SF 856

10th Engrossment - 94th Legislature (2025 - 2026) Posted on 05/09/2025 09:45am

A bill for an act
relating to state government; creating the Office of the Inspector General; creating
an advisory committee; requiring reports; transferring certain agency duties; placing
limits and prohibiting certain programs from receiving public funds; making
conforming and technical changes; providing for interagency agreements;
appropriating money; amending Minnesota Statutes 2024, sections 3.971, by adding
a subdivision; 13.82, subdivision 1; 15A.0815, subdivision 2; 127A.21, subdivisions
1a, 5, by adding subdivisions; 142A.03, by adding a subdivision; 142A.12,
subdivision 5; 144.05, by adding a subdivision; 181.932, subdivision 1; 245.095,
subdivision 5; 256.01, by adding a subdivision; 609.456, subdivision 2; 626.84,
subdivision 1; proposing coding for new law as Minnesota Statutes, chapter 15D;
repealing Minnesota Statutes 2024, sections 13.321, subdivision 12; 127A.21,
subdivisions 1, 2, 3, 4, 6, 7.

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

ARTICLE 1

OFFICE OF THE INSPECTOR GENERAL

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 fraud and misuse. new text end

new text begin Notwithstanding the classification of
data as not public, the legislative auditor must refer all reports from the public about potential
fraud or misuse, as those terms are defined in chapter 15D, to the inspector general. The
legislative auditor may coordinate reviews and investigations with the inspector general
when coordination conserves resources and does not compromise the reviews or
investigations.
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) In exercising the inspector general's powers and duties, the inspector general is in
the executive branch and must operate independently of all state executive branch agencies
and report directly to the governor. The inspector general must not be subject to direction
or interference from any executive or legislative authority.
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) "agency program" means a program funded or administered by a state agency,
including grants and contracts;
new text end

new text begin (2) "fraud" means an intentional or deceptive act or failure to act to gain an unlawful
benefit;
new text end

new text begin (3) "investigation" means an audit, review, or inquiry conducted by the inspector general
to detect or prevent fraud or misuse;
new text end

new text begin (4) "misuse" means improper use of authority or position for personal gain or to cause
harm to others, including the improper use of public resources or programs contrary to their
intended purpose; and
new text end

new text begin (5) "personal gain" means a benefit to a person; to a person's spouse, parent, child, or
other legal dependent; or to an in-law of the person or the person's child.
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 or higher 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, deputy agency heads, governors,
or legislators are not eligible to serve as inspector general within five years of their service
in those roles. A person elected to an office other than the governor or legislature is not
eligible until ten years after the end of service in an elected position.
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 inspector general is appointed by the governor, after consideration of
recommendations from the Legislative Inspector General Advisory Commission, with
confirmation by a vote of three-fifths of the senate. Section 15.066, subdivision 3, does not
apply.
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
unlimited additional terms. An appointment to an additional term must be confirmed by a
vote of three-fifths of the senate.
new text end

new text begin Subd. 4. new text end

new text begin Vacancy. new text end

new text begin The Legislative Inspector General Advisory Commission must provide
recommendations to the governor for appointment to fill a vacancy in the position of the
inspector general within 90 days of a vacancy occurring or within 60 days of being advised
by the inspector general that a vacancy is expected to occur. The governor must appoint an
inspector general within 30 days of receiving recommendations from the Legislative Inspector
General Advisory Commission or within 45 days of a vacancy occurring if the advisory
commission does not provide recommendations within the time allotted for recommendations
under this subdivision.
new text end

new text begin Subd. 5. new text end

new text begin Disclosure. new text end

new text begin A candidate considered by the Legislative Inspector General
Oversight Commission or selected for appointment by the governor must disclose all political
affiliations, appointments, campaign work, or partisan activities prior to confirmation.
new text end

new text begin Subd. 6. new text end

new text begin Nonpartisanship. new text end

new text begin The inspector general, and all employees of the office, must
perform duties of the office without regard to partisan preferences or influences. While
serving, the inspector general, and all employees of the office, may not engage in partisan
activities, campaign work, or public political speech, unless protected by the state or United
States Constitution.
new text end

new text begin Subd. 7. new text end

new text begin Conflict of interest; code of ethics. new text end

new text begin The inspector general and all employees
of the office are public officials for purposes of the conflict of interest and statement of
economic interest requirements in chapter 10A, and are subject to the code of ethics in
section 43A.38, where applicable.
new text end

new text begin Subd. 8. new text end

new text begin Removal. new text end

new text begin The inspector general may only be removed by the governor before
the expiration of the term for cause after a public hearing conducted by the governor and
with approval of both the senate and the house of representatives.
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 Subdivision 1. new text end

new text begin Authorized powers and responsibilities. new text end

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

new text begin (1) conduct inspections, evaluations, and investigations of state executive branch agencies
and programs according to professional auditing standards to: (i) identify fraud and misuse;
(ii) make recommendations for changes to programs to prevent fraud and misuse; and (iii)
protect the integrity of the use of public funds, data, and systems;
new text end

new text begin (2) refer matters for civil, criminal, or administrative action to the Office of the Inspector
General Anti-Fraud and Waste Bureau under section 15D.041, the Bureau of Criminal
Apprehension, the attorney general's office, or other appropriate authorities;
new text end

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

new text begin (4) publish 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) investigate any public or private entity that receives public funds to ensure compliance
with applicable laws, proper use of funds, and adherence to program requirements;
new text end

new text begin (6) submit 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 (7) alert relevant commissioners or heads of agencies when the inspector general has a
reasonable suspicion that fraud or misuse is being committed, whether or not the inspector
general is conducting an investigation, as provided in subdivision 3; and
new text end

new text begin (8) establish and maintain a current exclusion list in a format readily accessible to
agencies that identifies each program and individual for which the inspector general has
obtained a court order to freeze or cease distribution of funds or made a recommendation
under clause (7) to freeze or cease distribution of funds.
new text end

new text begin Subd. 2. new text end

new text begin Relationship to powers and duties of other agencies. new text end

new text begin (a) The inspector general
has authority to investigate fraud and misuse of public funds across all programs administered
by state agencies.
new text end

new text begin (b) The inspector general may perform the inspector general's duties and apply the
inspector general's authority without obtaining approval from another agency.
new text end

new text begin (c) The Department of Human Services has primary responsibility to investigate fraud
in the Medicaid program, but the inspector general has authority to conduct independent
investigations related to the Medicaid program as necessary.
new text end

new text begin (d) The Department of Children, Youth, and Families has primary responsibility to
investigate fraud in the child care assistance program, but the inspector general has authority
to conduct independent investigations related to the child care assistance program.
new text end

new text begin (e) The Department of Health has primary responsibility to investigate fraud related to
women, infants, and children (WIC) and food support programs, but the inspector general
has authority to conduct independent investigations related to WIC and food support
programs.
new text end

