SF 856

1st Engrossment - 94th Legislature (2025 - 2026) Posted on 02/24/2025 03:02pm

A bill for an act
relating to state government; creating the Office of the Inspector General; requiring
reports; appropriating money; amending Minnesota Statutes 2024, sections 3.971,
by adding a subdivision; 15A.0815, subdivision 2; proposing coding for new law
as Minnesota Statutes, chapter 15D.

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

Section 1.

Minnesota Statutes 2024, section 3.971, is amended by adding a subdivision
to read:

new text begin Subd. 3b. new text end

new text begin Public reports of waste, fraud, and abuse. new text end

new text begin The legislative auditor must refer
all reports from the public about potential waste, fraud, or abuse, as those terms are defined
in chapter 15D, to the inspector general.
new text end

Sec. 2.

Minnesota Statutes 2024, section 15A.0815, subdivision 2, is amended to read:

Subd. 2.

Agency head salaries.

The salary for a position listed in this subdivision shall
be determined by the Compensation Council under section 15A.082. The commissioner of
management and budget must publish the salaries on the department's website. This
subdivision applies to the following positions:

Commissioner of administration;

Commissioner of agriculture;

Commissioner of education;

Commissioner of children, youth, and families;

Commissioner of commerce;

Commissioner of corrections;

Commissioner of health;

Commissioner, Minnesota Office of Higher Education;

Commissioner, Minnesota IT Services;

Commissioner, Housing Finance Agency;

Commissioner of human rights;

Commissioner of human services;

Commissioner of labor and industry;

Commissioner of management and budget;

Commissioner of natural resources;

Commissioner, Pollution Control Agency;

Commissioner of public safety;

Commissioner of revenue;

Commissioner of employment and economic development;

Commissioner of transportation;

Commissioner of veterans affairs;

Executive director of the Gambling Control Board;

Executive director of the Minnesota State Lottery;

Executive director of the Office of Cannabis Management;

new text begin Inspector general;
new text end

Commissioner of Iron Range resources and rehabilitation;

Commissioner, Bureau of Mediation Services;

Ombudsman for mental health and developmental disabilities;

Ombudsperson for corrections;

Chair, Metropolitan Council;

Chair, Metropolitan Airports Commission;

School trust lands director;

Executive director of pari-mutuel racing;

Commissioner, Public Utilities Commission;

Chief Executive Officer, Direct Care and Treatment; and

Director of the Office of Emergency Medical Services.

Sec. 3.

new text begin [15D.01] OFFICE OF THE INSPECTOR GENERAL.
new text end

new text begin (a) The inspector general serves as an independent entity responsible for ensuring
accountability, transparency, and integrity in the operations of state agencies and programs.
new text end

new text begin (b) The inspector general must operate independently of all state executive branch
agencies and report directly to the chief administrative law judge under chapter 14. The
inspector general must not be subject to direction or interference from any executive,
legislative, or judicial authority, other than the chief administrative law judge.
new text end

new text begin (c) The inspector general shall direct an Office of the Inspector General.
new text end

new text begin (d) The inspector general serves in the unclassified service.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 4.

new text begin [15D.02] DEFINITIONS.
new text end

new text begin For the purposes of this chapter, the following terms have the meanings given:
new text end

new text begin (1) "abuse" means the misuse of authority or position for personal gain or to cause harm
to others, including the improper use of state resources or programs contrary to their intended
purpose;
new text end

new text begin (2) "agency program" means a program funded or administered by a state agency,
including grants and contracts;
new text end

new text begin (3) "fraud" means intentional acts of deception to gain an unlawful benefit;
new text end

new text begin (4) "investigation" means an audit, review, or inquiry conducted by the inspector general
to detect or prevent fraud, waste, or abuse; and
new text end

new text begin (5) "waste" means the negligent or careless expenditure, mismanagement, or squandering
of resources that result in unnecessary costs. Waste may also include inefficient practices
that could be avoided through reasonable efforts.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 5.

