Purpose and findings

• Federal funds support important health, safety, and welfare programs in Minnesota.
• Predictable, timely, and nondiscriminatory distribution of federal funds is essential; delays, suspensions, or special conditions can create fiscal instability and disrupt state services.
• The bill aims to protect residents, local governments, nonprofit providers, and state agencies from funding disruptions while staying compliant with federal law.

Establishment and structure of the fund

• Creates the Minnesota federal funding protection trust fund in the state treasury.
• The fund is a special revenue fund and is not part of the general fund.
• Money in the fund is held in trust and can be spent only as allowed by the statute.

Sources of funds

• The fund may receive:
  • Federal funds awarded or available to Minnesota or its agencies.
  • Federal passthrough funds intended for Minnesota political subdivisions, nonprofit organizations, or service providers.
  • Interest earnings on funds in the trust.
  • Any other money permitted 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 authorized by federal statute or regulation, or
  • There is a material risk of interruption to essential state services.
• Funds held under this provision must stay dedicated to the original federal purpose and cannot be repurposed or spent for other uses.

Release and remittance of funds

• Federal funds held in the trust may be released and distributed when the governor signs a written certification that:
  • The federal government has restored or confirmed the availability of funds consistent with federal law, or
  • Maintaining the hold would risk 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 plan does not authorize the state to collect federal taxes or interfere with federal tax obligations.
• It must be run so that individual taxpayers, service recipients, and program beneficiaries experience no disruption to eligibility, benefits, or services to the maximum extent allowed by law.

Reporting and oversight

• The commissioner of management and budget must give a quarterly report to the legislature detailing:
  • The amount of federal funds held in the trust fund.
  • Programs and agencies affected.
  • The legal or administrative basis for holding the funds.
  • Communications from federal agencies related to the funds.
• 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 appropriate budget and finance committees.

Severability

• If any part of the section is found invalid, the remaining provisions still apply where possible.

Additional notes

• The bill contemplates coding a new law in Minnesota Statutes chapter 16A.

Relevant Terms - Minnesota federal funding protection trust fund - state treasury - special revenue fund - not part of the general fund - federal funds - federal passthrough funds - political subdivisions - nonprofit organizations - service providers - conditional receipt and remittance of federal funds - conditional holding authority - governor - commissioner of management and budget - attorney general - release and remittance - certification in writing - compliance with federal law - suspension, delay, reduction, or conditioning of funds - material risk of interruption - eligibility, benefits, and services - quarterly report - legislative auditor - reporting and oversight - severability - Minnesota Statutes Chapter 16A