 
7.6 	the inspector general, a deputy or assistant, or withholds any information, book, record, 
7.7 	paper or other document called for by the inspector general for the purpose of examination, 
7.8 	after having been lawfully required by order or subpoena, upon application by the inspector 
7.9 	general, a judge of the district court in the county where the order or subpoena was made 
7.10 	returnable shall compel obedience or punish disobedience as for contempt, as in the case 
7.11 	of a similar order or subpoena issued by the court.
7.12 	(b) A person who swears falsely concerning any matter stated under oath is guilty of a 
7.13 	gross misdemeanor.

7.14 	Sec. 8. [15D.046] DATA PRACTICES.
7.15 		Subdivision 1.Definitions. (a) For the purposes of this section, the following terms have 
7.16 	the meanings given.
7.17 	(b) "Confidential data on individuals" has the meaning given in section 13.02, subdivision 
7.18 	3.
7.19 	(c) "Government entity" has the meaning given in section 13.02, subdivision 7a.
7.20 	(d) "Nonpublic data" has the meaning given in section 13.02, subdivision 9.
7.21 	(e) "Not public data" has the meaning given in section 13.02, subdivision 8a.
7.22 	(f) "Private data on individuals" has the meaning given in section 13.02, subdivision 12.
7.23 	(g) "Protected nonpublic data" has the meaning given in section 13.02, subdivision 13.
7.24 		Subd. 2.Government Data Practices Act. The inspector general is a government entity 
7.25 	and is subject to the Government Data Practices Act, chapter 13.
7.26 		Subd. 3.Access. In order to perform the duties authorized by this chapter, the inspector 
7.27 	general shall have access to data of any classification, including data classified as not public 
7.28 	data. It is not a violation of chapter 13 or any other statute classifying government data as 
7.29 	not public data if a government entity provides data pursuant to a subpoena issued under 
7.30 	this chapter.
8.1 		Subd. 4.Dissemination. The inspector general may disseminate data of any classification, 
8.2 	including not public data, to:
8.3 	(1) a government entity, other than a law enforcement agency or prosecuting authority, 
8.4 	if the dissemination of the data aids a pending investigation;
8.5 	(2) a law enforcement agency or prosecuting authority if there is reason to believe that 
8.6 	the data are evidence of criminal activity within the agency's or authority's jurisdiction; or
8.7 	(3) the commissioner of health; the commissioner of human services; or the commissioner 
8.8 	of children, youth, and families if the data are subject to section 15D.04, subdivision 2.
8.9 		Subd. 5.Data classifications. (a) Notwithstanding any other law, data relating to an 
8.10 	investigation conducted under this chapter are confidential data on individuals or protected 
8.11 	nonpublic data while the investigation is active.
8.12 	(b) Data relating to an investigation conducted under this chapter become public data 
8.13 	upon the inspector general's completion of the investigation, unless:
8.14 	(1) the release of the data would jeopardize another active investigation by the inspector 
8.15 	general or another government entity;
8.16 	(2) the inspector general reasonably believes the data will be used in litigation; or
8.17 	(3) the data are classified as not public under another statute or paragraph (e).
8.18 	(c) Data subject to paragraph (b), clause (2), are confidential data on individuals or 
8.19 	protected nonpublic data and become public when the litigation has been completed or is 
8.20 	no longer being actively pursued.
8.21 	(d) Unless the data are subject to a more restrictive classification, upon the inspector 
8.22 	general's decision to no longer actively pursue an investigation under this chapter, data 
8.23 	relating to an investigation are private data on individuals or nonpublic data except the 
8.24 	following data are public:
8.25 	(1) data relating to the investigation's existence, status, and disposition; and
8.26 	(2) data that document the inspector general's work.
8.27 	For an investigation subject to this paragraph, data identifying individuals or an entity that 
8.28 	is not a government entity, are private data on individuals or nonpublic data.
8.29 	(e) Data on an individual supplying information for an investigation that could reasonably 
8.30 	be used to determine the individual's identity are private data on individuals if the information 
8.31 	supplied was needed for the investigation and would not have been provided to the inspector 
9.1 	general without an assurance to the individual that the individual's identity would remain 
9.2 	private.
9.3 	(f) Data relating to an investigation conducted under this chapter that are obtained from 
9.4 	an entity that is not a government entity have the same classification that the data would 
9.5 	have if obtained from a government entity.
9.6 		Subd. 6.Departments of Health; Human Services; and Children, Youth, and 
9.7 	Families. Data relating to complaints or tips that are subject to section 15D.04, subdivision 
9.8 	2, are private data on individuals or nonpublic data.

