1.1                          A bill for an act 
  1.2             relating to human services; providing for disposition 
  1.3             of tobacco settlement money; establishing the 
  1.4             Minnesota families foundation; creating health-related 
  1.5             endowment funds; appropriating money; proposing coding 
  1.6             for new law in Minnesota Statutes, chapters 10; 16A; 
  1.7             144; and 145. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [10.57] [MINNESOTA FAMILIES FOUNDATION.] 
  1.10     Subdivision 1.  [ESTABLISHMENT.] The legislature finds that 
  1.11  the Minnesota families foundation will foster a public-private 
  1.12  partnership that will provide improved services to clients, a 
  1.13  more effective coordination of services, and a more efficient 
  1.14  allocation of resources.  The Minnesota families foundation is a 
  1.15  nonprofit foundation established to support self-sufficiency and 
  1.16  reduce long-term dependency on government.  The foundation shall 
  1.17  operate as a supporting organization under the Internal Revenue 
  1.18  Code, section 509(a), and chapter 317A.  The foundation is not 
  1.19  subject to chapters 13, 14, 16A, 16B, 16C, 43A, and 179A. 
  1.20     Subd. 2.  [BOARD MEMBERSHIP.] The foundation shall be 
  1.21  governed by a 15-member board of directors consisting of: 
  1.22     (1) four members, who are not state employees, appointed by 
  1.23  the governor; 
  1.24     (2) four members, who are not members of the legislature, 
  1.25  two of whom are appointed by the senate and two of whom are 
  1.26  appointed by the house of representatives; and 
  2.1      (3) seven members appointed by the board itself. 
  2.2      Subd. 3.  [TERMS; COMPENSATION; REMOVAL.] (a) Board members 
  2.3   appointed by the governor and the legislature shall serve during 
  2.4   the term of the appointing authority.  The governor and the 
  2.5   legislature shall make initial appointments of board members, as 
  2.6   specified in subdivision 2, as soon as possible after the 
  2.7   effective date of this section.  Initially appointed board 
  2.8   members' terms shall begin on July 1, 1999.  Two of the 
  2.9   governor's initial appointments shall be for two-year terms.  
  2.10  Subsequent appointments shall be made at the beginning of each 
  2.11  regular session of the legislature.  The board members appointed 
  2.12  by the governor and the legislature shall appoint seven board 
  2.13  members no later than January 1, 2000.  Board members appointed 
  2.14  by the board shall serve four-year terms.  A vacancy on the 
  2.15  board shall be filled for the unexpired portion of the term in 
  2.16  the same manner as the original appointment. 
  2.17     (b) Board members shall be reimbursed for reasonable 
  2.18  out-of-pocket expenses actually incurred. 
  2.19     (c) Board members must disclose fully to the board of 
  2.20  directors whenever they may have a conflict of interest within 
  2.21  the meaning of section 317A.255, subdivision 2.  Liability of 
  2.22  board members shall be governed by section 317A.257. 
  2.23     Subd. 4.  [ORGANIZATION.] The board of directors shall 
  2.24  adopt bylaws necessary for the conduct of the business of the 
  2.25  foundation.  The board shall select a chairperson from its 
  2.26  members, and any other officers the board deems necessary.  
  2.27  Board meetings shall be open to the public, and all grants, 
  2.28  contracts, and meeting minutes of the foundation shall be 
  2.29  available to the public. 
  2.30     Subd. 5.  [EXECUTIVE DIRECTOR; EMPLOYEES OF THE 
  2.31  FOUNDATION.] (a) The board members appointed by the governor and 
  2.32  the legislature shall convene prior to January 1, 2000, and hire 
  2.33  an executive director.  The executive director shall serve at 
  2.34  the pleasure of the board of directors.  The executive director 
  2.35  shall serve as a nonvoting member of the board.  The executive 
  2.36  director's compensation shall be capped at 95 percent of the 
  3.1   governor's salary. 
  3.2      (b) The executive director shall oversee the daily 
  3.3   operations of the foundation, including the hiring of necessary 
  3.4   staff.  Employees of the foundation are not state employees. 
  3.5      (c) The executive director shall prepare an annual budget 
  3.6   for the foundation for review and approval by the board of 
  3.7   directors. 
