Minnesota 2025-2026 Regular Session

Minnesota House Bill HF2537 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to state government; increasing fiscal safeguards for state grants to
3	3	1.3 nonprofit organizations; requiring a report; amending Minnesota Statutes 2024,
4	4	1.4 section 16B.98, subdivision 8; proposing coding for new law in Minnesota Statutes,
5	5	1.5 chapter 16B.
6	6	1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
7	7	1.7 Section 1. [16B.971] GRANTS TO NONPROFIT ORGANIZATIONS.
8	8	1.8 Subdivision 1.Definitions.(a) As used in this section, the following terms have the
9	9	1.9meanings given.
10	10	1.10 (b) "Certified financial audit" means a review of an organization's financial statements,
11	11	1.11fiscal policies, and control procedures by an independent third party to determine if the
12	12	1.12statements fairly represent the organization's financial position and if organizational
13	13	1.13procedures are in accordance with generally accepted accounting principles.
14	14	1.14 (c) "Fiscal agent" means the commissioner or head of the state agency responsible for
15	15	1.15administering a grant.
16	16	1.16 (d) "Grant" means a grant of state money from any source.
17	17	1.17 (e) "Organization" means a nongovernmental organization that is tax exempt under the
18	18	1.18Internal Revenue Code.
19	19	1.19 Subd. 2.Requirements for eligibility.(a) For an organization to be eligible to receive
20	20	1.20a grant, the organization must meet the following criteria:
21	21	1.21 (1) the organization must submit to the fiscal agent the relevant series Internal Revenue
22	22	1.22Service Form 990 in each of the two years preceding the execution of a grant agreement;
23	23	1Section 1.
24	24	REVISOR SGS/EN 25-0213401/27/25
25	25	State of Minnesota
26	26	This Document can be made available
27	27	in alternative formats upon request
28	28	HOUSE OF REPRESENTATIVES
29	29	H. F. No. 2537
30	30	NINETY-FOURTH SESSION
31	31	Authored by Mueller03/20/2025
32	32	The bill was read for the first time and referred to the Committee on State Government Finance and Policy 2.1 (2) the organization must not compensate an officer or employee in an amount greater
33	33	2.2than the governor's annual compensation in a 12-month period during the first fiscal year
34	34	2.3beginning, during, or after the 12-month period or in the following fiscal year. Compensation
35	35	2.4for purposes of this section includes salary, bonuses, the present value of stock options, the
36	36	2.5value of employment benefits, employer contributions to retirement or deferred compensation
37	37	2.6plans on behalf of the officer or employee, and any other compensation or benefit of value;
38	38	2.7and
39	39	2.8 (3) the organization must not have on its governing board a voting member who is:
40	40	2.9 (i) an employee of a state agency; or
41	41	2.10 (ii) an official elected to serve in a state, county, or local government office.
42	42	2.11 Subd. 3.Additional eligibility requirements for certain nonprofit organizations.For
43	43	2.12an organization that received more than 50 percent of revenue from state funds in the fiscal
44	44	2.13year preceding the organization's grant application, the organization must meet the following
45	45	2.14criteria to be eligible to receive a grant:
46	46	2.15 (1) the organization must submit to the fiscal agent certified financial audits of the most
47	47	2.16recent two fiscal years preceding the grant application; and
48	48	2.17 (2) officers and members of the governing board of the organization must not have been
49	49	2.18convicted of any offense involving theft, fraud, embezzlement, or other misuse or
50	50	2.19misappropriation of funds or property. The commissioner of administration must conduct
51	51	2.20background checks on officers and members of the governing body of the organization
52	52	2.21before an agency may enter into a grant agreement with the organization.
53	53	2.22 Subd. 4.Notice to legislature of ineligibility.If a grant has been awarded by law to a
54	54	2.23specified organization that the commissioner determines is ineligible to receive the grant
55	55	2.24under subdivision 2 or 3, the commissioner must promptly report that determination to the
56	56	2.25chair of the committee on finance in the senate and the chair of the committee on ways and
57	57	2.26means in the house of representatives.
58	58	2.27 Subd. 5.Grant application.(a) A fiscal agent administering a grant program must
59	59	2.28require the following information as part of a grant application:
60	60	2.29 (1) the purpose of the grant, including goals, priorities, and measurable outcomes;
61	61	2.30 (2) eligibility requirements for individuals who will be served by the grant program;
62	62	2.31 (3) the proposed geographic service areas for individuals served by the grant;
63	63	2.32 (4) the reporting requirements; and
64	64	2Section 1.
65	65	REVISOR SGS/EN 25-0213401/27/25 3.1 (5) certification that the applicant is eligible under subdivisions 2 and 3 to receive a
66	66	3.2grant.