9.9 	Sec. 9. [15D.05] RESOURCES.
9.10 		Subdivision 1.Staff. (a) The inspector general may hire and manage staff as necessary. 
9.11 	The inspector general must employ at least two individuals with experience in criminal 
9.12 	investigations to serve as investigators for the office. To the extent the inspector general 
9.13 	deems advisable, these individuals must have previous experience in complex investigations 
9.14 	as law enforcement officers. The staff in the Office of the Inspector General shall serve in 
9.15 	the classified civil service. Except as provided in paragraph (b), compensation for employees 
9.16 	of the inspector general in the classified service who are represented by an exclusive 
9.17 	representative shall be governed by a collective bargaining agreement negotiated between 
9.18 	the commissioner of management and budget and the exclusive representative. Compensation 
9.19 	for employees of the inspector general in the classified service who are not represented by 
9.20 	an exclusive representative shall be as provided in the commissioner's plan under section 
9.21 	43A.18, subdivision 2.
9.22 	(b) Section 15.039, subdivision 7, applies to employees transferred into the Office of 
9.23 	the Inspector General from other offices of inspectors general within the first year following 
9.24 	enactment of chapter 15D.
9.25 		Subd. 2.Contracting. The inspector general may contract with external experts to 
9.26 	support the work of the office, subject to section 16C.08.

9.27 	EFFECTIVE DATE. This section is effective January 1, 2026.

9.28 	Sec. 10. [15D.06] REPORTING AND TRANSPARENCY.
9.29 		Subdivision 1.Reports. The inspector general must issue public reports detailing 
9.30 	completed audits, investigations, and corrective actions taken.
9.31 		Subd. 2.Public tips. The inspector general must maintain a phone line and website for 
9.32 	reporting fraud and misuse that allows the person making the report to remain anonymous.

10.1 	EFFECTIVE DATE. This section is effective January 1, 2026.

10.2 	Sec. 11. [15D.07] PROFESSIONAL STANDARDS AND REVIEW.
10.3 	(a) The inspector general's activities must adhere to professional standards as promulgated 
10.4 	by the Association of Inspectors General or other recognized bodies.
10.5 	(b) The chief administrative law judge may contract for an external quality assurance 
10.6 	review of the inspector general every three years and must make findings from the review 
10.7 	public.

10.8 	EFFECTIVE DATE. This section is effective January 1, 2026.

10.9 	Sec. 12. [15D.08] LEGISLATIVE INSPECTOR GENERAL ADVISORY 
10.10 	COMMISSION.
10.11 		Subdivision 1.Membership. The Legislative Inspector General Advisory Commission 
10.12 	is comprised of:
10.13 	(1) two senators appointed by the majority leader of the senate;
10.14 	(2) two senators appointed by the minority leader of the senate;
10.15 	(3) two members of the house of representatives appointed by the speaker of the house 
10.16 	of representatives; and
10.17 	(4) two members of the house of representatives appointed by the minority leader of the 
10.18 	house of representatives.
10.19 		Subd. 2.Terms. Members serve at the pleasure of their appointing authorities and each 
10.20 	member serves until a replacement is appointed.
10.21 		Subd. 3.Duties. The Legislative Inspector General Advisory Commission must:
10.22 	(1) consider applicants for and make recommendations to the chief administrative law 
10.23 	judge for the position of inspector general; and
10.24 	(2) may conduct hearings to review the work of the inspector general to ensure 
10.25 	impartiality, independence, and effectiveness.
10.26 		Subd. 4.Per diem; expense reimbursement. Members may be compensated for time 
10.27 	spent on commission duties and may be reimbursed for expenses according to the rules of 
10.28 	their respective bodies.
10.29 		Subd. 5.Meeting space; staff. The Legislative Coordinating Commission must provide 
10.30 	meeting space and staff to assist the commission in performing its duties.
11.1 		Subd. 6.Open meetings. The Legislative Inspector General Advisory Commission is 
11.2 	subject to the requirements in section 3.055.

11.3 	EFFECTIVE DATE. This section is effective the day following final enactment. The 
11.4 	commission must submit recommendations for an inspector general by January 1, 2026.

