SF3900 (Legislative Session 94 (2025-2026))
Legislative auditor recommendations regarding agency grant, inventory, and debt collection practices implementation provision
Related bill: HF3672
AI Generated Summary
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)
Upcoming committee meetings
- Judiciary and Public Safety on: March 25, 2026 12:30
Past committee meetings
- State and Local Government on: March 17, 2026 12:30
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| February 26, 2026 | Senate | Action | Introduction and first reading | ||
| February 26, 2026 | Senate | Action | Referred to | State and Local Government | |
| March 02, 2026 | Senate | Action | Author added | ||
| March 18, 2026 | Senate | Action | Comm report: To pass as amended and re-refer to | Judiciary and Public Safety |
Citations
[
{
"analysis": {
"added": [
"Penalties for failure to obey lawful directions or subpoenas issued by the legislative auditor.",
"Gros s misdemeanor penalty for swearing falsely concerning any matter stated under oath.",
"Clarification that materials and information provided to the legislative auditor by public officials or public employees are subject to section 609.43."
],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 3.978 subdivision 3 to expand penalties and penalties for false oath related to compliance with the legislative auditor, and clarifies that materials submitted to the legislative auditor remain subject to the perjury statute.",
"modified": [
"Subdivision 3 is amended to incorporate new penalties and align with cross-references to 609.43."
]
},
"citation": "3.978",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"The commissioner must review audit reports from the Office of the Legislative Auditor and address internal control problems in executive agencies.",
"The commissioner must regularly provide guidance to executive agencies on implementing auditor recommendations related to internal controls.",
"The commissioner must submit a yearly report to the legislative auditor by September 1 detailing implementation status of all recommendations identified in audits, evaluations, or special reviews over the prior five years, including itemization of unimplemented recommendations and the basis for decisions.",
"The commissioner must provide technical assistance to agencies that have not implemented recommendations."
],
"removed": [],
"summary": "Amends Minnesota Statutes 2025 Supplement section 16A.057 subdivision 5 to strengthen monitoring and guidance related to Office of the Legislative Auditor recommendations on internal controls.",
"modified": []
},
"citation": "16A.057",
"subdivision": "subdivision 5"
},
{
"analysis": {
"added": [
"Subject to grants management requirements and oversight under sections 16B.97 to 16B.991 for appropriations, allocations, payments, or transfers to non-state entities.",
"Exceptions noted for general obligation grants defined in 16A.695 and capital project grants to political subdivisions or other grants subject to alternative sections, with adherence to policies adopted by the Commissioner of Management and Budget."
],
"removed": [],
"summary": "Establishes payment oversight provisions related to grants management for funds transferred from the state to non-state entities.",
"modified": []
},
"citation": "16A.38",
"subdivision": ""
},
{
"analysis": {
"added": [
"Inventory training all state agency employees responsible for maintaining inventory of state real or personal property must annually complete.",
"Training must cover accountability, oversight, segregation of duties, and identification of inventory-related risks."
],
"removed": [],
"summary": "Adds an inventory training requirement for state agencies regarding property accountability and oversight.",
"modified": []
},
"citation": "16B.24",
"subdivision": "subdivision 4a"
},
{
"analysis": {
"added": [
"General authority to review grants management practices and establish/enforce policy and procedure improvements.",
"Authority to sponsor, support, and facilitate innovative grants management projects with public and private entities.",
"Authority to review, recommend, and implement alternative strategies for grants management.",
"Authority to collect and disseminate information, issue reports, and sponsor/conduct conferences and studies.",
"Authority to participate in conferences and activities related to grants management issues.",
"Authority to suspend or debar grantees from eligibility for up to three years for reasons specified in Minnesota Rules part 1230.1150, subpart 2, with a right to an administrative hearing if a suspension or debarment is notified."
],
"removed": [],
"summary": "Expands grants governance and oversight powers and duties, including suspending/debarring grantees and requiring review of grant documents.",
"modified": []
},
"citation": "16B.97",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"Create general grants management policies and procedures applicable to all executive agencies; may approve exceptions every five years.",
"Provide a central point of contact for statewide grants management policies and procedures.",
"Serve as a resource in training, evaluation, collaboration, and best practices in grants management.",
"Ensure consideration of grants management needs in development/upgrade of statewide administrative systems and leverage technology.",
"Oversee and approve future professional/technical service contracts and IT spending related to grants management.",
"Provide a central contact for comments about violations of statewide grants governance policies and about fraud/waste in grants processes.",
"Forward comments to the appropriate agency and follow up as necessary.",
"Provide a single listing of all available executive agency competitive grant opportunities and recipients.",
"Selectively review development/implementation of grants policies and practices and agency compliance with best practices.",
"Ensure compliance with training requirements under section 16B.98 subdivision 6a."
