1.1 A bill for an act
1.2 relating to state government; creating the Office of the Inspector General; creating
1.3 an advisory committee; requiring reports; transferring certain agency duties;
1.4 appropriating money; amending Minnesota Statutes 2024, sections 3.971, by adding
1.5 a subdivision; 15A.0815, subdivision 2; 142A.03, by adding a subdivision;
1.6 142A.12, subdivision 5; 144.05, by adding a subdivision; 245.095, subdivision 5;
1.7 256.01, by adding a subdivision; 609.456, subdivision 2; proposing coding for
1.8 new law as Minnesota Statutes, chapter 15D; repealing Minnesota Statutes 2024,
1.9 sections 13.321, subdivision 12; 127A.21.
1.10BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.11 ARTICLE 1
1.12 OFFICE OF THE INSPECTOR GENERAL
1.13 Section 1. Minnesota Statutes 2024, section 3.971, is amended by adding a subdivision
1.14to read:
1.15 Subd. 3b.Public reports of fraud and misuse.Notwithstanding the classification of
1.16data as not public, the legislative auditor must refer all reports from the public about potential
1.17fraud or misuse, as those terms are defined in chapter 15D, to the inspector general. The
1.18legislative auditor may coordinate reviews and investigations with the inspector general
1.19when coordination conserves resources and does not compromise the reviews or
1.20investigations.
1.21 Sec. 2. Minnesota Statutes 2024, section 15A.0815, subdivision 2, is amended to read:
1.22 Subd. 2.Agency head salaries.The salary for a position listed in this subdivision shall
1.23be determined by the Compensation Council under section 15A.082. The commissioner of
1Article 1 Sec. 2.
S0856-8 8th EngrossmentSF856 REVISOR SGS
SENATE
STATE OF MINNESOTA
S.F. No. 856NINETY-FOURTH SESSION
(SENATE AUTHORS: GUSTAFSON, Draheim, Kreun, Putnam and Latz)
OFFICIAL STATUSD-PGDATE
Introduction and first reading23301/30/2025
Referred to State and Local Government
Comm report: To pass as amended and re-refer to Judiciary and Public Safety353a02/13/2025
Comm report: To pass as amended and re-refer to Education Finance525a02/24/2025
Comm report: To pass as amended and re-refer to Health and Human Services548a02/27/2025
Comm report: To pass as amended and re-refer to Human Services740a03/13/2025
Comm report: Amended, No recommendation, re-referred to State and Local Government876a03/17/2025
Comm report: To pass as amended and re-refer to Rules and Administration956a03/24/2025
Withdrawn and re-referred to Judiciary and Public Safety111703/27/2025
Comm report: To pass as amended and re-refer to Rules and Administration1158a04/01/2025
Comm report: To pass as amended and re-refer to Finance04/07/2025 2.1management and budget must publish the salaries on the department's website. This
2.2subdivision applies to the following positions:
2.3 Commissioner of administration;
2.4 Commissioner of agriculture;
2.5 Commissioner of education;
2.6 Commissioner of children, youth, and families;
2.7 Commissioner of commerce;
2.8 Commissioner of corrections;
2.9 Commissioner of health;
2.10 Commissioner, Minnesota Office of Higher Education;
2.11 Commissioner, Minnesota IT Services;
2.12 Commissioner, Housing Finance Agency;
2.13 Commissioner of human rights;
2.14 Commissioner of human services;
2.15 Commissioner of labor and industry;
2.16 Commissioner of management and budget;
2.17 Commissioner of natural resources;
2.18 Commissioner, Pollution Control Agency;
2.19 Commissioner of public safety;
2.20 Commissioner of revenue;
2.21 Commissioner of employment and economic development;
2.22 Commissioner of transportation;
2.23 Commissioner of veterans affairs;
2.24 Executive director of the Gambling Control Board;
2.25 Executive director of the Minnesota State Lottery;
2.26 Executive director of the Office of Cannabis Management;
2.27 Inspector general;
2Article 1 Sec. 2.
S0856-8 8th EngrossmentSF856 REVISOR SGS 3.1 Commissioner of Iron Range resources and rehabilitation;
3.2 Commissioner, Bureau of Mediation Services;
3.3 Ombudsman for mental health and developmental disabilities;
3.4 Ombudsperson for corrections;
3.5 Chair, Metropolitan Council;
3.6 Chair, Metropolitan Airports Commission;
3.7 School trust lands director;
3.8 Executive director of pari-mutuel racing;
3.9 Commissioner, Public Utilities Commission;
3.10 Chief Executive Officer, Direct Care and Treatment; and
3.11 Director of the Office of Emergency Medical Services.
3.12 Sec. 3. [15D.01] OFFICE OF THE INSPECTOR GENERAL.
3.13 (a) The inspector general serves as an independent entity responsible for ensuring
3.14accountability, transparency, and integrity in the operations of state agencies and programs.
3.15 (b) The inspector general must operate independently of all state executive branch
3.16agencies and report directly to the chief administrative law judge under chapter 14. The
3.17inspector general must not be subject to direction or interference from any executive or
3.18legislative authority, other than the chief administrative law judge.
3.19 (c) The inspector general shall direct an Office of the Inspector General.
3.20 (d) The inspector general serves in the unclassified service.