11.5 	Sec. 13. OFFICE OF THE INSPECTOR GENERAL ESTABLISHMENT AND 
11.6 	TRANSITION.
 11.7 		Subdivision 1.Appointment. By January 1, 2026, the Legislative Inspector General 
11.8 	Advisory Commission must make recommendations for appointment of an inspector general 
11.9 	under Minnesota Statutes, section 15D.03. By February 1, 2026, the chief judge of the Office 
11.10 	of Administrative Hearings must appoint an inspector general from among the recommended 
11.11 	candidates.
11.12 		Subd. 2.Operational. By September 1, 2026, the Office of the Inspector General must 
11.13 	be fully operational.
11.14 		Subd. 3.Transition of employees. (a) Before September 1, 2026, all officers and 
11.15 	employees employed in an office of inspector general for a state agency shall transition to 
11.16 	employment under the Office of the Inspector General under Minnesota Statutes, chapter 
11.17 	15D, except as specified in subdivision 6.
11.18 	(b) The following protections shall apply to employees who are transferred to the Office 
11.19 	of the Inspector General under Minnesota Statutes, chapter 15D, from state agencies:
11.20 	(1) no transferred employee shall have their employment status and job classification 
11.21 	altered as a result of the transfer;
11.22 	(2) transferred employees who were represented by an exclusive representative prior to 
11.23 	the transfer shall continue to be represented by the same exclusive representative after the 
11.24 	transfer;
11.25 	(3) any applicable collective bargaining agreements with exclusive representatives shall 
11.26 	continue in full force and effect for transferred employees after the transfer while the 
11.27 	agreement remains in effect;
11.28 	(4) when an employee in a temporary unclassified position is transferred to the Office 
11.29 	of the Inspector General, the total length of time that the employee has served in the 
11.30 	appointment must include all time served in the appointment at the transferring agency and 
11.31 	the time served in the appointment at the Office of the Inspector General. An employee in 
11.32 	a temporary unclassified position who was hired by a transferring agency through an open 
12.1 	competitive selection process under a policy enacted by the commissioner of management 
12.2 	and budget is considered to have been hired through a competitive selection process after 
12.3 	the transfer;
12.4 	(5) the state must meet and negotiate with the exclusive representatives of the transferred 
12.5 	employees about proposed changes to the transferred employees' terms and conditions of 
12.6 	employment to the extent that the proposed changes are not addressed in the applicable 
12.7 	collective bargaining agreement; and
12.8 	(6) if the state transfers ownership or control of any facilities, services, or operations of 
12.9 	the Office of the Inspector General to another private or public entity by subcontracting, 
12.10 	sale, assignment, lease, or other transfer, the state must require as a written condition of the 
12.11 	transfer of ownership or control the following:
12.12 	(i) employees who perform work in the facilities, services, or operations must be offered 
12.13 	employment with the entity acquiring ownership or control before the entity offers 
12.14 	employment to any individual who was not employed by the transferring agency at the time 
12.15 	of the transfer; and
12.16 	(ii) the wage and benefit standards of the transferred employees must not be reduced by 
12.17 	the entity acquiring ownership or control through the expiration of the collective bargaining 
12.18 	agreement in effect at the time of the transfer or for a period of two years after the transfer, 
12.19 	whichever is longer.
12.20 	There is no liability on the part of, and no cause of action arises against, the state of 
12.21 	Minnesota or its officers or agents for any action or inaction of any entity acquiring ownership 
12.22 	or control of any facilities, services, or operations of the department.
12.23 		Subd. 4.Assets. Before September 1, 2026, assets and unused appropriations for existing 
12.24 	offices of inspectors general shall be transferred to the Office of the Inspector General under 
12.25 	Minnesota Statutes, chapter 15D, except as specified in subdivision 6.
12.26 		Subd. 5.Office space. The commissioner of administration must provide office space 
12.27 	on the Capitol Mall complex for the Office of the Inspector General under Minnesota 
12.28 	Statutes, chapter 15D, under a rental agreement.
12.29 		Subd. 6.Exceptions. (a) Positions in the following divisions and teams in the Department 
12.30 	of Human Services will not transfer to the Office of the Inspector General:
12.31 	(1) background studies division;
12.32 	(2) licensing division;
13.1 	(3) enterprise operations and policy division;
13.2 	(4) legal counsel's office;
13.3 	(5) data services, analytics, and insights division;
13.4 	(6) Medicaid program integrity team within program integrity oversight division;
13.5 	(7) Medicaid provider audits and investigations team within program integrity oversight 
13.6 	division; and
13.7 	(8) functions of the fraud prevention investigations team in the program integrity oversight 
13.8 	division related to Medicaid and MinnesotaCare.
13.9 	(b) No employees or positions in the Department of Corrections are transferred under 
13.10 	this section.
13.11 	(c) No employees or positions in the student maltreatment program of the Department 
13.12 	of Education or other Department of Education employees or positions dedicated to student 
13.13 	maltreatment investigations under Minnesota Statutes, chapter 260E, are transferred under 
13.14 	this section.
13.15 	(d) Positions in the following divisions and teams in the Department of Children, Youth, 
13.16 	and Families will not transfer to the Office of the Inspector General:
13.17 	(1) the licensing functions under Minnesota Statutes, chapter 142B;
13.18 	(2) the certification functions under Minnesota Statutes, chapter 142C;
13.19 	(3) the child care assistance program integrity functions under Minnesota Statutes, 
13.20 	chapter 142E;
13.21 	(4) the food support and antipoverty programs performing recipient fraud prevention 
13.22 	investigation functions under Minnesota Statutes, chapter 142F;
13.23 	(5) the Minnesota family assistance program performing recipient fraud prevention 
13.24 	investigation functions under Minnesota Statutes, chapter 142G;
13.25 	(6) the great start compensation support payment program under Minnesota Statutes, 
13.26 	section 142D.21, and Minnesota Statutes, chapter 142E;
13.27 	(7) the operations and policy functions for the programs in clauses (1) to (6); and
13.28 	(8) the legal staff for the programs in clauses (1) to (6).