new text begin (f) The inspector general has concurrent authority over general compliance reviews,
information technology security audits, or administrative program integrity assessments
that are related to fraud or misuse.
new text end

new text begin (g) The inspector general must refer all reports from the public about potential fraud or
misuse to the legislative auditor, and to the commissioner of human services for reports
related to Medicaid. The inspector general may coordinate investigations with the legislative
auditor, and the commissioner of human services for investigations related to Medicaid,
when coordination conserves resources and does not compromise an investigation.
new text end

new text begin (h) The Department of Information Technology Services shall provide services to the
Office of the Inspector General, under a managed services contract, according to section
16E.016.
new text end

new text begin Subd. 3. new text end

new text begin Alerting agency of issue; seeking a court order to freeze funds. new text end

new text begin (a) If the
agency does not have primary investigative authority under subdivision 2, the inspector
general shall investigate and, if the inspector general has a reasonable suspicion that fraud
or misuse is occurring, then the inspector general may, at the inspector general's discretion,
alert the commissioner and seek a court order to freeze or stop distribution of public funds,
including any applicable due process and appeal rights, working in cooperation with the
agency where practical and where it would not jeopardize an investigation.
new text end

new text begin (b) If the agency has primary investigative authority under subdivision 2 but the inspector
general is not satisfied that the agency's internal investigation is adequate or proceeding
quickly enough, the inspector general may independently investigate and, if the inspector
general has a reasonable suspicion that fraud or misuse is being committed, may make a
recommendation to the agency to freeze or cease distribution of funds and notify the
appropriate law enforcement agencies.
new text end

new text begin (c) If a commissioner or head of an agency does not act on a recommendation to freeze
or cease distribution of funds as requested, after reasonable notice and consistent with any
applicable interagency agreements under section 18, unless prohibited by federal
requirements, the inspector general may, at the inspector general's discretion, seek a court
order to freeze or stop distribution of public funds, consistent with applicable due process
and appeal rights.
new text end

new text begin (d) If public funds are stopped or frozen pursuant to this subdivision, the inspector
general, working with and through the applicable state agency, must ensure that any person
whose public funds are interrupted and who is not implicated in the suspected fraud or
misuse receive notice of their rights related to continued receipt of the public funds, services,
or programs for which they are eligible.
new text end

new text begin Subd. 4. new text end

new text begin Exceptions for federal funding. new text end

new text begin The inspector general must not comply with
any provision under this section if compliance with the provision would prevent the state
from receiving federal financial participation for the medical assistance program or result
in a lower level of coverage or reduced access to coverage for medical assistance enrollees.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Subdivision 2, paragraph (c), and subdivision 3, paragraphs (b)
and (c), are effective January 1, 2026, or upon federal approval from the Centers for Medicare
and Medicaid Services, whichever is later. The commissioner of human services must notify
the revisor of statutes when the Centers for Medicare and Medicaid Services approve or
deny this section. The remainder of this section is effective January 1, 2026.
new text end

Sec. 7.

new text begin [15D.041] LAW ENFORCEMENT POWERS.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization. new text end

new text begin (a) The inspector general may appoint peace officers, as
defined in section 626.84, subdivision 1, paragraph (c), and establish a law enforcement
agency, as defined in section 626.84, subdivision 1, paragraph (f), known as the Office of
the Inspector General Anti-Fraud and Waste Bureau, to conduct statewide investigations,
and to make statewide arrests under sections 629.30 and 629.34. The primary jurisdiction
of the agency is limited to offenses involving fraud, abuse, and any other criminal conduct
within the jurisdiction of the Office of the Inspector General as described in this chapter.
new text end

new text begin (b) Upon request and at the inspector general's discretion, the bureau may respond to a
law enforcement agency's request to exercise law enforcement duties in cooperation with
the law enforcement agency that has jurisdiction over the particular matter.
new text end

new text begin Subd. 2. new text end

new text begin Arrests and investigations. new text end

new text begin The initial processing of a person arrested by the
bureau for an offense within its jurisdiction is the responsibility of the bureau unless otherwise
directed by the law enforcement agency with primary jurisdiction. Subsequent investigation
is the responsibility of the bureau unless otherwise directed by the law enforcement agency
with primary jurisdiction. At the request of the primary jurisdiction, the bureau may assist
in a subsequent investigation being carried out by the primary jurisdiction.
new text end

new text begin Subd. 3. new text end

new text begin Policy for notice of investigations. new text end

new text begin The bureau must develop a policy for
notifying the law enforcement agency with primary jurisdiction when it has initiated
investigation of any person within the jurisdiction of that agency.
new text end

new text begin Subd. 4. new text end

new text begin Chief law enforcement officer. new text end

new text begin If the inspector general establishes a law
enforcement agency under this section, the inspector general shall appoint a peace officer
employed full time to be the chief law enforcement officer and to be responsible for the
management of the bureau. The chief law enforcement officer shall possess the necessary
police and management experience to manage a law enforcement agency. The chief law
enforcement officer may appoint, discipline, and discharge all employees of the bureau. All
police managerial and supervisory personnel must be full-time employees of the bureau.
Supervisory personnel must be on duty and available any time peace officers of the bureau
are on duty.
new text end

new text begin Subd. 5. new text end

new text begin Compliance; powers and duties. new text end

new text begin (a) Except as otherwise provided in this
section, the bureau shall comply with all statutes and administrative rules relating to the
operation and management of a law enforcement agency.
new text end

new text begin (b) The bureau has the powers and duties of a law enforcement agency as provided by
law, including this section. Other powers and duties provided to the inspector general or
the Office of the Inspector General under this chapter do not apply to the bureau.
new text end

new text begin Subd. 6. new text end

new text begin Evidence, documentation, and related materials. new text end

new text begin If the bureau seeks evidence,
documentation, and related materials pertinent to an investigation, and the matter is located
outside of this state, the bureau may designate representatives, including officials of the
state where the matter is located, to secure the matter or inspect the matter on its behalf.
new text end

new text begin Subd. 7. new text end

new text begin Annual report on activities and cost-effectiveness. new text end

new text begin The bureau shall maintain
records and information in order to produce an annual report of its activities as may be
prescribed by the inspector general. The inspector general shall report annually to the chairs
and ranking minority members of the house of representatives and senate committees with
jurisdiction over the inspector general as to the activities and the cost-effectiveness of the
bureau.
new text end

new text begin Subd. 8. new text end

new text begin Assignment of peace officers. new text end

new text begin Regardless of whether a law enforcement agency
is established under this section, the inspector general may enter into memorandums of
understanding with chief law enforcement officers of state and local law enforcement
agencies to allow peace officers from those agencies to be assigned with the Office of the
Inspector General to enforce criminal laws and investigate matters within the jurisdiction
of the office. A peace officer assigned under this subdivision must be a licensed peace
officer as defined in section 626.84, subdivision 1, paragraph (c). Participating officers
remain employees of the same entity that employed them before being assigned under this
subdivision. Participating officers are subject to annual performance reviews conducted by
the entity's operational supervisor. Peace officers assigned under this subdivision have
statewide jurisdiction to conduct criminal investigations and have the same powers of arrest
as those possessed by a sheriff.
new text end

new text begin Subd. 9. new text end

new text begin Data practices. new text end

new text begin The Office of the Inspector General Anti-Fraud and Waste
Bureau is subject to chapter 13.
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. 8.