new text begin [15D.03] INSPECTOR GENERAL.
new text end

new text begin Subdivision 1. new text end

new text begin Minimum qualifications. new text end

new text begin (a) To be eligible to be appointed as inspector
general, a candidate must:
new text end

new text begin (1) have a bachelor's degree in criminal justice, public administration, law, or a related
field;
new text end

new text begin (2) have at least ten years of professional experience in auditing, investigations, law
enforcement, or a related area;
new text end

new text begin (3) hold a professional certificate from the Association of Inspectors General, including
Certified Inspector General or Certified Inspector General Investigator; and
new text end

new text begin (4) demonstrate a commitment to safeguarding the mission of public service and provide
a public disclosure of prior professional opinions, positions, or actions that may influence
the candidate's approach to the role.
new text end

new text begin (b) Current or former commissioners, agency heads, or deputy agency heads are not
eligible to serve as inspector general within five years of their service in those roles.
new text end

new text begin Subd. 2. new text end

new text begin Appointment. new text end

new text begin The Legislative Inspector General Advisory Commission will
recommend candidates for inspector general after a competitive process from among eligible
applicants for the position of inspector general. To be recommended by the commission, a
candidate must be approved for recommendation by five of the eight members of the
commission. The commission must assess eligible candidates based on qualifications,
including experience in auditing, financial analysis, public administration, law enforcement,
or related fields. The chief judge of the Office of Administrative Hearings will appoint an
inspector general from the recommendations provided by the Legislative Inspector General
Advisory Commission.
new text end

new text begin Subd. 3. new text end

new text begin Term. new text end

new text begin The inspector general serves a five-year term and may be appointed to
two terms. The inspector general may only be removed for cause by the chief judge of the
Office of Administrative Hearings.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 6.

new text begin [15D.04] POWERS AND DUTIES.
new text end

new text begin The inspector general is authorized and responsible for:
new text end

new text begin (1) conducting inspections, evaluations, and investigations of state executive branch
agencies and programs according to professional auditing standards to: (i) identify fraud,
waste, abuse, and inefficiencies; (ii) make recommendations for changes to programs for
improving effectiveness and efficiency; and (iii) protect the integrity of the use of state
funds;
new text end

new text begin (2) referring matters for civil, criminal, or administrative action to the appropriate
authorities;
new text end

new text begin (3) recommending legislative or policy changes to improve program efficiency and
effectiveness;
new text end

new text begin (4) publishing reports on completion of an audit or investigation summarizing findings,
recommendations, and outcomes of the inspector general's activities;
new text end

new text begin (5) establishing a specialized division within the Office of the Inspector General to
investigate fraud, waste, and abuse involving state law enforcement and public safety
programs. This division shall ensure that investigations are independent and distinct from
the roles of the attorney general or Department of Public Safety;
new text end

new text begin (6) investigating any public or private entity that receives public funds to ensure
compliance with applicable laws, proper use of funds, and adherence to program
requirements; and
new text end

new text begin (7) submitting an annual report summarizing the work of the office to the Legislative
Inspector General Advisory Commission and make the report publicly available by posting
the report on the inspector general's website.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 7.

new text begin [15D.042] AUXILIARY POWERS.
new text end

new text begin Subdivision 1. new text end

new text begin Subpoena power. new text end

new text begin In all matters relating to official duties, the inspector
general has the powers possessed by courts of law to issue and have subpoenas served.
new text end

new text begin Subd. 2. new text end

new text begin Inquiry and inspection power; duty to aid inspector general. new text end

new text begin All public
officials and their deputies and employees, and all corporations, firms, and individuals
having business involving the receipt, disbursement, or custody of public funds shall at all
times:
new text end

new text begin (1) afford reasonable facilities for examinations by the inspector general;
new text end

new text begin (2) provide returns and reports required by the inspector general;
new text end

new text begin (3) attend and answer under oath the inspector general's lawful inquiries;
new text end

new text begin (4) produce and exhibit all books, accounts, documents, data of any classification, and
property that the inspector general requests to inspect; and
new text end

new text begin (5) in all things cooperate with the inspector general.
new text end

new text begin Subd. 3. new text end

new text begin Penalties. new text end

new text begin (a) If a person refuses or neglects to obey any lawful direction of
the inspector general, a deputy or assistant, or withholds any information, book, record,
paper or other document called for by the inspector general for the purpose of examination,
after having been lawfully required by order or subpoena, upon application by the auditor,
a judge of the district court in the county where the order or subpoena was made returnable
shall compel obedience or punish disobedience as for contempt, as in the case of a similar
order or subpoena issued by the court.
new text end

new text begin (b) A person who swears falsely concerning any matter stated under oath is guilty of a
gross misdemeanor.
new text end

Sec. 8.

new text begin [15D.046] DATA PRACTICES.
new text end

new text begin (a) It is not a violation of chapter 13 or any other statute classifying government data as
not public data as defined in section 13.02, subdivision 8a, if a government entity as defined
in section 13.02, subdivision 7a, provides data pursuant to a subpoena issued under this
section.
new text end

new text begin (b) The inspector general is subject to the Government Data Practices Act, chapter 13,
and shall protect from unlawful disclosure data classified as not public data.
new text end

new text begin (c) Data collected, created, received, or maintained by the inspector general relating to
an audit, investigation, proceeding, or inquiry are subject to section 13.39.
new text end