13.29 	EFFECTIVE DATE. This section is effective January 1, 2026.

14.1 	Sec. 14. LEGISLATIVE INSPECTOR GENERAL ADVISORY COMMISSION; 
14.2 	INITIAL APPOINTMENTS AND FIRST MEETING.
 14.3 		Subdivision 1.Initial appointments. Appointing authorities must make appointments 
14.4 	to the Legislative Inspector General Advisory Commission by August 1, 2025.
14.5 		Subd. 2.First meeting. The senate majority leader must designate one member of the 
14.6 	Legislative Inspector General Advisory Commission to convene the first meeting of the 
14.7 	Legislative Inspector General Advisory Commission by September 15, 2025.

14.8 	Sec. 15. INTERAGENCY AGREEMENTS.
 14.9 	(a) By December 31, 2026, the Office of the Inspector General must enter into an 
14.10 	interagency agreement with the Department of Human Services. The interagency agreement 
14.11 	must include a clause on cost-sharing for investigations that may require multiagency 
14.12 	coordination and a clause that details what process will be followed if a joint investigation 
14.13 	is required. The interagency agreement must not limit the inspector general's authority or 
14.14 	authorized powers and responsibilities. The agency and the inspector general may coordinate 
14.15 	investigative efforts as necessary or practical, but an interagency agreement must not 
14.16 	diminish, delay, or restrict the inspector general's ability to investigate fraud and misuse.
14.17 	(b) By December 31, 2026, the Office of the Inspector General must enter into an 
14.18 	interagency agreement with the Department of Children, Youth, and Families. The 
14.19 	interagency agreement must include a clause on cost-sharing for investigations that may 
14.20 	require multiagency coordination and a clause that details what process will be followed if 
14.21 	a joint investigation is required. The interagency agreement must not limit the inspector 
14.22 	general's authority or authorized powers and responsibilities. The agency and the inspector 
14.23 	general may coordinate investigative efforts as necessary or practical, but an interagency 
14.24 	agreement must not diminish, delay, or restrict the inspector general's ability to investigate 
14.25 	fraud and misuse.

14.26 	Sec. 16. APPROPRIATIONS.
 14.27 	(a) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the 
14.28 	general fund to the Office of Administrative Hearings to support the creation of the Office 
14.29 	of the Inspector General. This is a onetime appropriation.
14.30 	(b) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the 
14.31 	general fund to the Office of the Inspector General for the purposes of this act.

15.1 	ARTICLE 2
15.2 	CONFORMING ITEMS AND REPEALERS

15.3 	Section 1. Minnesota Statutes 2024, section 142A.03, is amended by adding a subdivision 
15.4 	to read:
15.5 		Subd. 35.Office of the Inspector General; reports. The commissioner must submit 
15.6 	final investigative reports to the inspector general, serving under section 15D.01, for any 
15.7 	investigation conducted by the commissioner into fraud or misuse, as defined in section 
15.8 	15D.02, within the child care assistance program.

