| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to state government; establishing the position of director of grants |
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| 3 | 3 | | 1.3 management and oversight within the Department of Administration; requiring |
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| 4 | 4 | | 1.4 standards related to grantmaking and grants management practices; requiring |
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| 5 | 5 | | 1.5 reports; amending Minnesota Statutes 2024, sections 16B.97, subdivisions 2, 3, |
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| 6 | 6 | | 1.6 4, 5; 16B.98, subdivisions 4, 5, 6, 7. |
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| 7 | 7 | | 1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 8 | 8 | | 1.8 Section 1. Minnesota Statutes 2024, section 16B.97, subdivision 2, is amended to read: |
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| 9 | 9 | | 1.9 Subd. 2.Grants governance.The commissioner must appoint a director of grants |
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| 10 | 10 | | 1.10management and oversight. At a minimum, the director must have demonstrated professional |
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| 11 | 11 | | 1.11experience in auditing and legal compliance related to grantmaking within a large, complex |
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| 12 | 12 | | 1.12organization. The commissioner director shall provide leadership and direction for oversee |
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| 13 | 13 | | 1.13the implementation of law and policy related to grants management in Minnesota in order. |
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| 14 | 14 | | 1.14The director's responsibilities are to: (1) foster more consistent, streamlined interaction |
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| 15 | 15 | | 1.15between executive agencies, funders, and grantees that will enhance access to grant |
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| 16 | 16 | | 1.16opportunities and information; (2) ensure compliance with laws relating to grantmaking |
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| 17 | 17 | | 1.17and the grants management process; and lead to greater program accountability and |
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| 18 | 18 | | 1.18transparency (3) be a resource in ensuring public accountability and transparency in grant |
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| 19 | 19 | | 1.19programs administered by executive agencies. The commissioner director has the duties |
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| 20 | 20 | | 1.20and powers stated in this section and section 16B.98. Executive agencies shall fully cooperate |
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| 21 | 21 | | 1.21with the commissioner director in the creation, management, and oversight of state grants |
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| 22 | 22 | | 1.22and must do what the commissioner director requires under this section. The commissioner |
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| 23 | 23 | | 1.23director may adopt rules to carry out grants governance, oversight, and management. |
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| 24 | 24 | | 1Section 1. |
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| 25 | 25 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI |
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| 26 | 26 | | SENATE |
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| 27 | 27 | | STATE OF MINNESOTA |
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| 28 | 28 | | S.F. No. 538NINETY-FOURTH SESSION |
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| 29 | 29 | | (SENATE AUTHORS: ANDERSON, Koran, Drazkowski, Gruenhagen and Bahr) |
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| 30 | 30 | | OFFICIAL STATUSD-PGDATE |
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| 31 | 31 | | Introduction and first reading01/23/2025 |
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| 32 | 32 | | Referred to State and Local Government 2.1 Sec. 2. Minnesota Statutes 2024, section 16B.97, subdivision 3, is amended to read: |
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| 33 | 33 | | 2.2 Subd. 3.Discretionary powers.The commissioner director has the authority to: |
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| 34 | 34 | | 2.3 (1) review grants management practices and establish and enforce policy and procedure |
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| 35 | 35 | | 2.4improvements; |
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| 36 | 36 | | 2.5 (2) sponsor, support, and facilitate innovative and collaborative grants management |
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| 37 | 37 | | 2.6projects with public and private organizations; |
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| 38 | 38 | | 2.7 (3) review, recommend, and implement alternative strategies for grants management; |
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| 39 | 39 | | 2.8 (4) collect and disseminate information, issue reports relating to grants management, |
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| 40 | 40 | | 2.9and sponsor and conduct conferences and studies; |
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| 41 | 41 | | 2.10 (5) participate in conferences and other appropriate activities related to grants |
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| 42 | 42 | | 2.11management issues; |
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| 43 | 43 | | 2.12 (6) suspend or debar grantees from eligibility to receive state-issued grants for up to |
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| 44 | 44 | | 2.13three years for reasons specified in Minnesota Rules, part 1230.1150, subpart 2. A grantee |
