Journal of the House - 109th Day - Thursday, April 9, 1998

Section 1. [1998 PROPERTY TAX REBATE.]

PROPERTY TAX REBATE

(a) A credit is allowed against the tax imposed under Minnesota Statutes, chapter 290, to an individual, other than a dependent, as defined in sections 151 and 152 of the Internal Revenue Code, disregarding section 152(b)(3) of the Internal Revenue Code, equal to 20 percent of the qualified property tax paid before January 1, 1999, for taxes assessed in 1997. The maximum amount of qualifying tax to which the credit applies is $7,500.

(b) For property owned and occupied by the taxpayer during 1998, qualified property tax means property taxes payable as defined in Minnesota Statutes, section 290A.03, subdivision 13, assessed in 1997 and payable in 1998, and deductible by the individual under section 164 of the Internal Revenue Code of 1986, as amended through December 31, 1997, except the requirement in Minnesota Statutes, section 290A.03, subdivision 13, that the taxpayer own and occupy the property on January 2, 1998, does not apply. In the case of agricultural land assessed as part of a homestead pursuant to Minnesota Statutes, section 273.13, subdivision 23, the owner is allowed to calculate the credit on all property taxes on the homestead, except to the extent the owner is required to furnish a rent certificate under Minnesota Statutes, section 290A.19, to a tenant leasing a part of the farm homestead.

(c) For a renter, the qualified property tax means the amount of rent constituting property taxes under Minnesota Statutes, section 290A.03, subdivision 11, based on rent paid in 1998. If two or more renters could be claimants under Minnesota Statutes, chapter 290A, with regard to the rent constituting property taxes, the rules under Minnesota Statutes, section 290A.03, subdivision 8, paragraph (f), apply to determine the amount of the credit for the individual.

(d) For an individual who both owned and rented principal residences in calendar year 1998, qualified taxes are the sum of the amounts under paragraphs (b) and (c).

(e) If the amount of the credit under this section exceeds the taxpayer's tax liability under Minnesota Statutes, chapter 290, the commissioner shall refund the excess.

(f) To claim a credit under this section, the taxpayer must attach a copy of the property tax statement and certificate of rent paid, as applicable, and provide any additional information the commissioner requires.

(g) This credit applies to taxable years beginning after December 31, 1997, and before January 1, 1999.

(h) Payment of the credit under this section is subject to Minnesota Statutes, chapter 270A, and any other provision applicable to refunds under Minnesota Statutes, chapter 290.

(i) An amount sufficient to pay refunds under this section is appropriated to the commissioner of revenue from the general fund.

Sec. 2. [TRANSFER TO GENERAL FUND.]

The commissioner of finance shall transfer $500,000,000 from the property tax reform account to the general fund on July 1, 1998.

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Sec. 3. Laws 1997, chapter 231, article 1, section 16, as amended by Laws 1997, First Special Session chapter 5, section 35, and Laws 1997, Third Special Session chapter 3, section 11, and Laws 1998, chapter 304, section 1, is amended to read:

Sec. 16. [PROPERTY TAX REBATE.]

(a) A credit is allowed against the tax imposed under Minnesota Statutes, chapter 290, to an individual, other than as a dependent, as defined in sections 151 and 152 of the Internal Revenue Code, disregarding section 152(b)(3) of the Internal Revenue Code, equal to 20 percent of the qualified property tax paid before January 1, 1998, for taxes assessed in 1996.

(b) For property owned and occupied by the taxpayer during 1997, qualified tax means property taxes payable as defined in Minnesota Statutes, section 290A.03, subdivision 13, assessed in 1996 and payable in 1997, except the requirement that the taxpayer own and occupy the property on January 2, 1997, does not apply. The credit is allowed only to the individual and spouse, if any, who paid the tax, whether directly, through an escrow arrangement, or under a contractual agreement for the purchase or sale of the property. In the case of agricultural land assessed as part of a homestead pursuant to Minnesota Statutes, section 273.13, subdivision 23, the owner is allowed to calculate the credit on all property taxes on the homestead, except to the extent the owner is required to furnish a rent certificate under Minnesota Statutes, section 290A.19, to a tenant leasing a part of the farm homestead.

(c) For a renter, the qualified property tax means the amount of rent constituting property taxes under Minnesota Statutes, section 290A.03, subdivision 11, based on rent paid in 1997. If two or more renters could be claimants under Minnesota Statutes, chapter 290A with regard to the rent constituting property taxes, the rules under Minnesota Statutes, section 290A.03, subdivision 8, paragraph (f), applies to determine the amount of the credit for the individual.

(d) For an individual who both owned and rented principal residences in calendar year 1997, qualified taxes are the sum of the amounts under paragraphs (a) and (b).

(e) If the amount of the credit under this subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner shall refund the excess.

(f) To claim a credit under this subdivision, the taxpayer must attach a copy of the property tax statement and certificate of rent paid, as applicable, and provide any additional information the commissioner requires.

(g) An amount sufficient to pay refunds under this subdivision is appropriated to the commissioner from the general fund.

(h) This credit applies to taxable years beginning after December 31, 1996, and before January 1, 1998.

(i) Payment of the credit under this section is subject to Minnesota Statutes, chapter 270A, and any other provision applicable to refunds under Minnesota Statutes, chapter 290.

Sec. 4. [APPROPRIATION.]

$1,837,000 is appropriated from the general fund for fiscal year 1999 to the commissioner of revenue to administer section 1.

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Section 1. Minnesota Statutes 1997 Supplement, section 124.239, subdivision 5, is amended to read:

PROPERTY TAX REFORM

Subd. 5. [LEVY AUTHORIZED.] A district, after local board approval, may levy for costs related to an approved facility plan as follows:

(a) if the district has indicated to the commissioner that bonds will be issued, the district may levy for the principal and interest payments on outstanding bonds issued according to subdivision 3 after reduction for any alternative facilities aid receivable under subdivision 5a; or

(b) if the district has indicated to the commissioner that the plan will be funded through levy, the district may levy according to the schedule approved in the plan after reduction for any alternative facilities aid receivable under subdivision 5a.

Sec. 2. Minnesota Statutes 1997 Supplement, section 124.239, subdivision 5a, is amended to read:

Subd. 5a. [ALTERNATIVE FACILITIES AID.] A district's alternative facilities aid is the amount equal to the district's annual debt service costs, provided that the amount does not exceed the amount certified to be levied for those purposes for taxes payable in 1997, or for a district that made a levy under subdivision 5, paragraph (b), the lesser of the district's annual levy amount, or one-sixth of the amount of levy that it certified for that purpose for taxes payable in 1998.

Sec. 3. Minnesota Statutes 1997 Supplement, section 124.239, subdivision 5b, is amended to read:

Subd. 5b. [ALTERNATIVE FACILITIES APPROPRIATION.] (a) An amount not to exceed ~~$17,000,000~~ $19,700,000 for fiscal year 2000 and $20,000,000 for fiscal year 2001 and each year thereafter is appropriated from the general fund to the commissioner of children, families, and learning ~~for fiscal year 2000 and each year thereafter~~ for payment of alternative facilities aid under subdivision 5a. ~~The 2000 appropriation includes $1,700,000 for 1999 and $15,300,000 for 2000.~~

(b) The appropriation in paragraph (a) must be reduced by the amount of any money specifically appropriated for the same purpose in any year from any state fund.

Sec. 4. Minnesota Statutes 1997 Supplement, section 124.315, subdivision 4, is amended to read:

Subd. 4. [INTEGRATION LEVY.] A district may levy an amount equal to 46 33 percent for fiscal year 2000 and 22 percent for fiscal year 2001 and thereafter of the district's integration revenue as defined in subdivision 3.

Sec. 5. Minnesota Statutes 1997 Supplement, section 124.315, subdivision 5, is amended to read:

Subd. 5. [INTEGRATION AID.] A district's integration aid equals 54 67 percent for fiscal year 2000 and 78 percent for fiscal year 2001 and thereafter of the district's integration revenue as defined in subdivision 3.

Sec. 6. Minnesota Statutes 1996, section 124A.03, subdivision 1f, is amended to read:

Subd. 1f. [REFERENDUM EQUALIZATION REVENUE.] A district's referendum equalization revenue equals ~~$315~~ $350 times the district's actual pupil units for that year.

Referendum equalization revenue must not exceed a district's total referendum revenue for that year.

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Sec. 7. Minnesota Statutes 1997 Supplement, section 273.127, subdivision 3, is amended to read:

Subd. 3. [CLASS 4C PROPERTIES.] For the market value of properties that meet the criteria of subdivision 2, paragraph (a), and which no longer qualify as a result of the eligibility criteria specified in section 273.126, a class rate of 2.4 percent applies for taxes payable in 1999 and a class rate of ~~2.6~~ 2.5 percent applies for taxes payable in 2000.

Sec. 8. Minnesota Statutes 1997 Supplement, section 273.13, subdivision 22, is amended to read:

Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 23, real estate which is residential and used for homestead purposes is class 1. The market value of class 1a property must be determined based upon the value of the house, garage, and land.

~~For taxes payable in 1998 and thereafter,~~ The first $75,000 of market value of class 1a property has a net class rate of one percent of its market value; and the market value of class 1a property that exceeds $75,000 has a class rate of ~~1.85~~ 1.7 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured homes used for the purposes of a homestead by

(1) any blind person, or the blind person and the blind person's spouse; or

(2) any person, hereinafter referred to as "veteran," who:

(i) served in the active military or naval service of the United States; and

(ii) is entitled to compensation under the laws and regulations of the United States for permanent and total service-connected disability due to the loss, or loss of use, by reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or a wheelchair; and

(iii) has acquired a special housing unit with special fixtures or movable facilities made necessary by the nature of the veteran's disability, or the surviving spouse of the deceased veteran for as long as the surviving spouse retains the special housing unit as a homestead; or

(3) any person who:

(i) is permanently and totally disabled and

(ii) receives 90 percent or more of total income from

(A) aid from any state as a result of that disability; or

(B) supplemental security income for the disabled; or

(D) social security disability, including the amount of a disability insurance benefit which is converted to an old age insurance benefit and any subsequent cost of living increases; or

(E) aid under the federal Railroad Retirement Act of 1937, United States Code Annotated, title 45, section 228b(a)5; or

(F) a pension from any local government retirement fund located in the state of Minnesota as a result of that disability; or

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(G) pension, annuity, or other income paid as a result of that disability from a private pension or disability plan, including employer, employee, union, and insurance plans and

(iii) has household income as defined in section 290A.03, subdivision 5, of $50,000 or less; or

(4) any person who is permanently and totally disabled and whose household income as defined in section 290A.03, subdivision 5, is 275 percent or less of the federal poverty level.

Property is classified and assessed under clause (4) only if the government agency or income-providing source certifies, upon the request of the homestead occupant, that the homestead occupant satisfies the disability requirements of this paragraph.

Property is classified and assessed pursuant to clause (1) only if the commissioner of economic security certifies to the assessor that the homestead occupant satisfies the requirements of this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a condition which is permanent in nature and totally incapacitates the person from working at an occupation which brings the person an income. The first $32,000 market value of class 1b property has a net class rate of .45 percent of its market value. The remaining market value of class 1b property has a net class rate using the rates for class 1 or class 2a property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real property that abuts a lakeshore line and is devoted to temporary and seasonal residential occupancy for recreational purposes but not devoted to commercial purposes for more than 250 days in the year preceding the year of assessment, and that includes a portion used as a homestead by the owner, which includes a dwelling occupied as a homestead by a shareholder of a corporation that owns the resort or a partner in a partnership that owns the resort, even if the title to the homestead is held by the corporation or partnership. For purposes of this clause, property is devoted to a commercial purpose on a specific day if any portion of the property, excluding the portion used exclusively as a homestead, is used for residential occupancy and a fee is charged for residential occupancy. In order for a property to be classified as class 1c, at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted between Memorial Day weekend and Labor Day weekend, and at least 60 percent of all bookings by lodging guests during the year must be for periods of at least two consecutive nights. Class 1c property has a class rate of one percent of total market value with the following limitation: the area of the property must not exceed 100 feet of lakeshore footage for each cabin or campsite located on the property up to a total of 800 feet and 500 feet in depth, measured away from the lakeshore. If any portion of the class 1c resort property is classified as class 4c under subdivision 25, the entire property must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for class 1c treatment under this paragraph.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time when they work on that farm, and the occupants are not charged rent for the privilege of occupying the property, provided that use of the structure for storage of farm equipment and produce does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the appropriate season; and

(4) the structure is not saleable as residential property because it does not comply with local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same class rates as class 1a property under paragraph (a).

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Sec. 9. Minnesota Statutes 1997 Supplement, section 273.13, subdivision 23, is amended to read:

Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural land including any improvements that is homesteaded. The market value of the house and garage and immediately surrounding one acre of land has the same class rates as class 1a property under subdivision 22. The value of the remaining land including improvements up to $115,000 has a net class rate of ~~0.4~~ 0.35 percent of market value. The remaining value of class 2a property over $115,000 of market value that does not exceed 320 acres has a net class rate of ~~0.9~~ 0.8 percent of market value. The remaining property over ~~the~~ $115,000 market value in excess of 320 acres has a class rate of ~~1.4~~ 1.25 percent of market value.

(b) Class 2b property is (1) real estate, rural in character and used exclusively for growing trees for timber, lumber, and wood and wood products; (2) real estate that is not improved with a structure and is used exclusively for growing trees for timber, lumber, and wood and wood products, if the owner has participated or is participating in a cost-sharing program for afforestation, reforestation, or timber stand improvement on that particular property, administered or coordinated by the commissioner of natural resources; (3) real estate that is nonhomestead agricultural land; or (4) a landing area or public access area of a privately owned public use airport. Class 2b property has a net class rate of ~~1.4~~ 1.25 percent of market value.

(c) Agricultural land as used in this section means contiguous acreage of ten acres or more, used during the preceding year for agricultural purposes. "Agricultural purposes" as used in this section means the raising or cultivation of agricultural products or enrollment in the Reinvest in Minnesota program under sections 103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public Law Number 99-198. Contiguous acreage on the same parcel, or contiguous acreage on an immediately adjacent parcel under the same ownership, may also qualify as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land included in state or federal farm programs. Agricultural classification for property shall be determined excluding the house, garage, and immediately surrounding one acre of land, and shall not be based upon the market value of any residential structures on the parcel or contiguous parcels under the same ownership.

(d) Real estate, excluding the house, garage, and immediately surrounding one acre of land, of less than ten acres which is exclusively and intensively used for raising or cultivating agricultural products, shall be considered as agricultural land.

Land shall be classified as agricultural even if all or a portion of the agricultural use of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under section 273.111.

The property classification under this section supersedes, for property tax purposes only, any locally administered agricultural policies or land use restrictions that define minimum or maximum farm acreage.

(e) The term "agricultural products" as used in this subdivision includes production for sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing animals, horticultural and nursery stock described in sections 18.44 to 18.61, fruit of all kinds, vegetables, forage, grains, bees, and apiary products by the owner;

(2) fish bred for sale and consumption if the fish breeding occurs on land zoned for agricultural use;

(3) the commercial boarding of horses if the boarding is done in conjunction with raising or cultivating agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for equestrian activities, excluding racing; and

(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed under section 97A.115.

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(f) If a parcel used for agricultural purposes is also used for commercial or industrial purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and (3),

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use. The grading, sorting, and packaging of raw agricultural products for first sale is considered an agricultural purpose. A greenhouse or other building where horticultural or nursery products are grown that is also used for the conduct of retail sales must be classified as agricultural if it is primarily used for the growing of horticultural or nursery products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products. Use of a greenhouse or building only for the display of already grown horticultural or nursery products does not qualify as an agricultural purpose.

The assessor shall determine and list separately on the records the market value of the homestead dwelling and the one acre of land on which that dwelling is located. If any farm buildings or structures are located on this homesteaded acre of land, their market value shall not be included in this separate determination.

(g) To qualify for classification under paragraph (b), clause (4), a privately owned public use airport must be licensed as a public airport under section 360.018. For purposes of paragraph (b), clause (4), "landing area" means that part of a privately owned public use airport properly cleared, regularly maintained, and made available to the public for use by aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing or navigational aids. A landing area also includes land underlying both the primary surface and the approach surfaces that comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of the landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under paragraph (b), clause (4), must be described and certified by the commissioner of transportation. The certification is effective until it is modified, or until the airport or landing area no longer meets the requirements of paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area" means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival and departure building in connection with the airport.

Sec. 10. Minnesota Statutes 1997 Supplement, section 273.13, subdivision 24, is amended to read:

Subd. 24. [CLASS 3.] (a) Commercial and industrial property and utility real and personal property, except class 5 property as identified in subdivision 31, clause (1), is class 3a. Each parcel has a class rate of ~~2.7~~ 2.45 percent of the first tier of market value, and ~~4.0~~ 3.5 percent of the remaining market value, except that in the case of contiguous parcels of commercial and industrial property owned by the same person or entity, only the value equal to the first-tier value of the contiguous parcels qualifies for the reduced class rate. For the purposes of this subdivision, the first tier means the first $150,000 of market value. In the case of utility property owned by one person or entity, only one parcel in each county has a reduced class rate on the first tier of market value.

For purposes of this paragraph, parcels are considered to be contiguous even if they are separated from each other by a road, street, vacant lot, waterway, or other similar intervening type of property.

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(b) Employment property defined in section 469.166, during the period provided in section 469.170, shall constitute class 3b and has a class rate of 2.3 percent of the first $50,000 of market value and ~~3.6~~ 3.5 percent of the remainder, except that for employment property located in a border city enterprise zone designated pursuant to section 469.168, subdivision 4, paragraph (c), the class rate of the first tier of market value and the class rate of the remainder is determined under paragraph (a), unless the governing body of the city designated as an enterprise zone determines that a specific parcel shall be assessed pursuant to the first clause of this sentence. The governing body may provide for assessment under the first clause of the preceding sentence only for property which is located in an area which has been designated by the governing body for the receipt of tax reductions authorized by section 469.171, subdivision 1.

(c) Structures which are (i) located on property classified as class 3a, (ii) constructed under an initial building permit issued after January 2, 1996, (iii) located in a transit zone as defined under section 473.3915, subdivision 3, (iv) located within the boundaries of a school district, and (v) not primarily used for retail or transient lodging purposes, shall have a class rate equal to 85 percent of the class rate of the second tier of the commercial property rate under paragraph (a) on any portion of the market value that does not qualify for the first tier class rate under paragraph (a). As used in item (v), a structure is primarily used for retail or transient lodging purposes if over 50 percent of its square footage is used for those purposes. ~~The four percent rate~~ A class rate equal to 85 percent of the class rate of the second tier of the commercial property class rate under paragraph (a) shall also apply to improvements to existing structures that meet the requirements of items (i) to (v) if the improvements are constructed under an initial building permit issued after January 2, 1996, even if the remainder of the structure was constructed prior to January 2, 1996. For the purposes of this paragraph, a structure shall be considered to be located in a transit zone if any portion of the structure lies within the zone. If any property once eligible for treatment under this paragraph ceases to remain eligible due to revisions in transit zone boundaries, the property shall continue to receive treatment under this paragraph for a period of three years.

Sec. 11. Minnesota Statutes 1997 Supplement, section 273.13, subdivision 25, as amended by Laws 1997, Third Special Session chapter 3, section 28, is amended to read:

Subd. 25. [CLASS 4.] (a) Class 4a is residential real estate containing four or more units and used or held for use by the owner or by the tenants or lessees of the owner as a residence for rental periods of 30 days or more. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt under section 272.02, and contiguous property used for hospital purposes, without regard to whether the property has been platted or subdivided. Class 4a property in a city with a population of 5,000 or less, that is (1) located outside of the metropolitan area, as defined in section 473.121, subdivision 2, or outside any county contiguous to the metropolitan area, and (2) whose city boundary is at least 15 miles from the boundary of any city with a population greater than 5,000 has a class rate of ~~2.3~~ 2.15 percent of market value. All other class 4a property has a class rate of ~~2.9~~ 2.5 percent of market value. For purposes of this paragraph, population has the same meaning given in section 477A.011, subdivision 3.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class 4bb, other than seasonal residential, and recreational;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b) containing two or three units;

(4) unimproved property that is classified residential as determined under section 273.13, subdivision 33.

Class 4b property has a class rate of ~~2.1~~ 1.7 percent of market value.

(1) nonhomestead residential real estate containing one unit, other than seasonal residential, and recreational; and

(2) a single family dwelling, garage, and surrounding one acre of property on a nonhomestead farm classified under subdivision 23, paragraph (b).

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Class 4bb has a class rate of ~~1.9~~ 1.25 percent on the first $75,000 of market value and a class rate of ~~2.1~~ 1.7 percent of its market value that exceeds $75,000.

Property that has been classified as seasonal recreational residential property at any time during which it has been owned by the current owner or spouse of the current owner does not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real property devoted to temporary and seasonal residential occupancy for recreation purposes, including real property devoted to temporary and seasonal residential occupancy for recreation purposes and not devoted to commercial purposes for more than 250 days in the year preceding the year of assessment. For purposes of this clause, property is devoted to a commercial purpose on a specific day if any portion of the property is used for residential occupancy, and a fee is charged for residential occupancy. In order for a property to be classified as class 4c, seasonal recreational residential for commercial purposes, at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted ~~between Memorial Day weekend and Labor Day weekend~~ during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging guests during the year must be for periods of at least two consecutive nights; or (ii) at least 20 percent of the annual gross receipts must be from charges for rental of fish houses, boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina services, launch services, and guide services, or the sale of bait and fishing tackle. For purposes of this determination, a paid booking of five or more nights shall be counted as two bookings. Class 4c also includes commercial use real property used exclusively for recreational purposes in conjunction with class 4c property devoted to temporary and seasonal residential occupancy for recreational purposes, up to a total of two acres, provided the property is not devoted to commercial recreational use for more than 250 days in the year preceding the year of assessment and is located within two miles of the class 4c property with which it is used. Class 4c property classified in this clause also includes the remainder of class 1c resorts provided that the entire property including that portion of the property classified as class 1c also meets the requirements for class 4c under this clause; otherwise the entire property is classified as class 3. Owners of real property devoted to temporary and seasonal residential occupancy for recreation purposes and all or a portion of which was devoted to commercial purposes for not more than 250 days in the year preceding the year of assessment desiring classification as class 1c or 4c, must submit a declaration to the assessor designating the cabins or units occupied for 250 days or less in the year preceding the year of assessment by January 15 of the assessment year. Those cabins or units and a proportionate share of the land on which they are located will be designated class 1c or 4c as otherwise provided. The remainder of the cabins or units and a proportionate share of the land on which they are located will be designated as class 3a. The owner of property desiring designation as class 1c or 4c property must provide guest registers or other records demonstrating that the units for which class 1c or 4c designation is sought were not occupied for more than 250 days in the year preceding the assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other nonresidential facility operated on a commercial basis not directly related to temporary and seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;

(2) qualified property used as a golf course if:

(i) any portion of the property is located within a county that has a population of less than 50,000, or within a county containing a golf course owned by a municipality, the county, or a special taxing district;

~~(ii)~~ it is open to the public on a daily fee basis. It may charge membership fees or dues, but a membership fee may not be required in order to use the property for golfing, and its green fees for golfing must be comparable to green fees typically charged by municipal courses; and

~~(iii)~~ (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with the golf course is classified as class 3a property.

(3) real property up to a maximum of one acre of land owned by a nonprofit community service oriented organization; provided that the property is not used for a revenue-producing activity for more than six days in the calendar year preceding the year of assessment and the property is not used for residential purposes on either a temporary or permanent

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basis. For purposes of this clause, a "nonprofit community service oriented organization" means any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, fraternal, civic, or educational purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 1990. For purposes of this clause, "revenue-producing activities" shall include but not be limited to property or that portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling alley, a retail store, gambling conducted by organizations licensed under chapter 349, an insurance business, or office or other space leased or rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of the property which is used for revenue-producing activities for more than six days in the calendar year preceding the year of assessment shall be assessed as class 3a. The use of the property for social events open exclusively to members and their guests for periods of less than 24 hours, when an admission is not charged nor any revenues are received by the organization shall not be considered a revenue-producing activity;

(4) post-secondary student housing of not more than one acre of land that is owned by a nonprofit corporation organized under chapter 317A and is used exclusively by a student cooperative, sorority, or fraternity for on-campus housing or housing located within two miles of the border of a college campus; ~~and~~

(5) manufactured home parks as defined in section 327.14, subdivision 3; and

(6) real property that is actively and exclusively devoted to indoor fitness, health, social, recreational, and related uses, is owned and operated by a not-for-profit corporation, and is located within the metropolitan area as defined in section 473.121, subdivision 2.

Class 4c property has a class rate of ~~2.1~~ 1.8 percent of market value, except that (i) for each parcel of seasonal residential recreational property not used for commercial purposes the first $75,000 of market value has a class rate of ~~1.4~~ 1.25 percent, and the market value that exceeds $75,000 has a class rate of ~~2.5~~ 2.2 percent, ~~and~~ (ii) manufactured home parks assessed under clause (5) have a class rate of two percent, and (iii) property described in paragraph (d), clause (4), has the same class rate as the rate applicable to the first tier of class 4bb nonhomestead residential real estate under paragraph (c).

(e) Class 4d property is qualifying low-income rental housing certified to the assessor by the housing finance agency under sections 273.126 and 462A.071. Class 4d includes land in proportion to the total market value of the building that is qualifying low-income rental housing. For all properties qualifying as class 4d, the market value determined by the assessor must be based on the normal approach to value using normal unrestricted rents.

Class 4d property has a class rate of one percent of market value.

(f) Class 4e property consists of the residential portion of any structure located within a city that was converted from nonresidential use to residential use, provided that:

(1) the structure had formerly been used as a warehouse;

(2) the structure was originally constructed prior to 1940;

(3) the conversion was done after December 31, 1995, but before January 1, 2003; and

(4) the conversion involved an investment of at least $25,000 per residential unit.

Class 4e property has a class rate of 2.3 percent, provided that a structure is eligible for class 4e classification only in the 12 assessment years immediately following the conversion.

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Sec. 12. Minnesota Statutes 1997 Supplement, section 273.13, subdivision 31, is amended to read:

Subd. 31. [CLASS 5.] Class 5 property includes:

(1) tools, implements, and machinery of an electric generating, transmission, or distribution system or a pipeline system transporting or distributing water, gas, crude oil, or petroleum products or mains and pipes used in the distribution of steam or hot or chilled water for heating or cooling buildings, which are fixtures;

(2) unmined iron ore and low-grade iron-bearing formations as defined in section 273.14; and

(3) all other property not otherwise classified.

Class 5 property has a class rate of ~~4.0~~ 3.5 percent of market value ~~for taxes payable in 1998 and thereafter~~.

Sec. 13. Minnesota Statutes 1997 Supplement, section 273.1382, subdivision 1, is amended to read:

Subdivision 1. [EDUCATION HOMESTEAD CREDIT.] Each year, ~~beginning with property taxes payable in 1998,~~ the respective county auditors shall determine the initial tax rate for each school district for the general education levy certified under section 124A.23, subdivision 2 or 3. That rate plus the school district's education homestead credit tax rate adjustment under section 275.08, subdivision 1e, shall be the general education homestead credit local tax rate for the district. The auditor shall then determine a general education homestead credit for each homestead within the county equal to 32 68 percent for taxes payable in 1999 and 69 percent for taxes payable in 2000 and thereafter of the general education homestead credit local tax rate times the net tax capacity of the homestead for the taxes payable year. The amount of general education homestead credit for a homestead may not exceed ~~$225~~ $320 for taxes payable in 1999 and $335 for taxes payable in 2000 and thereafter. In the case of an agricultural homestead, only the net tax capacity of the house, garage, and surrounding one acre of land shall be used in determining the property's education homestead credit.

Sec. 14. Minnesota Statutes 1997 Supplement, section 273.1382, is amended by adding a subdivision to read:

Subd. 1a. [CREDIT PERCENTAGE REDUCTION.] If the general education levy target for fiscal year 2000 or 2001 is increased by another law enacted prior to the 1999 legislative session, the commissioner of revenue shall adjust the percentage rates of the education homestead credit for the corresponding taxes payable year by multiplying the percentage rate by the ratio of the prior general education levy target to the current general education levy target. If an adjustment is made under this section for fiscal year 2001, the adjusted rate shall remain in effect for future years until amended by subsequent legislation.

Sec. 15. Minnesota Statutes 1996, section 273.1398, subdivision 1a, is amended to read:

Subd. 1a. [TAX BASE DIFFERENTIAL.] ~~(a)~~ For aids payable in ~~1997~~ 2000, for purposes of computing the fiscal disparity adjustment only, the tax base differential is ~~0.25~~ 0.2 percent of the assessment year ~~1995~~ 1998 taxable market value of class ~~4c noncommercial seasonal recreational residential~~ 3 commercial-industrial property ~~up to $72,000~~ over $150,000.

(b) For aids payable in 1998, the tax base differential is 0.25 percent of the assessment year 1996 taxable market value of class 4c noncommercial seasonal recreational residential property up to $72,000.

Sec. 16. Minnesota Statutes 1996, section 273.1398, subdivision 2, is amended to read:

Subd. 2. [HOMESTEAD AND AGRICULTURAL CREDIT AID.] Homestead and agricultural credit aid for each unique taxing jurisdiction equals the product of (1) the homestead and agricultural credit aid base, and (2) the growth adjustment factor, plus the net tax capacity adjustment and the fiscal disparity adjustment. For aid payable in 2000, each county shall have its homestead and agricultural credit aid permanently reduced by an amount equal to one-third of the additional amount received by the county under section 477A.03, subdivision 2, paragraph (c), clause (ii).

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Sec. 17. Minnesota Statutes 1996, section 273.1398, subdivision 4, is amended to read:

Subd. 4. [DISPARITY REDUCTION CREDIT.] (a) Beginning with taxes payable in 1989, class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1) the property is located in a border city that has an enterprise zone designated pursuant to section 469.168, subdivision 4; (2) the property is located in a city with a population greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city in another state; and (4) the adjacent city in the other state has a population of greater than 5,000 and less than 75,000.

(b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class 3b property to ~~3.3~~ 2.3 percent of market value.

(c) The county auditor shall annually certify the costs of the credits to the department of revenue. The department shall reimburse local governments for the property taxes foregone as the result of the credits in proportion to their total levies.

Sec. 18. Minnesota Statutes 1997 Supplement, section 290A.03, subdivision 11, is amended to read:

Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent constituting property taxes" means 18 19 percent of the gross rent actually paid in cash, or its equivalent, or the portion of rent paid in lieu of property taxes, in any calendar year by a claimant for the right of occupancy of the claimant's Minnesota homestead in the calendar year, and which rent constitutes the basis, in the succeeding calendar year of a claim for relief under this chapter by the claimant.

Sec. 19. Minnesota Statutes 1997 Supplement, section 290A.03, subdivision 13, is amended to read:

Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes payable" means the property tax exclusive of special assessments, penalties, and interest payable on a claimant's homestead after deductions made under sections 273.135, 273.1382, 273.1391, 273.42, subdivision 2, and any other state paid property tax credits in any calendar year. In the case of a claimant who makes ground lease payments, "property taxes payable" includes the amount of the payments directly attributable to the property taxes assessed against the parcel on which the house is located. No apportionment or reduction of the "property taxes payable" shall be required for the use of a portion of the claimant's homestead for a business purpose if the claimant does not deduct any business depreciation expenses for the use of a portion of the homestead in the determination of federal adjusted gross income. For homesteads which are manufactured homes as defined in section 273.125, subdivision 8, and for homesteads which are park trailers taxed as manufactured homes under section 168.012, subdivision 9, "property taxes payable" shall also include 18 19 percent of the gross rent paid in the preceding year for the site on which the homestead is located. When a homestead is owned by two or more persons as joint tenants or tenants in common, such tenants shall determine between them which tenant may claim the property taxes payable on the homestead. If they are unable to agree, the matter shall be referred to the commissioner of revenue whose decision shall be final. Property taxes are considered payable in the year prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have owned and occupied the homestead on January 2 of the year in which the tax is payable and (i) the property must have been classified as homestead property pursuant to section 273.124, on or before December 15 of the assessment year to which the "property taxes payable" relate; or (ii) the claimant must provide documentation from the local assessor that application for homestead classification has been made on or before December 15 of the year in which the "property taxes payable" were payable and that the assessor has approved the application.

Sec. 20. Minnesota Statutes 1996, section 477A.0122, subdivision 6, is amended to read:

Subd. 6. [REPORT.] (a) On or before March 15 of the year following the year in which the distributions under this section are received, each county shall file with the commissioner of revenue and commissioner of human services a report on prior year expenditures for out-of-home placement and family preservation, including expenditures under this section. For the human services programs specified in this section, the commissioner of revenue and commissioner of human services, in consultation with representatives of county governments, shall make a recommendation to the 1999 legislature as to which current reporting requirements imposed on county governments, if any, may be eliminated, replaced, or onsolidated on the report established by this section. For aid payable in calendar year 2000 and thereafter, each county

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shall provide information on the amount of state aid, local property tax revenue, and federal aid expended by that county on the programs specified in this section using the consolidated financial report recommended by the commissioner of revenue and commissioner of human services under this subdivision.

(b) The commissioner of revenue and the commissioner of human services, in consultation with representatives of county governments and children's advocacy representatives, shall study the current formula used in distributing aid under this section and factors related to out-of-home placement and family preservation expenditures and make a report to the house and senate tax committees by February 1, 1999. The report shall include a recommendation for a new formula to be used in distributing the aid under this section, beginning with aids payable in 2000.

Sec. 21. [REPEALER.]

Minnesota Statutes 1997 Supplement, section 273.13, subdivision 32, is repealed.

Sec. 22. [APPROPRIATIONS; FUND TRANSFERS.]

Subdivision 1. [GENERAL FUND TRANSFER.] The sum of $12,027,000 is transferred from the property tax reform account to the general fund on June 30, 1999.

Subd. 2. [EDUCATION LEVY REDUCTION APPROPRIATION.] In addition to any amount appropriated by other law, $51,300,000 is appropriated to the commissioner of children, families, and learning in fiscal year 2000 and $57,000,000 in fiscal year 2001 and thereafter to fund a reduction in the statewide general education property tax levy. The fiscal year 2001 appropriation includes $5,700,000 for 2000 and $51,300,000 for 2001. The amounts appropriated for fiscal years 2000 and 2001 are from the property tax reform account; subsequent appropriations are from the general fund.

Subd. 3. [REFERENDUM EQUALIZATION AID.] For fiscal year 2000, $6,300,000 and for fiscal year 2001, $7,000,000 is appropriated from the property tax reform account to the commissioner of children, families, and learning to fund the additional costs of referendum equalization aid under section 6.

Subd. 4. [INTEGRATION AID.] For fiscal year 2000, $6,300,000 and for fiscal year 2001, $12,400,000 is appropriated to the commissioner of children, families, and learning from the property tax reform account to fund the increase in integration aid under section 5.

Subd. 5. [ALTERNATIVE FACILITIES AID.] $2,700,000 for fiscal year 2000 and $3,000,000 for fiscal year 2001 is appropriated from the property tax reform account to the commissioner of children, families, and learning to finance the increase in alternative facilities aid under sections 2 and 3.

Subd. 6. [EDUCATION HOMESTEAD CREDIT INCREASE.] The amounts necessary to make the increased payments attributable to the increases in education homestead credit percentage rates and maximums under sections 13 and 14 are transferred from the property tax reform account to the general fund in fiscal years 2000 and 2001.

Subd. 7. [FISCAL DISPARITIES HACA.] The amount necessary to fund the fiscal year 2001 cost of fiscal disparities HACA under section 15 is transferred from the property tax reform account to the general fund for fiscal year 2001.

Subd. 8. [PROPERTY TAX REFUND INCREASE.] The additional amount necessary to fund the changes in the property tax refund under sections 18 and 19 for fiscal years 2000 and 2001 is transferred from the property tax reform account to the general fund in each of those fiscal years.

Subd. 9. [FAMILY PRESERVATION AID INCREASE.] The sum of $20,000,000 is transferred from the property tax reform account to the general fund in fiscal year 2001 to fund a portion of the increase in family preservation aid under article 4, section 8, paragraph (c)(ii).

Subd. 10. [LOCAL GOVERNMENT AID INCREASE.] The sum of $3,000,000 in each of fiscal years 2000 and 2001 is transferred from the property tax reform account to the general fund to cover the additional local government aid appropriation provided in article 4, section 8, paragraph (d).

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Subd. 11. [EXISTING LOW-INCOME HOUSING AID.] The amount necessary to fund the cost of the existing low-income housing aid under article 4, section 10, is transferred from the property tax reform account to the general fund in each of fiscal years 2000 and 2001.

Subd. 12. [GENERAL FUND TRANSFER.] In the event that there are insufficient funds within the property tax reform account to fund any of the payments or transfers provided under this section, sufficient funds are appropriated from the general fund to the property tax reform account to fully fund the appropriation or transfer in fiscal year 2000 or 2001.

Sec. 23. [EFFECTIVE DATES.]

Sections 1 to 7 are effective for revenue for fiscal year 2000. Sections 8 to 14 and 17 are effective beginning with taxes payable in 1999. Sections 15 and 16 are effective beginning with aids payable in 2000. Sections 18 and 19 are effective beginning with rents paid in 1998. Sections 20 to 22 are effective the day following final enactment.

PROPERTY TAXES, LOCAL BONDING AND LEVY AUTHORITY

Section 1. Minnesota Statutes 1997 Supplement, section 272.02, subdivision 1, is amended to read:

Subdivision 1. All property described in this section to the extent herein limited shall be exempt from taxation:

(1) All public burying grounds.

(2) All public schoolhouses.

(3) All public hospitals.

(4) All academies, colleges, and universities, and all seminaries of learning.

(5) All churches, church property, and houses of worship.

(6) Institutions of purely public charity except parcels of property containing structures and the structures described in section 273.13, subdivision 25, paragraph ~~(c), clauses (1), (2), and (3), or paragraph (d)~~ (e), other than those that qualify for exemption under clause (25).

(7) All public property exclusively used for any public purpose.

(8) Except for the taxable personal property enumerated below, all personal property and the property described in section 272.03, subdivision 1, paragraphs (c) and (d), shall be exempt.

The following personal property shall be taxable:

(a) personal property which is part of an electric generating, transmission, or distribution system or a pipeline system transporting or distributing water, gas, crude oil, or petroleum products or mains and pipes used in the distribution of steam or hot or chilled water for heating or cooling buildings and structures;

(b) railroad docks and wharves which are part of the operating property of a railroad company as defined in section 270.80;

(d) leasehold or other personal property interests which are taxed pursuant to section 272.01, subdivision 2; 273.124, subdivision 7; or 273.19, subdivision 1; or any other law providing the property is taxable as if the lessee or user were the fee owner;

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(e) manufactured homes and sectional structures, including storage sheds, decks, and similar removable improvements constructed on the site of a manufactured home, sectional structure, park trailer or travel trailer as provided in section 273.125, subdivision 8, paragraph (f); and

(f) flight property as defined in section 270.071.

(9) Personal property used primarily for the abatement and control of air, water, or land pollution to the extent that it is so used, and real property which is used primarily for abatement and control of air, water, or land pollution as part of an agricultural operation, as a part of a centralized treatment and recovery facility operating under a permit issued by the Minnesota pollution control agency pursuant to chapters 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, and 7045.0020 to 7045.1260, as a wastewater treatment facility and for the treatment, recovery, and stabilization of metals, oils, chemicals, water, sludges, or inorganic materials from hazardous industrial wastes, or as part of an electric generation system. For purposes of this clause, personal property includes ponderous machinery and equipment used in a business or production activity that at common law is considered real property.

Any taxpayer requesting exemption of all or a portion of any real property or any equipment or device, or part thereof, operated primarily for the control or abatement of air or water pollution shall file an application with the commissioner of revenue. The equipment or device shall meet standards, rules, or criteria prescribed by the Minnesota pollution control agency, and must be installed or operated in accordance with a permit or order issued by that agency. The Minnesota pollution control agency shall upon request of the commissioner furnish information or advice to the commissioner. On determining that property qualifies for exemption, the commissioner shall issue an order exempting the property from taxation. The equipment or device shall continue to be exempt from taxation as long as the permit issued by the Minnesota pollution control agency remains in effect.

(10) Wetlands. For purposes of this subdivision, "wetlands" means: (i) land described in section 103G.005, subdivision 15a; (ii) land which is mostly under water, produces little if any income, and has no use except for wildlife or water conservation purposes, provided it is preserved in its natural condition and drainage of it would be legal, feasible, and economically practical for the production of livestock, dairy animals, poultry, fruit, vegetables, forage and grains, except wild rice; or (iii) land in a wetland preservation area under sections 103F.612 to 103F.616. "Wetlands" under items (i) and (ii) include adjacent land which is not suitable for agricultural purposes due to the presence of the wetlands, but do not include woody swamps containing shrubs or trees, wet meadows, meandered water, streams, rivers, and floodplains or river bottoms. Exemption of wetlands from taxation pursuant to this section shall not grant the public any additional or greater right of access to the wetlands or diminish any right of ownership to the wetlands.

(11) Native prairie. The commissioner of the department of natural resources shall determine lands in the state which are native prairie and shall notify the county assessor of each county in which the lands are located. Pasture land used for livestock grazing purposes shall not be considered native prairie for the purposes of this clause. Upon receipt of an application for the exemption provided in this clause for lands for which the assessor has no determination from the commissioner of natural resources, the assessor shall refer the application to the commissioner of natural resources who shall determine within 30 days whether the land is native prairie and notify the county assessor of the decision. Exemption of native prairie pursuant to this clause shall not grant the public any additional or greater right of access to the native prairie or diminish any right of ownership to it.

(12) Property used in a continuous program to provide emergency shelter for victims of domestic abuse, provided the organization that owns and sponsors the shelter is exempt from federal income taxation pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1992, notwithstanding the fact that the sponsoring organization receives funding under section 8 of the United States Housing Act of 1937, as amended.

(13) If approved by the governing body of the municipality in which the property is located, property not exceeding one acre which is owned and operated by any senior citizen group or association of groups that in general limits membership to persons age 55 or older and is organized and operated exclusively for pleasure, recreation, and other nonprofit purposes, no part of the net earnings of which inures to the benefit of any private shareholders; provided the property is used primarily as a clubhouse, meeting facility, or recreational facility by the group or association and the property is not used for residential purposes on either a temporary or permanent basis.

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(14) To the extent provided by section 295.44, real and personal property used or to be used primarily for the production of hydroelectric or hydromechanical power on a site owned by the federal government, the state, or a local governmental unit which is developed and operated pursuant to the provisions of section 103G.535.

(15) If approved by the governing body of the municipality in which the property is located, and if construction is commenced after June 30, 1983:

(a) a "direct satellite broadcasting facility" operated by a corporation licensed by the federal communications commission to provide direct satellite broadcasting services using direct broadcast satellites operating in the 12-ghz. band; and

(b) a "fixed satellite regional or national program service facility" operated by a corporation licensed by the federal communications commission to provide fixed satellite-transmitted regularly scheduled broadcasting services using satellites operating in the 6-ghz. band.

An exemption provided by clause (15) shall apply for a period not to exceed five years. When the facility no longer qualifies for exemption, it shall be placed on the assessment rolls as provided in subdivision 4. Before approving a tax exemption pursuant to this paragraph, the governing body of the municipality shall provide an opportunity to the members of the county board of commissioners of the county in which the facility is proposed to be located and the members of the school board of the school district in which the facility is proposed to be located to meet with the governing body. The governing body shall present to the members of those boards its estimate of the fiscal impact of the proposed property tax exemption. The tax exemption shall not be approved by the governing body until the county board of commissioners has presented its written comment on the proposal to the governing body or 30 days have passed from the date of the transmittal by the governing body to the board of the information on the fiscal impact, whichever occurs first.

(16) Real and personal property owned and operated by a private, nonprofit corporation exempt from federal income taxation pursuant to United States Code, title 26, section 501(c)(3), primarily used in the generation and distribution of hot water for heating buildings and structures.

(17) Notwithstanding section 273.19, state lands that are leased from the department of natural resources under section 92.46.

(18) Electric power distribution lines and their attachments and appurtenances, that are used primarily for supplying electricity to farmers at retail.

(19) Transitional housing facilities. "Transitional housing facility" means a facility that meets the following requirements. (i) It provides temporary housing to individuals, couples, or families. (ii) It has the purpose of reuniting families and enabling parents or individuals to obtain self-sufficiency, advance their education, get job training, or become employed in jobs that provide a living wage. (iii) It provides support services such as child care, work readiness training, and career development counseling; and a self-sufficiency program with periodic monitoring of each resident's progress in completing the program's goals. (iv) It provides services to a resident of the facility for at least three months but no longer than three years, except residents enrolled in an educational or vocational institution or job training program. These residents may receive services during the time they are enrolled but in no event longer than four years. (v) It is owned and operated or under lease from a unit of government or governmental agency under a property disposition program and operated by one or more organizations exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1992. This exemption applies notwithstanding the fact that the sponsoring organization receives financing by a direct federal loan or federally insured loan or a loan made by the Minnesota housing finance agency under the provisions of either Title II of the National Housing Act or the Minnesota housing finance agency law of 1971 or rules promulgated by the agency pursuant to it, and notwithstanding the fact that the sponsoring organization receives funding under Section 8 of the United States Housing Act of 1937, as amended.

(20) Real and personal property, including leasehold or other personal property interests, owned and operated by a corporation if more than 50 percent of the total voting power of the stock of the corporation is owned collectively by: (i) the board of regents of the University of Minnesota, (ii) the University of Minnesota Foundation, an organization exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code of 1986, as amended through

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December 31, 1992, and (iii) a corporation organized under chapter 317A, which by its articles of incorporation is prohibited from providing pecuniary gain to any person or entity other than the regents of the University of Minnesota; which property is used primarily to manage or provide goods, services, or facilities utilizing or relating to large-scale advanced scientific computing resources to the regents of the University of Minnesota and others.

(21)(a) Small scale wind energy conversion systems installed after January 1, 1991, and used as an electric power source are exempt.

"Small scale wind energy conversion systems" are wind energy conversion systems, as defined in section 216C.06, subdivision 12, including the foundation or support pad, which are (i) used as an electric power source; (ii) located within one county and owned by the same owner; and (iii) produce two megawatts or less of electricity as measured by nameplate ratings.

(b) Medium scale wind energy conversion systems installed after January 1, 1991, are treated as follows: (i) the foundation and support pad are taxable; (ii) the associated supporting and protective structures are exempt for the first five assessment years after they have been constructed, and thereafter, 30 percent of the market value of the associated supporting and protective structures are taxable; and (iii) the turbines, blades, transformers, and its related equipment, are exempt. "Medium scale wind energy conversion systems" are wind energy conversion systems as defined in section 216C.06, subdivision 12, including the foundation or support pad, which are: (i) used as an electric power source; (ii) located within one county and owned by the same owner; and (iii) produce more than two but equal to or less than 12 megawatts of energy as measured by nameplate ratings.

(c) Large scale wind energy conversion systems installed after January 1, 1991, are treated as follows: 25 percent of the market value of all property is taxable, including (i) the foundation and support pad; (ii) the associated supporting and protective structures; and (iii) the turbines, blades, transformers, and its related equipment. "Large scale wind energy conversion systems" are wind energy conversion systems as defined in section 216C.06, subdivision 12, including the foundation or support pad, which are: (i) used as an electric power source; and (ii) produce more than 12 megawatts of energy as measured by nameplate ratings.

(22) Containment tanks, cache basins, and that portion of the structure needed for the containment facility used to confine agricultural chemicals as defined in section 18D.01, subdivision 3, as required by the commissioner of agriculture under chapter 18B or 18C.

(23) Photovoltaic devices, as defined in section 216C.06, subdivision 13, installed after January 1, 1992, and used to produce or store electric power.

(24) Real and personal property owned and operated by a private, nonprofit corporation exempt from federal income taxation pursuant to United States Code, title 26, section 501(c)(3), primarily used for an ice arena or ice rink, and used primarily for youth and high school programs.

(25) A structure that is situated on real property that is used for:

(i) housing for the elderly or for low- and moderate-income families as defined in Title II of the National Housing Act, as amended through December 31, 1990, and funded by a direct federal loan or federally insured loan made pursuant to Title II of the act; or

(ii) housing lower income families or elderly or handicapped persons, as defined in Section 8 of the United States Housing Act of 1937, as amended.

In order for a structure to be exempt under (i) or (ii), it must also meet each of the following criteria:

(A) is owned by an entity which is operated as a nonprofit corporation organized under chapter 317A;

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(B) is owned by an entity which has not entered into a housing assistance payments contract under Section 8 of the United States Housing Act of 1937, or, if the entity which owns the structure has entered into a housing assistance payments contract under Section 8 of the United States Housing Act of 1937, the contract provides assistance for less than 90 percent of the dwelling units in the structure, excluding dwelling units intended for management or maintenance personnel;

(C) operates an on-site congregate dining program in which participation by residents is mandatory, and provides assisted living or similar social and physical support services for residents; and

(D) was not assessed and did not pay tax under chapter 273 prior to the 1991 levy, while meeting the other conditions of this clause.

An exemption under this clause remains in effect for taxes levied in each year or partial year of the term of its permanent financing.

(26) Real and personal property that is located in the Superior National Forest, and owned or leased and operated by a nonprofit organization that is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1992, and primarily used to provide recreational opportunities for disabled veterans and their families.

(27) Manure pits and appurtenances, which may include slatted floors and pipes, installed or operated in accordance with a permit, order, or certificate of compliance issued by the Minnesota pollution control agency. The exemption shall continue for as long as the permit, order, or certificate issued by the Minnesota pollution control agency remains in effect.

(28) Notwithstanding clause (8), item (a), attached machinery and other personal property which is part of a facility containing a cogeneration system as described in section 216B.166, subdivision 2, paragraph (a), if the cogeneration system has met the following criteria: (i) the system utilizes natural gas as a primary fuel and the cogenerated steam initially replaces steam generated from existing thermal boilers utilizing coal; (ii) the facility developer is selected as a result of a procurement process ordered by the public utilities commission; and (iii) construction of the facility is commenced after July 1, 1994, and before July 1, 1997.

(29) Real property acquired by a home rule charter city, statutory city, county, town, or school district under a lease purchase agreement or an installment purchase contract during the term of the lease purchase agreement as long as and to the extent that the property is used by the city, county, town, or school district and devoted to a public use and to the extent it is not subleased to any private individual, entity, association, or corporation in connection with a business or enterprise operated for profit.

(30) Property owned by a nonprofit charitable organization that qualifies for tax exemption under section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1997, that is intended to be used as a business incubator in a high-unemployment county but is not occupied on the assessment date. As used in this clause, a "business incubator" is a facility used for the development of nonretail businesses, offering access to equipment, space, services, and advice to the tenant businesses, for the purpose of encouraging economic development, diversification, and job creation in the area served by the organization, and "high-unemployment county" is a county that had an average annual unemployment rate of 7.9 percent or greater in 1997. Property that qualifies for the exemption under this clause is limited to no more than two contiguous parcels and structures that do not exceed in the aggregate 40,000 square feet. This exemption expires after taxes payable in 2005.

(31) Notwithstanding any other law to the contrary, real property that meets the following criteria is exempt:

(i) constitutes a wastewater treatment system (a) constructed by a municipality using public funds, (b) operates under a State Disposal System Permit issued by the Minnesota pollution control agency pursuant to chapters 115 and 116 and Minnesota Rules, chapter 700l, and (c) applies its effluent to land used as part of an agricultural operation;

(ii) is located within a municipality of a population of less than 10,000;

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(iii) is used for treatment of effluent from a private potato processing facility; and

(iv) is owned by a municipality and operated by a private entity under agreement with that municipality.

Sec. 2. Minnesota Statutes 1996, section 272.0211, subdivision 1, is amended to read:

Subdivision 1. [EFFICIENCY DETERMINATION AND CERTIFICATION.] An owner or operator of a new or existing electric power generation facility, excluding wind energy conversion systems, may apply to the commissioner of revenue for a market value exclusion on the property as provided for in this section. This exclusion shall apply only to the market value of the equipment of the facility, and shall not apply to the structures and the land upon which the facility is located. The commissioner of revenue shall prescribe the forms and procedures for this application. Upon receiving the application, the commissioner of revenue shall request the commissioner of public service to make a determination of the efficiency of the applicant's electric power generation facility. In calculating the efficiency of a facility, the commissioner of public service shall use a definition of efficiency which calculates efficiency as the sum of:

(1) the useful electrical power output; plus

(2) the useful thermal energy output; plus

(3) the fuel energy of the useful chemical products,

all divided by the total energy input to the facility, expressed as a percentage. The commissioner must include in this formula the energy used in any on-site preparation of materials necessary to convert the materials into the fuel used to generate electricity, such as a process to gasify petroleum coke. The commissioner shall use the high heating value for all substances in the commissioner's efficiency calculations, except for wood for fuel in a biomass-eligible project under section 216B.2424; for these instances, the commissioner shall adjust the heating value to allow for energy consumed for evaporation of the moisture in the wood. The applicant shall provide the commissioner of public service with whatever information the commissioner deems necessary to make the determination. Within 30 days of the receipt of the necessary information, the commissioner of public service shall certify the findings of the efficiency determination to the commissioner of revenue and to the applicant. The commissioner of public service shall determine the efficiency of the facility and certify the findings of that determination to the commissioner of revenue every two years thereafter from the date of the original certification.

Sec. 3. Minnesota Statutes 1997 Supplement, section 273.112, subdivision 2, is amended to read:

Subd. 2. The present general system of ad valorem property taxation in the state of Minnesota does not provide an equitable basis for the taxation of certain private outdoor recreational, ~~social,~~ open space and park land property and has resulted in excessive taxes on some of these lands. Therefore, it is hereby declared that the public policy of this state would be best served by equalizing tax burdens upon private outdoor, recreational, ~~social,~~ open space and park land within this state through appropriate taxing measures to encourage private development of these lands which would otherwise not occur or have to be provided by governmental authority.

Sec. 4. Minnesota Statutes 1997 Supplement, section 273.112, subdivision 3, is amended to read:

Subd. 3. Real estate shall be entitled to valuation and tax deferment under this section only if it is:

(a) actively and exclusively devoted to golf, skiing, lawn bowling, croquet, or archery or firearms range recreational use or other recreational ~~or social~~ uses carried on at the establishment;

(b) five acres in size or more, except in the case of a lawn bowling or croquet green or an archery or firearms range ~~or an establishment actively and exclusively devoted to indoor fitness, health, social, recreational, and related uses in which the establishment is owned and operated by a not-for-profit corporation~~;

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(c)(1) operated by private individuals or, in the case of a lawn bowling or croquet green, by private individuals or corporations, and open to the public; or

(2) operated by firms or corporations for the benefit of employees or guests; or

(3) operated by private clubs having a membership of 50 or more or open to the public, provided that the club does not discriminate in membership requirements or selection on the basis of sex or marital status; and

(d) made available for use in the case of real estate devoted to golf without discrimination on the basis of sex during the time when the facility is open to use by the public or by members, except that use for golf may be restricted on the basis of sex no more frequently than one, or part of one, weekend each calendar month for each sex and no more than two, or part of two, weekdays each week for each sex.

If a golf club membership allows use of golf course facilities by more than one adult per membership, the use must be equally available to all adults entitled to use of the golf course under the membership, except that use may be restricted on the basis of sex as permitted in this section. Memberships that permit play during restricted times may be allowed only if the restricted times apply to all adults using the membership. A golf club may not offer a membership or golfing privileges to a spouse of a member that provides greater or less access to the golf course than is provided to that person's spouse under the same or a separate membership in that club, except that the terms of a membership may provide that one spouse may have no right to use the golf course at any time while the other spouse may have either limited or unlimited access to the golf course.

A golf club may have or create an individual membership category which entitles a member for a reduced rate to play during restricted hours as established by the club. The club must have on record a written request by the member for such membership.

A golf club that has food or beverage facilities or services must allow equal access to those facilities and services for both men and women members in all membership categories at all times. Nothing in this paragraph shall be construed to require service or access to facilities to persons under the age of 21 years or require any act that would violate law or ordinance regarding sale, consumption, or regulation of alcoholic beverages.

For purposes of this subdivision and subdivision 7a, discrimination means a pattern or course of conduct and not linked to an isolated incident.

Sec. 5. Minnesota Statutes 1997 Supplement, section 273.112, subdivision 4, is amended to read:

Subd. 4. The value of any real estate described in subdivision 3 shall upon timely application by the owner, in the manner provided in subdivision 6, be determined solely with reference to its appropriate private outdoor, recreational, ~~social,~~ open space and park land classification and value notwithstanding sections 272.03, subdivision 8, and 273.11. In determining such value for ad valorem tax purposes the assessor shall not consider the value such real estate would have if it were converted to commercial, industrial, residential or seasonal residential use.

Sec. 6. Minnesota Statutes 1997 Supplement, section 272.115, subdivision 4, is amended to read:

Subd. 4. [ELIGIBILITY FOR HOMESTEAD STATUS.] No real estate sold or transferred ~~on or after January 1, 1993,~~ for which a certificate of real estate value is required under ~~subdivision 1~~ this section shall be classified as a homestead, unless ~~(1)~~ a certificate of value has been filed with the county auditor in accordance with this section, or (2) the real estate was conveyed by the federal government, the state, a political subdivision of the state, or combination of them to a person otherwise eligible to receive homestead classification of the property.

This subdivision shall apply to any real estate taxes that are payable the year or years following the sale or transfer of the property.

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Sec. 7. Minnesota Statutes 1997 Supplement, section 272.115, subdivision 5, is amended to read:

Subd. 5. [EXEMPTION FOR GOVERNMENT BODIES.] A certificate of real estate value is not required when the real estate is being conveyed to ~~or by a public authority or agency of the federal government,~~ the state of Minnesota, a political subdivision of the state, or any combination of them, for highway or roadway right-of-way purposes, provided that the ~~authority,~~ agency, or governmental unit has agreed to file a list of the real estate conveyed ~~by or~~ to the ~~authority,~~ agency, or governmental unit with the commissioner of revenue by June 1 of the year following the year of the conveyance.

Sec. 8. Minnesota Statutes 1997 Supplement, section 273.124, subdivision 14, is amended to read:

Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] (a) Real estate of less than ten acres that is the homestead of its owner must be classified as class 2a under section 273.13, subdivision 23, paragraph (a), if:

(1) the parcel on which the house is located is contiguous on at least two sides to (i) agricultural land, (ii) land owned or administered by the United States Fish and Wildlife Service, or (iii) land administered by the department of natural resources on which in lieu taxes are paid under sections 477A.11 to 477A.14;

(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 20 acres;

(3) the noncontiguous land is located not farther than ~~two~~ four townships or cities, or a combination of townships or cities from the homestead; and

(4) the agricultural use value of the noncontiguous land and farm buildings is equal to at least 50 percent of the market value of the house, garage, and one acre of land.

Homesteads initially classified as class 2a under the provisions of this paragraph shall remain classified as class 2a, irrespective of subsequent changes in the use of adjoining properties, as long as the homestead remains under the same ownership, the owner owns a noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use value qualifies under clause (4).

(b) Except as provided in paragraph (d), noncontiguous land shall be included as part of a homestead under section 273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a and the detached land is located in the same township or city, or not farther than ~~two~~ four townships or cities or combination thereof from the homestead. Any taxpayer of these noncontiguous lands must notify the county assessor that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer must also notify the assessor of the other county.

(c) Agricultural land used for purposes of a homestead and actively farmed by a person holding a vested remainder interest in it must be classified as a homestead under section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, any other dwellings on the land used for purposes of a homestead by persons holding vested remainder interests who are actively engaged in farming the property, and up to one acre of the land surrounding each homestead and reasonably necessary for the use of the dwelling as a home, must also be assessed class 2a.

(d) Agricultural land and buildings that were class 2a homestead property under section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain classified as agricultural homesteads for subsequent assessments if:

(1) the property owner abandoned the homestead dwelling located on the agricultural homestead as a result of the April 1997 floods;

(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, or Wilkin;

(3) the agricultural land and buildings remain under the same ownership for the current assessment year as existed for the 1997 assessment year and continue to be used for agricultural purposes;

(4) the dwelling occupied by the owner is located in Minnesota and is within 30 miles of one of the parcels of agricultural land that is owned by the taxpayer; and

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(5) the owner notifies the county assessor that the relocation was due to the 1997 floods, and the owner furnishes the assessor any information deemed necessary by the assessor in verifying the change in ~~homestead~~ dwelling. ~~For taxes payable in 1998, the owner must notify the assessor by December 1, 1997.~~ Further notifications to the assessor are not required if the property continues to meet all the requirements in this paragraph and any dwellings on the agricultural land remain uninhabited.

Sec. 9. Minnesota Statutes 1997 Supplement, section 273.126, subdivision 3, is amended to read:

Subd. 3. [RENT RESTRICTIONS.] (a) In order to qualify under class 4d, a unit must be subject to a rent restriction agreement with the housing finance agency for a period of at least five years. The agreement must be in effect and apply to the rents to be charged for the year in which the property taxes are payable. The agreement must provide that the restrictions apply to each year of the period, regardless of whether the unit is occupied by an individual with qualifying income or whether class 4d applies. The rent restriction agreement must provide for rents for the unit to be no higher than 30 percent of 60 percent of the median gross income. The definition of median gross income specified in this section applies. "Rent" means "gross rent" as defined in section 42(g)(2)(B) of the Internal Revenue Code of 1986, as amended through December 31, 1996.

(b) Notwithstanding the maximum rent levels permitted, 20 percent of the units in the metropolitan area and ten percent of the units in greater Minnesota qualifying under class 4d must be made available to a family with a section 8 certificate or voucher. For applications for class 4d made before July 1, 1999, the required percent of units for an applicant is increased to 40 percent and the maximum rent that may be charged on a unit occupied by a family with a section 8 certificate or voucher is limited to the fair market rent for the area, as established by the United States Department of Housing and Urban Development, if within the five year period ending January 2 of the assessment year:

(1) 40 percent or more of the units in the project or development were covered by a section 8 project-based housing assistance contract and the contract has been canceled or no longer applies; or

(2) the units were in a project or development financed with a direct federal loan or federally insured loan made pursuant to Title II of the National Housing Act and the loan has been paid or prepaid, eliminating the restrictions on rents under Title II of the Act.

(c) The rent restriction agreement runs with the land and binds any successor to title to the property, without regard to whether the successor had actual notice or knowledge of the agreement. The owner must promptly record the agreement in the office of the county recorder or must file it in the office of the registrar of titles, in the county where the property is located. If the agreement is not recorded, class 4d does not apply to the property.

Sec. 10. [273.1383] [1997 FLOOD LOSS REPLACEMENT AID.]

Subdivision 1. [FLOOD NET TAX CAPACITY LOSS.] In assessment years 1998, 1999, and 2000, the county assessor of each county listed in section 273.124, subdivision 14, paragraph (d), clause (2), shall compute a hypothetical county net tax capacity based upon market values for the current assessment year and the class rates that were in effect for assessment year 1997. The amount, if any, by which the assessment year 1997 total taxable net tax capacity exceeds the hypothetical taxable net tax capacity shall be known as the county's "flood net tax capacity loss" for the current assessment year. The county assessor of each county whose flood net tax capacity loss for the current year exceeds five percent of its assessment year 1997 total taxable net tax capacity shall certify its flood net tax capacity loss to the commissioner of revenue by August 1 of the assessment year.

Subd. 2. [FLOOD LOSS AID.] Each year, each county with a flood net tax capacity loss equal to or greater than five percent of its assessment year 1997 total taxable net tax capacity shall be entitled to flood loss aid equal to the flood net tax capacity loss times the county government's average local tax rate for taxes payable in 1998.

Subd. 3. [DUTIES OF COMMISSIONER.] The commissioner of revenue shall determine each qualifying county's aid amount. If the sum of the aid amounts for all qualifying counties exceeds the appropriation limit, the commissioner shall proportionately reduce each county's aid amount so that the sum of county aid amounts is equal to the appropriation limit. The commissioner shall notify each county of its flood loss aid amount by August 15 of the assessment year. The commissioner shall make payments to each county on or before July 20 of the taxes payable year corresponding to the assessment year.

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Subd. 4. [APPROPRIATION.] An amount necessary to fund the aid amounts under this section is annually appropriated from the general fund to the commissioner of revenue in fiscal years 2000, 2001, and 2002, for calendar years 1999, 2000, and 2001. The maximum amount of the appropriation is limited to $1,700,000 for fiscal year 2000 and $1,500,000 per year for fiscal years 2001 and 2002. In addition, the amount of the appropriation under Laws 1997, Second Special Session chapter 2, section 9, that the commissioner determines will not be spent for the programs under that section is available to pay the aid amounts under this section.

Sec. 11. [273.80] [DISTRESSED HOMESTEAD REINVESTMENT EXEMPTION.]

Subdivision 1. [DEFINITIONS.] For purposes of this section, the following terms shall have the meanings given.

"Substantially condition deficient" means that repairs estimated to cost at least $20,000 are necessary to restore a house to sound operating condition, according to prevailing costs of home improvements for the area.

"Sound operating condition" means that a home meets minimal health and safety standards for residential occupancy under applicable housing or building codes.

"Residential rehabilitation consultant" means a person who is employed by a housing services organization recognized by resolution of the city council of the city in which the property is located, and who has been trained in residential housing rehabilitation.

"Census tract" means a tract defined for the 1990 federal census.

Subd. 2. [ELIGIBILITY.] An owner-occupied, detached, single-family dwelling is eligible for treatment under this section if it:

(1) is located in a city of the first class;

(2) is located in a census tract where the median value of owner-occupied homes is less than 80 percent of the median value of owner-occupied homes for the entire city, according to the 1998 assessment;

(3) has an estimated market value less than 60 percent of the median value of owner-occupied homes for the entire city, according to the 1998 assessment; and

(4) has been declared to be substantially condition deficient, by a residential rehabilitation consultant.

Subd. 3. [QUALIFICATION.] A home which meets the eligibility requirements of subdivision 2 before May 1, 2003, qualifies for the property tax exemption under subdivision 4 after a residential rehabilitation consultant certifies that the home is in sound operating condition, and that all permits necessary to make the repairs were obtained. An owner need not occupy the dwelling while the necessary repairs are being done, provided that the property is occupied prior to granting the exemption under subdivision 4. All or a part of the repairs necessary to restore the house to sound operating conditions may be done prior to the owner purchasing the property, if those repairs are done by or for a 501(c)(3) nonprofit organization.

Subd. 4. [PROPERTY TAX EXEMPTION.] A home qualifying under subdivision 3 is exempt from all property taxes on the land and buildings for taxes payable for five consecutive years following its certification under subdivision 3, if the property is owned and occupied by the same person who owned it when the home was certified as substantially condition deficient or by the first purchaser from the 501(c)(3) nonprofit organization that repaired the property. To be effective beginning with taxes payable in the following year, the certification must be made by September 1.

Subd. 5. [ASSESSMENT; RECORD.] The assessor may require whatever information is necessary to determine eligibility for the tax exemption under this section. During the time that the property is exempt, the assessor shall continue to value the property and record its current value on the tax rolls.

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Sec. 12. Minnesota Statutes 1997 Supplement, section 275.065, subdivision 3, is amended to read:

Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The county auditor shall prepare and the county treasurer shall deliver after November 10 and on or before November 24 each year, by first class mail to each taxpayer at the address listed on the county's current year's assessment roll, a notice of proposed property taxes.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes each taxing authority proposes to collect for taxes payable the following year. In the case of a town, or in the case of the state determined portion of the school district levy, the final tax amount will be its proposed tax. The notice must clearly state that each taxing authority, including regional library districts established under section 134.201, and including the metropolitan taxing districts as defined in paragraph (i), but excluding all other special taxing districts and towns, will hold a public meeting to receive public testimony on the proposed budget and proposed or final property tax levy, or, in case of a school district, on the current budget and proposed property tax levy. It must clearly state the time and place of each taxing authority's meeting and an address where comments will be received by mail.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used for computing property taxes payable in the following year and for taxes payable in the current year as each appears in the records of the county assessor on November 1 of the current year; and, in the case of residential property, whether the property is classified as homestead or nonhomestead. The notice must clearly inform taxpayers of the years to which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, state determined school tax net of the education homestead credit under section 273.1382, voter approved school levy, other local school levy, and the sum of the special taxing districts, and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year;

(ii) the tax change due to spending factors, defined as the proposed tax minus the constant spending tax amount;

(iii) the tax change due to other factors, defined as the constant spending tax amount minus the actual current year tax; and

(iv) the proposed tax amount.

In the case of a town or the state determined school tax, the final tax shall also be its proposed tax unless the town changes its levy at a special town meeting under section 365.52. If a school district has certified under section 124A.03, subdivision 2, that a referendum will be held in the school district at the November general election, the county auditor must note next to the school district's proposed amount that a referendum is pending and that, if approved by the voters, the tax amount may be higher than shown on the notice. In the case of the city of Minneapolis, the levy for the Minneapolis library board and the levy for Minneapolis park and recreation shall be listed separately from the remaining amount of the city's levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies, the proposed tax levy on the captured value or the proposed tax levy on the tax capacity subject to the areawide tax must each be stated separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under the senior citizens' property tax deferral program under chapter 290B is the total amount of property tax before subtraction of the deferred property tax amount.

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(e) The notice must clearly state that the proposed or final taxes do not include the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified, including bond referenda, school district levy referenda, and levy limit increase referenda;

(3) amounts necessary to pay cleanup or other costs due to a natural disaster occurring after the date the proposed taxes are certified;

(4) amounts necessary to pay tort judgments against the taxing authority that become final after the date the proposed taxes are certified; and

(5) the contamination tax imposed on properties which received market value reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or the county treasurer to deliver the notice as required in this section does not invalidate the proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as nonhomestead, and satisfactory documentation is provided to the county assessor by the applicable deadline, and the property qualifies for the homestead classification in that assessment year, the assessor shall reclassify the property to homestead for taxes payable in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within three days of receipt of the notice, whichever is later. A taxpayer may notify the county treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special taxing districts" means the following taxing districts in the seven-county metropolitan area that levy a property tax for any of the specified purposes listed below:

(1) metropolitan council under section 473.132, 473.167, 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;

(2) metropolitan airports commission under section 473.667, 473.671, or 473.672; and

(3) metropolitan mosquito control commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A shall be included with the appropriate county's levy and shall be discussed at that county's public hearing.

(j) If a statutory or home rule charter city or a town has exercised the local levy option provided by section 473.388, subdivision 7, it may include in the notice of its proposed taxes the amount of its proposed taxes attributable to its exercise of the option. In the first year of the city or town's exercise of this option, the statement shall include an estimate of the reduction of the metropolitan council's tax on the parcel due to exercise of that option. The metropolitan council's levy shall be adjusted accordingly.

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Sec. 13. Minnesota Statutes 1997 Supplement, section 275.065, subdivision 6, is amended to read:

Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] (a) For purposes of this section, the following terms shall have the meanings given:

(1) "Initial hearing" means the first and primary hearing held to discuss the taxing authority's proposed budget and proposed property tax levy for taxes payable in the following year, or, for school districts, the current budget and the proposed property tax levy for taxes payable in the following year.

(2) "Continuation hearing" means a hearing held to complete the initial hearing, if the initial hearing is not completed on its scheduled date.

(3) "Subsequent hearing" means the hearing held to adopt the taxing authority's final property tax levy, and, in the case of taxing authorities other than school districts, the final budget, for taxes payable in the following year.

(b) Between November 29 and December 20, the governing bodies of a city that has a population over 500, county, metropolitan special taxing districts as defined in subdivision 3, paragraph (i), and regional library districts shall each hold an initial public hearing to discuss and seek public comment on its final budget and property tax levy for taxes payable in the following year, and the governing body of the school district shall hold an initial public hearing to review its current budget and proposed property tax levy for taxes payable in the following year. The metropolitan special taxing districts shall be required to hold only a single joint initial public hearing, the location of which will be determined by the affected metropolitan agencies.

(c) The initial hearing must be held after 5:00 p.m. if scheduled on a day other than Saturday. No initial hearing may be held on a Sunday.

(d) At the initial hearing under this subdivision, the percentage increase in property taxes proposed by the taxing authority, if any, and the specific purposes for which property tax revenues are being increased must be discussed. During the discussion, the governing body shall hear comments regarding a proposed increase and explain the reasons for the proposed increase. The public shall be allowed to speak and to ask questions. At the public hearing, the school district must also provide and discuss information on the distribution of its revenues by revenue source, and the distribution of its spending by program area.

(e) If the initial hearing is not completed on its scheduled date, the taxing authority must announce, prior to adjournment of the hearing, the date, time, and place for the continuation of the hearing. The continuation hearing must be held at least five business days but no more than 14 business days after the initial hearing. A continuation hearing may not be held later than December 20 except as provided in paragraphs (f) and (g). A continuation hearing must be held after 5:00 p.m. if scheduled on a day other than Saturday. No continuation hearing may be held on a Sunday.

(f) The governing body of a county shall hold its initial hearing on the ~~second Tuesday~~ first Thursday in December each year, and may hold additional initial hearings on other dates before December 20 if necessary for the convenience of county residents. If the county needs a continuation of its hearing, the continuation hearing shall be held on the third Tuesday in December. If the third Tuesday in December falls on December 21, the county's continuation hearing shall be held on Monday, December 20.

(g) The metropolitan special taxing districts shall hold a joint initial public hearing on the first ~~Monday~~ Wednesday of December. A continuation hearing, if necessary, shall be held on the second ~~Monday~~ Wednesday of December even if that second ~~Monday~~ Wednesday is after December 10.

(h) The county auditor shall provide for the coordination of initial and continuation hearing dates for all school districts and cities within the county to prevent conflicts under clauses (i) and (j).

(i) By August 10, each school board and the board of the regional library district shall certify to the county auditors of the counties in which the school district or regional library district is located the dates on which it elects to hold its initial hearing and any continuation hearing. If a school board or regional library district does not certify these dates by August 10, the auditor will assign the initial and continuation hearing dates. The dates elected or assigned must not conflict with the initial and continuation hearing dates of the county or the metropolitan special taxing districts.

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(j) By August 20, the county auditor shall notify the clerks of the cities within the county of the dates on which school districts and regional library districts have elected to hold their initial and continuation hearings. At the time a city certifies its proposed levy under subdivision 1 it shall certify the dates on which it elects to hold its initial hearing and any continuation hearing. Until September 15, the first and second Mondays of December are reserved for the use of the cities. If a city does not certify ~~these~~ its hearing dates by September 15, the auditor shall assign the initial and continuation hearing dates. The dates elected or assigned for the initial hearing must not conflict with the initial hearing dates of the county, metropolitan special taxing districts, regional library districts, or school districts within which the city is located. To the extent possible, the dates of the city's continuation hearing should not conflict with the continuation hearing dates of the county, metropolitan special taxing districts, regional library districts, or school districts within which the city is located. This paragraph does not apply to cities of 500 population or less.

(k) The county initial hearing date and the city, metropolitan special taxing district, regional library district, and school district initial hearing dates must be designated on the notices required under subdivision 3. The continuation hearing dates need not be stated on the notices.

(m) The property tax levy certified under section 275.07 by a city of any population, county, metropolitan special taxing district, regional library district, or school district must not exceed the proposed levy determined under subdivision 1, except by an amount up to the sum of the following amounts:

(1) the amount of a school district levy whose voters approved a referendum to increase taxes under section 124.82, subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 2, after the proposed levy was certified;

(2) the amount of a city or county levy approved by the voters after the proposed levy was certified;

(3) the amount of a levy to pay principal and interest on bonds approved by the voters under section 475.58 after the proposed levy was certified;

(4) the amount of a levy to pay costs due to a natural disaster occurring after the proposed levy was certified, if that amount is approved by the commissioner of revenue under subdivision 6a;

(5) the amount of a levy to pay tort judgments against a taxing authority that become final after the proposed levy was certified, if the amount is approved by the commissioner of revenue under subdivision 6a;

(6) the amount of an increase in levy limits certified to the taxing authority by the commissioner of children, families, and learning or the commissioner of revenue after the proposed levy was certified; and

(7) the amount required under section 124.755.

(n) This subdivision does not apply to towns and special taxing districts other than regional library districts and metropolitan special taxing districts.

(o) Notwithstanding the requirements of this section, the employer is required to meet and negotiate over employee compensation as provided for in chapter 179A.

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Sec. 14. Minnesota Statutes 1996, section 275.07, is amended by adding a subdivision to read:

Subd. 5. [REVISED FINAL LEVY.] (a) If the final levy of a taxing jurisdiction certified to the county auditor is incorrect due to an error in the deduction of the aid received under section 273.1398, subdivision 2, in determining the certified levy as required under subdivision 1, the taxing jurisdiction may apply to the commissioner of revenue to increase the levy and recertify it in the correct amount. The commissioner must receive the request by January 2.

(b) If the commissioner determines that the requirements of paragraph (a) have been met, the commissioner shall notify the taxing jurisdiction that the revised final levy has been approved. Upon receipt of the approval, but no later than January 15, the governing body of the taxing jurisdiction shall adopt the revised final levy and the taxing jurisdiction shall recertify the revised final levy to the county auditor. The county auditor shall use the revised final levy to compute the tax rate for the taxing jurisdiction.

(c) The county auditor shall report to the commissioner of revenue the revised final levy used to determine the tax rates for the taxing jurisdiction. The provisions of section 275.065, subdivisions 6, 6a, and 7 do not apply to the revised final levy for the taxing jurisdiction certified under this section.

(d) The taxing jurisdiction must publish in an official newspaper of general circulation in the taxing jurisdiction a notice of its revised final levy. The notice shall contain examples of the tax impact of the revised final levy on homestead, apartment, and commercial classes of property in the taxing jurisdiction. The county auditor shall assist the taxing jurisdiction in preparing the examples for the publication.

Sec. 15. Minnesota Statutes 1997 Supplement, section 287.08, is amended to read:

287.08 [TAX, HOW PAYABLE; RECEIPTS.]

(a) The tax imposed by sections 287.01 to 287.12 shall be paid to the treasurer of the county in which the mortgaged land or some part thereof is situated at or before the time of filing the mortgage for record or registration. The treasurer shall endorse receipt on the mortgage, countersigned by the county auditor, who shall charge the amount to the treasurer and such receipt shall be recorded with the mortgage, and such receipt of the record thereof shall be conclusive proof that the tax has been paid to the amount therein stated and authorize any county recorder to record the mortgage. Its form, in substance, shall be "registration tax hereon of . . . . . . . . . . . . . . . . . . . . . dollars paid." If the mortgages be exempt from taxation the endorsement shall be "exempt from registration tax," to be signed in either case by the treasurer as such, and in case of payment to be countersigned by the auditor. In case the treasurer shall be unable to determine whether a claim of exemption should be allowed, the tax shall be paid as in the case of a taxable mortgage.

(b) Upon written application of the taxpayer, the county treasurer may refund in whole or in part any tax which has been erroneously paid, or a person having paid a mortgage registry tax amount may seek a refund of such tax, or other appropriate relief, by bringing an action in tax court in the county in which the tax was paid, within 60 days of the payment. The action is commenced by the serving of a petition for relief on the county treasurer, and by filing a copy with the court. The county attorney shall defend the action. The county treasurer shall notify the treasurer of each county that has or would receive a portion of the tax as paid.

(c) If the county treasurer determines a refund should be paid, or if a refund is ordered, the county treasurer of each county that actually received a portion of the tax shall immediately pay a proportionate share of three percent of the refund using any available county funds. The county treasurer of each county which received, or would have received, a portion of the tax shall also pay their county's proportionate share of the remaining 97 percent of the court-ordered refund on or before the tenth day of the following month using solely the mortgage registry tax funds that would be paid to the commissioner of revenue on that date under section 287.12. If the funds on hand under this procedure are insufficient to fully fund 97 percent of the court-ordered refund, the county treasurer of the county in which the action was brought shall file a claim with the commissioner of revenue under section 16A.48 for the remaining portion of 97 percent of the refund, and shall pay over the remaining portion upon receipt of a warrant from the state issued pursuant to the claim.

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(d) When any such mortgage covers real property situate in more than one county in this state the whole of such tax shall be paid to the treasurer of the county where the mortgage is first presented for record or registration, and the payment shall be receipted and countersigned as above provided. If the principal debt or obligation secured by such a multiple county mortgage exceeds $1,000,000, the tax shall be divided and paid over by the county treasurer receiving the same, on or before the tenth day of each month after receipt thereof, to the county or counties entitled thereto in the ratio which the market value of the real property covered by the mortgage in each county bears to the market value of all the property described in the mortgage. In making such division and payment the county treasurer shall send therewith a statement giving the description of the property described in the mortgage and the market value of the part thereof situate in each county. For the purpose aforesaid, the treasurer of any county may require the treasurer of any other county to certify to the former the market valuation of any tract of land in any such mortgage.

Sec. 16. [365A.095] [DISSOLUTION.]

A petition signed by at least 75 percent of the property owners in the territory of the subordinate service district requesting the removal of the district may be presented to the town board. Within 30 days after the town board receives the petition, the town clerk shall determine the validity of the signatures on the petition. If the requisite number of signatures are certified as valid, the town board must hold a public hearing on the petitioned matter. Within 30 days after the end of the hearing, the town board must decide whether to discontinue the subordinate service district, continue as it is, or take some other action with respect to it.

Sec. 17. Minnesota Statutes 1996, section 462.396, subdivision 2, is amended to read:

Subd. 2. [BUDGET; HEARING; LEVY LIMITS.] On or before August 20 each year, the commission shall submit its proposed budget for the ensuing calendar year showing anticipated receipts, disbursements and ad valorem tax levy with a written notice of the time and place of the public hearing on the proposed budget to each county auditor and municipal clerk within the region and those town clerks who in advance have requested a copy of the budget and notice of public hearing. On or before September 15 each year, the commission shall adopt, after a public hearing held not later than September 15, a budget covering its anticipated receipts and disbursements for the ensuing year and shall decide upon the total amount necessary to be raised from ad valorem tax levies to meet its budget. After adoption of the budget and no later than September 15, the secretary of the commission shall certify to the auditor of each county within the region the county share of the tax, which shall be an amount bearing the same proportion to the total levy agreed on by the commission as the net tax capacity of the county bears to the net tax capacity of the region. (1) For taxes levied in ~~1990 and thereafter~~ 1998, the maximum amounts of levies made for the purposes of sections 462.381 to 462.398 are the following amounts~~, less the sum of regional planning grants from the commissioner to that region~~: for Region 1, $180,337; for Region 2, ~~$150,000~~ $180,000; for Region 3, $353,110; for Region 5, $195,865; for Region 6E, $197,177; for Region 6W, ~~$150,000~~ $180,000; for Region 7E, ~~$158,653~~ $180,000; for Region 8, $206,107; for Region 9, $343,572. (2) For taxes levied in 1999 and thereafter, the maximum amount that may be levied by each commission shall be the amount authorized in clause (1), or 103 percent of the amount levied in the previous year, whichever is greater. The auditor of each county in the region shall add the amount of any levy made by the commission within the limits imposed by this subdivision to other tax levies of the county for collection by the county treasurer with other taxes. When collected the county treasurer shall make settlement of the taxes with the commission in the same manner as other taxes are distributed to political subdivisions.

Sec. 18. Minnesota Statutes 1997 Supplement, section 462A.071, subdivision 2, is amended to read:

Subd. 2. [APPLICATION.] (a) In order to qualify for certification under subdivision 1, the owner or manager of the property must annually apply to the agency. The application must be in the form prescribed by the agency, contain the information required by the agency, and be submitted by the date and time specified by the agency. Beginning in calendar year 2000, the agency shall adopt procedures and deadlines for making application to permit certification of the units qualifying to the assessor by no later than April 1 of the assessment year.

(b) Each application must include:

(1) the property tax identification number;

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(2) the number, type, and size of units the applicant seeks to qualify as low-income housing under class 4d;

(3) the number, type, and size of units in the property for which the applicant is not seeking qualification, if any;

(4) a certification that the property has been inspected by a qualified inspector within the past three years and meets the minimum housing quality standards or is exempt from the inspection requirement under subdivision 4;

(5) a statement indicating the ~~building is~~ qualifying units in compliance with the income limits;

(6) an executed agreement to restrict rents meeting the requirements specified by the agency or executed leases for the units for which qualification as low-income housing as class 4d under section 273.13 is sought and the rent schedule; and

(7) any additional information the agency deems appropriate to require.

(c) The applicant must pay a per-unit application fee to be set by the agency. The application fee charged by the agency must approximately equal the costs of processing and reviewing the applications. The fee must be deposited in the ~~general~~ housing development fund.

Sec. 19. Minnesota Statutes 1997 Supplement, section 462A.071, subdivision 4, is amended to read:

Subd. 4. [MINIMUM HOUSING QUALITY STANDARDS.] (a) To qualify for taxation under class 4d under section 273.13, a unit must meet ~~both~~ the housing maintenance code of the local unit of government in which the unit is located, if such a code has been adopted, ~~and~~ or the housing quality standards adopted by the United States Department of Housing and Urban Development, if no local housing maintenance code has been adopted.

(b) In order to meet the minimum housing quality standards, a building must be inspected by an independent designated inspector at least once every three years. The inspector must certify that the building complies with the minimum standards. The property owner must pay the cost of the inspection.

(c) The agency may exempt from the inspection requirement housing units that are financed by a governmental entity and subject to regular inspection or other compliance checks with regard to minimum housing quality. Written certification must be supplied to show that these exempt units have been inspected within the last three years and comply with the requirements under the public financing or local requirements.

Sec. 20. Minnesota Statutes 1997 Supplement, section 462A.071, subdivision 6, is amended to read:

Subd. 6. [SECTION 8 ~~AND~~, TAX CREDIT, AND RURAL HOUSING SERVICE UNITS.] (a) The agency may deem units as meeting the requirements of section 273.126 and this section, if the units ~~either~~:

(1) are subject to a housing assistance payments contract under section 8 of the United States Housing Act of 1937, as amended; or

(2) are rent and income restricted units of a qualified low-income housing project receiving tax credits under section 42(g) of the Internal Revenue Code of 1986, as amended; or

(3) are financed by the Rural Housing Service of the United States Department of Agriculture and receive payments under the rental assistance program pursuant to section 521(a) of the Housing Act of 1949, as amended.

(b) The agency may certify these deemed units under subdivision 1 based on a simplified application procedure that verifies the unit's qualifications under paragraph (a).

Sec. 21. Minnesota Statutes 1997 Supplement, section 462A.071, subdivision 8, is amended to read:

Subd. 8. [PENALTIES.] (a) The penalties provided by this subdivision apply to each unit that received class 4d taxation for a year and failed to meet the requirements of section 273.126 and this section.

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(b) If the owner or manager does not comply with the rent restriction agreement, or does not comply with the income restrictions or, minimum housing quality standards, or the section 8 availability requirements, a penalty applies equal to the increased taxes that would have been imposed if the ~~property~~ unit had not been classified under class 4d for the year in which restrictions were violated, plus an additional amount equal to ten percent of the increased taxes. The provisions of section 279.03 apply to the amount of increased taxes that would have been imposed if a unit had not been classified under class 4d for the year in which restrictions were violated.

(c) If the agency finds that the violations were inadvertent and insubstantial, a penalty of $50 per unit per year applies in lieu of the penalty specified under paragraph (b). In order to qualify under this paragraph, violations of the minimum housing quality standards must be corrected within a reasonable period of time and rent charged in excess of the agreement must be rebated to the tenants.

(d) The agency may abate the penalties under this subdivision for reasonable cause.

(e) Penalties assessed under paragraph (c) are payable to the agency and must be deposited in the ~~general~~ housing development fund. If an owner or manager fails to timely pay a penalty imposed under paragraph (c), the agency may choose to:

(1) impose the penalty under paragraph (b); or

(2) certify the penalty under paragraph (c) to the auditor for collection as additional taxes.

The agency shall certify to the county auditor penalties assessed under paragraph (b) and clause (2). The auditor shall impose and collect the certified penalties as additional taxes which will be distributed to taxing districts in the same manner as property taxes on the property.

Sec. 22. Minnesota Statutes 1996, section 473.39, is amended by adding a subdivision to read:

Subd. 1e. [OBLIGATIONS.] In addition to the authority in subdivisions 1a, 1b, 1c, and 1d, the council may issue certificates of indebtedness, bonds, or other obligations under this section in an amount not exceeding $32,500,000, which may be used for capital expenditures as prescribed in the council's transit capital improvement program and for related costs, including the costs of issuance and sale of the obligations.

The metropolitan council, the city of St. Paul, and the Minnesota department of transportation shall jointly assess the feasibility of locating a bus storage facility near Mississippi and Cayuga Street and I-35E in St. Paul. If the metropolitan council determines feasibility, the first priority for siting must be at that location.

Sec. 23. Minnesota Statutes 1996, section 473.3915, subdivision 2, is amended to read:

Subd. 2. [REGULAR ROUTE TRANSIT SERVICE.] "Regular route transit service" means services as defined in section 473.385, subdivision 1, paragraph (b), with at least two scheduled runs per hour between 7:00 a.m. and 6:30 p.m., Monday to Friday, and regularly scheduled service on Saturday, Sunday, and holidays, and weekdays after 6:30 p.m. The two scheduled runs for buses leaving a replacement transit service transit hub need not be on the same route.

Sec. 24. Minnesota Statutes 1996, section 473.3915, subdivision 3, is amended to read:

Subd. 3. [TRANSIT ZONE.] "Transit zone" means: (1) the area within one-quarter of a mile of a route along which regular route transit service is provided that is also within the metropolitan urban service area, as determined by the council; or (2) the area within one-eighth of a mile around a replacement transit service transit hub. "Transit zone" includes any light rail transit route for which funds for construction have been committed.

Sec. 25. Minnesota Statutes 1996, section 475.58, subdivision 1, is amended to read:

Subdivision 1. [APPROVAL BY ELECTORS; EXCEPTIONS.] Obligations authorized by law or charter may be issued by any municipality upon obtaining the approval of a majority of the electors voting on the question of issuing the obligations, but an election shall not be required to authorize obligations issued:

(1) to pay any unpaid judgment against the municipality;

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(2) for refunding obligations;

(3) for an improvement or improvement program, which obligation is payable wholly or partly from the proceeds of special assessments levied upon property specially benefited by the improvement or by an improvement within the improvement program, or of taxes levied upon the increased value of property within a district for the development of which the improvement is undertaken, including obligations which are the general obligations of the municipality, if the municipality is entitled to reimbursement in whole or in part from the proceeds of such special assessments or taxes and not less than 20 percent of the cost of the improvement or the improvement program is to be assessed against benefited property or is to be paid from the proceeds of federal grant funds or a combination thereof, or is estimated to be received from such taxes within the district;

(4) payable wholly from the income of revenue producing conveniences;

(5) under the provisions of a home rule charter which permits the issuance of obligations of the municipality without election;

(6) under the provisions of a law which permits the issuance of obligations of a municipality without an election;

(7) to fund pension or retirement fund liabilities pursuant to section 475.52, subdivision 6;

(8) under a capital improvement plan under section 373.40; ~~and~~

(9) to fund facilities as provided in subdivision 3; and

(10) under sections 469.1813 to 469.1815 (property tax abatement authority bonds).

Sec. 26. Minnesota Statutes 1996, section 477A.14, is amended to read:

477A.14 [USE OF FUNDS.]

Forty percent of the total payment to the county shall be deposited in the county general revenue fund to be used to provide property tax levy reduction. The remainder shall be distributed by the county in the following priority:

(a) 37.5 cents for each acre of county-administered other natural resources land shall be deposited in a resource development fund to be created within the county treasury for use in resource development, forest management, game and fish habitat improvement, and recreational development and maintenance of county-administered other natural resources land. Any county receiving less than $5,000 annually for the resource development fund may elect to deposit that amount in the county general revenue fund;

(b) From the funds remaining, within 30 days of receipt of the payment to the county, the county treasurer shall pay each organized township 30 cents per acre of acquired natural resources land and 7.5 cents per acre of other natural resources land located within its boundaries. Payments for natural resources lands not located in an organized township shall be deposited in the county general revenue fund. Payments to counties and townships pursuant to this paragraph shall be used to provide property tax levy reduction, except that of the payments for natural resources lands not located in an organized township, the county may allocate the amount determined to be necessary for maintenance of roads in unorganized townships. Provided that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully fund the distribution provided for in this clause, the amount available shall be distributed to each township and the county general revenue fund on a pro rata basis; and

(c) Any remaining funds shall be deposited in the county general revenue fund. Provided that, if the distribution to the county general revenue fund exceeds $35,000, the excess shall be used to provide property tax levy reduction.

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Sec. 27. Laws 1971, chapter 773, section 1, as amended by Laws 1974, chapter 351, section 5, Laws 1976, chapter 234, sections 1 and 7, Laws 1978, chapter 788, section 1, Laws 1981, chapter 369, section 1, Laws 1983, chapter 302, section 1, Laws 1988, chapter 513, section 1, and Laws 1992, chapter 511, article 9, section 23, is amended to read:

Section 1. [ST. PAUL, CITY OF; CAPITAL IMPROVEMENT PROGRAM.]

Subdivision 1. Notwithstanding any provision of the charter of the city of St. Paul, the council of said city shall have power by a resolution adopted by five affirmative votes of all its members to authorize the issuance and sale of general obligation bonds of the city in the years stated and in the aggregate annual amounts not to exceed the limits prescribed in subdivision 2 of this section for the payment of which the full faith and credit of the city is irrevocably pledged.

Subd. 2. For each of the years through ~~1998~~ 2003, the city of St. Paul is authorized to issue bonds in the aggregate principal amount of ~~$8,000,000~~ $15,000,000 for each year; or in an amount equal to one-fourth of one percent of the assessors estimated market value of taxable property in St. Paul, whichever is greater, provided that no more than ~~$8,000,000~~ $15,000,000 of bonds is authorized to be issued in any year, unless St. Paul's local general obligation debt as defined in this section is less than six percent of market value calculated as of December 31 of the preceding year; but at no time shall the aggregate principal amount of bonds authorized exceed ~~$15,700,000 in 1992, $16,600,000 in 1993, $16,600,000 in 1994, $16,600,000 in 1995, $17,500,000 in 1996, $17,500,000 in 1997, and~~ $18,000,000 in 1998, $18,000,000 in 1999, $19,000,000 in 2000, $19,000,000 in 2001, $19,500,000 in 2002, and $20,000,000 in 2003.

Subd. 3. For purposes of this section, St. Paul's general obligation debt shall consist of the principal amount of all outstanding bonds of (1) the city of St. Paul, the housing and redevelopment authority of St. Paul, the civic center authority of St. Paul, and the port authority of St. Paul, for which the full faith and credit of the city or any of the foregoing authorities has been pledged; (2) Independent School District 625, for which the full faith and credit of the district has been pledged; and (3) the county of Ramsey, for which the full faith and credit of the county has been pledged, reduced by an amount equal to the principal amount of the outstanding bonds multiplied by a figure, the numerator of which is equal to the ~~assessed value~~ net tax capacity of property within the county outside of the city of St. Paul and the denominator of which is equal to the ~~assessed value~~ net tax capacity of the county.

There shall be deducted before making the foregoing computations the outstanding principal amount of all refunded bonds, all tax or aid anticipation certificates of indebtedness of the city, the authorities, the school district and the county for which the full faith and credit of the bodies has been pledged and all tax increment financed bonds which have not used, for the prior three consecutive years, general tax levies ~~or capitalized interest~~ to support annual principal and interest payments.

Sec. 28. Laws 1971, chapter 773, section 2, as amended by Laws 1978, chapter 788, section 2, Laws 1983, chapter 302, section 2, Laws 1988, chapter 513, section 2, and Laws 1992, chapter 511, article 9, section 24, is amended to read:

Sec. 2. The proceeds of all bonds issued pursuant to section 1 hereof shall be used exclusively for the acquisition, construction, and repair of capital improvements and, commencing in the year 1992 and notwithstanding any provision in Laws 1978, chapter 788, section 5, as amended, for redevelopment project activities as defined in Minnesota Statutes, section 469.002, subdivision 14, in accordance with Minnesota Statutes, section 469.041, clause (6). The amount of proceeds of bonds authorized by section 1 used for redevelopment project activities shall not exceed ~~$655,000 in 1992, $690,000 in 1993, $690,000 in 1994, $690,000 in 1995, $700,000 in 1996, $700,000 in 1997, and~~ $725,000 in 1998 or any later year.

None of the proceeds of any bonds so issued shall be expended except upon projects which have been reviewed, and have received a priority rating, from a capital improvements committee consisting of 18 members, of whom a majority shall not hold any paid office or position under the city of St. Paul. The members shall be appointed by the mayor, with at least four members from each Minnesota senate district located entirely within the city and at least two members from each senate district located partly within the city. Prior to making an appointment to a vacancy on the capital improvement budget committee, the mayor shall consult the legislators of the senate district in which the vacancy occurs. The priorities and recommendations of the committee shall be purely advisory, and no buyer of any bonds shall be required to see to the application of the proceeds.

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Sec. 29. Laws 1976, chapter 162, section 1, as amended by Laws 1982, chapter 474, section 1, Laws 1983, chapter 338, section 1, Laws 1989 First Special Session chapter 1, article 5, section 45, and Laws 1991, chapter 167, section 1, is amended to read:

Section 1. [RED RIVER OF THE NORTH WATERSHED; TAX BY WATERSHED DISTRICTS.]

Each watershed district located both within the counties of Kittson, Marshall, Polk, Pennington, Red Lake, Norman, Clay, Mahnomen, Clearwater, Roseau, Wilkin, Ottertail, Becker, Koochiching, Beltrami, Traverse, Grant, Big Stone, Stevens, and Itasca, ~~which district~~ and within the hydrologic basin of the Red River of the North that is a member of the Red River watershed management board, established by a joint powers agreement in accordance with Minnesota Statutes, section 471.59, may levy an ad valorem tax not to exceed 0.04836 percent of the taxable market value of all property within the district. This levy shall be in excess of any levy authorized by Minnesota Statutes, section 103D.905. The proceeds of one-half of this levy shall be credited to the district's construction fund and shall be used for the development, construction, and maintenance of projects and programs of benefit to the district. The proceeds of the remaining one-half of this levy shall be credited to the general fund of the Red River watershed management board and shall be used for funding the development, construction, and maintenance of projects and programs of benefit to the Red River basin. The Red River management board shall adopt criteria for member districts to follow in applying for funding from the board.

Sec. 30. Laws 1984, chapter 380, section 1, as amended by Laws 1994, chapter 505, article 6, section 27, is amended to read:

Section 1. [TAX.]

The Anoka county board may levy a tax on of not more than .01 percent of the taxable market value of taxable property located within the county ~~outside of~~ excluding any taxable property taxed by any city ~~in which is situated a~~ for the support of any free public library, to acquire, better, and construct county library buildings and to pay principal and interest on bonds issued for that purpose. The tax shall be disregarded in the calculation of levies or limits on levies provided by Minnesota Statutes, section 373.40, or other law.

Sec. 31. Laws 1984, chapter 380, section 2, is amended to read:

Sec. 2. [AUTHORIZATION.]

The Anoka county board may, by resolution adopted by a four-sevenths vote, issue and sell general obligation bonds of the county ~~in the amount of $9,000,000~~ in the manner provided in Minnesota Statutes, chapter 475, to acquire, better, and construct county library buildings. The total amount of bonds outstanding at any time shall not exceed $5,000,000. The county board, prior to the issuance of any bonds authorized by section 1 and after adopting the resolution as provided above in this section, shall adopt a resolution by majority vote of the county board stating the amount, purpose and, in general, the security to be provided for the bonds, and shall publish the resolution once each week for two consecutive weeks in the medium of official and legal publication of the county. The bonds may be issued without the submission of the question of their issuance to the voters of the county library district unless within 21 days after the second publication of the resolution a petition requesting a referendum, signed by at least ten percent of the registered voters of the county, is filed with the county auditor. If a petition is filed, bonds may be issued unless disapproved by a majority of the voters of the county library district, voting on the question of their issuance at a regular or special election. The bonds shall not be subject to the requirements of Minnesota Statutes, sections 475.57 to 475.59. The maturity years and amounts and interest rates of each series of bonds shall be fixed so that the maximum amount of principal and interest to become due in any year, on the bonds of that series and of all outstanding series issued by or for the purposes of libraries, shall not exceed an amount equal to ~~three-fourths of a mill times the assessed value~~ the lesser of (i) .01 percent of the taxable market value of all taxable property in the county, ~~which was not~~ excluding any taxable property taxed ~~in 1981~~ by any city for the support of any free public library, ~~as last finally equalized before the issuance of the series~~ or (ii) $1,250,000. When the tax levy authorized in this ~~sections~~ section is collected, it shall be appropriated and credited to a debt service fund for the bonds. The tax levy for the debt service fund under Minnesota Statutes, section 475.61 shall be reduced by the amount available or reasonably anticipated to be available in the fund to make payments otherwise payable from the levy pursuant to section 475.61.

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Sec. 32. Laws 1992, chapter 511, article 2, section 52, as amended by Laws 1997, chapter 231, article 2, section 50, is amended to read:

Sec. 52. [WATERSHED DISTRICT LEVIES.]

(a) The Nine Mile Creek watershed district, the Riley-Purgatory Bluff Creek watershed district, the Minnehaha Creek watershed district, the Coon Creek watershed district, and the Lower Minnesota River watershed district may levy in 1992 and thereafter a tax not to exceed $200,000 on property within the district for the administrative fund. The levy authorized under this section is in lieu of Minnesota Statutes, section 103D.905, subdivision 3. The administrative fund shall be used for the purposes contained in Minnesota Statutes, section 103D.905, subdivision 3. The board of managers shall make the levy for the administrative fund in accordance with Minnesota Statutes, section 103D.915.

(b) The Wild Rice watershed district may levy, for taxes payable in 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, and 2002, an ad valorem tax not to exceed $200,000 on property within the district for the administrative fund. The additional $75,000 above the amount authorized in Minnesota Statutes, section 103D.905, subdivision 3, must be used for (1) costs incurred in connection with the development and maintenance of cost-sharing projects with the United States Army Corps of Engineers or (2) administrative costs associated with 1997 flood mitigation projects. The board of managers shall make the levy for the administrative fund in accordance with Minnesota Statutes, section 103D.915.

Sec. 33. Laws 1994, chapter 587, article 11, is amended by adding a section to read:

Sec. 5a. [POLITICAL SUBDIVISION.]

For purposes of Minnesota Statutes, section 275.066, the Chisholm/Hibbing airport authority is a political subdivision of the state of Minnesota.

Sec. 34. Laws 1997, chapter 231, article 2, section 63, subdivision 1, is amended to read:

Subdivision 1. [IMPROVEMENTS MADE TO CERTAIN APARTMENTS.] (a) Notwithstanding any other provisions to the contrary, the market value increase resulting from improvements made after the effective date of this act and prior to January 1, ~~1999~~ 2000, to qualifying property located in the city of Brooklyn Center, Richfield, or St. Louis Park shall be excluded for assessment purposes under the conditions provided in this subdivision.

(b) "Qualifying property" means property that meets all of the following criteria:

(1) the building is at least 30 years old at the time of the improvements;

(2) the building is residential real estate of four or more units and is classified under Minnesota Statutes, section 273.13, subdivision 25, as class 4a, 4c, or 4d property; and

(3) the total cost of the qualifying improvements exceeds ~~$5,000~~ $2,500 per unit.

(c) A building permit must have been issued prior to the commencement of the improvements. Only improvements to the residential structure and garages qualify under this subdivision. The assessor shall require an application, including, if unknown by the assessor, documentation of the age of the building from the owner. The application may be filed subsequent to the date of the building permit provided that the application is filed prior to the next assessment date.

(d) If the property qualifies under this subdivision, the assessor shall note the qualifying value of the improvements on the property's record and that amount shall be subtracted from the qualifying property's market value for the five assessment years immediately following the year in which the improvements were completed, at which time the assessor shall determine the property's estimated market value, and 20 percent of the qualifying value shall be added back in each of the next five subsequent assessment years. The assessor may require from the owner any documentation necessary to verify that the cost of improvements exceed the ~~$5,000~~ $2,500 per unit minimum.

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Sec. 35. Laws 1997, chapter 231, article 2, section 68, subdivision 1, is amended to read:

Subdivision 1. [APPLICATION.] To facilitate a review by the ~~1998~~ legislature of the property taxation of elderly assisted living facilities and the development of standards and criteria for the taxation of these facilities, this section:

(1) requires the commissioner of revenue to conduct a survey of the tax status of these facilities under subdivision 2; and

(2) prohibits changes in assessment practices and policies regarding these facilities under subdivision 3.

Sec. 36. Laws 1997, chapter 231, article 2, section 68, subdivision 3, is amended to read:

Subd. 3. [MORATORIUM ON CHANGES IN ASSESSMENT PRACTICES.] (a) An assessor may not change the current practices or policies used generally in assessing elderly assisted living facilities.

(b) An assessor may not change the assessment of an existing elderly assisted living facility, unless the change is made as a result of a change in ownership, occupancy, or use of the facility. This paragraph does not apply to:

(1) a facility that was constructed during calendar year 1997 or 1998;

(2) a facility that was converted to an elderly assisted living facility during calendar year 1997 or 1998; or

(3) a change in market value.

(1) the enactment of legislation establishing criteria for the property taxation of elderly assisted living facilities; or

(2) ~~final~~ adjournment of the ~~1998 legislature~~ 1999 regular legislative session.

Sec. 37. [CHILD CARE FACILITY.]

In connection with the capital expenditure authority in Minnesota Statutes, section 473.39, subdivision 1e, the metropolitan council shall consider incorporating in a new transfer garage a child care facility to assist in the recruitment and retention of metropolitan transit drivers.

Sec. 38. [QUALIFIED PROPERTY.]

A contiguous property located within a county adjacent to a county containing a city of the first class and within the metropolitan area as defined in Minnesota Statutes, section 473.121, shall be valued and classified under sections 39 and 40, provided it meets the following conditions:

(1) the property does not exceed 60 acres;

(2) the property includes a sculpture garden open to the public, either free of charge or for a nominal admission fee;

(3) the property includes a system of internal roads and paths for pedestrian use and an amphitheater for live artistic performances;

(4) the property is used for a summer youth art camp;

(5) the property is used for seminars for aspiring and professional artists;

(6) the property includes the homestead of the owner; and

(7) the property has been owned by the owner for at least 40 years.

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Sec. 39. [CLASSIFICATION.]

Notwithstanding any law to the contrary, a property qualifying under section 38 shall be classified as class 2a property under Minnesota Statutes, section 273.13, subdivision 23.

Sec. 40. [VALUATION.]

Notwithstanding Minnesota Statutes, section 273.11, subdivision 1, the land qualifying under section 38 shall be valued as if it were agricultural property, using a per acre valuation equal to the average per acre valuation of similar agricultural property within the county.

Sec. 41. [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.]

Notwithstanding Minnesota Statutes, chapter 429, a city may defer the payment of any special assessment levied against a property qualifying under section 38 as determined by the city.

Sec. 42. [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED TAXES.]

Subdivision 1. [ADDITIONAL TAX.] The assessor shall make a separate determination of the market value and net tax capacity of a property qualifying under section 38 as if sections 39 and 40 did not apply. The tax based upon the appropriate local tax rate applicable to such property in the taxing district shall be recorded on the property assessment records.

Subd. 2. [RECAPTURE.] (a) Property or any portion thereof qualifying under section 38 is subject to additional taxes if (1) ownership of the property is transferred to anyone other than the spouse or child of the current owner, or (2) the current owner or the spouse or child of the current owner has not conveyed or entered into a contract before July 1, 2002, to convey the property to a nonprofit foundation or corporation created to own and operate the property as an art park providing the services included in section 38, clauses (2) to (5).

(b) The additional taxes are imposed at the earlier of (1) the year following transfer of ownership to anyone other than the spouse or child of the current owner or a nonprofit foundation or corporation created to own and operate the property as an art park, or (2) for taxes payable in 2003. The additional taxes are equal to the difference between the taxes determined under sections 39 and 40 and the amount determined under subdivision 1 for all years that the property qualified under section 38. The additional taxes must be extended against the property on the tax list for the current year; provided, however, that no interest or penalties may be levied on the additional taxes if timely paid.

Subd. 3. [CURRENT OWNER.] For purposes of this section, "current owner" means the owner of property qualifying under section 38 on the date of final enactment of this act or that owner's spouse or child.

Subd. 4. [NONPROFIT FOUNDATION OR CORPORATION.] For purposes of this act, "nonprofit foundation or corporation" means a nonprofit entity created to own and operate the property as an art park providing the services included in section 38, clauses (2) to (5).

Sec. 43. [WATER SUPPLY PROJECTS OF MORE THAN $15,000,000.]

Notwithstanding Minnesota Statutes, chapter 410, or Minneapolis city charter, chapter 15, section 9, the city of Minneapolis and its board of estimate and taxation may issue and sell bonds or incur other indebtedness for a capital improvement project related to water supply that in all phases from inception to completion exceeds $15,000,000 without submitting the question of issuing such obligations or incurring such indebtedness to the electorate for approval.

Sec. 44. [JENSEN-NOPEMING SPECIAL DISTRICT.]

Subdivision 1. [SPECIAL DISTRICT MAY BE ESTABLISHED.] The counties of Carlton and St. Louis may establish the Jensen-Nopeming Special District with authority to levy a property tax not greater than $200,000 annually for the capital costs of the Chris Jensen Nursing Home and the Nopeming Nursing Home. The tax may be levied on taxable

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property in the territory described in Minnesota Statutes, section 458D.02, subdivision 2. The district shall be governed by a board composed of those members of the St. Louis county board who represent territory subject to taxation by the district and two members of the Carlton county board elected by the Carlton county board to serve terms provided by the board. The proceeds of the tax may be used only for capital costs of the nursing homes. As provided by Minnesota Statutes, chapter 475, debt may be incurred by the district for capital costs of the nursing home and the proceeds of the tax may be pledged to secure the debt. The district may enter into appropriate agreements with either county to facilitate the incurrence of debt or otherwise discharge its duties under this section.

By April 15, 1999, the St. Louis county board shall complete a study examining the long-term profitability of Chris Jensen and Nopeming nursing homes. Upon completion of the study, the board must adopt a plan to eliminate any future property tax revenue dedicated to operating costs of the two facilities.

Subd. 2. [LOCAL APPROVAL.] Subdivision 1 is effective the day after the county boards of Carlton and St. Louis counties comply with the provisions of Minnesota Statutes, section 645.021, subdivision 3.

Sec. 45. [CITIES OF MINNEAPOLIS AND ST. PAUL; TRANSIT ZONE TAX.]

Subdivision 1. [DEFINITIONS.] (a) For purposes of this section, the following terms have the meanings given.

(b) "City" is the city of Minneapolis or the city of St. Paul.

(1) for the city of Minneapolis, the geographic area in which the city may impose the tax under Laws 1986, chapter 396, section 4, as amended by Laws 1986, chapter 400, section 44; and

(2) for the city of St. Paul, taxing wards numbers 3 and 4.

(d) "Purchase agreement" includes an option agreement to acquire a leasehold interest that includes an option to purchase.

(e) "Transit zone tax capacity" means the reduction in net tax capacity of transit zone property in the downtown taxing district that result from the reduced class rate under the provisions of Minnesota Statutes, section 273.13, subdivision 24, paragraph (c), or a successor provision. Transit zone tax capacity is determined without regard to captured or original net tax capacity under Minnesota Statutes, section 469.177, or to the distribution or contribution value under Minnesota Statutes, section 473F.08.

Subd. 2. [EXEMPTION.] The tax under this section does not apply to:

(1) property for which a building permit was issued before December 31, 1998; or

(2) property for which a building permit was issued before June 30, 2001, if:

(i) at least 50 percent of the land on which the structure is to be built has been acquired or is the subject of signed purchase agreements or signed options as of March 15, 1998, by the entity that proposes construction of the project or an affiliate of the entity;

(ii) signed agreements have been entered into with one entity or with affiliated entities to lease for the account of the entity or affiliated entities at least 50 percent of the square footage of the structure or the owner of the structure will occupy at least 50 percent of the square footage of the structure; and

(iii)(A) the project proposer has submitted the completed data portions of an environmental assessment worksheet by December 31, 1998, or (B) a notice of determination of adequacy of an environmental impact statement has been published by April 1, 1999, or (C) an alternative urban areawide review has been completed by April 1, 1999; or

(3) property for which a building permit is issued before July 30, 1999, if:

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(i) at least 50 percent of the land on which the structure is to be built has been acquired or is the subject of signed purchase agreements as of March 31, 1998, by the entity that proposes construction of the project or an affiliate of the entity;

(ii) a signed agreement has been entered into between the building developer and a tenant to lease for its own account at least 200,000 square feet of space in the building;

(iii) a signed letter of intent is entered into by July 1, 1998, between the building developer and the tenant to lease the space for its own account; and

(iv) the environmental review process required by state law was commenced by December 31, 1998; or

(4)(i) property a portion of the land on which the structure is to be built is the subject of condemnation proceedings as of March 15, 1998; and

Subd. 3. [AUTHORITY TO IMPOSE.] (a) The city may, by ordinance, impose a tax on transit zone tax capacity within the downtown taxing district.

(b) The rate of the tax equals the sum of the ad valorem property tax rates imposed by the county, city, school district, and special taxing districts in the city that apply for the taxable year.

(d) The tax imposed is not included in the calculation of levies or levy limits.

Subd. 4. [COLLECTION AND ADMINISTRATION.] Any tax imposed under this section is payable at the same time and in the same manner and must be collected and imposed as provided by general law for ad valorem taxes. Any tax not paid by the due date is subject to the same penalty and interest as ad valorem taxes not paid by the due date.

Subd. 5. [USE OF REVENUES.] The revenues from the tax imposed under this section must be deposited in a separate account on the city's books and records. Money in the account may only be used in the downtown taxing district to provide transit services or transit related projects that directly increase the feasibility of existing or proposed transit system services or improvements.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day following final enactment and applies to the cities of Minneapolis and St. Paul under the provisions of Minnesota Statutes, section 645.023.

Sec. 46. [APPLICATION.]

Sections 23 and 24 apply in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

Sec. 47. [REPEALER.]

Minnesota Statutes 1996, section 365A.09, is repealed.

Sec. 48. [EFFECTIVE DATE.]

Section 1, clause (30), is effective for the 1998 assessment for taxes payable in 1999 through assessment year 2004, taxes payable in 2005, and section 1, clause (31), is effective beginning with the 1998 assessment payable 1999 and thereafter, except that for the 1998 assessment, the filing requirement under Minnesota Statutes, section 272.025, subdivision 3, for both clauses (30) and (31) shall be 60 days after enactment of this act. Sections 2, 29, and 43 are

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effective the day following final enactment. Sections 3 to 5 and 8 are effective for the 1998 assessment, taxes payable in 1999 and thereafter. Sections 6 and 7 are effective for real estate sales and transfers occurring on or after July 1, 1998. Sections 9, 18, paragraph (c), and 19 to 21 are effective beginning for property taxes assessed in 1998 and payable in 1999. Section 10 is effective for aids payable in 1999, 2000, and 2001. Section 12 is effective beginning with notices prepared in 1998 for taxes payable in 1999. Section 13 is effective for public hearings held in 1998 and thereafter. Sections 14, 23, 24, and 46 are effective for taxes payable in 1999 and thereafter. Section 15 is effective for mortgages recorded or registered on or after July 1, 1998. Section 25 confirms the original intent of the legislature in enacting the abatement law and is effective retroactively to the same time Minnesota Statutes, sections 469.1813 to 469.1815, became effective. Section 26 is effective for payments to counties after June 30, 1998. Sections 27 and 28 are effective upon compliance by the governing body of the city of St. Paul with Minnesota Statutes, section 645.021, subdivision 3. Sections 30 and 31 are effective the day after the chief clerical officer of Anoka county complies with Minnesota Statutes, section 645.021, subdivision 3. Sections 32 and 33 are effective for taxes levied in 1997, payable in 1998, and thereafter. Section 34 is effective for each of the cities of Brooklyn Center, Richfield, and St. Louis Park upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the governing body of that city. Sections 38 to 42 are effective beginning with taxes payable in 1998 and ending with taxes payable in 2003. Section 48, subdivision 1, is effective the day following final enactment.

An applicant for class 4d for taxes payable in 1999 may withdraw its application by June 1, 1998, if the provisions added to Minnesota Statutes, section 273.126, subdivision 3, by section 9, would require the applicant to increase the percent of units that must be made available for section 8 tenants.

GENERAL LEVY LIMITS AND STATE AIDS

Section 1. Minnesota Statutes 1997 Supplement, section 275.70, subdivision 5, is amended to read:

Subd. 5. [SPECIAL LEVIES.] "Special levies" means those portions of ad valorem taxes levied by a local governmental unit for the following purposes or in the following manner:

(1) to pay the costs of the principal and interest on bonded indebtedness or to reimburse for the amount of liquor store revenues used to pay the principal and interest due on municipal liquor store bonds in the year preceding the year for which the levy limit is calculated;

(2) to pay the costs of principal and interest on certificates of indebtedness issued for any corporate purpose except for the following:

(i) tax anticipation or aid anticipation certificates of indebtedness;

(ii) certificates of indebtedness issued under sections 298.28 and 298.282;

(iii) certificates of indebtedness used to fund current expenses or to pay the costs of extraordinary expenditures that result from a public emergency; or

(iv) certificates of indebtedness used to fund an insufficiency in tax receipts or an insufficiency in other revenue sources;

(3) to provide for the bonded indebtedness portion of payments made to another political subdivision of the state of Minnesota;

(4) to fund payments made to the Minnesota state armory building commission under section 193.145, subdivision 2, to retire the principal and interest on armory construction bonds;

(5) for unreimbursed expenses related to flooding that occurred during the first half of calendar year 1997, as allowed by the commissioner of revenue under section 275.74, paragraph (b);

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(6) for local units of government located in an area designated by the Federal Emergency Management Agency pursuant to a major disaster declaration issued for Minnesota by President Clinton after April 1, 1997, and before June 11, 1997, for the amount of tax dollars lost due to abatements authorized under section 273.123, subdivision 7, and Laws 1997, chapter 231, article 2, section 64, to the extent that they are related to the major disaster and to the extent that neither the state or federal government reimburses the local government for the amount lost;

(7) property taxes approved by voters which are levied against the referendum market value as provided under section 275.61;

(8) to fund matching requirements needed to qualify for federal or state grants or programs to the extent that either (i) the matching requirement exceeds the matching requirement in calendar year 1997, or (ii) it is a new matching requirement that didn't exist prior to 1998; ~~and~~

(9) to pay the expenses reasonably and necessarily incurred in preparing for or repairing the effects of natural disaster including the occurrence or threat of widespread or severe damage, injury, or loss of life or property resulting from natural causes, in accordance with standards formulated by the emergency services division of the state department of public safety, as allowed by the commissioner of revenue under section 275.74, paragraph (b).;

(10) for the amount of tax revenue lost due to abatements authorized under section 273.123, subdivision 7, for damage related to the tornadoes of March 29, 1998, to the extent that neither the state or federal government provides reimbursement for the amount lost;

(11) pay amounts required to correct an error in the levy certified to the county auditor by a city or county in a levy year, but only to the extent that when added to the preceding year's levy it is not in excess of an applicable statutory, special law or charter limitation, or the limitation imposed on the governmental subdivision by sections 275.70 to 275.74 in the preceding levy year; and

(12) to pay an abatement under section 469.1815.

Sec. 2. Minnesota Statutes 1997 Supplement, section 275.70, is amended by adding a subdivision to read:

Subd. 6. [MATCHING FUND REQUIREMENTS.] The special levy provided in subdivision 5, clause (8), does not include the increased direct and indirect costs related to general increases in program costs where there is no mandated increase regarding the matching fund requirements. Specifically, but without limitation, the following provisions apply to the special levy authorization in subdivision 5, clause (8): (1) increases in direct or indirect income maintenance administrative costs are not included; (2) increases for social services and social services administration are included, but only to the extent that the minimum local share amount needed to receive community social service aids exceeds the amount levied for social services and social services administration for the taxes payable year 1997; and (3) increases in county costs for Title IV-E Foster Care Services over the amount levied for the taxes payable year 1997 are included to the extent the amount from both years represents the local matching fund requirement for the federal grant.

Sec. 3. Minnesota Statutes 1997 Supplement, section 275.71, subdivision 2, is amended to read:

Subd. 2. [LEVY LIMIT BASE.] (a) The levy limit base for a local governmental unit for taxes levied in 1997 shall be equal to the sum of:

(1) the amount the local governmental unit levied in 1996, less any amount levied for debt, as reported to the department of revenue under section 275.62, subdivision 1, clause (1), and less any tax levied in 1996 against market value as provided for in section 275.61;

(2) the amount of aids the local governmental unit was certified to receive in calendar year 1997 under sections 477A.011 to 477A.03 before any reductions for state tax increment financing aid under section 273.1399, subdivision 5;

(3) the amount of homestead and agricultural credit aid the local governmental unit was certified to receive under section 273.1398 in calendar year 1997 before any reductions for tax increment financing aid under section 273.1399, subdivision 5;

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(4) the amount of local performance aid the local governmental unit was certified to receive in calendar year 1997 under section 477A.05; and

(5) the amount of any payments certified to the local government unit in 1997 under sections 298.28 and 298.282.

If a governmental unit was not required to report under section 275.62 for taxes levied in 1997, the commissioner shall request information on levies used for debt from the local governmental unit and adjust its levy limit base accordingly.

(b) The levy limit base for a local governmental unit for taxes levied in 1998 is ~~limited~~ equal to its adjusted levy limit base in the previous year, subject to any adjustments under section 275.72 and multiplied by the increase that would have occurred under subdivision 3, clause (3), if that clause had been in effect for taxes levied in 1997.

Sec. 4. Minnesota Statutes 1997 Supplement, section 275.71, subdivision 3, is amended to read:

Subd. 3. [ADJUSTED LEVY LIMIT BASE.] For taxes levied in ~~1997 and~~ 1998, the adjusted levy limit is equal to the levy limit base computed under subdivision 2 or section 275.72, multiplied by:

(1) one plus a percentage equal to the percentage growth in the implicit price deflator; and

(2) for all cities and for counties outside of the seven-county metropolitan area, one plus a percentage equal to the percentage increase in number of households, if any, for the most recent 12-month period for which data is available; and

~~(3)~~ for counties located in the seven-county metropolitan area, one plus a percentage equal to the greater of the percentage increase in the number of households in the county or the percentage increase in the number of households in the entire seven-county metropolitan area for the most recent 12-month period for which data is available; and

(3) one plus a percentage equal to the percentage increase in the taxable market value of the jurisdiction due to new construction of class 3 and class 5 property, as defined in section 273.13, subdivisions 24 and 31, for the most recent year for which data are available.

Sec. 5. Minnesota Statutes 1997 Supplement, section 275.71, subdivision 4, is amended to read:

Subd. 4. [PROPERTY TAX LEVY LIMIT.] For taxes levied in ~~1997 and~~ 1998, the property tax levy limit for a local governmental unit is equal to its adjusted levy limit base determined under subdivision 3 plus any additional levy authorized under section 275.73, which is levied against net tax capacity, reduced by the sum of (1) the total amount of aids that the local governmental unit is certified to receive under sections 477A.011 to 477A.014, (2) homestead and agricultural aids it is certified to receive under section 273.1398, (3) local performance aid it is certified to receive under section 477A.05, ~~and~~ (4) taconite aids under sections 298.28 and 298.282 including any aid which was required to be placed in a special fund for expenditure in the next succeeding year, (5) flood loss aid under section 273.1383, and (6) low-income housing aid under sections 477A.06 and 477A.065.

Sec. 6. Minnesota Statutes 1997 Supplement, section 275.72, is amended by adding a subdivision to read:

Subd. 2a. [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a local governmental unit, as a result of an annexation agreement prior to January 1, 1997, has different tax rates in various parts of the jurisdiction due to different service levels, it may petition the commissioner of revenue to adjust its levy limits established under section 275.71. The commissioner shall adjust the levy limits to reflect scheduled changes in tax rates related to increasing service levels in areas currently receiving less city services. The local governmental unit shall provide the commissioner with any information the commissioner deems necessary in making the levy limit adjustment.

Sec. 7. Minnesota Statutes 1997 Supplement, section 477A.011, subdivision 36, is amended to read:

Subd. 36. [CITY AID BASE.] (a) Except as provided in paragraphs (b), (c), and (d), "city aid base" means, for each city, the sum of the local government aid and equalization aid it was originally certified to receive in calendar year 1993 under Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, and the amount of disparity reduction aid it received in calendar year 1993 under Minnesota Statutes 1992, section 273.1398, subdivision 3.

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(b) For aids payable in 1996 and thereafter, a city that in 1992 or 1993 transferred an amount from governmental funds to its sewer and water fund, which amount exceeded its net levy for taxes payable in the year in which the transfer occurred, has a "city aid base" equal to the sum of (i) its city aid base, as calculated under paragraph (a), and (ii) one-half of the difference between its city aid distribution under section 477A.013, subdivision 9, for aids payable in 1995 and its city aid base for aids payable in 1995.

(c) The city aid base for any city with a population less than 500 is increased by $40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $40,000 for aids payable in calendar year 1995 only, provided that:

(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;

(ii) the city portion of the tax capacity rate exceeds 100 percent; and

(iii) its city aid base is less than $60 per capita.

(d) The city aid base for a city is increased by $20,000 in 1998 and thereafter and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:

(i) the city has a population in 1994 of 2,500 or more;

(ii) the city is located in a county, outside of the metropolitan area, which contains a city of the first class;

(iii) the city's net tax capacity used in calculating its 1996 aid under section 477A.013 is less than $400 per capita; and

(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of property located in the city is classified as railroad property.

(e) The city aid base for a city is increased by $200,000 in 1999 and thereafter and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:

(i) the city was incorporated as a statutory city after December 1, 1993;

(ii) its city aid base does not exceed $5,600; and

(iii) the city had a population in 1996 of 5,000 or more.

(f) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the maximum amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:

(i) the city had a population in 1996 of at least 50,000;

(ii) its population had increased by at least 40 percent in the ten-year period ending in 1996; and

(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.

(g) Beginning in 2002, the city aid base for a city is equal to the sum of its city aid base in 2001 and the amount of additional aid it was certified to receive under section 477A.06 in 2001. For 2002 only, the maximum amount of total aid a city may receive under section 477A.013, subdivision 9, paragraph (c), is also increased by the amount it was certified to receive under section 477A.06 in 2001.

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Sec. 8. Minnesota Statutes 1996, section 477A.03, subdivision 2, is amended to read:

Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to discharge the duties imposed by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the commissioner of revenue. For aids payable in 1996 and thereafter, the total aids paid under sections 477A.013, subdivision 9, and 477A.0122 are the amounts certified to be paid in the previous year, adjusted for inflation as provided under subdivision 3.

(b) Aid payments to counties under section 477A.0121 are limited to $20,265,000 in 1996. Aid payments to counties under section 477A.0121 are limited to $27,571,625 in 1997. For aid payable in 1998 and thereafter, the total aids paid under section 477A.0121 are the amounts certified to be paid in the previous year, adjusted for inflation as provided under subdivision 3.

(c)(i) For aids payable in 1998 and thereafter, the total aids paid to counties under section 477A.0122 are the amounts certified to be paid in the previous year, adjusted for inflation as provided under subdivision 3.

(ii) Aid payments to counties under section 477A.0122 in 2000 are further increased by an additional $30,000,000 in 2000.

(d) Aid payments to cities in 1999 under section 477A.013, subdivision 9, are limited to $380,565,489. For aids payable in 2000 and 2001, the total aids paid under section 477A.013, subdivision 9, are the amounts certified to be paid in the previous year, adjusted for inflation as provided under subdivision 3. For aids payable in 2002, the total aids paid under section 477A.013, subdivision 9, are the amounts certified to be paid in the previous year, adjusted for inflation as provided under subdivision 3, and increased by the amount certified to be paid in 2001 under section 477A.06. For aids payable in 2003 and thereafter, the total aids paid under section 477A.013, subdivision 9, are the amounts certified to be paid in the previous year, adjusted for inflation as provided under subdivision 3. The additional amount authorized under subdivision 4 is not included when calculating the appropriation limits under this paragraph.

Sec. 9. Minnesota Statutes 1996, section 477A.03, is amended by adding a subdivision to read:

Subd. 4. [ADDITIONAL MONEY FOR CITY AID.] For the calendar years 1999 to 2008, the limit on the annual appropriation for aids paid under section 477A.013, subdivision 9, as determined in subdivision 2, paragraph (d), is increased by $450,000.

Sec. 10. [477A.06] [EXISTING LOW-INCOME HOUSING AID.]

Subdivision 1. [ELIGIBILITY.] (a) For assessment years 1998, 1999, and 2000, for all class 4d property on which construction was begun before January 1, 1999, the assessor shall determine the difference between the actual net tax capacity and the net tax capacity that would be determined for the property if the class rates for assessment year 1997 were in effect.

(b) In calendar years 1999, 2000, and 2001, each city shall be eligible for aid equal to (i) the amount by which the sum of the differences determined in clause (a) for the corresponding assessment year exceeds 2.5 percent of the city's total taxable net tax capacity for taxes payable in 1998, multiplied by (ii) the city government's average local tax rate for taxes payable in 1998.

Subd. 2. [CERTIFICATION.] The county assessor shall notify the commissioner of revenue of the amount determined under subdivision 1, paragraph (b), clause (i), for any city which qualifies for aid under this section by June 30 of the assessment year, in a form prescribed by the commissioner. The commissioner shall notify each city of its qualifying aid amount by August 15 of the assessment year.

Subd. 3. [APPROPRIATION; PAYMENT.] (a) The commissioner shall pay each city its qualifying aid amount on or before July 20 of each year. An amount sufficient to pay the aid authorized under this section is appropriated to the commissioner of revenue from the property tax reform account in fiscal years 2000 and 2001, and from the general fund in fiscal year 2002.

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(b) For fiscal years 2001 and 2002, the amount of aid appropriated under this section may not exceed $1,500,000 each year.

(c) If the total amount of aid that would otherwise be payable under the formula in this section exceeds the maximum allowed under paragraph (b), the amount of aid for each city is reduced proportionately to equal the limit.

Sec. 11. [477A.065] [NEW CONSTRUCTION LOW-INCOME HOUSING AID.]

Subdivision 1. [ELIGIBILITY.] Each taxes payable year, each city containing class 4d property on which initial construction was begun after January 1, 1999, shall be eligible for aid equal to (1) 1.5 times the net tax capacity of the property for the assessment year corresponding to the taxes payable year, multiplied by (2) the city government's average local tax rate for the previous taxes payable year.

Subd. 2. [CERTIFICATION.] The county assessor shall notify the commissioner of revenue of the amount determined under subdivision 1, clause (1), for any city which qualifies for aid under this section by June 30 of each assessment year, in a form prescribed by the commissioner. The commissioner shall notify each city of its qualifying aid amount by August 15 of the assessment year.

Subd. 3. [APPROPRIATION; PAYMENT.] The commissioner shall pay each city its qualifying aid amount on or before July 20 of each year. An amount sufficient to pay the aid authorized under this section is appropriated to the commissioner of revenue from the general fund each year.

Sec. 12. [CITY OF COON RAPIDS; ADJUSTMENT IN 1999 AID PAYMENTS.]

Notwithstanding Minnesota Statutes, section 477A.015, the July 20, 1999, aid payment to the city of Coon Rapids for aid under section 477A.013, subdivision 9, shall equal the entire amount of its city aid base increase in 1999 under section 477A.011, subdivision 36, plus one-half of the remaining amount of its aid under section 477A.013, subdivision 9. The remainder of its 1999 aid under section 477A.013, subdivision 9, shall be paid on or before December 26, 1999.

Sec. 13. [TEMPORARY LOCAL GOVERNMENT AID INCREASES.]

For payments in calendar year 1998 only, the city of East Grand Forks shall receive an additional payment of $9,200,000 and the city of Warren shall receive an additional payment of $800,000 under the provisions of Minnesota Statutes, sections 477A.011 to 477A.014. For payments in calendar year 1999 only, the city of East Grand Forks shall receive an additional aid payment of $4,600,000 and the city of Warren shall receive an additional payment of $400,000 under the provisions of Minnesota Statutes, sections 447A.011 to 477A.014. The amounts of these payments shall not be included in the calculation of any other aids provided under Minnesota Statutes, chapter 477A, or other law, or in any limitations on levies or expenditures.

$10,000,000 is appropriated in fiscal year 1999 and $5,000,000 is appropriated in fiscal year 2000 to the commissioner of revenue from the general fund to make the payments under this section.

Sec. 14. [CITY OF RED WING; LEVY LIMITS.]

