2nd Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to legislature; prescribing the powers and 1.3 duties of the legislative audit commission and the 1.4 legislative auditor; making various technical changes; 1.5 amending Minnesota Statutes 1998, sections 3.97; 1.6 3.971; 3.974; 3.975; 6.74; 10.48; 13.46, subdivision 1.7 8; 16A.27, subdivision 2; 37.06; 37.07; 85A.02, 1.8 subdivision 5c; 89.05; 161.08; 192.551; 352.03, 1.9 subdivision 6; 353.03, subdivision 3a; 353A.05, 1.10 subdivision 1; 354.06, subdivision 2a; 360.015, 1.11 subdivision 19; 574.20; and 609.456; Laws 1990, 1.12 chapter 535, section 5; repealing Minnesota Statutes 1.13 1998, sections 3.973; 116.072, subdivision 12; 1.14 469.207, subdivision 1; and 574.02. 1.15 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.16 Section 1. Minnesota Statutes 1998, section 3.97, is 1.17 amended to read: 1.18 3.97 [AUDIT POLICY; CREATION OF COMMISSION; TRANSFER OF 1.19 FUNCTIONS OF PUBLIC EXAMINER; DUTIES OF LEGISLATIVE AUDITOR; 1.20 ACCESS TO DATA.] 1.21 Subdivision 1. Continuous legislative review of the
effect1.22 of grant-in-aid programs, thespending of public funds and their1.23 financing at all levels of government is required in the public 1.24 interest to enable the enactment of appropriate legislation. 1.25 Subd. 2. The legislative audit commission is created. The1.26 commissionconsists of: 1.27 (1) the majority leader of the senate and the president of 1.28 the senate or their designees; 1.29 (2) the chair of the senate committee on taxes or a1.30 designee who is a member of the committee;2.1 (3)the chair of the senate committee on governmental 2.2 operations and reform or a designee who is a member of the 2.3 committee; 2.4 (4)(3) thea chair of thea senate committee on 2.5 finance or a designee who is a member of the2.6 committeedesignated by the majority leader; 2.7 (5)(4) fivefour members of the senate appointed by the 2.8 senate minority leader; 2.9 (6)(5) the speaker of the house and the chair of the house 2.10 committee on rules or their designees; 2.11 (7) the chair of the house committee on taxes or a designee2.12 who is a member of the committee;2.13 (8)(6) the chair of the house committee on governmental 2.14 operations and gaming or a designee who is a member of the 2.15 committee; 2.16 (9)(7) the chair of the house ways and means committee or 2.17 a designee who is a member of the committee; and 2.18 (10)(8) fivefour members of the house appointed by the 2.19 house minority leader. 2.20 The appointed members of the commission shall serve for a term 2.21 commencing upon appointment and expiring at the opening of the 2.22 next regular session of the legislature in the odd-numbered year 2.23 and until a successor is appointed. A vacancy in the membership 2.24 of the commission shall be filled for the unexpired term in a 2.25 manner that will preserve the representation established by this 2.26 subdivision. 2.27 The commission shall meet in January of each odd-numbered 2.28 year to elect its chair and other officers as it may determine 2.29 necessary. A chair shall serve a two-year term, expiring on 2.30 January 1 in the odd-numbered year following election, and until 2.31 a successor is elected. The chair shall alternate biennially 2.32 between the senate and the house. The commission shall meet at 2.33 the call of the chair or the executive secretary. The members 2.34 shall serve without compensation but be reimbursed for their 2.35 reasonable expenses as members of the legislature. The 2.36 commission may exercise the powers prescribed by section 3.153. 3.1 Subd. 3. The department of public examiner is transferred 3.2 from the executive to the legislative branch. 3.3 Subd. 4. The legislative auditor is the executive 3.4 secretary of the commission. The legislative auditor shall be 3.5 appointed by the commission for a six-year term and serve in the 3.6 unclassified service. When in office, the legislative auditor 3.7 shallmay not at any time while in officehold any other public 3.8 office. The legislative auditor shallmay not be removed from 3.9 office before the expiration of the term of service except for 3.10 cause after public hearing. 3.11 Subd. 5. The legislative auditor shall establish a 3.12 financial audits division and a program evaluation division to 3.13 fulfill the duties prescribed in this section. Each division 3.14 shallmust be supervised by a deputy auditor, appointed by the 3.15 legislative auditor, with the approval of the commission, for a 3.16 term coterminous with the legislative auditor's term. The 3.17 deputy auditors may be removed before the expiration of their 3.18 terms only for cause. The legislative auditor and deputy 3.19 auditors may each appoint a confidential secretary to serve at 3.20 pleasure. The commission shall fix thesalaries and benefits of 3.21 the legislative auditor, deputy auditors and confidential 3.22 secretaries shall be determined by the compensation plan 3.23 approved by the legislative coordinating commission. The deputy 3.24 auditors may perform and exercise the powers, duties and 3.25 responsibilities imposed by law on the legislative auditor when 3.26 authorized by the legislative auditor. The deputy auditors and 3.27 the confidential secretaries serve in the unclassified civil 3.28 service, but all other employees of the legislative auditor are 3.29 in the classified civil service. While in office, a person 3.30 appointed deputy for the financial audit division must hold an 3.31 active license as a certified public accountant. 3.32 Subd. 6. All the powers, duties, and responsibilities of 3.33 the department of public examiner relating to the state of 3.34 Minnesota, its departments and agencies as described in 3.35 Minnesota Statutes 1971, section 215.03, and any other law 3.36 concerning powers, duties, and responsibilities of the public 4.1 examiner not otherwise dealt with by Laws 1973, chapter 492, are 4.2 transferred to the legislative auditor. Nothing in this 4.3 subdivision shall supersede the powers conferred upon the 4.4 commissioner of finance under section 16A.055. 4.5 Subd. 7. In addition to the legislative auditing duties 4.6 concerning state financial matters, the legislative auditor 4.7 shall also exercise and perform duties prescribed by rule of the 4.8 legislature or either body of it or by the commission. The4.9 legislative auditor shall review department policies and4.10 evaluate projects or programs requested by the commission. Any4.11 standing legislative committee having legislative jurisdiction4.12 may request the commission to review projects or programs.4.13 Subd. 8. The legislature may, by rule, provide to the 4.14 legislative auditor the testimonial powers that are conferred by 4.15 law on legislative standing commissions or committees. 