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| 45 | 45 | | 2.14may obtain an administrative hearing pursuant to sections 14.57 to 14.62 before a suspension |
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| 46 | 46 | | 2.15or debarment is effective by filing a written request for hearing within 20 days of notification |
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| 47 | 47 | | 2.16of suspension or debarment; |
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| 48 | 48 | | 2.17 (7) establish offices for the purpose of carrying out grants governance, oversight, and |
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| 49 | 49 | | 2.18management; and |
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| 50 | 50 | | 2.19 (8) require granting agencies to submit grant solicitation documents for review prior to |
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| 51 | 51 | | 2.20issuance at dollar levels determined by the commissioner. |
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| 52 | 52 | | 2.21 Sec. 3. Minnesota Statutes 2024, section 16B.97, subdivision 4, is amended to read: |
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| 53 | 53 | | 2.22 Subd. 4.Duties.(a) The commissioner director shall: |
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| 54 | 54 | | 2.23 (1) create general grants management policies and procedures that are applicable to all |
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| 55 | 55 | | 2.24executive agencies. The commissioner director may approve exceptions to these policies |
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| 56 | 56 | | 2.25and procedures for particular grant programs. Exceptions shall expire or be renewed after |
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| 57 | 57 | | 2.26five years. Executive agencies shall retain management of individual grants programs, |
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| 58 | 58 | | 2.27provided that the director determines the executive agency is compliant with the requirements |
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| 59 | 59 | | 2.28of law related to grantmaking and grants management in administering its programs; |
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| 60 | 60 | | 2.29 (2) provide a central point of contact concerning statewide grants management policies |
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| 61 | 61 | | 2.30and, procedures, and requirements of law; |
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| 62 | 62 | | 2Sec. 3. |
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| 63 | 63 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI 3.1 (3) serve as a resource to executive agencies in such areas as training, evaluation, |
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| 64 | 64 | | 3.2collaboration, and best practices in grants management; |
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| 65 | 65 | | 3.3 (4) ensure grants management needs are considered in the development, upgrade, and |
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| 66 | 66 | | 3.4use of statewide administrative systems and leverage existing technology wherever possible; |
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| 67 | 67 | | 3.5 (5) oversee and approve future professional and technical service contracts and other |
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| 68 | 68 | | 3.6information technology spending related to executive agency grants management systems |
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| 69 | 69 | | 3.7and activities, including verifying, in consultation with the legislative auditor, that information |
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| 70 | 70 | | 3.8technology systems used by executive branch agencies in administering grant programs |
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| 71 | 71 | | 3.9meet the requirements of this section and section 16B.98; |
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| 72 | 72 | | 3.10 (6) provide a central point of contact for comments about executive agencies violating |
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| 73 | 73 | | 3.11statewide grants governance policies and about fraud and waste in grants processes; |
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| 74 | 74 | | 3.12 (7) forward received comments to the appropriate agency legislative auditor for further |
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| 75 | 75 | | 3.13action, and may follow up as necessary; |
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| 76 | 76 | | 3.14 (8) provide a single listing of all available executive agency competitive grant |
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| 77 | 77 | | 3.15opportunities and resulting grant recipients; |
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| 78 | 78 | | 3.16 (9) selectively review development and implementation of executive agency grants, |
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| 79 | 79 | | 3.17policies, and practices; and |
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| 80 | 80 | | 3.18 (10) selectively review executive agency compliance with best practices.; |
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| 81 | 81 | | 3.19 (11) in consultation with the legislative auditor, review executive agency compliance |
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| 82 | 82 | | 3.20with the requirements of law related to grantmaking and grants management; |
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| 83 | 83 | | 3.21 (12) review and approve or disapprove a grantee's request for waivers, deadline |
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| 84 | 84 | | 3.22extensions, or other variances from the terms of a written grant agreement; and |
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| 85 | 85 | | 3.23 (13) in consultation with the legislative auditor, provide a standardized form that granting |
