Purpose and Findings

• The bill creates a Minnesota federal funding protection trust fund to receive, hold, and manage federal funds so programs stay funded and stable even if federal money is delayed, suspended, or conditioned by federal authorities.
• It aims to protect residents, local governments, nonprofit providers, and state agencies from disruptions and to support cooperative federalism.

Establishment and Fund Structure

• The Minnesota federal funding protection trust fund is created in the state treasury as a special revenue fund (not part of the general fund).
• Money in the fund comes from:
  • federal funds awarded or granted to Minnesota or its agencies
  • federal passthrough funds intended for Minnesota political subdivisions, nonprofit organizations, or service providers
  • interest earnings on amounts held in the fund
  • other money allowed by law to be credited to the fund

Conditional Holding Authority

• The commissioner of management and budget, in consultation with the attorney general and the governor, may temporarily hold federal funds in the trust if:
  • federal funds have been suspended, delayed, reduced, or conditioned in a way not expressly allowed by federal statute or regulation, or
  • federal actions create a material risk of interrupting essential state services.
• Funds held under this authority must stay dedicated to their original federal purpose and cannot be spent for other uses.

Release and Remittance of Funds

• Federal funds in the trust must be released when the governor writes a certification that:
  • the federal government has restored or confirmed the funds’ availability in line with federal law, or
  • continuing to hold the funds would put the state or recipients at risk of noncompliance with federal requirements.
• The certification must be sent to the chairs and ranking minority members of the relevant legislative committees.

Taxpayer and Recipient Protections

• The bill clarifies:
  • the state cannot collect federal taxes on behalf of the United States
  • the state cannot interfere with individuals’ or businesses’ federal tax obligations
  • the state cannot assume liability for federal penalties, interest, or enforcement actions
• It requires the administration to minimize disruption to taxpayers, program beneficiaries, and service recipients to the greatest extent allowed by law.

Reporting and Oversight

• Quarterly reporting requirements:
  • The commissioner of management and budget must report to the legislature on the amount of funds held, affected programs, the legal/administrative basis for holding, and any communications from federal agencies.
  • The report must be published on the department’s website.
• The legislative auditor must review the trust fund within two years of enactment and report findings to the chairs and ranking minority members of the budget/finance committees.

Severability

• If any part of the section is found invalid, the rest still applies where possible.

Significance and Expected Impact

• The bill seeks to provide a predictable, timely, and nondiscriminatory distribution of federal funds for Minnesota.
• It aims to reduce fiscal instability from federal funding disruptions and support continued operation of essential state services through a structured trust fund and oversight.

Relevant Terms

• Minnesota federal funding protection trust fund
• federal funds
• federal passthrough funds
• special revenue fund
• state treasury
• conditional holding authority
• governor certification
• release and remittance
• chairs and ranking minority members
• legislative committees
• management and budget
• attorney general
• federal law / federal statute / federal regulation
• noncompliance
• essential state services
• cooperative federalism
• quarterly report
• legislative auditor
• nonprofit providers
• political subdivisions
• service providers
• interest earnings