4.16 Subd. 9. The legislative auditor is subject to the 4.17 Government Data Practices Act, chapter 13, and shall protect 4.18 from unlawful disclosure data classified as not public. If data 4.19 provided by the legislative auditor to the commission is 4.20 disseminated by the commission or its members or agents in 4.21 violation of section 13.05, subdivision 4, the commission is 4.22 subject to liability under section 13.08, subdivisions 1 and 3. 4.23 Subd. 10. Members of the commission have access to data 4.24 that is collected or used by the legislative auditor and 4.25 classified as not public or as private or confidential only as 4.26 authorized by resolution of the commission. The commission 4.27 shallmay not authorize its members to have access to private or 4.28 confidential data on individuals collected or used in connection 4.29 with the collection of any tax. 4.30 Subd. 11. (a) "Audit" as used in this subdivision means a 4.31 financial audit, areview, program evaluation, abest practices 4.32 review, or aninvestigation. Data relating to an audit are not 4.33 public or with respect to data on individuals are confidential 4.34 until the final report of the audit has been publishedreleased 4.35 by the legislative auditor or the audit is no longer being 4.36 actively pursued. Upon release of a final audit report by the 5.1 legislative auditor, data relating to an audit are public except 5.2 data otherwise classified as not public. 5.3 (b) Data that support the conclusions of therelated to an 5.4 audit but not published in the audit report and that the 5.5 legislative auditor reasonably believes will resultbe used in 5.6 litigation are not public and with respect to data on 5.7 individuals are confidential until the litigation has been 5.8 completed or is no longer being actively pursued. 5.9 (c) Data on individuals that could reasonably be used to 5.10 determine the identity of an individual supplying data for an 5.11 audit are private if the data supplied by the individual were 5.12 needed for an audit and the individual would not have provided 5.13 the data to the legislative auditor without an assurance that 5.14 the individual's identity would remain private, or the 5.15 legislative auditor reasonably believes that the subject would 5.16 not have provided the data. 5.17 (d) The definitions of terms provided in section 13.02 5.18 apply for purposes of this subdivision. 5.19 Subd. 11a. If, before releasing a report, the legislative 5.20 auditor provides a person with data relating to the audit for 5.21 the purpose of review and verification of the data, the person 5.22 must protect the data from unlawful disclosure or be subject to 5.23 the penalties and liabilities provided in sections 13.08 and 5.24 13.09. 5.25 Subd. 12. The commission shall periodically select topics 5.26 for the legislative auditor to evaluate. Topics may include any 5.27 agency, program, or activity established by law to achieve a 5.28 state purpose, or any topic that affects the operation of state 5.29 government, but the commission shall give primary consideration 5.30 to topics that are likely, upon examination, to produce 5.31 recommendations for cost savings, increased productivity, or the 5.32 elimination of duplication among public agencies. Legislators 5.33 and legislative committees may suggest topics for evaluation, 5.34 but the legislative auditor shall only conduct evaluations 5.35 approved by the commission. 5.36 Sec. 2. Minnesota Statutes 1998, section 3.971, is amended 6.1 to read: 6.2 3.971 [POWERS AND DUTIES OF LEGISLATIVE AUDITOR.] 6.3 Subdivision 1. To perform financial auditsThe legislative 6.4 auditor shall postaudit and make a complete examination and6.5 verification of all accounts, records, inventories, vouchers,6.6 receipts, funds, securities, and other assets ofaudit the 6.7 financial statements of the state of Minnesota required by 6.8 section 16A.50 and, as resources permit, shall audit Minnesota 6.9 state colleges and universities, the University of 6.10 Minnesota, allstate agencies, departments, boards, commissions, 6.11 courts, and other state agencies at least once a year, if money6.12 and personnel permit, and oftener if deemed necessary or as6.13 directed by the legislature or the legislative audit6.14 commission. Audits may include detailed checking of every6.15 transaction or test checking as the legislative auditor deems6.16 best. The books of the state treasurer and commissioner of6.17 finance may be examined monthly.organizations subject to audit 6.18 by the legislative auditor, including the state agricultural 6.19 society, agricultural utilization research institute, Minnesota 6.20 Technology, Inc., Minnesota historical society, labor 6.21 interpretive center, Minnesota partnership for action against 6.22 tobacco, metropolitan sports facilities commission, metropolitan 6.23 airports commission, and metropolitan mosquito control 6.24 district. Financial audits must be conducted according to 6.25 generally accepted government auditing standards. The 6.26 legislative auditor shall see that all provisions of law 6.27 respecting the appropriate and economic use of public funds are 6.28 complied with by alland may, as part of a financial audit or 6.29 separately, investigate allegations of noncompliance by 6.30 employees of departments and agencies of the state 6.31 government and the other organizations listed in this 6.32 subdivision. 6.33 A copy of all postaudits, reports, and results of6.34 examinations made by the legislative auditor shall be deposited6.35 with the legislative reference library.6.36 Subd. 2. To perform program evaluation,The legislative 7.1 auditor shall conduct program evaluations to determine the 7.2 degree to which the activities and programs entered into or 7.3 funded by the state are accomplishing their goals and 7.4 objectives, including a critical analysis of goals and 7.5 objectives, measurement of program results and effectiveness, 7.6 alternative means of achieving the same results, and efficiency 7.7 in the allocation of resources. The legislative auditor shall 7.8 recommend ways to improve the effectiveness of the programs, 7.9 reduce the cost of providing state services, and toeliminate 7.10 services of one agency that overlap with or duplicate the 7.11 services performed by another agency. At the direction of the 7.12 commission the legislative auditor may performconduct program 7.13 evaluations of any state department, board, commission, or 7.14 agency and any metropolitan agency, board, or commission created 7.15 under chapter 473; or any program or activity established or 7.16 funded, in whole or in part, by the state. After an evaluation 7.17 report has been released, the legislative auditor may 7.18 periodically conduct a follow-up review to assess what changes 7.19 have occurred. 