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 inspector
general, 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. 9.

new text begin [15D.043] IDENTIFICATION OF FRAUD REPORTING TOOL.
new text end

new text begin (a) The commissioner or other chief executive officer of each agency must prominently
highlight on the agency's website the fraud reporting tools administered by the Office of
the Inspector General and the Office of the Legislative Auditor under chapter 3.
new text end

new text begin (b) As part of any grant agreement between the state and a nonprofit organization, the
agreement must require the nonprofit organization to prominently highlight on the
organization's website the fraud reporting tools administered by the Office of the Inspector
General, under chapter 15, and the Office of the Legislative Auditor, under chapter 3. The
state agency administering the grant must regularly confirm and document the organization's
compliance with the requirement under this paragraph for the life of the grant agreement.
new text end

Sec. 10.

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

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Confidential data on individuals" has the meaning given in section 13.02, subdivision
3.
new text end

new text begin (c) "Government entity" has the meaning given in section 13.02, subdivision 7a.
new text end

new text begin (d) "Nonpublic data" has the meaning given in section 13.02, subdivision 9.
new text end

new text begin (e) "Not public data" has the meaning given in section 13.02, subdivision 8a.
new text end

new text begin (f) "Private data on individuals" has the meaning given in section 13.02, subdivision 12.
new text end

new text begin (g) "Protected nonpublic data" has the meaning given in section 13.02, subdivision 13.
new text end

new text begin Subd. 2. new text end

new text begin Government Data Practices Act. new text end

new text begin The inspector general is a government entity
and is subject to the Government Data Practices Act, chapter 13.
new text end

new text begin Subd. 3. new text end

new text begin Access. new text end

new text begin In order to perform the duties authorized by this chapter, the inspector
general shall have access to data of any classification, including data classified as not public
data. It is not a violation of chapter 13 or any other statute classifying government data as
not public data if a government entity provides data pursuant to a subpoena issued under
this chapter.
new text end

new text begin Subd. 4. new text end

new text begin Dissemination. new text end

new text begin The inspector general may disseminate data of any classification,
including not public data, to:
new text end

new text begin (1) a government entity, other than a law enforcement agency or prosecuting authority,
if the dissemination of the data aids a pending investigation or administrative action;
new text end

new text begin (2) a law enforcement agency or prosecuting authority if there is reason to believe that
the data are evidence of criminal activity within the agency's or authority's jurisdiction; or
new text end

new text begin (3) the legislative auditor or commissioner of human services as provided in section
15D.04, subdivision 2, paragraph (g).
new text end

new text begin Subd. 5. new text end

new text begin Data classifications; civil investigations. new text end

new text begin (a) Notwithstanding any other law,
data relating to a civil investigation conducted under this chapter are confidential data on
individuals or protected nonpublic data while the investigation is active. Whether a civil
investigation is active shall be determined by the inspector general.
new text end

new text begin (b) Data relating to a civil investigation conducted under this chapter become public
data upon the inspector general's completion of the investigation, unless:
new text end

new text begin (1) the release of the data would jeopardize another active investigation by the inspector
general or another government entity;
new text end

new text begin (2) the inspector general reasonably believes the data will be used in litigation related
to any civil, criminal, or administrative actions, including reconsideration or appeal of any
such action; or
new text end

new text begin (3) the data are classified as not public under another statute or paragraph (e).
new text end

new text begin (c) Data subject to paragraph (b), clause (2), are confidential data on individuals or
protected nonpublic data and become public when the litigation has been completed or the
time period to appeal has expired, or the litigation is no longer being actively pursued.
new text end

new text begin (d) Unless the data are subject to a more restrictive classification, upon the inspector
general's decision to no longer actively pursue a civil investigation under this chapter, data
relating to a civil investigation are private data on individuals or nonpublic data except the
following data are public:
new text end

new text begin (1) data relating to the investigation's general description, existence, status, and
disposition; and
new text end

new text begin (2) data that document the inspector general's work.
new text end

new text begin (e) Inactive civil investigative data on an individual supplying information for an
investigation that could reasonably be used to determine the individual's identity are private
data on individuals if the information supplied was needed for the investigation and would
not have been provided to the inspector general without an assurance to the individual that
the individual's identity would remain private.
new text end

new text begin (f) Data relating to a civil investigation conducted under this chapter that are obtained
from an entity that is not a government entity have the same classification that the data
would have if obtained from a government entity.
new text end

new text begin Subd. 6. new text end

new text begin Privileges. new text end

new text begin Nothing in this section or section 15D.042 requires the disclosure
of documents or information that is legally privileged under statute or other law, including
documents or information subject to section 13.393 or 595.02.
new text end

new text begin Subd. 7. new text end

new text begin Criminal investigations. new text end

new text begin This section does not apply to criminal investigations
conducted by the Office of the Inspector General Anti-Fraud and Waste Bureau under
section 15D.041.
new text end

Sec. 11.

new text begin [15D.05] RESOURCES.
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 as necessary
and in accordance with chapter 43A. The inspector general must employ and manage at
least one attorney to serve as legal counsel for the office and to advise the inspector general
on all legal matters relating to the office. Except for the inspector general, 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, or by the
managerial plan under section 43A.18, subdivision 3, depending on the employee's job
classification.
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 EFFECTIVE DATE. new text end

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

Sec. 12.

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 Public tips. new text end

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

new text begin Subd. 3. new text end

new text begin Report; inactive investigations. new text end

new text begin By December 1, 2026, and each December
1 thereafter, the inspector general must submit a report to the legislative auditor and the
chairs and ranking minority members of the legislative committees with jurisdiction over
state government and data practices regarding all investigations the inspector general did
not open after receiving a tip or complaint or decided to no longer actively pursue for the
preceding calendar year. The report must include, at a minimum, summary data as defined
in section 13.02, subdivision 19, for:
new text end

new text begin (1) all complaints or tips received;
new text end

new text begin (2) the type of allegation;
new text end

new text begin (3) if the complaint or tip was not frivolous, the reason that the inspector general did
not open an investigation or decided to no longer pursue the investigation; and
new text end

new text begin (4) referrals to other agencies or the legislative auditor.
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. 13.

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 governor 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. 14.