  3.8      (d) To the extent that the board of directors makes funds 
  3.9   available, the department of finance shall provide 
  3.10  administrative support to the foundation until June 30, 2000, 
  3.11  including but not limited to processing of payroll for the 
  3.12  executive director and foundation staff, payment of expenses to 
  3.13  board members, and payment of rent.  The board of directors 
  3.14  shall make up to $200,000 available to the department of finance 
  3.15  to cover payroll, expenses of board members, rent, and other 
  3.16  administrative expenses incurred to support the foundation in 
  3.17  fiscal year 2000. 
  3.18     Subd. 6.  [FOUNDATION FUNDS.] (a) The board of directors 
  3.19  shall be responsible for managing the investment of the 
  3.20  foundation funds as follows: 
  3.21     (1) all foundation fund assets, including income and 
  3.22  appreciation, shall be placed in a separate account; 
  3.23     (2) the foundation funds shall be audited annually by an 
  3.24  independent auditor; 
  3.25     (3) the foundation funds shall be invested and managed 
  3.26  according to rules applicable to trust investments, as provided 
  3.27  in the Minnesota Prudent Investor Act, sections 501B.151 and 
  3.28  501B.152; 
  3.29     (4) reasonable and necessary administrative and investment 
  3.30  expenses directly associated with the management and investment 
  3.31  of the foundation funds may be recovered from the foundation; 
  3.32  and 
  3.33     (5) according to limits established by the board and 
  3.34  consistent with the limitations in the Uniform Management of 
  3.35  Institutional Funds Act, sections 309.62 to 309.71, earnings on 
  3.36  foundation funds shall be expended to cover administrative 
  4.1   expenses of the foundation and grant awards under subdivision 7. 
  4.2      (b) The foundation may accept gifts from private donors.  
  4.3   Such gifts to the foundation must be accounted for and expended 
  4.4   in a manner consistent with this section. 
  4.5      Subd. 7.  [FOUNDATION GRANTS.] (a) Beginning in January 
  4.6   2001, the foundation shall provide grants to nonprofit, 
  4.7   community-based organizations for activities that: 
  4.8      (1) are flexible and innovative and that close the gap 
  4.9   between dependence on government and independence from 
  4.10  government programs; 
  4.11     (2) support the efforts of working families and working 
  4.12  individuals to remain self-sufficient by building assets that 
  4.13  promote family stability; 
  4.14     (3) will ensure that core public sector efforts to 
  4.15  encourage self-sufficiency have every opportunity to succeed; 
  4.16     (4) focus resources in a way that can demonstrate impact on 
  4.17  a single goal or a single set of goals; and 
  4.18     (5) have demonstrated success in reducing future government 
  4.19  expenditures. 
  4.20     (b) All grantees must match funds received from the 
  4.21  foundation, dollar for dollar.  The match may include up to 25 
  4.22  percent in-kind.  The match cannot be made with federal, state, 
  4.23  or local government funds. 
  4.24     Subd. 8.  [REPORTS TO THE LEGISLATURE.] (a) The foundation 
  4.25  shall biennially report to the governor and the legislature on 
  4.26  January 15th of each odd-numbered year.  The report must include:
  4.27     (1) a financial report that details the foundation's 
  4.28  earnings; 
  4.29     (2) an expense report detailing the amounts and purposes 
  4.30  for which funds were expended; 
  4.31     (3) a list of grant awards; and 
  4.32     (4) a copy of the independent audit reports for the two 
  4.33  previous years. 
  4.34     (b) The initial report of the foundation shall include a 
  4.35  copy of the foundation's mission statement, bylaws, and policies 
  4.36  adopted by the board of directors. 
  5.1      Subd. 9.  [DISSOLUTION OF THE FOUNDATION.] On June 30, 
  5.2   2009, the foundation shall sunset and all remaining foundation 
  5.3   funds shall be returned to the tobacco settlement fund.  If the 
  5.4   legal status of the foundation or the foundation funds are 
  5.5   successfully challenged in state or federal court, the 
  5.6   foundation is automatically dissolved and the funds appropriated 
  5.7   to the foundation, along with any unspent earnings, revert to 
  5.8   the tobacco settlement fund. 
