SF 4603

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/19/2026 09:30 a.m.

A bill for an act
relating to human services; requiring comparison of actual expenditures in
forecasted programs to projected spending from prior forecasts; requiring notice
to the legislative auditor when actual expenditures deviate from projected spending
by a specified amount; establishing contingent cancellation of certain forecasted
programs and services if actual expenditures deviate from projected spending by
a specified amount; providing direction to the commissioner of management and
budget regarding how to account for contingent cancellations of forecasted
programs and services when preparing certain forecasts; requiring notice to certain
committees; appropriating money; amending Minnesota Statutes 2024, sections
3.972, subdivisions 2a, 2b, by adding a subdivision; 16A.103, by adding a
subdivision; 142A.03, by adding subdivisions; 256.01, by adding subdivisions.

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

Section 1.

Minnesota Statutes 2024, section 3.972, subdivision 2a, is amended to read:

Subd. 2a.

Audits of Department of Human Services.

new text begin (a) new text end To ensure effective legislative
oversight and accountability, the legislative auditor shall give high priority to auditing the
programs, services, and benefits administered by the Department of Human Services. As
resources permit, the legislative auditor shall track and assess expenditures throughout the
human service delivery system, from the department to the point of service delivery, and
determine whether human services programs, services, and benefits are being provided
cost-effectively and only to eligible individuals and organizations in compliance with
applicable legal requirements.

new text begin (b) As resources permit, the legislative auditor shall audit the programs and services
identified by the commissioner of human services in the commissioner's notice to the
legislative auditor under section 256.01, subdivision 45, and shall determine the causes of
the deviation in actual expenditures from projected expenditures. The legislative auditor
may forgo an audit and accept the explanation of the deviation provided by the commissioner
if the legislative auditor determines that the commissioner's explanation reasonably explains
the entire deviation.
new text end

Sec. 2.

Minnesota Statutes 2024, section 3.972, subdivision 2b, is amended to read:

Subd. 2b.

Audits of managed care organizations.

(a) The legislative auditor shall audit
each managed care organization that contracts with the commissioner of human services to
provide health care services under sections 256B.69, 256B.692, and 256L.12. The legislative
auditor shall design the audits to determine if a managed care organization used the public
money in compliance with federal and state laws, rules, and in accordance with provisions
in the managed care organization's contract with the commissioner of human services. The
legislative auditor shall determine the schedule and scope of the audit work and may contract
with vendors to assist with the audits. The managed care organization must cooperate with
the legislative auditor and must provide the legislative auditor with all data, documents, and
other information, regardless of classification, that the legislative auditor requests to conduct
an audit. The legislative auditor shall periodically report audit results and recommendations
to the Legislative Audit Commission and the chairs and ranking minority members of the
legislative committees with jurisdiction over health and human services policy and finance.

(b) For purposes of this subdivision, a "managed care organization" means a
demonstration provider as defined under section 256B.69, subdivision 2.

new text begin (c) As resources permit, the legislative auditor shall audit each managed care organization
to determine the cause of the deviation in actual expenditures from projected expenditures
for the services identified by the commissioner of human services in the commissioner's
notice to the legislative auditor under section 256.01, subdivision 45. The legislative auditor
may forgo an audit and accept the explanation of the deviation provided by the commissioner
if the legislative auditor determines that the commissioner's explanation reasonably explains
the entire deviation. For audits conducted under this paragraph, the requirements of paragraph
(a) apply.
new text end

Sec. 3.

Minnesota Statutes 2024, section 3.972, is amended by adding a subdivision to
read:

new text begin Subd. 2e. new text end

new text begin Audits of Department of Children, Youth, and Families. new text end

new text begin As resources
permit, the legislative auditor shall audit the programs and services identified by the
commissioner of children, youth, and families in the commissioner's notice to the legislative
auditor under section 142A.03, subdivision 36, and determine the causes of the deviation
in actual expenditures from projected expenditures. The legislative auditor may forgo an
audit and accept the explanation of the deviation provided by the commissioner if the
legislative auditor determines that the commissioner's explanation reasonably explains the
entire deviation.
new text end

Sec. 4.

Minnesota Statutes 2024, section 16A.103, is amended by adding a subdivision to
read:

new text begin Subd. 1k. new text end

new text begin Contingent expenditure reductions. new text end

new text begin In preparing a February forecast during
the first fiscal year of a biennium under subdivision 1, notwithstanding the continuation of
current law assumption under subdivision 1a, the commissioner must not include estimates
of the expenditure reduction that would result beginning July 1 of the second year of the
biennium (1) from actions taken by the commissioner of human services under section
256.01, subdivision 46; or (2) from actions taken by the commissioner of children, youth,
and families under section 142A.03, subdivision 37. For the purposes of subsequent forecasts,
the commissioner must treat actions taken by the commissioner of human services under
section 256.01, subdivision 46, or by the commissioner of children, youth, and families
under section 142A.03, subdivision 37, in the same manner as an act finally enacted after
a February forecast.
new text end

Sec. 5.