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 The Legislative Inspector General Advisory Commission
is 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 Chair. new text end

new text begin The commission must select a chair after consideration of its members
by January 31 of each odd-numbered year. The chair shall serve until a successor is elected.
The chair must alternate biennially between the senate and the house of representatives.
new text end

new text begin Subd. 4. new text end

new text begin Duties. new text end

new text begin (a) The Legislative Inspector General Advisory Commission must:
new text end

new text begin (1) consider applicants for and make recommendations to the governor for the position
of inspector general; and
new text end

new text begin (2) may conduct hearings to review the work of the inspector general to ensure
impartiality, independence, and effectiveness.
new text end

new text begin (b) By January 1, 2026, the commission must conduct at least one hearing on, and provide
recommendations to the chairs and ranking minority members of the committees in the
senate and the house of representatives with jurisdiction over commerce and public safety
on, merging the Financial Crimes and Fraud Section of the Department of Public Safety
into the Office of the Inspector General. The recommendations should include proposed
legislation to effectuate the merger.
new text end

new text begin Subd. 5. 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. 6. 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. 7. 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. 15.

Minnesota Statutes 2024, section 609.456, subdivision 2, is amended to read:

Subd. 2.

Legislative auditor new text begin and inspector general new text end .

Whenever an employee or officer
of the state, University of Minnesota, or other organization listed in section 3.971, subdivision
6, discovers evidence of new text begin fraud, new text end theft, embezzlement, or new text begin other new text end unlawful use of public funds
or property, the employee or officer shall deleted text begin , except when to do so would knowingly impede
or otherwise interfere with an ongoing criminal investigation, deleted text end promptly report in writing to
the legislative auditor new text begin or inspector general new text end a detailed description of the alleged incident or
incidents.

Sec. 16. 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 Notwithstanding Minnesota Statutes, section 15D.03,
subdivision 4, 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 governor 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 (a) Positions, and assets and unused appropriations related to these
positions, in the Department of Human Services will not transfer to the Office of the Inspector
General.
new text end

new text begin (b) No employees or positions in the Department of Corrections are transferred under
this section.
new text end

new text begin (c) No employees or positions in the student maltreatment program of the Department
of Education or other Department of Education employees or positions dedicated to student
maltreatment investigations under Minnesota Statutes, chapter 260E, are transferred under
this section.
new text end

new text begin (d) No employees or positions in the Department of Children, Youth, and Families will
transfer to 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. 17. 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

new text begin Subd. 3. new text end

new text begin Chair. new text end

new text begin The Legislative Inspector General Advisory Commission must elect a
chair from among its senate members at its first meeting. The first chair shall serve until a
successor is selected at the start of the next biennium as provided in Minnesota Statutes,
section 15D.08, subdivision 3.
new text end

Sec. 18. new text begin INTERAGENCY AGREEMENTS.
new text end

new text begin (a) By December 31, 2026, the Office of the Inspector General must enter into an
interagency agreement with the Department of Human Services. The agreement must not
preclude the agency from performing, or give the inspector general authority to take actions
that would interfere with the agency's ability to perform, duties required as a condition for
securing or maintaining federal funding. The interagency agreement must include a clause
on cost-sharing for investigations that may require multiagency coordination and a clause
that details what process will be followed if a joint investigation is required. The interagency
agreement must not limit the inspector general's authority or authorized powers and
responsibilities. The agency and the inspector general may coordinate investigative efforts
as necessary or practical, but an interagency agreement must not diminish, delay, or restrict
the inspector general's ability to investigate fraud and misuse when an independent
investigation is pursued.
new text end

new text begin (b) By December 31, 2026, the Office of the Inspector General must enter into an
interagency agreement with the Department of Children, Youth, and Families. The
interagency agreement must include a clause on cost-sharing for investigations that may
require multiagency coordination and a clause that details what process will be followed if
a joint investigation is required. The interagency agreement must not limit the inspector
general's authority or authorized powers and responsibilities. The agency and the inspector
general may coordinate investigative efforts as necessary or practical, but an interagency
agreement must not diminish, delay, or restrict the inspector general's ability to investigate
fraud and misuse when an independent investigation is pursued.
new text end

new text begin (c) By December 31, 2026, the Office of the Inspector General must enter into an
interagency agreement with the Department of Health. The interagency agreement must
include a clause on cost-sharing for investigations that may require multiagency coordination
and a clause that details what process will be followed if a joint investigation is required.
The interagency agreement must not limit the inspector general's authority or authorized
powers and responsibilities. The agency and the inspector general may coordinate
investigative efforts as necessary or practical, but an interagency agreement must not
diminish, delay, or restrict the inspector general's ability to investigate fraud and misuse
when an independent investigation is pursued.
new text end

new text begin (d) As soon as practicable after January 1, 2026, the Office of the Inspector General
must enter into an interagency agreement with the Department of Education. The interagency
agreement must not limit the inspector general's authority or authorized powers and
responsibilities. Effective immediately, nothing in Minnesota Statutes, chapter 15D,
authorizes any sanction by the commissioner or inspector general that reduces, pauses, or
otherwise interrupts state or federal aid to a school district; charter school; cooperative unit
as defined by Minnesota Statutes, section 123A.24, subdivision 2; or any library, library
system, or library district defined in Minnesota Statutes, section 134.001.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective January 1, 2026, or upon federal approval
from the Centers for Medicare and Medicaid Services, whichever is later. The commissioner
of human services must notify the revisor of statutes when the Centers for Medicare and
Medicaid Services approve or deny this section. The remainder of this section is effective
January 1, 2026.
new text end

Sec. 19. new text begin APPROPRIATIONS.
new text end

new text begin (a) $644,000 in fiscal year 2026 and $430,000 in fiscal year 2027 are appropriated from
the general fund to the commissioner of administration to establish the Office of the Inspector
General. This is a onetime appropriation.
new text end

new text begin (b) $3,034,000 in fiscal year 2026 and $4,432,000 in fiscal year 2027 are appropriated
from the general fund to the Office of the Inspector General for purposes of this act. The
base for this appropriation is $4,439,000 in fiscal year 2028 and $4,474,000 in fiscal year
2029 and each fiscal year thereafter. The commissioner of administration, in consultation
with the commissioner of management and budget, may transfer amounts in fiscal year
2026 and fiscal year 2027 to the commissioner of administration for office build out, cost
of space, office equipment, and other costs directly related to the establishment of the office.
new text end

ARTICLE 2

CONFORMING ITEMS AND REPEALERS

Section 1.

Minnesota Statutes 2024, section 13.82, subdivision 1, is amended to read:

Subdivision 1.

Application.

This section shall apply to agencies which carry on a law
enforcement function, including but not limited to municipal police departments, county
sheriff departments, fire departments, the Bureau of Criminal Apprehension, the Minnesota
State Patrol, the Board of Peace Officer Standards and Training, the Department of
Commerce, new text begin the Office of the Inspector General Anti-Fraud and Waste Bureau, new text end and county
human service agency client and provider fraud investigation, prevention, and control units
operated or supervised by the Department of Human Services.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2024, section 127A.21, subdivision 1a, is amended to read:

Subd. 1a.

Definitions.