7.20 Subd. 4. (a) To perform best practices reviews,The 7.21 legislative auditor through the program evaluation division7.22 shall conduct best practices reviews that examine the procedures 7.23 and practices used to deliver local government 7.24 services, including those of municipalities and counties,7.25 determine the methods of local government service delivery, 7.26 identify variations in cost and effectiveness, and identify 7.27 practices to save money or provide more effective service 7.28 delivery. The legislative auditor shall recommend to local 7.29 governments service delivery methods and practices to improve 7.30 the cost-effectiveness of services. The legislative auditor and 7.31 the board of government innovation and cooperation shall notify 7.32 each other of projects being conducted relating to improving 7.33 local government services. 7.34 (b) The commission shall identifyapprove local government 7.35 services to be reviewed with advice from an advisory council 7.36 appointed by the legislative auditor and consisting of: 8.1 (1) three representatives from the Association of Minnesota 8.2 Counties; 8.3 (2) three representatives from the League of Minnesota 8.4 Cities; 8.5 (3) two representatives from the Association of 8.6 Metropolitan Municipalities; 8.7 (4) one representative from the Minnesota Association of 8.8 Townships; and 8.9 (5) one representative from the Minnesota Association of 8.10 School Administrators. 8.11 (c) This subdivision expires June 30, 1999.8.12 Sec. 3. Minnesota Statutes 1998, section 3.974, is amended 8.13 to read: 8.14 3.974 [TO FILE WRITTEN REPORTS.] 8.15 For each audit done, evaluation, or other review completed, 8.16 the legislative auditor shall fileprovide a written report with8.17 to the department, agency, society, or association8.18 concerned,organization or individual audited, evaluated, or 8.19 reviewed; the legislative reference library; and the legislative 8.20 audit commission for its consideration and action. 8.21 Each audit report shall set forth:8.22 (1) whether all funds have been expended for the purposes8.23 authorized in their appropriation;8.24 (2) whether all receipts have been accounted for and paid8.25 into the state treasury as required by law;8.26 (3) all illegal and unbusinesslike practices, if any;8.27 (4) an assessment of the financial control practices used8.28 in the agency, a measurement of performance, and recommendations8.29 for improved effectiveness; and8.30 (5) other data, information, and recommendations as the8.31 legislative auditor may deem advisable and necessary.8.32 Sec. 4. Minnesota Statutes 1998, section 3.975, is amended 8.33 to read: 8.34 3.975 [DUTIES WHEN VIOLATIONSMISUSE OF PUBLIC MONEY OR 8.35 OTHER RESOURCES ARE DISCOVERED.] 8.36 If a legislative auditor's examination discloses 9.1 malfeasance, misfeasance, or nonfeasance in office on the part9.2 of an officer or employee, a copy of the report shall be signed9.3 and verified, and it shall be the duty ofmisuse of public money 9.4 or other public resources, the legislative auditor toshall file 9.5 thea report with the legislative audit commission and, the 9.6 attorney general, and the appropriate county attorney. It shall9.7 be the duty ofThe attorney general to institute and prosecute9.8 civil proceedings against the delinquent officer or employee, or9.9 upon the officer's or employee's official bond, or both, as9.10 appropriate to secure to the state theshall seek recovery of 9.11 funds ormoney and other assets misappropriatedresources as the 9.12 evidence may warrant. The attorney generalcounty attorney 9.13 shall cause criminal proceedings to be instituted by the proper9.14 authoritiesas the evidence may warrant. 9.15 Sec. 5. Minnesota Statutes 1998, section 6.74, is amended 9.16 to read: 9.17 6.74 [INFORMATION COLLECTED FROM LOCAL GOVERNMENTS.] 9.18 The state auditor, or a designated agent, shall collect 9.19 annually from all city, county, and other local units of 9.20 government, information as to the assessment of property, 9.21 collection of taxes, receipts from licenses and other sources, 9.22 the expenditure of public funds for all purposes, borrowing, 9.23 debts, principal and interest payments on debts, and such other 9.24 information as may be needful. The data shall be supplied upon 9.25 blanks prescribed by the state auditor, and all public officials 9.26 so called upon shall fill out properly and return promptly all 9.27 blanks so transmitted. The state auditor or assistants, may 9.28 examine local records in order to complete or verify the 9.29 information. Copies of all reports so received shall be9.30 forwarded by the state auditor to the legislative auditor.9.31 Sec. 6. Minnesota Statutes 1998, section 10.48, is amended 9.32 to read: 9.33 10.48 [EXPENSE REPORTS.] 9.34 The house of representatives and senate shall by rule 9.35 require detailed quarterly reports of expenditures by the house 9.36 of representatives and senate to their respective committees on 10.1 rules and legislative administration. Each constitutional10.2 officer, the district courts, court of appeals, and supreme10.3 court shall submit detailed quarterly reports of their10.4 expenditures to the legislative auditor.These reports are 10.5 public information. 10.6 Sec. 7. Minnesota Statutes 1998, section 13.46, 10.7 subdivision 8, is amended to read: 10.8 Subd. 8. [ACCESS FOR AUDITING.] To the extent required by 10.9 state or federal law, representatives of federal, state, or 10.10 local agencies shall have access to data maintained by public or 10.11 private community mental health centers, mental health divisions 10.12 of counties, and other providers under contract to deliver 10.13 mental health services which is necessary to achieve the purpose 10.14 of auditing. Public or private community mental health centers, 10.15 mental health divisions of counties, and other providers under 10.16 contract to deliver mental health services shall not permit this 10.17 data to identify any particular patient or client by name or 10.18 contain any other unique personal identifier , except data10.19 provided to the legislative auditor. Notwithstanding any10.20 statute or rule to the contrary, and solely for the purposes of10.21 conducting an audit approved by the legislative audit commission10.22 in 1988, the legislative auditor shall be given access to all10.23 data, records, and files classified as not public. The10.24 legislative auditor shall maintain all data collected under this10.25 subdivision in accordance with chapter 13 and may not disclose10.26 data that identify a patient or client by name or that contain10.27 any other personal identifier. 