3.21 EFFECTIVE DATE.This section is effective January 1, 2026.
3.22 Sec. 4. [15D.02] DEFINITIONS.
3.23 For the purposes of this chapter, the following terms have the meanings given:
3.24 (1) "agency program" means a program funded or administered by a state agency,
3.25including grants and contracts;
3.26 (2) "fraud" means an intentional or deceptive act or failure to act to gain an unlawful
3.27benefit;
3Article 1 Sec. 4.
S0856-8 8th EngrossmentSF856 REVISOR SGS 4.1 (3) "investigation" means an audit, review, or inquiry conducted by the inspector general
4.2to detect or prevent fraud or misuse;
4.3 (4) "misuse" means improper use of authority or position for personal gain or to cause
4.4harm to others, including the improper use of public resources or programs contrary to their
4.5intended purpose; and
4.6 (5) "personal gain" means a benefit to a person; to a person's spouse, parent, child, or
4.7other legal dependent; or to an in-law of the person or the person's child.
4.8 EFFECTIVE DATE.This section is effective January 1, 2026.
4.9 Sec. 5. [15D.03] INSPECTOR GENERAL.
4.10 Subdivision 1.Minimum qualifications.(a) To be eligible to be appointed as inspector
4.11general, a candidate must:
4.12 (1) have a bachelor's or higher degree in criminal justice, public administration, law, or
4.13a related field;
4.14 (2) have at least ten years of professional experience in auditing, investigations, law
4.15enforcement, or a related area;
4.16 (3) hold a professional certificate from the Association of Inspectors General, including
4.17Certified Inspector General or Certified Inspector General Investigator; and
4.18 (4) demonstrate a commitment to safeguarding the mission of public service and provide
4.19a public disclosure of prior professional opinions, positions, or actions that may influence
4.20the candidate's approach to the role.
4.21 (b) Current or former commissioners, agency heads, deputy agency heads, governors,
4.22or legislators are not eligible to serve as inspector general within five years of their service
4.23in those roles. A person elected to an office other than the governor or legislature is not
4.24eligible until ten years after the end of service in an elected position.
4.25 Subd. 2.Appointment.The Legislative Inspector General Advisory Commission will
4.26recommend candidates for inspector general after a competitive process from among eligible
4.27applicants for the position of inspector general. To be recommended by the commission, a
4.28candidate must be approved for recommendation by five of the eight members of the
4.29commission. The commission must assess eligible candidates based on qualifications,
4.30including experience in auditing, financial analysis, public administration, law enforcement,
4.31or related fields. The inspector general is appointed by the governor, after consideration of
4.32recommendations from the Legislative Inspector General Advisory Commission, with
4Article 1 Sec. 5.
S0856-8 8th EngrossmentSF856 REVISOR SGS 5.1confirmation by a vote of three-fifths of the senate. Section 15.066, subdivision 3, does not
5.2apply.
5.3 Subd. 3.Term.The inspector general serves a five-year term and may be appointed to
5.4unlimited additional terms.
5.5 Subd. 4.Disclosure.A candidate considered by the Legislative Inspector General
5.6Oversight Commission or selected for appointment by the governor must disclose all political
5.7affiliations, appointments, campaign work, or partisan activities prior to confirmation.
5.8 Subd. 5.Nonpartisanship.The inspector general, and all employees of the office, must
5.9perform duties of the office without regard to partisan preferences or influences. While
5.10serving, the inspector general, and all employees of the office, may not engage in partisan
5.11activities, campaign work, or public political speech, unless protected by the state or United
5.12States Constitution.
5.13 Subd. 6.Conflict of interest; code of ethics.The inspector general and all employees
5.14of the office are public officials for purposes of the conflict of interest and statement of
5.15economic interest requirements in chapter 10A, and are subject to the code of ethics in
5.16section 43A.38, where applicable.
5.17 Subd. 7.Removal.The inspector general may only be removed before the expiration
5.18of the term for cause after a public hearing and with approval of both the senate and the
5.19house of representatives.
5.20 EFFECTIVE DATE.This section is effective January 1, 2026.
5.21 Sec. 6. [15D.04] POWERS AND DUTIES.
5.22 Subdivision 1.Authorized powers and responsibilities.The inspector general is
5.23authorized and responsible to:
5.24 (1) conduct inspections, evaluations, and investigations of state executive branch agencies
5.25and programs according to professional auditing standards to: (i) identify fraud and misuse;
5.26(ii) make recommendations for changes to programs to prevent fraud and misuse; and (iii)
5.27protect the integrity of the use of public funds, data, and systems;
5.28 (2) refer matters for civil, criminal, or administrative action to the Bureau of Criminal
5.29Apprehension, the attorney general's office, or other appropriate authorities;
5.30 (3) recommend legislative or policy changes to improve program efficiency and
5.31effectiveness;
5Article 1 Sec. 6.