(a) For purposes of this section, the following terms have the
meanings given.

deleted text begin (b) "Abuse" means actions that may, directly or indirectly, result in unnecessary costs
to department programs. Abuse may involve paying for items or services when there is no
legal entitlement to that payment.
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end "Department program" means a program funded by the Department of Education
that involves the transfer or disbursement of public funds or other resources to a program
participant. "Department program" includes state and federal aids or grants received by a
school district or charter school or other program participant.

new text begin (c) "Inspector general" refers to the inspector general as defined in section 15D.01.
new text end

deleted text begin (d) "Fraud" means an intentional or deliberate act to deprive another of property or
money or to acquire property or money by deception or other unfair means. Fraud includes
intentionally submitting false information to the department for the purpose of obtaining a
greater compensation or benefit than that to which the person is legally entitled. Fraud also
includes failure to correct errors in the maintenance of records in a timely manner after a
request by the department.
deleted text end

deleted text begin (e) "Investigation" means an audit, investigation, proceeding, or inquiry by the Office
of the Inspector General related to a program participant in a department program.
deleted text end

deleted text begin (f) deleted text end new text begin (d) new text end "Program participant" means any entity or person, including associated persons,
that receives, disburses, or has custody of funds or other resources transferred or disbursed
under a department program.

deleted text begin (g) "Waste" means practices that, directly or indirectly, result in unnecessary costs to
department programs, such as misusing resources.
deleted text end

deleted text begin (h) For purposes of this section, neither "fraud," "waste," nor "abuse" includes decisions
on instruction, curriculum, personnel, or other discretionary policy decisions made by a
school district, charter school, cooperative unit as defined by section 123A.24, subdivision
2, or any library, library system, or library district defined in section 134.001.
deleted text end

Sec. 3.

Minnesota Statutes 2024, section 127A.21, subdivision 5, is amended to read:

Subd. 5.

Sanctions; appeal.

(a) This subdivision does not authorize any sanction that
reduces, pauses, or otherwise interrupts state or federal aid to a school district, charter school,
cooperative unit as defined by section 123A.24, subdivision 2, or any library, library system,
or library district defined in section 134.001.

(b) The inspector general may recommend that the commissioner impose appropriate
deleted text begin temporary deleted text end sanctions deleted text begin , including withholding of payments under the department program, on
a program participant pending an investigation by the Office of the Inspector General deleted text end if:

deleted text begin (1) during the course of an investigation, the Office of the Inspector General finds credible
indicia of fraud, waste, or abuse by the program participant;
deleted text end

deleted text begin (2) deleted text end new text begin (1) new text end there has been a criminal, civil, or administrative adjudication of fraud deleted text begin , waste,
or abuse deleted text end new text begin or misuse new text end against the program participant in Minnesota or in another state or
jurisdiction; new text begin or
new text end

deleted text begin (3) the program participant was receiving funds under any contract or registered in any
program administered by another Minnesota state agency, a government agency in another
state, or a federal agency, and was excluded from that contract or program for reasons
credibly indicating fraud, waste, or abuse by the program participant; or
deleted text end

deleted text begin (4) deleted text end new text begin (2) new text end the program participant has a pattern of noncompliance with an investigation.

(c) If an investigation finds, by a preponderance of the evidence, fraud, deleted text begin waste, deleted text end or deleted text begin abuse deleted text end new text begin
misuse new text end by a program participant, the inspector general may, after reviewing all facts and
evidence and when acting judiciously on a case-by-case basis, recommend that the
commissioner impose appropriate sanctions on the program participant.

(d) Unless prohibited by law, the commissioner has the authority to implement
recommendations by the inspector general, including imposing appropriate sanctions,
temporarily or otherwise, on a program participant. Sanctions may include ending program
participation, stopping disbursement of funds or resources, monetary recovery, and
termination of department contracts with the participant for any current or future department
program or contract. A sanction may be imposed for up to the longest period permitted by
state or federal law. Sanctions authorized under this subdivision are in addition to other
remedies and penalties available under law.

(e) If the commissioner imposes sanctions on a program participant under this subdivision,
the commissioner must notify the participant in writing within seven business days of
imposing the sanction, unless requested in writing by a law enforcement agency to
temporarily delay issuing the notice to prevent disruption of an ongoing law enforcement
agency investigation. A notice of sanction must state:

(1) the sanction being imposed;

(2) the general allegations that form the basis for the sanction;

(3) the duration of the sanction;

(4) the department programs to which the sanction applies; and

(5) how the program participant may appeal the sanction pursuant to paragraph deleted text begin (f) deleted text end new text begin (e) new text end .

(f) A program participant sanctioned under this subdivision may, within 30 days after
the date the notice of sanction was mailed to the participant, appeal the determination by
requesting in writing that the commissioner initiate a contested case proceeding under
chapter 14. The scope of any contested case hearing is limited to the sanction imposed under
this subdivision. An appeal request must specify with particularity each disputed item, the
reason for the dispute, and must include the name and contact information of the person or
entity that may be contacted regarding the appeal.

(g) The commissioner shall lift sanctions imposed under this subdivision if the Office
of the Inspector General new text begin notifies the commissioner that it new text end determines there is insufficient
evidence of fraud deleted text begin , waste, deleted text end or deleted text begin abuse deleted text end new text begin misuse new text end by the program participant. The commissioner
must notify the participant in writing within seven business days of lifting the sanction.

Sec. 4.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to
read:

new text begin Subd. 8. new text end

new text begin Limits on receiving public funds; prohibition. new text end

new text begin (a) This subdivision does not
authorize any action that reduces, pauses, or otherwise interrupts state or federal aid to a
school district; charter school; cooperative unit as defined in section 123A.24, subdivision
2; or any library, library system, or library district defined in section 134.001.
new text end

new text begin (b) For purposes of this subdivision, "program participant" includes individuals or persons
who have an ownership interest in, control of, or the ability to control a program participant
in a department program.
new text end

new text begin (c) If a program participant is excluded from a department program, the commissioner
may:
new text end

new text begin (1) prohibit the excluded program participant from enrolling in, receiving grant money
from, or registering in any other program administered by the commissioner; and
new text end

new text begin (2) disenroll or disqualify the excluded program participant from any other program
administered by the commissioner.
new text end

new text begin (d) If a program participant enrolled, licensed, or receiving funds under any contract or
program administered by a Minnesota state agency or federal agency is excluded from that
program, the inspector general shall notify the commissioner, who may:
new text end

new text begin (1) prohibit the excluded program participant from enrolling in, becoming licensed,
receiving grant money from, or registering in any other program administered by the
commissioner; and
new text end

new text begin (2) disenroll or disqualify the excluded program participant from any other program
administered by the commissioner.
new text end

new text begin (e) The duration of a prohibition, disenrollment, revocation, suspension, or
disqualification under paragraph (c) must last for the longest applicable sanction or
disqualifying period in effect for the program participant permitted by state or federal law.
The duration of a prohibition, disenrollment, revocation, suspension, or disqualification
under paragraph (d) may last up until the longest applicable sanction or disqualifying period
in effect for the program participant as permitted by state or federal law.
new text end

