HF4715

Purpose

This bill strengthens how Minnesota tracks, reports, and acts on spending in key health and human services programs. It requires closer monitoring of actual spending compared to forecasts, increases transparency with public quarterly reporting, and creates mandatory actions (including possible program terminations) if spending consistently exceeds projections. It also broadens and clarifies how audits are used to investigate why actual spending diverges from what was forecasted.

Main provisions and goals

• Audit focus and oversight
  • Department of Human Services (DHS): The Legislative Auditor must give high priority to auditing DHS programs, services, and benefits, and track expenditures from the department to the point of service to assess cost-effectiveness, eligibility, and compliance. Audits may be limited if a clear explanation from DHS accounts for the deviation.
  • Managed care organizations (MCOs): The Legislative Auditor will audit each MCO under DHS contracts to ensure public funds are used legally and per contracts. Audits may be contracted out, and MCOs must cooperate and share data. Findings will be reported to key legislative bodies.
  • Department of Children Youth and Families (DCYF): The Legislative Auditor may audit DCYF programs as resources permit to determine why actual spending deviates from projections, with similar “forgo if explained” rules.
• Contingent reductions and terminations
  • Contingent reductions (16A.103 Subd.1k) and contingency terminations (142A.03 Subd.37; 256.01 Subd.46) create automatic or near-automatic steps to reduce or terminate programs or services if spending diverges from forecasts by large amounts (typically more than 10% over the forecast) or if other conditions are met.
  • Certain actions are limited or adjusted if a finally enacted act directs otherwise, or for mandatory medical assistance benefits where special rules apply.
• Forecasting, trend analysis, and notice
  • Quarterly forecasting and reporting: Beginning January 15, 2027, and quarterly thereafter, the relevant agency must post on its website a detailed accounting of actual expenditures by service for the prior quarter, updated as needed.
  • Comparison to forecasts: The actual expenditures by service must be compared to the four most recent February forecasts (adjusted for changes in law). The agency must post these comparisons with data visualizations and at least ten years of historical data.
  • Deviation notices: If actual spending in a quarter exceeds forecasted spending by more than 5%, the deviation must be noted publicly and reported to the legislative chairs, ranking minority members, and the legislative auditor.
  • Special notices: If January reports in a biennium show a deviation of more than 10%, the agency must issue special notices detailing potential consequences if the legislature does not act.
• Appropriations for analysis and forecasting
  • Specific appropriations are authorized in fiscal year 2027 to fund evaluation of deviations (for DHS, DCYF, and related forecast trend analyses) to the Legislative Auditor, and to the DCYF and DHS to conduct forecast trend analyses.

Significant changes to existing law

• Adds new requirements for:
  • Systematic, quarterly postings of actual vs. forecasted expenditures by service, with public display and dashboards.
  • Automated or near-automatic contingent actions (reductions, terminations, or rate adjustments) when expenditures exceed forecasts by specified thresholds.
  • Expanded audit authority and duties for the Legislative Auditor focused on DHS, MCOs, and DCYF, including potential contract with vendors and reporting to legislative leadership.
  • Explicit timelines and steps for seeking federal approval when program terminations are contemplated.
• Establishes new definitions and processes for “demonstration provider” and “service” in forecasting contexts, to align with demonstration waivers and waiver-based services.

How it would be implemented

• Timing and reporting
  • Start of quarterly reporting from January 15, 2027, with ongoing quarterly updates.
• Decision points
  • If deviations exceed thresholds, the department must publicly report and may trigger contingency actions, including potential termination of programs or modifications to services.
  • For mandatory medical assistance benefits, adjustments would be made to payment rates to curb growth, rather than terminating programs (where allowed).
• Oversight and accountability
  • The Legislative Auditor will audit DHS, MCOs, and DCYF programs to identify causes of spending deviations and propose corrective actions.
  • Audits and forecasting results will feed into legislative oversight through regular reporting to committees and leadership.

Practical implications for residents

• Greater transparency about how much is spent on health and human services, and on which services.
• Faster visibility into spending gaps and the potential impact on programs and services.
• Possible changes to funding or service availability if spending exceeds forecasts by significant margins, though some protections exist (e.g., for mandatory medical assistance benefits).

Potential questions to consider

• How will “deviation” thresholds be applied in practice, and what kinds of programs are most at risk of adjustments?
• How quickly can federal approvals be obtained if a program is terminated?
• What data visualization formats will be used, and how accessible will the information be to the public?

Relevant Terms - forecast trend analysis - actual expenditures - projected expenditures - February forecast - quarterly accounting - Minnesota Department of Human Services (DHS) - managed care organizations (MCOs) - demonstration provider - demonstration services - home and community-based waiver - 256B.69 / 256B.692 / 256L.12 (MCO contracts) - DCYF (Department of Children, Youth, and Families) - Legislative Auditor - deviation from forecast - contingency reductions - contingent program termination - federal approval - mandatory medical assistance benefits - payment rate reductions - data visualizations - public posting on department websites - notices to chairs and ranking minority members - appropriation for forecast trend analyses - section references (e.g., 256.01, 142A.03, 3.972)