S0856-8 8th EngrossmentSF856 REVISOR SGS 6.1 (4) publish reports on completion of an audit or investigation summarizing findings,
6.2recommendations, and outcomes of the inspector general's activities;
6.3 (5) investigate any public or private entity that receives public funds to ensure compliance
6.4with applicable laws, proper use of funds, and adherence to program requirements;
6.5 (6) submit an annual report summarizing the work of the office to the Legislative
6.6Inspector General Advisory Commission and make the report publicly available by posting
6.7the report on the inspector general's website;
6.8 (7) at the inspector general's discretion, seek a court order to freeze or stop distribution
6.9of public funds, or alert relevant commissioners or heads of agencies on an emergency basis
6.10before an investigation is concluded that the inspector general has a reasonable suspicion
6.11that fraud or misuse is being committed, with a recommendation to freeze or cease
6.12distribution of funds, with notice to the appropriate law enforcement agencies; and
6.13 (8) establish and maintain a current exclusion list in a format readily accessible to
6.14agencies that identifies each program and individual for which the inspector general has
6.15obtained a court order to freeze or cease distribution of funds or made a recommendation
6.16under clause (7) to freeze or cease distribution of funds.
6.17 Subd. 2.Relationship to powers and duties of other agencies.(a) The inspector general
6.18has authority to investigate fraud and misuse of public funds across all programs administered
6.19by state agencies.
6.20 (b) The inspector general may perform the inspector general's duties and apply the
6.21inspector general's authority without obtaining approval from another agency.
6.22 (c) The Department of Human Services has primary responsibility to investigate fraud
6.23in the Medicaid program, but the inspector general has authority to conduct independent
6.24investigations related to Medicaid fraud as necessary.
6.25 (d) The Department of Children, Youth, and Families has primary responsibility to
6.26investigate fraud in the child care assistance program, but the inspector general has authority
6.27to conduct independent investigations related to the child care assistance program.
6.28 (e) The Department of Health has primary responsibility to investigate fraud related to
6.29women, infants, and children (WIC) and food support programs, but the inspector general
6.30has authority to conduct independent investigations related to WIC and food support
6.31programs.
6Article 1 Sec. 6.
S0856-8 8th EngrossmentSF856 REVISOR SGS 7.1 (f) The inspector general has concurrent authority over general compliance reviews,
7.2information technology security audits, or administrative program integrity assessments
7.3that are related to fraud or misuse.
7.4 (g) The inspector general must refer all reports from the public about potential fraud or
7.5misuse to the legislative auditor. The inspector general may coordinate investigations with
7.6the legislative auditor when coordination conserves resources and does not compromise an
7.7investigation.
7.8 EFFECTIVE DATE.This section is effective January 1, 2026.
7.9 Sec. 7. [15D.042] AUXILIARY POWERS.
7.10 Subdivision 1.Subpoena power.In all matters relating to official duties, the inspector
7.11general has the powers possessed by courts of law to issue and have subpoenas served.
7.12 Subd. 2.Inquiry and inspection power; duty to aid inspector general.All public
7.13officials and their deputies and employees, and all corporations, firms, and individuals
7.14having business involving the receipt, disbursement, or custody of public funds shall at all
7.15times:
7.16 (1) afford reasonable facilities for examinations by the inspector general;
7.17 (2) provide returns and reports required by the inspector general;
7.18 (3) attend and answer under oath the inspector general's lawful inquiries;
7.19 (4) produce and exhibit all books, accounts, documents, data of any classification, and
7.20property that the inspector general requests to inspect; and
7.21 (5) in all things cooperate with the inspector general.
7.22 Subd. 3.Penalties.(a) If a person refuses or neglects to obey any lawful direction of
7.23the inspector general, a deputy or assistant, or withholds any information, book, record,
7.24paper or other document called for by the inspector general for the purpose of examination,
7.25after having been lawfully required by order or subpoena, upon application by the inspector
7.26general, a judge of the district court in the county where the order or subpoena was made
7.27returnable shall compel obedience or punish disobedience as for contempt, as in the case
7.28of a similar order or subpoena issued by the court.
7.29 (b) A person who swears falsely concerning any matter stated under oath is guilty of a
7.30gross misdemeanor.
7Article 1 Sec. 7.
S0856-8 8th EngrossmentSF856 REVISOR SGS 8.1 Sec. 8. [15D.043] IDENTIFICATION OF FRAUD REPORTING TOOL.
8.2 (a) The commissioner or other chief executive officer of each agency must prominently
8.3highlight on the agency's website the fraud reporting tools administered by the Office of
8.4the Inspector General and the Office of the Legislative Auditor under chapter 3.
8.5 (b) As part of any grant agreement between the state and a nonprofit organization, the
8.6agreement must require the nonprofit organization to prominently highlight on the
8.7organization's website the fraud reporting tools administered by the Office of the Inspector
8.8General, under chapter 15, and the Office of the Legislative Auditor, under chapter 3. The
8.9state agency administering the grant must regularly confirm and document the organization's
8.10compliance with the requirement under this paragraph for the life of the grant agreement.
8.11 Sec. 9. [15D.046] DATA PRACTICES.
8.12 Subdivision 1.Definitions.(a) For the purposes of this section, the following terms have
8.13the meanings given.
8.14 (b) "Confidential data on individuals" has the meaning given in section 13.02, subdivision
8.153.
8.16 (c) "Government entity" has the meaning given in section 13.02, subdivision 7a.
8.17 (d) "Nonpublic data" has the meaning given in section 13.02, subdivision 9.
8.18 (e) "Not public data" has the meaning given in section 13.02, subdivision 8a.
8.19 (f) "Private data on individuals" has the meaning given in section 13.02, subdivision 12.
8.20 (g) "Protected nonpublic data" has the meaning given in section 13.02, subdivision 13.