10.28 Sec. 8. Minnesota Statutes 1998, section 16A.27, 10.29 subdivision 2, is amended to read: 10.30 Subd. 2. [DAILY REPORT.] By 9:00 a.m. every business day, 10.31 a depository holding a total of over $100,000 in 10.32 non-interest-bearing state deposits shall report the balances as 10.33 of the close of the last business day to the treasurer and the 10.34 commissioner. The commissioner shall record the balances ,and 10.35 send a copy of them to the legislative reference library , and10.36 report them monthly to the legislative audit commission. 11.1 Sec. 9. Minnesota Statutes 1998, section 37.06, is amended 11.2 to read: 11.3 37.06 [SECRETARY; LEGISLATIVE AUDITOR; DUTIES; REPORT.] 11.4 The secretary shall keep a complete record of the 11.5 proceedings of the annual meetings of the state agricultural 11.6 society and all meetings of the board of managers and any 11.7 committee of the board, keep all accounts of the society other 11.8 than those kept by the treasurer of the society, and perform 11.9 other duties as directed by the board of managers. On or before 11.10 December 31 each year, the secretary shall report to the 11.11 governor for the fiscal year ending October 31 all the 11.12 proceedings of the society during the current year and its 11.13 financial condition as appears from its books. This report must 11.14 contain a full, detailed statement of all receipts and 11.15 expenditures during the year. 11.16 The books and accounts of the society for the fiscal year 11.17 must be examined and audited annually by the legislative 11.18 auditor. The cost of the examination must be paid by the 11.19 society to the state and credited to the legislative auditor's11.20 revolvinggeneral fund. 11.21 A summary of this examination, certified by the legislative 11.22 auditor, must be appended to the secretary's report, along with 11.23 the legislative auditor's recommendations and the proceedings of 11.24 the first annual meeting of the society held following the 11.25 secretary's report, including addresses made at the meeting as 11.26 directed by the board of managers. The summary, 11.27 recommendations, and proceedings must be printed in the same 11.28 manner as the reports of state officers. Copies of the report 11.29 must be printed annually and distributed as follows: to each 11.30 society or association entitled to membership in the society, to 11.31 each newspaper in the state, and the remaining copies as 11.32 directed by the board of managers. 11.33 Sec. 10. Minnesota Statutes 1998, section 37.07, is 11.34 amended to read: 11.35 37.07 [MONTHLY STATEMENTS BY SECRETARY; PURCHASES, 11.36 EXPENDITURES.] 12.1 The secretary of the state agricultural society shall 12.2 prepare a signed statement each month summarizing receipts and 12.3 expenditures for the preceding month, which must be approved by 12.4 the president or a vice-president of the board of managers. The 12.5 secretary's affidavit must be attached to this statement. The 12.6 affidavit must state: 12.7 (1) that all articles were purchased by or under the 12.8 secretary's direction, and that to the secretary's best 12.9 information and belief, all articles purchased by the board of 12.10 managers were purchased at a fair cash market value and received 12.11 by the society, and that all services charged for were actually 12.12 provided; 12.13 (2) that neither the secretary nor any person in the 12.14 secretary's behalf, or the board of managers, to the secretary's 12.15 best information and belief, had any pecuniary or other interest 12.16 in any purchase made or services rendered, or received any 12.17 pecuniary or other benefit from the purchases or services, 12.18 directly or indirectly, by commission, percentage, deduction, or 12.19 otherwise; and 12.20 (3) that the articles specified conformed in every respect 12.21 to the goods ordered, in both quality and quantity. 12.22 The report must also show the amount of money in the hands 12.23 of the treasurer of the society. 12.24 Copies of the secretary's monthly report must be furnished 12.25 to the commissioner of finance and the office of the legislative12.26 auditorand to each member of the board of managers no later 12.27 than the tenth of the month following the month's activities 12.28 reported. 12.29 The board of managers shall designate one or more national 12.30 or state banks, or trust companies authorized to do a banking 12.31 business, as official depositories for the society's money, and 12.32 shall then require the treasurer to deposit all or part of that 12.33 money in the designated bank or banks. The designation must be 12.34 in writing and must set forth all the terms and conditions upon 12.35 which the deposits are made, and it must be signed by the 12.36 president and secretary and made a part of the minutes of the 13.1 board. Any bank or trust company designated must qualify as a 13.2 depository by furnishing a corporate surety bond or collateral 13.3 as required by section 118A.03, and must, as long as any of the 13.4 society's money is on deposit with it, maintain the bond or 13.5 collateral in the amounts required by that section. No bond or 13.6 collateral is required to secure any deposit if it is insured 13.7 under federal law, as provided in section 118A.03. 13.8 Sec. 11. Minnesota Statutes 1998, section 85A.02, 13.9 subdivision 5c, is amended to read: 13.10 Subd. 5c. [FINANCIAL REPORT.] The board shall employ a 13.11 certified public accountant to audit and examine its financial 13.12 records each year. The board shall submit to the legislative 13.13 auditor a report of the accountant's examination or audit. The 13.14 legislative auditor shall review the report and accept it ormay 13.15 make additional examinations if these would be in the public 13.16 interest. The working papers of the certified public accountant 13.17 relating to the board must be made available to the legislative 13.18 auditor on request. 13.19 Sec. 12. Minnesota Statutes 1998, section 89.05, is 13.20 amended to read: 13.21 89.05 [ACCOUNTING SYSTEM.] 13.22 The department of natural resources shall consolidate and 13.23 simplify the accounting system within the department for 13.24 receipts from department managed lands, disbursements made on a 13.25 regular basis, and the program for federal aids and grant 13.26 reimbursements. The new accounting system shall be implemented 13.27 with the cooperation and under the supervision of the department 13.28 of finance , utilizing the assistance and recommendations of the13.29 office of the legislative auditor. 