Subdivision 1. [LEVY LIMIT BASE INCREASE.] The levy limit base of the city of Red Wing for taxes levied in 1998 under Minnesota Statutes, section 275.71, subdivision 2, paragraph (b), is increased by $477,677.

Subd. 2. [EFFECTIVE DATE.] Upon compliance by the governing body of the city of Red Wing with Minnesota Statutes, section 645.021, subdivision 3, subdivision 1 is effective for taxes levied in 1998, payable in 1999.

Sec. 15. [WAITE PARK; LEVY LIMIT ADJUSTMENT.]

Subdivision 1. [ADJUSTED LEVY LIMIT BASE.] For taxes levied in 1998 only, the adjusted levy limit base defined in Minnesota Statutes, section 275.71, subdivision 3, for the city of Waite Park, is increased by $117,000.

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Subd. 2. [EFFECTIVE DATE.] Upon compliance by the governing body of the city of Waite Park with Minnesota Statutes, section 645.021, subdivision 3, subdivision 1 is effective for taxes levied in 1998, payable in 1999.

Sec. 16. [CITY OF COON RAPIDS; LEVY LIMITS.]

Subdivision 1. [LEVY LIMIT BASE INCREASE.] For taxes levied in 1998 only, the adjusted levy limit base defined in Minnesota Statutes, section 275.71, subdivision 3, for the city of Coon Rapids, is increased by $450,000.

Subd. 2. [EFFECTIVE DATE.] Upon compliance by the governing body of the city of Coon Rapids with Minnesota Statutes, section 645.021, subdivision 3, subdivision 1 is effective for taxes levied in 1998, payable in 1999.

Sec. 17. [CITY OF ST. PETER; LEVY LIMIT EXEMPTION.]

For taxes levied in 1998, payable in 1999, the city of St. Peter is exempt from the levy limits imposed under Minnesota Statutes, sections 275.71 to 275.74. This section is effective the day after compliance by the governing body of the city of St. Peter with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 18. [EFFECTIVE DATES.]

Sections 1, 3 to 6, 14, and 15 are effective for taxes levied in 1998, payable in 1999. Section 2 is effective for taxes levied in 1997 and 1998, payable in 1998 and 1999. Sections 7 and 8 are effective for aids payable in 1999 and thereafter. Section 9 is effective for aids payable in 1999 to 2008. Section 10 is effective for aids payable in 1999 to 2001. Section 11 is effective for aids payable in 2001 and thereafter. Section 12 is effective for aids payable in 1999 only. Section 13 is effective for aids payable in 1998 and 1999 only.

SENIOR CITIZEN'S PROPERTY TAX DEFERRAL

Section 1. Minnesota Statutes 1997 Supplement, section 276.04, subdivision 2, is amended to read:

Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer shall provide for the printing of the tax statements. The commissioner of revenue shall prescribe the form of the property tax statement and its contents. The statement must contain a tabulated statement of the dollar amount due to each taxing authority and the amount of the state determined school tax from the parcel of real property for which a particular tax statement is prepared. The dollar amounts attributable to the county, the state determined school tax, the voter approved school tax, the other local school tax, the township or municipality, and the total of the metropolitan special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated. The amounts due all other special taxing districts, if any, may be aggregated. The amount of the tax on homesteads qualifying under the senior citizens' property tax deferral program under chapter 290B is the total amount of property tax before subtraction of the deferred property tax amount. The amount of the tax on contamination value imposed under sections 270.91 to 270.98, if any, must also be separately stated. The dollar amounts, including the dollar amount of any special assessments, may be rounded to the nearest even whole dollar. For purposes of this section whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar. The amount of market value excluded under section 273.11, subdivision 16, if any, must also be listed on the tax statement. The statement shall include the following sentences, printed in upper case letters in boldface print: "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX LEVY. THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."

(b) The property tax statements for manufactured homes and sectional structures taxed as personal property shall contain the same information that is required on the tax statements for real property.

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(c) Real and personal property tax statements must contain the following information in the order given in this paragraph. The information must contain the current year tax information in the right column with the corresponding information for the previous year in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's taxable market value after reductions under section 273.11, subdivisions 1a and 16;

(3) the property's gross tax, calculated by adding the property's total property tax to the sum of the aids enumerated in clause (4);

(4) a total of the following aids:

(i) education aids payable under chapters 124 and 124A;

(ii) local government aids for cities, towns, and counties under chapter 477A;

(iii) disparity reduction aid under section 273.1398; and

(iv) homestead and agricultural credit aid under section 273.1398;

(5) for homestead residential and agricultural properties, the education homestead credit under section 273.1382;

(6) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received under section 273.135 must be separately stated and identified as "taconite tax relief"; and

(7) ~~any deferred property tax amount under the senior citizens' property tax deferral program under chapter 290B, as well as the total deferred amount plus accrued interest; and~~

~~(8)~~ the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county agrees, a taxing district may include a notice with the property tax statement notifying taxpayers when the taxing district will begin its budget deliberations for the current year, and encouraging taxpayers to attend the hearings. If the county allows notices to be included in the envelope containing the property tax statement, and if more than one taxing district relative to a given property decides to include a notice with the tax statement, the county treasurer or auditor must coordinate the process and may combine the information on a single announcement.

The commissioner of revenue shall certify to the county auditor the actual or estimated aids enumerated in clause (4) that local governments will receive in the following year. The commissioner must certify this amount by January 1 of each year.

Sec. 2. Minnesota Statutes 1996, section 290A.14, is amended to read:

290A.14 [PROPERTY TAX STATEMENT.]

The county treasurer shall prepare and send a sufficient number of copies of the property tax statement to the owner, and to the owner's escrow agent if the taxes are paid via an escrow account, to enable the owner to comply with the filing requirements of this chapter and to retain one copy as a record. The property tax statement, in a form prescribed by the commissioner, shall indicate the manner in which the claimant may claim relief from the state under both this chapter and chapter 290B, and the amount of the tax for which the applicant may claim relief. The statement shall also indicate if there are delinquent property taxes on the property in the preceding year. Taxes included in a confession of judgment under section 279.37 shall not constitute delinquent taxes as long as the claimant is current on the payments required to be made under section 279.37.

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Sec. 3. Minnesota Statutes 1997 Supplement, section 290B.03, subdivision 2, is amended to read:

Subd. 2. [QUALIFYING HOMESTEAD; DEFINED.] Qualifying homestead property is defined as the dwelling occupied as the homeowner's principal residence and so much of the land surrounding it~~, not exceeding one acre,~~ as is reasonably necessary for use of the dwelling as a home and any other property used for purposes of a homestead as defined in section 273.13, subdivisions 22 and 23, but not to exceed one acre. The homestead may be part of a multidwelling building and the land on which it is built.

Sec. 4. Minnesota Statutes 1997 Supplement, section 290B.04, subdivision 1, is amended to read:

Subdivision 1. [INITIAL APPLICATION.] (a) A taxpayer meeting the program qualifications under section 290B.03 may apply to the commissioner of revenue for the deferral of taxes. Applications are due on or before July 1 for deferral of any of the following year's property taxes. A taxpayer may apply in the year in which the taxpayer becomes 65 years old, provided that no deferral of property taxes will be made until the calendar year after the taxpayer becomes 65 years old. The application, which shall be prescribed by the commissioner of revenue, shall include the following items and any other information which the commissioner deems necessary:

(1) the name, address, and social security number of the owner or owners;

(2) a copy of the property tax statement for the current payable year for the homesteaded property;

(3) the initial year of ownership and occupancy as a homestead;

(4) the owner's household income for the previous calendar year; and

(5) information on any mortgage loans or other amounts secured by mortgages or other liens against the property, for which purpose the commissioner may require the applicant to provide a copy of the mortgage note, the mortgage, or a statement of the balance owing on the mortgage loan provided by the mortgage holder. The commissioner may require the appropriate documents in connection with obtaining and confirming information on unpaid amounts secured by other liens.

The application must state that program participation is voluntary. The application must also state that the deferred amount depends directly on the applicant's household income, and that program participation includes authorization for the annual deferred amount ~~for each year and~~, the cumulative deferral and interest to that appear on each year's ~~property tax statement as~~ notice prepared by the county under section 290B.04, subdivision 6, is public data.

The application must state that program participants may claim the property tax refund based on the full amount of property taxes eligible for the refund, including any deferred amounts. The application must also state that property tax refunds will be used to offset any deferral and interest under this program, and that any other amounts subject to revenue recapture under section 270A.03, subdivision 7, will also be used to offset any deferral and interest under this program.

(b) As part of the initial application process, the commissioner may require the applicant to obtain at the applicant's own cost and submit:

(1) if the property is registered property under chapter 508 or 508A, a copy of the original certificate of title in the possession of the county registrar of titles (sometimes referred to as "condition of register"), or

(2) if the property is abstract property, a report prepared by a licensed abstracter showing the last deed and any unsatisfied mortgages, liens, judgments, and state and federal tax lien notices which were recorded on or after the date of that last deed with respect to the property or to the applicant.

The certificate or report under clauses (1) and (2) need not include references to any documents filed or recorded more than 40 years prior to the date of the certification or report. The certification or report must be as of a date not more than 30 days prior to submission of the application.

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The commissioner may also require the county recorder or county registrar of the county where the property is located to provide copies of recorded documents related to the applicant or the property, for which the recorder or registrar shall not charge a fee. The commissioner may use any information available to determine or verify eligibility under this section.

Sec. 5. Minnesota Statutes 1997 Supplement, section 290B.04, subdivision 3, is amended to read:

Subd. 3. [~~ANNUAL~~ EXCESS-INCOME CERTIFICATION BY TAXPAYER.] ~~Annually on or before July 1,~~ A taxpayer whose initial application has been approved under subdivision 2, shall ~~complete the certification form and return it to~~ notify the commissioner of revenue in writing by July 1 if the taxpayer's household income for the preceding calendar year exceeded $30,000. The certification must state whether or not the taxpayer wishes to have property taxes deferred for the following year provided the taxes exceed the maximum property tax amount under section 290B.05. If the taxpayer does wish to have property taxes deferred, the certification must state the homeowner's total household income for the previous calendar year ~~and any other information which the commissioner deems necessary~~. No property taxes may be deferred under chapter 290B in any year following the year in which a program participant filed or should have filed an excess-income certification under this subdivision, unless the participant has filed a resumption of eligibility certification as described in subdivision 4.

Sec. 6. Minnesota Statutes 1997 Supplement, section 290B.04, is amended by adding a subdivision to read:

Subd. 4. [RESUMPTION OF ELIGIBILITY CERTIFICATION BY TAXPAYER.] A taxpayer who has previously filed an excess-income certification under subdivision 3 may resume program participation if the taxpayer's household income for a subsequent year is $30,000 or less. If the taxpayer chooses to resume program participation, the taxpayer must notify the commissioner of revenue in writing by July 1 of the year following a calendar year in which the taxpayer's household income is $30,000 or less. The certification must state the taxpayer's total household income for the previous calendar year. Once a taxpayer resumes participation in the program under this subdivision, participation will continue until the taxpayer files a subsequent excess-income certification under subdivision 3 or until participation is terminated under section 290B.08, subdivision 1.

Sec. 7. Minnesota Statutes 1997 Supplement, section 290B.04, is amended by adding a subdivision to read:

Subd. 5. [PENALTY FOR FAILURE TO FILE EXCESS-INCOME CERTIFICATION; INVESTIGATIONS.] (a) The commissioner shall assess a penalty equal to 20 percent of the property taxes improperly deferred in the case of a false application, a false certification, or in the case of a required excess-income certification which was not filed as of the applicable due date. The commissioner shall assess a penalty equal to 50 percent of the property taxes improperly deferred if the taxpayer knowingly filed a false application or certification, or knowingly failed to file a required excess-income certification by the applicable due date. The commissioner shall assess penalties under this section through the issuance of an order under the provisions of chapter 289A. Persons affected by a commissioner's order issued under this section may appeal as provided in chapter 289A.

(b) The commissioner may conduct investigations related to initial applications and excess-income certifications required under this chapter within the period ending 3-1/2 years from the due date of the application or certification.

Sec. 8. Minnesota Statutes 1997 Supplement, section 290B.04, is amended by adding a subdivision to read:

Subd. 6. [ANNUAL NOTICE TO PARTICIPANT.] Annually, on or before July 1, the county auditor shall notify, in writing, each participant in the county who is in the senior citizen's deferral program of the current year's deferred taxes and the total cumulative deferred taxes and accrued interest on the participant's property as of that date.

Sec. 9. Minnesota Statutes 1997 Supplement, section 290B.05, subdivision 1, is amended to read:

Subdivision 1. [DETERMINATION BY COMMISSIONER.] The commissioner shall determine each qualifying homeowner's "annual maximum property tax amount" following approval of the homeowner's initial application and following the receipt of a resumption of eligibility certification. The "annual maximum property tax amount" equals five percent of the homeowner's total household income for the year preceding either the initial application or the resumption of eligibility certification, whichever is applicable. Following approval of the initial application, the commissioner shall

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~~annually~~ determine the qualifying homeowner's ~~"maximum property tax amount" and~~ "maximum allowable deferral." ~~The maximum property tax amount calculated for taxes payable in the following year is equal to five percent of the homeowner's total household income for the previous calendar year.~~ No tax may be deferred relative to the appropriate assessment year for any homeowner whose total household income for the previous year exceeds $30,000. No tax shall be deferred in any year in which the homeowner does not meet the program qualifications in section 290B.03. The maximum allowable total deferral is equal to 75 percent of the assessor's estimated market value for the year, less ~~(1)~~ the balance of any mortgage loans and other amounts secured by liens against the property at the time of application, including any unpaid special assessments but not including property taxes payable during the year~~; and (2) any outstanding deferral and interest~~.

Sec. 10. Minnesota Statutes 1997 Supplement, section 290B.05, subdivision 2, is amended to read:

Subd. 2. [CERTIFICATION BY COMMISSIONER.] On or before December 1 of the year of initial application, the commissioner shall certify to the county auditor of the county in which the qualifying homestead is located (1) the annual maximum property tax amount; and (2) the maximum allowable deferral ~~for the year; and (3) the cumulative deferral and interest for all years preceding the next taxes payable year~~. On or before December 1 of any year in which a homeowner files a resumption of eligibility certification, the commissioner shall certify to the county auditor the new annual maximum property tax amount to be used in calculating the deferral for subsequent years.

Sec. 11. Minnesota Statutes 1997 Supplement, section 290B.05, subdivision 4, is amended to read:

Subd. 4. [LIMITATION ON TOTAL AMOUNT OF DEFERRED TAXES.] On or before September 1 of each year, the commissioner shall request, and each county or city assessor shall provide, the current year's estimated market value of each property on the list supplied by the commissioner that may be eligible for deferral under this section for taxes payable in the following year. The total amount of deferred taxes and interest on a property, when added to (1) the balance owing on any mortgages on the property at the time of initial application; and (2) other amounts secured by liens on the property at the time of the initial application, may not exceed 75 percent of the assessor's current estimated market value of the property.

Sec. 12. Minnesota Statutes 1997 Supplement, section 290B.06, is amended to read:

290B.06 [~~PROPERTY TAX~~ REFUNDS; OFFSET.]

For purposes of qualifying for the regular property tax refund or the special refund for homeowners under chapter 290A, the qualifying tax is the full amount of taxes, including the deferred portion of the tax. In any year in which a program participant chooses to have property taxes deferred under this section, any ~~regular or special property tax~~ refund ~~awarded based upon those property taxes~~ as defined in section 270A.03, subdivision 7, must be taken first as a deduction from the amount of the deferred tax for that year, and second as a deduction against any outstanding deferral from previous years, rather than as a cash payment ~~to the homeowner~~. The commissioner shall cancel any current year's deferral or previous years' deferral and interest that is offset by the ~~property tax~~ refunds. If the total of the ~~regular and the special property tax~~ refund amounts exceeds the sum of the deferred tax for the current year and cumulative deferred tax and interest for previous years, the commissioner shall then remit the excess amount to the homeowner. On or before the date on which the commissioner issues property tax refunds, the commissioner shall notify program participants of any reduction in the deferred amount for the current and previous years resulting from ~~property tax~~ refunds.

Sec. 13. Minnesota Statutes 1997 Supplement, section 290B.07, is amended to read:

290B.07 [LIEN; DEFERRED PORTION.]

(a) Payment by the state to the county treasurer of taxes deferred under this section is deemed a loan from the state to the program participant. The commissioner must compute the interest as provided in section 270.75, subdivision 5, but not to exceed five percent, and maintain records of the total deferred amount and interest for each participant. Interest shall accrue beginning September 1 of the payable year for which the taxes are deferred. Any deferral made under this chapter shall not be construed as delinquent property taxes.

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The lien created under section 272.31 continues to secure payment by the taxpayer, or by the taxpayer's successors or assigns, of the amount deferred, including interest, with respect to all years for which amounts are deferred. The lien for deferred taxes and interest has the same priority as any other lien under section 272.31, except that liens, including mortgages, recorded or filed prior to the recording or filing of the notice under section 290B.04, subdivision 2, have priority over the lien for deferred taxes and interest. A seller's interest in a contract for deed, in which a qualifying homeowner is the purchaser or an assignee of the purchaser, has priority over deferred taxes and interest on deferred taxes, regardless of whether the contract for deed is recorded or filed. The lien for deferred taxes and interest for future years has the same priority as the lien for deferred taxes and interest for the first year, which is always higher in priority than any mortgages or other liens filed, recorded, or created after the notice recorded or filed under section 290B.04, subdivision 2. The county treasurer or auditor shall maintain records of the deferred portion and shall list the amount of deferred taxes for the year and the cumulative deferral and interest for all previous years as a lien against the property ~~on the property tax statement~~. In any certification of unpaid taxes for a tax parcel, the county auditor shall clearly distinguish between taxes payable in the current year, deferred taxes and interest, and delinquent taxes. Payment of the deferred portion becomes due and owing at the time specified in section 290B.08. Upon receipt of the payment, the commissioner shall issue a receipt for it to the person making the payment upon request and shall notify the auditor of the county in which the parcel is located, within ten days, identifying the parcel to which the payment applies. Upon receipt by the commissioner of revenue of collected funds in the amount of the deferral, the state's loan to the program participant is deemed paid in full.

(b) If property for which taxes have been deferred under this chapter forfeits under chapter 281 for nonpayment of a nondeferred property tax amount, or because of nonpayment of amounts previously deferred following a termination under section 290B.08, the lien for the taxes deferred under this chapter, plus interest and costs, shall be canceled by the county auditor as provided in section 282.07. However, notwithstanding any other law to the contrary, any proceeds from a subsequent sale of the property under chapter 282 or another law, must be used to first reimburse the county's forfeited tax sale fund for any direct costs of selling the property or any costs directly related to preparing the property for sale, and then to reimburse the state for the amount of the canceled lien. Within 90 days of the receipt of any sale proceed to which the state is entitled under these provisions, the county auditor must pay those funds to the commissioner of revenue by warrant for deposit in the general fund. No other deposit, use, distribution, or release of gross sale proceeds or receipts may be made by the county until payments sufficient to fully reimburse the state for the canceled lien amount have been transmitted to the commissioner.

Sec. 14. Minnesota Statutes 1997 Supplement, section 290B.08, subdivision 2, is amended to read:

Subd. 2. [PAYMENT UPON TERMINATION.] Upon the termination of the deferral under subdivision 1, the amount of deferred taxes and interest plus the recording or filing fees under both section 290B.04, subdivision 2, and this subdivision becomes due and payable to the commissioner within 90 days of termination of the deferral for terminations under subdivision 1, paragraph (a), clauses (1) and (2), and within one year of termination of the deferral for terminations under subdivision 1, paragraph (a), clauses (3) and (4). No additional interest is due on the deferral if timely paid. On receipt of payment, the commissioner shall within ten days notify the auditor of the county in which the parcel is located, identifying the parcel to which the payment applies and shall remit the recording or filing fees under section 290B.04, subdivision 2, and this subdivision to the auditor. A notice of termination of deferral, containing the legal description and the recording or filing data for the notice of qualification for deferral under section 290B.04, subdivision 2, shall be prepared and recorded or filed by the county auditor in the same office in which the notice of qualification for deferral under section 290B.04, subdivision 2, was recorded or filed, and the county auditor shall mail a copy of the notice of termination to the property owner. The property owner shall pay the recording or filing fees. Upon recording or filing of the notice of termination of deferral, the notice of qualification for deferral under section 290B.04, subdivision 2, and the lien created by it are discharged. If the deferral is not timely paid, the penalty, interest, lien, forfeiture, and other rules for the collection of ad valorem property taxes apply.

Sec. 15. Minnesota Statutes 1997 Supplement, section 290B.09, subdivision 1, is amended to read:

Subdivision 1. [DETERMINATION; PAYMENT.] The ~~commissioner of revenue~~ county auditor shall determine the total current year's deferred amount of property tax under this chapter in ~~each~~ the county, ~~basing determinations on a review of~~ and submit those amounts as part of the abstracts of tax lists submitted by the county auditors under section 275.29. The commissioner may make changes in the abstracts of tax lists as deemed necessary. The commissioner of revenue, after such review, shall pay the deferred amount of property tax to each county treasurer on or before August 31.

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~~At least once each year, the commissioner shall report to the county auditor the total cumulative amount of deferred taxes and interest that constitute a lien against the property.~~

The county treasurer shall distribute as part of the October settlement the funds received as if they had been collected as a part of the property tax.

Sec. 16. [290B.10] [SENIOR DEFERRAL PROGRAM; INFORMATION PROVIDED.]

The commissioner of revenue shall provide information about the senior deferral program and eligibility criteria for the program in the instruction booklet prepared for taxpayers to use in applying for property tax refunds under chapter 290A.

Sec. 17. [EFFECTIVE DATE.]

Sections 1 and 3 to 15 are effective for deferrals of property taxes payable in 1999 and thereafter, except that the July 1 application date for taxes payable in 1999 in section 4 is extended to August 1 for applications filed in 1998 only.

Section 2 is effective for statements prepared in 1998 for taxes payable in 1999 and thereafter. Section 16 is effective for booklets prepared in 1998 for refunds claimed in 1999 and thereafter.

INCOME AND FRANCHISE TAXES

Section 1. Minnesota Statutes 1997 Supplement, section 289A.19, subdivision 2, is amended to read:

Subd. 2. [CORPORATE FRANCHISE AND MINING COMPANY TAXES.] Corporations or mining companies shall receive an extension of seven months for filing the return of a corporation subject to tax under chapter 290 or for filing the return of a mining company subject to tax under sections 298.01 and 298.015 ~~if:~~. Interest on any balance of tax not paid when the regularly required return is due must be paid at the rate specified in section 270.75, from the date such payment should have been made if no extension was granted, until the date of payment of such tax.

If a corporation or mining company does not:

(1) ~~the corporation or mining company pays~~ pay at least 90 percent of the amount of tax shown on the return on or before the regular due date of the return, the penalty prescribed by section 289A.60, subdivision 1, shall be imposed on the unpaid balance of tax; or

(2) pay the balance due shown on the regularly required return ~~is paid~~ on or before the extended due date of the return~~; and~~

~~(3) interest on any balance due is paid at the rate specified in section 270.75 from the regular due date of the return until the tax is paid~~, the penalty prescribed by section 289A.60, subdivision 1, shall be imposed on the unpaid balance of tax from the original due date of the return.

Sec. 2. Minnesota Statutes 1996, section 290.01, subdivision 3b, is amended to read:

Subd. 3b. [LIMITED LIABILITY COMPANY.] For purposes of this chapter and chapter 289A, a limited liability company that is formed under either the laws of this state or under similar laws of another state, ~~and that is considered to be a partnership~~ will be treated as an entity similar to its treatment for federal income tax purposes~~, is considered to be a partnership and the members must be considered to be partners~~.

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Sec. 3. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 19a, is amended to read:

Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For individuals, estates, and trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political or governmental subdivision, municipality, or governmental agency or instrumentality of any state other than Minnesota exempt from federal income taxes under the Internal Revenue Code or any other federal statute, and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue Code, except the portion of the exempt-interest dividends derived from interest income on obligations of the state of Minnesota or its political or governmental subdivisions, municipalities, governmental agencies or instrumentalities, but only if the portion of the exempt-interest dividends from such Minnesota sources paid to all shareholders represents 95 percent or more of the exempt-interest dividends that are paid by the regulated investment company as defined in section 851(a) of the Internal Revenue Code, or the fund of the regulated investment company as defined in section 851(h) of the Internal Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal government described in section 7871(c) of the Internal Revenue Code shall be treated as interest income on obligations of the state in which the tribe is located;

(2) the amount of income taxes paid or accrued within the taxable year under this chapter and income taxes paid to any other state or to any province or territory of Canada, to the extent allowed as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not be more than the amount by which the itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the disallowance of itemized deductions under section 68 of the Internal Revenue Code of 1986, income tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to which the special tax under section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law Number 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this chapter and income taxes paid to any other state or any province or territory of Canada, to the extent allowed as a deduction in determining federal adjusted gross income. For the purpose of this paragraph, income taxes do not include the taxes imposed by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of loss or expense included in federal taxable income under section 1366 of the Internal Revenue Code flowing from a corporation that has a valid election in effect for the taxable year under section 1362 of the Internal Revenue Code, but which is not allowed to be an "S" corporation under section 290.9725; ~~and~~

(6) the amount of any distributions in cash or property made to a shareholder during the taxable year by a corporation that has a valid election in effect for the taxable year under section 1362 of the Internal Revenue Code, but which is not allowed to be an "S" corporation under section 290.9725 to the extent not already included in federal taxable income under section 1368 of the Internal Revenue Code.;

(7) in the year stock of a corporation that had made a valid election under section 1362 of the Internal Revenue Code but was not an "S" corporation under section 290.9725 is sold or disposed of in a transaction taxable under the Internal Revenue Code, the amount of difference between the Minnesota basis of the stock under subdivision 19f, paragraph (m), and the federal basis if the Minnesota basis is lower than the shareholder's federal basis; and

(8) the amount of expense, interest, or taxes disallowed pursuant to section 290.10.

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Sec. 4. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 19b, is amended to read:

Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For individuals, estates, and trusts, there shall be subtracted from federal taxable income:

(1) interest income on obligations of any authority, commission, or instrumentality of the United States to the extent includable in taxable income for federal income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income tax to Minnesota or to any other state, for any previous taxable year, whether the amount is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the credit allowed under section 290.0674, not to exceed $1,625 for each dependent in grades kindergarten to 6 and $2,500 for each dependent in grades 7 to 12, for tuition, textbooks, and transportation of each dependent in attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363. For the purposes of this clause, "tuition" includes fees or tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, "textbooks" includes books and other instructional materials and equipment used in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. Equipment expenses qualifying for deduction includes expenses as defined and limited in section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for, or transportation to, extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs;

(4) to the extent included in federal taxable income, distributions from a qualified governmental pension plan, an individual retirement account, simplified employee pension, or qualified plan covering a self-employed person that represent a return of contributions that were included in Minnesota gross income in the taxable year for which the contributions were made but were deducted or were not included in the computation of federal adjusted gross income. The distribution shall be allocated first to return of contributions until the contributions included in Minnesota gross income have been exhausted. This subtraction applies only to contributions made in a taxable year prior to 1985;

(5) income as provided under section 290.0802;

(6) the amount of unrecovered accelerated cost recovery system deductions allowed under subdivision 19g;

(7) to the extent included in federal adjusted gross income, income realized on disposition of property exempt from tax under section 290.491;

(8) to the extent not deducted in determining federal taxable income, the amount paid for health insurance of self-employed individuals as determined under section 162(l) of the Internal Revenue Code, except that the 25 percent limit does not apply. If the taxpayer deducted insurance payments under section 213 of the Internal Revenue Code of 1986, the subtraction under this clause must be reduced by the lesser of:

(i) the total itemized deductions allowed under section 63(d) of the Internal Revenue Code, less state, local, and foreign income taxes deductible under section 164 of the Internal Revenue Code and the standard deduction under section 63(c) of the Internal Revenue Code; or

(ii) the lesser of (A) the amount of insurance qualifying as "medical care" under section 213(d) of the Internal Revenue Code to the extent not deducted under section 162(1) of the Internal Revenue Code or excluded from income or (B) the total amount deductible for medical care under section 213(a);

(9) the exemption amount allowed under Laws 1995, chapter 255, article 3, section 2, subdivision 3;

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(10) to the extent included in federal taxable income, postservice benefits for youth community service under section 121.707 for volunteer service under United States Code, title 42, section 5011(d), as amended; ~~and~~

(11) to the extent not subtracted under clause (1), the amount of income or gain included in federal taxable income under section 1366 of the Internal Revenue Code flowing from a corporation that has a valid election in effect for the taxable year under section 1362 of the Internal Revenue Code which is not allowed to be an "S" corporation under section 290.9725.;

(12) in the year stock of a corporation that had made a valid election under section 1362 of the Internal Revenue Code but was not an "S" corporation under section 290.9725 is sold or disposed of in a transaction taxable under the Internal Revenue Code, the amount of difference between the Minnesota basis of the stock under subdivision 19f, paragraph (m), and the federal basis if the Minnesota basis is higher than the shareholder's federal basis; and

(13) an amount equal to an individual's, trust's, or estate's net federal income tax liability for the tax year that is attributable to items of income, expense, gain, loss, or credits federally flowing to the taxpayer in the tax year from a corporation, having a valid election in effect for federal tax purposes under section 1362 of the Internal Revenue Code but not treated as a "S" corporation for state tax purposes under section 290.9725.

Sec. 5. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 19f, is amended to read:

Subd. 19f. [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON DISPOSITION OF PROPERTY.] (a) For individuals, estates, and trusts, the basis of property is its adjusted basis for federal income tax purposes except as set forth in paragraphs (f), (g), and (m). For corporations, the basis of property is its adjusted basis for federal income tax purposes, without regard to the time when the property became subject to tax under this chapter or to whether out-of-state losses or items of tax preference with respect to the property were not deductible under this chapter, except that the modifications to the basis for federal income tax purposes set forth in paragraphs (b) to (j) are allowed to corporations, and the resulting modifications to federal taxable income must be made in the year in which gain or loss on the sale or other disposition of property is recognized.

(b) The basis of property shall not be reduced to reflect federal investment tax credit.

(c) The basis of property subject to the accelerated cost recovery system under section 168 of the Internal Revenue Code shall be modified to reflect the modifications in depreciation with respect to the property provided for in subdivision 19e. For certified pollution control facilities for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, the basis of the property must be increased by the amount of the amortization deduction not previously allowed under this chapter.

(d) For property acquired before January 1, 1933, the basis for computing a gain is the fair market value of the property as of that date. The basis for determining a loss is the cost of the property to the taxpayer less any depreciation, amortization, or depletion, actually sustained before that date. If the adjusted cost exceeds the fair market value of the property, then the basis is the adjusted cost regardless of whether there is a gain or loss.

(e) The basis is reduced by the allowance for amortization of bond premium if an election to amortize was made pursuant to Minnesota Statutes 1986, section 290.09, subdivision 13, and the allowance could have been deducted by the taxpayer under this chapter during the period of the taxpayer's ownership of the property.

(f) For assets placed in service before January 1, 1987, corporations, partnerships, or individuals engaged in the business of mining ores other than iron ore or taconite concentrates subject to the occupation tax under chapter 298 must use the occupation tax basis of property used in that business.

(g) For assets placed in service before January 1, 1990, corporations, partnerships, or individuals engaged in the business of mining iron ore or taconite concentrates subject to the occupation tax under chapter 298 must use the occupation tax basis of property used in that business.

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(h) In applying the provisions of sections 301(c)(3)(B), 312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the dates December 31, 1932, and January 1, 1933, shall be substituted for February 28, 1913, and March 1, 1913, respectively.

(i) In applying the provisions of section 362(a) and (c) of the Internal Revenue Code, the date December 31, 1956, shall be substituted for June 22, 1954.

(j) The basis of property shall be increased by the amount of intangible drilling costs not previously allowed due to differences between this chapter and the Internal Revenue Code.

(k) The adjusted basis of any corporate partner's interest in a partnership is the same as the adjusted basis for federal income tax purposes modified as required to reflect the basis modifications set forth in paragraphs (b) to (j). The adjusted basis of a partnership in which the partner is an individual, estate, or trust is the same as the adjusted basis for federal income tax purposes modified as required to reflect the basis modifications set forth in paragraphs (f) and (g).

(l) The modifications contained in paragraphs (b) to (j) also apply to the basis of property that is determined by reference to the basis of the same property in the hands of a different taxpayer or by reference to the basis of different property.

(m) If a corporation has a valid election in effect for the taxable year under section 1362 of the Internal Revenue Code, but is not allowed to be an "S" corporation under section 290.9725, and the corporation is liquidated or the individual shareholder disposes of the stock and there is no capital loss reflected in federal adjusted gross income because of the fact that corporate losses have exhausted the shareholders' basis for federal purposes, the shareholders shall be entitled to a capital loss commensurate to their Minnesota basis for the stock, the Minnesota basis in the shareholder's stock in the corporation shall be computed as if the corporation were not an "S" corporation for federal tax purposes.

Sec. 6. Minnesota Statutes 1996, section 290.06, subdivision 2c, is amended to read:

Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, AND TRUSTS.] (a) The income taxes imposed by this chapter upon married individuals filing joint returns and surviving spouses as defined in section 2(a) of the Internal Revenue Code must be computed by applying to their taxable net income the following schedule of rates:

(1) On the first $19,910, 6 percent;

(2) On all over $19,910, but not over $79,120, 8 percent;

(3) On all over $79,120, 8.5 percent.

Married individuals filing separate returns, estates, and trusts must compute their income tax by applying the above rates to their taxable income, except that the income brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be computed by applying to taxable net income the following schedule of rates:

(1) On the first $13,620, 6 percent;

(2) On all over $13,620, but not over $44,750, 8 percent;

(3) On all over $44,750, 8.5 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as a head of household as defined in section 2(b) of the Internal Revenue Code must be computed by applying to taxable net income the following schedule of rates:

(1) On the first $16,770, 6 percent;

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(2) On all over $16,770, but not over $67,390, 8 percent;

(3) On all over $67,390, 8.5 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax of any individual taxpayer whose taxable net income for the taxable year is less than an amount determined by the commissioner must be computed in accordance with tables prepared and issued by the commissioner of revenue based on income brackets of not more than $100. The amount of tax for each bracket shall be computed at the rates set forth in this subdivision, provided that the commissioner may disregard a fractional part of a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the individual's Minnesota income tax as provided in this subdivision. After the application of the nonrefundable credits provided in this chapter, the tax liability must then be multiplied by a fraction in which:

(1) The numerator is the individual's Minnesota source federal adjusted gross income as defined in section 62 of the Internal Revenue Code disregarding income or loss flowing from a corporation having a valid election for the taxable year under section 1362 of the Internal Revenue Code but which is not an "S" corporation under section 290.9725 and increased by the addition required for interest income from non-Minnesota state and municipal bonds under section 290.01, subdivision 19a, clause (1), after applying the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section 62 of the Internal Revenue Code of 1986~~, as amended through April 15, 1995,~~ increased by the ~~addition required for interest income from non-Minnesota state and municipal bonds under section 290.01, subdivision 19a, clause (1)~~ amounts specified in section 290.01, subdivision 19a, clauses (1), (5), (6), and (7), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (11), and (12).

Sec. 7. Minnesota Statutes 1997 Supplement, section 290.0671, subdivision 1, is amended to read:

Subdivision 1. [CREDIT ALLOWED.] (a) An individual is allowed a credit against the tax imposed by this chapter equal to a percentage of ~~the credit for which the individual is eligible~~ earned income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code. The percentage is 15 for individuals without a qualifying child, and 25 for individuals with at least one qualifying child. For purposes of this section, "qualifying child" has the meaning given in section 32(c)(3) of the Internal Revenue Code.

(b) For individuals with no qualifying children, the credit equals 1.1475 percent of the first $4,460 of earned income. The credit is reduced by 1.1475 percent of earned income or modified adjusted gross income, whichever is greater, in excess of $5,570, but in no case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 6.8 percent of the first $6,680 of earned income and 8.5 percent of earned income over $11,650 but less than $12,990. The credit is reduced by 4.77 percent of earned income or modified adjusted gross income, whichever is greater, in excess of $14,560, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals eight percent of the first $9,390 of earned income and 20 percent of earned income over $14,350 but less than $16,230. The credit is reduced by 8.8 percent of earned income or modified adjusted gross income, whichever is greater, in excess of $17,280, but in no case is the credit less than zero.

(e) For a nonresident or part-year resident, the credit ~~determined under section 32 of the Internal Revenue Code~~ must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income not subject to tax under this chapter, the credit must be allocated based on the ratio of federal adjusted gross income reduced by the earned income not subject to tax under this chapter over federal adjusted gross income.

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Sec. 8. Minnesota Statutes 1996, section 290.0671, is amended by adding a subdivision to read:

Subd. 1a. [DEFINITIONS.] For purposes of this section, the terms "qualifying child," "earned income," and "modified adjusted gross income" have the meanings given in section 32(c) of the Internal Revenue Code.

Sec. 9. Minnesota Statutes 1996, section 290.0671, is amended by adding a subdivision to read:

Subd. 7. [INFLATION ADJUSTMENT.] The earned income amounts used to calculate the credit and the income thresholds at which the maximum credit begins to be reduced in subdivision 1 must be adjusted for inflation. The commissioner shall adjust the earned income and threshold amounts by the percentage determined under section 290.06, subdivision 2d, for the taxable year.

Sec. 10. Minnesota Statutes 1997 Supplement, section 290.0673, subdivision 2, is amended to read:

Subd. 2. [QUALIFIED JOB TRAINING PROGRAM.] (a) To qualify for credits under this section, a job training program must satisfy the following requirements:

(1) It must be operated by a nonprofit corporation that qualifies under section 501(c)(3) of the Internal Revenue Code.

(2) The organization must spend at least $5,000 per graduate of the program.

(3) The program must provide education and training in:

(i) basic skills, such as reading, writing, mathematics, and communications;

(ii) thinking skills, such as reasoning, creative thinking, decision making, and problem solving; and

(iii) personal qualities, such as responsibility, self-esteem, self-management, honesty, and integrity.

(4) The program must provide income supplements, when needed, to participants for housing, counseling, tuition, and other basic needs.

(5) The education and training course must last for at least six months.

(6) Individuals served by the program must:

(i) be 18 years old or older;

(ii) have had federal adjusted gross income of no more than ~~$10,000~~ $15,000 per year in the last two years;

(iii) have assets of no more than ~~$5,000~~ $7,000, excluding the value of a homestead; and

(iv) not have been claimed as a dependent on the federal tax return of another person in the previous taxable year.

(7) The program must charge placement and retention fees that cumulatively exceed the amount of credit certificates provided to the employer by at least 20 percent.

(b) The program must be certified by the commissioner of children, families, and learning as meeting the requirements of this subdivision.

Sec. 11. Minnesota Statutes 1997 Supplement, section 290.0673, subdivision 6, is amended to read:

Subd. 6. [~~NONREFUNDABLE~~ REFUNDABLE.] The taxpayer must use the tax credit for the taxable year in which the certificate is issued to the employer. If the credit for the taxable year ~~may not exceed~~ exceeds the liability for tax under ~~section 290.06, subdivision 1,~~ chapter 290 for the taxable year, ~~before reduction by the nonrefundable credits allowed under this chapter~~ the commissioner shall refund the excess to the taxpayer. An amount sufficient to pay the refunds authorized by this subdivision is appropriated to the commissioner from the general fund.

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Sec. 12. Minnesota Statutes 1996, section 290.091, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by this section, the following terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section 55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum taxable income, but excluding:

(i) the Minnesota charitable contribution deduction ~~and~~;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue Code, with respect to each property (as defined in section 614 of the Internal Revenue Code), to the extent not included in federal alternative minimum taxable income, the excess of the deduction for depletion allowable under section 611 of the Internal Revenue Code for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount of interest income as provided by section 290.01, subdivision 19a, clause (1);

(6) amounts added to federal taxable income as provided by section 290.01, subdivision 19a, clauses (5), (6), and (7);

less the sum of the amounts determined under the following clauses (1) to ~~(3)~~ (4):

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision 19b, clause (2), to the extent included in federal alternative minimum taxable income; ~~and~~

(3) the amount of investment interest paid or accrued within the taxable year on indebtedness to the extent that the amount does not exceed net investment income, as defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted in computing federal adjusted gross income; and

(4) amounts subtracted from federal taxable income as provided by section 290.01, subdivision 19b, clauses (11) and (12).

In the case of an estate or trust, alternative minimum taxable income must be computed as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of the Internal Revenue Code.

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(c) "Tentative minimum tax" equals seven percent of alternative minimum taxable income after subtracting the exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this section.

(f) "Minnesota charitable contribution deduction" means a charitable contribution deduction under section 170 of the Internal Revenue Code to or for the use of an entity described in section 290.21, subdivision 3, clauses (a) to (e). When the federal deduction for charitable contributions is limited under section 170(b) of the Internal Revenue Code, the allowable contributions in the year of contribution are deemed to be first contributions to entities described in section 290.21, subdivision 3, clauses (a) to (e).

Sec. 13. Minnesota Statutes 1997 Supplement, section 290.091, subdivision 6, is amended to read:

Subd. 6. [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit is allowed against the tax imposed by this chapter on individuals, trusts, and estates equal to the minimum tax credit for the taxable year. The minimum tax credit equals the adjusted net minimum tax for taxable years beginning after December 31, 1988, reduced by the minimum tax credits allowed in a prior taxable year. The credit may not exceed the excess (if any) for the taxable year of

(1) the regular tax, over

(2) the greater of (i) the tentative alternative minimum tax, or (ii) zero.

(b) The adjusted net minimum tax for a taxable year equals the lesser of the net minimum tax or the excess (if any) of

(1) the tentative minimum tax, over

(2) seven percent of the sum of

(i) adjusted gross income as defined in section 62 of the Internal Revenue Code,

(ii) interest income as defined in section 290.01, subdivision 19a, clause (1),

(iii) the amount added to federal taxable income as provided by section 290.01, subdivision 19a, clauses (5), (6), and (7),

(iv) interest on specified private activity bonds, as defined in section 57(a)(5) of the Internal Revenue Code, to the extent not included under clause (ii),

~~(iv)~~ (v) depletion as defined in section 57(a)(1), determined without regard to the last sentence of paragraph (1), of the Internal Revenue Code, less

~~(v)~~ (vi) the deductions allowed in computing alternative minimum taxable income provided in subdivision 2, paragraph (a), clause (2) of the first series of clauses and clauses (1), (2), ~~and~~ (3), and (4) of the second series of clauses, and

~~(vi)~~ (vii) the exemption amount determined under subdivision 3.

In the case of an individual who is not a Minnesota resident for the entire year, adjusted net minimum tax must be multiplied by the fraction defined in section 290.06, subdivision 2c, paragraph (e). In the case of a trust or estate, adjusted net minimum tax must be multiplied by the fraction defined under subdivision 4, paragraph (b).

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Sec. 14. Minnesota Statutes 1996, section 290.10, is amended to read:

290.10 [NONDEDUCTIBLE ITEMS.]

Except as provided in section 290.17, subdivision 4, paragraph (i), in computing the net income of a ~~corporation~~ taxpayer no deduction shall in any case be allowed for expenses, interest and taxes connected with or allocable against the production or receipt of all income not included in the measure of the tax imposed by this chapter, except that for corporations engaged in the business of mining or producing iron ore, the mining of which is subject to the occupation tax imposed by section 298.01, subdivision 4, this shall not prevent the deduction of expenses and other items to the extent that the expenses and other items are allowable under this chapter and are not deductible, capitalizable, retainable in basis, or taken into account by allowance or otherwise in computing the occupation tax and do not exceed the amounts taken for federal income tax purposes for that year. Occupation taxes imposed under chapter 298, royalty taxes imposed under chapter 299, or depletion expenses may not be deducted under this clause.

Sec. 15. Minnesota Statutes 1996, section 290.21, subdivision 3, is amended to read:

Subd. 3. An amount for contribution or gifts made within the taxable year:

(a) to or for the use of the state of Minnesota, or any of its political subdivisions for exclusively public purposes,

(b) to or for the use of any community chest, corporation, organization, trust, fund, association, or foundation located in and carrying on substantially all of its activities within this state, organized and operating exclusively for religious, charitable, public cemetery, scientific, literary, artistic, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual,

(c) to a fraternal society, order, or association, operating under the lodge system located in and carrying on substantially all of their activities within this state if such contributions or gifts are to be used exclusively for the purposes specified in clause (b), or for or to posts or organizations of war veterans or auxiliary units or societies of such posts or organizations, if they are within the state and no part of their net income inures to the benefit of any private shareholder or individual,

(d) to or for the use of the United States of America for exclusively public purposes if the contribution or gift consists of real property located in Minnesota,

(e) to or for the use of a foundation if the foundation is organized and operated exclusively for a purpose in clause (b), and has no part of its net earnings inuring to the benefit of a private shareholder or individual, but does not carry on substantially all of its activities within this state. The deduction under this clause equals the amount of the corporation's contributions or gifts to the foundation within the taxable year multiplied by a fraction equal to the ratio of the foundation's total expenditures during the taxable year for the benefit of organizations described in clause (b) to the foundation's total expenditures during the taxable year,

(f) the total deduction hereunder shall not exceed 15 percent of the taxpayer's taxable net income less the deductions allowable under this section other than those for contributions or gifts,

(g) in the case of a corporation reporting its taxable income on the accrual basis, if: (A) the board of directors authorizes a charitable contribution during any taxable year, and (B) payment of such contribution is made after the close of such taxable year and on or before the 15th day of the third month following the close of such taxable year; then the taxpayer may elect to treat such contribution as paid during such taxable year. The election may be made only at the time of the filing of the return for such taxable year, and shall be signified in such manner as the commissioner shall by rules prescribe.

For a contribution of ordinary income or capital gain property, the amount allowed as a deduction is limited to the amount deductible under section 170(e) of the Internal Revenue Code. The contribution must also qualify under the rules in clauses (a) to (g) to be deductible.

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Sec. 16. Minnesota Statutes 1997 Supplement, section 290.371, subdivision 2, is amended to read:

Subd. 2. [EXEMPTIONS.] A corporation is not required to file a notice of business activities report if:

(1) by the end of an accounting period for which it was otherwise required to file a notice of business activities report under this section, it had received a certificate of authority to do business in this state;

(2) a timely return has been filed under section 289A.08;

(3) the corporation is exempt from taxation under this chapter pursuant to section 290.05; or

(4) the corporation's activities in Minnesota, or the interests in property which it owns, consist solely of activities or property exempted from jurisdiction to tax under section 290.015, subdivision 3, paragraph (b)~~; or~~

~~(5) the corporation is an "S" corporation under section 290.9725~~.

Sec. 17. Laws 1995, chapter 255, article 3, section 2, subdivision 1, as amended by Laws 1996, chapter 464, article 4, section 1, and Laws 1997, chapter 231, article 5, section 16, is amended to read:

Subdivision 1. [URBAN REVITALIZATION AND STABILIZATION ZONES.] (a) By September 1, 1995, the metropolitan council shall designate one or more urban revitalization and stabilization zones in the metropolitan area, as defined in section 473.121, subdivision 2. The designated zones must contain no more than 1,000 single family homes in total. In designating urban revitalization and stabilization zones, the council shall choose areas that are in transition toward blight and poverty. The council shall use indicators that evidence increasing neighborhood distress such as declining residential property values, declining resident incomes, declining rates of owner-occupancy, and other indicators of blight and poverty in determining which areas are to be urban revitalization and stabilization zones.

(b) An urban revitalization and stabilization zone is created in the geographic area composed entirely of parcels that are in whole or in part located within the 1996 65Ldn contour surrounding the Minneapolis-St. Paul International Airport, or within one mile of the boundaries of the 1996 65Ldn contour. For residents of the zone created under this paragraph, eligibility for the program as provided in subdivision 2 is limited to persons buying and occupying a residence in the zone after June 1, 1996, who have entered into purchase agreements related to those homes before July 1, 1997. Initial applications for the homesteading program in this paragraph shall not be accepted after December 31, 1998.

Sec. 18. Laws 1995, chapter 255, article 3, section 2, subdivision 4, as amended by Laws 1996, chapter 464, article 4, section 2, is amended to read:

Subd. 4. [EXPIRATION.] Initial applications for the urban homesteading program in the zones designated under subdivision 1, paragraph (a), shall not be accepted after July 1, 1997, for homes purchased and occupied before May 1, 1997. For homes purchased and occupied on or after May 1, 1997, but before July 1, 1998, initial applications shall not be accepted after June 30, 1998.

Sec. 19. [PROHIBITION OF USE OF SOCIAL SECURITY NUMBERS.]

No label, envelope, or other material printed by the department of revenue may include the social security number of the taxpayer in a place that will be visible when delivered or mailed to the taxpayer.

Sec. 20. [REPEALER.]

Minnesota Statutes 1996, section 289A.50, subdivision 6, is repealed.

Sec. 21. [EFFECTIVE DATES.]

Section 1 is effective for extensions received under Minnesota Statutes, section 289A.19, subdivision 2, for tax years beginning after December 31, 1996. Section 2 is effective retroactive to August 1, 1997. The change in section 3 made by clause (7) and section 12, paragraph (a), clause (2)(iii) of the first set of clauses, are effective for tax years beginning

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Section 1. Minnesota Statutes 1997 Supplement, section 289A.02, subdivision 7, is amended to read:

FEDERAL UPDATE

Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically defined otherwise, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, ~~1996, and includes the provisions of section 1(a) and (b) of Public Law Number 104-117~~ 1997.

Sec. 2. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 19, is amended to read:

Subd. 19. [NET INCOME.] The term "net income" means the federal taxable income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through the date named in this subdivision, incorporating any elections made by the taxpayer in accordance with the Internal Revenue Code in determining federal taxable income for federal income tax purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section 851(a) or 851(h) of the Internal Revenue Code, federal taxable income means investment company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue Code must be applied by allowing a deduction for capital gain dividends and exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any undistributed capital gains which the regulated investment company elects to have treated as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section 856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of the Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through December 31, 1986, shall be in effect for taxable years beginning after December 31, 1986. The provisions of sections 10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the Omnibus Budget Reconciliation Act of 1987, Public Law Number 100-203, the provisions of sections 1001, 1002, 1003, 1004, 1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 6277, and 6282 of the Technical and Miscellaneous Revenue Act of 1988, Public Law Number 100-647, the provisions of sections 7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 1989, Public Law Number 101-239, ~~and~~ the provisions of sections 1305, 1704(r), and 1704(e)(1) of the Small Business Job Protection Act, Public Law Number 104-188, and the provisions of sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall be effective at the time they become effective for federal income tax purposes.

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The Internal Revenue Code of 1986, as amended through December 31, 1987, shall be in effect for taxable years beginning after December 31, 1987. The provisions of sections 4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 6182, 6280, and 6281 of the Technical and Miscellaneous Revenue Act of 1988, Public Law Number 100-647, the provisions of sections 7815 and 7821 of the Omnibus Budget Reconciliation Act of 1989, Public Law Number 101-239, and the provisions of section 11702 of the Revenue Reconciliation Act of 1990, Public Law Number 101-508, shall become effective at the time they become effective for federal tax purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1988, shall be in effect for taxable years beginning after December 31, 1988. The provisions of sections 7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget Reconciliation Act of 1989, Public Law Number 101-239, the provision of section 1401 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Public Law Number 101-73, the provisions of sections 11701 and 11703 of the Revenue Reconciliation Act of 1990, Public Law Number 101-508, and the provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the Small Business Job Protection Act, Public Law Number 104-188, shall become effective at the time they become effective for federal tax purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1989, shall be in effect for taxable years beginning after December 31, 1989. The provisions of sections 11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of the Revenue Reconciliation Act of 1990, Public Law Number 101-508, and the provisions of sections 13224 and 13261 of the Omnibus Budget Reconciliation Act of 1993, Public Law Number 103-66, shall become effective at the time they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1990, shall be in effect for taxable years beginning after December 31, 1990.

The provisions of section 13431 of the Omnibus Budget Reconciliation Act of 1993, Public Law Number 103-66, shall become effective at the time they became effective for federal purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1991, shall be in effect for taxable years beginning after December 31, 1991.

The provisions of sections 1936 and 1937 of the Comprehensive National Energy Policy Act of 1992, Public Law Number 102-486, ~~and~~ the provisions of sections 13101, 13114, 13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of the Omnibus Budget Reconciliation Act of 1993, Public Law Number 103-66, and the provisions of section 1604(a)(1), (2), and (3) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall become effective at the time they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1992, shall be in effect for taxable years beginning after December 31, 1992.

The provisions of sections 13116, 13121, 13206, 13210, 13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of the Omnibus Budget Reconciliation Act of 1993, Public Law Number 103-66, ~~and~~ the provisions of sections 1703(a), 1703(d), 1703(i), 1703(l), and 1703(m) of the Small Business Job Protection Act, Public Law Number 104-188, and the provision of section 1604(c) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall become effective at the time they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1993, shall be in effect for taxable years beginning after December 31, 1993.

The provision of section 741 of Legislation to Implement Uruguay Round of General Agreement on Tariffs and Trade, Public Law Number 103-465, the provisions of sections 1, 2, and 3, of the Self-Employed Health Insurance Act of 1995, Public Law Number 104-7, the provision of section 501(b)(2) of the Health Insurance Portability and Accountability Act, Public Law Number 104-191, ~~and~~ the provisions of sections 1604 and 1704(p)(1) and (2) of the Small Business Job Protection Act, Public Law Number 104-188, and the provisions of sections 1011, 1211(b)(1), and 1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall become effective at the time they become effective for federal purposes.

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The Internal Revenue Code of 1986, as amended through December 31, 1994, shall be in effect for taxable years beginning after December 31, 1994.

The provisions of sections 1119(a), 1120, 1121, 1202(a), 1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small Business Job Protection Act, Public Law Number 104-188, ~~and~~ the provision of section 511 of the Health Insurance Portability and Accountability Act, Public Law Number 104-191, and the provisions of sections 1174 and 1601(i)(2) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall become effective at the time they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through March 22, 1996, is in effect for taxable years beginning after December 31, 1995.

The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 1616, 1617, 1704(l), and 1704(m) of the Small Business Job Protection Act, Public Law Number 104-188, ~~and~~ the provisions of Public Law Number 104-117, and the provisions of sections 313(a) and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall become effective at the time they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1996, shall be in effect for taxable years beginning after December 31, 1996.

The provisions of sections 202(a) and (b), 221(a), 225, 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) of the Taxpayer Relief Act of 1997, Public Law Number 105-34, shall become effective at the time they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through December 31, 1997, shall be in effect for taxable years beginning after December 31, 1997.

Except as otherwise provided, references to the Internal Revenue Code in subdivisions 19a to 19g mean the code in effect for purposes of determining net income for the applicable year.

Sec. 3. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 19a, is amended to read:

Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For individuals, estates, and trusts, there shall be added to federal taxable income:

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(3) the capital gain amount of a lump sum distribution to which the special tax under section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law Number 99-514, applies;

(7) the amount of a partner's pro rata share of net income which does not flow through to the partner because the partnership elected to pay the tax on the income under section 6242(a)(2) of the Internal Revenue Code.

Sec. 4. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 19c, is amended to read:

Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE INCOME.] For corporations, there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income, excise, or franchise taxes based on net income or related minimum taxes paid by the corporation to Minnesota, another state, a political subdivision of another state, the District of Columbia, or any foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its possessions, its agencies, or its instrumentalities; the state of Minnesota or any other state, any of its political or governmental subdivisions, any of its municipalities, or any of its governmental agencies or instrumentalities; the District of Columbia; or Indian tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes under sections 241 to 247 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under sections 1211 and 1212 of the Internal Revenue Code;

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(8) the amount of any charitable contributions deducted for federal income tax purposes under section 170 of the Internal Revenue Code;

(9) the exempt foreign trade income of a foreign sales corporation under sections 921(a) and 291 of the Internal Revenue Code;

(10) the amount of percentage depletion deducted under sections 611 through 614 and 291 of the Internal Revenue Code;

(11) for certified pollution control facilities placed in service in a taxable year beginning before December 31, 1986, and for which amortization deductions were elected under section 169 of the Internal Revenue Code of 1954, as amended through December 31, 1985, the amount of the amortization deduction allowed in computing federal taxable income for those facilities;

(12) the amount of any deemed dividend from a foreign operating corporation determined pursuant to section 290.17, subdivision 4, paragraph (g); ~~and~~

(13) the amount of any environmental tax paid under section 59(a) of the Internal Revenue Code.; and

(14) the amount of a partner's pro rata share of net income which does not flow through to the partner because the partnership elected to pay the tax on the income under section 6242(a)(2) of the Internal Revenue Code.

Sec. 5. Minnesota Statutes 1997 Supplement, section 290.01, subdivision 31, is amended to read:

Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically defined otherwise, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, ~~1996, and includes the provisions of section 1(a) and (b) of Public Law Number 104-117~~ 1997.

Sec. 6. Minnesota Statutes 1996, section 290.06, subdivision 2c, is amended to read:

(1) On the first $19,910, 6 percent;

(2) On all over $19,910, but not over $79,120, 8 percent;

(3) On all over $79,120, 8.5 percent.

(b) The income taxes imposed by this chapter upon unmarried individuals must be computed by applying to taxable net income the following schedule of rates:

(1) On the first $13,620, 6 percent;

(2) On all over $13,620, but not over $44,750, 8 percent;

(3) On all over $44,750, 8.5 percent.

(1) On the first $16,770, 6 percent;

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(2) On all over $16,770, but not over $67,390, 8 percent;

(3) On all over $67,390, 8.5 percent.

(1) The numerator is the individual's Minnesota source federal adjusted gross income as defined in section 62 of the Internal Revenue Code increased by the ~~addition~~ additions required ~~for interest income from non-Minnesota state and municipal bonds~~ under section 290.01, subdivision 19a, ~~clause~~ clauses (1) and (7), after applying the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section 62 of the Internal Revenue Code of 1986, ~~as amended through April 15, 1995,~~ increased by the ~~addition required for interest income from non-Minnesota state and municipal bonds~~ amounts specified under section 290.01, subdivision 19a, ~~clause~~ clauses (1) and (7).

Sec. 7. Minnesota Statutes 1996, section 290.067, subdivision 2a, is amended to read:

Subd. 2a. [INCOME.] (a) For purposes of this section, "income" means the sum of the following:

(1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code; and

(2) the sum of the following amounts to the extent not included in clause (1):

(i) all nontaxable income;

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss carryover allowed under section 469(b) of the Internal Revenue Code;

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a solvent individual excluded from gross income under section 108(g) of the Internal Revenue Code;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments received under the federal Social Security Act, supplemental security income, and veterans benefits), which was not exclusively funded by the claimant or spouse, or which was funded exclusively by the claimant or spouse and which funding payments were excluded from federal adjusted gross income in the years when the payments were made;

(vi) interest received from the federal or a state government or any instrumentality or political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

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(ix) the gross amounts of payments received in the nature of disability income or sick pay as a result of accident, sickness, or other disability, whether funded through insurance or otherwise;

(x) a lump sum distribution under section 402(e)(3) of the Internal Revenue Code;

(xi) contributions made by the claimant to an individual retirement account, including a qualified voluntary employee contribution; simplified employee pension plan; self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal Revenue Code; and

(xii) nontaxable scholarship or fellowship grants.

In the case of an individual who files an income tax return on a fiscal year basis, the term "federal adjusted gross income" means federal adjusted gross income reflected in the fiscal year ending in the next calendar year. Federal adjusted gross income may not be reduced by the amount of a net operating loss carryback or carryforward or a capital loss carryback or carryforward allowed for the year.

(b) "Income" does not include:

(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a), and 102~~, and 121~~;

(2) amounts of any pension or annuity that were exclusively funded by the claimant or spouse if the funding payments were not excluded from federal adjusted gross income in the years when the payments were made;

(3) surplus food or other relief in kind supplied by a governmental agency;

(4) relief granted under chapter 290A; and

(5) child support payments received under a temporary or final decree of dissolution or legal separation.

Sec. 8. Minnesota Statutes 1996, section 290.0921, subdivision 3a, is amended to read:

Subd. 3a. [EXEMPTIONS.] The following entities are exempt from the tax imposed by this section:

(1) cooperatives taxable under subchapter T of the Internal Revenue Code or organized under chapter 308 or a similar law of another state;

(2) corporations subject to tax under section 60A.15, subdivision 1;

(3) real estate investment trusts;

(4) regulated investment companies or a fund thereof; ~~and~~

(5) entities having a valid election in effect under section 860D(b) of the Internal Revenue Code.; and

(6) small corporations exempt from the federal alternative minimum tax under section 55(e) of the Internal Revenue Code.

Sec. 9. Minnesota Statutes 1996, section 290A.03, subdivision 3, is amended to read:

Subd. 3. [INCOME.] (1) "Income" means the sum of the following:

(a) federal adjusted gross income as defined in the Internal Revenue Code; and

(b) the sum of the following amounts to the extent not included in clause (a):

(i) all nontaxable income;

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(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a solvent individual excluded from gross income under section 108(g) of the Internal Revenue Code;

(iv) cash public assistance and relief;

(vi) interest received from the federal or a state government or any instrumentality or political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(ix) the gross amounts of payments received in the nature of disability income or sick pay as a result of accident, sickness, or other disability, whether funded through insurance or otherwise;

(x) a lump sum distribution under section 402(e)(3) of the Internal Revenue Code;

(xii) nontaxable scholarship or fellowship grants.

In the case of an individual who files an income tax return on a fiscal year basis, the term "federal adjusted gross income" shall mean federal adjusted gross income reflected in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be reduced by the amount of a net operating loss carryback or carryforward or a capital loss carryback or carryforward allowed for the year.

(2) "Income" does not include

(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a), and 102~~, and 121~~;

(b) amounts of any pension or annuity which was exclusively funded by the claimant or spouse and which funding payments were not excluded from federal adjusted gross income in the years when the payments were made;

(d) relief granted under this chapter; or

(e) child support payments received under a temporary or final decree of dissolution or legal separation.

(3) The sum of the following amounts may be subtracted from income:

(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;

(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;

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(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;

(e) for the claimant's fifth dependent, the exemption amount; and

(f) if the claimant or claimant's spouse was disabled or attained the age of 65 on or before December 31 of the year for which the taxes were levied or rent paid, the exemption amount.

For purposes of this subdivision, the "exemption amount" means the exemption amount under section 151(d) of the Internal Revenue Code for the taxable year for which the income is reported.

Sec. 10. Minnesota Statutes 1997 Supplement, section 290A.03, subdivision 15, is amended to read:

Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through December 31, ~~1996~~ 1997.

Sec. 11. Minnesota Statutes 1997 Supplement, section 291.005, subdivision 1, is amended to read:

Subdivision 1. Unless the context otherwise clearly requires, the following terms used in this chapter shall have the following meanings:

(1) "Federal gross estate" means the gross estate of a decedent as valued and otherwise determined for federal estate tax purposes by federal taxing authorities pursuant to the provisions of the Internal Revenue Code.

(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) excluding therefrom any property included therein which has its situs outside Minnesota and (b) including therein any property omitted from the federal gross estate which is includable therein, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(3) "Personal representative" means the executor, administrator or other person appointed by the court to administer and dispose of the property of the decedent. If there is no executor, administrator or other person appointed, qualified, and acting within this state, then any person in actual or constructive possession of any property having a situs in this state which is included in the federal gross estate of the decedent shall be deemed to be a personal representative to the extent of the property and the Minnesota estate tax due with respect to the property.

(4) "Resident decedent" means an individual whose domicile at the time of death was in Minnesota.

(5) "Nonresident decedent" means an individual whose domicile at the time of death was not in Minnesota.

(6) "Situs of property" means, with respect to real property, the state or country in which it is located; with respect to tangible personal property, the state or country in which it was normally kept or located at the time of the decedent's death; and with respect to intangible personal property, the state or country in which the decedent was domiciled at death.

(7) "Commissioner" means the commissioner of revenue or any person to whom the commissioner has delegated functions under this chapter.

(8) "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended through December 31, ~~1996, and includes the provisions of section 1(a)(4) of Public Law Number 104-117~~ 1997.

Sec. 12. [INSTRUCTION TO REVISOR.]

Each place in Minnesota Statutes that refers to section 851(h) or 851(q) of the Internal Revenue Code, the revisor in the next edition of Minnesota Statutes shall substitute "851(g)" for those references.

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Sec. 13. [EFFECTIVE DATES.]

Sections 1, 3, 4, and 6 to 9 are effective for tax years beginning after December 31, 1997. Sections 5, 10, and 11 are effective at the same time federal changes made by the Taxpayer Relief Act of 1997, Public Law Number 105-34, which are incorporated into Minnesota Statutes, chapters 290, 290A, and 291 by these sections, become effective for federal tax purposes.

Section 1. Minnesota Statutes 1996, section 297A.01, subdivision 8, is amended to read:

SALES TAX

Subd. 8. "Sales price" means the total consideration valued in money, for a retail sale whether paid in money or otherwise, excluding therefrom any amount allowed as credit for tangible personal property taken in trade for resale, without deduction for the cost of the property sold, cost of materials used, labor or service cost, interest, or discount allowed after the sale is consummated, the cost of transportation incurred prior to the time of sale, any amount for which credit is given to the purchaser by the seller, or any other expense whatsoever. A deduction may be made for charges of up to 15 percent in lieu of tips, if the consideration for such charges is separately stated. No deduction shall be allowed for charges for services that are part of a sale. Except as otherwise provided in this subdivision, a deduction may also be made for interest, financing, or carrying charges, charges for labor or services used in installing or applying the property sold or transportation charges if the transportation occurs after the retail sale of the property only if the consideration for such charges is separately stated. "Sales price," for purposes of sales of ready-mixed concrete sold from a ready-mixed concrete truck, includes any transportation, delivery, or other service charges, and no deduction is allowed for those charges, whether or not the charges are separately stated. There shall not be included in "sales price" cash discounts allowed and taken on sales or the amount refunded either in cash or in credit for property returned by purchasers.

Sec. 2. Minnesota Statutes 1996, section 297A.01, subdivision 15, is amended to read:

Subd. 15. "Farm machinery" means new or used machinery, equipment, implements, accessories, and contrivances used directly and principally in the production for sale, but not including the processing, of livestock, dairy animals, dairy products, poultry and poultry products, fruits, vegetables, forage, grains and bees and apiary products. "Farm machinery" includes:

(1) machinery for the preparation, seeding or cultivation of soil for growing agricultural crops and sod, harvesting and threshing of agricultural products, harvesting or mowing of sod, and certain machinery for dairy, livestock and poultry farms;

(2) barn cleaners, milking systems, grain dryers, automatic feeding systems and similar installations, whether or not the equipment is installed by the seller and becomes part of the real property;

(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe fittings, valves, sprinklers and other equipment necessary to the operation of an irrigation system when sold as part of an irrigation system, whether or not the equipment is installed by the seller and becomes part of the real property;

(4) logging equipment, including chain saws used for commercial logging;

(5) fencing used for the containment of farmed cervidae, as defined in section 17.451, subdivision 2; ~~and~~

(6) primary and backup generator units used to generate electricity for the purpose of operating farm machinery, as defined in this subdivision, or providing light or space heating necessary for the production of livestock, dairy animals, dairy products, or poultry and poultry products; and

(7) aquaculture production equipment as defined in subdivision 19.

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Repair or replacement parts for farm machinery shall not be included in the definition of farm machinery.

Tools, shop equipment, grain bins, feed bunks, fencing material except fencing material covered by clause (5), communication equipment and other farm supplies shall not be considered to be farm machinery. "Farm machinery" does not include motor vehicles taxed under chapter 297B, snowmobiles, snow blowers, lawn mowers except those used in the production of sod for sale, garden-type tractors or garden tillers and the repair and replacement parts for those vehicles and machines.

Sec. 3. Minnesota Statutes 1997 Supplement, section 297A.01, subdivision 16, is amended to read:

Subd. 16. [CAPITAL EQUIPMENT.] (a) Capital equipment means machinery and equipment purchased or leased for use in this state and used by the purchaser or lessee primarily for manufacturing, fabricating, mining, or refining tangible personal property to be sold ultimately at retail and for electronically transmitting results retrieved by a customer of an on-line computerized data retrieval system.

(b) Capital equipment includes all machinery and equipment that is essential to the integrated production process. Capital equipment includes, but is not limited to:

(1) machinery and equipment used or required to operate, control, or regulate the production equipment;

(2) machinery and equipment used for research and development, design, quality control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as temperature, humidity, light, or air pressure when those conditions are essential to and are part of the production process;

(4) materials and supplies necessary to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment; or

(7) materials used to construct and install special purpose buildings used in the production process; or

(8) ready-mixed concrete trucks in which the ready-mixed concrete is mixed as part of the delivery process.

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials;

(4) machinery or equipment used for nonproduction purposes, including, but not limited to, the following: machinery and equipment used for plant security, fire prevention, first aid, and hospital stations; machinery and equipment used in support operations or for administrative purposes; machinery and equipment used solely for pollution control, prevention, or abatement; and machinery and equipment used in plant cleaning, disposal of scrap and waste, plant communications, space heating, lighting, or safety;

(5) "farm machinery" as defined by subdivision 15, and "aquaculture production equipment" as defined by subdivision 19; or

(6) any other item that is not essential to the integrated process of manufacturing, fabricating, mining, or refining.

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(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but essential to an integrated production process, including computers and software, used in operating, controlling, or regulating machinery and equipment; and any subunit or assembly comprising a component of any machinery or accessory or attachment parts of machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or property to work in a new or different manner.

(3) "Machinery" means mechanical, electronic, or electrical devices, including computers and software, that are purchased or constructed to be used for the activities set forth in paragraph (a), beginning with the removal of raw materials from inventory through the completion of the product, including packaging of the product.

(4) "Manufacturing" means an operation or series of operations where raw materials are changed in form, composition, or condition by machinery and equipment and which results in the production of a new article of tangible personal property. For purposes of this subdivision, "manufacturing" includes the generation of electricity or steam to be sold at retail.

(5) "Mining" means the extraction of minerals, ores, stone, and peat.

(6) "On-line data retrieval system" means a system whose cumulation of information is equally available and accessible to all its customers.

(7) "Pollution control equipment" means machinery and equipment used to eliminate, prevent, or reduce pollution resulting from an activity described in paragraph (a).

(8) "Primarily" means machinery and equipment used 50 percent or more of the time in an activity described in paragraph (a).

(9) "Refining" means the process of converting a natural resource to a product, including the treatment of water to be sold at retail.

(e) For purposes of this subdivision the requirement that the machinery or equipment "must be used by the purchaser or lessee" means that the person who purchases or leases the machinery or equipment must be the one who uses it for the qualifying purpose. When a contractor buys and installs machinery or equipment as part of an improvement to real property, only the contractor is considered the purchaser.

Sec. 4. Minnesota Statutes 1996, section 297A.02, subdivision 2, is amended to read:

Subd. 2. [MACHINERY AND EQUIPMENT.] Notwithstanding the provisions of subdivision 1, the rate of the excise tax imposed upon sales of farm machinery and aquaculture production equipment is ~~2.5~~ 2.0 percent for sales after June 30, 1998, and before July 1, 1999, and 1.0 percent for sales after June 30, 1999, and before July 1, 2000.

Sec. 5. Minnesota Statutes 1996, section 297A.02, subdivision 4, is amended to read:

Subd. 4. [MANUFACTURED HOUSING AND PARK TRAILERS.] Notwithstanding the provisions of subdivision 1, for sales at retail of manufactured homes as defined in section 327.31, subdivision 6, that are used for residential purposes ~~and new or used park trailers, as defined in section 168.011, subdivision 8, paragraph (b)~~, the excise tax is imposed upon 65 percent of the ~~sales price~~ dealer's cost of the home or, and for sales of new and used park trailers, as defined in section 168.011, subdivision 8, paragraph (b), the excise tax is imposed upon 65 percent of the sales price of the park trailer.

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Sec. 6. Minnesota Statutes 1996, section 297A.135, subdivision 4, as amended by Laws 1997, Third Special Session chapter 3, section 23, is amended to read:

Subd. 4. [~~EXEMPTION~~ EXEMPTIONS.] (a) The tax and the fee imposed by this section do not apply to a lease or rental of (1) a vehicle to be used by the lessee to provide a licensed taxi service; (2) a hearse or limousine used in connection with a burial or funeral service; or (3) a van designed or adapted primarily for transporting property rather than passengers.

(b) The lessor may elect not to charge the fee imposed in subdivision 1a if in the previous calendar year the lessor had no more than 20 vehicles available for lease that would have been subject to tax under this section, or no more than $50,000 in gross receipts that would have been subject to tax under this section.

Sec. 7. Minnesota Statutes 1996, section 297A.135, subdivision 5, as added by Laws 1997, Third Special Session chapter 3, section 23, is amended to read:

Subd. 5. [PAYMENT OF EXCESS FEES.] On the first sales tax return due following the end of a calendar year during which a lessor has imposed a fee under subdivision 1a, the lessor shall report to the commissioner of revenue, in the form required by the commissioner, the amount of the fee collected and the amount of motor vehicle registration taxes paid by the lessor under chapter 168 on vehicles subject to the fee under this section. If the amount of the fee collected during the previous year exceeds the amount of motor vehicle registration taxes paid under chapter 168 during the previous year, the lessor shall remit the excess to the commissioner of revenue at the time the report is submitted.

Sec. 8. Minnesota Statutes 1997 Supplement, section 297A.25, subdivision 3, is amended to read:

Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts from the sale of and storage, use, or consumption of prescribed drugs, prescribed medicine and insulin, intended for use, internal or external, in the cure, mitigation, treatment or prevention of illness or disease in human beings are exempt, together with prescription glasses, fever thermometers, therapeutic, and prosthetic devices. "Prescribed drugs" or "prescribed medicine" includes over-the-counter drugs or medicine prescribed by a licensed physician. "Therapeutic devices" includes reusable finger pricking devices for the extraction of blood, blood glucose monitoring machines, and other diagnostic agents used in diagnosing, monitoring, or treating diabetes. Nonprescription analgesics consisting principally (determined by the weight of all ingredients) of acetaminophen, acetylsalicylic acid, ibuprofen, ketoprofen, naproxen, and other nonprescription analgesics that are approved by the United States Food and Drug Administration for internal use by human beings, or a combination thereof, are exempt.

Medical supplies purchased by a licensed health care facility or licensed health care professional to provide medical treatment to residents or patients are exempt. The exemption does not apply to medical equipment or components of medical equipment, laboratory supplies, radiological supplies, and other items used in providing medical services. For purposes of this subdivision, "medical supplies" means adhesive and nonadhesive bandages, gauze pads and strips, cotton applicators, antiseptics, nonprescription drugs, eye solution, and other similar supplies used directly on the resident or patient in providing medical services.

Sec. 9. Minnesota Statutes 1997 Supplement, section 297A.25, subdivision 9, is amended to read:

Subd. 9. [MATERIALS CONSUMED IN PRODUCTION.] The gross receipts from the sale of and the storage, use, or consumption of all materials, including chemicals, fuels, petroleum products, lubricants, packaging materials, including returnable containers used in packaging food and beverage products, feeds, seeds, fertilizers, electricity, gas and steam, used or consumed in agricultural or industrial production of personal property intended to be sold ultimately at retail, whether or not the item so used becomes an ingredient or constituent part of the property produced are exempt. Seeds, trees, fertilizers, and herbicides purchased for use by farmers in the Conservation Reserve Program under United States Code, title 16, section 590h, as amended through December 31, 1991, the Integrated Farm Management Program under section 1627 of Public Law Number 101-624, the Wheat and Feed Grain Programs under sections 301 to 305 and 401 to 405 of Public Law Number 101-624, and the conservation reserve program under sections 103F.505 to 103F.531, are included in this exemption. Sales to a veterinarian of materials used or consumed in the care, medication, and treatment of horses and agricultural production animals are exempt under this subdivision. Chemicals used for cleaning food

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processing machinery and equipment are included in this exemption. Materials, including chemicals, fuels, and electricity purchased by persons engaged in agricultural or industrial production to treat waste generated as a result of the production process are included in this exemption. Such production shall include, but is not limited to, research, development, design or production of any tangible personal property, manufacturing, processing (other than by restaurants and consumers) of agricultural products whether vegetable or animal, commercial fishing, refining, smelting, reducing, brewing, distilling, printing, mining, quarrying, lumbering, generating electricity and the production of road building materials. Such production shall not include painting, cleaning, repairing or similar processing of property except as part of the original manufacturing process. Machinery, equipment, implements, tools, accessories, appliances, contrivances, furniture and fixtures, used in such production and fuel, electricity, gas or steam used for space heating or lighting, are not included within this exemption; however, accessory tools, equipment and other short lived items, which are separate detachable units used in producing a direct effect upon the product, where such items have an ordinary useful life of less than 12 months, are included within the exemption provided herein. Electricity used to make snow for outdoor use for ski hills, ski slopes, or ski trails is included in this exemption. Petroleum and special fuels used in producing or generating power for propelling ready-mixed concrete trucks on the public highways of this state are not included in this exemption.

Sec. 10. Minnesota Statutes 1997 Supplement, section 297A.25, subdivision 11, is amended to read:

Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from all sales, including sales in which title is retained by a seller or a vendor or is assigned to a third party under an installment sale or lease purchase agreement under section 465.71, of tangible personal property to, and all storage, use or consumption of such property by, the United States and its agencies and instrumentalities, the University of Minnesota, state universities, community colleges, technical colleges, state academies, the Lola and Rudy Perpich Minnesota center for arts education, ~~and~~ an instrumentality of a political subdivision that is accredited as an optional/special function school by the North Central Association of Colleges and Schools, school districts, public libraries, public library systems, multicounty, multitype library systems as defined in section 134.001, county law libraries under chapter 134A, the state library under section 480.09, and the legislative reference library are exempt.

As used in this subdivision, "school districts" means public school entities and districts of every kind and nature organized under the laws of the state of Minnesota, including, without limitation, school districts, intermediate school districts, education districts, service cooperatives, secondary vocational cooperative centers, special education cooperatives, joint purchasing cooperatives, telecommunication cooperatives, regional management information centers, and any instrumentality of a school district, as defined in section 471.59.

Sales exempted by this subdivision include sales under section 297A.01, subdivision 3, paragraph (f).

Sales to hospitals and nursing homes owned and operated by political subdivisions of the state are exempt under this subdivision.

The sales to and exclusively for the use of libraries of books, periodicals, audio-visual materials and equipment, photocopiers for use by the public, and all cataloguing and circulation equipment, and cataloguing and circulation software for library use are exempt under this subdivision. For purposes of this paragraph "libraries" means libraries as defined in section 134.001, county law libraries under chapter 134A, the state library under section 480.09, and the legislative reference library.

Sales of supplies and equipment used in the operation of an ambulance service owned and operated by a political subdivision of the state are exempt under this subdivision provided that the supplies and equipment are used in the course of providing medical care. Sales to a political subdivision of repair and replacement parts for emergency rescue vehicles and fire trucks and apparatus are exempt under this subdivision.

Sales to a political subdivision of machinery and equipment, except for motor vehicles, used directly for mixed municipal solid waste management services at a solid waste disposal facility as defined in section 115A.03, subdivision 10, are exempt under this subdivision.

Sales to political subdivisions of chore and homemaking services to be provided to elderly or disabled individuals are exempt.

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Sales to a town of gravel and of machinery, equipment, and accessories, except motor vehicles, used exclusively for road and bridge maintenance are exempt.

Sales of telephone services to the department of administration that are used to provide telecommunications services through the intertechnologies revolving fund are exempt under this subdivision.

This exemption shall not apply to building, construction or reconstruction materials purchased by a contractor or a subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed maximum price covering both labor and materials for use in the construction, alteration, or repair of a building or facility. This exemption does not apply to construction materials purchased by tax exempt entities or their contractors to be used in constructing buildings or facilities which will not be used principally by the tax exempt entities.

This exemption does not apply to the leasing of a motor vehicle as defined in section 297B.01, subdivision 5, except for leases entered into by the United States or its agencies or instrumentalities.

The tax imposed on sales to political subdivisions of the state under this section applies to all political subdivisions other than those explicitly exempted under this subdivision, notwithstanding section 115A.69, subdivision 6, 116A.25, 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 469.127, 473.448, 473.545, or 473.608 or any other law to the contrary enacted before 1992.

Sales exempted by this subdivision include sales made to other states or political subdivisions of other states, if the sale would be exempt from taxation if it occurred in that state, but do not include sales under section 297A.01, subdivision 3, paragraphs (c) and (e).

Sec. 11. Minnesota Statutes 1997 Supplement, section 297A.25, subdivision 59, is amended to read:

Subd. 59. [FARM MACHINERY.] The gross receipts from the sale of used farm machinery and, after June 30, 2000, the gross receipts from the sale of new farm machinery, are exempt.

Sec. 12. Minnesota Statutes 1996, section 297A.25, subdivision 60, is amended to read:

Subd. 60. [CONSTRUCTION MATERIALS; STATE CONVENTION CENTER.] Construction materials and supplies are exempt from the tax imposed under this chapter, regardless of whether purchased by the owner or a contractor, subcontractor, or builder, if:

(1) the materials and supplies are used or consumed in constructing improvements to a state convention center located in a city located outside of the metropolitan area as defined in section 473.121, subdivision 2, and the center is governed by an 11-person board of which four are appointed by the governor; and

(2) the improvements are financed in whole or in part by nonstate resources including, but not limited to, revenue or general obligations issued by the state convention center board of the city in which the center is located.

~~The exemption provided by this subdivision applies to construction materials and supplies purchased prior to December 31, 1998.~~

Sec. 13. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 73. [BIOSOLIDS PROCESSING EQUIPMENT.] The gross receipts from the sale of and the storage, use, or consumption of equipment designed to process, dewater, and recycle biosolids for wastewater treatment facilities of political subdivisions, and materials incidental to installation of that equipment, are exempt.

Sec. 14. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 74. [CONSTRUCTION MATERIALS; MINNEAPOLIS CONVENTION CENTER.] Purchases of materials, supplies, or equipment used or consumed in the construction, equipment, improvement, or expansion of the Minneapolis convention center are exempt from the tax imposed under this chapter and from any sales and use tax imposed by a local unit of government notwithstanding any ordinance or charter provision. This exemption applies regardless of whether the materials, supplies, or equipment are purchased by the city or by a construction manager or contractor.

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Sec. 15. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 75. [CONSTRUCTION MATERIALS; RIVERCENTRE ARENA.] Purchases of materials, supplies, or equipment used or consumed in the construction, equipment, improvement, or expansion of the RiverCentre arena complex in the city of St. Paul are exempt from the tax imposed under this chapter and from any sales and use tax imposed by a local unit of government notwithstanding any ordinance or charter provision. This exemption applies regardless of whether the materials, supplies, or equipment are purchased by the city or by a construction manager or contractor.

Sec. 16. Minnesota Statutes 1997 Supplement, section 297A.25, is amended by adding a subdivision to read:

Subd. 76. [CONSTRUCTION MATERIALS FOR AN ENVIRONMENTAL LEARNING CENTER.] Construction materials and supplies are exempt from the tax imposed under this section, regardless of whether purchased by the owner or a contractor, subcontractor, or builder, if they are used or consumed in constructing or improving the Long Lake Conservation Center pursuant to the funding provided under Laws 1994, chapter 643, section 23, subdivision 28, as amended by Laws 1995, First Special Session chapter 2, article 1, section 48; and Laws 1996, chapter 463, section 7, subdivision 26. The tax shall be calculated and paid as if the rate in section 297A.02, subdivision 1, was in effect and a refund applied for in the manner prescribed in section 297A.15, subdivision 7.

Sec. 17. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 77. [SOYBEAN OILSEED PROCESSING AND REFINING FACILITY.] Purchases of construction materials and supplies are exempt from the sales and use taxes imposed under this chapter, regardless of whether purchased by the owner or a contractor, subcontractor, or builder, if:

(1) the materials and supplies are used or consumed in constructing a facility for soybean oilseed processing and refining;

(2) the total capital investment made in the facility is at least $60,000,000; and

(3) the facility is constructed by a Minnesota-based cooperative, organized under chapter 308A.

Sec. 18. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 78. [EARLE BROWN HERITAGE CENTER CONSTRUCTION MATERIALS.] Purchases of materials and supplies used or consumed in and equipment incorporated into the construction, improvement, or expansion of the Earle Brown Heritage Center in Brooklyn Center are exempt from the tax imposed under this chapter, and from any sales and use tax imposed by a local unit of government notwithstanding any ordinance or charter provision. This exemption applies regardless of whether the materials, supplies, or equipment are purchased by the city or a contractor, subcontractor, or builder.

Sec. 19. Minnesota Statutes 1997 Supplement, section 297A.256, subdivision 1, is amended to read:

Subdivision 1. [FUNDRAISING SALES BY NONPROFIT GROUPS.] Notwithstanding the provisions of this chapter, the following sales made by a "nonprofit organization" are exempt from the sales and use tax.

(a)(1) All sales made by an organization for fundraising purposes if that organization exists solely for the purpose of providing educational or social activities for young people primarily age 18 and under. This exemption shall apply only if the gross annual sales receipts of the organization from fundraising do not exceed $10,000.

(2) A club, association, or other organization of elementary or secondary school students organized for the purpose of carrying on sports, educational, or other extracurricular activities is a separate organization from the school district or school for purposes of applying the $10,000 limit. This paragraph does not apply if the sales are derived from admission charges or from activities for which the money must be deposited with the school district treasurer under section 123.38, subdivision 2, or be recorded in the same manner as other revenues or expenditures of the school district under section 123.38, subdivision 2b.

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(b) All sales made by an organization for fundraising purposes if that organization is a senior citizen group or association of groups that in general limits membership to persons age 55 or older and is organized and operated exclusively for pleasure, recreation and other nonprofit purposes and no part of the net earnings inure to the benefit of any private shareholders. This exemption shall apply only if the gross annual sales receipts of the organization from fundraising do not exceed $10,000.

(c) The gross receipts from the sales of tangible personal property at, admission charges for, and sales of food, meals, or drinks at fundraising events sponsored by a nonprofit organization when the entire proceeds, except for the necessary expenses therewith, will be used solely and exclusively for charitable, religious, or educational purposes. This exemption does not apply to admission charges for events involving bingo or other gambling activities or to charges for use of amusement devices involving bingo or other gambling activities. For purposes of this paragraph, a "nonprofit organization" means any unit of government, corporation, society, association, foundation, or institution organized and operated for charitable, religious, educational, civic, fraternal, senior citizens' or veterans' purposes, no part of the net earnings of which inures to the benefit of a private individual.

If the profits are not used solely and exclusively for charitable, religious, or educational purposes, the entire gross receipts are subject to tax.

Each nonprofit organization shall keep a separate accounting record, including receipts and disbursements from each fundraising event. All deductions from gross receipts must be documented with receipts and other records. If records are not maintained as required, the entire gross receipts are subject to tax.

The exemption provided by this paragraph does not apply to any sale made by or in the name of a nonprofit corporation as the active or passive agent of a person that is not a nonprofit corporation.

The exemption for fundraising events under this paragraph is limited to no more than 24 days a year. Fundraising events conducted on premises leased for more than ~~four~~ five days but less than 30 days do not qualify for this exemption.

(d) The gross receipts from the sale or use of tickets or admissions to a golf tournament held in Minnesota are exempt if the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code, as amended through December 31, 1994, including a tournament conducted on premises leased or occupied for more than four days.

Sec. 20. Minnesota Statutes 1997 Supplement, section 297A.48, is amended by adding a subdivision to read:

Subd. 9a. [LOCAL RESOLUTION BEFORE APPLICATION FOR AUTHORITY.] Before the governing body of a political subdivision requests legislative approval of a special law for a local sales tax that is administered under this section, it shall adopt a resolution indicating its approval of the tax. The resolution must include, at a minimum, information on the proposed tax rate, how the revenues will be used, the total revenue that will be raised before the tax expires, and the estimated length of time that the tax will be in effect.

Sec. 21. Minnesota Statutes 1997 Supplement, section 297B.03, is amended to read:

297B.03 [EXEMPTIONS.]

There is specifically exempted from the provisions of this chapter and from computation of the amount of tax imposed by it the following:

(1) Purchase or use, including use under a lease purchase agreement or installment sales contract made pursuant to section 465.71, of any motor vehicle by the United States and its agencies and instrumentalities and by any person described in and subject to the conditions provided in section 297A.25, subdivision 18.

(2) Purchase or use of any motor vehicle by any person who was a resident of another state at the time of the purchase and who subsequently becomes a resident of Minnesota, provided the purchase occurred more than 60 days prior to the date such person began residing in the state of Minnesota.

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(3) Purchase or use of any motor vehicle by any person making a valid election to be taxed under the provisions of section 297A.211.

(4) Purchase or use of any motor vehicle previously registered in the state of Minnesota when such transfer constitutes a transfer within the meaning of section 351 or 721 of the Internal Revenue Code of 1986, as amended through December 31, 1988.

(5) Purchase or use of any vehicle owned by a resident of another state and leased to a Minnesota based private or for hire carrier for regular use in the transportation of persons or property in interstate commerce provided the vehicle is titled in the state of the owner or secured party, and that state does not impose a sales tax or sales tax on motor vehicles used in interstate commerce.

(6) Purchase or use of a motor vehicle by a private nonprofit or public educational institution for use as an instructional aid in automotive training programs operated by the institution. "Automotive training programs" includes motor vehicle body and mechanical repair courses but does not include driver education programs.

(7) Purchase of a motor vehicle for use as an ambulance by an ambulance service licensed under section 144E.10.

(8) Purchase of a motor vehicle by or for a public library, as defined in section 134.001, subdivision 2, as a bookmobile or library delivery vehicle.

(9) Purchase of a ready-mixed concrete truck.

(10) Purchase or use of a motor vehicle by a town for use exclusively for road maintenance, including snowplows and dump trucks, but not including automobiles, vans, or pickup trucks.

Sec. 22. Minnesota Statutes 1997 Supplement, section 297G.01, is amended by adding a subdivision to read:

Subd. 3a. [CIDER.] "Cider" means a product that contains not less than one-half of one percent nor more than seven percent alcohol by volume and is made from the alcoholic fermentation of the juice of apples. Cider includes, but is not limited to, flavored, sparkling, and carbonated cider.

Sec. 23. Minnesota Statutes 1997 Supplement, section 297G.03, subdivision 1, is amended to read:

Subdivision 1. [GENERAL RATE; DISTILLED SPIRITS AND WINE.] The following excise tax is imposed on all distilled spirits and wine manufactured, imported, sold, or possessed in this state:

Standard Metric

(a) Distilled spirits, liqueurs, cordials and $5.03 per gallon $1.33 per liter

specialties regardless of alcohol content

(excluding ethyl alcohol)

(b) Wine containing 14 percent or less $ .30 per gallon $ .08 per liter

alcohol by volume (except cider as defined

in section 297G.01,subdivision 3a)

not more than 21 percent alcohol by volume

(d) Wine containing more than 21 percent but $1.82 per gallon $ .48 per liter

not more than 24 percent alcohol by volume

(e) Wine containing more than 24 percent $3.52 per gallon $ .93 per liter

alcohol by volume

(f) Natural and artificial sparkling wines $1.82 per gallon $ .48 per liter

containing alcohol

(g) Cider as defined in section 297G.01, $ .15 per gallon $ .04 per liter

subdivision 3a

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In computing the tax on a package of distilled spirits or wine, a proportional tax at a like rate on all fractional parts of a gallon or liter must be paid, except that the tax on a fractional part of a gallon less than 1/16 of a gallon is the same as for 1/16 of a gallon.

Sec. 24. Minnesota Statutes 1996, section 475.58, subdivision 3, is amended to read:

Subd. 3. [YOUTH ICE FACILITIES.] (a) A municipality may, without regard to the election requirement under subdivision 1 or under any other provision of law or a home rule charter, issue and sell obligations to finance acquisition, improvement, or construction of an indoor ice arena intended to be used predominantly for youth athletic activities if all the following conditions are met:

(1) the obligations are secured by a pledge of revenues from the facility;

(2) the facility and its financing are approved by resolutions of at least two of the following governing bodies of (i) the city in which the facility is located, (ii) the school district in which the facility is located, or (iii) the county in which the facility is located;

(3) the governing body of the municipality finds, based on analysis provided by a professional experienced in finance, that the facility's revenues and other available money will be sufficient to pay the obligations, without reliance on a property tax levy or the municipality's general purpose state aid; and

(4) no petition for an election has been timely filed under paragraph (b).

(b) At least 30 days before issuing obligations under this subdivision, the municipality must hold a public hearing on the issue. The municipality must publish or provide notice of the hearing in the same manner provided for its regular meetings. The obligations are not exempt from the election requirement under this subdivision, if:

(1) registered voters equal to ten percent of the votes cast in the last general election in the municipality sign a petition requesting a vote on the issue; and

(2) the petition is filed with the municipality within 20 days after the public hearing.

Sec. 25. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991, chapter 291, article 8, section 22, is amended to read:

Subd. 2. Notwithstanding Minnesota Statutes, Section ~~477A.01, Subdivision 18~~ 477A.016, or any other law, ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance, impose an additional sales tax of up to one and one-half percent on sales transactions which are described in Minnesota Statutes, Section 297A.01, Subdivision 3, Clause (c). When the city council determines that the taxes imposed under this subdivision and under section 26 at a rate of one-half of one percent have produced revenue sufficient to pay the debt service on bonds in a principal amount of $8,000,000 since the imposition of the taxes at the rate of one and one-half percent, the rate of the tax under this subdivision is reduced to one percent. The imposition of this tax shall not be subject to voter referendum under either state law or city charter provisions.

Sec. 26. Laws 1980, chapter 511, section 2, is amended to read:

Sec. 2. [CITY OF DULUTH; TAX ON RECEIPTS BY HOTELS AND MOTELS.]

Notwithstanding Minnesota Statutes, Section ~~477A.01, Subdivision 18~~ 477A.016, or any other law, or ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance, impose an additional tax of one and one-half percent upon the gross receipts from the sale of lodging for periods of less than 30 days in hotels and motels located in the city. When the city council determines that the taxes imposed under this section and section 25 at a rate of one-half of one percent have produced revenue sufficient to pay the debt service on bonds in a principal amount of $8,000,000

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since the imposition of the taxes at the rate of one and one-half percent, the rate of the tax under this section is reduced to one percent. The tax shall be collected in the same manner as the tax set forth in the Duluth city charter, section 54(d), paragraph one. The imposition of this tax shall not be subject to voter referendum under either state law or city charter provisions.

Sec. 27. Laws 1980, chapter 511, section 3, is amended to read:

Sec. 3. [ALLOCATION OF REVENUES.]

Revenues received from the taxes authorized by section 1, subdivision 2, and section 2 shall be used to pay for activities conducted by the city or by other organizations which promote tourism in the city of Duluth, including capital improvements of tourism facilities, and to subsidize the Duluth Arena-Auditorium and the Spirit Mountain recreation authority. Distribution of the revenues derived from these taxes shall be approved by the Duluth city council at least once annually, may include pledging such revenues to pay principal of and interest on city of Duluth bonds issued to finance such tourism facilities, and shall be made in accordance with the policy set forth in this section.

Sec. 28. Laws 1991, chapter 291, article 8, section 27, subdivision 3, is amended to read:

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 shall be used by the city to pay the cost of collecting the tax and to pay all or a portion of the expenses of constructing and operating facilities as part of an urban revitalization project in downtown Mankato known as Riverfront 2000. Authorized expenses include, but are not limited to, acquiring property and paying relocation expenses related to the development of Riverfront 2000 and related facilities, and securing or paying debt service on bonds or other obligations issued to finance the construction of Riverfront 2000 and related facilities. For purposes of this section, "Riverfront 2000 and related facilities" means a civic-convention center, an arena, a riverfront park, a technology center and related educational facilities, and all publicly owned real or personal property that the governing body of the city determines will be necessary to facilitate the use of these facilities, including but not limited to parking, skyways, pedestrian bridges, lighting, and landscaping.

Sec. 29. Laws 1992, chapter 511, article 8, section 33, subdivision 5, is amended to read:

Subd. 5. [TERMINATION OF TAXES.] The taxes imposed pursuant to subdivisions 1 and 2 shall terminate at the later of (1) December 31, 1998, or (2) on the first day of the second month next succeeding a determination by the city council that sufficient funds have been received from the taxes to finance capital and administrative costs of $28,760,000 for improvements for fire station, city hall, and public library facilities and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the improvements. Any funds remaining after completion of the improvements and retirement or redemption of the bonds may be placed in the general fund of the city.

Sec. 30. Laws 1993, chapter 375, article 9, section 46, subdivision 2, is amended to read:

Subd. 2. [USE OF REVENUES.] Revenues received from the tax authorized by subdivision 1 may only be used by the city to pay the cost of collecting the tax, and to pay for the following projects or to secure or pay any principal, premium, or interest on bonds issued in accordance with subdivision 3 for the following projects.

(a) To pay all or a portion of the capital expenses of construction, equipment and acquisition costs for the expansion and remodeling of the St. Paul Civic Center complex, including the demolition of the existing arena and the construction and equipping of a new arena.

(b) The remainder of the funds must be spent for capital projects to further residential, cultural, commercial, and economic development in both downtown St. Paul and St. Paul neighborhoods. The amount apportioned under this paragraph shall be no less than 60 percent of the revenues derived from the tax each year, except to the extent that a portion of that amount is required to pay debt service on (1) bonds issued for the purposes of paragraph (a) prior to March 1, 1998; or (2) bonds issued for the purposes of paragraph (a) after March 1, 1998, but only if the city council determines that 40 percent of the revenues derived from the tax together with other revenues pledged to the payment of the bonds, including the proceeds of definitive bonds, is expected to exceed the annual debt service on the bonds.

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(c) If in any year more than 40 percent of the revenue derived from the tax authorized by subdivision 1 is used to pay debt service on the bonds issued for the purposes of paragraph (a) and to fund a reserve for the bonds, the amount of the debt service payment that exceeds 40 percent of the revenue must be determined for that year. In any year when 40 percent of the revenue produced by the sales tax exceeds the amount required to pay debt service on the bonds and to fund a reserve for the bonds under paragraph (a), the amount of the excess must be made available for capital projects to further residential, cultural, commercial, and economic development in the neighborhoods and downtown until the cumulative amounts determined for all years under the preceding sentence have been made available under this sentence. The amount made available as reimbursement in the preceding sentence is not included in the 60 percent determined under paragraph (b).

(d) By January 15 of each odd-numbered year, the mayor and the city council must report to the legislature on the use of sales tax revenues during the preceding two-year period.

Sec. 31. Laws 1993, chapter 375, article 9, section 46, subdivision 3, is amended to read:

Subd. 3. [BONDS.] The city may issue general obligation bonds ~~of the city~~ or special revenue bonds to finance all or a portion of the cost for projects authorized in subdivision 2, paragraph (a). The debt represented by the bonds shall not be included in computing any debt limitations applicable to the city. The bonds may be paid from or secured by any funds available to the city, including the tax authorized under subdivision 1, any revenues derived from the project, tax increments from the tax increment district that includes the project, and revenue from any lodging tax imposed under Laws 1982, chapter 523, article 25, section 1. The bonds may be issued in one or more series and sold without election on the question of issuance of the bonds or a property tax to pay them. Except as otherwise provided in this section, the bonds must be issued, sold, and secured in the manner provided in Minnesota Statutes, chapter 475. The aggregate principal amount of bonds issued under this subdivision may not exceed $65 million, provided that the city may issue additional bonds under this subdivision as long as the total principal amount of the additional bonds together with the outstanding principal amount of the bonds previously issued under this subdivision does not exceed $130 million. The bonds authorized by this subdivision shall not be included in local general obligation debt as defined in Laws 1971, chapter 773, as amended, including Laws 1992, chapter 511, and shall not affect the amount of capital improvement bonds authorized to be issued by the city of St. Paul.

Sec. 32. Laws 1993, chapter 375, article 9, section 46, subdivision 5, is amended to read:

Subd. 5. [EXPIRATION OF TAXING AUTHORITY.] The authority granted by subdivision 1 to the city to impose a sales tax shall expire ~~when the principal and interest on any bonds or other obligations issued to finance projects authorized in subdivision 2, paragraph (a) have been paid~~ on December 31, 2030, or at an earlier time as the city shall, by ordinance, determine. Any funds remaining after completion of projects approved under subdivision 2, paragraph (a) and retirement or redemption of any bonds or other obligations may be placed in the general fund of the city.

Sec. 33. Laws 1995, chapter 264, article 2, section 44, as amended by Laws 1996, chapter 471, article 2, section 27, is amended to read:

Sec. 44. [EFFECTIVE DATE.]

Section 1 is effective the day following final enactment.

Sections 3 and 4 are effective June 1, 1995. Section 4 is repealed June 1, 2000.

Sections 5 to 21 and 43, paragraph (a), are effective July 1, 1995.

Sections 23, 28, 33, 40, 42, and the part of section 22 amending language in paragraph (i), clause (vii), are effective the day following final enactment.

Sections 24 and 34 are effective for sales made after December 31, 1996.

Section 25 is effective beginning with leases or rentals made after June 30, 1995.

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Section 26 is effective retroactively for sales after May 31, 1992.

Section 27 is effective for sales made after June 30, 1995.

Section 29 and the part of section 22 striking the language after paragraph (h) are effective for sales after June 30, 1995.

Section 32 is effective for sales made after June 30, 1995, and before July 1, ~~1998~~ 1999.

Sections 35 and 36 are effective for sales or transfers made after June 30, 1995.

Section 38 is effective the day after the governing body of the city of Winona complies with Minnesota Statutes, section 645.021, subdivision 3.

Section 39 is effective upon compliance by the Minneapolis city council with Minnesota Statutes, section 645.021, subdivision 3.

Section 43, paragraph (b), is effective for sales of 900 information services made after June 30, 1995.

Sec. 34. Laws 1997, chapter 231, article 7, section 47, is amended to read:

Sec. 47. [EFFECTIVE DATES.]

Section 1 is effective for refund claims filed after June 30, 1997.

Sections 2, 6, 7, 9, 13, 15, 16, 17, 18, ~~20,~~ 21, 25, 31, and 32 are effective for purchases, sales, storage, use, or consumption occurring after June 30, 1997.

Section 3 is effective on July 1, 1997, or upon adoption of the corresponding rules, whichever occurs earlier.

Section 4, paragraph (i), clause (iv), is effective for purchases and sales occurring after September 30, 1987; the remainder of section 4 is effective for purchases and sales occurring after June 30, 1997.

Section 5, paragraph (h), is effective for purchases and sales occurring after June 30, 1997, and paragraph (i) is effective for purchases and sales occurring after December 31, 1992.

Sections 8 and 46 are effective July 1, 1998.

Sections 10 and 22 are effective for purchases, sales, storage, use, or consumption occurring after August 31, 1996.

Sections 11, 12, 33, 34, and 35 are effective July 1, 1997.

Sections 14 and 19 are effective for purchases and sales after June 30, 1999.

Section 20 is effective for sales and purchases occurring after December 31, 1995.

Section 23 is effective January 1, 1997.

Section 24 is effective for purchases, sales, storage, use, or consumption occurring after April 30, 1997.

Sections 26 and 45 are effective for purchases, sales, storage, use, or consumption occurring after July 31, 1997, and before August 1, 2003.

Section 27 is effective for purchases, sales, storage, use, or consumption occurring after May 31, 1997.

Section 28 is effective for sales made after December 31, 1989, and before January 1, 1997. The provisions of Minnesota Statutes, section 289A.50, apply to refunds claimed under section 28. Refunds claimed under section 28 must be filed by the later of December 31, 1997, or the time limit under Minnesota Statutes, section 289A.40, subdivision 1.

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Section 29 is effective for sales or first use after May 31, 1997~~, and before June 1, 1998~~.

Sections 30, 42, and 43 are effective the day following final enactment.

Sections 36 to 39 are effective the day after compliance by the governing body of Cook county with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 35. [TRANSFER OF TRAVEL TRAILERS EXEMPTED.]

Notwithstanding the provisions of Minnesota Statutes, chapter 297B, any transfer of title of a travel trailer from the Federal Emergency Management Agency to the state of Minnesota and any subsequent transfer of title of the trailer to a political subdivision of the state shall be exempt from the tax imposed under Minnesota Statutes, chapter 297B.

Sec. 36. [CITY OF ST. PAUL; USE OF SALES TAX REVENUES.]

The revenue derived from the sales tax imposed by the city of St. Paul under Laws 1993, chapter 375, article 9, section 46, as amended by Laws 1997, chapter 231, article 7, section 40, that is distributed to the city's cultural STAR program must be awarded through a grant or loan review process as provided in this section. Eighty percent of the revenue must be annually awarded to nonprofit arts organizations, libraries, and museums that are located in the designated cultural district of downtown St. Paul, and the remaining 20 percent may be awarded to businesses in the cultural district for projects which enhance visitor enjoyment of the district, or to nonprofit arts organizations, libraries, and museums located in St. Paul but outside of the cultural district. Grants or loans may be used for capital improvements. The restrictions in this section apply to all STAR cultural funds expended for projects approved after June 30, 1998.

Sec. 37. [ST. PAUL NEIGHBORHOOD INVESTMENT SALES TAX EXPENDITURES; CITIZEN REVIEW PROCESS.]

Subdivision 1. [REQUIREMENT.] Expenditures of revenues from the sales tax imposed by the city of St. Paul that are dedicated to neighborhood investments may be made only after review of the proposals for expenditures by the citizen review panel described in this section. The panel must evaluate the proposals and provide a report to the city council that makes recommendations regarding the proposed expenditures in rank order.

Subd. 2. [APPOINTMENT OF MEMBERS.] The citizen review panel must consist of 17 members, each of whom represents one of the district councils. The mayor must appoint the members, and the appointments are subject to confirmation by a majority vote of the city council. Members serve for a term of four years. Elected officials and employees of the city are ineligible to serve as members of the panel.

Sec. 38. [CITY OF BEMIDJI.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if approved by the city voters at a general election held within one year of the date of final enactment of this act, the city of Bemidji may impose by ordinance a sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if a sales and use tax is imposed under subdivision 1, the city of Bemidji may impose by ordinance, for the purpose specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay all or part of the capital and administrative cost of acquiring and constructing facilities as part of a regional convention center in Bemidji. Authorized expenses include, but are not limited to, acquiring property and paying construction expenses related to the development of a convention center which is an arena for sporting events, concerts, trade shows, conventions, meeting rooms, and other compatible uses including, but not limited to, parking, lighting, and landscaping.

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Subd. 4. [BONDING AUTHORITY.] (a) The city may issue bonds under Minnesota Statutes, chapter 475, to finance the capital expenditure and improvement projects. An election to approve the bonds under Minnesota Statutes, section 475.58, may be held in combination with the election to authorize imposition of the tax under subdivision 1. Whether to permit imposition of the tax and issuance of bonds may be posed to the voters as a single question. The question must state that the sales tax revenues are pledged to pay the bonds, but that the bonds are general obligations and will be guaranteed by the city's property taxes.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements, may not exceed $25,000,000, plus an amount equal to the costs related to issuance of the bonds.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them only if the bonds and any refunding bonds are general obligations of the city.

Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city council determines that sufficient funds have been received from taxes to finance the capital and administrative costs for acquisition and construction of a convention center and related facilities to repay or retire at maturity the principal, interest, and premium due on any bonds issued for the project under subdivision 4. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Bemidji with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 39. [CITY OF DETROIT LAKES.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city charter, if approved by the city voters at a general election held within one year of the date of final enactment of this act, the city of Detroit Lakes may, by ordinance, impose an additional sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city charter, the city of Detroit Lakes may impose, by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 must be used by the city to pay the costs of collecting the taxes and to pay all or part of the capital and administrative costs, up to $6,000,000, for constructing a community center. Authorized expenses include, but are not limited to, acquiring property and paying construction and operating expenses related to the development of the community center and paying debt service on bonds or other obligations issued to finance the construction of the community center.

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(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $6,000,000, plus an amount equal to the costs related to issuance of the bonds.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city council determines that sufficient funds have been received from the taxes to finance the capital and administrative costs for constructing the community center and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the construction. Any funds remaining after completion of the project or retirement or redemption of the bonds may be placed in the general fund of the city.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Detroit Lakes with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 40. [CITY OF FERGUS FALLS.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if approved by the city voters at a general election held within one year of the date of final enactment of this act, the city of Fergus Falls may impose by ordinance a sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision, except that the sales and use taxes shall not apply to farm machinery.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if a sales and use tax is imposed under subdivision 1, the city of Fergus Falls may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 must be used by the city to pay the costs of collecting the taxes and to pay all or part of the capital and administrative costs of constructing facilities as part of a regional conference center, community center, recreational and tourism project in Fergus Falls known as Project Reach Out. Authorized expenses include, but are not limited to, acquiring property and paying construction and operating expenses related to the development of Project Reach Out and related facilities, and paying debt service on bonds or other obligations issued to finance the construction of Project Reach Out and related facilities.

For purposes of this section, "Project Reach Out and related facilities" means a regional conference center, community center, regional park and recreational facilities, and all publicly owned real or personal property that the governing body of the city determines are necessary to facilitate the use of these facilities, including but not limited to, parking, pedestrian bridges, lighting, and landscaping.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

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The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $9,000,000, plus an amount equal to the costs related to issuance of the bonds.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city determines that sufficient funds have been received from the taxes to finance the capital and administrative costs for acquisition, construction, improvement, and operation of Project Reach Out and related facilities and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the project under subdivision 4. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Fergus Falls with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 41. [CITY OF HUTCHINSON; TAXES AUTHORIZED.]

Subdivision 1. [SALES AND USE TAX.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if approved by the city voters at a general election or special election held within one year of final enactment of this act, the city of Hutchinson may impose by ordinance a sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, the city of Hutchinson may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for construction and improvement of a civic and community center and recreational facilities to serve seniors and youth. Authorized expenses include, but are not limited to, acquiring property, paying construction and operating expenses related to the development of an authorized facility, and paying debt service on bonds or other obligations issued to finance the construction or expansion of an authorized facility. The capital expenses for all projects authorized under this paragraph that may be paid with these taxes is limited to $5,000,000, plus an amount equal to the costs related to issuance of the bonds.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $5,000,000, plus an amount equal to the costs related to issuance of the bonds.

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(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city council determines that sufficient funds have been received from the taxes to finance the capital and administrative costs for the acquisition, construction, and improvement of facilities described in subdivision 3, and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the facilities under subdivision 5. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Hutchinson with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 42. [CITY OF OWATONNA; SALES AND USE TAX.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if approved by the city voters at a general election held within one year of the date of final enactment of this act, the city of Owatonna may impose by ordinance a sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if a sales and use tax is imposed under subdivision 1, the city of Owatonna may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 must be used by the city to pay the costs of collecting the taxes and to pay all or part of the capital and administrative costs of constructing and improving infrastructure and facilities as part of Owatonna Economic Development 2000 and related facilities. Authorized expenses include, but are not limited to, acquiring property and paying construction and operating expenses related to the development of Owatonna Economic Development 2000 and related facilities, and paying debt service on bonds or other obligations issued to finance the construction of Owatonna Economic Development 2000 and related facilities.

For purposes of this section, "Owatonna Economic Development 2000 and related facilities" means the improvement of the Owatonna regional airport and infrastructure improvements, including roads and the extension of water and sewer services, for an economic and tourism project.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

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Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city council determines that sufficient funds have been received from the taxes to finance the capital and administrative costs for acquisition, construction, and improvement of Owatonna Economic Development 2000 and related facilities and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the project under subdivision 4. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Owatonna with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 43. [CITY OF ROCHESTER; TAXES.]

Subdivision 1. [SALES AND USE TAXES AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city charter, upon termination of the taxes authorized under Laws 1992, chapter 511, article 8, section 33, subdivision 1, and if approved by the voters of the city at a general or special election held within one year of the date of final enactment of this act, the city of Rochester may, by ordinance, impose an additional sales and use tax of up to one-half of one percent. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city charter, upon termination of the tax authorized under Laws 1992, chapter 511, article 8, section 33, subdivision 2, the city of Rochester may, by ordinance, impose an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from the taxes authorized by subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and administering the taxes and to pay for the following projects:

(1) transportation infrastructure improvements including both highway and airport improvements;

(2) improvements to the civic center complex;

(3) a municipal water, sewer, and storm sewer project necessary to improve regional ground water quality; and

(4) construction of a regional recreation and sports center and associated facilities available for both community and student use, located at or adjacent to the Rochester center.

The total amount of capital expenditures or bonds for these projects that may be paid from the revenues raised from the taxes authorized in this section may not exceed $71,500,000. The total amount of capital expenditures or bonds for the project in clause (4) that may be paid from the revenues raised from the taxes authorized in this section may not exceed $20,000,000.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

(c) The bonds are not included in computing any debt limitation applicable to the city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of and interest on the bonds is not subject to any levy limitation The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $71,500,000, plus an amount equal to the costs related to issuance of the bonds.

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(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city council determines that sufficient funds have been received from the taxes to finance the projects and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the projects under subdivision 4. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Rochester with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 44. [CENTRAL MINNESOTA EVENTS CENTER; LOCAL OPTION TAXES.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, the cities of St. Cloud, Sauk Rapids, Sartell, Waite Park, and St. Joseph may impose by ordinance a sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. This tax, and the taxes described in subdivisions 2 to 4, may be imposed in any of these cities only if approved by the voters of the city at a general election held within one year of the date of final enactment of this act, or at an election held on the first Tuesday in November of 1999. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the taxes authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, the cities identified in subdivision 1 may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [FOOD AND BEVERAGE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, the cities identified in subdivision 1 may each impose by ordinance, for the purposes specified in subdivision 5, a tax of up to one percent on the gross receipts from the on-sales of intoxicating liquor and fermented malt beverages and the sale of food and beverages sold at restaurants and places of refreshment within the city. The city shall define "restaurant" and "place of refreshment" as part of the ordinance.

Subd. 4. [LODGING TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, the cities identified in subdivision 1 may each impose by ordinance, for the purposes specified in subdivision 5, a tax of up to one percent on the gross receipts from the furnishing for a consideration of lodging and related services by a hotel, rooming house, tourist court, motel, or trailer camp, other than the renting or leasing of it for a continuous period of 30 days or more. This tax is in addition to the tax authorized in Minnesota Statutes, section 469.190, and is not included in calculating the tax rate subject to the limit imposed on lodging taxes in Minnesota Statutes, section 469.190, subdivision 2.

Subd. 5. [USE OF REVENUES.] (a) Revenues received from the taxes authorized by subdivisions 1 to 4 must be used to pay for the cost of collecting the taxes; to pay all or part of the capital or administrative cost of the acquisition, construction, and improvement of the Central Minnesota Events Center and related on-site and off-site improvements; and to pay for the operating deficit, if any, in the first five years of operation of the facility. Authorized expenses related to acquisition, construction, and improvement of the center include, but are not limited to, acquiring property, paying construction and operating expenses related to the development of the facility, and securing and paying debt service on bonds or other obligations issued to finance construction or improvement of the authorized facility.

(b) In addition, if the revenues collected from a tax imposed in subdivisions 1 to 4 are greater than the amount needed to meet obligations under paragraph (a) in any year, the surplus may be returned to the cities in a manner agreed upon by the participating cities under this section, to be used by the cities for projects of regional significance, limited to the acquisition and improvement of park land and open space; the purchase, renovation, and construction of public buildings and land primarily used for the arts, libraries, and community centers; and for debt service on bonds issued for these purposes. The amount of surplus revenues raised by a tax will be determined either as provided for by an applicable joint powers agreement or by a governing entity in charge of administering the project in paragraph (a).

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Subd. 6. [BONDING AUTHORITY.] (a) The cities named in subdivision 1 may issue bonds under Minnesota Statutes, chapter 475, to finance the acquisition, construction, and improvement of the Central Minnesota Events Center. An election to approve the bonds under Minnesota Statutes, section 475.58, may be held in combination with the election to authorize imposition of the tax under subdivision 1. Whether to permit imposition of the tax and issuance of bonds may be posed to the voters as a single question. The question must state that the sales tax revenues are pledged to pay the bonds, but that the bonds are general obligations and will be guaranteed by the city's property taxes.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

The aggregate principal amount of bonds issued by all cities named in subdivision 1, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $50,000,000, plus an amount equal to the costs related to issuance of the bonds, less any amount made available to the cities for the project described in subdivision 5 under the capital expenditure legislation adopted during the 1998 session of the legislature.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

Subd. 7. [TERMINATION OF TAXES.] The taxes imposed by each city under subdivisions 1 to 4 expire when sufficient funds have been received from the taxes to finance the obligations under subdivision 3, and to prepay or retire at maturity the principal, interest, and premium due on the original bonds issued for the initial acquisition, construction, and improvement of the Central Minnesota Events Center as determined under an applicable joint powers agreement or by a governing entity in charge of administering the project. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general funds of the cities imposing the taxes. The taxes imposed by a city under this section may expire at an earlier time by city ordinance, if authorized under the applicable joint powers agreement or by the governing entity in charge of administering the project.

If the cities that pass a referendum required under subdivision 6 determine that the revenues raised from the sum of all the taxes authorized by referendum under this subdivision will not be sufficient to fund the project in subdivision 5, none of the authorized taxes may be imposed.

Subd. 8. [EFFECTIVE DATE.] This section is effective August 1, 1998, with respect to any city listed in subdivision 1 upon compliance of the governing body of that city with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 45. [CITY OF TWO HARBORS; TAXES AUTHORIZED.]

Subdivision 1. [SALES AND USE TAXES.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if approved by the voters of the city at the next general election held after the date of final enactment of this act, the city of Two Harbors may impose by ordinance, a sales and use tax at a rate of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city charter, the city of Two Harbors may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from the taxes authorized under subdivision 1 must be used for sanitary sewer separation, wastewater treatment, and harbor refuge development projects.

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Whether to permit imposition of the tax and issuance of bonds may be posed to the voters as a single question. The question must state that the sales tax revenues are pledged to pay the bonds, but that the bonds are general obligations and will be guaranteed by the city's property taxes.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $20,000,000, plus an amount equal to the costs related to issuance of the bonds.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

Subd. 5. [TERMINATION OF TAXES.] The authority granted under subdivision 1 to the city of Two Harbors to impose sales and use taxes expires when the costs of the projects described in subdivision 3 have been paid.

Subd. 6. [EFFECTIVE DATE.] This section is effective the day after compliance by the governing body of the city of Two Harbors with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 46. [CITY OF WINONA; TAXES AUTHORIZED.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other provision of law, ordinance, or city charter, if approved by the city voters at a general election held within one year of the date of final enactment of this act, the city of Winona may impose by ordinance a sales and use tax of up to one-half of one percent for the purposes specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.48, govern the imposition, administration, collection, and enforcement of the tax authorized under this subdivision.

Subd. 2. [EXCISE TAX AUTHORIZED.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city charter, the city of Winona may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person engaged within the city in the business of selling motor vehicles at retail.

Subd. 3. [USE OF REVENUES.] Revenues received from taxes authorized by subdivisions 1 and 2 must be used by the city to pay the costs of collecting the taxes and to pay all or a part of the capital and administrative costs of the dredging of Lake Winona, including paying debt service on bonds or other obligations issued to finance the project under subdivision 4.

(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 275.60.

The aggregate principal amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital expenditures and improvements may not exceed $4,000,000, plus an amount equal to the costs related to issuance of the bonds.

(d) The taxes may be pledged to and used for the payment of the bonds and any bonds issued to refund them, only if the bonds and any refunding bonds are general obligations of the city.

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Subd. 5. [TERMINATION OF TAXES.] The taxes imposed under subdivisions 1 and 2 expire when the city council determines that sufficient funds have been received from the taxes to finance the dredging of Lake Winona and to prepay or retire at maturity the principal, interest, and premium due on any bonds issued for the project under subdivision 4. Any funds remaining after completion of the project and retirement or redemption of the bonds may be placed in the general fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines by ordinance.

Subd. 6. [EFFECTIVE DATE.] This section is effective upon compliance by the governing body of the city of Winona with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 47. [REPEALER.]

Minnesota Statutes 1996, section 297A.02, subdivision 2, is repealed.

Sec. 48. [EFFECTIVE DATE.]

Sections 1, 3, 8, 9, 19, and 21 are effective for sales and purchases made after June 30, 1998. Sections 2 and 47 are effective for sales made after June 30, 2000. Sections 5, 13, and 17 are effective for sales made after June 30, 1998. Sections 6 and 7 are effective for rentals after June 30, 1998. Section 10 is effective for purchases made after June 30, 1998. Sections 12, 14, 15, and 34 are effective the day following final enactment. Section 16 is effective for purchases made after December 1, 1997. Section 18 is effective for purchases made after June 30, 1998, and before July 1, 2003. Section 20 is effective for local laws enacted after June 30, 1998. Sections 22 and 23 are effective July 1, 1998. Section 24 is effective December 31, 1997. Sections 25 to 27 are effective upon approval by the governing body of the city of Duluth and compliance with Minnesota Statutes, section 645.021, subdivision 3. Section 28 is effective upon approval by the governing body of the city of Mankato and compliance with Minnesota Statutes, section 645.021, subdivision 3. Section 29 is effective upon approval by the governing body of the city of Rochester and compliance with Minnesota Statutes, section 645.021, subdivision 3. Sections 30 to 32, 36, and 37 are effective the day after the governing body of the city of St. Paul complies with Minnesota Statutes, section 645.021. Section 35 is effective for transfers after November 30, 1997, and before January 1, 1999.

Section 1. Minnesota Statutes 1997 Supplement, section 16A.152, subdivision 2, is amended to read:

BUDGET RESERVES

Subd. 2. [ADDITIONAL REVENUES; PRIORITY.] If on the basis of a forecast of general fund revenues and expenditures after November 1 in an odd-numbered year, the commissioner of finance determines that there will be a positive unrestricted budgetary general fund balance at the close of the biennium, the commissioner of finance must allocate money as follows:

(a) first, to the budget reserve until the total amount in the account equals ~~$522,000,000~~ $622,000,000; then

(b) 60 percent to the property tax reform account established in section 16A.1521; and

The amounts necessary to meet the requirements of this section are appropriated from the general fund within two weeks after the forecast is released.

Sec. 2. [EXCESS REVENUE; TO REDUCE BORROWING.]

Subdivision 1. [TAX REFORM AND REDUCTION ACCOUNT.] A tax reform and reduction account is established in the general fund. Amounts in the account are available only to provide tax reform and reduction, as enacted by law. The governor shall make recommendations to the legislature regarding uses of the money in the account to reduce taxes and to reform the Minnesota tax system.

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Subd. 2. [PRIORITIES.] If on the basis of a forecast of general fund revenues and expenditures after November 1 in 1998, the commissioner of finance determines that there will be a positive unrestricted budgetary general fund balance at the close of the biennium, the commissioner of finance must allocate money as follows:

(1) first, to the budget reserve until the total amount in that account equals $622,000,000; then

(2) second, to the tax reduction and reform account until the amount allocated equals $200,000,000; and

(3) third, to reduce the need to borrow money to finance state building projects as provided in subdivision 3.

Subd. 3. [CANCELLATION OF BOND APPROPRIATIONS AND AUTHORIZATIONS.] The commissioner of finance shall reduce appropriations from the bond proceeds fund and the state transportation fund in 1998 H. F. No. 3843, if enacted, for which bonds have not yet been sold as authorized by that law, by the amount of general fund revenue made available for this purpose under subdivision 2, and the amount reduced is appropriated from the general fund for the same purposes as the appropriations reduced. The commissioner of finance shall reduce the bond sale authorizations in 1998 H. F. No. 3843 accordingly.

Sec. 3. [APPROPRIATION.]

On July 1, 1998, $100,000,000 is appropriated from the general fund to the commissioner of finance to transfer to the budget reserve account under Minnesota Statutes, section 16A.152, subdivision 1a.

ARTICLE 10

TACONITE TAXES

Section 1. Minnesota Statutes 1997 Supplement, section 124.918, subdivision 8, is amended to read:

Subd. 8. [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) Reductions in levies pursuant to section 124.918, subdivision 1, and section 273.138, shall be made prior to the reductions in clause (2).

(2) Notwithstanding any other law to the contrary, districts which received payments pursuant to sections 298.018; 298.23 to 298.28, except an amount distributed under section 298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 298.39; 298.391 to 298.396; 298.405; and any law imposing a tax upon severed mineral values, or recognized revenue pursuant to section 477A.15; shall not include a portion of these aids in their permissible levies pursuant to those sections, but instead shall reduce the permissible levies authorized by this chapter and chapter 124A by the greater of the following:

(a) an amount equal to 50 percent of the total dollar amount of the payments received pursuant to those sections or revenue recognized pursuant to section 477A.15 in the previous fiscal year; or

(b) an amount equal to the total dollar amount of the payments received pursuant to those sections or revenue recognized pursuant to section 477A.15 in the previous fiscal year less the product of the same dollar amount of payments or revenue times the ratio of the maximum levy allowed the district under Minnesota Statutes 1986, sections 124A.03, subdivision 2, 124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, subdivision 3a, 124A.12, subdivision 3a, and 124A.14, subdivision 5a, to the total levy allowed the district under this section and Minnesota Statutes 1986, sections 124A.03, 124A.06, subdivision 3a, 124A.08, subdivision 3a, 124A.10, subdivision 3a, 124A.12, subdivision 3a, 124A.14, subdivision 5a, and 124A.20, subdivision 2, for levies certified in 1986 five percent.

(3) No reduction pursuant to this subdivision shall reduce the levy made by the district pursuant to section 124A.23, to an amount less than the amount raised by a levy of a net tax rate of 6.82 percent times the adjusted net tax capacity for taxes payable in 1990 and thereafter of that district for the preceding year as determined by the commissioner. The amount of any increased levy authorized by referendum pursuant to section 124A.03, subdivision 2, shall not be reduced pursuant to this subdivision. The amount of any levy authorized by section 124.912, subdivision 1, to make payments for bonds issued and for interest thereon, shall not be reduced pursuant to this subdivision.

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(4) Before computing the reduction pursuant to this subdivision of the health and safety levy authorized by sections 124.83 and 124.91, subdivision 6, the commissioner shall ascertain from each affected school district the amount it proposes to levy under each section or subdivision. The reduction shall be computed on the basis of the amount so ascertained.

(5) Notwithstanding any law to the contrary, any amounts received by districts in any fiscal year pursuant to sections 298.018; 298.23 to 298.28; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on severed mineral values; and not deducted from general education aid pursuant to section 124A.035, subdivision 5, clause (2), and not applied to reduce levies pursuant to this subdivision shall be paid by the district to the St. Louis county auditor in the following amount by March 15 of each year, the amount required to be subtracted from the previous fiscal year's general education aid pursuant to section 124A.035, subdivision 5, which is in excess of the general education aid earned for that fiscal year. The county auditor shall deposit any amounts received pursuant to this clause in the St. Louis county treasury for purposes of paying the taconite homestead credit as provided in section 273.135.

Sec. 2. Minnesota Statutes 1996, section 273.135, subdivision 2, is amended to read:

Subd. 2. The amount of the reduction authorized by subdivision 1 shall be:

(a) In the case of property located within the boundaries of a municipality which meets the qualifications prescribed in section 273.134, 66 percent of the tax, provided that the reduction shall not exceed the maximum amounts specified in clause (c), and shall not exceed an amount sufficient to reduce the effective tax rate on each parcel of property to 95 percent of the base year effective tax rate. In no case will the reduction for each homestead resulting from this credit be less than $10.

(b) In the case of property located within the boundaries of a school district which qualifies as a tax relief area but which is outside the boundaries of a municipality which meets the qualifications prescribed in section 273.134, 57 percent of the tax, provided that the reduction shall not exceed the maximum amounts specified in clause (c), and shall not exceed an amount sufficient to reduce the effective tax rate on each parcel of property to 95 percent of the base year effective tax rate. In no case will the reduction for each homestead resulting from this credit be less than $10.

(c) The maximum reduction of the tax is ~~$225.40~~ $315.10 on property described in clause (a) and ~~$200.10~~ $289.80 on property described in clause (b). , for taxes payable in 1985. These maximum amounts shall increase by $15 times the quantity one minus the homestead credit equivalency percentage per year for taxes payable in 1986 and subsequent years.

For the purposes of this subdivision, "homestead credit equivalency percentage" means one minus the ratio of the net class rate to the gross class rate applicable to the first $72,000 of the market value of residential homesteads, "effective tax rate" means tax divided by the market value of a property, and the "base year effective tax rate" means the payable 1988 tax on a property with an identical market value to that of the property receiving the credit in the current year after the application of the credits payable under Minnesota Statutes 1988, section 273.13, subdivisions 22 and 23, and this section, divided by the market value of the property.

Sec. 3. Minnesota Statutes 1996, section 273.1391, subdivision 2, is amended to read:

Subd. 2. The amount of the reduction authorized by subdivision 1 shall be:

(a) In the case of property located within a school district which does not meet the qualifications of section 273.134 as a tax relief area, but which is located in a county with a population of less than 100,000 in which taconite is mined or quarried and wherein a school district is located which does meet the qualifications of a tax relief area, and provided that at least 90 percent of the area of the school district which does not meet the qualifications of section 273.134 lies within such county, 57 percent of the tax on qualified property located in the school district that does not meet the qualifications of section 273.134, provided that the amount of said reduction shall not exceed the maximum amounts specified in clause (c), and shall not exceed an amount sufficient to reduce the effective tax rate on each parcel of property to the product of 95 percent of the base year effective tax rate multiplied by the ratio of the current year's tax rate to the payable 1989 tax rate. In no case will the reduction for each homestead resulting from this credit be less than $10. The reduction provided by this clause shall only be applicable to property located within the boundaries of the county described therein.

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(b) In the case of property located within a school district which does not meet the qualifications of section 273.134 as a tax relief area, but which is located in a school district in a county containing a city of the first class and a qualifying municipality, but not in a school district containing a city of the first class or adjacent to a school district containing a city of the first class unless the school district so adjacent contains a qualifying municipality, 57 percent of the tax, but not to exceed the maximums specified in clause (c), and shall not exceed an amount sufficient to reduce the effective tax rate on each parcel of property to the product of 95 percent of the base year effective tax rate multiplied by the ratio of the current year's tax rate to the payable 1989 tax rate. In no case will the reduction for each homestead resulting from this credit be less than $10.

(c) The maximum reduction of the tax is $200.10 for taxes payable in 1985. This maximum amount shall increase by $15 multiplied by the quantity one minus the homestead credit equivalency percentage per year for taxes payable in 1986 and subsequent years $289.80.

For the purposes of this subdivision, "homestead credit equivalency percentage" means one minus the ratio of the net class rate to the gross class rate applicable to the first $72,000 of the market value of residential homesteads, and "effective tax rate" means tax divided by the market value of a property, and the "base year effective tax rate" means the payable 1988 tax on a property with an identical market value to that of the property receiving the credit in the current year after application of the credits payable under Minnesota Statutes 1988, section 273.13, subdivisions 22 and 23, and this section, divided by the market value of the property.

Sec. 4. [298.001] [DEFINITIONS.]

Subdivision 1. [GENERALLY.] As used in this chapter, the terms defined in this section have the meanings given in this section.

Subd. 2. [CITY.] "City" includes any home rule charter city, statutory city, or any city however organized.

Subd. 3. [PERSON.] "Person" means individuals, fiduciaries, estates, trusts, partnerships, companies, joint stock companies, corporations, and all associations.

Subd. 4. [TACONITE.] "Taconite" means ferruginous chert or ferruginous slate in the form of compact, siliceous rock, in which the iron oxide is so finely disseminated that substantially all of the iron-bearing particles of merchantable grade are smaller than 20 mesh and which is not merchantable as iron ore in its natural state, and which cannot be made merchantable by simple methods of beneficiation involving only crushing, screening, washing, jigging, drying, or any combination thereof.

Subd. 5. [IRON SULPHIDES.] "Iron sulphides" means chemical combinations of iron and sulphur (mineralogically known as pyrrhotite, pyrites, or marcasite), in relatively impure condition, which are not merchantable as iron ore and which cannot be made merchantable by the simple methods of beneficiation above described.

Subd. 6. [SEMITACONITE.] "Semitaconite" means altered iron formation, altered taconite, ferruginous chert, or ferruginous slate which has been oxidized and partially leached and in which the iron oxide is so finely disseminated that substantially all of the iron-bearing particles of merchantable grade are smaller than 20 mesh and which is not merchantable as iron ore in its natural state, and which cannot be made merchantable by simple methods of beneficiation involving only crushing, screening, washing, jigging, heavy media separation, spirals, cyclones, drying, or any combination thereof.

Subd. 7. [AGGLOMERATES.] "Agglomerates" means the merchantable iron ore aggregates which are produced by agglomeration.

Subd. 8. [COMMISSIONER.] "Commissioner" means the commissioner of revenue of the state of Minnesota.