8.21 Subd. 2.Government Data Practices Act.The inspector general is a government entity
8.22and is subject to the Government Data Practices Act, chapter 13.
8.23 Subd. 3.Access.In order to perform the duties authorized by this chapter, the inspector
8.24general shall have access to data of any classification, including data classified as not public
8.25data. It is not a violation of chapter 13 or any other statute classifying government data as
8.26not public data if a government entity provides data pursuant to a subpoena issued under
8.27this chapter.
8.28 Subd. 4.Dissemination.The inspector general may disseminate data of any classification,
8.29including not public data, to:
8.30 (1) a government entity, other than a law enforcement agency or prosecuting authority,
8.31if the dissemination of the data aids a pending investigation or administrative action;
8Article 1 Sec. 9.
S0856-8 8th EngrossmentSF856 REVISOR SGS 9.1 (2) a law enforcement agency or prosecuting authority if there is reason to believe that
9.2the data are evidence of criminal activity within the agency's or authority's jurisdiction; or
9.3 (3) the legislative auditor as provided in section 15D.04, subdivision 2, paragraph (g).
9.4 Subd. 5.Data classifications.(a) Notwithstanding any other law, data relating to an
9.5investigation conducted under this chapter are confidential data on individuals or protected
9.6nonpublic data while the investigation is active. Whether an investigation is active shall be
9.7determined by the inspector general.
9.8 (b) Data relating to an investigation conducted under this chapter become public data
9.9upon the inspector general's completion of the investigation, unless:
9.10 (1) the release of the data would jeopardize another active investigation by the inspector
9.11general or another government entity;
9.12 (2) the inspector general reasonably believes the data will be used in litigation related
9.13to any civil, criminal, or administrative actions, including reconsideration or appeal of any
9.14such action; or
9.15 (3) the data are classified as not public under another statute or paragraph (e).
9.16 (c) Data subject to paragraph (b), clause (2), are confidential data on individuals or
9.17protected nonpublic data and become public when the litigation has been completed or the
9.18time period to appeal has expired, or the litigation is no longer being actively pursued.
9.19 (d) Unless the data are subject to a more restrictive classification, upon the inspector
9.20general's decision to no longer actively pursue an investigation under this chapter, data
9.21relating to an investigation are private data on individuals or nonpublic data except the
9.22following data are public:
9.23 (1) data relating to the investigation's general description, existence, status, and
9.24disposition; and
9.25 (2) data that document the inspector general's work.
9.26 (e) Inactive investigative data on an individual supplying information for an investigation
9.27that could reasonably be used to determine the individual's identity are private data on
9.28individuals if the information supplied was needed for the investigation and would not have
9.29been provided to the inspector general without an assurance to the individual that the
9.30individual's identity would remain private.
9Article 1 Sec. 9.
S0856-8 8th EngrossmentSF856 REVISOR SGS 10.1 (f) Data relating to an investigation conducted under this chapter that are obtained from
10.2an entity that is not a government entity have the same classification that the data would
10.3have if obtained from a government entity.
10.4 Subd. 6.Privileges.Nothing in this section or section 15D.042 requires the disclosure
10.5of documents or information that is legally privileged under statute or other law, including
10.6documents or information subject to section 13.393 or 595.02.
10.7 Sec. 10. [15D.05] RESOURCES.
10.8 Subdivision 1.Staff.(a) The inspector general may hire and manage staff as necessary.
10.9The inspector general must employ at least two individuals with experience in criminal
10.10investigations to serve as investigators for the office. To the extent the inspector general
10.11deems advisable, these individuals must have previous experience in complex investigations
10.12as law enforcement officers. The staff in the Office of the Inspector General shall serve in
10.13the classified civil service. Except as provided in paragraph (b), compensation for employees
10.14of the inspector general in the classified service who are represented by an exclusive
10.15representative shall be governed by a collective bargaining agreement negotiated between
10.16the commissioner of management and budget and the exclusive representative. Compensation
10.17for employees of the inspector general in the classified service who are not represented by
10.18an exclusive representative shall be as provided in the commissioner's plan under section
10.1943A.18, subdivision 2.
10.20 (b) Section 15.039, subdivision 7, applies to employees transferred into the Office of
10.21the Inspector General from other offices of inspectors general within the first year following
10.22enactment of chapter 15D.
10.23 Subd. 2.Contracting.The inspector general may contract with external experts to
10.24support the work of the office, subject to section 16C.08.
10.25 EFFECTIVE DATE.This section is effective January 1, 2026.
10.26Sec. 11. [15D.06] REPORTING AND TRANSPARENCY.
10.27 Subdivision 1.Reports.The inspector general must issue public reports detailing
10.28completed audits, investigations, and corrective actions taken.
10.29 Subd. 2.Public tips.The inspector general must maintain a phone line and website for
10.30reporting fraud and misuse that allows the person making the report to remain anonymous.
10.31 Subd. 3.Report; inactive investigations.By December 1, 2026, and each December
10.321 thereafter, the inspector general must submit a report to the legislative auditor and the
10Article 1 Sec. 11.