15.9 	Sec. 2. Minnesota Statutes 2024, section 142A.12, subdivision 5, is amended to read:
15.10 		Subd. 5.Withholding of payments. (a) Except as otherwise provided by state or federal 
15.11 	law, the commissioner may withhold payments to a provider, vendor, individual, associated 
15.12 	individual, or associated entity in any program administered by the commissioner if the 
15.13 	commissioner determines there is a credible allegation of fraud for which an investigation 
15.14 	is pending for a program administered by a Minnesota state or federal agency.
15.15 	(b) For purposes of this subdivision, "credible allegation of fraud" means an allegation 
15.16 	that has been verified by the commissioner from any source, including but not limited to:
15.17 	(1) fraud hotline complaints;
15.18 	(2) claims data mining;
15.19 	(3) patterns identified through provider audits, civil false claims cases, and law 
15.20 	enforcement investigations; and
15.21 	(4) court filings and other legal documents, including but not limited to police reports, 
15.22 	complaints, indictments, informations, affidavits, declarations, and search warrants; and
15.23 	(5) information from the inspector general, including information listed on the inspector 
15.24 	general's exclusion list under section 15D.04, subdivision 1, clause (8).
15.25 	(c) The commissioner must send notice of the withholding of payments within five days 
15.26 	of taking such action. The notice must:
15.27 	(1) state that payments are being withheld according to this subdivision;
15.28 	(2) set forth the general allegations related to the withholding action, except the notice 
15.29 	need not disclose specific information concerning an ongoing investigation;
15.30 	(3) state that the withholding is for a temporary period and cite the circumstances under 
15.31 	which the withholding will be terminated; and
16.1 	(4) inform the provider, vendor, individual, associated individual, or associated entity 
16.2 	of the right to submit written evidence to contest the withholding action for consideration 
16.3 	by the commissioner.
16.4 	(d) If the commissioner withholds payments under this subdivision, the provider, vendor, 
16.5 	individual, associated individual, or associated entity has a right to request administrative 
16.6 	reconsideration. A request for administrative reconsideration must be made in writing, state 
16.7 	with specificity the reasons the payment withholding decision is in error, and include 
16.8 	documents to support the request. Within 60 days from receipt of the request, the 
16.9 	commissioner shall judiciously review allegations, facts, evidence available to the 
16.10 	commissioner, and information submitted by the provider, vendor, individual, associated 
16.11 	individual, or associated entity to determine whether the payment withholding should remain 
16.12 	in place.
16.13 	(e) The commissioner shall stop withholding payments if the commissioner determines 
16.14 	there is insufficient evidence of fraud by the provider, vendor, individual, associated 
16.15 	individual, or associated entity or when legal proceedings relating to the alleged fraud are 
16.16 	completed, unless the commissioner has sent notice under subdivision 3 to the provider, 
16.17 	vendor, individual, associated individual, or associated entity.
16.18 	(f) The withholding of payments is a temporary action and is not subject to appeal under 
16.19 	section 256.0451 or chapter 14.

16.20 	Sec. 3. Minnesota Statutes 2024, section 144.05, is amended by adding a subdivision to 
16.21 	read:
16.22 		Subd. 9.Office of the Inspector General; reports. The commissioner must submit 
16.23 	final investigative reports to the inspector general serving under section 15D.01 for any 
16.24 	investigation conducted by the commissioner into fraud or misuse, as defined in section 
16.25 	15D.02, within the special supplemental nutrition program for women, infants, and children.

