Legislative Update
Dear Neighbor,
The House is scheduled to adjourn in two weeks and much work remains to put the state’s new two-year budget in place before our May 19 deadline. Some budget bills have sailed right along, passing the split House with strong, bipartisan support. Others, not so much.
Here’s more on the budget and other notes from the House:
Fraud Committee
The House Fraud Prevention and Government Agency Oversight Committee had another interesting meeting on Monday, May 5th (click the above image for full video). Attorney General Keith Ellison briefly spoke and then quickly left the hearing, deferring to Nick Wanka, the Minnesota Medicaid Fraud Control Unit (MFCU) Director.
According to Attorney General Ellison, over the last five years, the unit has recovered a total of $53 million. Let me put that in perspective, the State Medicaid operating budget is $20 billion annually. By comparison, the unemployment insurance agency reported to our committee that they saw a very low rate of fraud, at just 1.4% during COVID. Even at 1% fraud in Medicaid, that adds up to $200 million of fraud each year. If the unit recovers an average of $10 million a year, that's just 5% of the estimated yearly fraud.
The key point I want to emphasize is the importance of preventing fraud on the front end, rather than trying to claw back stolen taxpayer dollars at the back end.
We need stronger safeguards, more accountability, and tighter oversight of taxpayer dollars in government programs. Two House Republican bills we discussed in committee on Monday would help address this. One bill (H.F. 3043) would make kickbacks illegal. As we’ve heard in testimony, much of the Medicaid misuse we’re seeing is tied to kickbacks, often run through small businesses or nonprofits acting as providers.
It was stunning to hear the agencies explain that, because there’s currently no state crime for kickbacks, Minnesota prosecutors won’t bring charges. Even though agencies can stop payments when there are credible allegations of fraud, kickbacks don’t currently “meet that threshold.” This is a glaring gap in state law that needs to be closed to protect taxpayers.
Another issue we’re addressing involves grant management. We have grant administrators in our state who appear woefully undertrained in spotting fraud. A House Republican bill (H.F. 2891) would require all state employees involved in grant management complete certification and training.
Both of these bills are common-sense solutions, and I hope we can get them across the finish line this session. We also need to strengthen the state’s theft statutes, which currently aren’t tough enough to hold fraudsters accountable. For example, under current law, if someone with no prior criminal history is convicted of stealing more than $35,000, they only receive a stayed 21-month prison sentence, and serve zero prison time. They could steal hundreds of millions of your hard earned tax dollars, and it could be the same punishment.
I’m not a fan of micromanaging every detail through statute, but this is exactly what the Office of the Legislative Auditor has repeatedly recommended, because it’s simply not happening.
Are we going to clean up this massive fraud problem in our state? If so, we need to take the OLA’s recommendations seriously. I look forward to continuing this important work. Click here for video of Monday’s meeting.
State Government Finance
House Republicans have made rooting out fraud, waste and abuse in our state a top priority this session. An omnibus State Government Finance bill recently approved by the full House includes legislation to help in this mission while reining in agency spending.
One notable provision in the bill provides funding for four new fraud investigators at the Office of the Legislative Auditor and establishing “fraud notes,” to inform the legislature whether an agency has made suggested changes provided by the OLA as a way to ensure anti-fraud policies and procedures are actually being followed.
Other House Republican provisions included in the bill to strengthen oversight, improve transparency, and stop fraud before it starts include:
- Requiring all state agencies and grant recipients to publicly post their organizational structures.
- Allowing agencies to withhold payments when there are credible allegations of fraud.
- Requiring state employees to promptly report suspected fraud or abuse.
- Strengthening the Office of the Legislative Auditor (OLA): Enhancing the OLA’s ability to investigate cases of waste, fraud, and abuse.
- Creating a Medicaid Fraud Unit.
- Expanding whistleblower protections.
- A new Saving Accountability through Verified Innovation initiative to reduce waste and reward cost-saving ideas within government.
Transportation
The House approved a balanced, responsible, and bipartisan transportation bill (H.F. 2438) that puts Minnesotans first. It makes our roads safer, our transportation system more fiscally responsible, and invests in the modes of transportation that Minnesotans use most.
The bill keeps the same level of general fund dollars as the base budget but reallocates funding and saves money in different ways, including canceling and delaying non-cost-efficient options and general cuts to Metro Transit (delaying the Blue Line and reducing unused transit routes).
Another measure in the bill enhances fairness in taxes with more electric vehicles in use. Roads in Minnesota are largely funded through money raised by the gas tax, but as the use of electric vehicles rises, road funds continue to fall. All drivers use the roads, so all drivers should help maintain them. This bill ensures that EVs contribute to the road fund just like gas-powered cars, making it fairer for everyone and keeping the quality of our roads high.
Higher Education
 In my last newsletter, I mentioned the House approved an omnibus higher education package (H.F. 2431) which takes steps toward closing a major State Grant Program shortfall without increasing state spending. As Chair of the House Higher Education Committee, I’m pleased with the bipartisan support we received. Click the above image for a quick video where I discuss this bill.
 Click the above image for a recent episode of TPT’s Almanac at the Capitol where I provided a behind-the-scenes look at challenges we faced assembling this bill.
 In addition, I appeared on KARE 11 to talk about my desire for tuition increases to be curtailed. Click the above image for those comments.
The next step in the process for our Higher Education bill is for a joint House-Senate conference committee to resolve differences between each body’s bills and then, we pass it one last time off the House and Senate floors to send it to the Governor.
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