13.30 Sec. 13. Minnesota Statutes 1998, section 161.08, is 13.31 amended to read: 13.32 161.08 [BOOKS OF ACCOUNT.] 13.33 The commissioner shall keep accurate and complete books of 13.34 account of such characteras may be prescribed by the 13.35 legislative auditorcommissioner of finance, the same to show in 13.36 detail itemized receipts and disbursements of the trunk highway 14.1 fund. The books of account shall show the following facts, 14.2 among others: 14.3 (1) The expenses of maintaining the transportation 14.4 department, including the salaries and expenses of the 14.5 individual members thereof; 14.6 (2) The amounts of money expended in each county of the 14.7 state for the construction of trunk highways, and when, where, 14.8 and upon what job or portion of road expended so that the cost 14.9 per mile of such construction can be easily ascertained; 14.10 (3) Any other money expended by the state in connection 14.11 with any roads other than trunk highways and when, where, and 14.12 upon what portion of road so expended; and 14.13 (4) The amount of road equipment and materials purchased, 14.14 and when, where, and from whom purchased, and the price paid for 14.15 each item. The original invoices shall form a part of the 14.16 permanent files and records in the department of transportation 14.17 and be open to public inspection. 14.18 Sec. 14. Minnesota Statutes 1998, section 192.551, is 14.19 amended to read: 14.20 192.551 [ARMY REGULATIONS TO APPLY.] 14.21 All money and property received from any source for the 14.22 military forces shallmust be kept, disbursed, and accounted for 14.23 as prescribed by army regulations, where applicable, otherwise 14.24 as prescribed by state rules. All such accounts shallmust be 14.25 examined and audited at least once annually by officers of the 14.26 military forces detailed by the adjutant general as military 14.27 auditors. The legislative auditor may appoint any military14.28 auditor as an assistant examiner, with all the powers incident14.29 thereto, in connection with the examination of such accounts.14.30 The provisions of the state Civil Service Act shall not be14.31 applicable to such appointmentsalso audit those activities of 14.32 the accounts that are subject to state law or rule. 14.33 Sec. 15. Minnesota Statutes 1998, section 352.03, 14.34 subdivision 6, is amended to read: 14.35 Subd. 6. [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 14.36 management of the system is vested in the director, who is the 15.1 executive and administrative head of the system. The director 15.2 shall be advisor to the board on matters pertaining to the 15.3 system and shall also act as the secretary of the board. The 15.4 director shall: 15.5 (1) attend meetings of the board; 15.6 (2) prepare and recommend to the board appropriate rules to 15.7 carry out this chapter; 15.8 (3) establish and maintain an adequate system of records 15.9 and accounts following recognized accounting principles and 15.10 controls; 15.11 (4) designate an assistant director with the approval of 15.12 the board; 15.13 (5) appoint any employees, both permanent and temporary, 15.14 that are necessary to carry out the provisions of this chapter; 15.15 (6) organize the work of the system as the director deems 15.16 necessary to fulfill the functions of the system, and define the 15.17 duties of its employees and delegate to them any powers or 15.18 duties, subject to the control of the director and under 15.19 conditions the director may prescribe. Appointments to exercise 15.20 delegated power must be by written order and shall be filed with 15.21 the secretary of state; 15.22 (7) with the advice and consent of the board, contract for 15.23 the services of an approved actuary, professional management 15.24 services, and any other consulting services as necessary and fix 15.25 the compensation for those services. The contracts are not 15.26 subject to competitive bidding under chapter 16C. Any approved 15.27 actuary retained by the executive director shall function as the 15.28 actuarial advisor of the board and the executive director, and 15.29 may perform actuarial valuations and experience studies to 15.30 supplement those performed by the actuary retained by the 15.31 legislative commission on pensions and retirement. Any 15.32 supplemental actuarial valuations or experience studies shall be 15.33 filed with the executive director of the legislative commission 15.34 on pensions and retirement. Professional management services 15.35 may not be contracted for more often than once in six years. 15.36 Copies of professional management survey reports must be 16.1 transmitted to the secretary of the senate, the chief clerk of 16.2 the house of representatives, and the legislative reference 16.3 library as provided by section 3.195, and to the executive 16.4 director of the commission and to the legislative auditorat the 16.5 time as reports are furnished to the board. Only management 16.6 firms experienced in conducting management surveys of federal, 16.7 state, or local public retirement systems are qualified to 16.8 contract with the director; 16.9 (8) with the advice and consent of the board provide 16.10 in-service training for the employees of the system; 16.11 (9) make refunds of accumulated contributions to former 16.12 state employees and to the designated beneficiary, surviving 16.13 spouse, legal representative, or next of kin of deceased state 16.14 employees or deceased former state employees, as provided in 16.15 this chapter; 16.16 (10) determine the amount of the annuities and disability 16.17 benefits of employees covered by the system and authorize 16.18 payment of the annuities and benefits beginning as of the dates 16.19 on which the annuities and benefits begin to accrue, in 16.20 accordance with the provisions of this chapter; 16.21 (11) pay annuities, refunds, survivor benefits, salaries, 16.22 and necessary operating expenses of the system; 16.23 (12) certify funds available for investment to the state 16.24 board of investment; 16.25 (13) with the advice and approval of the board request the 16.26 state board of investment to sell securities when the director 16.27 determines that funds are needed for the system; 16.28 (14) prepare and submit to the board and the legislature an 16.29 annual financial report covering the operation of the system, as 16.30 required by section 356.20; 16.31 (15) prepare and submit biennial and annual budgets to the 16.32 board and with the approval of the board submit the budgets to 16.33 the department of finance; and 16.34 (16) with the approval of the board, perform other duties 16.35 required to administer the retirement and other provisions of 16.36 this chapter and to do its business. 