S0856-8 8th EngrossmentSF856 REVISOR SGS 11.1chairs and ranking minority members of the legislative committees with jurisdiction over
11.2state government and data practices regarding all investigations the inspector general did
11.3not open after receiving a tip or complaint or decided to no longer actively pursue for the
11.4preceding calendar year. The report must include, at a minimum, summary data as defined
11.5in section 13.02, subdivision 19, for:
11.6 (1) all complaints or tips received;
11.7 (2) the type of allegation;
11.8 (3) if the complaint or tip was not frivolous, the reason that the inspector general did
11.9not open an investigation or decided to no longer pursue the investigation; and
11.10 (4) referrals to other agencies or the legislative auditor.
11.11 EFFECTIVE DATE.This section is effective January 1, 2026.
11.12Sec. 12. [15D.07] PROFESSIONAL STANDARDS AND REVIEW.
11.13 (a) The inspector general's activities must adhere to professional standards as promulgated
11.14by the Association of Inspectors General or other recognized bodies.
11.15 (b) The chief administrative law judge may contract for an external quality assurance
11.16review of the inspector general every three years and must make findings from the review
11.17public.
11.18 EFFECTIVE DATE.This section is effective January 1, 2026.
11.19Sec. 13. [15D.08] LEGISLATIVE INSPECTOR GENERAL ADVISORY
11.20COMMISSION.
11.21 Subdivision 1.Membership.The Legislative Inspector General Advisory Commission
11.22is comprised of:
11.23 (1) two senators appointed by the majority leader of the senate;
11.24 (2) two senators appointed by the minority leader of the senate;
11.25 (3) two members of the house of representatives appointed by the speaker of the house
11.26of representatives; and
11.27 (4) two members of the house of representatives appointed by the minority leader of the
11.28house of representatives.
11.29 Subd. 2.Terms.Members serve at the pleasure of their appointing authorities and each
11.30member serves until a replacement is appointed.
11Article 1 Sec. 13.
S0856-8 8th EngrossmentSF856 REVISOR SGS 12.1 Subd. 3.Chair.The commission must select a chair from among its members by January
12.231 of each odd-numbered year. The chair shall serve until a successor is elected. The chair
12.3must alternate biennially between the senate and the house of representatives.
12.4 Subd. 4.Duties.The Legislative Inspector General Advisory Commission must:
12.5 (1) consider applicants for and make recommendations to the chief administrative law
12.6judge for the position of inspector general; and
12.7 (2) may conduct hearings to review the work of the inspector general to ensure
12.8impartiality, independence, and effectiveness.
12.9 Subd. 5.Per diem; expense reimbursement.Members may be compensated for time
12.10spent on commission duties and may be reimbursed for expenses according to the rules of
12.11their respective bodies.
12.12 Subd. 6.Meeting space; staff.The Legislative Coordinating Commission must provide
12.13meeting space and staff to assist the commission in performing its duties.
12.14 Subd. 7.Open meetings.The Legislative Inspector General Advisory Commission is
12.15subject to the requirements in section 3.055.
12.16 EFFECTIVE DATE.This section is effective the day following final enactment. The
12.17commission must submit recommendations for an inspector general by January 1, 2026.
12.18Sec. 14. Minnesota Statutes 2024, section 609.456, subdivision 2, is amended to read:
12.19 Subd. 2.Legislative auditor and inspector general.Whenever an employee or officer
12.20of the state, University of Minnesota, or other organization listed in section 3.971, subdivision
12.216, discovers evidence of fraud, theft, embezzlement, or other unlawful use of public funds
12.22or property, the employee or officer shall, except when to do so would knowingly impede
12.23or otherwise interfere with an ongoing criminal investigation, promptly report in writing to
12.24the legislative auditor or inspector general a detailed description of the alleged incident or
12.25incidents.
12.26Sec. 15. OFFICE OF THE INSPECTOR GENERAL ESTABLISHMENT AND
12.27TRANSITION.
12.28 Subdivision 1.Appointment.By January 1, 2026, the Legislative Inspector General
12.29Advisory Commission must make recommendations for appointment of an inspector general
12.30under Minnesota Statutes, section 15D.03. By February 1, 2026, the chief judge of the Office
12Article 1 Sec. 15.
S0856-8 8th EngrossmentSF856 REVISOR SGS 13.1of Administrative Hearings must appoint an inspector general from among the recommended
13.2candidates.
13.3 Subd. 2.Operational.By September 1, 2026, the Office of the Inspector General must
13.4be fully operational.
13.5 Subd. 3.Transition of employees.(a) Before September 1, 2026, all officers and
13.6employees employed in an office of inspector general for a state agency shall transition to
13.7employment under the Office of the Inspector General under Minnesota Statutes, chapter
13.815D, except as specified in subdivision 6.
