SF3900

Purpose

• Strengthen state government oversight and accountability for how grants are managed, how debts are collected, and how agencies respond to findings from the Legislative Auditor.
• Implement recommendations from the Legislative Auditor about grant inventory, internal controls, and debt collection practices.

What this bill would change or add

• It adds new requirements and rules for grants management, audits, inventories, and debt collection across state agencies.
• It creates stronger enforcement and oversight mechanisms to prevent conflicts of interest, fraud, and waste in grants.
• It aligns debt collection practices and uncollectible debt reporting with clearer procedures and reporting requirements.

Main Provisions

• Enforcement related to the Legislative Auditor (Sec. 1)

  • Establishes penalties for refusing or withholding information from the Legislative Auditor and for providing false sworn statements.
  • Public officials who submit documents in violation of related law can face consequences, including potential dismissal.

• Auditor oversight and annual reporting (Sec. 2)

  • The commissioner must review Office of the Legislative Auditor (OLA) audit reports, address internal control problems, and guide agencies on implementing auditor recommendations.
  • The commissioner must annually report to the legislative auditor by September 1 on how all recommendations from the prior five years have been implemented, and explain any that have not been implemented, with the reasons.
  • The commissioner must provide technical assistance to agencies that have not followed through on recommendations.

• Grants management oversight and payment oversight (Sec. 3)

  • Most state or non-state funding that is not a state agency or political subdivision is subject to grants management oversight.
  • Some categories (like general obligation capital project grants) may be exempt from these requirements; otherwise, grants must follow policies set by the Commissioner of Management and Budget (MMB) and related law.

• Inventory training (Sec. 4)

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

• Grants governance and management (Secs. 5-6)

  • The commissioner has broad power to review grants management, set policies, improve practices, promote collaboration, and sponsor conferences and studies.
  • The commissioner can suspend or debar grantees for up to three years for specified reasons and establish offices to oversee grants governance.
  • Grant solicitation documents must be reviewed before being issued, at dollar levels determined by the commissioner.
  • The commissioner must create general grants management policies, serve as a central resource, and ensure grants management considerations are built into statewide systems and IT spending.
  • The commissioner may encourage shared grants management technology systems.

• Conflict of interest and ethics (Sec. 7)

  • The bill requires policies on ethics and conflicts of interest to prevent conflicts in the grants process.
  • Employees and others involved in the grant process must be trained and must disclose conflicts.
  • If a conflict exists, the matter should be reassigned if possible; if not possible, those involved must be notified, and progress may continue with appropriate safeguards.

• Reporting of investigations and site visits (Sec. 8-9)

  • Granting agencies must report to the commissioner when a grantee is under credible fraud investigation; the agencies must maintain and protect the list.
  • Agencies must perform unannounced on-site monitoring visits for grants over certain dollar amounts (e.g., over $50,000 and over $250,000 for higher-frequency checks), with potential exceptions justified.

• Grants management training and compliance (Sec. 10)

  • All staff with grants management duties must complete initial training and annual continuing training.
  • Staff responsible for financial reconciliations must also complete initial and ongoing training.
  • Agencies must report annually how many staff have completed the training.

• Hiring restriction after grant awards (Sec. 11)

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

• Balances owed to the state and debt collection training (Secs. 12-13)

  • State agency staff who oversee balances owed to the state must receive training on how to quantify such balances and explore collection options; the training will include guidance for staff on collecting debts.
  • When a debt is deemed uncollectible, agencies may write it off, but must meet defined criteria (e.g., exhausted collection efforts, cost of collection exceeds amount, legal issues, bankruptcy, statute of limitations, not in the public interest).
  • Uncollectible debts and collection efforts must be reported quarterly; large uncollectible debts (e.g., $100,000 or more) must be reported to legislative chairs and ranking minority members with details.
  • The Department of Management and Budget must report yearly on the number and dollar amount of uncollectible debts by agency.

Significant changes to existing law

• Adds comprehensive grants governance structure with a central policies and oversight role for the commissioner (Secs. 5-6).
• Expands mandatory training across inventory and grants management, including ongoing reconciliation training (Secs. 4, 10, 12-13).
• Introduces concrete anti-fraud and ethics provisions, including reporting of investigations and conflict-of-interest safeguards (Secs. 7-9).
• Tightens controls over grant awarding and management, including potential debarment, and requires pre-issuance review of grant solicitations (Secs. 5-6).
• Strengthens debt collection processes and formalizes write-off criteria and reporting for uncollectible debts (Secs. 12-13).

How it affects stakeholders

• State agencies: new training, reporting, grants management standards, conflict-of-interest policies, and oversight responsibilities.
• Grant recipients and grantees: potential for increased oversight, site visits, and possible debarment; new hiring restrictions related to grant work.
• The Legislative Auditor: strengthened ability to enforce recommendations and obtain compliance information.
• The public: greater transparency around grant governance, potential fraud investigations, and debt write-offs.

Implementation considerations

• Compliance timelines are tied to annual reporting deadlines (e.g., September 1 for annual status updates).
• New penalties and enforcement options could affect agency practices and personnel decisions.
• Training requirements and system-wide grants management modernization may require investment in staff development and IT resources.

Relevant Terms - Office of the Legislative Auditor (OLA) - Grants management - Grants governance - Debarment - Suspension - Conflict of interest - Code of ethics - Fraud investigations - Unannounced site visits - Grants solicitation documents - Capital project grants - General obligation grants - Inventory training - Segregation of duties - Internal controls - Balances owed to the state - Debt collection - Write-off of debt - Quarterly reporting - Management and Budget (MMB) - State agencies - Grantees - Administrative systems - Technical assistance - Public data and privacy (section 609.43 references) - Administrative hearings (related to suspension/debarment)