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| 86 | 86 | | 3.24agencies may use to submit oversight reports to the governor and legislature regarding grant |
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| 87 | 87 | | 3.25activities, including details related to the number of grants awarded by the agency, how |
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| 88 | 88 | | 3.26each grant is being used, appropriate statistics demonstrating how the use of the grant |
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| 89 | 89 | | 3.27benefits the public, and specific details on the use of any funds retained by the granting |
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| 90 | 90 | | 3.28agency for costs associated with administering the grant. |
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| 91 | 91 | | 3.29 (b) No later than July 1, 2025, The commissioner may director must determine that |
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| 92 | 92 | | 3.30whether it is cost-effective for agencies to develop and use shared grants management |
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| 93 | 93 | | 3.31technology systems. This system would be governed under section 16E.01, subdivision 3, |
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| 94 | 94 | | 3.32paragraph (b). If the director determines that a shared grants management technology system |
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| 95 | 95 | | 3Sec. 3. |
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| 96 | 96 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI 4.1would not be cost-effective, the director must propose an alternative enterprise-wide reporting |
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| 97 | 97 | | 4.2system for grants management that allows for public accountability, transparency, and |
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| 98 | 98 | | 4.3information sharing across all agencies. To the extent practical, the director must work with |
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| 99 | 99 | | 4.4the commissioner of management and budget to build appropriate grants management |
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| 100 | 100 | | 4.5functionality into any new statewide accounting system developed for use by agencies. |
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| 101 | 101 | | 4.6 Sec. 4. Minnesota Statutes 2024, section 16B.97, subdivision 5, is amended to read: |
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| 102 | 102 | | 4.7 Subd. 5.Data classification.Data maintained by the commissioner director that identify |
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| 103 | 103 | | 4.8a person providing comments to the commissioner under subdivision 4, paragraph (a), |
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| 104 | 104 | | 4.9clauses (6) and (7), are private and nonpublic data but may be shared with the executive |
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| 105 | 105 | | 4.10agency that is the subject of the comments. |
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| 106 | 106 | | 4.11 Sec. 5. Minnesota Statutes 2024, section 16B.98, subdivision 4, is amended to read: |
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| 107 | 107 | | 4.12 Subd. 4.Reporting of violations.A state employee who discovers evidence of violation |
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| 108 | 108 | | 4.13of laws or rules governing grants is encouraged to must report the violation or suspected |
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| 109 | 109 | | 4.14violation to the employee's supervisor, the commissioner or the commissioner's designee |
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| 110 | 110 | | 4.15director of grants management and oversight, or the legislative auditor. The legislative |
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| 111 | 111 | | 4.16auditor shall report to the Legislative Audit Commission if there are multiple complaints |
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| 112 | 112 | | 4.17about the same agency. The auditor's report to the Legislative Audit Commission under this |
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| 113 | 113 | | 4.18section must disclose only the number and type of violations alleged. An employee making |
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| 114 | 114 | | 4.19a good faith report under this section has the protections provided for under section 181.932, |
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| 115 | 115 | | 4.20prohibiting the employer from discriminating against the employee. |
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| 116 | 116 | | 4.21 Sec. 6. Minnesota Statutes 2024, section 16B.98, subdivision 5, is amended to read: |
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| 117 | 117 | | 4.22 Subd. 5.Creation and validity of grant agreements.(a) A grant agreement and |
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| 118 | 118 | | 4.23amendments are not valid and do not bind unless: |
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| 119 | 119 | | 4.24 (1) the grant agreement and amendments have been executed by the head of the agency |
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| 120 | 120 | | 4.25or a delegate who is party to the grant; |
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| 121 | 121 | | 4.26 (2) the grant agreement and amendments have been approved by the commissioner; |
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| 122 | 122 | | 4.27 (3) the accounting system shows an encumbrance for the amount of the grant in |
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| 123 | 123 | | 4.28accordance with policy approved by the commissioner except as provided in subdivision |
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| 124 | 124 | | 4.2911; and |
