HF 4914
Introduction - 94th Legislature (2025 - 2026)
Posted on 04/09/2026 02:49 p.m.
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A bill for an act
relating to state government; requiring fraud risk scoring and fraud risk score
benchmarks for grants to political subdivisions; establishing a pilot program;
requiring a report; proposing coding for new law in Minnesota Statutes, chapter
6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
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[6.94] FRAUD RISK SCORING SYSTEM.
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new text begin Subdivision 1. new text end
new text begin Definition. new text end
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For purposes of sections 6.94 to 6.96, "fraud risk score"
means a standardized numerical or categorical assessment that measures the relative risk
of fraud, waste, abuse, or mismanagement within a political subdivision based on internal
controls, financial practices, governance structures, audit findings, and other risk indicators
determined by the state auditor.
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new text begin Subd. 2. new text end
new text begin Fraud risk score required. new text end
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The state auditor must assign a fraud risk score to
every political subdivision at least once every two years, or more frequently if determined
necessary by the state auditor.
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new text begin Subd. 3. new text end
new text begin Methodology. new text end
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The state auditor must:
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(1) develop and publish a uniform fraud risk scoring methodology applicable to political
subdivisions;
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(2) periodically review and update the methodology to reflect emerging risks, best
practices in fraud prevention, and audit findings; and
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(3) provide guidance and technical assistance to political subdivisions.
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new text begin Subd. 4. new text end
new text begin Data collection. new text end
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The state auditor may require political subdivisions to submit
financial, operational, governance, and internal control information necessary to calculate
fraud risk scores. Data submitted to the state auditor under this subdivision are subject to
applicable data practices laws.
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new text begin Subd. 5. new text end
new text begin Public dashboard. new text end
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(a) The state auditor must establish and maintain a publicly
accessible online dashboard that displays fraud risk scores for each political subdivision.
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(b) At a minimum, the dashboard must include:
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(1) the most recent fraud risk score for each political subdivision;
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(2) a label or graphic representing the score;
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(3) the date the score was issued;
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(4) an explanation of the scoring scale and the benchmark established under section
6.95; and
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(5) historical scores, if available.
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Sec. 2.
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[6.95] FRAUD RISK BENCHMARK FOR GRANT ELIGIBILITY.
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new text begin Subdivision 1. new text end
new text begin Benchmark established. new text end
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The state auditor, in consultation with the
commissioner of management and budget and the Legislative Audit Commission, must
establish a minimum acceptable fraud risk benchmark score. The benchmark must represent
an acceptable level of fraud risk and internal control maturity, as determined by the state
auditor.
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new text begin Subd. 2. new text end
new text begin Grant eligibility condition. new text end
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Except as provided in subdivision 3, a political
subdivision must attain or exceed the fraud risk benchmark established under subdivision
1 to be eligible for a grant from any state department or agency.
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new text begin Subd. 3. new text end
new text begin Corrective action plans. new text end
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A political subdivision that fails to achieve the
benchmark score may submit a corrective action plan to the state auditor. The plan must
identify deficiencies, proposed remediation steps, and a timeline for improvement. The state
auditor may grant temporary grant eligibility to the political subdivision if the state auditor
determines that the corrective action plan is sufficient.
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Sec. 3.
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[6.96] RULEMAKING.
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The state auditor may adopt rules necessary to implement sections 6.94 and 6.95,
including fraud risk scoring criteria, reporting formats, and corrective action plan
requirements.
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Sec. 4. new text begin PILOT PROGRAM.
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new text begin Subdivision 1. new text end
new text begin Pilot required. new text end
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The state auditor must establish a pilot program to test
and refine the fraud risk scoring system required under Minnesota Statutes, sections 6.94
to 6.96.
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new text begin Subd. 2. new text end
new text begin Duration. new text end
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The pilot program must operate for a period of not less than 18
months and not more than 24 months following the effective date of this act.
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new text begin Subd. 3. new text end
new text begin Scope and limitations. new text end
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(a) During the pilot program, fraud risk scores may not
be used to determine eligibility for grant funding under Minnesota Statutes, section 6.95,
and the state auditor must clearly indicate that any fraud risk scores posted on the public
dashboard are pilot results and not final determinations.
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(b) Participation in the pilot program must not result in adverse funding consequences
for participating political subdivisions.
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new text begin Subd. 4. new text end
new text begin Evaluation and adjustment. new text end
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(a) The state auditor must evaluate the pilot
program and may revise the fraud risk scoring methodology, data requirements, and
benchmarks based on pilot results.
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(b) The state auditor must consult with political subdivisions and relevant stakeholders
when making revisions under this subdivision. The state auditor must consult the Legislative
Audit Commission before adjusting the grant eligibility benchmark.
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new text begin Subd. 5. new text end
new text begin Report. new text end
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No later than 60 days after completion of the pilot program, the state
auditor must submit a report to the chairs and ranking minority members of the legislative
committees with jurisdiction over local government. The report must include a summary
of pilot findings and any resulting modifications to the fraud risk scoring methodology or
benchmark score.
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Sec. 5. new text begin EFFECTIVE DATE.
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(a) Unless otherwise specified, this act is effective July 1, 2026.
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(b) Section 1, subdivision 2 is effective July 1 following the state auditor's submission
of a pilot program report under section 4, subdivision 5.
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(c) Section 2, subdivision 2 is effective July 1 following the effective date of paragraph
(b).
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(d) The state auditor must promptly notify the revisor of statutes of the dates that section
1, subdivision 2, and section 2, subdivision 2, take effect.
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