1.1 A bill for an act
1.2 relating to state government; changing grants management provisions; amending
1.3 Minnesota Statutes 2024, sections 16B.97, subdivision 1; 16B.98, subdivisions 1,
1.4 4; 16B.981, subdivision 4; 16B.991, subdivision 2.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2024, section 16B.97, subdivision 1, is amended to read:
1.7 Subdivision 1.Grant agreement Definitions.(a) For the purposes of this section, the
1.8following terms have the meanings given:
1.9 A grant agreement is (1) "grant agreement" means a written instrument or electronic
1.10document defining a legal relationship between a granting agency and a grantee when the
1.11principal purpose of the relationship is to transfer cash or something of value to the recipient
1.12to support a public purpose authorized by law instead of acquiring by professional or technical
1.13contract, purchase, lease, or barter property or services for the direct benefit or use of the
1.14granting agency.; and
1.15 (2) "grantee" means a potential or current recipient of a state-issued grant.
1.16 (b) This section does not apply to general obligation grants as defined by section 16A.695
1.17and, capital project grants to political subdivisions as defined by section 16A.86, or capital
1.18project grants otherwise subject to section 16A.642.
1.19 Sec. 2. Minnesota Statutes 2024, section 16B.98, subdivision 1, is amended to read:
1.20 Subdivision 1.Limitation.(a) As a condition of receiving a grant from an appropriation
1.21of state funds, the recipient of the grant must agree to minimize that administrative costs
1.22must be necessary and reasonable. The granting agency is responsible for negotiating
1Sec. 2.
25-00446 as introduced03/10/25 REVISOR EB/BM
SENATE
STATE OF MINNESOTA
S.F. No. 2578NINETY-FOURTH SESSION
(SENATE AUTHORS: XIONG)
OFFICIAL STATUSD-PGDATE
Introduction and first reading03/17/2025
Referred to State and Local Government 2.1appropriate limits to these costs so that the state derives the optimum benefit for grant
2.2funding.
2.3 (b) This section does not apply to general obligation grants as defined by section 16A.695
2.4and also capital project grants to political subdivisions as defined by section 16A.86, or
2.5capital project grants otherwise subject to section 16A.642.
2.6 Sec. 3. Minnesota Statutes 2024, section 16B.98, subdivision 4, is amended to read:
2.7 Subd. 4.Reporting of violations.A state employee who discovers evidence of violation
2.8of laws or rules governing grants is encouraged required to report the violation or suspected
2.9violation to the employee's supervisor, the commissioner or the commissioner's designee,
2.10or the legislative auditor. The legislative auditor shall report to the Legislative Audit
2.11Commission if there are multiple complaints about the same agency. The auditor's report
2.12to the Legislative Audit Commission under this section must disclose only the number and
2.13type of violations alleged. An employee making a good faith report under this section has
2.14the protections provided for under section 181.932, prohibiting the employer from
2.15discriminating against the employee.
2.16 Sec. 4. Minnesota Statutes 2024, section 16B.981, subdivision 4, is amended to read:
2.17 Subd. 4.Agency authority to not award grant.(a) If, while performing the required
2.18steps in subdivision 2 and pursuant to sections 16B.97, 16B.98, and 16B.991, the agency
2.19requires additional information to determine whether there is a substantial risk that the
2.20potential grantee cannot or would not perform the required duties of the grant agreement,
2.21the agency must give the grantee 30 business 15 calendar days within which the grantee
2.22can respond to the agency for the purpose of satisfying the agency's concerns or work with
2.23the agency to develop a plan to satisfy the concerns.
2.24 (b) If, after performing the required steps in subdivision 2 and pursuant to sections
2.2516B.97, 16B.98, and 16B.991, and after reviewing any additional requested information
2.26from the grantee, the agency still has concerns that there is a substantial risk that a potential
2.27grantee cannot or would not perform the required duties under the grant agreement, the
2.28agency must either create a plan to satisfy remaining concerns with the grantee or must not
2.29award the grant.
2.30 (c) If, pursuant to paragraphs (a) and (b), the agency does not award a competitive,
2.31single-source, or sole-source grant, the agency must provide notification to the grantee and
2.32the commissioner of administration of the determination. The notification to the grantee
2.33must include the agency's reason for postponing or forgoing the grant, including information
2Sec. 4.
25-00446 as introduced03/10/25 REVISOR EB/BM 3.1sufficient to explain and support the agency's decision, and notify the applicant of the process
3.2for contesting the agency's decision with the agency and the applicant's options under
3.3paragraph (d). If the applicant contests the agency's decision no later than 15 business days
3.4after receiving the notice, the agency must consider any additional written information
3.5submitted by the grantee. The agency has 15 business days to consider this information,
3.6during which the agency may reverse or modify the agency's initial decision to postpone
3.7or forgo the grant.
3.8 (d) The final decision by an agency under paragraph (c) may be challenged as a contested
3.9case under chapter 14. The contested case proceeding must be initiated within 30 business
3.10calendar days of the date of written notification of a final decision by the agency.
3.11 (e) If, pursuant to paragraphs (a) and (b), the agency does not award a legislatively named
3.12grant, the agency must delay award of the grant until adjournment of the next regular or
3.13special legislative session for action from the legislature. The agency must provide
3.14notification to the potential grantee, the commissioner of administration, and the chairs and
3.15ranking minority members of the Ways and Means Committee in the house of representatives
3.16and the chairs and ranking minority members of the Finance Committee in the senate. The
3.17notification to the grantee must include the agency's reason for postponing or forgoing the
3.18grant, including information sufficient to explain and support the agency's decision and
3.19notify the applicant of the process for contesting the agency's decision under paragraph (d).
3.20If the applicant contests the agency's decision no later than 15 business days after receiving
3.21the notice, the agency must consider any additional written information submitted by the
3.22grantee. The agency has 15 business days to consider this information, during which the
3.23agency may reverse or modify the agency's initial decision to postpone or forgo the grant.
3.24The notification to the commissioner of administration and legislators must identify the
3.25legislatively named potential grantee and the agency's reason for postponing or forgoing
3.26the grant. After hearing the concerns of the agency, the legislature may reaffirm the award
3.27of the grant or reappropriate the funds to a different legislatively named grantee. Based on
3.28the action of the legislature, the agency must award the grant to the legislatively named
3.29grantee. If the legislature does not provide direction to the agency on the disposition of the
3.30grant, the funds revert to the original appropriation source.
3.31 Sec. 5. Minnesota Statutes 2024, section 16B.991, subdivision 2, is amended to read:
3.32 Subd. 2.Authority.A grant agreement must by its terms permit the commissioner to
3.33unilaterally terminate the grant agreement prior to completion if the commissioner determines
3Sec. 5.
25-00446 as introduced03/10/25 REVISOR EB/BM 4.1that further performance under the grant agreement would not serve agency purposes or
4.2performance under the grant agreement is not in the best interests of the state.
4Sec. 5.
25-00446 as introduced03/10/25 REVISOR EB/BM