Minnesota Statutes 2024, section 142A.03, is amended by adding a subdivision to
read:

new text begin Subd. 36. new text end

new text begin Forecast trend analysis and notice. new text end

new text begin (a) Beginning January 15, 2027, and by
the 15th calendar day following the end of each quarter thereafter, the commissioner must
provide an accounting of actual expenditures in all forecasted programs for the prior quarter,
itemized by service. The commissioner must update the accounting of actual expenditures
from prior quarters as necessary. The commissioner must post the quarterly actual
expenditures on the department's website.
new text end

new text begin (b) With each quarterly accounting of actual expenditures, the commissioner must
compare the actual expenditures by service to the forecasted expenditures from the four
most recent February forecasts, after accounting for any increases attributable to changes
in law that may have occurred between the February forecasts. The commissioner must post
the comparison of actual expenditures to the four most recent February forecasts on the
department's website and include data visualizations of the comparisons using data
visualization best practices. The commissioner must also include at least ten years of
historical actual expenditures by program and by service.
new text end

new text begin (c) If in any given quarter the actual expenditures for a program or service exceed the
projected spending for that program or service in the most recent February forecast by more
than five percent, after accounting for any increases attributable to changes in law during
intervening legislative sessions, the commissioner must note the deviation from projected
spending on the department's website, provide notice of the deviation to the chairs and
ranking minority members of the legislative committees with jurisdiction over the program
or service, and provide notice of the deviation to the legislative auditor.
new text end

new text begin (d) For an expenditure deviation described in paragraph (c), the commissioner may
include with the posted accounting of actual expenditures a narrative providing the
commissioner's explanation of the deviation from the projected expenditures. The
commissioner may also include the narrative in the commissioner's notice to the chairs and
ranking minority members of the relevant legislative committees and in the commissioner's
notice to the legislative auditor.
new text end

new text begin (e) If an accounting of actual expenditures released in January of the first fiscal year of
a biennium reveals that since the most recent February forecast, after accounting for any
increases attributable to changes in law during intervening legislative sessions, the actual
expenditures for a program or service exceeded the projected expenditures for that program
or service by more than ten percent, the commissioner must provide special notice of the
deviation to the chairs and ranking minority members of the legislative committees with
jurisdiction over the program or service, the chair and ranking minority member of the
senate Finance Committee, the chair and ranking minority member of the house of
representatives Ways and Means Committee, and the majority and minority caucus leaders
of both legislative bodies. Before March 31 in a year in which the commissioner sends a
special notice under this paragraph, the commissioner must provide a second special notice
to the same individuals to whom the commissioner sent the first special notice. In the second
special notice, the commissioner must detail the consequences that will result from the
commissioner's actions under subdivision 37 in the event the legislature does not act to
prevent the commissioner from taking those actions.
new text end

Sec. 6.

Minnesota Statutes 2024, section 142A.03, is amended by adding a subdivision to
read:

new text begin Subd. 37. new text end

new text begin Contingent program and service terminations and modifications. new text end

new text begin (a)
Except as otherwise provided in this subdivision, if an accounting of actual expenditures
prepared according to subdivision 36 and released in January of the first fiscal year of a
biennium reveals that since the most recent February forecast the actual expenditures for a
program or service, after accounting for any increases attributable to changes in law during
intervening legislative sessions, exceeded the projected spending for that program or service
by more than ten percent, the commissioner must terminate the program or service effective
July 1 of the second year of the biennium. If the termination of the program or service
requires federal approval, the commissioner must initiate the process to seek federal approval
by March 31.
new text end

new text begin (b) This subdivision does not apply if a finally enacted act explicitly directs the
commissioner not to take the actions required under this subdivision.
new text end

Sec. 7.

Minnesota Statutes 2024, section 256.01, is amended by adding a subdivision to
read:

new text begin Subd. 45. new text end

new text begin Forecast trend analysis and notice. new text end

new text begin (a) For purposes of this subdivision, the
following terms have the meanings given:
new text end

new text begin (1) "demonstration provider" has the meaning given in section 256B.69, subdivision 2;
and
new text end

new text begin (2) "service," when used in the context of the medical assistance program, means any
service listed in section 256B.0625, any service defined in a home and community-based
waiver plan, and any service available through a 1115 demonstration waiver.
new text end

new text begin (b) Beginning January 15, 2027, and by the 15th calendar day following the end of each
quarter thereafter, the commissioner of human services must provide an accounting of actual
expenditures in all forecasted programs for the prior quarter, itemized by service. The
commissioner must include aggregate demonstration provider spending by service and
merge aggregate demonstration provider spending for each service with the aggregate
fee-for-service spending for the same service. The commissioner must update the accounting
of actual expenditures from prior quarters as necessary. The commissioner must post the
quarterly actual expenditures on the department's website.
new text end

