New law creates Office of Inspector General

A new law that mostly takes effect on Jan. 1, 2027, aims to prevent fraud against the state’s programs and services, help coordinate program integrity measures across agencies, and act as a government watchdog and protector of tax dollars.

Sponsored by Rep. Matt Norris (DFL-Blaine) and Sen. Heather Gustafson (DFL-Vadnais Heights), an independent Office of the Inspector General will be created in the executive branch.

Fully operational by Sept. 1, 2027, the office will oversee current agency-based inspectors general and investigate credible allegations of fraud or misuse in state-administered programs.

The office will be an independent entity in the executive branch “responsible for ensuring accountability, transparency, and integrity in the operation of state executive branch agencies and programs.” Classified as a public official, the inspector general will report directly to the governor.

An inspector general must be appointed by Feb. 1, 2027.

The governor will appoint that person to a five-year term; however, they will be subject to a three-fifths supermajority confirmation by the Senate. A newly created eight-member joint House-Senate commission will recommend candidates; however, the governor does not have to select a candidate recommended by the commission. The commission creation part of the law took effect May 16, 2026.

The inspector general may only be removed by the governor before term expiration for cause after a public hearing conducted by the governor and with approval of the House and Senate.

In addition to investigating fraud in state programs, 11 specific inspector general duties are prescribed in the law:

• establishing standards and best practices concerning the operation, investigations, and fraud prevention processes of agency inspectors general and periodically review agency compliance with these standards and practices;

• alerting relevant state agencies when there is a credible allegation of fraud or misuse;

• facilitating information sharing between agencies and coordinating investigations involving multiple agencies;

• evaluating the performance of agency inspector general offices and recommend improvements;

• conducting inspections, evaluations and investigations of agencies and programs, with a focus on recipients of public funds and publicly funded services;

• referring matters for civil, criminal, or administrative action to the Office of the Inspector General Anti-Fraud and Waste Bureau, Bureau of Criminal Apprehension, the attorney general's office, the federal Department of Justice for federal programs, or other appropriate authorities;

• recommending legislative or policy changes to improve program efficiency and effectiveness;

• publishing reports on completion of investigative findings, recommendations and outcomes of inspector general activity;

• investigating a private entity or local unit of government administering a state program, or any private recipient of state funds or services, to ensure proper use of state funds;

• submitting an annual summary of office work to the Legislative Inspector General Advisory Commission and making it public; and

• maintaining a list that includes each program and individual for which the inspector general has obtained a court order or made a recommendation to freeze or cease payment.

In all matters relating to official duties, the inspector general will have subpoena power.

State officers and employees must now report evidence of the unlawful use of public funds or property to the legislative auditor. That information will also go to the Office of the Inspector General. Additionally, the legislative auditor will be required to refer all credible reports from the public about potential or misuse to the office. The legislative auditor will be permitted to coordinate investigations with the inspector general when coordination will conserve resources and not compromise a review or investigation.

State agencies will be required to prominently post on their website the fraud reporting tools administered by the Office of the Inspector General and the Office of the Legislative Auditor.

Beginning Jan. 1, 2028, the office will have the authority to appoint licensed peace officers and establish a law enforcement agency to be called the Inspector General Anti-Fraud and Waste Bureau to conduct statewide investigations and make arrests.

Current Department of Education inspector general staff will be embedded within the new office; however, they will still office at the department to focus on its programs. Statutes establishing and governing work within the department will be abolished the day after the new office assumes responsibility for the work.

The law provides $7.29 million in Fiscal Year 2027 funding and sets a $23.01 million base for the 2028-29 biennium.

HF1338/SF856*/CH92

SF0856* / HF1338 / CH92