HF3672 (Legislative Session 94 (2025-2026))
Recommendations of the legislative auditor regarding agency grant, inventory, and debt collection practices implemented.
Related bill: SF3900
AI Generated Summary
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
Bill text versions
- Introduction PDF PDF file
Upcoming committee meetings
- State Government Finance and Policy on: March 24, 2026 08:15
Past committee meetings
- State Government Finance and Policy on: March 10, 2026 08:15
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| February 25, 2026 | House | Action | Introduction and first reading, referred to | State Government Finance and Policy |
Citations
[
{
"analysis": {
"added": [
"Clarified penalties and contempt implications for non-compliance with the legislative auditor."
],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 3.978, subdivision 3 to address penalties related to non-compliance with the legislative auditor's directions and information requests.",
"modified": [
"Subdivison 3 text updated to reflect revised obedience/contempt provisions."
]
},
"citation": "3.978",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"Adds duties for reviewing audit reports and addressing internal control problems; annual reporting on implementation status; technical assistance to agencies."
],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement to add or modify responsibilities for monitoring and reporting related to the Office of the Legislative Auditor's recommendations.",
"modified": [
"Subdivision 5 text expanded to formalize ongoing monitoring and reporting obligations."
]
},
"citation": "16A.057",
"subdivision": "subdivision 5"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Sec. 3 references 16A.38 (Payment Oversight) in connection with grants management oversight.",
"modified": [
"Statement clarifies applicability of grants management oversight to certain payments and transfers; cross-references to grants governance provisions."
]
},
"citation": "16A.38",
"subdivision": ""
},
{
"analysis": {
"added": [
"Annual inventory training requirement for state agency employees handling real property or personal property inventories."
],
"removed": [],
"summary": "Adds Subdivision 4a requiring inventory training for state agency personnel.",
"modified": [
"Creation of new subdivision to mandate training; emphasizes accountability and oversight."
]
},
"citation": "16B.24",
"subdivision": "subdivision 4a"
},
{
"analysis": {
"added": [
"Authority to review grants practices, enforce policy/procedure improvements, suspend or debar grantees for up to three years, establish offices, and require review of grant solicitation documents."
],
"removed": [],
"summary": "Sec. 5 expands discretionary grants management powers and enforcement tools.",
"modified": [
"Subsection reorganized to incorporate broader grants governance and enforcement authority."
]
},
"citation": "16B.97",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"Policies and procedures applicable to all executive agencies; central contact; training and evaluation support; collaboration and best practices; consideration of statewide systems; fraud/waste comments handling."
],
"removed": [],
"summary": "Sec. 6 outlines duties related to grants management policies and oversight.",
"modified": [
"Expanded duties and responsibilities for the grants management function."
]
},
"citation": "16B.97",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [
"Code of ethics and conflict-of-interest policies; disclosure and recusal processes; personnel assignment when conflicts exist."
],
"removed": [],
"summary": "Sec. 7 establishes conflict of interest and ethics policies for grants management.",
"modified": [
"Policy framework for conflicts of interest clarified and expanded."
]
},
"citation": "16B.98",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"Reporting obligations for investigations of grantees; maintenance of a list; data classification per section 13.39."
],
"removed": [],
"summary": "Sec. 8 requires reporting of investigations related to grant activities.",
"modified": [
"New reporting and record-keeping requirements introduced."
]
},
"citation": "16B.98",
"subdivision": "subdivision 4a"
},
{
"analysis": {
"added": [
"Unannounced onsite monitoring for grants above $50,000; annual unannounced visits for grants above $250,000; potential exceptions by the commissioner."
],
"removed": [],
"summary": "Sec. 9 sets grant administration site visit requirements.",
"modified": [
"Monitoring framework for grants strengthened."
]
},
"citation": "16B.98",
"subdivision": "subdivision 6"
},
{
"analysis": {
"added": [
"Initial and continuing grants management training; annual reporting on training completion; agency compliance verification."
],
"removed": [],
"summary": "Sec. 10 adds grant management training requirements.",
"modified": [
"Formalizes training requirements for grants staff."
]
},
"citation": "16B.98",
"subdivision": "subdivision 6a"
},
{
"analysis": {
"added": [
"12-month prohibition on hiring an individual who was a state employee involved in awarding or managing the grant; termination and repayment if violated; 24-month debarment."
],
"removed": [],
"summary": "Sec. 11 imposes hiring limitations on grantees post-award.",
"modified": [
"Strengthens oversight of personnel involved in grant processes."
]
},
"citation": "16B.98",
"subdivision": "subdivision 15"
},
{
"analysis": {
"added": [
"Training to quantify balances owed and to guide collection efforts; guidance for agency staff on collecting balances."
],
"removed": [],
"summary": "Sec. 12 requires training related to balances owed to the state.",
"modified": [
"Establishes standardized training for balance collection."
]
},
"citation": "16D.03",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [
"Criteria for determining uncollectible debt; reporting to the management and budget authorities; annual agency-level summaries."
],
"removed": [],
"summary": "Sec. 13 defines uncollectible debt and write-off procedures.",
"modified": [
"Uncollectible debt framework and reporting requirements clarified."
]
},
"citation": "16D.09",
"subdivision": "subdivision 1"
},
{
"analysis": {
"added": [
"Annual reporting to the legislative auditor on recommendations and implementation status; emphasis on transparency."
],
"removed": [],
"summary": "References to annual reporting requirements connected to the Office of the Legislative Auditor.",
"modified": [
"Paragraph a of subdivision 10 cited in relation to reporting requirements."
]
},
"citation": "3.971",
"subdivision": "subdivision 10, paragraph a"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to grants or capital project-related provisions within Minnesota statutes.",
"modified": [
"No direct change to 16A.642; referenced within the bill's grants context."
]
},
"citation": "16A.642",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to capital project grants within Minnesota statutes.",
"modified": [
"No direct change to 16A.695; referenced as part of general grant provisions."
]
},
"citation": "16A.695",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to capital project grants definitions or applicability.",
"modified": [
"No direct change to 16A.86; referenced in context of capital project grants."
]
},
"citation": "16A.86",
"subdivision": ""
},
{
"analysis": {
"added": [
"Conflict-of-interest training requirements; disclosures and avoidance of potential conflicts."
],
"removed": [],
"summary": "Code of ethics and conflict-of-interest training provisions for grants management.",
"modified": [
"Subsection expands ethics and conflict-of-interest training provisions."
]
},
"citation": "16E.01",
"subdivision": "subdivision 3, paragraph b"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Data classification reference for information created or shared under investigations.",
"modified": [
"Affirms data classification for information related to investigations."
]
},
"citation": "13.39",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "References to administrative hearing procedures (sections 14.57 through 14.62).",
"modified": [
"Cites existing hearing procedures; no substantive modification indicated."
]
},
"citation": "14.57 to 14.62",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to criminal or public integrity provisions governing documents submitted to the legislative auditor.",
"modified": [
"Section emphasizes actions against officials who violate 609.43."
]
},
"citation": "609.43",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Part of the range 16B.97 to 16B.991 referenced for grants management.",
"modified": [
"No direct change to 16B.991; referenced as part of the grants management framework."
]
},
"citation": "16B.991",
"subdivision": ""
}
]Progress through the legislative process
In Committee