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HF 4682

as introduced - 92nd Legislature (2021 - 2022) Posted on 04/07/2022 01:08pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to state government; increasing fiscal safeguards for state grants to
nonprofit organizations; amending Minnesota Statutes 2020, section 16B.98,
subdivision 8; proposing coding for new law in Minnesota Statutes, chapter 16B.

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

Section 1.

new text begin [16B.971] GRANTS TO NONPROFIT ORGANIZATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, the following terms have the
meanings given.
new text end

new text begin (b) "Certified financial audit" means a review of an organization's financial statements,
fiscal policies, and control procedures by an independent third party to determine if the
statements fairly represent the organization's financial position and if organizational
procedures are in accordance with generally accepted accounting principles.
new text end

new text begin (c) "Fiscal agent" means the commissioner or head of the state agency responsible for
administering a grant.
new text end

new text begin (d) "Grant" means a grant of state money from any source.
new text end

new text begin (e) "Organization" means a nongovernmental organization that is tax exempt under the
Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Requirements for eligibility. new text end

new text begin (a) For an organization to be eligible to receive
a grant, the organization must meet the following criteria:
new text end

new text begin (1) the organization must submit to the fiscal agent the relevant series Internal Revenue
Service Form 990 in each of the two years preceding the execution of a grant agreement;
new text end

new text begin (2) the organization must not compensate an officer or employee in an amount greater
than the governor's annual compensation in a 12-month period during the first fiscal year
beginning, during, or after the 12-month period or in the following fiscal year. Compensation
for purposes of this section includes salary, bonuses, the present value of stock options, the
value of employment benefits, employer contributions to retirement or deferred compensation
plans on behalf of the officer or employee, and any other compensation or benefit of value;
and
new text end

new text begin (3) the organization must not have on its governing board a voting member who is:
new text end

new text begin (i) an employee of a state agency; or
new text end

new text begin (ii) an official elected to serve in a state, county, or local government office.
new text end

new text begin Subd. 3. new text end

new text begin Additional eligibility requirements for certain nonprofit organizations. new text end

new text begin For
an organization that received more than 25 percent of revenue from state funds in the fiscal
year preceding the organization's grant application or that has revenue greater than $750,000,
to be eligible to receive a grant, the organization must meet the following criteria:
new text end

new text begin (1) the organization must submit to the fiscal agent certified financial audits of the most
recent two fiscal years preceding the grant application; and
new text end

new text begin (2) officers and members of the governing board of the organization must not have been
convicted of any offense involving theft, fraud, embezzlement, or other misuse or
misappropriation of funds or property. The commissioner of administration must conduct
background checks on officers and members of the governing body of the organization
before an agency may enter into a grant agreement with the organization.
new text end

new text begin Subd. 4. new text end

new text begin Notice to legislature of ineligibility. new text end

new text begin If a grant has been awarded by law to a
specified organization that the commissioner determines is ineligible to receive the grant
under subdivision 2 or 3, the commissioner must promptly report that determination to the
chair of the committee on finance in the senate and the chair of the committee on ways and
means in the house of representatives.
new text end

new text begin Subd. 5. new text end

new text begin Grant application. new text end

new text begin (a) A fiscal agent administering a grant program must
require the following information as part of a grant application:
new text end

new text begin (1) the purpose of the grant, including goals, priorities, and measurable outcomes;
new text end

new text begin (2) eligibility requirements for individuals who will be served by the grant program;
new text end

new text begin (3) the proposed geographic service areas for individuals served by the grant;
new text end

new text begin (4) the reporting requirements; and
new text end

new text begin (5) certification that the applicant is eligible under subdivisions 2 and 3 to receive a
grant.
new text end

new text begin These requirements are in addition to any requirements under existing laws and policies.
new text end

new text begin (b) An organization that is specifically identified in law to receive a grant must provide
the information in paragraph (a) to the commissioner of the fiscal agent for the grant before
the commissioner may execute the grant agreement.
new text end

new text begin Subd. 6. new text end

new text begin Reporting on use of funds. new text end

new text begin (a) Organizations must provide the following
information to the fiscal agent:
new text end

new text begin (1) a detailed accounting of the use of any grant proceeds;
new text end

new text begin (2) a description of program outcomes to date, including performance measured against
indicators specified in the grant agreement, including but not limited to job creation,
employment activity, wage information, business formation or expansion, and academic
performance; and
new text end

new text begin (3) the portion of the grant, if any, spent on the recipient's operating expenses.
new text end

new text begin Grant recipients must report the information required under this paragraph to the fiscal agent
within one year after receiving any portion of the grant, and annually thereafter, and within
30 days following the use of all funds provided under the grant.
new text end

new text begin (b) The fiscal agent for a grant to an organization must submit a report containing the
information provided by the grant recipients to the chairs and ranking minority members
of the legislative committees and budget divisions with jurisdiction over the agency serving
as fiscal agent for the grant. The report submitted under this section must also include the
commissioner's summary of the use of grant proceeds and an analysis of the grant recipients'
success in meeting the goals, priorities, and measurable outcomes specified for the grant.
An updated version of this report must be submitted on January 15 of each succeeding year
until January 15 in the year following the date when all of the grant funds have been spent.
new text end

new text begin Subd. 7. new text end

new text begin Notice to legislature of fraud or abuse claims. new text end

new text begin If the commissioner of
administration or the Department of Administration Office of Grants Management receives
a comment or concern about fraud or waste for a grant made by law to a specified
organization, the commissioner must promptly report the comment or concern to the chair
of the committee on finance in the senate and the chair of the committee on ways and means
in the house of representatives.
new text end

Sec. 2.

Minnesota Statutes 2020, section 16B.98, subdivision 8, is amended to read:


Subd. 8.

Audit.

(a) A grant agreement made by an executive agency must include an
audit clause that providesnew text begin:
new text end

new text begin (1) that the books, records, documents, and accounting procedures and practices of the
grantee receiving a grant of more than $500,000 are subject to examination by the granting
agency and either the legislative auditor or the state auditor, as appropriate, for a period of
two years prior to the execution of the grant agreement for a grant and during the term of
the grant agreement; and
new text end

new text begin (2)new text end that the books, records, documents, and accounting procedures and practices of the
grantee or other party that are relevant to the grant or transaction are subject to examination
by the granting agency and either the legislative auditor or the state auditor, as appropriate,
for a minimum of six years from the grant agreement end date, receipt and approval of all
final reports, or the required period of time to satisfy all state and program retention
requirements, whichever is later. If a grant agreement does not include an express audit
clause, the audit authority under this subdivision is implied.

new text begin (b) If a grant agreement does not include an express audit clause, the audit authority
under this subdivision is implied.
new text end

deleted text begin (b)deleted text endnew text begin (c)new text end If the granting agency is a local unit of government, and the governing body of
the local unit of government requests that the state auditor examine the books, records,
documents, and accounting procedures and practices of the grantee or other party according
to this subdivision, the granting agency shall be liable for the cost of the examination. If
the granting agency is a local unit of government, and the grantee or other party requests
that the state auditor examine all books, records, documents, and accounting procedures
and practices related to the grant, the grantee or other party that requested the examination
shall be liable for the cost of the examination.

Sec. 3. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective the day following final enactment and apply to grants
appropriated by law after the effective date and to grant agreements executed after the
effective date.
new text end