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Sec. 5. Minnesota Statutes 1996, section 298.22, subdivision 2, is amended to read:

Subd. 2. There is hereby created the iron range resources and rehabilitation board, consisting of 11 members, five of whom ~~shall be~~ are state senators appointed by the subcommittee on committees of the rules committee of the senate, and five of whom ~~shall be~~ are representatives, appointed by the speaker of the house of representatives~~, their terms of office to commence on May 1, 1943, and continue until January 3rd, 1945, or until their successors are appointed and qualified~~. ~~Their successors~~ The members shall be appointed ~~each two years in the same manner as the original members were appointed,~~ in January of every ~~second~~ odd-numbered year~~, commencing in January, 1945~~. The 11th member of ~~said~~ the board ~~shall be~~ is the commissioner of natural resources ~~of the state of Minnesota~~. Vacancies on the board shall be filled in the same manner as the original members were chosen. At least a majority of the legislative members of the board shall be elected from state senatorial or legislative districts in which over 50 percent of the residents reside within a tax relief area as defined in section 273.134. All expenditures and projects made by the commissioner of iron range resources and rehabilitation shall first be submitted to ~~said~~ the iron range resources and rehabilitation board for approval by at least eight board members of expenditures and projects for rehabilitation purposes as provided by this section, and the method, manner, and time of payment of all ~~said~~ funds proposed to be disbursed shall be first approved or disapproved by ~~said~~ the board. The board shall biennially make its report to the governor and the legislature on or before November 15 of each even-numbered year. The expenses of ~~said~~ the board shall be paid by the state ~~of Minnesota~~ from the funds raised pursuant to this section.

Sec. 6. Minnesota Statutes 1996, section 298.221, is amended to read:

298.221 [RECEIPTS FROM CONTRACTS; APPROPRIATION.]

(a) All ~~moneys~~ money paid to the state of Minnesota pursuant to the terms of any contract entered into by the state under authority of ~~Laws 1941, chapter 544, section 4, or of said section as amended~~ section 298.22 and any fees which may, in the discretion of the commissioner of iron range resources and rehabilitation, be charged in connection with any project pursuant to that section as amended, shall be deposited in the state treasury to the credit of the iron range resources and rehabilitation board account in the special revenue fund and are hereby appropriated for the purposes of section 298.22.

(b) Notwithstanding section 7.09, merchandise may be accepted by the commissioner of the iron range resources and rehabilitation board for payment of advertising contracts if the commissioner determines that the merchandise can be used for special event prizes or mementos at facilities operated by the board. Nothing in this paragraph authorizes the commissioner or a member of the board to receive merchandise for personal use.

Sec. 7. Minnesota Statutes 1996, section 298.2213, subdivision 4, is amended to read:

Subd. 4. [PROJECT APPROVAL.] The board shall by August 1~~, 1987, and~~ each year ~~thereafter~~ prepare a list of projects to be funded from the money appropriated in this section with necessary supporting information including descriptions of the projects, plans, and cost estimates. A project must not be approved by the board unless it finds that:

(1) the project will materially assist, directly or indirectly, the creation of additional long-term employment opportunities;

(2) the prospective benefits of the expenditure exceed the anticipated costs; and

(3) in the case of assistance to private enterprise, the project will serve a sound business purpose.

To be proposed by the board, a project must be approved by at least eight iron range resources and rehabilitation board members and the commissioner of iron range resources and rehabilitation. The list of projects must be submitted to the governor, who shall, by November 15 of each year, approve, disapprove, or return for further consideration, each project. The money for a project may be spent only upon approval of the project by the governor. The board may submit supplemental projects for approval at any time.

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Sec. 8. Minnesota Statutes 1996, section 298.225, subdivision 1, is amended to read:

Subdivision 1. ~~For distribution of taconite production tax in 1987 and thereafter with respect to production in 1986 and thereafter,~~ The distribution of the taconite production tax as provided in section 298.28, subdivisions 2 to 5, 6, ~~paragraphs~~ paragraph (b) ~~and (c)~~, 7, and 8, shall equal the lesser of the following amounts:

(1) the amount distributed pursuant to this section and section 298.28, with respect to 1983 production if the production for the year prior to the distribution year is no less than 42,000,000 taxable tons. If the production is less than 42,000,000 taxable tons, the amount of the distributions shall be reduced proportionately at the rate of two percent for each 1,000,000 tons, or part of 1,000,000 tons by which the production is less than 42,000,000 tons; or

(2)(i) for the distributions made pursuant to section 298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph (c), 50 40.5 percent of the amount distributed pursuant to this section and section 298.28, with respect to 1983 production.

(ii) for the distributions made pursuant to section 298.28, subdivision 5, paragraphs (b) and (d), 75 percent of the amount distributed pursuant to this section and section 298.28, with respect to 1983 production.

Sec. 9. Minnesota Statutes 1997 Supplement, section 298.24, subdivision 1, is amended to read:

Subdivision 1. (a) For concentrate produced in ~~1992, 1993, 1994, and 1995~~ 1997 and 1998, there is imposed upon taconite and iron sulphides, and upon the mining and quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon the concentrate so produced, a tax of ~~$2.054~~ $2.141 per gross ton of merchantable iron ore concentrate produced therefrom.

(b) On concentrates produced in 1997 and thereafter, an additional tax is imposed equal to three cents per gross ton of merchantable iron ore concentrate for each one percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees Fahrenheit.

~~(c)~~ For concentrates produced in ~~1996~~ 1999 and subsequent years, the tax rate shall be equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate multiplied by the percentage increase in the implicit price deflator from the fourth quarter of the second preceding year to the fourth quarter of the preceding year~~, provided that, for concentrates produced in 1996 only, the increase in the rate of tax imposed under this section over the rate imposed for the previous year may not exceed four cents per ton~~. "Implicit price deflator" for the gross national product means the implicit price deflator prepared by the bureau of economic analysis of the United States Department of Commerce.

(c) On concentrates produced in 1997 and thereafter, an additional tax is imposed equal to three cents per gross ton of merchantable iron ore concentrate for each one percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees Fahrenheit.

(d) The tax shall be imposed on the average of the production for the current year and the previous two years. The rate of the tax imposed will be the current year's tax rate. This clause shall not apply in the case of the closing of a taconite facility if the property taxes on the facility would be higher if this clause and section 298.25 were not applicable.

(e) If the tax or any part of the tax imposed by this subdivision is held to be unconstitutional, a tax of ~~$2.054~~ $2.141 per gross ton of merchantable iron ore concentrate produced shall be imposed.

(f) Consistent with the intent of this subdivision to impose a tax based upon the weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly determine the weight of merchantable iron ore concentrate included in fluxed pellets by subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic flux additives included in the pellets from the weight of the pellets. For purposes of this paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite, olivine, or other basic flux additives are combined with merchantable iron ore concentrate. No subtraction from the weight of the pellets shall be allowed for binders, mineral and chemical additives other than basic flux additives, or moisture.

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(g)(1) Notwithstanding any other provision of this subdivision, for the first two years of a plant's production of direct reduced ore, no tax is imposed under this section. As used in this paragraph, "direct reduced ore" is ore that results in a product that has an iron content of at least 75 percent. For the third year of a plant's production of direct reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined under this subdivision. For the fourth such production year, the rate is 50 percent of the rate otherwise determined under this subdivision; for the fifth such production year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for all subsequent production years, the full rate is imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to the tax imposed by this section, but if that production is not produced by a producer of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the production of direct reduced iron in this state is not subject to the tax imposed by this section on taconite or iron sulfides.

Sec. 10. Minnesota Statutes 1996, section 298.28, subdivision 2, is amended to read:

Subd. 2. [CITY OR TOWN WHERE QUARRIED OR PRODUCED.] (a) 4.5 cents per gross ton of merchantable iron ore concentrate, hereinafter referred to as "taxable ton," must be allocated to the city or town in the county in which the lands from which taconite was mined or quarried were located or within which the concentrate was produced. If the mining, quarrying, and concentration, or different steps in either thereof are carried on in more than one taxing district, the commissioner shall apportion equitably the proceeds of the part of the tax going to cities and towns among such subdivisions upon the basis of attributing 40 percent of the proceeds of the tax to the operation of mining or quarrying the taconite, and the remainder to the concentrating plant and to the processes of concentration, and with respect to each thereof giving due consideration to the relative extent of such operations performed in each such taxing district. The commissioner's order making such apportionment shall be subject to review by the tax court at the instance of any of the interested taxing districts, in the same manner as other orders of the commissioner.

(b) Four cents per taxable ton shall be allocated to cities and organized townships affected by mining because their boundaries are within three miles of a taconite mine pit that has been actively mined in at least one of the prior three years. If a city or town is located near more than one mine meeting these criteria, the city or town is eligible to receive aid calculated from only the mine producing the largest taxable tonnage. When more than one municipality qualifies for aid based on one company's production, the aid must be apportioned among the municipalities in proportion to their populations. Of the amounts distributed under this paragraph to each municipality, one-half must be used for infrastructure improvement projects, and one-half must be used for projects in which two or more municipalities cooperate. Each municipality that receives a distribution under this paragraph must report annually to the iron range resources and rehabilitation board and the commissioner of iron range resources and rehabilitation on the projects involving cooperation with other municipalities.

Sec. 11. Minnesota Statutes 1996, section 298.28, subdivision 3, is amended to read:

Subd. 3. [CITIES; TOWNS.] (a) 12.5 cents per taxable ton, less any amount distributed under subdivision 8, and paragraph (b), must be allocated to the taconite municipal aid account to be distributed as provided in section 298.282.

(b) An amount must be allocated to towns or cities that is annually certified by the county auditor of a county containing a taconite tax relief area within which there is (1) an organized township if, as of January 2, 1982, more than 75 percent of the assessed valuation of the township consists of iron ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation of the city consists of iron ore.

(c) The amount allocated under paragraph (b) will be the portion of a township's or city's certified levy equal to the proportion of (1) the difference between 50 percent of January 2, 1982, assessed value in the case of a township and 50 percent of the January 2, 1980, assessed value in the case of a city and its current assessed value to (2) the sum of its current assessed value plus the difference determined in (1), provided that the amount distributed shall not exceed $55 per capita in the case of a township or $75 per capita in the case of a city. For purposes of this limitation, population will be determined according to the 1980 decennial census conducted by the United States Bureau of the Census. If the current assessed value of the township exceeds 50 percent of the township's January 2, 1982, assessed value, or if the current assessed value of the city exceeds 50 percent of the city's January 2, 1980, assessed value, this paragraph shall not apply.

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For purposes of this paragraph, "assessed value," when used in reference to years other than 1980 or 1982, means, for distributions for production year 1989, production taxes payable in 1990, the appropriate net tax capacities multiplied by 8.2 and for distributions for production year 1990 and thereafter, production taxes payable in 1991 and thereafter, the appropriate net tax capacities multiplied by 10.2.

Sec. 12. Minnesota Statutes 1996, section 298.28, subdivision 4, is amended to read:

Subd. 4. [SCHOOL DISTRICTS.] (a) ~~27.5~~ 22.28 cents per taxable ton plus the increase provided in paragraph (d) must be allocated to qualifying school districts to be distributed, based upon the certification of the commissioner of revenue, under paragraphs (b) and (c).

(b) ~~5.5~~ 4.46 cents per taxable ton must be distributed to the school districts in which the lands from which taconite was mined or quarried were located or within which the concentrate was produced. The distribution must be based on the apportionment formula prescribed in subdivision 2.

(c)(i) 22 17.82 cents per taxable ton, less any amount distributed under paragraph (e), shall be distributed to a group of school districts comprised of those school districts in which the taconite was mined or quarried or the concentrate produced or in which there is a qualifying municipality as defined by section 273.134 in direct proportion to school district indexes as follows: for each school district, its pupil units determined under section 124.17 for the prior school year shall be multiplied by the ratio of the average adjusted net tax capacity per pupil unit for school districts receiving aid under this clause as calculated pursuant to chapter 124A for the school year ending prior to distribution to the adjusted net tax capacity per pupil unit of the district. Each district shall receive that portion of the distribution which its index bears to the sum of the indices for all school districts that receive the distributions.

(ii) Notwithstanding clause (i), each school district that receives a distribution under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on severed mineral values that is less than the amount of its levy reduction under section 124.918, subdivision 8, for the second year prior to the year of the distribution shall receive a distribution equal to the difference; the amount necessary to make this payment shall be derived from proportionate reductions in the initial distribution to other school districts under clause (i).

(d) Any school district described in paragraph (c) where a levy increase pursuant to section 124A.03, subdivision 2, is authorized by referendum, shall receive a distribution according to the following formula. In 1994, the amount distributed per ton shall be equal to the amount per ton distributed in 1991 under this paragraph increased in the same proportion as the increase between the fourth quarter of 1989 and the fourth quarter of 1992 in the implicit price deflator as defined in section 298.24, subdivision 1 from a fund that receives a distribution in 1998 of 21.3 cents per ton. On July 15~~, 1995, and subsequent years~~ of 1999, and each year thereafter, the increase over the amount established for the prior year shall be determined according to the increase in the implicit price deflator as provided in section 298.24, subdivision 1. Each district shall receive the product of:

(i) $175 times the pupil units identified in section 124.17, subdivision 1, enrolled in the second previous year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent times the district's taxable net tax capacity in the second previous year; times

(ii) the lesser of:

(A) one, or

(B) the ratio of the sum of the amount certified pursuant to section 124A.03, subdivision 1g, in the previous year, plus the amount certified pursuant to section 124A.03, subdivision 1i, in the previous year, plus the referendum aid according to section 124A.03, subdivision 1h, for the current year, plus an amount equal to the reduction under section 124A.03, subdivision 3b, to the product of 1.8 percent times the district's taxable net tax capacity in the second previous year.

If the total amount provided by paragraph (d) is insufficient to make the payments herein required then the entitlement of $175 per pupil unit shall be reduced uniformly so as not to exceed the funds available. Any amounts received by a qualifying school district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general education aid

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which the district receives pursuant to section 124A.23 or the permissible levies of the district. Any amount remaining after the payments provided in this paragraph shall be paid to the commissioner of iron range resources and rehabilitation who shall deposit the same in the taconite environmental protection fund and the northeast Minnesota economic protection trust fund as provided in subdivision 11.

Each district receiving money according to this paragraph shall reserve $25 times the number of pupil units in the district. It may use the money for early childhood programs or for outcome-based learning programs that enhance the academic quality of the district's curriculum. The outcome-based learning programs must be approved by the commissioner of children, families, and learning.

(e) There shall be distributed to any school district the amount which the school district was entitled to receive under section 298.32 in 1975.

Sec. 13. Minnesota Statutes 1996, section 298.28, subdivision 6, is amended to read:

Subd. 6. [PROPERTY TAX RELIEF.] (a) ~~Fifteen~~ In 1999, 38.81 cents per taxable ton, less any amount required to be distributed under paragraphs (b) and (c), and less any amount required to be deducted under paragraph (d), must be allocated to St. Louis county acting as the counties' fiscal agent, to be distributed as provided in sections 273.134 to 273.136.

(b) If an electric power plant owned by and providing the primary source of power for a taxpayer mining and concentrating taconite is located in a county other than the county in which the mining and the concentrating processes are conducted, .1875 cent per taxable ton of the tax imposed and collected from such taxpayer shall be paid to the county.

(c) If an electric power plant owned by and providing the primary source of power for a taxpayer mining and concentrating taconite is located in a school district other than a school district in which the mining and concentrating processes are conducted, ~~.5625~~ .7282 cent per taxable ton of the tax imposed and collected from the taxpayer shall be paid to the school district.

(d) Two cents per taxable ton must be deducted from the amount allocated to the St. Louis county auditor under paragraph (a).

Sec. 14. Minnesota Statutes 1996, section 298.28, subdivision 7, is amended to read:

Subd. 7. [IRON RANGE RESOURCES AND REHABILITATION BOARD.] ~~Three~~ For the 1998 distribution, 6.5 cents per taxable ton shall be paid to the iron range resources and rehabilitation board for the purposes of section 298.22. The amount determined in this subdivision shall be increased in 1981 and subsequent years prior to 1988 in the same proportion as the increase in the steel mill products index as provided in section 298.24, subdivision 1, and shall be increased in 1989, 1990, and 1991 according to the increase in the implicit price deflator as provided in section 298.24, subdivision 1. In 1992 and 1993, the amount distributed per ton shall be the same as the amount distributed per ton in 1991. In 1994, the amount distributed shall be the distribution per ton for 1991 increased in the same proportion as the increase between the fourth quarter of 1989 and the fourth quarter of 1992 in the implicit price deflator as defined in section 298.24, subdivision 1. That amount shall be increased in ~~1995~~ 1999 and subsequent years in the same proportion as the increase in the implicit price deflator as provided in section 298.24, subdivision 1. The amount distributed in 1988 shall be increased according to the increase that would have occurred in the rate of tax under section 298.24 if the rate had been adjusted according to the implicit price deflator for 1987 production. The amount distributed pursuant to this subdivision shall be expended within or for the benefit of a tax relief area defined in section 273.134. No part of the fund provided in this subdivision may be used to provide loans for the operation of private business unless the loan is approved by the governor.

Sec. 15. Minnesota Statutes 1996, section 298.28, subdivision 9, is amended to read:

Subd. 9. [MINNESOTA ECONOMIC PROTECTION TRUST FUND.] ~~1.5~~ In 1999, 3.35 cents per taxable ton shall be paid to the northeast Minnesota economic protection trust fund.

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Sec. 16. Minnesota Statutes 1997 Supplement, section 298.28, subdivision 9a, is amended to read:

Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 cents per ton for distributions in 1996, 1998, ~~and~~ 1999, and 2000 and 20.4 cents per ton for distributions in 1997 shall be paid to the taconite economic development fund. No distribution shall be made under this paragraph in any year in which total industry production falls below 30 million tons.

(b) An amount equal to 50 percent of the tax under section 298.24 for concentrate sold in the form of pellet chips and fines not exceeding 5/16 inch in size and not including crushed pellets shall be paid to the taconite economic development fund. The amount paid shall not exceed $700,000 annually for all companies. If the initial amount to be paid to the fund exceeds this amount, each company's payment shall be prorated so the total does not exceed $700,000.

Sec. 17. Minnesota Statutes 1997 Supplement, section 298.28, subdivision 9b, is amended to read:

Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per ton for distributions in 1998 ~~and,~~ 1999, and 2000 shall be paid to the taconite environmental fund for use under section 298.2961. No distribution may be made under this paragraph in any year in which total industry production falls below 30,000,000 tons.

Sec. 18. Minnesota Statutes 1996, section 298.28, subdivision 10, is amended to read:

Subd. 10. [INCREASE.] Beginning with distributions in 2000, the amounts determined under subdivisions 6, paragraph (a), and 9 shall be increased in 1979 and subsequent years prior to 1988 in the same proportion as the increase in the steel mill products index as provided in section 298.24, subdivision 1. The amount distributed in 1988 shall be increased according to the increase that would have occurred in the rate of tax under section 298.24 if the rate had been adjusted according to the implicit price deflator for 1987 production. Those amounts shall be increased in 1989, 1990, and 1991 in the same proportion as the increase in the implicit price deflator as provided in section 298.24, subdivision 1. In 1992 and 1993, the amounts determined under subdivisions 6, paragraph (a), and 9, shall be the distribution per ton determined for distribution in 1991. In 1994, the amounts determined under subdivisions 6, paragraph (a), and 9, shall be the distribution per ton determined for distribution in 1991 increased in the same proportion as the increase between the fourth quarter of 1989 and the fourth quarter of 1992 in the implicit price deflator as defined in section 298.24, subdivision 1. Those amounts shall be increased in 1995 and subsequent years in the same proportion as the increase in the implicit price deflator as provided in section 298.24, subdivision 1.

The distributions per ton determined under subdivisions 5, paragraphs (b) and (d), and 6, ~~paragraphs~~ paragraph (b) ~~and (c)~~ for distribution in 1988 and subsequent years shall be the distribution per ton determined for distribution in 1987. The distribution per ton under subdivision 6, paragraph (c), for distribution in 2000 and subsequent years shall be 81 percent of the distribution per ton determined for distribution in 1987.

Sec. 19. Minnesota Statutes 1996, section 298.28, subdivision 11, is amended to read:

Subd. 11. [REMAINDER.] (a) The proceeds of the tax imposed by section 298.24 which remain after the distributions and payments in subdivisions 2 to 10a, as certified by the commissioner of revenue, and paragraphs (b) ~~and~~, (c), and (d) have been made, together with interest earned on all money distributed under this section prior to distribution, shall be divided between the taconite environmental protection fund created in section 298.223 and the northeast Minnesota economic protection trust fund created in section 298.292 as follows: Two-thirds to the taconite environmental protection fund and one-third to the northeast Minnesota economic protection trust fund. The proceeds shall be placed in the respective special accounts.

(b) There shall be distributed to each city, town, ~~school district,~~ and county the amount that it received under section 294.26 in calendar year 1977; provided, however, that the amount distributed in 1981 to the unorganized territory number 2 of Lake county and the town of Beaver Bay based on the between-terminal trackage of Erie Mining Company will be distributed in 1982 and subsequent years to the unorganized territory number 2 of Lake county and the towns of Beaver Bay and Stony River based on the miles of track of Erie Mining Company in each taxing district.

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(c) There shall be distributed to the iron range resources and rehabilitation board the amounts it received in 1977 under section 298.22. The amount distributed under this paragraph shall be expended within or for the benefit of the tax relief area defined in section 273.134.

(d) There shall be distributed to each school district 81 percent of the amount that it received under section 294.26 in calendar year 1977.

Sec. 20. Minnesota Statutes 1997 Supplement, section 298.296, subdivision 4, is amended to read:

Subd. 4. [TEMPORARY LOAN AUTHORITY.] (a) The board may recommend that up to $7,500,000 from the corpus of the trust may be used for loans as provided in this subdivision. The money would be available for loans for construction and equipping of facilities constituting (1) a value added iron products plant, which may be either a new plant or a facility incorporated into an existing plant that produces iron upgraded to a minimum of 75 percent iron content or any iron alloy with a total minimum metallic content of 90 percent; or (2) a new mine or minerals processing plant for any mineral subject to the net proceeds tax imposed under section 298.015. A loan under this paragraph may not exceed $5,000,000 for any facility.

(b) Additionally, the board must reserve the first $2,000,000 of the net interest, dividends, and earnings arising from the investment of the trust after June 30, 1996, to be used for additional grants for the purposes set forth in paragraph (a). This amount must be reserved until it is used for the grants or until June 30, ~~1998~~ 1999, whichever is earlier.

(c) Additionally, the board may recommend that up to $5,500,000 from the corpus of the trust may be used for additional grants for the purposes set forth in paragraph (a).

(d) The board may require that it receive an equity percentage in any project to which it contributes under this section.

(e) The authority to make loans and grants under this subdivision terminates June 30, ~~1998~~ 1999.

Sec. 21. Minnesota Statutes 1996, section 298.48, subdivision 1, is amended to read:

Subdivision 1. [ANNUAL FILING.] By April 1 each year, every owner or lessee of mineral rights who, in respect thereto, has engaged in any exploration for or mining of taconite, semitaconite, or iron-sulphide shall~~, within six months of June 3, 1977,~~ file with the commissioner of revenue all data of the following kinds in the possession or under the control of the owner or lessee which was acquired ~~prior to January 1, 1977~~ during the preceding calendar year:

(a) Maps and other records indicating the location, character and extent of exploration for taconite, semitaconite, or iron-sulphides;

(b) Logs, notes and other records indicating the nature of minerals encountered during the course of exploration;

(d) The ultimate pit layout and the supporting cross sections; and

(e) Any other data which the commissioner of revenue may determine to be relevant to the determination of the location, nature, extent, quality or quantity of unmined ores of said minerals. The commissioner of revenue ~~shall have the power to~~ may compel submission of the data. The court administrator of any court of record, upon demand of the commissioner, shall issue a subpoena for the production of any data before the commissioner. Disobedience of subpoenas issued under this section shall be punished by the district court of the district in which the subpoena is issued as for a contempt of the district court. ~~By April 1 of each succeeding year every owner or lessee of mineral rights shall file with the commissioner of revenue all such data acquired during the preceding calendar year.~~

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Sec. 22. [USE OF PRODUCTION TAX PROCEEDS.]

An amount equal to the amount distributed under Laws 1997, chapter 231, article 8, section 16, shall be used by the iron range resources and rehabilitation board to make equal grants to the cities of Chisholm and Hibbing to be used for the establishment of an industrial park located at the Chisholm/Hibbing airport.

Sec. 23. [REPEALER.]

Minnesota Statutes 1996, sections 298.012; 298.21; 298.23; 298.34, subdivisions 1 and 4; and 298.391, subdivisions 2 and 5, are repealed.

Sec. 24. [EFFECTIVE DATE.]

Section 1 is effective for taxes levied in 2000. Sections 2 and 3 are effective for taxes payable in 1999. Sections 8; 10; 12, other than paragraph (d); 13, paragraph (c); 18; and 19 are effective for distributions in 2000 and subsequent years. Sections 13, paragraph (a); and 22 are effective for production year 1998, distributions made in 1999.

ARTICLE 11

TAX INCREMENT FINANCING AND DEVELOPMENT

Section 1. Minnesota Statutes 1996, section 469.174, is amended by adding a subdivision to read:

Subd. 28. [DECERTIFY OR DECERTIFICATION.] "Decertify" or "decertification" means the termination of a tax increment financing district which occurs when the county auditor removes all remaining parcels from the district.

Sec. 2. Minnesota Statutes 1996, section 469.175, subdivision 5, is amended to read:

Subd. 5. [ANNUAL DISCLOSURE.] (a) ~~For all tax increment financing districts, whether created prior or subsequent to August 1, 1979, on or before July 1 of each year,~~ The authority shall annually submit to the county board, the county auditor, the school board, state auditor and, if the authority is other than the municipality, the governing body of the municipality, a report of the status of the district. The report shall include the following information: the amount and the source of revenue in the account, the amount and purpose of expenditures from the account, the amount of any pledge of revenues, including principal and interest on any outstanding bonded indebtedness, the original net tax capacity of the district and any subdistrict, the captured net tax capacity retained by the authority, the captured net tax capacity shared with other taxing districts, the tax increment received, and any additional information necessary to demonstrate compliance with any applicable tax increment financing plan. The authority must submit the annual report for a year on or before August 1 of the next year.

(b) An annual statement showing the tax increment received and expended in that year, the original net tax capacity, captured net tax capacity, amount of outstanding bonded indebtedness, the amount of the district's and any subdistrict's increments paid to other governmental bodies, the amount paid for administrative costs, the sum of increments paid, directly or indirectly, for activities and improvements located outside of the district, and any additional information the authority deems necessary shall be published in a newspaper of general circulation in the municipality. If the fiscal disparities contribution under chapter 276A or 473F for the district is computed under section 469.177, subdivision 3, paragraph (a), the annual statement must disclose that fact and indicate the amount of increased property tax imposed on other properties in the municipality as a result of the fiscal disparities contribution. The commissioner of revenue shall prescribe the form of this statement and the method for calculating the increased property taxes. The authority must publish the annual statement for a year no later than ~~July 1~~ August 15 of the next year. The authority must identify the newspaper of general circulation in the municipality to which the annual statement has been or will be submitted for publication and provide a copy of the annual statement to the state auditor ~~by the time it submits it for publication~~ on or before August 1 of the year in which the statement must be published.

(c) The disclosure and reporting requirements imposed by this subdivision apply to districts certified before, on, or after August 1, 1979.

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Sec. 3. Minnesota Statutes 1996, section 469.175, subdivision 6, is amended to read:

Subd. 6. [FINANCIAL REPORTING.] (a) The state auditor shall develop a uniform system of accounting and financial reporting for tax increment financing districts. The system of accounting and financial reporting shall, as nearly as possible:

(1) provide for full disclosure of the sources and uses of public funds in the district;

(2) permit comparison and reconciliation with the affected local government's accounts and financial reports;

(3) permit auditing of the funds expended on behalf of a district, including a single district that is part of a multidistrict project or that is funded in part or whole through the use of a development account funded with tax increments from other districts or with other public money;

(4) be consistent with generally accepted accounting principles.

(b) The authority must annually submit to the state auditor~~, on or before July 1,~~ a financial report in compliance with paragraph (a). Copies of the report must also be provided to the county and school district boards and to the governing body of the municipality, if the authority is not the municipality. To the extent necessary to permit compliance with the requirement of financial reporting, the county and any other appropriate local government unit or private entity must provide the necessary records or information to the authority or the state auditor as provided by the system of accounting and financial reporting developed pursuant to paragraph (a). The authority must submit the annual report for a year on or before August 1 of the next year.

(1) the original net tax capacity of the district and any subdistrict;

(2) the captured net tax capacity of the district, including the amount of any captured net tax capacity shared with other taxing districts;

(3) for the reporting period and for the duration of the district, the amount budgeted under the tax increment financing plan, and the actual amount expended for, at least, the following categories:

(i) acquisition of land and buildings through condemnation or purchase;

(ii) site improvements or preparation costs;

(iii) installation of public utilities, parking facilities, streets, roads, sidewalks, or other similar public improvements;

(iv) administrative costs, including the allocated cost of the authority;

(v) public park facilities, facilities for social, recreational, or conference purposes, or other similar public improvements;

(4) for properties sold to developers, the total cost of the property to the authority and the price paid by the developer; and

(5) the amount of increments rebated or paid to developers or property owners for privately financed improvements or other qualifying costs.

(d) The reporting requirements imposed by this subdivision apply to districts certified before, on, and after August 1, 1979.

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Sec. 4. Minnesota Statutes 1996, section 469.175, subdivision 6a, is amended to read:

Subd. 6a. [REPORTING REQUIREMENTS.] (a) The municipality must annually report to the state auditor the following amounts for the entire municipality:

(1) the total principal amount of nondefeased tax increment financing bonds that are outstanding at the end of the previous calendar year; and

(2) the total annual amount of principal and interest payments that are due for the current calendar year on (i) general obligation tax increment financing bonds, and (ii) other tax increment financing bonds.

(b) The municipality must annually report to the state auditor the following amounts for each tax increment financing district located in the municipality:

(1) the type of district, whether economic development, redevelopment, housing, soils condition, mined underground space, or hazardous substance site;

(2) the date on which the district is required to be decertified;

(3) the amount of any payments and the value of in-kind benefits, such as physical improvements and the use of building space, that are financed with revenues derived from increments and are provided to another governmental unit (other than the municipality) during the preceding calendar year;

(4) the tax increment revenues for taxes payable in the current calendar year;

(5) whether the tax increment financing plan or other governing document permits increment revenues to be expended (i) to pay bonds, the proceeds of which were or may be expended on activities located outside of the district, (ii) for deposit into a common fund from which money may be expended on activities located outside of the district, or (iii) to otherwise finance activities located outside of the tax increment financing district; and

(6) any additional information that the state auditor may require.

(c) ~~The report required by this subdivision must be filed with the state auditor on or before July 1 of each year.~~ The municipality must submit the annual report for a year required by this subdivision on or before August 1 of the next year.

(d) The state auditor may provide for combining the reports required by this subdivision and subdivisions 5 and 6 so that only one report is made for each year to the auditor.

(e) This section applies to districts certified before, on, and after August 1, 1979.

Sec. 5. Minnesota Statutes 1996, section 469.175, is amended by adding a subdivision to read:

Subd. 6b. [DURATION OF DISCLOSURE AND REPORTING REQUIREMENTS.] The disclosure and reporting requirements imposed by subdivisions 5, 6, and 6a apply with respect to a tax increment financing district beginning with the annual disclosure and reports for the year in which the original net tax capacity of the district was certified and ending with the annual disclosure and reports for the year in which both of the following events have occurred:

(1) decertification of the district; and

(2) expenditure or return to the county auditor of all remaining revenues derived from tax increments paid by properties in the district.

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Sec. 6. Minnesota Statutes 1996, section 469.176, subdivision 7, is amended to read:

Subd. 7. [PARCELS NOT INCLUDABLE IN DISTRICTS.] (a) The authority may request inclusion in a tax increment financing district and the county auditor may certify the original tax capacity of a parcel or a part of a parcel that qualified under the provisions of section 273.111 or 273.112 or chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification only for

(1) a district in which 85 percent or more of the planned buildings and facilities (determined on the basis of square footage) are ~~for~~ a qualified manufacturing ~~or production of tangible personal property, including processing resulting in the change in condition of the property~~ facility or a qualified distribution facility or a combination of both; or

(2) a qualified housing district as defined in section 273.1399, subdivision 1.

(b) (1) A distribution facility means buildings and other improvements to real property that are used to conduct activities in at least each of the following categories:

(i) to store or warehouse tangible personal property;

(ii) to take orders for shipment, mailing, or delivery;

(iii) to prepare personal property for shipment, mailing, or delivery; and

(iv) to ship, mail, or deliver property.

(2) A manufacturing facility includes space used for manufacturing or producing tangible personal property, including processing resulting in the change in condition of the property, and space necessary for and related to the manufacturing activities.

(3) To be a qualified facility, the owner or operator of a manufacturing or distribution facility must agree to pay and pay 90 percent or more of the employees of the facility at a rate equal to or greater than 160 percent of the federal minimum wage for individuals over the age of 20.

Sec. 7. Minnesota Statutes 1996, section 469.177, is amended by adding a subdivision to read:

Subd. 12. [DECERTIFICATION OF TAX INCREMENT FINANCING DISTRICT.] The county auditor shall decertify a tax increment financing district when the earliest of the following times is reached:

(1) the applicable maximum duration limit under section 469.176, subdivisions 1a to 1g;

(2) the maximum duration limit, if any, provided by the municipality pursuant to section 469.176, subdivision 1;

(3) the time of decertification specified in section 469.1761, subdivision 4, if the commissioner of revenue issues an order of noncompliance and the maximum duration limit for economic development districts has been exceeded;

(4) upon completion of the required actions to allow decertification under section 469.1763, subdivision 4; or

(5) upon receipt by the county auditor of a written request for decertification from the authority that requested certification of the original net tax capacity of the district or its successor.

Sec. 8. Minnesota Statutes 1996, section 469.1771, is amended by adding a subdivision to read:

Subd. 2a. [SUSPENSION OF DISTRIBUTION OF TAX INCREMENT.] (a) If an authority fails to make a disclosure or to submit a report containing the information required by section 469.175, subdivisions 5 and 6, regarding a tax increment financing district within the time provided in section 469.175, subdivisions 5 and 6, or if a municipality fails to submit a report containing the information required of section 469.175, subdivision 6a, regarding a tax increment

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financing district within the time provided in section 469.175, subdivision 6a, the state auditor shall mail to the authority a written notice that it or the municipality has failed to make the required disclosure or to submit a required report with respect to a particular district. The state auditor shall mail the notice on or before the third Tuesday of August of the year in which the disclosure or report was required to be made or submitted. The notice must describe the consequences of failing to disclose or submit a report as provided in paragraph (b). If the state auditor has not received a copy of a disclosure or a report described in this paragraph on or before the third Tuesday of November of the year in which the disclosure or report was required to be made or submitted, the state auditor shall mail a written notice to the county auditor to hold the distribution of tax increment from a particular district.

(b) Upon receiving written notice from the state auditor to hold the distribution of tax increment, the county auditor shall hold:

(1) 25 percent of the amount of tax increment that otherwise would be distributed, if the distribution is made after the third Friday in November but during the year in which the disclosure or report was required to be made or submitted; or

(2) 100 percent of the amount of tax increment that otherwise would be distributed, if the distribution is made after December 31 of the year in which the disclosure or report was required to be made or submitted.

(c) Upon receiving the copy of the disclosure and all of the reports described in paragraph (a) with respect to a district regarding which the state auditor has mailed to the county auditor a written notice to hold distribution of tax increment, the state auditor shall mail to the county auditor a written notice lifting the hold and authorizing the county auditor to distribute to the authority or municipality any tax increment that the county auditor had held pursuant to paragraph (b). The state auditor shall mail the written notice required by this paragraph within five working days after receiving the last outstanding item. The county auditor shall distribute the tax increment to the authority or municipality within 15 working days after receiving the written notice required by this paragraph.

(d) Notwithstanding any law to the contrary, any interest that accrues on tax increment while it is being held by the county auditor pursuant to paragraph (b) is not tax increment and may be retained by the county.

(e) For purposes of sections 469.176, subdivisions 1a to 1g, and 469.177, subdivision 11, tax increment being held by the county auditor pursuant to paragraph (b) is considered distributed to or received by the authority or municipality as of the time that it would have been distributed or received but for paragraph (b).

Sec. 9. Minnesota Statutes 1996, section 469.1771, subdivision 5, is amended to read:

Subd. 5. [DISPOSITION OF PAYMENTS.] If the authority does not have sufficient increments or other available money to make a payment required by this section, the municipality that approved the district must use any available money to make the payment including the levying of property taxes. Money received by the county auditor under this section must be distributed as excess increments under section 469.176, subdivision 2, paragraph (a), clause (4)., except that if the county auditor receives the payment after (1) 60 days from a municipality's receipt of the state auditor's notification under subdivision 1, paragraph (c), of noncompliance requiring the payment, or (2) the commencement of an action by the county attorney to compel the payment, then no distributions may be made to the municipality that approved the tax increment financing district.

Sec. 10. [469.1791] [TAX INCREMENT FINANCING SPECIAL TAXING DISTRICT.]

Subdivision 1. [DEFINITIONS.] (a) As used in this section, the terms defined in this subdivision have the meanings given them.

(b) "City" means a city containing a tax increment financing district, the request for certification of which was made before June 2, 1997.

(d) "Special taxing district" means all or any portion of the property located within a tax increment financing district, the request for certification of which was made before June 2, 1997.

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(e) "Development or redevelopment services" has the meaning given in the city's enabling ordinance, and may include any services or expenditures the city or its economic development authority or housing and redevelopment authority or port authority may provide or incur under sections 469.001 to 469.1081 and 469.124 to 469.134, including, without limitation, amounts necessary to pay the principal of or interest on bonds issued by the city or its economic development authority or housing and redevelopment authority or port authority under section 469.178, for the tax increment financing districts contained within the special taxing district or projects to be funded with increments from tax increment financing districts contained within the special taxing district.

(f) "Preexisting obligations" means bonds issued and sold before June 2, 1997, and binding contracts entered into before June 2, 1997, to the extent that the bonds and contracts are secured by a pledge of increments from the tax increment financing district contained within the special taxing district.

Subd. 2. [ESTABLISHMENT OF SPECIAL TAXING DISTRICT.] The governing body of a city may adopt an ordinance establishing a special taxing district, if the conditions under subdivision 3 are satisfied. The ordinance must describe with particularity the property to be included in the district and the development or redevelopment services to be provided in the district. Only property that is subject to an assessment agreement or development agreement with the city or its economic development authority, housing and redevelopment authority, or port authority, as of the date of adoption of the ordinance, may be included within the special taxing district and be subject to the tax imposed by the city on the district. The ordinance may not be adopted until after a public hearing has been held on the question. Notice of the hearing must include the time and place of the hearing, a map showing the boundaries of the proposed district, and a statement that all persons owning property in the proposed district that would be subject to a special tax will be given the opportunity to be heard at the hearing. Within 30 days after adoption of the ordinance under this subdivision, the governing body shall send a copy of the ordinance to the commissioner of revenue.

Subd. 3. [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city may establish a special taxing district within a tax increment financing district under this section only if the conditions under paragraphs (b) and (c) are met or if the city elects to exercise the authority under paragraph (d).

(b) The city has determined that:

(1) total tax increments from the district, including unspent increments from previous years and increments transferred under paragraph (c), will be insufficient to pay the amounts due in a year on preexisting obligations; and

(2) this insufficiency of increments resulted from the reduction in property tax class rates enacted in the 1997 and 1998 legislative sessions.

(c) The city has agreed to transfer any available increments from other tax increment financing districts in the city to pay the preexisting obligations of the district. This requirement does not apply to any available increments of a qualified housing district, as defined in section 273.1399, subdivision 1. Notwithstanding any law to the contrary, the city may require a development authority to transfer available increments for any of its tax increment financing districts in the city to make up an insufficiency in another district in the city, regardless of whether the district was established by the development authority or another development authority. Notwithstanding any law to the contrary, increments transferred under this authority must be spent to pay preexisting obligations. "Development authority" for this purpose means any authority as defined in section 469.174, subdivision 2.

(d) If a tax increment financing district does not qualify under paragraphs (b) and (c), the governing body may elect to establish a special taxing district under this section. If the city elects to exercise this authority, increments from the tax increment financing district and the proceeds of the tax imposed under this section may only be used to pay preexisting obligations and reasonable administrative expenses of the authority for the tax increment financing district. The tax increment financing district must be decertified when all preexisting obligations have been paid.

Subd. 4. [NOTICE; HEARING.] Notice of the hearing must be given by publication in the official newspaper of the city at least ten but not more than 30 days prior to the hearing. Not less than ten days before the hearing, notice must also be mailed to the owner of each parcel within the area proposed to be included within the district. For the purpose of giving mailed notice, owners are those shown on the records of the county auditor. At the public hearing a person affected by

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the proposed district may testify on any issues relevant to the proposed district. The hearing may be adjourned from time to time and the ordinance establishing the district may be adopted at any time within six months after the date of the conclusion of the hearing by a vote of the majority of the governing body of the city.

Subd. 5. [BENEFIT; OBJECTION.] Before the ordinance is adopted or at the hearing at which it is to be adopted, any affected landowner may file a written objection with the city clerk asserting that the landowner's property should not be included in the district or should not be subject to a special tax and objecting to:

(1) the fact that the landowner's property is not subject to an assessment agreement or development agreement; or

(2) the fact that neither the landowner's property nor its use is benefited by the development or redevelopment services provided.

The governing body shall make a determination on the objection within 30 days of its filing. Pending its determination, the governing body may delay adoption of the ordinance or it may adopt the ordinance with a reservation that the landowner's property may be excluded from the district or district special taxes when a determination is made.

Subd. 6. [APPEAL TO DISTRICT COURT.] Within 30 days after the determination of the objection, any person aggrieved may appeal to the district court by serving a notice upon the mayor or city clerk. No appeal may be filed if the aggrieved person failed to timely file a written objection with the city clerk under subdivision 5, and the failure was not due to reasonable cause. The notice must be filed with the court administrator of the district court within ten days after its service. The city clerk shall furnish the appellant a certified copy of the findings and determination of the governing body. The court may affirm the action objected to or, if the appellant's objections have merit, modify or cancel it. If the appellant does not prevail upon the appeal, the costs incurred are taxed to the appellant by the court and judgment entered for them. All objections are deemed waived unless presented on appeal.

Subd. 7. [MODIFICATION OF SPECIAL TAXING DISTRICT.] The boundaries of the special taxing district may be enlarged or reduced under the procedures for establishment of the district under subdivision 2. Property added to the district is subject to the special tax imposed within the district after the property becomes a part of the district.

Subd. 8. [SPECIAL TAX AUTHORITY.] A city may impose a special tax within a special taxing district that is reasonably related to the development or redevelopment services provided. The tax may be imposed at a rate or amount sufficient to produce the revenues required to provide the development or redevelopment services within the project area subject to limits under subdivision 9. The special tax is payable only in a year in which the assessment or development agreement for the property subject to the tax remains in effect for that taxes payable year.

Subd. 9. [LIMITS ON TAX.] (a) The maximum levy for any year may not exceed the least of:

(1) the amount specified in the assessment agreement or development agreement;

(2) the amount needed to pay preexisting obligations, less available increments including increments transferred from other districts; and

(3) the amount of the general ad valorem tax that would have been paid by the captured net tax capacity of the tax increment financing district, if the property tax class rates for taxes payable in 1997 were in effect, less the amount of the general ad valorem tax imposed for the payable year on the captured net tax capacity.

(b) If the city uses the proceeds of a tax imposed under this section to pay preexisting obligations secured by increments from more than one tax increment financing district, the city must establish a special taxing district in each of the districts and impose a uniform rate upon all the districts. The maximum limits under paragraph (a) must be calculated in aggregate for all of the affected districts.

(c) If neither the assessment agreement nor the development agreement specify a tax amount but state an agreed market value for the property, the amount specified for purposes of paragraph (a), clause (1), is the market value of the property under the agreement multiplied by the class rate for taxes payable in 1997 and multiplied by the sum of the ad valorem tax rates for all the taxing jurisdictions.

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Subd. 10. [LIMITS UNDER OTHER LAW.] The tax imposed under this section is not included in the calculation of levies or limits imposed under law or charter. Section 275.065 does not apply to any tax imposed under this section. The tax proceeds are subject to the restrictions imposed by law on revenues derived from tax increments and may only be spent for the purposes for which increments may be spent.

Subd. 11. [COLLECTION AND ADMINISTRATION.] The special tax must be imposed on the net tax capacity of the taxable property located in the geographic area described in the ordinance. Taxable net tax capacity must be determined without regard to captured or original net tax capacity under section 469.177 or to the distribution or contribution value under section 473F.08. The city shall compute the amount of the tax for each parcel subject to tax and certify the amount to the county auditor by the date provided in section 429.061, subdivision 3, for the annual certification of special assessment installments. The special tax is payable and must be collected at the same time and in the same manner as provided for payment and collection of ad valorem taxes. Special taxes not paid on or before the applicable due date are subject to the same penalty and interest as ad valorem tax amounts not paid by the respective due date. The due date for the special tax is the due date for the real property tax for the property on which the special tax is imposed.

Sec. 11. Laws 1965, chapter 326, section 1, subdivision 5, as amended by Laws 1975, chapter 110, section 1, and Laws 1985, chapter 87, section 3, is amended to read:

Subd. 5. [PROMOTION OF TOURIST, AGRICULTURAL AND INDUSTRIAL DEVELOPMENT.] The amount to be spent annually for the purposes of this subdivision shall not exceed $1 $4 per capita of the county's population.

Sec. 12. Laws 1967, chapter 170, section 1, subdivision 5, as amended by Laws 1985, chapter 87, section 6, is amended to read:

Subd. 5. Promotion of tourist, agricultural and industrial developments. The amount to be spent annually for the purposes of this subdivision shall not exceed $1 $4 per capita of the county's population.

Sec. 13. Laws 1997, chapter 231, article 10, section 24, is amended to read:

Sec. 24. [TASK FORCE; ~~TIF~~ TAX INCREMENT FINANCING RECODIFICATION.]

(a) A legislative task force is established on tax increment financing and local economic development powers. The task force consists of 12 members as follows:

(1) six members of the house of representatives, at least two of whom are members of the minority caucus, appointed by the speaker; and

(2) six members of the senate, at least two of whom are members of the minority caucus, appointed by the committee on committees.

(b) The task force shall prepare a bill for the ~~1998~~ 1999 legislative session that recodifies the Tax Increment Financing Act and combines the statutes providing local economic development powers into one law providing a uniform set of powers relative to the use of tax increment financing.

(c) In preparing the bill under this section, the task force shall consult with and seek comments from and participation by representatives of the affected local governments.

(d) The revisor of statutes and house and senate legislative staff shall staff the task force.

(e) This section expires on ~~March 1, 1998~~ May 1, 1999.

Sec. 14. [GOLDEN VALLEY; TAX INCREMENT FINANCING.]

Subdivision 1. [DISTRICT EXTENSION.] (a) Notwithstanding Minnesota Statutes, section 469.176, subdivision 1c, tax increments from the Valley Square tax increment financing district shall be paid to the housing and redevelopment

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authority of the city of Golden Valley for property taxes payable in 2001 through 2010 for the following parcels in the district, identified by their property tax identification numbers:

(1) 31-118-21-14-0001;

(2) 31-118-21-14-0006;

(3) 31-118-21-14-0018 through 31-118-21-14-0022;

(4) 31-118-21-14-0029 through 31-118-21-14-0032; and

(5) 31-118-21-41-0001.

(b) Increments permitted to be paid to the authority by paragraph (a) may only be used to pay or defease bonds issued to fund public redevelopment costs within the redevelopment project or bonds issued to refund the bonds.

(c) Collection or receipt of increments by the housing and redevelopment authority under paragraph (a) does not reduce or affect the amount of increments that the authority may receive after April 1, 2001, for the district to pay bonds issued before April 1, 1990.

(d) Any housing financed or assisted, directly or indirectly, with increments from the district during the extension period permitted by this section must meet the requirements of Minnesota Statutes, section 469.1761.

Subd. 2. [EFFECTIVE DATE.] This section is effective the day after compliance with the requirements of Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021, subdivision 3.

Sec. 15. [CITY OF BROWERVILLE; TAX INCREMENT FINANCING.]

Subdivision 1. [EXPENDITURE OUTSIDE DISTRICT.] Notwithstanding the provisions of Minnesota Statutes, section 469.1763, the city of Browerville may expend tax increments from tax increment district No. 2 for eligible activities outside tax increment district No. 2 but within development district No. 1. The limitations contained in Minnesota Statutes, section 469.1763, subdivision 2, do not apply if the expenditures are used to finance improvements to provide sewer and water service to the tax increment financing district.

Subd. 2. [EFFECTIVE DATE.] This section is effective only after its approval by the governing body of the city of Browerville and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 16. [CITY OF DEEPHAVEN; TAX INCREMENT FINANCING.]

Subdivision 1. [AUTHORIZATION OF EXPENDITURES.] Notwithstanding any law to the contrary, the city of Deephaven may expend revenues derived from tax increment financing district number 1-1 that are available and unencumbered on the date of enactment of this act to finance a public improvement located outside of the district under the conditions in subdivision 2. The public improvement must be included in the tax increment plan prior to January 1, 1997.

Subd. 2. [CONDITIONS ON USE.] The authority under subdivision 1 to spend increments outside of the tax increment financing district number 1-1 is subject to the following conditions:

(1) The city must request decertification of district number 1-1 by no later than December 31, 1998.

(2) The city transfers no more than $800,000 of increments from district number 1-1 to a separate account on the city's books and records. The interest earned on this account is not tax increment for purposes of Minnesota Statutes, sections 469.174 to 469.179.

(3) Any unspent increments from district number 1-1 after the transfer under clause (2) are excess increments that must be distributed under Minnesota Statutes, section 469.176, subdivision 2, clause (4).

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(4) Money in the account established under clause (2) may only be spent to pay for the improvement of the Minnetonka bouevard-Carsons Bay bridge project in the city. If matching funds are not available for the project by December 31, 2002, the balance in the account must be distributed as excess increments under Minnesota Statutes, section 469.176, subdivision 2, clause (4). Any unspent amounts after completion of the project must be distributed as excess increments under Minnesota Statutes, section 469.176, subdivision 2, clause (4).

(5) The authority to spend increments from district number 1-1 other than money transferred to the account under clause (2) expires upon the day following final enactment of this act.

Subd. 3. [EFFECTIVE DATE.] This section is effective the day upon approval by the governing body of the city of Deephaven and compliance with Minnesota Statutes, section 645.021, subdivision 3, and applies to revenues expended after the date of final enactment.

Sec. 17. [CITY OF BURNSVILLE; ADMISSIONS TAX.]

Subdivision 1. [IMPOSITION.] Notwithstanding Minnesota Statutes, section 477A.016, or any other contrary provision of law or ordinance, the governing body of the city of Burnsville may by ordinance impose a tax on admissions to an amphitheater to be constructed within the city.

Subd. 2. [RATE.] The tax may be imposed at a rate not to exceed $2 per paid admission. The governing body of the city may by ordinance change the rate imposed, subject to the limitation in this subdivision.

Subd. 3. [COLLECTION.] The method of collection of the tax must be specified in the ordinance imposing the tax. The tax is exempt from the rules under Minnesota Statutes, section 297A.48. The commissioner of revenue and the city may enter into agreements for the collection and administration of the tax by the state on behalf of the city. The commissioner may charge the city a reasonable fee for its services from the proceeds of the tax. The tax is subject to the same interest, penalties, and enforcement provisions as the tax imposed under Minnesota Statutes, chapter 297A.

Subd. 4. [USE OF PROCEEDS.] The city must pay money received from the tax imposed under this section into a separate fund or account to be used only to pay:

(1) the costs of imposing and collecting the tax; and

(2) for parking lots or ramps, and other public improvements as defined by Minnesota Statutes, section 429.021, within the boundaries of the tax increment financing district established under section 18, or that serve the area within the district.

Subd. 5. [EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 18. [CITY OF BURNSVILLE; TAX INCREMENT FINANCING DISTRICT.]

Subdivision 1. [AUTHORIZATION.] The governing body of the city of Burnsville may create a soils condition tax increment financing district, as provided in this section, for an amphitheater and related infrastructure improvements. Except as otherwise provided in this section, the provisions of Minnesota Statutes, sections 469.174 to 469.179, apply to the district. The city or its economic development authority may be the "authority" for the purposes of Minnesota Statutes, sections 469.174 to 469.179.

Subd. 2. [SPECIAL RULES.] (a) The district established under subdivision 1 is subject to the provisions of Minnesota Statutes, sections 469.174 to 469.179, except as provided in this subdivision.

(b) The district may consist of all or any portion of the parcels designated by the city of Burnsville as development district No. 2 as of April 26, 1990.

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(d) Upon approval of the tax increment financing plan, the governing body of the city of Burnsville must find that the present value of the projected cost of closure of the former solid waste landfill within the district equals or exceeds the present value of the projected tax increments for the maximum duration of the district permitted by the plan.

(e) Notwithstanding the provisions of Minnesota Statutes, section 469.1763, increments from the district established under this section may only be expended on improvements and activities within or directly in aid of the district and on administrative expenses.

(f) Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 1b, no tax increment may be paid to the authority after 18 years after receipt by the authority of the first increment for the district.

Subd. 3. [DISTRICT NO. 2-1.] Upon approval of the tax increment financing plan for the district created under subdivision 1, the city shall request decertification of tax increment financing district No. 2-1. The balance of the tax increments derived from tax increment financing district No. 2-1 may be expended under the tax increment financing plan for the district created under subdivision 1. Minnesota Statutes, section 469.176, subdivision 4c, does not apply to the expenditures. Minnesota Statutes, section 469.1782, subdivision 1, does not apply to tax increment financing district No. 2-1 or the district created under subdivision 1.

Subd. 4. [EFFECTIVE DATE.] This section is effective upon compliance with Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021, subdivision 2.

Sec. 19. [REDEVELOPMENT DISTRICT FOR LAKE STREET PROJECT.]

Subdivision 1. [AUTHORIZATION.] Upon approval of the governing body of the city of Minneapolis by resolution, the Minneapolis community development agency may establish for the Lake Street project a redevelopment tax increment financing district with phased redevelopment. The district is subject to Minnesota Statutes, sections 469.174 to 469.179, as amended, except as provided in this section.

Subd. 2. [ORIGINAL NET TAX CAPACITY.] Notwithstanding Minnesota Statutes, section 469.174, subdivision 7, the original net tax capacity of the district, as of the date the authority certifies to the county auditor that the authority has entered into a redevelopment or other agreement for rehabilitation of the site or remediation of hazardous substances, is zero.

Subd. 3. [DURATION OF DISTRICT.] Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 1b, no tax increment may be paid to the authority after 18 years from the date of receipt by the authority of the first increment generated from the final phase of redevelopment. In no case may increments be paid to the authority after 30 years from approval of the tax increment plan. "Final phase of redevelopment" means that phase of redevelopment activity which completes the rehabilitation of the Lake Street site.

Subd. 4. [REMOVAL OF HAZARDOUS SUBSTANCES.] For purposes of the three-year activity rule under Minnesota Statutes, section 469.176, subdivision 1a, and the four-year action requirement under Minnesota Statutes, section 469.176, subdivision 6, the removal of hazardous substances from the site shall constitute a qualifying activity.

Subd. 5. [FIVE-YEAR RULE.] The five-year period under Minnesota Statutes, section 469.1763, subdivision 3, is extended to ten years.

Subd. 6. [NO POOLING AUTHORITY.] Notwithstanding the provisions of Minnesota Statutes, section 469.1763, increments from the district established under this section may only be expended on improvements and activities within or directly in aid of the district and on administrative expenses related to the district.

Subd. 7. [EFFECTIVE DATE.] This section is effective upon compliance with Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021, subdivision 2.

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Sec. 20. [CITY OF WEST ST. PAUL; DAKOTA COUNTY HOUSING AND REDEVELOPMENT AUTHORITY; EXCEPTION TO TAX INCREMENT FINANCING REQUIREMENTS.]

Subdivision 1. [GENERALLY.] The city of West St. Paul and the Dakota county housing and redevelopment authority may operate the Signal Hills redevelopment tax increment financing district (Dakota county housing and redevelopment authority tax increment financing district No. 10) under the provisions of this section.

Subd. 2. [TIME LIMITS FOR INITIATING ACTION.] The time limits for initiation of activity in the district and reporting the initiation to the county auditor under Minnesota Statutes, section 469.176, subdivision 6, are extended to five and six years, respectively.

Subd. 3. [FIVE-YEAR RULE.] The district is subject to the requirement of Minnesota Statutes, section 469.1763, subdivision 3, except that the five-year period is extended to a nine-year period.

Subd. 4. [THREE-YEAR RULE; EXCEPTION.] The district is subject to the provisions of Minnesota Statutes, section 469.176, subdivision 1a, except that any references to three years in that subdivision are five years for purposes of this section.

Subd. 5. [POOLING EXCEPTION.] The city and the Dakota county housing and redevelopment authority may elect to increase the limit on the percentage of increments under Minnesota Statutes, section 469.1763, subdivision 2, that may be spent outside of the district to 40 percent, if all the amounts spent outside of the district, other than administrative expenses, are for improvements and activities within or directly in aid of the South Robert Street redevelopment tax increment financing district (Dakota county housing and redevelopment authority tax increment financing district No. 4).

Subd. 6. [EFFECTIVE DATE.] This section is effective upon approval by the governing bodies of the city of West St. Paul and Dakota county and upon compliance by the city with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 21. [CITY OF RENVILLE; TAX INCREMENT FINANCING DISTRICT.]

Subdivision 1. [CERTIFICATION DATE.] Except as otherwise provided in this section, for purposes of Minnesota Statutes, section 273.1399, and chapter 469, the certification date of the addition of the following described property to tax increment financing district No. 1 in the city of Renville is deemed to be November 1, 1994: Lots 5, 6, 7, 8, and 9, Block 32, O'Connor's Addition.

Subd. 2. [ORIGINAL NET TAX CAPACITY; ORIGINAL LOCAL TAX RATE.] The original net tax capacity of property in subdivision 1 is $432.

Subd. 3. [EXPENDITURE OF INCREMENT.] Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 1b, the city of Renville may collect and expend tax increment generated by the lots cited in subdivision 1, in tax increment financing district No. 1 in the city of Renville, until December 31, 2003.

Subd. 4. [STATE AID OFFSET.] Minnesota Statutes, section 469.1782, subdivision 1, does not apply to the extension allowed by this section.

Subd. 5. [EFFECTIVE DATE.] This section is effective upon compliance with Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021, subdivision 3.

Sec. 22. [CITY OF FOLEY; TAX INCREMENT FINANCING.]

Subdivision 1. [EXPENDITURE AUTHORITY.] Notwithstanding any law to the contrary, expenditures by the city of Foley before January 1, 1998, of revenue derived from tax increment financing district number 1 to finance a wastewater treatment facility located outside of the district are authorized expenditures of that revenue.

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Subd. 2. [CONDITIONS.] The authority to spend increment under subdivision 1 on the wastewater treatment facility is subject to the following conditions:

(1) the city must request decertification of tax increment financing district number 1 by no later than December 31, 1998; and

(2) any unspent increments and any increments collected after December 31, 1997, must be distributed under Minnesota Statutes, section 469.176, subdivision 2, clause (4).

Subd. 3. [EFFECTIVE DATE.] This section is effective upon local approval by the governing body of the city of Foley and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 23. [GARRISON; TAX INCREMENT FINANCING.]

The reduction in state aid under Minnesota Statutes, section 273.1399, for the city of Garrison as a result of tax increment financing district number 1 does not apply for aids paid in fiscal years 1999 and 2000. The aid reduction for fiscal years 1999 and 2000 must be deducted from aid payable to the city in the year or years after the remainder of the aid reduction for tax increment financing district number 1 has been made.

Sec. 24. [NEW BRIGHTON; TAX INCREMENT FINANCING.]

Subdivision 1. [SPECIAL RULES.] (a) If the city elects upon the adoption of the tax increment financing plan for the district, the rules under this section apply to redevelopment or soils condition tax increment financing districts established by the city of New Brighton or a development authority of the city in the area bounded on the north by the south boundary line of tax increment district number 8 extended to Long Lake regional park, on the east by interstate highway 35W, on the south by interstate highway 694, and on the west by Long Lake regional park.

(b) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3, is extended to nine years for the district.

(c) The limitations on spending increment outside of the district under Minnesota Statutes, section 469.1763, subdivision 2, do not apply, but increments may only be expended on improvements or activities within the area defined in paragraph (a).

Subd. 2. [EXPIRATION.] (a) The exception from the limitations of Minnesota Statutes, section 469.1763, subdivision 2, expires 18 years after the receipt of the first increment from a district to which the city has elected that this section applies.

(b) The authority to approve tax increment financing plans to establish a tax increment financing district under this section expires on December 31, 2008.

Subd. 3. [EFFECTIVE DATE.] This section is effective upon approval by the governing bodies of the city of New Brighton and Ramsey county and upon compliance by the city with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 25. [MEEKER COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; ESTABLISHMENT AND POWERS.]

Subdivision 1. [ESTABLISHMENT.] The board of county commissioners of Meeker county may establish an economic development authority in the manner provided in Minnesota Statutes, sections 469.090 to 469.1081, and may impose limits on the authority enumerated in Minnesota Statutes, section 469.092. The economic development authority has all of the powers and duties granted to or imposed upon economic development authorities under Minnesota Statutes, sections 469.090 to 469.1081. The county economic development authority may create and define the boundaries of economic development districts at any place or places within the county, provided that a project as recommended by the county authority that is to be located within the corporate limits of a city may not be commenced without the approval of

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the governing body of the city. Minnesota Statutes, section 469.174, subdivision 10, and the contiguity requirement specified under Minnesota Statutes, section 469.101, subdivision 1, do not apply to limit the areas that may be designated as county economic development districts.

Subd. 2. [POWERS.] If an economic development authority is established as provided in subdivision 1, the county may exercise all of the powers relating to an economic development authority granted to a city under Minnesota Statutes, sections 469.090 to 469.1081, or other law, including the power to levy a tax to support the activities of the authority.

Subd. 3. [EFFECTIVE DATE.] This section is effective the day after the Meeker county board's approval is filed as provided in Minnesota Statutes, section 645.021, subdivision 3.

Sec. 26. [KITTSON COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; ESTABLISHMENT AND POWERS.]

Subdivision 1. [ESTABLISHMENT.] The board of county commissioners of Kittson county may establish an economic development authority in the manner provided in Minnesota Statutes, sections 469.090 to 469.1081, and may impose limits on the authority enumerated in Minnesota Statutes, section 469.092. The economic development authority has all of the powers and duties granted to or imposed upon economic development authorities under Minnesota Statutes, sections 469.090 to 469.1081. The county economic development authority may create and define the boundaries of economic development districts at any place or places within the county, provided that a project as recommended by the county authority that is to be located within the corporate limits of a city may not be commenced without the approval of the governing body of the city. Minnesota Statutes, section 469.174, subdivision 10, and the contiguity requirement specified under Minnesota Statutes, section 469.101, subdivision 1, do not apply to limit the areas that may be designated as county economic development districts.

Subd. 3. [EFFECTIVE DATE.] This section is effective the day after the Kittson county board's approval is filed as provided in Minnesota Statutes, section 645.021, subdivision 3.

Sec. 27. [BLUE EARTH COUNTY; ECONOMIC DEVELOPMENT AUTHORITY; ESTABLISHMENT AND POWERS.]

Subdivision 1. [ESTABLISHMENT.] The board of county commissioners of Blue Earth county may establish an economic development authority in the manner provided in Minnesota Statutes, sections 469.090 to 469.1081, and may impose limits on the authority enumerated in Minnesota Statutes, section 469.092. The economic development authority has all of the powers and duties granted to or imposed upon economic development authorities under Minnesota Statutes, sections 469.090 to 469.1081. The county economic development authority may create and define the boundaries of economic development districts at any place or places within the county, provided that a project as recommended by the county authority that is to be located within the corporate limits of a city may not be commenced without the approval of the governing body of the city. Minnesota Statutes, section 469.174, subdivision 10, and the contiguity requirement specified under Minnesota Statutes, section 469.101, subdivision 1, do not apply to limit the areas that may be designated as county economic development districts.

Subd. 3. [HOUSING PROGRAMS.] The Blue Earth county economic development authority may exercise its authority for purposes of consolidating housing programs with the city of Mankato.

Subd. 4. [EFFECTIVE DATE.] This section is effective the day after the Blue Earth county board's approval is filed as provided in Minnesota Statutes, section 645.021, subdivision 3.

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Sec. 28. [SPECIAL TAXING AUTHORITY; BROOKLYN CENTER.]

Subdivision 1. [AUTHORITY.] The city of Brooklyn Center may establish a special taxing district and impose a tax under Minnesota Statutes, section 469.1791, for the following described property within tax increment financing district No. 3 in the city:

All that property that is located within the area bounded by a continuous line beginning at a point at the intersection of county road No. 10 and trunk highway No. 100 and going southwesterly along the center line of trunk highway No. 100 to its intersection with Brooklyn Boulevard; thence northerly along the center line of Brooklyn Boulevard to a point 476.52 feet northerly of the intersection of Brooklyn Boulevard and county road No. 10; thence easterly from that point along a straight line to the center line of Shingle Creek; thence southerly along the center line of Shingle Creek to its intersection with the north right-of-way line of county road No. 10; thence easterly along the north right-of-way line of county road No. 10 to the east right-of-way line of Shingle Creek Parkway; thence northerly along the west property line of lot 2, block 2, Brookdale square addition 165.43 feet; thence northeasterly along the northwest property line of lot 2, block 2, Brookdale square addition 297.73 feet; thence easterly along the north property line of lot 2, block 2, Brookdale square addition 914.34 feet; thence southerly 517.9 feet along the easterly property line of lot 2, block 2, Brookdale square addition extended to the center line of county road No. 10; thence easterly along the center line of county road No. 10 to the point of the beginning.

Subd. 2. [EXCEPTIONS FROM GENERAL LAW.] The following requirements under general law do not apply to a special taxing district created under this section:

(1) the preconditions for establishing a special taxing district under Minnesota Statutes, section 469.1791, subdivision 3;

(2) the authority to file written objections under Minnesota Statutes, section 469.1791, subdivision 5, and to appeal to the district court under Minnesota Statutes, section 469.1791, subdivision 6; and

(3) the limits on the maximum levy and the use of the proceeds under Minnesota Statutes, section 469.1791, subdivision 9.

Subd. 3. [RESTRICTIONS.] The authority to impose the tax under this section is limited to property that is subject to an assessment agreement with the city or its economic development authority under Minnesota Statutes, section 469.177, subdivision 8, as of the date of adoption of the enabling ordinance. The maximum levy may not exceed the amount specified in the assessment agreement.

Subd. 4. [EFFECTIVE DATE.] This section is effective upon compliance by the city of Brooklyn Center with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 29. [EFFECTIVE DATE.]

Sections 1, 5, and 7 apply to tax increment financing districts certified on, before, and after August 1, 1979.

Sections 2, 3, 4, and 8 are effective for disclosures required to be made and reports required to be submitted beginning in 1999.

Section 6 is effective for tax increment financing districts for which the request for certification is made after April 30, 1998.

Section 9 is effective the day following final enactment and applies to tax increment financing districts certified on, before, and after August 1, 1979.

Section 10 is effective beginning for taxes payable in 1999.

Section 11 is effective upon compliance by Itasca county with Minnesota Statutes, section 645.021, subdivision 3.

Section 12 is effective upon compliance by Koochiching county with Minnesota Statutes, section 645.021, subdivision 3.

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ARTICLE 12

BORDER CITY ZONES

Section 1. [272.0212] [BORDER DEVELOPMENT ZONE PROPERTY.]

Subdivision 1. [EXEMPTION.] All qualified property in a zone is exempt to the extent and for the duration provided by the zone designation and under sections 469.1731 to 469.1735.

Subd. 2. [LIMITS ON EXEMPTION.] Property in a zone is not exempt under this section from the following:

(1) special assessments;

(2) ad valorem property taxes specifically levied for the payment of principal and interest on debt obligations; and

(3) all taxes levied by a school district, except equalized school levies as defined in section 273.1398, subdivision 1, paragraph (e).

Subd. 3. [STATE AID.] Property exempt under this section is included in the net tax capacity for purposes of computing aids under chapter 477A.

Subd. 4. [DEFINITIONS.] (a) For purposes of this section, the following terms have the meanings given.

(b) "Qualified property" means class 3 and class 5 property as defined in section 273.13 that is located in a zone and is newly constructed after the zone was designated, including the land that contains the improvements.

Subd. 5. [FINDING REQUIRED.] The exemption under this section is available to a parcel only if the municipality determines that the granting of the tax exemption is necessary to enable a business to expand within a zone or to attract a business to a zone.

Sec. 2. Minnesota Statutes 1997 Supplement, section 469.169, subdivision 11, is amended to read:

Subd. 11. [ADDITIONAL BORDER CITY ALLOCATIONS.] In addition to tax reductions authorized in subdivisions 7, 8, 9, and 10, the commissioner may allocate $1,500,000 for tax reductions to border city enterprise zones in cities located on the western border of the state. The commissioner shall make allocations to zones in cities on the western border on a per capita basis. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the zone. Limitations on allocations under section 469.169, subdivision 7, do not apply to this allocation. ~~Enterprise zones that receive allocations under this subdivision may continue in effect for purposes of those allocations through December 31, 1998.~~

Sec. 3. Minnesota Statutes 1996, section 469.169, is amended by adding a subdivision to read:

Subd. 12. [ADDITIONAL ZONE ALLOCATIONS.] In addition to tax reductions authorized in subdivisions 7, 8, 9, 10, and 11, the commissioner shall allocate tax reductions to border city enterprise zones located on the western border of the state. The cumulative total amount of tax reductions for all years of the program under sections 469.1731 to 469.1735, is limited to:

(1) for the city of Breckenridge, $394,000;

(2) for the city of Dilworth, $118,200;

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(3) for the city of East Grand Forks, $788,000;

(4) for the city of Moorhead, $591,000; and

(5) for the city of Ortonville, $78,800.

Allocations made under this subdivision may be used for tax reductions provided in section 469.1732 or 469.1734 or for reimbursements under section 469.1735, subdivision 3, but only if the municipality determines that the granting of the tax reduction or offset is necessary to enable a business to expand within a city or to attract a business to a city. Limitations on allocations under subdivision 7 do not apply to this allocation.

Sec. 4. Minnesota Statutes 1996, section 469.170, is amended by adding a subdivision to read:

Subd. 5e. [LIMITS ON MULTIYEAR PLANS.] The requirements for a multiyear enterprise zone tax credit distribution plan under subdivisions 5a to 5d apply only for:

(1) each business that will receive more than $25,000 in credits in a year; or

(2) tax reductions under section 469.171, subdivision 1, for businesses in areas designated under section 469.171, subdivision 5.

Sec. 5. Minnesota Statutes 1996, section 469.171, subdivision 9, is amended to read:

Subd. 9. [RECAPTURE.] Any business that (1) receives tax reductions authorized by subdivisions 1 to 8, classification as employment property pursuant to section 469.170, or an alternative local contribution under section 469.169, subdivision 5; and (2) ceases to operate its facility located within the enterprise zone ~~within two years after the expiration of the tax reductions~~ shall repay the amount of the tax reduction or local contribution ~~pursuant to the following schedule:~~

~~Termination~~ ~~Repayment~~

~~of operations~~ ~~Portion~~

~~Less than 6 months~~ ~~100 percent~~

~~6 months or more but less than 12 months~~ ~~75 percent~~

~~12 months or more but less than 18 months~~ ~~50 percent~~

~~18 months or more but less than 24 months~~ ~~25 percent~~

received during the two years immediately before it ceased to operate in the zone.

The repayment must be paid to the state to the extent it represents a tax reduction under subdivisions 1 to 8 and to the municipality to the extent it represents a property tax reduction or other local contribution. Any amount repaid to the state must be credited to the amount certified as available for tax reductions in the zone pursuant to section 469.169, subdivision 7. Any amount repaid to the municipality must be used by the municipality for economic development purposes. The commissioner of revenue may seek repayment of tax credits from a business ceasing to operate within an enterprise zone by utilizing any remedies available for the collection of tax.

Sec. 6. [469.1731] [BORDER CITY DEVELOPMENT ZONES.]

Subdivision 1. [DESIGNATION.] To encourage economic development, to revitalize the designated areas, to expand tax base and economic activity, and to provide job creation, growth, and retention, the following border cities may designate, by resolution, areas of the city as development zones after a public hearing upon 30-day notice.

(a) The city of Breckenridge may designate all or any part of the city as a zone.

(b) The city of Dilworth may designate between one and six areas of the city as zones containing not more than 100 acres in the aggregate.

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(d) The city of Moorhead may designate between one and six areas of the city as zones containing not more than 100 acres in the aggregate.

(e) The city of Ortonville may designate between one and six areas of the city as zones containing not more than 100 acres in the aggregate.

Subd. 2. [DEVELOPMENT PLAN.] (a) Before designating a development zone, the city must adopt a written development plan that addresses:

(1) evidence of adverse economic conditions within the area resulting from competition with the bordering state or the 1997 floods or both;

(2) the viability of the development plan;

(3) public and private commitment to and other resources available for the area;

(4) how designation would relate to a development and revitalization plan for the city as a whole; and

(5) how the local regulatory burden will be eased for businesses operating in the area.

(b) The development plan must include:

(1) a map of the proposed zone that indicates the geographic boundaries, the total area, and the present use and conditions generally of land and structures within the area;

(2) evidence of community support and commitment from business interests;

(3) a description of the methods proposed to increase economic opportunity and expansion, facilitate infrastructure improvement, and identify job opportunities; and

(4) the duration of the zone designation, not to exceed 15 years.

Subd. 3. [FILING.] The city must file a copy of the resolution and development plan with the commissioner of trade and economic development. The designation takes effect for the first calendar year that begins more than 90 days after the filing.

Sec. 7. [469.1732] [TAX INCENTIVES WITHIN DEVELOPMENT ZONES.]

Subdivision 1. [AUTHORITY.] A business that conducts business activity within a border city development zone designated under section 469.1731 may qualify for the property tax exemption under section 272.0212, the corporate franchise tax credit under subdivision 2, and the sales tax exemption under section 469.1734, subdivision 6.

Subd. 2. [BORDER CITY ZONE CREDIT.] (a) A corporation may claim a credit against the tax imposed by sections 290.02, 290.0921, and 290.0922, subdivision 1, paragraph (a). The commissioner of revenue shall prescribe the method in which the credit may be claimed. This may include allowing the credit only as a separately processed claim for refund. The allowable credit is based on the tax liability attributable to business conducted within a zone, and may be equal to all or a portion of that liability, as determined by the city.

(b) "Tax liability" means the tax liability under sections 290.02, 290.0921, and 290.0922, subdivision 1, paragraph (a), after any other credits.

(c) The tax liability attributable to business conducted within a zone means the taxpayer's tax liability multiplied by a fraction:

(1) the numerator of which is:

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(i) the ratio of the taxpayer's property factor under section 290.191 located in the border city development zone, for the taxable year over the property factor denominator determined under section 290.191, plus

(ii) the ratio of the taxpayer's payroll factor under section 290.191 located in the border city development zone, for the taxable year over the payroll factor denominator determined under section 290.191; and

(2) the denominator of which is two.

(d) Any portion of the taxpayer's tax liability that is attributable to illegal activity conducted in the zone must not be used to calculate a credit under this subdivision.

(e) The credit allowed under this subdivision continues through the taxable year in which the zone designation expires.

(f) To be eligible for a credit under this subdivision, the taxpayer must file an annual return under chapter 290.

(g) The credit allowed under this subdivision may not exceed the lesser of:

(1) the tax liability of the taxpayer for the taxable year; or

(2) the amount of the tax credit certificates received by the taxpayer from the city, less any tax credit certificates used under section 469.1734, subdivisions 4, 5, and 6.

Subd. 3. [PHASEOUT AT END OF ZONE DURATION.] During the last three years of the duration of a border city development zone, the available exemptions, subtractions, or credits are reduced by the following percentages for the taxes payable year or the taxable years that begin during:

(1) the calendar year that is two years before the final year of designation as a development zone, 25 percent;

(2) the calendar year that is immediately before the final year of designation as a development zone, 50 percent; and

(3) for the final calendar year of designation as a development zone, 75 percent.

Sec. 8. [469.1733] [DISQUALIFIED TAXPAYERS.]

Subdivision 1. [DELINQUENT TAXPAYERS.] An individual or a business is not eligible for the exemptions or credits available under section 272.0212, 469.1732, or 469.1734, if the individual or business owes delinquent amounts under chapter 290, 296, 297, 297A, 297B, or 297C or if the individual or business owns property located in the city or county in which the zone is located on which the property taxes are delinquent. Delinquency is determined as of the date of the application for a certificate under section 469.1735, subdivision 1. As a condition of receiving a certificate, the individual or business must authorize the department of revenue to disclose information necessary to make the determination under this subdivision notwithstanding any provision of chapter 270B or other law to the contrary.

Subd. 2. [RELOCATION WITHIN COUNTY.] If a business located in the county in which the border city development zone is located relocates from outside a zone into a zone, the business is not eligible for the exemptions or credits available in the border city development zone, unless the governing body of the city, for a business located in an incorporated area, or the county, for a business located outside of an incorporated area, approves the relocation of the business.

Subd. 3. [RELOCATION FROM OUTSIDE COUNTY.] (a) If a business relocates more than 25 full-time equivalent jobs from a location in Minnesota outside of the county in which the zone is located, the business must notify the commissioner of trade and economic development and the city and county governments from which the jobs are being relocated. A business may satisfy the notification requirement by notifying the commissioner of trade and economic development, the city, and county of its intent to transfer jobs to a zone before actually doing so. The business is not eligible for the exemptions and credits available in the border city development zone, if the governing body of the city or county from which the jobs are being relocated adopts a resolution objecting to the relocation within 60 days after its receipt of the notice.

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(b) The business becomes eligible for the exemptions and credits available in the zone when each city and county that objected to the relocation rescinds its objection by resolution.

(c) A city or county that objects to the relocation of jobs must file a copy of the resolution with the commissioner of trade and economic development and the city that created the border city development zone into which the jobs were or intend to be transferred.

Sec. 9. [469.1734] [TAX INCENTIVES OUTSIDE ZONES.]

Subdivision 1. [AUTHORITY.] A city with authority to establish a border city development zone under section 469.1731 may grant the tax incentives provided by this section. This authority applies only to projects located outside of a zone, except as provided in subdivision 6.

Subd. 2. [DEFINITIONS.] For purposes of this section, "qualifying business" means the business conducted by a corporation, partnership, or individual doing business from a fixed location within the border city but located outside of the border city development zone.

Subd. 3. [PROPERTY TAX.] (a) A city may grant a partial or complete exemption from property taxation of all buildings, structures, fixtures, and improvements used in or necessary to a qualifying business for a period not exceeding five taxes payable years. A partial exemption must be stated as a percentage of the total ad valorem taxes assessed against the property.

(b) In addition to, or in lieu of, a property tax exemption under paragraph (a), a city may establish an amount due as payments in lieu of ad valorem taxes on buildings, structures, fixtures, and improvements used by the qualifying business. The city council shall designate the amount of the payments for each year and the beginning year and the concluding year for payments in lieu of taxes. The option to make payments in lieu of taxes under this section is limited to 20 consecutive taxes payable years for any qualifying business. To establish the amount of payments in lieu of taxes, the city council may use actual or estimated levels of assessment and taxation or may designate different amounts of payments in lieu of other taxes in different years to recognize future expansion plans of a qualifying business or other considerations. The payments in lieu shall be collected and distributed in the same manner as ad valorem taxes.

(c) The city council must determine whether granting the exemption or payments in lieu of taxes, or both, is necessary to enable a business to expand in the city or to attract a business to the city and is in the best interest of the city. If it so determines, the city must give its approval.

Subd. 4. [INCOME TAX.] (a) Upon application by the qualifying business to the city, and approval of the city, a qualifying business shall receive a credit against taxes imposed under chapter 290, other than the tax imposed under section 290.92, based on the taxable net income of the qualified business attributable to the border city, but outside the border city development zone, multiplied by 9.8 percent in the case of a taxpayer under section 290.02, and 8.5 percent in the case of a taxpayer taxable under section 290.06, subdivision 2c. The attributable net income of a qualified business in the border city is determined by multiplying the taxable net income of the business entity, determined as if the business were a C corporation, by a fraction:

(1) the numerator of which is:

(i) the ratio of the taxpayer's property factor under section 290.191 located in the border city, but outside of the border city development zone, for the taxable year over the property factor denominator determined under section 290.191, plus

(ii) the ratio of the taxpayer's payroll factor under section 290.191 located in the border city, but outside of the border city development zone, for the taxable year over the payroll factor denominator determined under section 290.191; and

(2) the denominator of which is two.

(b) The credit under this subdivision applies after any credit allowed under subdivision 5.

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(c) After any notice period required by subdivision 7, the city council must determine whether granting the credit is in the best interest of the city, and if it so determines, must approve the granting of the credit and determine its amount.

(d) The credit under this subdivision may not exceed the amount of the tax credit certificates received by the taxpayer from the city, less any tax credit certificates used under section 469.1732, subdivision 2, and subdivisions 5 and 6.

(e) No taxpayer may receive the credit under this subdivision for more than five taxable years.

Subd. 5. [BORDER CITY NEW INDUSTRY CREDIT.] (a) To provide a tax incentive for new industry in border cities, a corporation may be allowed a credit against the tax imposed by section 290.02. The commissioner shall prescribe the method in which the credit may be claimed. This may include allowing the credit only as a separately processed claim for refund.

(b) The credit equals one percent of the wages and salaries paid by the taxpayer during the taxable year for employees whose principal place of work is located in a border city but outside of a zone designated under section 469.1731. The credit applies for the first three taxable years of the operation of the corporation in the border city. In the fourth and fifth taxable years of the operation of the corporation in the border city, the credit equals 0.5 percent of the wages and salaries. After the fifth year, no credit is allowed. The city shall determine the amount of wages that qualify for the credit and issue tax credit certificates in the correct amount.

(c) The credit under this subdivision applies only to a corporate enterprise engaged in assembling, fabricating, manufacturing, mixing, or processing of any agricultural, mineral, or manufactured product or combinations of them.

(d) The credit allowed under this subdivision may not exceed the lesser of:

(1) the tax liability of the taxpayer for the taxable year; or

(2) the amount of the tax credit certificates received by the taxpayer from the city, less any tax credit certificates used under subdivisions 4 and 6, and section 469.1732, subdivision 2.

Subd. 6. [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION MATERIALS.] (a) The gross receipts from the sale of machinery and equipment and repair parts are exempt from taxation under chapter 297A, if the machinery and equipment:

(1) are used in connection with a trade or business;

(2) are placed in service in a city that is authorized to designate a zone under section 469.1731, regardless of whether the machinery and equipment are used in a zone; and

(3) have a useful life of 12 months or more.

(b) The gross receipts from the sale of construction materials are exempt, if they are used to construct a facility for use in a trade or business located in a city that is authorized to designate a zone under section 469.1731, regardless of whether the facility is located in a zone. The exemptions under this paragraph apply regardless of whether the purchase is made by the owner, the user, or a contractor.

(1) the amount of the tax credit certificates received from the city, less

(2) any tax credit certificates used under the provisions of subdivisions 4 and 5, and 469.1732, subdivision 2.

(d) The tax on sales of items exempted under this subdivision shall be imposed and collected as if the applicable rate under section 297A.02 applied. Upon application by the purchaser, on forms prescribed by the commissioner, a refund equal to the tax paid shall be paid to the purchaser. The application must include sufficient information to permit the

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commissioner to verify the sales tax paid and the eligibility of the claimant to receive the credit. No more than two applications for refunds may be filed under this subdivision in a calendar year. The provisions of section 289A.40 apply to the refunds payable under this subdivision. There is annually appropriated to the commissioner of revenue the amount required to make the refunds, which must be deducted from the amount of the city's allocation under section 469.169, subdivision 12, that remains available and its limitation under section 469.1735. The amount to be refunded shall bear interest at the rate in section 270.76 from the date the refund claim is filed with the commissioner.

Subd. 7. [NOTICE TO COMPETITORS.] (a) Before an exemption or other concession is granted under subdivision 3 or 4, the procedure under this subdivision applies.

(b) Unless the city council determines that no existing business within the city would be a potential competitor of the project, the project operator shall publish two notices to competitors of the application of the tax exemption or payments in lieu in the official newspaper of the city. The city shall prescribe the form of the notice. The two notices must be published at least one week apart. The publications must be completed not less than 15 days nor more than 30 days before the city council approves the tax exemption or payments in lieu of taxes.

Sec. 10. [469.1735] [LIMIT ON TAX REDUCTIONS; APPLICATIONS REQUIRED.]

Subdivision 1. [BUSINESSES MUST APPLY.] To claim a tax credit under section 469.1732, subdivision 2, or 469.1734, subdivision 4 or 5, or an exemption from sales tax under section 469.1734, subdivision 6, a business must apply to the city for a tax credit certificate. As a condition of its application, the business must agree to furnish information to the city that is sufficient to verify the eligibility for any credits or other tax reductions claimed. The total amount of the state tax reductions allowed for the specified period may not exceed the amount of the tax credit certificates provided by the city to the business. The city must verify the amount of tax reduction or credits for which each business is eligible.

Subd. 2. [CITY LIMITATIONS.] (a) Each city may provide tax credit certificates to businesses that apply and meet the requirements for the tax credit and exemption. The certificates that each city may provide for the period covered by this section is limited to the amount specified in this subdivision.

(b) The maximum amount of tax credit certificates each city may issue over the duration of the program equals the amount of the allocation to the city under section 469.169, subdivision 12.

Subd. 3. [TRANSFER AUTHORITY FOR PROPERTY TAX.] (a) A city may elect to use all or part of its allocation under subdivision 2 to reimburse the city or county or both for property tax reductions under section 272.0212. To elect this option, the city must notify the commissioner of revenue by October 1 of each calendar year of the amount of the property tax reductions it seeks reimbursements for taxes payable during the following year and the governmental units to which the amounts will be paid. The commissioner may require the city to provide information substantiating the amount of the reductions granted or any other information necessary to administer this provision. The commissioner shall pay the reimbursements by December 26. Any amount transferred under this authority reduces the amount of tax credit certificates available under subdivisions 1 and 2.

(b) The amount elected by the city under paragraph (a) is appropriated to the commissioner of revenue from the general fund to reimburse the city or county for tax reductions under section 272.0212. The amount appropriated may not exceed the maximum amounts allocated to a city under subdivision 2, paragraph (b), less the amount of certificates issued by the city under subdivision 1, and is available until expended.

Sec. 11. [EFFECTIVE DATE.]

Sections 1, 2, and 6 to 10 are effective the day following final enactment, provided that sections 7, subdivision 2, and 9, subdivisions 4 and 5, are effective for taxable years beginning after December 31, 1998.

Section 4 is effective for plans required to be filed after the day following final enactment, regardless of whether the business received a credit and was required to file a plan in a prior year.

Section 5 is effective for tax reductions received beginning in the first calendar year after the day following final enactment.

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ARTICLE 13

GAMING TAXES

Section 1. Minnesota Statutes 1996, section 240.15, subdivision 1, is amended to read:

Subdivision 1. [TAXES IMPOSED.] (a) ~~From July 1, 1996, until July 1, 1999,~~ There is imposed a tax at the rate of six percent of the amount in excess of $12,000,000 annually withheld from all pari-mutuel pools by the licensee, including breakage and amounts withheld under section 240.13, subdivision 4. ~~After June 30, 1999, the tax is imposed on the total amount withheld from all pari-mutuel pools.~~ For the purpose of this subdivision, "annually" is the period from July 1 to June 30 of the next year.

In addition to the above tax, the licensee must designate and pay to the commission a tax of one percent of the total amount bet on each racing day, for deposit in the Minnesota breeders fund.

The taxes imposed by this clause must be paid from the amounts permitted to be withheld by a licensee under section 240.13, subdivision 4.

(b) The commission may impose an admissions tax of not more than ten cents on each paid admission at a licensed racetrack on a racing day if:

(1) the tax is requested by a local unit of government within whose borders the track is located;

(2) a public hearing is held on the request; and

(3) the commission finds that the local unit of government requesting the tax is in need of its revenue to meet extraordinary expenses caused by the racetrack.

Sec. 2. Minnesota Statutes 1996, section 240.15, subdivision 5, is amended to read:

Subd. 5. [UNREDEEMED TICKETS.] (a) Notwithstanding any provision to the contrary in chapter 345, unredeemed pari-mutuel tickets shall not be considered unclaimed funds and shall be handled in accordance with the provisions of this subdivision.

(b) ~~Until the end of calendar year 1999,~~ Any person claiming to be entitled to the proceeds of any unredeemed ticket may within one year after the conclusion of each race meet file with the licensee a verified claim for such proceeds on such form as the licensee prescribes along with the pari-mutuel ticket. Unless the claimant satisfactorily establishes the right to the proceeds, the claim shall be rejected. If the claim is allowed, the licensee shall pay the proceeds without interest to the claimant.

(c) Beginning January 1, 2000, not later than 100 days after the end of a race meet a licensee who sells pari-mutuel tickets must remit to the commission or its representative an amount equal to the total value of unredeemed tickets from the race meet. The remittance must be accompanied by a detailed statement of the money on a form the commission prescribes. Any person claiming to be entitled to the proceeds of any unredeemed ticket who fails to claim said proceeds prior to their being remitted to the commission, may within one year after the date of remittance to the commission file with the commission a verified claim for such proceeds on such form as the commission prescribes along with the pari-mutuel ticket. Unless the claimant satisfactorily establishes the right to the proceeds, the claim shall be rejected. If the claim is allowed, the commission shall pay the proceeds without interest to the claimant. There is hereby appropriated from the general fund to the commission an amount sufficient to make payment to persons entitled to such proceeds.

Sec. 3. Minnesota Statutes 1996, section 297E.02, subdivision 1, is amended to read:

Subdivision 1. [IMPOSITION.] A tax is imposed on all lawful gambling other than (1) pull-tabs purchased and placed into inventory after January 1, 1987, and (2) tipboards purchased and placed into inventory after June 30, 1988, at the rate of ~~ten~~ 9.5 percent on the gross receipts as defined in section 297E.01, subdivision 8, less prizes actually paid. The tax

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imposed by this subdivision is in lieu of the tax imposed by section 297A.02 and all local taxes and license fees except a fee authorized under section 349.16, subdivision 8, or a tax authorized under subdivision 5.

The tax imposed under this subdivision is payable by the organization or party conducting, directly or indirectly, the gambling.

Sec. 4. Minnesota Statutes 1996, section 297E.02, subdivision 4, is amended to read:

Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed on the sale of each deal of pull-tabs and tipboards sold by a distributor. The rate of the tax is ~~two~~ 1.9 percent of the ideal gross of the pull-tab or tipboard deal. The sales tax imposed by chapter 297A on the sale of the pull-tabs and tipboards by the distributor is imposed on the retail sales price less the tax imposed by this subdivision. The retail sale of pull-tabs or tipboards by the organization is exempt from taxes imposed by chapter 297A and is exempt from all local taxes and license fees except a fee authorized under section 349.16, subdivision 8.

(b) The liability for the tax imposed by this section is incurred when the pull-tabs and tipboards are delivered by the distributor to the customer or to a common or contract carrier for delivery to the customer, or when received by the customer's authorized representative at the distributor's place of business, regardless of the distributor's method of accounting or the terms of the sale.

The tax imposed by this subdivision is imposed on all sales of pull-tabs and tipboards, except the following:

(1) sales to the governing body of an Indian tribal organization for use on an Indian reservation;

(2) sales to distributors licensed under the laws of another state or of a province of Canada, as long as all statutory and regulatory requirements are met in the other state or province;

(3) sales of promotional tickets as defined in section 349.12; and

(4) pull-tabs and tipboards sold to an organization that sells pull-tabs and tipboards under the exemption from licensing in section 349.166, subdivision 2. A distributor shall require an organization conducting exempt gambling to show proof of its exempt status before making a tax-exempt sale of pull-tabs or tipboards to the organization. A distributor shall identify, on all reports submitted to the commissioner, all sales of pull-tabs and tipboards that are exempt from tax under this subdivision.

(c) A distributor having a liability of $120,000 or more during a fiscal year ending June 30 must remit all liabilities in the subsequent calendar year by a funds transfer as defined in section 336.4A-104, paragraph (a). The funds transfer payment date, as defined in section 336.4A-401, must be on or before the date the tax is due. If the date the tax is due is not a funds transfer business day, as defined in section 336.4A-105, paragraph (a), clause (4), the payment date must be on or before the funds transfer business day next following the date the tax is due.

(d) Any customer who purchases deals of pull-tabs or tipboards from a distributor may file an annual claim for a refund or credit of taxes paid pursuant to this subdivision for unsold pull-tab and tipboard tickets. The claim must be filed with the commissioner on a form prescribed by the commissioner by March 20 of the year following the calendar year for which the refund is claimed. The refund must be filed as part of the customer's February monthly return. The refund or credit is equal to ~~two~~ 1.9 percent of the face value of the unsold pull-tab or tipboard tickets, provided that the refund or credit will be 1.95 percent of the face value of the unsold pull-tab or tipboard tickets for claims for a refund or credit of taxes filed on the February 1999 monthly return. The refund claimed will be applied as a credit against tax owing under this chapter on the February monthly return. If the refund claimed exceeds the tax owing on the February monthly return, that amount will be refunded. The amount refunded will bear interest pursuant to section 270.76 from 90 days after the claim is filed.

Sec. 5. Minnesota Statutes 1996, section 297E.02, subdivision 6, is amended to read:

Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes imposed under subdivisions 1 and 4, a tax is imposed on the combined receipts of the organization. As used in this section, "combined receipts" is the sum of the organization's gross receipts from lawful gambling less gross receipts directly derived from the conduct of bingo, raffles,

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and paddlewheels, as defined in section 297E.01, subdivision 8, for the fiscal year. The combined receipts of an organization are subject to a tax computed according to the following schedule:

If the combined receipts for the The tax is:

fiscal year are:

Not over $500,000 zero

Over $500,000, but not over $700,000 ~~two~~ 1.9 percent of the amount over $500,000, but not over $700,000

Over $700,000, but not over $900,000 ~~$4,000~~ $3,800 plus ~~four~~ 3.8 percent of the

amount over $700,000, but not over $900,000

Over $900,000 ~~$12,000~~ $11,400 plus ~~six~~ 5.7 percent of the

amount over $900,000

Sec. 6. Minnesota Statutes 1997 Supplement, section 349.19, subdivision 2a, is amended to read:

Subd. 2a. [TAX REFUND OR CREDIT.] (a) Each organization that receives a refund or credit under section 297E.02, subdivision 4, paragraph (d), must within four business days of receiving a refund under that paragraph deposit the refund in the organization's gambling account.

(b) In addition, each organization must annually calculate 5.26 percent of the sum of the amount of tax it paid under:

(1) section 297E.02, subdivision 1, on gross receipts, less prizes paid, after August 1, 1998; and

(2) section 297E.02, subdivision 6, on combined receipts received after August 1, 1998.

(c) The calculated amount must be reported to the board on a form prescribed by the board by March 20 of the year after the calendar year for which the calculated amount is made. The calculated amount must be filed as part of the organization's report of expenditure of profits from lawful gambling required under section 349.19, subdivision 5.

(d) The organization may expend the tax refund or credit issued under section 297E.02, subdivision 4, paragraph (d), plus the amount calculated under paragraph (b), only for lawful purposes, other than lawful purposes described in section 349.12, subdivision 25, paragraph (a), clauses (8), (9), and (12). Amounts ~~received as refunds or allowed as credits~~ subject to this paragraph must be spent for qualifying lawful purposes no later than one year after the refund or credit is received or the tax savings calculated under paragraph (b).

Sec. 7. [EFFECTIVE DATE.]

Sections 3 to 5 are effective July 1, 1998.

ARTICLE 14

HOUSING

Section 1. [HOUSING APPROPRIATIONS.]

The sums in the columns marked "APPROPRIATIONS" are appropriated from the general fund, or another named fund, to the agencies and for the purposes specified in this article, to be available for the fiscal years indicated for each purpose. The figures "1998" and "1999," where used in this act, mean that the appropriation or appropriations listed under them are available for the year ending June 30, 1998, or June 30, 1999, respectively. The term "first year" means the fiscal year ending June 30, 1998, and "second year" means the fiscal year ending June 30, 1999.

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General $ -0-$10,000,000

TOTAL $ -0- $10,000,000

Available for the Year

Ending June 30

Sec. 2. MINNESOTA HOUSING FINANCE AGENCY -0- 10,000,000

The amounts that may be spent from this appropriation for certain programs are specified below.

This appropriation is for transfer to the housing development fund for the programs specified and is part of the agency's budget base.

(a) Affordable Rental Investment Fund

$10,000,000 in 1999 is for the affordable rental investment fund program under Minnesota Statutes, section 462A.21, subdivision 8b, to finance the acquisition, rehabilitation, and debt restructuring of federally assisted rental property and for making equity take-out loans under Minnesota Statutes, section 462A.05, subdivision 39. The owner of the rental property must agree to participate in the applicable federally assisted housing program and to extend any existing low-income affordability restrictions on the housing for the maximum term permitted. The owner must also enter into an agreement that gives local units of government, housing and redevelopment authorities, and nonprofit housing organizations the right of first refusal if the rental property is offered for sale. Priority must be given to properties with the longest remaining term under an agreement for federal rental assistance. Priority must also be given among comparable rental housing developments to developments that are or will be owned by a local government unit, a housing and redevelopment authority, or a nonprofit housing organization. This appropriation is reduced by the amount of an appropriation for the affordable rental investment fund program enacted in any other legislation in the 1998 regular session of the Minnesota Legislature.

(b) Administrative Spending Limit

Notwithstanding Laws 1997, chapter 200, article 1, section 6, the spending limit on cost of general administration of housing finance agency programs is $11,684,000 in fiscal year 1998 and $13,278,000 in fiscal year 1999.

Sec. 3. [TRANSFER OF BONDING AUTHORITY.]

The Minnesota housing finance agency may enter into an agreement with the city of Minnetonka for a residential rental project which received an allocation from the housing pool in 1998, whereby the city of Minnetonka may issue up to $500,000 in obligations pursuant to bonding authority allocated to the Minnesota housing finance agency in 1998 under Minnesota Statutes, section 474A.03.

Sec. 4. Minnesota Statutes 1997 Supplement, section 462A.05, subdivision 39, is amended to read:

Subd. 39. [EQUITY TAKE-OUT LOANS.] The agency may make equity take-out loans to owners of ~~section 8 project-based and section 236~~ federally assisted rental property ~~upon which the agency holds a first mortgage~~. The owner of a ~~section 8 project-based~~ federally assisted rental property must agree to participate in the ~~section 8~~ federal assistance

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program and extend the low-income affordability restrictions on the housing for the maximum term of the ~~section 8~~ federal assistance contract. The owner of section 236 rental property must agree to participate in the section 236 interest reduction payments program, to extend any existing low-income affordability restrictions on the housing, and to extend any rental assistance payments for the maximum term permitted under the agreement for rental assistance payments. The An equity take-out loan must be secured by ~~a subordinate loan on the property and may include additional~~ appropriate security determined necessary by the agency.

Sec. 5. Minnesota Statutes 1996, section 462A.222, subdivision 3, is amended to read:

Subd. 3. [ALLOCATION PROCEDURE.] (a) Projects will be awarded tax credits in three competitive rounds on an annual basis. The date for applications for each round must be determined by the agency. No allocating agency may award tax credits prior to the application dates established by the agency.

(b) Each allocating agency must meet the requirements of section 42(m) of the Internal Revenue Code of 1986, as amended through December 31, 1989, for the allocation of tax credits and the selection of projects.

(c) For projects that are eligible for an allocation of credits pursuant to section 42(h)(4) of the Internal Revenue Code of 1986, as amended, tax credits may only be allocated if the project satisfies the requirements of the allocating agency's qualified allocation plan. For projects that are eligible for an allocation of credits pursuant to section 42(h)(4) of the Internal Revenue Code of 1986, as amended, for which the agency is the issuer of the bonds for the project, or the issuer of the bonds for the project is located outside the jurisdiction of a city or county that has received reserved tax credits, the applicable allocation plan is the agency's qualified allocation plan.

(d) For applications submitted for the first round, an allocating agency may allocate tax credits only to the following types of projects:

(1) in the metropolitan area:

(i) new construction or substantial rehabilitation of projects in which, for the term of the extended use period, at least 75 percent of the total tax credit units are single-room occupancy, efficiency, or one bedroom units and which are affordable by households whose income does not exceed 30 percent of the median income;

(ii) new construction or substantial rehabilitation family housing projects that are not restricted to persons who are 55 years of age or older and in which, for the term of the extended use period, at least 75 percent of the tax credit units contain two or more bedrooms and at least one-third of the 75 percent contain three or more bedrooms; or

(iii) substantial rehabilitation projects in neighborhoods targeted by the city for revitalization;

(2) outside the metropolitan area, projects which meet a locally identified housing need and which are in short supply in the local housing market as evidenced by credible data submitted with the application;

(3) projects that are not restricted to persons of a particular age group and in which, for the term of the extended use period, a percentage of the units are set aside and rented to persons:

(i) with a serious and persistent mental illness as defined in section 245.462, subdivision 20, paragraph (c);

(ii) with a developmental disability as defined in United States Code, title 42, section 6001, paragraph (5), as amended through December 31, 1990;

(iii) who have been assessed as drug dependent persons as defined in section 254A.02, subdivision 5, and are receiving or will receive care and treatment services provided by an approved treatment program as defined in section 254A.02, subdivision 2;

(iv) with a brain injury as defined in section 256B.093, subdivision 4, paragraph (a); or

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(v) with permanent physical disabilities that substantially limit one or more major life activities, if at least 50 percent of the units in the project are accessible as provided under Minnesota Rules, chapter 1340;

(4) projects, whether or not restricted to persons of a particular age group, which preserve existing subsidized housing ~~which is subject to prepayment~~ if the use of tax credits is necessary to prevent conversion to market rate use; or

(5) projects financed by the Farmers Home Administration, or its successor agency, which meet statewide distribution goals.

(e) Before the date for applications for the second round, the allocating agencies other than the agency shall return all uncommitted and unallocated tax credits to the pool from which they were allocated, along with copies of any allocation or commitment. In the second round, the agency shall allocate the remaining credits from the regional pools to projects from the respective regions.

(f) In the third round, all unallocated tax credits must be transferred to a unified pool for allocation by the agency on a statewide basis.

(g) Unused portions of the state ceiling for low-income housing tax credits reserved to cities and counties for allocation may be returned at any time to the agency for allocation.

(h) If an allocating agency determines, at any time after the initial commitment or allocation for a specific project, that a project is no longer eligible for all or a portion of the low-income housing tax credits committed or allocated to the project, the credits must be transferred to the agency to be reallocated pursuant to the procedures established in paragraphs (e) to (g); provided that if the tax credits for which the project is no longer eligible are from the current year's annual ceiling and the allocating agency maintains a waiting list, the allocating agency may continue to commit or allocate the credits until not later than October 1, at which time any uncommitted credits must be transferred to the agency.

Sec. 6. [471.9997] [FEDERALLY ASSISTED RENTAL HOUSING; IMPACT STATEMENT.]

At least 12 months before termination of participation in a federally assisted rental housing program, including project-based section 8 and section 236 rental housing, the owner of the federally assisted rental housing must submit a statement regarding the impact of termination on the residents of the rental housing to the governing body of the local government unit in which the housing is located. The impact statement must identify the number of units that will no longer be subject to rent restrictions imposed by the federal program, the estimated rents that will be charged as compared to rents charged under the federal program, and actions the owner will take to assist displaced tenants in obtaining other housing. A copy of the impact statement must be provided to each resident of the affected building, the Minnesota housing finance agency, and, if the property is located in the metropolitan area as defined in section 473.121, subdivision 2, the metropolitan council.

Sec. 7. Laws 1997, Second Special Session chapter 2, section 4, subdivision 3, is amended to read:

Subd. 3. Community Rehabilitation Fund Program 4,500,000

This is a one-time appropriation from the general fund for the community rehabilitation fund program under Minnesota Statutes, section 462A.206. Of this amount, up to $500,000 is available for grants for damages occurring after June 10, 1997, in an area designated under a presidential declaration of major disaster. Pursuant to a plan approved by the agency, grants or loans may be made without regard to the income of the borrower in communities where at least 20 percent of the housing stock is subject to acquisition and buyout as a result of the 1997 flooding. The grants or loans made without regard to the borrower's income shall not exceed the maximum grant or loan amount available to buyout households. This appropriation is available until expended.

Sec. 8. [EFFECTIVE DATES.]

Sections 3, 4, and 7 are effective the day following final enactment.

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ARTICLE 15

SANITARY SEWERS

Section 1. [LEGISLATIVE PURPOSE AND POLICY.]

The legislature determines that in the cities of Farwell and Kensington there are serious problems of water pollution and disposal of sewage which cannot be effectively or economically dealt with by existing government units under existing laws. The legislature, therefore, declares that for the protection of the public health, safety, and welfare of these areas, for the preservation and best use of waters and other natural resources of the state in the area, for the prevention, control, and abatement of water pollution in the area, and for the efficient and economic collection, treatment, and disposal of sewage, it is necessary to establish in Minnesota for said area a sanitary sewer board.

Sec. 2. [DEFINITIONS.]

Subdivision 1. [APPLICATION.] The terms defined in this section shall have the meaning given them unless otherwise provided or indicated by the context.

Subd. 2. [ACQUISITION AND BETTERMENT.] "Acquisition" and "betterment" shall have the meanings given them in Minnesota Statutes, chapter 475.

Subd. 3. [AGENCY.] "Agency" means the Minnesota pollution control agency created and established by Minnesota Statutes, chapter 116.

Subd. 4. [AGRICULTURAL PROPERTY.] "Agricultural property" means land as is classified agricultural land within the meaning of Minnesota Statutes, section 273.13, subdivision 23.

Subd. 5. [CURRENT COSTS OF ACQUISITION, BETTERMENT, AND DEBT SERVICE.] "Current costs of acquisition, betterment, and debt service" means interest and principal estimated to be due during the budget year on bonds issued to finance said acquisition and betterment and all other costs of acquisition and betterment estimated to be paid during such year from funds other than bond proceeds and federal or state grants.

Subd. 6. [DISTRICT DISPOSAL SYSTEM.] "District disposal system" means any and all of the interceptors or treatment works owned, constructed, or operated by the board unless designated by the board as local sanitary sewer facilities.

Subd. 7. [FARWELL-KENSINGTON SANITARY DISTRICT AND DISTRICT.] "Farwell-Kensington sanitary district" and "district" mean the area over which the sanitary sewer board has jurisdiction which shall include all that part of Douglas county and Pope county described as follows, to wit:

(1) all of the land within the corporate limits of the city of Farwell;

(2) all of the land within the corporate limits of the city of Kensington.

Subd. 8. [INTERCEPTOR.] "Interceptor" means any sewer and necessary appurtenances thereto, including but not limited to, mains, pumping stations, and sewage flow regulating and measuring stations, which is designed for or used to conduct sewage originating in more than one local government unit, or which is designed or used to conduct all or substantially all the sewage originating in a single local government unit from a point of collection in that unit to an interceptor or treatment works outside that unit, or which is determined by the board to be a major collector of sewage used or designed to serve a substantial area in the district.

Subd. 9. [LOCAL GOVERNMENT UNIT OR GOVERNMENT UNIT.] "Local government unit" or "government unit" means any municipal or public corporation or governmental or political subdivision or agency located in whole or in part in the district, authorized by law to provide for the collection and disposal of sewage.

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Subd. 10. [LOCAL SANITARY SEWER FACILITIES.] "Local sanitary sewer facilities" means all or any part of any disposal system in the district other than the district disposal system.

Subd. 11. [MUNICIPALITY.] "Municipality" means any city or town located in whole or in part in the district.

Subd. 12. [PERSON.] "Person" means any individual, partnership, corporation, cooperative, or other organization or entity, public or private.

Subd. 13. [POLLUTION AND SEWAGE SYSTEM.] "Pollution" and "sewage system" shall have the meanings given them in Minnesota Statutes, section 115.01.

Subd. 14. [SANITARY SEWER BOARD OR BOARD.] "Sanitary sewer board" or "board" means the sanitary sewer board established for the Farwell-Kensington sanitary district as provided in section 3.

Subd. 15. [SEWAGE.] "Sewage" means all liquid or water-carried waste products from whatever sources derived, together with such groundwater infiltration and surface water as may be present.

Subd. 16. [TOTAL COSTS OF ACQUISITION AND BETTERMENT AND COSTS OF ACQUISITION AND BETTERMENT.] "Total costs of acquisition and betterment" and "costs of acquisition and betterment" mean all acquisition and betterment expenses which are permitted to be financed out of bond proceeds issued in accordance with section 13, subdivision 4, whether or not such expenses are in fact financed out of such bond proceeds.

Subd. 17. [TREATMENT WORKS AND DISPOSAL SYSTEM.] "Treatment works" and "disposal system" shall have the meanings given them in Minnesota Statutes, section 115.01.

Sec. 3. [SANITARY SEWER BOARD.]

Subdivision 1. [ESTABLISHMENT.] A sanitary sewer board with jurisdiction in the Farwell-Kensington sanitary district is established as a public corporation and political subdivision of the state with perpetual succession and all the rights, powers, privileges, immunities, and duties which may be validly granted to or imposed upon a municipal corporation, as provided in this article.

Subd. 2. [NUMBER, TERMS, AND ELECTION OF MEMBERS.] The board has five members, two elected at large from the city of Farwell and three elected at large from the city of Kensington. The terms of the members are four years and until a successor is qualified, except that for the first election in 1998 one at large seat from Farwell and one from Kensington shall be for two years and until a successor is qualified. The short term shall be determined by lot and designated before filings open by the municipal clerks of the two cities. The election shall be conducted by the municipal clerks as provided in Minnesota Statutes, chapter 205, at the same time as the city council elections are held. Vacancies, removal, and qualification for office are as otherwise provided by statute for elected city council members.

Subd. 3. [CERTIFICATES OF SELECTION, OATH OF OFFICE.] A certificate of selection of every board member selected under subdivision 2 stating the term shall be made by the respective municipal clerks. The certificates, with the approval appended by other authority, if required, shall be filed with the secretary of state. Counterparts shall be furnished to the board member and the secretary of the board. Each member shall qualify by taking and subscribing the oath of office prescribed by the Minnesota Constitution, article V, section 6. Such oath, duly certified by the official administering the same, shall be filed with the secretary of state and the secretary of the board.

Subd. 4. [COMPENSATION OF BOARD MEMBERS.] Each board member shall be paid a per diem compensation for meetings and for such other services in such amount as may be specifically authorized by the board from time to time. Per diem compensation shall not exceed $2,000 in any one year. All members of the board shall be reimbursed for all reasonable expenses incurred in the performance of their duties as determined by the board.

Sec. 4. [GENERAL PROVISIONS FOR ORGANIZATION AND OPERATION OF BOARD.]

Subdivision 1. [OFFICERS, MEETINGS, SEAL.] A majority of the members shall constitute a quorum at all meetings of the board, but a lesser number may meet and adjourn from time to time and compel the attendance of absent members. The board shall meet regularly at such time and place as the board shall by resolution designate. Special meetings may

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be held at any time upon call of the chair or any two members, upon written notice sent by mail to each member at least three days prior to the meeting, or upon such other notice as the board by resolution may provide, or without notice if each member is present or files with the secretary a written consent to the meeting either before or after the meeting. Except as otherwise provided in this article, any action within the authority of the board may be taken by the affirmative vote of a majority of the board at a regular or adjourned regular meeting or at a duly held special meeting, but in any case only if a quorum is present. All meetings of the board shall be open to the public as provided in Minnesota Statutes, section 471.705. The board may adopt a seal, which shall be officially and judicially noticed, to authenticate instruments executed by its authority, but omission of the seal shall not affect the validity of any instrument.

Subd. 2. [CHAIR.] The board shall elect a chair from its membership. The term of the chair shall expire on January 1 of each year. The chair shall preside at all meetings of the board, if present, and shall perform all other duties and functions usually incumbent upon such an officer, and all administrative functions assigned to the chair by the board. The board shall elect a vice-chair from its membership to act for the chair during a temporary absence or disability.

Subd. 3. [SECRETARY AND TREASURER.] The board shall select a person or persons who may but need not be a member or members of the board, to act as its secretary and treasurer. The secretary and treasurer shall hold office at the pleasure of the board, subject to the terms of any contract of employment which the board may enter into with the secretary or treasurer. The secretary shall record the minutes of all meetings of the board, and shall be custodian of all books and records of the board except such as the board shall entrust to the custody of a designated employee. The board may appoint a deputy to perform any and all functions of either the secretary or the treasurer. A secretary or treasurer who is not a member of the board or a deputy of either shall not have any right to vote.

Subd. 4. [GENERAL MANAGER.] The board may appoint a general manager who shall be selected solely upon the basis of training, experience, and other qualifications and who shall serve at the pleasure of the board and at a compensation to be determined by the board. The general manager need not be a resident of the district and may also be selected by the board to serve as either secretary or treasurer, or both, of the board. The general manager shall attend all meetings of the board, but shall not vote, and shall:

(1) see that all resolutions, rules, regulations, or orders of the board are enforced;

(2) appoint and remove, upon the basis of merit and fitness, all subordinate officers and regular employees of the board except the secretary and the treasurer and their deputies;

(3) present to the board plans, studies, and other reports prepared for board purposes and recommend to the board for adoption such measures as the general manager deems necessary to enforce or carry out the powers and duties of the board, or the efficient administration of the affairs of the board;

(4) keep the board fully advised as to its financial condition, and prepare and submit to the board, and to the governing bodies of the local government units, the board's annual budget and such other financial information as the board may request;

(5) recommend to the board for adoption such rules and regulations as he or she deems necessary for the efficient operation of a district disposal system and all local sanitary sewer facilities over which the board may assume responsibility as provided in section 18; and

(6) perform such other duties as may be prescribed by the board.

Subd. 5. [PUBLIC EMPLOYEES.] The general manager and all persons employed by the general manager shall be public employees, and shall have all the rights and duties conferred on public employees under Minnesota Statutes, sections 179A.01 to 179A.25. The compensation and conditions of employment of such employees shall not be governed by any rule applicable to state employees in the classified service nor to any of the provisions of Minnesota Statutes, chapter 15A, unless the board so provides.

Subd. 6. [PROCEDURES.] The board shall adopt resolutions or bylaws establishing procedures for board action, personnel administration, recordkeeping, investment policy, approving claims, authorizing or making disbursements, safekeeping funds, and audit of all financial operations of the board.

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Subd. 7. [SURETY BONDS AND INSURANCE.] The board may procure surety bonds for its officers and employees and in such amounts as are deemed necessary to assure proper performance of their duties and proper accounting for funds in their custody. It may procure insurance against such risks to property and such liability of the board and its officers, agents, and employees for personal injuries or death and property damage and destruction and in such amounts as may be deemed necessary or desirable, with the force and effect stated in Minnesota Statutes, chapter 466.

Sec. 5. [COMPREHENSIVE PLAN.]

Subdivision 1. [BOARD PLAN AND PROGRAM.] The board shall adopt a comprehensive plan for the collection, treatment, and disposal of sewage in the district for such designated period as the board deems proper and reasonable. The board shall prepare and adopt subsequent comprehensive plans for the collection, treatment, and disposal of sewage in the district for each such succeeding designated period as the board deems proper and reasonable. The plan shall take into account the preservation and best and most economic use of water and other natural resources in the area; the preservation, use and potential for use of lands adjoining waters of the state to be used for the disposal of sewage; and the impact such a disposal system will have on present and future land use in the area affected thereby. Such plans shall include the general location of needed interceptors and treatment works, a description of the area that is to be served by the various interceptors and treatment works, a long-range capital improvements program and such other details as the board shall deem appropriate. In developing the plans, the board shall consult with persons designated for such purpose by governing bodies of any municipal or public corporation or governmental or political subdivision or agency within the district to represent such entities and shall consider the data, resources, and input offered to the board by such entities and any planning agency acting on behalf of one or more such entities. Each such plan, when adopted, shall be followed in the district and may be revised as often as the board deems necessary.

Subd. 2. [COMPREHENSIVE PLANS; HEARING.] Before adopting any subsequent comprehensive plan the board shall hold a public hearing on such proposed plan at such time and place in the district as it shall determine. The hearing may be continued from time to time. Not less than 45 days before the hearing, the board shall publish notice thereof in a newspaper or newspapers having general circulation in the district, stating the date, time, and place of the hearing, and the place where the proposed plan may be examined by any interested person. At the hearing, all interested persons shall be permitted to present their views on the plan.

Subd. 3. [MUNICIPAL PLANS AND PROGRAMS; COORDINATION WITH BOARD'S RESPONSIBILITIES.] Before undertaking the construction of new sewers of other disposal facilities or the substantial alteration or improvement of any existing sewers or other disposal facilities, each local government unit may, and shall if the construction or alteration of any sewage disposal facilities is contemplated by such government unit, adopt a comprehensive plan and program for the collection, treatment, and disposal of sewage for which the local government unit is responsible, coordinated with the board's comprehensive plan, and may revise the same as often as deems necessary. Each such local plan or revision thereof shall be submitted forthwith to the board for review and shall be subject to the approval of the board as to those features of the plan affecting the board's responsibilities as determined by the board. Any such features disapproved by the board shall be modified in accordance with the board's recommendations. No construction project involving such features shall be undertaken by the local government unit unless its governing body shall first find the project to be in accordance with the government unit's comprehensive plan and program as approved by the board. Prior to approval by the board of the comprehensive plan and program of any local government unit in the district, no construction project shall be undertaken by such government unit unless approval of the project is first secured from the board as to those features of the project affecting the board's responsibilities as determined by the board.

Sec. 6. [SEWER SERVICE FUNCTION.]

Subdivision 1. [DUTY OF BOARD; ACQUISITION OF EXISTING FACILITIES; NEW FACILITIES.] At any time after the board has become organized it shall assume ownership of all existing interceptors and treatment works which will be needed to implement the board's comprehensive plan for the collection, treatment, and disposal of sewage in the district, in the manner and subject to the conditions prescribed in subdivision 2, and shall design, acquire, construct, better, equip, operate, and maintain all additional interceptors and treatment works which will be needed for such purpose. The board shall assume ownership of all treatment works owned by a local government unit if any part of such treatment works will be needed for such purpose.

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Subd. 3. [EXISTING JOINT POWERS BOARD.] Effective January 1, 2000, or such earlier date as determined by the board, the corporate existence of the joint powers board created by agreement among local government units pursuant to Minnesota Statutes, section 471.59, to provide the financing, acquisition, construction, improvement, extension, operation, and maintenance of facilities for the collection, treatment, and disposal of sewage shall terminate. All persons regularly employed by such joint powers board on that date shall be employees of the board, and may at their option become members of the retirement system applicable to persons employed directly by the board or may continue as members of a public retirement association under any other law, to which they belonged before such date, and shall retain all pension rights which they may have under such latter laws, and all other rights to which they are entitled by contract or law. The board shall make the employer's contributions to pension funds of its employees. Such employees shall perform such duties as may be prescribed by the board. On January 1, 2000, or such earlier date, all funds of such joint powers board then on hand, and all subsequent collections of taxes, special assessments, or service charges or any other sums due the joint powers board or levied, or imposed by or for such joint powers board shall be transferred to or made payable to the sanitary sewer board and the county auditor shall remit the sums to the board. The local government units otherwise entitled to such cash, taxes, assessments, or service charges shall be credited with such amounts, and such credits shall be offset against any amounts to be paid by them to the board as provided in section 9. On January 1, 2000, or such earlier date, the board shall succeed to and become vested with all right, title, and interest in and to any property, real or personal, owned or operated by such joint powers board; and prior to that date the proper officers of such joint powers board shall execute and deliver to the sanitary sewer board all deeds, conveyances, bills of sale, and other documents or instruments required to vest in the board good and marketable title to all such real or personal property, but this article shall operate as such transfer and conveyance to the board of such real or personal property, if not so transferred, as may be required under the law or under the circumstances. On January 1, 2000, or such earlier date, the board shall become obligated to pay or assume all outstanding bonds or other debt and all contracts or obligations incurred by such joint powers board, and all such bonds, obligations, or debts of the joint powers board outstanding on the date this article becomes effective are validated.

Subd. 4. [CONTRACTS BETWEEN LOCAL GOVERNMENT UNITS.] The board may terminate upon 60 days mailed notice to the contracting parties, any existing contract between or among local government units requiring payments by a local government unit to any other local government unit, for the use of a disposal system, or as reimbursement of capital costs of such a disposal system, all or part of which will be needed to implement the board's comprehensive plan. All contracts between or among local government units for use of a disposal system entered into subsequent to the date on which this article becomes effective shall be submitted to the board for approval as to those features affecting the board's responsibilities as determined by the board and shall not become effective until such approval is given.

Sec. 7. [SEWAGE COLLECTION AND DISPOSAL; POWERS.]

Subdivision 1. [POWERS.] In addition to all other powers conferred upon the board in this article, the board has the powers specified in this section.

Subd. 2. [DISCHARGE OF TREATED SEWAGE.] The board shall have the right to discharge the effluent from any treatment works operated by it into any waters of the state, subject to approval of the agency if required and in accordance with any effluent or water quality standards lawfully adopted by the agency, any interstate agency or any federal agency having jurisdiction.

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Subd. 3. [UTILIZATION OF DISTRICT SYSTEM.] The board may require any person or local government unit to provide for the discharge of any sewage, directly or indirectly, into the district disposal system, or to connect any disposal system or a part thereof with the district disposal system wherever reasonable opportunity therefore is provided; may regulate the manner in which such connections are made; may require any person or local government unit discharging sewage into the disposal system to provide preliminary treatment therefore; may prohibit the discharge into the district disposal system of any substance which it determines will or may be harmful to the system or any persons operating it; may prohibit any extraneous flow into the system; and may require any local government unit to discontinue the acquisition, betterment, or operation of any facility for such unit's disposal system wherever and so far as adequate service is or will be provided by the district disposal system.

Sec. 8. [BUDGET.]

Except as otherwise specifically provided in this article, the board is subject to Minnesota Statutes, section 275.065, popularly known as the Truth in Taxation Act. The board shall prepare and adopt, on or before September 15 of each year, a budget showing for the following calendar year or other fiscal year determined by the board, sometimes referred to in this article as the budget year, estimated receipts of money from all sources including, but not limited to, payments by each local government unit, federal or state grants, taxes on property, and funds on hand at the beginning of the year, and estimated expenditures for:

(1) costs of operation, administration, and maintenance of the district disposal system;

(2) cost acquisition and betterment of the district disposal system; and

(3) debt service, including principal and interest, on general obligation bonds and certificates issued pursuant to section 13, obligations and debts assumed under section 6, subdivisions 2 and 3, and any money judgments entered by a court of competent jurisdiction.

Expenditures within these general categories, and such others as the board may from time to time determine, shall be itemized in such detail as the board shall prescribe. The board and its officers, agents, and employees shall not spend money for any purpose other than debt service without having set forth such expense in the budget nor in excess of the amount set forth in the budget therefor, and no obligation to make sure an expenditure shall be enforceable except as the obligation of the person or persons incurring it; provided that the board may amend the budget at any time by transferring from one purpose to another any sums except money for debt service and bond proceeds or by increasing expenditures in any amount by which cash receipts during the budget year actually exceed the total amounts designated in the original budget. The creation of any obligation pursuant to section 13 or the receipts of any federal or state grant is a sufficient budget designation of the proceeds for the purpose for which it is authorized, and of the tax or other revenue pledged to pay the obligation and interest on it, whether or not specifically included in any annual budget.

Sec. 9. [ALLOCATION OF COSTS.]

Subdivision 1. [DEFINITION OF CURRENT COSTS.] The estimated cost of administration, operation, maintenance, and debt service of the district disposal system to be paid by the board in each fiscal year and the estimated costs of acquisition and betterment of the system which are to be paid during the year from funds other than state or federal grants and bond proceeds and all other previously unallocated payments made by the board pursuant to this article in such year are referred to as current costs.

Subd. 2. [COLLECTION OF CURRENT COSTS.] Current costs shall be collected as follows:

(a) Allocation of current costs: current costs may be allocated to local government units in the district on an equitable basis as the board may from time to time determine by resolution to be fair and reasonable and in the best interests of the district. In making the allocation the board may provide for the deferment of payment of all or part of current costs, the reallocation of deferred costs and the reimbursement of reallocated deferred costs on an equitable basis as the board may from time to time determine by resolution to be fair and reasonable and in the best interests of the district. The adoption or revision of a method of allocation, deferment, reallocation, or reimbursement used by the board shall be made by the affirmative vote of at least two-thirds of the members of the board.

(b) Direct collection: upon approval of at least two-thirds of the members of the board, the board may provide for direct collection of current costs by monthly or other periodic billing of sewer users.

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Sec. 10. [GOVERNMENT UNITS; PAYMENTS TO BOARD.]

Subdivision 1. [OBLIGATIONS OF GOVERNMENT UNITS TO THE BOARD.] Each government unit shall pay to the board all sums charged to it as provided in section 9, at the times and in the manner determined by the board. The governing body of each such government unit shall take all action that may be necessary to provide the funds required for such payments and to make the same when due.

Subd. 2. [AMOUNTS DUE BOARD; WHEN PAYABLE.] Charges payable to the board by local government units may be made payable at such times during each year as the board determines, after it has taken into account the dates on which taxes, assessments, revenue collections, and other funds become available to the government unit required to pay such charges.

Subd. 3. [GENERAL POWERS OF GOVERNMENT UNITS; LOCAL TAX LEVIES.] To accomplish any duty imposed on it by the board, the governing body of every government unit may, in addition to the powers granted in this article and in any other law or charter, exercise the powers granted any municipality by Minnesota Statutes, chapters 117, 412, 429, and 475 and sections 115.46, 444.075, and 471.59, with respect to the area of the government unit located in the district. In addition thereto, the governing body of every government unit located in whole or part in the district may levy taxes upon all taxable property in that part of the government unit located in the district for all or a part of the amount payable to the board, but if the levy is for only part of the amounts payable to the board, the governing body of the government unit may levy additional taxes on the entire net tax capacity of all taxable property for all or a part of the balance remaining payable. The taxes levied under this subdivision shall be assessed and extended as a tax upon such taxable property by the county auditor for the next calendar year, free from any limitation of rate or amount imposed by law or charter. The tax shall be collected and remitted in the same manner as other general taxes of the government unit.

Subd. 3a. [ALTERNATE LEVY.] In lieu of levying taxes on all taxable property pursuant to subdivision 3, the governing body of the government unit may elect to levy taxes upon the net tax capacity of all taxable property, except agricultural property, and upon only 25 percent of the net tax capacity of all agricultural property, in that part of the government unit located in the district for all or a part of the amounts payable to the board. If the levy is for only part of the amounts payable to the board, the governing body may levy additional taxes on the entire net tax capacity of all such property, including agricultural property, for all or a part of the balance of such amounts. The taxes shall be assessed and extended as a tax upon such taxable property by the county auditor for the next calendar year, free from any limitation of rate or amount imposed by law or charge, and shall be collected and remitted in the same manner as other general taxes of the government unit. In computing the tax capacity pursuant to this subdivision, the county auditor shall include only 25 percent of the net tax capacity of all taxable agricultural property and 100 percent of the net tax capacity of all other taxable property in that part of the government unit located within the district and, in spreading the levy, the auditor shall apply the tax rate upon the same percentages of agricultural and nonagricultural taxable property. If the government unit elects to levy taxes under this subdivision and any of the taxable agricultural property is reclassified so as to no longer qualify as agricultural property, it shall be subject to additional taxes. The additional taxes shall be in an amount which, together with any such additional taxes previously levied and the estimated collection of additional taxes subsequently levied on any other such reclassified property, is determined by the governing body of the government unit to be at least sufficient to reimburse each other government unit for any excess current costs reallocated to it as a result of the board deferring any current costs under section 9 on account of the difference between the amount of such current costs initially allocated to each government unit based on the total net tax capacity of all taxable property in the district and the amount of such current costs reallocated to each government unit based on 25 percent of the net tax capacity of agricultural property and 100 percent of the net tax capacity of all other taxable property in the district. Any reimbursement shall be made on terms which the board determines to be just and reasonable. These additional taxes may be levied in any greater amount as the governing body of the government unit determines to be appropriate, provided that in no event shall the total amount of the additional taxes exceed the difference between:

(1) the total amount of taxes which would have been levied upon such reclassified property to help pay current costs charged in each year to the government unit by the board if that portion of such costs, if any, initially allocated by the board solely on the basis of 100 percent of the net tax capacity of all taxable property in the district and then reallocated on the basis of inclusion of only 25 percent of the net tax capacity of agricultural property in the district was not reallocated and if the amount of taxes levied by the government unit each year under this subdivision to pay current costs had been based on such initial allocation and had been imposed upon 100 percent of the net tax capacity of all taxable property, including agricultural property, in that part of the government unit located in the district; and

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(2) the amount of taxes theretofore levied each year under this subdivision upon such reclassified property, plus interest on the cumulative amount of such difference accruing each year at the approximate average annual rate borne by bonds issued by the board and outstanding at the beginning of such year or, if no bonds are then outstanding, at such rate of interest which may be determined by the board, but not exceeding the maximum rate of interest which may then be paid on bonds issued by the board. The additional taxes shall be a lien upon the reclassified property assessed in the same manner and for the same duration as all other ad valorem taxes levied upon the property. The additional taxes shall be extended against the reclassified property on the tax list for the current year, provided however that no penalties or additional interest shall be levied on such additional taxes if timely paid, and shall be collected and remitted in the same manner as other general taxes of the government unit.

Subd. 4. [DEBT LIMIT.] Any ad valorem taxes levied under section 10, subdivision 3, or section 5 by the governing body of a government unit to pay any sums charged to it by the board pursuant to this article are not subject to, or counted towards, any limit imposed by law on the levy of taxes upon taxable property within any governmental unit.

Subd. 5. [DEFICIENCY TAX LEVIES.] If the local government unit fails to make any payment to the board when due, the board may certify to the auditor of the county in which the government unit is located the amount required for payment of such amount with interest at not more than the maximum rate per annum authorized at that time on assessments pursuant to Minnesota Statutes, section 429.061, subdivision 2. The auditor shall levy and extend such amount as a tax upon all taxable property in that part of the government unit located in the district, for the next calendar year, free from any limitation imposed by law or charter. Such tax shall be collected in the same manner as other general taxes of the government unit, and the proceeds thereof, when collected, shall be paid by the county treasurer to the treasurer of the board and credited to the government unit for which the tax was levied.

Sec. 11. [PUBLIC HEARING AND SPECIAL ASSESSMENTS.]

Subdivision 1. [PUBLIC HEARING REQUIREMENT ON SPECIFIC PROJECT.] Before the board orders any project involving the acquisition or betterment of any interceptor or treatment works, all or a part of the cost of which will be allocated to local government units pursuant to section 9, as current costs, the board shall hold a public hearing on the proposed project following two publications in a newspaper or newspapers having general circulation in the district, stating the time and place of the hearing, the general nature and location of the project, the estimated total cost of acquisition and betterment, that portion of such costs estimated to be paid out of federal and state grants, and that portion of such costs estimated to be allocated to each local government unit affected thereby. The two publications shall be a week apart and the hearing shall be at least three days after the last publication. Not less than 45 days before the hearing notice thereof shall also be mailed to each clerk of all local government units in the district, but failure to give mailed notice of any defects in the notice shall not invalidate the proceedings. The project may include all or part of one or more interceptors or treatment works. A hearing is not required with respect to a project, no part of the costs of which are to be allocated to local government units as the current costs of acquisition, betterment, and debt service.

Subd. 2. [NOTICE TO BENEFITED PROPERTY OWNERS.] If the governing body of any local government unit in the district proposes to assess against benefited property within such units all or any part of the allocable costs of the project as provided in subdivision 5, such governing body shall, not less than ten days prior to the hearing provided for in subdivision 1 cause mailed notice thereof to be given to the owner of each parcel within the area proposed to be specially assessed and shall also give one week's published notice of the hearing. The notice of hearing shall contain the same information provided in the notice published by the board pursuant to subdivision 1, and in addition, a description of the area proposed to be assessed by the local government unit. For the purpose of giving mailed notice, owners shall be those shown to be on the records of the county auditor or, in any county where tax statements are mailed by the county treasurer, on the records of the county treasurer; but other appropriate records may be used for this purpose. However, as to properties which are tax exempt or subject to taxation on a gross earnings basis and are not listed on the records of the county auditor or the county treasurer, the owners thereof shall be ascertained by any practicable means and mailed notice shall be given them as herein provided. Failure to give mailed notice or any defects in the notice shall not invalidate the proceedings of the board or the local governing body.