Sec. 5.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to
read:

new text begin Subd. 9. new text end

new text begin Notice. new text end

new text begin Within five days of taking an action against a program participant under
subdivision 8, paragraph (c) or (d), the commissioner must send notice of the action to the
program participant. The notice must state the:
new text end

new text begin (1) basis for the action;
new text end

new text begin (2) effective date of the action;
new text end

new text begin (3) right to appeal the action; and
new text end

new text begin (4) requirements and procedures for reinstatement.
new text end

Sec. 6.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to
read:

new text begin Subd. 10. new text end

new text begin Appeal. new text end

new text begin (a) Upon receipt of a notice under subdivision 9, a program participant
may request a contested case hearing, as defined in section 14.02, subdivision 3, by filing
with the commissioner a written request of appeal. The appeal request must be received by
the commissioner no later than 30 days after the date the notification was mailed to the
program participant.
new text end

new text begin (b) The appeal request must specify:
new text end

new text begin (1) each disputed item and the reason for the dispute;
new text end

new text begin (2) the authority in statute or rule upon which the program participant relies for each
disputed item;
new text end

new text begin (3) the name and address of the person or entity with whom contacts may be made
regarding the appeal; and
new text end

new text begin (4) other information required by the commissioner.
new text end

new text begin (c) Unless a timely and proper appeal is received by the commissioner, the action of the
commissioner shall be considered final and binding on the effective date of the action as
stated in the notice under subdivision 9, clause (2).
new text end

Sec. 7.

Minnesota Statutes 2024, section 127A.21, is amended by adding a subdivision to
read:

new text begin Subd. 11. new text end

new text begin Withholding of payments. new text end

new text begin (a) This subdivision does not authorize withholding
of payments that reduces, pauses, or otherwise interrupts state or federal aid to a school
district; charter school; cooperative unit as defined in section 123A.24, subdivision 2; or
any library, library system, or library district defined in section 134.001.
new text end

new text begin (b) Except as otherwise provided by state or federal law, the inspector general shall
notify and recommend to the commissioner to withhold payments to a program participant
in any program administered by the commissioner, who shall have the authority to withhold
such payments to the extent permitted under federal law, if the inspector general determines
there is a credible allegation of fraud or misuse for which an investigation is pending for a
program administered by the department, a Minnesota state agency, or a federal agency.
new text end

new text begin (c) Allegations are considered credible when they have indicia of reliability and the
inspector general has reviewed the evidence and acts on a case-by-case basis. A credible
allegation of fraud is an allegation that has been verified by the commissioner from any
source, including but not limited to:
new text end

new text begin (1) fraud hotline complaints;
new text end

new text begin (2) claims data mining; and
new text end

new text begin (3) patterns identified through provider audits, civil false claims cases, and investigations.
new text end

new text begin (d) The commissioner must send notice of the withholding of payments within five days
of taking such action. The notice must:
new text end

new text begin (1) state that payments are being withheld according to this paragraph;
new text end

new text begin (2) set forth the general allegations as to the reasons for the withholding action, but need
not disclose any specific information concerning an ongoing investigation;
new text end

new text begin (3) state that the withholding is for a temporary period and cite the circumstances under
which withholding will be terminated; and
new text end

new text begin (4) inform the program participant of the right to submit written evidence for
consideration by the commissioner.
new text end

new text begin (e) The withholding of payments shall not continue after the inspector general determines
there is insufficient evidence of fraud by the program participant or after legal proceedings
relating to the alleged fraud are completed, unless the commissioner has sent notice under
subdivision 5 of the intention to take an additional action related to the program participant's
participation in a program administered by the commissioner. If the inspector general
determines there is insufficient evidence of fraud by the program participant or after legal
proceedings relating to the alleged fraud are completed, the inspector general shall notify
the commissioner within ten days of the determination.
new text end

new text begin (f) The withholding of payments is a temporary action and shall not be subject to appeal
under this subdivision or chapter 14.
new text end

Sec. 8.

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

new text begin Subd. 35. new text end

new text begin Office of the Inspector General; reports. new text end

new text begin The commissioner must submit
final investigative reports to the inspector general, serving under section 15D.01, for any
investigation conducted by the commissioner into fraud or misuse, as defined in section
15D.02, within the child care assistance program.
new text end

Sec. 9.

Minnesota Statutes 2024, section 142A.12, subdivision 5, is amended to read:

Subd. 5.

Withholding of payments.

(a) Except as otherwise provided by state or federal
law, the commissioner may withhold payments to a provider, vendor, individual, associated
individual, or associated entity in any program administered by the commissioner if the
commissioner determines there is a credible allegation of fraud for which an investigation
is pending for a program administered by a Minnesota state or federal agency.

(b) For purposes of this subdivision, "credible allegation of fraud" means an allegation
that has been verified by the commissioner from any source, including but not limited to:

(1) fraud hotline complaints;

(2) claims data mining;

(3) patterns identified through provider audits, civil false claims cases, and law
enforcement investigations; deleted text begin and
deleted text end

(4) court filings and other legal documents, including but not limited to police reports,
complaints, indictments, informations, affidavits, declarations, and search warrants new text begin ; and
new text end

new text begin (5) information from the inspector general, including information listed on the inspector
general's exclusion list under section 15D.04, subdivision 1, clause (8) new text end .

(c) The commissioner must send notice of the withholding of payments within five days
of taking such action. The notice must:

(1) state that payments are being withheld according to this subdivision;

(2) set forth the general allegations related to the withholding action, except the notice
need not disclose specific information concerning an ongoing investigation;

(3) state that the withholding is for a temporary period and cite the circumstances under
which the withholding will be terminated; and

(4) inform the provider, vendor, individual, associated individual, or associated entity
of the right to submit written evidence to contest the withholding action for consideration
by the commissioner.

(d) If the commissioner withholds payments under this subdivision, the provider, vendor,
individual, associated individual, or associated entity has a right to request administrative
reconsideration. A request for administrative reconsideration must be made in writing, state
with specificity the reasons the payment withholding decision is in error, and include
documents to support the request. Within 60 days from receipt of the request, the
commissioner shall judiciously review allegations, facts, evidence available to the
commissioner, and information submitted by the provider, vendor, individual, associated
individual, or associated entity to determine whether the payment withholding should remain
in place.

(e) The commissioner shall stop withholding payments if the commissioner determines
there is insufficient evidence of fraud by the provider, vendor, individual, associated
individual, or associated entity or when legal proceedings relating to the alleged fraud are
completed, unless the commissioner has sent notice under subdivision 3 to the provider,
vendor, individual, associated individual, or associated entity.

(f) The withholding of payments is a temporary action and is not subject to appeal under
section 256.0451 or chapter 14.

Sec. 10.

