Purpose of the Bill

The bill aims to change how state agencies in Minnesota manage the financial aspects of grants. It seeks to eliminate the authority of state agencies to retain a portion of grant funds for administrative costs.

Main Provisions

• Repeal of Current Authority: The legislation removes the statutory permission that currently allows state agencies to keep a percentage of funds from grants for covering administrative costs.

Significant Changes to Existing Law

• Current Practice: Under the existing law, state agencies can hold up to 5% of the funds for grants passed by the legislature and formula grants, and up to 10% for grants awarded through competitive processes.

• New Practice: With the proposed repeal, state agencies will no longer be permitted to withhold any percentage of grant funds for administrative purposes, meaning all funds should go directly to the purpose of the grant itself. This change will impact new grant programs initiated after July 1, 2023.

• The repeal does not affect grants funded through proceeds from the sale of state general obligation bonds.

Relevant Terms

• Grants management
• Administrative costs
• Statutory authority
• State agencies
• Formula grants
• Competitively awarded grants