17.1 Sec. 16. Minnesota Statutes 1998, section 353.03, 17.2 subdivision 3a, is amended to read: 17.3 Subd. 3a. [EXECUTIVE DIRECTOR.] (a) [APPOINTMENT.] The 17.4 board shall appoint, with the advice and consent of the senate, 17.5 an executive director on the basis of education, experience in 17.6 the retirement field, and leadership ability. The executive 17.7 director shall have had at least five years' experience in an 17.8 executive level management position, which has included 17.9 responsibility for pensions, deferred compensation, or employee 17.10 benefits. The executive director serves at the pleasure of the 17.11 board. The salary of the executive director is as provided by 17.12 section 15A.0815. 17.13 (b) [DUTIES.] The management of the association is vested 17.14 in the executive director who shall be the executive and 17.15 administrative head of the association. The executive director 17.16 shall act as adviser to the board on all matters pertaining to 17.17 the association and shall also act as the secretary of the 17.18 board. The executive director shall: 17.19 (1) attend all meetings of the board; 17.20 (2) prepare and recommend to the board appropriate rules to 17.21 carry out the provisions of this chapter; 17.22 (3) establish and maintain an adequate system of records 17.23 and accounts following recognized accounting principles and 17.24 controls; 17.25 (4) designate, with the approval of the board, up to two 17.26 persons who shall serve in the unclassified service and whose 17.27 salary is set in accordance with section 43A.18, subdivision 3, 17.28 appoint a confidential secretary in the unclassified service, 17.29 and appoint employees to carry out this chapter, who are subject 17.30 to chapters 43A and 179A in the same manner as are executive 17.31 branch employees; 17.32 (5) organize the work of the association as the director 17.33 deems necessary to fulfill the functions of the association, and 17.34 define the duties of its employees and delegate to them any 17.35 powers or duties, subject to the control of, and under such 17.36 conditions as, the executive director may prescribe; 18.1 (6) with the approval of the board, contract for the 18.2 services of an approved actuary, professional management 18.3 services, and any other consulting services as necessary to 18.4 fulfill the purposes of this chapter. All contracts are subject 18.5 to chapter 16C. The commissioner of administration shall not 18.6 approve, and the association shall not enter into, any contract 18.7 to provide lobbying services or legislative advocacy of any 18.8 kind. Any approved actuary retained by the executive director 18.9 shall function as the actuarial advisor of the board and the 18.10 executive director and may perform actuarial valuations and 18.11 experience studies to supplement those performed by the actuary 18.12 retained by the legislative commission on pensions and 18.13 retirement. Any supplemental actuarial valuations or experience 18.14 studies shall be filed with the executive director of the 18.15 legislative commission on pensions and retirement. Copies of 18.16 professional management survey reports shall be transmitted to 18.17 the secretary of the senate, the chief clerk of the house of 18.18 representatives, and the legislative reference library as 18.19 provided by section 3.195, and to the executive director of the 18.20 commission and to the legislative auditorat the same time as 18.21 reports are furnished to the board. Only management firms 18.22 experienced in conducting management surveys of federal, state, 18.23 or local public retirement systems shall be qualified to 18.24 contract with the director hereunder; 18.25 (7) with the approval of the board provide in-service 18.26 training for the employees of the association; 18.27 (8) make refunds of accumulated contributions to former 18.28 members and to the designated beneficiary, surviving spouse, 18.29 legal representative or next of kin of deceased members or 18.30 deceased former members, as provided in this chapter; 18.31 (9) determine the amount of the annuities and disability 18.32 benefits of members covered by the association and authorize 18.33 payment of the annuities and benefits beginning as of the dates 18.34 on which the annuities and benefits begin to accrue, in 18.35 accordance with the provisions of this chapter; 18.36 (10) pay annuities, refunds, survivor benefits, salaries, 19.1 and necessary operating expenses of the association; 19.2 (11) prepare and submit to the board and the legislature an 19.3 annual financial report covering the operation of the 19.4 association, as required by section 356.20; 19.5 (12) prepare and submit biennial and annual budgets to the 19.6 board for its approval and submit the approved budgets to the 19.7 department of finance for approval by the commissioner; 19.8 (13) reduce all or part of the accrued interest payable 19.9 under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 19.10 subdivision 5, upon receipt of proof by the association of an 19.11 unreasonable processing delay or other extenuating circumstances 19.12 of the employing unit. The executive director shall prescribe 19.13 and submit for approval by the board the conditions under which 19.14 such interest may be reduced; and 19.15 (14) with the approval of the board, perform such other 19.16 duties as may be required for the administration of the 19.17 association and the other provisions of this chapter and for the 19.18 transaction of its business. 19.19 Sec. 17. Minnesota Statutes 1998, section 353A.05, 19.20 subdivision 1, is amended to read: 19.21 Subdivision 1. [COMMISSION ACTIONS.] Upon initiation of 19.22 consolidation as provided in section 353A.04, the executive 19.23 director of the commission shall direct the actuary retained by 19.24 the commission to undertake the preparation of the actuarial 19.25 calculations necessary to complete the consolidation. 