13.9 (b) The following protections shall apply to employees who are transferred to the Office
13.10of the Inspector General under Minnesota Statutes, chapter 15D, from state agencies:
13.11 (1) no transferred employee shall have their employment status and job classification
13.12altered as a result of the transfer;
13.13 (2) transferred employees who were represented by an exclusive representative prior to
13.14the transfer shall continue to be represented by the same exclusive representative after the
13.15transfer;
13.16 (3) any applicable collective bargaining agreements with exclusive representatives shall
13.17continue in full force and effect for transferred employees after the transfer while the
13.18agreement remains in effect;
13.19 (4) when an employee in a temporary unclassified position is transferred to the Office
13.20of the Inspector General, the total length of time that the employee has served in the
13.21appointment must include all time served in the appointment at the transferring agency and
13.22the time served in the appointment at the Office of the Inspector General. An employee in
13.23a temporary unclassified position who was hired by a transferring agency through an open
13.24competitive selection process under a policy enacted by the commissioner of management
13.25and budget is considered to have been hired through a competitive selection process after
13.26the transfer;
13.27 (5) the state must meet and negotiate with the exclusive representatives of the transferred
13.28employees about proposed changes to the transferred employees' terms and conditions of
13.29employment to the extent that the proposed changes are not addressed in the applicable
13.30collective bargaining agreement; and
13.31 (6) if the state transfers ownership or control of any facilities, services, or operations of
13.32the Office of the Inspector General to another private or public entity by subcontracting,
13Article 1 Sec. 15.
S0856-8 8th EngrossmentSF856 REVISOR SGS 14.1sale, assignment, lease, or other transfer, the state must require as a written condition of the
14.2transfer of ownership or control the following:
14.3 (i) employees who perform work in the facilities, services, or operations must be offered
14.4employment with the entity acquiring ownership or control before the entity offers
14.5employment to any individual who was not employed by the transferring agency at the time
14.6of the transfer; and
14.7 (ii) the wage and benefit standards of the transferred employees must not be reduced by
14.8the entity acquiring ownership or control through the expiration of the collective bargaining
14.9agreement in effect at the time of the transfer or for a period of two years after the transfer,
14.10whichever is longer.
14.11There is no liability on the part of, and no cause of action arises against, the state of
14.12Minnesota or its officers or agents for any action or inaction of any entity acquiring ownership
14.13or control of any facilities, services, or operations of the department.
14.14 Subd. 4.Assets.Before September 1, 2026, assets and unused appropriations for existing
14.15offices of inspectors general shall be transferred to the Office of the Inspector General under
14.16Minnesota Statutes, chapter 15D, except as specified in subdivision 6.
14.17 Subd. 5.Office space.The commissioner of administration must provide office space
14.18on the Capitol Mall complex for the Office of the Inspector General under Minnesota
14.19Statutes, chapter 15D, under a rental agreement.
14.20 Subd. 6.Exceptions.(a) Positions in the Department of Human Services will not transfer
14.21to the Office of the Inspector General.
14.22 (b) No employees or positions in the Department of Corrections are transferred under
14.23this section.
14.24 (c) No employees or positions in the student maltreatment program of the Department
14.25of Education or other Department of Education employees or positions dedicated to student
14.26maltreatment investigations under Minnesota Statutes, chapter 260E, are transferred under
14.27this section.
14.28 (d) Positions in the following divisions and teams in the Department of Children, Youth,
14.29and Families will not transfer to the Office of the Inspector General:
14.30 (1) the licensing functions under Minnesota Statutes, chapter 142B;
14.31 (2) the certification functions under Minnesota Statutes, chapter 142C;
14Article 1 Sec. 15.
S0856-8 8th EngrossmentSF856 REVISOR SGS 15.1 (3) the child care assistance program integrity functions under Minnesota Statutes,
15.2chapter 142E;
15.3 (4) the food support and antipoverty programs performing recipient fraud prevention
15.4investigation functions under Minnesota Statutes, chapter 142F;
15.5 (5) the Minnesota family assistance program performing recipient fraud prevention
15.6investigation functions under Minnesota Statutes, chapter 142G;
15.7 (6) the great start compensation support payment program under Minnesota Statutes,
15.8section 142D.21, and Minnesota Statutes, chapter 142E;
15.9 (7) the operations and policy functions for the programs in clauses (1) to (6); and
15.10 (8) the legal staff for the programs in clauses (1) to (6).
15.11 EFFECTIVE DATE.This section is effective January 1, 2026.
15.12Sec. 16. LEGISLATIVE INSPECTOR GENERAL ADVISORY COMMISSION;
15.13INITIAL APPOINTMENTS AND FIRST MEETING.
15.14 Subdivision 1.Initial appointments.Appointing authorities must make appointments
15.15to the Legislative Inspector General Advisory Commission by August 1, 2025.
15.16 Subd. 2.First meeting.The senate majority leader must designate one member of the
15.17Legislative Inspector General Advisory Commission to convene the first meeting of the
15.18Legislative Inspector General Advisory Commission by September 15, 2025.
15.19 Subd. 3.Chair.The Legislative Inspector General Advisory Commission must elect a
15.20chair from among its senate members at its first meeting. The first chair shall serve until a
15.21successor is selected at the start of the next biennium as provided in Minnesota Statutes,
15.22section 15D.08, subdivision 3.
15.23Sec. 17. INTERAGENCY AGREEMENTS.
15.24 (a) By December 31, 2026, the Office of the Inspector General must enter into an
15.25interagency agreement with the Department of Human Services. The interagency agreement
15.26must include a clause on cost-sharing for investigations that may require multiagency
15.27coordination and a clause that details what process will be followed if a joint investigation
15.28is required. The interagency agreement must not limit the inspector general's authority or
15.29authorized powers and responsibilities. The agency and the inspector general may coordinate
15.30investigative efforts as necessary or practical, but an interagency agreement must not
15.31diminish, delay, or restrict the inspector general's ability to investigate fraud and misuse.
15Article 1 Sec. 17.