16.26 	Sec. 4. Minnesota Statutes 2024, section 245.095, subdivision 5, is amended to read:
16.27 		Subd. 5.Withholding of payments. (a) Except as otherwise provided by state or federal 
16.28 	law, the commissioner may withhold payments to a provider, vendor, individual, associated 
16.29 	individual, or associated entity in any program administered by the commissioner if the 
16.30 	commissioner determines there is a credible allegation of fraud for which an investigation 
16.31 	is pending for a program administered by a Minnesota state or federal agency.
17.1 	(b) For purposes of this subdivision, "credible allegation of fraud" means an allegation 
17.2 	that has been verified by the commissioner from any source, including but not limited to:
17.3 	(1) fraud hotline complaints;
17.4 	(2) claims data mining;
17.5 	(3) patterns identified through provider audits, civil false claims cases, and law 
17.6 	enforcement investigations; and
17.7 	(4) court filings and other legal documents, including but not limited to police reports, 
17.8 	complaints, indictments, informations, affidavits, declarations, and search warrants; and
17.9 	(5) information from the inspector general, including information listed on the inspector 
17.10 	general's exclusion list under section 15D.04, subdivision 1, clause (8).
17.11 	(c) The commissioner must send notice of the withholding of payments within five days 
17.12 	of taking such action. The notice must:
17.13 	(1) state that payments are being withheld according to this subdivision;
17.14 	(2) set forth the general allegations related to the withholding action, except the notice 
17.15 	need not disclose specific information concerning an ongoing investigation;
17.16 	(3) state that the withholding is for a temporary period and cite the circumstances under 
17.17 	which the withholding will be terminated; and
17.18 	(4) inform the provider, vendor, individual, associated individual, or associated entity 
17.19 	of the right to submit written evidence to contest the withholding action for consideration 
17.20 	by the commissioner.
17.21 	(d) If the commissioner withholds payments under this subdivision, the provider, vendor, 
17.22 	individual, associated individual, or associated entity has a right to request administrative 
17.23 	reconsideration. A request for administrative reconsideration must be made in writing, state 
17.24 	with specificity the reasons the payment withholding decision is in error, and include 
17.25 	documents to support the request. Within 60 days from receipt of the request, the 
17.26 	commissioner shall judiciously review allegations, facts, evidence available to the 
17.27 	commissioner, and information submitted by the provider, vendor, individual, associated 
17.28 	individual, or associated entity to determine whether the payment withholding should remain 
17.29 	in place.
17.30 	(e) The commissioner shall stop withholding payments if the commissioner determines 
17.31 	there is insufficient evidence of fraud by the provider, vendor, individual, associated 
17.32 	individual, or associated entity or when legal proceedings relating to the alleged fraud are 
18.1 	completed, unless the commissioner has sent notice under subdivision 3 to the provider, 
18.2 	vendor, individual, associated individual, or associated entity.
18.3 	(f) The withholding of payments is a temporary action and is not subject to appeal under 
18.4 	section 256.045 or chapter 14.

18.5 	Sec. 5. Minnesota Statutes 2024, section 256.01, is amended by adding a subdivision to 
18.6 	read:
18.7 		Subd. 44.Office of the Inspector General; reports. The commissioner must submit 
18.8 	final investigative reports to the inspector general, serving under section 15D.01, for any 
18.9 	investigation conducted by the commissioner into fraud or misuse, as defined in section 
18.10 	15D.02, within the Medicaid program.

18.11 	Sec. 6. EXISTING DUTIES ABOLISHED; TRANSFERS PROVIDED.
 18.12 		Subdivision 1.Duties abolished. Except as exempted in article 1, section 6, subdivision 
18.13 	2, and section 13, subdivision 6, duties pertaining to the investigation of fraud, misuse, and 
18.14 	other unlawful use of public funds in the Office of Inspector General in the Departments 
18.15 	of Education; Human Services; and Children, Youth, and Families are abolished effective 
18.16 	the day after the inspector general under Minnesota Statutes, section 15D.01, certifies in 
18.17 	writing to the commissioners of the respective departments and the commissioner of 
18.18 	management and budget that the inspector general has assumed responsibility for these 
18.19 	duties.
18.20 		Subd. 2.Inspector general transfers. Pursuant to Minnesota Statutes, section 15.039, 
18.21 	all active investigations, obligations, court actions, contracts, and records shall transfer from 
18.22 	each department in subdivision 1 to the inspector general under Minnesota Statutes, section 
18.23 	15D.01, except as provided by the inspector general and as provided in article 1, section 6, 
18.24 	subdivision 2, and section 13, subdivision 6.

18.25 	EFFECTIVE DATE. This section is effective July 1, 2025.

18.26 	Sec. 7. REPEALER.
 18.27 	Minnesota Statutes 2024, sections 13.321, subdivision 12; and 127A.21, are repealed.

18.28 	EFFECTIVE DATE. This section is effective the day after the inspector general under 
18.29 	Minnesota Statutes, section 15D.01, notifies the revisor of statutes that the Office of the 
18.30 	Inspector General under Minnesota Statutes, section 15D.01, has assumed responsibility 
19.1 	for identifying and investigating fraud, misuse, and other unlawful use of public funds in 
19.2 	the Department of Education.