Subd. 3. [BOARD PROCEEDINGS PERTAINING TO HEARING.] Prior to adoption of the resolution calling for such a hearing, the board shall secure from the district engineer or some other competent person of the board's selection a report advising it in a preliminary way as to whether the proposed project is feasible, necessary, and cost effective and

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as to whether it should best be made as proposed or in connection with some other project and the estimated costs of the project as recommended; but no error or omission in such report shall invalidate the proceeding. The board may also take such other steps prior to the hearing, as well in its judgment provide helpful information in determining the desirability and feasibility of the project including, but not limited to, preparation of plans and specifications and advertisement for bids thereon. The hearing may be adjourned from time to time and a resolution ordering the project may be adopted at any time within six months after the date of hearing. In ordering the project the board may reduce but not increase the extent of the project as stated in the notice of hearing, unless another hearing is held, and shall find that the project as ordered is in accordance with the comprehensive plan and program adopted by the board pursuant to section 5.

Subd. 4. [EMERGENCY ACTION.] If the board by resolution adopted by the affirmative vote of not less than two-thirds of its members determines that an emergency exists requiring the immediate purchase of materials or supplies or the making of emergency repairs, it may order the purchase of such supplies and materials and the making of such repairs prior to any hearing required under this section, provided that the board shall set as early a date as practicable for such hearing at the time it declares such emergency. All other provisions of this section shall be followed in giving notice of and conducting such hearing. Nothing herein shall be construed as preventing the board or its agents from purchasing maintenance supplies or incurring maintenance costs without regard to the requirements of this section.

Subd. 5. [POWER OF GOVERNMENT UNIT TO SPECIALLY ASSESS.] A local government unit may specially assess all or any part of the costs of acquisition and betterment as herein provided, of any project ordered by the board pursuant to this section. Such special assessments shall be levied in accordance with Minnesota Statutes, sections 429.051 to 429.081, except as otherwise provided in this subdivision. No other provisions of Minnesota Statutes, chapter 429, shall apply. For purposes of levying such special assessments, the hearing on such project required in subdivision 1 shall serve as the hearing on the making of the original improvement provided for by Minnesota Statutes, section 429.051. The area assessed may be less than but may not exceed the area proposed to be assessed as stated in the notice of hearing on the project provided for in subdivision 2. For the purpose of determining the allocable cost of the project, or part thereof, to the local government unit, the government unit may adopt one of the following procedures.

(a) At any time after a contract is let for the project, the local government unit may obtain from the board a current written estimate, on the basis of such historical and reasonably projected data as may be available, of that part of the total costs of acquisition and betterment of such project or of some portion of the project which the government unit shall designate, which will be allocated to the government unit and the number of years over which such costs will be allocated as current costs of acquisition, betterment, and debt service pursuant to section 9. The board shall not in any way be bound by this estimate for the purpose of allocating the costs of such project to local government units.

(b) The governing body may obtain from the board a written statement setting forth, for such prior period as the governing body designates, that portion of the costs previously allocated to the local government unit as current costs of acquisition, betterment, and debt service only, of all or any part of the project designated by the governing body. In addition to the allocable costs so ascertained, the local government unit may include in the total expense it will pay, as a basis for levying assessments, all other expenses incurred directly by the government unit in connection with said project, or any part thereof. Special assessments levied by the government unit with respect to previously allocated costs ascertained under this paragraph shall be payable in equal annual installments extending over a period not exceeding by more than one year the number of years which such costs have been allocated to the government unit or the estimated useful life of said project, or part thereof, whichever number of years is the lesser. No limitation is placed upon the number of times the governing body of a government unit may assess such previously allocated costs not previously assessed by the government unit. The power to specially assess provided for in this section shall be in addition and supplemental to all other powers of government units to levy special assessments.

Sec. 12. [INITIAL COSTS.]

Subdivision 1. [CONTRIBUTIONS OR ADVANCES FROM LOCAL GOVERNMENT UNITS.] The board may, at such time as it deems necessary and proper, request from all or some of the local government units necessary money to defray the costs of any obligations assumed under section 6 and the costs of administration, operation, and maintenance. Before making such request, the board shall, by formal resolution, determine the necessity for such money, setting forth in such resolution the purposes for which such money is needed and the estimated amount for each such purpose. Upon receiving such request, the governing body of each such government unit may provide for payment of the amount

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requested or such part thereof as it deems fair and reasonable. Such money may be paid out of general revenue funds or any other available funds of any local government unit and the governing bodies thereof may levy taxes to provide funds therefor, free from any existing limitations imposed by law or charter. Such money may be provided by such government units with or without interest but if interest is charged it shall not exceed five percent per annum. The board shall credit the local government units for such payments in allocating current costs pursuant to section 9, on such terms and at such times as it may agree with the unit furnishing the same.

Subd. 2. [LIMITED TAX LEVY.] The board may levy ad valorem taxes on all taxable property in the district to defray any of the costs described in subdivision 1, provided that such costs have not been defrayed by contribution under subdivision 1.

Before certification of such levy to the county auditor, the board shall determine the need for the money to be derived from such levy by formal resolution setting forth in said resolution the purposes for which the tax money will be used and the amount proposed to be used for each such purpose. In allocating current costs pursuant to section 9 the board shall credit the government units for taxes collected pursuant to levy made under this subdivision on such terms and at such time or times as the board deems fair and reasonable and upon such terms as are consistent with the provisions of section 9, subdivision 2.

Sec. 13. [BONDS, CERTIFICATES, AND OTHER OBLIGATIONS.]

Subdivision 1. [BUDGET ANTICIPATION CERTIFICATES OF INDEBTEDNESS.] (a) At any time or times after adoption of its annual budget and in anticipation of the collection of tax and other revenues estimated and set forth by the board in such budget, except:

(1) taxes already anticipated by the issuance of certificates under subdivision 2;

(2) deficiency taxes levied pursuant to this subdivision; and

(3) taxes levied for the payment of certificates issued pursuant to subdivision 3, the board may by resolution, authorize the issuance, negotiation, and sale in accordance with subdivision 5 in such form and manner and upon such terms as it may determine of its negotiable general obligation certificates of indebtedness in aggregate principal amounts not exceeding 50 percent of the total amount of such tax collections and other revenues and maturing not later than three months after the close of the budget year in which issued. The proceeds of the sale of such certificates shall be used solely for the purposes for which such tax collections and other revenues are to be expended pursuant to such budget.

(b) All such tax collections and other revenues included in the budget for such budget year, after the expenditures of such tax collections and other revenues in accordance with the budget, shall be irrevocably pledged and appropriated to a special fund to pay the principal and interest on the certificates when due. If for any reason such tax collections and other revenues are insufficient to pay the certificates and interest when due, the board shall levy a tax in the amount of the deficiency on all taxable property in the district and shall appropriate this amount when received to the special fund.

Subd. 2. [TAX LEVY ANTICIPATION CERTIFICATES OF INDEBTEDNESS.] At any time or times after a tax is levied by the board pursuant to section 12, subdivision 2, and certified to the county auditors in anticipation of the collection of such tax, provided that such tax has not been anticipated by the issuance of certificates under subdivision 1, the board may, by resolution, authorize the issuance, negotiation, and sale in accordance with subdivision 5 in such form and manner and upon such terms and conditions as it may determine of its negotiable general obligation tax levy anticipation certificates of indebtedness in aggregate principal amounts not exceeding 50 percent of such uncollected tax as to which no penalty for nonpayment or delinquency has attached. Such certificates shall mature not later than April 1 in the year following the year in which such tax is collectible. The proceeds of the tax in anticipation of which such certificates were issued and other funds which may become available shall be applied to the extent necessary to repay such certificates.

Subd. 3. [EMERGENCY CERTIFICATES OF INDEBTEDNESS.] If in any budget year the receipts of tax and other revenues should for some unforeseen cause become insufficient to pay the board's current expenses, or if any calamity or other public emergency should subject it to the necessity of making extraordinary expenditures, the board may by

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resolution authorize the issuance, negotiation, and sale in accordance with subdivision 5 in such form and manner and upon such terms and conditions as it may determine of its negotiable general obligation certificates of indebtedness in an amount sufficient to meet such deficiency, and the board shall forthwith levy on all taxable property in the district a tax sufficient to pay the certificates and interest thereon and shall appropriate all collections of such tax to a special fund created for the payment of such certificates and the interest thereon.

Subd. 4. [GENERAL OBLIGATION BONDS.] The board may by resolution authorize the issuance of general obligation bonds maturing serially in one or more annual or semiannual installments, for the acquisition or betterment of any part of the district disposal system, including but without limitation the payment of interest during construction and for a reasonable period thereafter, or for the refunding of outstanding bonds, certificates of indebtedness, or judgments. The board shall pledge its full faith and credit and taxing power for the payment of such bonds and shall provide for the issuance and sale and for the security of such bonds in the manner provided in Minnesota Statutes, chapter 475, and shall have the same powers and duties as a municipality issuing bonds under that law. No election shall be required to authorize the issuance of such bonds and the debt limitations of Minnesota Statutes, chapter 475, shall not apply to such bonds. The board may also pledge for the payment of such bonds and deduct from the amount of any tax levy required under Minnesota Statutes, section 475.61, subdivision 1, any sums receivable under section 10 or any state and federal grants anticipated by the board and may covenant to refund such bonds if and when and to the extent that for any reasons such revenues, together with other funds properly available and appropriated for such purpose, are not sufficient to pay all principal and interest due or about to become due thereon, provided that such revenues have not been anticipated by the issuance of certificates under subdivision 1. All bonds which have been or shall hereafter be issued and sold in conformity with the provisions of this subdivision, and otherwise in conformity with law, are hereby authorized, legalized, and validated.

Subd. 5. [MANNER OF SALE AND ISSUANCE OF CERTIFICATES.] Certificates issued under subdivisions 1, 2, and 3 may be issued and sold by negotiation, without public sale, and may be sold at a price equal to such percentage of the par value thereof, plus accrued interest, and bearing interest at such rate or rates as may be determined by the board. No election shall be required to authorize the issuance of such certificates. Such certificates shall bear the same rate of interest after maturity as before and the full faith and credit and taxing power of the board shall be pledged to the payment of such certificates.

Sec. 14. [TAX LEVIES.]

The board shall have power to levy taxes for the payment of bonds or other obligations assumed by the district under section 6 and for debt service of the district disposal system authorized in section 13 upon all taxable property within the district without limitation of rate or amount and without affecting the amount or rate of taxes which may be levied by the board for other purposes or by any local government unit in the district. No other provision of law relating to debt limit shall restrict or in any way limit the power of the board to issue the bonds and certificates authorized in section 13. The board shall also have power to levy taxes as provided in sections 10 and 12. The county auditor shall annually assess and extend upon the tax rolls the portion of the taxes levied by the board in each year which is certified to the auditor by the board. The county treasurer shall collect and make settlement of such taxes with the treasurer of the board.

Sec. 15. [DEPOSITORIES.]

The board shall from time to time designate one or more national or state banks, or trust companies authorized to do a banking business, as official depositories for money of the board, and thereupon shall require the treasurer to deposit all or a part of such money in such institutions. Such designation shall be in writing and shall set forth all the terms and conditions upon which the deposits are made, and shall be signed by the chair and treasurer, and made a part of the minutes of the board. Any bank or trust company so designated shall qualify as a depository by furnishing a corporate surety bond or collateral in the amounts required by Minnesota Statutes, section 118A.03. However, no bond or collateral shall be required to secure any deposit insofar as it is insured under federal law.

Sec. 16. [MONEY; ACCOUNTS AND INVESTMENTS.]

Subdivision 1. [RECEIPT AND APPLICATION.] All money received by the board shall be deposited or invested by the treasurer and disposed of as the board may direct in accordance with its budget; provided that any money that has been pledged or dedicated by the board to the payment of obligations or interest thereon or expenses incident thereto, or for any other specific purpose authorized by law, shall be paid by the treasurer into the fund to which they have been pledged.

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Subd. 2. [FUNDS AND ACCOUNTS.] The board's treasurer shall establish such funds and accounts as may be necessary or convenient to handle the receipts and disbursements of the board in an orderly fashion.

Subd. 3. [DEPOSIT AND INVESTMENT.] The money on hand in said funds and accounts may be deposited in the official depositories of the board or invested as hereinafter provided. The amount thereof not currently needed or required by law to be kept in cash on deposit may be invested in obligations authorized for the investment of municipal sinking funds by law. The money may also be held under certificates of deposit issued by any official depository of the board. All investments by the board must conform to an investment policy adopted by the board and amended from time to time.

Subd. 4. [BONDS PROCEEDS.] The use of proceeds of all bonds issued by the board for the acquisition and betterment of the district disposal system, and the use, other than investment, of all money on hand in any sinking fund or funds of the board, shall be governed by Minnesota Statutes, chapter 475, this article, and the resolutions authorizing the issuance of the bonds. Such bond proceeds when received shall be transferred to the treasurer of the board for safekeeping, investment, and payment of the costs for which they were issued.

Subd. 5. [AUDIT.] The board shall provide for and pay the cost of an independent annual audit of its official books and records by the state public examiner or a certified public accountant.

Sec. 17. [GENERAL POWERS OF BOARD.]

Subdivision 1. [ALL NECESSARY OR CONVENIENT POWER.] The board shall have all powers which may be necessary or convenient to discharge the duties imposed upon it by law. The powers shall include those herein specified, but the express grant or enumeration of powers does not limit the generality or scope of the grant of power contained in this subdivision.

Subd. 2. [SUITS.] The board may sue or be sued.

Subd. 3. [CONTRACTS.] The board may enter into any contract necessary or proper for the exercise of its powers of the accomplishment of its purposes.

Subd. 4. [RULES.] The board shall have the power to adopt rules relating to the board's responsibilities and may provide penalties for the violation thereof not exceeding the maximum which may be specified for a misdemeanor, and the cost of prosecution may be added to the penalties imposed. Any rule prescribing a penalty for violation shall be published at least once in a newspaper having general circulation in the district. Such violations may be prosecuted before any court in the district having jurisdiction of misdemeanor, and every such court shall have jurisdiction of such violations. Any constable or other peace officer of any municipality in the district may make arrests for such violations committed anywhere in the district in like manner and with like effect as for violations of village ordinances or for statutory misdemeanors. All fines collected in such cases shall be deposited in the treasury of the board, or may be allocated between the board and the municipality in which such prosecution occurs on such basis as the board and the municipality agree.

Subd. 5. [GIFTS; GRANTS.] The board may accept gifts, may apply for and accept grants or loans of money or other property from the United States, the state, or any person for any of its purposes, may enter into any agreement required in connection herewith, and may hold, use, and dispose of such money or property in accordance with the terms of the gift, grant, loan, or agreement relating thereto; and, with respect to any loans or grants of funds or real or personal property or other assistance from any state or federal government or any agency or instrumentality thereof, the board may contract to do and perform all acts and things required as a condition or consideration therefore pursuant to state or federal law or regulations, whether or not included among the powers expressly granted to the board in this article.

Subd. 6. [JOINT POWERS.] The board may act under Minnesota Statutes, section 471.59, or any other appropriate law providing for joint or cooperative action between government units.

Subd. 7. [RESEARCH, HEARINGS, INVESTIGATIONS, ADVISE.] The board may conduct research studies and programs, collect and analyze data, prepare reports, maps, charts, and tables, and conduct all necessary hearings and investigations in connection with the design, construction, and operation of the district disposal system; and may advise

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and assist other government units on system planning matters within the scope of its powers, duties, and objectives and may provide at the request of any such governmental unit such other technical and administrative assistance as the board deems appropriate for the government unit to carry out the powers and duties vested in the government unit under this article or imposed on by the board.

Subd. 8. [EMPLOYEES, CONTRACTORS, INSURANCE.] The board may employ on such terms as it deems advisable, persons or firms performing engineering, legal, or other services of a professional nature; require any employee to obtain and file with it an individual bond or fidelity insurance policy; and procure insurance in such amounts as it deems necessary against liability of the board or its officers or both, for personal injury or death and property damage or destruction, with the force and effect stated in Minnesota Statutes, chapter 466, and against risks of damage to or destruction of any of its facilities, equipment, or other property as it deems necessary.

Subd. 9. [PROPERTY.] The board may acquire by purchase, lease, condemnation, gift, or grant, and real or personal property including positive and negative easements and water and air rights, and it may construct, enlarge, improve, replace, repair, maintain, and operate any interceptor, treatment works, or water facility determined to be necessary or convenient for the collection and disposal of sewage in the district. Any local government unit and the commissioners of transportation and natural resources may convey to or permit the use of any such facilities owned or controlled by it, by the board, subject to the rights of the holders of any bonds issued with respect thereto, with or without compensation, without an election or approval by any other government unit or agency. All powers conferred by this subdivision may be exercised both within or without the district as may be necessary for the exercise by the board of its powers or the accomplishment of its purposes. The board may hold, lease, convey, or otherwise dispose of such property for its purposes upon such terms and in such manner as it shall deem advisable. Unless otherwise provided, the right to acquire lands and property rights by condemnation shall be exercised in accordance with Minnesota Statutes, chapter 117, and shall apply to any property or interest therein owned by any local government unit; provided, that no such property devoted to an actual public use at the time, or held to be devoted to such use within a reasonable time, shall be so acquired unless a court of competent jurisdiction shall determine that the use proposed by the board is paramount to such use. Except in case of property in actual public use, the board may take possession of any property of which condemnation proceedings have been commenced at any time after the issuance of a court order appointing commissioners for its condemnation.

Subd. 10. [RIGHTS-OF-WAY.] The board may construct or maintain its systems or facilities in, along, on, under, over, or through public waters, streets, bridges, viaducts, and other public right-of-way without first obtaining a franchise from any county or local government unit having jurisdiction over them; but such facilities shall be constructed and maintained in accordance with the ordinances and resolutions of any such county or government unit relating to construction, installation, and maintenance of similar facilities on such public properties and shall not unnecessarily obstruct the public use of such rights-of-way.

Subd. 11. [DISPOSAL OF PROPERTY.] The board may sell, lease, or otherwise dispose of any real or personal property acquired by it which is no longer required for accomplishment of its purposes. Such property may be sold in the manner provided by Minnesota Statutes, section 469.065, insofar as practical. The board may give such notice of sale as it shall deem appropriate. When the board determines that any property or any part of the district disposal system which has been acquired from a local government unit without compensation is no longer required but is required as a local facility by the government unit from which it was acquired, the board may by resolution transfer it to such government unit.

Subd. 12. [JOINT OPERATIONS.] The board may contract with the United States or any agency thereof, any state or agency thereof, or any regional public planning body in the state with jurisdiction over any part of the district, or any other municipal or public corporation, or governmental subdivision in any state, for the joint use of any facility owned by the board or such entity, for the operation by such entity of any system or facility of the board, or for the performance on the board's behalf of any service including, but not limited to, planning, on such terms as may be agreed upon by the contracting parties. Unless designated by the board as a local sanitary sewer facility, any treatment works or interceptor jointly used, or operated on behalf of the board, as provided in this subdivision, shall be deemed to be operated by the board for purposes of including said facilities in the district disposal system.

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Sec. 18. [LOCAL FACILITIES.]

Subdivision 1. [SANITARY SEWER FACILITIES.] Except as otherwise provided in this article, local government units shall retain responsibility for the planning, design, acquisition, betterment, operation, administration, and maintenance of all local sanitary sewer facilities as provided by law.

Subd. 2. [ASSUMPTION OF RESPONSIBILITY OVER LOCAL SANITARY SEWER FACILITIES.] The board shall upon request of any government unit or units assume either alone or jointly with the local government unit all or any part of the responsibility of the local government unit described in subdivision 1. Except as provided in subdivision 4 and for the purpose of exercising such responsibility, the board shall have all the powers and duties elsewhere conferred in this article with the same force and effect as if such local sanitary sewer facilities were a part of the district disposal system.

Subd. 3. [WATER AND STREET FACILITIES.] The board may, upon request of any governmental unit or units, enter into an agreement under which the board may assume either alone or jointly with such unit or units, the responsibility for the acquisition and construction of water and street facilities in conjunction with (1) any project for the acquisition or betterment of the district disposal system, or (2) any project undertaken by the board under subdivision 2. Except as provided in subdivision 4, and for the purpose of exercising any responsibilities pursuant to this subdivision, the board shall have all the powers and duties elsewhere conferred in this article with the same force and effect as if such water or street facilities were a part of the district disposal system.

Subd. 4. [ALLOCATION OF CURRENT COSTS.] All current costs attributable to responsibilities assumed by the board over local sanitary sewer facilities and water and street facilities as provided in this section shall be allocated solely to the local unit for or with whom such responsibilities are assumed on such terms and over such period as the board determines to be equitable and in the best interest of the district, provided that if two or more government units form a region in accordance with this section, all or part of such current costs attributable to the region shall at the request of its joint board be allocated to the region and provided in the agreement establishing the region.

Subd. 5. [PART OF DISTRICT SYSTEM.] Nothing contained in this section or in any other part of this article shall be construed to prevent the board from including, where appropriate, treatment works or interceptors, previously designated or treated as local sanitary sewer facilities as a part of the district disposal system.

Sec. 19. [SERVICE CONTRACTS WITH GOVERNMENTS OUTSIDE DISTRICT.]

The board may contract with the United States or any agency thereof, any state or any agency thereof, or any municipal or public corporation, governmental subdivision or agency or political subdivision in any state, outside the jurisdiction of the board, for furnishing to such entities any services which the board may furnish to local government units in the district under this article including, but not limited to, planning for and the acquisition, betterment, operation, administration, and maintenance of any or all interceptors, treatment works, and local sanitary sewer facilities, provided that the board may further include as one of the terms of the contract that such entity also pay to the board such amount as may be agreed upon as a reasonable estimate of the proportionate share properly allocable to the entity of costs of acquisition, betterment, and debt service previously allocated to local government units in the district. When such payments are made by such entities to the board, they shall be applied in reduction of the total amount of costs thereafter allocated to each local government unit in the district, on such equitable basis as the board deems to be in the best interest of the district. Any municipality in the state of Minnesota may enter into such contract and perform all acts and things required as a condition or consideration therefore consistent with the purpose of this article, whether or not included among the powers otherwise granted to such municipality by law or charter, such powers to include those powers set out in section 10, subdivisions 3, 3a, and 4.

Sec. 20. [CONTRACTS FOR CONSTRUCTION, MATERIALS, SUPPLIES, AND EQUIPMENT.]

Subdivision 1. [PLANS AND SPECIFICATIONS.] When the board orders a project involving the acquisition or betterment of a part of the district disposal system it shall cause plans and specifications of this project to be made, or if previously made, to be modified, if necessary, and to be approved by the agency if required, and after any required approval by the agency, one or more contracts for work and materials called for by such plans and specification may be awarded as provided in this section.

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Subd. 2. [UNIFORM MUNICIPAL CONTRACTING LAW.] Except as otherwise provided in this section, all contracts for work to be done or for purchases of materials, supplies, or equipment shall be done in accordance with Minnesota Statutes, section 471.345.

Subd. 3. [CONTRACTS OR PURCHASES.] The board may, without advertising for bids, enter into any contract or purchase any materials, supplies, or equipment of the type referred to in subdivision 2 in accordance with applicable state law.

Sec. 21. [ANNEXATION OF TERRITORY.]

Any municipality in Douglas county or Pope county, upon resolution adopted by a four-fifths vote of its governing body, may petition the board for annexation to the district of the area then comprising the municipality, or any part thereof and, if accepted by the board, such area shall be deemed annexed to the district and subject to the jurisdiction of the board under the terms and provisions of this article. The territory so annexed shall be subject to taxation and assessment pursuant to the provisions of this article and shall be subject to taxation by the board like other property in the district for the payment of principal and interest thereafter becoming due on general obligations of the board, whether authorized or issued before or after such annexation. The board may, in its discretion, condition approval of the annexation upon the contribution, by or on behalf of the municipality petitioning for annexation, to the board of such amount as may be agreed upon as being a reasonable estimate of the proportionate share, properly allocable to the municipality, of costs or acquisition, betterment, and debt service previously allocated to local government units in the district, on such terms as may be agreed upon; and in place of or in addition thereto such other and further conditions as the board deems in the best interests of the district. Notwithstanding any other provisions of this article to the contrary, the conditions established for annexation may include the requirement that the annexed municipality pay for, contract for, and oversee the construction of local sanitary sewer facilities and interceptor sewers as those terms are defined in section 2. For the purpose of paying such contribution or of satisfying any other condition established by the board, the municipality petitioning annexation may exercise the powers conferred in section 10. When such contributions are made by the municipality to the board, they shall be applied in reduction of the total amount of costs thereafter allocated to each local government unit in the district, on such equitable basis as the board deems to be in the best interests of the district, applying so far as practicable and appropriate the criteria set forth in section 9, subdivision 2. Upon annexation of such territory, the secretary of the board shall certify to the auditor and treasurer of the county in which the municipality is located the fact of such annexation and a legal description of the territory annexed.

Sec. 22. [PROPERTY EXEMPT FROM TAXATION.]

Any properties, real or personal, owned, leased, controlled, used, or occupied by the sanitary sewer board for any purpose under this article are declared to be acquired, owned, leased, controlled, used, and occupied for public, governmental, and municipal purposes, and are exempt from taxation by the state or any political subdivision of the state, provided that such properties are subject to special assessments levied by a political subdivision for a local improvement in amounts proportionate to and not exceeding the special benefit received by the properties from such improvement. No possible use of any such properties in any manner different from their use as part of the disposal system at the time shall be considered in determining the special benefit received by such properties. All such assessments shall be subject to final approval by the board, whose determination of the benefits shall be conclusive upon the political subdivision levying the assessment. All bonds, certificates of indebtedness, or other obligations of the board, and the interest thereon, are exempt from taxation by the state or any political subdivision of the state.

Sec. 23. [RELATION TO EXISTING LAWS.]

This article prevails over any law or charter inconsistent with it. The powers conferred on the board under this article do not diminish or supersede the powers conferred on the agency by Minnesota Statutes, chapters 115 and 116.

Sec. 24. [LOCAL APPROVAL.]

This article takes effect the day after the governing bodies of the city of Farwell in Pope county and the city of Kensington in Douglas county comply with Minnesota Statutes, section 645.021, subdivision 3, or 30 days after a referendum is held in those cities.

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ARTICLE 16

MISCELLANEOUS

Section 1. Minnesota Statutes 1997 Supplement, section 3.986, subdivision 2, is amended to read:

Subd. 2. [LOCAL FISCAL IMPACT.] (a) "Local fiscal impact" means increased or decreased costs or revenues that a political subdivision would incur as a result of a law enacted after June 30, 1997, or rule proposed after ~~June 30~~ December 31, 1998:

(1) that mandates a new program, eliminates an existing mandated program, requires an increased level of service of an existing program, or permits a decreased level of service in an existing mandated program;

(2) that implements or interprets federal law and, by its implementation or interpretation, increases or decreases program or service levels beyond the level required by the federal law;

(3) that implements or interprets a statute or amendment adopted or enacted pursuant to the approval of a statewide ballot measure by the voters and, by its implementation or interpretation, increases or decreases program or service levels beyond the levels required by the ballot measure;

(4) that removes an option previously available to political subdivisions, or adds an option previously unavailable to political subdivisions, thus requiring higher program or service levels or permitting lower program or service levels, or prohibits a specific activity and so forces political subdivisions to use a more costly alternative to provide a mandated program or service;

(5) that requires that an existing program or service be provided in a shorter time period and thus increases the cost of the program or service, or permits an existing mandated program or service to be provided in a longer time period, thus permitting a decrease in the cost of the program or service;

(6) that adds new requirements to an existing optional program or service and thus increases the cost of the program or service because the political subdivisions have no reasonable alternative other than to continue the optional program;

(7) that affects local revenue collections by changes in property or sales and use tax exemptions;

(8) that requires costs previously incurred at local option that have subsequently been mandated by the state; or

(9) that requires payment of a new fee or increases the amount of an existing fee, or permits the elimination or decrease of an existing fee mandated by the state.

(b) When state law is intended to achieve compliance with federal law or court orders, state mandates shall be determined as follows:

(1) if the federal law or court order is discretionary, the state law is a state mandate;

(2) if the state law exceeds what is required by the federal law or court order, only the provisions of the state law that exceed the federal requirements are a state mandate; and

(3) if the state law does not exceed what is required by the federal statute or regulation or court order, the state law is not a state mandate.

Sec. 2. Minnesota Statutes 1997 Supplement, section 3.986, subdivision 4, is amended to read:

Subd. 4. [POLITICAL SUBDIVISION.] A "political subdivision" is a county, or home rule charter or statutory city ~~, town, or other taxing district or municipal corporation~~.

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Sec. 3. Minnesota Statutes 1997 Supplement, section 3.987, subdivision 1, is amended to read:

Subdivision 1. [LOCAL IMPACT NOTES.] The commissioner of finance shall coordinate the development of a local impact note for any proposed legislation introduced after June 30, 1997, or any rule proposed after ~~June 30~~ December 31, 1998, upon request of the chair or the ranking minority member of either legislative tax committee. Upon receipt of a request to prepare a local impact note, the commissioner must notify the authors of the proposed legislation or, for an administrative rule, the head of the relevant executive agency or department, that the request has been made. The local impact note must be ~~prepared as provided in section 3.98, subdivision 2, and~~ made available to the public upon request. If the action is among the exceptions listed in section 3.988, a local impact note need not be requested nor prepared. The commissioner shall make a reasonable and timely estimate of the local fiscal impact on each type of political subdivision that would result from the proposed legislation. The commissioner of finance may require any political subdivision or the commissioner of an administrative agency of the state to supply in a timely manner any information determined to be necessary to determine local fiscal impact. The political subdivision, its representative association, or commissioner shall convey the requested information to the commissioner of finance with a signed statement to the effect that the information is accurate and complete to the best of its ability. The political subdivision, its representative association, or commissioner, when requested, shall update its determination of local fiscal impact based on actual cost or revenue figures, improved estimates, or both. Upon completion of the note, the commissioner must provide a copy to the authors of the proposed legislation or, for an administrative rule, to the head of the relevant executive agency or department.

Sec. 4. Minnesota Statutes 1997 Supplement, section 3.987, subdivision 2, is amended to read:

Subd. 2. [MANDATE EXPLANATIONS.] Before a committee hearing on any bill ~~introduced in the legislature after June 30, 1997,~~ that seeks to impose program or financial mandates on political subdivisions ~~must include an attachment from~~ the chair or ranking minority member of the committee may request that the author provide the committee with a note that gives appropriate responses to the following guidelines. It must state and list:

(1) the policy goals that are sought to be attained~~, the~~ and any performance standards that are to be imposed~~, and an explanation why the goals and standards will best be served by requiring compliance by~~ on political subdivisions;

(2) any performance standards that will allow political subdivisions flexibility and innovation of method in achieving those goals;

(3) ~~the reasons for each prescribed standard and~~ the process by which each standard governs input such as staffing and other administrative aspects of the program;

(4) the sources of additional revenue, in addition to existing funding for similar programs, that are directly linked to imposition of the mandates that will provide adequate and stable funding for their requirements;

(5) ~~what input has been obtained to ensure that the implementing agencies have the capacity to carry out the delegated responsibilities; and~~

~~(6)~~ the reasons why ~~less intrusive measures such as~~ financial incentives or voluntary compliance would not yield the equity, efficiency, or desired level of statewide uniformity in the proposed program;

(6) what input has been obtained to ensure that the implementing agencies have the capacity to carry out the delegated responsibilities; and

(7) the efforts put forth, if any, to involve political subdivisions in the creation or development of the proposed mandate.

Sec. 5. Minnesota Statutes 1997 Supplement, section 3.988, subdivision 3, is amended to read:

Subd. 3. [MISCELLANEOUS EXCEPTIONS.] A local impact note or an attachment as provided in section 3.987, subdivision 2, need not be prepared for the cost of a mandated action if the law, including a rulemaking, containing the mandate:

(1) accommodates a specific local request;

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(2) results in no new local government duties;

(3) leads to revenue losses from exemptions to taxes;

(4) provided only clarifying or conforming, nonsubstantive charges on local government;

(5) imposes additional net local costs that are minor (~~less than $200~~ an amount less than or equal to one-half of one percent of the local revenue base as defined in section 477A.011, subdivision 27, or $50,000, whichever is less for any single local government if the mandate does not apply statewide or less than ~~$3,000,000~~ $1,000,000 if the mandate is statewide) ~~and do not cause a financial burden on local government~~;

(6) is a law or executive order enacted before July 1, 1997, or a rule initially implementing a law enacted before July 1, 1997;

(7) implements something other than a law or executive order, such as a federal, court, or voter-approved mandate;

(8) ~~defines a new crime or redefines an existing crime or infraction;~~

~~(9)~~ results in savings that equal or exceed costs;

~~(10)~~ (9) requires the holding of elections;

~~(11)~~ (10) ensures due process or equal protection;

~~(12)~~ (11) provides for the notification and conduct of public meetings;

~~(13)~~ (12) establishes the procedures for administrative and judicial review of actions taken by political subdivisions;

~~(14)~~ (13) protects the public from malfeasance, misfeasance, or nonfeasance by officials of political subdivisions;

~~(15)~~ (14) relates directly to financial administration, including the levy, assessment, and collection of taxes;

~~(16)~~ (15) relates directly to the preparation and submission of financial audits necessary to the administration of state laws; or

~~(17)~~ (16) requires uniform standards to apply to public and private institutions without differentiation.

Sec. 6. Minnesota Statutes 1997 Supplement, section 3.989, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] In this section:

(1) "Class A state mandates" means those laws under which the state mandates to political subdivisions, their participation, the organizational structure of the program, and the procedural regulations under which the law must be administered; and

(2) "Class B state mandates" means those mandates resulting from legislation enacted after July 1, 1998, that specifically reference this section and that allow the political subdivisions to opt for administration of a law with program elements mandated beforehand and with an assured revenue level from the state of at least 90 percent of full program and administrative costs.

Sec. 7. Minnesota Statutes 1997 Supplement, section 3.989, subdivision 2, is amended to read:

Subd. 2. [REPORT.] The commissioner of finance shall prepare by September 1, ~~1998~~ 2000, and by September 1 of each even-numbered year thereafter, a report ~~by political subdivisions~~ of the costs of ~~class A state~~ local mandates established after June 30, 1997.

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The commissioner shall ~~annually~~ include the statewide total of the statement of costs of ~~class A~~ local mandates after June 30, 1997, as a notation in the state biennial budget ~~for the next fiscal year~~.

Sec. 8. Minnesota Statutes 1996, section 16A.102, subdivision 1, is amended to read:

Subdivision 1. [GOVERNOR'S RECOMMENDATION.] By the fourth Monday in January of each odd-numbered year, the governor shall submit to the legislature a recommended revenue target for the next two bienniums. The recommended revenue target must specify:

(1) the maximum share of Minnesota personal income to be collected in taxes and other revenues to pay for state and local government services;

(2) the division of the share between state and local government revenues; and

(3) the ~~appropriate~~ mix and rates of income, sales, and other state and local taxes including property taxes and other revenues~~, other than property taxes, and the amount of property taxes and the effect of the recommendations on the incidence of the tax burden by income class~~.

The recommendations must be based on the November forecast prepared under section 16A.103.

Sec. 9. Minnesota Statutes 1996, section 16A.102, subdivision 2, is amended to read:

Subd. 2. [LEGISLATIVE BUDGET RESOLUTION.] By March 15 of each odd-numbered year, the legislature shall by concurrent resolution adopt revenue targets for the next two bienniums. The resolution must specify:

(1) the maximum share of Minnesota personal income to be collected in taxes and other revenues to pay for state and local government services;

(2) the division of the share between state and local government services; and

(3) the ~~appropriate~~ mix and rates of income, sales, and other state and local taxes including property taxes and other revenues~~, other than property taxes, and the amount of property taxes and the effect of the resolution on the incidence of the tax burden by income class~~.

The resolution must be based on the February forecast prepared under section 16A.103 and take into consideration the revenue targets recommended by the governor under subdivision 1.

Sec. 10. Minnesota Statutes 1997 Supplement, section 60A.15, subdivision 1, is amended to read:

Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or before April 1, June 1, and December 1 of each year, every domestic and foreign company, including town and farmers' mutual insurance companies, domestic mutual insurance companies, marine insurance companies, health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations, shall pay to the commissioner of revenue installments equal to one-third of the insurer's total estimated tax for the current year. Except as provided in paragraphs (d), (e), (h), and (i), installments must be based on a sum equal to two percent of the premiums described in paragraph (b).

(b) Installments under paragraph (a), (d), or (e) are percentages of gross premiums less return premiums on all direct business received by the insurer in this state, or by its agents for it, in cash or otherwise, during such year.

(c) Failure of a company to make payments of at least one-third of either (1) the total tax paid during the previous calendar year or (2) 80 percent of the actual tax for the current calendar year shall subject the company to the penalty and interest provided in this section, unless the total tax for the current tax year is $500 or less.

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(d) For health maintenance organizations, nonprofit health service plan corporations, and community integrated service networks, the installments must be based on an amount determined under paragraph (h) or (i).

(e) For purposes of computing installments for town and farmers' mutual insurance companies and for mutual property casualty companies with total assets on December 31, 1989, of $1,600,000,000 or less, the following rates apply:

(1) for all life insurance, two percent;

(2) for town and farmers' mutual insurance companies and for mutual property and casualty companies with total assets of $5,000,000 or less, on all other coverages, one percent; and

(3) for mutual property and casualty companies with total assets on December 31, 1989, of $1,600,000,000 or less, on all other coverages, 1.26 percent.

(f) If the aggregate amount of premium tax payments under this section and the fire marshal tax payments under section 299F.21 made during a calendar year is equal to or exceeds $120,000, all tax payments in the subsequent calendar year must be paid by means of a funds transfer as defined in section 336.4A-104, paragraph (a). The funds transfer payment date, as defined in section 336.4A-401, must be on or before the date the payment is due. If the date the payment is due is not a funds transfer business day, as defined in section 336.4A-105, paragraph (a), clause (4), the payment date must be on or before the funds transfer business day next following the date the payment is due.

(g) Premiums under medical assistance, general assistance medical care, the MinnesotaCare program, and the Minnesota comprehensive health insurance plan and all payments, revenues, and reimbursements received from the federal government for Medicare-related coverage as defined in section 62A.31, subdivision 3, paragraph (e), are not subject to tax under this section.

(h) For calendar years 1997, 1998, and 1999, the installments for health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations must be based on an amount equal to one percent of premiums described under paragraph (b). Health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations that have met the cost containment goals established under section 62J.04 in the individual and small employer market for calendar year 1996 are exempt from payment of the tax imposed under this section for premiums paid after March 30, 1997, and before April 1, 1998. Health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations that have met the cost containment goals established under section 62J.04 in the individual and small employer market for calendar year 1997 are exempt from payment of the tax imposed under this section for premiums paid after March 30, 1998, and before April 1, 1999. Health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations that have met the cost containment goals established under section 62J.04 in the individual and small employer market for calendar year 1998 are exempt from payment of the tax imposed under this section for premiums paid after March 30, 1999, and before January 1, 2000.

(i) For calendar years after 1999, the commissioner of finance shall determine the balance of the health care access fund on September 1 of each year beginning September 1, 1999. If the commissioner determines that there is no structural deficit for the next fiscal year, no tax shall be imposed under paragraph (d) for the following calendar year. If the commissioner determines that there will be a structural deficit in the fund for the following fiscal year, then the commissioner, in consultation with the commissioner of revenue, shall determine the amount needed to eliminate the structural deficit and a tax shall be imposed under paragraph (d) for the following calendar year. The commissioner shall determine the rate of the tax as either one-quarter of one percent, one-half of one percent, three-quarters of one percent, or one percent of premiums described in paragraph (b), whichever is the lowest of those rates that the commissioner determines will produce sufficient revenue to eliminate the projected structural deficit. The commissioner of finance shall publish in the State Register by October 1 of each year the amount of tax to be imposed for the following calendar year.

(j) In approving the premium rates as required in sections 62L.08, subdivision 8, and 62A.65, subdivision 3, the commissioners of health and commerce shall ensure that any exemption from the tax as described in paragraphs (h) and (i) is reflected in the premium rate.

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Sec. 11. Minnesota Statutes 1997 Supplement, section 270.60, subdivision 4, is amended to read:

Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner shall pay to a ~~qualified~~ county in which an Indian gaming casino is located ten percent of the state share of all taxes generated from activities on reservations and collected under a tax agreement under this section with the tribal government for the reservation located in the county. If the tribe has casinos located in more than one county, the payment must be divided equally among the counties in which the casinos are located.

(b) A county ~~qualifies for payments~~ is a qualified county under this subdivision ~~only~~ if one of the following conditions is met:

(1) the county's per capita income is less than 80 percent of the state per capita personal income, based on the most recent estimates made by the United States Bureau of Economic Analysis; or

(2) 30 percent or more of the total market value of real property in the county is exempt from ad valorem taxation.

(c) The commissioner shall make the payments required under this subdivision by February 28 of the year following the year the taxes are collected.

(d) An amount sufficient to make the payments authorized by this subdivision, not to exceed $1,100,000 in any fiscal year, is annually appropriated from the general fund to the commissioner. If the authorized payments exceed the amount of the appropriation, the commissioner shall first proportionately reduce the ~~rate~~ payments to counties other than qualified counties so that the total amount equals the appropriation. If the authorized payments to qualified counties also exceed the amount of the appropriation, the commissioner shall then proportionately reduce the rate so that the total amount to be paid to qualified counties equals the appropriation.

Sec. 12. Minnesota Statutes 1997 Supplement, section 270.67, subdivision 2, is amended to read:

Subd. 2. [EXTENSION AGREEMENTS.] When any portion of any tax payable to the commissioner of revenue together with interest and penalty thereon, if any, has not been paid, the commissioner may extend the time for payment for a further period. When the authority of this section is invoked, the extension shall be evidenced by written agreement signed by the taxpayer and the commissioner, stating the amount of the tax with penalty and interest, if any, and providing for the payment of the amount in installments. The agreement may contain a confession of judgment for the amount and for any unpaid portion thereof and shall provide that the commissioner may forthwith enter judgment against the taxpayer in the district court of the county of residence as shown upon the taxpayer's tax return for the unpaid portion of the amount specified in the extension agreement. The agreement shall provide that it can be terminated, after notice by the commissioner, if information provided by the taxpayer prior to the agreement was inaccurate or incomplete, collection of the tax covered by the agreement is in jeopardy, there is a subsequent change in the taxpayer's financial condition, the taxpayer has failed to make a payment due under the agreement, or has failed to pay any other tax or file a tax return coming due after the agreement. The notice must be given at least 14 calendar days prior to termination, and shall advise the taxpayer of the right to request a reconsideration from the commissioner of whether termination is reasonable and appropriate under the circumstances. A request for reconsideration does not stay collection action beyond the 14-day notice period. If the commissioner has reason to believe that collection of the tax covered by the agreement is in jeopardy, the commissioner may proceed under sections 270.70, subdivision 2, paragraph (b), and 270.274, and terminate the agreement without regard to the 14-day period. The commissioner may accept other collateral the commissioner considers appropriate to secure satisfaction of the tax liability. The principal sum specified in the agreement shall bear interest at the rate specified in section 270.75 on all unpaid portions thereof until the same has been fully paid or the unpaid portion thereof has been entered as a judgment. The judgment shall bear interest at the rate specified in section 270.75. If it appears to the commissioner that the tax reported by the taxpayer is in excess of the amount actually owing by the taxpayer, the extension agreement or the judgment entered pursuant thereto shall be corrected. If after making the extension agreement or entering judgment with respect thereto, the commissioner determines that the tax as reported by the taxpayer is less than the amount actually due, the commissioner shall assess a further tax in accordance with the provisions of law applicable to the tax. The authority granted to the commissioner by this section is in addition to any other authority granted to the commissioner by law to extend the time of payment or the time for filing a return and shall not be construed in limitation thereof.

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Sec. 13. Minnesota Statutes 1997 Supplement, section 295.52, subdivision 4, is amended to read:

Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] (a) A person that receives prescription drugs for resale or use in Minnesota, other than from a wholesale drug distributor that paid the tax under subdivision 3, is subject to a tax equal to the price paid to the wholesale drug distributor multiplied by the tax percentage specified in this section. Liability for the tax is incurred when prescription drugs are received or delivered in Minnesota by the person.

(b) A person that receives prescription drugs for use in Minnesota from a nonresident pharmacy required to be registered under section 151.19 is subject to a tax equal to the price paid by the nonresident pharmacy to the wholesale drug distributor or the price received by the nonresident pharmacy, whichever is lower, multiplied by the tax percentage specified in this section. Liability for the tax is incurred when prescription drugs are received in Minnesota by the person.

Sec. 14. Minnesota Statutes 1996, section 295.52, subdivision 4a, is amended to read:

Subd. 4a. [TAX COLLECTION.] A wholesale drug distributor with nexus in Minnesota, who is not subject to tax under subdivision 3, on all or a particular transaction or a nonresident pharmacy with nexus in Minnesota, is required to collect the tax imposed under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt for the tax paid. The tax collected shall be remitted to the commissioner in the manner prescribed by section 295.55, subdivision 3.

Sec. 15. Minnesota Statutes 1997 Supplement, section 297H.04, is amended by adding a subdivision to read:

Subd. 3. [INCINERATION WITH MIXED WASTE; RATE.] Nonmixed municipal solid waste that is separately collected and processed, but must be incinerated with mixed municipal solid waste in accordance with an industrial solid waste management plan approved by the pollution control agency, shall be taxed at the rate for nonmixed municipal solid waste.

Sec. 16. Minnesota Statutes 1996, section 325E.112, is amended by adding a subdivision to read:

Subd. 2a. [REFUND PROGRAM.] A person who accepts from the public used motor oil and used motor oil filters as defined in section 325E.10, subdivisions 3 and 5, may apply for a refund of $250 for the year in which the person operates a facility that qualifies for the reimbursement under subdivision 2, or would qualify for the reimbursement except that it does not accept contaminated motor oil. The refund is issued by the department of revenue. In order to claim the refund, the applicant must provide the commissioner of revenue with a copy of a certificate issued to the applicant by the commissioner of the pollution control agency verifying the applicant's eligibility for the refund, and other information as the commissioner may prescribe. The commissioner of the pollution control agency may issue no more than 200 certificates for any calendar year. The amount necessary to pay the refunds under this subdivision is appropriated to the commissioner of revenue an amount from the general fund.

Sec. 17. Minnesota Statutes 1997 Supplement, section 446A.085, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section, the terms defined in this subdivision have the meanings given them.

(a) [ACT.] "Act" means the National Highway System Designation Act of 1995, Public Law Number 104-59, as amended.

(b) [BORROWER.] "Borrower" means the state, counties, cities, and other governmental entities eligible under the act and state law to apply for and receive loans from the transportation revolving loan fund, the trunk highway revolving loan account, the county state-aid highway revolving loan account, and the municipal state-aid street revolving loan account.

(d) [LOAN.] "Loan" means financial assistance provided for all or part of the cost of a project including money disbursed in anticipation of reimbursement or repayment, loan guarantees, lines of credit, credit enhancements, equipment financing leases, bond insurance, or other forms of financial assistance.

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(e) [TRANSPORTATION COMMITTEE.] "Transportation committee" means a committee of the Minnesota public facilities authority, acting on behalf of the Minnesota public facilities authority, consisting of the commissioner of the department of trade and economic development, the commissioner of finance, and the commissioner of transportation.

Sec. 18. [462A.2092] [EMPLOYER HOUSING CONTRIBUTIONS; MATCHING GRANT.]

(a) The commissioner may provide matching grants for contributions made by employers for the development, rehabilitation, or acquisition of affordable housing. An employer contribution is eligible for a matching grant or low-interest loan if the contribution is:

(1) made to a fund administered by a nonprofit corporation to which the employer is not associated or to a government agency; and

(2) used to develop or rehabilitate affordable housing located in Minnesota or is used to assist low-income and moderate-income households to acquire affordable housing located in Minnesota.

(b) The matching grant is available up to the amount of the contribution made by the employer. The amount of the matching grant may not exceed the amount the commissioner determines is necessary for the financial feasibility of the project or loan. The total matching grants available for an employer's contributions may not exceed $250,000. The commissioner shall award the matching grant to the housing project or initiative for which the employer contribution is used.

Sec. 19. Minnesota Statutes 1996, section 462A.21, is amended by adding a subdivision to read:

Subd. 26. [EMPLOYER HOUSING CONTRIBUTIONS; MATCHING GRANT.] It may spend money for the purpose of the matching grant for employer contributions program under section 462A.2092, and may pay costs and expenses necessary and incidental to the development and operation of the program.

Sec. 20. Minnesota Statutes 1997 Supplement, section 465.715, is amended by adding a subdivision to read:

Subd. 1a. [APPLICATION.] Except as provided by subdivision 2, subdivision 1 only applies to a corporation for which a certificate of incorporation is issued by the secretary of state on or after June 1, 1997. A corporation that had been issued a certificate of incorporation before June 1, 1997, may continue to operate as if it had been created in compliance with subdivision 1. This subdivision expires July 1, 1999.

Sec. 21. Minnesota Statutes 1997 Supplement, section 465.715, is amended by adding a subdivision to read:

Subd. 3. [INFORMATION.] (a) By June 30, 1998, the office of the state auditor shall request from all counties, home rule charter cities, statutory cities, urban towns, and school districts information regarding all corporations, including limited liability companies or limited liability partnerships, whether for profit or not for profit, created by the political subdivision. The information requested must include information regarding the corporation's incorporation date, organizational structure, purpose, a brief summary of the extent to which the corporation receives or expends public funds, potential public liabilities for conduct of the corporation, public oversight, and public laws applicable to the corporation. This information must be received by the state auditor on or before October 15, 1998.

(b) The office of the state auditor shall compile and summarize the information received and report to the senate local and metropolitan government committee and the house of representatives local government and metropolitan affairs committee or their successor committees by January 30, 1999. The report may include recommendations for any changes in laws governing the operation of existing and future corporate entities created by such political subdivisions, and changes in laws needed to clarify the legal status of these corporate entities. Any corporate entity created by a political subdivision before September 1, 1998, for which a report is not received by the state auditor is not authorized to receive public funds or contract with public entities after July 1, 1999.

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Sec. 22. Minnesota Statutes 1996, section 469.015, subdivision 4, is amended to read:

Subd. 4. [EXCEPTIONS.] (a) An authority need not require competitive bidding in the following circumstances:

(1) in the case of a contract for the acquisition of a low-rent housing project:

(i) for which financial assistance is provided by the federal government;

(ii) which does not require any direct loan or grant of money from the municipality as a condition of the federal financial assistance; and

(iii) for which the contract provides for the construction of the project upon land that is either owned by the authority for redevelopment purposes or not owned by the authority at the time of the contract but the contract provides for the conveyance or lease to the authority of the project or improvements upon completion of construction;

(2) with respect to a structured parking facility:

(i) constructed in conjunction with, and directly above or below, a development; and

(ii) financed with the proceeds of tax increment or parking ramp general obligation or revenue bonds; and

(3) in the case of any building in which at least 75 percent of the useable square footage constitutes a housing development project if:

(i) the project is financed with the proceeds of bonds issued under section 469.034 or from nongovernmental sources;

(ii) the project is either located on land that is owned or is being acquired by the authority only for development purposes, or is not owned by the authority at the time the contract is entered into but the contract provides for conveyance or lease to the authority of the project or improvements upon completion of construction; and

(iii) the authority finds and determines that elimination of the public bidding requirements is necessary in order for the housing development project to be economical and feasible.

(b) An authority need not require a performance bond for the following projects:

(1) a contract described in paragraph (a), clause (1);

(2) a construction change order for a housing project in which 30 percent of the construction has been completed;

(3) a construction contract for a single-family housing project in which the authority acts as the general construction contractor; or

(4) a services or materials contract for a housing project.

For purposes of this paragraph, "services or materials contract" does not include construction contracts.

Sec. 23. Minnesota Statutes 1996, section 469.169, is amended by adding a subdivision to read:

Subd. 12. [ADDITIONAL ENTERPRISE ZONE ALLOCATIONS.] In addition to tax reductions authorized in subdivisions 7, 8, 9, 10, and 11, the commissioner may allocate $500,000 for tax reductions pursuant to enterprise zone designations, as designated in Laws 1997, chapter 231, article 16, section 26. Allocations made under this subdivision may be used for tax reductions as provided in section 469.171, or other offsets of taxes imposed on or remitted by businesses located in the enterprise zone, but only if the municipality determines that the granting of the tax reduction or offset is necessary in order to retain a business within or attract a business to the enterprise zone. Limitations on allocations under subdivision 7 do not apply to this allocation.

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Sec. 24. Minnesota Statutes 1996, section 469.303, is amended to read:

469.303 [ELIGIBILITY REQUIREMENTS.]

An area within the city is eligible for designation as an enterprise zone if the area (1) includes census tracts eligible for a federal empowerment zone or enterprise community as defined by the United States Department of Housing and Urban Development under Public Law Number 103-66, notwithstanding the maximum zone population standard under the federal empowerment zone program for cities with a population under 500,000 or, (2) is an area within a city of the second class that is designated as an economically depressed area by the United States Department of Commerce, or (3) includes property located in St. Paul in a transit zone as defined in section 473.3915, subdivision 3.

Sec. 25. Laws 1997, chapter 105, section 3, as amended by Laws 1997, Second Special Session chapter 2, section 23, is amended to read:

Sec. 3. [TEMPORARY WAIVER OF FEES, ASSESSMENTS, OR TAXES.]

Subdivision 1. [FEES.] Notwithstanding any law to the contrary, for fiscal years 1997 and 1998, an agency, with the approval of the governor, may waive fees that would otherwise be charged for agency services. The waiver of fees must be confined to geographic areas affected by flooding within counties included in a federal disaster declaration and to the minimum periods of times necessary to deal with the emergency situation. The agency must promptly report the reasons for and the impact of any suspended fees to the chairs of the legislative committees that oversee the policy and budgetary affairs of the agency. This subdivision expires February 1, 1998.

Subd. 2. [SOLID WASTE GENERATOR ASSESSMENTS AND SOLID WASTE MANAGEMENT TAXES.] Notwithstanding any law to the contrary, the waiver authority provided in subdivision 1 is also extended to the commissioner of revenue in relation to the solid waste generator assessment under Minnesota Statutes, section 116.07, subdivision 10, and the solid waste management taxes under Laws 1997, chapter 231, article 13, for construction debris generated from repair and demolition activities in the area designated under Presidential Declaration of Major Disaster, DR-1175, and disposed of in a waste management facility designated by the commissioner of the pollution control agency. The commissioner of revenue's authority under this subdivision to waive the assessment and tax expires for waste transported to the designated facilities after ~~December 31, 1997~~ June 30, 1998, including waste transported to a landfill that is limited by permit exclusively to the disposal of flood debris. The waiver authority granted to the commissioner of revenue is retroactive to April 1, 1997.

Sec. 26. Laws 1997, chapter 225, article 2, section 64, is amended to read:

Sec. 64. [EFFECTIVE DATE.]

Section 8 is effective for payments made for MinnesotaCare services on or after July 1, 1996. Section 23 is effective the day following final enactment. Section 46 is effective January 1, 1998, and applies to high deductible health plans issued or renewed on or after that date.

Sec. 27. Laws 1997, chapter 231, article 5, section 18, subdivision 1, is amended to read:

Subdivision 1. [COMMISSION RESPONSIBILITIES.] (a) The legislative coordinating commission shall prepare studies of business taxation and the taxation of telecommunications services during the ~~1997-98~~ 1998 interim and the 1999 legislative session, as provided by this section. The commission is responsible for managing any contracts under this section and for preparing the studies. It may delegate any or all of its responsibilities under this section to the legislative commission on planning and fiscal policy.

(b) For the business tax study under subdivision 2, the commission may appoint a formal or informal bipartisan working group of house and senate members to oversee and coordinate the study.

(c) For the study of the taxation of telecommunications services under subdivision 4, the commission shall appoint a bipartisan working group that includes house and senate members and members of the public, at least two of whom are representatives of Internet service businesses who are knowledgeable about the technologies and practices of the Internet and at least two of whom are the representatives of businesses that conduct commerce on the Internet.

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Sec. 28. Laws 1997, chapter 231, article 13, section 19, is amended to read:

Sec. 19. [MORATORIUM.]

The commissioner of revenue shall not initiate or continue any action to collect any underpayment from political subdivisions, or to reimburse any overpayment to any political subdivisions, of sales or use taxes on solid waste management services under Minnesota Statutes, section 297A.45,. The moratorium is effective for the period from January 1, 1990, through December 31, ~~1996~~ 1997.

Sec. 29. [SPECIAL PREMIUM TAX PAYMENT.]

Health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations that have met the cost containment goals established in Minnesota Statutes, section 62J.04, in the individual and small employer market for calendar year 1996 shall pay a special, one-time 1999 premium tax payment. The tax payment must be based on an amount equal to one percent of gross premiums less return premiums on all direct business received by the insurer in this state, or by its agents for it, in cash or otherwise after March 30, 1997, and before January 1, 1998. Payment of the tax under this section is due January 2, 1999. Provisions relating to the payment, assessment, and collection of the tax assessed under Minnesota Statutes, section 60A.15, shall apply to the special tax payment assessed under this section.

Sec. 30. [PRIVATE SALE OF SURPLUS LAND; RED LAKE COUNTY.]

(a) Notwithstanding Minnesota Statutes, sections 92.45, 94.09, and 94.10, the commissioner of natural resources may sell by private sale to the adjacent land owner, for a consideration equal to the appraised value, the surplus land bordering public water that is described in paragraph (c), under the remaining provisions of Minnesota Statutes, chapter 94.

(b) The conveyance shall be in a form approved by the attorney general.

(1) Government lot 5, section 25, Township 152 North, Range 40 West;

(2) Government lot 7, section 25, Township 152 North, Range 40 West.

(d) The commissioner has determined that the land is no longer needed for any natural resource purpose and that the state's land management interests would best be served if the land was returned to private ownership.

Sec. 31. [EXCHANGE OF LAKESHORE LEASED LOTS.]

Subdivision 1. [ANALYSIS OF LOTS.] By January 15, 1999, the commissioner of natural resources must submit a report to the chairs of the senate and house environment and natural resources committees, the house environment, natural resources, and agriculture finance committee, the senate environment and agriculture budget division, the senate children, families and learning committee, and the house education committee. The report must provide the results of the field inspection required by this section, recommendations on appropriations needed to accomplish the purposes of this section, and additional recommendations on methods to preserve public lakeshore in the state. The commissioner must conduct a field inspection of all lands leased pursuant to Minnesota Statutes, section 92.46, subdivision 1. The commissioner must identify all lots within the following classifications:

(1) the lot contains all or part of an unusual resource, such as a historical or archaeological site, or a sensitive ecological resource, or contains unique habitat, or has a high scenic value;

(2) the lot provides access for adjacent state land; or

(3) the lot is part of the trust land in Horseshoe Bay, as referenced in Laws 1997, chapter 216, section 151.

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Subd. 2. [EXCHANGE OF COUNTY LAKESHORE LAND FOR LEASED LAKESHORE LOTS.] (a) For the purposes of this section:

(1) "county land" includes, but is not limited to, tax-forfeited land administered by any county; and

(2) "leased lakeshore lots" means lands leased by the state pursuant to Minnesota Statutes, section 92.46, subdivision 1.

(b) By June 1, 1999, a county board with leased lakeshore lots must petition the land exchange board with a plan for an exchange of county land for leased lakeshore lots in the county that are not listed by the commissioner pursuant to subdivision 1. Notwithstanding Minnesota Statutes, section 94.342, the land proposed for the exchange must be land bordering on or adjacent to meandered or other public waters. A county board proposing an exchange under this section may include tax-forfeited land administered by another county in the proposal with the consent of that county board.

(c) In determining the value of the leased lakeshore lots for purposes of the exchange, the land exchange board must review an appraisal of each lot prepared by an appraiser licensed by the commissioner of commerce. The selection of the appraiser must be agreed to by the commissioner of natural resources and the county board of the county containing the leased lakeshore lot. The commissioner of natural resources must pay the costs of appraisal and may recover these costs as provided in this section. The commissioner must submit appraisals under this paragraph to the land exchange board by June 1, 1999.

(d) The land exchange board must determine whether the land offered for exchange by a county under this section is lakeshore of substantially equal value to the leased lakeshore lots included in the county's petition. In making this determination, the land exchange board must review an appraisal of the land offered for exchange prepared by an appraiser licensed by the commissioner of commerce. The selection of the appraiser must be agreed to by the commissioner of natural resources and the county board of the county containing the leased lakeshore lots. The county must pay the costs of this appraisal and may recover those costs as provided in this section.

(e) Before the proposed exchange may be submitted to the land exchange board, the commissioner of natural resources must ensure that, whenever possible, state lands are added to the leased lakeshore lots when necessary to provide conformance with zoning requirements. The lands added to the leased lakeshore lots must be included in the appraised value of the lots. If the commissioner is unable to add the necessary land to a lot, the lot shall be treated as if purchased at the time the state first leased the site, for the purposes of local zoning ordinances at the time of sale of the lot by the county.

(f) The land exchange board must determine whether the lots are of substantially equal value and may approve the exchange, notwithstanding the requirements of Minnesota Statutes, sections 94.342 to 94.347, relating to the approval process. If the board approves the exchange, the commissioner must exchange the leased lakeshore lots for the county lands, subject to the requirements of the Minnesota Constitution, article XI, section 10, relating to the reservation of mineral and water power rights.

Subd. 3. [COUNTY SALE.] Notwithstanding Minnesota Statutes, section 282.018, or any other law to the contrary, a county board must offer land that it has acquired through an exchange under this section for sale to the lessee of the land within 90 days from the date of acquisition for the value of the land as determined by the county board. The county board may include the cost of appraisal of the county land for the purposes of this section in the value of the land. If the lessee does not elect to purchase the land, the county board may sell the land by public sale at the expiration of the lease term for no less than the value of the land as determined by the county board, including the cost of appraisal required by this section, and the value of improvements to the land. The county board must reimburse the lessee for the value of the improvements to the land and the county may retain a sum from the proceeds of the sale equivalent to the cost of appraisal. The county board must reimburse the commissioner of natural resources for the costs of appraisal under subdivision 2, paragraph (c), from the proceeds of the sale.

Subd. 4. [COUNTY ENVIRONMENTAL TRUST FUND.] Notwithstanding the provisions of Minnesota Statutes, chapter 282, and any other law relating to the apportionment of proceeds from the sale of tax-forfeited land, and except as otherwise provided in this section, a county board must deposit the money received from the sale of land under subdivision 3 into an environmental trust fund established by the county under this subdivision. The principal from the

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sale of the land may not be expended, and the county board may spend interest earned on the principal only for purposes related to the improvement of natural resources. To the extent money received from the sale is attributable to tax-forfeited land from another county, the money must be deposited in an environmental trust fund established under this section by that county board.

Subd. 5. [NOTICE.] The commissioner must mail notice of this section to each lessee of a leased lakeshore lot and to each affected county board by July 1, 1998.

Sec. 32. [STATE PAYMENT OF CITY OF ADA AND EAST GRAND FORKS DEBT OBLIGATION UPON DEFAULT; REPAYMENT; STATE OBLIGATION NOT DEBT.]

Subdivision 1. [DEFINITIONS.] (a) For the purposes of this section, the following terms have the meanings given.

(b) "Debt obligation" means:

(1) for the city of Ada, a loan from the Federal Emergency Management Agency under its community disaster loan program to the city in the amount of approximately $1,423,000, to cover operating losses for a publicly owned health care facility that was damaged in the spring floods of 1997; and

(2) for the city of East Grand Forks, a loan from the Federal Emergency Management Agency under its community disaster loan program to the city in the amount of approximately $2,907,000.

Subd. 2. [NOTIFICATIONS; PAYMENT; APPROPRIATION.] (a) If the city believes that it may be unable to make a principal or interest payment on any outstanding debt obligation on the date that payment is due, it must notify the commissioner of finance of that fact as soon as possible, but not less than 15 working days before the date that principal or interest payment is due. The notice must identify the debt obligation issue in question, the date the payment is due, the amount of principal and interest due on the payment date, the amount of principal or interest that the city will be unable to repay on that date, the paying agent for the debt obligation, the wire transfer instructions to transfer funds to that paying agent, and an indication as to whether a payment is being requested by the city under this section. If a paying agent becomes aware of a potential default, it shall inform the commissioner of finance of that fact.

(b) Except as provided in subdivision 9, upon receipt of a notice from the city, which must include a final figure as to the amount due that the city will be unable to repay on the date due, the commissioner of finance shall issue a warrant to pay to the paying agent for the debt obligation the specified amount on or before the date due. The amounts needed for the purposes of this subdivision are annually appropriated to the commissioner of finance from the state general fund.

Subd. 3. [CITY BOUND; INTEREST RATE ON STATE PAID AMOUNT.] If, at the request of the city, the state has paid part or all of the principal or interest due on the city's debt obligation on a specific date, the city is bound by all provisions of this section and the amount paid shall bear taxable interest from the date paid until the date of repayment at the state treasurer's invested cash rate as it is certified by the commissioner of finance. Interest only accrues on the amounts paid and outstanding less the reduction in aid under subdivision 4 and other payments received from the city.

Subd. 4. [PLEDGE OF CITY'S FULL FAITH AND CREDIT.] If, at the request of the city, the state has paid part or all of the principal or interest due on the city's debt obligation on a specific date, the pledge of the full faith and credit and unlimited taxing powers of the city to repay the principal and interest due on those debt obligations, without an election or the requirement of a further authorization, becomes a pledge of the full faith and credit and unlimited taxing powers of the city to repay to the state the amount paid, with interest. Amounts paid by the state shall be repaid in the order in which the state payments were made.

Subd. 5. [AID REDUCTION FOR REPAYMENT.] Except as provided in this subdivision, the state shall reduce the state aid payable to the city under chapters 273, 469, and 477A, according to a schedule determined by the commissioner of finance, by the amount paid by the state under this section on behalf of the city, plus the interest due on it, and the amount reduced shall revert from the appropriate account to the state general fund. Payments from any federal aid payments shall not be reduced. The amount of aids to be reduced are decreased by any amounts repaid to the state by the city from other revenue sources.

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Subd. 6. [TAX LEVY FOR REPAYMENT.] (a) With the approval of the commissioner of finance, the city may levy in the year the state makes a payment under this section an amount up to the amount necessary to provide funds for the repayment of the amount paid by the state plus interest through the date of estimated repayment by the city. The proceeds of this levy may be used only for this purpose unless they are in excess of the amount actually due, in which case the excess shall be used to repay other state payments made under this section or shall be deposited in the debt redemption fund of the city. This levy is an increase in the levy limits of the city for purposes of Minnesota Statutes, section 275.065, subdivision 6. The amount of aids to be reduced to repay the state are decreased by the amount levied.

(b) If the state is not repaid in full for a payment made under this section by November 30 of the calendar year following the year in which the state makes the payment, the commissioner of finance shall require the city to certify a property tax levy in an amount up to the amount necessary to provide funds for repayment of the amount paid by the state plus interest through the date of estimated repayment by the city. To prevent undue hardship, the commissioner may allow the city to certify the levy over a five-year period. The proceeds of the levy may be used only for this purpose unless they are in excess of the amount actually due, in which case the excess must be used to repay other state payments made under this section or must be deposited in the debt redemption fund of the city. This levy is an increase in the levy limits of the city for purposes of Minnesota Statutes, section 275.065, subdivision 6. If the commissioner orders the city to levy, the amount of aids reduced to repay the state is decreased by the amount levied. A levy under this subdivision must be explained as a specific increase at the meeting required under Minnesota Statutes, section 275.065, subdivision 6.

Subd. 7. [ELECTION AS TO MANDATORY APPLICATION.] The city may covenant and obligate itself, prior to incurring a debt obligation, to notify the commissioner of finance of a potential default and to use the provisions of this section to guarantee payment of the principal and interest on those debt obligations when due. If the city obligates itself to be bound by this section, it shall covenant to deposit with the paying agent three business days prior to the date on which a payment is due an amount sufficient to make that payment or to notify the commissioner of finance under subdivision 1 that it will be unable to make all or a portion of that payment. The city shall include a provision in its agreement with the paying agent for that issue that requires the paying agent to inform the commissioner of finance if it becomes aware of a potential default in the payment of principal or interest on that issue or if, on the day two business days prior to the date a payment is due on that issue, there are insufficient funds to make the payment on deposit with the paying agent. If the city either covenants to be bound by this section or accepts state payments under this section to prevent a default on debt obligations, the provisions of this section are binding as to that issue as long as any debt obligation of that issue remains outstanding.

Subd. 8. [MANDATORY PLAN; TECHNICAL ASSISTANCE.] If the state makes payments on behalf of the city under this section or the city defaults in the payment of principal or interest on an outstanding debt obligation, it shall submit a plan to the commissioner of finance for approval specifying the measures it intends to implement to resolve the issues which led to its inability to make the payment and to prevent further defaults. The commissioner shall provide technical assistance to the city in preparing its plan. If the commissioner determines that the city's plan is not adequate, the commissioner shall notify the city that the plan has been disapproved, the reasons for the disapproval, and that the state shall not make future payments under this section for debt obligations issued after the date specified in that notice until its plan is approved. The commissioner may also notify the city that until its plan is approved, other aids due the city will be withheld after a date specified in the notice.

Subd. 9. [STATE BOND RATING.] If the commissioner of finance determines that the credit rating of the state would be adversely affected thereby, the commissioner shall not issue warrants under subdivision 2 for the payment of principal or interest on any debt obligations for which the city did not, prior to their issuance, obligate itself to be bound by the provisions of this section.

Sec. 33. [COON RAPIDS BONDING.]

Subdivision 1. [AUTHORITY.] The city of Coon Rapids may issue general obligation bonds under Minnesota Statutes, chapter 475, in an amount up to $11,000,000 to finance costs related to the upgrading of the existing state and county bridges and roadways within the project areas of the tax increment financing districts designated 2-2 and 2-3. No referendum is required on the question of the issuance of bonds under this authority. The bonds are not included in computing any debt limitations of the city. The levy of taxes to pay the bonds is not subject to any levy limit.

Subd. 2. [EFFECTIVE DATE.] This section is effective the day following final enactment without local approval and applies to the city of Coon Rapids under Minnesota Statutes, section 645.023.

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Sec. 34. [STUDY OF HOME CARE TAX INCENTIVES.]

The commissioners of revenue and human services shall conduct a study on the issue of the effectiveness of tax incentives to encourage people to provide care for elderly or disabled individuals in their homes. The study must include analysis of the most effective types of incentives and their cost. The commissioners shall transmit the conclusions of the study in a report to the legislature by January 15, 1999.

Sec. 35. [APPROPRIATIONS.]

Subdivision 1. [BAT STUDY.] $100,000 is appropriated from the general fund for fiscal year 1999 to the legislative coordinating commission to study alternative methods of taxing business. The appropriations under this section and under Laws 1997, chapter 231, article 5, section 18, subdivision 3, are available in fiscal years 2000 and 2001.

Subd. 2. [COST OF ADMINISTERING BILL.] $281,000 is appropriated from the general fund for fiscal year 1999 to the commissioner of revenue for the cost of administering this act, excluding article 1.

Subd. 3. [HOUSING DEVELOPMENT FUND.] In addition to any amount appropriated by other law, $250,000 is appropriated from the general fund to the housing development fund for fiscal year 1999, $800,000 for fiscal year 2000, and $800,000 for fiscal year 2001 to provide matching grants for employer contributions for affordable housing under Minnesota Statutes, section 462A.2092. This appropriation is available until expended.

Subd. 4. [TRANSPORTATION.] $1,500,000 is appropriated from the general fund for fiscal year 1999 to the state treasurer for transfer to the transit account in the transportation revolving loan fund established in Minnesota Statutes, section 446A.085, subdivision 3.

Sec. 36. [REPEALER.]

(a) Minnesota Statutes 1997 Supplement, sections 3.987, subdivision 3, and 14.431, are repealed.

(b) 1998 S. F. No. 3353, section 60, relating to the exchange and sale of certain lakeshore lots, if enacted, is repealed.

Sec. 37. [EFFECTIVE DATE.]

Sections 8, 9, 12, 20, 21, 23, 24, 28, and 30 are effective the day following final enactment. Sections 15 and 25 are effective retroactively to January 1, 1998.

Section 16 is effective January 1, 1999."

"A bill for an act relating to the financing and operation of government in this state; providing property tax reform; providing a property tax rebate; making changes to property tax rates, levies, notices, hearings, assessments, exemptions, aids, and credits; providing bonding and levy authority, and other powers to certain political subdivisions; making changes to income, sales, excise, mortgage registry and deed, premiums, health care provider, and solid waste tax provisions; allowing credits; authorizing the imposition of certain local sales, use, excise, and lodging taxes; authorizing a sanitary sewer district; modifying provisions relating to the budget reserve and other accounts; making changes to tax increment financing, regional development, housing, and economic development provisions; providing for the taxation of taconite and the distribution of taconite taxes; modifying provisions relating to the taxation and operation of gaming; providing tax incentives for border city zones; making miscellaneous changes to state and local tax and administrative provisions; changing the senior citizens' property tax deferral program; providing grants, loan guarantees, and low interest loans; changing certain fiscal note requirements; providing for a land transfer; appropriating money; amending Minnesota Statutes 1996, sections 16A.102, subdivisions 1 and 2; 124A.03, subdivision 1f; 240.15, subdivisions 1 and 5; 272.0211, subdivision 1; 273.135, subdivision 2; 273.1391, subdivision 2; 273.1398, subdivisions 1a, 2, and 4; 275.07, by adding a subdivision; 290.01, subdivision 3b; 290.06, subdivisions 2c; 290.067, subdivision 2a; 290.0671, by adding subdivisions; 290.091, subdivision 2; 290.0921, subdivision 3a; 290.10; 290.21, subdivision 3; 290A.03, subdivision 3;

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We request adoption of this report and repassage of the bill.

House Conferees: Dee Long, Ted Winter, Edgar Olson, Andy Dawkins and Dan McElroy.

Senate Conferees: Douglas J. Johnson, Carol Flynn, John C. Hottinger, Jim Vickerman and William V. Belanger, Jr.

Long moved that the report of the Conference Committee on H. F. No. 3840 be adopted and that the bill be repassed as amended by the Conference Committee.

Winter moved that the House recess subject to the call of the Chair. The motion prevailed.

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RECESS

RECONVENED

The House reconvened and was called to order by the Speaker.

CALL OF THE HOUSE

On the motion of Sviggum and on the demand of 10 members, a call of the House was ordered. The following members answered to their names:

Abrams Entenza Juhnke McCollum Paymar Swenson, H.
Anderson, B. Erickson Kalis McElroy Pelowski Sykora
Bakk Evans Kelso McGuire Peterson Tomassoni
Bettermann Farrell Kielkucki Milbert Pugh Tompkins
Biernat Finseth Kinkel Molnau Rest Tuma
Bishop Folliard Knoblach Mulder Reuter Tunheim
Boudreau Goodno Koskinen Munger Rhodes Vandeveer
Bradley Greenfield Kraus Murphy Rifenberg Weaver
Broecker Greiling Kubly Ness Schumacher Wejcman
Carlson Gunther Kuisle Nornes Seagren Wenzel
Chaudhary Haas Larsen Olson, E. Seifert Westfall
Clark, J. Harder Leighton Olson, M. Sekhon Westrom
Clark, K. Hasskamp Leppik Opatz Skare Winter
Daggett Hilty Lieder Orfield Skoglund Wolf
Davids Huntley Lindner Osskopp Slawik Workman
Dawkins Jaros Long Osthoff Smith Spk. Carruthers
Dehler Jefferson Macklin Otremba, M. Solberg
Delmont Jennings Mares Ozment Stanek
Dempsey Johnson, A. Mariani Paulsen Stang
Dorn Johnson, R. Marko Pawlenty Sviggum

Tomassoni moved that further proceedings of the roll call be suspended and that the Sergeant at Arms be instructed to bring in the absentees. The motion prevailed and it was so ordered.

Van Dellen moved that the House refuse to adopt the Conference Committee report on H. F. No. 3840, and that the bill be returned to the Conference Committee.

The question was taken on the Van Dellen motion and the roll was called. There were 44 yeas and 89 nays as follows:

Abrams Erhardt Knoblach Nornes Seagren Van Dellen
Anderson, B. Erickson Kraus Olson, M. Seifert Vandeveer
Boudreau Gunther Krinkie Osskopp Smith Weaver
Bradley Haas Kuisle Ozment Stanek Workman
Broecker Harder Larsen Paulsen Sviggum
Clark, J. Holsten Leppik Pawlenty Swenson, H.
Commers Kielkucki Lindner Reuter Tompkins
Dehler Knight Molnau Rostberg Tuma

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Anderson, I. Evans Johnson, A. Mariani Otremba, M. Stang
Bakk Farrell Johnson, R. Marko Paymar Sykora
Bettermann Finseth Juhnke McCollum Pelowski Tingelstad
Biernat Folliard Kahn McElroy Peterson Tomassoni
Bishop Garcia Kalis McGuire Pugh Trimble
Carlson Goodno Kelso Milbert Rest Tunheim
Chaudhary Greenfield Kinkel Mulder Rhodes Wagenius
Clark, K. Greiling Koskinen Mullery Rifenberg Wejcman
Daggett Hasskamp Kubly Munger Rukavina Wenzel
Davids Hausman Leighton Murphy Schumacher Westfall
Dawkins Hilty Lieder Ness Sekhon Westrom
Delmont Huntley Long Olson, E. Skare Winter
Dempsey Jaros Macklin Opatz Skoglund Wolf
Dorn Jefferson Mahon Orfield Slawik Spk. Carruthers
Entenza Jennings Mares Osthoff Solberg

The question recurred on the Long motion that the report of the Conference Committee on H. F. No. 3840 be adopted ansd that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9680

subdivision 6; 290.371, subdivision 2; 290A.03, subdivisions 11, 13, and 15; 290B.03, subdivision 1; 290B.04, subdivisions 1, 3, and by adding subdivisions; 290B.05, subdivisions 1, 2, and 4; 290B.06; 290B.07; 290B.08, subdivision 2; 290B.09, subdivision 1; 291.005, subdivision 1; 297A.01, subdivisions 4 and 16; 297A.14, subdivision 4; 297A.25, subdivisions 3, 9, and 11; 297A.256, subdivision 1; 297A.48, by adding a subdivision; 297B.03; 297G.01, by adding a subdivision; 297G.03, subdivision 1; 297H.04, by adding a subdivision; 349.19, subdivision 2a; 462A.071, subdivisions 2, 4, and 8; and 477A.011, subdivision 36; Laws 1971, chapter 773, sections 1, as amended, and 2, as amended; Laws 1980, chapter 511, sections 2 and 3; Laws 1984, chapter 380, sections 1, as amended, and 2; Laws 1992, chapter 511, articles 2, section 52, as amended; and 8, section 33, subdivision 5; Laws 1994, chapter 587, article 11, by adding a section; Laws 1995, chapter 255, article 3, section 2, subdivisions 1, as amended, and 4, as amended; Laws 1997, chapter 231, articles 1, section 16, as amended; 2, sections 63, subdivision 1, and 68, subdivision 3; 3, section 9; 5, section 20; 7, section 47; and 13, section 19; and Laws 1997, Second Special Session chapter 2, section 33; proposing coding for new law in Minnesota Statutes, chapters 272; 273; 290; 365A; and 469; repealing Minnesota Statutes 1996, sections 124A.697; 124A.698; 124A.70; 124A.71; 124A.711, subdivision 1; 124A.72; 124A.73; 289A.50, subdivision 6; and 365A.09; Minnesota Statutes 1997 Supplement, sections 3.987, subdivision 3; 14.431; and 124A.711, subdivision 2; Laws 1992, chapter 499, article 7, section 31.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called. There were 100 yeas and 33 nays as follows:

Abrams Dorn Jennings Mahon Paymar Stanek
Anderson, I. Entenza Johnson, A. Mares Pelowski Sykora
Bakk Erhardt Johnson, R. Mariani Peterson Tingelstad
Bettermann Evans Juhnke Marko Pugh Tomassoni
Biernat Finseth Kahn McCollum Rest Tuma
Bishop Folliard Kalis McElroy Rhodes Tunheim
Boudreau Goodno Kelso McGuire Rostberg Vandeveer
Bradley Greenfield Kinkel Milbert Rukavina Wagenius
Carlson Greiling Koskinen Mullery Schumacher Weaver
Chaudhary Haas Kraus Munger Seagren Wejcman
Clark, J. Harder Kubly Murphy Seifert Wenzel
Clark, K. Hasskamp Larsen Ness Sekhon Westfall
Daggett Hausman Leighton Nornes Skare Westrom
Dawkins Hilty Leppik Olson, E. Skoglund Winter
Dehler Holsten Lieder Opatz Slawik Spk. Carruthers
Delmont Huntley Long Otremba, M. Smith
Dempsey Jefferson Macklin Ozment Solberg

Anderson, B. Garcia Krinkie Orfield Rifenberg Van Dellen
Broecker Gunther Kuisle Osskopp Stang Wolf
Commers Jaros Lindner Osthoff Sviggum Workman
Davids Kielkucki Molnau Paulsen Swenson, H.
Erickson Knight Mulder Pawlenty Tompkins
Farrell Knoblach Olson, M. Reuter Trimble

The bill was repassed, as amended by Conference, and its title agreed to.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9681
MESSAGES FROM THE SENATE

The following message was received from the Senate:

I hereby announce that the Senate refuses to concur in the House amendments to the following Senate File:

S. F. No. 2592, A bill for an act relating to transportation; authorizing advance payment when required by federal government for transportation project; permitting transfer or extinguishment of access rights; regulating snow fence easements, highway closures, and signs; providing payment for certain culverts; changing distributions from the highway user tax distribution fund; providing for the costs of town highways and bridges; permitting conveyances to public bodies; requiring owners to inventory and inspect certain bridges; providing for the revision of the state transportation plan; changing the scope of certain exemptions relating to motor carriers; regulating charges for air transportation services; modifying contractor bond requirements for certain transportation projects; authorizing conveyance of certain tax-forfeited and acquired land; making technical changes; removing a route from the trunk highway system; directing the metropolitan airports commission to convey certain land to the state; amending Minnesota Statutes 1996, sections 84.63; 117.21; 160.18, subdivision 1; 160.296, subdivision 1; 160.80, subdivision 1, and by adding a subdivision; 161.081, subdivision 1, and by adding a subdivision; 161.082, subdivisions 1 and 2a; 161.115, subdivisions 38 and 87; 161.44, subdivision 1; 162.081, subdivision 1; 165.03; 169.26, subdivision 1; 174.03, subdivisions 1a and 2; 174A.06; 221.025; 221.0314, subdivision 9a; 221.034, subdivisions 1 and 5; 222.63, subdivision 4; 270.077; 360.024; and 574.26, subdivision 1a; proposing coding for new law in Minnesota Statutes, chapter 16B; repealing Minnesota Statutes 1996, section 161.115, subdivision 57.

The Senate respectfully requests that a Conference Committee be appointed thereon. The Senate has appointed as such committee:

Ms. Johnson, J. B.; Messrs. Johnson, D. H., and Ourada.

Said Senate File is herewith transmitted to the House with the request that the House appoint a like committee.

Wagenius moved that the House accede to the request of the Senate and that the Speaker appoint a Conference Committee of 3 members of the House to meet with a like committee appointed by the Senate on the disagreeing votes of the two houses on S. F. No. 2592. The motion prevailed.

ANNOUNCEMENT BY THE SPEAKER

The Speaker announced the appointment of the following members of the House to a Conference Committee on S. F. No. 2592:

Wagenius, Kraus and Mahon.

The following Conference Committee Reports were received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 3853

A bill for an act relating to agriculture; modifying provisions relating to the Farmer-Lender Mediation Act; providing emergency financial relief for farm families in certain counties; establishing a temporary program of assistance for federal crop insurance premiums; mitigating neighborhood insect infestation; appropriating money; amending Minnesota Statutes 1997 Supplement, section 583.22, subdivision 5; Laws 1986, chapter 398, article 1, section 18, as amended.

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We, the undersigned conferees for H. F. No. 3853, report that we have agreed upon the items in dispute and recommend as follows:

That the Senate recede from its amendments and that H. F. No. 3853 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 90.193, is amended to read:

90.193 [EXTENSION OF TIMBER PERMITS.]

The commissioner may, in the case of an exceptional circumstance beyond the control of the timber permit holder which makes it unreasonable, impractical, and not feasible to complete cutting and removal under the permit within the time allowed, grant an extension of one year. A request for the extension must be received by the commissioner before the permit expires. The request must state the reason the extension is necessary and be signed by the permit holder. The value of the timber remaining to be cut will be recalculated using current stumpage rates. Any timber cut during the period of extension or remaining uncut at the expiration of the extension shall be billed for at the stumpage rates determined at the time of extension provided that in no event shall stumpage rates be less than those in effect at the time of the original sale. An interest rate of eight percent ~~will~~ may be charged for the period of extension.

Sec. 2. [583.311] [VOLUNTARY ALTERNATIVE DISPUTE RESOLUTION.]

The administrator shall establish procedures and measures to ensure maximum use of alternative dispute resolution under this chapter for disputes in rural areas. Referrals may be accepted from courts, state agencies, local units of government, or any party to a dispute involving rural land, regulation, rural individuals, businesses, or property, or any matter affecting rural quality of life. The legislature encourages state and federal agencies and governmental subdivisions to use the services provided by the administrator under this chapter and to cooperate fully when matters under this jurisdiction are subjected to alternative dispute resolution methods. The administrator may set fees for participation in voluntary procedures to pay all or part of the costs of providing such services.

Sec. 3. [REPORT.]

By the first Tuesday in January, 1999, the commissioner of agriculture shall report to the committees on agriculture in the senate and house of representatives on the need for and any suggested changes in the Farmer-Lender Mediation Act.

Sec. 4. [DEFINITIONS.]

Subdivision 1. [APPLICABILITY.] The definitions in this section apply to sections 4 and 5.

Subd. 2. [COMMISSIONER.] "Commissioner" means the commissioner of agriculture.

Subd. 3. [CRISIS COUNTY.] "Crisis county" means Beltrami, Clay, Clearwater, Kittson, Lake of the Woods, Lincoln, Lyon, Mahnomen, Marshall, Norman, Pennington, Pipestone, Polk, Red Lake, Roseau, or Wilkin county.

Subd. 4. [FARMER.] "Farmer" means a natural person residing in Minnesota who operates a family farm as defined in Minnesota Statutes, section 500.24, subdivision 2, located wholly or in part in a crisis county. "Farmer" also means a resident who is a shareholder in a family farm corporation or a partner in a family farm partnership as defined in Minnesota Statutes, section 500.24, subdivision 2, located wholly or in part in a crisis county.

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Sec. 5. [FEDERAL CROP INSURANCE ASSISTANCE.]

Subdivision 1. [PROGRAM ANNOUNCEMENT.] Within 30 days after the effective date of sections 4, 5, and 8, the commissioner shall announce procedures and distribute application forms for the federal crop insurance assistance program.

Subd. 2. [ELIGIBILITY.] A farmer is eligible for state assistance under this section if:

(1) the farmer experienced a 50 percent or greater loss from the United States Department of Agriculture, Farm Service Agency, county yield or collected an indemnity or disaster payment on wheat or barley in one or more growing seasons between 1993 and 1997;

(2) the crop covered by the insurance is located in a crisis county; and

(3) the farmer or the farmer's federal crop insurance agent submits a properly completed application for assistance to the commissioner on forms provided by the commissioner on or before August 1, 1998.

Subd. 3. [REIMBURSEMENT RATE, PRIORITY, AND MAXIMUM ASSISTANCE.] (a) From funds appropriated for purposes of this section, the commissioner shall provide reimbursement to an eligible farmer for premiums and administrative fees paid for federal crop insurance on wheat and barley grown in a crisis county for the 1997 growing season. The maximum reimbursement available to any farmer, or in the case of a family farm corporation or a family farm partnership, to the family farm corporation or partnership, is $4,000.

(b) Properly completed applications for federal crop insurance assistance take priority in the order in which they are received by the commissioner.

Sec. 6. [COMMISSIONER TO OVERSEE MITIGATION OF NEIGHBORHOOD INSECT INFESTATION.]

(a) The commissioner of agriculture, in close cooperation with the city of Minneapolis and all other appropriate public and nonpublic entities, shall exercise all available authority and enforcement powers to resolve a longstanding problem of red flour beetle infestation in an area of Minneapolis adjacent to a rail transportation corridor and a grain handling and processing facility. Notwithstanding other law, rule, or local authority to the contrary, the commissioner is authorized to perform inspections, tests, monitoring, insect trapping, or other actions to identify the source or sources of the continued infestation and bring enforcement actions adequate to accomplish resolution of the problems.

(b) Not later than March 1, 1999, the commissioner shall report to the agriculture policy committees of the senate and the house of representatives on the actions taken, the conditions identified, and corrective actions ordered and completed.

Sec. 7. Laws 1986, chapter 398, article 1, section 18, as amended by Laws 1987, chapter 292, section 37; Laws 1989, chapter 350, article 16, section 8; Laws 1990, chapter 525, section 1; Laws 1991, chapter 208, section 2; Laws 1993, First Special Session chapter 2, article 6, section 2; Laws 1995, chapter 212, article 2, section 11; and Laws 1997, chapter 183, article 3, section 29, is amended to read:

Sec. 18. [REPEALER.]

Sections 1 to 17 and Minnesota Statutes, section 336.9-501, subsections (6) and (7), and sections 583.284, 583.285, 583.286, and 583.305, are repealed on July 1, ~~1998~~ 1999.

Sec. 8. [APPROPRIATION.]

$8,800,000 is appropriated to the commissioner of agriculture for purposes of section 5 from the budget reserve and cash flow account under Minnesota Statutes, section 16A.152. Up to $70,000 of this appropriation is available for necessary program administrative costs of the departments of agriculture and revenue. The commissioner of finance may transfer money appropriated in this section to the commissioner of revenue to pay for necessary program administration costs.

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Sec. 9. [EFFECTIVE DATE.]

Section 1 is effective retroactively to January 1, 1998.

Sections 2, 3, and 7 are effective July 1, 1998.

Sections 4, 5, 6, and 8 are effective the day following final enactment."

"A bill for an act relating to agriculture; modifying provisions for timber permit extensions; extending the Farmer-Lender Mediation Act; requiring a report; providing for voluntary alternative dispute resolution in rural areas; providing emergency financial relief for farm families in certain counties; establishing a temporary program of assistance for federal crop insurance premiums; mitigating neighborhood insect infestation; appropriating money; amending Minnesota Statutes 1996, section 90.193; Laws 1986, chapter 398, article 1, section 18, as amended; proposing coding for new law in Minnesota Statutes, chapter 583."

We request adoption of this report and repassage of the bill.

House Conferees: Jim Tunheim, Gary W. Kubly, Stephen G. Wenzel, Tim Finseth and Bernard L "Bernie" Lieder.

Senate Conferees: LeRoy A. Stumpf, Dallas C. Sams, Roger D. Moe, David J. Ten Eyck and Cal Larson.

Tunheim moved that the report of the Conference Committee on H. F. No. 3853 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

The Speaker called Opatz to the Chair.

H. F. No. 3853, A bill for an act relating to agriculture; modifying provisions relating to the Farmer-Lender Mediation Act; providing emergency financial relief for farm families in certain counties; establishing a temporary program of assistance for federal crop insurance premiums; mitigating neighborhood insect infestation; appropriating money; amending Minnesota Statutes 1997 Supplement, section 583.22, subdivision 5; Laws 1986, chapter 398, article 1, section 18, as amended.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 95 yeas and 32 nays as follows:

Anderson, I. Erhardt Jefferson Mariani Pawlenty Stang
Bakk Erickson Jennings Marko Paymar Swenson, H.
Bettermann Evans Johnson, A. McCollum Pelowski Tingelstad
Biernat Finseth Johnson, R. McGuire Peterson Tomassoni
Carlson Folliard Juhnke Milbert Pugh Tompkins
Chaudhary Garcia Kahn Mulder Rest Tuma
Clark, J. Goodno Kalis Mullery Rhodes Tunheim
Clark, K. Greenfield Kelso Munger Rukavina Wagenius
Commers Greiling Koskinen Murphy Schumacher Weaver
Daggett Gunther Kraus Ness Seifert Wejcman
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Davids Haas Kubly Nornes Sekhon Wenzel
Dawkins Harder Leighton Olson, E. Skare Westfall
Delmont Hasskamp Lieder Opatz Skoglund Westrom
Dempsey Hilty Long Orfield Slawik Winter
Dorn Huntley Mahon Otremba, M. Solberg Spk. Carruthers
Entenza Jaros Mares Ozment Stanek

Abrams Holsten Larsen Olson, M. Seagren Wolf
Anderson, B. Kielkucki Leppik Osskopp Smith Workman
Boudreau Knight Lindner Paulsen Sviggum
Bradley Knoblach Macklin Reuter Sykora
Broecker Krinkie McElroy Rifenberg Van Dellen
Dehler Kuisle Molnau Rostberg Vandeveer

The bill was repassed, as amended by Conference, and its title agreed to.

CONFERENCE COMMITTEE REPORT ON H. F. NO. 2970

A bill for an act relating to retirement; various retirement plans; adjusting pension coverage for certain privatized public hospital employees; providing for voluntary deduction of health insurance premiums from certain annuities; providing for increased survivor benefits relating to certain public employees murdered in the line of duty; authorizing certain service credit purchases; specifying prior service credit purchase payment amount determination procedures increasing salaries of various judges; modifying other judicial salaries; modifying the judges retirement plan member and employer contribution rates; authorizing the transfer of certain prior retirement contributions from the legislators retirement plan and from the elective state officers retirement plan; creating a contribution transfer account in the general fund of the state; appropriating money; reformulating the Columbia Heights volunteer firefighters relief association plan as a defined contribution plan under the general volunteer fire law; restructuring the Columbia Heights volunteer firefighter relief association board; modifying various higher education retirement plan provisions; modifying administrative expense provisions for various public pension plans; expanding the teacher retirement plans part-time teaching positions eligible to participate in the qualified full-time service credit for part-time teaching service program; making certain Minneapolis fire department relief association survivor benefit options retroactive; providing increased disability benefit coverage for certain local government correctional facility employees; increasing local government correctional employee and employer contribution rates; providing increased survivor benefits to certain Minneapolis employee retirement fund survivors; authorizing certain Hennepin county regional park employees to change retirement plan membership; modifying benefit increase provision for Eveleth police and firefighters; modifying the length of the actuarial services contract of the legislative commission on pensions and retirement; modifying the scope of quadrennial projection valuations; amending Minnesota Statutes 1996, sections 3A.13; 136F.45, by adding a subdivision; 136F.48; 352.96, subdivision 4; 352D.09, subdivision 7; 352D.12; 353D.05, subdivision 3; 354.445; 354.66, subdivisions 2 and 3; 354A.094, subdivisions 2 and 3; 354B.23, by adding a subdivision; 354C.12, by adding a subdivision; 383B.52; 422A.23, subdivision 2; and 490.123, subdivisions 1a and 1b; Minnesota Statutes 1997 Supplement, sections 3.85, subdivision 11; 15A.083, subdivisions 5, 6a, and 7; 354B.25, subdivisions 1a and 5; 354C.12, subdivision 4; and 356.215, subdivision 2; Laws 1995, chapter 262, article 10, section 1; and Laws 1997, Second Special Session chapter 3, section 16; proposing new law for coding in Minnesota Statutes, chapter 356; repealing Minnesota Statutes 1996, sections 11A.17, subdivisions 10a and 14; and 352D.09, subdivision 8; Minnesota Statutes 1997 Supplement, section 136F.45, subdivision 3.

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We, the undersigned conferees for H. F. No. 2970, report that we have agreed upon the items in dispute and recommend as follows:

That the Senate recede from its amendments and that H. F. No. 2970 be further amended as follows:

Delete everything after the enacting clause and insert:

PUBLIC MEDICAL FACILITY PRIVATIZATIONS

Section 1. [LUVERNE COMMUNITY HOSPITAL; PENSION COVERAGE FOR TRANSFERRED EMPLOYEES.]

Subdivision 1. [AUTHORIZATION.] This section applies if the Luverne Community Hospital is sold, leased, or transferred to a private entity, nonprofit corporation, or public corporation. Notwithstanding Minnesota Statutes, sections 356.24 and 356.25, to facilitate the orderly transition of employees affected by the sale, lease, or transfer, the city may, at its discretion, make, from assets to be transferred to the private entity, nonprofit corporation, or public corporation, payments to a qualified pension plan established for the transferred employees by the private entity, nonprofit corporation, or public corporation, to provide benefits substantially similar to those the employees would have been entitled to under the provisions of the public employees retirement association applicable to nonpublic safety employees under Minnesota Statutes, chapter 353, as amended, in effect on the date of the sale, lease, or transfer.

Subd. 2. [TREATMENT OF TERMINATED, NONVESTED EMPLOYEES; ELIGIBILITY.] (a) An eligible individual is an individual who:

(1) is an employee of the Luverne Community Hospital immediately prior to the sale, lease, or transfer of that facility to a private entity, nonprofit corporation, or public corporation;

(2) is terminated at the time of the sale, lease, or transfer; and

(3) had less than three years of service credit in the public employees retirement association plan at the date of termination.

(b) For an eligible individual under paragraph (a), the city may make a member contribution equivalent payment under subdivision 3.

Subd. 3. [MEMBER CONTRIBUTION EQUIVALENT PAYMENT.] The member contribution equivalent payment is an amount equal to the total refund provided by Minnesota Statutes, section 353.34, subdivisions 1 and 2. To be eligible for the member contribution equivalent payment, the individual in subdivision 2, paragraph (a), must apply for a refund under Minnesota Statutes, section 353.34, subdivisions 1 and 2, within one year of termination. A member contribution equivalent amount exceeding $200 must be made directly to an individual retirement account under section 408(a) of the Internal Revenue Code, as amended, or to another qualified plan. A member contribution equivalent amount of $200 or less may, at the preference of the individual, be made to the individual or to an individual retirement account under section 408(a) of the Internal Revenue Code, as amended, or to another qualified plan.

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Sec. 2. [ARNOLD MEMORIAL HOSPITAL, ADRIAN, MINNESOTA; PENSION COVERAGE FOR TRANSFERRED EMPLOYEES.]

Subdivision 1. [AUTHORIZATION.] This section applies if the Arnold Memorial Hospital in Adrian is sold, leased, or transferred to a private entity, nonprofit corporation, or public corporation. Notwithstanding Minnesota Statutes, sections 356.24 and 356.25, to facilitate the orderly transition of employees affected by the sale, lease, or transfer, the city may, at its discretion, make, from assets to be transferred to the private entity, nonprofit corporation, or public corporation, payments to a qualified pension plan established for the transferred employees by the private entity, nonprofit corporation, or public corporation, to provide benefits substantially similar to those the employees would have been entitled to under the provisions of the public employees retirement association applicable to nonpublic safety employees under Minnesota Statutes, chapter 353, as amended, in effect on the date of the sale, lease, or transfer.

Subd. 2. [TREATMENT OF TERMINATED, NONVESTED EMPLOYEES; ELIGIBILITY.] (a) An eligible individual is an individual who:

(1) is an employee of the Arnold Memorial Hospital in Adrian immediately prior to the sale, lease, or transfer of that facility to a private entity, nonprofit corporation, or public corporation;

(2) is terminated at the time of the sale, lease, or transfer; and

(3) had less than three years of service credit in the public employees retirement association plan at the date of termination.

(b) For an eligible individual under paragraph (a), the city may make a member contribution equivalent payment under subdivision 3.

Sec. 3. [EFFECTIVE DATE.]

(a) Section 1 is effective on the day following approval by the Luverne city council and compliance with Minnesota Statutes, section 645.021.

(b) Section 2 is effective on the day following approval by the Adrian city council and compliance with Minnesota Statutes, section 645.021.

MISCELLANEOUS GENERAL EMPLOYEE PENSION CHANGES

Section 1. Minnesota Statutes 1996, section 3A.13, is amended to read:

3A.13 [EXEMPTION FROM PROCESS AND TAXATION; HEALTH PREMIUM DEDUCTION.]

The provisions of section 352.15 shall apply to the legislators retirement plan, chapter 3A. The executive director of the Minnesota state retirement system must, at the request of a retired legislator who is enrolled in a health insurance plan covering state employees, deduct the person's health insurance premiums from the person's annuity and transfer the amount of the premium to a health insurance carrier covering state employees.

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Sec. 2. Minnesota Statutes 1996, section 11A.17, subdivision 2, is amended to read:

Subd. 2. [ASSETS.] The assets of the supplemental investment fund shall consist of the money certified and transmitted to the state board from the participating public retirement plans and funds ~~and shall~~ or from the board of the Minnesota state colleges and universities under section 136F.45. The assets must be used to purchase investment shares in the investment accounts specified by the plan or fund.

Sec. 3. Minnesota Statutes 1996, section 136F.45, is amended by adding a subdivision to read:

Subd. 1a. [SUBSEQUENT VENDOR CONTRACTS.] (a) The board may limit the number of vendors under subdivision 1.

(b) In addition to any other tax-sheltered annuity program investment options, the board may offer as an investment option the Minnesota supplemental investment fund administered by the state board of investment under section 11A.17.

(c) For the tax-sheltered annuity program vendor contracts to be executed for the period beginning July 1, 2000, the board shall actively solicit participation of and shall include as vendors lower expense and "no-load" mutual funds or equivalent investment products as those terms are defined by the federal securities and exchange commission. To the extent possible, in addition to a range of insurance annuity contract providers and other mutual fund provider arrangements, the board must assure that no less than five insurance annuity providers and no less than one nor more than three lower expense and "no-load" mutual funds or equivalent investment products will be made available for direct-access by employee participants. To the extent that offering a lower expense "no-load" product increases the total necessary and reasonable expenses of the program and if the board is unable to negotiate a rebate of fees from the mutual fund or equivalent investment product providers, the board may charge the participants utilizing the lower expense "no-load" mutual fund products a fee to cover those expenses. The participant fee may not exceed one percent of the participant's annual contributions or $20 per participant per year, whichever is greater. Any excess fee revenue generated under this subdivision must be reimbursed to participant accounts in the manner provided in subdivision 3a.

Sec. 4. Minnesota Statutes 1996, section 136F.45, is amended by adding a subdivision to read:

Subd. 3a. [SHARING OF FEES.] (a) For purposes of this subdivision, a gross fee amount is defined as the fees, commissions, and other charges which an annuity investment provider or vendor would charge a typical consumer of those services for identical or similar products. A net fee amount is an amount below the gross fee amount reflecting a negotiated reduction below gross fees.

(b) To offset the board's necessary and reasonable expenses incurred under subdivisions 1 and 2, the Minnesota state colleges and universities system is authorized to negotiate with an annuity investment provider or vendor to establish a net fee amount.

(c) Under the negotiated arrangements, the Minnesota state colleges and universities system is authorized to either make arrangements to recapture the difference between gross and net fee amounts through a rebate from the annuity investment provider or vendor, or deduct those amounts prior to transmitting the contributions or premiums.

(d) The revenues collected or retained under these negotiated arrangements must be used to offset the board's necessary and reasonable expenses incurred under this section. Any excess above the necessary and reasonable expenses must be allocated annually to the accounts of the participants.

Sec. 5. Minnesota Statutes 1996, section 136F.48, is amended to read:

136F.48 [EMPLOYER-PAID HEALTH INSURANCE.]

(a) This section applies to a person who:

(1) retires from the state university system, the technical college system, or the community college system, or from a successor system employing state university, technical college, or community college faculty, with at least ten years of combined service credit in a system under the jurisdiction of the board of trustees of the Minnesota state colleges and universities;

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(2) was employed on a full-time basis immediately preceding retirement as a state university, technical college, or community college faculty member or as an unclassified administrator in one of those systems;

(3) begins drawing an annuity from the teachers retirement association or from a first class city teacher plan; and

(4) returns to work on not less than a one-third time basis and not more than a two-thirds time basis in the system from which the person retired under an agreement in which the person may not earn a salary of more than $35,000 in a calendar year from employment after retirement in the system from which the person retired.

(b) Initial participation, the amount of time worked, and the duration of participation under this section must be mutually agreed upon by the ~~employer~~ president of the institution where the person returns to work and the employee. The ~~employer~~ president may require up to one-year notice of intent to participate in the program as a condition of participation under this section. The ~~employer~~ president shall determine the time of year the employee shall work. The employer or the president may not require a person to waive any rights under a collective bargaining agreement as a condition of participation under this section.

(c) For a person eligible under paragraphs (a) and (b), the employing board shall make the same employer contribution for hospital, medical, and dental benefits as would be made if the person were employed full time.

(d) For work under paragraph (a), a person must receive a percentage of the person's salary at the time of retirement that is equal to the percentage of time the person works compared to full-time work.

(e) If a collective bargaining agreement covering a person provides for an early retirement incentive that is based on age, the incentive provided to the person must be based on the person's age at the time employment under this section ends. However, the salary used to determine the amount of the incentive must be the salary that would have been paid if the person had been employed full time for the year immediately preceding the time employment under this section ends.

(f) A person who returns to work under this section is a member of the appropriate bargaining unit and is covered by the appropriate collective bargaining contract. Except as provided in this section, the person's coverage is subject to any part of the contract limiting rights of part-time employees.

Sec. 6. Minnesota Statutes 1996, section 352.96, subdivision 4, is amended to read:

Subd. 4. [EXECUTIVE DIRECTOR TO ESTABLISH RULES.] The executive director of the system with the advice and consent of the board of directors shall establish rules and procedures to carry out this section including allocation of administrative costs ~~against the assets accumulated under this section. Funds to pay these costs are appropriated from the fund or account in which the assets accumulated under this section are placed~~ of the plan to participants. Fees cannot be charged on contributions and investment returns attributable to contributions made to the Minnesota supplemental investment funds before July 1, 1992. Annual total fees charged for plan administration for the Minnesota supplemental investment funds cannot exceed 40/100 of one percent of the contributions and investment returns attributable to contributions made on or after July 1, 1992. The rules established by the executive director must conform to federal and state tax laws, regulations, and rulings, and are not subject to the administrative procedure act. Except for the marketing rules, rules relating to the options provided under subdivision 2, clauses (2) and (3), must be approved by the state board of investment.

Sec. 7. Minnesota Statutes 1996, section 352D.09, subdivision 7, is amended to read:

Subd. 7. Up to one-tenth of one percent of salary shall be deducted from the employee contributions and up to one-tenth of one percent of salary from the employer contributions authorized by section 352D.04, subdivision 2, The board of directors shall establish a budget and charge participants a fee to pay the administrative expenses of the unclassified program. Fees cannot be charged on contributions and investment returns attributable to contributions made before July 1, 1992. Annual total fees charged for plan administration cannot exceed 10/100 of one percent of the contributions and investment returns attributable to contributions made on or after July 1, 1992.

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Sec. 8. Minnesota Statutes 1996, section 353D.05, subdivision 3, is amended to read:

Subd. 3. [ADMINISTRATIVE EXPENSES.] The executive director of the association with the advice and consent of the board shall annually set an amount to recover the costs of the association in administering the public employees defined contribution plan ~~that are not met by the amount recovered under section 11A.17~~.

Sec. 9. Minnesota Statutes 1996, section 354.445, is amended to read:

354.445 [NO ANNUITY REDUCTION.]

(a) The annuity reduction provisions of section 354.44, subdivision 5, do not apply to a person who:

(1) retires from the state university system, technical college system, or the community college system, or from a successor system employing state university, technical college, or community college faculty, with at least ten years of combined service credit in a system under the jurisdiction of the board of trustees of the Minnesota state colleges and universities;

(3) begins drawing an annuity from the teachers retirement association; and

(c) Notwithstanding any law to the contrary, a person eligible under paragraphs (a) and (b) may not earn further service credit in the teachers retirement association and is not eligible to participate in the individual retirement account plan or the supplemental retirement plan established in chapter 354B as a result of service under this section. No employer or employee contribution to any of these plans may be made on behalf of such a person.

(d) For a person eligible under paragraphs (a) and (b) who earns more than $35,000 in a calendar year from employment after retirement in the system from which the person retired, the annuity reduction provisions of section 354.44, subdivision 5, apply only to income over $35,000.

(e) A person who returns to work under this section is a member of the appropriate bargaining unit and is covered by the appropriate collective bargaining contract. Except as provided in this section, the person's coverage is subject to any part of the contract limiting rights of part-time employees.

Sec. 10. Minnesota Statutes 1996, section 354B.23, is amended by adding a subdivision to read:

Subd. 5a. [EXCESS CONTRIBUTIONS.] (a) When contributions to the plan exceed limits imposed by federal law or regulation and it is necessary to return contributions to comply with the federal limits, excess contributions must be returned to the employee and to the employer in the same proportions as the contributions were made.

(b) When an employer contribution required under section 354B.24 due to a sabbatical leave is made after completion of the leave or an employer contribution is made due to omitted deductions under subdivision 5, and these employer contributions cause or would cause total contributions to the plan to exceed limits imposed by federal law or regulation, the employer must make that portion of the contribution that would exceed the federal limit during the next calendar year.

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Sec. 11. Minnesota Statutes 1997 Supplement, section 354B.25, subdivision 1a, is amended to read:

Subd. 1a. [ADVISORY COMMITTEE.] (a) A committee is created to advise the state board of investment and the board of trustees of the Minnesota state colleges and universities concerning administration of the individual retirement account plan and the supplemental retirement plan established in chapter 354C. The committee shall adopt recommendations by majority vote of those members voting on each issue. The exclusive representatives of the state university instructional unit, the community college instructional unit, and the technical college instructional unit shall each appoint two members to the committee. The exclusive representatives of the general professional unit, the supervisory employees unit and the state university administrative unit shall each appoint one member to the committee. The chancellor of the Minnesota state colleges and universities shall appoint three members, at least one of whom shall be a personnel administrator. No member of the committee shall be retired. Members serve at the pleasure of the applicable appointing authority, but no member shall serve for more than a total of five years. Members shall be reimbursed from the administrative expense account of the individual retirement account plan for expenses as provided in section 15.059, subdivision 3.

(b) The committee shall:

(1) advise the board of trustees of the Minnesota state colleges and universities on the structure and operation of the individual retirement account plan and the supplemental retirement plan;

(2) along with any other consultants selected by the board, advise the state board of investment on selection of financial institutions and on the type of investment products to be offered by these institutions for the plans;

(3) advise the board of trustees of the Minnesota state colleges and universities on administration of the plans, including selection of a third-party plan administrator, if any, for the individual retirement account plan.

(c) The board of trustees of the Minnesota state colleges and universities shall provide the advisory committee with meeting space and other administrative support.

(d) Expenses of the advisory committee are considered administrative expenses of the plans under subdivision 5 and section 354C.12, subdivision 4, and must be allocated between the two plans in proportion to the market value of the total assets of the plans as of the most recent prior audited annual financial report.

Sec. 12. Minnesota Statutes 1997 Supplement, section 354B.25, subdivision 5, is amended to read:

Subd. 5. [INDIVIDUAL RETIREMENT ACCOUNT PLAN ADMINISTRATIVE EXPENSES.] (a) The reasonable and necessary administrative expenses of the individual retirement account plan must be paid by plan participants in the following manner:

(1) from plan participants with amounts invested in the Minnesota supplemental investment fund, the plan administrator may charge an administrative expense assessment ~~as provided in section 11A.17, subdivisions 10a and 14~~ in an amount such that annual total fees charged for plan administration cannot exceed 40/100 of one percent of the assets of the Minnesota supplemental investment funds; and

(2) from plan participants with amounts through annuity contracts and custodial accounts purchased under subdivision 2, paragraph (a), the plan administrator may charge an administrative expense assessment of a designated amount, not to exceed two percent of member and employer contributions, as those contributions are made.

(b) Any administrative expense charge that is not actually needed for the administrative expenses of the individual retirement account plan must be refunded to member accounts.

(c) The board of trustees shall report annually, before October 1, to the advisory committee created in subdivision 1a on administrative expenses of the plan. The report must include a detailed accounting of charges for administrative expenses collected from plan participants and expenditure of the administrative expense charges. The administrative expense charges collected from plan participants must be kept in a separate account from any other funds under control of the board of trustees and may be used only for the necessary and reasonable administrative expenses of the plan.

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Sec. 13. Minnesota Statutes 1996, section 354C.12, is amended by adding a subdivision to read:

Subd. 1a. [EXCESS CONTRIBUTIONS.] (a) When contributions to the plan exceed limits imposed by federal law or regulation and it is necessary to return contributions to comply with the federal limits, one-half of the excess contributions must be returned to the employee and half to the employer.

(b) When an employer contribution is made due to omitted deductions under subdivision 2, and these employer contributions cause or would cause total contributions to the plan to exceed limits imposed by federal law or regulation, the employer must make that portion of the contribution that would exceed the federal limit during the next calendar year.

Sec. 14. Minnesota Statutes 1997 Supplement, section 354C.12, subdivision 4, is amended to read:

Subd. 4. [ADMINISTRATIVE EXPENSES.] The board of trustees of the Minnesota state colleges and universities is authorized to pay the necessary and reasonable administrative expenses of the supplemental retirement plan. The administrative fees or charges must be paid by participants in the following manner:

(1) from participants whose contributions are invested with the state board of investment, the plan administrator may recover administrative expenses in the manner ~~provided by section 11A.17, subdivisions 10a and 14~~ authorized by the Minnesota state colleges and universities in an amount such that annual total fees charged for plan administration cannot exceed 40/100 of one percent of the assets of the Minnesota supplemental investment funds; or

(2) from participants where contributions are invested through contracts purchased from any other authorized source, the plan administrator may assess an amount of up to two percent of the employee and employer contributions.

Any recovered or assessed amounts that are not needed for the necessary and reasonable administrative expenses of the plan must be refunded to member accounts.

The board of trustees shall report annually, before October 1, to the advisory committee created in section 354B.25, subdivision 1a, on administrative expenses of the plan. The report must include a detailed accounting of charges for administrative expenses collected from plan participants and expenditure of the administrative expense charges. The administrative expense charges collected from plan participants must be kept in a separate account from any other funds under control of the board of trustees and may be used only for the necessary and reasonable administrative expenses of the plan.

Sec. 15. Minnesota Statutes 1996, section 383B.52, is amended to read:

383B.52 [ADMINISTRATION COSTS.]

The board of county commissioners of Hennepin county is hereby authorized to appropriate money for the administration of the supplementary benefit program created by sections 383B.46 to 383B.52. The board of county commissioners of Hennepin county may charge participants a fee to recover the administrative expenses of the supplementary benefit program. Annual total fees charged to administer the supplementary benefit program may not exceed 40/100 of one percent of the assets of the program.

Sec. 16. Minnesota Statutes 1996, section 422A.23, subdivision 2, is amended to read:

Subd. 2. [SHORT-SERVICE SURVIVOR BENEFIT.] ~~Upon the death of a contributing~~ (a) If an active member ~~after having been in the city service not less than~~ dies prior to termination of service with at least 18 months but before the effective date of retirement, the board shall in lieu of the settlement hereinbefore provided pay to the surviving spouse and/or children of the member under the age of 18, or under the age of 22 if a full-time student at an accredited school, college or university, and single, the following monthly benefit:

(a) Surviving spouse $325 per month, except for benefits beginning after July 1, 1983, which shall be 30 percent of member's average salary in effect over the last six months of allowable service preceding the month in which the death occurred.

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(b) Each surviving child $150 per month, except for benefits beginning after July 1, 1983, which shall be ten percent of the member's average salary in effect over the last six months of allowable service preceding the month in which the death occurred but less than 20 years of service credit, the surviving spouse or surviving child or children is eligible to receive the survivor benefit specified in paragraph (b) or (c), as applicable. ~~Payments for the~~ Payment of a benefit of for any surviving child under the age of 18 years shall be made to the surviving parent, or if there be none, to the legal guardian of ~~such~~ the surviving child. ~~The maximum monthly benefit shall not exceed a total of $750.~~

(c) Effective for payments made after June 30, 1991, surviving spouse and surviving child benefits under paragraphs (a) and (b) beginning on or before July 1, 1983, are increased to $500 per month and $225 per month, respectively. The maximum monthly payment under paragraph (b) is increased to $900. The increased cost resulting from the benefit increases in this paragraph must be allocated to each employing unit listed in section 422A.101, subdivisions 1a, 2, and 2a, on the basis of the additional accrued liability resulting from increased benefits paid to the survivors of employees from that unit. For purposes of this subdivision, a surviving child is an unmarried child of the deceased member under the age of 18, or under the age of 22 if a full-time student at an accredited school, college, or university.

(b) If the surviving spouse or surviving child benefit commenced before July 1, 1983, the surviving spouse benefit is $750 per month and the surviving child benefit is $225 per month, beginning with the first monthly payment payable after the effective date of this section. The sum of surviving spouse and surviving child benefits payable under this paragraph shall not exceed $900 per month. The increased cost resulting from the benefit increases under this paragraph must be allocated to each employing unit listed in section 422A.101, subdivisions 1a, 2, and 2a, on the basis of the additional accrued liability resulting from increased benefits paid to the survivors of employees from that unit.

(c) If the surviving spouse or surviving child benefit commences after June 30, 1983, the surviving spouse benefit is 30 percent of the member's average salary in effect over the last six months of allowable service preceding the month in which death occurs. The surviving child benefit is ten percent of the member's average salary in effect over the last six months of allowable service preceding the month in which death occurs. The sum of surviving spouse and surviving child benefits payable under this paragraph shall not exceed 50 percent of the member's average salary in effect over the last six months of allowable service.

(d) Any surviving child benefit or surviving spouse benefit computed under paragraph (c) and in effect for the month immediately prior to the effective date of this section is increased by 15 percent as of the first payment on or after the effective date of this section.

(e) Surviving child benefits under this subdivision terminate when the child no longer meets the definition of surviving child.

Sec. 17. [PUBLIC EMPLOYEES RETIREMENT ASSOCIATION; SPECIAL SURVIVING SPOUSE BENEFIT ELIGIBILITY.]

(a) Notwithstanding any provision of law to the contrary, the surviving spouse of a deceased qualified public employee who died as a result of an alleged homicide in the line of duty within one month of eligibility for normal retirement is entitled to receive the second portion of a 100 percent joint and survivor optional annuity under Minnesota Statutes, section 353.31, subdivision 1b, calculated as if the deceased qualified public employee had qualified for the "rule of 90" early normal retirement annuity on the date of death.

(b) A deceased qualified public employee is a person who:

(1) was born on August 18, 1941;

(2) became a member of the public employees retirement association on July 7, 1964;

(3) was a member of the basic program of the public employees retirement association;

(4) was employed as a building inspector by the city of St. Paul;

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(5) died during the course of employment duties on December 24, 1997; and

(6) would have been eligible to retire under the "rule of 90" early normal retirement provision on or before February 1, 1998.

(c) The benefit under paragraph (a) is payable in lieu of any other survivor benefit from the public employee retirement association. The benefit under paragraph (a) accrues on January 1, 1998, and the initial payment of the benefit must include any applicable retroactive payment amounts. The benefit under paragraph (a) must be elected by the surviving spouse on a form prescribed by the executive director of the public employee retirement association.

Sec. 18. [REIMBURSEMENT OF ACTUARIAL COST BY CITY OF ST. PAUL.]

On the effective date of this section, the city of St. Paul shall pay to the public employees retirement association $36,698 and whatever portion of a remaining $36,697 is not appropriated from the general fund to the public employees retirement association for this purpose in order to offset the increased actuarial accrued liability related to the survivor benefit increase provided in section 15.

Sec. 19. [PUBLIC EMPLOYEES RETIREMENT ASSOCIATION COVERAGE TERMINATION.]

Subdivision 1. [ELIGIBILITY.] (a) An eligible member specified in paragraph (b) is authorized to apply for a retirement annuity, provided necessary age and service requirements are met, under Minnesota Statutes, section 353.29 or 353.30, as applicable, as further specified under subdivision 2.

(b) An eligible member is an individual who:

(1) is an active member of the public employees retirement association coordinated plan;

(2) contributes to that plan based on employment by the suburban Hennepin county regional park district and as an elected member of the Minneapolis park and recreation board; and

(3) was born on February 25, 1936.

Subd. 2. [RETIREMENT ANNUITY.] (a) Notwithstanding Minnesota Statutes, section 353.01, subdivision 2a, clause (3), and continuation of elected service, an eligible individual under subdivision 1, paragraph (b), is deemed to have terminated membership under Minnesota Statutes, section 353.01, subdivision 11b, following termination of the suburban Hennepin county regional park district employment and meeting applicable length of separation requirements.

(b) If the requirements of paragraph (a) are satisfied, the eligible individual may apply for a retirement annuity under Minnesota Statutes, section 353.29 or 353.30, whichever applies. In computing the annuity, the public employees retirement association must exclude salary due to appointed and elected Minneapolis park and recreation board service.

Subd. 3. [TREATMENT OF MINNEAPOLIS PARK AND RECREATION BOARD CONTRIBUTION TO THE PUBLIC EMPLOYEES RETIREMENT ASSOCIATION.] (a) Upon termination of the suburban Hennepin county regional park district employment, all employee contributions to the public employees retirement association coordinated plan by an eligible individual in subdivision 1, paragraph (b), due to Minneapolis park and recreation board appointed and elected service, and all corresponding employer contributions, terminate.

(b) Following termination of contributions under paragraph (a), an eligible member under subdivision 1, paragraph (b), must elect, within one year of termination of contributions under paragraph (a) or termination of elective service, whichever is earlier, a refund under Minnesota Statutes, section 353.34, subdivision 2, or coverage by the public employees defined contribution plan under Minnesota Statutes, chapter 353D, as further specified in paragraph (c).

(c) If public employee defined contribution plan coverage is elected under this paragraph, contributions to that plan commence as of the first day of the pay period following this election. Notwithstanding Minnesota Statutes, section 353D.12, accumulated employee contributions made by an eligible member as specified in subdivision 1, paragraph (b), and corresponding employer contributions, due to the Minneapolis park and recreation board appointed and elected service, must be transferred with six percent annual interest to an account for an eligible member in the public employees defined contribution plan.

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(d) If no election is made by an eligible member by the required date in paragraph (b), the individual is assumed to have elected the refund indicated in paragraph (b).

(e) Upon an election under paragraph (b), or a mandatory refund under paragraph (d), all rights in the public employees retirement association coordinated plan due to elected and appointed service are forfeited and may not be reestablished.

Sec. 20. [MNSCU STUDY.]

(a) The board of the Minnesota state colleges and universities, in consultation with representatives of the respective collective bargaining units, shall study the issue of converting the tax sheltered annuity program under Minnesota Statutes, section 136F.45, to an unrestricted investment vendor program, recognizing that college and university employees should have maximum flexibility to exercise their own judgment about the investment of their personal retirement savings. As an unrestricted investment vendor program, the role of the Minnesota state colleges and universities system would be to minimize additional costs for activities other than those necessary for administrative or monitoring duties required under state or federal law.

(b) The study results must be reported to the chair of the legislative commission on pensions and retirement, the chair of the committee on governmental operations of the house of representatives, and the chair of the committee on governmental operations and veterans of the senate. The study report must be filed on or before February 1, 1999.

Sec. 21. [REPEALER.]

(a) Minnesota Statutes 1996, sections 11A.17, subdivisions 10a and 14; and 352D.09, subdivision 8, are repealed.

(b) Minnesota Statutes 1997 Supplement, section 136F.45, subdivision 3, is repealed.

Sec. 22. [EFFECTIVE DATE.]

(a) Sections 4 and 21, paragraph (b), are effective on the day following final enactment. Sections 5 and 9 do not abrogate or modify any memorandum of understanding between an exclusive representative of affected employees and the board of the Minnesota state colleges and universities entered into before the effective date of those sections.

(b) Sections 2, 3, 5, 9, 10, 11, 13, 19, and 20 are effective on the day following final enactment.

(d) Section 16 is effective upon approval by the Minneapolis city council and compliance with Minnesota Statutes, section 645.021.

(e) Sections 17 and 18 are effective on the day following approval by the city council of the city of St. Paul and compliance with Minnesota Statutes, section 645.021.

QUALIFIED PART-TIME TEACHER RETIREMENT PROGRAM

REPORTING DEADLINE

Section 1. Minnesota Statutes 1996, section 354.66, subdivision 2, is amended to read:

Subd. 2. [QUALIFIED PART-TIME ~~POSITIONS~~ TEACHER PROGRAM PARTICIPATION REQUIREMENTS.] A teacher in ~~the~~ a Minnesota public elementary ~~schools~~ school, a Minnesota secondary ~~schools~~ school, or ~~technical~~ the Minnesota state colleges ~~or in the community college system or the state university~~ and universities system ~~of the state~~ who has three years or more of allowable service in the association or three years or more of full-time teaching service in Minnesota public elementary schools, Minnesota secondary schools, or ~~technical~~ the Minnesota state colleges ~~or in the community college system or the state university~~ and universities system, ~~may,~~ by agreement with the board of the

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employing district or with the authorized representative of the board, may be assigned to teaching service ~~within the district~~ in a part-time teaching position under subdivision 3. The ~~association must receive a copy of the~~ agreement must be executed before October 1 of the year for which the teacher requests to make retirement contributions under subdivision 4. A copy of the executed agreement must be filed with the executive director of the association. If the copy of the executed agreement is filed with the association after October 1 of the year for which the teacher requests to make retirement contributions under subdivision 4, the employing unit shall pay the fine specified in section 354.52, subdivision 6, for each calendar day that elapsed since the October 1 due date. The association may not accept an executed agreement that is received by the association more than 15 months late. The association may not waive the fine required by this section.

Sec. 2. Minnesota Statutes 1996, section 354.66, subdivision 3, is amended to read:

Subd. 3. [PART-TIME TEACHING POSITION, DEFINED.] For purposes of this section, the term "part-time teaching position" shall mean a teaching position within the district in which the teacher is employed for at least 50 full days or a fractional equivalent thereof as prescribed in section 354.091, and for which the teacher is compensated in an amount not exceeding 67 80 percent of the compensation established by the board for a full-time teacher with identical education and experience with the employing unit. The compensation of a teacher in the state colleges and university system may exceed the 67 80 percent limit if the teacher does not teach just one of the three quarters in the system's full school year, provided no additional services are performed while the teacher participates in the program.

Sec. 3. Minnesota Statutes 1996, section 354A.094, subdivision 2, is amended to read:

Subd. 2. [PART-TIME TEACHING POSITION, DEFINED.] For purposes of this section, the term "part-time teaching position" shall mean a teaching position within the district in which the teacher is employed for at least 50 full days or a fractional equivalent of 50 full days calculated using the appropriate minimum number of hours which would result in a full day of service credit by the appropriate association and for which the teacher is compensated in an amount not to exceed 67 80 percent of the compensation rate established by the board for a full-time teacher with identical education and experience within the district.

Sec. 4. Minnesota Statutes 1996, section 354A.094, subdivision 3, is amended to read:

Subd. 3. [QUALIFIED PART-TIME TEACHER PROGRAM PARTICIPATION REQUIREMENTS.] A teacher in the public schools of a city of the first class who has three years or more allowable service in the applicable retirement fund association or three years or more of full-time teaching service in Minnesota public elementary schools, Minnesota secondary schools, and ~~technical~~ Minnesota state colleges and universities system may, by agreement with the board of the employing district, be assigned to teaching service within the district in a part-time teaching position. The agreement must be executed before October 1 of the year for which the teacher requests to make retirement contributions under subdivision 4. A copy of the executed agreement must be filed with the executive director of the retirement fund association. If the copy of the executed agreement is filed with the association after October 1 of the year for which the teacher requests to make retirement contributions under subdivision 4, the employing school district shall pay a fine of $5 for each calendar day that elapsed since the October 1 due date. The association may not accept an executed agreement that is received by the association more than 15 months late. The association may not waive the fine required by this section.

Sec. 5. [EFFECTIVE DATE.]

(a) Sections 1 and 4 are effective on the day following final enactment.

(b) Sections 2 and 3 are effective on July 1, 1998.

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PRIOR SERVICE CREDIT PURCHASES

Section 1. [356.55] [PRIOR SERVICE CREDIT PURCHASE PAYMENT AMOUNT DETERMINATION PROCEDURE.]

Subdivision 1. [APPLICATION.] Unless the prior service credit purchase authorization special law or general statute provision explicitly specifies a different purchase payment amount determination procedure, this section governs the determination of the prior service credit purchase payment amount of any prior service credit purchase.

Subd. 2. [DETERMINATION.] (a) Unless the prior service credit purchase minimum amount determined under paragraph (d) is greater, the prior service credit purchase amount is the result obtained by subtracting the amount determined under paragraph (c) from the amount determined under paragraph (b).

(b) The present value of the unreduced single life retirement annuity, with the purchase of the additional service credit included, must be calculated as follows:

(1) the age at first eligibility for an unreduced single life retirement annuity, including the purchase of the additional service credit, must be determined;

(2) the length of total service credit, including the period of the purchase of the additional service credit, at the age determined under clause (1) must be determined;

(3) the highest five successive years average salary at the age determined under clause (1), assuming five percent annual compounding salary increases from the most current annual salary amount at the age determined under clause (1), must be determined;

(4) using the benefit accrual rate or rates applicable to the prospective purchaser of the service credit based on the prospective purchaser's actual date of entry into covered service, the length of service determined under clause (2), and the final average salary determined under clause (3), the annual unreduced single life retirement annuity amount must be determined;

(5) the actuarial present value of the projected annual unreduced single life retirement annuity amount determined under clause (4) at the age determined under clause (1), using the same actuarial factor that the plan would use to determine actuarial equivalence for optional annuity forms and related purposes, must be determined; and

(6) the discounted value of the amount determined under clause (5) to the date of the prospective purchase, using an interest rate of 8.5 percent and no mortality probability decrement, must be determined.

(c) The present value of the unreduced single life retirement annuity, without the purchase of the additional service credit included, must be calculated as follows:

(1) the age at first eligibility for an unreduced single life retirement annuity, not including the purchase of additional service credit, must be determined;

(2) the length of accrued service credit, without the period of of the purchase of the additional service credit, at the age determined under clause (1), must be determined;

(3) the highest five successive years average salary at the age determined under clause (1), assuming five percent annual compounding salary increases from the must current annual salary amount to the age determined under clause (1), must be determined;

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(4) using the benefit accrual rate or rates applicable to the prospective purchaser of the service credit based on the prospective purchaser's actual date of entry into covered service the length of service credit determined under clause (2), and the final average salary determined under clause (3), the annual unreduced single life retirement annuity amount must be determined;

(5) the actuarial present value of the projected annual unreduced single life retirement annuity amount determined under clause (4) at the age determined under clause (1), using the same actuarial factor that the plan would use to determined actuarial equivalence for optional annuity forms and related purposes, must be determined;

(7) the net value of the discounted value determined under clause (6), must be determined by applying a service ratio, where the numerator is the total length of credited service determined under paragraph (b), clause (2), reduced by the period of the additional service credit proposed to be purchased, and where the denominator is the total length of service credit determined under clause (2).

(d) The minimum prior service credit purchase amount is the amount determined by multiplying the most current annual salary of the prospective purchaser by the combined current employee, employer, and any additional employer contribution rates for the applicable pension plan and by multiplying that results by the number of years of service or fractions of years of service of the potential service credit purchase.

Subd. 3. [SOURCE OF DETERMINATION.] The prior service credit purchase amounts under subdivision 2 must be calculated by the chief administrative officer of the public pension plan using a prior service credit purchase amount determination process that has been verified for accuracy and consistency under this section by the commission-retained actuary. That verification must be in writing and must occur before the first prior service credit purchase for the plan under this section is accepted and every five years thereafter or whenever the preretirement interest rate, postretirement interest rate, payroll growth, or mortality actuarial assumption for the applicable pension plan is modified under section 356.215, whichever occurs first.

Subd. 4. [PRIOR SERVICE CREDIT PURCHASE PROCESSING FEE.] A public pension plan may establish a fee to be charged to the prospective purchaser for processing a prior service credit purchase application and the prior service credit payment amount calculation. The fee must be established by the governing board of the pension plan and must be uniform for comparable service credit purchase situations or actuarial calculation requests. The prior service credit purchase processing fee structure must be published by the chief administrative officer of the applicable retirement plan in the State Register.

