HF3672

Purpose

• Strengthen state government practices by implementing Legislative Auditor recommendations on agency grant inventory and debt collection.
• Increase transparency, oversight, and accountability in how agencies manage grants and collect owed money.

What the bill does (Main provisions)

• Legislative Auditor access and penalties

  • Clarifies penalties for not obeying lawful directions or subpoenas from the Legislative Auditor; protects documents, and imposes penalties for false oath.

• Auditor recommendations, internal controls, and reporting

  • Requires the commissioner to review auditor findings, provide guidance on internal controls, and regularly report to the Legislative Auditor about how auditor recommendations are being implemented.
  • Includes a process to help agencies that have not adopted auditor recommendations.

• Grants management oversight and governance

  • Grants to non-state entities (i.e., outside state agencies or political subdivisions) are subject to grants management oversight and policies, with specific exceptions for certain types of capital grants.
  • The commissioner can review and improve grants practices, sponsor and support innovative projects, and may suspend or debar grantees for up to three years for specified reasons.
  • Agencies must submit grant solicitation documents for pre-issuance review, at dollar levels set by the commissioner.
  • Establishes offices dedicated to grants governance, oversight, and management.

• Inventory and asset training

  • All state employees who maintain state real or personal property inventories must complete annual training on inventory accountability, oversight, segregation of duties, and related risks.

• Grants management policies and centralization

  • The commissioner will create broad grants policies applicable to all executive agencies, serve as a central resource, and help with training, evaluation, collaboration, and best practices.
  • Encourages the use of shared grants management technology systems where cost-effective.
  • The commissioner will monitor agency compliance, review grant opportunities, and provide a central point for comments about violations, fraud, or waste.

• Conflict of interest protections

  • Establishes policies for ethics and conflicts of interest in the grants process (from drafting requirements to awarding and monitoring grants).
  • Requires training on conflicts of interest and disclosure of potential conflicts; if a conflict exists, another employee handles the matter or the assignment is adjusted.

• Investigations and monitoring

  • Granting agencies must report to the commissioner if a grantee is under a credible fraud investigation.
  • The commissioner will maintain a list of such grantees and keep it until investigations are closed; data are classified.

• Onsite verification and monitoring

  • Unannounced on-site monitoring visits are required for significant grants (above thresholds), with annual unannounced visits for very large grants, unless an exception is justified.

• Grants management training requirements

  • All staff with grant management duties must complete initial and annual continuing training.
  • Staff involved in financial reconciliation of grants must complete required training, with annual updates.
  • Agencies must report annually on how many staff have completed this training.

• Hiring restrictions for grantees

  • For 12 months after a grant is awarded, grantees cannot hire a state employee who was involved in awarding or managing that grant.
  • Violations can lead to termination of the grant, required repayment of funds, and a 24-month debarment for the grantee.

• Balances owed to the state and debt collection training

  • Agencies overseeing balances owed to the state must receive training on how to quantify balances and determine collection options.
  • The commissioner will provide guidance for collecting such balances.

• Debt uncollectibility and reporting

  • When a debt is deemed uncollectible, it may be written off from the state’s accounts (still owed legally) and must be reported in quarterly budget reports.
  • Criteria for uncollectibility include exhausted collection efforts, high cost relative to amount, lack of legal merit, inability to locate the debtor, insufficient assets, bankruptcy, statute of limitations, or not being in the public interest to pursue.
  • For uncollectible debts of $100,000 or more, the chairs and ranking minority members of relevant legislative committees must be notified with details about the debt and the efforts, and the budget commissioner must provide an annual, agency-wide summary of uncollectible debts.

Significant changes to existing law

• Adds substantial grants governance structure and central oversight for state grant programs.
• Expands mandatory training for asset inventory and grants management across all state agencies.
• Creates strict conflict of interest policies and required disclosures in the grant process.
• Introduces routine, unannounced monitoring for large grants and a formal process to report and track fraud investigations of grantees.
• Establishes a formal process to report uncollectible debts and requires annual reporting of such debts to the legislature.
• Tightens hiring rules for grantees to prevent conflicts of state personnel.

Overall impact

• Aims to reduce waste, fraud, and mismanagement in state grants and debt collection.
• Improves accountability and transparency in how public funds are awarded, monitored, and recovered.
• Strengthens internal controls, training, and oversight across state agencies.

Relevant Terms - Legislative Auditor - grants management - grants governance - grant solicitation documents - debarment - suspend - conflict of interest - code of ethics - disclosure - unannounced onsite monitoring - on-site monitoring - grantee - debt collection - uncollectible debt - write-off - accounts receivable - management and budget - reporting requirements - inventory accountability - segregation of duties - asset inventory - management of grants - fraud investigations - grantee monitoring - transparency