SF 5099

03/27/26  REVISOR  SGS/BM  26-08327  as introduced
  SENATE
  STATE OF MINNESOTA
  NINETY-FOURTH SESSION  S.F. No. 5099
  (SENATE AUTHORS: KORAN)
  DATE       D-PG  OFFICIAL STATUS
  04/13/2026      8000 Introduction and first reading
  Referred to State and Local Government
1.1A bill for an act
1.2relating to state government; requiring fraud risk scoring and fraud risk score
1.3benchmarks for grants to political subdivisions; establishing a pilot program;
1.4requiring a report; proposing coding for new law in Minnesota Statutes, chapter
1.56.
1.6    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7Section 1. [6.94] FRAUD RISK SCORING SYSTEM.
1.8Subdivision 1. Definition. For purposes of sections 6.94 to 6.96, "fraud risk score"
1.9    means a standardized numerical or categorical assessment that measures the relative risk
1.10   of fraud, waste, abuse, or mismanagement within a political subdivision based on internal
1.11   controls, financial practices, governance structures, audit findings, and other risk indicators
1.12   determined by the state auditor.
1.13Subd. 2. Fraud risk score required. The state auditor must assign a fraud risk score to
1.14   every political subdivision at least once every two years, or more frequently if determined
1.15   necessary by the state auditor.
1.16Subd. 3. Methodology. The state auditor must:
1.17(1) develop and publish a uniform fraud risk scoring methodology applicable to political
1.18   subdivisions;
1.19(2) periodically review and update the methodology to reflect emerging risks, best
1.20   practices in fraud prevention, and audit findings; and
1.21(3) provide guidance and technical assistance to political subdivisions.
Section 1.  1
 03/27/26  REVISOR  SGS/BM  26-08327  as introduced
2.1      Subd. 4. Data collection. The state auditor may require political subdivisions to submit
2.2  financial, operational, governance, and internal control information necessary to calculate
2.3  fraud risk scores. Data submitted to the state auditor under this subdivision are subject to
2.4  applicable data practices laws.
2.5      Subd. 5. Public dashboard. (a) The state auditor must establish and maintain a publicly
2.6  accessible online dashboard that displays fraud risk scores for each political subdivision.
2.7      (b) At a minimum, the dashboard must include:
2.8      (1) the most recent fraud risk score for each political subdivision;
2.9      (2) a label or graphic representing the score;
2.10     (3) the date the score was issued;
2.11     (4) an explanation of the scoring scale and the benchmark established under section
2.12 6.95; and
2.13     (5) historical scores, if available.
2.14   Sec. 2. [6.95] FRAUD RISK BENCHMARK FOR GRANT ELIGIBILITY.
2.15     Subdivision 1. Benchmark established. The state auditor, in consultation with the
2.16 commissioner of management and budget and the Legislative Audit Commission, must
2.17 establish a minimum acceptable fraud risk benchmark score. The benchmark must represent
2.18 an acceptable level of fraud risk and internal control maturity, as determined by the state
2.19 auditor.
2.20     Subd. 2. Grant eligibility condition. Except as provided in subdivision 3, a political
2.21 subdivision must attain or exceed the fraud risk benchmark established under subdivision
2.22 1 to be eligible for a grant from any state department or agency.
2.23     Subd. 3. Corrective action plans. A political subdivision that fails to achieve the
2.24 benchmark score may submit a corrective action plan to the state auditor. The plan must
2.25 identify deficiencies, proposed remediation steps, and a timeline for improvement. The state
2.26 auditor may grant temporary grant eligibility to the political subdivision if the state auditor
2.27 determines that the corrective action plan is sufficient.
2.28   Sec. 3. [6.96] RULEMAKING.
2.29     The state auditor may adopt rules necessary to implement sections 6.94 and 6.95,
2.30 including fraud risk scoring criteria, reporting formats, and corrective action plan
2.31 requirements.
 Sec. 3.  2
 03/27/26  REVISOR  SGS/BM  26-08327  as introduced
3.1    Sec. 4. PILOT PROGRAM.
3.2      Subdivision 1. Pilot required. The state auditor must establish a pilot program to test
3.3  and refine the fraud risk scoring system required under Minnesota Statutes, sections 6.94
3.4  to 6.96.
3.5      Subd. 2. Duration. The pilot program must operate for a period of not less than 18
3.6  months and not more than 24 months following the effective date of this act.
3.7      Subd. 3. Scope and limitations. (a) During the pilot program, fraud risk scores may not
3.8  be used to determine eligibility for grant funding under Minnesota Statutes, section 6.95,
3.9  and the state auditor must clearly indicate that any fraud risk scores posted on the public
3.10 dashboard are pilot results and not final determinations.
3.11     (b) Participation in the pilot program must not result in adverse funding consequences
3.12 for participating political subdivisions.
3.13     Subd. 4. Evaluation and adjustment. (a) The state auditor must evaluate the pilot
3.14 program and may revise the fraud risk scoring methodology, data requirements, and
3.15 benchmarks based on pilot results.
3.16     (b) The state auditor must consult with political subdivisions and relevant stakeholders
3.17 when making revisions under this subdivision. The state auditor must consult the Legislative
3.18 Audit Commission before adjusting the grant eligibility benchmark.
3.19     Subd. 5. Report. No later than 60 days after completion of the pilot program, the state
3.20 auditor must submit a report to the chairs and ranking minority members of the legislative
3.21 committees with jurisdiction over local government. The report must include a summary
3.22 of pilot findings and any resulting modifications to the fraud risk scoring methodology or
3.23 benchmark score.
3.24   Sec. 5. EFFECTIVE DATE.
3.25     (a) Unless otherwise specified, this act is effective July 1, 2026.
3.26     (b) Section 1, subdivision 2 is effective July 1 following the state auditor's submission
3.27 of a pilot program report under section 4, subdivision 5.
3.28     (c) Section 2, subdivision 2 is effective July 1 following the effective date of paragraph
3.29 (b).
3.30     (d) The state auditor must promptly notify the revisor of statutes of the dates that section
3.31 1, subdivision 2, and section 2, subdivision 2, take effect.
 Sec. 5.  3