Subd. 5. [PAYMENT RESPONSIBILITY; EMPLOYER OPTION.] Unless the prior service credit purchase authorization special law or general statute provision explicitly specifies otherwise, the prior service credit purchase payment amount determined under subdivision 2 is payable by the purchaser, but the former employer of the purchaser or the current employer of the purchaser may, at its discretion, pay all or a portion of the purchase payment amount in excess of an amount equal to the employee contribution rate or rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made.

Subd. 6. [REPORT ON PRIOR SERVICE CREDIT PURCHASES.] (a) As part of the regular data reporting to the consulting actuary retained by the legislative commission on pensions and retirement annually, the chief administrative officer of each public pension plan that has accepted a prior service credit purchase payment under this section shall report for any purchase, the purchaser, the purchaser's employer, the age of the purchaser, the period of the purchase, the purchaser's prepurchase accrued service credit, the purchaser's postpurchase accrued service credit, the purchaser's prior service credit payment, the prior service credit payment made by the purchaser's employer, and the amount of the additional benefit or annuity purchased.

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(b) As part of the regular annual actuarial valuation for the applicable public pension plan prepared by the consulting actuary retained by the legislative commission on pensions and retirement, there must be an exhibit comparing for each purchase the total prior service credit payment received from all sources and the increased public pension plan actuarial accrued liability resulting from each purchase.

Subd. 7. [EXPIRATION OF PURCHASE PAYMENT DETERMINATION PROCEDURE.] (a) This section expires and is repealed on July 1, 2001.

(b) Authority for any public pension plan to accept a prior service credit payment calculated in a timely fashion under this section expires on October 1, 2001.

Sec. 2. [356.551] [POST-JULY 1, 2001, PRIOR SERVICE CREDIT PURCHASE PAYMENT AMOUNT DETERMINATION PROCEDURE.]

(a) Unless the prior service credit purchase authorization special law or general statute provision explicitly specifies a different purchase payment amount determination procedure, and if section 356.55 has expired, this section governs the determination of the prior service credit purchase payment amount of any prior service credit purchase.

(b) The prior service credit purchase amount is an amount equal to the actuarial present value, on the date of payment, as calculated by the chief administrative officer of the pension plan and reviewed by the actuary retained by the legislative commission on pensions and retirement, of the amount of the additional retirement annuity obtained by the acquisition of the additional service credit in this section. Calculation of this amount must be made using the preretirement interest rate applicable to the public pension plan specified in section 356.215, subdivision 4d, and the mortality table adopted for the public pension plan. The calculation must assume continuous future service in the public pension plan until, and retirement at, the age at which the minimum requirements of the fund for normal retirement or retirement with an annuity unreduced for retirement at an early age, including section 356.30, are met with the additional service credit purchased. The calculation must also assume a full-time equivalent salary, or actual salary, whichever is greater, and a future salary history that includes annual salary increases at the applicable salary increase rate for the plan specified in section 356.215, subdivision 4d. Payment must be made in one lump sum within one year of the prior service credit authorization. Payment of the amount calculated under this subdivision must be made by the applicable eligible person. However, the current employer or the prior employer may, at its discretion, pay all or any portion of the payment amount that exceeds an amount equal to the employee contribution rates in effect during the period or periods of prior service applied to the actual salary rates in effect during the period or periods of prior service, plus interest at the rate of 8.5 percent a year compounded annually from the date on which the contributions would otherwise have been made to the date on which the payment is made. If the employer agrees to payments under this paragraph, the purchaser must make the employee payments required under this paragraph within 290 days of the prior service credit authorization. If that employee payment is made, the employer payment under this paragraph must be remitted to the chief administrative officer of the public pension plan within 60 days of receipt by the chief administrative officer of the employee payments specified under this paragraph.

(c) The prospective purchaser must provide any relevant documentation required by the chief administrative officer of the public pension plan to determine eligibility for the prior service credit under this section.

(d) Service credit for the purchase period must be granted by the public pension plan to the purchaser upon receipt of the purchase payment amount specified in paragraph (b).

Sec. 3. [PRIOR SERVICE CREDIT PURCHASE AUTHORIZATION.]

Subdivision 1. [INDEPENDENT SCHOOL DISTRICT NO. 77, MANKATO, TEACHER.] (a) Notwithstanding any provision of Minnesota Statutes, section 354.094, or other law to the contrary, an eligible person described in paragraph (b) is entitled to obtain allowable and formula service credit in the teachers retirement association for the period described in paragraph (c) upon the payment of the full service credit purchase amount specified in Minnesota Statutes, section 356.55.

(b) An eligible person is a person who was:

(1) born on June 23, 1946;

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(2) granted an extended leave of absence from employment under the teacher mobility program by independent school district No. 77, Mankato, on March 3, 1986, for the period July 1, 1986, to June 30, 1989; and

(3) granted a leave which was erroneously characterized in the "other" category on the leave of absence report submitted to the teachers retirement association.

(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before September 1, 1998, an amount equal to the employee contribution rate or rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made and independent school district No. 77, Mankato, must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the superintendent of independent school district No. 77, Mankato, of its payment amount and payment due date if the eligible person makes the required payment.

(e) If independent school district No. 77, Mankato, fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required school district payment be deducted from the next subsequent payment or payments of state education aid to the school district and be transmitted to the teachers retirement association.

Subd. 2. [INDEPENDENT SCHOOL DISTRICT NO. 199, INVER GROVE HEIGHTS, TEACHER.] (a) Notwithstanding Minnesota Statutes, section 354.096, an eligible person described in paragraph (b) is entitled to purchase allowable service credit in the teachers retirement association for the period described in paragraph (c) by paying the amount specified in Minnesota Statutes, section 356.55, subdivision 2.

(b) An eligible person is a person who:

(1) was on medical leave for multiple sclerosis in the fall of 1990;

(2) was employed by independent school district No. 199, Inver Grove Heights, during the period that the medical leave was taken; and

(3) was not properly notified of the deadline to purchase service credit for the medical leave period.

(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before September 1, 1998, an amount equal to the employee contribution rate or rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made and independent school district No. 199, Inver Grove Heights, must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the superintendent of independent school district No. 199, Inver Grove Heights, of its payment amount and payment due date if the eligible person makes the required payment.

(e) If independent school district No. 199, Inver Grove Heights, fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required school district payment be deducted from the next subsequent payment or payments of state education aid to the school district and be transmitted to the teachers retirement association.

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Subd. 3. [PRE-JANUARY 1, 1998, LATE REPORTED QUALIFIED PART-TIME TEACHER PROGRAM AGREEMENT PERIODS.] (a) Notwithstanding any provision of Minnesota Statutes, section 354.66, to the contrary, an eligible person described in paragraph (b) is entitled to obtain allowable and formula service credit in the teachers retirement association for the period described in paragraph (c) upon the payment of the full service credit purchase amount specified in Minnesota Statutes, section 356.55.

(b) An eligible person is a person who rendered part-time teaching service after the end of the 1993-1994 school year and before the beginning of the 1998-1999 school year under an agreement with a school district or other applicable employer under Minnesota Statutes, section 354.66, that was executed before the applicable October 1, but was not filed by the employing unit with the teachers retirement association before the applicable October 1 deadline.

(c) The period for service credit purchase is the uncredited portion of a full year of service credit during the 1994-1995, 1995-1996, 1996-1997, and 1997-1998 school years where the uncredited period of service resulted solely from a failure of the employing unit to file the part-time teaching participation agreement with the teachers retirement association in a timely fashion.

(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before November 30, 1998, an amount equal to the employee contribution rate or rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made and the employing unit that agreed to the part-time teaching service participation program must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the chief administrative officer of the applicable employing unit of its payment amount and payment due date if the eligible person makes the required payment.

(e) If the applicable employing unit fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required employer payment be deducted from the next subsequent payment or payments of any state education or other aid to that employing unit and be transmitted to the teachers retirement association.

Subd. 4. [PURCHASE OF SERVICE CREDIT AUTHORIZATION; MIDDLE MANAGEMENT ASSOCIATION EMPLOYEE.] (a) Notwithstanding Minnesota Statutes, sections 352.01, subdivision 2, and 352.029, subdivision 1, and Minnesota Statutes 1997 Supplement, section 352.01, subdivision 2a, an eligible employee described in paragraph (b) is eligible for membership in the Minnesota state retirement system general plan and is eligible to purchase service credit in that plan as specified in paragraph (d).

(b) An eligible employee is a person who:

(1) has been employed by the middle management association since February 14, 1994; and

(2) was born on September 13, 1958.

(c) An eligible employee in paragraph (b) remains eligible for membership in the Minnesota state retirement system general plan, under this subdivision, while the individual remains employed by the middle management association or a successor organization providing contribution requirements and other general requirements for membership are met.

(d) An eligible employee under paragraph (b) is entitled to purchase service credit in the Minnesota state retirement system general plan for the period of service prior to the effective date of this act for service with the middle management association. An eligible employee may not purchase service credit for any period during which the employer has made contributions on behalf of the employee to a defined contribution pension plan or for any period during which the employee or the employer have made contributions to a defined benefit pension plan covering public, nonprofit, or private sector employees, other than a volunteer firefighter relief association governed by Minnesota Statutes, chapter 424A. Authority to make the payment terminates on July 1, 1999, or upon termination of employment with the middle management association, whichever is earlier.

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Subd. 5. [INDEPENDENT SCHOOL DISTRICT NO. 13, COLUMBIA HEIGHTS, TEACHER.] (a) Notwithstanding Minnesota Statutes, section 354.094, an eligible person described in paragraph (b) is entitled to purchase allowable and formula service credit in the teachers retirement association for the period described in paragraph (c) by paying the amount specified in Minnesota Statutes, section 356.55, subdivision 2.

(b) An eligible person for purposes of paragraph (a) is a person who was born on January 26, 1944, was initially hired by independent school district No. 13, Columbia Heights, on August 30, 1967, was granted a five year extended leave of absence by independent school district No. 13, Columbia Heights, for the period July 1, 1994, through June 30, 1999, and was unable to make contributions under Minnesota Statutes, section 354.094, subdivision 1, because of the failure of independent school district No. 13, Columbia Heights, to timely forward the person's leave payment to the teachers retirement association.

(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before September 1, 1998, an amount equal to the employee, employer, and employer additional contribution rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made and independent school district No. 13, Columbia Heights, must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the superintendent of independent school district No. 13, Columbia Heights, of its payment amount and payment due date if the eligible person makes the required payment.

(e) If independent school district No. 13, Columbia Heights, fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required employer payment be deducted from any state education or other aid payable to independent school district No. 13, Columbia Heights, and be transmitted to the teachers retirement association.

Subd. 6. [WINONA STATE UNIVERSITY FACULTY MEMBER.] (a) Notwithstanding Minnesota Statutes, section 354.094, an eligible person described in paragraph (b) is entitled to purchase allowable service credit in the teachers retirement association for the period described in paragraph (c) by paying the amount specified in Minnesota Statutes, section 356.55, subdivision 2.

(b) An eligible person for purposes of paragraph (a) is a person who was born on September 5, 1943, was initially hired by Winona state university on September 4, 1979, was granted an extended leave of absence by Winona state university on March 18, 1996, and was unable to make contributions under Minnesota Statutes, section 354.094, subdivision 1, because of the failure of Winona state university to timely submit the leave of absence report to the teachers retirement association.

(c) The period for service credit purchase is the first year of a three year extended leave of absence that began with the 1996-1997 school year.

(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before September 1, 1998, an amount equal to the employee, employer, and employer additional contribution rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made and Winona state university must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the president of Winona state university of its payment amount and payment due date if the eligible person makes the required payment.

(e) If Winona state university fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required employer payment be deducted from any appropriation to the Minnesota state colleges and universities system and be transmitted to the teachers retirement association.

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Subd. 7. [INDEPENDENT SCHOOL DISTRICT NO. 621, MOUNDS VIEW, TEACHER.] (a) Notwithstanding Minnesota Statutes, section 354.092, an eligible person described in paragraph (b) is entitled to purchase allowable service credit in the teachers retirement association for the period described in paragraph (c) by paying the amount specified in Minnesota Statutes, section 356.55, subdivision 2.

(b) An eligible person for purposes of paragraph (a) is a person who was born on December 19, 1940, was initially employed as a teacher on August 27, 1968, and is employed by independent school district No. 621, Mounds View.

(c) The period for service credit purchase is the uncredited portion of a sabbatical leave during the 1984-1985 school year.

(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before September 1, 1998, an amount equal to the employee contribution rate or rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made. Independent school district No. 621, Mounds View, must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the superintendent of independent school district No. 621, Mounds View, of its payment amount and payment due date if the eligible person makes the required payment.

(e) If independent school district No. 621, Mounds View, fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required employer payment be deducted from the next subsequent payment or payments of state education aid to the school district be transmitted to the teachers retirement association.

Subd. 8. [INDEPENDENT SCHOOL DISTRICT NO. 709, DULUTH, TEACHER.] (a) Notwithstanding any provision of Minnesota Statutes, chapter 354A, the articles of incorporation of the Duluth teachers retirement fund association, or the Duluth teachers retirement fund association bylaws to the contrary, an eligible person described in paragraph (b) is entitled to purchase allowable service credit in the Duluth teachers retirement fund association for the periods described in paragraph (c) by paying the amount specified in Minnesota Statutes, section 356.55, subdivision 2.

(b) An eligible person for purposes of paragraph (a) is a person who was born on October 29, 1942, was first employed by independent school district No. 709, Duluth, on September 7, 1966, was granted a maternity leave that began on February 26, 1968, was employed by independent school district No. 709, Duluth, on a less-than-full-time basis during the 1970-1971 and 1971-1972 school years, and was employed on a full-time contract basis from September 4, 1972, through the 1997-1998 school year.

(c) The period for service credit purchase is any portion of the period February 26, 1968, to September 4, 1972, that was not previously credited as allowable service by the Duluth teachers retirement fund association, but not to exceed one year of service credit for any school year.

Subd. 9. [INDEPENDENT SCHOOL DISTRICT NO. 200, HASTINGS, TEACHER.] (a) Notwithstanding Minnesota Statutes, section 354.094, an eligible person described in paragraph (b) is entitled to purchase allowable and formula service credit in the teachers retirement association for the period described in paragraph (c) by paying the amount specified in Minnesota Statutes, section 356.55, subdivision 2.

(b) An eligible person for purposes of paragraph (a) is a person who was born on December 17, 1941, was initially employed by independent school district No. 200, Hastings, and was first granted an extended leave of absence for the 1996-1997 school year.

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(d) Notwithstanding Minnesota Statutes, section 356.55, subdivision 5, the eligible person must pay, on or before September 1, 1998, an amount equal to the employee contribution rate or rates in effect during the prior service period applied to the actual salary rates in effect during the prior service period, plus annual compound interest at the rate of 8.5 percent from the date on which the contributions would have been made if made contemporaneous with the service period to the date on which the payment is actually made. Independent school district No. 200, Hastings, must pay the balance of the prior service credit purchase payment amount calculated under Minnesota Statutes, section 356.55, within 30 days of the payment by the eligible person. The executive director of the teachers retirement association must notify the superintendent of independent school district No. 200, Hastings, of its payment amount and payment due date if the eligible person makes the required payment.

(e) If independent school district No. 200, Hastings, fails to pay its portion of the required prior service credit purchase payment amount, the executive director may notify the commissioner of finance of that fact and the commissioner of finance may order that the required employer payment be deducted from the next subsequent payment or payments of state education aid to the school district be transmitted to the teachers retirement association.

Sec. 4. [EFFECTIVE DATE.]

Sections 1, 2, and 3 are effective on the day following final enactment.

JUDGES RETIREMENT PLAN CONTRIBUTION MODIFICATIONS

Section 1. Minnesota Statutes 1997 Supplement, section 15A.083, subdivision 5, is amended to read:

Subd. 5. [TAX COURT.] The salary of a judge of the tax court is ~~the same as~~ 98.52 percent of the salary for a district court judge. The salary of the chief tax court judge is ~~the same as~~ 98.52 percent of the salary for a chief district court judge.

Sec. 2. Minnesota Statutes 1997 Supplement, section 15A.083, subdivision 6a, is amended to read:

Subd. 6a. [ADMINISTRATIVE LAW JUDGE; SALARIES.] The salary of the chief administrative law judge is ~~the same as~~ 98.52 percent of the salary of a district court judge. The salaries of the assistant chief administrative law judge and administrative law judge supervisors are 95 93.60 percent of the salary of a district court judge. The salary of an administrative law judge employed by the office of administrative hearings is 90 88.67 percent of the salary of a district court judge as set under section 15A.082, subdivision 3.

Sec. 3. Minnesota Statutes 1997 Supplement, section 15A.083, subdivision 7, is amended to read:

Subd. 7. [WORKERS' COMPENSATION COURT OF APPEALS AND COMPENSATION JUDGES.] Salaries of judges of the workers' compensation court of appeals are ~~the same as~~ 98.52 percent of the salary for district court judges. The salary of the chief judge of the workers' compensation court of appeals is ~~the same as~~ 98.52 percent of the salary for a chief district court judge. Salaries of compensation judges are 90 88.67 percent of the salary of district court judges. The chief workers' compensation settlement judge at the department of labor and industry may be paid an annual salary that is up to five percent greater than the salary of workers' compensation settlement judges at the department of labor and industry.

Sec. 4. Minnesota Statutes 1996, section 490.123, subdivision 1a, is amended to read:

Subd. 1a. [MEMBER CONTRIBUTION RATES.] (a) A judge who is covered by the federal old age, survivors, disability, and health insurance program shall contribute to the fund from each salary payment a sum equal to ~~6.27~~ 8.00 percent of salary.

(b) A judge not so covered shall contribute to the fund from each salary payment a sum equal to 8.15 percent of salary.

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Sec. 5. Minnesota Statutes 1996, section 490.123, subdivision 1b, is amended to read:

Subd. 1b. [EMPLOYER CONTRIBUTION RATE.] The employer contribution rate on behalf of a judge is 22 20.5 percent of salary.

The employer contribution must be paid by the state court administrator and is payable at the same time as member contributions under subdivision 1a are remitted.

Sec. 6. Laws 1997, Second Special Session chapter 3, section 16, is amended to read:

Sec. 16. [SALARIES OF CONSTITUTIONAL OFFICERS, LEGISLATORS, AND JUDGES.]

(a) The salaries of constitutional officers are increased by 2.5 percent effective July 1, 1997, and by 2.5 percent effective January 1, 1998.

(b) The salaries of legislators are increased by 5.0 percent effective January 4, 1999.

(c) The salaries of the judges of the supreme court, court of appeals, and district court are increased by 4.0 percent effective July 1, 1997, ~~and~~ by 5.0 percent effective January 1, 1998, and by 1.5 percent effective July 1, 1998.

(d) Effective July 1, 1999, the salaries of judges of the supreme court, court of appeals, and district court are increased by the average of the general salary adjustments for state employees in fiscal year 1998 provided by negotiated collective bargaining agreements or arbitration awards ratified by the legislature in the 1998 legislative session.

(e) Effective January 1, 2000, the salaries of judges of the supreme court, court of appeals, and district court are increased by the average of the general salary adjustments for state employees in fiscal year 1999 provided by negotiated collective bargaining agreements or arbitration awards ratified by the legislature in the 1998 legislative session.

(f) The commissioner of employee relations shall calculate the average of the general salary adjustments provided by negotiated collective bargaining agreements or arbitration awards ratified by the legislature in the 1998 legislative session. Negotiated collective bargaining agreements or arbitration awards that do not include general salary adjustments may not be included in these calculations. The commissioner shall weigh the general salary adjustments by the number of full-time equivalent employees covered by each agreement or arbitration award. The commissioner shall calculate the average general salary adjustment for each fiscal year covered by the agreements or arbitration awards. The results of these calculations must be expressed as percentages, rounded to the nearest one-tenth of one percent. The commissioner shall calculate the new salaries for the positions listed in paragraphs (d) and (e) using the applicable percentages from the calculations in this paragraph and report them to the speaker of the house, the president of the senate, the chief justice of the supreme court, and the governor.

Sec. 7. [SALARY INCREASE CONDITIONED ON MEMBER CONTRIBUTION INCREASE.]

(a) The increase in judicial salaries under section 6 is not applicable to a judge if the member contribution rate increase under section 4, paragraph (a), is not also deducted from the salary of the judge.

(b) The increase in judicial salaries under section 6 also applies to judges who are not covered by the federal old age, survivors, disability, and health insurance program.

Sec. 8. [EFFECTIVE DATE.]

Sections 1 to 7 are effective on July 1, 1998.

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UNCLASSIFIED STATE EMPLOYEE PENSION PLAN

MODIFICATIONS

Section 1. Minnesota Statutes 1996, section 352D.12, is amended to read:

352D.12 [TRANSFER OF PRIOR SERVICE CONTRIBUTIONS.]

(a) An employee who is a participant in the unclassified program and who has prior service credit in a covered plan under chapters 3A, 352, 352C, 353, 354, 354A, and 422A may, within the time limits specified in this section, elect to transfer to the unclassified program prior service contributions to one or more of those plans. Participants with six or more years of prior service credit in a plan governed by chapter 3A or 352C on July 1, 1998, may not transfer prior service contributions. Participants with less than six years of prior service credit in a plan governed by chapter 3A or 352C on July 1, 1998, must be contributing to the unclassified plan on or after January 5, 1999, in order to transfer prior contributions.

(b) For participants with prior service credit in a plan governed by chapter 352, 353, 354, 354A, or 422A, "prior service contributions" means the accumulated employee and equal employer contributions with interest at an annual rate of 8.5 percent compounded annually, based on fiscal year balances. For participants with less than six years of service credit as of July 1, 1998, and with prior service credit in a plan governed by chapter 3A or 352C, "prior service contributions" means an amount equal to twice the amount of the accumulated member contributions plus annual compound interest at the rate of 8.5 percent, computed on fiscal year balances.

(c) If a participant has taken a refund from a ~~fund~~ retirement plan listed in this section, the participant may repay the refund to that ~~fund~~ plan, notwithstanding any restrictions on repayment to that ~~fund~~ plan, plus 8.5 percent interest compounded annually and have the accumulated employee and equal employer contributions transferred to the unclassified program with interest at an annual rate of 8.5 percent compounded annually based on fiscal year balances. If a person repays a refund and subsequently elects to have the money transferred to the unclassified program, the repayment amount, including interest, is added to the fiscal year balance in the year which the repayment was made.

(d) A participant electing to transfer prior service contributions credited to a retirement plan governed by chapter 352, 353, 354, 354A, or 422A as provided under this section must complete the application for the transfer and repay any refund within one year of ~~July 1, 1985 or~~ the commencement of the employee's participation in the unclassified program~~, whichever is later~~. A participant electing to transfer prior service contributions credited to a retirement plan governed by chapter 3A or 352C as provided under this section must complete the application for the transfer and repay any refund between January 5, 1999, and June 1, 1999, if the employee commenced participation in the unclassified program before January 5, 1999, or within one year of the commencement of the employee's participation in the unclassified program if the employee commenced participation in the unclassified program after January 4, 1999.

Sec. 2. [FUNDING.]

Money appropriated in Laws 1997, chapter 202, article 1, section 31, may be used to make transfers of funds on behalf of legislators and constitutional officers under section 1.

Sec. 3. [EFFECTIVE DATE.]

Sections 1 and 2 are effective July 1, 1998.

LOCAL POLICE AND FIRE RELIEF ASSOCIATION

PENSION CHANGES

Section 1. [COLUMBIA HEIGHTS VOLUNTEER FIRE DEPARTMENT RELIEF ASSOCIATION; INCORPORATION AND PLAN RESTRUCTURING.]

Subdivision 1. [ORGANIZATION AND PLAN RESTRUCTURING.] Notwithstanding the provisions of Laws 1977, chapter 374, sections 38 to 60, as amended, the entity currently known as the "Columbia Heights fire department relief association, volunteer division" shall become incorporated under Minnesota Statutes, chapter 317A, and be known as the

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"Columbia Heights volunteer fire department relief association." The new entity will be governed by Minnesota Statutes, chapters 69, 317A, 356, 356A, and 424A, and any other laws applicable to volunteer fire department relief associations. The Columbia Heights volunteer fire department relief association may adopt the existing bylaws of the "Columbia Heights fire department relief association, volunteer division"; provided, however, that the bylaws must provide that future benefits payable to any member of the association are defined contribution lump sum service pensions under Minnesota Statutes, section 424A.02, subdivision 4.

Subd. 2. [BOARD RESTRUCTURING.] The board must be reconstituted in conformance with Minnesota Statutes, section 424A.04 within 90 days after the effective date of this section.

Sec. 2. [MINNEAPOLIS FIRE; OPTIONAL ANNUITY EXTENSION TO CERTAIN SURVIVORS.]

(a) Notwithstanding Laws 1997, chapter 233, article 4, section 18, the surviving spouse of any service pensioner or disability benefit recipient of the Minneapolis fire department relief association who died between July 1, 1997, and October 1, 1997, is entitled to a surviving spouse benefit equal to the 100 percent joint and survivor annuity amount which the decedent would have been eligible to select if the decedent had been entitled and able to select an optional annuity form on the date of death.

(b) The benefit under paragraph (a) is in lieu of any other survivor benefit payable from the Minneapolis fire department relief association.

(c) The benefit under this section accrues as of October 1, 1997, and is payable on the first day of the month next following the effective date of this section. The initial benefit payment must include the increase amounts retroactive to October 1, 1997.

Sec. 3. Laws 1977, chapter 61, section 6, as amended by Laws 1981, chapter 68, section 39, is amended to read:

Sec. 6. [FINANCIAL REQUIREMENTS OF THE TRUST FUND.]

~~Commencing January 1, 1978,~~ (a) The city of Eveleth shall provide by annual levy an amount sufficient to pay ~~the greater of either (a)~~ an amount which when added to the investment income of the trust fund is sufficient to pay the benefits provided under the trust fund for the succeeding year as certified by the board of trustees of the trust fund.; or (b) an amount equal to the level annual dollar amount sufficient to amortize the unfunded accrued liability of the trust fund by December 31, 1991, as determined in accordance with Minnesota Statutes, Sections 69.77, 356.215 and 356.216, in the latest actuarial valuation.

The annual levy under this section shall not be included in any limitation as to rate or amount set by charter and shall be a special levy for purposes of Minnesota Statutes, Section 275.50, Subdivision 5. All revenues generated by the levy required under this section shall be transferred to the trust fund.

(b) If the city of Eveleth fails to contribute the amount required in paragraph (a) in a given year, no postretirement adjustment granted under Laws 1995, chapter 262, article 10, section 1, or Laws 1997, chapter 241, article 2, section 19, is payable in the following year.

Sec. 4. Laws 1995, chapter 262, article 10, section 1, is amended to read:

Section 1. [EVELETH POLICE AND FIREFIGHTERS; BENEFIT INCREASE.]

Notwithstanding any general or special law to the contrary, in addition to the current pensions and other retirement benefits payable, the pensions and retirement benefits payable to retired police officers and firefighters and their surviving spouses by the Eveleth police and fire trust fund are increased by $100 a month. Increases are retroactive to January 1, 1995. If the city of Eveleth fails to contribute an amount required in a given year sufficient to amortize the unfunded actuarial accrued liability of the police and fire trust fund by December 31, 1998, the increases under this section in the following year are not payable.

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Sec. 5. [EFFECTIVE DATE.]

(a) Section 1 is effective the day after approval by the Columbia Heights city council and compliance with Minnesota Statutes, section 645.021.

(b) Section 2 is effective upon approval by the city council of the city of Minneapolis and compliance with Minnesota Statutes, section 645.021, subdivision 3.

ACTUARIAL SERVICES CONTRACT-RELATED CHANGES

Section 1. Minnesota Statutes 1997 Supplement, section 3.85, subdivision 11, is amended to read:

Subd. 11. [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The commission shall contract with an established actuarial consulting firm to conduct annual actuarial valuations for the retirement plans named in paragraph (b). The contract must include provisions for performing cost analyses of proposals for changes in benefit and funding policies.

(b) The contract for actuarial valuation must include the following retirement plans:

(1) the teachers retirement plan, teachers retirement association;

(2) the general state employees retirement plan, Minnesota state retirement system;

(3) the correctional employees retirement plan, Minnesota state retirement system;

(4) the state patrol retirement plan, Minnesota state retirement system;

(5) the judges retirement plan, Minnesota state retirement system;

(6) the Minneapolis employees retirement plan, Minneapolis employees retirement fund;

(7) the public employees retirement plan, public employees retirement association;

(8) the public employees police and fire plan, public employees retirement association;

(9) the Duluth teachers retirement plan, Duluth teachers retirement fund association;

(10) the Minneapolis teachers retirement plan, Minneapolis teachers retirement fund association;

(11) the St. Paul teachers retirement plan, St. Paul teachers retirement fund association;

(12) the legislators retirement plan, Minnesota state retirement system; and

(13) the elective state officers retirement plan, Minnesota state retirement system.

(c) The contract must specify completion of annual actuarial valuation calculations on a fiscal year basis with their contents as specified in section 356.215, and the standards for actuarial work adopted by the commission.

The contract must specify completion of annual experience data collection and processing and a quadrennial published experience study for the plans listed in paragraph (b), clauses (1), (2), and (7), as provided for in the standards for actuarial work adopted by the commission. The experience data collection, processing, and analysis must evaluate the following:

(1) individual salary progression;

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(2) rate of return on investments based on current asset value;

(d) The actuary retained by the commission shall annually prepare a report to the legislature, including the commentary on the actuarial valuation calculations for the plans named in paragraph (b) and summarizing the results of the actuarial valuation calculations. The commission-retained actuary shall include with the report the actuary's recommendations concerning the appropriateness of the support rates to achieve proper funding of the retirement funds by the required funding dates. The commission-retained actuary shall, as part of the quadrennial published experience study, include recommendations to the legislature on the appropriateness of the actuarial valuation assumptions required for evaluation in the study.

(e) If the actuarial gain and loss analysis in the actuarial valuation calculations indicates a persistent pattern of sizable gains or losses, as directed by the commission, the actuary retained by the commission shall prepare a special experience study for a plan listed in paragraph (b), clause (3), (4), (5), (6), (8), (9), (10), (11), (12), or (13), in the manner provided for in the standards for actuarial work adopted by the commission.

(f) The term of the contract between the commission and the actuary retained by the commission is ~~two~~ four years~~, plus not to exceed two one-year extensions before competitive bidding~~. The contract is subject to competitive bidding procedures as specified by the commission.

Sec. 2. Minnesota Statutes 1997 Supplement, section 356.215, subdivision 2, is amended to read:

Subd. 2. [REQUIREMENTS.] (a) It is the policy of the legislature that it is necessary and appropriate to determine annually the financial status of tax supported retirement and pension plans for public employees. To achieve this goal, the legislative commission on pensions and retirement shall have prepared by the actuary retained by the commission annual actuarial valuations of the retirement plans enumerated in section 3.85, subdivision 11, paragraph (b), quadrennial experience studies of the retirement plans enumerated in section 3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7), and, two years after each set of quadrennial experience studies, quadrennial projection valuations of at least one of the retirement plans enumerated in section 3.85, subdivision 11, paragraph (b), ~~clauses (1), (2), and (7), and of any other retirement plan enumerated in section 3.85, subdivision 11, paragraph (b),~~ for which it determines that the analysis is may be beneficial. The governing or managing board or administrative officials of each public pension and retirement fund or plan enumerated in section 356.20, subdivision 2, clauses (9), (10), and (12), shall have prepared by an approved actuary annual actuarial valuations of their respective funds as provided in this section. This requirement also applies to any fund that is the successor to any organization enumerated in section 356.20, subdivision 2, or to the governing or managing board or administrative officials of any newly formed retirement fund or association operating under the control or supervision of any public employee group, governmental unit, or institution receiving a portion of its support through legislative appropriations, and any local police or fire fund coming within the provisions of section 356.216.

(b) ~~The~~ A quadrennial projection ~~valuations~~ valuation required under paragraph (a) ~~are~~ is intended to serve as an additional analytical tool with which policy makers may assess the future funding status of public plans through forecasting and testing various potential outcomes over time if certain plan assumptions or valuation methods were to be modified. In consultation with the executive director of the legislative commission on pensions and retirement, the retirement fund directors, the state economist, the state demographer, the commissioner of finance, and the commissioner of employee relations, the actuary retained by the legislative commission on pensions and retirement shall perform the quadrennial projection valuations, testing future implications for plan funding by modifying assumptions and methods currently in place. The commission-retained actuary shall provide advice to the commission as to the periods over which such projections should be made, the nature and scope of the scenarios to be analyzed, and the measures of funding status to be employed, and shall report the results of these analyses in the same manner as for quadrennial experience studies.

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Sec. 3. [EFFECTIVE DATE.]

Sections 1 and 2 are effective on the day following final enactment.

PERA CORRECTIONAL EMPLOYEE DISABILITY COVERAGE

Section 1. Minnesota Statutes 1997 Supplement, section 353.27, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE CONTRIBUTION.] (a) Except as provided in paragraph (b), the employee contribution shall be an amount ~~(a)~~ (1) for a "basic member" equal to 8.75 percent of total salary; and ~~(b)~~ (2) for a "coordinated member" equal to 4.75 percent of total salary.

(b) For local government correctional service employees, as defined in section 353.33, subdivision 3a, the employee contribution is an amount equal to 4.96 percent of total salary.

(c) These contributions must be made by deduction from salary in the manner provided in subdivision 4. Where any portion of a member's salary is paid from other than public funds, such member's employee contribution must be based on the total salary received from all sources.

Sec. 2. Minnesota Statutes 1996, section 353.27, subdivision 3, is amended to read:

Subd. 3. [EMPLOYER CONTRIBUTION.] (a) Except as provided in paragraph (b), the employer contribution shall be an amount equal to the employee contribution under subdivision 2.

(b) On behalf of local government correctional service employees, as defined in section 353.33, subdivision 3a, the employer contribution is an amount equal to 5.06 percent of total salary.

(c) This contribution shall be made from funds available to the employing subdivision by the means and in the manner provided in section 353.28.

Sec. 3. Minnesota Statutes 1996, section 353.33, subdivision 3a, is amended to read:

Subd. 3a. [CORRECTIONAL EMPLOYEE DISABILITY BENEFIT COVERAGE.] (a) For purposes of the disability benefit coverage provided under this subdivision, a local government correctional service employee is a person who:

(1) is an "essential employee" as defined in section 179A.03, subdivision 7;

(2) is employed in a county-administered jail or correctional facility or in a regional correctional facility administered by multiple counties;

(3) spends at least 75 percent of the employee's working time in direct contact with persons confined in the jail or facility, as certified by the employer to the executive director of the association before August 1, 1998, or within 30 days of employment in the qualifying county employment position, whichever is later; and

(4) is a "public employee" as defined in section 353.01, and is not a member of the public employees retirement association police and fire fund.

(b) A local government correctional employee who becomes disabled and physically or mentally unfit to perform the duties of the position as a direct result of an injury, sickness, or other disability incurred in or arising out of any act of duty that renders the employee physically or mentally unable to perform the employee's correctional facility duties, is entitled to a disability benefit based on covered service under this chapter only in an amount equal to 45 percent of the average salary defined in section 353.29, subdivision 2, plus an additional 1.8 percent for each year of service as a correctional service employee after July 1, 1998, in excess of 25 years.

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(c) If the eligible employee is entitled to receive a disability benefit as provided in paragraph (b) and has credit for less covered correctional service than the length of service upon which the correctional disability benefit is based, and also has credit for regular plan service, the employee is entitled to a disability benefit or deferred retirement annuity based on the regular plan service only for the service that, when combined with the correctional service, exceeds the number of years on which the correctional disability benefit is based. The disabled employee who also has credit for regular plan service must in all respects qualify under section 353.33 to be entitled to receive a disability benefit based on the regular plan service, except that the service may be combined to satisfy length of service requirements. Any deferred annuity to which the employee may be entitled based on regular plan service must be augmented as provided in section 353.71 while the employee is receiving a disability benefit under this subdivision.

Subd. 3b. [OPTIONAL ANNUITY ELECTION.] A disabled member may elect to receive the normal disability benefit or an optional annuity under section 353.30, subdivision 3. The election of an optional annuity must be made prior to the commencement of payment of the disability benefit. The optional annuity must begin to accrue on the same date as provided for the disability benefit.

(1) If a person who is not the spouse of a member is named as beneficiary of the joint and survivor optional annuity, the person is eligible to receive the annuity only if the spouse, on the disability application form prescribed by the executive director, permanently waives the surviving spouse benefits under sections 353.31, subdivision 1, and 353.32, subdivision 1a. If the spouse of the member refuses to permanently waive the surviving spouse coverage, the selection of a person other than the spouse of the member as a joint annuitant is invalid.

(2) If the spouse of the member permanently waives survivor coverage, the dependent children, if any, continue to be eligible for survivor benefits under section 353.31, subdivision 1, including the minimum benefit in section 353.31, subdivision 1a. The designated optional annuity beneficiary may draw the monthly benefit; however, the amount payable to the dependent child or children and joint annuitant must not exceed the 70 percent maximum family benefit under section 353.31, subdivision 1a. If the maximum is exceeded, the benefit of the joint annuitant must be reduced to the amount necessary so that the total family benefit does not exceed the 70 percent maximum family benefit amount.

(3) If the spouse is named as the beneficiary of the joint and survivor optional annuity, the spouse may draw the monthly benefits; however, the amount payable to the dependent child or children and the joint annuitant must not exceed the 70 percent maximum family benefit under section 353.31, subdivision 1a. If the maximum is exceeded, each dependent child will receive ten percent of the member's specified average monthly salary, and the benefit to the joint annuitant must be reduced to the amount necessary so that the total family benefit does not exceed the 70 percent maximum family benefit amount. The joint and survivor optional annuity must be restored to the surviving spouse, plus applicable postretirement adjustments under section 356.41, as the dependent child or children become no longer dependent under section 353.01, subdivision 15.

Sec. 4. [EFFECTIVE DATE.]

Sections 1 and 2 are effective the first full pay period beginning after June 30, 1998. Section 3 is effective July 1, 1998, and applies to disabilities that occur after June 30, 1998."

"A bill for an act relating to retirement; various retirement plans; adjusting pension coverage for certain privatized public hospital employees; providing for voluntary deduction of health insurance premiums from certain annuities; providing for increased survivor benefits relating to certain public employees murdered in the line of duty; authorizing certain service credit purchases; specifying prior service credit purchase payment amount determination procedures increasing salaries of various judges; modifying other judicial salaries; modifying the judges retirement plan member and employer contribution rates; authorizing the transfer of certain prior retirement contributions from the legislators retirement plan and from the elective state officers retirement plan; creating a contribution transfer account in the general fund of the state; appropriating money; reformulating the Columbia Heights volunteer firefighters relief association plan as a defined contribution plan under the general volunteer fire law; restructuring the Columbia Heights volunteer firefighter relief association board; modifying various higher education retirement plan provisions; modifying administrative expense provisions for various public pension plans; expanding the teacher retirement plans part-time teaching positions eligible

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9712

to participate in the qualified full-time service credit for part-time teaching service program; making certain Minneapolis fire department relief association survivor benefit options retroactive; providing increased disability benefit coverage for certain local government correctional facility employees; increasing local government correctional employee and employer contribution rates; providing increased survivor benefits to certain Minneapolis employee retirement fund survivors; authorizing certain Hennepin county regional park employees to change retirement plan membership; modifying benefit increase provision for Eveleth police and firefighters; modifying the length of the actuarial services contract of the legislative commission on pensions and retirement; modifying the scope of quadrennial projection valuations; providing special disability coverage for local correctional employees; requiring report on tax sheltered annuity for higher education employees; amending Minnesota Statutes 1996, sections 3A.13; 11A.17, subdivision 2; 136F.45, by adding subdivisions; 136F.48; 352.96, subdivision 4; 352D.09, subdivision 7; 352D.12; 353.27, subdivision 3; 353.33, subdivision 3a; 353D.05, subdivision 3; 354.445; 354.66, subdivisions 2 and 3; 354A.094, subdivisions 2 and 3; 354B.23, by adding a subdivision; 354C.12, by adding a subdivision; 383B.52; 422A.23, subdivision 2; and 490.123, subdivisions 1a and 1b; Minnesota Statutes 1997 Supplement, sections 3.85, subdivision 11; 15A.083, subdivisions 5, 6a, and 7; 353.27, subdivision 2; 354B.25, subdivisions 1a and 5; 354C.12, subdivision 4; and 356.215, subdivision 2; Laws 1977, chapter 61, section 6, as amended; Laws 1995, chapter 262, article 10, section 1; Laws 1997, Second Special Session chapter 3, section 16; proposing coding for new law in Minnesota Statutes, chapter 356; repealing Minnesota Statutes 1996, sections 11A.17, subdivisions 10a and 14; and 352D.09, subdivision 8; Minnesota Statutes 1997 Supplement, section 136F.45, subdivision 3."

We request adoption of this report and repassage of the bill.

House Conferees: Phyllis Kahn, Richard H. Jefferson and Harry Mares.

Senate Conferees: Steven Morse, James P. Metzen and Roy W. Terwilliger.

Kahn moved that the report of the Conference Committee on H. F. No. 2970 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 2970, A bill for an act relating to retirement; various retirement plans; adjusting pension coverage for certain privatized public hospital employees; providing for voluntary deduction of health insurance premiums from certain annuities; providing for increased survivor benefits relating to certain public employees murdered in the line of duty; authorizing certain service credit purchases; specifying prior service credit purchase payment amount determination procedures increasing salaries of various judges; modifying other judicial salaries; modifying the judges retirement plan member and employer contribution rates; authorizing the transfer of certain prior retirement contributions from the legislators retirement plan and from the elective state officers retirement plan; creating a contribution transfer account in the general fund of the state; appropriating money; reformulating the Columbia Heights volunteer firefighters relief association plan as a defined contribution plan under the general volunteer fire law; restructuring the Columbia Heights volunteer firefighter relief association board; modifying various higher education retirement plan provisions; modifying administrative expense provisions for various public pension plans; expanding the teacher retirement plans part-time teaching positions eligible to participate in the qualified full-time service credit for part-time teaching service program; making certain Minneapolis fire department relief association survivor benefit options retroactive; providing increased disability benefit coverage for certain local government correctional facility employees; increasing local government correctional employee and employer contribution rates; providing increased survivor benefits to certain Minneapolis employee retirement fund survivors; authorizing certain Hennepin county regional park employees to change retirement plan membership; modifying benefit increase provision for Eveleth police and firefighters; modifying the length of the actuarial services contract of the legislative commission on pensions and retirement; modifying the scope of quadrennial projection valuations; amending Minnesota Statutes 1996, sections 3A.13; 136F.45, by adding a subdivision; 136F.48; 352.96, subdivision 4; 352D.09, subdivision 7; 352D.12; 353D.05, subdivision 3; 354.445; 354.66, subdivisions 2 and 3; 354A.094, subdivisions 2 and 3; 354B.23, by adding a subdivision; 354C.12, by adding a subdivision; 383B.52; 422A.23, subdivision 2; and 490.123, subdivisions 1a and 1b; Minnesota Statutes 1997 Supplement, sections 3.85, subdivision 11; 15A.083, subdivisions 5, 6a, and 7; 354B.25, subdivisions 1a and 5; 354C.12, subdivision 4; and 356.215, subdivision 2; Laws 1995, chapter 262, article 10, section 1; and Laws 1997, Second Special Session chapter 3, section 16; proposing new law for coding in Minnesota Statutes, chapter 356; repealing Minnesota Statutes 1996, sections 11A.17, subdivisions 10a and 14; and 352D.09, subdivision 8; Minnesota Statutes 1997 Supplement, section 136F.45, subdivision 3.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9713

The question was taken on the repassage of the bill and the roll was called.

Pursuant to rule 2.05, Speaker pro tempore Opatz excused Pawlenty from voting on H. F. No. 2970, as amended by Conference.

Leighton moved that those not voting be excused from voting. The motion prevailed.

There were 89 yeas and 42 nays as follows:

Anderson, I. Evans Jennings Mares Ozment Solberg
Bakk Farrell Johnson, A. Mariani Paymar Stanek
Bettermann Folliard Johnson, R. Marko Pelowski Swenson, H.
Biernat Garcia Juhnke McCollum Peterson Tingelstad
Bishop Goodno Kahn McGuire Pugh Trimble
Carlson Greenfield Kalis Milbert Rest Tuma
Chaudhary Greiling Kelso Mullery Rhodes Tunheim
Clark, K. Gunther Koskinen Munger Rostberg Wagenius
Dawkins Hasskamp Kubly Murphy Rukavina Weaver
Dehler Hausman Larsen Ness Schumacher Wejcman
Delmont Hilty Leighton Nornes Sekhon Wenzel
Dempsey Holsten Lieder Olson, E. Skare Winter
Dorn Huntley Long Opatz Skoglund Wolf
Entenza Jaros Macklin Orfield Slawik Spk. Carruthers
Erhardt Jefferson Mahon Otremba, M. Smith

Abrams Daggett Knight McElroy Reuter Tomassoni
Anderson, B. Davids Knoblach Molnau Rifenberg Tompkins
Boudreau Erickson Kraus Mulder Seagren Van Dellen
Bradley Finseth Krinkie Olson, M. Seifert Vandeveer
Broecker Haas Kuisle Osskopp Stang Westfall
Clark, J. Harder Leppik Osthoff Sviggum Westrom
Commers Kielkucki Lindner Paulsen Sykora Workman

The bill was repassed, as amended by Conference, and its title agreed to.

The Speaker resumed the Chair.

MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 2351.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9714

CONFERENCE COMMITTEE REPORT ON S. F. NO. 2351

A bill for an act relating to natural resources; adding to and deleting from state parks; creating a new recreation area; providing for a state park permit exemption; amending Minnesota Statutes 1996, section 85.054, by adding a subdivision.

We, the undersigned conferees for S. F. No. 2351, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendment and that S. F. No. 2351 be further amended as follows:

Page 5, delete lines 20 to 26 and insert:

"Subd. 3. [ADMINISTRATION.] The commissioner of natural resources shall administer the area according to Minnesota Statutes, section 86A.05, subdivision 3, subject to existing rules and regulations for state recreation areas and shall allow hunting in the area. The commissioner may not adopt new rules or regulations that would limit or restrict recreational uses of Garden Island as a state recreation area without legislative approval. The commissioner shall hold a public meeting in Lake of the Woods county in conjunction with developing a management plan for the area."

We request adoption of this report and repassage of the bill.

Senate Conferees: Jim Vickerman, LeRoy A. Stumpf and Pat Pariseau.

House Conferees: Henry J. Kalis, Tom Osthoff and Kathleen Sekhon.

Kalis moved that the report of the Conference Committee on S. F. No. 2351 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 2351, A bill for an act relating to natural resources; adding to and deleting from state parks; creating a new recreation area; providing for a state park permit exemption; amending Minnesota Statutes 1996, section 85.054, by adding a subdivision.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 121 yeas and 11 nays as follows:

Abrams Erhardt Johnson, R. Milbert Reuter Tompkins
Anderson, I. Erickson Juhnke Molnau Rhodes Trimble
Bakk Evans Kahn Mulder Rifenberg Tuma
Bettermann Farrell Kalis Mullery Rostberg Tunheim
Biernat Finseth Kinkel Munger Rukavina Van Dellen
Bishop Folliard Koskinen Murphy Schumacher Vandeveer
Boudreau Garcia Kraus Ness Seagren Wagenius
Bradley Goodno Kubly Nornes Seifert Weaver
Broecker Greenfield Larsen Olson, E. Sekhon Wejcman
Carlson Greiling Leighton Opatz Skare Wenzel
Chaudhary Gunther Leppik Orfield Skoglund Westfall
Clark, J. Haas Lieder Osthoff Slawik Westrom
Clark, K. Harder Long Otremba, M. Smith Winter
Commers Hausman Macklin Ozment Solberg Wolf
Daggett Hilty Mahon Paulsen Stanek Workman
Davids Holsten Mares Pawlenty Stang Spk. Carruthers
Dawkins Huntley Mariani Paymar Sviggum
Delmont Jaros Marko Pelowski Swenson, H.
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9715
Dempsey Jefferson McCollum Peterson Sykora
Dorn Jennings McElroy Pugh Tingelstad
Entenza Johnson, A. McGuire Rest Tomassoni

Anderson, B. Hasskamp Knight Krinkie Lindner Osskopp
Dehler Kielkucki Knoblach Kuisle Olson, M.

The bill was repassed, as amended by Conference, and its title agreed to.

CALL OF THE HOUSE LIFTED

Kahn moved that the call of the House be suspended. The motion prevailed and it was so ordered.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 41.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

CONFERENCE COMMITTEE REPORT ON S. F. NO. 41

A bill for an act proposing an amendment to the Minnesota Constitution, article 1, by adding a section; affirming the right of citizens to hunt or take game and fish.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9716

We, the undersigned conferees for S. F. No. 41, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and that S. F. No. 41 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. [CONSTITUTIONAL AMENDMENT PROPOSED.]

An amendment to the Minnesota Constitution, article XIII, by adding a section, is proposed to the people. If the amendment is adopted, the section will read as follows:

Sec. 12. Hunting and fishing and the taking of game and fish are a valued part of our heritage that shall be forever preserved for the people and shall be managed by law and regulation for the public good.

Sec. 2. [SUBMISSION TO VOTERS.]

The proposed amendment must be submitted to the people at the 1998 general election. The question submitted shall be:

"Shall the Minnesota Constitution be amended to affirm that hunting and fishing and the taking of game and fish are a valued part of our heritage that shall be forever preserved for the people and shall be managed by law and regulation for the public good?

Yes .......

No ........""

"A bill for an act proposing an amendment to the Minnesota Constitution, article XIII, by adding a section; affirming that hunting and fishing and the taking of game and fish are a valued part of our heritage."

We request adoption of this report and repassage of the bill.

Senate Conferees: Bob Lessard, Dallas C. Sams, Steven G. Novak, Pat Pariseau and Dan Stevens.

House Conferees: Bob Milbert, Mark Holsten, Robert Leighton, Betty McCollum and Wesley J. "Wes" Skoglund.

Milbert moved that the report of the Conference Committee on S. F. No. 41 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 41, A bill for an act proposing an amendment to the Minnesota Constitution, article 1, by adding a section; affirming the right of citizens to hunt or take game and fish.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

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The question was taken on the repassage of the bill and the roll was called. There were 124 yeas and 7 nays as follows:

Abrams Erhardt Kalis McCollum Peterson Sykora
Anderson, B. Erickson Kelso McElroy Pugh Tingelstad
Anderson, I. Evans Kielkucki McGuire Rest Tomassoni
Bakk Farrell Kinkel Milbert Reuter Tompkins
Bettermann Finseth Knight Molnau Rhodes Trimble
Bishop Folliard Knoblach Mulder Rifenberg Tuma
Boudreau Garcia Koskinen Mullery Rostberg Tunheim
Bradley Goodno Kraus Murphy Rukavina Van Dellen
Broecker Gunther Krinkie Ness Schumacher Vandeveer
Carlson Haas Kubly Nornes Seagren Wagenius
Chaudhary Harder Kuisle Olson, E. Seifert Weaver
Clark, J. Hasskamp Larsen Olson, M. Sekhon Wejcman
Commers Hilty Leighton Opatz Skare Wenzel
Daggett Holsten Leppik Orfield Skoglund Westfall
Davids Huntley Lieder Osskopp Slawik Westrom
Dawkins Jefferson Lindner Osthoff Smith Winter
Dehler Jennings Long Otremba, M. Solberg Wolf
Delmont Johnson, A. Macklin Ozment Stanek Workman
Dempsey Johnson, R. Mares Paulsen Stang Spk. Carruthers
Dorn Juhnke Mariani Pawlenty Sviggum
Entenza Kahn Marko Pelowski Swenson, H.

Biernat Greiling Hausman Jaros Mahon Munger
Paymar

The bill was repassed, as amended by Conference, and its title agreed to.

REPORT FROM THE COMMITTEE ON RULES AND

LEGISLATIVE ADMINISTRATION

Winter from the Committee on Rules and Legislative Administration, pursuant to rule 1.09, designated the following bills as Special Orders to be acted upon today:

S. F. Nos. 2346, 1006, 2498, 2082, 2712 and 1181.

SPECIAL ORDERS

S. F. No. 2346 was reported to the House.

Wejcman moved to amend S. F. No. 2346 as follows:

Pages 2 and 3, delete sections 2, 3, and 4

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Page 3, after line 28, insert:

"Minnesota Statutes 1996, section 418.20, is repealed."

Renumber the sections in sequence and correct internal references

The motion prevailed and the amendment was adopted.

S. F. No. 2346, A bill for an act relating to local government; adding a position to a list for certain purposes; establishing and providing the powers and duties of the midtown planning and coordination board; removing an age ceiling for new firefighters in Minneapolis; amending Laws 1969, chapter 937, section 1, subdivision 9a, as amended; repealing Laws 1959, chapter 213.

The bill was read for the third time, as amended, and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 125 yeas and 0 nays as follows:

Abrams Evans Juhnke McCollum Paymar Swenson, H.
Anderson, B. Farrell Kahn McElroy Pelowski Sykora
Anderson, I. Finseth Kalis McGuire Peterson Tingelstad
Bakk Folliard Kielkucki Milbert Pugh Tomassoni
Bettermann Garcia Kinkel Molnau Rest Tompkins
Biernat Goodno Knight Mulder Reuter Trimble
Boudreau Greenfield Knoblach Mullery Rhodes Tuma
Broecker Greiling Kraus Munger Rifenberg Tunheim
Carlson Gunther Krinkie Murphy Rostberg Van Dellen
Chaudhary Haas Kuisle Ness Rukavina Vandeveer
Clark, J. Harder Larsen Nornes Schumacher Wagenius
Clark, K. Hasskamp Leighton Olson, E. Seifert Weaver
Daggett Hausman Leppik Olson, M. Sekhon Wejcman
Davids Hilty Lieder Opatz Skare Wenzel
Dawkins Holsten Lindner Orfield Skoglund Westfall
Dehler Huntley Long Osskopp Slawik Westrom
Delmont Jaros Macklin Osthoff Smith Winter
Dorn Jefferson Mahon Otremba, M. Solberg Wolf
Entenza Jennings Mares Ozment Stanek Workman
Erhardt Johnson, A. Mariani Paulsen Stang Spk. Carruthers
Erickson Johnson, R. Marko Pawlenty Sviggum

The bill was passed, as amended, and its title agreed to.

S. F. No. 1006 was reported to the House.

McGuire moved that S. F. No. 1006 be continued on Special Orders. The motion prevailed.

S. F. No. 2498 was reported to the House.

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Bishop, Skoglund and Pugh moved to amend S. F. No. 2498 as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 241.67, subdivision 8, is amended to read:

Subd. 8. [COMMUNITY-BASED SEX OFFENDER PROGRAM EVALUATION PROJECT.] (a) For the purposes of this project, a sex offender is an adult who has been convicted, or a juvenile who has been adjudicated, for a sex offense or a sex-related offense ~~and has been sentenced to sex offender treatment as a condition of probation~~ which would require registration under section 244.166.

(b) The commissioner shall develop a long-term project to accomplish the following:

(1) provide follow-up information on each sex offender for a period of three years following the offender's completion of or termination from treatment;

(2) provide treatment programs in several geographical areas in the state;

(3) provide the necessary data to form the basis to recommend a fiscally sound plan to provide a coordinated statewide system of effective sex offender treatment programming; and

(4) provide an opportunity to local and regional governments, agencies, and programs to establish models of sex offender programs that are suited to the needs of that region.

(c) The commissioner shall provide the legislature with an annual report of the data collected and the status of the project by October 15 of each year, beginning in 1993.

(d) The commissioner shall establish an advisory task force consisting of county probation officers from community corrections act counties and other counties, court services providers, and other interested officials. The commissioner shall consult with the task force concerning the establishment and operation of the project.

Sec. 2. Minnesota Statutes 1996, section 241.67, is amended by adding a subdivision to read:

Subd. 9. [INFORMATION ON SEX OFFENDER TREATMENT.] (a) All sex offender treatment facilities that provide treatment to sex offenders who begin treatment as a condition of probation shall provide the commissioner relevant information on the treatment of those offenders as the commissioner requests for the purpose of this evaluation. The information disclosed to the commissioner shall only be reported in aggregate and that information must not be used to designate additional sanctions for any individual offender.

(b) All county corrections agencies or court services officers shall provide the commissioner information as requested regarding juveniles and adults as defined in subdivision 8, paragraph (a) for the purpose of completing the requirements of subdivision 8.

Sec. 3. Minnesota Statutes 1996, section 244.052, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] As used in this section:

(1) ~~"accepted for supervision" means accepted from another state under a reciprocal agreement under the interstate compact authorized by section 243.16;~~

~~(2)~~ "confinement" means confinement in a state correctional facility or a state treatment facility;

~~(3)~~ (2) "law enforcement agency" means the law enforcement agency having primary jurisdiction over the location where the offender expects to reside upon release; and

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~~(4)~~ (3) "sex offender" and "offender" mean a person who has been convicted of an offense for which registration under section 243.166 is required or a person who has been committed pursuant to a court commitment order under section 253B.185 or Minnesota Statutes 1992, section 526.10, regardless of whether the person was convicted of any offense.

Sec. 4. Minnesota Statutes 1997 Supplement, section 244.052, subdivision 3, is amended to read:

Subd. 3. [END-OF-CONFINEMENT REVIEW COMMITTEE.] (a) The commissioner of corrections shall establish and administer end-of-confinement review committees at each state correctional facility and at each state treatment facility where sex offenders are confined. The committees shall assess on a case-by-case basis:

~~(1)~~ the public risk posed by sex offenders who are about to be released from confinement~~; and~~.

~~(2) the public risk posed by sex offenders who are accepted from another state under a reciprocal agreement under the interstate compact authorized by section 243.16.~~

(b) Each committee shall be a standing committee and shall consist of the following members appointed by the commissioner:

(1) the chief executive officer or head of the correctional or treatment facility where the offender is currently confined, or that person's designee;

(2) a law enforcement officer;

(3) a treatment professional who is trained in the assessment of sex offenders;

(4) a caseworker experienced in supervising sex offenders; and

(5) ~~an employee of the department of corrections from the~~ a victim's services ~~unit~~ professional.

Members of the committee, other than the facility's chief executive officer or head, shall be appointed by the commissioner to two-year terms. The chief executive officer or head of the facility or designee shall act as chair of the committee and shall use the facility's staff, as needed, to administer the committee, obtain necessary information from outside sources, and prepare risk assessment reports on offenders.

(c) The committee shall have access to the following data on a sex offender only for the purposes of its assessment and to defend the committee's risk assessment determination upon administrative review under this section:

(1) private medical data under section 13.42 or 144.335, or welfare data under section 13.46 that relate to medical treatment of the offender;

(2) private and confidential court services data under section 13.84;

(3) private and confidential corrections data under section 13.85; and

(4) private criminal history data under section 13.87.

Data collected and maintained by the committee under this paragraph may not be disclosed outside the committee, except as provided under section 13.05, subdivision 3 or 4. The sex offender has access to data on the offender collected and maintained by the committee, unless the data are confidential data received under this paragraph.

(d)(i) Except as otherwise provided in item (ii), at least 90 days before a sex offender is to be released from confinement ~~or accepted for supervision~~, the commissioner of corrections shall convene the appropriate end-of-confinement review committee for the purpose of assessing the risk presented by the offender and determining the risk level to which the offender shall be assigned under paragraph (e). The offender and the law enforcement agency that was responsible for

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the charge resulting in confinement shall be notified of the time and place of the committee's meeting ~~and~~. The offender has a right to be present and be heard at the meeting. The law enforcement agency may provide material in writing that is relevant to the offender's risk level to the chair of the committee. The committee shall use the risk factors described in paragraph (g) and the risk assessment scale developed under subdivision 2 to determine the offender's risk assessment score and risk level. Offenders scheduled for release from confinement shall be assessed by the committee established at the facility from which the offender is to be released. ~~Offenders accepted for supervision shall be assessed by whichever committee the commissioner directs.~~

(ii) If an offender is received for confinement in a facility with less than 90 days remaining in the offender's term of confinement, the offender's risk shall be assessed at the first regularly scheduled end of confinement review committee that convenes after the appropriate documentation for the risk assessment is assembled by the committee. The commissioner shall make reasonable efforts to ensure that offender's risk is assessed and a risk level is assigned or reassigned at least 30 days before the offender's release date.

(e) The committee shall assign to risk level I a sex offender whose risk assessment score indicates a low risk of reoffense. The committee shall assign to risk level II an offender whose risk assessment score indicates a moderate risk of reoffense. The committee shall assign to risk level III an offender whose risk assessment score indicates a high risk of reoffense.

(f) Before the sex offender is released from confinement ~~or accepted for supervision~~, the committee shall prepare a risk assessment report which specifies the risk level to which the offender has been assigned and the reasons underlying the committee's risk assessment decision. The committee shall give the report to the offender and to the law enforcement agency at least 60 days before an offender is released from confinement ~~or accepted for supervision~~. If the risk assessment is performed under the circumstances described in paragraph (d), item (ii), the report shall be given to the offender and the law enforcement agency as soon as it is available. The committee also shall inform the offender of the availability of review under subdivision 6.

(g) As used in this subdivision, "risk factors" includes, but is not limited to, the following factors:

(1) the seriousness of the offense should the offender reoffend. This factor includes consideration of the following:

(i) the degree of likely force or harm;

(ii) the degree of likely physical contact; and

(iii) the age of the likely victim;

(2) the offender's prior offense history. This factor includes consideration of the following:

(i) the relationship of prior victims to the offender;

(ii) the number of prior offenses or victims;

(iii) the duration of the offender's prior offense history;

(iv) the length of time since the offender's last prior offense while the offender was at risk to commit offenses; and

(v) the offender's prior history of other antisocial acts;

(3) the offender's characteristics. This factor includes consideration of the following:

(i) the offender's response to prior treatment efforts; and

(ii) the offender's history of substance abuse;

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(4) the availability of community supports to the offender. This factor includes consideration of the following:

(i) the availability and likelihood that the offender will be involved in therapeutic treatment;

(ii) the availability of residential supports to the offender, such as a stable and supervised living arrangement in an appropriate location;

(iii) the offender's familial and social relationships, including the nature and length of these relationships and the level of support that the offender may receive from these persons; and

(iv) the offender's lack of education or employment stability;

(5) whether the offender has indicated or credible evidence in the record indicates that the offender will reoffend if released into the community; and

(6) whether the offender demonstrates a physical condition that minimizes the risk of reoffense, including but not limited to, advanced age or a debilitating illness or physical condition.

(h) Upon the request of the law enforcement agency or the offender's corrections agent, the commissioner may reconvene the end-of-confinement review committee for the purpose of reassessing the risk level to which an offender has been assigned under paragraph (e). In a request for a reassessment, the law enforcement agency which was responsible for the charge resulting in confinement or agent shall list the facts and circumstances arising after the initial assignment or facts and circumstances known to law enforcement or the agent but not considered by the committee under paragraph (e) which support the request for a reassessment. The request for reassessment must occur within 30 days of receipt of the report indicating the offender's risk level assignment. Upon review of the request, the end-of-confinement review committee may reassign an offender to a different risk level. If the offender is reassigned to a higher risk level, the offender has the right to seek review of the committee's determination under subdivision 6.

(i) An offender may request the end-of-confinement review committee to reassess the offender's assigned risk level after two years have elapsed since the committee's initial risk assessment and may renew the request once every two years following subsequent denials. In a request for reassessment, the offender shall list the facts and circumstances which demonstrate that the offender no longer poses the same degree of risk to the community. The committee shall follow the process outlined in paragraphs (a) to (e), and (g) in the reassessment.

(j) The commissioner shall establish an end-of-confinement review committee to assign a risk level to offenders who are released from a federal correctional facility in Minnesota or another state and who intend to reside in Minnesota, and to offenders accepted from another state under a reciprocal agreement for parole supervision under the interstate compact authorized by section 243.16. The committee shall make reasonable efforts to conform to the same timelines as applied to Minnesota cases. Offenders accepted from another state under a reciprocal agreement for probation supervision are not assigned a risk level, but are considered downward dispositional departures. The probation or court services officer and law enforcement officer shall manage such cases in accordance with section 244.10, subdivision 2a. The policies and procedures of the committee for federal offenders and interstate compact cases must be in accordance with all requirements as set forth in this section, unless restrictions caused by the nature of federal or interstate transfers prevents such conformance.

Sec. 5. Minnesota Statutes 1997 Supplement, section 244.052, subdivision 4, is amended to read:

Subd. 4. [LAW ENFORCEMENT AGENCY; DISCLOSURE OF INFORMATION TO PUBLIC.] (a) The law enforcement agency in the area where the sex offender resides, expects to reside, is employed, or is regularly found, shall disclose to the public any information regarding the offender contained in the report forwarded to the agency under subdivision 3, paragraph (f), if the agency determines that disclosure of the information is relevant and necessary to protect the public and to counteract the offender's dangerousness. The extent of the information disclosed and the community to whom disclosure is made must relate to the level of danger posed by the offender, to the offender's pattern of offending behavior, and to the need of community members for information to enhance their individual and collective safety.

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(b) The law enforcement agency shall consider the following guidelines in determining the scope of disclosure made under this subdivision:

(1) if the offender is assigned to risk level I, the agency may maintain information regarding the offender within the agency and may disclose it to other law enforcement agencies. Additionally, the agency may disclose the information to any victims of or witnesses to the offense committed by the offender. The agency shall disclose the information to victims of the offense committed by the offender who have requested disclosure;

(2) if the offender is assigned to risk level II, the agency also may disclose the information to agencies and groups that the offender is likely to encounter for the purpose of securing those institutions and protecting individuals in their care while they are on or near the premises of the institution. These agencies and groups include the staff members of public and private educational institutions, day care establishments, and establishments and organizations that primarily serve individuals likely to be victimized by the offender. The agency also may disclose the information to individuals the agency believes are likely to be victimized by the offender. The agency's belief shall be based on the offender's pattern of offending or victim preference as documented in the information provided by the department of corrections or human services;

(3) if the offender is assigned to risk level III, the agency also may disclose the information to other members of the community whom the offender is likely to encounter.

Notwithstanding the assignment of a sex offender to risk level II or III, a law enforcement agency may not make the disclosures permitted by clause (2) or (3), if: the offender is placed or resides in a residential facility that is licensed as a residential program, as defined in section 245A.02, subdivision 14, by the commissioner of human services under chapter 254A, or the commissioner of corrections under section 241.021; and the facility and its staff are trained in the supervision of sex offenders. However, if an offender is placed or resides in a licensed facility, the offender and the head of the facility shall designate the offender's likely residence upon release from the facility and the head of the facility shall notify the commissioner of corrections or the commissioner of human services of the offender's likely residence at least 14 days before the offender's scheduled release date. The commissioner shall give this information to the law enforcement agency having jurisdiction over the offender's likely residence. The head of the facility also shall notify the commissioner of corrections or human services within 48 hours after finalizing the offender's approved relocation plan to a permanent residence. Within five days after receiving this notification, the appropriate commissioner shall give to the appropriate law enforcement agency all relevant information the commissioner has concerning the offender, including information on the risk factors in the offender's history and the risk level to which the offender was assigned. After receiving this information, the law enforcement agency may make the disclosures permitted by clause (2) or (3), as appropriate.

(1) the organizations or community members are in a location or in close proximity to a location where the offender lives or is employed, or which the offender visits or is likely to visit on a regular basis, other than the location of the offender's outpatient treatment program; and

(2) the types of interaction which ordinarily occur at that location and other circumstances indicate that contact with the offender is reasonably certain.

(d) A law enforcement agency or official who decides to disclose information under this subdivision shall make a good faith effort to make the notification ~~at least 14 days before an offender is released from confinement or accepted for supervision~~ within 14 days of receipt of a confirmed address from the department of corrections indicating that the offender will be, or has been, released from confinement, or accepted for supervision, or has moved to a new address and will reside at the address indicated. If a change occurs in the release plan, this notification provision does not require an extension of the release date.

(e) A law enforcement agency or official that decides to disclose information under this subdivision shall not disclose the identity of the victims of or witnesses to the offender's offenses.

(f) A law enforcement agency may continue to disclose information on an offender under this subdivision for as long as the offender is required to register under section 243.166.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9724

Sec. 6. Minnesota Statutes 1997 Supplement, section 244.052, subdivision 5, is amended to read:

Subd. 5. [RELEVANT INFORMATION PROVIDED TO LAW ENFORCEMENT.] At least 60 days before a sex offender is released from confinement ~~or accepted for supervision~~, the department of corrections or the department of human services, in the case of a person who was committed under section 253B.185 or Minnesota Statutes 1992, section 526.10, shall give to the law enforcement agency that investigated the offender's crime of conviction or, where relevant, the law enforcement agency having primary jurisdiction where the offender was committed, all relevant information that the departments have concerning the offender, including information on risk factors in the offender's history. Within five days after receiving the offender's approved release plan from the office of adult release, the appropriate department shall give to the law enforcement agency having primary jurisdiction where the offender plans to reside all relevant information the department has concerning the offender, including information on risk factors in the offender's history and the risk level to which the offender was assigned. If the offender's risk level was assigned under the circumstances described in paragraph (d), item (ii), the appropriate department shall give the law enforcement agency all relevant information that the department has concerning the offender, including information on the risk factors in the offender's history and the offender's risk level within five days of the risk level assignment or reassignment.

Sec. 7. Minnesota Statutes 1996, section 611A.037, subdivision 2, is amended to read:

Subd. 2. [NOTICE TO VICTIM.] The officer conducting a presentence or predispositional investigation shall make reasonable and good faith efforts to ~~contact~~ assure that the victim of that crime ~~and to provide that victim~~ is provided with the following information by contacting the victim or assuring that another public or private agency has contacted the victim: (i) the charge or juvenile court petition to which the defendant has been convicted or pleaded guilty, or the juvenile respondent has admitted in court or has been found to have committed by the juvenile court, and of any plea agreement between the prosecution and the defense counsel; (ii) the victim's right to request restitution pursuant to section 611A.04; (iii) the time and place of the sentencing or juvenile court disposition and the victim's right to be present; and (iv) the victim's right to object in writing to the court, prior to the time of sentencing or juvenile court disposition, to the proposed sentence or juvenile dispositional alternative, or to the terms of the proposed plea agreement. To assist the victim in making a recommendation under clause (iv), the officer shall provide the victim with information about the court's options for sentencing and other dispositions. Failure of the officer to comply with this subdivision does not give any rights or grounds for postconviction or postjuvenile disposition relief to the defendant or juvenile court respondent, nor does it entitle a defendant or a juvenile court respondent to withdraw a plea of guilty.

Sec. 8. [STUDY OF CONFIDENTIALITY OF STATEMENTS MADE DURING SEX OFFENDER TREATMENT.]

The commissioners of corrections and human services shall include in the report they are required to submit under Laws 1998, chapter 367, article 3, section 16, a recommendation concerning whether and to what extent statements made by sex offenders during the course of sex offender treatment should be treated as confidential. As used in this section, "sex offender" means a person who is required to register under Minnesota Statutes, section 243.166, the sex offender registration act.

Sec. 9. [EFFECTIVE DATE.]

Sections 1 to 7 are effective the day following final enactment and apply to offenders released from confinement, sentenced, or accepted for supervision on or after that date, or who move to a new address on or after that date. Section 8 is effective July 1, 1998."

"A bill for an act relating to corrections; requiring sex offender treatment facilities to provide certain information regarding sex offenders; clarifying which law enforcement agency may request the end-of-confinement review committee to reassess the risk level to which an offender has been assigned; adjusting the time within which certain requirements of the community notification law must be met; providing certain immunity; eliminating duplicative efforts on notifying victims of certain information; requiring a study of the confidentiality of statements made by offenders in the course of sex offender treatment; amending Minnesota Statutes 1996, sections 241.67, subdivision 8, and by adding a subdivision; 244.052, subdivision 1; and 611A.037, subdivision 2; Minnesota Statutes 1997 Supplement, section 244.052, subdivisions 3, 4, and 5."

The motion prevailed and the amendment was adopted.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9725

S. F. No. 2498, A bill for an act relating to corrections; registration of sexual offenders; requiring certain offenders moving into Minnesota to register within five days; authorizing adult and juvenile offender registration information to be maintained together; expanding prosecutorial jurisdiction; amending Minnesota Statutes 1996, section 243.166, subdivisions 1 and 5; Minnesota Statutes 1997 Supplement, section 244.166, subdivision 4.

The bill was read for the third time, as amended, and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 129 yeas and 0 nays as follows:

Abrams Erickson Kahn Marko Paymar Sykora
Anderson, B. Evans Kalis McCollum Peterson Tingelstad
Anderson, I. Farrell Kelso McElroy Pugh Tomassoni
Bakk Finseth Kielkucki McGuire Rest Tompkins
Bettermann Folliard Kinkel Milbert Reuter Trimble
Biernat Garcia Knight Molnau Rhodes Tuma
Bishop Goodno Knoblach Mulder Rifenberg Tunheim
Boudreau Greenfield Koskinen Mullery Rostberg Van Dellen
Bradley Gunther Kraus Munger Rukavina Vandeveer
Broecker Haas Krinkie Murphy Schumacher Wagenius
Carlson Harder Kubly Ness Seagren Weaver
Chaudhary Hasskamp Kuisle Nornes Seifert Wejcman
Clark, J. Hausman Larsen Olson, E. Sekhon Wenzel
Commers Hilty Leighton Olson, M. Skare Westfall
Daggett Holsten Leppik Opatz Skoglund Westrom
Davids Huntley Lieder Orfield Slawik Winter
Dawkins Jaros Lindner Osskopp Smith Wolf
Dehler Jefferson Long Osthoff Solberg Workman
Delmont Jennings Macklin Otremba, M. Stanek Spk. Carruthers
Dempsey Johnson, A. Mahon Ozment Stang
Entenza Johnson, R. Mares Paulsen Sviggum
Erhardt Juhnke Mariani Pawlenty Swenson, H.

The bill was passed, as amended, and its title agreed to.

S. F. No. 2082 was reported to the House.

There being no objection, S. F. No. 2082 was temporarily laid over on Special Orders.

S. F. No. 2712 was reported to the House.

Osthoff moved that S. F. No. 2712 be temporarily laid over on Special Orders. The motion prevailed.

S. F. No. 1181 was reported to the House.

Kahn moved to amend S. F. No. 1181, the second unofficial engrossment, as follows:

Page 1, line 14, after the period, insert "The study must consider concerns expressed by some persons in the law enforcement community including the adequate visual identification of hemp plant species at various stages of plant development; the effects of deliberate or inadvertent cross-pollinization between species; and the use of industrial species hemp to visually screen illegally grown species."

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9726

Page 1, line 19, delete everything after the period

Page 1, delete line 20

Page 1, line 21, delete "projects."

The motion prevailed and the amendment was adopted.

S. F. No. 1181, A bill for an act relating to agriculture; providing for an industrial hemp study.

The bill was read for the third time, as amended, and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 68 yeas and 64 nays as follows:

Anderson, I. Garcia Johnson, R. Mariani Ozment Trimble
Bakk Greenfield Juhnke McCollum Paymar Tunheim
Biernat Greiling Kahn McGuire Peterson Wagenius
Bishop Gunther Kalis Milbert Pugh Wejcman
Clark, K. Hasskamp Kinkel Mullery Rostberg Wenzel
Dawkins Hausman Koskinen Munger Rukavina Westfall
Dehler Hilty Krinkie Murphy Schumacher Winter
Delmont Huntley Kubly Olson, E. Sekhon Spk. Carruthers
Dorn Jaros Leighton Opatz Skare
Entenza Jefferson Lieder Orfield Skoglund
Evans Jennings Long Osskopp Solberg
Farrell Johnson, A. Mahon Otremba, M. Tomassoni

Abrams Dempsey Knight Molnau Rhodes Tingelstad
Anderson, B. Erhardt Knoblach Mulder Rifenberg Tompkins
Bettermann Erickson Kraus Ness Seagren Tuma
Boudreau Finseth Kuisle Nornes Seifert Van Dellen
Bradley Folliard Larsen Olson, M. Slawik Vandeveer
Broecker Goodno Leppik Osthoff Smith Weaver
Carlson Haas Lindner Paulsen Stanek Westrom
Clark, J. Harder Macklin Pawlenty Stang Wolf
Commers Holsten Mares Pelowski Sviggum Workman
Daggett Kelso Marko Rest Swenson, H.
Davids Kielkucki McElroy Reuter Sykora

The bill was passed, as amended, and its title agreed to.

CALL OF THE HOUSE

On the motion of Winter and on the demand of 10 members, a call of the House was ordered. The following members answered to their names:

Abrams Dorn Jennings Mares Ozment Stang
Anderson, B. Entenza Johnson, A. Mariani Paulsen Sviggum
Anderson, I. Erhardt Johnson, R. Marko Pelowski Swenson, H.
Bakk Erickson Juhnke McCollum Peterson Sykora
Bettermann Evans Kahn McElroy Pugh Tingelstad
Biernat Farrell Kelso McGuire Rest Tomassoni
Bishop Finseth Kielkucki Milbert Reuter Tompkins
Boudreau Folliard Knoblach Molnau Rhodes Trimble
Bradley Garcia Koskinen Mulder Rifenberg Tuma
Broecker Goodno Kraus Mullery Rostberg Tunheim
Carlson Greiling Kubly Munger Rukavina Van Dellen
Chaudhary Gunther Kuisle Ness Seagren Weaver
Clark, J. Haas Larsen Nornes Seifert Wejcman
Clark, K. Harder Leighton Olson, E. Sekhon Wenzel
Commers Hasskamp Leppik Olson, M. Skare Westfall
Daggett Hausman Lieder Opatz Skoglund Westrom
Davids Hilty Lindner Orfield Slawik Winter
Dehler Holsten Long Osskopp Smith Wolf
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9727
Delmont Huntley Macklin Osthoff Solberg Workman
Dempsey Jefferson Mahon Otremba, M. Stanek Spk. Carruthers

Winter moved that further proceedings of the roll call be suspended and that the Sergeant at Arms be instructed to bring in the absentees. The motion prevailed and it was so ordered.

The following Conference Committee Report was received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 2874

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9728

124.2713, subdivision 6b; 124.647; 124A.292, subdivisions 2 and 4; 124A.697; 124A.698; 124A.70; 124A.71; 124A.711, subdivision 1; 124A.72; and 124A.73; Minnesota Statutes 1997 Supplement, sections 124.2601, subdivisions 4 and 5; 124.912, subdivisions 2 and 3; 124A.711, subdivision 2; and 135A.081; Laws 1993, chapter 146, article 5, section 20, as amended; Laws 1997, chapter 231, article 1, section 17; Minnesota Rules, part 3525.2750, subpart 1, item B.

April 9, 1998

The Honorable Phil Carruthers

Speaker of the House of Representatives

The Honorable Allan H. Spear

President of the Senate

We, the undersigned conferees for H. F. No. 2874, report that we have agreed upon the items in dispute and recommend as follows:

That the Senate recede from its amendment and that H. F. No. 2874 be further amended as follows:

Delete everything after the enacting clause and insert:

(i) 31 percent of the referendum levy certified in the prior calendar year according to section 124A.03, subdivision 2; plus

GENERAL EDUCATION

Section 1. Minnesota Statutes 1997 Supplement, section 121.904, subdivision 4a, is amended to read:

Subd. 4a. [LEVY RECOGNITION.] (a) "School district tax settlement revenue" means the current, delinquent, and manufactured home property tax receipts collected by the county and distributed to the school district~~, including distributions made pursuant to section 279.37, subdivision 7, and excluding the amount levied pursuant to section 124.914, subdivision 1~~.

(b) In June of each year, the school district shall recognize as revenue, in the fund for which the levy was made, the lesser of:

(1) the May, June, and July school district tax settlement revenue received in that calendar year; or

(2) the sum of: the state aids and credits enumerated in section 124.155, subdivision 2, which are for the fiscal year payable in that fiscal year plus an amount equal to the levy recognized as revenue in June of the prior year plus 31 percent of the amount of the levy certified in the prior calendar year according to section 124A.03, subdivision 2; or

(3)(i) 7.0 percent of the lesser of the amount of the general education levy certified in the prior calendar year according to section 124A.23, subdivision 2, or the difference between the amount of the total general fund levy certified in the prior calendar year and the sum of the amounts certified in the prior calendar year according to sections 124A.03, subdivision 2; 124.315, subdivision 4; 124.912, subdivisions 1, paragraph (2), 2, and 3; 124.916, subdivisions 1, 2, and 3, paragraphs (4), (5), and (6); and 124.918, subdivision 6; plus

~~(ii) 31 percent of the referendum levy certified in the prior calendar year according to section 124A.03, subdivision 2; plus~~

(iii) the entire amount of the levy certified in the prior calendar year according to sections 124.315, subdivision 4; 124.912, subdivisions 1, paragraph (2), 2, and 3; 124.916, subdivisions 1, 2, and 3, paragraphs (4), (5), and (6); and 124.918, subdivision 6.

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(ii) the entire amount of the levy certified in the prior calendar year according to sections 124.912, subdivisions 1, paragraph (2), 2, and 3; 124.315, subdivision 4; 124.916, subdivisions 1, 2, and 3, paragraphs (4), (5), and (6); and 124.918, subdivision 6.

(c) In July of each year, the school district shall recognize as revenue that portion of the school district tax settlement revenue received in that calendar year and not recognized as revenue for the previous fiscal year pursuant to clause (b).

(d) All other school district tax settlement revenue shall be recognized as revenue in the fiscal year of the settlement. Portions of the school district levy assumed by the state, including prior year adjustments and the amount to fund the school portion of the reimbursement made pursuant to section 273.425, shall be recognized as revenue in the fiscal year beginning in the calendar year for which the levy is payable.

Sec. 2. Minnesota Statutes 1996, section 121.908, subdivision 2, is amended to read:

Subd. 2. Each district shall submit to the commissioner by ~~August~~ September 15 of each year an unaudited financial ~~statement~~ data for the preceding fiscal year. ~~This statement~~ These financial data shall be submitted ~~on forms~~ in the format prescribed by the commissioner.

Sec. 3. Minnesota Statutes 1996, section 121.908, subdivision 3, is amended to read:

Subd. 3. By ~~December 31~~ November 30 of the calendar year of the submission of the unaudited financial ~~statement~~ data, the district shall provide to the commissioner ~~and state auditor an~~ audited financial data for the preceding fiscal year. An audited financial statement prepared in a form which will allow comparison with and correction of material differences in the unaudited ~~statement~~ financial data shall be submitted to the commissioner and the state auditor by December 31. The audited financial statement must also provide a statement of assurance pertaining to uniform financial accounting and reporting standards compliance and a copy of the management letter submitted to the district by the school district's auditor.

Sec. 4. Minnesota Statutes 1996, section 124.14, subdivision 7, is amended to read:

Subd. 7. [APPROPRIATION TRANSFERS.] If a direct appropriation from the general fund to the department of children, families, and learning for any education aid or grant authorized in this chapter and chapters 121, 123, 124A, 124C, 125, 126, and 134, excluding appropriations under sections 124.26, 124.2601, 124.2605, 124.261, 124.2615, 124.2711, 124.2712, 124.2713, 124.2714, 124.2715, and 124.2716, exceeds the amount required, the commissioner of children, families, and learning may transfer the excess to any education aid or grant appropriation that is insufficient. However, section 124A.032 applies to a deficiency in the direct appropriation for general education aid. Excess appropriations shall be allocated proportionately among aids or grants that have insufficient appropriations. The commissioner of finance shall make the necessary transfers among appropriations according to the determinations of the commissioner of children, families, and learning. If the amount of the direct appropriation for the aid or grant plus the amount transferred according to this subdivision is insufficient, the commissioner shall prorate the available amount among eligible districts. The state is not obligated for any additional amounts.

Sec. 5. Minnesota Statutes 1996, section 124.14, is amended by adding a subdivision to read:

Subd. 7a. [APPROPRIATION TRANSFERS FOR COMMUNITY EDUCATION PROGRAMS.] If a direct appropriation from the general fund to the department of children, families, and learning for an education aid or grant authorized under section 124.26, 124.2601, 124.2605, 124.261, 124.2615, 124.2711, 124.2712, 124.2713, 124.2714, 124.2715, or 124.2716 exceeds the amount required, the commissioner of children, families, and learning may transfer the excess to any education aid or grant appropriation that is insufficiently funded under these sections. Excess appropriations shall be allocated proportionately among aids or grants that have insufficient appropriations. The commissioner of finance shall make the necessary transfers among appropriations according to the determinations of the commissioner of children, families, and learning. If the amount of the direct appropriation for the aid or grant plus the amount transferred according to this subdivision is insufficient, the commissioner shall prorate the available amount among eligible districts. The state is not obligated for any additional amounts.

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Sec. 6. Minnesota Statutes 1997 Supplement, section 124.17, subdivision 4, is amended to read:

Subd. 4. [LEARNING YEAR PUPIL UNITS.] (a) When a pupil is enrolled in a learning year program under section 121.585, an area learning center under sections 124C.45 and 124C.46, or an alternative program approved by the commissioner, or a contract alternative program under section 126.22, subdivision 3, paragraph (d), or subdivision 3a, for more than 1,020 hours in a school year for a secondary student, more than 935 hours in a school year for an elementary student, or more than 425 hours in a school year for a kindergarten student without a disability, that pupil may be counted as more than one pupil in average daily membership. The amount in excess of one pupil must be determined by the ratio of the number of hours of instruction provided to that pupil in excess of: (i) the greater of 1,020 hours or the number of hours required for a full-time secondary pupil in the district to 1,020 for a secondary pupil; (ii) the greater of 935 hours or the number of hours required for a full-time elementary pupil in the district to 935 for an elementary pupil in grades 1 through 6; and (iii) the greater of 425 hours or the number of hours required for a full-time kindergarten student without a disability in the district to 425 for a kindergarten student without a disability. Hours that occur after the close of the instructional year in June shall be attributable to the following fiscal year. A kindergarten student must not be counted as more than 1.2 pupils in average daily membership under this subdivision.

(b)(i) To receive general education revenue for a pupil in an alternative program that has an independent study component, a school district must meet the requirements in this paragraph. The school district must develop with the pupil a continual learning plan for the pupil. A district must allow a minor pupil's parent or guardian to participate in developing the plan, if the parent or guardian wants to participate. The plan must identify the learning experiences and expected outcomes needed for satisfactory credit for the year and for graduation. The plan must be updated each year. Each school district that has a state-approved public alternative program must reserve revenue in an amount equal to at least 90 percent of the district average general education revenue per pupil unit less compensatory revenue per pupil unit times the number of pupil units generated by students attending a state-approved public alternative program. The amount of reserved revenue available under this subdivision may only be spent for program costs associated with the state-approved public alternative program. Compensatory revenue must be allocated according to section 124A.28, subdivision 1a.

(ii) General education revenue for a pupil in an approved alternative program without an independent study component must be prorated for a pupil participating for less than a full year, or its equivalent. Each school district that has a state-approved public alternative program must reserve revenue in an amount equal to at least 90 percent of the district average general education revenue per pupil unit less compensatory revenue per pupil unit times the number of pupil units generated by students attending a state-approved public alternative program. The amount of reserved revenue available under this subdivision may only be spent for program costs associated with the state-approved public alternative program. Compensatory revenue must be allocated according to section 124A.28, subdivision 1a.

(iii) General education revenue for a pupil in an approved alternative program that has an independent study component must be paid for each hour of teacher contact time and each hour of independent study time completed toward a credit or graduation standards necessary for graduation. Average daily membership for a pupil shall equal the number of hours of teacher contact time and independent study time divided by 1,020.

(iv) For an alternative program having an independent study component, the commissioner shall require a description of the courses in the program, the kinds of independent study involved, the expected learning outcomes of the courses, and the means of measuring student performance against the expected outcomes.

Sec. 7. Minnesota Statutes 1997 Supplement, section 124.17, subdivision 6, is amended to read:

Subd. 6. [FREE AND REDUCED PRICED LUNCHES.] The commissioner shall determine the number of children eligible to receive either a free or reduced priced lunch on October 1 each year. Children enrolled in a building on October 1 and determined to be eligible to receive free or reduced price lunch by January 15 of the following year shall be counted as eligible on October 1 for purposes of subdivision 1d. The commissioner may use federal definitions for these purposes and may adjust these definitions as appropriate. The commissioner may adopt reporting guidelines to assure accuracy of data counts and eligibility. Districts shall use any guidelines adopted by the commissioner.

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Sec. 8. Minnesota Statutes 1997 Supplement, section 124.17, subdivision 7, is amended to read:

Subd. 7. [LEP PUPIL UNITS.] (a) Limited English proficiency pupil units for fiscal year 1998 and thereafter shall be determined according to this subdivision.

(b) The limited English proficiency concentration percentage for a district equals the product of 100 times the ratio of:

(1) the number of pupils of limited English proficiency enrolled in the district during the current fiscal year; to

(2) the number of pupils in average daily membership enrolled in the district.

(c) The limited English proficiency pupil units for each pupil enrolled in a program for pupils of limited English proficiency in accordance with sections 126.261 to 126.269 equals the lesser of one or the quotient obtained by dividing the limited English proficiency concentration percentage for the pupil's district of enrollment by 11.5.

(d) Limited English proficiency pupil units shall be counted by the district of enrollment.

(e) Notwithstanding paragraph (d), for the purposes of this subdivision, pupils enrolled in a cooperative or intermediate school district shall be counted by the district of residence.

Sec. 9. Minnesota Statutes 1997 Supplement, section 124.195, subdivision 7, is amended to read:

Subd. 7. [PAYMENTS TO SCHOOL NONOPERATING FUNDS.] Each fiscal year state general fund payments for a district nonoperating fund shall be made at 90 percent of the estimated entitlement during the fiscal year of the entitlement. This amount shall be paid in 12 equal monthly installments. The amount of the actual entitlement, after adjustment for actual data, minus the payments made during the fiscal year of the entitlement shall be paid prior to October 31 of the following school year. The commissioner may make advance payments of debt service equalization aid or homestead and agricultural credit aid for a district's debt service fund earlier than would occur under the preceding schedule if the district submits evidence showing a serious cash flow problem in the fund. The commissioner may make earlier payments during the year and, if necessary, increase the percent of the entitlement paid to reduce the cash flow problem.

Sec. 10. Minnesota Statutes 1996, section 124.248, subdivision 1, is amended to read:

Subdivision 1. [GENERAL EDUCATION REVENUE.] General education revenue shall be paid to a charter school as though it were a school district. The general education revenue for each pupil unit is the state average general education revenue per pupil unit minus ~~$170~~ an amount equal to the product of the formula allowance according to section 124A.22, subdivision 2, times .0485, calculated without ~~compensatory~~ basic skills revenue, transportation sparsity revenue, and the transportation portion of the transition revenue adjustment, plus ~~compensatory~~ basic skills revenue as though the school were a school district.

Sec. 11. Minnesota Statutes 1996, section 124.248, subdivision 1a, is amended to read:

Subd. 1a. [TRANSPORTATION REVENUE.] Transportation revenue shall be paid to a charter school that provides transportation services according to section 120.064, subdivision 15, according to this subdivision. Transportation aid shall equal transportation revenue.

~~(a)~~ In addition to the revenue under subdivision 1, a charter school providing transportation services shall receive general education aid for each pupil unit equal to the sum of ~~$170~~ an amount equal to the product of the formula allowance according to section 124A.22, subdivision 2, times .0485, plus the transportation sparsity allowance for the school district in which the charter school is located, plus the transportation transition allowance for the school district in which the charter school is located.

(b) For the first two years that a charter school is providing transportation services, the special programs transportation revenue equals the charter school's actual cost in the current school year for transportation services for children with disabilities under section 124.223, subdivisions 4, 5, 7, and 8. For the third year of transportation services and later fiscal years, the special programs transportation revenue shall be computed according to section 124.225, subdivision 14.

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Sec. 12. Minnesota Statutes 1997 Supplement, section 124.248, subdivision 2a, is amended to read:

Subd. 2a. [BUILDING LEASE AID.] When a charter school finds it economically advantageous to rent or lease a building or land for any instructional purposes and it determines that the total operating capital revenue under section 124A.22, subdivision 10, is insufficient for this purpose, it may apply to the commissioner for building lease aid for this purpose. Criteria for aid approval and revenue uses shall be as defined for the building lease levy in section 124.91, subdivision 1, paragraphs (a) and (b). The amount of building lease aid per pupil unit served for a charter school for any year shall not exceed the lesser of (a) 80 percent of the approved cost or (b) the product of the ~~actual~~ pupil units served for the current school year times the sum of the state average debt redemption fund revenue plus capital revenue, according to section 124.91, per ~~actual~~ pupil unit served for the current fiscal year.

Sec. 13. Minnesota Statutes 1997 Supplement, section 124.248, subdivision 6, is amended to read:

Subd. 6. [START-UP COSTS.] During the first two years of a charter school's operation, the charter school is eligible for aid to pay for start-up costs and additional operating costs. Start-up cost aid equals the greater of:

(1) $50,000 per charter school; or

(2) $500 times the charter school's pupil units served for that year.

Sec. 14. Minnesota Statutes 1997 Supplement, section 124.2601, subdivision 3, is amended to read:

Subd. 3. [~~REVENUE~~ AID.] Adult basic education ~~revenue~~ aid for each approved program equals 65 percent of the general education formula allowance times the number of full-time equivalent students in its adult basic education program.

Sec. 15. Minnesota Statutes 1997 Supplement, section 124.2601, subdivision 6, is amended to read:

Subd. 6. [AID GUARANTEE.] (a) For fiscal year 1994, any adult basic education program that receives less state aid under subdivisions 3 and 7 than from the aid formula for fiscal year 1992 shall receive the amount of aid it received in fiscal year 1992.

(b) For 1995, 1996, and 1997 fiscal years, an adult basic education program that receives aid shall receive at least the amount of aid it received in fiscal year 1992 under subdivisions 3 and 7, plus aid equal to the amount of revenue that would have been raised for taxes payable in 1994 under Minnesota Statutes 1992, section 124.2601, subdivision 4, minus the amount raised under subdivision 4.

Sec. 16. Minnesota Statutes 1997 Supplement, section 124.2711, subdivision 2a, is amended to read:

Subd. 2a. [EARLY CHILDHOOD FAMILY EDUCATION LEVY.] To obtain early childhood family education revenue, a district may levy an amount equal to the tax rate of ~~.653~~ .45 percent times the adjusted tax capacity of the district for the year preceding the year the levy is certified. If the amount of the early childhood family education levy would exceed the early childhood family education revenue, the early childhood family education levy shall equal the early childhood family education revenue.

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Sec. 17. Minnesota Statutes 1997 Supplement, section 124.2713, subdivision 6, is amended to read:

Subd. 6. [COMMUNITY EDUCATION LEVY.] To obtain community education revenue, a district may levy the amount raised by a tax rate of ~~1.09~~ .41 percent times the adjusted net tax capacity of the district. If the amount of the community education levy would exceed the community education revenue, the community education levy shall be determined according to subdivision 6a.

Sec. 18. Minnesota Statutes 1996, section 124.2713, subdivision 6a, is amended to read:

Subd. 6a. [COMMUNITY EDUCATION LEVY; DISTRICTS OFF THE FORMULA.] If the amount of the community education levy for a district exceeds the district's community education revenue, the amount of the community education levy is limited to ~~the sum of:~~

~~(1)~~ the district's community education revenue according to subdivision 1~~; plus~~.

~~(2) the amount of the aid reduction for the same fiscal year according to subdivision 6b.~~

~~For purposes of statutory cross-reference, a levy made according to this subdivision is the levy made according to subdivision 6.~~

Sec. 19. Minnesota Statutes 1996, section 124.2727, subdivision 6a, is amended to read:

Subd. 6a. [FISCAL YEAR 1999 DISTRICT COOPERATION REVENUE.] A district's cooperation revenue for fiscal year 1999 is equal to the greater of $67 times the actual pupil units or $25,000.

Sec. 20. Minnesota Statutes 1996, section 124.2727, subdivision 6c, is amended to read:

Subd. 6c. [FISCAL YEAR 1999 DISTRICT COOPERATION AID.] A district's cooperation aid for fiscal year 1999 is the difference between its district cooperation revenue and its district cooperation levy. If a district does not levy the entire amount permitted, aid must be reduced in proportion to the actual amount levied.

Sec. 21. Minnesota Statutes 1996, section 124.273, is amended by adding a subdivision to read:

Subd. 8. [ALLOCATIONS FROM COOPERATIVE UNITS.] For the purposes of this section and section 124.321, pupils of limited English proficiency enrolled in a cooperative or intermediate school district unit shall be counted by the school district of residence, and the cooperative unit shall allocate its approved expenditures for limited English proficiency programs among participating school districts. Limited English proficiency aid for services provided by a cooperative or intermediate school district shall be paid to the participating school districts.

Sec. 22. Minnesota Statutes 1996, section 124.3201, subdivision 5, is amended to read:

Subd. 5. [SCHOOL DISTRICT SPECIAL EDUCATION REVENUE.] (a) A school district's special education revenue for fiscal year 1996 and later equals the state total special education revenue, minus the amount determined under paragraph (b), times the ratio of the district's adjusted special education base revenue to the state total adjusted special education base revenue. If the state board of education modifies its rules for special education in a manner that increases a school district's special education obligations or service requirements, the commissioner of children, families, and learning shall annually increase each district's special education revenue by the amount necessary to compensate for the increased service requirements. The additional revenue equals the cost in the current year attributable to rule changes not reflected in the computation of special education base revenue, multiplied by the appropriate percentages from subdivision 2.

(b) Notwithstanding paragraph (a), if the special education base revenue for a district equals zero, the special education revenue equals the amount computed according to subdivision 2 using current year data.

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(c) Notwithstanding paragraphs (a) and (b), if the special education base revenue for a district is greater than zero, and the base year amount for the district under subdivision 2, paragraph (a), clause (7), equals zero, the special education revenue equals the sum of the amount computed according to paragraph (a), plus the amount computed according to subdivision 2, paragraph (a), clause (7), using current year data.

Sec. 23. Minnesota Statutes 1996, section 124.85, subdivision 4, is amended to read:

Subd. 4. [DISTRICT ACTION.] A district may enter into a guaranteed energy savings contract with a qualified provider if, after review of the report and the commissioner's evaluation if requested, the board finds that the amount it would spend on the energy conservation measures recommended in the report is not likely to exceed the amount to be saved in energy and operation costs over 15 years from the date of installation if the recommendations in the report were followed, and the qualified provider provides a written guarantee that the energy or operating cost savings will meet or exceed the costs of the system. The guaranteed energy savings contract may provide for payments over a period of time, not to exceed 15 years. Notwithstanding section 121.912, a district annually may transfer from the general fund to the ~~capital expenditure fund~~ reserve for operating capital account an amount up to the amount saved in energy and operation costs as a result of guaranteed energy savings contracts.

Sec. 24. Minnesota Statutes 1996, section 124A.03, subdivision 2b, is amended to read:

Subd. 2b. [REFERENDUM DATE.] In addition to the referenda allowed in subdivision 2, clause (a), the commissioner may authorize a referendum for a different day.

(a) The commissioner may grant authority to a district to hold a referendum on a different day if the district is in statutory operating debt and has an approved plan or has received an extension from the department to file a plan to eliminate the statutory operating debt.

(b) The commissioner may grant authority for a district to hold a referendum on a different day if: (1) the district will conduct a bond election under chapter 475 on that same day; and (2) the proceeds of the referendum will provide only additional operating revenue ~~necessitated by the facility~~ complementing the purpose for which bonding authority is sought. The commissioner may only grant authority under this paragraph if the district demonstrates to the commissioner's satisfaction that the district's ability to operate the new facility or achieve efficiencies with the purchases connected to the proceeds of the bond sale will be significantly affected if the operating referendum is not conducted until the November general election. Authority under this paragraph expires November 30, 1998.

(c) The commissioner must approve, deny, or modify each district's request for a referendum levy on a different day within 60 days of receiving the request from a district.

Sec. 25. Minnesota Statutes 1996, section 124A.03, subdivision 3c, is amended to read:

Subd. 3c. [REFERENDUM ALLOWANCE REDUCTION.] For fiscal year 1998 and later, a district's referendum allowance for referendum authority under subdivision 1c is reduced as provided in this subdivision.

(a) For referendum revenue authority approved before June 1, 1996, and effective for fiscal year 1997, the reduction equals the amount of the reduction computed for fiscal year 1997 under subdivision 3b.

(b) For referendum revenue authority approved before June 1, 1996, and effective beginning in fiscal year 1998, the reduction equals the amount of the reduction computed for fiscal year 1998 under subdivision 3b.

(d) For districts with more than one referendum authority, the reduction shall be computed separately for each authority. The reduction shall be applied first to authorities levied against tax capacity, and then to authorities levied against referendum market value. For districts with more than one authority levied against net tax capacity or against referendum market value, the referendum allowance reduction shall be applied first to the authority with the earliest expiration date.

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(e) When referendum authority approved before June 1, 1996, expires, the referendum allowance reduction for a district shall be decreased by the amount of the decrease in the district's total referendum allowance under subdivision 1c. For districts with more than one referendum authority remaining after the expiration, the amount of any remaining allowance reduction shall be reallocated among the remaining referendum authority approved before June 1, 1996, according to paragraph (d).

(f) For a newly reorganized district created after July 1, 1996, the referendum revenue reduction equals the lesser of the amount calculated for the combined district, or the sum of the amounts by which each of the reorganizing district's supplemental revenue reduction exceeds its respective supplemental revenue allowances calculated for the year preceding the year of reorganization.

Sec. 26. Minnesota Statutes 1997 Supplement, section 124A.036, subdivision 5, is amended to read:

Subd. 5. [ALTERNATIVE ATTENDANCE PROGRAMS.] The general education aid for districts must be adjusted for each pupil attending a nonresident district under sections 120.062, 120.075, 120.0751, 120.0752, 124C.45 to 124C.48, and 126.22. The adjustments must be made according to this subdivision.

(a) General education aid paid to a resident district must be reduced by an amount equal to the general education revenue exclusive of ~~compensatory~~ basic skills revenue attributable to the pupil in the resident district.

(b) General education aid paid to a district serving a pupil in programs listed in this subdivision shall be increased by an amount equal to the general education revenue exclusive of ~~compensatory~~ basic skills revenue attributable to the pupil in the nonresident district.

(c) If the amount of the reduction to be made from the general education aid of the resident district is greater than the amount of general education aid otherwise due the district, the excess reduction must be made from other state aids due the district.

(d) The district of residence shall pay tuition to a district or an area learning center, operated according to paragraph (e), providing special instruction and services to a pupil with a disability, as defined in section 120.03, or a pupil, as defined in section 120.181, who is enrolled in a program listed in this subdivision. The tuition shall be equal to (1) the actual cost of providing special instruction and services to the pupil, including a proportionate amount for debt service and for capital expenditure facilities and equipment, and debt service but not including any amount for transportation, minus (2) the amount of general education aid and special education aid, attributable to that pupil, that is received by the district providing special instruction and services.

(e) An area learning center operated by a service cooperative, intermediate district, education district, or a joint powers cooperative may elect through the action of the constituent boards to charge tuition for pupils rather than to calculate general education aid adjustments under paragraph (a), (b), or (c). The tuition must be equal to the greater of the average general education revenue per pupil unit attributable to the pupil, or the actual cost of providing the instruction, excluding transportation costs, if the pupil meets the requirements of section 120.03 or 120.181.

Sec. 27. Minnesota Statutes 1996, section 124A.036, subdivision 6, is amended to read:

Subd. 6. [CHARTER SCHOOLS.] (a) The general education aid for districts must be adjusted for each pupil attending a charter school under section 120.064. The adjustments must be made according to this subdivision.

(b) General education aid paid to a resident district must be reduced by an amount equal to the general education revenue exclusive of ~~compensatory~~ basic skills revenue.

(c) General education aid paid to a district in which a charter school not providing transportation according to section 120.064, subdivision 15, is located shall be increased by an amount equal to the product of: (1) the sum of ~~$170~~ an amount equal to the product of the formula allowance according to section 124A.22, subdivision 2, times .0485, plus the transportation sparsity allowance for the district, plus the transportation transition allowance for the district; times (2) the pupil units attributable to the pupil.

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(d) If the amount of the reduction to be made from the general education aid of the resident district is greater than the amount of general education aid otherwise due the district, the excess reduction must be made from other state aids due the district.

Sec. 28. Minnesota Statutes 1997 Supplement, section 124A.22, subdivision 1, is amended to read:

Subdivision 1. [GENERAL EDUCATION REVENUE.] (a) For fiscal years 1997 and 1998, the general education revenue for each district equals the sum of the district's basic revenue, compensatory education revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity revenue, total operating capital revenue, transition revenue, and supplemental revenue.

~~(b)~~ For fiscal year 1999 and thereafter, the general education revenue for each district equals the sum of the district's basic revenue, basic skills revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity revenue, transportation sparsity revenue, total operating capital revenue, graduation standards implementation revenue, transition revenue, and supplemental revenue.

Sec. 29. Minnesota Statutes 1997 Supplement, section 124A.22, subdivision 2, is amended to read:

Subd. 2. [BASIC REVENUE.] The basic revenue for each district equals the formula allowance times the actual pupil units for the school year. The formula allowance for fiscal year 1997 is $3,505. The formula allowance for fiscal year 1998 is $3,581 and the formula allowance for fiscal year 1999 ~~and subsequent fiscal years~~ is $3,530. The formula allowance for fiscal year 2000 and subsequent fiscal years is $3,597.

Sec. 30. Minnesota Statutes 1997 Supplement, section 124A.22, subdivision 13b, is amended to read:

Subd. 13b. [TRANSITION ALLOWANCE.] (a) A district's transportation transition allowance for fiscal year 1998 and later equals the result of the following:

(1) if the result in subdivision 13a, paragraph (a), clause (iii), for fiscal year 1998 is less than the fiscal year 1996 base allowance, the transportation transition allowance equals the fiscal year 1996 base allowance minus the result in subdivision 13a, paragraph (a), clause (iii); or

(2) if the result in subdivision 13a, paragraph (a), clause (iii), for fiscal year 1998 and later is greater than or equal to the fiscal year 1996 base allowance, the transportation transition allowance equals zero.

(b) For fiscal years 1997 and 1998, a district's training and experience transition allowance is equal to the training and experience revenue the district would have received under Minnesota Statutes 1994, section 124A.22, subdivision 4, divided by the actual pupil units for fiscal year 1997 minus $130. For fiscal year 1999 and later, a district's training and experience transition allowance equals zero.

~~If the training and experience transition allowance is less than zero, the reduction shall be determined according to the following schedule:~~

~~(1) for fiscal year 1997, the reduction is equal to .9 times the amount initially determined;~~

~~(2) for fiscal year 1998, the reduction is equal to .75 times the amount initially determined; and~~

~~(c)~~ A district's ~~transition~~ compensatory transition allowance equals the greater of zero or the difference between:

(1) the amount of compensatory revenue the district would have received under subdivision 3 for fiscal year 1998 computed using a basic formula allowance of $3,281; and

(2) the amount the district receives under subdivision 3; divided by

(3) the district's actual pupil units for fiscal year 1998.

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(c) A district's cooperation transition allowance for fiscal year 2000 and later equals the greater of zero or the difference between:

(1) $25,000; and

(2) $67 times the district's actual pupil units for fiscal year 2000.

(d) A district's transition allowance for fiscal year 1998 is equal to the sum of its transportation transition allowance, its training and experience transition allowance, and its transition compensatory allowance. A district's transition allowance for fiscal year 1999 ~~and thereafter~~ is equal to the sum of its transportation transition allowance and its ~~transition~~ compensatory transition allowance. A district's transition allowance for fiscal year 2000 and thereafter is equal to the sum of its transportation transition allowance, its compensatory transition allowance, and its cooperation transition allowance.

Sec. 31. Minnesota Statutes 1996, section 124A.22, is amended by adding a subdivision to read:

Subd. 14. [GRADUATION STANDARDS IMPLEMENTATION REVENUE.] (a) A school district's graduation standards implementation revenue is equal to $52 times its actual pupil units for fiscal year 1999 plus $14 times its actual pupil units for fiscal year 1999 if the district implements the graduation rule under section 121.1114, paragraph (b), and $43 per pupil unit for all districts for fiscal year 2000 and later. Graduation standards implementation revenue is reserved and must be used according to paragraphs (b) and (c).

(b) For fiscal year 1999, revenue must be reserved for programs according to clauses (1) to (3).

(1) At least $20 per actual pupil unit plus $14 per actual pupil unit for a district that implements the graduation rule under section 121.1114, paragraph (b), must be allocated to school sites in proportion to the number of students enrolled at each school site weighted according to section 124.17, subdivision 1, and is reserved for programs designed to enhance the implementation of the graduation rule through intensive staff development and decentralized decision making.

(2) At least $5 per actual pupil unit is reserved for gifted and talented programs that are integrated with the graduation rule. This aid must supplement, not supplant, money spent on gifted and talented programs authorized under Laws 1997, First Special Session chapter 4, article 5, section 24.

(3) Remaining aid under this paragraph must be used:

(i) for technology purposes including wiring, network connections, and other technology-related infrastructure improvements; purchase or lease of computer software and hardware to be used in classrooms and for instructional purposes; purchase or lease of interactive television network equipment and network support; purchase or lease of computer software and hardware designed to support special needs programming and limited English proficiency programming; network and technical support; and purchase of textbooks and other instructional materials; or

(ii) to reduce class size.

(c) For fiscal year 2000 and later, revenue must be allocated to school sites and reserved for programs designed to enhance the implementation of the graduation rule through: (1) staff development programs; (2) technology purposes under paragraph (b), clause (3); (3) gifted and talented programs; or (4) class size reduction programs based at the school site.

(d) To the extent possible, school districts shall make opportunities for graduation standards implementation available to teachers employed by intermediate school districts. If the commissioner determines that the supplemental appropriation made for this subdivision under section 40, subdivision 2, is in excess of the amount needed for this subdivision, the commissioner shall make equal payments of one-third of the excess to each intermediate school district for the purpose of paragraph (a).

(e) A district that qualifies for the referendum allowance reduction under section 124A.03, subdivision 3c, shall receive a graduation standards implementation equity adjustment. In fiscal year 1999, the equity adjustment aid is equal to $29 per actual pupil unit. In fiscal year 2001 and thereafter, the equity adjustment is equal to $20 per actual pupil unit.

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Sec. 32. [124A.226] [RESERVED REVENUE FOR DISTRICT COOPERATION.]

A district that was a member of an intermediate school district organized pursuant to chapter 136D on July 1, 1996, must place a portion of its general education revenue in a reserved account for instructional services from entities formed for cooperative services for special education programs and secondary vocational programs. The amount reserved is equal to the levy made according to Minnesota Statutes 1993, section 124.2727, subdivision 6, for taxes payable in 1994 divided by the actual pupil units in the intermediate school district for fiscal year 1995 times the number of actual pupil units in the school district in 1995. The district must use 5/11 of the revenue for special education and 6/11 of the revenue for secondary vocational education. The district must demonstrate that the revenue is being used to provide the full range of special education and secondary vocational programs and services available to each child served by the intermediate. The secondary vocational programs and services must meet the requirements established in an articulation agreement developed between the state board of education and the board of trustees of the Minnesota state colleges and universities.

A district that was a member of an education district organized pursuant to section 122.91 on July 1, 1999, must place a portion of its general education revenue in a reserve account for instructional services from entities formed for cooperative services. Services may include secondary vocational programs, special education programs, staff development, and gifted and talented instruction. The amount reserved is equal to $50 per pupil unit times the actual number of pupil units in the district.

Sec. 33. Minnesota Statutes 1997 Supplement, section 124A.23, subdivision 1, is amended to read:

Subdivision 1. [GENERAL EDUCATION TAX RATE.] The commissioner shall establish the general education tax rate by July 1 of each year for levies payable in the following year. The general education tax capacity rate shall be a rate, rounded up to the nearest hundredth of a percent, that, when applied to the adjusted net tax capacity for all districts, raises the amount specified in this subdivision. The general education tax rate shall be the rate that raises ~~$1,359,000,000 for fiscal year 1998 and~~ $1,385,500,000 for fiscal year 1999 ~~and~~, $1,384,900,000 for fiscal year 2000, and $1,387,100,000 for fiscal year 2001, and later fiscal years. The general education tax rate may not be changed due to changes or corrections made to a district's adjusted net tax capacity after the tax rate has been established. If the levy target for fiscal year 1999 or fiscal year 2000 is changed by another law enacted during the 1997 or 1998 session, the commissioner shall reduce the general education levy target in this ~~bill~~ section by the amount of the reduction in the enacted law.

Sec. 34. Minnesota Statutes 1997 Supplement, section 124A.28, subdivision 1, is amended to read:

Subdivision 1. [USE OF THE REVENUE.] The compensatory education revenue under section 124A.22, subdivision 3, and the portion of the transition revenue adjustment under section 124A.22, subdivision 13c, attributable to the compensatory transition allowance under section 124A.22, subdivision 13b, paragraph (b), must be used to meet the educational needs of pupils who enroll under-prepared to learn and whose progress toward meeting state or local content or performance standards is below the level that is appropriate for learners of their age. Any of the following may be provided to meet these learners' needs:

(1) direct instructional services under the assurance of mastery program according to section 124.3111;

(2) remedial instruction in reading, language arts, mathematics, other content areas, or study skills to improve the achievement level of these learners;

(3) additional teachers and teacher aides to provide more individualized instruction to these learners through individual tutoring, lower instructor-to-learner ratios, or team teaching;

(4) a longer school day or week during the regular school year or through a summer program that may be offered directly by the site or under a performance-based contract with a community-based organization;

(5) comprehensive and ongoing staff development consistent with district and site plans according to section 126.70, for teachers, teacher aides, principals, and other personnel to improve their ability to identify the needs of these learners and provide appropriate remediation, intervention, accommodations, or modifications;

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(6) instructional materials and technology appropriate for meeting the individual needs of these learners;

(7) programs to reduce truancy, encourage completion of high school, enhance self-concept, provide health services, provide nutrition services, provide a safe and secure learning environment, provide coordination for pupils receiving services from other governmental agencies, provide psychological services to determine the level of social, emotional, cognitive, and intellectual development, and provide counseling services, guidance services, and social work services;

(8) bilingual programs, bicultural programs, and programs for learners of limited English proficiency;

(9) all day kindergarten;

(10) extended school day and extended school year programs;

(11) substantial parent involvement in developing and implementing remedial education or intervention plans for a learner, including learning contracts between the school, the learner, and the parent that establish achievement goals and responsibilities of the learner and the learner's parent or guardian; and

(12) other methods to increase achievement, as needed.

Sec. 35. Minnesota Statutes 1997 Supplement, section 124A.28, subdivision 1a, is amended to read:

Subd. 1a. [BUILDING ALLOCATION.] (a) For fiscal years 1999 and 2000, upon approval by the commissioner, a district must allocate at least the difference between its compensatory revenue for that year and 95 percent of the amount of compensatory revenue that the district would have received under section 124A.22, subdivision 3, for fiscal year 1998 computed using a basic formula allowance of $3,281 to each school building in the district where the children who have generated the revenue are served.

(b) A district may allocate compensatory revenue not otherwise allocated under paragraph (a) to school sites accordingly to a plan adopted by the school board.

(c) For the purposes of this section and section 124.17, subdivision 1d, "building" means education site as defined in section 123.951, subdivision 1.

(d) If the pupil is served at a site other than one owned and operated by the district, the revenue shall be paid to the district and used for services for pupils who generate the revenue.

Sec. 36. Minnesota Statutes 1996, section 124A.29, subdivision 1, is amended to read:

Subdivision 1. [STAFF DEVELOPMENT ~~AND PARENTAL INVOLVEMENT~~ REVENUE.] A district is ~~encouraged~~ required to reserve ~~general education revenue~~ an amount equal to at least one percent of the basic formula allowance for in-service education for programs under section 126.77, subdivision 2, for staff development plans, including plans for challenging instructional activities and experiences under section 126.70, and for curriculum development and programs, other in-service education, teachers' workshops, teacher conferences, the cost of substitute teachers staff development purposes, and other related costs for staff development efforts. Districts may expend an additional amount of basic revenue for staff development based on their needs. The school board shall initially allocate 50 percent of the revenue to each school site in the district on a per teacher basis, which shall be retained by the school site until used. The board may retain 25 percent to be used for district wide staff development efforts. The remaining 25 percent of the revenue shall be used to make grants to school sites that demonstrate exemplary use of allocated staff development revenue. A grant may be used for any purpose authorized under section 126.70, 126.77, subdivision 2, or for the costs of curriculum development and programs, other in-service education, teachers' workshops, teacher conferences, substitute teachers for staff development purposes, and other staff development efforts, and determined by the site decision-making team. The site decision-making team must demonstrate to the school board the extent to which staff at the site have met the outcomes of the program. The board may withhold a portion of initial allocation of revenue if the staff development outcomes are not being met.

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Sec. 37. Minnesota Statutes 1996, section 124A.292, subdivision 3, is amended to read:

Subd. 3. [STAFF DEVELOPMENT LEVY.] A district's levy equals ~~its revenue times the lesser of one or the ratio of:~~

(1) the quotient derived by dividing the district's adjusted net tax capacity for the year before the year the levy is certified by the district's actual pupil units for the school year to which the levy is attributable, to

~~(2) the equalizing factor for the school year to which the levy is attributable~~ the number of teachers at the site times $8.15.

Sec. 38. Minnesota Statutes 1996, section 124A.30, is amended to read:

124A.30 [STATEWIDE AVERAGE REVENUE.]

By October 1 of each year the commissioner shall estimate the statewide average adjusted general ~~education~~ revenue per actual pupil unit and the ~~range~~ disparity in adjusted general ~~education~~ revenue among pupils and districts by computing ~~the difference between the fifth and~~ the ratio of the ninety-fifth ~~percentiles~~ percentile to the fifth percentile of adjusted general ~~education~~ revenue. The commissioner must provide that information to all school districts.

If the disparity in adjusted general ~~education~~ revenue as measured by the ~~difference between the fifth and~~ ratio of the ninety-fifth ~~percentiles~~ percentile to the fifth percentile increases in any year, the commissioner ~~must propose a~~ shall recommend to the legislature options for change in the general education formula that will limit the disparity in adjusted general ~~education~~ revenue to no more than the disparity for the previous school year. The commissioner must submit the ~~proposal~~ recommended options to the education committees of the legislature by January 15.

For purposes of this section, adjusted general revenue means the sum of basic revenue under section 124A.22, subdivision 2; supplemental revenue under section 124A.22, subdivisions 8 and 9; transition revenue under section 124.22, subdivision 13c; and referendum revenue under section 124A.03.

Sec. 39. Laws 1992, chapter 499, article 7, section 31, is amended to read:

Sec. 31. [REPEALER.]

Minnesota Statutes 1990, sections 124A.02, subdivision 24; 124A.23, subdivisions 2 and 3; 124A.26, subdivisions 2 and 3; 124A.27; 124A.28; and 124A.29, subdivision 2; and Minnesota Statutes 1991 Supplement, sections 124A.02, subdivisions 16 and 23; 124A.03, subdivisions 1b, 1c, 1d, 1e, 1f, 1g, 1h, and 1i; 124A.04; 124A.22, subdivisions 2, 3, 4, 4a, 4b, 8, and 9; 124A.23, subdivisions 1, 4, and 5; 124A.24; 124A.26, subdivision 1; and 124A.29, subdivision 1, are repealed effective June 30, ~~1999~~ 2001; Laws 1991, chapter 265, article 7, section 35, is repealed.

Sec. 40. Laws 1997, First Special Session chapter 4, article 1, section 58, is amended to read:

Sec. 58. [BUS PURCHASE LEVY.]

(a) For 1997 taxes payable in 1998, a school district may levy the amount necessary to eliminate the deficit in the reserved fund balance account for bus purchases in its transportation fund as of June 30, 1996.

(b) For 1998 taxes payable in 1999, a school district that had a positive balance in the reserved fund balance account for bus purchases in its transportation fund as of June 30, 1996, but that had already entered into a contract for new buses or ordered new buses that had not been received prior to June 30, 1996, may levy an amount equal to the difference between the purchase price of the buses and its balance in the reserve account for bus purchases.

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Sec. 41. Laws 1997, First Special Session chapter 4, article 1, section 61, subdivision 3, is amended to read:

Subd. 3. [EQUALIZING FACTORS.] The commissioner shall adjust each equalizing factor established using adjusted net tax capacity per actual pupil unit under Minnesota Statutes, chapters 124 and 124A, by dividing the equalizing factor by the ratio of the statewide tax capacity as calculated using the class rates in effect for assessment year 1996 to the statewide tax capacity using the class rates for that assessment year.

Sec. 42. Laws 1997, First Special Session chapter 4, article 5, section 28, subdivision 12, is amended to read:

Subd. 12. [GRADUATION RULE IMPLEMENTATION AT THE SITE AID.] For graduation rule implementation:

$10,000,000 . . . . . 1998

(a) This appropriation shall be paid to districts according to paragraph (b). The purpose of the aid is to accelerate the implementation of the graduation rule throughout all education sites in the district through intensive staff development and decentralized decision making. The board shall work with the teaching staff in the district to determine the most effective staff development processes to assure an acceleration of the implementation. This appropriation is one-time only.

(b) A district shall receive aid equal to $10 times the number of fund balance pupil units in the district for fiscal year 1998 excluding pupil units attributable to shared time pupils. At least 30 percent must be used for the purposes of paragraph (a).

Sec. 43. [COMPENSATION PUPIL UNITS; FISCAL YEAR 1998.]

Notwithstanding Minnesota Statutes, section 124.17, subdivision 1d, paragraphs (a) to (c), for fiscal year 1998 only, compensation revenue pupil units for buildings with no free or reduced price lunch counts for fiscal year 1997 because the site did not participate in the national school lunch program, or for a contracted alternative program for which no count was reported to the department of children, families, and learning, shall be computed using data for the current fiscal year.

Sec. 44. [ONE-TIME DISTRICT-LEVEL COMPENSATORY REVENUE FOR TRANSITION.]

Subdivision 1. [ELIGIBILITY.] For fiscal year 1999 only, a district is eligible for supplemental compensatory revenue if its growth factor is less than 35 percent.

Subd. 2. [GROWTH FACTOR.] A school district's growth factor equals the ratio of:

(1) its fiscal year 1999 compensatory revenue per actual pupil unit for that year less the amount of compensatory revenue divided by the district's actual pupil units for fiscal year 1998 that the district would have received under Minnesota Statutes, section 124A.22, subdivision 3, for fiscal year 1998 computed using a basic formula allowance of $3,281; to

(2) the amount of compensatory revenue divided by the district's actual pupil units for fiscal year 1998 that the district would have received under Minnesota Statutes, section 124A.22, subdivision 3, for fiscal year 1998 computed using a basic formula allowance of $3,281.

Subd. 3. [REVENUE.] Supplemental compensatory revenue equals the total number of compensation revenue pupil units computed according to Minnesota Statutes, section 124.17, subdivision 1d, at each site for fiscal year 1998, times $216.

Subd. 4. [ALLOCATION.] Revenue under this section is allocated to school districts, and must be used according to Minnesota Statutes, section 124A.28, subdivision 1.

Sec. 45. [SUPPLEMENTAL REVENUE.]

Supplemental revenue for fiscal years 1998 and later under Minnesota Statutes, section 124A.22, subdivision 8, is increased by the following amounts:

(1) for independent school district No. 593, Crookston, $117,000;

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(2) for independent school district No. 361, International Falls, $107,000;

(3) for independent school district No. 706, Virginia, $43,000; and

(4) for independent school district No. 2154, Eveleth-Gilbert, $8,000.

Supplemental revenue increased under this section is not subject to reduction under Minnesota Statutes, section 124A.22, subdivision 9.

Sec. 46. [INDEPENDENT SCHOOL DISTRICT NO. 2862, JACKSON COUNTY CENTRAL; REFERENDUM AUTHORITY.]

Subdivision 1. [REFERENDUM REVENUE ADJUSTMENT.] Notwithstanding Minnesota Statutes, section 124A.03, referendum equalization aid for fiscal year 1998 for independent school district No. 2862, Jackson County Central, is $72,000, and the district's net tax capacity referendum levy is $61,000.

Subd. 2. [AID ADJUSTMENT.] The department of children, families, and learning shall adjust the aid payments for fiscal year 1998 to independent school district No. 2862, Jackson County Central, according to subdivision 1.

Subd. 3. [LEVY ADJUSTMENT.] For taxes payable in 1999, the department of children, families, and learning shall make a levy adjustment for the independent school district No. 2862, Jackson County Central, referendum levy authority for fiscal year 1998, according to subdivision 1.

Sec. 47. [LA CRESCENT-HOKAH; DEBT SERVICE EQUALIZATION.]

For the purpose of calculating debt service equalization, donations for capital improvements received before December 31, 2000, to independent school district No. 300, La Crescent-Hokah, must be considered as part of the percentage that is required to be raised locally under Minnesota Statutes, section 124.95, subdivision 3.

Sec. 48. [BUS LEVY; MAHTOMEDI.]

In addition to other levies, independent school district No. 832, Mahtomedi, a district that was in statutory operating debt, according to Minnesota Statutes, section 121.914, subdivisions 1 and 2, may levy an amount up to $110,000 for the purchase of four type III school buses. This amount may be levied over a period of three years.

Sec. 49. [ELMORE LEVY ADJUSTMENT.]

For property taxes payable in 1999 only, the levy for independent school district No. 2860, Blue Earth area, must be reduced by an amount equal to the amount levied by independent school district No. 219, Elmore, according to Laws 1996, chapter 412, article 5, section 18, subdivision 2, for taxes payable in 1997. The levy reduction must be applied against all taxable property in preexisting independent school district No. 219, Elmore, only.

Sec. 50. [APPROPRIATION.]

Subdivision 1. [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.] The sums indicated in this section are appropriated from the general fund to the department of children, families, and learning for the fiscal years designated.

Subd. 2. [GENERAL EDUCATION AID.] For general education aid:

$257,000 . . . . . 1998

$70,246,000 . . . . . 1999

This aid is in addition to any other aid appropriated for this purpose.

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Subd. 3. [SHIFT ELIMINATED.] For additional general education aid for eliminating the property tax recognition shift under this article:

$90,100,000 . . . . . 1999

Notwithstanding the provisions of Minnesota Statutes, section 124.195, the commissioner of children, families, and learning shall pay the fiscal year 1999 appropriation on June 20, 1999.

Subd. 4. [DISTRICT-LEVEL COMPENSATORY REVENUE.] For one-time additional district level compensatory revenue:

$14,700,000 . . . . . 1999

Of this amount:

(1) $4,500,000 is for a grant to independent school district No. 11, Anoka-Hennepin;

(2) $500,000 is for a grant to independent school district No. 281, Robbinsdale;

(3) $400,000 is for a grant to independent school district No. 625, St. Paul;

(4) $900,000 is for a grant to independent school district No. 709, Duluth;

(5) $800,000 is for a grant to independent school district No. 279, Osseo; and

(6) $200,000 is for a grant to independent school district No. 535, Rochester.

Subd. 5. [TECHNOLOGY INTEGRATION PROJECT.] For a grant to independent school district No. 62, Ortonville, to implement a technology integration program:

$200,000 . . . . . 1999

The purpose of the technology integration pilot project is to demonstrate successful and effective uses of technology for students, teachers, guidance counselors, administrators, and parents to implement Minnesota's graduation standards and track student performance in meeting the standards.

Sec. 51. [REPEALER.]

(a) Minnesota Statutes 1997 Supplement, section 124.912, subdivisions 2 and 3, are repealed effective for taxes payable in 1998.

(b) Minnesota Statutes 1996, sections 121.904, subdivision 4c; and 124.2601, subdivision 4, are repealed.

(d) Minnesota Statutes 1996, section 124.2713, subdivision 6b, is repealed effective for taxes payable in 1999 and revenue for fiscal year 2000.

(e) Minnesota Statutes 1996, section 124.2727, subdivision 6b, is repealed effective for taxes payable in 1999.

(f) Minnesota Statutes 1996, section 124A.292, subdivisions 2 and 4, are repealed effective for revenue for fiscal year 2000.

(g) Laws 1997, chapter 231, article 1, section 17, is repealed effective the day following final enactment.

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Sec. 52. [EFFECTIVE DATES.]

(a) Sections 1, 2, 15, 16, 17, 37, 38, and 40 are effective July 1, 1998.

(b) Sections 4, 5, 8, 9, 12, 13, 25, 41, 42, and 43 are effective for revenue for fiscal year 1998.

(d) Sections 10, 11, 26, 27, 28, 31, 34, and 35 are effective for revenue for fiscal year 1999.

(e) Section 14 is effective July 1, 1999.

(f) Section 18 is effective for revenue for fiscal year 2000.

(g) Section 21 is effective retroactive for revenue for fiscal year 1997.

(h) Sections 24, 33, and 46 are effective the day following final enactment.

Section 1. Minnesota Statutes 1996, section 120.03, subdivision 1, is amended to read:

SPECIAL EDUCATION

Subdivision 1. Every child who has a hearing impairment, visual disability, speech or language impairment, physical handicap, other health impairment, mental handicap, emotional/behavioral disorder, specific learning disability, autism, traumatic brain injury, multiple disabilities, or deaf/blind disability and needs special instruction and services, as determined by the standards of the state board, is a child with a disability. In addition, every child under age ~~five~~ three, and at local district discretion from age three to age seven, who needs special instruction and services, as determined by the standards of the state board, because the child has a substantial delay or has an identifiable physical or mental condition known to hinder normal development is a child with a disability.

Sec. 2. [120.031] [STATEWIDE DATA MANAGEMENT SYSTEM TO MAXIMIZE MEDICAL ASSISTANCE REIMBURSEMENT.]

Subdivision 1. [DEFINITION.] For purposes of this section, cooperative unit has the meaning given in section 123.35, subdivision 19b, paragraph (d).

Subd. 2. [STATEWIDE DATA MANAGEMENT SYSTEM.] The commissioner of children, families, and learning, in cooperation with the commissioner of human services, shall develop a statewide data management system using the educational data reporting system or other existing data management system for school districts and cooperative units to use to maximize medical assistance reimbursement for health and health-related services provided under individual education plans and individual family service plans. The system must be appropriately integrated with state and local existing and developing human services and education data systems. The statewide data management system must enable school district and cooperative unit staff to:

(1) establish medical assistance billing systems or improve existing systems;

(2) understand the appropriate medical assistance billing codes for services provided under individual education plans and individual family service plans;

(3) comply with the Individuals with Disabilities Education Act, Public Law Number 105-17;

(4) contract with billing agents; and

(5) carry out other activities necessary to maximize medical assistance reimbursement.

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Subd. 3. [IMPLEMENTATION.] Consistent with Minnesota Statutes 256B.0625, subdivision 26, school districts may enroll as medical assistance providers or subcontractors and bill the department of human services under the medical assistance fee for service claims processing system for special education services which are covered services under chapter 256B, which are provided in the school setting for a medical assistance recipient, and for whom the district has secured informed consent consistent with section 13.05, subdivision 4, paragraph (d), and section 256B.77, subdivision 2, paragraph (p), to bill for each type of covered service. A school district is not eligible to enroll as a home care provider or a personal care provider organization for purposes of billing home care services under section 256B.0627 until the commissioner of human services issues a bulletin instructing county public health nurses on how to assess for the needs of eligible recipients during school hours. To use private duty nursing services or personal care services at school, the recipient or responsible party must provide written authorization in the care plan identifying the chosen provider and the daily amount of services to be used at school. Medical assistance services for those enrolled in a prepaid health plan shall remain the responsibility of the contracted health plan subject to their network, credentialing, prior authorization, and determination of medical necessity criteria. The commissioner of human services shall adjust payments to health plans to reflect increased costs incurred by health plans due to increased payments made to school districts or new payment or delivery arrangements developed by health plans in cooperation with school districts.

Sec. 3. Minnesota Statutes 1996, section 120.06, subdivision 2a, is amended to read:

Subd. 2a. [EDUCATION AND RESIDENCE OF HOMELESS.] (a) Notwithstanding subdivision 1, a school district must not deny free admission to a homeless person of school age solely because the school district cannot determine that the person is a resident of the school district.

(b) The school district of residence for a homeless person of school age shall be the school district in which the homeless shelter or other program, center, or facility assisting the homeless person is located. The educational services a school district provides to a homeless person must allow the person to work toward meeting the graduation standards under section 121.11, subdivision 7c.

Sec. 4. Minnesota Statutes 1996, section 120.064, subdivision 5, is amended to read:

Subd. 5. [CONTRACT.] The sponsor's authorization for a charter school shall be in the form of a written contract signed by the sponsor and the board of directors of the charter school. The contract for a charter school shall be in writing and contain at least the following:

(1) a description of a program that carries out one or more of the purposes in subdivision 1;

(2) specific outcomes pupils are to achieve under subdivision 10;

(3) admission policies and procedures;

(4) management and administration of the school;

(5) requirements and procedures for program and financial audits;

(6) how the school will comply with subdivisions 8, 13, 15, and 21;

(7) assumption of liability by the charter school;

(8) types and amounts of insurance coverage to be obtained by the charter school; ~~and~~

(9) the term of the contract, which may be up to three years; and

(10) if the board of directors or the operators of the charter school provide special instruction and services for children with a disability under section 120.17, a description of the financial parameters within which the charter school will operate to provide the special instruction and services to children with a disability.