Sec. 9.

new text begin [15D.05] RESOURCES; APPROPRIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Staff. new text end

new text begin (a) The inspector general may hire and manage staff, including
certified public accountants, legal experts, and investigators, as necessary. The inspector
general must employ at least two licensed peace officers to serve as investigators and to
assist with investigations requiring specialized law enforcement knowledge. The staff in
the Office of the Inspector General shall serve in the classified civil service. Except as
provided in paragraph (b), compensation for employees of the inspector general in the
classified service who are represented by an exclusive representative shall be governed by
a collective bargaining agreement negotiated between the commissioner of management
and budget and the exclusive representative. Compensation for employees of the inspector
general in the classified service who are not represented by an exclusive representative shall
be as provided in the commissioner's plan under section 43A.18, subdivision 2.
new text end

new text begin (b) Section 15.039, subdivision 7, applies to employees transferred into the Office of
the Inspector General from other offices of inspectors general within the first year following
enactment of chapter 15D.
new text end

new text begin Subd. 2. new text end

new text begin Contracting. new text end

new text begin The inspector general may contract with external experts to
support the work of the office, subject to section 16C.08.
new text end

new text begin Subd. 3. new text end

new text begin Appropriation. new text end

new text begin $....... is appropriated each year from the general fund to the
chief administrative law judge for the operations of the Office of the Inspector General.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 10.

new text begin [15D.06] REPORTING AND TRANSPARENCY.
new text end

new text begin Subdivision 1. new text end

new text begin Reports. new text end

new text begin The inspector general must issue public reports detailing
completed audits, investigations, and corrective actions taken.
new text end

new text begin Subd. 2. new text end

new text begin Confidential information. new text end

new text begin In public reports, the inspector general must redact
sensitive or confidential information to comply with privacy laws and protect whistleblowers.
new text end

new text begin Subd. 3. new text end

new text begin Public tips. new text end

new text begin The inspector general must maintain a phone line and website for
reporting fraud, waste, and abuse that allows the person making the report to remain
anonymous.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 11.

new text begin [15D.07] PROFESSIONAL STANDARDS AND REVIEW.
new text end

new text begin (a) The inspector general's activities must adhere to professional standards as promulgated
by the Association of Inspectors General or other recognized bodies.
new text end

new text begin (b) The chief administrative law judge may contract for an external quality assurance
review of the inspector general every three years and must make findings from the review
public.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 12.

new text begin [15D.08] LEGISLATIVE INSPECTOR GENERAL ADVISORY
COMMISSION.
new text end

new text begin Subdivision 1. new text end

new text begin Membership. new text end

new text begin To ensure impartiality and independence, the inspector
general shall be appointed by the chief administrative law judge and supervised by the
Legislative Inspector General Advisory Commission comprised of:
new text end

new text begin (1) two senators appointed by the majority leader of the senate;
new text end

new text begin (2) two senators appointed by the minority leader of the senate;
new text end

new text begin (3) two members of the house of representatives appointed by the speaker of the house
of representatives; and
new text end

new text begin (4) two members of the house of representatives appointed by the minority leader of the
house of representatives.
new text end

new text begin Subd. 2. new text end

new text begin Terms. new text end

new text begin Members serve at the pleasure of their appointing authorities and each
member serves until a replacement is appointed.
new text end

new text begin Subd. 3. new text end

new text begin Per diem; expense reimbursement. new text end

new text begin Members may be compensated for time
spent on commission duties and may be reimbursed for expenses according to the rules of
their respective bodies.
new text end

new text begin Subd. 4. new text end

new text begin Meeting space; staff. new text end

new text begin The Legislative Coordinating Commission must provide
meeting space and staff to assist the commission in performing its duties.
new text end

new text begin Subd. 5. new text end

new text begin Open meetings. new text end

new text begin The Legislative Inspector General Advisory Commission is
subject to the requirements in section 3.055.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. The
commission must submit recommendations for an inspector general by January 1, 2026.
new text end