S0856-8 8th EngrossmentSF856 REVISOR SGS 16.1 (b) By December 31, 2026, the Office of the Inspector General must enter into an
16.2interagency agreement with the Department of Children, Youth, and Families. The
16.3interagency agreement must include a clause on cost-sharing for investigations that may
16.4require multiagency coordination and a clause that details what process will be followed if
16.5a joint investigation is required. The interagency agreement must not limit the inspector
16.6general's authority or authorized powers and responsibilities. The agency and the inspector
16.7general may coordinate investigative efforts as necessary or practical, but an interagency
16.8agreement must not diminish, delay, or restrict the inspector general's ability to investigate
16.9fraud and misuse.
16.10Sec. 18. APPROPRIATIONS.
16.11 (a) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
16.12general fund to the Office of Administrative Hearings to support the creation of the Office
16.13of the Inspector General. This is a onetime appropriation.
16.14 (b) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
16.15general fund to the Office of the Inspector General for the purposes of this act.
16.16 ARTICLE 2
16.17 CONFORMING ITEMS AND REPEALERS
16.18Section 1. Minnesota Statutes 2024, section 142A.03, is amended by adding a subdivision
16.19to read:
16.20 Subd. 35.Office of the Inspector General; reports.The commissioner must submit
16.21final investigative reports to the inspector general, serving under section 15D.01, for any
16.22investigation conducted by the commissioner into fraud or misuse, as defined in section
16.2315D.02, within the child care assistance program.
16.24Sec. 2. Minnesota Statutes 2024, section 142A.12, subdivision 5, is amended to read:
16.25 Subd. 5.Withholding of payments.(a) Except as otherwise provided by state or federal
16.26law, the commissioner may withhold payments to a provider, vendor, individual, associated
16.27individual, or associated entity in any program administered by the commissioner if the
16.28commissioner determines there is a credible allegation of fraud for which an investigation
16.29is pending for a program administered by a Minnesota state or federal agency.
16.30 (b) For purposes of this subdivision, "credible allegation of fraud" means an allegation
16.31that has been verified by the commissioner from any source, including but not limited to:
16Article 2 Sec. 2.
S0856-8 8th EngrossmentSF856 REVISOR SGS 17.1 (1) fraud hotline complaints;
17.2 (2) claims data mining;
17.3 (3) patterns identified through provider audits, civil false claims cases, and law
17.4enforcement investigations; and
17.5 (4) court filings and other legal documents, including but not limited to police reports,
17.6complaints, indictments, informations, affidavits, declarations, and search warrants; and
17.7 (5) information from the inspector general, including information listed on the inspector
17.8general's exclusion list under section 15D.04, subdivision 1, clause (8).
17.9 (c) The commissioner must send notice of the withholding of payments within five days
17.10of taking such action. The notice must:
17.11 (1) state that payments are being withheld according to this subdivision;
17.12 (2) set forth the general allegations related to the withholding action, except the notice
17.13need not disclose specific information concerning an ongoing investigation;
17.14 (3) state that the withholding is for a temporary period and cite the circumstances under
17.15which the withholding will be terminated; and
17.16 (4) inform the provider, vendor, individual, associated individual, or associated entity
17.17of the right to submit written evidence to contest the withholding action for consideration
17.18by the commissioner.
17.19 (d) If the commissioner withholds payments under this subdivision, the provider, vendor,
17.20individual, associated individual, or associated entity has a right to request administrative
17.21reconsideration. A request for administrative reconsideration must be made in writing, state
17.22with specificity the reasons the payment withholding decision is in error, and include
17.23documents to support the request. Within 60 days from receipt of the request, the
17.24commissioner shall judiciously review allegations, facts, evidence available to the
17.25commissioner, and information submitted by the provider, vendor, individual, associated
17.26individual, or associated entity to determine whether the payment withholding should remain
17.27in place.
17.28 (e) The commissioner shall stop withholding payments if the commissioner determines
17.29there is insufficient evidence of fraud by the provider, vendor, individual, associated
17.30individual, or associated entity or when legal proceedings relating to the alleged fraud are
17.31completed, unless the commissioner has sent notice under subdivision 3 to the provider,
17.32vendor, individual, associated individual, or associated entity.
17Article 2 Sec. 2.
S0856-8 8th EngrossmentSF856 REVISOR SGS 18.1 (f) The withholding of payments is a temporary action and is not subject to appeal under
18.2section 256.0451 or chapter 14.
18.3 Sec. 3. Minnesota Statutes 2024, section 144.05, is amended by adding a subdivision to
18.4read:
18.5 Subd. 9.Office of the Inspector General; reports.The commissioner must submit
18.6final investigative reports to the inspector general serving under section 15D.01 for any
18.7investigation conducted by the commissioner into fraud or misuse, as defined in section
18.815D.02, within the special supplemental nutrition program for women, infants, and children.
18.9 Sec. 4. Minnesota Statutes 2024, section 245.095, subdivision 5, is amended to read:
18.10 Subd. 5.Withholding of payments.(a) Except as otherwise provided by state or federal
18.11law, the commissioner may withhold payments to a provider, vendor, individual, associated
18.12individual, or associated entity in any program administered by the commissioner if the
18.13commissioner determines there is a credible allegation of fraud for which an investigation
18.14is pending for a program administered by a Minnesota state or federal agency.