],
"removed": [],
"summary": "Outlines duties related to statewide grants management policies and oversight.",
"modified": []
},
"citation": "16B.97",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [
"Develop policies regarding ethics and conflict of interest to prevent conflicts for employees, committee members, and others involved in grants.",
"Policies must apply to those in the grants process, including RFP drafting, evaluation, awarding, and administration."
],
"removed": [],
"summary": "Establishes conflict of interest policies for grants management.",
"modified": []
},
"citation": "16B.98",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"Head of granting agency must report to the commissioner any grantee investigated for credible fraud; the commissioner must maintain a list of such grantees and not remove them until investigations are complete or closed."
],
"removed": [],
"summary": "Requires reporting of investigations into grantees for credible fraud.",
"modified": []
},
"citation": "16B.98",
"subdivision": "subdivision 4a"
},
{
"analysis": {
"added": [
"Grantees to receive ongoing monitoring; unannounced onsite and in-person visits for grants over $50,000; annual unannounced visits for grants over $250,000; exceptions may be made if justified."
],
"removed": [],
"summary": "Site visit and monitoring requirements for grants.",
"modified": []
},
"citation": "16B.98",
"subdivision": "subdivision 6"
},
{
"analysis": {
"added": [
"All state agency staff with grants management responsibilities must complete initial and annual continuing grants management training.",
"Staff conducting financial reconciliations must complete initial and annual ongoing financial reconciliation training.",
"Agencies must report annually on staff training completion and compliance."
],
"removed": [],
"summary": "Grants management training requirements.",
"modified": []
},
"citation": "16B.98",
"subdivision": "subdivision 6a"
},
{
"analysis": {
"added": [
"Grantees may not hire a state employee involved in awarding or managing the grant for 12 months following grant award.",
"Violations trigger immediate grant termination, repayment of funds, and a 24-month debarment for the grantee."
],
"removed": [],
"summary": "Hiring limitation for grantees involving state employees.",
"modified": []
},
"citation": "16B.98",
"subdivision": "subdivision 15"
},
{
"analysis": {
"added": [
"State agency employees who oversee balances owed must complete training to quantify balances and determine collection options; training includes guidance for staff on collection activities."
],
"removed": [],
"summary": "Training for state agency staff to collect balances owed to the state.",
"modified": []
},
"citation": "16D.03",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [
"Defines when a debt is uncollectible and may be written off, including exhaustion of collection efforts, cost considerations, lack of evidence, inability to locate the debtor, insufficient assets, discharge in bankruptcy, expired statute of limitations, or public interest concerns.",
"Requires reporting of uncollectible debt and collection efforts in quarterly reports; maintains basis for uncollectibility determinations."
],
"removed": [],
"summary": "Debt uncollectibility and write-off procedures.",
"modified": []
},
"citation": "16D.09",
"subdivision": "subdivision 1"
},
{
"analysis": {
"added": [
"Notes related to grants governance and a cross-reference toward codification for new law in Minnesota Statutes chapter 16A.1.9, influencing how grants governance is codified."
],
"removed": [],
"summary": "References to grants governance and related coding; codification alignment.",
"modified": []
},
"citation": "16E.01",
"subdivision": "subdivision 3"
},
{
"analysis": {
"added": [
"Cross-reference indicating that materials submitted to the legislative auditor in breach of duties may be subject to 609.43 (perjury)."
],
"removed": [],
"summary": "References to the Minnesota criminal statute on perjury and false statements.",
"modified": []
},
"citation": "609.43",
"subdivision": ""
},
{
"analysis": {
"added": [
"Cross-references to sections 14.57 through 14.62 for hearing and dispute resolution procedures related to grants governance and related actions."
],
"removed": [],
"summary": "References to sections of Minnesota Statutes addressing administrative procedures and hearings.",
"modified": []
},
"citation": "14.57 to 14.62",
"subdivision": ""
}
]Progress through the legislative process
In Committee