  5.9      Sec. 2.  [16A.86] [TOBACCO SETTLEMENT FUND.] 
  5.10     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The tobacco 
  5.11  settlement fund is established and dedicated for the purposes of 
  5.12  sections 144.1461 and 145.076. 
  5.13     Subd. 2.  [DEPOSIT OF MONEY.] The commissioner shall 
  5.14  deposit all settlement payments received after July 1, 1998, as 
  5.15  defined in section IIB of the settlement document filed in State 
  5.16  v. Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 
  5.17  Second Judicial District), in the tobacco settlement fund.  All 
  5.18  other payments to the state resulting from the specified 
  5.19  litigation shall be deposited in the general fund. 
  5.20     Sec. 3.  [144.1461] [MEDICAL EDUCATION AND RESEARCH COSTS 
  5.21  ENDOWMENT.] 
  5.22     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The medical 
  5.23  education and research costs endowment fund is established as a 
  5.24  nonexpendable trust fund to support medical education and 
  5.25  research activities throughout the state.  The commissioner of 
  5.26  health shall administer the fund.  All earnings of the endowment 
  5.27  must be credited to the fund. 
  5.28     Subd. 2.  [APPROPRIATION.] Beginning in fiscal year 2000, 
  5.29  the accrued earnings of the medical education and research costs 
  5.30  endowment fund, not to exceed $5,000,000, is annually 
  5.31  appropriated to the commissioner of health for distribution 
  5.32  according to section 62J.69. 
  5.33     Subd. 3.  [REVIEW.] The purpose of the endowment fund shall 
  5.34  be reviewed in the governor's budget each biennium. 
  5.35     Sec. 4.  [145.076] [LOCAL PUBLIC HEALTH ENDOWMENT FUND.] 
  5.36     Subdivision 1.  [ESTABLISHMENT; PURPOSE.] The local public 
  6.1   health endowment fund is established as a nonexpendable trust 
  6.2   fund for the purpose of assuring active community involvement 
  6.3   and coordination of community resources in addressing locally 
  6.4   identified public health needs.  The commissioner of health 
  6.5   shall administer the fund.  All earnings of the endowment fund 
  6.6   must be credited to the fund. 
  6.7      Subd. 2.  [APPROPRIATION OF EARNINGS.] The accrued earnings 
  6.8   of the local public health endowment fund, not to exceed five 
  6.9   percent of the account balance, is annually appropriated to the 
  6.10  commissioner of health for distribution to community health 
  6.11  boards under chapter 145A. 
  6.12     Subd. 3.  [REPORT.] On January 15 of each odd-numbered 
  6.13  year, the commissioner of health shall report to the legislature 
  6.14  on the activities of community health boards under chapter 145A. 
  6.15     Subd. 4.  [REVIEW.] The purpose of the endowment fund shall 
  6.16  be reviewed in the governor's budget each biennium. 
  6.17     Sec. 5.  [TRANSFER OF MONEY.] 
  6.18     (a) The commissioner of finance shall transfer $100,000,000 
  6.19  from the tobacco settlement fund to the medical education and 
  6.20  research costs endowment fund. 
  6.21     (b) The commissioner of finance shall transfer $100,000,000 
  6.22  from the tobacco settlement fund to the local public health 
  6.23  endowment fund in fiscal year 2001; $38,450,000 in fiscal year 
  6.24  2002; and $121,550,000 in fiscal year 2003. 
  6.25     Sec. 6.  [APPROPRIATION.] 
  6.26     (a) The appropriations in clauses (1) to (3) are made to 
  6.27  the commissioner of finance for the Minnesota families 
  6.28  foundation from the tobacco settlement fund: 
  6.29     (1) $253,350,000 is appropriated in fiscal year 2000; 
  6.30     (2) $142,550,000 is appropriated in fiscal year 2001; and 
  6.31     (3) $204,100,000 is appropriated in fiscal year 2002. 
  6.32     (b) The commissioner shall transfer the appropriated funds 
  6.33  to the Minnesota families foundation when the board of directors 
  6.34  establishes an account, as required in Minnesota Statutes, 
  6.35  section 10.57, subdivision 6. 
  6.36     Sec. 7.  [EFFECTIVE DATES.] 
  7.1      Sections 1 and 2 are effective the day following final 
  7.2   enactment.  Sections 3 to 6 are effective July 1, 1999.