Sec. 13. new text begin OFFICE OF THE INSPECTOR GENERAL ESTABLISHMENT AND
TRANSITION.
new text end

new text begin Subdivision 1. new text end

new text begin Appointment. new text end

new text begin By January 1, 2026, the Legislative Inspector General
Advisory Commission must make recommendations for appointment of an inspector general
under Minnesota Statutes, section 15D.03. By February 1, 2026, the chief judge of the Office
of Administrative Hearings must appoint an inspector general from among the recommended
candidates.
new text end

new text begin Subd. 2. new text end

new text begin Operational. new text end

new text begin By September 1, 2026, the Office of the Inspector General must
be fully operational.
new text end

new text begin Subd. 3. new text end

new text begin Transition of employees. new text end

new text begin (a) Before September 1, 2026, all officers and
employees employed in an office of inspector general for a state agency shall transition to
employment under the Office of the Inspector General under Minnesota Statutes, chapter
15D, except as specified in subdivision 6.
new text end

new text begin (b) The following protections shall apply to employees who are transferred to the Office
of the Inspector General under Minnesota Statutes, chapter 15D, from state agencies:
new text end

new text begin (1) no transferred employee shall have their employment status and job classification
altered as a result of the transfer;
new text end

new text begin (2) transferred employees who were represented by an exclusive representative prior to
the transfer shall continue to be represented by the same exclusive representative after the
transfer;
new text end

new text begin (3) any applicable collective bargaining agreements with exclusive representatives shall
continue in full force and effect for transferred employees after the transfer while the
agreement remains in effect;
new text end

new text begin (4) when an employee in a temporary unclassified position is transferred to the Office
of the Inspector General, the total length of time that the employee has served in the
appointment must include all time served in the appointment at the transferring agency and
the time served in the appointment at the Office of the Inspector General. An employee in
a temporary unclassified position who was hired by a transferring agency through an open
competitive selection process under a policy enacted by the commissioner of management
and budget is considered to have been hired through a competitive selection process after
the transfer;
new text end

new text begin (5) the state must meet and negotiate with the exclusive representatives of the transferred
employees about proposed changes to the transferred employees' terms and conditions of
employment to the extent that the proposed changes are not addressed in the applicable
collective bargaining agreement; and
new text end

new text begin (6) if the state transfers ownership or control of any facilities, services, or operations of
the Office of the Inspector General to another private or public entity by subcontracting,
sale, assignment, lease, or other transfer, the state must require as a written condition of the
transfer of ownership or control the following:
new text end

new text begin (i) employees who perform work in the facilities, services, or operations must be offered
employment with the entity acquiring ownership or control before the entity offers
employment to any individual who was not employed by the transferring agency at the time
of the transfer; and
new text end

new text begin (ii) the wage and benefit standards of the transferred employees must not be reduced by
the entity acquiring ownership or control through the expiration of the collective bargaining
agreement in effect at the time of the transfer or for a period of two years after the transfer,
whichever is longer.
new text end

new text begin There is no liability on the part of, and no cause of action arises against, the state of
Minnesota or its officers or agents for any action or inaction of any entity acquiring ownership
or control of any facilities, services, or operations of the department.
new text end

new text begin Subd. 4. new text end

new text begin Assets. new text end

new text begin Before September 1, 2026, assets and unused appropriations for existing
offices of inspectors general shall be transferred to the Office of the Inspector General under
Minnesota Statutes, chapter 15D, except as specified in subdivision 6.
new text end

new text begin Subd. 5. new text end

new text begin Office space. new text end

new text begin The commissioner of administration must provide office space
on the Capitol Mall complex for the Office of the Inspector General under Minnesota
Statutes, chapter 15D, under a rental agreement.
new text end

new text begin Subd. 6. new text end

new text begin Exceptions. new text end

new text begin Positions in the following divisions and teams in the Department
of Human Services will not transfer to the Office of the Inspector General:
new text end

new text begin (1) background studies division;
new text end

new text begin (2) licensing division;
new text end

new text begin (3) enterprise operations and policy division;
new text end

new text begin (4) background studies legal team;
new text end

new text begin (5) licensing legal team;
new text end

new text begin (6) Medicaid program integrity team within program integrity oversight division; and
new text end

new text begin (7) Medicaid provider audits and investigations team within program integrity oversight
division.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2026.
new text end

Sec. 14. new text begin LEGISLATIVE INSPECTOR GENERAL ADVISORY COMMISSION;
INITIAL APPOINTMENTS AND FIRST MEETING.
new text end

new text begin Subdivision 1. new text end

new text begin Initial appointments. new text end

new text begin Appointing authorities must make appointments
to the Legislative Inspector General Advisory Commission by August 1, 2025.
new text end

new text begin Subd. 2. new text end

new text begin First meeting. new text end

new text begin The senate majority leader must designate one member of the
Legislative Inspector General Advisory Commission to convene the first meeting of the
Legislative Inspector General Advisory Commission by September 15, 2025.
new text end