18.15 (b) For purposes of this subdivision, "credible allegation of fraud" means an allegation
18.16that has been verified by the commissioner from any source, including but not limited to:
18.17 (1) fraud hotline complaints;
18.18 (2) claims data mining;
18.19 (3) patterns identified through provider audits, civil false claims cases, and law
18.20enforcement investigations; and
18.21 (4) court filings and other legal documents, including but not limited to police reports,
18.22complaints, indictments, informations, affidavits, declarations, and search warrants; and
18.23 (5) information from the inspector general, including information listed on the inspector
18.24general's exclusion list under section 15D.04, subdivision 1, clause (8).
18.25 (c) The commissioner must send notice of the withholding of payments within five days
18.26of taking such action. The notice must:
18.27 (1) state that payments are being withheld according to this subdivision;
18.28 (2) set forth the general allegations related to the withholding action, except the notice
18.29need not disclose specific information concerning an ongoing investigation;
18Article 2 Sec. 4.
S0856-8 8th EngrossmentSF856 REVISOR SGS 19.1 (3) state that the withholding is for a temporary period and cite the circumstances under
19.2which the withholding will be terminated; and
19.3 (4) inform the provider, vendor, individual, associated individual, or associated entity
19.4of the right to submit written evidence to contest the withholding action for consideration
19.5by the commissioner.
19.6 (d) If the commissioner withholds payments under this subdivision, the provider, vendor,
19.7individual, associated individual, or associated entity has a right to request administrative
19.8reconsideration. A request for administrative reconsideration must be made in writing, state
19.9with specificity the reasons the payment withholding decision is in error, and include
19.10documents to support the request. Within 60 days from receipt of the request, the
19.11commissioner shall judiciously review allegations, facts, evidence available to the
19.12commissioner, and information submitted by the provider, vendor, individual, associated
19.13individual, or associated entity to determine whether the payment withholding should remain
19.14in place.
19.15 (e) The commissioner shall stop withholding payments if the commissioner determines
19.16there is insufficient evidence of fraud by the provider, vendor, individual, associated
19.17individual, or associated entity or when legal proceedings relating to the alleged fraud are
19.18completed, unless the commissioner has sent notice under subdivision 3 to the provider,
19.19vendor, individual, associated individual, or associated entity.
19.20 (f) The withholding of payments is a temporary action and is not subject to appeal under
19.21section 256.045 or chapter 14.
19.22Sec. 5. Minnesota Statutes 2024, section 256.01, is amended by adding a subdivision to
19.23read:
19.24 Subd. 44.Office of the Inspector General; reports.The commissioner must submit
19.25final investigative reports to the inspector general, serving under section 15D.01, for any
19.26investigation conducted by the commissioner into fraud or misuse, as defined in section
19.2715D.02, within the Medicaid program.
19.28Sec. 6. EXISTING DUTIES ABOLISHED; TRANSFERS PROVIDED.
19.29 Subdivision 1.Duties abolished.Except as exempted in article 1, section 15, subdivision
19.306, and Minnesota Statutes, section 15D.04, subdivision 2, duties pertaining to the
19.31investigation of fraud, misuse, and other unlawful use of public funds in the Office of
19.32Inspector General in the Departments of Education; Human Services; and Children, Youth,
19Article 2 Sec. 6.
S0856-8 8th EngrossmentSF856 REVISOR SGS 20.1and Families are abolished effective the day after the inspector general under Minnesota
20.2Statutes, section 15D.01, certifies in writing to the commissioners of the respective
20.3departments and the commissioner of management and budget that the inspector general
20.4has assumed responsibility for these duties.
20.5 Subd. 2.Inspector general transfers.Pursuant to Minnesota Statutes, section 15.039,
20.6all active investigations, obligations, court actions, contracts, and records shall transfer from
20.7each department in subdivision 1 to the inspector general under Minnesota Statutes, section
20.815D.01, except as provided by the inspector general and as provided in article 1, section
20.915, subdivision 6, and Minnesota Statutes, section 15D.04, subdivision 2.
20.10 EFFECTIVE DATE.This section is effective July 1, 2025.
20.11Sec. 7. REPEALER.
20.12 Minnesota Statutes 2024, sections 13.321, subdivision 12; and 127A.21, are repealed.
20.13 EFFECTIVE DATE.This section is effective the day after the inspector general under
20.14Minnesota Statutes, section 15D.01, notifies the revisor of statutes that the Office of the
20.15Inspector General under Minnesota Statutes, section 15D.01, has assumed responsibility
20.16for identifying and investigating fraud, misuse, and other unlawful use of public funds in
20.17the Department of Education.
20Article 2 Sec. 7.
S0856-8 8th EngrossmentSF856 REVISOR SGS Page.Ln 1.11OFFICE OF THE INSPECTOR GENERAL.........................................ARTICLE 1
Page.Ln 16.16CONFORMING ITEMS AND REPEALERS.......................................ARTICLE 2
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APPENDIX
Article locations for S0856-8 13.321 PREKINDERGAR TEN 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.
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APPENDIX
Repealed Minnesota Statutes: S0856-8 (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
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APPENDIX
Repealed Minnesota Statutes: S0856-8 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.
3R
APPENDIX
Repealed Minnesota Statutes: S0856-8