67	67	3.3These requirements are in addition to any requirements under existing laws and policies.
68	68	3.4 (b) An organization that is specifically identified in law to receive a grant must provide
69	69	3.5the information in paragraph (a) to the commissioner of the fiscal agent for the grant before
70	70	3.6the commissioner executes the grant agreement.
71	71	3.7 Subd. 6.Reporting on use of funds.(a) Organizations must provide the following
72	72	3.8information to the fiscal agent:
73	73	3.9 (1) a detailed accounting of the use of any grant proceeds;
74	74	3.10 (2) a description of program outcomes to date, including performance measured against
75	75	3.11indicators specified in the grant agreement, including but not limited to job creation,
76	76	3.12employment activity, wage information, business formation or expansion, and academic
77	77	3.13performance; and
78	78	3.14 (3) the portion of the grant, if any, spent on the recipient's operating expenses.
79	79	3.15Grant recipients must report the information required under this paragraph to the fiscal agent
80	80	3.16within one year after receiving any portion of the grant, and annually thereafter, and within
81	81	3.1730 days following the use of all funds provided under the grant.
82	82	3.18 (b) The fiscal agent for a grant to an organization must submit a report containing the
83	83	3.19information provided by the grant recipients to the chairs and ranking minority members
84	84	3.20of the legislative committees and budget divisions with jurisdiction over the agency serving
85	85	3.21as fiscal agent for the grant. The report submitted under this section must also include the
86	86	3.22commissioner's summary of the use of grant proceeds and an analysis of the grant recipients'
87	87	3.23success in meeting the goals, priorities, and measurable outcomes specified for the grant.
88	88	3.24An updated version of this report must be submitted on January 15 of each succeeding year
89	89	3.25until January 15 in the year following the date when all of the grant funds have been spent.
90	90	3.26 Subd. 7.Notice to legislature of fraud or abuse claims.If the commissioner of
91	91	3.27administration or the Department of Administration Office of Grants Management receives
92	92	3.28a comment or concern about fraud or waste for a grant made by law to a specified
93	93	3.29organization, the commissioner must promptly report the comment or concern to the chair
94	94	3.30of the committee on finance in the senate and the chair of the committee on ways and means
95	95	3.31in the house of representatives.
96	96	3Section 1.
97	97	REVISOR SGS/EN 25-0213401/27/25 4.1 Sec. 2. Minnesota Statutes 2024, section 16B.98, subdivision 8, is amended to read:
98	98	4.2 Subd. 8.Audit.(a) A grant agreement made by an executive agency must include an
99	99	4.3audit clause that provides:
100	100	4.4 (1) that the books, records, documents, and accounting procedures and practices of the
101	101	4.5grantee receiving a grant of more than $500,000 are subject to examination by the granting
102	102	4.6agency and either the legislative auditor or the state auditor, as appropriate, for a period of
103	103	4.7two years prior to the execution of the grant agreement for a grant and during the term of
104	104	4.8the grant agreement; and
105	105	4.9 (2) that the books, records, documents, and accounting procedures and practices of the
106	106	4.10grantee or other party that are relevant to the grant or transaction are subject to examination
107	107	4.11by the commissioner, the granting agency and either the legislative auditor or the state
108	108	4.12auditor, as appropriate, for a minimum of six years from the grant agreement end date,
109	109	4.13receipt and approval of all final reports, or the required period of time to satisfy all state
110	110	4.14and program retention requirements, whichever is later. If a grant agreement does not include
111	111	4.15an express audit clause, the audit authority under this subdivision is implied.
112	112	4.16 (b) If a grant agreement does not include an express audit clause, the audit authority
113	113	4.17under this subdivision is implied.
114	114	4.18 (b) (c) If the granting agency is a local unit of government, and the governing body of
115	115	4.19the local unit of government requests that the state auditor examine the books, records,
116	116	4.20documents, and accounting procedures and practices of the grantee or other party according
117	117	4.21to this subdivision, the granting agency shall be liable for the cost of the examination. If
118	118	4.22the granting agency is a local unit of government, and the grantee or other party requests
119	119	4.23that the state auditor examine all books, records, documents, and accounting procedures
120	120	4.24and practices related to the grant, the grantee or other party that requested the examination
121	121	4.25shall be liable for the cost of the examination.
122	122	4.26 Sec. 3. EFFECTIVE DATE.
123	123	4.27 Sections 1 and 2 are effective the day following final enactment and apply to grants
124	124	4.28appropriated by law after the effective date and to grant agreements executed after the
125	125	4.29effective date.
126	126	4Sec. 3.
127	127	REVISOR SGS/EN 25-0213401/27/25