MN HF1

Creates a new Office of Inspector General in the legislative branch under the Legislative Audit Commission, with a six-year term appointment, to investigate fraud, misuse, and unlawful use of public funds in state programs, with staff physically embedded in seven state departments including Human Services, Education, and Children, Youth, and Families.

Grants the Inspector General broad powers including subpoena authority, access to all government data regardless of classification, ability to recommend temporary sanctions such as withholding payments to recipients suspected of fraud, and authority to recommend grantee suspension or debarment.

Strengthens grant oversight by requiring at least one unannounced in-person monitoring visit before final payment for grants over $50,000, annual unannounced visits for grants over $250,000, and mandatory withholding of funds from grantees who fail to submit required progress reports.

Reduces agency administrative cost retention from grants by one percentage point (from 5% to 4% for formula grants, 10% to 9% for competitive grants), with that 1% transferred to the Inspector General; grant agreements must now be suspended upon criminal charges (not just convictions) related to the grant.

Abolishes and transfers fraud investigation duties from existing inspector general offices in the Departments of Education, Human Services, and Children, Youth, and Families to the new legislative Inspector General, while protecting whistleblowers from retaliation under existing employee disclosure laws.