Purpose

• The bill proposes a constitutional change to limit when local governments and school districts must follow state mandates. It would add a new section to the Minnesota Constitution (Article XI) saying they cannot be required to comply until the state passes a law that provides money equal to the cost of compliance. An exception applies to mandates that involve financial audit requirements. The bill also creates implementation rules for how unfunded mandates would be handled and financed, and it includes a process for contested cases.

Constitutional amendment details

• Adds a new Sec. 16 to Article XI of the Minnesota Constitution.
• Key idea: local governments and school districts should not be required to comply with a state mandate unless the state funds the cost to comply.
• Exception: mandates addressing financial audit requirements must be followed even without new funding.
• The legislature may allow the state to withhold reasonable administrative fees related to implementing mandates.

Submission to voters

• The proposed amendment would be placed on the ballot at the 2026 general election.
• Ballot question: Should Minnesota Constitution be amended to exempt local governments and school districts from complying with state mandates unless the state funds the cost to comply?
• Title for the ballot: Local Governments Exempt from Compliance with Unfunded Mandates.

Implementation language (how the plan would work in practice)

• Minnesota Statutes chapter to be added: 465.793 – Exemption from Certain State Mandates.
  • Subdivision 1: Assertion of noncompliance
  • A local government or school district may pass a resolution stating it will not comply with a state mandate because the legislature has not appropriated money enough to cover the cost.
  • The resolution must be sent to the commissioner of management and budget within 14 days.
  • By January 15 each year, the commissioner must report to the chairs and ranking minority members of certain budget and finance committees on all such resolutions received in the prior year, including copies of the resolutions.
  • Subdivision 2: Contested case procedure
  • An agency with authority to oversee or enforce a state mandate may start a contested case process (under chapter 14) to challenge a local government or school district's resolution that says there wasn’t enough money appropriated to meet the mandate.

Main provisions and what they aim to accomplish

• Create a clear rule that unfunded state mandates cannot require a local government or school district to spend money unless the state provides funding.
• Establish a formal reporting mechanism so state budgeting officials track unfunded mandates and related resolutions.
• Provide a formal dispute mechanism (contested case) for challenges to a local government’s or school district’s unfunded-mandate resolution.
• Maintain a specific exception for financial audit requirements, which would still require compliance even without new funding.

Notable changes to existing law

• Introduces a constitutional constraint on applying state mandates to local governments and school districts without corresponding funding.
• Creates a new reporting obligation for the commissioner of management and budget.
• Establishes an accessible contested-case process for disputes over unfunded mandates.
• Codifies procedures in a new section of Minnesota Statutes (chapter 465).

Timeline and implementation notes

• If adopted, the constitutional amendment would take effect January 1, 2027.
• The ballot question and title would accompany the 2026 general election.
• The implementation language sets up the annual reporting cycle and the contested-case framework.

Enforcement and dispute process

• Local governments and school districts can officially declare noncompliance via a resolution when funding is not provided.
• The state budget office must receive these resolutions promptly and report them annually.
• Agencies may initiate formal contested proceedings to challenge those local resolutions if they believe the funding shortfall is not properly addressed.

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Relevant Terms - unfunded mandates - local government - school district - state mandate - appropriation / funding - cost to comply - financial audit requirements - administrative fees - contested case - Minnesota Constitution Article XI - Sec. 16 (new section) - constitutional amendment - Minnesota Statutes chapter 465 - commissioner of management and budget - Ways and Means Committee - Finance Committee - reporting requirements - general election 2026 - effective date January 1, 2027 - resolution (noncompliance) - ruling/contest mechanism