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Minnesota Legislature

Office of the Revisor of Statutes

HF 681

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/23/2011 04:40pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to state government; authorizing issuance of state appropriation bonds;
appropriating money; establishing the Minnesota pay for performance pilot
program; proposing coding for new law in Minnesota Statutes, chapter 16A.

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

Section 1.

new text begin [16A.90] MINNESOTA PAY FOR PERFORMANCE ACT.
new text end

new text begin Sections 16A.90 to 16A.96 may be cited as the "Minnesota Pay for Performance
Act of 2011."
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [16A.94] PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Pilot program established. new text end

new text begin The commissioner shall implement a
pilot program to demonstrate the feasibility and desirability of using state appropriation
bonds to pay for certain services based on performance and outcomes for the people served.
new text end

new text begin Subd. 2. new text end

new text begin Oversight committee. new text end

new text begin (a) The commissioner shall appoint an oversight
committee to:
new text end

new text begin (1) identify criteria to select one or more services to be included in the pilot program;
new text end

new text begin (2) identify the conditions of performance and desired outcomes for the people
served by each service selected;
new text end

new text begin (3) identify criteria to evaluate whether a service has met the performance
conditions; and
new text end

new text begin (4) provide any other advice or assistance requested by the commissioner.
new text end

new text begin (b) The oversight committee must include the commissioners of the Departments
of Human Services, Employment and Economic Development, and Administration, or
their designees; a representative of a nonprofit organization that has participated in a
pay-for-performance program; and any other person or organization that the commissioner
determines would be of assistance in developing and implementing the pilot program.
new text end

new text begin Subd. 3. new text end

new text begin Contracts. new text end

new text begin The commissioner and the commissioner of the agency with
a service to be provided through the pilot program shall enter into a contract with the
selected provider. The contract must specify the service to be provided, the time frame in
which it is to be provided, the outcome required for payment, and any other terms deemed
necessary or convenient for implementation of the pilot program. The commissioner
shall pay a provider that has met the terms and conditions of a contract with money
appropriated to the commissioner from the special appropriation bond proceeds account
established in section 16A.96. At a minimum, before the commissioner pays a provider,
the commissioner must determine that the state's return on investment is positive.
new text end

new text begin Subd. 4. new text end

new text begin Return on investment calculation. new text end

new text begin The commissioner, in consultation
with the oversight committee, must establish the method and data required for calculating
the state's return on investment. The data at a minimum must include:
new text end

new text begin (1) state income taxes and any other revenues collected in the year after the service
was provided that would not have been collected without the service; and
new text end

new text begin (2) costs avoided by the state by providing the service.
new text end

new text begin A positive return on investment for the state will cover the state's costs in financing
and administering the pilot program through documented increased state tax revenue
or cost avoidance.
new text end

new text begin Subd. 5. new text end

new text begin Report to governor and legislature. new text end

new text begin The commissioner must report to the
governor and legislative committees with jurisdiction over capital investment, finance, and
ways and means, and the services included in the pilot program, by January 15 of each
year following a year in which the pilot program is operating. The report must describe
and discuss the criteria for selection and evaluation of services to be provided through
the program, the net benefits to the state of the program, the state's return on investment,
the cost of the services provided by other means in the most recent past, the time frame
for payment for the services, and the timing and costs for sale and issuance of the bonds
authorized in section 16A.96.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [16A.96] MINNESOTA PAY FOR PERFORMANCE PROGRAM;
APPROPRIATION BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this
section.
new text end

new text begin (b) "Appropriation bond" means a bond, note, or other similar instrument of the state
payable during a biennium from one or more of the following sources:
new text end

new text begin (1) money appropriated by law in any biennium for debt service due with respect
to obligations described in subdivision 2, paragraph (b);
new text end

new text begin (2) proceeds of the sale of obligations described in subdivision 2, paragraph (b);
new text end

new text begin (3) payments received for that purpose under agreements and ancillary arrangements
described in subdivision 2, paragraph (d); and
new text end

new text begin (4) investment earnings on amounts in clauses (1) to (3).
new text end

new text begin (c) "Debt service" means the amount payable in any biennium of principal, premium,
if any, and interest on appropriation bonds.
new text end

new text begin Subd. 2. new text end

new text begin Authority. new text end

new text begin (a) Subject to the limitations of this subdivision, the
commissioner of management and budget may sell and issue appropriation bonds of the
state under this section for the purposes of the Minnesota pay for performance program
established in sections 16A.90 to 16A.96. Proceeds of the bonds must be credited to
a special appropriation bond proceeds account in the state treasury. Net income from
investment of the proceeds, as estimated by the commissioner, must be credited to the
special appropriation bond proceeds account.
new text end