	ARTICLE 1	OFFICE OF THE INSPECTOR GENERAL........	Page.Ln 1.11	
	ARTICLE 2	CONFORMING ITEMS AND REPEALERS........	Page.Ln 15.1	

APPENDIX 

Repealed Minnesota Statutes: S0856-6 

13.321 PREKINDERGARTEN TO GRADE 12 EDUCATIONAL DATA CODED ELSEWHERE.Subd. 12.Office of the Inspector General; access to data. 
Data involving the Department of Education's Office of the Inspector General are governed by section 127A.21. 

127A.21 OFFICE OF THE INSPECTOR GENERAL.Subdivision 1.Establishment of Office of the Inspector General; powers; duties. 
The commissioner must establish within the department an Office of the Inspector General. The inspector general shall report directly to the commissioner. The Office of the Inspector General is charged with protecting the integrity of the department and the state by detecting and preventing fraud, waste, and abuse in department programs. The Office of the Inspector General must conduct independent and objective investigations to promote the integrity of the department's programs and operations. When fraud or other misuse of public funds is detected, the Office of the Inspector General must report it to the appropriate law enforcement entity and collaborate and cooperate with law enforcement to assist in the investigation and any subsequent civil and criminal prosecution. 

Subd. 1a.Definitions. 
(a) For purposes of this section, the following terms have the meanings given. 

(b) "Abuse" means actions that may, directly or indirectly, result in unnecessary costs to department programs. Abuse may involve paying for items or services when there is no legal entitlement to that payment. 

(c) "Department program" means a program funded by the Department of Education that involves the transfer or disbursement of public funds or other resources to a program participant. "Department program" includes state and federal aids or grants received by a school district or charter school or other program participant. 

(d) "Fraud" means an intentional or deliberate act to deprive another of property or money or to acquire property or money by deception or other unfair means. Fraud includes intentionally submitting false information to the department for the purpose of obtaining a greater compensation or benefit than that to which the person is legally entitled. Fraud also includes failure to correct errors in the maintenance of records in a timely manner after a request by the department. 

(e) "Investigation" means an audit, investigation, proceeding, or inquiry by the Office of the Inspector General related to a program participant in a department program. 

(f) "Program participant" means any entity or person, including associated persons, that receives, disburses, or has custody of funds or other resources transferred or disbursed under a department program. 

(g) "Waste" means practices that, directly or indirectly, result in unnecessary costs to department programs, such as misusing resources. 

(h) For purposes of this section, neither "fraud," "waste," nor "abuse" includes decisions on instruction, curriculum, personnel, or other discretionary policy decisions made by a school district, charter school, cooperative unit as defined by section 123A.24, subdivision 2, or any library, library system, or library district defined in section 134.001. 

Subd. 2. Hiring; reporting; procedures. 
(a) The commissioner, or the commissioner's designee, must hire an inspector general to lead the Office of the Inspector General. The inspector general must hire a deputy inspector general and, at the discretion of the inspector general, sufficient assistant inspectors general to carry out the duties of the office. The inspector general, deputy inspector general, and any assistant inspectors general serve in the classified service. 

(b) In a form and manner determined by the inspector general, the Office of the Inspector General must develop a public platform for the public to report instances of potential fraud, waste, or abuse of public funds administered by the department. Nothing in this paragraph shall be construed to give a member of the public standing to sue based on allegations of fraud, waste, or abuse. 

(c) The inspector general shall establish procedures for conducting investigations. Procedures adopted under this subdivision are not subject to chapter 14, including section 14.386. 

Subd. 3.Subpoenas. 
(a) For the purpose of an investigation, the inspector general or a designee may administer oaths and affirmations, subpoena witnesses, compel attendance, take evidence, and issue subpoenas duces tecum to require the production of books, papers, correspondence, memoranda, agreements, financial records, or other documents or records relevant to the investigation. 

(b) A subpoena issued pursuant to this subdivision must state that the subpoena recipient may not disclose the fact that the subpoena was issued or the fact that the requested records have been given to the inspector general, or their staff, except: 

(1) in so far as the disclosure is necessary to find and disclose the records; 

(2) pursuant to court order; or 

(3) to legal counsel for the purposes of responding to the subpoena. 

(c) The fees for service of a subpoena must be paid in the same manner as prescribed by law for a service of process issued by a district court. 

(d) The subpoena issued under this subdivision shall be enforceable through the district court in the district where the subpoena is issued. 