19.26 These actuarial calculations shall include for each active 19.27 member, each deferred former member, each retired member, and 19.28 each current beneficiary the computation of the present value of 19.29 future benefits, the future normal costs, if any, and the 19.30 actuarial accrued liability on the basis of the existing relief 19.31 association benefit plan and on the basis of the public 19.32 employees police and fire fund benefit plan. These actuarial 19.33 calculations shall also include for the total active, deferred, 19.34 retired, and benefit recipient membership the sum of the present 19.35 value of future benefits, the future normal costs, if any, and 19.36 the actuarial accrued liability on the basis of the existing 20.1 relief association benefit plan, on the basis of the public 20.2 employees police and fire fund benefit plan, and on the basis of 20.3 the benefit plan which produced the largest present value of 20.4 future benefits for each person. The actuarial calculations 20.5 shall be prepared using the entry age actuarial cost method for 20.6 all components of the benefit plan and using the actuarial 20.7 assumptions applicable to the fund for the most recent actuarial 20.8 valuation prepared under section 356.215, except that the 20.9 actuarial calculations on the basis of the existing relief 20.10 association benefit plan shall be prepared using an interest 20.11 rate actuarial assumption during the postretirement period which 20.12 is in the same amount as the interest rate actuarial assumption 20.13 applicable to the preretirement period. The actuarial 20.14 calculations shall include the computation of the present value 20.15 of the initial postretirement adjustment anticipated by the 20.16 executive director of the state board as payable after the 20.17 effective date of the consolidation from the Minnesota 20.18 postretirement investment fund under section 11A.18. 20.19 The chief administrative officer of the relief association 20.20 shall, upon request, provide in a timely manner to the executive 20.21 director of the commission and to the actuary retained by the 20.22 commission the most current available information or documents, 20.23 whichever applies, regarding the demographics of the active, 20.24 deferred, retired, and benefit recipient membership of the 20.25 relief association, the financial condition of the relief 20.26 association, and the existing benefit plan of the relief 20.27 association. 20.28 Upon completion of the actuarial calculations required by 20.29 this subdivision, the actuary retained by the commission shall 20.30 issue a report in the form of an appropriate summary of the 20.31 actuarial calculations and shall provide a copy of that report 20.32 to the executive director of the commission, the executive 20.33 director of the public employees retirement association, the 20.34 chief administrative officer of the relief association, the 20.35 chief administrative officer of the municipality in which the 20.36 relief association is located, and the state auditor , and the21.1 legislative auditor. 21.2 Sec. 18. Minnesota Statutes 1998, section 354.06, 21.3 subdivision 2a, is amended to read: 21.4 Subd. 2a. [DUTIES OF EXECUTIVE DIRECTOR.] The management 21.5 of the association is vested in the executive director who shall 21.6 be the executive and administrative head of the association. 21.7 The executive director shall act as advisor to the board on all 21.8 matters pertaining to the association and shall also act as the 21.9 secretary of the board. The executive director shall: 21.10 (1) attend all meetings of the board; 21.11 (2) prepare and recommend to the board appropriate rules to 21.12 carry out the provisions of this chapter; 21.13 (3) establish and maintain an adequate system of records 21.14 and accounts following recognized accounting principles and 21.15 controls; 21.16 (4) designate an assistant executive director in the 21.17 unclassified service and two assistant executive directors in 21.18 the classified service with the approval of the board, and 21.19 appoint such employees, both permanent and temporary, as are 21.20 necessary to carry out the provisions of this chapter; 21.21 (5) organize the work of the association as the director 21.22 deems necessary to fulfill the functions of the association, and 21.23 define the duties of its employees and delegate to them any 21.24 powers or duties, subject to the director's control and under 21.25 such conditions as the director may prescribe; 21.26 (6) with the approval of the board, contract and set the 21.27 compensation for the services of an approved actuary, 21.28 professional management services, and any other consulting 21.29 services. These contracts are not subject to the competitive 21.30 bidding procedure prescribed by chapter 16C. An approved 21.31 actuary retained by the executive director shall function as the 21.32 actuarial advisor of the board and the executive director and 21.33 may perform actuarial valuations and experience studies to 21.34 supplement those performed by the actuary retained by the 21.35 legislative commission on pensions and retirement. Any 21.36 supplemental actuarial valuations or experience studies shall be 22.1 filed with the executive director of the legislative commission 22.2 on pensions and retirement. Copies of professional management 22.3 survey reports must be transmitted to the secretary of the 22.4 senate, the chief clerk of the house of representatives, and the 22.5 legislative reference library as provided by section 3.195, and 22.6 to the executive director of the commission and to the22.7 legislative auditorat the same time as reports are furnished to 22.8 the board. Only management firms experienced in conducting 22.9 management surveys of federal, state, or local public retirement 22.10 systems are qualified to contract with the executive director; 22.11 (7) with the approval of the board, provide in-service 22.12 training for the employees of the association; 22.13 (8) make refunds of accumulated contributions to former 22.14 members and to the designated beneficiary, surviving spouse, 22.15 legal representative, or next of kin of deceased members or 22.16 deceased former members, under this chapter; 22.17 (9) determine the amount of the annuities and disability 22.18 benefits of members covered by the association and authorize 22.19 payment of the annuities and benefits beginning as of the dates 22.20 on which the annuities and benefits begin to accrue, under this 22.21 chapter; 22.22 (10) pay annuities, refunds, survivor benefits, salaries, 22.23 and necessary operating expenses of the association; 22.24 (11) prepare and submit to the board and the legislature an 22.25 annual financial report covering the operation of the 22.26 association, as required by section 356.20; 22.27 (12) certify funds available for investment to the state 22.28 board of investment; 22.29 (13) with the advice and approval of the board, request the 22.30 state board of investment to