new text begin (c) With each quarterly accounting of actual expenditures, the commissioner must
compare the actual expenditures by service to the forecasted expenditures from the four
most recent February forecasts, after accounting for any increases attributable to changes
in law that may have occurred between the February forecasts. The commissioner must post
the comparison of actual expenditures to the four most recent February forecasts on the
department's website and include data visualizations of the comparisons using data
visualization best practices. The commissioner must also include at least ten years of
historical actual expenditures by program and by service.
new text end

new text begin (d) If in any given quarter the actual expenditures for a program or service exceed the
projected spending for that program or service in the most recent February forecast by more
than five percent, after accounting for any increases attributable to changes in law during
intervening legislative sessions, the commissioner must note the deviation from projected
spending on the department's website, provide notice of the deviation to the chairs and
ranking minority members of the legislative committees with jurisdiction over the program
or service, and provide notice of the deviation to the legislative auditor.
new text end

new text begin (e) For an expenditure deviation described in paragraph (d), the commissioner may
include with the posted accounting of actual expenditures a narrative providing the
commissioner's explanation of the deviation from the projected expenditures. The
commissioner may also include the narrative in the commissioner's notice to the chairs and
ranking minority members of the relevant legislative committees and in the commissioner's
notice to the legislative auditor.
new text end

new text begin (f) If an accounting of actual expenditures released in January of the first fiscal year of
a biennium reveals that since the most recent February forecast, after accounting for any
increases attributable to changes in law during intervening legislative sessions, the actual
expenditures for a program or service exceeded the projected expenditures for that program
or service by more than ten percent, the commissioner must provide special notice of the
deviation to the chairs and ranking minority members of the legislative committees with
jurisdiction over the program or services, the chair and ranking minority member of the
senate Finance Committee, the chair and ranking minority member of the house of
representatives Ways and Means Committee, and the majority and minority caucus leaders
of both legislative bodies. Before March 31 in a year in which the commissioner sends a
special notice under this paragraph, the commissioner must provide a second special notice
to the same individuals to whom the commissioner sent the first special notice. In the second
special notice, the commissioner must detail the consequences that will result from the
commissioner's actions under subdivision 46 in the event the legislature does not act to
prevent the commissioner from taking those actions.
new text end

Sec. 8.

Minnesota Statutes 2024, section 256.01, is amended by adding a subdivision to
read:

new text begin Subd. 46. new text end

new text begin Contingent program and service terminations and modifications. new text end

new text begin (a)
Except as otherwise provided in this subdivision, if an accounting of actual expenditures
prepared according to subdivision 45 and released in January of the first fiscal year of a
biennium reveals that since the most recent February forecast the actual expenditures for a
program or service exceeded the projected expenditures for that program or service by more
than ten percent, after accounting for any increases attributable to changes in law during
intervening legislative sessions, the commissioner must terminate the program or service
effective July 1 of the second year of the biennium. If the termination of the program or
service requires federal approval, the commissioner must initiate the process to seek federal
approval by the last day of March.
new text end

new text begin (b) Paragraph (a) does not apply to mandatory medical assistance benefits. If the
commissioner determines that actual expenditures for a mandatory medical assistance benefit
exceed the projected spending for that program or service in the most recent February
forecast by more than ten percent, after accounting for any increases attributable to changes
in law during any intervening legislative sessions, the commissioner must, in the aggregate,
prospectively reduce payment rates effective July 1 of the second year of the biennium for
medical assistance providers of the service to eliminate any additional growth in actual
expenditures for the mandatory benefit. If the payment reductions require federal approval,
the commissioner must initiate the process to seek federal approval by the last day of March.
new text end

new text begin (c) This subdivision does not apply if a finally enacted act explicitly directs the
commissioner not to take the actions required under this subdivision.
new text end

Sec. 9. new text begin APPROPRIATION; EVALUATION OF DEVIATIONS FROM PROJECTED
SPENDING.
new text end

new text begin $....... in fiscal year 2027 is appropriated from the general fund to the legislative auditor
for evaluations of deviations from projected spending under Minnesota Statutes, section
3.972, subdivisions 2a, 2b, and 2e.
new text end

Sec. 10. new text begin APPROPRIATION; CHILDREN, YOUTH, AND FAMILIES FORECAST
TREND ANALYSIS.
new text end

new text begin $....... in fiscal year 2027 is appropriated from the general fund to the commissioner of
children, youth, and families for forecast trend analyses under Minnesota Statutes, section
142A.03, subdivision 36.
new text end

Sec. 11. new text begin APPROPRIATION; HUMAN SERVICES FORECAST TREND ANALYSIS.
new text end

new text begin $....... in fiscal year 2027 is appropriated from the general fund to the commissioner of
human services for forecast trend analyses under Minnesota Statutes, section 256.01,
subdivision 45.
new text end