Subd. 4.Access to records. 
(a) For purposes of an investigation, and regardless of the data's classification under chapter 13, the Office of the Inspector General shall have access to all relevant books, accounts, documents, data, and property related to department programs that are maintained by a program participant, charter school, or government entity as defined by section 13.02. 

(b) Notwithstanding paragraph (a), the Office of the Inspector General must issue a subpoena under subdivision 3 in order to access routing and account numbers to which Department of Education funds have been disbursed. 

(c) Records requested by the Office of the Inspector General under this subdivision shall be provided in a format, place, and time frame reasonably requested by the Office of the Inspector General. 

(d) The department may enter into specific agreements with other state agencies related to records requests by the Office of the Inspector General. 

Subd. 5.Sanctions; appeal. 
(a) This subdivision does not authorize any sanction that reduces, pauses, or otherwise interrupts state or federal aid to a school district, charter school, cooperative unit as defined by section 123A.24, subdivision 2, or any library, library system, or library district defined in section 134.001. 

(b) The inspector general may recommend that the commissioner impose appropriate temporary sanctions, including withholding of payments under the department program, on a program participant pending an investigation by the Office of the Inspector General if: 

(1) during the course of an investigation, the Office of the Inspector General finds credible indicia of fraud, waste, or abuse by the program participant; 

(2) there has been a criminal, civil, or administrative adjudication of fraud, waste, or abuse against the program participant in Minnesota or in another state or jurisdiction; 

(3) the program participant was receiving funds under any contract or registered in any program administered by another Minnesota state agency, a government agency in another state, or a federal agency, and was excluded from that contract or program for reasons credibly indicating fraud, waste, or abuse by the program participant; or 

(4) the program participant has a pattern of noncompliance with an investigation. 

(c) If an investigation finds, by a preponderance of the evidence, fraud, waste, or abuse by a program participant, the inspector general may, after reviewing all facts and evidence and when acting judiciously on a case-by-case basis, recommend that the commissioner impose appropriate sanctions on the program participant. 

(d) Unless prohibited by law, the commissioner has the authority to implement recommendations by the inspector general, including imposing appropriate sanctions, temporarily or otherwise, on a program participant. Sanctions may include ending program participation, stopping disbursement of funds or resources, monetary recovery, and termination of department contracts with the participant for any current or future department program or contract. A sanction may be imposed for up to the longest period permitted by state or federal law. Sanctions authorized under this subdivision are in addition to other remedies and penalties available under law. 

(e) If the commissioner imposes sanctions on a program participant under this subdivision, the commissioner must notify the participant in writing within seven business days of imposing the sanction, unless requested in writing by a law enforcement agency to temporarily delay issuing the notice to prevent disruption of an ongoing law enforcement agency investigation. A notice of sanction must state: 

(1) the sanction being imposed; 

(2) the general allegations that form the basis for the sanction; 

(3) the duration of the sanction; 

(4) the department programs to which the sanction applies; and 

(5) how the program participant may appeal the sanction pursuant to paragraph (e). 

(f) A program participant sanctioned under this subdivision may, within 30 days after the date the notice of sanction was mailed to the participant, appeal the determination by requesting in writing that the commissioner initiate a contested case proceeding under chapter 14. The scope of any contested case hearing is limited to the sanction imposed under this subdivision. An appeal request must specify with particularity each disputed item, the reason for the dispute, and must include the name and contact information of the person or entity that may be contacted regarding the appeal. 

(g) The commissioner shall lift sanctions imposed under this subdivision if the Office of the Inspector General determines there is insufficient evidence of fraud, waste, or abuse by the program participant. The commissioner must notify the participant in writing within seven business days of lifting the sanction. 

Subd. 6.Data practices. 
(a) It is not a violation of rights conferred by chapter 13 or any other statute related to the confidentiality of government data for a government entity as defined in section 13.02 to provide data or information under this section. 

(b) The inspector general is subject to the Government Data Practices Act, chapter 13, and shall protect from unlawful disclosure data classified as not public. Data collected, created, received, or maintained by the inspector general relating to an audit, investigation, proceeding, or inquiry are subject to section 13.39. 

Subd. 7.Retaliation, interference prohibited. 
(a) An employee or other individual who discloses information to the Office of the Inspector General about fraud, waste, or abuse in department programs is protected under section 181.932, governing disclosure of information by employees. 

(b) No state employee may interfere with or obstruct an investigation authorized by this section.