new text begin (b) Appropriation bonds may be sold and issued in amounts that, in the opinion of
the commissioner, are necessary to provide sufficient funds for achieving the purposes
authorized as provided under paragraph (a), and pay debt service, pay costs of issuance,
make deposits to reserve funds, pay the costs of credit enhancement, or make payments
under other agreements entered into under paragraph (d); provided, however, that bonds
issued and unpaid shall not exceed $20,000,000 in principal amount, excluding refunding
bonds sold and issued under subdivision 4.
new text end

new text begin (c) Appropriation bonds may be issued in one or more series on the terms and
conditions the commissioner determines to be in the best interests of the state, but the term
on any series of bonds may not exceed 20 years.
new text end

new text begin (d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any
time thereafter, so long as the appropriation bonds are outstanding, the commissioner
may enter into agreements and ancillary arrangements relating to the appropriation
bonds, including but not limited to trust indentures, liquidity facilities, remarketing or
dealer agreements, letter of credit agreements, insurance policies, guaranty agreements,
reimbursement agreements, indexing agreements, or interest exchange agreements. Any
payments made or received according to the agreement or ancillary arrangement shall be
made from or deposited as provided in the agreement or ancillary arrangement. The
determination of the commissioner included in an interest exchange agreement that the
agreement relates to an appropriation bond shall be conclusive.
new text end

new text begin Subd. 3. new text end

new text begin Form; procedure. new text end

new text begin (a) Appropriation bonds may be issued in the form
of bonds, notes, or other similar instruments, and in the manner provided in section
16A.672. In the event that any provision of section 16A.672 conflicts with this section,
this section shall control.
new text end

new text begin (b) Every appropriation bond shall include a conspicuous statement of the limitation
established in subdivision 6.
new text end

new text begin (c) Appropriation bonds may be sold at either public or private sale upon such terms
as the commissioner shall determine are not inconsistent with this section and may be sold
at any price or percentage of par value. Any bid received may be rejected.
new text end

new text begin (d) Appropriation bonds may bear interest at a fixed or variable rate.
new text end

new text begin Subd. 4. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner from time to time may issue
appropriation bonds for the purpose of refunding any appropriation bonds then
outstanding, including the payment of any redemption premiums on the bonds, any
interest accrued or to accrue to the redemption date, and costs related to the issuance
and sale of the refunding bonds. The proceeds of any refunding bonds may, in the
discretion of the commissioner, be applied to the purchase or payment at maturity of the
appropriation bonds to be refunded, to the redemption of the outstanding bonds on any
redemption date, or to pay interest on the refunding bonds and may, pending application,
be placed in escrow to be applied to the purchase, payment, retirement, or redemption.
Any escrowed proceeds, pending such use, may be invested and reinvested in obligations
that are authorized investments under section 11A.24. The income earned or realized on
the investment may also be applied to the payment of the bonds to be refunded or interest
or premiums on the refunded bonds, or to pay interest on the refunding bonds. After
the terms of the escrow have been fully satisfied, any balance of the proceeds and any
investment income may be returned to the general fund or, if applicable, the appropriation
bond proceeds account for use in any lawful manner. All refunding bonds issued under
this subdivision must be prepared, executed, delivered, and secured by appropriations in
the same manner as the bonds to be refunded.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation bonds as legal investments. new text end

new text begin Any of the following entities
may legally invest any sinking funds, money, or other funds belonging to them or under
their control in any appropriation bonds issued under this section:
new text end

new text begin (1) the state, the investment board, public officers, municipal corporations, political
subdivisions, and public bodies;
new text end

new text begin (2) banks and bankers, savings and loan associations, credit unions, trust companies,
savings banks and institutions, investment companies, insurance companies, insurance
associations, and other persons carrying on a banking or insurance business; and
new text end

new text begin (3) personal representatives, guardians, trustees, and other fiduciaries.
new text end

new text begin Subd. 6. new text end

new text begin No full faith and credit; state not required to make appropriations.
new text end

new text begin The appropriation bonds are not public debt of the state, and the full faith, credit, and
taxing powers of the state are not pledged to the payment of the appropriation bonds or to
any payment that the state agrees to make under this section. Appropriation bonds shall
not be obligations paid directly, in whole or in part, from a tax of statewide application
on any class of property, income, transaction, or privilege. Appropriation bonds shall be
payable in each fiscal year only from amounts that the legislature may appropriate for debt
service for any fiscal year, provided that nothing in this section shall be construed to
require the state to appropriate funds sufficient to make debt service payments with respect
to the bonds in any fiscal year.
new text end

new text begin Subd. 7. new text end

new text begin Appropriation of proceeds. new text end

new text begin The proceeds of appropriation bonds and
interest credited to the special appropriation bond proceeds account are appropriated to the
commissioner for payment of contract obligations under the pay for performance program,
as permitted by state and federal law, and nonsalary expenses incurred in conjunction
with the sale of the appropriation bonds.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation for debt service. new text end

new text begin The amount needed to pay principal and
interest on appropriation bonds issued under this section is appropriated each year to the
commissioner from the general fund subject to the repeal, unallotment under section
16A.152, or cancellation otherwise pursuant to subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end