Minnesota Statutes 2024, section 144.05, is amended by adding a subdivision to
read:

new text begin Subd. 9. new text end

new text begin Office of the Inspector General; reports. new text end

new text begin The commissioner must submit
final investigative reports to the inspector general serving under section 15D.01 for any
investigation conducted by the commissioner into fraud or misuse, as defined in section
15D.02, within the special supplemental nutrition program for women, infants, and children.
new text end

Sec. 11.

Minnesota Statutes 2024, section 181.932, subdivision 1, is amended to read:

Subdivision 1.

Prohibited action.

An employer shall not discharge, discipline, penalize,
interfere with, threaten, restrain, coerce, or otherwise retaliate or discriminate against an
employee regarding the employee's compensation, terms, conditions, location, or privileges
of employment because:

(1) the employee, or a person acting on behalf of an employee, in good faith, reports a
violation, suspected violation, or planned violation of any federal or state law or common
law or rule adopted pursuant to law to an employer or to any governmental body or law
enforcement official;

(2) the employee is requested by a public body or office to participate in an investigation,
hearing, inquiry;

(3) the employee refuses an employer's order to perform an action that the employee
has an objective basis in fact to believe violates any state or federal law or rule or regulation
adopted pursuant to law, and the employee informs the employer that the order is being
refused for that reason;

(4) the employee, in good faith, reports a situation in which the quality of health care
services provided by a health care facility, organization, or health care provider violates a
standard established by federal or state law or a professionally recognized national clinical
or ethical standard and potentially places the public at risk of harm;

(5) a public employee communicates the findings of a scientific or technical study that
the employee, in good faith, believes to be truthful and accurate, including reports to a
governmental body or law enforcement official; deleted text begin or
deleted text end

(6) deleted text begin an deleted text end new text begin a public new text end employee deleted text begin in the classified service of state government deleted text end communicates
information that the new text begin public new text end employee, in good faith, believes to be truthful and accurate,
and that relates to deleted text begin state deleted text end new text begin public new text end services, including the financing of deleted text begin state deleted text end new text begin public new text end services, to:

(i) a legislator or the legislative auditor; or

(ii) a constitutional officer deleted text begin . deleted text end new text begin ; or
new text end

new text begin (7) a public employee, in good faith, reports fraud or misuse in programs of a state
agency or political subdivision to the employer, any governmental body, a law enforcement
official, the legislative auditor, a member of the legislature, or a constitutional officer.
new text end

The disclosures protected pursuant to this section do not authorize the disclosure of data
otherwise protected by law.

Sec. 12.

Minnesota Statutes 2024, section 245.095, subdivision 5, is amended to read:

Subd. 5.

Withholding of payments.

(a) Except as otherwise provided by state or federal
law, the commissioner may withhold payments to a provider, vendor, individual, associated
individual, or associated entity in any program administered by the commissioner if the
commissioner determines there is a credible allegation of fraud for which an investigation
is pending for a program administered by a Minnesota state or federal agency.

(b) For purposes of this subdivision, "credible allegation of fraud" means an allegation
that has been verified by the commissioner from any source, including but not limited to:

(1) fraud hotline complaints;

(2) claims data mining;

(3) patterns identified through provider audits, civil false claims cases, and law
enforcement investigations; deleted text begin and
deleted text end

(4) court filings and other legal documents, including but not limited to police reports,
complaints, indictments, informations, affidavits, declarations, and search warrants new text begin ; and
new text end

new text begin (5) information from the inspector general, including information listed on the inspector
general's exclusion list under section 15D.04, subdivision 1, clause (8) new text end .

(c) The commissioner must send notice of the withholding of payments within five days
of taking such action. The notice must:

(1) state that payments are being withheld according to this subdivision;

(2) set forth the general allegations related to the withholding action, except the notice
need not disclose specific information concerning an ongoing investigation;

(3) state that the withholding is for a temporary period and cite the circumstances under
which the withholding will be terminated; and

(4) inform the provider, vendor, individual, associated individual, or associated entity
of the right to submit written evidence to contest the withholding action for consideration
by the commissioner.

(d) If the commissioner withholds payments under this subdivision, the provider, vendor,
individual, associated individual, or associated entity has a right to request administrative
reconsideration. A request for administrative reconsideration must be made in writing, state
with specificity the reasons the payment withholding decision is in error, and include
documents to support the request. Within 60 days from receipt of the request, the
commissioner shall judiciously review allegations, facts, evidence available to the
commissioner, and information submitted by the provider, vendor, individual, associated
individual, or associated entity to determine whether the payment withholding should remain
in place.

(e) The commissioner shall stop withholding payments if the commissioner determines
there is insufficient evidence of fraud by the provider, vendor, individual, associated
individual, or associated entity or when legal proceedings relating to the alleged fraud are
completed, unless the commissioner has sent notice under subdivision 3 to the provider,
vendor, individual, associated individual, or associated entity.

(f) The withholding of payments is a temporary action and is not subject to appeal under
section 256.045 or chapter 14.

Sec. 13.

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

new text begin Subd. 44. new text end

new text begin Office of the Inspector General; reports. new text end

new text begin The commissioner must submit
final investigative reports to the inspector general, serving under section 15D.01, for any
investigation conducted by the commissioner into fraud or misuse, as defined in section
15D.02, within the Medicaid program.
new text end

Sec. 14.

Minnesota Statutes 2024, section 626.84, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

For purposes of sections 626.84 to 626.863, the following
terms have the meanings given them:

(a) "Board" means the Board of Peace Officer Standards and Training.

(b) "Director" means the executive director of the board.

(c) "Peace officer" means:

(1) an employee or an elected or appointed official of a political subdivision or law
enforcement agency who is licensed by the board, charged with the prevention and detection
of crime and the enforcement of the general criminal laws of the state and who has the full
power of arrest, and shall also include the Minnesota State Patrol, agents of the Division of
Alcohol and Gambling Enforcement, state conservation officers, Metropolitan Transit police
officers, Department of Corrections Fugitive Apprehension Unit officers, Department of
Commerce Fraud Bureau Unit officers, new text begin Office of the Inspector General Anti-Fraud and
Waste Bureau officers, new text end the statewide coordinator of the Violent Crime Coordinating Council,
and railroad peace officers as authorized by section 219.995 and United States Code, title
49, section 28101; and

(2) a peace officer who is employed by a law enforcement agency of a federally
recognized tribe, as defined in United States Code, title 25, section 450b(e), and who is
licensed by the board.

(d) "Part-time peace officer" means an individual licensed by the board whose services
are utilized by law enforcement agencies no more than an average of 20 hours per week,
not including time spent on call when no call to active duty is received, calculated on an
annual basis, who has either full powers of arrest or authorization to carry a firearm while
on active duty. The term shall apply even though the individual receives no compensation
for time spent on active duty, and shall apply irrespective of the title conferred upon the
individual by any law enforcement agency.

