SF 856

3rd Engrossment - 94th Legislature (2025 - 2026) Posted on 03/12/2025 03:10pm

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;
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; repealing Minnesota Statutes 2024, sections 13.321,
subdivision 12; 127A.21.

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 abuse. new text end

new text begin The legislative auditor must refer all
reports from the public about potential 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 or
legislative 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 an intentional or deceptive act 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 or abuse; 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 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,
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 Bureau of Criminal
Apprehension, the attorney general's office, or other 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 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;
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; and
new text end

new text begin (8) alerting relevant commissioners or heads of agencies on an emergency basis before
an investigation is concluded that the inspector general has a reasonable suspicion that fraud
or abuse is being committed, with a recommendation to freeze or cease distribution of funds.
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 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. 8.

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
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.
new text end

new text begin Subd. 5. new text end

new text begin Data classifications. new text end

new text begin (a) Notwithstanding any other law, data relating to an
investigation conducted under this chapter are confidential data on individuals or protected
nonpublic data while the investigation is active.
new text end

new text begin (b) Data relating to an 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;
new text end

new text begin (2) the inspector general reasonably believes the data will be used in litigation; 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 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 an investigation under this chapter, data
relating to an 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 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 For an investigation subject to this paragraph, data identifying individuals or an entity that
is not a government entity, are private data on individuals or nonpublic data.
new text end

new text begin (e) 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 an 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

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 individuals with experience in criminal investigations to
serve as investigators for the office. To the extent the inspector general deems advisable,
these individuals must have previous experience in complex investigations as law
enforcement officers. 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 Public tips. new text end

new text begin The inspector general must maintain a phone line and website for
reporting fraud 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 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 Duties. new text end

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

new text begin (1) consider applicants for and make recommendations to the chief administrative law
judge 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 Subd. 4. 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. 5. 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. 6. 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 (a) 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 (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 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

ARTICLE 2

CONFORMING ITEMS AND REPEALERS

Section 1. 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 13, subdivision
6, duties pertaining to the investigation of fraud, abuse, and other unlawful use of public
funds in the Office of Inspector General in the Departments of Education; Human Services;
and Children, Youth, and Families are abolished effective the day after the inspector general
under Minnesota Statutes, section 15D.01, certifies in writing to the commissioners of the
respective departments 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
each 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
13, subdivision 6.
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. 2. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, sections 13.321, subdivision 12; and 127A.21, 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, abuse, and other unlawful use of public funds in the
Department of Education.
new text end

APPENDIX

Repealed Minnesota Statutes: S0856-3

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. 1a.

Definitions.

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

(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.

(c) "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.

(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.

(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.

(f) "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.

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

(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.

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. 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 temporary sanctions, including withholding of payments under the department program, on a program participant pending an investigation by the Office of the Inspector General if:

(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;

(2) there has been a criminal, civil, or administrative adjudication of fraud, waste, or abuse against the program participant in Minnesota or in another state or jurisdiction;

(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

(4) the program participant has a pattern of noncompliance with an investigation.

(c) If an investigation finds, by a preponderance of the evidence, fraud, waste, or abuse 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 (e).

(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 determines there is insufficient evidence of fraud, waste, or abuse by the program participant. The commissioner must notify the participant in writing within seven business days of lifting the sanction.

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.