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Sec. 5. Minnesota Statutes 1996, section 120.101, subdivision 3, is amended to read:

Subd. 3. [PARENT DEFINED; RESIDENCY DETERMINED.] (a) In sections 120.101 to 120.103, "parent" means a parent, guardian, or other person having legal custody of a child.

(b) In section 120.17, "parent" means a parent, guardian, or other person having legal custody of a child under age 18. For an unmarried pupil age 18 or over, "parent" means the pupil unless a guardian or conservator has been appointed, in which case it means the guardian or conservator.

(c) For purposes of section 120.17, the school district of residence for an unmarried pupil age 18 or over who is a parent under paragraph (b) and who is placed in a center for care and treatment, shall be the school district in which the pupil's biological or adoptive parent or designated guardian resides.

(d) For a married pupil age 18 or over, the school district of residence is the school district in which the married pupil resides.

Sec. 6. Minnesota Statutes 1996, section 120.17, subdivision 1, is amended to read:

Subdivision 1. [SPECIAL INSTRUCTION FOR CHILDREN WITH A DISABILITY.] (a) As defined in paragraph (b), to the extent required in federal law as of July 1, 1999, every district shall provide special instruction and services, either within the district or in another district, for children with a disability who are residents of the district and who are disabled as set forth in section 120.03.

(b) Notwithstanding any age limits in laws to the contrary, special instruction and services must be provided from birth until September 1 after the child with a disability becomes 22 years old but shall not extend beyond secondary school or its equivalent, except as provided in section 126.22, subdivision 2. Local health, education, and social service agencies shall refer children under age five who are known to need or suspected of needing special instruction and services to the school district. Districts with less than the minimum number of eligible children with a disability as determined by the state board shall cooperate with other districts to maintain a full range of programs for education and services for children with a disability. This subdivision does not alter the compulsory attendance requirements of section 120.101.

Sec. 7. Minnesota Statutes 1996, section 120.17, subdivision 2, is amended to read:

Subd. 2. [METHOD OF SPECIAL INSTRUCTION.] (a) As defined in this subdivision, to the extent required by federal law as of July 1, 1999, special instruction and services for children with a disability must be based on the assessment and individual education plan. The instruction and services may be provided by one or more of the following methods:

(1) in connection with attending regular elementary and secondary school classes;

(2) establishment of special classes;

(3) at the home or bedside of the child;

(4) in other districts;

(5) instruction and services by special education cooperative centers established under this section, or in another member district of the cooperative center to which the resident district of the child with a disability belongs;

(6) in a state residential school or a school department of a state institution approved by the commissioner;

(7) in other states;

(8) by contracting with public, private or voluntary agencies;

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(9) for children under age five and their families, programs and services established through collaborative efforts with other agencies;

(10) for children under age five and their families, programs in which children with a disability are served with children without a disability; and

(11) any other method approved by the commissioner.

(b) Preference shall be given to providing special instruction and services to children under age three and their families in the residence of the child with the parent or primary caregiver, or both, present.

(c) The primary responsibility for the education of a child with a disability shall remain with the district of the child's residence regardless of which method of providing special instruction and services is used. If a district other than a child's district of residence provides special instruction and services to the child, then the district providing the special instruction and services shall notify the child's district of residence before the child's individual education plan is developed and shall provide the district of residence an opportunity to participate in the plan's development. The district of residence must inform the parents of the child about the methods of instruction that are available.

(d) Paragraphs (e) to (i) may be cited as the "Blind Persons' Literacy Rights and Education Act."

(e) The following definitions apply to paragraphs (f) to (i).

"Blind student" means an individual who is eligible for special educational services and who:

(1) has a visual acuity of 20/200 or less in the better eye with correcting lenses or has a limited field of vision such that the widest diameter subtends an angular distance of no greater than 20 degrees; or

(2) has a medically indicated expectation of visual deterioration.

"Braille" means the system of reading and writing through touch commonly known as standard English Braille.

"Individualized education plan" means a written statement developed for a student eligible for special education and services pursuant to this section and section 602(a)(20) of part A of the Individuals with Disabilities Education Act, United States Code, title 20, section 1401(a).

(f) In developing an individualized education plan for each blind student the presumption must be that proficiency in Braille reading and writing is essential for the student to achieve satisfactory educational progress. The assessment required for each student must include a Braille skills inventory, including a statement of strengths and deficits. Braille instruction and use are not required by this paragraph if, in the course of developing the student's individualized education program, team members concur that the student's visual impairment does not affect reading and writing performance commensurate with ability. This paragraph does not require the exclusive use of Braille if other special education services are appropriate to the student's educational needs. The provision of other appropriate services does not preclude Braille use or instruction. Instruction in Braille reading and writing shall be available for each blind student for whom the multidisciplinary team has determined that reading and writing is appropriate.

(g) Instruction in Braille reading and writing must be sufficient to enable each blind student to communicate effectively and efficiently with the same level of proficiency expected of the student's peers of comparable ability and grade level.

(h) The student's individualized education plan must specify:

(1) the results obtained from the assessment required under paragraph (f);

(2) how Braille will be implemented through integration with other classroom activities;

(3) the date on which Braille instruction will begin;

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(4) the length of the period of instruction and the frequency and duration of each instructional session;

(5) the level of competency in Braille reading and writing to be achieved by the end of the period and the objective assessment measures to be used; and

(6) if a decision has been made under paragraph (f) that Braille instruction or use is not required for the student:

(i) a statement that the decision was reached after a review of pertinent literature describing the educational benefits of Braille instruction and use; and

(ii) a specification of the evidence used to determine that the student's ability to read and write effectively without Braille is not impaired.

(i) Instruction in Braille reading and writing is a service for the purpose of special education and services under this section.

(j) Paragraphs (e) to (i) shall not be construed to supersede any rights of a parent or guardian of a child with a disability under federal or state law.

Sec. 8. Minnesota Statutes 1996, section 120.17, subdivision 3, is amended to read:

Subd. 3. [RULES OF THE STATE BOARD.] (a) As defined in this paragraph, but not to exceed the extent required by federal law as of July 1, 1999, the state board shall promulgate rules relative to qualifications of essential personnel, courses of study, methods of instruction, pupil eligibility, size of classes, rooms, equipment, supervision, parent consultation, and ~~any~~ other ~~rules it deems~~ necessary rules for instruction of children with a disability. These rules shall provide standards and procedures appropriate for the implementation of and within the limitations of subdivisions 3a and 3b. These rules shall also provide standards for the discipline, control, management and protection of children with a disability. The state board shall not adopt rules for pupils served ~~in level 1, 2, or 3, as defined in Minnesota Rules, part 3525.2340,~~ primarily in the regular classroom establishing either case loads or the maximum number of pupils that may be assigned to special education teachers. The state board, in consultation with the departments of health and human services, shall adopt permanent rules for instruction and services for children under age five and their families. These rules are binding on state and local education, health, and human services agencies. The state board shall adopt rules to determine eligibility for special education services. The rules shall include procedures and standards by which to grant variances for experimental eligibility criteria. The state board shall, according to section 14.05, subdivision 4, notify a district applying for a variance from the rules within 45 calendar days of receiving the request whether the request for the variance has been granted or denied. If a request is denied, the board shall specify the program standards used to evaluate the request and the reasons for denying the request.

(b) As provided in this paragraph, but not to exceed the extent required by federal law as of July 1, 1999, the state's regulatory scheme should support schools by assuring that all state special education rules adopted by the state board of education result in one or more of the following outcomes:

(1) increased time available to teachers and, where appropriate, to support staff including school nurses for educating students through direct and indirect instruction;

(2) consistent and uniform access to effective education programs for students with disabilities throughout the state;

(3) reduced inequalities, and conflict, appropriate due process hearing procedures and reduced court actions related to the delivery of special education instruction and services for students with disabilities;

(4) clear expectations for service providers and for students with disabilities;

(5) increased accountability for all individuals and agencies that provide instruction and other services to students with disabilities;

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(6) greater focus for the state and local resources dedicated to educating students with disabilities; and

(7) clearer standards for evaluating the effectiveness of education and support services for students with disabilities.

Sec. 9. Minnesota Statutes 1996, section 120.17, subdivision 3a, is amended to read:

Subd. 3a. [SCHOOL DISTRICT OBLIGATIONS.] (a) As defined in this subdivision, to the extent required by federal law as of July 1, 1999, every district shall ensure that:

(1) all students with disabilities are provided the special instruction and services which are appropriate to their needs. Where the individual education plan team has determined appropriate goals and objectives based on the student's needs, including the extent to which the student can be included in the least restrictive environment, and where there are essentially equivalent and effective instruction, related services, or assistive technology devices available to meet the student's needs, cost to the school district may be among the factors considered by the team in choosing how to provide the appropriate services, instruction, or devices that are to be made part of the student's individual education plan. The student's needs and the special education instruction and services to be provided shall be agreed upon through the development of an individual education plan. The plan shall address the student's need to develop skills to live and work as independently as possible within the community. By grade 9 or age 14, the plan shall address the student's needs for transition from secondary services to post-secondary education and training, employment, community participation, recreation, and leisure and home living. In developing the plan, districts must inform parents of the full range of transitional goals and related services that should be considered. The plan must include a statement of the needed transition services, including a statement of the interagency responsibilities or linkages or both before secondary services are concluded;

(2) children with a disability under age five and their families are provided special instruction and services appropriate to the child's level of functioning and needs;

(3) children with a disability and their parents or guardians are guaranteed procedural safeguards and the right to participate in decisions involving identification, assessment including assistive technology assessment, and educational placement of children with a disability;

(4) eligibility and needs of children with a disability are determined by an initial assessment or reassessment, which may be completed using existing data under United States Code, title 20, section 33, et seq.;

(5) to the maximum extent appropriate, children with a disability, including those in public or private institutions or other care facilities, are educated with children who are not disabled, and that special classes, separate schooling, or other removal of children with a disability from the regular educational environment occurs only when and to the extent that the nature or severity of the disability is such that education in regular classes with the use of supplementary services cannot be achieved satisfactorily;

~~(5)~~ (6) in accordance with recognized professional standards, testing and evaluation materials, and procedures utilized for the purposes of classification and placement of children with a disability are selected and administered so as not to be racially or culturally discriminatory; and

~~(6)~~ (7) the rights of the child are protected when the parents or guardians are not known or not available, or the child is a ward of the state.

(b) For paraprofessionals employed to work in programs for students with disabilities, the school board in each district shall ensure that:

(1) before or immediately upon employment, each paraprofessional develops sufficient knowledge and skills in emergency procedures, building orientation, roles and responsibilities, confidentiality, vulnerability, and reportability, among other things, to begin meeting the needs of the students with whom the paraprofessional works;

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(2) annual training opportunities are available to enable the paraprofessional to continue to further develop the knowledge and skills that are specific to the students with whom the paraprofessional works, including understanding disabilities, following lesson plans, and implementing follow-up instructional procedures and activities; and

(3) a districtwide process obligates each paraprofessional to work under the ongoing direction of a licensed teacher and, where appropriate and possible, the supervision of a school nurse.

Sec. 10. Minnesota Statutes 1996, section 120.17, subdivision 3b, is amended to read:

Subd. 3b. [PROCEDURES FOR DECISIONS.] As defined in this paragraph, but not to exceed the extent required by federal law as of July 1, 1999, every district shall utilize ~~at least~~ the following procedures for decisions involving identification, assessment, and educational placement of children with a disability:

(a) Parents and guardians shall receive prior written notice of:

(1) any proposed formal educational assessment or proposed denial of a formal educational assessment of their child;

(2) a proposed placement of their child in, transfer from or to, or denial of placement in a special education program; or

(3) the proposed provision, addition, denial or removal of special education services for their child;.

(b) The district shall not proceed with the initial formal assessment of a child, the initial placement of a child in a special education program, or the initial provision of special education services for a child without the prior written consent of the child's parent or guardian. The refusal of a parent or guardian to consent may be overridden by the decision in a hearing held pursuant to ~~clause~~ paragraph (e) at the district's initiative;.

(c) Parents and guardians shall have an opportunity to meet with appropriate district staff in at least one conciliation conference, mediation, or other method of alternative dispute resolution that the parties agree to, if they object to any proposal of which they are notified ~~pursuant to clause~~ under paragraph (a). The ~~conciliation process or other form of~~ state intends to encourage parties to resolve disputes through mediation or other form of alternative dispute resolution. A school district and a parent or guardian must participate in mediation using mediation services acceptable to both parties, unless a party objects to the mediation. Mediation shall remain available to the parties until a party objects to the mediation, or the mediator determines that further efforts to mediate a dispute are not warranted. All mediation is subject to the confidentiality requirements under rule 114.08 of the general rules of practice for the district courts. Alternative dispute resolution shall not be used to deny or delay a parent or guardian's right to a due process hearing. If the parent or guardian refuses efforts by the district to conciliate the dispute with the school district, the requirement of an opportunity for conciliation or other alternative dispute resolution shall be deemed to be satisfied. Notwithstanding other law, in any proceeding following a conciliation conference, the school district must not offer a conciliation conference memorandum into evidence, except for any portions that describe the district's final proposed offer of service. Otherwise, with respect to forms of dispute resolution, mediation, or conciliation, Minnesota Rule of Evidence 408 applies. The department of children, families, and learning may reimburse the districts or directly pay the costs of lay advocates, not to exceed $150 per dispute, used in conjunction with alternative dispute resolution.

(d) The commissioner shall establish a mediation process to assist parents, school districts, or other parties to resolve disputes arising out of the identification, assessment, or educational placement of children with a disability. The mediation process must be offered as an informal alternative to the due process hearing provided under ~~clause~~ paragraph (e), but must not be used to deny or postpone the opportunity of a parent or guardian to obtain a due process hearing.

(e) Parents, guardians, and the district shall have an opportunity to obtain an impartial due process hearing initiated and conducted by and in the school district responsible for assuring that an appropriate program is provided in accordance with state board rules, if the parent or guardian continues to object to:

(1) a proposed formal educational assessment or proposed denial of a formal educational assessment of their child;

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(2) the proposed placement of their child in, or transfer of their child to a special education program;

(3) the proposed denial of placement of their child in a special education program or the transfer of their child from a special education program;

(4) the proposed provision or addition of special education services for their child; or

(5) the proposed denial or removal of special education services for their child.

A hearing officer may limit an impartial due process hearing to an amount of time sufficient for each party to present its case. The party requesting the hearing shall plead with specificity as to what issues are in dispute and all issues not pleaded with specificity are deemed waived. Parties must limit evidence to the issues specifically pleaded. A hearing officer, at the officer's discretion, may exclude cumulative evidence or may encourage parties to present only essential witnesses.

Within five business days after the request for a hearing, or as directed by the hearing officer, the objecting party shall provide the other party with a brief written statement of particulars of the objection, the reasons for the objection, and the specific remedies sought. The other party shall provide the objecting party with a written response to the statement of objections within five business days of receipt of the statement.

The hearing shall take place before an impartial hearing officer mutually agreed to by the school board and the parent or guardian. Within four business days of the receipt of the request for the hearing, if the parties have not agreed on the hearing officer, the school board shall request the commissioner to appoint a hearing officer from a list maintained for that purpose. A retired judge, retired court referee, or retired federal magistrate judge who is otherwise qualified under this section and wishes to be a hearing officer may be put on the list. The school board shall include with the request the name of the person requesting the hearing, the name of the student, the attorneys involved, if any, and the date the hearing request was received. The hearing officer shall not be a school board member or employee of the school district where the child resides or of the child's school district of residence, an employee of any other public agency involved in the education or care of the child, or any person with a personal or professional interest which would conflict with the person's objectivity at the hearing. A person who otherwise qualifies as a hearing officer is not an employee of the district solely because the person is paid by the district to serve as a hearing officer. Any party to a hearing, except an expedited hearing under federal law, may make and serve upon the opposing party and the commissioner a notice to remove a hearing officer appointed by the commissioner. The notice shall be served and filed within two business days after the party receives notice of the appointment of the hearing officer by the commissioner.

No such notice may be filed by a party against a hearing officer who has presided at a motion or any other proceeding of which the party had notice. A hearing officer who has presided at a motion or other proceeding may not be removed except upon an affirmative showing of prejudice on the part of the hearing officer.

After the party has once disqualified a hearing officer as a matter of right, that party may disqualify the substitute hearing officer only by making an affirmative showing of prejudice or bias to the commissioner, or to the chief administrative law judge if the hearing officer is an administrative law judge.

Upon the filing of a notice to remove or if a party makes an affirmative showing of prejudice against a substitute hearing officer, the commissioner shall assign any other hearing officer to hear the matter.

If the hearing officer requests an independent educational assessment of a child, the cost of the assessment shall be at district expense. The proceedings shall be recorded and preserved, at the expense of the school district, pending ultimate disposition of the action.

(f) The decision of the hearing officer pursuant to ~~clause~~ paragraph (e) shall be rendered not more than 45 calendar days from the date of the receipt of the request for the hearing, except that hearing officers are encouraged to accelerate the timeline to 30 days for children birth through two whose needs change rapidly and require quick resolution of complaints. A hearing officer may not grant specific extensions of time beyond the 45-day period unless requested by either party for good cause shown on the record. Good cause includes the time required for mediation under paragraph (c). The decision

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of the hearing officer shall be binding on all parties unless appealed to the commissioner by the parent; guardian; school board of the district where the child resides pursuant to ~~clause (g)~~ paragraph (h); and also in the case of children birth through two, by the county board.

The local decision shall:

(1) be in writing;

(2) state the controlling facts upon which the decision is made in sufficient detail to apprise the parties and the hearing review officer of the basis and reason for the decision; and

(3) be based on the standards set forth in subdivision 3a and the rules of the state board.

(g) The hearing officer may require the resident school district to provide compensatory educational services to the child if the hearing officer finds that the school district has not offered or made available to the child a free appropriate public education in the child's educational program and that the child has suffered a loss of educational benefit. Such services shall take the form of direct and indirect special education and related services designed to address any loss of educational benefit that may have occurred. The hearing officer's finding shall be based on a present determination of whether the child has suffered a loss of educational benefit.

~~(g)~~ (h) Any local decision issued pursuant to ~~clauses~~ paragraphs (e) and (f) may be appealed to the commissioner within 30 calendar days of receipt of that written decision, by the parent, guardian, or the school board of the district responsible for assuring that an appropriate program is provided in accordance with state board rules. The appealing party shall note the specific parts of the hearing decision being appealed.

If the decision is appealed, a written transcript of the hearing shall be made by the school district and provided by the district to the parties involved and the hearing review officer within five calendar days of the filing of the appeal. The hearing review officer shall conduct an appellate review and issue a final independent decision based on an impartial review of the local decision and the entire record within 30 calendar days after the filing of the appeal. However, the hearing review officer shall seek additional evidence if necessary and may afford the parties an opportunity for written or oral argument; provided any hearing held to seek additional evidence shall be an impartial due process hearing but shall be deemed not to be a contested case hearing for purposes of chapter 14. The hearing review officer may grant specific extensions of time beyond the 30-day period at the request of any party for good cause shown on the record.

The final decision shall:

(1) be in writing;

(2) include findings and conclusions; and

(3) be based upon the standards set forth in subdivision 3a and in the rules of the state board.

~~(h)~~ (i) The decision of the hearing review officer shall be final unless appealed by the parent or guardian or school board to the Minnesota court of appeals or federal district court as provided by federal law. State judicial review shall be in accordance with chapter 14.

~~(i)~~ (j) The commissioner of children, families, and learning shall select an individual who has the qualifications enumerated in this paragraph to serve as the hearing review officer:

(1) the individual must be knowledgeable and impartial;

(2) the individual must not have a personal interest in or specific involvement with the student who is a party to the hearing;

(3) the individual must not have been employed as an administrator by the district that is a party to the hearing;

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(4) the individual must not have been involved in the selection of the administrators of the district that is a party to the hearing;

(5) the individual must not have a personal, economic, or professional interest in the outcome of the hearing other than the proper administration of the federal and state laws, rules, and policies;

(6) the individual must not have substantial involvement in the development of a state or local policy or procedures that are challenged in the appeal;

(7) the individual is not a current employee or board member of a Minnesota public school district, education district, intermediate unit or regional education agency, the department of children, families, and learning, the state board of education; and

(8) the individual is not a current employee or board member of a disability advocacy organization or group.

~~(j)~~ (k) In all appeals, the parent or guardian of the pupil with a disability or the district that is a party to the hearing may challenge the impartiality or competence of the proposed hearing review officer by applying to the hearing review officer.

~~(k)~~ (l) Pending the completion of proceedings pursuant to this subdivision, unless the district and the parent or guardian of the child agree otherwise, the child shall remain in the child's current educational placement and shall not be denied initial admission to school.

~~(l)~~ (m) The child's school district of residence, a resident district, and providing district shall receive notice of and may be a party to any hearings or appeals under this subdivision.

~~(m)~~ (n) A school district is not liable for harmless technical violations of this subdivision or rules implementing this subdivision if the school district can demonstrate on a case-by-case basis that the violations did not harm the student's educational progress or the parent or guardian's right to notice, participation, or due process.

~~(n)~~ (o) Within ten calendar days after appointment, the hearing officer shall schedule and hold a prehearing conference. At that conference, or later, the hearing officer may take any appropriate action that a court might take under Rule 16 of Minnesota Rules of Civil Procedure including, but not limited to, scheduling, jurisdiction, and listing witnesses including expert witnesses.

~~(o)~~ (p) A hearing officer or hearing review officer appointed under this subdivision shall be deemed to be an employee of the state under section 3.732 for the purposes of section 3.736 only.

~~(p)~~ (q) In order to be eligible for selection, hearing officers and hearing review officers shall participate in training and follow procedures as designated by the commissioner.

~~(q)~~ (r) The hearing officer may admit all evidence which possesses probative value, including hearsay, if it is the type of evidence on which reasonable, prudent persons are accustomed to rely in the conduct of their serious affairs. The hearing officer shall give effect to the rules of privilege recognized by law. Evidence which is incompetent, irrelevant, immaterial, or unduly repetitious shall be excluded.

Sec. 11. Minnesota Statutes 1996, section 120.17, subdivision 6, is amended to read:

Subd. 6. [PLACEMENT IN ANOTHER DISTRICT; RESPONSIBILITY.] The responsibility for special instruction and services for a child with a disability temporarily placed in another district for care and treatment shall be determined in the following manner:

(a) The school district of residence of a child shall be the district in which the child's parent resides, if living, or the child's guardian, or the district designated by the commissioner of children, families, and learning if neither parent nor guardian is living within the state.

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(b) When a child is temporarily placed for care and treatment in a day program located in another district and the child continues to live within the district of residence during the care and treatment, the district of residence is responsible for providing transportation and an appropriate educational program for the child. The district may provide the educational program at a school within the district of residence, at the child's residence, or in the district in which the day treatment center is located by paying tuition to that district.

(c) When a child is temporarily placed in a residential program for care and treatment, the nonresident district in which the child is placed is responsible for providing an appropriate educational program for the child and necessary transportation while the child is attending the educational program; and shall bill the district of the child's residence for the actual cost of providing the program, as outlined in subdivision 4, except that the board, lodging, and treatment costs incurred in behalf of a child with a disability placed outside of the school district of residence by the commissioner of human services or the commissioner of corrections or their agents, for reasons other than for making provision for the child's special educational needs shall not become the responsibility of either the district providing the instruction or the district of the child's residence. For the purposes of this section, the state correctional facilities operated on a fee-for-service basis are considered to be residential programs for care and treatment.

(d) The district of residence shall pay tuition and other program costs, not including transportation costs, to the district providing the instruction and services. The district of residence may claim general education aid for the child as provided by law. Transportation costs shall be paid by the district responsible for providing the transportation and the state shall pay transportation aid to that district.

Sec. 12. Minnesota Statutes 1996, section 120.17, subdivision 7, is amended to read:

Subd. 7. [PLACEMENT IN STATE INSTITUTION; RESPONSIBILITY.] Responsibility for special instruction and services for a child with a disability placed in a state institution on a temporary basis shall be determined in the following manner:

(a) The legal residence of such child shall be the school district in which the child's parent resides, if living, or the child's guardian.

(b) When the educational needs of such child can be met through the institutional program, the costs for such instruction shall be paid by the department to which the institution is assigned with exception of children placed in fee-for-service facilities operated by the commissioner of corrections whose cost for such instruction shall be paid as outlined in subdivision 6.

(c) When it is determined that such child can benefit from public school enrollment, provision for such instruction shall be made in the following manner:

(1) determination of eligibility for special instruction and services shall be made by the commissioner of children, families, and learning and the commissioner of the department responsible for the institution;

(2) the school district where the institution is located shall be responsible for providing transportation and an appropriate educational program for the child and shall make a tuition charge to the child's district of residence for the actual cost of providing the program;

(3) the district of the child's residence shall pay the tuition and other program costs excluding transportation costs and may claim general education aid for the child. Transportation costs shall be paid by the district where the institution is located and the state shall pay transportation aid to that district.

Sec. 13. Minnesota Statutes 1996, section 120.17, subdivision 9, is amended to read:

Subd. 9. [SPECIAL INSTRUCTION.] No resident of a district who is eligible for special instruction and services ~~pursuant to~~ under this section shall be denied ~~provision of this~~ instruction and service on a shared time basis consistent with section 124A.034, subdivision 2, because of ~~attendance at~~ attending a nonpublic school defined in section 123.932, subdivision 3. If a resident pupil with a disability attends a nonpublic school located within the district of residence, the

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district shall provide necessary transportation for that pupil within the district between the nonpublic school and the educational facility where special instruction and services are provided on a shared time basis. If a resident pupil with a disability attends a nonpublic school located in another district and if no agreement exists ~~pursuant to~~ under section 124A.034, subdivision 1 or 1a, for ~~the provision of~~ providing special instruction and services on a shared time basis to that pupil by the district of attendance and where the special instruction and services are provided within the district of residence, the district of residence shall provide necessary transportation for that pupil between the boundary of the district of residence and the educational facility. The district of residence may provide necessary transportation for that pupil between its boundary and the nonpublic school attended, but the nonpublic school shall pay the cost of transportation provided outside the district boundary.

Sec. 14. Minnesota Statutes 1996, section 120.17, subdivision 15, is amended to read:

Subd. 15. [THIRD PARTY PAYMENT.] (a) Nothing in this section relieves an insurer or similar third party from an otherwise valid obligation to pay, or changes the validity of an obligation to pay, for services rendered to a child with a disability, and the child's family. A school district may pay or reimburse copayments, coinsurance, deductibles, and other enrollee cost-sharing amounts, on behalf of the student or family, in connection with health and related services provided under an individual educational plan.

(b) Beginning July 1, 1999, districts shall seek reimbursement from insurers and similar third parties for the cost of services provided by the district whenever the services provided by the district are otherwise covered by the child's health coverage. Districts shall request, but may not require, the child's family to provide information about the child's health coverage when a child with a disability begins to receive services from the district of a type that may be reimbursable, and shall request, but may not require, updated information after that as needed. Districts shall request, but may not require, the child's parent or legal representative to sign a consent form, permitting the school district to apply for and receive reimbursement directly from the insurer or other similar third party, to the extent permitted by the insurer or other third party and subject to their networking credentialing, prior authorization, and determination of medical necessity criteria.

(1) retain an amount sufficient to compensate the district for its administrative costs of obtaining reimbursements;

(2) regularly obtain from education- and health-related entities training and other appropriate technical assistance designed to improve the district's ability to determine which services are reimbursable and to seek timely reimbursement in a cost-effective manner; or

(3) reallocate reimbursements for the benefit of students with special needs in the district.

(d) To the extent required by federal law, a school district may not require parents of children with disabilities, if they would incur a financial cost, to use private or public health coverage to pay for the services that must be provided under an individual education plan.

(e) When obtaining informed consent, consistent with sections 13.05, subdivision 4, paragraph (d); and 256B.77, subdivision 2, paragraph (p), to bill health plans for covered services, the school district must notify the legal representative (1) that the cost of the person's private health insurance premium may increase due to providing the covered service in the school setting, (2) that the school district may pay certain enrollee health plan costs, including but not limited to, copayments, coinsurance, deductibles, premium increases or other enrollee cost-sharing amounts for health and related services required by an individual service plan, or individual family service plan, and (3) that the school's billing for each type of covered service may affect service limits and prior authorization thresholds. The informed consent may be revoked in writing at any time by the person authorizing the billing of the health plan.

(f) To the extent required by federal law, no school district may deny, withhold, or delay any service that must be provided under an individual education plan because a family has refused to provide informed consent to bill a health plan for services or a health plan company has refused to pay any, all, or a portion of the cost of services billed.

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(g) A school district may disclose information contained in a student's individual education plan, consistent with section 13.32, subdivision 3(a), including records of the student's diagnosis and treatment, to a health plan company only with the signed and dated consent of the student's parent, or other legally authorized individual. The school district shall disclose only that information necessary for the health plan company to decide matters of coverage and payment. A health plan company may use the information only for making decisions regarding coverage and payment, and for any other use permitted by law.

Sec. 15. Minnesota Statutes 1996, section 120.1701, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] For the purposes of this section the following terms have the meaning given them.

(a) "Coordinate" means to provide ready access to a community's services and resources to meet child and family needs.

(b) "Core early intervention services" means services that are available at no cost to children and families. These services include:

(1) identification and referral;

(2) screening;

(3) evaluation;

(4) assessment;

(5) service coordination;

(6) special education and related services provided under section 120.17, subdivision 3a, and United States Code, title 20, section 1401; and

(7) protection of parent and child rights by means of procedural safeguards.

(d) "Early intervention record" means any personally identifiable information about a child or the child's family that is generated by the early intervention system, and that pertains to evaluation and assessment, development of an individualized family service plan, and the delivery of early intervention services.

(e) "Early intervention services" means services provided in conformity with an individualized family service plan that are designed to meet the special developmental needs of a child eligible under Code of Federal Regulations, title 34, part 303, and the needs of the child's family related to enhancing the child's development and that are selected in collaboration with the parent. These services include core early intervention services and additional early intervention services listed in subdivision 4 and services defined in Code of Federal Regulations, title 34, section 303, et seq.

(f) "Early intervention system" means the total effort in the state to meet the needs of eligible children and their families, including, but not limited to:

(1) any public agency in the state that receives funds under the Individuals with Disabilities Education Act, United States Code, title 20, sections 1471 to 1485 (Part H, Public Law Number 102-119);

(2) other state and local agencies administering programs involved in the provision of early intervention services, including, but not limited to:

(i) the Maternal and Child Health program under title V of the Social Security Act, United States Code, title 42, sections 701 to 709;

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(ii) the Individuals with Disabilities Education Act, United States Code, title 20, sections 1411 to 1420 (Part B);

(iii) medical assistance under the Social Security Act, United States Code, title 42, section 1396 et seq.;

(iv) the Developmental Disabilities Assistance and Bill of Rights Act, United States Code, title 42, sections 6021 to 6030 (Part B); and

(v) the Head Start Act, United States Code, title 42, sections 9831 to 9852; and

(3) services provided by private groups or third-party payers in conformity with an individualized family service plan.

(g) "Eligibility for Part H" means eligibility for early childhood special education under section 120.03 and Minnesota Rules, part 3525.2335, subpart 1, items A and B.

(h) "Facilitate payment" means helping families access necessary public or private assistance that provides payment for services required to meet needs identified in a service plan, individual education plan (IEP), individual service plan (ISP), or individualized family service plan (IFSP), according to time frames required by the plan. This may also include activities to collect fees for services provided on a sliding fee basis, where permitted by state law.

(i) "Individualized family service plan" or "IFSP" means a written plan for providing services to a child and the child's family.

(j) "Interagency child find systems" means activities developed on an interagency basis with the involvement of interagency early intervention committees and other relevant community groups to actively seek out, identify, and refer infants and young children with, or at risk of, disabilities, and their families.

(k) "Local primary agency" means the agency designated jointly by the school and county board under subdivision 4.

(l) "Natural environments" means the child's home and community settings in which children without disabilities participate.

(m) "Parent" means the biological parent with parental rights, adoptive parent, legal guardian, or surrogate parent.

~~(m)~~ (n) "Part H state plan" means the annual state plan application approved by the federal government under the Individuals with Disabilities Education Act, United States Code, title 20, section 1471 et seq. (Part H, Public Law Number 102-119).

~~(n)~~ (o) "Pay for" means using federal, state, local, and private dollars available for early intervention services.

~~(o)~~ (p) "Respite" means short-term, temporary care provided to a child with a disability due to the temporary absence or need for relief of the family member or members or primary caregiver, normally providing the care.

~~(p)~~ (q) "State lead agency" means the state agency receiving federal funds under the Individuals with Disabilities Education Act, United States Code, title 20, section 1471 et seq. (Part H, Public Law Number 102-119).

~~(q)~~ (r) "Surrogate parent" means a person appointed by the local education agency to assure that the rights of the child to early intervention services are protected. A person cannot be a surrogate parent to a child for whom the person provides early intervention services.

Sec. 16. Minnesota Statutes 1997 Supplement, section 120.1701, subdivision 3, is amended to read:

Subd. 3. [STATE INTERAGENCY COORDINATING COUNCIL.] An interagency coordinating council of at least 17, but not more than 25 members is established, in compliance with Public Law Number 102-119, section 682. The members shall be appointed by the governor. Council members shall elect the council chair. The representative of the commissioner of children, families, and learning may not serve as the chair. The council shall be composed of at least

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five parents, including persons of color, of children with disabilities under age 12, including at least three parents of a child with a disability under age seven, five representatives of public or private providers of services for children with disabilities under age five, including a special education director, county social service director, local Head Start director, and a community health services or public health nursing administrator, one member of the senate, one member of the house of representatives, one representative of teacher preparation programs in early childhood-special education or other preparation programs in early childhood intervention, at least one representative of advocacy organizations for children with disabilities under age five, one physician who cares for young children with special health care needs, one representative each from the commissioners of commerce, children, families, and learning, health, human services, ~~and economic security~~ a representative from the state agency responsible for child care, and a representative from Indian health services or a tribal council. Section 15.059, subdivisions 2 to 5, apply to the council. The council shall meet at least quarterly.

The council shall address methods of implementing the state policy of developing and implementing comprehensive, coordinated, multidisciplinary interagency programs of early intervention services for children with disabilities and their families.

The duties of the council include recommending policies to ensure a comprehensive and coordinated system of all state and local agency services for children under age five with disabilities and their families. The policies must address how to incorporate each agency's services into a unified state and local system of multidisciplinary assessment practices, individual intervention plans, comprehensive systems to find children in need of services, methods to improve public awareness, and assistance in determining the role of interagency early intervention committees.

Each year by June 1, the council shall recommend to the governor and the commissioners of children, families, and learning, health, human services, commerce, and economic security policies for a comprehensive and coordinated system.

Notwithstanding any other law to the contrary, the state interagency coordinating council shall expire on June 30, 2001.

Sec. 17. Minnesota Statutes 1996, section 120.1701, subdivision 11, is amended to read:

Subd. 11. [PAYOR OF LAST RESORT.] ~~(a) For fiscal years 1995 and 1996,~~ The state lead agency shall ~~establish~~ maintain a reserve account from federal sources to pay for services in dispute or to pay for early intervention services when local agencies have exhausted all other public and private funds available for Part H eligible children.

~~(b) The lead agency shall report to the legislature by January 1, 1996, regarding county board expenditures for early intervention services and the continuing need and funding of the reserve account.~~

Sec. 18. Minnesota Statutes 1996, section 120.1701, subdivision 17, is amended to read:

Subd. 17. [MEDIATION PROCEDURE.] The commissioner, or the commissioner's designee, of the state lead agency shall use federal funds to provide mediation for the activities in paragraphs (a) and (b).

(a) A parent may resolve a dispute regarding issues in subdivision 16, paragraph (b), clause (5), through mediation. If the parent chooses mediation, all public agencies involved in the dispute shall participate in the mediation process. The parent and the public agencies must complete the mediation process within 20 30 calendar days of the date the ~~commissioner~~ office of dispute resolution receives a parent's written request for mediation. The mediation process may not be used to delay a parent's right to a due process hearing. The resolution of the mediation is not binding on any party.

(b) Resolution of a dispute through mediation, or other form of alternative dispute resolution, is not limited to formal disputes arising from the objection of a parent or guardian and is not limited to the period following a request for a due process hearing.

(c) The local primary agency may request mediation on behalf of involved agencies when there are disputes between agencies regarding responsibilities to coordinate, provide, pay for, or facilitate payment for early intervention services.

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Sec. 19. Minnesota Statutes 1996, section 120.173, subdivision 1, is amended to read:

Subdivision 1. [COMMISSIONER APPROVAL.] The commissioner of children, families, and learning may approve applications from school districts to provide prevention services as an alternative to special education and other compensatory programs ~~during three school years~~. A district with an approved program may provide instruction and services in a regular education classroom, or an area learning center, to eligible pupils. Pupils eligible to participate in the program are low-performing pupils who, based on documented experience, the professional judgment of a classroom teacher, or a team of licensed professionals, would eventually qualify for special education instruction or related services under section 120.17 if the intervention services authorized by this section were unavailable. Pupils may be provided services during extended school days and throughout the entire year and through the assurance of mastery program under section 124.3111.

Sec. 20. Minnesota Statutes 1996, section 120.173, subdivision 6, is amended to read:

Subd. 6. [PUPIL RIGHTS.] A pupil participating in the program must be individually evaluated according to the pupil's actual abilities and needs. A pupil who is eligible for services under section 120.17 is entitled to procedural protections provided under ~~Public Law Number 94-142~~ United States Code, title 20, section 33, in any matter that affects the identification, evaluation, placement, or change in placement of a pupil. The district must ensure the protection of a pupil's civil rights, provide equal educational opportunities, and prohibit discrimination. Failure to comply with this subdivision will at least cause a district to become ineligible to participate in the program. Notwithstanding rules of the state board of education, a pupil's rights under this section cannot be waived by the state board.

Sec. 21. Minnesota Statutes 1997 Supplement, section 120.181, is amended to read:

120.181 [PLACEMENT OF CHILDREN WITHOUT DISABILITIES; EDUCATION AND TRANSPORTATION.]

The responsibility for providing instruction and transportation for a pupil without a disability who has a short-term or temporary physical or emotional illness or disability, as determined by the standards of the state board, and who is temporarily placed for care and treatment for that illness or disability, shall be determined as provided in this section.

(a) The school district of residence of the pupil shall be the district in which the pupil's parent or guardian resides, or when neither the pupil's parent nor guardian resides within the state and tuition has been denied, the district designated by the commissioner of children, families, and learning.

(b) Prior to the placement of a pupil for care and treatment, the district of residence shall be notified and provided an opportunity to participate in the placement decision. When an immediate emergency placement is necessary and time does not permit resident district participation in the placement decision, the district in which the pupil is temporarily placed, if different from the district of residence, shall notify the district of residence of the emergency placement within 15 days of the placement.

(c) When a pupil without a disability is temporarily placed for care and treatment in a day program and the pupil continues to live within the district of residence during the care and treatment, the district of residence shall provide instruction and necessary transportation for the pupil. The district may provide the instruction at a school within the district of residence, at the pupil's residence, or in the case of a placement outside of the resident district, in the district in which the day treatment program is located by paying tuition to that district. The district of placement may contract with a facility to provide instruction by teachers licensed by the state board of teaching.

(d) When a pupil without a disability is temporarily placed in a residential program for care and treatment, the district in which the pupil is placed shall provide instruction for the pupil and necessary transportation while the pupil is receiving instruction, and in the case of a placement outside of the district of residence, the nonresident district shall bill the district of residence for the actual cost of providing the instruction for the regular school year and for summer school, excluding transportation costs. When a pupil without a disability is temporarily placed in a residential program outside the district of residence, the administrator of the court placing the pupil shall send timely written notice of the placement to the district of residence. The district of placement may contract with a residential facility to provide instruction by teachers licensed by the state board of teaching. For purposes of this section, the state correctional facilities operated on a fee-for-service basis are considered to be residential programs for care and treatment.

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(e) The district of residence shall include the pupil in its residence count of pupil units and pay tuition as provided in section 124.18 to the district providing the instruction. Transportation costs shall be paid by the district providing the transportation and the state shall pay transportation aid to that district. For purposes of computing state transportation aid, pupils governed by this subdivision shall be included in the disabled transportation category.

Sec. 22. Minnesota Statutes 1996, section 123.935, subdivision 1, is amended to read:

Subdivision 1. [PROVIDED SERVICES.] The state board of education shall promulgate rules under the provisions of chapter 14 requiring each school district or other intermediary service area: (a) to provide each year upon formal request by a specific date by or on behalf of a nonpublic school pupil enrolled in a nonpublic school located in that district or area, the same specific health services as are provided for public school pupils by the district where the nonpublic school is located; and (b) to provide each year upon formal request by a specific date by or on behalf of a nonpublic school secondary pupil enrolled in a nonpublic school located in that district or area, the same specific guidance and counseling services as are provided for public school secondary pupils by the district where the nonpublic school is located. The district where the nonpublic school is located shall provide the necessary transportation within the district boundaries between the nonpublic school and a public school or neutral site for nonpublic school pupils who are provided pupil support services ~~pursuant to~~ under this section if the district elects to provide pupil support services at a site other than the nonpublic school. Each request for pupil support services shall set forth the guidance and counseling or health services requested by or on behalf of all eligible nonpublic school pupils enrolled in a given nonpublic school. No district or intermediary service area shall expend an amount for these pupil support services which exceeds the amount allotted to it under this section.

Sec. 23. Minnesota Statutes 1996, section 123.935, subdivision 2, is amended to read:

Subd. 2. [LOCATION OF SERVICES.] Health and guidance and counseling services may be provided to nonpublic school pupils ~~pursuant to~~ under this section at a public school, a neutral site, the nonpublic school or any other suitable location. ~~Guidance and counseling services may be provided to nonpublic school pupils pursuant to this section only at a public school or a neutral site.~~ District or intermediary service area personnel and representatives of the nonpublic school pupils receiving pupil support services shall hold an annual consultation regarding the type of services, provider of services, and the location of the provision of these services. The district board or intermediary service area governing board shall make the final decision on the location of the provision of these services.

Sec. 24. Minnesota Statutes 1996, section 124.17, subdivision 2, is amended to read:

Subd. 2. [AVERAGE DAILY MEMBERSHIP.] Membership for pupils in grades kindergarten through 12 and for prekindergarten pupils with disabilities shall mean the number of pupils on the current roll of the school, counted from the date of entry until withdrawal. The date of withdrawal shall mean the day the pupil permanently leaves the school or the date it is officially known that the pupil has left or has been legally excused. However, a pupil, regardless of age, who has been absent from school for 15 consecutive school days during the regular school year or for five consecutive school days during summer school or intersession classes of flexible school year programs without receiving instruction in the home or hospital shall be dropped from the roll and classified as withdrawn. Nothing in this section shall be construed as waiving the compulsory attendance provisions cited in section 120.101. Average daily membership shall equal the sum for all pupils of the number of days of the school year each pupil is enrolled in the district's schools divided by the number of days the schools are in session. Days of summer school or intersession classes of flexible school year programs shall only be included in the computation of membership for pupils with a disability not appropriately served ~~at level 4, 5, or 6 of the continuum of placement model described in Minnesota Rules, part 3525.0200~~ primarily in the regular classroom.

Sec. 25. Minnesota Statutes 1997 Supplement, section 124.3111, subdivision 2, is amended to read:

Subd. 2. [ELIGIBLE PUPILS.] A pupil is eligible to receive services through an assurance of mastery program if the pupil has not demonstrated progress toward mastering the required graduation standards, after receiving instruction that was designed to enable the pupil to make progress toward mastering the required graduation standards in a regular classroom setting. A pupil also is eligible to receive services through an assurance of mastery program if the pupil, based on the professional judgment of a classroom teacher or a team of licensed professionals, demonstrates a need for alternative instructional strategies or interventions. To determine pupil eligibility, a district must use a process adopted by the school board to review curriculum and instruction, for the subjects and at the grade level at which the district uses the revenue.

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Sec. 26. Minnesota Statutes 1996, section 124.32, is amended by adding a subdivision to read:

Subd. 13. [LITIGATION AND HEARING COSTS.] (a) For fiscal year 1999 and thereafter, the commissioner of children, families, and learning, or the commissioner's designee, shall use state funds to pay school districts for the administrative costs of a due process hearing incurred under section 120.17, subdivision 3b, paragraphs (e), (h), and (i), including hearing officer fees, court reporter fees, mileage costs, transcript costs, independent evaluations ordered by the hearing officer, and rental of hearing rooms, but not including district attorney fees. To receive state aid under this paragraph, a school district shall submit to the commissioner at the end of the school year an itemized list of unreimbursed actual costs for fees and other expenses under this paragraph. State funds used for aid to school districts under this paragraph shall be based on the unreimbursed actual costs and fees submitted by a district from previous school years.

(b) For fiscal year 1999 and thereafter, a school district, to the extent to which it prevails under United States Code, title 20, section 1415(i)(3)(B)(D) and Rule 68 of the Federal Rules of Civil Procedure, shall receive state aid equal to 50 percent of the total actual cost of attorney fees incurred after a request for a due process hearing under section 120.17, subdivision 3b, paragraphs (e), (h), and (i), is served upon the parties. A district is eligible for reimbursement for attorney fees under this paragraph only if:

(1) a court of competent jurisdiction determines that the parent is not the prevailing party under United States Code, title 20, section 1415(i)(3)(B)(D), or the parties stipulate that the parent is not the prevailing party;

(2) the district has made a good faith effort to resolve the dispute through mediation, but the obligation to mediate does not compel the district to agree to a proposal or make a concession; and

(3) the district made an offer of settlement under Rule 68 of the Federal Rules of Civil Procedure.

To receive aid, a school district that meets the criteria of this paragraph shall submit to the commissioner at the end of the school year an itemized list of unreimbursed actual attorney fees associated with a due process hearing under section 120.17, subdivision 3b, paragraphs (e), (h), and (i). Aid under this paragraph for each school district is based on unreimbursed actual attorney fees submitted by the district from previous school years.

(c) For fiscal year 1999 and thereafter, a school district is eligible to receive state aid for 50 percent of the total actual cost of attorney fees it incurs in appealing to a court of competent jurisdiction the findings, conclusions, and order of a due process hearing under section 120.17, subdivision 3b, paragraphs (e), (h) and (i). The district is eligible for reimbursement under this paragraph only if the commissioner authorizes the reimbursement after evaluating the merits of the case. In a case where the commissioner is a named party in the litigation, the commissioner of the bureau of mediation services shall make the determination regarding reimbursement. The commissioner's decision is final.

(d) The commissioner shall provide districts with a form on which to annually report litigation costs under this section and shall base aid estimates on those reports.

Sec. 27. Minnesota Statutes 1997 Supplement, section 124.3201, subdivision 2, is amended to read:

Subd. 2. [SPECIAL EDUCATION BASE REVENUE.] (a) The special education base revenue equals the sum of the following amounts computed using base year data:

(1) 68 percent of the salary of each essential person employed in the district's program for children with a disability during the ~~regular school~~ fiscal year, whether the person is employed by one or more districts or a Minnesota correctional facility operating on a fee-for-service basis;

(2) for the Minnesota state academy for the deaf or the Minnesota state academy for the blind, 68 percent of the salary of each instructional aide assigned to a child attending the academy, if that aide is required by the child's individual education plan;

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(3) for special instruction and services provided to any pupil by contracting with public, private, or voluntary agencies other than school districts, in place of special instruction and services provided by the district, 52 percent of the difference between the amount of the contract and the basic revenue of the district for that pupil for the fraction of the school day the pupil receives services under the contract;

(4) for special instruction and services provided to any pupil by contracting for services with public, private, or voluntary agencies other than school districts, that are supplementary to a full educational program provided by the school district, 52 percent of the amount of the contract for that pupil;

(5) for supplies and equipment purchased or rented for use in the instruction of children with a disability an amount equal to 47 percent of the sum actually expended by the district, or a Minnesota correctional facility operating on a fee-for-service basis, but not to exceed an average of $47 in any one school year for each child with a disability receiving instruction;

(6) for fiscal years 1997 and later, special education base revenue shall include amounts under clauses (1) to (5) for special education summer programs provided during the base year for that fiscal year; and

(7) for fiscal years 1999 and later, the cost of providing transportation services for children with disabilities under section 124.225, subdivision 1, paragraph (b), clause (4).

(b) If requested by a school district operating a special education program during the base year for less than the full ~~school~~ fiscal year, or a school district in which is located a Minnesota correctional facility operating on a fee-for-service basis for less than the full fiscal year, the commissioner may adjust the base revenue to reflect the expenditures that would have occurred during the base year had the program been operated for the full ~~school~~ fiscal year.

(c) Notwithstanding paragraphs (a) and (b), the portion of a school district's base revenue attributable to a Minnesota correctional facility operating on a fee-for-service basis during the facilities first year of operating on a fee-for-service basis shall be computed using current year data.

Sec. 28. Minnesota Statutes 1996, section 124.323, is amended by adding a subdivision to read:

Subd. 4. [TUITION.] Notwithstanding section 120.17, for children who are nonresidents of Minnesota, receive services under section 124.3201, subdivisions 1 and 2, and are placed in the serving school district by court action, the serving school district shall submit unreimbursed tuition bills for eligible services to the department of children, families, and learning instead of the resident school district. To be eligible for reimbursement, the serving school district, as part of its child intake procedures, must demonstrate good faith effort to obtain from the placing agency a financial commitment to pay tuition costs.

Sec. 29. Minnesota Statutes 1996, section 124A.034, subdivision 2, is amended to read:

Subd. 2. [LOCATION OF SERVICES.] (a) Public school programs that provide instruction in core curriculum may be provided to shared time pupils only at a public school building; ~~provided, however, that special instruction and services for children with a disability required pursuant to section 120.17 may also be provided at a neutral site as defined in section 123.932,~~ public school programs, excluding programs that provide instruction in core curriculum, may be provided to shared time pupils at a public school building, a neutral site, the nonpublic school, or any other suitable location. Guidance and counseling and diagnostic and health services required ~~pursuant to~~ under section 120.17 may ~~also~~ be provided at a nonpublic school building. As used in this subdivision, "diagnostic services" means speech, hearing, vision, psychological, medical and dental diagnostic services and "health services" means physician, nursing or optometric services provided to pupils in the field of physical and mental health.

(b) For those children with a disability under section 120.17 who attend nonpublic school at their parent's choice, a school district may provide special instruction and services at the nonpublic school building, a public school, or at a neutral site other than a nonpublic school as defined in section 123.932, subdivision 9. The school district shall determine the location at which to provide services on a student-by-student basis, consistent with federal law.

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Sec. 30. Minnesota Statutes 1996, section 124A.036, subdivision 1a, is amended to read:

Subd. 1a. [REPORTING; REVENUE FOR HOMELESS.] For all school purposes, unless otherwise specifically provided by law, a homeless pupil ~~must be considered~~ is a resident of the school district ~~that enrolls the pupil~~ in which the homeless shelter or other program, center, or facility assisting the homeless pupil or the pupil's family is located.

Sec. 31. Minnesota Statutes 1996, section 124A.036, is amended by adding a subdivision to read:

Subd. 1b. [REVENUE FOR CHILDREN OF DIVORCED PARENTS.] (a) In those instances when the divorced parents share joint physical custody of the child and the divorced parents reside in different school districts, for all school purposes, unless otherwise specifically provided by law, the child must be considered a resident of the school district, as indicated by the child's parents.

(b) When the child of divorced parents under paragraph (a) resides with each parent on alternate weeks, the parents shall be responsible for the transportation of the child to the border of the resident school district during those weeks when the child resides in the nonresident school district.

Sec. 32. Minnesota Statutes 1996, section 124A.036, subdivision 4, is amended to read:

Subd. 4. [STATE AGENCY AND COURT PLACEMENTS.] If a state agency or a court of the state desires to place a child in a school district which is not the child's district of residence or to place a pupil who is a parent under section 120.101, subdivision 3, in a school district which is not the school district in which the pupil's biological or adoptive parent or designated guardian resides, that agency or court shall, prior to placement, allow the district of residence an opportunity to participate in the placement decision and notify the district of residence, the district of attendance and the commissioner of children, families, and learning of the placement decision. When a state agency or court determines that an immediate emergency placement is necessary and that time does not permit district participation in the placement decision or notice to the districts and the commissioner of children, families, and learning of the placement decision prior to the placement, the agency or court may make the decision and placement without that participation or prior notice. The agency or court shall notify the district of residence, the district of attendance and the commissioner of children, families, and learning of an emergency placement within 15 days of the placement.

Sec. 33. Minnesota Statutes 1996, section 124C.45, subdivision 2, is amended to read:

Subd. 2. [ACCESS TO SERVICES.] A center shall have access to the district's regular education programs, special education programs, technology facilities, and staff. It may contract with individuals or post-secondary institutions. It shall seek the involvement of community education programs, post-secondary institutions, interagency collaboratives, community resources, businesses, and other federal, state, and local public agencies.

Sec. 34. Minnesota Statutes 1997 Supplement, section 124C.46, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM FOCUS.] (a) The programs and services of a center must focus on academic and learning skills, applied learning opportunities, trade and vocational skills, work-based learning opportunities, work experience, youth service to the community, and transition services. Applied learning, work-based learning, and service learning may best be developed in collaboration with a local education and transitions partnership. In addition to offering programs, the center shall coordinate the use of other available educational services, special education services, social services, health services, and post-secondary institutions in the community and services area.

(b) Consistent with the requirements of section 127.26 to 127.39, a school district may provide an alternative education program for a student who is within the compulsory attendance age under section 120.06, and who is involved in severe or repeated disciplinary action.

Sec. 35. Minnesota Statutes 1997 Supplement, section 124C.46, subdivision 2, is amended to read:

Subd. 2. [PEOPLE TO BE SERVED.] A center shall provide programs for secondary pupils and adults. A center may also provide programs and services for elementary and secondary pupils who are not attending the center to assist them in being successful in school. An individual education plan team may identify a center as an appropriate placement to the

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extent a center can provide the student with the appropriate special education services described in the student's plan. Pupils eligible to be served are those age five to adults 21 22 and older who qualify under the graduation incentives program in section 126.22, subdivision 2, or those pupils who are eligible to receive special education services under section 120.17.

Sec. 36. Minnesota Statutes 1996, section 124C.47, is amended to read:

124C.47 [RESOURCE CENTER FOR OTHER PROGRAMS.]

An area learning center must serve as a resource for other districts, educational, community, and business organizations. The center may charge a fee for these services. The following services shall be provided for a region or the state:

(1) information and research for alternative programs;

(2) regional or state workshops on awareness, identification, programs, and support for these pupils; ~~and~~

(3) recommendations for staff qualifications to ensure the most qualified staff can be selected for the programs; and

(4) recommendations for successful learning programs for special education students placed in an alternative setting.

Sec. 37. Minnesota Statutes 1996, section 124C.48, is amended by adding a subdivision to read:

Subd. 3. [SPECIAL EDUCATION REVENUE.] Payment of special education revenue for nonresident pupils enrolled in the center must be made according to section 120.17, subdivision 6.

Sec. 38. Minnesota Statutes 1996, section 126.237, is amended to read:

126.237 [ALTERNATE INSTRUCTION REQUIRED.]

(a) Before a pupil is referred for a special education assessment, the district must conduct and document at least two instructional strategies, alternatives, or interventions while the pupil is in the regular classroom. The pupil's teacher must provide the documentation. A special education assessment team may waive this requirement when they determine the pupil's need for the assessment is urgent. This section may not be used to deny a pupil's right to a special education assessment.

(b) A school district shall use alternative intervention services, including the assurance of mastery program under section 124.3111 and the supplemental early education program under section 124.2613, to serve at-risk students who demonstrate a need for alternative instructional strategies or interventions.

Sec. 39. Minnesota Statutes 1996, section 127.27, subdivision 2, is amended to read:

Subd. 2. [DISMISSAL.] "Dismissal" means the denial of the ~~appropriate~~ current educational program to any pupil, including exclusion, expulsion, and suspension. It does not include removal from class.

Sec. 40. Minnesota Statutes 1997 Supplement, section 127.27, subdivision 10, is amended to read:

Subd. 10. [SUSPENSION.] "Suspension" means an action by the school administration, under rules promulgated by the school board, prohibiting a pupil from attending school for a period of no more than ten school days. If a suspension is longer than five days, the suspending administrator must provide the superintendent with a reason for the longer suspension. This definition does not apply to dismissal from school for one school day or less, except as provided in federal law for a student with a disability. Each suspension action ~~shall~~ may include a readmission plan. The readmission plan shall include, where appropriate, a provision for implementing alternative educational services upon readmission and may not be used to extend the current suspension. The school administration may not impose consecutive suspensions against the same pupil for the same course of conduct, or incident of misconduct, except where the pupil will create an immediate and substantial danger to self or to surrounding persons or property, or where the district is in the process of

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initiating an expulsion, in which case the school administration may extend the suspension up to a total of 15 days. In the case of a pupil with a disability, ~~a suspension may not exceed ten school days~~ school districts must comply with applicable federal law. The school administration shall implement alternative educational services ~~to the extent that~~ when the suspension exceeds five days. A separate administrative conference is required for each period of suspension.

Sec. 41. Minnesota Statutes 1997 Supplement, section 127.27, subdivision 11, is amended to read:

Subd. 11. [ALTERNATIVE EDUCATIONAL SERVICES.] "Alternative educational services" may include, but are not limited to, special tutoring, modified curriculum, modified instruction, other modifications or adaptations, instruction through electronic media, special education services as indicated by appropriate assessment, homebound instruction, supervised homework, or enrollment in another district or in an alternative learning center under section 124C.45 selected to allow the pupil to progress toward meeting graduation standards under section 121.11, subdivision 7c, although in a different setting.

Sec. 42. Minnesota Statutes 1997 Supplement, section 127.31, subdivision 15, is amended to read:

Subd. 15. [ADMISSION OR READMISSION PLAN.] A school administrator shall prepare and enforce an admission or readmission plan for any pupil who is ~~suspended,~~ excluded, or expelled from school. The plan may include measures to improve the pupil's behavior and require parental involvement in the admission or readmission process, and may indicate the consequences to the pupil of not improving the pupil's behavior.

Sec. 43. Minnesota Statutes 1997 Supplement, section 127.32, is amended to read:

127.32 [APPEAL.]

A party to an exclusion or expulsion decision made under sections 127.26 to 127.39 may appeal the decision to the commissioner of children, families, and learning within 21 calendar days of school board action. Upon being served with a notice of appeal, the district shall provide the commissioner and the parent or guardian with a complete copy of the hearing record within five days of its receipt of the notice of appeal. All written submissions by the appellant must be submitted and served on the respondent within ten days of its actual receipt of the transcript. All written submissions by the respondent must be submitted and served on the appellant within ten days of its actual receipt of the written submissions of the appellant. The decision of the school board must be implemented during the appeal to the commissioner.

In an appeal under this section, the commissioner may affirm the decision of the agency, may remand the decision for additional findings, or may reverse or modify the decision if the substantial rights of the petitioners ~~may~~ have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(1) in violation of constitutional provisions;

(2) in excess of the statutory authority or jurisdiction of the school district;

(3) made upon unlawful procedure, except as provided in section 127.311;

(4) affected by other error of law;

(5) unsupported by substantial evidence in view of the entire record submitted; or

(6) arbitrary or capricious.

The commissioner or the commissioner's representative shall make a final decision based upon the record ~~of evidence presented at the hearing~~. The commissioner shall issue a decision within 30 calendar days of receiving the entire record and the parties' written submission on appeal. The commissioner's decision shall be final and binding upon the parties after the time for appeal expires under section 127.33.

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Sec. 44. Minnesota Statutes 1997 Supplement, section 127.36, subdivision 1, is amended to read:

Subdivision 1. [EXCLUSIONS AND EXPULSIONS.] The school board shall report each exclusion or expulsion within 30 days of the effective date of the action to the commissioner of children, families, and learning. This report shall include a statement of alternative educational services given the pupil ~~before beginning exclusion or expulsion proceedings,~~ and the reason for, the effective date, and the duration of the exclusion or expulsion.

Sec. 45. Minnesota Statutes 1997 Supplement, section 127.38, is amended to read:

127.38 [POLICIES TO BE ESTABLISHED.]

(a) The commissioner of children, families, and learning shall promulgate guidelines to assist each school board. Each school board shall establish uniform criteria for dismissal and adopt written policies and rules to effectuate the purposes of sections 127.26 to 127.39. The policies shall emphasize preventing dismissals through early detection of problems and shall be designed to address students' inappropriate behavior from recurring. The policies shall recognize the continuing responsibility of the school for the education of the pupil during the dismissal period. The alternative educational services, if the pupil wishes to take advantage of them, must be adequate to allow the pupil to make progress towards meeting the graduation standards adopted under section 121.11, subdivision 7c, and help prepare the pupil for readmission.

(b) An area learning center under section 124C.45 may not prohibit an expelled or excluded pupil from enrolling solely because a district expelled or excluded the pupil. The board of the area learning center may use the provisions of The Pupil Fair Dismissal Act to exclude a pupil or to require an admission plan.

(c) The commissioner shall actively encourage and assist school districts to cooperatively establish alternative educational services within school buildings or at alternative program sites that offer instruction to pupils who are dismissed from school for willfully engaging in dangerous, disruptive, or violent behavior, including for possessing a firearm in a school zone.

Sec. 46. Minnesota Statutes 1996, section 256B.0625, subdivision 26, is amended to read:

Subd. 26. [SPECIAL EDUCATION SERVICES.] Medical assistance covers medical services identified in a recipient's individualized education plan and covered under the medical assistance state plan. The services may be provided by a Minnesota school district that is enrolled as a medical assistance provider or its subcontractor, and only if the services meet all the requirements otherwise applicable if the service had been provided by a provider other than a school district, in the following areas: medical necessity, physician's orders, documentation, personnel qualifications, and prior authorization requirements. Services of a speech-language pathologist provided under this section are covered notwithstanding Minnesota Rules, part 9505.0390, subpart 1, item L, if the person:

(1) holds a masters degree in speech-language pathology;

(2) is licensed by the Minnesota board of teaching as an educational speech-language pathologist; and

(3) either has a certificate of clinical competence from the American Speech and Hearing Association, has completed the equivalent educational requirements and work experience necessary for the certificate or has completed the academic program and is acquiring supervised work experience to qualify for the certificate. Medical assistance coverage for medically necessary services provided under other subdivisions in this section may not be denied solely on the basis that the same or similar services are covered under this subdivision.

Sec. 47. Laws 1993, chapter 224, article 3, section 32, is amended to read:

Sec. 32. [ASL GUIDELINES.]

(a) In determining appropriate licensure requirements for teachers of deaf and hard of hearing students under Minnesota Statutes, section 125.189, the board of teaching shall develop the requirements according to the guidelines described in this section.

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(b) Each teacher must complete the American sign language sign communication proficiency interview or a comparable American sign language evaluation that the board of teaching, the Minnesota association of deaf citizens, and the Minnesota council for the hearing impaired accept as a means for establishing the teacher's baseline level of American sign language skills. A teacher shall not be charged for this evaluation.

(c) Each teacher must complete 60 continuing education credits in American sign language, American sign language linguistics, or deaf culture for every 120 continuing education credits the teacher is required to complete to renew a teaching license.

(d) ~~As a condition of obtaining~~ In order to obtain an initial license to teach deaf and hard of hearing students, or to apply for a Minnesota teaching license, after being licensed to teach in another state, a person must demonstrate in the sign communication proficiency interview an intermediate plus level of proficiency in American sign language.

(e) Each teacher applying to renew a teaching license ~~and each teacher holding a teaching license from another state who wishes to apply for a Minnesota teaching license~~ must take the American sign language sign communication proficiency interview or a comparable American sign language evaluation every five years until the teacher demonstrates a minimum, or survival plus, level of proficiency in American sign language.

(f) A teacher working directly with students whose primary language is American sign language should demonstrate at least an advanced level of proficiency in American sign language. The board should not consider a minimum, or survival plus, level of proficiency adequate for providing direct instruction to students whose primary language is American sign language.

(g) To renew a teaching license, a teacher must comply with paragraphs (c) and (e) in addition to other applicable board requirements. A teacher's ability to demonstrate a minimum, or survival plus, level of proficiency in American sign language is not a condition for renewing the teacher's license.

(h) A teacher who demonstrates an increased proficiency in American sign language skill in the American sign language sign communication proficiency interview or a comparable American sign language evaluation shall receive credit toward completing the requirements of paragraph (c). The number of continuing education credits the teacher receives is based on the teacher's increased level of proficiency from the teacher's baseline level:

(1) 35 continuing education credits for demonstrating an intermediate level of proficiency;

(2) 40 continuing education credits for demonstrating an intermediate plus level of proficiency;

(3) 45 continuing education credits for demonstrating an advanced level of proficiency;

(4) 50 continuing education credits for demonstrating an advanced plus level of proficiency;

(5) 55 continuing education credits for demonstrating a superior level of proficiency; and

(6) 60 continuing education credits for demonstrating a superior plus level of proficiency.

Sec. 48. Laws 1997, First Special Session chapter 4, article 2, section 51, subdivision 2, is amended to read:

Subd. 2. [AMERICAN INDIAN LANGUAGE AND CULTURE PROGRAMS.] For grants to American Indian language and culture education programs according to Minnesota Statutes, section 126.54, subdivision 1:

$591,000 . . . . . 1998

~~$591,000~~ $716,000 . . . . . 1999

The 1998 appropriation includes $59,000 for 1997 and $532,000 for 1998.

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The 1999 appropriation includes $59,000 for 1998 and ~~$532,000~~ $657,000 for 1999.

Any balance in the first year does not cancel but is available in the second year.

Sec. 49. Laws 1997, First Special Session chapter 4, article 2, section 51, subdivision 4, is amended to read:

Subd. 4. [AMERICAN INDIAN POST-SECONDARY PREPARATION GRANTS.] For American Indian post-secondary preparation grants according to Minnesota Statutes, section 124.481:

$857,000 . . . . . 1998

~~$857,000~~ $982,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Sec. 50. Laws 1997, First Special Session chapter 4, article 2, section 51, subdivision 5, is amended to read:

Subd. 5. [AMERICAN INDIAN SCHOLARSHIPS.] For American Indian scholarships according to Minnesota Statutes, section 124.48:

$1,600,000 . . . . . 1998

~~$1,600,000~~ $1,875,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Sec. 51. Laws 1997, First Special Session chapter 4, article 2, section 51, subdivision 25, is amended to read:

Subd. 25. [MATCHING GRANTS FOR EDUCATION PROGRAMS SERVING HOMELESS CHILDREN.] For matching grants for education programs for homeless children:

~~$400,000~~ $1,100,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Sec. 52. Laws 1997, First Special Session chapter 4, article 2, section 51, subdivision 29, is amended to read:

Subd. 29. [FIRST GRADE PREPAREDNESS.] (a) For grants for the first grade preparedness program under Minnesota Statutes, section 124.2613, and for school sites that have provided a full-day kindergarten option for kindergarten students enrolled in fiscal years 1996 and 1997:

$5,000,000 . . . . . 1998

~~$5,000,000~~ $6,500,000 . . . . . 1999

(b) To be a qualified site, licensed teachers must have taught the optional full-day kindergarten classes. A district that charged a fee for students participating in an optional full-day program is eligible to receive the grant to provide full-day kindergarten for all students as required by Minnesota Statutes, section 124.2613, subdivision 4. Districts with eligible sites must apply to the commissioner of children, families, and learning for a grant.

(c) This appropriation must first be used to fund programs operating during the 1996-1997 school year under paragraph (b) and Minnesota Statutes, section 124.2613. Any remaining funds may be used to expand the number of sites providing first grade preparedness programs.

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Sec. 53. [RULES AFFECTING SPECIAL EDUCATION INSTRUCTION AND SERVICES.]

(a) The state board of education must amend all rules relating to providing special instruction and services to children with a disability so that the rules do not impose requirements that exceed federal law. Consistent with the report from the commissioner to compare federal and state special education law, the state board may use the expedited process under Minnesota Statutes 1997, section 14.389, to amend these rules.

(b) As of July 1, 1999, any rules relating to providing special instruction and services to children with a disability are invalid to the extent they exceed the requirements in federal law unless a law is enacted before July 1, 1999, indicating the intent of the state to exceed one or more federal requirements.

Sec. 54. [REPORT TO COMPARE FEDERAL AND STATE SPECIAL EDUCATION LAW.]

Subdivision 1. [REPORT.] The commissioner of children, families, and learning shall prepare a report comparing existing and currently proposed federal laws and regulations and state laws and rules governing special education, indicating those state laws and rules governing special education that exceed or expand upon minimum requirements under federal special education law or regulations. The commissioner shall make the report available by September 30, 1998, to the public, the state board of education, and the education committees of the legislature for consideration of amending state rules.

Sec. 55. [SPEECH-LANGUAGE PATHOLOGISTS.]

The board of teaching shall allow individuals who hold a certificate of clinical competence from the American Speech-Language-Hearing Association to be licensed as speech-language pathologists.

Sec. 56. [BOARD OF TEACHING; RULE CHANGES; SPEECH-LANGUAGE SERVICES.]

The board of teaching, in order to comply with section 55, shall by rule allow individuals who hold a certificate of clinical competence from the American Speech-Language-Hearing Association to be licensed as speech-language pathologists.

Sec. 57. [IN-SCHOOL BEHAVIOR INTERVENTION GRANTS.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of children, families, and learning shall award grants to develop, adapt, implement, or evaluate discipline programs that prevent behavior that leads to suspensions or expulsions and that provide students with an alternative education setting within the school or program site. A grant recipient must be a school site, school district, charter school, or provider of an alternative education program.

Subd. 2. [EVALUATION.] The commissioner shall evaluate the grant sites to determine the impact of the discipline program on measures of student performance and behavior, including, but not limited to, achievement, attendance, suspensions, expulsions, and the impact on the site, student body, classroom, and school faculty. The commissioner may make recommendations to the education committees of the legislature based on the results of the grant recipients and disseminate information about successful programs to interested schools and school sites.

Sec. 58. [SPECIAL EDUCATION BASE ADJUSTMENT; ROCHESTER.]

Special education revenue for independent school district No. 535, Rochester, is increased by $150,000 for fiscal year 1999 to reflect the increased special education costs associated with the opening of a new facility for juvenile offenders in Olmsted county.

Sec. 59. [DEPARTMENT OF HUMAN SERVICES.]

The department of human services shall report to the legislature on January 15 for the years 1999, 2000, and 2001, the medical assistance MinnesotaCare reimbursed costs of special education services, which are covered services under Minnesota Statutes, chapter 256B. If the November 1998 forecast for the state medical assistance expenditures for special

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education services which are covered services under Minnesota Statutes, chapter 256B, exceeds $8,000,000 per year, the department of children, families, and learning must develop a plan to allocate additional resources to cover the excess costs.

Sec. 60. [APPROPRIATIONS.]

Subd. 2. [IN-SCHOOL BEHAVIOR INTERVENTION GRANTS.] For grants to develop, implement, and evaluate school discipline policies under section 57:

$300,000 . . . . . 1999

Grant recipients may expend grant proceeds over a three-year period. Of this amount, $13,500 is for performing an evaluation.

Subd. 3. [STATEWIDE THIRD-PARTY BILLING SYSTEM; TECHNICAL ASSISTANCE.] For developing and implementing an effective and efficient statewide third-party billing system under section 2:

$200,000 . . . . . 1999

Funds remain available until expended.

Subd. 4. [LITIGATION COSTS.] For paying the litigation costs a district actually incurs under section 26:

$500,000 . . . . . 1999

If the amount appropriated is insufficient to fully fund the aid for hearing and litigation costs and attorney fees under Minnesota Statutes, section 124.32, subdivision 13, paragraph (b), the commissioner shall prorate the appropriation to school districts based on the amount of aid calculated for each district.

Subd. 5. [PROVIDING TECHNICAL ASSISTANCE.] For department staff to provide technical assistance and training to school districts and cooperative units under section 2:

$50,000 . . . . . 1999

Subd. 6. [COURT-PLACED SPECIAL EDUCATION REVENUE.] For reimbursing serving school districts for unreimbursed eligible expenditures attributable to children placed in the serving school district by court action under Minnesota Statutes, section 124.323:

$350,000 . . . . . 1999

Subd. 7. [SPECIAL EDUCATION ADJUSTMENT; ROCHESTER.] For a special education revenue adjustment for independent school district No. 535, Rochester, according to section 58:

$ 135,000 . . . . . 1999

Sec. 61. [APPROPRIATION.]

Subdivision 1. [DEPARTMENT OF HUMAN SERVICES.] The sums indicated in this section are appropriated from the general fund to the department of human services for the fiscal years designated.

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Subd. 2. [PROVIDING TECHNICAL ASSISTANCE.] For technical assistance and training under section 2:

$50,000 . . . . . 1999

Subd. 3. [MEDICAL ASSISTANCE COSTS.] For additional medical assistance costs associated with state law changes regarding speech-language pathologists in Minnesota Statutes, section 256B.0625, subdivision 26:

$458,000 . . . . 1999

Subd. 4. [MINNESOTACARE COSTS.] For transfer into the health care access fund for the purposes of state law changes regarding speech-language pathologists in Minnesota Statutes, section 256B.0625, subdivision 26:

$93,000 . . . . 1999

Sec. 62. [MEDICAL COST REIMBURSEMENT DESIGNATION.]

For fiscal years 2000 and 2001, the department of children, families, and learning must reimburse the department of human services for medical assistance and MinnesotaCare costs associated with state law changes regarding the speech-language pathologists in Minnesota Statutes, section 256B.0625, subdivision 26.

Sec. 63. [REPEALER.]

Minnesota Rules, part 3525.2750, subpart 1, item B, is repealed.

Sec. 64. [EFFECTIVE DATES.]

(a) Sections 2, 9, 25, 42, 43, 44, 45, 46, 48, 49, 50, 53, 55, and 56, are effective the day following final enactment.

(b) Section 14 is effective July 1, 1999.

INTERAGENCY SERVICE; LIFELONG LEARNING; TECHNOLOGY

Section 1. Minnesota Statutes 1996, section 120.1701, subdivision 5, is amended to read:

Subd. 5. [INTERAGENCY EARLY INTERVENTION COMMITTEES.] (a) A school district, group of districts, or special education cooperative, in cooperation with the health and human service agencies located in the county or counties in which the district or cooperative is located, shall establish an interagency early intervention committee for children with disabilities under age five and their families under this section, and for children with disabilities ages three to 22 consistent with the requirements under sections 120.1703 and 120.1705. Committees shall include representatives of local and regional health, education, and county human service agencies; county boards; school boards; early childhood family education programs; parents of young children with disabilities under age 12; current service providers; and may also include representatives from other private or public agencies and school nurses. The committee shall elect a chair from among its members and shall meet at least quarterly.

(b) The committee shall develop and implement interagency policies and procedures concerning the following ongoing duties:

(1) develop public awareness systems designed to inform potential recipient families of available programs and services;

(2) implement interagency child find systems designed to actively seek out, identify, and refer infants and young children with, or at risk of, disabilities and their families;

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(3) establish and evaluate the identification, referral, child and family assessment systems, procedural safeguard process, and community learning systems to recommend, where necessary, alterations and improvements;

(4) assure the development of individualized family service plans for all eligible infants and toddlers with disabilities from birth through age two, and their families, and individual education plans and individual service plans when necessary to appropriately serve children with disabilities, age three and older, and their families and recommend assignment of financial responsibilities to the appropriate agencies. Agencies are encouraged to develop individual family service plans for children with disabilities, age three and older;

(5) implement a process for assuring that services involve cooperating agencies at all steps leading to individualized programs;

(6) facilitate the development of a transitional plan if a service provider is not recommended to continue to provide services;

(7) identify the current services and funding being provided within the community for children with disabilities under age five and their families;

(8) develop a plan for the allocation and expenditure of additional state and federal early intervention funds under United States Code, title 20, section 1471 et seq. (Part H, Public Law Number 102-119) and United States Code, title 20, section 631, et seq. (Chapter I, Public Law Number 89-313); and

(9) develop a policy that is consistent with section 13.05, subdivision 9, and federal law to enable a member of an interagency early intervention committee to allow another member access to data classified as not public.

(1) participate in needs assessments and program planning activities conducted by local social service, health and education agencies for young children with disabilities and their families;

(2) review and comment on the early intervention section of the total special education system for the district, the county social service plan, the section or sections of the community health services plan that address needs of and service activities targeted to children with special health care needs, and the section of the maternal and child health special project grants that address needs of and service activities targeted to children with chronic illness and disabilities; and

(3) prepare a yearly summary on the progress of the community in serving young children with disabilities, and their families, including the expenditure of funds, the identification of unmet service needs identified on the individual family services plan and other individualized plans, and local, state, and federal policies impeding the implementation of this section.

(d) The summary must be organized following a format prescribed by the commissioner of the state lead agency and must be submitted to each of the local agencies and to the state interagency coordinating council by October 1 of each year.

The departments of children, families, and learning, health, and human services must provide assistance to the local agencies in developing cooperative plans for providing services.

Sec. 2. [120.1703] [COORDINATED INTERAGENCY SERVICES.]

Subdivision 1. [CITATION.] Sections 120.1703 and 120.1705 shall be cited as the "Interagency Services for Children with Disabilities Act."

Subd. 2. [PURPOSE.] It is the policy of the state to develop and implement a coordinated, multidisciplinary, interagency intervention service system for children ages three to 22 with disabilities.

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Subd. 3. [DEFINITIONS.] For purposes of sections 120.1703 and 120.1705, the following terms have the meanings given them:

(a) "Health plan" means:

(1) a health plan under section 62Q.01, subdivision 3;

(2) a county-based purchasing plan under section 256B.692;

(3) a self-insured health plan established by a local government under section 471.617; or

(4) self-insured health coverage provided by the state to its employees or retirees.

(b) For purposes of this section, "health plan company" means an entity that issues a health plan as defined in paragraph (a).

(c) "Individual interagency intervention plan" means a standardized written plan describing those programs or services and the accompanying funding sources available to eligible children with disabilities.

(d) "Interagency intervention service system" means a system that coordinates services and programs required in state and federal law to meet the needs of eligible children with disabilities ages three to 22, including:

(1) services provided under the following programs or initiatives administered by state or local agencies:

(i) the maternal and child health program under title V of the Social Security Act, United States Code, title 42, sections 701 to 709;

(ii) the Individuals with Disabilities Education Act under United States Code, title 20, chapter 33, subchapter II, sections 1411 to 1420;

(iii) medical assistance under the Social Security Act, United States Code, title 42, chapter 7, subchapter XIX, section 1396, et seq.;

(iv) the Developmental Disabilities Assistance and Bill of Rights Act, United States Code, title 42, chapter 75, subchapter II, sections 6021 to 6030, Part B;

(v) the Head Start Act, United States Code, title 42, chapter 105, subchapter II, sections 9831 to 9852;

(vi) rehabilitation services provided under chapter 268A;

(vii) juvenile court act services provided under sections 260.011 to 260.301;

(viii) the children's mental health collaboratives under section 245.493;

(ix) the family service collaboratives under section 121.8355;

(x) the family community support plan under section 245.4881, subdivision 4;

(xi) the Minnesota care program under chapter 256L;

(xii) the community health services grants under chapter 145;

(xiii) the community social services act funding under the Social Security Act, United States Code, title 42, sections 1397 to 1397f; and

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(xiv) the community interagency transition committees under section 120.17, subdivision 16;

(2) services provided under a health plan in conformity with an individual family service plan or an individual education plan; and

(3) additional appropriate services that local agencies and counties provide on an individual need basis upon determining eligibility and receiving a request from the interagency early intervention committee and the child's parent.

(e) "Children with disabilities" has the meaning given in section 120.03.

(f) A "standardized written plan" means those individual services or programs available through the interagency intervention service system to an eligible child other than the services or programs described in the child's individual education plan or the child's individual family service plan.

Subd. 4. [STATE INTERAGENCY COMMITTEE.] (a) The governor shall convene an 18-member interagency committee to develop and implement a coordinated, multidisciplinary, interagency intervention service system for children ages three to 22 with disabilities. The commissioners of commerce, children, families, and learning, health, human rights, human services, economic security, and corrections shall each appoint two committee members from their departments; the association of Minnesota counties shall appoint two county representatives, one of whom must be an elected official, as committee members; and the Minnesota school boards association and the school nurse association of Minnesota shall each appoint one committee member. The committee shall select a chair from among its members.

(b) The committee shall:

(1) identify and assist in removing state and federal barriers to local coordination of services provided to children with disabilities;

(2) identify adequate, equitable, and flexible funding sources to streamline these services;

(3) develop guidelines for implementing policies that ensure a comprehensive and coordinated system of all state and local agency services, including multidisciplinary assessment practices for children with disabilities ages three to 22;

(4) develop, consistent with federal law, a standardized written plan for providing services to a child with disabilities;

(5) identify how current systems for dispute resolution can be coordinated and develop guidelines for that coordination;

(6) develop an evaluation process to measure the success of state and local interagency efforts in improving the quality and coordination of services to children with disabilities ages three to 22;

(7) develop guidelines to assist the governing boards of the interagency early intervention committees in carrying out the duties assigned in section 120.1705, subdivision 1, paragraph (b); and

(8) carry out other duties necessary to develop and implement within communities a coordinated, multidisciplinary, interagency intervention service system for children with disabilities.

(c) The committee shall consult on an on-going basis with the state education advisory committee for special education and the governor's interagency coordinating council in carrying out its duties under this section, including assisting the governing boards of the interagency early intervention committees.

Subd. 5. [INTERVENTION DEMONSTRATION PROJECTS.] (a) The commissioner of children, families, and learning, based on recommendations from the state interagency committee, shall issue a request for proposals by January 1, 1999, for grants to the governing boards of interagency intervention committees under section 120.1705 or a combination of one or more counties and school districts to establish five voluntary interagency intervention demonstration projects. One grant shall be used to implement a coordinated service system for all eligible children with disabilities up to age 5 who received services under section 120.1701. One grant shall be used to implement a coordinated service

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system for a population of minority children with disabilities from ages 12 to 22, who may have behavioral problems and are in need of transitional services. Each project must be operational by July 1, 1999. The governing boards of the interagency early intervention committees and the counties and school districts receiving project grants must develop efficient ways to coordinate services and funding for children with disabilities ages three to 22, consistent with the requirements of sections 120.1703 and 120.1705 and the guidelines developed by the state interagency committee under this section.

(b) The state interagency committee shall evaluate the demonstration projects and provide the evaluation results to interagency early intervention committees.

Subd. 6. [THIRD-PARTY LIABILITY.] Nothing in sections 120.1703 and 120.1705 relieves a health plan company, third party administrator or other third-party payer of an obligation to pay for, or changes the validity of an obligation to pay for, services provided to children with disabilities ages three to 22 and their families.

Subd. 7. [AGENCY OBLIGATION.] Nothing in sections 120.1703 and 120.1705 removes the obligation of the state, counties, local school districts, a regional agency, or a local agency or organization to comply with any federal or state law that mandates responsibility for finding, assessing, delivering, assuring, or paying for education or related services for children with disabilities and their families.

Sec. 3. [120.1705] [INTERAGENCY EARLY INTERVENTION COMMITTEE RESPONSIBILITIES.]

Subdivision 1. [ADDITIONAL DUTIES.] (a) The governing boards of the interagency early intervention committees are responsible for developing and implementing interagency policies and procedures to coordinate services at the local level for children with disabilities ages three to 22 under guidelines established by the state interagency committee under section 120.1703, subdivision 4. Consistent with the requirements in sections 120.1703 and 120.1705, the governing boards of the interagency early intervention committees shall organize as a joint powers board under section 471.59 or enter into an interagency agreement that establishes a governance structure.

(b) The governing board of each interagency early intervention committee as defined in section 120.1701, subdivision 5, paragraph (a), which may include a juvenile justice professional, shall:

(1) identify and assist in removing state and federal barriers to local coordination of services provided to children with disabilities;

(2) identify adequate, equitable, and flexible use of funding by local agencies for these services;

(3) implement policies that ensure a comprehensive and coordinated system of all state and local agency services, including multidisciplinary assessment practices, for children with disabilities ages three to 22;

(4) use a standardized written plan for providing services to a child with disabilities developed under section 120.1703;

(5) access the coordinated dispute resolution system and incorporate the guidelines for coordinating services at the local level, consistent with section 120.1703;

(6) use the evaluation process to measure the success of the local interagency effort in improving the quality and coordination of services to children with disabilities ages three to 22 consistent with section 120.1703;

(7) develop a transitional plan for children moving from the interagency early childhood intervention system under section 120.1701 into the interagency intervention service system under this section;

(8) coordinate services and facilitate payment for services from public and private institutions, agencies, and health plan companies; and

(9) share needed information consistent with state and federal data practices requirements.

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Subd. 2. [SERVICES.] (a) Parents, physicians, other health care professionals including school nurses, and education and human services providers jointly must determine appropriate and necessary services for eligible children with disabilities ages three to 22. The services provided to the child under this section must conform with the child's standardized written plan. The governing board of an interagency early intervention committee must provide those services contained in a child's individual education plan and those services for which a legal obligation exists.

(b) Nothing in section 120.1703 or 120.1705 increases or decreases the obligation of the state, county, regional agency, local school district, or local agency or organization to pay for education, health care, or social services.

(c) A health plan may not exclude any medically necessary covered service solely because the service is or could be identified in a child's individual family service plan, individual education plan, a plan established under section 504 of the federal Rehabilitation Act of 1973, or a student's individual health plan. This paragraph reaffirms the obligation of a health plan company to provide or pay for certain medically necessary covered services, and encourages a health plan company to coordinate this care with any other providers of similar services. Also, a health plan company may not exclude from a health plan any medically necessary covered service such as an assessment or physical examination solely because the resulting information may be used for an individual education plan or a standardized written plan.

Subd. 3. [IMPLEMENTATION TIMELINE.] By July 1, 2000, all governing boards of interagency early intervention committees statewide must implement a coordinated service system for children up to age five with disabilities consistent with the requirements of sections 120.1703 and 120.1705 and the evaluation results from the demonstration projects under section 120.1703, subdivision 5. Children with disabilities up to the age of 22 shall be eligible for coordinated services and their eligibility to receive such services under this section shall be phased-in over a four-year period as follows:

(1) July 1, 2001, children up to age nine become eligible;

(2) July 1, 2002, children up to age 14 become eligible; and

(3) July 1, 2003, children up to age 22 become eligible.

Sec. 4. Minnesota Statutes 1997 Supplement, section 126.79, subdivision 3, is amended to read:

Subd. 3. [LOCAL PROGRAMS; APPLICATION PROCEDURE; GRANT AWARDS.] The commissioner shall make grants to eligible applicants to establish local learn and earn programs. Each program shall operate for at least a four-year period. A local program shall select its participants from among eligible students who are entering or are in the ninth grade at the inception of the program. A program may not refill a program slot with another student if a student drops out of the program. Students selected to participate in the program shall be considered part of the program class and students who drop out may return to the program at any time prior to graduation.

The commissioner shall establish the application procedure for awarding grants under this section. The commissioner shall begin awarding grants by ~~September 1, 1997~~ May 1, 1998.

Sec. 5. Minnesota Statutes 1997 Supplement, section 126.79, subdivision 6, is amended to read:

Subd. 6. [PROGRAM COMPONENTS.] Each learn and earn graduation achievement program must provide the opportunity for participating students to complete:

(1) 250 hours each year, not including regular required classroom hours, in basic education competency skills;

(2) 250 hours each year of service to the community ~~service~~; and

(3) 250 hours each year of cultural enrichment and personal development, including but not limited to adult mentoring; participating in community cultural events; developing life skills for use in the home, workplace, and community; and learning to set goals, manage time, and make appropriate behavior choices for varying social situations.

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Sec. 6. Minnesota Statutes 1997 Supplement, section 126.79, subdivision 7, is amended to read:

Subd. 7. [PROGRAM INCENTIVES.] (a) Each participating student shall receive a monetary stipend for each hour spent in a program component activity, plus a bonus upon completion of each component during each year of the program.

(b) An additional amount equal to or greater than each student's earned stipends and bonuses must be deposited for the student in a post-secondary opportunities ~~interest-bearing~~ account, established by the commissioner through the higher education services office. A student may, upon graduation from high school, use the funds accumulated for the student toward the costs, including tuition, books, and lab fees, of attending a Minnesota post-secondary institution or ~~participating in a Minnesota post-secondary program~~ in a career training program. Funds accumulated for a student shall be available to the student from the time the student graduates from high school until ten years after the date the student entered the learn and earn graduation achievement program. After ten years, the commissioner shall close the student's account and any remaining money in the account shall revert to the general fund.

The commissioner shall establish a procedure for providing the monetary stipends and bonuses to students. The commissioner may delegate this authority to grantees.

Sec. 7. Minnesota Statutes 1997 Supplement, section 126.79, subdivision 8, is amended to read:

Subd. 8. [PROGRAM COORDINATOR.] The local learn and earn program coordinator must maintain contact with all participating students and their families; work with the school to link students with the resources needed to improve their educational skills; arrange for service to the community ~~service~~ and cultural enrichment opportunities for students; maintain records regarding student completion of program component hours; and perform other administrative duties as necessary. A program coordinator must, to the extent possible, agree to remain with the program for four years to provide continuity of adult contact to the participating students.

Sec. 8. Minnesota Statutes 1997 Supplement, section 126.79, subdivision 9, is amended to read:

Subd. 9. [EVALUATION AND REPORTS.] The commissioner shall collect information about participating students and a demographically similar control group and shall evaluate the short-term and long-term benefits participating students receive from the learn and earn graduation achievement program, based on the outcome measures specified in subdivision 2, and any other criteria established by the commissioner as part of the grant application process. The evaluation must include a statistical comparison of students participating in the program and the control group. The commissioner shall ~~track~~ follow participating students and the control group for a minimum of six years from the start of the program. The commissioner shall submit a preliminary report to the governor and the chairs of the senate and house committees having jurisdiction over education and crime prevention by December 15, ~~2000~~ 2001, regarding continuation of the learn and earn graduation achievement program for participating schools and expansion of the program to additional schools. The commissioner shall submit a final report by December 15, ~~2002~~ 2003.

Sec. 9. Minnesota Statutes 1997 Supplement, section 268.665, subdivision 2, is amended to read:

Subd. 2. [MEMBERSHIP.] The governor's workforce development council is composed of 33 members appointed by the governor. The members may be removed pursuant to section 15.059. In selecting the representatives of the council, the governor shall ensure that 50 percent of the members come from nominations provided by local workforce councils. Local education representatives shall come from nominations provided by local education to employment partnerships. The 32 33 members shall represent the following sectors:

(a) State agencies: the following individuals shall serve on the council:

(1) commissioner of the Minnesota department of economic security;

(2) commissioner of the Minnesota department of children, families, and learning;

(3) commissioner of the Minnesota department of human services; and

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(4) commissioner of the Minnesota department of trade and economic development.

(b) Business and industry: six individuals shall represent the business and industry sectors of Minnesota.

(d) Community-based organizations: four individuals shall represent community-based organizations of Minnesota. Community-based organizations are defined by the Job Training Partnership Act as private nonprofit organizations that are representative of communities or significant segments of communities and that provide job training services, agencies serving youth, agencies serving individuals with disabilities, agencies serving displaced homemakers, union-related organizations, and employer-related nonprofit organizations and organizations serving nonreservation Indians and tribal governments.

(e) Education: six individuals shall represent the education sector of Minnesota as follows:

(1) one individual shall represent local public secondary education;

(2) one individual shall have expertise in design and implementation of school-based service-learning;

(3) one individual shall represent post-secondary education;

(4) one individual shall represent secondary/post-secondary vocational institutions;

(5) the chancellor of the board of trustees of the Minnesota state colleges and universities; and

(6) one individual shall have expertise in agricultural education.

(f) Other: two individuals shall represent other constituencies including:

(1) units of local government; and

(2) applicable state or local programs.

The speaker and the minority leader of the house of representatives shall each appoint a representative to serve as an ex officio member of the council. The majority and minority leaders of the senate shall each appoint a senator to serve as an ex officio member of the council. After January 1, 1997, the Minnesota director of the corporation for national service shall also serve as an ex officio member.

(g) Appointment: each member shall be appointed for a term of three years from the first day of January or July immediately following their appointment. Elected officials shall forfeit their appointment if they cease to serve in elected office.

(h) Members of the council are compensated as provided in section 15.059, subdivision 3.

Sec. 10. Minnesota Statutes 1996, section 268.665, subdivision 3, is amended to read:

Subd. 3. [PURPOSE; DUTIES.] The governor's workforce development council shall replace the governor's job training council and assume all of its requirements, duties, and responsibilities, under the Job Training Partnership Act, United States Code, title 29, section 1501, et seq. Additionally, the workforce development council shall assume the following duties and responsibilities:

(a) Coordinate the development, implementation, and evaluation of the statewide education and employment transitions system under section 126B.01. Beginning January 1, 1997, the council shall also coordinate the development, implementation, and evaluation of the Minnesota youth services programs under sections 121.704 to 121.709, and the National and Community Services Act of 1993, United States Code, title 42, section 12501, et seq.

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(b) Review the provision of services and the use of funds and resources under applicable federal human resource programs and advise the governor on methods of coordinating the provision of services and the use of funds and resources consistent with the laws and regulations governing the programs. For purposes of this section, applicable federal and state human resource programs mean the:

(1) Job Training Partnership Act, United States Code, title 29, section 1501, et seq.;

(2) Carl D. Perkins Vocational and Applied Technology Education Act, United States Code, title 20, section 2301, et seq.;

(3) National and Community Service Act of 1993, United States Code, title 42, section 12501, et seq.;

(4) Adult Education Act, United States Code, title 20, section 1201, et seq.;

(5) Wagner-Peyser Act, United States Code, title 29, section 49;

(6) Social Security Act, title IV, part F, (JOBS), United States Code, title 42, section 681, et seq.;

(7) Food Stamp Act of 1977, United States Code, title 7, section 6(d)(4), Food Stamp Employment and Training Program, United States Code, title 7, section 2015(d)(4);

(8) programs defined in section 268.0111, subdivisions 4 and 5; and

(9) School to Work Opportunity Act of 1994, Public Law Number 103-239.

Additional federal and state programs and resources can be included within the scope of the council's duties if recommended by the governor after consultation with the council.

(c) Review federal, state, and local education, post-secondary, job skills training, and youth employment programs, and make recommendations to the governor and the legislature for establishing an integrated seamless system for providing education, service-learning, and work skills development services to learners and workers of all ages.

(d) Advise the governor on the development and implementation of statewide and local performance standards and measures relating to applicable federal human resource programs and the coordination of performance standards and measures among programs.

(e) ~~Administer~~ Develop program guidelines and recommend grant approval procedures to the department of children, families, and learning for grants to local education and employment transition partnerships, including implementation grants under section 126B.01, grants for youth apprenticeship programs under section 126B.03, and youth employer grants~~. Beginning January 1, 1997, administer youthworks grants under sections 121.704 to 121.709~~; and

(1) coordinate implementation of the education and employment transitions system under section 126B.01;

(2) promote education and employment transitions programs and knowledge and skills of entrepreneurship among employers, workers, youth, and educators, and encourage employers to provide meaningful work-based learning opportunities;

(3) evaluate and identify exemplary education and employment transitions programs and provide technical assistance to local partnerships to replicate the programs throughout the state;

(4) establish a performance-based quality assurance system for consistent statewide evaluation of the performance of the education and employment transitions system at both the state and local level;

(5) conduct an annual review of each local education and employment transitions partnership to ensure it adequately meets the quality assurance standards established as part of the state quality assurance system;

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(6) develop the methods to assess local partnership effectiveness;

(7) annually publish a report on the findings of the evaluations of each local education transitions partnership;

(8) promote knowledge and skills of entrepreneurship among students in kindergarten through grade 12 by sharing information about the ways new business development contributes to a strong economy.

(f) Advise the governor on methods to evaluate applicable federal human resource programs.

(g) Sponsor appropriate studies to identify human investment needs in Minnesota and recommend to the governor goals and methods for meeting those needs.

(h) Recommend to the governor goals and methods for the development and coordination of a human resource system in Minnesota.

(i) Examine federal and state laws, rules, and regulations to assess whether they present barriers to achieving the development of a coordinated human resource system.

(j) Recommend to the governor and to the federal government changes in state or federal laws, rules, or regulations concerning employment and training programs that present barriers to achieving the development of a coordinated human resource system.

(k) Recommend to the governor and to the federal government waivers of laws and regulations to promote coordinated service delivery.

(l) Sponsor appropriate studies and prepare and recommend to the governor a strategic plan which details methods for meeting Minnesota's human investment needs and for developing and coordinating a state human resource system.

Sec. 11. Laws 1997, chapter 157, section 71, is amended to read:

Sec. 71. [SCHOOL BANK PILOT PROJECT.]

(a) A school bank sponsored by independent school district No. 31, Bemidji, or by independent school district No. 508, St. Peter, that meets all requirements of paragraph (b) is not subject to Minnesota Statutes, section 47.03, subdivision 1, or to any other statute or rule that regulates banks, other financial institutions, or currency exchanges.

(b) To qualify under paragraph (a), the school bank must:

(1) be operated as part of a high school educational program and under guidelines adopted by the school board;

(2) be advised on a regular basis by a one or more state-chartered or federally-chartered financial ~~institution~~ institutions, but not owned or operated by ~~that~~ any financial institution;

(3) be located on school premises and have as customers only students enrolled in, or employees of, the school in which it is located; and

(4) have a written commitment from the school board, guaranteeing reimbursement of any depositor's funds lost due to insolvency of the school bank.

(c) Funds of a school bank that meets the requirements of this section are not school district or other public funds for purposes of any state law governing the use or investment of school district or other public funds.

(d) The school district shall annually file with the commissioner of commerce a report, prepared by the students and teachers involved, summarizing the operation of the school bank.

(e) This section expires June 30, 2000. The commissioner of commerce shall, no later than December 15, 1999, provide a written report to the legislature regarding this pilot project and any recommended legislation regarding school banks.

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Sec. 12. Laws 1997, First Special Session chapter 4, article 2, section 51, subdivision 33, is amended to read:

Subd. 33. [LEARN AND EARN GRADUATION ACHIEVEMENT PROGRAM.] For the learn and earn graduation achievement program according to Minnesota Statutes, section 126.79:

$1,000,000 . . . . . 1998

$1,000,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

At least 95 percent of the appropriation must be used for stipends, educational awards, and program coordination. The remaining five percent of the appropriation may be used for administrative costs.

Sec. 13. Laws 1997, First Special Session chapter 4, article 3, section 23, is amended by adding a subdivision to read:

Subd. 4a. [DESIGN AND IMPLEMENTATION GRANT.] An eligible lifework learning site applicant may apply for a one-time grant to design and implement a lifework learning facility. The design and implementation grant shall not exceed $200,000 for a site.

Sec. 14. Laws 1997, First Special Session chapter 4, article 3, section 25, subdivision 4, is amended to read:

Subd. 4. [EDUCATION AND EMPLOYMENT TRANSITIONS PROGRAM GRANTS.] For education and employment transitions program:

~~$4,750,000~~ $4,800,000 . . . . . 1998

~~$4,750,000~~ $4,800,000 . . . . . 1999

$500,000 each year is for development of MnCEPs, an Internet-based education and employment information system. These are one-time funds.

$1,225,000 in fiscal year 1998 and $1,250,000 in fiscal year 1999 is for a rebate program for qualifying employers who employ less than 250 employees, who offer youth internships to educators. An employer may apply for a rebate of up to $500 for each paid youth internship and each educator internship, and up to $3,000 for each paid youth apprenticeship. The commissioner shall determine the application and payment process.

$450,000 each year is for youth apprenticeship program grants.

$225,000 each year is for youth entrepreneurship grants under Minnesota Statutes, section 121.72. Of this amount, $25,000 each year is for the high school student entrepreneurship program in independent school district No. 175, Westbrook. This appropriation shall be used for expenses, including, but not limited to, salaries, travel, seminars, equipment purchases, contractual expenses, and other expenses related to the student-run business.

$125,000 each year is for youth employer grants under Laws 1995, First Special Session chapter 3, article 4, section 28.

$150,000 each year is for parent and community awareness training.

$825,000 each year is for the development of career assessment benchmarks, lifework portfolios, industry skill standards, curriculum development, career academies, and career programs for elementary, middle school, and at-risk learners.

$400,000 each year is for state level activities, including the governor's workforce council.

$275,000 each year is for development of occupational information.

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$300,000 each year is for a grant to be made available to a county government that has established school-to-work projects with schools located in a city of the first class. These grants must be used to expand the number of at-risk students participating in these school-to-work projects. Priority must be given to projects that demonstrate collaboration ~~between~~ among private and public employers, collective bargaining representatives, school officials, and the county government and which prepare at-risk students for long-term employment with private sector employers paying a minimum of 150 percent of the federal poverty level for a family of four and with the majority of their employees in collective bargaining units.

$250,000 each year is for agricultural school-to-work grants.

$25,000 is for a grant to the Minnesota Historical Society for money canceled in fiscal year 1997.

$50,000 each year is awarded to the Minnesota valley action council, the fiscal agent for the south central tri-county school-to-work partnership, to serve as a model for the state in demonstrating the capability of a multicounty partnership to develop both a resource map for sustaining all learners and an assessment process for employer, labor, and community organizations involved in the school-to-work initiative. The partnership shall submit a report to the commissioner and to the governor's workforce development council by September 1, 1999, that includes the resource map, the results of the assessments, and models for multicounty partnerships to replicate these activities.

Any balance remaining in the first year does not cancel but is available in the second year.

Sec. 15. Laws 1997, First Special Session chapter 4, article 9, section 11, is amended to read:

Sec. 11. [ADDITIONAL TECHNOLOGY REVENUE.]

(a) For fiscal year 1998 only, the allowance in Minnesota Statutes, section 124A.22, subdivision 10, paragraph (a), is increased by:

(1) $24 per pupil unit; or

(2) the lesser of $25,000 or $80 per pupil unit.

Revenue received under this section must be used according to Minnesota Statutes, section 124A.22, subdivision 11, clauses (15), (18), (19), (23), and (24).

(b) For the purposes of paragraph (a), "pupil unit" means fund balance pupil unit as defined in Minnesota Statutes, section 124A.26, subdivision 1, excluding pupil units attributable to shared time pupils.

Sec. 16. [DEADLINE.]

The governor shall convene the interagency committee required by Minnesota Statutes, section 120.1703, subdivision 4, by July 1, 1998.

Sec. 17. [APPROPRIATIONS.]

Subd. 2. [INTERVENTION DEMONSTRATION PROJECTS.] For establishing five voluntary interagency intervention demonstration projects under section 2, subdivision 5:

$ 250,000 . . . . . 1999

The commissioner shall allocate the grant awards according to the implementation needs of the grant recipients.

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Subd. 3. [DESIGN AND IMPLEMENTATION GRANT.] For one-time grants to design and implement a lifework learning facility under section 13:

$ 450,000 . . . . . 1999

In awarding the grants, priority shall be given to applicants who are ready to implement a lifework learning facility.

Sec. 18. [REPEALER.]

Laws 1993, chapter 146, article 5, section 20, as amended by Laws 1997, First Special Session chapter 4, article 3, section 20, is repealed.

Sec. 19. [EFFECTIVE DATES.]

(a) Sections 2 to 4, 6, 11 to 14, and 16 are effective the day following final enactment.

(b) Section 15 is effective for revenue for fiscal year 1998.

FACILITIES AND ORGANIZATION

Section 1. Minnesota Statutes 1997 Supplement, section 121.15, subdivision 6, is amended to read:

Subd. 6. [REVIEW AND COMMENT.] A school district, a special education cooperative, or a cooperative unit of government, as defined in section 123.35, subdivision 19b, paragraph (d), must not initiate an installment contract for purchase or a lease agreement, hold a referendum for bonds, nor solicit bids for new construction, expansion, or remodeling of an educational facility that requires an expenditure in excess of $400,000 per school site prior to review and comment by the commissioner. The commissioner may exempt a facility maintenance project funded with general education aid and levy or health and safety revenue from this provision after reviewing a written request from a school district describing the scope of work. A school board shall not separate portions of a single project into components to avoid the requirements of this subdivision.

Sec. 2. Minnesota Statutes 1996, section 124.755, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section, the term "debt obligation" means ~~either~~:

(1) a tax or aid anticipation certificate of indebtedness;

(2) a certificate of participation issued under section 124.91, subdivision 7; or

(3) a general obligation bond.

Sec. 3. Minnesota Statutes 1996, section 124.83, subdivision 8, is amended to read:

Subd. 8. [HEALTH, SAFETY, AND ENVIRONMENTAL MANAGEMENT COST.] (a) A district's cost for health, safety, and environmental management is limited to the lesser of:

(1) actual cost to implement their plan; or

(2) an amount determined by the commissioner, based on enrollment, building age, and size.

(b) ~~Effective July 1, 1993,~~ The department of children, families, and learning may contract with regional service organizations, private contractors, Minnesota safety council, or state agencies to provide management assistance to school districts for health and safety capital projects. Management assistance is the development of written programs for the identification, recognition and control of hazards, and prioritization and scheduling of district health and safety capital projects.

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(c) Notwithstanding paragraph (b), the department may approve revenue, up to the limit defined in paragraph (a) for districts having an approved health, safety, and environmental management plan that uses district staff to accomplish coordination and provided services.

Sec. 4. Minnesota Statutes 1997 Supplement, section 124.91, subdivision 1, is amended to read:

Subdivision 1. [TO LEASE BUILDING OR LAND.] (a) When a district finds it economically advantageous to rent or lease a building or land for any instructional purposes or for school storage or furniture repair, and it determines that the operating capital revenue authorized under section 124A.22, subdivision 10, is insufficient for this purpose, it may apply to the commissioner for permission to make an additional capital expenditure levy for this purpose. An application for permission to levy under this subdivision must contain financial justification for the proposed levy, the terms and conditions of the proposed lease, and a description of the space to be leased and its proposed use.

(b) The criteria for approval of applications to levy under this subdivision must include: the reasonableness of the price, the appropriateness of the space to the proposed activity, the feasibility of transporting pupils to the leased building or land, conformity of the lease to the laws and rules of the state of Minnesota, and the appropriateness of the proposed lease to the space needs and the financial condition of the district. The commissioner must not authorize a levy under this subdivision in an amount greater than the cost to the district of renting or leasing a building or land for approved purposes. The proceeds of this levy must not be used for custodial or other maintenance services. A district may not levy under this subdivision for the purpose of leasing or renting a district-owned building or site to itself.

(c) For agreements finalized after July 1, 1997, a district may not levy under this subdivision for the purpose of leasing: (1) a newly constructed building used primarily for regular kindergarten, elementary, or secondary instruction; or (2) a newly constructed building addition or additions used primarily for regular kindergarten, elementary, or secondary instruction that contains more than 20 percent of the square footage of the previously existing building.

(d) The total levy under this subdivision for a district for any year must not exceed $100 times the actual pupil units for the fiscal year to which the levy is attributable.

(e) For agreements for which a review and comment have been submitted to the department of children, families, and learning after April 1, 1998, the term "instructional purpose" as used in this subdivision excludes expenditures on stadiums.

Sec. 5. Minnesota Statutes 1997 Supplement, section 124.91, subdivision 5, is amended to read:

Subd. 5. [INTERACTIVE TELEVISION.] (a) A school district with its central administrative office located within economic development region one, two, three, four, five, six, seven, eight, nine, and ten may apply to the commissioner of children, families, and learning for ITV revenue up to the greater of .5 percent of the adjusted net tax capacity of the district or $25,000. Eligible interactive television expenditures include the construction, maintenance, and lease costs of an interactive television system for instructional purposes. An eligible school district that has completed the construction of its interactive television system may also purchase computer hardware and software used primarily for instructional purposes and access to the Internet provided that its total expenditures for interactive television maintenance and lease costs and for computer hardware and software under this subdivision do not exceed its interactive television revenue for fiscal year 1998. The approval by the commissioner of children, families, and learning and the application procedures set forth in subdivision 1 shall apply to the revenue in this subdivision. In granting the approval, the commissioner must consider whether the district is maximizing efficiency through peak use and off-peak use pricing structures.

(b) To obtain ITV revenue, a district may levy an amount not to exceed the district's ITV revenue times the lesser of one or the ratio of:

(1) the quotient derived by dividing the adjusted net tax capacity of the district for the year before the year the levy is certified by the actual pupil units in the district for the year to which the levy is attributable; to

(2) ~~100 percent of the equalizing factor as defined in section 124A.02, subdivision 8, for the year to which the levy is attributable~~ $10,000.

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(d) The revenue in the first year after reorganization for a district that has reorganized under section 122.22, 122.23, or 122.241 to 122.247 shall be the greater of:

(1) the revenue computed for the reorganized district under paragraph (a), or

(2)(i) for two districts that reorganized, 75 percent of the revenue computed as if the districts involved in the reorganization were separate, or

(ii) for three or more districts that reorganized, 50 percent of the revenue computed as if the districts involved in the reorganization were separate.

(e) The revenue in paragraph (d) is increased by the difference between the initial revenue and ITV lease costs for leases that had been entered into by the preexisting districts on the effective date of the consolidation or combination and with a term not exceeding ten years. This increased revenue is only available for the remaining term of the lease. However, in no case shall the revenue exceed the amount available had the preexisting districts received revenue separately.

(f) Effective for fiscal year 2000, the revenue under this section shall be 75 percent of the amount determined in paragraph (a); for fiscal year 2001, 50 percent of the amount in paragraph (a); and for fiscal year 2002, 25 percent of the amount in paragraph (a).

(g) This section expires effective for revenue for fiscal year 2003, or when leases in existence on the effective date of Laws 1997, First Special Session chapter 4, expire.

Sec. 6. Minnesota Statutes 1996, section 124.91, subdivision 6, is amended to read:

Subd. 6. [ENERGY CONSERVATION.] For loans approved before March 1, 1998, the school district may annually ~~levy~~ include as revenue under section 124.95, without the approval of a majority of the voters in the district, an amount sufficient to repay the annual principal and interest of the loan made pursuant to sections 216C.37 and 298.292 to 298.298. For energy loans approved after March 1, 1998, school districts must annually transfer from the general fund to the debt redemption fund the amount sufficient to pay interest and principal on the loans.

Sec. 7. Minnesota Statutes 1996, section 124.95, subdivision 6, is amended to read:

Subd. 6. [DEBT SERVICE EQUALIZATION AID PAYMENT SCHEDULE.] Debt service equalization aid must be paid as follows: 30 percent before September 15, 30 percent before December 15, 25 30 percent before March 15, and a final payment of 15 10 percent by July 15 of the subsequent fiscal year.

Sec. 8. Minnesota Statutes 1997 Supplement, section 124A.22, subdivision 11, is amended to read:

Subd. 11. [USES OF TOTAL OPERATING CAPITAL REVENUE.] Total operating capital revenue may be used only for the following purposes:

(1) to acquire land for school purposes;

(2) to acquire or construct buildings for school purposes~~, up to $400,000~~;

(3) to rent or lease buildings, including the costs of building repair or improvement that are part of a lease agreement;

(4) to improve and repair school sites and buildings, and equip or reequip school buildings with permanent attached fixtures;

(5) for a surplus school building that is used substantially for a public nonschool purpose;

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(6) to eliminate barriers or increase access to school buildings by individuals with a disability;

(7) to bring school buildings into compliance with the uniform fire code adopted according to chapter 299F;

(8) to remove asbestos from school buildings, encapsulate asbestos, or make asbestos-related repairs;

(9) to clean up and dispose of polychlorinated biphenyls found in school buildings;

(10) to clean up, remove, dispose of, and make repairs related to storing heating fuel or transportation fuels such as alcohol, gasoline, fuel oil, and special fuel, as defined in section 296.01;

(11) for energy audits for school buildings and to modify buildings if the audit indicates the cost of the modification can be recovered within ten years;

(12) to improve buildings that are leased according to section 123.36, subdivision 10;

(13) to pay special assessments levied against school property but not to pay assessments for service charges;

(14) to pay principal and interest on state loans for energy conservation according to section 216C.37 or loans made under the Northeast Minnesota Economic Protection Trust Fund Act according to sections 298.292 to 298.298;

(15) to purchase or lease interactive telecommunications equipment;

(16) by school board resolution, to transfer money into the debt redemption fund to: (i) pay the amounts needed to meet, when due, principal and interest payments on certain obligations issued according to chapter 475; or (ii) pay principal and interest on debt service loans or capital loans according to section 124.44;

(17) to pay capital expenditure equipment-related assessments of any entity formed under a cooperative agreement between two or more districts;

(18) to purchase or lease computers and related materials, copying machines, telecommunications equipment, and other noninstructional equipment;

(19) to purchase or lease assistive technology or equipment for instructional programs;

(20) to purchase textbooks;

(21) to purchase new and replacement library books;

(22) to purchase vehicles;

(23) to purchase or lease telecommunications equipment, computers, and related equipment for integrated information management systems for:

(i) managing and reporting learner outcome information for all students under a results-oriented graduation rule;

(ii) managing student assessment, services, and achievement information required for students with individual education plans; and

(iii) other classroom information management needs; and

(24) to pay personnel costs directly related to the acquisition, operation, and maintenance of telecommunications systems, computers, related equipment, and network and applications software.

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Sec. 9. Laws 1997, First Special Session chapter 4, article 4, section 34, is amended to read:

Sec. 34. [FISCAL ~~YEAR~~ YEARS 1998 AND 1999 DECLINING PUPIL UNIT AID.]

For fiscal ~~year~~ years 1998 and 1999 only, a school district with one or more school buildings closed during the 1996-1997 school year due to flooding is eligible for declining pupil unit aid equal to the greater of zero or the product of the general education formula allowance for fiscal year 1998 times the difference between the district's actual pupil units for the 1996-1997 school year and the district's actual pupil units for the 1997-1998 school year.

Sec. 10. Laws 1997, First Special Session chapter 4, article 4, section 35, subdivision 9, is amended to read:

Subd. 9. [FLOOD LOSSES.] (a) For grants and loans to independent school district Nos. 2854, Ada-Borup; 2176, Warren-Alvarado-Oslo; 846, Breckenridge; 595, East Grand Forks; and other districts affected by the 1997 floods for expenses associated with the floods not covered by insurance or state or federal disaster relief:

~~$4,700,000~~ $14,775,000 . . . . . 1998

(b) The commissioner shall award grants and loans to school districts to cover expenses associated with the 1997 floods. The grants or loans may be for capital losses or for extraordinary operating expenses resulting from the floods. School districts shall repay any loan or grant amounts to the department if those amounts are otherwise funded from other sources. The commissioner shall establish the terms and conditions of any loans and may request any necessary information from school districts before awarding a grant or loan. This appropriation shall also be used to fund aid under sections 33 and 34.

(c) Of the amount in paragraph (a), $1,400,000 is for special school district No. 1, Minneapolis, for Edison high school; $1,250,000 is for independent school district No. 2854, Ada-Borup; and $7,425,000 is for independent school district No. 595, East Grand Forks. Part of the appropriation to independent school district No. 595, East Grand Forks, may be used to convert the Valley elementary school into a facility for community, early childhood, and senior programs.

(d) The commissioner shall determine a schedule for payments to the school districts.

(e) This appropriation is available until June 30, 1999.

Sec. 11. [JOINT FACILITY.]

Notwithstanding Minnesota Statutes, section 471.19, independent school district No. 277, Westonka, may expend bond funds for building and remodeling a facility to be operated and maintained under a joint-powers agreement with other governmental entities for joint use by the school district and local community agencies. The school district is not eligible for debt service equalization on the bonds associated with the joint facility.

Sec. 12. [ENHANCED PAIRING COOPERATION AND COMBINATION AID.]

Subdivision 1. [DISTRICT ELIGIBILITY.] A group of districts participating in an enhanced pairing agreement under Laws 1995, First Special Session chapter 3, article 6, section 17, is eligible for a grant for cooperation and combination.

Subd. 2. [AID AMOUNT.] A district that is participating in an enhanced pairing agreement is eligible for consolidation transition revenue under Minnesota Statutes, section 124.2726 and is also eligible for additional state aid equal to $100 times the number of pupil units enrolled in an enhanced paired district in the year prior to consolidation.

Subd. 3. [AID USES.] A district receiving aid under this section must use the aid consistent with the purposes listed under Minnesota Statutes, section 124.2725, subdivision 11, or other purposes related to combination of the individual districts as determined by the school board. If, after receipt of state aid under this section the districts choose not to combine and receive aid under Minnesota Statutes, section 124.2726, the commissioner of children, families, and learning must recover aid equal to $25 times the number of pupil units in the enhanced paired district.

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Sec. 13. [LEASE LEVY FOR ADMINISTRATIVE SPACE; SOUTH ST. PAUL AND MANKATO.]

Each year, special school district No. 6, South St. Paul, and independent school district No. 77, Mankato, may levy the amounts necessary to rent or lease administrative space so that space previously used for administrative purposes may be used for instructional purposes.

Sec. 14. [USE OF BOND PROCEEDS; ST. CLOUD.] Notwithstanding Minnesota Statutes, section 475.58, subdivision 4, independent school district No. 742, St. Cloud, upon passage of a written resolution specifying the amount and purpose of the expenditure, may expend up to $800,000 from its building construction fund to purchase a building and site to be used for community education purposes.

Sec. 15. [BONDING AUTHORIZATION.]

To provide funds for the acquisition or betterment of school facilities, independent school district No. 625, St. Paul, may by two-thirds majority vote of all the members of the board of directors issue general obligation bonds in one or more series in calendar years 1998 to 2002, both inclusive, as provided in this section. The aggregate principal amount of any bonds issued under this section for each calendar year must not exceed $15,000,000. Issuance of the bonds is not subject to Minnesota Statutes, section 475.58 or 475.59. The bonds must otherwise be issued as provided in Minnesota Statutes, chapter 475. The authority to issue bonds under this section is in addition to any bonding authority authorized by Minnesota Statutes, chapter 124, or other law. The amount of bonding authority authorized under this section must be disregarded in calculating the bonding limit of Minnesota Statutes, chapter 124, or any other law other than Minnesota Statutes, section 475.53, subdivision 4.

Sec. 16. [TAX LEVY FOR DEBT SERVICE.]

To pay the principal of and interest on bonds issued under section 13, independent school district No. 625, St. Paul, must levy a tax annually in an amount sufficient under Minnesota Statutes, section 475.61, subdivisions 1 and 3, to pay the principal of and interest on the bonds. The tax authorized under this section is in addition to the taxes authorized to be levied under Minnesota Statutes, chapter 124A or 275, or other law.

Sec. 17. [MOUNTAIN IRON-BUHL; BONDS.]

Subdivision 1. [AUTHORIZATION.] Independent school district No. 712, Mountain Iron-Buhl, may issue bonds in an aggregate principal amount not exceeding $5,300,000 in addition to any bonds already issued or authorized, to provide funds to design, construct, equip, furnish, remodel, rehabilitate, and acquire land for school facilities and buildings, or abate, remove, and dispose of asbestos, polychlorinated biphenyls, or petroleum as defined in Minnesota Statutes, section 115C.02, and make repairs related to the abatement, removal, or disposal of these substances. Independent school district No. 712, Mountain Iron-Buhl, may spend the proceeds of the bond sale for those purposes and any architect, engineer, and legal fees incidental to those purposes or the sale. The bond shall be authorized, issued, sold, executed, and delivered in the manner provided by Minnesota Statutes, chapter 475, including submission of the proposition to the electors under Minnesota Statutes, section 475.58. After authorization by the electors under Minnesota Statutes, section 475.58, a resolution of the board levying taxes for the payment of bonds and interest on them and pledging the proceeds of the levies for the payment of the bonds and interest on them shall be deemed to be in compliance with the provisions of Minnesota Statutes, chapter 475, with respect to the levying of taxes for their payment.

Subd. 2. [APPROPRIATION.] There is annually appropriated from the distribution of taconite production tax revenues to the taconite environmental protection fund pursuant to Minnesota Statutes, section 298.28, subdivision 11, and to the northeast Minnesota economic protection trust pursuant to Minnesota Statutes, section 298.28, subdivisions 9 and 11, in equal shares, an amount sufficient to pay when due 80 percent of the principal and interest on the bonds issued pursuant to subdivision 1. If the annual distribution to the northeast Minnesota economic protection trust is insufficient to pay its share after fulfilling any obligations of the trust under Minnesota Statutes, section 298.225 or 298.293, the deficiency shall be appropriated from the taconite environmental protection fund.

Subd. 3. [DISTRICT OBLIGATIONS.] Bonds issued under authority of this section shall be the general obligations of the school district, for which its full faith and credit and unlimited taxing powers shall be pledged. If there are any deficiencies in the amount received pursuant to subdivision 2, they shall be made good by general levies, not subject to

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limit, on all taxable properties in the district in accordance with Minnesota Statutes, section 475.64. If any deficiency levies are necessary, the school board may effect a temporary loan or loans on certificates of indebtedness issued in anticipation of them to meet payments of principal or interest on the bonds due or about to become due.

Subd. 4. [DISTRICT LEVY.] The school board shall by resolution levy on all property in the school district subject to the general ad valorem school tax levies, and not subject to taxation under Minnesota Statutes, sections 298.23 to 298.28, a direct annual ad valorem tax for each year of the term of the bonds in amounts that, if collected in full, will produce the amounts needed to meet when due 20 percent of the principal and interest payments on the bonds. A copy of the resolution shall be filed, and the necessary taxes shall be extended, assessed, collected, and remitted in accordance with Minnesota Statutes, section 475.61.

Subd. 5. [LEVY LIMITATIONS.] Taxes levied pursuant to this section shall be disregarded in the calculation of any other tax levies or limits on tax levies provided by other law.

Subd. 6. [BONDING LIMITATIONS.] Bonds may be issued under authority of this section notwithstanding any limitations upon the indebtedness of a district, and their amounts shall not be included in computing the indebtedness of a district for any purpose, including the issuance of subsequent bonds and the incurring of subsequent indebtedness.

Subd. 7. [TERMINATION OF APPROPRIATION.] The appropriation authorized in subdivision 2 shall terminate upon payment or maturity of the last of those bonds.

Subd. 8. [BOND ISSUE REQUIREMENT.] No bonds may be issued under this section after March 1, 2000, unless they are issued under a contract in effect on or before March 1, 2000.

Subd. 9. [LOCAL APPROVAL.] This section is effective for independent school district No. 712, Mountain Iron-Buhl, the day after its governing body complies with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 18. [BONDS PAID FROM TACONITE PRODUCTION TAX REVENUES.]

Subdivision 1. [REFUNDING BONDS.] The appropriation of funds from the distribution of taconite production tax revenues to the taconite environmental protection tax fund and the northeast Minnesota economic protection fund made by Laws 1988, chapter 718, article 7, sections 62 and 63; Laws 1989, chapter 329, article 5, section 20; Laws 1990, chapter 604, article 8, section 13; Laws 1992, chapter 499, article 5, section 29; and Laws 1996, chapter 412, article 5, sections 18 to 20; and by section 16, shall continue to apply to bonds issued under Minnesota Statutes, chapter 475, to refund bonds originally issued pursuant to those chapters.

Subd. 2. [LOCAL PAYMENTS.] School districts that are required in Laws 1988, chapter 718, article 7, sections 62 and 63; Laws 1989, chapter 329, article 5, section 20; Laws 1990, chapter 604, article 8, section 13; Laws 1992, chapter 499, article 5, section 29; and sections 18 to 20, to impose levies to pay debt service on the bonds issued under those provisions to the extent the principal and interest on the bonds is not paid by distributions from the taconite environmental protection fund and the northeast Minnesota economic protection trust, may pay their portion of the principal and interest from any funds available to them. To the extent a school district uses funds other than the proceeds of a property tax levy to pay its share of the principal and interest on the bonds, the requirement to impose a property tax to pay the local share does not apply to the school district.

Sec. 19. [HEALTH AND SAFETY REVENUE; MOUNDS VIEW.] (a) Upon approval of the commissioner of children, families, and learning, and notwithstanding Minnesota Statutes, section 124.83, subdivision 6, independent school district No. 621, Mounds View, is authorized to use up to $300,000 of its health and safety revenue to replace portable classrooms with new construction of classrooms.

(b) The department of children, families, and learning shall approve the revenue use under paragraph (a) only after the district has demonstrated to the commissioner's satisfaction that:

(1) mold has rendered the portable classrooms uninhabitable;

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(2) Island Lake elementary school could not receive an occupancy permit from local building code officials; and

(3) the timing of the damage to Island Lake elementary school portables presented a hardship to the school by leaving it short by two classrooms.

Sec. 20. [HEALTH AND SAFETY; EVELETH-GILBERT.]

Notwithstanding any law to the contrary, independent school district No. 2154, Eveleth-Gilbert, may include in its health and safety program the amounts necessary to make health and safety improvements to an ice arena located within the district boundaries. The total amount of revenue approved for this purpose shall not exceed $300,000.

Sec. 21. [APPROPRIATION.]

Subd. 2. [MONTICELLO.] For a grant to independent school district No. 882, Monticello, for losses related to summer storms in 1997:

$ 100,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 3. [CARLTON PLANNING GRANT.] For a grant to independent school district No. 93, Carlton, to develop a plan to coordinate district buildings and services:

$ 10,000 . . . . . 1999

The school district shall collaborate with the city of Carlton and Carlton county in developing the plan.

Subd. 4. [CALEDONIA PLANNING GRANT.] (a) For a grant to perform a management assistance study for independent school district No. 299, Caledonia:

$ 40,000 . . . . . 1999

(b) The study shall include an analysis of facility needs, enrollment trends, and instructional opportunities available to pupils of independent school district No. 299, Caledonia. The department may consult with neighboring school districts, as appropriate. The department shall complete the management assistance study by December 31, 1998.

Subd. 5. [COORDINATED FACILITIES PLANS.] For grants for coordinated facilities plans:

$ 550,000 . . . . . 1999

Of this amount, $200,000 is for independent school district No. 2135, Maple River, $150,000 is for independent school district No. 2184, Luverne, $100,000 is for independent school district No. 238, Mabel-Canton, and $100,000 is for independent school district No. 534, Stewartville. The grants shall be used to examine and coordinate the districts' building needs. Each district must evaluate how the current use of its facilities is affecting its educational services and examine cost efficiencies that may result from a coordinated facilities plan. The grants may be used for operating purposes, transportation purposes, or facilities purposes that lead to greater program efficiencies.

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Subd. 6. [ENHANCED PAIRING COMBINATION AID.] For a grant to a group of school districts participating in the enhanced pairing program that intend to combine into a single school district:

$ 135,000 . . . . . 1999

Sec. 22. [EFFECTIVE DATES.]

(a) Section 2 is effective retroactively for revenue for fiscal year 1997.

(b) Section 4 is effective retroactively to April 1, 1998.

(d) Sections 10 and 14 are effective the day following final enactment.

(e) Sections 15 and 16 are effective the day after the governing body of independent school district No. 625, St. Paul, complies with Minnesota Statutes, section 645.021, subdivision 3.

(f) Section 21, subdivision 2, is effective the day following final enactment.

POLICIES PROMOTING ACADEMIC EXCELLENCE

Section 1. Minnesota Statutes 1996, section 43A.17, subdivision 9, is amended to read:

Subd. 9. [POLITICAL SUBDIVISION COMPENSATION LIMIT.] The salary and the value of all other forms of compensation of a person employed by a statutory or home rule charter city, county, town, ~~school district,~~ metropolitan or regional agency, or other political subdivision of this state excluding a school district, or employed under section 422A.03, may not exceed 95 percent of the salary of the governor as set under section 15A.082, except as provided in this subdivision. Deferred compensation and payroll allocations to purchase an individual annuity contract for an employee are included in determining the employee's salary. Other forms of compensation which shall be included to determine an employee's total compensation are all other direct and indirect items of compensation which are not specifically excluded by this subdivision. Other forms of compensation which shall not be included in a determination of an employee's total compensation for the purposes of this subdivision are:

(1) employee benefits that are also provided for the majority of all other full-time employees of the political subdivision, vacation and sick leave allowances, health and dental insurance, disability insurance, term life insurance, and pension benefits or like benefits the cost of which is borne by the employee or which is not subject to tax as income under the Internal Revenue Code of 1986;

(2) dues paid to organizations that are of a civic, professional, educational, or governmental nature; and

(3) reimbursement for actual expenses incurred by the employee which the governing body determines to be directly related to the performance of job responsibilities, including any relocation expenses paid during the initial year of employment.

The value of other forms of compensation shall be the annual cost to the political subdivision for the provision of the compensation. The salary of a medical doctor or doctor of osteopathy occupying a position that the governing body of the political subdivision has determined requires an M.D. or D.O. degree is excluded from the limitation in this subdivision. The commissioner may increase the limitation in this subdivision for a position that the commissioner has determined requires special expertise necessitating a higher salary to attract or retain a qualified person. The commissioner shall review each proposed increase giving due consideration to salary rates paid to other persons with similar responsibilities in the state and nation. The commissioner may not increase the limitation until the commissioner has presented the proposed increase to the legislative coordinating commission and received the commission's recommendation on it. The recommendation is advisory only. If the commission does not give its recommendation on a proposed increase within 30 days from its receipt of the proposal, the commission is deemed to have recommended approval.

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Sec. 2. Minnesota Statutes 1996, section 43A.17, subdivision 10, is amended to read:

Subd. 10. [LOCAL ELECTED OFFICIALS; CERTAIN COMPENSATION PROHIBITED.] The compensation plan for an elected official of a statutory or home rule charter city, county, or town~~, or school district~~ may not include a provision for vacation or sick leave. The salary of an official covered by this subdivision may not be diminished because of the official's absence from official duties because of vacation or sickness.

Sec. 3. Minnesota Statutes 1997 Supplement, section 120.064, subdivision 3, is amended to read:

Subd. 3. [SPONSOR.] A school board, intermediate school district school board, private college, community college, state university, technical college, or the University of Minnesota may sponsor one or more charter schools.

Sec. 4. Minnesota Statutes 1997 Supplement, section 120.101, subdivision 5, is amended to read:

Subd. 5. [AGES AND TERMS.] (a) Every child between seven and 16 years of age shall receive instruction. Every child under the age of seven who is enrolled in a half-day kindergarten, or a full-day kindergarten program on alternate days, or other kindergarten programs shall receive instruction. Except as provided in subdivision 5a, a parent may withdraw a child under the age of seven from enrollment at any time.

(b) A school district by annual board action may require children subject to this subdivision to receive instruction in summer school. A district that acts to require children to receive instruction in summer school shall establish at the time of its action the criteria for determining which children must receive instruction.

Sec. 5. Minnesota Statutes 1996, section 120.73, subdivision 1, is amended to read:

Subdivision 1. A school board is authorized to require payment of fees in the following areas:

~~(a)~~ (1) in any program where the resultant product, in excess of minimum requirements and at the pupil's option, becomes the personal property of the pupil;

~~(b)~~ (2) admission fees or charges for extra curricular activities, where attendance is optional and where the admission fees or charges a student must pay to attend or participate in an extracurricular activity is the same for all students, regardless of whether the student is enrolled in a public or a home school;

~~(c)~~ (3) a security deposit for the return of materials, supplies, or equipment;

~~(d)~~ (4) personal physical education and athletic equipment and apparel, although any pupil may personally provide it if it meets reasonable requirements and standards relating to health and safety established by the school board;

~~(e)~~ (5) items of personal use or products which a student has an option to purchase such as student publications, class rings, annuals, and graduation announcements;

~~(f)~~ (6) fees specifically permitted by any other statute, including but not limited to section 171.04, subdivision 1, clause (1);

~~(g)~~ (7) field trips considered supplementary to a district educational program;

~~(h)~~ (8) any authorized voluntary student health and accident benefit plan;

~~(i)~~ (9) for the use of musical instruments owned or rented by the district, a reasonable rental fee not to exceed either the rental cost to the district or the annual depreciation plus the actual annual maintenance cost for each instrument;

~~(j)~~ (10) transportation of pupils to and from extra curricular activities conducted at locations other than school, where attendance is optional;

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~~(k)~~ (11) transportation of pupils to and from school for which aid for fiscal year 1996 is not authorized under Minnesota Statutes 1994, section 124.223, subdivision 1, and for which levy for fiscal year 1996 is not authorized under Minnesota Statutes 1994, section 124.226, subdivision 5, if a district charging fees for transportation of pupils establishes guidelines for that transportation to ensure that no pupil is denied transportation solely because of inability to pay;

~~(l)~~ (12) motorcycle classroom education courses conducted outside of regular school hours; provided the charge shall not exceed the actual cost of these courses to the school district;

~~(m)~~ (13) transportation to and from post-secondary institutions for pupils enrolled under the post-secondary enrollment options program under section 123.39, subdivision 16. Fees collected for this service must be reasonable and shall be used to reduce the cost of operating the route. Families who qualify for mileage reimbursement under section 123.3514, subdivision 8, may use their state mileage reimbursement to pay this fee. If no fee is charged, districts shall allocate costs based on the number of pupils riding the route.