(e) "Reserve officer" means an individual whose services are utilized by a law
enforcement agency to provide supplementary assistance at special events, traffic or crowd
control, and administrative or clerical assistance, and shall include reserve deputies, special
deputies, mounted or unmounted patrols, and all other employees or volunteers performing
reserve officer functions. A reserve officer's duties do not include enforcement of the general
criminal laws of the state, and the officer does not have full powers of arrest or authorization
to carry a firearm on duty.

(f) "Law enforcement agency" means:

(1) a unit of state or local government that is authorized by law to grant full powers of
arrest and to charge a person with the duties of preventing and detecting crime and enforcing
the general criminal laws of the state;

(2) subject to the limitations in section 626.93, a law enforcement agency of a federally
recognized tribe, as defined in United States Code, title 25, section 450b(e); and

(3) subject to the limitation of section 219.995, a railroad company.

(g) "Professional peace officer education" means a postsecondary degree program, or a
nondegree program for persons who already have a college degree, that is offered by a
college or university in Minnesota, designed for persons seeking licensure as a peace officer,
and approved by the board.

(h) "Railroad peace officer" means an individual as authorized under United States Code,
title 49, section 28101:

(1) employed by a railroad for the purpose of aiding and supplementing law enforcement
agencies in the protection of property owned by or in the care, custody, or control of a
railroad and to protect the persons and property of railroad passengers and employees; and

(2) licensed by the board.

new text begin EFFECTIVE DATE. new text end

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

Sec. 15. new text begin EXISTING DUTIES ABOLISHED; TRANSFERS PROVIDED.
new text end

new text begin Subdivision 1. new text end

new text begin Duties abolished. new text end

new text begin Except as exempted in article 1, section 16, subdivision
6, and Minnesota Statutes, section 15D.04, subdivision 2, duties pertaining to the
investigation of fraud, misuse, and other unlawful use of public funds in the Office of the
Inspector General in the Department of Education are abolished effective the day after the
inspector general under Minnesota Statutes, section 15D.01, certifies in writing to the
commissioner of the respective department and the commissioner of management and budget
that the inspector general has assumed responsibility for these duties.
new text end

new text begin Subd. 2. new text end

new text begin Inspector general transfers. new text end

new text begin Pursuant to Minnesota Statutes, section 15.039,
all active investigations, obligations, court actions, contracts, and records shall transfer from
the department in subdivision 1 to the inspector general under Minnesota Statutes, section
15D.01, except as provided by the inspector general and as provided in article 1, section
16, subdivision 6, and Minnesota Statutes, section 15D.04, subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 16. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, sections 13.321, subdivision 12; and 127A.21, subdivisions
1, 2, 3, 4, 6, and 7, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the inspector general under
Minnesota Statutes, section 15D.01, notifies the revisor of statutes that the Office of the
Inspector General under Minnesota Statutes, section 15D.01, has assumed responsibility
for identifying and investigating fraud, misuse, and other unlawful use of public funds in
the Department of Education.
new text end

APPENDIX

Repealed Minnesota Statutes: S0856-10

13.321 PREKINDERGARTEN TO GRADE 12 EDUCATIONAL DATA CODED ELSEWHERE.

Subd. 12.

Office of the Inspector General; access to data.

Data involving the Department of Education's Office of the Inspector General are governed by section 127A.21.

127A.21 OFFICE OF THE INSPECTOR GENERAL.

Subdivision 1.

Establishment of Office of the Inspector General; powers; duties.

The commissioner must establish within the department an Office of the Inspector General. The inspector general shall report directly to the commissioner. The Office of the Inspector General is charged with protecting the integrity of the department and the state by detecting and preventing fraud, waste, and abuse in department programs. The Office of the Inspector General must conduct independent and objective investigations to promote the integrity of the department's programs and operations. When fraud or other misuse of public funds is detected, the Office of the Inspector General must report it to the appropriate law enforcement entity and collaborate and cooperate with law enforcement to assist in the investigation and any subsequent civil and criminal prosecution.

Subd. 2.

Hiring; reporting; procedures.

(a) The commissioner, or the commissioner's designee, must hire an inspector general to lead the Office of the Inspector General. The inspector general must hire a deputy inspector general and, at the discretion of the inspector general, sufficient assistant inspectors general to carry out the duties of the office. The inspector general, deputy inspector general, and any assistant inspectors general serve in the classified service.

(b) In a form and manner determined by the inspector general, the Office of the Inspector General must develop a public platform for the public to report instances of potential fraud, waste, or abuse of public funds administered by the department. Nothing in this paragraph shall be construed to give a member of the public standing to sue based on allegations of fraud, waste, or abuse.

(c) The inspector general shall establish procedures for conducting investigations. Procedures adopted under this subdivision are not subject to chapter 14, including section 14.386.

Subd. 3.

Subpoenas.

(a) For the purpose of an investigation, the inspector general or a designee may administer oaths and affirmations, subpoena witnesses, compel attendance, take evidence, and issue subpoenas duces tecum to require the production of books, papers, correspondence, memoranda, agreements, financial records, or other documents or records relevant to the investigation.

(b) A subpoena issued pursuant to this subdivision must state that the subpoena recipient may not disclose the fact that the subpoena was issued or the fact that the requested records have been given to the inspector general, or their staff, except:

(1) in so far as the disclosure is necessary to find and disclose the records;

(2) pursuant to court order; or

(3) to legal counsel for the purposes of responding to the subpoena.

(c) The fees for service of a subpoena must be paid in the same manner as prescribed by law for a service of process issued by a district court.

(d) The subpoena issued under this subdivision shall be enforceable through the district court in the district where the subpoena is issued.

Subd. 4.

Access to records.

(a) For purposes of an investigation, and regardless of the data's classification under chapter 13, the Office of the Inspector General shall have access to all relevant books, accounts, documents, data, and property related to department programs that are maintained by a program participant, charter school, or government entity as defined by section 13.02.

(b) Notwithstanding paragraph (a), the Office of the Inspector General must issue a subpoena under subdivision 3 in order to access routing and account numbers to which Department of Education funds have been disbursed.

(c) Records requested by the Office of the Inspector General under this subdivision shall be provided in a format, place, and time frame reasonably requested by the Office of the Inspector General.

(d) The department may enter into specific agreements with other state agencies related to records requests by the Office of the Inspector General.

Subd. 6.

Data practices.

(a) It is not a violation of rights conferred by chapter 13 or any other statute related to the confidentiality of government data for a government entity as defined in section 13.02 to provide data or information under this section.

(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 collected, created, received, or maintained by the inspector general relating to an audit, investigation, proceeding, or inquiry are subject to section 13.39.

Subd. 7.

Retaliation, interference prohibited.

(a) An employee or other individual who discloses information to the Office of the Inspector General about fraud, waste, or abuse in department programs is protected under section 181.932, governing disclosure of information by employees.

(b) No state employee may interfere with or obstruct an investigation authorized by this section.