HF 2 Minnesota House · 2025-2026 Regular Session

Fraud reporting required when a state employee has reason to suspect fraud, and grants management requirements strengthened.

HF 2 requires state agency employees to immediately report suspected fraud to law enforcement and legislative committee leaders when they have reason to believe fraud exists in agency programs. It mandates that all state agencies post current organizational charts online with contact details for leadership and division heads. The bill strengthens grant management by requiring agencies to conduct unannounced monitoring visits before final payments for grants over $50,000 (and annually for grants over $250,000), perform financial reconciliations prior to disbursement, and withhold funds from grantees failing to submit required progress reports. Violating these grant management requirements constitutes a misdemeanor under the bill.

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 6, 2025 Last action Feb 24, 2025

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What changed between versions

Introduction → 1st Engrossment · 8 edits · Feb 20, 2025

MODERATE

This bill updates fraud reporting requirements to mandate immediate notification to supervisors and the legislative auditor, replacing the previous requirement to notify law enforcement and legislative committee chairs. It also strengthens grants management by requiring in-person monitoring visits for larger grants, adding financial reconciliation steps, and removing a criminal penalty for employees who violate commissioner requirements. Additionally, the bill modifies eligibility criteria for certain grants by requiring nonprofits to submit additional years of financial forms instead of criminal background checks for principals.

Scope change

The bill's scope regarding fraud reporting was expanded to include the legislative auditor as a mandatory recipient of reports, while the scope of criminal penalties was narrowed by removing the penalty for specific employee violations.

REQUIREMENT

Fraud reporting protocol changed from notifying law enforcement and legislative committee chairs to notifying supervisors, agency heads, or the legislative auditor.

Grants over $50,000 now require an in-person unannounced monitoring visit before final payment, and grants over $250,000 require annual in-person visits.

Financial reconciliation of grant expenditures is now required before disbursement for grants over $50,000.

Funds can no longer be withheld solely for missing progress reports if the delay was caused by the executive agency's failure or malfunction.

Grant agreements must now require grantees to post leadership names and contact information on their websites instead of an organizational chart.

Exceptions to general grants management policies can no longer be approved for any grant over $500,000.

ENFORCEMENT

The criminal misdemeanor penalty for state employees knowingly violating commissioner requirements was removed.

ELIGIBILITY

Eligibility requirements for nonprofits were changed from requiring principals to have no felony convictions in ten years to requiring two additional years of IRS Form 990 filings.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Feb 20, 2025

Lower · Passed

Committee report, to adopt as amended and re-refer to Ways and Means

lower

Feb 6, 2025

Introduced

Introduction and first reading, referred to State Government Finance and Policy

lower

1 primary · 31 co-sponsors