sell securities on determining that 22.31 funds are needed for the purposes of the association; 22.32 (14) prepare and submit biennial and annual budgets to the 22.33 board and with the approval of the board submit those budgets to 22.34 the department of finance; and 22.35 (15) with the approval of the board, perform such other 22.36 duties as may be required for the administration of the 23.1 association and the other provisions of this chapter and for the 23.2 transaction of its business. The executive director may: 23.3 (i) reduce all or part of the accrued interest and fines 23.4 payable by an employing unit for reporting requirements under 23.5 section 354.52, based on an evaluation of any extenuating 23.6 circumstances of the employing unit; 23.7 (ii) assign association employees to conduct field audits 23.8 of an employing unit to ensure compliance with the provisions of 23.9 this chapter; and 23.10 (iii) recover overpayments, if not repaid to the 23.11 association, by suspending or reducing the payment of a 23.12 retirement annuity, refund, disability benefit, survivor 23.13 benefit, or optional annuity under this chapter until the 23.14 overpayment, plus interest, has been recovered. 23.15 Sec. 19. Minnesota Statutes 1998, section 360.015, 23.16 subdivision 19, is amended to read: 23.17 Subd. 19. [KEEP BOOKS AND RECORDS.] The commissioner shall 23.18 keep accurate and complete books of account of such character as23.19 may be prescribed by the legislative auditor, the sameaccounts 23.20 to show in detail itemized receipts and disbursements of the 23.21 airports fund. The books shall show , and it shall be the duty23.22 of the legislative auditor to so prescribe,the following facts, 23.23 among others: 23.24 (a) The expenses of maintaining the department, including 23.25 the salaries and expenses of the individual members thereof; 23.26 (b) The amounts of money expended in each county of the 23.27 state for the construction or maintenance of airports or 23.28 restricted landing areas, when, where, and upon what airport or 23.29 restricted landing area expended, so that the cost for each such 23.30 airport or restricted landing area can be easily ascertained; 23.31 (c) The amount of equipment and materials purchased and 23.32 when, where, and from whom purchased; these books shall show the 23.33 price paid for each item; the original invoice shall form a part 23.34 of the permanent files and records in the department and shall 23.35 be open to public inspection. 23.36 Sec. 20. Minnesota Statutes 1998, section 574.20, is 24.1 amended to read: 24.2 574.20 [BONDS, BY WHOM APPROVED.] 24.3 Except as otherwise provided by law in particular cases, 24.4 bonds shall be approved as follows: 24.5 (1) The official bonds of all state officers, including 24.6 those of the treasurers, superintendents, and other officials, 24.7 and employees of the several public educational, charitable, 24.8 penal, and reformatory institutions belonging to the state, 24.9 shall be approved, as to form, by the attorney general, and in 24.10 all other respects by the governor and the legislative auditor,24.11 or one of them; 24.12 (2) The official bonds of county, town, city, and school 24.13 district officers and employees by the governing body of the 24.14 political subdivision for whose security they are, respectively, 24.15 given; and 24.16 (3) Those required or permitted by law to be given in any 24.17 court, by the judge or justice of the court in which the 24.18 proceeding is begun or pending. 24.19 No officer, official, or employee required to give bond 24.20 shall enter upon duties until the bond is duly approved and 24.21 filed. 24.22 Sec. 21. Minnesota Statutes 1998, section 609.456, is 24.23 amended to read: 24.24 609.456 [REPORTING TO STATE AUDITOR AND LEGISLATIVE AUDITOR 24.25 REQUIRED.] 24.26 Subdivision 1. [STATE AUDITOR.] Whenever a public employee 24.27 or public officer of a political subdivision discovers evidence 24.28 of theft, embezzlement, or unlawful use of public funds or 24.29 property, the employee or elected official shall, except when to 24.30 do so would knowingly impede or otherwise interfere with an 24.31 ongoing criminal investigation, promptly report in writing to 24.32 the state auditor a detailed description of the alleged incident 24.33 or incidents. 24.34 Subd. 2. [LEGISLATIVE AUDITOR.] Whenever an employee or 24.35 officer of the state, University of Minnesota, or other 24.36 organization listed in section 3.971, subdivision 1, discovers 25.1 evidence of theft, embezzlement, or unlawful use of public funds 25.2 or property, the employee or officer shall, except when to do so 25.3 would knowingly impede or otherwise interfere with an ongoing 25.4 criminal investigation, promptly report in writing to the 25.5 legislative auditor a detailed description of the alleged 25.6 incident or incidents. 25.7 Sec. 22. Laws 1990, chapter 535, section 5, is amended to 25.8 read: 25.9 Sec. 5. [ACCOUNTS; AUDITS.] 25.10 The corporation may establish funds and accounts that it 25.11 finds convenient. The board shall provide for and pay the cost 25.12 of an independent annual audit of its official books and records 25.13 by the legislativestate auditor subject to Minnesota Statutes,25.14 sections 3.971 and 3.972. A copy of this audit shall be filed 25.15 with the secretary of state. 25.16 Sec. 23. [REVISOR INSTRUCTION.] 25.17 The revisor of statutes shall renumber each section of 25.18 Minnesota Statutes listed in column A with the number listed in 25.19 column B. The revisor shall make necessary cross-reference 25.20 changes consistent with the renumbering. The revisor shall 25.21 provide appropriate section and subdivision headnotes in 25.22 Minnesota Statutes, sections 3.97, 3.971, and 3.979. 25.23 Column A Column B 25.24 3.97, subd. 4 3.971, subd. 1 25.25 3.97, subd. 5 3.971, subd. 2 25.26 3.97, subd. 6 3.971, subd. 3a 25.27 3.97, subd. 7 3.971, subd. 4 25.28 3.97, subd. 8 3.971, subd. 5 25.29 3.97, subd. 9 3.979, subd. 1 25.30 3.97, subd. 10 3.979, subd. 2 25.31 3.97, subd. 11 3.979, subd. 3 25.32 3.97, subd. 11a 3.979, subd. 4 25.33 3.97, subd. 12 3.97, subd. 3a 25.34 3.971, subd. 1 3.971, subd. 6 25.35 3.971, subd. 2 3.971, subd. 7 25.36 3.971, subd. 4 3.971, subd. 8 26.1 Sec. 24. [REPEALER.] 26.2 Minnesota Statutes 1998, sections 3.973; 116.072, 26.3 subdivision 12; 469.207, subdivision 1; and 574.02, are repealed. 26.4 Sec. 25. [EFFECTIVE DATE.] 26.5 The amendments made to Minnesota Statutes 1998, section 26.6 3.97, subdivision 2, in section 1, are effective January 1, 26.7 2001. The remainder of the act is effective the day following 26.8 final enactment.