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| 125 | 125 | | 4Sec. 6. |
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| 126 | 126 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI 5.1 (4) the grant agreement and amendments include an effective date that references either |
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| 127 | 127 | | 5.2section 16C.05, subdivision 2, or 16B.98, subdivisions 5 and 7, as determined by the granting |
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| 128 | 128 | | 5.3agency. |
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| 129 | 129 | | 5.4 (b) The combined grant agreement and amendments must not exceed five years without |
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| 130 | 130 | | 5.5specific, written approval by the commissioner according to established policy, procedures, |
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| 131 | 131 | | 5.6and standards, or unless the commissioner determines that a longer duration is in the best |
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| 132 | 132 | | 5.7interest of the state. |
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| 133 | 133 | | 5.8 (c) A fully executed copy of the grant agreement with all amendments and other required |
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| 134 | 134 | | 5.9records relating to the grant must be kept on file at the granting agency for a time equal to |
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| 135 | 135 | | 5.10that required of grantees in subdivision 8. |
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| 136 | 136 | | 5.11 (d) Grant agreements must comply with policies established by the commissioner director |
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| 137 | 137 | | 5.12of grants management and oversight for minimum grant agreement standards and practices. |
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| 138 | 138 | | 5.13 (e) The attorney general may must periodically review and evaluate a sample of state |
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| 139 | 139 | | 5.14agency grants to ensure compliance with applicable laws. |
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| 140 | 140 | | 5.15 Sec. 7. Minnesota Statutes 2024, section 16B.98, subdivision 6, is amended to read: |
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| 141 | 141 | | 5.16 Subd. 6.Grant administration.A granting agency shall diligently administer and |
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| 142 | 142 | | 5.17monitor any grant it has entered into. A granting agency must report to the commissioner |
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| 143 | 143 | | 5.18at any time at the commissioner's request on the status of any grant to which the agency is |
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| 144 | 144 | | 5.19a party. At a minimum, a granting agency must: |
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| 145 | 145 | | 5.20 (1) administer a grant utilizing a grants management technology system approved by |
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| 146 | 146 | | 5.21the director of grants management and oversight; |
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| 147 | 147 | | 5.22 (2) require each grantee to identify all grants the grantee has received or applied to |
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| 148 | 148 | | 5.23receive from an executive agency; |
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| 149 | 149 | | 5.24 (3) independently determine whether the grantee has previously received grants or |
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| 150 | 150 | | 5.25entered contracts with a state agency, record that information in the grants management |
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| 151 | 151 | | 5.26technology system, and review any outcomes reported by a state agency related to a grantee's |
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| 152 | 152 | | 5.27performance under a prior grant or contract; |
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| 153 | 153 | | 5.28 (4) identify a program manager for each grant and identify the program manager in the |
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| 154 | 154 | | 5.29grants management technology system; |
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| 155 | 155 | | 5.30 (5) collect appropriate documentation, as determined by the director of grants management |
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| 156 | 156 | | 5.31and oversight, sufficient to verify that providing a grant to a proposed grantee is reasonable |
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| 157 | 157 | | 5.32and appropriate given the grantee's level of financial health and sophistication, including |
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| 158 | 158 | | 5Sec. 7. |
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| 159 | 159 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI 6.1at a minimum, an audit report or IRS form 990, and the proposed grantee's balance sheets |
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| 160 | 160 | | 6.2from the most recent fiscal year or, if the proposed grant has a value of $500,000 or more, |
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| 161 | 161 | | 6.3the proposed grantee's balance sheets covering the most recent five fiscal years, and record |
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| 162 | 162 | | 6.4that information in the grants management technology system; |
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| 163 | 163 | | 6.5 (6) conduct either an unannounced or scheduled in-person meeting with a grantee, at |
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| 164 | 164 | | 6.6the grantee's offices or worksite, to verify that the grant is being used for its intended |
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| 165 | 165 | | 6.7purposes; |
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| 166 | 166 | | 6.8 (7) submit to the director of grants management and oversight for approval any request |
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| 167 | 167 | | 6.9made by a grantee for a waiver, deadline extension, or other variance from the terms of a |
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| 168 | 168 | | 6.10written grant agreement; |
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| 169 | 169 | | 6.11 (8) ensure that the job description of any employee of an agency with responsibilities |
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| 170 | 170 | | 6.12related to grantmaking or grants management includes those duties, that the employee is |
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| 171 | 171 | | 6.13properly and regularly trained on these duties, and that these duties are incorporated in the |
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| 172 | 172 | | 6.14annual review of the employee's job performance, and where appropriate, remedial action |
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| 173 | 173 | | 6.15is taken in the event an employee fails to adequately fulfill the duties; |
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| 174 | 174 | | 6.16 (9) subject to review and approval by the director of grants management and oversight, |
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| 175 | 175 | | 6.17in consultation with the legislative auditor, establish internal controls for conducting ongoing |
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| 176 | 176 | | 6.18oversight of grants administered by the agency, along with policies and procedures for |
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| 177 | 177 | | 6.19remedial action when these controls are not followed; and |
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| 178 | 178 | | 6.20 (10) using the standardized form established by the director of grants management and |
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| 179 | 179 | | 6.21oversight, submit an annual report to the governor and the legislative committees with |
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| 180 | 180 | | 6.22jurisdiction over the agency's budget detailing the agency's grant activity in the prior year. |
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| 181 | 181 | | 6.23 Sec. 8. Minnesota Statutes 2024, section 16B.98, subdivision 7, is amended to read: |
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| 182 | 182 | | 6.24 Subd. 7.Grant payments.(a) Payments to the grantee may not be issued until the grant |
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| 183 | 183 | | 6.25agreement is fully executed. Encumbrances for grants issued by June 30 may be certified |
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| 184 | 184 | | 6.26for a period of one year beyond the year in which the funds were originally appropriated as |
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| 185 | 185 | | 6.27provided by section 16A.28, subdivision 6. |
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| 186 | 186 | | 6.28 (b) An executive agency must withhold payments on a grant if a grantee has not submitted |
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| 187 | 187 | | 6.29each required progress report, financial reconciliation, or other report required by the terms |
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| 188 | 188 | | 6.30of the grant agreement, or if the executive agency determines that the grantee no longer |
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| 189 | 189 | | 6.31qualifies to receive the grant. |
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| 190 | 190 | | 6.32 (c) An executive agency must not make final payment on a grant until it has received |
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| 191 | 191 | | 6.33all annual financial reconciliations required by the terms of the grant agreement, in addition |
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| 192 | 192 | | 6Sec. 8. |
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| 193 | 193 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI 7.1to a comprehensive reconciliation of all expenses, reimbursements, and other uses of the |
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| 194 | 194 | | 7.2grant funds that demonstrate to the granting agency that the grantee is prepared to receive |
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| 195 | 195 | | 7.3a final grant payment on the grant. |
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| 196 | 196 | | 7.4 Sec. 9. DIRECTOR OF GRANTS MANAGEMENT AND OVERSIGHT; |
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| 197 | 197 | | 7.5TRANSITION. |
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| 198 | 198 | | 7.6 The commissioner must appoint a director of grants management and oversight as |
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| 199 | 199 | | 7.7required by this act no later than October 1, 2025. The commissioner must engage with the |
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| 200 | 200 | | 7.8public and private sector to recruit highly qualified applicants and make a final appointment |
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| 201 | 201 | | 7.9through an open and competitive process. The appointed director's responsibilities must |
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| 202 | 202 | | 7.10include the work and mission of the existing Office of Grants Management, in addition to |
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| 203 | 203 | | 7.11the new duties prescribed by this act. |
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| 204 | 204 | | 7Sec. 9. |
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| 205 | 205 | | 25-01447 as introduced12/17/24 REVISOR SGS/MI |
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