Sec. 6. Minnesota Statutes 1997 Supplement, section 121.11, subdivision 7c, is amended to read:

Subd. 7c. [RESULTS-ORIENTED GRADUATION RULE.] (a) The legislature is committed to establishing a rigorous, results-oriented graduation rule for Minnesota's public school students. To that end, the state board shall use its rulemaking authority under subdivision 7b to adopt a statewide, results-oriented graduation rule to be implemented starting with students beginning ninth grade in the 1996-1997 school year. The board shall not prescribe in rule or otherwise the delivery system or form of instruction that local sites must use to meet the requirements contained in this rule.

(b) To successfully accomplish paragraph (a), the state board shall set in rule high academic standards for all students. The standards must contain the foundational skills in the three core curricular areas of reading, writing, and mathematics while meeting requirements for high school graduation. The standards must also provide an opportunity for students to excel by meeting higher academic standards through a profile of learning that uses curricular requirements to allow students to expand their knowledge and skills beyond the foundational skills. All state board actions regarding the rule must be premised on the following:

(1) the rule is intended to raise academic expectations for students, teachers, and schools;

(2) any state action regarding the rule must evidence consideration of school district autonomy; and

(3) the department of children, families, and learning, with the assistance of school districts, must make available information about all state initiatives related to the rule to students and parents, teachers, and the general public in a timely format that is appropriate, comprehensive, and readily understandable.

(c) For purposes of adopting the rule, the state board, in consultation with the department, recognized psychometric experts in assessment, and other interested and knowledgeable educators, using the most current version of professional standards for educational testing, shall evaluate the alternative approaches to assessment.

(d) The content of the graduation rule must differentiate between minimum competencies reflected in the basic requirements assessment and rigorous profile of learning standards. When fully implemented, the requirements for high school graduation in Minnesota must include both basic requirements and the required profile of learning. The profile of learning must measure student performance using performance-based assessments compiled over time that integrate higher academic standards, higher order thinking skills, and application of knowledge from a variety of content areas. The profile of learning shall include a broad range of academic experience and accomplishment necessary to achieve the goal of preparing students to function effectively as purposeful thinkers, effective communicators, self-directed learners, productive group participants, and responsible citizens. The commissioner shall develop and disseminate to school districts a uniform method for reporting student performance on the profile of learning.

(e) The state board shall periodically review and report on the assessment process and student achievement with the expectation of raising the standards and expanding high school graduation requirements.

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(f) The state board shall report in writing to the legislature annually by January 15 on its progress in developing and implementing the graduation requirements according to the requirements of this subdivision and section 123.97 until such time as all the graduation requirements are implemented.

Sec. 7. Minnesota Statutes 1996, section 121.11, subdivision 7d, is amended to read:

Subd. 7d. [DESEGREGATION/INTEGRATION, INCLUSIVE EDUCATION, AND LICENSURE RULES.] (a) ~~The state board may~~ By January 10, 1999, the commissioner shall make rules relating to desegregation/integration, and inclusive education~~, and licensure of school personnel not licensed by the board of teaching~~.

(b) In adopting a rule related to school desegregation/integration, the ~~state board~~ commissioner shall address the need for equal educational opportunities for all students and racial balance as defined by the ~~state board~~ commissioner.

Sec. 8. Minnesota Statutes 1997 Supplement, section 121.1113, subdivision 1, is amended to read:

Subdivision 1. [STATEWIDE TESTING.] (a) The commissioner, with advice from experts with appropriate technical qualifications and experience and stakeholders, shall include in the comprehensive assessment system, for each grade level to be tested, a single statewide norm-referenced or criterion-referenced test, or a combination of a norm-referenced and a criterion-referenced test, which shall be highly correlated with the state's graduation standards and administered annually to all students in the third, fifth, and eighth grades. The commissioner shall establish one or more months during which schools shall administer the tests to students each school year. ~~The~~ Only Minnesota basic skills tests in reading ~~and~~, mathematics, and writing shall fulfill students' ~~eighth grade~~ testing requirements for a passing state notation.

(b) In addition, at the secondary level, districts shall assess student performance in all required learning areas and selected required standards within each area of the profiles of learning. The testing instruments and testing process shall be determined by the commissioner. The results shall be aggregated at the site and district level. The testing shall be administered beginning in the 1999-2000 school year and thereafter.

(c) The comprehensive assessment system shall include an evaluation of school site and school district performance levels during the 1997-1998 school year and thereafter using an established performance baseline developed from students' test scores under this section that records, at a minimum, students' unweighted mean test scores in each tested subject, a second performance baseline that reports, at a minimum, the same unweighted mean test scores of only those students enrolled in the school by January 1 of the previous school year, and a third performance baseline that reports the same unweighted test scores of all students except those students receiving limited English proficiency instruction. The evaluation also shall record separately, in proximity to the performance baselines, the percentages of students who are eligible to receive a free or reduced price school meal, demonstrate limited English proficiency, or are eligible to receive special education services.

(d) In addition to the testing and reporting requirements under paragraphs (a), (b), and (c), the commissioner, in consultation with the state board of education, shall include the following components in the statewide educational accountability and public reporting system:

(1) uniform statewide testing of all third, fifth, eighth, and post-eighth grade students with exemptions, only with parent or guardian approval, from the testing requirement only for those very few students for whom the student's individual education plan team under section 120.17, subdivision 2, determines that the student is incapable of taking a statewide test, or a limited English proficiency student under section 126.262, subdivision 2, if the student has been in the United States for fewer than 12 months and for whom special language barriers exist, such as the student's native language does not have a written form or the district does not have access to appropriate interpreter services for the student's native language;

(2) educational indicators that can be aggregated and compared across school districts and across time on a statewide basis;

(3) students' scores on the American College Test;

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(4) participation in the National Assessment of Educational Progress so that the state can benchmark its performance against the nation and other states, and, where possible, against other countries, and contribute to the national effort to monitor achievement; and

(5) basic skills and advanced competencies connecting teaching and learning to high academic standards, assessment, and transitions to citizenship and employment.

(e) Districts must report exemptions under paragraph (d), clause (1), to the commissioner consistent with a format provided by the commissioner.

Sec. 9. [121.1114] [GRADUATION RULE.]

Subdivision 1. [IMPLEMENTATION OF THE PROFILE OF LEARNING.] (a) A school district shall implement the profile of learning of the graduation rule under paragraph (b), (c), or (d).

A district may implement the profile of learning under paragraph (c) or (d) only after the commissioner approves the district's request for a waiver and approves the local plan for full implementation.

(b) A school district shall implement the profile of learning for the 1998-1999 school year and later.

(1) for the 1998-1999 school year and later, the district shall implement all required standards in learning areas at the preparatory level and implement for ninth grade students a minimum of six learning areas under the profile of learning with three from the areas of read, listen, and view; write and speak; mathematical applications; scientific applications; and people and cultures; and three from the areas of literature and the arts; inquiry; decision making; resource management; and world language;

(2) for the 1999-2000 school year and later, the district shall implement for ninth and tenth grade students two learning areas in addition to those implemented under clause (1). The district shall complete the four learning areas of read, listen, and view; write and speak; mathematical applications; scientific applications; and people and cultures if the four areas were not completed in clause (1); and the remainder from the areas of literature and the arts; inquiry; decision making; resource management; and world language; and

(3) for the 2000-2001 school year and later, the district shall implement for ninth, tenth, and eleventh grade students the two learning areas in the profile of learning that were not implemented under clauses (1) and (2).

(d) A district shall develop a local plan to implement the profile of learning and have all ten learning areas fully implemented by the 2001-2002 school year.

(e) A district shall notify the commissioner by July 1, 1998, as to whether the district will implement the profile of learning under paragraph (b), (c), or (d).

(f) An advisory committee of 11 members is established to advise the governor and commissioner on the implementation of the graduation rule under this section. The commissioner shall appoint 11 members with representatives from education organizations, business, higher education, parents, and organizations representing communities of color.

The committee shall review the implementation of the basic requirements and the profile of learning standards.

The commissioner shall provide technical and other assistance to the advisory committee. The committee expires on December 1, 1998.

Subd. 2. [PERFORMANCE PACKAGES.] Teachers are not required to use a state model performance package. Teachers are encouraged to develop and use a performance package that equals or exceeds the difficulty of the state model performance package.

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Subd. 3. [WAIVER.] In order to receive a waiver, a district must document why the waiver is necessary, how the local plan improves student achievement, and how the profile of learning will be fully implemented for the 2001-2002 school year.

Sec. 10. Minnesota Statutes 1996, section 121.1115, is amended by adding a subdivision to read:

Subd. 1b. [EDUCATIONAL ACCOUNTABILITY.] (a) The independent office of educational accountability, as authorized by Laws 1997, First Special Session chapter 4, article 5, section 28, subdivision 2, is established. The office shall advise the education committees of the legislature and the commissioner of children, families, and learning, at least on a biennial basis, on the degree to which the statewide educational accountability and reporting system includes a comprehensive assessment framework that measures school accountability for students achieving the goals described in the state's results-oriented graduation rule. The office shall consider whether the statewide system of educational accountability utilizes multiple indicators to provide valid and reliable comparative and contextual data on students, schools, districts, and the state, and if not, recommend ways to improve the accountability reporting system.

(b) When the office reviews the statewide educational accountability and reporting system, it shall also consider:

(1) the objectivity and neutrality of the state's educational accountability system; and

(2) the impact of a testing program on school curriculum and student learning.

Sec. 11. Minnesota Statutes 1996, section 125.183, subdivision 1, is amended to read:

Subdivision 1. The board of teaching consists of 11 members appointed by the governor, with the advice and consent of the senate. Membership terms, compensation of members, removal of members, the filling of membership vacancies, and fiscal year and reporting requirements shall be as provided in sections 214.07 to 214.09. No member may be reappointed for more than one additional term.

Sec. 12. Minnesota Statutes 1996, section 125.183, subdivision 3, is amended to read:

Subd. 3. [MEMBERSHIP.] Except for the representatives of higher education and the public, to be eligible for appointment to the board of teaching a person must be a teacher currently teaching in a Minnesota school and fully licensed for the position held and have at least five years teaching experience in Minnesota, including the two years immediately preceding nomination and appointment. Each nominee, other than a public nominee, must be selected on the basis of professional experience and knowledge of teacher education, accreditation, and licensure. The board must be composed of:

(1) six ~~classroom~~ teachers who are currently teaching in a Minnesota school, at least four of whom must be teaching in a public school;

(2) one higher education representative, who must be a faculty member preparing teachers;

(3) one school administrator; and

(4) three members of the public, two of whom must be present or former members of school boards.

Sec. 13. Minnesota Statutes 1996, section 126.70, subdivision 2a, is amended to read:

Subd. 2a. [STAFF DEVELOPMENT OUTCOMES.] The staff development committee shall adopt a staff development plan for improving student achievement of education outcomes. The plan must be consistent with education outcomes that the school board determines. The plan shall include ongoing staff development activities that contribute toward continuous improvement in achievement of the following goals:

(1) improve student achievement of state and local education standards in all areas of the curriculum by using best practices methods;

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(2) effectively meet the needs of a diverse student population, including at-risk children, children with disabilities, and gifted children, within the regular classroom and other settings;

(3) provide an inclusive curriculum for a racially, ethnically, and culturally diverse student population that is consistent with the state education diversity rule and the district's education diversity plan;

(4) improve staff ability to collaborate and consult with one another and to resolve conflicts;

(5) effectively teach and model violence prevention policy and curriculum that address issues of harassment and teach nonviolent alternatives for conflict resolution; and

(6) provide teachers and other members of site-based management teams with appropriate management and financial management skills.

Sec. 14. Minnesota Statutes 1996, section 128A.02, subdivision 1, is amended to read:

Subdivision 1. [~~TO GOVERN~~ GOVERNANCE.] The ~~state~~ board of ~~education~~ the Faribault academy shall govern the state academy for the deaf and the state academy for the blind. The board must promote academic standards based on high expectation and an assessment system to measure academic performance toward the achievement of those standards. The board must focus on the academies' needs as a whole and not prefer one school over the other. The board of the Faribault academies shall consist of seven persons. The members of the board shall be appointed by the governor with the advice and consent of the senate. Three members must be from the seven-county metropolitan area, three members must be from greater Minnesota, and one member may be appointed at-large. The board must be composed of:

(1) one superintendent of an independent school district;

(2) one special education director;

(3) the commissioner of children, families, and learning or the commissioner's designee;

(4) one member of the blind community;

(5) one member of the deaf community; and

(6) two members of the general public with business or financial expertise.

Sec. 15. Minnesota Statutes 1996, section 128A.02, is amended by adding a subdivision to read:

Subd. 1b. [TERMS; COMPENSATION; AND OTHER.] The membership terms, compensation, removal of members, and filling of vacancies shall be as provided for in section 15.0575. A member may serve not more than two consecutive terms.

Sec. 16. Minnesota Statutes 1996, section 128A.02, is amended by adding a subdivision to read:

Subd. 2b. [MEETINGS.] All meetings of the board shall be as provided in section 471.705 and must be held in Faribault.

Sec. 17. Minnesota Statutes 1996, section 128A.02, subdivision 3, is amended to read:

Subd. 3. [MOST BENEFICIAL, LEAST RESTRICTIVE.] The ~~state~~ board must do what is necessary to provide the most beneficial and least restrictive program of education for each pupil at the academies who is handicapped by visual disability or deafness.

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Sec. 18. Minnesota Statutes 1996, section 128A.02, subdivision 3b, is amended to read:

Subd. 3b. [PLANNING, EVALUATION, AND REPORTING.] To the extent required in school districts, the ~~state~~ board must establish a process for the academies to include parent and community input in the planning, evaluation, and reporting of curriculum and pupil achievement.

Sec. 19. Minnesota Statutes 1996, section 128A.02, subdivision 5, is amended to read:

Subd. 5. [SITE COUNCILS.] The ~~state~~ board may establish, and appoint members to, a site council at each academy. The site councils shall exercise power and authority granted by the ~~state~~ board. The ~~state~~ board must appoint to each site council the exclusive representative's employee designee from each exclusive representative at the academies.

Sec. 20. Minnesota Statutes 1996, section 128A.02, subdivision 6, is amended to read:

Subd. 6. [TRUSTEE OF ACADEMIES' PROPERTY.] The ~~state~~ board is the trustee of the academies' property. Securities and money, including income from the property, must be deposited in the state treasury according to section 16A.275. The deposits are subject to the order of the ~~state~~ board.

Sec. 21. Minnesota Statutes 1997 Supplement, section 128A.02, subdivision 7, is amended to read:

Subd. 7. [GRANTS.] The ~~state~~ board, through the chief administrators of the academies, may apply for all competitive grants administered by agencies of the state and other government or nongovernment sources. Application may not be made for grants over which the board has discretion.

Sec. 22. Minnesota Statutes 1996, section 128A.022, is amended to read:

128A.022 [POWERS OF ~~STATE~~ BOARD OF ~~EDUCATION~~ THE FARIBAULT ACADEMIES.]

Subdivision 1. [PERSONNEL.] The ~~state~~ board ~~of education~~ of the Faribault academies may employ central administrative staff members and other personnel necessary to provide and support programs and services at each academy.

Subd. 2. [GET HELP FROM DEPARTMENT.] The ~~state~~ board of the Faribault academies may require the department of children, families, and learning to provide program leadership, program monitoring, and technical assistance at the academies.

Subd. 3. [UNCLASSIFIED POSITIONS.] The ~~state~~ board of the Faribault academies may place any position other than residential academies administrator in the unclassified service. The position must meet the criteria in section 43A.08, subdivision 1a.

Subd. 4. [RESIDENTIAL AND BUILDING MAINTENANCE SERVICES.] The ~~state~~ board of the Faribault academies may enter into agreements with public or private agencies or institutions to provide residential and building maintenance services. The ~~state~~ board of the Faribault academies must first decide that contracting for the services is more efficient and less expensive than not contracting for them.

Subd. 6. [STUDENT TEACHERS AND PROFESSIONAL TRAINEES.] (a) The ~~state~~ board of the Faribault academies may enter into agreements with teacher preparation institutions for student teachers to get practical experience at the academies. A licensed teacher must provide appropriate supervision of each student teacher.

(b) The ~~state~~ board of the Faribault academies may enter into agreements with accredited higher education institutions for certain student trainees to get practical experience at the academies. The students must be preparing themselves in a professional field that provides special services to children with a disability in school programs. To be a student trainee in a field, a person must have completed at least two years of an approved program in the field. A person who is licensed or registered in the field must provide appropriate supervision of each student trainee.

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Sec. 23. Minnesota Statutes 1996, section 128A.023, subdivision 1, is amended to read:

Subdivision 1. [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.] The department of children, families, and learning must assist the ~~state~~ board of ~~education~~ the Faribault academies in preparing reports on the academies.

Sec. 24. Minnesota Statutes 1996, section 128A.023, subdivision 2, is amended to read:

Subd. 2. [DEPARTMENT OF EMPLOYEE RELATIONS.] The department of employee relations, in cooperation with the ~~state~~ board of ~~education~~ the Faribault academies, must develop a statement of necessary qualifications and skills for all staff members of the academies.

Sec. 25. Minnesota Statutes 1996, section 128A.026, subdivision 1, is amended to read:

Subdivision 1. [SUBJECTS.] The ~~state~~ board of ~~education~~ the Faribault academies must establish procedures for:

(1) admission, including short-term admission, to the academies;

(2) discharge from the academies;

(3) decisions on a pupil's program at the academies; and

(4) evaluation of a pupil's progress at the academies.

Sec. 26. Minnesota Statutes 1996, section 128A.026, subdivision 3, is amended to read:

Subd. 3. [NOT CONTESTED CASE.] A proceeding about admission to or discharge from the academies or about a pupil's program or progress at the academies is not a contested case under section 14.02. The proceeding is governed instead by the rules ~~of the state board~~ governing special education.

Sec. 27. Minnesota Statutes 1996, section 128A.07, subdivision 2, is amended to read:

Subd. 2. [LOCAL SOCIAL SERVICES AGENCY.] If the person liable for support of a pupil cannot support the pupil, the local social services agency of the county of the pupil's residence must do so. The commissioner of children, families, and learning must decide how much the local social services agency must pay. The ~~state~~ board of ~~education~~ the Faribault academies must adopt rules that tell how the commissioner is to fix the amount. The local social services agency must make the payment to the superintendent of the school district of residence.

Sec. 28. Minnesota Statutes 1996, section 260.015, subdivision 19, is amended to read:

Subd. 19. [HABITUAL TRUANT.] "Habitual truant" means a child under the age of 16 years who is absent from attendance at school without lawful excuse for seven school days if the child is in elementary school or for one or more class periods on seven school days if the child is in middle school, junior high school, or high school, or a child who is 16 or 17 years of age who is absent from attendance at school without lawful excuse for one or more class periods on seven school days and who has not lawfully withdrawn from school under section 120.101, subdivision 5d.

Sec. 29. Minnesota Statutes 1996, section 260.131, subdivision 1b, is amended to read:

Subd. 1b. [CHILD IN NEED OF PROTECTION OR SERVICES; HABITUAL TRUANT.] If there is a school attendance review board or county attorney mediation program operating in the child's school district, a petition alleging that a child is in need of protection or services as a habitual truant under section 260.015, subdivision 2a, clause (12), may not be filed until the applicable procedures under section 260A.06 or 260A.07 have been ~~exhausted~~ followed.

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Sec. 30. Minnesota Statutes 1996, section 260.132, subdivision 1, is amended to read:

Subdivision 1. [NOTICE.] When a peace officer, or attendance officer in the case of a habitual truant, has probable cause to believe that a child:

(1) is in need of protection or services under section 260.015, subdivision 2a, clause (11) or (12);

(2) is a juvenile petty offender; or

(3) has committed a delinquent act that would be a petty misdemeanor or misdemeanor if committed by an adult;

the officer may issue a notice to the child to appear in juvenile court in the county in which the child is found or in the county of the child's residence or, in the case of a juvenile petty offense, or a petty misdemeanor or misdemeanor delinquent act, the county in which the offense was committed. If there is a school attendance review board or county attorney mediation program operating in the child's school district, a notice to appear in juvenile court for a habitual truant may not be issued until the applicable procedures under section 260A.06 or 260A.07 have been ~~exhausted~~ followed. The officer shall file a copy of the notice to appear with the juvenile court of the appropriate county. If a child fails to appear in response to the notice, the court may issue a summons notifying the child of the nature of the offense alleged and the time and place set for the hearing. If the peace officer finds it necessary to take the child into custody, sections 260.165 and 260.171 shall apply.

Sec. 31. Minnesota Statutes 1996, section 260A.05, subdivision 2, is amended to read:

Subd. 2. [GENERAL POWERS AND DUTIES.] A school attendance review board shall prepare an annual plan to promote interagency and community cooperation and to reduce duplication of services for students with school attendance problems. The plan shall include a description of truancy procedures and services currently in operation within the board's jurisdiction, including the programs and services under section 260A.04. A board may provide consultant services to, and coordinate activities of, truancy programs and services. If a board determines that it will be unable to provide services for all truant students who are referred to it, the board shall establish procedures and criteria for determining whether to accept referrals of students or refer them for other appropriate action.

Sec. 32. Minnesota Statutes 1996, section 260A.06, is amended to read:

260A.06 [REFERRAL OF TRUANT STUDENTS TO SCHOOL ATTENDANCE REVIEW BOARD.]

Subdivision 1. [REFERRAL; NOTICE.] An attendance officer or other school official may refer a student who is a continuing truant to the school attendance review board. The person making the referral shall provide a written notice by first class mail or other reasonable means to the student and the student's parent or legal guardian. The notice must:

(1) include the name and address of the board to which the student has been referred and the reason for the referral; and

(2) indicate that the student, the parent or legal guardian, and the referring person will meet with the board to determine a proper disposition of the referral, unless the board refers the student directly to the county attorney or for other appropriate legal action.

Subd. 2. [MEETING; COMMUNITY SERVICES.] (a) Except as provided in paragraph (b), the school attendance review board shall schedule the meeting described in subdivision 1 and provide notice of the meeting by first class mail or other reasonable means to the student, parent or guardian, and referring person. If the board determines that available community services may resolve the attendance problems of the truant student, the board shall refer the student or the student's parent or guardian to participate in the community services. The board may develop an agreement with the student and parent or guardian that specifies the actions to be taken. The board shall inform the student and parent or guardian that failure to comply with any agreement or to participate in appropriate community services will result in a referral to the county attorney under subdivision 3. The board may require the student or parent or guardian to provide evidence of participation in available community services or compliance with any agreement.

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(b) A school attendance review board may refer a student directly to the county attorney or for other appropriate legal action under subdivision 3 if it has established procedures and criteria for these referrals.

Subd. 3. [REFERRAL TO COUNTY ATTORNEY; OTHER APPROPRIATE ACTION.] If the school attendance review board determines that available community services cannot resolve the attendance problems of the truant student or, if the student or the parent or guardian has failed to comply with any referrals or agreements under subdivision 2 or to otherwise cooperate with the board, or if the board determines that a student should be referred directly under this subdivision, the board may:

(1) refer the matter to the county attorney under section 260A.07, if the county attorney has elected to participate in the truancy mediation program; or

(2) if the county attorney has not elected to participate in the truancy mediation program, refer the matter for appropriate legal action against the child or the child's parent or guardian under chapter 260 or section 127.20.

Sec. 33. Laws 1997, First Special Session chapter 4, article 5, section 24, subdivision 4, is amended to read:

Subd. 4. [GRANT AWARDS.] A school district or any group of districts may receive a grant in the amount of $25 per pupil per year. ~~The~~ A grant recipient with 6,000 or more pupils in average daily membership must match one local dollar for every state dollar received. The local match may include in kind contributions. In awarding grants, the commissioner shall consider which students will benefit most from these programs. No grant recipient shall use the grant award to supplant existing funding for gifted and talented programs.

Sec. 34. Laws 1997, First Special Session chapter 4, article 5, section 28, subdivision 4, is amended to read:

Subd. 4. [ADVANCED PLACEMENT AND INTERNATIONAL BACCALAUREATE PROGRAMS.] For the state advanced placement and international baccalaureate programs:

$1,875,000 . . . . . 1998

$1,875,000 . . . . . 1999

Notwithstanding Minnesota Statutes, section 126.239, subdivisions 1 and 2, $200,000 each year is for teachers to attend subject matter summer training programs and follow-up support workshops approved by the advanced placement or international baccalaureate programs. The amount of the subsidy for each teacher attending an advanced placement or international baccalaureate summer training program or workshop shall be the same. The commissioner shall determine the payment process and the amount of the subsidy.

Notwithstanding Minnesota Statutes, section 126.239, subdivision 3, in each year to the extent of available appropriations, the commissioner shall pay all examination fees for all students sitting for an advanced placement examination, international baccalaureate examination, or both. If this amount is not adequate, the commissioner may pay less than the full examination fee.

$300,000 each year is for student scholarships. A student scholarship shall be awarded to a student scoring three or better on one or more advanced placement examinations or a four or better on one or more international baccalaureate examinations. The amount of each scholarship shall range from ~~$150~~ $75 to $500 based on the student's score on the exams. The scholarships shall be awarded only to students who are enrolled in a Minnesota public or private college or university. The total amount of each scholarship shall be paid directly to the student's designated college or university and must be used by the student only for tuition, required fees, and books in nonsectarian courses or programs. The higher education services office, in consultation with the commissioner, shall determine the payment process, the amount of the scholarships, and provisions for unused scholarships.

In order to be eligible to receive advanced placement or international baccalaureate scholarships on behalf of the qualifying students, the college or university must have an advanced placement, international baccalaureate, or both, credit and placement policy for the scholarship recipients. In addition, each college or university must certify these policies to the department each year. The department must provide each secondary school in the state with a copy of the post-secondary advanced placement and international baccalaureate policies each year.

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$375,000 each year is for teacher stipends. A teacher who teaches an advanced placement or international baccalaureate course shall receive a stipend for each student in that teacher's course who receives a three or better on the advanced placement or a four or better on the international baccalaureate examination that covers the subject matter of the course. The commissioner shall determine the payment process and the amount of the teacher stipend ranging from $25 to $50 for each student receiving a qualifying score.

A stipend awarded to a teacher under this subdivision shall not be a mandatory subject of bargaining under Minnesota Statutes, chapter 179A, or any other law and shall not be a term or condition of employment. The amount of any award shall be final and shall not be subject to review by an arbitrator through any grievance or other process or by a court through any appeal process.

Any balance in the first year does not cancel but is available in the second year.

Sec. 35. Laws 1997, First Special Session chapter 4, article 5, section 28, subdivision 9, is amended to read:

Subd. 9. [COLLABORATIVE URBAN EDUCATOR PROGRAMS.] For grants to collaborative urban educator programs that prepare and license people of color to teach:

$895,000 . . . . . 1998

$500,000 . . . . . 1999

This appropriation is available until June 30, 1999.

Sec. 36. Laws 1997, First Special Session chapter 4, article 5, section 28, subdivision 10, is amended to read:

Subd. 10. [CHARTER SCHOOL BUILDING LEASE AID.] For building lease aid according to section 124.248, subdivision 2a:

~~$1,078,000~~ $1,294,000 . . . . . 1998

~~$1,577,000~~ $1,889,000 . . . . . 1999

The 1999 appropriation includes ~~$120,000~~ $143,000 for 1998 and ~~$1,457,000~~ $1,746,000 for 1999.

Sec. 37. Laws 1997, First Special Session chapter 4, article 5, section 28, subdivision 11, is amended to read:

Subd. 11. [CHARTER SCHOOL START-UP GRANTS.] For charter school start-up cost aid under Minnesota Statutes, section 124.248:

~~$500,000~~ $900,000 . . . . . 1998

$1,000,000 . . . . . 1999

The 1999 appropriation includes $100,000 for 1998 and $900,000 for 1999.

Any balance in the first year does not cancel but is available in the second year. This appropriation may also be used for grants to convert existing schools into charter schools.

Sec. 38. Laws 1997 First Special Session, chapter 4, article 5, section 28, subdivision 17, is amended to read:

Subd. 17. [YEAR-ROUND SCHOOL/EXTENDED WEEK OR DAY GRANTS.] For year-round school/extended week or day grants under Laws 1995, First Special Session chapter 3, article 7, section 4:

$1,800,000 . . . . . 1998

$455,000 . . . . . 1999

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The department of children, families, and learning must award grants to school districts with priority given to programs that have not previously received year-round school/extended week or day pilot grants. Of this amount, $500,000 is for a grant to independent school district No. 624, White Bear Lake. Of this amount, $225,000 is for a year-round school extended day project in independent school district No. 911, Cambridge. Of this amount, $200,000 is for the four-period day program at independent school district No. 833, south Washington county. Of the fiscal year 1999 appropriation, $250,000 is for a grant to independent school district No. 241, Albert Lea, $105,000 is for a grant to independent school district No. 200, Hastings, and $100,000 is for a grant to independent school district No. 270, Hopkins. The maximum grant amount for other recipients is $300,000. Grant recipients are required to make reports on progress made, planning, and implementing projects in the form and manner specified by the department of children, families, and learning.

The senior high site councils in the independent school district No. 833, south Washington county, shall develop and implement a model four-period day curriculum during the 1997-1998 and 1998-1999 school years. The site councils shall seek input from parents, teachers, and students in the design and implementation of the four-period day model. If one or more site councils determine a four-period day model is not desirable, the site council shall report its recommendations back to the board and need not proceed with the development and implementation of the model.

The south Washington county school board shall develop a system for monitoring and evaluating the development and implementation of the four-period day models at its high schools. The board shall monitor and evaluate: (1) the process used by the site council to discuss, develop, and implement a four-period day; and (2) the academic outcomes of students after the four-period day has been fully implemented. To evaluate the academic outcomes of students, the district shall compare the academic achievement of its high school students with the achievement of students in similar school districts using a six-period day model. The board shall report the results of its evaluation to the commissioner of children, families, and learning on August 30, 1998, and August 30, 1999. The reports shall include a detailed description of the site-based, decision-making model that was used to develop and implement the four-period day and the steps that were taken to successfully implement and evaluate the model.

Independent school district No. 833, south Washington County, shall complete a class size mitigation pilot project to explore options for improving learning outcomes in elementary and junior high classrooms with 30 or more students. The options for mitigating the adverse impacts of large class sizes shall be developed and implemented using a site-based management decision-making process. The district shall report the results of its pilot project to the commissioner of children, families, and learning by August 30, 1998.

Sec. 39. Laws 1997, First Special Session chapter 4, article 6, section 20, subdivision 4, is amended to read:

Subd. 4. [SCHOOL LUNCH AND FOOD STORAGE AID.] (a) For school lunch aid according to Minnesota Statutes, section 124.646, and Code of Federal Regulations, title 7, section 210.17, and for food storage and transportation costs for United States Department of Agriculture donated commodities; and for a temporary transfer to the commodity processing revolving fund to provide cash flow to permit schools and other recipients of donated commodities to take advantage of volume processing rates and for school milk aid according to Minnesota Statutes, section 124.648:

$7,254,000 . . . . . 1998

~~$7,254,000~~ $7,770,000 . . . . . 1999

(b) Any unexpended balance remaining from the appropriations in this subdivision shall be prorated among participating schools based on the number of free, reduced, and fully paid federally reimbursable student lunches served during that school year.

(c) If the appropriation amount attributable to either year is insufficient, the rate of payment for each fully paid student lunch shall be reduced and the aid for that year shall be prorated among participating schools so as not to exceed the total authorized appropriation for that year.

(d) Any temporary transfer processed in accordance with this subdivision to the commodity processing fund will be returned by June 30 in each year so that school lunch aid and food storage costs can be fully paid as scheduled.

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(e) Not more than $800,000 of the amount appropriated each year may be used for school milk aid.

(f) The commissioner may reduce other future aid and grant payments due to school districts and other organizations for the costs of processing and storage of commodities used by the district or organization.

Sec. 40. [GRADUATION RULE RESOURCE GRANTS.]

The commissioner of children, families, and learning shall award grants to develop learning resources for the state's results-oriented graduation rule. The grants are available to:

(1) provide staff development for implementation of the graduation standards, including training in economics, the arts, and training in technology by community members;

(2) establish and equip learning resource centers;

(3) develop and sustain historical educational programming;

(4) make historical collections available via the Internet;

(5) develop a system of graduation rule implementation for alternative programs;

(6) develop systemic site decision-making models and implementing site decision making in schools;

(7) expand attention and reading readiness programs; and

(8) provide for reporting systems.

The commissioner may require a match of private funds as part of the application process.

Sec. 41. [REPORT.]

The commissioner of children, families, and learning, in consultation with the Minnesota state colleges and universities, the University of Minnesota, and the private college council, shall examine the training of teachers entering the workforce in Minnesota. The commissioner shall also consult with the Minnesota federation of teachers and the Minnesota education association for this report. The report shall make recommendations for proposed legislative action to promote a more direct connection between teacher training and student learning needs under the state's results-oriented graduation rule. The commissioner shall seek assistance from the state public policy unit within the Humphrey Institute of Minnesota for existing research in this area for this report. The commissioner shall report its findings to education committees of the legislature by December 1, 1998. The report shall examine at least the following areas:

(1) whether teachers entering the workforce are prepared to meet the basic skills needs and higher learning needs of students under the state's results-oriented graduation rule;

(2) identify teacher skills which are considered crucial to the success of students in a knowledge-based economy and determine if Minnesota colleges and universities are teaching those skills adequately to teachers;

(3) examine the ability of Minnesota colleges and universities to provide training to existing teachers who are seeking further staff development experiences in order to meet the students' needs under the graduation rule; and

(4) identify resources and organizations outside of the colleges and universities that can provide training and teaching experiences necessary to meet the needs of students under the graduation rule.

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Sec. 42. [CLEARINGHOUSE OF BEST EDUCATIONAL PRACTICES.]

(a) The department of children, families, and learning shall establish a clearinghouse of best educational practices and shared decision-making for improving student performance, particularly for at-risk students. The clearinghouse must:

(1) align with all current activities for best educational practice, shared decision-making, and the results-oriented graduation rule;

(2) conduct research and collect information on the best educational practices affecting a school's management, operation, financing, personnel and instruction;

(3) train quality intervention teams composed of highly qualified educators to assist a school's staff in working to improve student performance, particularly for at-risk students, by addressing a school's management, operation, financing, personnel and instruction practices;

(4) develop and make available to interested school districts a model for an independent educational audit that evaluates a school's performance strengths and weaknesses and makes specific recommendations for reinforcing performance strengths and improving performance weaknesses cited in the audit;

(5) using the comprehensive assessment framework under section 121.1115, subdivision 1b, paragraph (a), develop student and school performance indicators schools may use to reliably measure school improvement over time; and

(6) provide staff development opportunities to assist teachers and other educators in integrating educational reform measures into a school's best practices.

(b) The clearinghouse must assist school districts, at district request, and recommend methods to engage parents and communities in improving student performance, particularly for at-risk students.

(c) The clearinghouse must collaborate with and may contract with community stakeholders, including the Minneapolis urban league, the St. Paul urban league, the urban coalition, the council on Asian-Pacific Minnesotans, the Chicano/Latino affairs council, the council on Black Minnesotans, the Indian affairs council, or the communities of color institute and Minneapolis Pathways at the University of Minnesota's Roy Wilkins center.

Sec. 43. [NOTIFICATION TO COMMISSIONER ON COOPERATIVE SPONSORSHIP.]

A school district shall transmit to the commissioner of children, families, and learning information about each decision to deny a home school a cooperative sponsorship under state high school league rules or to otherwise deny a home school student an opportunity to participate in the district's extracurricular activities. The school district shall transmit the information in the form and manner the commissioner requires.

Sec. 44. [COUNSELOR ASSESSMENT.]

The department of children, families, and learning, in consultation with affected groups, shall conduct an assessment of the need for expanding the number of counselors in school districts. As part of the assessment, the department shall consider recommended ratios and the costs of meeting these, alternative strategies for collaboration to provide counseling services to pupils especially in small districts, mechanisms to strengthen collaboration between school districts and local colleges and universities in providing information and experience to pupils, and suggestions for meeting the needs of pupils for counseling that is focused on academic and career needs and planning. The department shall report its findings and recommendations to the education committees of the house and senate as part of its 2000-2001 biennial budget request.

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Sec. 45. [YOUTH ATHLETIC DEMONSTRATION PROGRAM.]

(a) A demonstration athletic grant program through special school district No. 1, Minneapolis, and the Minneapolis park and recreation board is established for children ages seven to 14 at Waite Park school. The goal of the demonstration program is to develop a neighborhood-based athletic program that teaches sports fundamentals to students that will lead to their participation in high school level athletics. The program shall be year-round and shall require both in-school and after-school participation by students. A student who satisfactorily completes the program curriculum shall receive secondary course credit and the credit shall count towards the student's graduation requirements consistent with Minnesota Statutes, section 126.83.

(b) The program shall be established at Waite Park school in Minneapolis where the school facility and park and recreation facility are jointly located and where the school district has established a neighborhood-based school for enrollment purposes. The school district and the park and recreation board shall recruit at-risk students and those students who have not participated in current after-school park programs to participate in the demonstration project.

(c) The program funds shall be used for recreational professionals at the park board to coordinate the program and licensed teachers employed in the district; internships for students at the University of Minnesota, Augsburg College, or other post-secondary institutions to work in the program; master coaches to train coaches; transportation costs; facilities' costs; and assistance to neighborhood park athletic councils.

(d) The school district and the park board shall report to the commissioner of children, families, and learning on the outcome of the program. Up to $10,000 of the appropriation in section 38, subdivision 2, may be used for the planning of a multipurpose community education and recreation center at a northeast park adjacent to a northeast school. The commissioner shall report to the education committees of the legislature on the program and the advisability of creating a statewide program by March 15, 1999.

Sec. 46. [RESIDENTIAL ACADEMIES PROGRAM.]

Subdivision 1. [GRANT RECIPIENT.] The commissioner of children, families, and learning may award grants to public organizations or a collaborative of public and private organizations for capital and start-up costs for residential academies for students in grades 4 through 12 who desire to attend a residential academy, demonstrate an interest in learning and a potential for academic achievement, and who may:

(1) perform or are at risk of performing below the academic performance level for students of the same age or ability; or

(2) have experienced homelessness or an unstable home environment.

Subd. 2. [ENROLLMENT.] Enrollment is voluntary. A parent or guardian, the student's county of residence, the student's school, a health care provider, or the judicial system may recommend a student for admission to an academy.

Subd. 3. [EDUCATIONAL PROGRAMMING.] The education program of a residential academy must be designed to:

(1) increase students' academic achievement;

(2) increase students' school attendance;

(3) enable secondary students to meet the requirements of the state graduation rule; and

(4) improve secondary students' transition to post-secondary education or the transition from school to work.

Subd. 4. [FUNDING.] (a) Education and social services funding shall follow each student from the student's school district or county of residence to the academy as provided by law.

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(b) The cost of residential care for a student may be covered under a sliding fee program based on student need.

Subd. 5. [AWARDING GRANTS.] The commissioner of children, families, and learning shall prescribe the form and manner of applications. In awarding grants, the commissioner shall consider the quality of the education program, the academy's location, the composition of the academy's governance structure and board, the extent of the collaborative effort among various organizations, the extent of family and community involvement, and whether social services, after-school enrichment, and instruction throughout the entire year are provided. The commissioner shall evaluate the components of the residential academy program described in this section and report to the education committees of the legislature by February 15, 2001.

Sec. 47. [COMMISSIONER OF CHILDREN, FAMILIES, AND LEARNING.]

The commissioner of children, families, and learning shall designate a staff member as a resource person for gifted and talented programs to provide assistance to parents and school districts. The commissioner shall pay all costs for that staff member out of existing department appropriations.

Sec. 48. [GOALS 2000.]

School boards shall not be required to adopt specific provisions of the federal Goals 2000 program as state graduation standards.

Sec. 49. [RESIDENCY REQUIREMENT.]

The magnet schools that are part of the western metropolitan education program must first enroll in the magnet schools those otherwise qualified students who reside within one of the nine participating school districts.

Sec. 50. [TASK FORCE ON TRANSITIONAL ISSUES.]

Subdivision 1. [ESTABLISHMENT; PURPOSE.] A task force on prekindergarten through grade 12 education governance structure is established to examine the transitional issues related to the repeal of the state board of education under section 39, paragraph (b).

Subd. 2. [TASK FORCE MEMBERS.] The task force is composed of one person appointed by the governor, one person appointed by the speaker of the house of representatives, and one person appointed by the subcommittee on committees of the senate committee on rules and administration. The task force may select additional members to serve on the task force.

Subd. 3. [REPORT.] The task force shall submit a report on appropriate statutory changes, if any, to accomplish an orderly elimination of the state board to the chairs of the education committees of the legislature by December 15, 1998.

Sec. 51. [EXAMINATION OF PREKINDERGARTEN THROUGH GRADE 12 EDUCATION GOVERNANCE.]

Subdivision 1. [MEMBERSHIP; EXPENSES.] The coalition for education reform and accountability panel established according to Laws 1993, chapter 224, article 1, section 35, subdivision 3, must update the membership and fill vacancies on the coalition according to the criteria established in Laws 1993, chapter 224, article 1, section 35, subdivision 2. The department of children, families, and learning shall provide technical and other assistance to the panel.

Subd. 2. [STUDY.] The coalition for education reform and accountability must examine alternatives for restructuring the state's prekindergarten through grade 12 education system to optimize student achievement for all children by considering at least the following:

(1) the roles of the legislature, executive branch, and local school boards in policymaking and administering the prekindergarten through grade 12 education system;

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(2) the best structure, excluding funding issues, to anticipate and accommodate the changing demographics of students and staff in the context of a dynamic education system; and

(3) the best structure, excluding funding issues, to maintain a system adaptable to changing societal needs, that is flexible and innovative, and that places the interest of students first.

The coalition shall make recommendations regarding appropriate parameters for the commissioner's rulemaking authority and the extent of necessary legislative direction and oversight of rulemaking activities.

Subd. 3. [REPORT.] The coalition must submit a report of its findings and recommendations to the education committees of the house and senate by December 15, 1998.

Sec. 52. [RECOMMENDATIONS ON A CENTRAL DEPOSITORY OF EMPLOYMENT DATA.]

Subdivision 1. [WORKING GROUP.] The board of teaching shall convene a working group to consider data management policies and appropriate organizing structures and operational practices for a central depository of data containing licensing and employment information about licensed education personnel employed in Minnesota school districts. The working group must include one representative from each of the following organizations: the state board of education; the department of children, families, and learning; the department of administration; the Minnesota school boards association; the Minnesota association of school administrators; the Minnesota association of school personnel administrators; the Minnesota education association; the Minnesota federation of teachers; the Minnesota association of secondary school principals; the Minnesota association of elementary school principals; and any other groups the board determines are relevant. Expenses incurred by working group members must be reimbursed by the agencies and organizations they represent. By December 1, 1998, the board shall submit to the education committees of the legislature the group's recommendations concerning establishing and operating a central depository of employment data on licensed education personnel, including recommended statutory changes. The board shall convene the working group by June 15, 1998.

Subd. 2. [ISSUES TO RESOLVE.] The working group must address at least the following:

(1) to what extent a central database of employment history of licensed education personnel would be useful and how it would operate;

(2) what kinds of post-secondary education records and employment-related data on licensed education personnel should be gathered and stored, including whether to gather and store complaints against licensed education personnel received by the board of teaching or the board of education, or disciplinary actions by the board of teaching or the board of education;

(3) what mechanisms and policies should be developed for reporting state and school district data on licensed education personnel to ensure that stored data are timely and accurate and to ensure the integrity and privacy of the data;

(4) what policies should govern the access of individuals and organizations to the data, including the release of personnel data to prospective school or school district employers;

(5) what should be the extent of liability and immunity from liability for individuals and organizations that release data; and

(6) whether guidelines consistent with this section for hiring education personnel would be useful to school districts.

Sec. 53. [RECOMMENDATIONS FOR ALTERNATIVE SCHOOL YEAR CALENDARS.]

Subdivision 1. [WORKING GROUP.] The commissioner of children, families and learning shall convene a working group to consider alternative school year calendars, including at least 45-15 plans, four-quarter plans, quinmester plans, extended learning year plans, flexible all-year plans, and four-day week plans, and recommend to the legislature those alternative school year calendars that best allow school districts to meet the educational needs of their students. The

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working group must include one representative from each of the following organizations: the Minnesota school boards association; the Minnesota education association; the Minnesota federation of teachers; the Minnesota association of school administrators; the Minnesota association of secondary school principals; the Minnesota elementary school principals' association; the Minnesota association for pupil transportation; the Minnesota association for supervision and curriculum; the Minnesota congress of parents, teachers and students; the Minnesota state high school league; the Minnesota business partnership; and the Minnesota restaurant, hotel and resort associations. By February 1, 1999, the commissioner shall submit the group's recommendations concerning the alternative school year calendars that best allow school districts to meet the educational needs of their students to the chairs of the education committees of the legislature.

Subd. 2. [ISSUE TO RESOLVE.] In recommending to the legislature the alternative school year calendars that best allow school districts to meet the educational needs of their students, the working group must at least consider:

(1) how buildings and other facilities can be optimally used during an entire year;

(2) what the optimal learning year schedule is of elementary and secondary disabled students and staff in schools and residential facilities;

(3) how a district divides its students among its facilities to accommodate an alternative school year calendar;

(4) how a district accommodates an alternative school year calendar in the context of the public employment labor relations act;

(5) what parent involvement is required in establishing an alternative school year calendar;

(6) how school staff is assigned in a district with fewer than all facilities adopting an alternative school year calendar;

(7) how teachers' contracting rights are affected by an alternative school year calendar;

(8) what educational standards and requirements apply to a district operating an alternative school year calendar;

(9) what adjustments of attendance and apportionments of state aid are required; and addressed in an alternative school year calendar.

Sec. 54. [APPROPRIATIONS.]

Subd. 2. [GRADUATION RULE RESOURCE GRANTS.] For graduation rule resource grants:

$3,500,000 . . . . . 1999

Of this amount, $200,000 is for a grant to the Council on Economic Education; $300,000 is to the Lola and Rudy Perpich Center for the Arts to develop arts-related performance packages as part of the state high school graduation rule under Minnesota Statutes, section 121.11, subdivision 7c; $90,000 is for a grant to Murphy's Landing; $40,000 is for a grant to the metropolitan multitype library consortium for copying and distributing Minnesota authors videocassette series; and $300,000 is for a grant to A Chance to Grow/New Visions to acquire the space and technology needed to establish, equip, and operate the Minnesota Learning Resource Center.

The department shall consider grant proposals from the Minnesota Historical Society, the Richard Green Institute, Ironworld, parent or community technology specialists working or volunteering in schools, higher education institutions working in conjunction with a school district or consortium of school districts, and database access programs for public libraries and school media centers.

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Subd. 3. [RESIDENTIAL ACADEMIES.] For grants for residential academies:

$12,000,000 . . . . . 1999

Subd. 4. [YOUTH ATHLETIC DEMONSTRATION PROGRAM.] For a grant to special school district No. 1, Minneapolis, and the Minneapolis park and recreation board to establish a youth athletic demonstration program under section 26:

$ 100,000 . . . . . 1999

Subd. 5. [UNLIMITED POSSIBILITIES PLAN.] For a grant to a nonprofit agency representing the private alternative schools:

$ 100,000 . . . . . 1999

The purpose of the grant is to support the Unlimited Possibilities Plan to assist student transition from secondary school to college or gainful employment including mentoring programs, post-secondary training, career exploration, and placement services. The grant recipient must match state funds with an equal amount of funds raised from nonpublic sources.

This appropriation does not cancel but is available until June 30, 2000.

Subd. 6. [CLEARINGHOUSE OF BEST EDUCATIONAL PRACTICES.] For a clearinghouse of best educational practices according to section 19:

$2,000,000 . . . . . 1999

Of this amount, $500,000 is for a contract with an institution of higher education for the purposes of Minnesota Statutes, section 121.1115, subdivisions 1b and 1c.

Subd. 7. [MODEL DISTANCE LEARNING GRANT; LAKE OF THE WOODS.] For a grant to independent school district No. 390, Lake of the Woods, for developing a model distance learning program:

$ 250,000 . . . . . 1999

The model program must address students' curriculum needs for vocational programs, advanced collegiate level courses, gifted and talented programming, programming for students with disabilities, and other areas of programming made more difficult because of the school district's geographic isolation.

Sec. 55. [REVISOR'S INSTRUCTION.]

In the next and subsequent editions of Minnesota Statutes and Minnesota Rules, all references to the state board of education shall be changed to the commissioner of children, families, and learning. The changes made by the revisor shall be effective December 31, 1999.

Sec. 56. [REPEALER.]

Minnesota Statutes 1996, section 121.02, is repealed effective December 31, 1999.

Sec. 57. [EFFECTIVE DATES.]

(a) Sections 5, 28, and 33 are effective for the 1998-1999 school year and thereafter.

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(b) Section 9 is effective for the profile of learning of the graduation rule authorized under Minnesota Statutes, section 121.11, subdivision 7c, and adopted after January 1, 1998.

Sections 14 to 27 are effective December 31, 1999.

Section 1. Minnesota Statutes 1996, section 120.17, subdivision 7a, is amended to read:

EDUCATION POLICY ISSUES

Subd. 7a. [ATTENDANCE AT SCHOOL FOR THE DISABLED.] Responsibility for special instruction and services for a visually disabled or hearing impaired child attending the Minnesota state academy for the deaf or the Minnesota state academy for the blind shall be determined in the following manner:

(a) The legal residence of the child shall be the school district in which the child's parent or guardian resides.

(b) When it is determined pursuant to section 128A.05, subdivision 1 or 2, that the child is entitled to attend either school, the ~~state~~ board of the Faribault academies shall provide the appropriate educational program for the child. The ~~state~~ board of the Faribault academies shall make a tuition charge to the child's district of residence for the cost of providing the program. The amount of tuition charged shall not exceed the basic revenue of the district for that child, for the amount of time the child is in the program. For purposes of this subdivision, "basic revenue" has the meaning given it in section 124A.22, subdivision 2. The district of the child's residence shall pay the tuition and may claim general education aid for the child. Tuition received by the ~~state~~ board of the Faribault academies, except for tuition received under clause (c), shall be deposited in the state treasury as provided in clause (g).

(c) In addition to the tuition charge allowed in clause (b), the academies may charge the child's district of residence for the academy's unreimbursed cost of providing an instructional aide assigned to that child, if that aide is required by the child's individual education plan. Tuition received under this clause must be used by the academies to provide the required service.

(d) When it is determined that the child can benefit from public school enrollment but that the child should also remain in attendance at the applicable school, the school district where the institution is located shall provide an appropriate educational program for the child and shall make a tuition charge to the ~~state~~ board of the Faribault academies for the actual cost of providing the program, less any amount of aid received pursuant to section 124.32. The ~~state~~ board of the Faribault academies shall pay the tuition and other program costs including the unreimbursed transportation costs. Aids for children with a disability shall be paid to the district providing the special instruction and services. Special transportation shall be provided by the district providing the educational program and the state shall reimburse such district within the limits provided by law.

(e) Notwithstanding the provisions of clauses (b) and (d), the ~~state~~ board of the Faribault academies may agree to make a tuition charge for less than the amount specified in clause (b) for pupils attending the applicable school who are residents of the district where the institution is located and who do not board at the institution, if that district agrees to make a tuition charge to the ~~state~~ board of the Faribault academies for less than the amount specified in clause (d) for providing appropriate educational programs to pupils attending the applicable school.

(f) Notwithstanding the provisions of clauses (b) and (d), the ~~state~~ board of the Faribault academies may agree to supply staff from the Minnesota state academy for the deaf and the Minnesota state academy for the blind to participate in the programs provided by the district where the institutions are located when the programs are provided to students in attendance at the state schools.

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(g) On May 1 of each year, the ~~state~~ board of the Faribault academies shall count the actual number of Minnesota resident kindergarten and elementary students and the actual number of Minnesota resident secondary students enrolled and receiving education services at the Minnesota state academy for the deaf and the Minnesota state academy for the blind. The ~~state~~ board of the Faribault academies shall deposit in the state treasury an amount equal to all tuition received less:

(1) the total number of students on May 1 less 175, times the ratio of the number of kindergarten and elementary students to the total number of students on May 1, times the general education formula allowance; plus

(2) the total number of students on May 1 less 175, times the ratio of the number of secondary students on May 1 to the total number of students on May 1, times 1.3, times the general education formula allowance.

(h) The sum provided by the calculation in clause (g), subclauses (1) and (2), must be deposited in the state treasury and credited to the general operation account of the academy for the deaf and the academy for the blind.

(i) There is annually appropriated to the department of children, families, and learning for the Faribault academies the tuition amounts received and credited to the general operation account of the academies under this section. A balance in an appropriation under this paragraph does not cancel but is available in successive fiscal years.

Sec. 2. Minnesota Statutes 1996, section 121.14, is amended to read:

121.14 [RECOMMENDATIONS; BUDGET.]

The ~~state board and the~~ commissioner of children, families, and learning shall recommend to the governor and legislature such modification and unification of laws relating to the state system of education as shall make those laws more readily understood and more effective in execution. The commissioner of children, families, and learning shall prepare a biennial education budget which shall be submitted to the governor and legislature, such budget to contain a complete statement of finances pertaining to the maintenance of the state department and to the distribution of state aid.

Sec. 3. Minnesota Statutes 1996, section 121.148, subdivision 3, is amended to read:

Subd. 3. [NEGATIVE REVIEW AND COMMENT.] (a) If the commissioner submits a negative review and comment for a proposal according to section 121.15, the following steps must be taken:

(1) the commissioner must notify the school board of the proposed negative review and comment and schedule a public meeting within 60 days of the notification within that school district to discuss the proposed negative review and comment on the school facility; and

(2) the school board shall appoint an advisory task force of up to five members to advise the school board and the commissioner on the advantages, disadvantages, and alternatives to the proposed facility at the public meeting. One member of the advisory task force must also be a member of the county facilities group.

(b) After attending the public meeting, the commissioner shall reconsider the proposal. If the commissioner submits a negative review and comment, the school board may appeal that decision ~~to the state board of education~~ under chapter 14. The state board of education may either uphold the commissioner's negative review and comment or instruct the commissioner to submit a positive or unfavorable review and comment on the proposed facility.

(c) A school board may not proceed with construction if ~~the state board of education upholds~~ the commissioner's negative review and comment is upheld or if the commissioner's negative review and comment is not appealed.

Sec. 4. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 4. [UNIFORM SYSTEM OF RECORDS AND ACCOUNTING.] The commissioner of children, families, and learning shall prepare a uniform system of records for public schools and require reports from superintendents and principals of schools, teachers, school officers, and the chief officers of public and other educational institutions to give

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such facts as it may deem of public value. All reports required of school districts by the commissioner shall be in conformance with the uniform financial accounting and reporting system. With the cooperation of the state auditor, the commissioner shall establish and carry into effect a uniform system of accounting by public school officers and shall have authority to supervise and examine the accounts and other records of all public schools.

Sec. 5. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 5. [GENERAL SUPERVISION OVER EDUCATIONAL AGENCIES.] The commissioner of children, families, and learning shall adopt goals for and exercise general supervision over public schools and public educational agencies in the state, classify and standardize public elementary and secondary schools, and prepare for them outlines and suggested courses of study. The commissioner shall develop a plan to attain the adopted goals. The commissioner may recognize educational accrediting agencies for the sole purposes of sections 120.101, 120.102, and 120.103.

Sec. 6. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 6. [ADMINISTRATIVE RULES.] The commissioner may adopt new rules and amend them or amend any existing rules only under specific authority. The commissioner may repeal any existing rules. Notwithstanding the provisions of section 14.05, subdivision 4, the commissioner may grant a variance to rules adopted by the commissioner upon application by a school district for purposes of implementing experimental programs in learning or school management. This subdivision shall not prohibit the commissioner from making technical changes or corrections to adopted rules.

Sec. 7. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 7. [LICENSURE RULES.] The commissioner may make rules relating to licensure of school personnel not licensed by the board of teaching.

Sec. 8. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 8. [GENERAL EDUCATION DEVELOPMENT TESTS RULES.] The commissioner may amend rules to reflect changes in the national minimum standard score for passing the general education development (GED) tests.

Sec. 9. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 9. [UNIFORM FORMS FOR STATE EXAMINATIONS.] Upon the request of any superintendent of any public or private school teaching high school courses in the state, the commissioner shall designate or prepare uniform forms for state examinations in each high school subject during the month of May of each year; the request shall be in writing and delivered to the commissioner before January 1 of that year.

Sec. 10. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 10. [EVENING SCHOOLS.] The commissioner shall exercise general supervision over the public evening schools, adult education programs, and summer programs.

Sec. 11. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 11. [TEACHER RULE VARIANCES.] Notwithstanding any law to the contrary, and only upon receiving the agreement of the state board of teaching, the commissioner of children, families, and learning may grant a variance to rules governing licensure of teachers for those teachers licensed by the board of teaching. The commissioner may grant a variance, without the agreement of the board of teaching, to rules adopted by the commissioner governing licensure of teachers for those teachers the commissioner licenses.

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Sec. 12. Minnesota Statutes 1996, section 121.16, is amended by adding a subdivision to read:

Subd. 12. [SCHOOL LUNCH PROGRAM; REVOLVING FUND.] The commissioner of finance shall establish for the commissioner of children, families, and learning a revolving fund for deposit of storage and handling charges paid by recipients of donated foods shipped by the school lunch section of the department of children, families, and learning. These funds are to be used only to pay storage and related charges as they are incurred for United States Department of Agriculture foods.

The commissioner of finance shall also establish a revolving fund for the department of children, families, and learning to deposit charges paid by recipients of processed commodities and for any authorized appropriation transfers for the purpose of this subdivision. These funds are to be used only to pay for commodity processing and related charges as they are incurred using United States Department of Agriculture donated commodities.

Sec. 13. Minnesota Statutes 1996, section 121.1601, subdivision 2, is amended to read:

Subd. 2. [COORDINATION.] ~~The commissioner shall coordinate the office activities under subdivision 1 with new or existing department and state board of education efforts to accomplish school desegregation/integration.~~ The commissioner may request information or assistance from, or contract with, any state or local agency or officer, local unit of government, or recognized expert to assist the commissioner in performing the activities described in subdivision 1.

Sec. 14. Minnesota Statutes 1996, section 122.23, subdivision 2b, is amended to read:

Subd. 2b. [ORDERLY REDUCTION PLAN.] As part of the resolution required by subdivision 2, the school board must prepare a plan for the orderly reduction of the membership of the board to six or seven members and a plan for the establishment or dissolution of election districts. The plan may shorten any or all terms of incumbent board members to achieve the orderly reduction. The plan must be submitted to the secretary of state for review and comment.

Sec. 15. Minnesota Statutes 1996, section 122.23, subdivision 6, is amended to read:

Subd. 6. The commissioner shall, upon receipt of a plat, forthwith examine it and approve, modify or reject it. The commissioner shall also approve or reject any proposal contained in the resolution or petition regarding the disposition of the bonded debt of the component districts. If the plat shows the boundaries of proposed separate election districts and if the commissioner modifies the plat, the commissioner shall also modify the boundaries of the proposed separate election districts. The commissioner shall conduct a ~~hearing~~ public meeting at the nearest county seat in the area upon reasonable notice to the affected districts and county boards if requested within 20 days after submission of the plat. ~~Such a hearing~~ The public meeting may be requested by the board of any affected district, a county board of commissioners, or the petition of 20 resident voters living within the area proposed for consolidation. The commissioner shall endorse on the plat action regarding any proposal for the disposition of the bonded debt of component districts and the reasons for these actions and ~~within~~ after a minimum of 20 days, but no more than 60 days of the date of the receipt of the plat, the commissioner shall return it to the county auditor who submitted it. The commissioner shall furnish a copy of that plat, and the supporting statement and its endorsement to the auditor of each county containing any land area of the proposed new district. If land area of a particular county was included in the plat, as submitted by the county auditor, and all of such land area is excluded in the plat as modified and approved, the commissioner shall also furnish a copy of the modified plat, supporting statement, and any endorsement to the auditor of such county.

Sec. 16. Minnesota Statutes 1996, section 123.34, subdivision 9, is amended to read:

Subd. 9. [SUPERINTENDENT.] All districts maintaining a classified secondary school shall employ a superintendent who shall be an ex officio nonvoting member of the school board. The authority for selection and employment of a superintendent shall be vested in the school board in all cases. An individual employed by a school board as a superintendent shall have an initial employment contract for a period of time no longer than three years from the date of employment. Any subsequent employment contract must not exceed a period of three years. A school board, at its discretion, may or may not renew an employment contract. A school board shall not, by action or inaction, extend the duration of an existing employment contract. Beginning 365 days prior to the expiration date of an existing employment contract, a school board may negotiate and enter into a subsequent employment contract to take effect upon the expiration

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of the existing contract. A subsequent contract shall be contingent upon the employee completing the terms of an existing contract. If a contract between a school board and a superintendent is terminated prior to the date specified in the contract, the school board may not enter into another superintendent contract with that same individual that has a term that extends beyond the date specified in the terminated contract. A school board may terminate a superintendent during the term of an employment contract for any of the grounds specified in section 125.12, subdivision 6 or 8. A superintendent shall not rely upon an employment contract with a school board to assert any other continuing contract rights in the position of superintendent under section 125.12. Notwithstanding the provisions of sections 122.532, 122.541, 125.12, subdivision 6a or 6b, or any other law to the contrary, no individual shall have a right to employment as a superintendent based on order of employment in any district. If two or more school districts enter into an agreement for the purchase or sharing of the services of a superintendent, the contracting districts have the absolute right to select one of the individuals employed to serve as superintendent in one of the contracting districts and no individual has a right to employment as the superintendent to provide all or part of the services based on order of employment in a contracting district. The superintendent of a district shall perform the following:

(1) visit and supervise the schools in the district, report and make recommendations about their condition when advisable or on request by the board;

(2) recommend to the board employment and dismissal of teachers;

(3) superintend school grading practices and examinations for promotions;

(4) make reports required by the commissioner of children, families, and learning; ~~and~~

(5) by January 10, submit an annual report to the commissioner in a manner prescribed by the commissioner, in consultation with school districts, identifying the expenditures that the district requires to ensure an 80 percent and a 90 percent student passage rate on the basic standards test taken in the eighth grade, identifying the amount of expenditures that the district requires to ensure a 99 percent student passage rate on the basic standards test by 12th grade, and how much the district is cross-subsidizing programs with special education, compensatory, and general education revenue; and

(6) perform other duties prescribed by the board.

Sec. 17. Minnesota Statutes 1996, section 123.35, subdivision 19a, is amended to read:

Subd. 19a. [LIMITATION ON PARTICIPATION AND FINANCIAL SUPPORT.] (a) No school district shall be required by any type of formal or informal agreement except an agreement to provide building space according to paragraph (f), including a joint powers agreement, or membership in any cooperative unit defined in subdivision 19b, paragraph (d), to participate in or provide financial support for the purposes of the agreement for a time period in excess of ~~one~~ four fiscal ~~year~~ years, or the time period set forth in this subdivision. Any agreement, part of an agreement, or other type of requirement to the contrary is void.

(b) This subdivision shall not affect the continued liability of a school district for its share of bonded indebtedness or other debt incurred as a result of any agreement before July 1, 1993. The school district is liable only until the obligation or debt is discharged and only according to the payment schedule in effect on July 1, 1993, except that the payment schedule may be altered for the purpose of restructuring debt or refunding bonds outstanding on July 1, 1993, if the annual payments of the school district are not increased and if the total obligation of the school district for its share of outstanding bonds or other debt is not increased.

(c) To cease participating in or providing financial support for any of the services or activities relating to the agreement or to terminate participation in the agreement, the school board shall adopt a resolution and notify other parties to the agreement of its decision on or before February 1 of any year. The cessation or withdrawal shall be effective June 30 of the same year except that for a member of an education district organized under sections 122.91 to 122.95 or an intermediate district organized under chapter 136D, cessation or withdrawal shall be effective June 30 of the following fiscal year. At the option of the school board, cessation or withdrawal may be effective June 30 of the following fiscal year for a district participating in any type of agreement.

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(d) Before issuing bonds or incurring other debt, the governing body responsible for implementing the agreement shall adopt a resolution proposing to issue bonds or incur other debt and the proposed financial effect of the bonds or other debt upon each participating district. The resolution shall be adopted within a time sufficient to allow the school board to adopt a resolution within the time permitted by this paragraph and to comply with the statutory deadlines set forth in sections 122.895, 125.12, and 125.17. The governing body responsible for implementing the agreement shall notify each participating school board of the contents of the resolution. Within 120 days of receiving the resolution of the governing body, the school board of the participating district shall adopt a resolution stating:

(1) its concurrence with issuing bonds or incurring other debt;

(2) its intention to cease participating in or providing financial support for the service or activity related to the bonds or other debt; or

(3) its intention to terminate participation in the agreement.

A school board adopting a resolution according to clause (1) is liable for its share of bonded indebtedness or other debt as proposed by the governing body implementing the agreement. A school board adopting a resolution according to clause (2) is not liable for the bonded indebtedness or other debt, as proposed by the governing body, related to the services or activities in which the district ceases participating or providing financial support. A school board adopting a resolution according to clause (3) is not liable for the bonded indebtedness or other debt proposed by the governing body implementing the agreement.

(e) After July 1, 1993, a district is liable according to paragraph (d) for its share of bonded indebtedness or other debt incurred by the governing body implementing the agreement to the extent that the bonds or other debt are directly related to the services or activities in which the district participates or for which the district provides financial support. The district has continued liability only until the obligation or debt is discharged and only according to the payment schedule in effect at the time the governing body implementing the agreement provides notice to the school board, except that the payment schedule may be altered for the purpose of refunding the outstanding bonds or restructuring other debt if the annual payments of the district are not increased and if the total obligation of the district for the outstanding bonds or other debt is not increased.

(f) A school district that is a member of a cooperative unit as defined in subdivision 19b, paragraph (d), may obligate itself to participate in and provide financial support for an agreement with a cooperative unit to provide school building space for a term not to exceed two years with an option on the part of the district to renew for an additional two years.

(g) Notwithstanding any limitations imposed under this subdivision, a school district may, according to section 123.36, subdivision 10, enter into a lease of all or a portion of a schoolhouse that is not needed for school purposes, including, but not limited to, a lease with a term of more than one year.

Sec. 18. Minnesota Statutes 1996, section 123.3514, is amended by adding a subdivision to read:

Subd. 4f. [PARTICIPATION IN HIGH SCHOOL ACTIVITIES.] Enrolling in a course under this section shall not, by itself, prohibit a pupil from participating in activities sponsored by the pupil's high school.

Sec. 19. Minnesota Statutes 1996, section 123.39, subdivision 1, is amended to read:

Subdivision 1. The board may provide for the transportation of pupils to and from school and for any other purpose. The board may also provide for the transportation of pupils to schools in other districts for grades and departments not maintained in the district, including high school, at the expense of the district, when funds are available therefor and if agreeable to the district to which it is proposed to transport the pupils, for the whole or a part of the school year, as it may deem advisable, and subject to its rules. In any school district, the board shall arrange for the attendance of all pupils living two miles or more from the school, except pupils whose transportation privileges have been revoked under section 123.805, subdivision 1, clause (6), or 123.7991, paragraph (b), or whose privileges have been voluntarily surrendered under subdivision 1a, through suitable provision for transportation or through the boarding and rooming of the pupils who may be more economically and conveniently provided for by that means. Arrangements for attendance

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may include a requirement that parents or guardians request transportation before it is provided. The board shall provide transportation to and from the home of a child with a disability not yet enrolled in kindergarten when special instruction and services under sections 120.17 and 120.1701 are provided in a location other than in the child's home. When transportation is provided, scheduling of routes, establishment of the location of bus stops, manner and method of transportation, control and discipline of school children and any other matter relating thereto shall be within the sole discretion, control, and management of the school board. The district may provide for the transportation of pupils or expend a reasonable amount for room and board of pupils whose attendance at school can more economically and conveniently be provided for by that means or who attend school in a building rented or leased by a district within the confines of an adjacent district.

Sec. 20. Minnesota Statutes 1996, section 123.39, is amended by adding a subdivision to read:

Subd. 1a. [VOLUNTARY SURRENDER OF TRANSPORTATION PRIVILEGES.] The parent or guardian of a secondary student may voluntarily surrender the secondary student's to and from school transportation privileges granted under subdivision 1.

Sec. 21. Minnesota Statutes 1996, section 123.805, subdivision 1, is amended to read:

Subdivision 1. [COMPREHENSIVE POLICY.] Each school district shall develop and implement a comprehensive, written policy governing pupil transportation safety, including transportation of nonpublic school students, when applicable. The policy shall, at minimum, contain:

(1) provisions for appropriate student bus safety training under section 123.7991;

(2) rules governing student conduct on school buses and in school bus loading and unloading areas;

(3) a statement of parent or guardian responsibilities relating to school bus safety;

(4) provisions for notifying students and parents or guardians of their responsibilities and the rules;

(5) an intradistrict system for reporting school bus accidents or misconduct, and a system for dealing with local law enforcement officials in cases of criminal conduct on a school bus~~, and a system for reporting accidents, crimes, incidents of misconduct, and bus driver dismissals to the department of public safety under section 169.452~~;

(6) a discipline policy to address violations of school bus safety rules, including procedures for revoking a student's bus riding privileges in cases of serious or repeated misconduct;

(7) a system for integrating school bus misconduct records with other discipline records;

(8) a statement of bus driver duties;

(9) planned expenditures for safety activities under section 123.799 and, where applicable, provisions governing bus monitor qualifications, training, and duties;

(10) rules governing the use and maintenance of type III vehicles, drivers of type III vehicles, qualifications to drive a type III vehicle, qualifications for a type III vehicle and the circumstances under which a student may be transported in a type III vehicle;

(11) operating rules and procedures;

(12) provisions for annual bus driver in-service training and evaluation;

(13) emergency procedures;

(14) a system for maintaining and inspecting equipment;

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(15) requirements of the school district, if any, that exceed state law minimum requirements for school bus operations; and

(16) requirements for basic first aid training, which shall include the Heimlich maneuver and procedures for dealing with obstructed airways, shock, bleeding, and seizures.

School districts are encouraged to use the model policy developed by the Minnesota school boards association, the department of public safety, and the department of children, families, and learning, as well as the current edition of the "National Standards for School Buses and Operations" published by the National Safety Council, in developing safety policies. Each district shall submit a copy of its policy under this subdivision to the school bus safety advisory committee no later than August 1, 1994. Each district shall review its policy annually and make appropriate amendments, which must be submitted to the school bus safety advisory committee within one month of approval by the school board.

Sec. 22. Minnesota Statutes 1996, section 124.078, is amended to read:

124.078 [PERMANENT SCHOOL FUND ADVISORY COMMITTEE.]

A state permanent school fund advisory committee is established to advise the department of natural resources on the management of permanent school fund land, which is held in trust for the school districts of the state. The advisory committee shall consist of the following persons or their designees: the chairs of the education committees of the legislature, the chairs of the senate committee on finance and house committee on ways and means, the commissioner of children, families, and learning, one superintendent from a nonmetropolitan district, and one superintendent from a metropolitan area district. The school district superintendents shall be appointed by the commissioner of children, families, and learning.

The advisory committee shall review the policies of the department of natural resources and current statutes on management of school trust fund lands at least semiannually and shall recommend necessary changes in statutes, policy, and implementation in order to ensure provident utilization of the permanent school fund lands.

Sec. 23. Minnesota Statutes 1996, section 124.225, subdivision 7f, is amended to read:

Subd. 7f. [RESERVED REVENUE FOR TRANSPORTATION SAFETY.] A district shall reserve an amount equal to the greater of $500 or $1.50 times the number of fund balance pupil units, for that school year to provide student transportation safety programs under section 123.799. This revenue may only be used if the district complies with the reporting requirements of section 123.7991, 123.805, ~~169.452,~~ 169.4582, or 171.321, subdivision 5.

Sec. 24. Minnesota Statutes 1996, section 124.225, subdivision 8m, is amended to read:

Subd. 8m. [TRANSPORTATION SAFETY AID.] A district's transportation safety aid equals the district's reserved revenue for transportation safety under subdivision 7f for that school year. Failure of a school district to comply with the reporting requirements of section 123.7991, 123.805, ~~169.452,~~ 169.4582, or 171.321, subdivision 5, may result in a withholding of that district's transportation safety aid for that school year.

Sec. 25. Minnesota Statutes 1996, section 124.646, subdivision 4, is amended to read:

Subd. 4. [SCHOOL FOOD SERVICE FUND.] (a) The expenses described in this subdivision must be recorded as provided in this subdivision.

(b) In each school district, the expenses for a school food service program for pupils must be attributed to a school food service fund. Under a food service program, the school food service may prepare or serve milk, meals, or snacks in connection with school or community service activities.

(c) Revenues and expenditures for food service activities must be recorded in the food service fund. The costs of processing applications, accounting for meals, preparing and serving food, providing kitchen custodial services, and other expenses involving the preparing of meals or the kitchen section of the lunchroom may be charged to the food service fund or to the general fund of the district. The costs of lunchroom supervision, lunchroom custodial services, lunchroom utilities, and other administrative costs of the food service program must be charged to the general fund.

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That portion of superintendent and fiscal manager costs that can be documented as attributable to the food service program may be charged to the food service fund provided that the school district does not employ or contract with a food service director or other individual who manages the food service program, or food service management company. If the cost of the superintendent or fiscal manager is charged to the food service fund, the charge must be at a wage rate not to exceed the statewide average for food service directors as determined by the department of children, families, and learning.

(d) Capital expenditures for the purchase of food service equipment must be made from the ~~capital~~ general fund and not the food service fund, unless two conditions apply:

(1) the unreserved balance in the food service fund at the end of the last fiscal year is greater than the cost of the equipment to be purchased; and

(2) the department of children, families, and learning has approved the purchase of the equipment.

(e) If the two conditions set out in paragraph (d) apply, the equipment may be purchased from the food service fund.

(f) If a deficit in the food service fund exists at the end of a fiscal year, and the deficit is not eliminated by revenues from food service operations in the next fiscal year, then the deficit must be eliminated by a permanent fund transfer from the general fund at the end of that second fiscal year. However, if a district contracts with a food service management company during the period in which the deficit has accrued, the deficit must be eliminated by a payment from the food service management company.

(g) Notwithstanding paragraph (f), a district may incur a deficit in the food service fund for up to three years without making the permanent transfer if the district submits to the commissioner by January 1 of the second fiscal year a plan for eliminating that deficit at the end of the third fiscal year.

(h) If a surplus in the food service fund exists at the end of a fiscal year for three successive years, a district may recode for that fiscal year the costs of lunchroom supervision, lunchroom custodial services, lunchroom utilities, and other administrative costs of the food service program charged to the general fund according to paragraph (c) and charge those costs to the food service fund in a total amount not to exceed the amount of surplus in the food service fund.

Sec. 26. Minnesota Statutes 1997 Supplement, section 124.6475, is amended to read:

124.6475 [SUMMER FOOD SERVICE REPLACEMENT AID.]

States funds are available to compensate department-approved summer food program sponsors for reduced federal operating reimbursement rates under Public Law Number 104-193, the federal summer food service program. A sponsor is eligible for summer food service replacement aid equal to the sum of the following amounts:

(1) for breakfast service, ~~subtract the current year maximum reimbursement rate from the 1996 maximum reimbursement rate and multiply the result by the number of breakfasts the district served~~ up to four cents per breakfast served by the sponsor during the current ~~school~~ program year;

(2) for lunch or supper service, ~~subtract the current year maximum reimbursement rate from the 1996 maximum reimbursement rate and multiply the result by the number of lunches and suppers the district served~~ up to 14 cents per lunch or supper served by the sponsor during the current ~~school~~ program year; and

(3) for supplement service, ~~subtract the current year maximum reimbursement rate from the 1996 maximum reimbursement rate and multiply the result by the number of~~ up to ten cents per supplement ~~meals~~ served by the ~~district served~~ sponsor during the current ~~school~~ program year.

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Sec. 27. Minnesota Statutes 1997 Supplement, section 124.648, subdivision 3, is amended to read:

Subd. 3. [PROGRAM GUIDELINES; DUTIES OF THE COMMISSIONER.] (a) The commissioner shall:

(1) encourage all districts to participate in the school milk program for kindergartners;

(2) prepare program guidelines, not subject to chapter 14 until July 1, 1998, which will effectively and efficiently distribute appropriated and donated money to participating districts; and

(3) seek donations and matching funds from appropriate private and public sources.

(b) Program guidelines may provide for disbursement to districts through a mechanism of prepayments or by reimbursement for approved program expenses.

Sec. 28. Minnesota Statutes 1996, section 125.191, is amended to read:

125.191 [LICENSE AND DEGREE EXEMPTION FOR HEAD COACH.]

Notwithstanding section 125.03, subdivision 1, a school district may employ as a head varsity coach of an interscholastic sport at its secondary school a person who does not have a license as head varsity coach of interscholastic sports and who does not have a bachelor's degree if:

(1) in the judgment of the school board, the person has the knowledge and experience necessary to coach the sport;

(2) ~~the position has been posted as a vacancy within the present teaching staff for a period of 30 days and no licensed coaches have applied for the position;~~

~~(3) the person~~ can verify completion of six quarter credits, or the equivalent, or 60 clock hours of instruction in first aid and the care and prevention of athletic injuries; and

~~(4) the person~~ (3) can verify completion of a coaching methods or theory course.

Notwithstanding section 125.121, a person employed as a head varsity coach under this section has an annual contract as a coach that the school board may or may not renew as the board sees fit~~, after annually posting the position as required in clause (2) and no licensed coach has applied for the position~~.

Sec. 29. Minnesota Statutes 1996, section 126.12, subdivision 1, is amended to read:

Subdivision 1. Except for learning programs during summer, flexible learning year programs authorized under sections 120.59 to 120.67, and learning year programs under section 121.585, a school district shall not commence an elementary or secondary school year prior to ~~Labor Day~~ September 1. Days which are devoted to teachers' workshops may be held before ~~Labor Day~~ September 1. Districts that enter into cooperative agreements are encouraged to adopt similar school calendars.

Sec. 30. Minnesota Statutes 1997 Supplement, section 169.01, subdivision 6, is amended to read:

Subd. 6. [SCHOOL BUS.] "School bus" means a motor vehicle used to transport pupils to or from a school defined in section 120.101, or to or from school-related activities, by the school or a school district, or by someone under an agreement with the school or a school district. A school bus does not include a motor vehicle transporting children to or from school for which parents or guardians receive direct compensation from a school district, a motor coach operating

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under charter carrier authority, a transit bus providing services as defined in section 174.22, subdivision 7, or a vehicle otherwise qualifying as a type III vehicle under paragraph (5), when the vehicle is properly registered and insured and being driven by an employee or agent of a school district for nonscheduled transportation. A school bus may be type A, type B, type C, or type D, or type III as follows:

(1) A "type A school bus" is a conversion or body constructed upon a van-type or cutaway front section vehicle with a left-side driver's door, designed for carrying more than ten persons. This definition includes two classifications: type A-I, with a gross vehicle weight rating (GVWR) over 10,000 pounds; and type A-II, with a GVWR of 10,000 pounds or less.

(2) A "type B school bus" is a conversion or body constructed and installed upon a van or front-section vehicle chassis, or stripped chassis, with a gross vehicle weight rating of more than 10,000 pounds, designed for carrying more than ten persons. Part of the engine is beneath or behind the windshield and beside the driver's seat. The entrance door is behind the front wheels.

(3) A "type C school bus" is a body installed upon a flat back cowl chassis with a gross vehicle weight rating of more than 10,000 pounds, designed for carrying more than ten persons. All of the engine is in front of the windshield and the entrance door is behind the front wheels.

(4) A "type D school bus" is a body installed upon a chassis, with the engine mounted in the front, midship or rear, with a gross vehicle weight rating of more than 10,000 pounds, designed for carrying more than ten persons. The engine may be behind the windshield and beside the driver's seat; it may be at the rear of the bus, behind the rear wheels, or midship between the front and rear axles. The entrance door is ahead of the front wheels.

(5) Type III school buses and type III Head Start buses are restricted to passenger cars, station wagons, vans, and buses in service after January 1, 1999, having ~~a maximum~~ an original maximum manufacturer's rated seating capacity of ten or fewer people, including the driver, and a gross vehicle weight rating of 10,000 pounds or less. In this subdivision, "gross vehicle weight rating" means the value specified by the manufacturer as the loaded weight of a single vehicle. A "type III school bus" and "type III Head Start bus" must not be outwardly equipped and identified as a type A, B, C, or D school bus or type A, B, C, or D Head Start bus.

Sec. 31. Minnesota Statutes 1996, section 169.451, subdivision 5, is amended to read:

Subd. 5. [RANDOM SPOT INSPECTIONS.] In addition to the annual inspection, the Minnesota state patrol has authority to conduct random, unannounced spot inspections of any school bus or Head Start bus being operated within the state ~~at the location where the bus is kept when not in operation~~ to ascertain whether ~~its construction, design, equipment, and color comply~~ it is in compliance with ~~all~~ provisions of law, including the Minnesota school bus equipment standards in sections 169.4501 to 169.4504, subject to the procedures approved by the commissioner.

Sec. 32. Minnesota Statutes 1997 Supplement, section 290.0674, subdivision 1, is amended to read:

Subdivision 1. [CREDIT ALLOWED.] An individual is allowed a credit against the tax imposed by this chapter in an amount equal to the amount paid for education-related expenses for a dependent in kindergarten through grade 12. For purposes of this section, "education-related expenses" means:

(1) fees or tuition for instruction by an instructor under section 120.101, subdivision 7, clause (1), (2), (3), (4), or (5), for instruction outside the regular school day or school year, including tutoring, driver's education ~~taken~~ offered as part of school curriculum, regardless of whether it is taken from a public or private entity or summer camps, in grade or age appropriate curricula that supplement curricula and instruction available during the regular school year, that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills under the graduation rule under section 121.11, subdivision 7c, and that do not include the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship;

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(2) expenses for textbooks, including books and other instructional materials and equipment used in elementary and secondary schools in teaching only those subjects legally and commonly taught in public elementary and secondary schools in this state. "Textbooks" does not include instructional books and materials used in the teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship, nor does it include books or materials for extracurricular activities including sporting events, musical or dramatic events, speech activities, driver's education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware, excluding single purpose processors, and educational software that assists a dependent to improve knowledge of core curriculum areas or to expand knowledge and skills under the graduation rule under section 121.11, subdivision 7c, purchased for use in the taxpayer's home and not used in a trade or business regardless of whether the computer is required by the dependent's school; and

(4) the amount paid to others for transportation of a dependent attending an elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory attendance laws, which is not operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and chapter 363.

Sec. 33. [COMMISSIONER OF CHILDREN, FAMILIES, AND LEARNING.]

The commissioner of children, families, and learning shall apply directly to the Internal Revenue Service to obtain access to federal income tax information for the purpose of determining state school aids. If the commissioner's request is approved, then the commissioner shall report to the education committees of the legislature on the changes needed in state statute.

Sec. 34. [ACCELERATED TRANSITION PLAN.]

Notwithstanding Minnesota Statutes, section 122.23, subdivision 2b, or other law to the contrary, independent school district No. 2884, Red Rock Central, is authorized to terminate all existing school board members' terms by the first Monday in January 1999, and to hold elections for seven school board members at the 1998 school district general election under Minnesota Statutes, section 205A.04. Of the seven board members elected, three members shall be elected to serve four-year terms and four members shall be elected to serve two-year terms. Only one board member from each election district shall be elected to serve a four-year term. Candidates must specify in their affidavit the election district and the term of office to which they are seeking election. The school board members elected at the 1998 school district general election shall assume office on the first Monday in January 1999. The school board of independent school district No. 2884, Red Rock Central, then shall consist of seven members until such time as the electors in the school district vote on a proposition favoring a six-member board under Minnesota Statutes, section 123.33, subdivision 1.

Sec. 35. [SCHOOL YEAR START DATE.]

Subdivision 1. [BUFFALO.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, for the 1998-1999 and 1999-2000 school years only, independent school district No. 877, Buffalo, may begin the school year any day prior to Labor Day.

Subd. 2. [SARTELL.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, independent school district No. 748, Sartell, may begin the 1998-1999 school year before Labor Day only by the number of days necessary to accommodate the district building construction project.

Subd. 3. [HOLDINGFORD.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, independent school district No. 738, Holdingford, may begin the 1998-1999 school year on the Monday prior to Labor Day.

Subd. 4. [BROWNS VALLEY.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997 First Special Session, chapter 4, article 7, section 49, subdivision 1, independent school district No. 801, Browns Valley, may begin the 1998-99 school year on August 24, 1998, to accommodate its shared school calendar with the Sisseton, South Dakota, school district.

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Subd. 5. [FARIBAULT ACADEMIES.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, for the 1998-1999 and 1999-2000 school years only, Faribault Academies may begin the school year any day prior to Labor Day.

Subd. 6. [CROOKSTON.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, for the 1998-1999 school year only, independent school district No. 593, Crookston, may begin the school year any day prior to Labor Day.

Subd. 7. [FERTILE-BELTRAMI.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, for the 1998-1999 school year only, independent school district No. 599, Fertile-Bertrami, may begin the school year any day prior to Labor Day.

Subd. 8. [FISHER.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, and Laws 1997, First Special Session chapter 4, article 7, section 49, subdivision 1, for the 1998-1999 school year only, independent school district No. 600, Fisher, may begin the school year any day prior to Labor Day.

Sec. 36. [FUND TRANSFERS.]

Subdivision 1. [ADA-BORUP.] Notwithstanding Minnesota Statutes, section 124.83, subdivision 6, independent school district No. 2854, Ada-Borup, may use up to $90,000 of its health and safety revenue for capital improvements, equipment, or furnishings for new facilities.

Subd. 2. [LYND.] Notwithstanding Minnesota Statutes, sections 121.912 and 121.9121, on June 30, 1998, independent school district No. 415, Lynd, may permanently transfer $100,000 from reserve accounts in the general fund to the unreserved general fund. The transfer may be made from the reemployment account and the bus purchase account. Transfers from the reemployment and bus purchase accounts may be made without making a levy reduction.

Subd. 3. [RUSSELL.] Notwithstanding Minnesota Statutes, section 121.912 or 121.9121, on June 30, 1998, independent school district No. 418, Russell, may permanently transfer up to $150,000 from its capital expenditure fund to the district's general fund. The transfer must not include health and safety or handicapped access revenue.

Subd. 4. [WIN-E-MAC.] Notwithstanding Minnesota Statutes, section 121.912 or 121.9121, on June 30, 1998, independent school district No. 2609, Win-E-Mac, may permanently transfer the balance of its health and safety account to its building construction fund. This is an eligible expenditure of health and safety revenue.

Sec. 37. [APPROPRIATIONS.]

Subd. 2. [MEDIA SPECIALIST.] For a media specialist for independent school district No. 707, Nett Lake:

$ 34,000 . . . . . 1999

Sec. 38. [REPEALER.]

(a) Minnesota Statutes 1996, section 121.11, subdivisions 5, 7, 7b, 9, 11, 12, and 14; and Minnesota Statutes 1997 Supplement, section 121.11, subdivision 7e, are repealed effective December 31, 1999.

(b) Minnesota Statutes 1996, section 121.11, subdivision 7d, is repealed effective January 10, 1999.

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Sec. 39. [EFFECTIVE DATES.]

(a) Sections 1 to 13 are effective December 31, 1999.

(b) Sections 14, 28, 34, and 35 are effective the day following final enactment.

(d) Section 29 is effective for the 2000-2001 school year.

(e) Section 36 is effective June 30, 1998.

Section 1. Laws 1997, First Special Session chapter 4, article 8, section 4, subdivision 3, is amended to read:

LIBRARIES

Subd. 3. [BOARD; APPOINTMENTS.] The resolution in subdivision 2 shall provide for a library board of ~~five~~ seven members as follows: two members appointed by the school board of independent school district No. 319, one member appointed by each town board located within independent school district No. 319 boundaries, one member appointed by the council of the city of Nashwauk, and one member appointed by the Itasca county board to represent the unorganized towns within the school district territory.

Sec. 2. [APPROPRIATION; DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.]

Subdivision 1. [APPROPRIATIONS.] The sums indicated in this section are appropriated from the general fund to the department of children, families, and learning for the fiscal years designated.

Subd. 2. [REGIONAL LIBRARY SYSTEMS.] For regional library systems:

$250,000 . . . . . 1999

The money must be divided equally among the 12 regional public library systems established under Minnesota Statutes, section 134.20, for use in providing library services.

Subd. 3. [LIBRARY FOR THE BLIND; APPROPRIATION.] For the purchase and installation of online catalog software for the Minnesota library for the blind and physically handicapped:

$60,000 . . . . . 1999

Section 1. Laws 1997, First Special Session chapter 4, article 10, section 3, subdivision 2, is amended to read:

STATE AGENCIES

Subd. 2. [DEPARTMENT.] For the department of children, families, and learning:

~~$24,360,000~~ $24,810,000 . . . . . 1998

~~$23,978,000~~ $24,428,000 . . . . . 1999

(a) Any balance in the first year does not cancel but is available in the second year.

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(b) $21,000 each year is from the trunk highway fund.

Up to $50,000 each year is contingent upon the match of $1 in the previous year from private sources consisting of either direct monetary contributions or in-kind contributions of related goods or services, for each $1 of the appropriation. The commissioner of children, families, and learning must certify receipt of the money or documentation for the private matching funds or in-kind contributions. The unencumbered balance from the amount actually appropriated from the contingent amount in 1998 does not cancel but is available in 1999. The amount carried forward must not be used to establish a larger annual base appropriation for later fiscal years.

(d) $207,000 in 1998 and $210,000 in 1999 is for the state board of education.

(e) $230,000 in 1998 and $234,000 in 1999 is for the board of teaching.

(f) The expenditures of federal grants and aids as shown in the biennial budget document and its supplements are approved and appropriated and shall be spent as indicated.

(g) The department of children, families, and learning shall develop a performance report on the quality of its programs and services. The report must be consistent with the process specified in Minnesota Statutes, sections 15.90 to 15.92. The goals, objectives, and measures of this report must be developed in cooperation with the chairs of the finance divisions of the education committees of the house of representatives and senate, the department of finance, and the office of legislative auditor. The report must include data to indicate the progress of the department in meeting its goals and objectives.

(h) At least $50,000 is to ensure compliance with state and federal laws prohibiting discrimination because of race, religion, or sex. The department shall use the appropriation to provide state-level leadership on equal education opportunities which promote elimination of discriminatory practices in the areas of race, religion, and sex in public schools and public educational agencies under its general supervision and on activities including, at least, compliance monitoring and voluntary compliance when local school district deficiencies are found.

(i) Notwithstanding Minnesota Statutes, section 15.53, subdivision 2, the commissioner of children, families, and learning may contract with a school district for a period no longer than five consecutive years to work in the development or implementation of the graduation rule. The commissioner may contract for services and expertise as necessary. The contracts are not subject to Minnesota Statutes, sections 16B.06 to 16B.08.

(j) In preparing the department budget for fiscal years 2000-2001, the department shall shift all administrative funding from aids appropriations into the appropriation for the department.

(k) Reallocations of excesses under Minnesota Statutes, section 124.14, subdivision 7, from appropriations within this act shall only be made to deficiencies in programs with appropriations contained within this act.

(l) ~~$850,000~~ $1,300,000 each year is for costs associated with educational adequacy litigation ~~costs~~ and may only be used for those purposes. These appropriations are one-time only. Amounts appropriated for one year of the biennium may be used for the other.

(m) Collaborative efforts between the department of children, families, and learning and the office of technology, as specified in Minnesota Statutes, section 237A.015, include:

(1) advising the commissioner of children, families, and learning on new and emerging technologies, potential business partnerships, and technical standards;

(2) assisting the commissioner of children, families, and learning in the sharing of data between state agencies relative to children's programs; and

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(3) as requested by the commissioner of children, families, and learning, assisting in collaborative efforts for joint prekindergarten through grade 12 and higher education projects, including the learning network.

The commissioner of children, families, and learning shall have final approval for prekindergarten through grade 12 programs and lifelong learning programs, grant awards, and funding decisions.

Sec. 2. Laws 1997, First Special Session chapter 4, article 10, section 4, is amended to read:

Sec. 4. [APPROPRIATIONS; LOLA AND RUDY PERPICH MINNESOTA CENTER FOR ARTS EDUCATION.]

The sums indicated in this section are appropriated from the general fund to the center for arts education for the fiscal years designated:

~~$5,541,000~~ $5,559,000 . . . . . 1998

~~$6,054,000~~ $6,120,000 . . . . . 1999

Of the fiscal year 1998 appropriation, $154,000 is to fund artist and arts organization participation in the education residency and education technology projects, $75,000 is for school support for the residency project, and $121,000 is for further development of the partners: arts and school for students (PASS) program, including pilots. Of the fiscal year 1999 appropriation, $154,000 is to fund artist and arts organizations participation in the education residency project, $75,000 is for school support for the residency project, ~~and~~ $121,000 is to fund the PASS program, including additional pilots, and $30,000 is for staff development activities related to implementation of the graduation rule. The guidelines for the education residency project and the pass program shall be developed and defined by the center for arts education in cooperation with the Minnesota arts board. The Minnesota arts board shall participate in the review and allocation process. The center for arts education and the Minnesota arts board shall cooperate to fund these projects.

Any balance in the first year does not cancel but is available in the second year.

Sec. 3. Laws 1997, First Special Session chapter 4, article 10, section 5, is amended to read:

Sec. 5. [APPROPRIATIONS; FARIBAULT ACADEMIES.]

The sums indicated in this section are appropriated from the general fund to the department of children, families, and learning for the Faribault academies for the fiscal years designated:

~~$8,910,000~~ $8,949,000 . . . . . 1998

~~$8,908,000~~ $8,986,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

In the next biennial budget, the academies must assess their progress in meeting the established performance measures for the Faribault academies and inform the legislature on the content of that assessment. The information must include an assessment of its progress by consumers and employees.

Sec. 4. [EFFECTIVE DATE.]

Sections 1 to 3 are effective the day following final enactment.

Section 1. [123.3517] [STUDENT ACHIEVEMENT LEVELS.]

MISCELLANEOUS

Subdivision 1. [STATE EXPECTATIONS; PLAN.] (a) Each school year, a school district must determine if the student achievement levels at each school site meet state expectations. If student achievement levels at a school site do not meet state expectations for two out of three consecutive school years, beginning with the 1999-2000 school year, the

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district must work with the school site to adopt a plan to raise student achievement levels to state expectations. The legislature will determine state expectations after receiving a recommendation from the commissioner of children, families, and learning. The commissioner must submit its recommendations to the legislature by December 15, 1998.

(b) The department must assist the district and the school site in developing a plan to improve student achievement. The plan must include parental involvement components.

Sec. 2. [145.9266] [FETAL ALCOHOL SYNDROME CAMPAIGN AND EDUCATION.]

Subdivision 1. [PUBLIC AWARENESS AND EDUCATION.] The commissioner of health shall design and implement an ongoing statewide campaign to raise awareness and educate the public about fetal alcohol syndrome and other effects of prenatal alcohol exposure. The campaign shall include messages directed to the general population as well as culturally specific and community-based messages. A toll-free resource and referral telephone line shall be included in the messages. The commissioner of health shall conduct an evaluation to determine the effectiveness of the campaign.

Subd. 2. [STATEWIDE NETWORK OF FETAL ALCOHOL SYNDROME DIAGNOSTIC CLINICS.] A statewide network of regional fetal alcohol syndrome diagnostic clinics shall be developed between the department of health and the University of Minnesota. This collaboration shall be based on a statewide needs assessment and shall include involvement from consumers, providers, and payors. By the end of calendar year 1998, a plan shall be developed for the clinic network, and shall include a comprehensive evaluation component. Sites shall be established in calendar year 1999. The commissioner shall not access or collect individually identifiable data for the statewide network of regional fetal alcohol syndrome diagnostic clinics. Data collected at the clinics shall be maintained according to applicable data privacy laws, including section 144.335.

Subd. 3. [PROFESSIONAL TRAINING AND EDUCATION ABOUT FETAL ALCOHOL SYNDROME.] (a) The commissioner of health, in collaboration with the board of medical practice, the board of nursing, and other professional boards and state agencies, shall develop curricula and materials about fetal alcohol syndrome for professional training of health care providers, social service providers, educators, and judicial and corrections systems professionals. The training and curricula shall increase knowledge and develop practical skills of professionals to help them address the needs of at-risk pregnant women and the needs of individuals affected by fetal alcohol syndrome or fetal alcohol effects and their families.

(b) Training for health care providers shall focus on skill building for screening, counseling, referral, and follow-up for women using or at risk of using alcohol while pregnant. Training for health care professionals shall include methods for diagnosis and evaluation of fetal alcohol syndrome and fetal alcohol effects. Training for education, judicial, and corrections professionals shall involve effective education strategies, methods to identify the behaviors and learning styles of children with alcohol-related birth defects, and methods to identify available referral and community resources.

(c) Training and education for social service providers shall focus on resources for assessing, referring, and treating at-risk pregnant women, changes in the mandatory reporting and commitment laws, and resources for affected children and their families.

Subd. 4. [FETAL ALCOHOL SYNDROME COMMUNITY GRANT EDUCATION PROGRAM.] The commissioner of health shall administer a grant education program to provide money to community organizations and coalitions to collaborate on fetal alcohol syndrome prevention and intervention strategies and activities. The commissioner shall disburse grant money through a request for proposal process or sole-source distribution where appropriate, and shall include at least one grant award for transitional skills and services for individuals with fetal alcohol syndrome or fetal alcohol effects.

Subd. 5. [SCHOOL PILOT PROGRAMS.] (a) The commissioner of children, families, and learning shall award up to four grants to schools for pilot programs to identify and implement effective educational strategies for individuals with fetal alcohol syndrome and other alcohol-related birth defects.

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(b) One grant shall be awarded in each of the following age categories:

(1) birth to three years;

(2) three to five years;

(3) six to 12 years; and

(4) 13 to 18 years.

(c) Grant proposals must include an evaluation plan, demonstrate evidence of a collaborative or multisystem approach, provide parent education and support, and show evidence of a child- and family-focused approach consistent with research-based best educational practices and other guidelines developed by the department of children, families, and learning.

(d) Children participating in the pilot program sites may be identified through child find activities or a diagnostic clinic. No identification activity may be undertaken without the consent of a child's parent or guardian.

Subd. 6. [FETAL ALCOHOL COORDINATING BOARD; DUTIES.] (a) The fetal alcohol coordinating board consists of:

(1) the commissioners of health, human services, corrections, public safety, economic security, and children, families, and learning;

(2) the director of the office of strategic and long-range planning;

(3) the chair of the maternal and child health advisory task force established by section 145.881, or the chair's designee;

(4) a representative of the University of Minnesota academic health center, appointed by the provost;

(5) five members from the general public appointed by the governor, one of whom must be a family member of an individual with fetal alcohol syndrome or fetal alcohol effect; and

(6) one member from the judiciary appointed by the chief justice of the supreme court.

Terms, compensation, removal, and filling of vacancies of appointed members are governed by section 15.0575. The board shall elect a chair from its membership to serve a one-year term. The commissioner of health shall provide staff and consultant support for the board. Support must be provided based on an annual budget and work plan developed by the board. The board shall contract with the department of health for necessary administrative services. Administrative services include personnel, budget, payroll, and contract administration. The board shall adopt an annual budget and work program.

(b) Board duties include:

(1) reviewing programs of state agencies that involve fetal alcohol syndrome and coordinating those that are interdepartmental in nature;

(2) providing an integrated and comprehensive approach to fetal alcohol syndrome prevention and intervention strategies both at a local and statewide level;

(3) approving on an annual basis the statewide public awareness campaign as designed and implemented by the commissioner of health under subdivision 1;

(4) reviewing fetal alcohol syndrome community grants administered by the commissioner of health under subdivision 4; and

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(5) submitting a report to the governor on January 15 of each odd-numbered year summarizing board operations, activities, findings, and recommendations, and fetal alcohol syndrome activities throughout the state.

Subd. 7. [FEDERAL FUNDS; CONTRACTS; DONATIONS.] The fetal alcohol coordinating board may apply for, receive, and disburse federal funds made available to the state by federal law or rules adopted for any purpose related to the powers and duties of the board. The board shall comply with any requirements of federal law, rules, and regulations in order to apply for, receive, and disburse funds. The board may contract with or provide grants to public and private nonprofit entities. The board may accept donations or grants from any public or private entity. Money received by the board must be deposited in a separate account in the state treasury and invested by the state board of investment. The amount deposited, including investment earnings, is appropriated to the board to carry out its duties. Money deposited in the state treasury shall not cancel.

Sec. 3. Minnesota Statutes 1996, section 254A.17, subdivision 1, is amended to read:

Subdivision 1. [MATERNAL AND CHILD SERVICE PROGRAMS.] (a) The commissioner shall fund maternal and child health and social service programs designed to improve the health and functioning of children born to mothers using alcohol and controlled substances. Comprehensive programs shall include immediate and ongoing intervention, treatment, and coordination of medical, educational, and social services through a child's preschool years. Programs shall also include research and evaluation to identify methods most effective in improving outcomes among this high-risk population. The commissioner shall ensure that the programs are available on a statewide basis to the extent possible with available funds.

(b) The commissioner of human services shall develop models for the treatment of children ages 6 to 12 who are in need of chemical dependency treatment. The commissioner shall fund at least two pilot projects with qualified providers to provide nonresidential treatment for children in this age group. Model programs must include a component to monitor and evaluate treatment outcomes.

Sec. 4. Minnesota Statutes 1996, section 254A.17, is amended by adding a subdivision to read:

Subd. 1b. [INTERVENTION, EDUCATION, AND ADVOCACY PROGRAM.] Within the limits of money available, the commissioner of human services shall fund voluntary hospital-based outreach programs targeted at women who deliver children affected by prenatal alcohol or drug use. The program shall help women obtain treatment, stay in recovery, and plan any future pregnancies. An advocate shall be assigned to each woman in the program to provide education, guidance, and advice with respect to treatment programs, child safety and parenting, housing, family planning, and any other personal issues that are barriers to remaining free of chemical dependence. The commissioner shall develop an evaluation component and provide centralized coordination of the evaluation process.

Sec. 5. Laws 1996, chapter 412, article 12, section 12, subdivision 5, is amended to read:

Subd. 5. [REPORT.] By January 1, ~~1999~~ 2000, the selected district shall submit a report to the commissioner on the program with recommendations for expanding it or making changes.

Sec. 6. Laws 1997, First Special Session chapter 4, article 9, section 12, subdivision 6, is amended to read:

Subd. 6. [ELECTRONIC CURRICULUM RESOURCE.] For support of electronic curriculum development:

$4,000,000 . . . . . 1998

Of this amount, $2,700,000 is for the electronic curriculum resource under section 5, $1,000,000 of which is for the collaborative arts project in section 5, subdivision 1, paragraph (c), clause (5).

Of this amount, $300,000 is for the purposes of the Gopher Biology Shareware Project under section 5, subdivision 1, paragraph (c), clause (1).

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9830

The department may use up to $100,000 for quality control of the curriculum repository.

This appropriation is available until June 30, 1999.

Sec. 7. [DATABASE ACCESS PROGRAM FOR PUBLIC LIBRARIES AND SCHOOL MEDIA CENTERS.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of children, families, and learning shall establish a program to provide statewide licenses to commercial electronic databases of periodicals, encyclopedias, and associated reference materials for school media centers and public libraries. The commissioner, in consultation with Minitex and in cooperation with the Library Planning Task Force, shall solicit proposals for access licenses to commercial vendors of the databases. Responses to those proposals shall be evaluated by staff of the office of library development and services in the department of children, families, and learning, Minitex staff, and a representative panel of school media specialists and public librarians.

Subd. 2. [ELIGIBILITY.] Access to the selected databases shall be made available to a school or school district that is a member of a multicounty, multitype library system as defined in Minnesota Statutes, section 134.001, subdivision 6, or a public library as defined in Minnesota Statutes, section 134.001, subdivision 2, that is a member of a multicounty, multitype library system. With appropriate authentication any user of an eligible library may have access to the databases from a remote site.

Subd. 3. [RESOURCE GRANTS.] Graduation rule resource grants are available for the purposes of this section.

Sec. 8. [CITY OF EAST GRAND FORKS; APPROPRIATION.]

$650,000 is appropriated in fiscal year 1998 from the general fund to the department of public safety for a grant to the city of East Grand Forks to make a loan for the nonfederal share of flood costs for educational facilities in East Grand Forks.

Sec. 9. [APPROPRIATIONS.]

(a) $5,000,000 is appropriated in 1999 from the general fund to the commissioner of health for the fetal alcohol syndrome initiative in section 2.

(b)(1) Of the appropriation in paragraph (a), $5,000,000 in fiscal year 1999 is from the general fund to the commissioner for the fetal alcohol syndrome/fetal alcohol effect (FAS/FAE) initiatives specified in paragraphs (2) to (11).

(2) Of the amount in paragraph (a), $200,000 is transferred to the commissioner of children, families, and learning for school-based pilot programs to identify and implement effective educational strategies for individuals with FAS/FAE.

(3) Of the amount in paragraph (a), $800,000 is for the public awareness campaign under Minnesota Statutes, section 145.9266, subdivision 1.

(4) Of the amount in paragraph (a), $400,000 is to develop a statewide network of regional FAS diagnostic clinics under Minnesota Statutes, section 145.9266, subdivision 2.

(5) Of the amount in paragraph (a), $150,000 is for professional training about FAS under Minnesota Statutes, section 145.9266, subdivision 3.

(6) Of the amount in paragraph (a), $350,000 is for the fetal alcohol coordinating board under Minnesota Statutes, section 145.9266, subdivision 6.

(7) Of the amount in paragraph (a), $800,000 is transferred to the commissioner of human services to expand the maternal and child health social service programs under Minnesota Statutes, section 254A.17, subdivision 1.

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(8) Of the amount in paragraph (a), $200,000 is for the commissioner to study the extent of fetal alcohol syndrome in the state.

(9) Of the amount in paragraph (a), $400,000 is transferred to the commissioner of human services for the intervention and advocacy program under Minnesota Statutes, section 254A.17, subdivision 1b.

(10) Of the amount in paragraph (a), $850,000 is for the FAS community grant program under Minnesota Statutes, section 145.9266, subdivision 4.

(11) Of the amount in paragraph (a), $850,000 is transferred to the commissioner of human services to expand treatment services and halfway houses for pregnant women and women with children who abuse alcohol during pregnancy.

(c) Notwithstanding chapter 645 or any other law to the contrary, if the fetal alcohol syndrome initiative in this article is enacted into law in the same or a substantially similar form during the 1998 regular legislative session in S. F. No. 3346 or other legislation, then the provisions in section 2 and this subdivision are not effective.

Sec. 10. [EFFECTIVE DATES.]

Sections 1, 6, and 8 are effective the day following final enactment."

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9832

subdivisions 4, 9, 10, 11, 12, and 17; article 6, section 20, subdivision 4; article 8, section 4, subdivision 3; article 9, sections 11 and 12, subdivision 6; article 10, sections 3, subdivision 2, 4, and 5; proposing coding for new law in Minnesota Statutes, chapters 120; 121; 123; 124A; and 145; repealing Minnesota Statutes 1996, sections 121.02; 121.11, subdivisions 5, 7, 7b, 7d, 9, 11, 12, and 14; 121.904, subdivision 4c; 124.2601, subdivision 4; 124.2713, subdivision 6b; 124.2727, subdivision 6b; 124.647; and 124A.292, subdivisions 2 and 4; Minnesota Statutes 1997 Supplement, sections 121.11, subdivision 7e; 124.2601, subdivision 5; 124.912, subdivisions 2 and 3; and 169.452; Laws 1993, chapter 146, article 5, section 20; and Laws 1997, chapter 231, article 1, section 17; Minnesota Rules, part 3525.2750, subpart 1, item B."

We request adoption of this report and repassage of the bill.

House Conferees: Becky Kelso, Mindy Greiling, Len Biernat, Robert Leighton and Jerry Dempsey.

Senate Conferees: Lawrence J. Pogemiller, Jane Krentz, Martha R. Robertson, Sandra L. Pappas and Kenric J. Scheevel.

Kelso moved that the report of the Conference Committee on H. F. No. 2874 be adopted and that the bill be repassed as amended by the Conference Committee.

Sviggum moved that the House refuse to adopt the Conference Committee report on H. F. No. 2874, that the present House Conference Committee be discharged, that the Speaker appoint a new Conference Committee on the part of the House, and that the bill be returned to the Conference Committee.

Kelso moved that the Conference Committee Report on H. F. No. 2874 be laid on the table temporarily. The motion prevailed and the Conference Committee Report on H. F. No. 2874 was laid on the table.

LAY ON THE TABLE

SPECIAL ORDERS, Continued

S. F. No. 2082 which was temporarily laid over earlier today on Special Orders was again reported to the House.

Kelso moved to amend S. F. No. 2082 as follows:

Page 31, delete lines 20 to 22 and insert:

"Sec. 57. [REPEALER.]

Minnesota Statutes 1996, section 120.90, is repealed."

Page 316, delete lines 17 to 19 and insert:

"Sec. 102. [REPEALER.]

Minnesota Statutes 1996, sections 122.532, subdivision 1; and 122.541, subdivision 3, are repealed."

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9833

Page 383, delete lines 7 to 9 and insert:

"Sec. 123. [REPEALER.]

Minnesota Statutes 1996, section 123.35, subdivision 10, is repealed."

Page 536 to page 537, delete section 42

Page 586, delete lines 16 to 19 and insert:

"Sec. 2. [REPEALER.]

Minnesota Statutes 1996, section 127.01, is repealed."

Renumber the sections in sequence and correct internal references

The motion prevailed and the amendment was adopted.

Sviggum moved to amend S. F. No. 2082, as amended, as follows:

Page 586, after line 8, insert:

"ARTICLE 11

HIGH SCHOOL LEAGUE

Section 1. Minnesota Statutes 1997 Supplement, section 128C.12, subdivision 1, is amended to read:

Subdivision 1. [DUES AND EVENTS REVENUE.] The state auditor annually must examine the accounts of, and audit all money paid to, the state high school league by its members. The audit must include financial and compliance issues. The state auditor must also audit all money derived from any event sponsored by the league. ~~League audits must include audits of~~ The state auditor may audit administrative regions of the league. ~~The league and its~~ Administrative regions of the league may ~~not~~ contract with private auditors. The scope of the state auditor's examinations of the league must be agreed upon by the board and the state auditor, provided that all requirements of this section must be met."

Page 586, line 9, delete "11" and insert "12"

Renumber the sections in sequence and correct internal references

The question was taken on the Sviggum amendment and the roll was called.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9834

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 60 yeas and 67 nays as follows:

Anderson, B. Davids Jaros Molnau Rifenberg Tingelstad
Anderson, I. Dehler Kielkucki Mulder Rostberg Tompkins
Bettermann Dempsey Knoblach Ness Seagren Tuma
Bishop Erickson Kuisle Nornes Seifert Van Dellen
Boudreau Finseth Larsen Olson, M. Solberg Vandeveer
Bradley Goodno Lindner Ozment Stanek Weaver
Broecker Gunther Mares Paulsen Stang Westfall
Clark, J. Haas McCollum Pawlenty Sviggum Westrom
Commers Harder McElroy Pugh Swenson, H. Wolf
Daggett Holsten Milbert Reuter Sykora Workman

Abrams Folliard Kahn Long Otremba, M. Trimble
Bakk Garcia Kalis Mahon Paymar Tunheim
Biernat Greiling Kelso Mariani Pelowski Wagenius
Carlson Hasskamp Kinkel Marko Peterson Wejcman
Chaudhary Hausman Knight McGuire Rest Wenzel
Clark, K. Hilty Koskinen Mullery Rhodes Winter
Dawkins Huntley Kraus Munger Rukavina Spk. Carruthers
Delmont Jefferson Krinkie Murphy Schumacher
Entenza Jennings Kubly Olson, E. Sekhon
Erhardt Johnson, A. Leighton Opatz Skare
Evans Johnson, R. Leppik Orfield Skoglund
Farrell Juhnke Lieder Osthoff Tomassoni

The motion did not prevail and the amendment was not adopted.

Weaver and Tuma moved to amend S. F. No. 2082, as amended, as follows:

Page 586, after line 15, insert:

"Sec. 2. Minnesota Statutes, 1996, section 124.32, subdivision 13, as added by 1998 H. F. No. 2874, article 2, section 26, if enacted, is amended to read:

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9835

subdivision 3b, paragraphs (e), (h), and (i), is served upon the parties. A district is eligible for reimbursement for attorney fees under this paragraph only if:

(2) the district has made a good faith effort to resolve the dispute through mediation, but the obligation to mediate does not compel the district to agree to a proposal or make a concession; and

(3) the district made an offer of settlement under Rule 68 of the Federal Rules of Civil Procedure.

~~(d)~~ The commissioner shall provide districts with a form on which to annually report litigation costs under this section and shall base aid estimates on those reports."

Renumber the sections in sequence and correct internal references

The Speaker called Opatz to the Chair.

The question was taken on the Weaver and Tuma amendment and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 57 yeas and 72 nays as follows:

Anderson, B. Dehler Johnson, A. Molnau Rostberg Tuma
Bettermann Delmont Kielkucki Mulder Seagren Tunheim
Boudreau Dempsey Knight Ness Seifert Van Dellen
Bradley Erickson Krinkie Nornes Smith Weaver
Broecker Finseth Larsen Olson, M. Stanek Westfall
Clark, J. Goodno Lindner Osskopp Stang Westrom
Clark, K. Gunther Long Paymar Sviggum Workman
Commers Haas Macklin Reuter Swenson, H.
Daggett Harder Mares Rhodes Tingelstad
Davids Holsten McCollum Rifenberg Tompkins

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9836

Abrams Garcia Kalis Mariani Otremba, M. Slawik
Anderson, I. Greiling Kelso Marko Paulsen Solberg
Bakk Hasskamp Kinkel McElroy Pawlenty Sykora
Biernat Hausman Knoblach McGuire Pelowski Tomassoni
Bishop Hilty Koskinen Milbert Peterson Trimble
Carlson Huntley Kraus Mullery Pugh Vandeveer
Chaudhary Jaros Kubly Munger Rest Wagenius
Dawkins Jefferson Kuisle Murphy Rukavina Wejcman
Erhardt Jennings Leighton Olson, E. Schumacher Wenzel
Evans Johnson, R. Leppik Opatz Sekhon Winter
Farrell Juhnke Lieder Orfield Skare Wolf
Folliard Kahn Mahon Osthoff Skoglund Spk. Carruthers

The motion did not prevail and the amendment was not adopted.

Tuma, Kuisle and Sviggum moved to amend S. F. No. 2082, as amended, as follows:

Page 586, after line 33, insert:

"Sec. 4. [COORDINATED FACILITIES PLANS.]

For grants for coordinated facilities plans:

$1,000,000 . . . . . 1999

Of this amount, $200,000 is for the independent school district for each of the following communities: Dassel-Cokato, Kenyon-Wanamingo, LeCenter, Northfield, and Owatonna. The grants shall be used to examine and coordinate the districts' building needs. Each district must evaluate how the current use of its facilities is affecting its educational services and examine cost efficiencies that may result from a coordinated facilities plan. The grants may be used for operating purposes, transportation purposes, or facilities purposes that lead to greater program efficiencies."

Renumber the sections in sequence and correct internal references

The question was taken on the Tuma et al amendment and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 64 yeas and 68 nays as follows:

Abrams Dehler Knight Molnau Rifenberg Tompkins
Anderson, B. Dempsey Knoblach Mulder Rostberg Tuma
Bettermann Erhardt Kraus Ness Seagren Van Dellen
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9837
Bishop Erickson Krinkie Nornes Seifert Vandeveer
Boudreau Finseth Kuisle Olson, M. Smith Weaver
Bradley Goodno Larsen Osskopp Stanek Westfall
Broecker Gunther Leppik Ozment Stang Westrom
Clark, J. Haas Lindner Paulsen Sviggum Wolf
Commers Harder Macklin Pawlenty Swenson, H. Workman
Daggett Holsten Mares Reuter Sykora
Davids Kielkucki McElroy Rhodes Tingelstad

Bakk Garcia Juhnke Marko Paymar Tomassoni
Biernat Greenfield Kahn McCollum Pelowski Trimble
Carlson Greiling Kalis McGuire Peterson Tunheim
Chaudhary Hasskamp Kelso Milbert Pugh Wagenius
Clark, K. Hausman Kinkel Mullery Rest Wejcman
Dawkins Hilty Koskinen Munger Rukavina Wenzel
Delmont Huntley Kubly Murphy Schumacher Winter
Dorn Jaros Leighton Olson, E. Sekhon Spk. Carruthers
Entenza Jefferson Lieder Opatz Skare
Evans Jennings Long Orfield Skoglund
Farrell Johnson, A. Mahon Osthoff Slawik
Folliard Johnson, R. Mariani Otremba, M. Solberg

The motion did not prevail and the amendment was not adopted.

Kelso, Long and Abrams moved to amend S. F. No. 2082, as amended, as follows:

Page 586, after line 35, insert:

"ARTICLE 12

Section 1. Minnesota Statutes 1996, section 124.2727, subdivision 6a, as added by 1998 H. F. No. 2874, article 1, section 19, if enacted, is amended to read:

Subd. 6a. [FISCAL YEAR 1999 AND FISCAL YEAR 2000 DISTRICT COOPERATION REVENUE.] A district's cooperation revenue for fiscal year 1999 and fiscal year 2000 is equal to the greater of $67 times the actual pupil units or $25,000.

Sec. 2. Minnesota Statutes 1996, section 124.2727, subdivision 6c, as added by 1998 H. F. No. 2874, article 1, section 20, if enacted, is amended to read:

Subd. 6c. [FISCAL YEAR 1999 AND FISCAL YEAR 2000 DISTRICT COOPERATION AID.] A district's cooperation aid for fiscal year 1999 and fiscal year 2000 is the difference between its district cooperation revenue and its district cooperation levy. If a district does not levy the entire amount permitted, aid must be reduced in proportion to the actual amount levied.

Sec. 3. Minnesota Statutes 1997 Supplement, section 124A.22, subdivision 2, as added by 1998 H. F. No. 2874, article 1, section 27, if enacted, is amended to read:

Subd. 2. [BASIC REVENUE.] The basic revenue for each district equals the formula allowance times the actual pupil units for the school year. The formula allowance for fiscal year 1997 is $3,505. The formula allowance for fiscal year 1998 is $3,581 and the formula allowance for fiscal year 1999 and fiscal year 2000 is $3,530. The formula allowance for fiscal year ~~2000~~ 2001 and subsequent fiscal years is $3,597.

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Sec. 4. Minnesota Statutes 1997 Supplement, section 124A.22, subdivision 13b, as added by H. F. No. 2874, article 1, section 30, if enacted, is amended to read:

Subd. 13b. [TRANSITION ALLOWANCE.] (a) A district's transportation transition allowance for fiscal year 1998 and later equals the result of the following:

(b) A district's compensatory transition allowance equals the greater of zero or the difference between:

(1) the amount of compensatory revenue the district would have received under subdivision 3 for fiscal year 1998 computed using a basic formula allowance of $3,281; and

(2) the amount the district receives under subdivision 3; divided by

(3) the district's actual pupil units for fiscal year 1998.

(c) A district's cooperation transition allowance for fiscal year ~~2000~~ 2001 and later equals the greater of zero or the difference between:

(1) $25,000; and

(2) $67 times the district's actual pupil units for fiscal year ~~2000~~ 2001.

(d) A district's transition allowance for fiscal year 1999 is equal to the sum of its transportation transition allowance and its compensatory transition allowance. A district's transition allowance for fiscal year 2000 and thereafter is equal to the sum of its transportation transition allowance, its compensatory transition allowance, and its cooperation transition allowance.

Sec. 5. Minnesota Statutes 1996, section 124A.22, subdivision 14, as added by H. F. No. 2874, article 1, section 31, if enacted, is amended to read:

(b) For fiscal year 1999, revenue must be reserved for programs according to clauses (1) to (3).

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9839

(3) Remaining aid under this paragraph must be used:

(ii) to reduce class size.

(e) A district that qualifies for the referendum allowance reduction under section 124A.03, subdivision 3c, and whose authority does not exceed the referendum allowance limit under section 124A.03, subdivision 1c, clause (2), shall receive a graduation standards implementation equity adjustment. In fiscal year 1999, the equity adjustment aid is equal to $29 34 per actual pupil unit. In fiscal year ~~2001~~ 2000 and thereafter, the equity adjustment is equal to $20 25 per actual pupil unit.

Sec. 6. Minnesota Statutes 1997 Supplement, section 124A.23, subdivision 1, as added by H. F. No. 2874, article 1, section 33, if enacted, is amended to read:

Subdivision 1. [GENERAL EDUCATION TAX RATE.] The commissioner shall establish the general education tax rate by July 1 of each year for levies payable in the following year. The general education tax capacity rate shall be a rate, rounded up to the nearest hundredth of a percent, that, when applied to the adjusted net tax capacity for all districts, raises the amount specified in this subdivision. The general education tax rate shall be the rate that raises $1,385,500,000 for fiscal year 1999, $1,325,500,000 for fiscal year 2000, and $1,387,100,000 for fiscal year 2001, and later fiscal years. The general education tax rate may not be changed due to changes or corrections made to a district's adjusted net tax capacity after the tax rate has been established. If the levy target for fiscal year 1999 or fiscal year 2000 is changed by another law enacted during the 1997 or 1998 session, the commissioner shall reduce the general education levy target in this section by the amount of the reduction in the enacted law.

Sec. 7. 1998 H. F. No. 2874, article 1, section 51, if enacted, is amended to read:

Sec. 51. [REPEALER.]

(a) Minnesota Statutes 1997 Supplement, section 124.912, subdivisions 2 and 3, are repealed effective for taxes payable in 1998.

(b) Minnesota Statutes 1996, sections 121.904, subdivision 4c; and 124.2601, subdivision 4, are repealed.

(d) Minnesota Statutes 1996, section 124.2713, subdivision 6b, is repealed effective for taxes payable in 1999 and revenue for fiscal year 2000.

(e) ~~Minnesota Statutes 1996, section 124.2727, subdivision 6b, is repealed effective for taxes payable in 1999.~~

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9840

~~(f)~~ Minnesota Statutes 1996, section 124A.292, subdivisions 2 and 4, are repealed effective for revenue for fiscal year 2000.

~~(g)~~ (f) Laws 1997, chapter 231, article 1, section 17, is repealed effective the day following final enactment.

Sec. 8. [FORMULA ALLOWANCE.]

For fiscal year 2000 the basic formula allowance under Minnesota Statutes, section 124A.22, subdivision 2, is increased by $67 per actual pupil unit for purposes of calculating compensatory revenue and sparsity revenue under Minnesota Statutes, section 124A.22."

Renumber the sections in sequence and correct internal references

The motion prevailed and the amendment was adopted.

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124.26, subdivision 1c; 124.2601, subdivision 7; 124.2605; 124.2615, subdivision 4; 124.2711, as amended; 124.2713, subdivision 7; 124.2715, subdivision 3; 124.2716, subdivisions 1 and 2; 124.2725, subdivision 15; 124.2726, subdivisions 1, 2, and 4; 124.2727, subdivision 9; 124.273, subdivisions 3, 4, 6, and 7; 124.276, subdivisions 1 and 3; 124.278, subdivision 3; 124.311, subdivision 1; 124.32; 124.3201, subdivisions 5, 6, and 7; 124.322, subdivision 1; 124.35; 124.37; 124.38, subdivisions 1, 4a, and 7; 124.381; 124.39; 124.40; 124.41, subdivision 3; 124.42, as amended; 124.431, subdivisions 4, 5, 6, 10, 12, 13, and 14; 124.44; 124.46, as amended; 124.48, as amended; 124.492; 124.493, subdivision 1; 124.494, subdivisions 1, 2, 2a, 3, 5, and 7; 124.4945; 124.511; 124.573, subdivisions 2, 2b, 2e, 2f, 3, 3a, and 5a; 124.625; 124.63; 124.646; 124.6462; 124.6469, subdivision 3; 124.647; 124.6471; 124.6472; 124.648, as amended; 124.71, subdivision 1; 124.72; 124.73; 124.74; 124.75; 124.755, subdivisions 2, 3, 4, 5, 6, 7, 8, and 9; 124.82, subdivisions 1 and 3; 124.83, subdivision 8; 124.84, subdivisions 1 and 2; 124.85, subdivisions 2, 2a, 2b, 2c, 5, 6, and 7; 124.86, subdivisions 1, 3, and 4; 124.90; 124.91, subdivisions 4 and 6; 124.912, subdivisions 7 and 9; 124.914; 124.916, as amended; 124.918, subdivisions 2, 3, and 7; 124.95, subdivision 1; 124.97; 124A.02, subdivisions 1, 3a, 20, 21, 22, 23, and 24; 124A.029, subdivisions 1, 3, and 4; 124A.03, subdivisions 2, 2a, and 3c; 124A.0311, subdivisions 2, 3, and 4; 124A.032; 124A.034; 124A.035; 124A.036, as amended; 124A.04, as amended; 124A.22, subdivisions 2a, 5, 8, and 12; 124A.225, subdivisions 4 and 5; 124A.29; 124A.30; 124C.07; 124C.08, subdivisions 2 and 3; 124C.09; 124C.12, subdivision 2; 124C.41, subdivision 4; 124C.45, subdivision 1; 124C.49; 124C.498, as amended; 124C.60, subdivision 2; 124C.72, subdivision 2; 124C.73, subdivision 3; 125.03, subdivisions 1 and 6; 125.04; 125.05, subdivisions 1, 1a, 6, and 8; 125.06; 125.09; 125.11; 125.12, subdivisions 1a, 2, 2a, 3, 3b, 4, 6, 6a, 6b, 7, 8, 9, 9a, 10, 11, and 13; 125.121, subdivisions 1 and 2; 125.135; 125.138, subdivisions 1, 3, 4, and 5; 125.16; 125.17, subdivisions 2, 2b, 3, 3b, 4, 5, 6, 7, 8, 9, 10, 10a, 11, and 12; 125.18; 125.181; 125.183, subdivisions 1, 4, and 5; 125.184; 125.185, subdivisions 1, 2, 4, 5, and 7; 125.187; 125.188, subdivisions 1, 3, and 5; 125.1885, subdivision 5; 125.189; 125.1895, subdivision 4; 125.211, subdivision 2; 125.230, subdivisions 4, 6, and 7; 125.231, subdivision 3; 125.53; 125.54; 125.60, subdivisions 2, 3, 4, 6a, and 8; 125.611, subdivisions 1 and 13; 125.62, subdivisions 2, 3, and 7; 125.623, subdivision 3; 125.702; 125.703; 125.704, subdivision 1; 125.705, subdivisions 1, 3, 4, and 5; 125.80; 126.05; 126.12; 126.13; 126.14; 126.15, subdivisions 2 and 3; 126.1995; 126.21, subdivisions 3 and 5; 126.22, subdivisions 5 and 6; 126.235; 126.239, subdivision 1; 126.262, subdivisions 3 and 6; 126.264; 126.265; 126.266, subdivision 1; 126.267; 126.36, subdivisions 1, 5, and 7; 126.43, subdivisions 1 and 2; 126.48, subdivisions 1, 2, 3, 4, and 5; 126.49, subdivisions 1, 5, 6, and 8; 126.50; 126.501; 126.51, subdivisions 1a and 2; 126.52, subdivisions 5 and 8; 126.531, subdivision 1; 126.54, subdivisions 1, 2, 3, 4, 5, and 6; 126.56, subdivision 6; 126.69, subdivision 1; 126.70, subdivisions 1 and 2a; 126.72, subdivisions 3 and 6; 126.78, subdivision 4; 126.84, subdivisions 1, 3, 4, and 5; 126A.01; 126B.01, subdivisions 2 and 4; 126B.10; 127.02; 127.03; 127.04; 127.17, subdivisions 1, 3, and 4; 127.19; 127.20; 127.40, subdivision 4; 127.41; 127.411; 127.412; 127.413; 127.42; 127.44; 127.45, subdivision 2; 127.455; 127.46; 127.47, subdivision 2; 127.48; 129C.10, subdivisions 3a, 3b, 4, and 6; and 129C.15; Minnesota Statutes 1997 Supplement, sections 120.05; 120.062, subdivisions 3, 6, and 7; 120.064, subdivisions 8, 10, 14a, and 20a; 120.101, subdivisions 5 and 5c; 120.1015; 120.1701, subdivision 3; 120.181; 121.1113, subdivision 1; 121.615, subdivisions 2, 3, 9, and 10; 121.831, subdivision 3; 121.88, subdivision 10; 121.882, subdivision 2; 121.904, subdivision 4a; 121.912, subdivision 1; 123.35, subdivision 8; 123.3514, subdivisions 4, 4a, 4e, 6c, and 8; 123.7991, subdivision 2; 124.155, subdivisions 1 and 2; 124.17, subdivisions 1 and 4; 124.195, subdivisions 2, 7, and 10; 124.2445; 124.2455; 124.248, subdivisions 3 and 4; 124.26, subdivision 2; 124.2601, subdivision 6; 124.2615, subdivision 2; 124.2713, subdivision 8; 124.321, subdivisions 1 and 2; 124.322, subdivision 1a; 124.323, subdivision 1; 124.41, subdivision 2; 124.431, subdivisions 2 and 11; 124.45, subdivision 2; 124.481; 124.574, subdivision 9; 124.83, subdivision 1; 124.86, subdivision 2; 124.91, subdivision 5; 124.912, subdivisions 1 and 6; 124.918, subdivisions 1, 6, and 8; 124A.22, subdivisions 6, 11, and 13; 124A.23, subdivisions 1, 2, and 3; 124A.28, subdivision 3; 124C.45, subdivision 1a; 125.05, subdivision 1c; 125.12, subdivision 14; 126.22, subdivisions 2, 3a, and 8; 126.23, subdivision 1; 126.51, subdivision 1; 126.531, subdivision 3; 126.72, subdivision 2; 126.77, subdivision 1; and 129C.10, subdivision 3; proposing coding for new law as Minnesota Statutes, chapters 120B; and 120C; repealing Minnesota Statutes 1996, sections 16B.43; 120.71; 120.72; 120.90; 122.52; 122.532, subdivision 1; 122.541, subdivision 3; 123.35, subdivision 10; 123.42; 124.01; 124.19, subdivision 4; 124.2725, subdivisions 1, 2, 3, 4, 5, 6, 7, 9, 10, 12, 13, 14, and 16; 124.312, as amended; 124.38, subdivision 9; 124.472; 124.473; 124.474; 124.476; 124.477; 124.478; 124.479; 124.71, subdivision 2; 124A.02, subdivisions 15 and 16; 124A.029, subdivision 2; 124A.03, subdivision 3b; 124A.22, subdivision 13f; 124A.225, subdivision 6; 124A.31; 124C.55; 124C.56; 124C.57; 124C.58; 125.10; 126.84, subdivision 6; 127.01; 127.08; 127.09; 127.10; 127.11; 127.12; 127.13; 127.15; 127.16; 127.17, subdivision 2; 127.21; and 127.23; Minnesota Statutes 1997 Supplement, sections 124.2725, subdivision 11; 124.313; 124.314; and 124A.26.

The bill was read for the third time, as amended, and placed upon its final passage.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9842

The question was taken on the passage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 122 yeas and 10 nays as follows:

Abrams Dorn Jennings Mahon Pawlenty Swenson, H.
Anderson, B. Entenza Johnson, A. Mares Paymar Sykora
Anderson, I. Erhardt Johnson, R. Mariani Pelowski Tingelstad
Bakk Evans Juhnke Marko Peterson Tomassoni
Bettermann Farrell Kahn McCollum Pugh Trimble
Biernat Finseth Kalis McElroy Rest Tunheim
Bishop Folliard Kelso McGuire Rhodes Van Dellen
Boudreau Garcia Kinkel Milbert Rifenberg Vandeveer
Bradley Goodno Knight Molnau Rostberg Wagenius
Broecker Greenfield Knoblach Mullery Rukavina Weaver
Carlson Greiling Koskinen Munger Schumacher Wenzel
Chaudhary Gunther Kraus Murphy Seagren Westfall
Clark, J. Haas Krinkie Nornes Sekhon Westrom
Clark, K. Harder Kubly Olson, E. Skare Winter
Commers Hasskamp Kuisle Opatz Skoglund Wolf
Daggett Hausman Larsen Orfield Slawik Workman
Davids Hilty Leighton Osskopp Smith Spk. Carruthers
Dawkins Holsten Leppik Osthoff Solberg
Dehler Huntley Lieder Otremba, M. Stanek
Delmont Jaros Long Ozment Stang
Dempsey Jefferson Macklin Paulsen Sviggum

Erickson Lindner Ness Reuter Tompkins
Kielkucki Mulder Olson, M. Seifert Tuma

The bill was passed, as amended, and its title agreed to.

MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9843

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said House File is herewith returned to the House.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9844

member and employer contribution rates; authorizing the transfer of certain prior retirement contributions from the legislators retirement plan and from the elective state officers retirement plan; creating a contribution transfer account in the general fund of the state; appropriating money; reformulating the Columbia Heights volunteer firefighters relief association plan as a defined contribution plan under the general volunteer fire law; restructuring the Columbia Heights volunteer firefighter relief association board; modifying various higher education retirement plan provisions; modifying administrative expense provisions for various public pension plans; expanding the teacher retirement plans part-time teaching positions eligible to participate in the qualified full-time service credit for part-time teaching service program; making certain Minneapolis fire department relief association survivor benefit options retroactive; providing increased disability benefit coverage for certain local government correctional facility employees; increasing local government correctional employee and employer contribution rates; providing increased survivor benefits to certain Minneapolis employee retirement fund survivors; authorizing certain Hennepin county regional park employees to change retirement plan membership; modifying benefit increase provision for Eveleth police and firefighters; modifying the length of the actuarial services contract of the legislative commission on pensions and retirement; modifying the scope of quadrennial projection valuations; amending Minnesota Statutes 1996, sections 3A.13; 136F.45, by adding a subdivision; 136F.48; 352.96, subdivision 4; 352D.09, subdivision 7; 352D.12; 353D.05, subdivision 3; 354.445; 354.66, subdivisions 2 and 3; 354A.094, subdivisions 2 and 3; 354B.23, by adding a subdivision; 354C.12, by adding a subdivision; 383B.52; 422A.23, subdivision 2; and 490.123, subdivisions 1a and 1b; Minnesota Statutes 1997 Supplement, sections 3.85, subdivision 11; 15A.083, subdivisions 5, 6a, and 7; 354B.25, subdivisions 1a and 5; 354C.12, subdivision 4; and 356.215, subdivision 2; Laws 1995, chapter 262, article 10, section 1; and Laws 1997, Second Special Session chapter 3, section 16; proposing new law for coding in Minnesota Statutes, chapter 356; repealing Minnesota Statutes 1996, sections 11A.17, subdivisions 10a and 14; and 352D.09, subdivision 8; Minnesota Statutes 1997 Supplement, section 136F.45, subdivision 3.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said House File is herewith returned to the House.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said House File is herewith returned to the House.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 2050.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9845

CONFERENCE COMMITTEE REPORT ON S. F. NO. 2050

A bill for an act relating to health; modifying provisions governing advance health care directives; combining laws governing living wills and durable power of attorney for health care; amending Minnesota Statutes 1996, sections 144.335, subdivision 1; 145C.01, subdivisions 2, 3, 4, 8, and by adding subdivisions; 145C.02; 145C.03; 145C.04; 145C.05, subdivisions 1 and 2; 145C.06; 145C.07; 145C.08; 145C.09; 145C.10; 145C.11; 145C.12; 145C.13, subdivision 1; 145C.15; 525.55, subdivisions 1 and 2; 525.551, subdivisions 1 and 5; 525.9212; and 609.215, subdivision 3; Minnesota Statutes 1997 Supplement, sections 149A.80, subdivision 2; 253B.04, subdivision 1a; 253B.07, subdivision 1; and 253B.092, subdivisions 2 and 6; proposing coding for new law in Minnesota Statutes, chapters 145B; and 145C.

We, the undersigned conferees for S. F. No. 2050, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and S. F. No. 2050 be further amended as follows:

Page 4, line 29, delete "readily" and delete "without undue effort"

Page 7, line 12, before "A" insert "(a)"

Page 7, delete lines 22 to 24 and insert:

"(b) Nothing in this section shall be interpreted to authorize a directive or similar document to override the provisions of section 609.215 prohibiting assisted suicide."

Page 14, line 28, after "and" insert ", except as otherwise provided by section 145C.15,"

Page 15, line 1, delete "who has a health care directive"

Page 15, line 2, delete "in the third trimester"

Page 15, line 6, delete "it is presumed that" and insert "the health care provider shall presume that the patient would have wanted" and delete "should" and insert "to"

Page 16, line 1, delete everything before the comma

Page 16, line 4, before the period, insert "and in accordance with applicable standards of care"

We request adoption of this report and repassage of the bill.

Senate Conferees: Ember R. Junge, Sheila M. Kiscaden and Steve Kelley.

House Conferees: Dave Bishop, Wesley J. "Wes" Skoglund and Thomas Pugh.

Bishop moved that the report of the Conference Committee on S. F. No. 2050 be adopted and that the bill be repassed as amended by the Conference Committee.

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Osskopp moved that the House refuse to adopt the Conference Committee report on S. F. No. 2050, and that the bill be returned to the Conference Committee.

The question was taken on the Osskopp motion and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 65 yeas and 66 nays as follows:

Anderson, B. Dempsey Kraus Ness Rostberg Tuma
Anderson, I. Erickson Krinkie Nornes Seagren Van Dellen
Bettermann Finseth Kubly Olson, M. Seifert Vandeveer
Boudreau Goodno Kuisle Osskopp Smith Weaver
Bradley Gunther Larsen Otremba, M. Stanek Wenzel
Broecker Haas Lindner Ozment Stang Westfall
Clark, J. Harder Macklin Paulsen Sviggum Westrom
Commers Hasskamp Mares Pawlenty Swenson, H. Winter
Daggett Kielkucki McElroy Peterson Sykora Wolf
Davids Knight Molnau Reuter Tingelstad Workman
Dehler Knoblach Mulder Rifenberg Tompkins

Abrams Erhardt Jaros Leppik Olson, E. Sekhon
Bakk Evans Jefferson Lieder Opatz Skare
Biernat Farrell Jennings Long Orfield Skoglund
Bishop Folliard Johnson, A. Mahon Osthoff Slawik
Carlson Garcia Johnson, R. Mariani Paymar Solberg
Chaudhary Greenfield Juhnke Marko Pelowski Tomassoni
Clark, K. Greiling Kahn McCollum Pugh Trimble
Dawkins Hausman Kelso McGuire Rest Tunheim
Delmont Hilty Kinkel Milbert Rhodes Wagenius
Dorn Holsten Koskinen Mullery Rukavina Wejcman
Entenza Huntley Leighton Munger Schumacher Spk. Carruthers

The question recurred on the Bishop motion that the report of the Conference Committee on S. F. No. 2050 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 2050, A bill for an act relating to health; modifying provisions governing advance health care directives; combining laws governing living wills and durable power of attorney for health care; amending Minnesota Statutes 1996, sections 144.335, subdivision 1; 145C.01, subdivisions 2, 3, 4, 8, and by adding subdivisions; 145C.02; 145C.03; 145C.04; 145C.05, subdivisions 1 and 2; 145C.06; 145C.07; 145C.08; 145C.09; 145C.10; 145C.11; 145C.12; 145C.13, subdivision 1; 145C.15; 525.55, subdivisions 1 and 2; 525.551, subdivisions 1 and 5; 525.9212; and 609.215, subdivision 3; Minnesota Statutes 1997 Supplement, sections 149A.80, subdivision 2; 253B.04, subdivision 1a; 253B.07, subdivision 1; and 253B.092, subdivisions 2 and 6; proposing coding for new law in Minnesota Statutes, chapters 145B; and 145C.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9847

The question was taken on the repassage of the bill and the roll was called. There were 75 yeas and 58 nays as follows:

Abrams Evans Jennings Mariani Paymar Tomassoni
Bakk Farrell Johnson, A. Marko Pelowski Trimble
Biernat Folliard Johnson, R. McCollum Pugh Tunheim
Bishop Garcia Juhnke McElroy Rest Van Dellen
Bradley Greenfield Kahn McGuire Rhodes Wagenius
Carlson Greiling Kelso Milbert Rukavina Weaver
Chaudhary Gunther Kinkel Molnau Schumacher Wejcman
Clark, K. Hausman Koskinen Mullery Sekhon Winter
Dawkins Hilty Leighton Munger Skare Wolf
Delmont Holsten Leppik Olson, E. Skoglund Spk. Carruthers
Dorn Huntley Lieder Opatz Slawik
Entenza Jaros Long Orfield Solberg
Erhardt Jefferson Mahon Osthoff Sykora

Anderson, B. Dempsey Knoblach Murphy Reuter Tingelstad
Anderson, I. Erickson Kraus Ness Rifenberg Tompkins
Bettermann Finseth Krinkie Nornes Rostberg Tuma
Boudreau Goodno Kubly Olson, M. Seagren Vandeveer
Broecker Haas Kuisle Osskopp Seifert Wenzel
Clark, J. Harder Larsen Otremba, M. Smith Westfall
Commers Hasskamp Lindner Ozment Stanek Westrom
Daggett Kalis Macklin Paulsen Stang Workman
Davids Kielkucki Mares Pawlenty Sviggum
Dehler Knight Mulder Peterson Swenson, H.

The bill was repassed, as amended by Conference, and its title agreed to.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 1169.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

CONFERENCE COMMITTEE REPORT ON S. F. NO. 1169

A bill for an act relating to personal watercraft; increasing restrictions on personal watercraft; imposing additional requirements on renters and dealers of personal watercraft; exempting emergency, safety, and enforcement watercraft from certain watercraft restrictions; amending Minnesota Statutes 1996, sections 86B.313, subdivisions 1, 3, and 4; and 86B.805, by adding a subdivision.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9848

We, the undersigned conferees for S. F. No. 1169, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and that S. F. No. 1169 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 86B.101, subdivision 2, is amended to read:

Subd. 2. [YOUTH WATERCRAFT SAFETY COURSE.] (a) The commissioner shall establish an educational course and a testing program for personal watercraft and watercraft operators and for persons age 12 or older but younger than age 18 required to take the watercraft safety course. The commissioner shall prescribe a written test as part of the course. A personal watercraft educational course and testing program that emphasizes safe and legal operation must be required for persons age 13 or older but younger than age 18 operating personal watercraft.

(b) The commissioner shall issue a watercraft operator's permit to a person age 12 or older but younger than age 18 who successfully completes the educational program and the written test.

Sec. 2. Minnesota Statutes 1996, section 86B.313, subdivision 1, is amended to read:

Subdivision 1. [GENERAL REQUIREMENTS.] (a) In addition to requirements of other laws relating to watercraft, ~~it is unlawful to~~ a person may not operate or to permit the operation of a personal watercraft:

(1) without each person on board the personal watercraft wearing a United States Coast Guard approved Type I, II, III, or V personal flotation device;

(2) between one hour before sunset and ~~8:00~~ 9:30 a.m.;

(3) at greater than slow-no wake speed within ~~100~~ 150 feet of:

(i) a shoreline,;

(ii) a dock,;

(iii) a swimmer~~, or~~;

(iv) a raft used for swimming or diving ~~raft~~; or

(v) a moored, anchored, or nonmotorized watercraft ~~at greater than slow-no wake speed~~;

(4) while towing a person on water skis, a kneeboard, an inflatable craft, or any other device unless:

(i) an observer is on board; or

(ii) the personal watercraft is equipped with factory-installed or factory-specified accessory mirrors that give the operator a wide field of vision to the rear;

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9849

(5) without the lanyard-type engine cutoff switch being attached to the person, clothing, or personal flotation device of the operator, if the personal watercraft is equipped by the manufacturer with such a device;

(6) if any part of the spring-loaded throttle mechanism has been removed, altered, or tampered with so as to interfere with the return-to-idle system;

(7) to chase or harass wildlife;

(8) through emergent or floating vegetation at other than a slow-no wake speed;

(9) in a manner that unreasonably or unnecessarily endangers life, limb, or property, including weaving through congested watercraft traffic, jumping the wake of another watercraft within ~~100~~ 150 feet of the other watercraft, or operating the watercraft while facing backwards; or

(10) in any other manner that is not reasonable and prudent; or

(11) without a personal watercraft rules decal, issued by the commissioner, attached to the personal watercraft so as to be in full view of the operator.

(b) Paragraph (a), clause (3), does not apply to a person operating a personal watercraft to launch or land a person on water skis, a kneeboard, or similar device by the most direct route to open water.

Sec. 3. Minnesota Statutes 1996, section 86B.313, subdivision 3, is amended to read:

Subd. 3. [OPERATOR'S PERMIT.] Except in the case of an emergency, a person 13 years of age or over but less than 18 years of age may not operate a personal watercraft, regardless of horsepower, without possessing a valid watercraft operator's permit as required by section 86B.305, unless there is a person 18 21 years of age or older on board the craft. In addition to the permit requirement, a person 13 years of age operating a personal watercraft must ~~maintain unaided observation~~ remain under visual supervision by a person 18 who is 21 years of age or older. ~~It is unlawful for the~~ An owner of a personal watercraft to may not permit the personal watercraft to be operated contrary to this subdivision.

Sec. 4. Minnesota Statutes 1996, section 86B.313, subdivision 4, is amended to read:

Subd. 4. [DEALERS AND RENTAL OPERATIONS.] (a) A dealer of personal watercraft shall distribute a summary of the laws and rules governing the operation of personal watercraft and, upon request, shall provide instruction to a purchaser regarding:

(1) the laws and rules governing personal watercraft; and

(2) the safe operation of personal watercraft.

(b) A person who offers personal watercraft for rent:

(1) shall provide a summary of the laws and rules governing the operation of personal watercraft and provide instruction regarding the laws and rules and the safe operation of personal watercraft to each person renting a personal watercraft; ~~and~~

(2) shall provide a United States Coast Guard approved Type I, II, III, or V personal flotation device and any other required safety equipment to all persons who rent a personal watercraft at no additional cost; and

(3) shall require that a watercraft operator's permit from this state or from the operator's state of residence be shown each time a personal watercraft is rented to any person younger than age 18 and shall record the permit on the form provided by the commissioner.

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(c) Each dealer of personal watercraft or person offering personal watercraft for rent shall have the person who purchases or rents a personal watercraft sign a form provided by the commissioner acknowledging that the purchaser or renter has been provided a copy of the laws and rules regarding personal watercraft operation and has read them. The form must be retained by the dealer or person offering personal watercraft for rent for a period of six months following the date of signature and must be made available for inspection by sheriff's deputies or conservation officers during normal business hours.

Sec. 5. Minnesota Statutes 1996, section 86B.805, is amended by adding a subdivision to read:

Subd. 3. [EXEMPTIONS FOR ENFORCEMENT WATERCRAFT.] The restrictions on hours and location of operation in this chapter do not apply to emergency, safety, and enforcement watercraft.

Sec. 6. [EFFECTIVE DATE.]

Section 1 is effective the day following final enactment. Sections 2 to 5 are effective on June 1, 1998."

"A bill for an act relating to personal watercraft; modifying provisions for the operation of personal watercraft; amending Minnesota Statutes 1996, sections 86B.101, subdivision 2; 86B.313, subdivisions 1, 3, and 4; and 86B.805, by adding a subdivision."

We request adoption of this report and repassage of the bill.

Senate Conferees: LeRoy A. Stumpf, Janet B. Johnson, Cal Larson, Dallas C. Sams and Dean E. Johnson.

House Conferees: Kris Hasskamp, Tom Osthoff, Betty McCollum, Peggy Leppik and John Tuma.

Hasskamp moved that the report of the Conference Committee on S. F. No. 1169 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 1169, A bill for an act relating to personal watercraft; increasing restrictions on personal watercraft; imposing additional requirements on renters and dealers of personal watercraft; exempting emergency, safety, and enforcement watercraft from certain watercraft restrictions; amending Minnesota Statutes 1996, sections 86B.313, subdivisions 1, 3, and 4; and 86B.805, by adding a subdivision.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 102 yeas and 28 nays as follows:

Abrams Erhardt Jennings McCollum Pawlenty Stang
Anderson, B. Evans Johnson, A. McElroy Paymar Sykora
Anderson, I. Farrell Johnson, R. McGuire Pelowski Tingelstad
Bakk Finseth Juhnke Milbert Peterson Tomassoni
Bettermann Folliard Kahn Molnau Pugh Tompkins
Biernat Garcia Kalis Mullery Rest Trimble
Bishop Greenfield Kelso Munger Rhodes Tuma
Broecker Greiling Kinkel Murphy Rukavina Tunheim
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9851
Carlson Gunther Koskinen Ness Schumacher Van Dellen
Chaudhary Haas Kubly Nornes Seagren Wagenius
Clark, K. Hasskamp Larsen Olson, E. Seifert Weaver
Daggett Hausman Leppik Opatz Sekhon Wejcman
Dawkins Hilty Lieder Orfield Skare Wenzel
Delmont Holsten Long Osthoff Skoglund Winter
Dempsey Huntley Macklin Otremba, M. Slawik Wolf
Dorn Jaros Mares Ozment Solberg Workman
Entenza Jefferson Marko Paulsen Stanek Spk. Carruthers

Boudreau Dehler Knight Lindner Rifenberg Vandeveer
Bradley Erickson Knoblach Mulder Rostberg Westfall
Clark, J. Goodno Kraus Olson, M. Smith Westrom
Commers Harder Krinkie Osskopp Sviggum
Davids Kielkucki Kuisle Reuter Swenson, H.

The bill was repassed, as amended by Conference, and its title agreed to.

MOTION TO TAKE FROM TABLE

Kelso moved that the Conference Committee Report on H. F. No. 2874 be taken from the table. The motion prevailed and the Conference Committee Report on H. F. No. 2874 was taken from the table.

H. F. No. 2874, as amended by Conference, was again reported to the House.

The question recurred on the Sviggum motion that the House refuse to adopt the Conference Committee report on H. F. No. 2874, that the present House conference Committee be discharged, that the Speaker appoint a new Conference Committee on the part of the House, and that the bill be returned to the Conference Committee.

The question was taken on the Sviggum motion and the roll was called. There were 54 yeas and 79 nays as follows:

Abrams Erhardt Knight Molnau Reuter Tingelstad
Anderson, B. Erickson Knoblach Mulder Rostberg Tompkins
Bettermann Finseth Krinkie Ness Seifert Tuma
Boudreau Goodno Kuisle Nornes Smith Van Dellen
Broecker Gunther Larsen Olson, M. Stanek Vandeveer
Clark, J. Haas Lindner Osskopp Stang Weaver
Commers Harder Mares Ozment Sviggum Westfall
Daggett Holsten McElroy Paulsen Swenson, H. Westrom
Dehler Kielkucki Milbert Pawlenty Sykora Workman

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9852

Anderson, I. Evans Johnson, R. Mahon Pelowski Tomassoni
Bakk Farrell Juhnke Mariani Peterson Trimble
Biernat Folliard Kahn Marko Pugh Tunheim
Bishop Garcia Kalis McCollum Rest Wagenius
Bradley Greenfield Kelso McGuire Rhodes Wejcman
Carlson Greiling Kinkel Mullery Rifenberg Wenzel
Chaudhary Hasskamp Koskinen Munger Rukavina Winter
Clark, K. Hausman Kraus Murphy Schumacher Wolf
Davids Hilty Kubly Olson, E. Seagren Spk. Carruthers
Dawkins Huntley Leighton Opatz Sekhon
Delmont Jaros Leppik Orfield Skare
Dempsey Jefferson Lieder Osthoff Skoglund
Dorn Jennings Long Otremba, M. Slawik
Entenza Johnson, A. Macklin Paymar Solberg

The question recurred on the Kelso motion that the report of the Conference Committee on H. F. No. 2874 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9853

The question was taken on the repassage of the bill and the roll was called. There were 105 yeas and 28 nays as follows:

Anderson, I. Evans Johnson, A. Mares Pawlenty Stang
Bakk Farrell Johnson, R. Mariani Paymar Tingelstad
Biernat Finseth Juhnke Marko Pelowski Tomassoni
Bishop Folliard Kahn McCollum Peterson Trimble
Broecker Garcia Kalis McGuire Pugh Tunheim
Carlson Goodno Kelso Milbert Rest Vandeveer
Chaudhary Greenfield Kinkel Mullery Rhodes Wagenius
Clark, J. Greiling Knoblach Munger Rifenberg Weaver
Clark, K. Haas Koskinen Murphy Rukavina Wejcman
Daggett Harder Kraus Nornes Schumacher Wenzel
Davids Hasskamp Kubly Olson, E. Seifert Westfall
Dawkins Hausman Larsen Opatz Sekhon Westrom
Dehler Hilty Leighton Orfield Skare Winter
Delmont Holsten Leppik Osskopp Skoglund Wolf
Dempsey Huntley Lieder Osthoff Slawik Spk. Carruthers
Dorn Jaros Long Otremba, M. Smith
Entenza Jefferson Macklin Ozment Solberg
Erhardt Jennings Mahon Paulsen Stanek

Abrams Commers Krinkie Mulder Seagren Tuma
Anderson, B. Erickson Kuisle Ness Sviggum Van Dellen
Bettermann Gunther Lindner Olson, M. Swenson, H. Workman
Boudreau Kielkucki McElroy Reuter Sykora
Bradley Knight Molnau Rostberg Tompkins

The bill was repassed, as amended by Conference, and its title agreed to.

MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

I hereby announce that the Senate does not accede to the request of the House to return S. F. No. 3353 to the Conference Committee for further consideration.

S. F. No. 3353, A bill for an act relating to the organization and operation of state government; appropriating money for environmental, natural resource, and agricultural purposes; providing for regulation of certain activities and practices; amending Minnesota Statutes 1996, sections 3.737, subdivisions 1, 4, and by adding a subdivision; 41A.09, subdivision 1a; 84.83, subdivision 3; 84.871; 84.943, subdivision 3; 86B.415, by adding a subdivision; 97A.037, subdivision 1; 97A.245; 103C.315, subdivision 4; 103F.155, subdivision 2; 103F.161, subdivision 2; 103G.271, subdivision 6; 115B.175, subdivision 3; and 116.07, subdivision 4h; 116.49, by adding a subdivision; Minnesota Statutes 1997 Supplement, sections 17.101, subdivision 5; 41A.09, subdivision 3a; 84.8205; 84.86, subdivision 1; and 97A.485, subdivision 6; repealing Minnesota Statutes 1997 Supplement, section 85.015, subdivision 1c; Laws 1991, chapter 275, section 3.

Said Senate File is herewith transmitted to the House for further consideration.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9854

MOTION FOR RECONSIDERATION

Solberg moved that the vote whereby the House refused to adopt the Conference Committee report on S. F. No. 3353 on April 3, 1998, and voted to return the bill to Conference Committee be now reconsidered.

Abrams raised a point of order pursuant to rule 3.04 relating to the motion for reconsideration. Speaker pro tempore Opatz ruled the point of order not well taken.

Abrams appealed the decision of the Chair.

The vote was taken on the question "Shall the decision of Speaker pro tempore Opatz stand as the judgment of the House?" and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 65 yeas and 64 nays as follows:

Biernat Garcia Johnson, R. Mariani Osthoff Skoglund
Carlson Greenfield Juhnke Marko Otremba, M. Slawik
Chaudhary Greiling Kahn McCollum Paymar Solberg
Clark, K. Hasskamp Kalis McGuire Pelowski Trimble
Dawkins Hausman Kelso Milbert Peterson Tunheim
Delmont Hilty Kinkel Mullery Pugh Wagenius
Dorn Huntley Koskinen Munger Rest Wejcman
Entenza Jaros Leighton Murphy Rukavina Wenzel
Evans Jefferson Lieder Olson, E. Schumacher Winter
Farrell Jennings Long Opatz Sekhon Spk. Carruthers
Folliard Johnson, A. Mahon Orfield Skare

Abrams Dehler Knight Molnau Rifenberg Tompkins
Anderson, B. Dempsey Knoblach Mulder Rostberg Tuma
Bettermann Erhardt Kraus Ness Seagren Van Dellen
Bishop Erickson Krinkie Nornes Seifert Vandeveer
Boudreau Finseth Kuisle Olson, M. Smith Weaver
Bradley Goodno Larsen Osskopp Stanek Westfall
Broecker Gunther Leppik Ozment Stang Westrom
Clark, J. Haas Lindner Paulsen Sviggum Wolf
Commers Harder Macklin Pawlenty Swenson, H. Workman
Daggett Holsten Mares Reuter Sykora
Davids Kielkucki McElroy Rhodes Tingelstad

So it was the judgment of the House that the decision of Speaker pro tempore Opatz should stand.

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The question recurred on the Solberg motion and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 66 yeas and 64 nays as follows:

Biernat Garcia Johnson, R. Mariani Osthoff Skoglund
Carlson Greenfield Juhnke Marko Otremba, M. Slawik
Chaudhary Greiling Kahn McCollum Paymar Solberg
Clark, K. Hasskamp Kalis McGuire Pelowski Tomassoni
Dawkins Hausman Kinkel Milbert Peterson Trimble
Delmont Hilty Koskinen Mullery Pugh Tunheim
Dorn Huntley Kubly Munger Rest Wagenius
Entenza Jaros Leighton Murphy Rukavina Wejcman
Evans Jefferson Lieder Olson, E. Schumacher Wenzel
Farrell Jennings Long Opatz Sekhon Winter
Folliard Johnson, A. Mahon Orfield Skare Spk. Carruthers

Abrams Daggett Holsten Mares Reuter Tingelstad
Anderson, B. Davids Kielkucki McElroy Rhodes Tompkins
Anderson, I. Dehler Knight Molnau Rifenberg Van Dellen
Bakk Dempsey Knoblach Mulder Rostberg Vandeveer
Bettermann Erhardt Kraus Ness Seagren Weaver
Bishop Erickson Krinkie Nornes Seifert Westfall
Boudreau Finseth Kuisle Olson, M. Smith Westrom
Bradley Goodno Larsen Osskopp Stanek Wolf
Broecker Gunther Leppik Ozment Stang Workman
Clark, J. Haas Lindner Paulsen Sviggum
Commers Harder Macklin Pawlenty Sykora

The motion prevailed.

S. F. No. 3353, as amended by Conference, was reported to the House.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 3353.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

CONFERENCE COMMITTEE REPORT ON S. F. NO. 3353

A bill for an act relating to the organization and operation of state government; appropriating money for environmental, natural resource, and agricultural purposes; providing for regulation of certain activities and practices; amending Minnesota Statutes 1996, sections 3.737, subdivisions 1, 4, and by adding a subdivision;

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41A.09,subdivision 1a; 84.83, subdivision 3; 84.871; 84.943, subdivision 3; 86B.415, by adding a subdivision; 97A.037, subdivision 1; 97A.245; 103C.315, subdivision 4; 103F.155, subdivision 2; 103F.161, subdivision 2; 103G.271, subdivision 6; 115B.175, subdivision 3; and 116.07, subdivision 4h; 116.49, by adding a subdivision; Minnesota Statutes 1997 Supplement, sections 17.101, subdivision 5; 41A.09, subdivision 3a; 84.8205; 84.86, subdivision 1; and 97A.485, subdivision 6; repealing Minnesota Statutes 1997 Supplement, section 85.015, subdivision 1c; Laws 1991, chapter 275, section 3.

April 3, 1998

The Honorable Allan H. Spear

President of the Senate

The Honorable Phil Carruthers

Speaker of the House of Representatives

We, the undersigned conferees for S. F. No. 3353, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and that S. F. No. 3353 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. [ENVIRONMENT AND NATURAL RESOURCES APPROPRIATIONS.]

The sums in the columns headed "APPROPRIATIONS" are appropriated from the general fund, or another named fund, to the agencies and for the purposes specified in this act to be available for the fiscal years indicated for each purpose. The figures "1998" and "1999," where used in this act, mean that the appropriation or appropriations listed under them are available for the year ending June 30, 1998, or June 30, 1999, respectively.

$350,000 in fiscal year 1999 is added to the appropriation for county feedlot program grants in Laws 1997, chapter 216, section 2, subdivision 2. In fiscal year 1999 delegated counties shall be eligible to receive a grant of either: $40 multiplied by the number of livestock or poultry farms with sales greater than $10,000, as reported in the 1992 Census of Agriculture, published by the United States Bureau of Census; or $50 multiplied by the number of feedlots with greater than ten animal units, as determined by a level 2 or level 3 feedlot inventory conducted in accordance with the Feedlot Inventory Guidebook published by the board of water and soil resources, dated June 1991.

1998 1999

General Fund $5,294,000$12,498,000

Natural Resources Fund -0- 500,000

Total 5,294,000 12,998,000

APPROPRIATIONS

Available for the Year

Ending June 30

1998 1999

Sec. 2. POLLUTION CONTROL AGENCY 180,000 1,210,000

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$50,000 in fiscal year 1999 is for the bioaccumulative residues research program at the University of Minnesota-Duluth to analyze fish contaminants, including researching the presence of selenium in fish samples. As a condition of this grant, the University of Minnesota-Duluth must submit a work program and submit semiannual progress reports as provided in Minnesota Statutes, section 116P.05, subdivision 2, paragraph (c). This is a one-time appropriation.

$180,000 in fiscal year 1998 is for the cost of administering the wastewater infrastructure program. This appropriation is available until June 30, 2002.

$50,000 in fiscal year 1999 is for a scoping study for a cost-benefit model to analyze the costs of water quality standards. This is a one-time appropriation.

$375,000 in fiscal year 1999 is for acceleration of research being conducted on deformities and possible causes found in amphibians. The funding must be shared with the departments of agriculture, natural resources, and health and with the appropriate University of Minnesota departments. $39,000 of the appropriation must be shared with Hamline University for its friends of the frog program. The money must be used for research and monitoring of amphibian deformities, including, but not limited to, a possible groundwater surface water interconnection. The money may be used as a match for any federal dollars available. This is a one-time appropriation.

$300,000 in fiscal year 1999 is for expansion of permitting activities under the federal Clean Water Act that affect feedlots in excess of 1,000 animal units.

The availability of the appropriation in Laws 1997, chapter 216, section 15, subdivision 14, paragraph (c), to monitor and research the effects of endocrine disrupting chemicals in surface waters is extended to June 30, 2000.

$85,000 in fiscal year 1999 is for a grant to Benton county to pay the principal amount due in fiscal year 1999 on bonds issued by the county to pay part of a final order or settlement of a lawsuit for environmental response costs at a mixed municipal solid waste facility. This money and any future money appropriated for this purpose must be apportioned by Benton county among the local units of government that were parties to the final order or settlement in the same proportion that the local units of government agreed to as their share of the liability. This is a one-time appropriation.

Sec. 3. ZOOLOGICAL BOARD 1,500,000 -0-

$1,500,000 is for zoo operations. This is a one-time supplemental appropriation. By September 1, 1998, the board shall report to the governor, the chair of the senate environment and agriculture

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budgetdivision, and the chair of the house environment, natural resources and agriculture finance committee on recommendations to internally manage the effects of lowered attendance projections and methods for improving attendance forecasting.

Sec. 4. NATURAL RESOURCES 2,974,0007,717,000

General Fund 2,974,000 7,267,000

Natural Resources Fund -0- 450,000

$1,504,000 in fiscal year 1999 is for flood-related activities in the division of waters. $200,000 of this appropriation is for alternative flood control measures beneficial to the environment, such as culvert downsizing on man-made waterways and wetland restoration. $10,000 of this appropriation is for a grant to the Marine-on-St. Croix watershed management organization for engineering analysis of flooding problems along Twin lake. Notwithstanding Minnesota Statutes, section 103F.161, subdivision 2, paragraph (c), this appropriation may be combined with a flood hazard mitigation grant previously awarded to the watershed management organization. $75,000 of this appropriation is for a grant under Minnesota Statutes, section 103F.161, to Swift county for improvements at Lake Oliver. $30,000 of this appropriation is for a grant under Minnesota Statutes, section 103F.161, to the Chisago Lake improvement district for improvements to the outlet project. The portion of this appropriation to be included in the department's base is $1,189,000 for each fiscal year.

$150,000 in fiscal year 1999 is for transfer to the Minnesota forest resources council for implementation of the Sustainable Forest Resources Act pursuant to Minnesota Statutes, chapter 89A. This a one-time appropriation.

$476,000 in fiscal year 1998 is for sealing inactive wells on state-owned land. The commissioner shall determine project priorities as appropriate based upon need. This appropriation is available until June 30, 2002.

$430,000 in fiscal year 1999 is for operations at Fort Snelling park and for statewide resource protection. The portion of this appropriation to be included in the department's base is $200,000 in each fiscal year.

$250,000 in fiscal year 1999 is for population and habitat objectives of the nongame wildlife management program.

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$180,000 in fiscal year 1998 and $120,000 in fiscal year 1999 are for increased public involvement in white pine management planning and to accelerate white pine management on state forest lands. Any amount of this appropriation not used in fiscal year 1998 is available in fiscal year 1999.

$370,000 in fiscal year 1998 and $230,000 in fiscal year 1999 are for improvement of camper safety and security in state forest campgrounds and to make repairs to selected state forest campgrounds.

$450,000 in fiscal year 1999 is from the water recreation account in the natural resources fund for enforcement of personal watercraft laws. At least one-half of the conservation officers hired pursuant to this item must be from the protected classes. $225,000 of this appropriation is for grants to counties where there is significant use of personal watercraft on waters in and bordering the counties. The grants must be used for personal watercraft safety education and law enforcement, pursuant to Minnesota Statutes, section 86B.415, subdivision 7a.

$250,000 in fiscal year 1999 is for operational costs related to wildlife management at the area level.

$470,000 in fiscal year 1998 and $250,000 in fiscal year 1999 are for the interpretation, management, and monitoring of scientific and natural areas.

$340,000 in fiscal year 1999 is for technical assistance and grants to assist local government units and organizations in the metropolitan area to acquire and develop natural areas and greenways.

$300,000 in fiscal year 1999 is for state trail maintenance and amenities.

$250,000 in fiscal year 1999 is for a grant to the city of North St. Paul for improvements including trail connections, lighting, and landscaping related to the trail bridge over Highway 36 in North St. Paul. This is a one-time appropriation.

$500,000 in fiscal year 1999 is for further work to develop protected water flow recommendations on Minnesota streams and for support of river restoration expertise and its application to the Whitewater river and Sandy river. $300,000 of this amount is a one-time appropriation for stream protection on Brown's creek in Washington county.

$53,000 in fiscal year 1999 is for minerals cooperative environmental research. $26,500 is available only as matched by $1 of nonstate money for each $1 of state money. This appropriation is added to the appropriation in Laws 1997, chapter 216, section 5, subdivision 2.

$75,000 in fiscal year 1998 is to repair state forest land in Morrison, Mille Lacs, Kanabec, and Crow Wing counties.

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$100,000 in fiscal year 1998 is for development and maintenance of habitat and facilities, and data management system development at Swan lake wildlife management area.

$1,175,000 in fiscal year 1999 is for wildlife habitat improvement, wildlife population surveys, monitoring, private lands cost-sharing for wildlife habitat and forest stewardship, and project grants to local governments and private organizations to enhance fish, wildlife, and native plant habitats. Of this amount, $375,000 is for brush land and forest habitat renewal for sharp-tailed grouse and other species of birds dependent on open brush lands in forest areas by providing financial and technical assistance to landowners as well as brush land renewal on public lands; $300,000 is for wildlife habitat improvements through cost-sharing and technical assistance to private landowners; $300,000 is for forest stewardship improvements through cost-sharing and technical assistance to private landowners; and $200,000 is for wildlife population surveys, monitoring, evaluation, and constituent surveys. The portion of this appropriation to be included in the department's base is $1,075,000 in each fiscal year. The base amounts for each specific item are $325,000, $275,000, $275,000, and $200,000, respectively.

$100,000 in fiscal year 1998 is for engineering and hydraulic studies in conjunction with the proposed development of an urban whitewater trail along the Mississippi river in the lower St. Anthony Falls area below the stone arch bridge in Minneapolis and to examine the economic impact, market use potential, public safety concerns, environmental considerations, and land and water use impacts of the proposed Mississippi Whitewater trail. The commissioner must coordinate and work with affected local, state, and federal governments and interested citizen groups, including, but not limited to, the National Park Service, the United States Army Corps of Engineers, the University of Minnesota, the Minnesota historical society, the metropolitan parks and open space commission, the Minneapolis park board, and the Mississippi Whitewater Park Development Corporation. The commissioner must report to the senate environment and agriculture budget division and the house environment, natural resources, and agriculture finance committee by November 1, 1999, on the findings from the studies required under this item. This appropriation is available until June 30, 1999.

$100,000 in fiscal year 1998 is for a grant to the township of Linwood in Anoka county to construct a surface water drainage system to control water pollution. This appropriation is available until expended. Expenses incurred by Linwood township related to the proposed project, prior to this appropriation, may be considered as part of the total project cost for purposes of satisfying the requirements of Minnesota Statutes, section 103F.161, subdivision 2, paragraph (c).

$200,000 in fiscal year 1998 is added to the appropriation in Laws 1997, chapter 216, section 15, subdivision 4, paragraph (c), clause (4), for the statewide conservation partners program.

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$215,000 in fiscal year 1998 and $250,000 in fiscal year 1999 are to enhance customer service and data access through the collaborative use of technology, to improve communication with citizens and stakeholders, to provide technical assistance and data delivery to citizens and local government, and for the Minnesota Environmental/Natural Resource Electronic Library (MENREL) to accelerate the development of integrated and indexed environmental and geographic data catalogs, cross-agency search and retrieval, and content-rich libraries of environmental data and information.

$350,000 in fiscal year 1998 is to serve as the state match to federal money to remove surplus sediment along the east bank of the Mississippi river at Little Falls. The commissioner must coordinate and work with the United States Army Corps of Engineers on this project. This appropriation is available until expended.

$203,000 in fiscal year 1998 is for a forestry information management system to improve the timber sale program, forest development model, and fire management.

$35,000 in fiscal year 1998 and $115,000 in fiscal year 1999 are for expansion of the "Becoming an Outdoors Woman Program," and for a position to coordinate shooting range development on a statewide basis. Of this amount, $35,000 in fiscal year 1998 is available until June 30, 1999, to match an equal amount of nonstate money for shooting range partnership agreements and is a one-time appropriation.

$50,000 in fiscal year 1998 is for ecosystem-based management workshops for teams of local officials, natural resource managers, and citizens.

$200,000 in fiscal year 1999 is for aquatic plant restoration.

$125,000 in fiscal year 1999 is for local initiatives grants program administration.

$150,000 in fiscal year 1999 is for long-term monitoring of lake ecosystems.

The appropriations in Laws 1996, chapter 407, section 3, for the Iron Range off-highway vehicle recreation area are available until June 30, 2000.

$100,000 in fiscal year 1999 is for an enhanced lake classification system to provide comprehensive lake descriptions. This appropriation is added to the base in fiscal year 2000 only.

$200,000 in fiscal year 1999 is to identify lake watershed boundaries for lakes greater than 100 acres in a geographic information system format. This appropriation is added to the base in fiscal year 2000 only.

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$150,000 in fiscal year 1999 is to develop methodologies to assess the cumulative effects of development on lakes. This appropriation is added to the base in fiscal year 2000 only.

$100,000 in fiscal year 1999 is for a grant to the Upper Swede Hollow Association for improvements in and around Swede Hollow Park. The appropriation must be used for plantings, improvements to railway trestles, trail repair, reconstruction of the pond outlet, and other trail improvements. This is a one-time appropriation.

$50,000 in fiscal year 1998 and $50,000 in fiscal year 1999 are for an agreement with the University of Minnesota College of Architecture and Landscape Architecture to develop environmental brownfields mitigation strategies. This is a one-time appropriation.

The appropriation in Laws 1997, chapter 216, section 5, subdivision 4, for grants to local community forest ecosystem health programs is available until June 30, 2000.

$25,000 in fiscal year 1999 is for promotion and enhanced public awareness of the RIM critical habitat license plate program.

Sec. 5. BOARD OF WATER AND SOIL RESOURCES 300,0001,100,000

$200,000 in fiscal year 1998 is for a grant to the Faribault county soil and water conservation district for the quad-lakes restoration project in Faribault and Blue Earth counties and is available until expended.

$1,000,000 in fiscal year 1999 is for grants to soil and water conservation districts for cost-sharing contracts for water quality management on feedlots. Priority must be given to feedlot operators who have received a notice of violation and for feedlots in counties that are conducting or have completed a level 2 or level 3 feedlot inventory.

$100,000 in fiscal year 1998 is for a grant to the University of Minnesota extension service to improve existing Minnesota extension shoreland guidance and other related guidebooks. This is a one-time appropriation, available until expended.

$100,000 in fiscal year 1999 is for a pilot grant program to soil and water conservation districts for cost-sharing contracts with landowners to establish and maintain plantings of trees, shrubs, and grass strips that are native species of a local ecotype for the primary purpose of controlling snow deposition for the benefit of public transportation. The board, in consultation with the Minnesota Association of Soil and Water Conservation Districts, shall select at least five districts for participation in the pilot program. Up to 20 percent of the appropriation may be used for the technical and administrative expenses of soil and water conservation districts to implement this item. The board shall enter into grant agreements

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toaccomplish the transfer of funds to soil and water conservation districts and to establish guidelines to implement this item. Cost-sharing contracts between soil and water conservation districts and landowners may provide for annual payments to landowners for maintenance. This appropriation is available until spent.

Sec. 6. AGRICULTURE 310,000 2,169,000

$110,000 in fiscal year 1998 and $250,000 in fiscal year 1999 are for expansion of efforts to prevent the establishment and spread of gypsy moths in Minnesota.

$25,000 in fiscal year 1998 and $325,000 in fiscal year 1999 are for a state meat inspection program.

$75,000 in fiscal year 1999 is for additional matching funds for the WIC coupon program.

$25,000 in fiscal year 1999 is for additional livestock depredation payments pursuant to Minnesota Statutes, section 3.737.

$50,000 in fiscal year 1999 is added to the appropriation in Laws 1997, chapter 216, section 7, subdivision 4, for beaver damage control grants. This is a one-time appropriation.

Any unencumbered balance from the appropriation in Laws 1997, chapter 216, section 7, subdivision 4, for beaver damage control grants for the first year of the biennium is available for the second year of the biennium.

$100,000 in fiscal year 1998 is added to the appropriation in Laws 1997, chapter 216, section 7, subdivision 4, to accomplish reform of the federal milk market order system and for legal actions opposing the Northeast Dairy Compact. This appropriation is available until June 30, 1999.

$500,000 in fiscal year 1999 is added to the appropriation for dairy diagnostic teams in Laws 1997, chapter 216, section 7, subdivision 2, and is added to the department's base.

$267,000 in fiscal year 1999 is for a pilot program to expand the concept of the Minnesota grown program. The program is to assist low-income families in accessing nutritious and affordable food and to promote economic development by creating new markets and food distribution systems. $17,000 of this appropriation is for costs of administration. $87,000 of this appropriation is for payment to the Sustainable Resources Center for the purposes of this appropriation. $163,000 of this appropriation is for food coupons. The coupons shall be distributed and administered according to this section, subject to the approval of the commissioner of agriculture. The portion of this appropriation to be included in the department's base for fiscal year 2001 is $200,000, which may only be used for food coupons.

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The Sustainable Resources Center, in conjunction with the Minnesota Food Association, and subject to the approval of the commissioner of agriculture, shall select up to two urban and up to two rural communities as locations for activities that will serve as models for sustainable community food systems. These activities shall include but are not limited to:

(1) conducting food system assessments in each community to identify assets and needs;

(2) supporting the creation of producer distribution networks to establish direct links to low-income consumers; and

(3) working with food processing plants in the selected community to develop the support services needed to make entry-level jobs accessible to low-income people.

During each fiscal year beginning in fiscal year 1999, the commissioner of agriculture, within the funds available, shall provide coupons to the Sustainable Resources Center for distribution to participating eligible individuals. The coupons must be issued in two allocations each fiscal year. Eligible individuals may receive up to $100 in coupons per year, subject to the limitation that additional eligible individuals who reside in the same household may receive up to $20 in coupons per year, up to a maximum of $200 per household per year. Eligible individuals include individuals who are residents of the communities in the pilot project and are eligible for the Minnesota grown coupons under this section. Eligible individuals include:

(1) individuals who are in a state-verified income program; and

(2) individuals who are selected by the Sustainable Resources Center based on guidelines targeting specific populations within the pilot communities.

The amount of the Minnesota grown coupons must be excluded as income under the AFDC, refugee cash assistance, general assistance, MFIP, MFIP-R, MFIP-S, food stamp programs, state housing subsidy programs, low-income energy assistance programs, and other programs that do not count food stamps as income.

The coupons must be clearly labeled as redeemable only for products licensed to use the Minnesota grown logo or labeling statement under Minnesota Statutes, section 17.102. Coupons may be redeemed by farmers, custom meat processors, community-supported agriculture farms, and other entities approved by the commissioner of agriculture. The person accepting the coupon is responsible for its redemption only on products licensed to use the Minnesota grown logo or labeling statement. The commissioner must receive and reimburse all valid coupons redeemed pursuant to this section.

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The commissioner may establish criteria for vendor eligibility and may enforce the Minnesota grown coupon program according to Minnesota Statutes, sections 17.982 to 17.984.

$160,000 in fiscal year 1999 is for value-added agricultural product processing and marketing grants under Minnesota Statutes, section 17.101, subdivision 5. This appropriation and the appropriation in Laws 1997, chapter 216, section 7, subdivision 3, for grants under Minnesota Statutes, section 17.101, subdivision 5, are available until June 30, 2001.

$125,000 in fiscal year 1999 is for a grant to the Market Champ, Inc. board. This is a one-time appropriation.

$25,000 in fiscal year 1999 is for the Passing on the Farm Center established in Minnesota Statutes, section 17.985. This is a one-time appropriation.

$200,000 in fiscal year 1999 is to expand the shared savings loan program under Minnesota Statutes, section 17.115, to include a program of revolving loans for demonstration projects of farm manure digester technology. Notwithstanding the limitations of Minnesota Statutes, section 17.115, subdivision 2, paragraphs (b) and (c), loans under this program are no-interest loans in principal amounts not to exceed $200,000 and may be made to any resident of this state. Loans for one or more projects must be made only after the commissioner seeks applications. Loans under this program may be used as a match for federal loans or grants. Money repaid from loans must be returned to the revolving fund for future projects. This is a one-time appropriation.

$50,000 in fiscal year 1998 is for a grant to the University of Minnesota for investigation, screening, and a survey of existing research into the design and development of low-cost alternatives to pasteurization that provide comparable bacteria count reduction in fruit juice. The commissioner must report to the chair of the house environment, natural resources, and agriculture finance committee and the chair of the senate environment and agriculture budget division by January 15, 1999, regarding the results of the research and with a recommendation for further action.

$25,000 in fiscal year 1998 is for a grant to the University of Minnesota to study factors associated with farms that experience varying levels of livestock depredation caused by timber wolves. The university shall make recommendations to the commissioner to assist in the development of best management practices to prevent timber wolf depredation on livestock farms. This appropriation is available until June 30, 1999.

$60,000 in fiscal year 1999 is for payment of attorney general and other costs of assisting local government units in the process of adoption, review, or modification of ordinances relating to animal feedlots. This appropriation is available until June 30, 1999.

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$107,000 in fiscal year 1999 is for development of the program under Minnesota Statutes, section 18C.430. This is a one-time appropriation.

As a condition of receiving state funds, the ethanol production plant in St. Paul must provide year-round public access to the well that was publicly accessible when the plant was a brewery.

Sec. 7. UNIVERSITY OF MINNESOTA -0- 292,000

For alternative and sustainable hog production facilities and programs. $125,000 of this appropriation is for a grant to the Minnesota Institute for Sustainable Agriculture to extend funding for the Alternative Swine Production Systems Task Force and coordinator. $30,000 of this appropriation is for a grant to the Minnesota Institute for Sustainable Agriculture for alternative and sustainable hog production programs and program support, including on-farm systems research. $137,000 of this appropriation is to establish a faculty position in agricultural and community sociology at the University of Minnesota-Morris, focusing on the sustainability of agricultural systems and rural communities. The position shall be defined by the Alternative Swine Production Systems Task Force. This is a one-time appropriation.

Sec. 8. BOARD OF ANIMAL HEALTH 30,000 160,000

$30,000 in fiscal year 1998 and $160,000 in fiscal year 1999 is for expansion of the program for the control of paratuberculosis ("Johne's disease") in domestic bovine herds. These appropriations are in addition to the appropriations for the same purposes in Laws 1997, chapter 216, section 8.

Sec. 9. ADMINISTRATION -0- 350,000

Natural Resources Fund -0- 50,000

General Fund -0- 300,000

$50,000 is from the water recreation account in the natural resources fund for a study by a qualified consultant to determine the actual percentage of all gasoline received in and produced or brought into the state, except gasoline used for aviation purposes, that is being used as fuel for watercraft in this state. The study must include a determination of the amount of gasoline consumed by vehicles in the course of transporting watercraft on the highways of this state. The commissioner shall consult with the commissioners of revenue, transportation, and natural resources in preparing the request for proposals for the study and in selecting the consultant to perform the study. The commissioner shall report to the chairs of the senate and

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house environment and natural resources committees, the senate environment and agriculture budget division, the house environment, natural resources, and agriculture finance committee, the senate transportation committee, and the house transportation and transit committee on the results of the study by February 1, 1999. This is a one-time appropriation.

$300,000 is for modifications of department of natural resources business systems to address year 2000 changes. This appropriation is added to the appropriation for technology management in Laws 1997, chapter 202, article 1, section 12, subdivision 7. This is a one-time appropriation.

Sec. 10. ETHANOL DEVELOPMENT FUND TRANSFER

As cash flow in the ethanol development fund under Minnesota Statutes, section 41B.044, permits, but no later than June 30, 1999, the commissioner of finance, in consultation with the commissioner of agriculture, shall transfer $400,000 from the unencumbered balance in the fund to the general fund. This transfer is in addition to the transfer required by Laws 1997, chapter 216, section 17.

Sec. 11. Minnesota Statutes 1996, section 3.737, subdivision 1, is amended to read:

Subdivision 1. [COMPENSATION REQUIRED.] (a) Notwithstanding section 3.736, subdivision 3, paragraph (e), or any other law, a livestock owner shall be compensated by the commissioner of agriculture for livestock that is destroyed by a timber wolf or is so crippled so by a timber wolf that it must be destroyed ~~by an animal classified as endangered under the federal Endangered Species Act of 1973~~. The owner is entitled to the fair market value of the destroyed livestock, not to exceed ~~$400~~ $750 per animal destroyed, as determined by the commissioner, upon recommendation of ~~the county~~ a university extension agent ~~for the owner's county~~ and a conservation officer.

(b) Either the agent or the conservation officer must make a personal inspection of the site. The agent or the conservation officer must take into account factors in addition to a visual identification of a carcass when making a recommendation to the commissioner. The commissioner, upon recommendation of the agent and conservation officer, shall determine whether the livestock was destroyed by ~~an animal described in this subdivision~~ a timber wolf and any deficiencies in the owner's adoption of the best management practices developed in subdivision 5. The commissioner may authorize payment of claims only if the agent and the conservation officer have recommended payment. The owner shall file a claim on forms provided by the commissioner and available at the ~~county~~ university extension agent's office.

Sec. 12. Minnesota Statutes 1996, section 3.737, subdivision 4, is amended to read:

Subd. 4. [PAYMENT, DENIAL OF COMPENSATION.] (a) If the commissioner finds that the livestock owner has shown that the loss of the livestock was likely caused ~~more probably than not~~ by ~~an animal classified as an endangered species~~ a timber wolf, the commissioner shall pay compensation as provided in this section and in the rules of the department.

(b) For a timber wolf depredation claim submitted by a livestock owner after September 1, 1999, the commissioner shall, based on the report from the university extension agent and conservation officer, evaluate the claim for conformance with the best management practices developed by the commissioner in subdivision 5. The commissioner must provide to the livestock owner an itemized list of any deficiencies in the livestock owner's adoption of best management practices that were noted in the university extension agent's or conservation officer's report.

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(c) If the commissioner denies compensation claimed by an owner under this section, the commissioner shall issue a written decision based upon the available evidence. It shall include specification of the facts upon which the decision is based and the conclusions on the material issues of the claim. A copy of the decision shall be mailed to the owner.

(d) A decision to deny compensation claimed under this section is not subject to the contested case review procedures of chapter 14, but may be reviewed upon a trial de novo in a court in the county where the loss occurred. The decision of the court may be appealed as in other civil cases. Review in court may be obtained by filing a petition for review with the administrator of the court within 60 days following receipt of a decision under this section. Upon the filing of a petition, the administrator shall mail a copy to the commissioner and set a time for hearing within 90 days of the filing.

Sec. 13. Minnesota Statutes 1996, section 3.737, is amended by adding a subdivision to read:

Subd. 5. [TIMBER WOLF BEST MANAGEMENT PRACTICES.] By September 1, 1999, the commissioner must develop best management practices to prevent timber wolf depredation on livestock farms. The commissioner shall periodically update the best management practices when new practices are found by the commissioner to prevent timber wolf depredation on livestock farms. The commissioner must provide an updated copy of the best management practices for timber wolf depredation to all livestock owners who are still engaged in livestock farming and have previously submitted livestock claims under this section.

Sec. 14. Minnesota Statutes 1997 Supplement, section 17.101, subdivision 5, is amended to read:

Subd. 5. [VALUE-ADDED AGRICULTURAL ~~LIVESTOCK~~ PRODUCT PROCESSING AND MARKETING GRANT PROGRAM.] (a) For purposes of this section,:

(1) "~~livestock or dairy~~ agricultural commodity" means a material produced for use in or as food, feed, seed, or fiber and includes crops for fiber, food, oilseeds, seeds, livestock, livestock products, dairy, dairy products, poultry, poultry products, and other products or by-products of the farm produced for the same or similar use, except ethanol; and

(2) "agricultural product processing facility" means land, buildings, structures, fixtures, and improvements located or to be located in Minnesota and used or operated primarily for the processing or production of marketable products from agricultural ~~livestock or dairy~~ commodities produced in Minnesota.

(b) The commissioner shall establish and implement a value-added agricultural ~~livestock and dairy~~ product processing and marketing grant program to help farmers finance new cooperatives that organize for the purposes of operating ~~livestock and dairy~~ agricultural product processing facilities and for marketing activities related to the sale and distribution of processed ~~livestock and dairy~~ agricultural products.

(1) be a cooperative organized under chapter 308A;

(2) certify that all of the control and equity in the cooperative is from farmers as defined in section 500.24, subdivision 2, who are actively engaged in ~~livestock or dairy~~ agricultural commodity production;

(3) be operated primarily for the processing of ~~livestock or dairy~~ agricultural commodities produced in Minnesota;

(4) receive ~~livestock or dairy~~ agricultural commodities produced primarily by shareholders or members of the cooperative; and

(5) have no direct or indirect involvement in the production of ~~livestock and dairy~~ agricultural commodities.

(d) The commissioner may receive applications from and make grants up to $50,000 for feasibility, marketing analysis, and predesign of facilities to eligible cooperatives. The commissioner shall give priority to applicants who use the grants for planning costs related to an application for financial assistance from the United States Department of Agriculture, Rural Business - Cooperative Service.

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Sec. 15. [17.987] [MARKET CHAMP, INC; ACCESS TO QUALITY GENETICS BY FAMILY FARMERS.]

Subdivision 1. [ESTABLISHMENT; PURPOSE.] Market Champ, Inc. is established as a nonprofit public corporation under chapter 317A and is subject to the provisions of that chapter. The corporation is neither a state agency nor an entity within the University of Minnesota. The purpose of the corporation is to transfer high quality swine genetic material from the University of Minnesota to the family farmers of the state in order to enhance the state's economic growth and the competitiveness of family farmers. Market Champ, Inc. shall assist Minnesota swine producers in understanding genetic technologies and developing improved animal genetic lines.

Subd. 2. [DUTIES.] Market Champ, Inc. shall:

(1) encourage family farmers to use the highest quality swine genetics;

(2) facilitate the transfer of the latest swine genetic research and technology information and materials from the University of Minnesota and other sources to family farmers;

(3) assist family farmers to market the swine they produce;

(4) develop a system for tracking family farmers' products through the processing, meat packing, and marketing system to determine the market value of the genetic technology;

(5) provide genetic testing, counseling, and assistance in genetic decisions to identify new market developments and capture value-added opportunities;

(6) provide centralized testing services with regional technology transfer specialists;

(7) secure access to new genetic tests and services for all Minnesota producers through licensing agreements; and

(8) assist family farmers who do not otherwise have access to high quality genetic technologies.

Subd. 3. [BOARD OF DIRECTORS.] (a) Market Champ, Inc. shall be governed by a board of directors consisting of 11 voting members, appointed by the governor.

(b) The members of the board shall be:

(1) two representatives of small family farmers with under 250 sows;

(2) one representative of purebred swine producers;

(3) one member of the Minnesota Pork Producers Association;

(4) one representative of the pork industry;

(5) one member of the meat packing industry;

(6) one member representing the University of Minnesota;

(7) one member representing Minnesota state colleges and universities;

(8) the commissioner of agriculture;

(9) the chair of the senate committee on agriculture and rural development, or the chair's designee; and

(10) the chair of the house committee on agriculture, or the chair's designee.

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Members listed in clauses (1) to (5) must be recommended by the president of the University of Minnesota or a designee of the president, in consultation with the chairs of the senate and house of representatives committees with jurisdiction over agricultural policy and finance issues.

(d) Members of the board shall be compensated and reimbursed in the same manner as members of advisory councils under section 15.059, subdivision 3.

Subd. 4. [BYLAWS.] Bylaws of Market Champ, Inc. must provide for the qualification and removal of directors and for filling vacancies on the board in a manner not inconsistent with this section.

Subd. 5. [ARTICLES OF INCORPORATION.] The articles of incorporation of Market Champ, Inc. must be filed with the secretary of state under chapter 317A and must be consistent with this section.

Subd. 6. [AUDIT.] Market Champ, Inc. shall contract with the legislative auditor to perform audits and must report the results to the legislature.

Subd. 7. [REPORT.] The board of directors of Market Champ, Inc. shall submit an annual report on the activities of Market Champ, Inc. by January 15 of each year to the appropriations, finance, and agriculture committees of the legislature and to the governor. The report must include a description of the corporation's activities for the past year, a list of all contracts entered into by the corporation, and a financial report of revenues and expenditures of the corporation.

Subd. 8. [EXPIRATION.] The board of directors of Market Champ, Inc. expires on June 30, 2003.

Sec. 16. Minnesota Statutes 1996, section 18C.141, is amended to read:

18C.141 [SOIL AND MANURE TESTING LABORATORY CERTIFICATION.]

Subdivision 1. [PROGRAM ESTABLISHMENT.] The commissioner shall establish a program to certify the accuracy of analyses from soil and manure testing laboratories and promote standardization of soil and manure testing procedures and analytical results.

Subd. 2. [CHECK SAMPLE SYSTEM.] (a) The commissioner shall institute a system of check samples that requires a laboratory to be certified to analyze at least ~~four~~ two multiple soil or manure check samples during the calendar year. The samples must be supplied by the commissioner or by a person under contract with the commissioner to prepare and distribute the samples.

(b) Within 30 days after the laboratory receives check samples, the laboratory shall report to the commissioner the results of the analyses for all requested elements or compounds or for the elements or compounds the laboratory makes an analytical determination of as a service to others.

(c) The commissioner shall compile analytical data submitted by laboratories and provide laboratories submitting samples with a copy of the data without laboratory names or code numbers.

(d) The commissioner may conduct check samples on laboratories that are not certified.

Subd. 3. [ANALYSES REPORTING STANDARDS.] (a) The results obtained from soil, manure, or plant analysis must be reported in accordance with standard reporting units established by the commissioner by rule. The standard reporting units must conform as far as practical to uniform standards that are adopted on a regional or national basis.

(b) If a certified laboratory offers a recommendation, the University of Minnesota recommendation or that of another land grant college in a contiguous state must be offered in addition to other recommendations, and the source of the recommendation must be identified on the recommendation form. If relative levels such as low, medium, or high are presented to classify the analytical results, the corresponding relative levels based on the analysis as designated by the University of Minnesota or the land grant college in a contiguous state must also be presented.

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Subd. 4. [REVOCATION OF CERTIFICATION.] If the commissioner determines that analysis being performed by a laboratory is inaccurate as evidenced by check sample results, the commissioner may deny, suspend, or revoke certification.

Subd. 5. [CERTIFICATION FEES.] (a) A laboratory applying for certification shall pay an application fee of $100 and a certification fee of $100 before the certification is issued.

(b) Certification is valid for one year and the renewal fee is $100. The commissioner shall charge an additional application fee of $100 if a certified laboratory allows certification to lapse before applying for renewed certification.

(c) The commissioner shall notify a certified lab that its certification lapses within 30 to 60 days of the date when the certification lapses.

Subd. 6. [RULES.] The commissioner shall adopt rules for the establishment of minimum standards for laboratories, equipment, procedures, and personnel used in soil and manure analysis and rules necessary to administer and enforce this section. The commissioner shall consult with representatives of the fertilizer industry, representatives of the laboratories doing business in this state, and with the University of Minnesota college of agriculture before proposing rules.

Sec. 17. [18C.430] [COMMERCIAL ANIMAL WASTE TECHNICIAN.]

Subdivision 1. [REQUIREMENT.] (a) Except as provided in paragraph (c), after March 1, 2000, a person may not manage or apply animal wastes for hire without a valid commercial animal waste technician license. This section does not apply to a person managing or applying animal waste on land managed by the person's employer.

(b) A person managing or applying animal wastes for hire must have a valid license identification card when managing or applying animal wastes for hire and must display it upon demand by an authorized representative of the commissioner or a law enforcement officer. The commissioner shall prescribe the information required on the license identification card.

(c) A person who is not a licensed commercial animal waste technician who has had at least two hours of training or experience in animal waste management may manage or apply animal waste for hire under the supervision of a commercial animal waste technician.

Subd. 2. [RESPONSIBILITY.] A person required to be licensed under this section who performs animal waste management or application for hire or who employs a person to perform animal waste management or application for compensation is responsible for proper management or application of the animal wastes.

Subd. 3. [LICENSE.] A commercial animal waste technician license:

(1) is valid for three years and expires on December 31 of the third year for which it is issued, unless suspended or revoked before that date;

(2) is not transferable to another person; and

(3) must be prominently displayed to the public in the commercial animal waste technician's place of business.

Subd. 4. [APPLICATION.] (a) A person must apply to the commissioner for a commercial animal waste technician license on forms and in the manner required by the commissioner and must include the application fee. The commissioner shall prescribe and administer an examination or equivalent measure to determine if the applicant is eligible for the commercial animal waste technician license.

(b) The commissioner of agriculture, in cooperation with the Minnesota extension service and appropriate educational institutions, shall establish and implement a program for training and licensing commercial animal waste technicians.

Subd. 5. [RENEWAL APPLICATION.] A person must apply to the commissioner of agriculture to renew a commercial animal waste technician license and must include the application fee. The commissioner may renew a commercial animal waste technician license, subject to reexamination, attendance at workshops approved by the

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commissioner, or other requirements imposed by the commissioner to provide the animal waste technician with information regarding changing technology and to help ensure a continuing level of competence and ability to manage and apply animal wastes properly. The applicant may renew a commercial animal waste technician license within 12 months after expiration of the license without having to meet initial testing requirements. The commissioner may require additional demonstration of animal waste technician qualification if a person has had a license suspended or revoked or has had a history of violations of this section.

Subd. 6. [FINANCIAL RESPONSIBILITY.] (a) A commercial animal waste technician license may not be issued unless the applicant furnishes proof of financial responsibility. The financial responsibility may be demonstrated by (1) proof of net assets equal to or greater than $50,000, or (2) a performance bond or insurance of the kind and in an amount determined by the commissioner of agriculture.

(b) The bond or insurance must cover a period of time at least equal to the term of the applicant's license. The commissioner shall immediately suspend the license of a person who fails to maintain the required bond or insurance.

(c) An employee of a licensed person is not required to maintain an insurance policy or bond during the time the employer is maintaining the required insurance or bond.

(d) Applications for reinstatement of a license suspended under paragraph (b) must be accompanied by proof of satisfaction of judgments previously rendered.

Subd. 7. [APPLICATION FEE.] A person initially applying for or renewing a commercial animal waste technician license must pay a nonrefundable application fee of $50 and a fee of $10 for each additional identification card requested.

Sec. 18. Minnesota Statutes 1996, section 35.82, subdivision 2, is amended to read:

Subd. 2. [DISPOSITION OF CARCASSES.] (a) Except as provided in subdivision 1b and paragraph (d), every person owning or controlling any domestic animal that has died or been killed otherwise than by being slaughtered for human or animal consumption, shall as soon as reasonably possible bury the carcass ~~at least three feet deep~~ at a depth adequate to prevent scavenging by other animals in the ground or thoroughly burn it or dispose of it by another method approved by the board as being effective for the protection of public health and the control of livestock diseases. The board, through its executive secretary, may issue permits to owners of rendering plants located in Minnesota which are operated and conducted as required by law, to transport carcasses of domestic animals and fowl that have died, or have been killed otherwise than by being slaughtered for human or animal consumption, over the public highways to their plants for rendering purposes in accordance with the rules adopted by the board relative to transportation, rendering, and other provisions the board considers necessary to prevent the spread of disease. The board may issue permits to owners of rendering plants located in an adjacent state with which a reciprocal agreement is in effect under subdivision 3.

(b) Carcasses collected by rendering plants under permit may be used for pet food or mink food if the owner or operator meets the requirements of subdivision 1b.

(c) An authorized employee or agent of the board may enter private or public property and inspect the carcass of any domestic animal that has died or has been killed other than by being slaughtered for human or animal consumption. Failure to dispose of the carcass of any domestic animal within the period specified by this subdivision is a public nuisance. The board may petition the district court of the county in which a carcass is located for a writ requiring the abatement of the public nuisance. A civil action commenced under this paragraph does not preclude a criminal prosecution under this section. No person may sell, offer to sell, give away, or convey along a public road or on land the person does not own, the carcass of a domestic animal when the animal died or was killed other than by being slaughtered for human or animal consumption unless it is done with a special permit pursuant to this section. The carcass or parts of a domestic animal that has died or has been killed other than by being slaughtered for human or animal consumption may be transported along a public road for a medical or scientific purpose if the carcass is enclosed in a leakproof container to prevent spillage or the dripping of liquid waste. The board may adopt rules relative to the transportation of the carcass of any domestic animal for a medical or scientific purpose. A carcass on a public thoroughfare may be transported for burial or other disposition in accordance with this section.

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No person who owns or controls diseased animals shall negligently or willfully permit them to escape from that control or to run at large.

(d) A sheep producer may compost sheep carcasses owned by the producer on the producer's land without a permit and is exempt from compost facility specifications contained in rules of the board.

(e) The board shall develop best management practices for dead animal disposal and the pollution control agency feedlot program shall distribute them to livestock producers in the state.

Sec. 19. Minnesota Statutes 1996, section 41A.09, subdivision 1a, is amended to read:

Subd. 1a. [ETHANOL PRODUCTION GOAL.] It is a goal of the state that ethanol production plants in the state attain a total annual production level of ~~220,000,000~~ 240,000,000 gallons.

Sec. 20. Minnesota Statutes 1997 Supplement, section 41A.09, subdivision 3a, is amended to read:

Subd. 3a. [PAYMENTS.] (a) The commissioner of agriculture shall make cash payments to producers of ethanol, anhydrous alcohol, and wet alcohol located in the state. These payments shall apply only to ethanol, anhydrous alcohol, and wet alcohol fermented in the state and produced at plants that have begun production by June 30, 2000. For the purpose of this subdivision, an entity that holds a controlling interest in more than one ethanol plant is considered a single producer. The amount of the payment for each producer's annual production is:

(1) except as provided in paragraph (b), for each gallon of ethanol or anhydrous alcohol produced on or before June 30, 2000, or ten years after the start of production, whichever is later, 20 cents per gallon; and

(2) for each gallon produced of wet alcohol on or before June 30, 2000, or ten years after the start of production, whichever is later, a payment in cents per gallon calculated by the formula "alcohol purity in percent divided by five," and rounded to the nearest cent per gallon, but not less than 11 cents per gallon.

The producer payments for anhydrous alcohol and wet alcohol under this section may be paid to either the original producer of anhydrous alcohol or wet alcohol or the secondary processor, at the option of the original producer, but not to both.

(b) If the level of production at an ethanol plant increases due to an increase in the production capacity of the plant and the increased production begins by June 30, 2000, the payment under paragraph (a), clause (1), applies to the additional increment of production until ten years after the increased production began. Once a plant's production capacity reaches 15,000,000 gallons per year, no additional increment will qualify for the payment.

(c) The commissioner shall make payments to producers of ethanol or wet alcohol in the amount of 1.5 cents for each kilowatt hour of electricity generated using closed-loop biomass in a cogeneration facility at an ethanol plant located in the state. Payments under this paragraph shall be made only for electricity generated at cogeneration facilities that begin operation by June 30, 2000. The payments apply to electricity generated on or before the date ten years after the producer first qualifies for payment under this paragraph. Total payments under this paragraph in any fiscal year may not exceed $750,000. For the purposes of this paragraph:

(1) "closed-loop biomass" means any organic material from a plant that is planted for the purpose of being used to generate electricity or for multiple purposes that include being used to generate electricity; and

(2) "cogeneration" means the combined generation of:

(i) electrical or mechanical power; and

(ii) steam or forms of useful energy, such as heat, that are used for industrial, commercial, heating, or cooling purposes.

(d) Except for new production capacity approved under paragraph (i), clause (1), the total payments under paragraphs (a) and (b) to all producers may not exceed $34,000,000 in a fiscal year. Total payments under paragraphs (a) and (b) to a producer in a fiscal year may not exceed $3,000,000.

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(e) By the last day of October, January, April, and July, each producer shall file a claim for payment for ethanol, anhydrous alcohol, and wet alcohol production during the preceding three calendar months. A producer with more than one plant shall file a separate claim for each plant. A producer shall file a separate claim for the original production capacity of each plant and for each additional increment of production that qualifies under paragraph (b). A producer that files a claim under this subdivision shall include a statement of the producer's total ethanol, anhydrous alcohol, and wet alcohol production in Minnesota during the quarter covered by the claim, including anhydrous alcohol and wet alcohol produced or received from an outside source. A producer shall file a separate claim for any amount claimed under paragraph (c). For each claim and statement of total ethanol, anhydrous alcohol, and wet alcohol production filed under this subdivision, the volume of ethanol, anhydrous alcohol, and wet alcohol production or amounts of electricity generated using closed-loop biomass must be examined by an independent certified public accountant in accordance with standards established by the American Institute of Certified Public Accountants.

(f) Payments shall be made November 15, February 15, May 15, and August 15. A separate payment shall be made for each claim filed. The total quarterly payment to a producer under this paragraph, excluding amounts paid under paragraph (c), may not exceed $750,000. Except for new production capacity approved under paragraph (i), clause (1), if the total amount for which all other producers are eligible in a quarter under paragraphs (a) and (b) exceeds $8,500,000, the commissioner shall make payments for production capacity that is subject to this restriction in the order in which the portion of production capacity covered by each claim went into production. ~~If the total amount of ethanol or wet alcohol production reported for a quarter under paragraph (e) equals or exceeds 55,000,000 gallons:~~

~~(1) payments under this subdivision do not apply to the amount produced in excess of 55,000,000 gallons;~~

~~(2) the commissioner shall make payments to producers in the order in which the portion of production capacity covered by each claim began production; and~~

(3) only those producers that receive payments for the quarter, or received payments under paragraph (a) or (b) in an earlier quarter, will be eligible for future ethanol or wet alcohol production payments under this subdivision.

(g) If the total amount for which all producers are eligible in a quarter under paragraph (c) exceeds the amount available for payments, the commissioner shall make payments in the order in which the plants covered by the claims began generating electricity using closed-loop biomass.

(h) After July 1, 1997, new production capacity is only eligible for payment under this subdivision if the commissioner receives:

(1) an application for approval of the new production capacity;

(2) an appropriate letter of long-term financial commitment for construction of the new production capacity; and

(3) copies of all necessary permits for construction of the new production capacity.

The commissioner may approve ~~the additional~~ new production capacity based on the order in which the applications are received. ~~The commissioner shall not approve production capacity in excess of the limitations in paragraph (f).~~

(i) After the effective date of this section, the commissioner may only approve: (1) up to 12,000,000 gallons of new production capacity at one plant that has not previously received approval or payment for any production capacity; or (2) new production capacity at existing plants ~~are not eligible for new capacity beyond~~ not to exceed planned expansions reported to the commissioner by February 1997. The commissioner may not approve any new production capacity after July 1, 1998.

(j) For the purposes of this subdivision "new production capacity" means annual ethanol production capacity that was not allowed under a permit issued by the pollution control agency prior to July 1, 1997, or for which construction did not begin prior to July 1, 1997.

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Sec. 21. Minnesota Statutes 1997 Supplement, section 84.8205, is amended to read:

84.8205 [SNOWMOBILE STATE TRAIL ~~PERMIT~~ STICKER.]

Subdivision 1. [STICKER REQUIRED; FEE.] A person may not operate a snowmobile that is not registered in this state ~~may not be operated~~ on a state or grant-in-aid snowmobile trail unless a snowmobile state trail sticker is affixed to the snowmobile ~~operator has in possession a snowmobile state trail permit~~. The commissioner of natural resources shall issue a ~~permit~~ sticker upon application and payment of a $15 fee. The ~~permit~~ sticker is valid from November 1 through April 30. Fees collected under this section shall be deposited in the state treasury and credited to the snowmobile trails and enforcement account in the natural resources fund.

Subd. 2. [PLACEMENT OF STICKER.] The state trail sticker shall be permanently affixed to the forward half of the snowmobile directly above or below the headlight of the snowmobile.

Subd. 3. [LICENSE AGENTS.] County auditors are appointed agents of the commissioner for the sale of snowmobile state trail stickers. The commissioner may appoint other state agencies as agents for the sale of the stickers. A county auditor may appoint subagents within the county or within adjacent counties to sell stickers. Upon appointment of a subagent, the auditor shall notify the commissioner of the name and address of the subagent. The auditor may revoke the appointment of a subagent, and the commissioner may revoke the appointment of a state agency at any time. The commissioner may require an auditor to revoke a subagent's appointment. The auditor shall furnish stickers on consignment to any subagent who furnishes a surety bond in favor of the county in an amount at least equal to the value of the stickers to be consigned to that subagent. A surety bond is not required for a state agency appointed by the commissioner. The county auditor shall be responsible for all stickers issued to and user fees received by agents except in a county where the county auditor does not retain fees paid for license purposes. In these counties, the responsibilities imposed by this section upon the county auditor are imposed upon the county. The commissioner may promulgate additional rules governing the accounting and procedures for handling state trail stickers as provided in section 97A.485, subdivision 11.

Any resident desiring to sell snowmobile state trail stickers may either purchase for cash or obtain on consignment stickers from a county auditor in groups of not less than ten individual stickers. In selling stickers, the resident shall be deemed a subagent of the county auditor and the commissioner, and shall observe all rules promulgated by the commissioner for accounting and handling of licenses and stickers pursuant to section 97A.485, subdivision 11.

The county auditor shall promptly deposit all money received from the sale of the stickers with the county treasurer and shall promptly transmit any reports required by the commissioner, plus 96 percent of the price paid by each stickerholder, exclusive of the issuing fee, for each sticker sold or consigned by the auditor and subsequently sold to a stickerholder during the accounting period. The county auditor shall retain as a commission four percent of all sticker fees, excluding the issuing fee for stickers consigned to subagents and the issuing fee on stickers sold by the auditor to stickerholders.

Unsold stickers in the hands of any subagent shall be redeemed by the commissioner if presented for redemption within the time prescribed by the commissioner. Any stickers not presented for redemption within the period prescribed shall be conclusively presumed to have been sold, and the subagent possessing the same or to whom they are charged shall be accountable.

Subd. 4. [DISTRIBUTION OF STICKERS.] The commissioner shall provide stickers to all agents authorized to issue stickers by the commissioner.

Subd. 5. [AGENT'S FEE.] The fee for a sticker shall be increased by the amount of an issuing fee of $1 per sticker. The issuing fee may be retained by the seller of the sticker.

Sec. 22. Minnesota Statutes 1997 Supplement, section 84.86, subdivision 1, is amended to read:

Subdivision 1. With a view of achieving maximum use of snowmobiles consistent with protection of the environment the commissioner of natural resources shall adopt rules in the manner provided by chapter 14, for the following purposes:

(1) Registration of snowmobiles and display of registration numbers.

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(2) Use of snowmobiles insofar as game and fish resources are affected.

(3) Use of snowmobiles on public lands and waters, or on grant-in-aid trails, including, but not limited to, the use of specified metal traction devices and nonmetal traction devices.

(4) Uniform signs to be used by the state, counties, and cities, which are necessary or desirable to control, direct, or regulate the operation and use of snowmobiles.

(5) Specifications relating to snowmobile mufflers.

(6) A comprehensive snowmobile information and safety education and training program, including but not limited to the preparation and dissemination of snowmobile information and safety advice to the public, the training of snowmobile operators, and the issuance of snowmobile safety certificates to snowmobile operators who successfully complete the snowmobile safety education and training course. For the purpose of administering such program and to defray a portion of the expenses of training and certifying snowmobile operators, the commissioner shall collect a fee of not to exceed $5 from each person who receives the youth and young adult training and a fee established under chapter 16A from each person who receives the adult training. The commissioner shall deposit the fee in the snowmobile trails and enforcement account and the amount thereof is appropriated annually to the commissioner of natural resources for the administration of such programs. The commissioner shall cooperate with private organizations and associations, private and public corporations, and local governmental units in furtherance of the program established under this clause. The commissioner shall consult with the commissioner of public safety in regard to training program subject matter and performance testing that leads to the certification of snowmobile operators.

(7) The operator of any snowmobile involved in an accident resulting in injury requiring medical attention or hospitalization to or death of any person or total damage to an extent of $500 or more, shall forward a written report of the accident to the commissioner on such form as the commissioner shall prescribe. If the operator is killed or is unable to file a report due to incapacitation, any peace officer investigating the accident shall file the accident report within ten business days.

Sec. 23. Minnesota Statutes 1996, section 84.871, is amended to read:

84.871 [~~MUFFLERS~~ EQUIPMENT REQUIREMENTS.]

Subdivision 1. [MUFFLERS.] Except as provided in this section, every snowmobile shall be equipped at all times with a muffler in good working order which blends the exhaust noise into the overall snowmobile noise and is in constant operation to prevent excessive or unusual noise. The exhaust system shall not emit or produce a sharp popping or crackling sound. This section does not apply to organized races or similar competitive events held on (1) private lands, with the permission of the owner, lessee, or custodian of the land; (2) public lands and water under the jurisdiction of the commissioner of natural resources, with the commissioner's permission; or (3) other public lands, with the consent of the public agency owning the land. No person shall have for sale, sell, or offer for sale on any new snowmobile any muffler that fails to comply with the specifications required by the rules of the commissioner after the effective date of the rules.

Subd. 2. [METAL TRACTION DEVICES ON SNOWMOBILE TRACKS.] Except as provided in this subdivision, a person may not operate a snowmobile with a track equipped with metal traction devices on public lands, roads, or trails, or public road or trail rights-of-way. Pursuant to section 84.86, the commissioner may adopt rules that: (1) limit the use of nonmetal traction devices; and (2) permit metal traction devices that meet certain specifications.

Sec. 24. [84.8715] [METAL TRACTION DEVICE STICKER.]

Subdivision 1. [STICKER REQUIRED; FEE.] A person may not operate a snowmobile with a track equipped with metal traction devices unless a metal traction device sticker is affixed to the snowmobile. The commissioner shall issue a metal traction device sticker upon application and payment of a $50 fee. The sticker is valid for one year following June 30 in the year it is issued. Fees collected under this section shall be deposited in the state treasury and credited to the snowmobile trails and enforcement account in the natural resources fund. Money deposited under this section must be used for repair of paved public trails except that any money not necessary for this purpose may be used for the grant-in-aid snowmobile trail system.

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Subd. 2. [PLACEMENT OF STICKER.] The metal traction device sticker must be permanently affixed to the forward half of the snowmobile directly above or below the headlight of the snowmobile.

Subd. 3. [LICENSE AGENTS.] The commissioner shall sell metal traction device stickers through the process established under section 84.8205.

Subd. 4. [REPEALER.] This section is repealed on July 1, 1999.

Sec. 25. Minnesota Statutes 1997 Supplement, section 85.015, subdivision 1c, is amended to read:

Subd. 1c. [METAL TRACTION DEVICES; PROHIBITION ON PAVED TRAILS.] A person may not use a snowmobile with metal traction devices on any paved ~~state~~ public trail, except as otherwise provided by a local government with jurisdiction over a trail.

Sec. 26. [85.0156] [MISSISSIPPI WHITEWATER TRAIL.]

Subdivision 1. [CREATION.] An urban whitewater trail is created along the Mississippi river in the lower St. Anthony falls area below the stone arch bridge in Minneapolis. The trail must be primarily developed for whitewater rafters, canoers, and kayakers.

Subd. 2. [COMMISSIONER'S DUTIES.] (a) The commissioner of natural resources must coordinate the creation of the whitewater trail by placing designation signs near and along the river and must publicize the designation.

(b) In designating the Mississippi whitewater trail, the commissioner must work with other federal, state, and local agencies and private businesses and organizations interested in the trail.

Subd. 3. [GIFTS; DONATIONS.] The commissioner of natural resources is authorized to accept, on behalf of a nonprofit corporation, donations of land or easements in land for the whitewater trail and may seek and accept money for the trail from other public and private sources.

Sec. 27. Minnesota Statutes 1996, section 86B.101, subdivision 2, is amended to read:

(b) The commissioner shall issue a watercraft operator's permit to a person age 12 or older but younger than age 18 who successfully completes the educational program and the written test.

Sec. 28. Minnesota Statutes 1996, section 86B.415, subdivision 1, is amended to read:

Subdivision 1. [WATERCRAFT 19 FEET OR LESS.] The fee for a watercraft license for watercraft 19 feet or less in length is $12 except:

(1) for watercraft, other than personal watercraft, 19 feet in length or less that is offered for rent or lease, the fee is $6;

(2) for a canoe, kayak, sailboat, sailboard, paddle boat, or rowing shell 19 feet in length or less, the fee is $7;

(3) for a watercraft 19 feet in length or less used by a nonprofit corporation for teaching boat and water safety, the fee is as provided in subdivision 4; and

(4) for a watercraft owned by a dealer under a dealer's license, the fee is as provided in subdivision 5.

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Sec. 29. Minnesota Statutes 1996, section 86B.415, is amended by adding a subdivision to read:

Subd. 7a. [PERSONAL WATERCRAFT SURCHARGE.] A $50 surcharge is placed on each personal watercraft licensed under subdivisions 1 to 5 for enforcement of personal watercraft laws and for personal watercraft safety education. The surcharge must be deposited in the state treasury and credited to the water recreation account in the natural resources fund. Any grants to counties from revenue collected under this subdivision must be proportional to the use of personal watercraft in each county. Grants made under this subdivision are subject to the applicable administrative, reporting, and auditing requirements in sections 86B.701 and 86B.705.

Sec. 30. Minnesota Statutes 1996, section 89A.03, subdivision 1, is amended to read:

Subdivision 1. [MEMBERSHIP.] The Minnesota forest resources council has 13 members appointed by the governor and one member appointed by the Indian affairs council. The council membership appointed by the governor must include ~~one representative from each of~~ the following individuals:

(1) a representative from an organization representing environmental interests within the state;

(2) a representative from an organization representing the interests of management of game species;

(3) a representative from a conservation organization;

(4) a representative from an association representing forest products industry within the state;

(5) a commercial logging contractor active in a forest product association;

(6) a representative from a statewide association representing the resort and tourism industry;

(7) a faculty or researcher of a Minnesota research or higher educational institution;

(8) an owner of nonindustrial, private forest land of 40 acres or more;

(9) an agricultural woodlot owner;

(10) a representative from the department;

(11) a county land commissioner who is a member of the Minnesota association of county land commissioners;

(12) a representative from the United States Forest Service unit with land management responsibility in Minnesota; and

(13) a representative from a labor organization with membership having an interest in forest resource issues.

Sec. 31. Minnesota Statutes 1996, section 90.193, is amended to read:

90.193 [EXTENSION OF TIMBER PERMITS.]

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Sec. 32. Minnesota Statutes 1996, section 93.002, subdivision 1, is amended to read:

Subdivision 1. [ESTABLISHMENT.] The mineral coordinating committee is established to plan for diversified mineral development. The mineral coordinating committee consists of the director of the minerals division of the department of natural resources, the deputy commissioner of the Minnesota pollution control agency, the director of United Steelworkers of America, district 11, or the director's designee, the commissioner of the iron range resources and rehabilitation board, the director of the Minnesota geological survey, the dean of the University of Minnesota institute of technology, ~~and~~ the director of the natural resources research institute, and three individuals appointed by the governor for a four-year term, one each representing the iron ore and taconite, the nonferrous metallic minerals, and the industrial minerals industries within the state. The director of the minerals division of the department of natural resources shall serve as chair. A member of the committee may designate another person of the member's organization to act in the member's place. The commissioner of natural resources shall provide staff and administrative services necessary for the committee's activities.

The mineral coordinating committee is encouraged to solicit and receive advice from representatives of ~~the United States Bureau of Mines,~~ the United States Geological Survey, and the United States Environmental Protection Agency.

Sec. 33. Minnesota Statutes 1996, section 97A.037, subdivision 1, is amended to read:

Subdivision 1. [INTERFERENCE WITH TAKING WILD ANIMALS PROHIBITED.] A person who has the intent to prevent, or disrupt~~, or dissuade the taking of~~ another person from taking or preparing to take a wild animal or enjoyment of the out-of-doors ~~may~~ must not disturb or interfere with ~~another~~ that person ~~who~~ if that person is lawfully taking ~~a wild animal~~ or preparing to take a wild animal. "Preparing to take a wild animal" includes travel, camping, and other acts that occur on land or water where the affected person has the right or privilege to take lawfully a wild animal.

Sec. 34. Minnesota Statutes 1996, section 97A.245, is amended to read:

97A.245 [REWARDS.]

The commissioner may pay rewards for information leading to the conviction of a person that has violated a provision of laws relating to wild animals or threatened or endangered species of wildlife. A reward may not exceed $500, except a reward for information relating to big game or threatened or endangered species of wildlife, may be up to $1,000 and a reward for information relating to timber wolves may be up to $2,500. The rewards may only be paid from funds donated to the commissioner for these purposes and may not be paid to salaried conservation officers or peace officers.

Sec. 35. Minnesota Statutes 1996, section 103C.315, subdivision 4, is amended to read:

Subd. 4. [COMPENSATION.] A supervisor shall receive compensation for services as the state board may determine, and may be reimbursed for expenses, including traveling expenses, necessarily incurred in the discharge of duties. A supervisor ~~shall~~ may be reimbursed for the use of the supervisor's own automobile in the performance of official duties at ~~the~~ a rate ~~per mile prescribed for state officers and employees~~ up to the maximum tax-deductible mileage rate permitted under the federal Internal Revenue Code.

Sec. 36. Minnesota Statutes 1996, section 103F.155, subdivision 2, is amended to read:

Subd. 2. [COMMISSIONER'S REVIEW.] (a) The commissioner shall review the plan and consult with the state office of civil defense and other appropriate state and federal agencies. Following the review, the commissioner shall accept, require modification, or reject the plan.

(b) If required modifications are not made, or if the plan is rejected, the commissioner shall order the removal of the emergency protection measures and shall not provide grant money under section 103F.161 until the plan is approved or the required modifications are made.

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Sec. 37. Minnesota Statutes 1996, section 103F.161, subdivision 2, is amended to read:

Subd. 2. [ACTION ON GRANT APPLICATIONS.] (a) A local government may apply to the commissioner for a grant on forms provided by the commissioner. The commissioner shall confer with the local government requesting the grant and may make a grant up to ~~$75,000~~ $150,000 based on the following considerations:

(1) the extent and effectiveness of mitigation measures already implemented by the local government requesting the grant;

(2) the feasibility, practicality, and effectiveness of the proposed mitigation measures and the associated nonflood related benefits and detriments;

(3) the level of grant assistance that should be provided to the local government, based on available facts regarding the nature, extent, and severity of flood problems;

(4) the frequency of occurrence of severe flooding that has resulted in declaration of the area as a flood disaster area by the President of the United States;

(5) the economic, social, and environmental benefits and detriments of the proposed mitigation measures;

(6) whether the floodplain management ordinance or regulation adopted by the local government meets the minimum standards established by the commissioner, the degree of enforcement of the ordinance or regulation, and whether the local government is complying with the ordinance or regulation;

(7) the degree to which the grant request is consistent with local water plans developed under chapters 103B and 103D;

(8) the financial capability of the local government to solve its flood hazard problems without financial assistance; and

(9) the estimated cost and method of financing of the proposed mitigation measures based on local money and federal and state financial assistance.

(b) If the amount of the grant requested is ~~$75,000~~ $150,000 or more, the commissioner shall determine, under the considerations in paragraph (a), whether any part of the grant should be awarded. The commissioner must submit an appropriation request to the governor and the legislature for funding consideration before each odd-numbered year, consisting of requests or parts of grant requests of ~~$75,000~~ $150,000 or more. The commissioner must prioritize the grant requests, under the considerations in paragraph (a), beginning with the projects the commissioner determines most deserving of financing.

(d) After July 1, 1991, grants made under this section may be made to local governments whose grant requests are part of, or responsive to, a comprehensive local water plan prepared under chapter 103B or 103D.

Sec. 38. Minnesota Statutes 1996, section 103G.271, subdivision 6, is amended to read:

Subd. 6. [WATER USE PERMIT PROCESSING FEE.] (a) Except as described in paragraphs (b) to (f), a water use permit processing fee must be prescribed by the commissioner in accordance with the following schedule of fees for each water use permit in force at any time during the year:

(1) 0.05 cents per 1,000 gallons for the first 50,000,000 gallons per year;

(2) 0.10 cents per 1,000 gallons for amounts greater than 50,000,000 gallons but less than 100,000,000 gallons per year;

(3) 0.15 cents per 1,000 gallons for amounts greater than 100,000,000 gallons but less than 150,000,000 gallons per year; and

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(4) 0.20 cents per 1,000 gallons for amounts greater than 150,000,000 gallons but less than 200,000,000 gallons per year;

(5) 0.25 cents per 1,000 gallons for amounts greater than 200,000,000 gallons but less than 250,000,000 gallons per year;

(6) 0.30 cents per 1,000 gallons for amounts greater than 250,000,000 gallons but less than 300,000,000 gallons per year;

(7) 0.35 cents per 1,000 gallons for amounts greater than 300,000,000 gallons but less than 350,000,000 gallons per year;

(8) 0.40 cents per 1,000 gallons for amounts greater than 350,000,000 gallons but less than 400,000,000 gallons per year; and

(9) 0.45 cents per 1,000 gallons for amounts greater than 400,000,000 gallons per year.

(b) For once-through cooling systems, a water use processing fee must be prescribed by the commissioner in accordance with the following schedule of fees for each water use permit in force at any time during the year:

(1) for nonprofit corporations and school districts:

~~(i) 5.0 cents per 1,000 gallons until December 31, 1991;~~

~~(ii) 10.0 cents per 1,000 gallons from January 1, 1992, until December 31, 1996; and~~

~~(iii)~~, 15.0 cents per 1,000 gallons ~~after January 1, 1997~~; and

(2) for all other users, 20 cents per 1,000 gallons.

(c) The fee is payable based on the amount of water appropriated during the year and, except as provided in paragraph (f), the minimum fee is $50.

(d) For water use processing fees other than once-through cooling systems:

(1) the fee for a city of the first class may not exceed $175,000 per year;

(2) the fee for other entities for any permitted use may not exceed:

(i) $35,000 per year for an entity holding three or fewer permits;

(ii) $50,000 per year for an entity holding four or five permits;

(iii) $175,000 per year for an entity holding more than five permits;

(3) the fee for agricultural irrigation may not exceed $750 per year; ~~and~~

(4) the fee for a municipality that furnishes electric service and cogenerates steam for home heating may not exceed $10,000 for its permit for water use related to the cogeneration of electricity and steam; and

(5) no fee is required for a project involving the appropriation of surface water to prevent flood damage or to remove flood waters during a period of flooding, as determined by the commissioner.

(e) Failure to pay the fee is sufficient cause for revoking a permit. A penalty of two percent per month calculated from the original due date must be imposed on the unpaid balance of fees remaining 30 days after the sending of a second notice of fees due. A fee may not be imposed on an agency, as defined in section 16B.01, subdivision 2, or federal governmental agency holding a water appropriation permit.

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(f) The minimum water use processing fee for a permit issued for irrigation of agricultural land is $10 for years in which:

(1) there is no appropriation of water under the permit; or

(2) the permit is suspended for more than seven consecutive days between May 1 and October 1.

(g) For once-through systems fees payable after July 1, 1993, 75 percent of the fees must be credited to a special account and are appropriated to the Minnesota public facilities authority for loans under section 446A.21.

Sec. 39. Minnesota Statutes 1996, section 115.076, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY OF COMMISSIONER.] (a) The agency may refuse to issue or to authorize the transfer of:

(1) a hazardous waste facility permit or a solid waste facility permit to construct or operate a commercial waste facility as defined in section 115A.03, subdivision 6, if the agency determines that the permit applicant does not possess sufficient expertise and competence to operate the facility in conformance with the requirements of this chapter and chapters 114C and 116, or if other circumstances exist that demonstrate that the permit applicant may not operate the facility in conformance with the requirements of this chapter and chapters 114C and 116; or

(2) an animal feedlot facility permit, under section 116.07, subdivision 7, to construct or operate an animal feedlot facility, if the agency determines that the permit applicant does not possess sufficient expertise and competence to operate the feedlot facility in conformance with the requirements of this chapter and chapter 116 or if other circumstances exist that demonstrate that the permit applicant may not operate the feedlot facility in conformance with the requirements of this chapter and chapter 116.

(b) In making ~~this~~ a determination under paragraph (a), the agency may consider:

(1) the experience of the permit applicant in constructing or operating commercial waste facilities or animal feedlot facilities;

(2) the expertise of the permit applicant;

(3) the past record of the permit applicant in operating commercial waste facilities or animal feedlot facilities in Minnesota and other states;

(4) any criminal convictions of the permit applicant in state or federal court during the past five years that bear on the likelihood that the permit applicant will operate the facility in conformance with the applicable requirements of this chapter and chapters 114C and 116; and

(5) in the case of a corporation or business entity, any criminal convictions in state or federal court during the past five years of any of the permit applicant's officers, partners, or facility managers that bear on the likelihood that the facility will be operated in conformance with the applicable requirements of this chapter and chapters 114C and 116.

Sec. 40. Minnesota Statutes 1997 Supplement, section 115.55, subdivision 5a, is amended to read:

Subd. 5a. [INSPECTION CRITERIA FOR EXISTING SYSTEMS.] (a) An inspection of an existing system must evaluate the criteria in paragraphs (b) to (h).

(b) If the inspector finds one or more of the following conditions:

(1) sewage discharge to surface water;

(2) sewage discharge to ground surface;

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(3) sewage backup; or

(4) ~~a cesspool; or~~

~~(5)~~ any other situation with the potential to immediately and adversely affect or threaten public health or safety,

then the system constitutes an imminent threat to public health or safety and, if not repaired, must be upgraded, replaced, or its use discontinued within ten months of receipt of the notice described in subdivision 5b, or within a shorter period of time if required by local ordinance.

(c) An existing system that has none of the conditions in paragraph (b), and has at least two feet of soil separation need not be upgraded, repaired, replaced, or its use discontinued, notwithstanding any local ordinance that is more restrictive.

(d) Paragraph (c) does not apply to systems in shoreland areas regulated under sections 103F.201 to 103F.221, wellhead protection areas as defined in section 103I.005, or those used in connection with food, beverage, and lodging establishments regulated under chapter 157.

(e) If the local unit of government with jurisdiction over the system has adopted an ordinance containing local standards pursuant to subdivision 7, the existing system must comply with the ordinance. If the system does not comply with the ordinance, it must be upgraded, replaced, or its use discontinued according to the ordinance.

(f) If a seepage pit, drywell, cesspool, or leaching pit exists and the local unit of government with jurisdiction over the system has not adopted local standards to the contrary, the system is failing and must be upgraded, replaced, or its use discontinued within the time required by subdivision 3 or local ordinance.

(g) If the system fails to provide sufficient groundwater protection, then the local unit of government or its agent shall order that the system be upgraded, replaced, or its use discontinued within the time required by rule or the local ordinance.

(h) The authority to find a threat to public health under section 145A.04, subdivision 8, is in addition to the authority to make a finding under paragraphs (b) to (d).

Sec. 41. Minnesota Statutes 1997 Supplement, section 116.07, subdivision 7, is amended to read:

Subd. 7. [COUNTIES; PROCESSING OF APPLICATIONS FOR ANIMAL LOT PERMITS.] Any Minnesota county board may, by resolution, with approval of the pollution control agency, assume responsibility for processing applications for permits required by the pollution control agency under this section for livestock feedlots, poultry lots or other animal lots. The responsibility for permit application processing, if assumed by a county, may be delegated by the county board to any appropriate county officer or employee.

(a) For the purposes of this subdivision, the term "processing" includes:

(1) the distribution to applicants of forms provided by the pollution control agency;

(2) the receipt and examination of completed application forms, and the certification, in writing, to the pollution control agency either that the animal lot facility for which a permit is sought by an applicant will comply with applicable rules and standards, or, if the facility will not comply, the respects in which a variance would be required for the issuance of a permit; and

(3) rendering to applicants, upon request, assistance necessary for the proper completion of an application.

(b) For the purposes of this subdivision, the term "processing" may include, at the option of the county board, issuing, denying, modifying, imposing conditions upon, or revoking permits pursuant to the provisions of this section or rules promulgated pursuant to it, subject to review, suspension, and reversal by the pollution control agency. The pollution control agency shall, after written notification, have 15 days to review, suspend, modify, or reverse the issuance of the permit. After this period, the action of the county board is final, subject to appeal as provided in chapter 14.

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(c) For the purpose of administration of rules adopted under this subdivision, the commissioner and the agency may provide exceptions for cases where the owner of a feedlot has specific written plans to close the feedlot within five years. These exceptions include waiving requirements for major capital improvements.

(d) For purposes of this subdivision, a discharge caused by an extraordinary natural event such as a precipitation event of greater magnitude than the 25-year, 24-hour event, tornado, or flood in excess of the 100-year flood is not a "direct discharge of pollutants."

(e) In adopting and enforcing rules under this subdivision, the commissioner shall cooperate closely with other governmental agencies.

(f) The pollution control agency shall work with the Minnesota extension service, the department of agriculture, the board of water and soil resources, producer groups, local units of government, as well as with appropriate federal agencies such as the ~~Soil~~ Natural Resources Conservation Service and the ~~Agricultural Stabilization and Conservation Service~~ Farm Service Agency, to notify and educate producers of rules under this subdivision at the time the rules are being developed and adopted and at least every two years thereafter.

(g) The pollution control agency shall adopt rules governing the issuance and denial of permits for livestock feedlots, poultry lots or other animal lots pursuant to this section. A feedlot permit is not required for livestock feedlots with more than ten but less than 50 animal units; provided they are not in shoreland areas. These rules apply both to permits issued by counties and to permits issued by the pollution control agency directly.

(h) The pollution control agency shall exercise supervising authority with respect to the processing of animal lot permit applications by a county.

(i) After May 17, 1997, any new rules or amendments to existing rules proposed under the authority granted in this subdivision, must be submitted to the members of legislative policy committees with jurisdiction over agriculture and the environment prior to final adoption. The rules must not become effective until 90 days after the proposed rules are submitted to the members.

(j) Until new rules are adopted that provide for plans for manure storage structures, any plans for a liquid manure storage structure must be prepared or approved by a registered professional engineer or a United States Department of Agriculture, Natural Resources Conservation Service employee.

(k) A county may adopt by ordinance standards for animal feedlots that are more stringent than standards in pollution control agency rules.

(l) After January 1, 2001, a county that has not accepted delegation of the feedlot permit program must hold a public meeting prior to the agency issuing a feedlot permit for a feedlot facility with 300 or more animal units, unless another public meeting has been held with regard to the feedlot facility to be permitted.

Sec. 42. Minnesota Statutes 1996, section 116.07, is amended by adding a subdivision to read:

Subd. 7b. [FEEDLOT INVENTORY NOTIFICATION AND PUBLIC MEETING REQUIREMENTS.] (a) Any state agency or local government unit conducting an inventory or survey of livestock feedlots under its jurisdiction must publicize notice of the inventory in a newspaper of general circulation in the affected area and in other media as appropriate. The notice must state the dates the inventory will be conducted, the information that will be requested in the inventory, and how the information collected will be provided to the public. The notice must also specify the date for a public meeting to provide information regarding the inventory.

(b) A local government unit conducting an inventory or survey of livestock feedlots under its jurisdiction must hold at least one public meeting within the boundaries of the jurisdiction of the local unit of government, prior to beginning the inventory. A state agency conducting a survey of livestock feedlots must hold at least four public meetings outside of the seven-county Twin Cities metropolitan area, prior to beginning the inventory. The public meeting must provide information concerning the dates the inventory will be conducted, the procedure the agency or local unit of government will use to request the information to be included in the inventory, and how the information collected will be provided to the public.

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Sec. 43. Minnesota Statutes 1996, section 116.07, is amended by adding a subdivision to read:

Subd. 7c. [NPDES PERMITTING REQUIREMENTS.] (a) The agency must issue National Pollutant Discharge Elimination System permits for feedlots with 1,000 animal units or more based on the following schedule:

(1) for applications received after the effective date of this section, a permit for a newly constructed or expanded animal feedlot with 2,000 or more animal units must be issued as an individual permit;

(2) for applications received after January 1, 1999, a permit for a newly constructed or expanded animal feedlot with between 1,000 and 2,000 animal units that is identified as a priority by the commissioner, using criteria established under paragraph (e), must be issued as an individual permit; and

(3) after January 1, 2001, all existing feedlots with 1,000 or more animal units must be issued an individual or general National Pollutant Discharge Elimination System permit.

(b) By October 1, 1999, the agency must issue a general National Pollutant Discharge Elimination System permit for animal feedlots with between 1,000 and 2,000 animal units that are not identified under paragraph (a), clause (2).

(c) Prior to the issuance of a general National Pollutant Discharge Elimination System permit for a category of animal feedlot facility permittees, the agency must hold at least one public hearing on the permit issuance.

(d) To the extent practicable, the agency must include a public notice and comment period for an individual National Pollutant Discharge Elimination System permit concurrent with any public notice and comment for:

(1) the purpose of environmental review of the same facility under chapter 116D; or

(2) the purpose of obtaining a conditional use permit from a local unit of government where the local government unit is the responsible governmental unit for purposes of environmental review under chapter 116D.

(e) By January 1, 1999, the commissioner, in consultation with the feedlot and manure management advisory committee, created under section 17.136, and other interested parties must develop criteria for determining whether an individual National Pollutant Discharge Elimination System permit is required under paragraph (a), clause (2), for an animal feedlot with between 1,000 and 2,000 animal units. The criteria must be based on proximity to waters of the state, facility design, and other site-specific environmental factors.

(f) By January 1, 2000, the commissioner, in consultation with the feedlot and manure management advisory committee, created under section 17.136, and other interested parties must develop criteria for determining whether an individual National Pollutant Discharge Elimination System permit is required for an existing animal feedlot, under paragraph (a), clause (3). The criteria must be based on violations and other compliance problems at the facility.

Sec. 44. Minnesota Statutes 1997 Supplement, section 116.18, subdivision 3c, is amended to read:

Subd. 3c. [INDIVIDUAL ON-SITE TREATMENT SYSTEMS AND ALTERNATIVE DISCHARGING SEWAGE SYSTEMS PROGRAM.] (a) Beginning in fiscal year 1989, up to ten percent of the money to be awarded as grants under subdivision 3a in any single fiscal year, up to a maximum of $1,000,000, may be set aside for the award of grants by the agency to municipalities to reimburse owners of individual on-site wastewater treatment systems or alternative discharging sewage systems for a part of the costs of upgrading or replacing the systems.

(b) An individual on-site treatment system is a wastewater treatment system, or part thereof, that uses soil treatment and disposal technology to treat 5,000 gallons or less of wastewater per day from dwellings or other establishments.

(1) serves one or more dwellings and other establishments;

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(2) discharges less than 10,000 gallons of water per day; and

(3) uses any treatment and disposal methods other than subsurface soil treatment and disposal.

(d) Municipalities may apply yearly for grants of up to 50 percent of the cost of replacing or upgrading individual on-site treatment systems, including conversion to an alternative discharging sewage system, within their jurisdiction, up to a limit of $5,000 per system or per connection to a cluster system. Before agency approval of the grant application, a municipality must certify that:

(1) it has adopted and is enforcing the requirements of Minnesota Rules governing individual sewage treatment systems;

(2) the existing systems for which application is made do not conform to those rules, are at least 20 years old, do not serve seasonal residences, and were not constructed with state or federal funds; and

(3) the costs requested do not include administrative costs, costs for improvements or replacements made before the application is submitted to the agency unless it pertains to the plan finally adopted, and planning and engineering costs other than those for the individual site evaluations and system design.

~~(d)~~ (e) The federal and state regulations regarding the award of state and federal wastewater treatment grants do not apply to municipalities or systems funded under this subdivision, except as provided in this subdivision.

~~(e)~~ (f) The agency shall adopt permanent rules regarding priorities, distribution of funds, payments, inspections, procedures for administration of the agency's duties, and other matters that the agency finds necessary for proper administration of grants awarded under this subdivision.

Sec. 45. Minnesota Statutes 1997 Supplement, section 169.1217, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] As used in this section, the following terms have the meanings given them:

(a) "Appropriate agency" means a law enforcement agency that has the authority to make an arrest for a violation of a designated offense or to require a test under section 169.123.

(b) "Designated license revocation" includes a license revocation under section 169.123:

(1) within five years of two prior impaired driving convictions, two prior license revocations, or a prior impaired driving conviction and a prior license revocation, based on separate incidents; or

(2) within 15 years of the first of three or more prior impaired driving convictions, three or more prior license revocations, or any combination of three or more prior impaired driving convictions and prior license revocations, based on separate incidents.

(1) a violation of section 169.121, subdivision 1, clause (a), (b), (c), (d), (e), (g), or (h), subdivision 1a, an ordinance in conformity with any of them, or section 169.129:

(i) within five years of two prior impaired driving convictions, or two prior license revocations, or a prior impaired driving conviction and a prior license revocation, based on separate incidents; or

(ii) within 15 years of the first of three or more prior impaired driving convictions, three or more prior license revocations, or any combination of three or more impaired driving convictions and prior license revocations, based on separate incidents;

(2) a violation of section 169.121, subdivision 1, clause (f), or a violation of section 169.121, subdivision 3, paragraph (c), clause (4):

(i) within five years of a prior impaired driving conviction or a prior license revocation; or

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(ii) within 15 years of the first of two or more prior impaired driving convictions, two or more prior license revocations, or a prior impaired driving conviction and a prior license revocation, based on separate incidents; or

(3) a violation of section 169.121, an ordinance in conformity with it, or section 169.129:

(i) by a person whose driver's license or driving privileges have been canceled under section 171.04, subdivision 1, clause (9); or

(ii) by a person who is subject to a restriction on the person's driver's license under section 171.09 which provides that the person may not use or consume any amount of alcohol or a controlled substance; or

(4) until June 30, 1999, a second or subsequent violation of section 85.015, subdivision 1c.

(d) "Motor vehicle" and "vehicle" have the meaning given "motor vehicle" in section 169.121, subdivision 11. The terms do not include a vehicle which is stolen or taken in violation of the law.

(e) "Owner" means the registered owner of the motor vehicle according to records of the department of public safety and includes a lessee of a motor vehicle if the lease agreement has a term of 180 days or more.

(f) "Prior impaired driving conviction" has the meaning given it in section 169.121, subdivision 3. A prior impaired driving conviction also includes a prior juvenile adjudication that would have been a prior impaired driving conviction if committed by an adult.

(g) "Prior license revocation" has the meaning given it in section 169.121, subdivision 3.

(h) "Prosecuting authority" means the attorney in the jurisdiction in which the designated offense occurred who is responsible for prosecuting violations of a designated offense.

Sec. 46. Minnesota Statutes 1996, section 308A.131, subdivision 1, is amended to read:

Subdivision 1. [CONTENTS.] (a) The incorporators shall prepare the articles, which must include:

(1) the name of the cooperative;

(2) the purpose of the cooperative;

(3) the principal place of business for the cooperative;

(4) the period of duration for the cooperative, if the duration is not to be perpetual;

(5) the total authorized number of shares and the par value of each share if the cooperative is organized on a capital stock basis;

(6) a description of the classes of shares, if the shares are to be classified;

(7) a statement of the number of shares in each class and relative rights, preferences, and restrictions granted to or imposed upon the shares of each class, and a provision that only common stockholders have voting power;

(8) a statement that individuals owning common stock shall be restricted to one vote in the affairs of the cooperative or a statement that the cooperative is one described in section 308A.641, subdivision 2;

(9) a statement that shares of stock are transferable only with the approval of the board;

(10) a statement that dividends on the capital stock and nonstock units of equity of the cooperative may not exceed eight percent annually;

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(11) the names, post office addresses, and terms of office of the directors of the first board;

(12) a statement that net income in excess of dividends and additions to reserves shall be distributed on the basis of patronage, and that the records of the cooperative may show the interest of patrons, stockholders of any classes, and members in the reserves; and

(13) the registered office address of the cooperative and the name of the registered agent, if any, at that address.

(b) The articles must always contain the provisions in paragraph (a), except that the names, post office addresses, and terms of offices of the directors of the first board may be omitted after their successors have been elected by the members or the articles are amended in their entirety.

(d) The articles must be signed by the incorporators.

Sec. 47. Minnesota Statutes 1997 Supplement, section 308A.705, subdivision 1, is amended to read:

Subdivision 1. [DISTRIBUTION OF NET INCOME.] Net income in excess of dividends on capital stock, nonstock units of equity, and additions to reserves shall be distributed on the basis of patronage. A cooperative may establish allocation units, whether the units are functional, divisional, departmental, geographic, or otherwise, and pooling arrangements and may account for and distribute net income on the basis of allocation units and pooling arrangements. A cooperative may offset the net loss of an allocation unit or pooling arrangement against the net income of other allocation units or pooling arrangements to the extent permitted by section 1388(j) of the Internal Revenue Code of 1986, as amended through December 31, 1996.

Sec. 48. Minnesota Statutes 1996, section 308A.705, subdivision 3, is amended to read:

Subd. 3. [DIVIDENDS.] Dividends may be paid on capital stock and nonstock units of equity only if the net income of the cooperative for the previous fiscal year is sufficient. The dividends are not cumulative.

Sec. 49. Laws 1997, chapter 216, section 15, subdivision 8, is amended to read:

Subd. 8. Pollution Prevention

(a) TOXIC EMISSIONS FROM FIRE TRAINING 65,000

This appropriation is from the trust fund to metropolitan state university to identify and quantify toxic emissions from live-burn training in acquired structures to evaluate and propose alternatives. This appropriation is available until June 30, 2000, at which time the project must be completed and final products delivered, unless an earlier date is specified in the work program.

(b) POLLUTION PREVENTION TRAINING PROGRAM FOR

INDUSTRIAL EMPLOYEES 200,000

This appropriation is from the future resources fund to ~~the director of the office of environmental assistance for agreements with Citizens for a Better Environment and~~ the University of Minnesota to provide the training and technical assistance needed for pollution prevention by industrial employees.

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Sec. 50. [AGGREGATE RESOURCES TASK FORCE.]

Subdivision 1. [CREATION; MEMBERSHIP.] (a) An aggregate resources task force consists of 12 members appointed as follows:

(1) the subcommittee on subcommittees of the senate committee on rules and administration shall appoint one citizen member with experience in the state's aggregates industry, one citizen member who is an employee of a local government unit that works with environmental and land use impacts from aggregate mining, and four members of the senate, two of whom must be members of the minority caucus; and

(2) the speaker of the house shall appoint one citizen member who is an employee of a local governmental unit that works with environmental and land use impacts from aggregate mining, one citizen member with experience in native prairie conservation, and four members of the house, two of whom must be members of the minority caucus.

(b) The appointing authorities must make their respective appointments not later than July 1, 1998.

(c) The first meeting of the task force must be convened by a person designated by the chair of the senate committee on rules and administration. Task force members shall then elect a permanent chair from among the task force members.

Subd. 2. [DUTIES.] The task force shall examine current and projected issues concerning the need for and use of the state's aggregate resources. The task force shall seek input from the aggregate industry, state agencies, counties, local units of government, environmental organizations, and other interested parties on aggregate resource issues, including resource inventory, resource depletion, mining practices, nuisance problems, safety, competing land uses and land use planning, native prairie conservation, environmental review, local permit requirements, reclamation, recycling, transportation of aggregates, and the aggregate material tax.

Subd. 3. [REPORT.] Not later than February 1, 2000, the task force shall report to the legislature on the findings of its study. The report must include a recommendation as to whether there is a need for a comprehensive statewide policy on any aggregate resource issue. If the task force recommends a statewide policy, the report must include recommendations on the framework for the statewide policy.

Subd. 4. [EXPIRATION.] The aggregate resources task force expires 45 days after its report and recommendations are delivered to the legislature, or on June 30, 2001, whichever date is earlier.

Sec. 51. [REPORT ON NONCOMMERCIAL MANURE APPLICATOR TRAINING AND CERTIFICATION.]

The commissioner of agriculture, in close consultation with the commissioner of the pollution control agency and statewide farm organizations including the Minnesota Farmers Union and the Minnesota Farm Bureau Federation, shall conduct a study to assess the need for and feasibility of a program for noncommercial manure applicator training and certification. The commissioner must submit a report to the members of the senate and house policy committees with jurisdiction over agriculture and the environment by January 20, 1999. The report must include recommendations on:

(1) persons and activities that should be exempt from certification;

(2) dates by which persons should be required to obtain certification;

(3) content of the noncommercial animal waste technician training curriculum; and

(4) procedures and timelines for implementing noncommercial animal waste technician training programs.

Sec. 52. [PERMIT REQUIREMENTS.]

Until June 30, 2000, neither the pollution control agency nor a county board may issue a permit for the construction of an open-air clay, earthen, or flexible membrane lined swine waste lagoon. This section does not apply to repair or modification related to an environmental improvement of an existing lagoon.

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Sec. 53. [FEEDLOT RULES.]

By March 1, 1999, the commissioner of the pollution control agency must submit a copy of updated feedlot permit rules as prescribed in Minnesota Statutes, section 116.07, subdivision 7, paragraph (i). The updated rules must become effective no later than June 1, 1999.

Sec. 54. [ENVIRONMENTAL REVIEW RULES.]

The environmental quality board, in consultation with the pollution control agency, shall study and adopt rules pursuant to Minnesota Statutes, chapter 14, to revise and clarify Minnesota Rules, part 4410.1000, subpart 4, as it applies to connected actions on animal feedlots and the need for environmental review. The board must submit a copy of the proposed rules and a summary of public comments received on the rules to the members of the senate and house policy committees with jurisdiction over agriculture and the environment, the senate environment and agriculture budget division, and the house environment, natural resources, and agriculture finance committee by March 1, 1999. The rules may not become effective until 60 days after they are submitted to the committee members and must become effective no later than June 1, 1999.

Sec. 55. [REPORT ON REVISED STANDARDS FOR HYDROGEN SULFIDE EXPOSURE.]

By January 15, 1999, the commissioner of labor and industry, in consultation with the commissioners of the pollution control agency, health, and agriculture, shall report to the senate and house policy committees with jurisdiction over agriculture and environment on the need for and, if appropriate, suggested changes to standards for hydrogen sulfide exposure levels within livestock confinement facilities having a design capacity of 500 animal units or more and at various distances up to 5,000 feet from animal waste storage facilities.

Sec. 56. [REPORT ON ANIMAL WASTE LIABILITY.]

By January 15, 1999, the commissioner of the pollution control agency, in conjunction with the commissioner of agriculture, shall report to the legislative policy and finance committees or divisions with jurisdiction over agriculture and the environment on the need for an animal waste liability account, improved animal waste incident reporting, and a contingency action plan for animal waste sites. The report must include:

(1) an analysis of the need and level of funding required for an animal waste liability account;

(2) the identification of possible funding sources to ensure adequate resources for animal waste site cleanup under clause (1);

(3) an analysis of the need for changes to the current animal waste incident reporting system; and

(4) the need for development of a statewide animal waste contingency plan for animal waste sites, including containment, closure, and cleanup.

Sec. 57. [COUNTIES AND TOWNS TO REPORT.]

(a) Not later than August 1, 1998, each county and each town that has adopted ordinances related to animal feedlots shall supply copies of the ordinances to the commissioner of agriculture. A county or town that adopts a new or amended ordinance related to animal feedlots shall report the new or amended ordinance to the commissioner within 60 days after the adoption.

(b) The reporting requirements of paragraph (a) expire after June 30, 2001.

Sec. 58. [LOAN WORK PLAN.]

Notwithstanding the requirements of rules adopted pursuant to Minnesota Statutes, section 115A.0716, that prevent the use of funds for costs incurred before the term of the agreement, the director shall disburse loan funds awarded to United Recycling, Inc., provided that the director has approved a new project proposal that includes performance goals for carpet recycling and demonstrates the financial viability of the recycling enterprise.

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Sec. 59. [WATER QUALITY COST-BENEFIT MODEL SCOPING TASK FORCE.]

The commissioner of the pollution control agency shall convene a task force comprising of no more than three representatives each from industry, municipalities, watershed management groups, labor, agriculture, and environmental groups within 30 days of the effective date of this section. The task force shall select an entity to conduct a scoping study for a cost-benefit model to analyze water quality standards. The scoping study shall include: a watershed-based approach that evaluates both point and nonpoint pollution sources, the extent of the costs and benefits to be evaluated, the necessary elements of the model, a model that is transferable to other watersheds and standards, and the characteristics of the watersheds and standards to be evaluated. By October 15, 1998, the task force shall review the completed scoping study and make recommendations on the scope, cost, and time frame for development of the model to the commissioner and to the chairs of the house and senate environment and natural resources committees, the chair of the house environment, natural resources, and agriculture finance committee, and the chair of the senate environment and agriculture budget division.

Sec. 60. [ANALYSIS AND SALE OF LAKESHORE LEASED LOTS.]

Subdivision 1. [ANALYSIS OF LOTS.] By January 15, 1999, the commissioner of natural resources must submit a report to the chairs of the senate and house environment and natural resources committees, the chair of the house environment, natural resources, and agriculture finance committee, the chair of the senate environment and agriculture budget division, the chairs of the senate children, families and learning committee, and the chair of the house education committee, including the results of the field inspection required by this section, recommendations on appropriations needed to accomplish this section, and additional recommendations on methods to preserve public lakeshore in the state. The commissioner must conduct a field inspection of all lands leased pursuant to Minnesota Statutes, section 92.46, subdivision 1. The commissioner shall identify all lots within the following classifications:

(1) sale of the lot would create a block of contiguous property that could result in a shift in land use from residential to commercial development;

(2) the lot should remain in public ownership in order to provide public access to the lake where it is located;

(3) the lot is part of the trust land in Horseshoe Bay, as referenced in Laws 1997, chapter 216, section 151;

(4) the lot contains all or part of an unusual resource, such as a historical or archaeological site, or a sensitive ecological resource, or contains high quality habitat, or has a high scenic value;

(5) the lot is not in compliance with state law concerning on-site sewage treatment or minimum lot size requirements for development, or the lot is hydrologically unsuitable for future development; and

(6) the lot provides access for adjacent state land.

Subd. 2. [SCHOOL TRUST LAKESHORE LOTS; EXCHANGE AND SALE.] (a) For each parcel of land that does not meet the criteria in subdivision 1, the commissioner must preserve the assets of the school trust pursuant to this subdivision.

(b) The commissioner must attempt to establish a land exchange with each lessee. The lessee and the commissioner must attempt to agree on a parcel of private lakeshore land to be used for the land exchange. If the lessee obtains an option to purchase the parcel, the commissioner must conduct an appraisal and a survey of both parcels of land at the lessee's expense. If the commissioner determines that the parcel offered by the lessee is of equal or greater value than the trust land, the commissioner must submit the proposed exchange to the land exchange board, as defined in Minnesota Statutes, section 94.341, for approval. Notwithstanding Minnesota Statutes, sections 94.342 to 94.347, the land exchange board shall determine the procedures for approval of individual land exchanges, subject to the requirements of the Minnesota Constitution and this section. Any exchange under this paragraph must be submitted to the land exchange board by July 1, 2004.

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(c) By December 15, 2004, the commissioner must submit a list of each parcel of land that has not been exchanged pursuant to paragraph (b) to the house and senate environment and natural resource committees. The list submitted by the commissioner must include recommendations for sale or retention of the remaining individual parcels. Subject to approval by the legislature, the commissioner must sell parcels approved for sale by public sale at the expiration of the lease term using a sealed bid procedure under the remaining provisions of Minnesota Statutes, chapter 92. After approval of sale by the legislature, a lessee of land approved for sale may request during the remainder of the lease term that lands leased by the lessee be sold at a public sale pursuant to this section within one year of the request.

(d) The commissioner must mail notice of this section to each lessee by July 1, 1998.

Sec. 61. [REPEALER.]

(a) Minnesota Statutes 1997 Supplement, section 85.015, subdivision 1c, as amended by this act, is repealed effective June 30, 1999.

(b) Laws 1991, chapter 275, section 3, is repealed.

Sec. 62. [EFFECTIVE DATE.]

Section 31 is effective January 1, 1998. Sections 28 and 29 are effective January 1, 1999. Section 23 is effective July 1, 1999. Section 52 is effective the day following final enactment and applies to new applications submitted after that date. The remainder of this act is effective the day following final enactment."

"A bill for an act relating to the organization and operation of state government; appropriating money for environmental, natural resource, and agricultural purposes; providing for regulation of certain activities and practices; amending Minnesota Statutes 1996, sections 3.737, subdivisions 1, 4, and by adding a subdivision; 18C.141; 35.82, subdivision 2; 41A.09, subdivision 1a; 84.871; 86B.101, subdivision 2; 86B.415, subdivision 1, and by adding a subdivision; 89A.03, subdivision 1; 90.193; 93.002, subdivision 1; 97A.037, subdivision 1; 97A.245; 103C.315, subdivision 4; 103F.155, subdivision 2; 103F.161, subdivision 2; 103G.271, subdivision 6; 115.076, subdivision 1; 116.07, by adding subdivisions; 308A.131, subdivision 1; 308A.705, subdivision 3; Minnesota Statutes 1997 Supplement, sections 17.101, subdivision 5; 41A.09, subdivision 3a; 84.8205; 84.86, subdivision 1; 85.015, subdivision 1c; 115.55, subdivision 5a; 116.07, subdivision 7; 116.18, subdivision 3c; 169.1217, subdivision 1; and 308A.705, subdivision 1; Laws 1997, chapter 216, section 15, subdivision 8; proposing coding for new law in Minnesota Statutes, chapters 17; 18C; and 84; repealing Minnesota Statutes 1997 Supplement, section 85.015, subdivision 1c; and Laws 1991, chapter 275, section 3."

We request adoption of this report and repassage of the bill.

Senate Conferees: Steven Morse, Dallas C. Sams, Becky Lourey and Steve Dille.

House Conferees: Tom Osthoff, Willard Munger, Betty McCollum and Doug Peterson.

Osthoff moved that the report of the Conference Committee on S. F. No. 3353 be adopted and that the bill be repassed as amended by the Conference Committee.

Winter moved that the House recess subject to the call of the Chair. The motion prevailed.

RECESS

The House recessed for an address by the Honorable Arne H. Carlson, Governor of the State of Minnesota

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RECONVENED

The House reconvened and was called to order by the Speaker.

Krinkie moved that the House refuse to adopt the Conference Committee report on S. F. No. 3353, and that the bill be returned to the Conference Committee. The motion prevailed.

The question was taken on the Krinkie motion and the roll was called.

McCollum moved that those not voting be excused from voting. The motion prevailed.

There were 62 yeas and 70 nays as follows:

Abrams Davids Kielkucki Mulder Rostberg Tompkins
Anderson, B. Dehler Knight Ness Seagren Van Dellen
Anderson, I. Dempsey Knoblach Nornes Seifert Vandeveer
Bakk Erhardt Kraus Olson, M. Smith Weaver
Bettermann Erickson Krinkie Osskopp Stanek Westfall
Boudreau Finseth Kuisle Ozment Stang Westrom
Bradley Goodno Lindner Paulsen Sviggum Workman
Broecker Gunther Macklin Pawlenty Swenson, H.
Clark, J. Haas Mahon Reuter Sykora
Commers Harder McElroy Rhodes Tingelstad
Daggett Holsten Molnau Rifenberg Tomassoni

Biernat Garcia Juhnke Mariani Otremba, M. Solberg
Bishop Greenfield Kahn Marko Paymar Trimble
Carlson Greiling Kalis McCollum Pelowski Tuma
Chaudhary Hasskamp Kelso McGuire Peterson Tunheim
Clark, K. Hausman Kinkel Milbert Pugh Wagenius
Dawkins Hilty Koskinen Mullery Rest Wejcman
Delmont Huntley Kubly Munger Rukavina Wenzel
Dorn Jaros Larsen Murphy Schumacher Winter
Entenza Jefferson Leighton Olson, E. Sekhon Wolf
Evans Jennings Lieder Opatz Skare Spk. Carruthers
Farrell Johnson, A. Long Orfield Skoglund
Folliard Johnson, R. Mares Osthoff Slawik

The question recurred on the Osthoff motion that the report of the Conference Committee on S. F. No. 3353 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

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subdivision 1a; 84.83, subdivision 3; 84.871; 84.943, subdivision 3; 86B.415, by adding a subdivision; 97A.037, subdivision 1; 97A.245; 103C.315, subdivision 4; 103F.155, subdivision 2; 103F.161, subdivision 2; 103G.271, subdivision 6; 115B.175, subdivision 3; and 116.07, subdivision 4h; 116.49, by adding a subdivision; Minnesota Statutes 1997 Supplement, sections 17.101, subdivision 5; 41A.09, subdivision 3a; 84.8205; 84.86, subdivision 1; and 97A.485, subdivision 6; repealing Minnesota Statutes 1997 Supplement, section 85.015, subdivision 1c; Laws 1991, chapter 275, section 3.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 72 yeas and 60 nays as follows:

Biernat Garcia Johnson, R. Long Orfield Slawik
Bishop Greenfield Juhnke Mares Osthoff Solberg
Carlson Greiling Kahn Mariani Otremba, M. Swenson, H.
Chaudhary Hasskamp Kalis Marko Paymar Trimble
Clark, K. Hausman Kelso McCollum Pelowski Tuma
Dawkins Hilty Kinkel McGuire Peterson Tunheim
Delmont Holsten Koskinen Milbert Pugh Wagenius
Dorn Huntley Kubly Mullery Rest Wejcman
Entenza Jaros Larsen Munger Rukavina Wenzel
Evans Jefferson Leighton Murphy Schumacher Winter
Farrell Jennings Leppik Olson, E. Sekhon Wolf
Folliard Johnson, A. Lieder Opatz Skoglund Spk. Carruthers

Abrams Daggett Harder McElroy Reuter Sykora
Anderson, B. Davids Kielkucki Molnau Rhodes Tingelstad
Anderson, I. Dehler Knight Mulder Rifenberg Tomassoni
Bakk Dempsey Knoblach Ness Rostberg Tompkins
Bettermann Erhardt Kraus Nornes Seagren Van Dellen
Boudreau Erickson Krinkie Olson, M. Seifert Vandeveer
Bradley Finseth Kuisle Osskopp Smith Weaver
Broecker Goodno Lindner Ozment Stanek Westfall
Clark, J. Gunther Macklin Paulsen Stang Westrom
Commers Haas Mahon Pawlenty Sviggum Workman

The bill was repassed, as amended by Conference, and its title agreed to.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

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The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said House File is herewith returned to the House.

I hereby announce that the Senate has reconsidered the vote whereby S. F. No. 3346 was repassed and has also reconsidered the vote whereby the recommendations and the Conference Committee report were adopted on April 8, 1998.

The Senate has re-referred S. F. No. 3346 to the Conference Committee, as formerly constituted, for further consideration.

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 816.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

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CONFERENCE COMMITTEE REPORT ON S. F. NO. 816

A bill for an act relating to animals; requiring court order issued on complaint of animal cruelty to require that peace officer be accompanied by veterinarian; allowing veterinarians to dock horses; modifying requirements for the care of equine animals; repealing restrictions on clipped animals; changing dog house specifications; amending Minnesota Statutes 1996, sections 343.22, subdivision 1; 343.25; 343.40, subdivision 2; and 346.38, subdivisions 4 and 5; repealing Minnesota Statutes 1996, section 343.26.

We, the undersigned conferees for S. F. No. 816, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and that S. F. No. 816 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 343.24, is amended to read:

343.24 [CRUELTY IN TRANSPORTATION.]

Subdivision 1. [PENALTY.] Any person who does any of the following is guilty of a misdemeanor: (a) Carries or causes to be carried, any live animals upon any vehicle or otherwise, without providing suitable racks, cars, crates, or cages in which the animals can both stand and lie down during transportation and while awaiting slaughter; (b) Except as provided in subdivision 2, paragraph (a), carries or causes to be carried, upon a vehicle or otherwise, any live animal having feet or legs tied together, or in any other cruel or ~~inhuman~~ inhumane manner; (c) Transports or detains livestock in cars or compartments for more than 28 consecutive hours without unloading the livestock in a humane manner into properly equipped pens for rest, water, and feeding for a period of at least five consecutive hours, unless requested to do so as provided in subdivision 2, paragraph (b), or unless prevented by storm or unavoidable causes which cannot be anticipated or avoided by the exercise of due diligence and foresight; or (d) Permits livestock to be crowded together without sufficient space to stand, or so as to overlie, crush, wound, or kill each other.

Subd. 2. [~~EXCEPTION~~ EXCEPTIONS.] (a) A person may carry or cause to be carried, upon a vehicle or otherwise, a cloven-hoofed animal having legs tied together, if:

(1) the person transporting the animal is the animal's owner, or an employee or agent of the owner;

(2) the animal weighs 250 pounds or less;

(3) the tying is done in a humane manner and is necessary for the animal's safe transport; and

(4) the animal's legs are tied for no longer than one-half hour.

(b) A person or corporation engaged in transporting livestock may confine livestock for 36 consecutive hours if the owner or person with custody of that particular shipment of livestock requests in writing that an extension be allowed. That written request shall be separate from any printed bill of lading or other railroad form.

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Sec. 2. Minnesota Statutes 1996, section 343.40, subdivision 2, is amended to read:

Subd. 2. [BUILDING SPECIFICATIONS.] The shelter shall include a moistureproof and windproof structure of suitable size to accommodate the dog and allow retention of body heat. It shall be made of durable material with a solid, moisture-proof floor or a floor raised at least two inches from the ground ~~and with the entrance covered by a flexible windproof material or a self-closing swinging door~~. Between November 1 and March 31 the structure must have a windbreak at the entrance. The structure shall be provided with a sufficient quantity of suitable bedding material consisting of hay, straw, cedar shavings, blankets, or the equivalent, to provide insulation and protection against cold and dampness and promote retention of body heat.

Sec. 3. Minnesota Statutes 1996, section 346.38, subdivision 4, is amended to read:

Subd. 4. [SHELTER.] Equines must be provided a minimum of free choice protection or constructed shelter from ~~direct rays of the sun when temperatures exceed 95 degrees Fahrenheit, from wind, and from freezing precipitation~~ adverse weather conditions, including direct rays of the sun in extreme heat or cold, wind, or precipitation. Natural or constructed shelters must be of sufficient size to provide the necessary protection. Constructed shelters must be structurally sound, free of injurious matter, maintained in good repair, and ventilated. Outside exercise paddocks for equines do not require separate constructed shelter where a shelter is accessible to the equine on adjacent or other accessible areas of the property provided that equines are not kept in outdoor exercise paddocks during adverse weather conditions.

Sec. 4. Minnesota Statutes 1996, section 346.38, subdivision 5, is amended to read:

Subd. 5. [SPACE AND CLEANLINESS REQUIREMENTS.] Constructed shelters except for tie stalls must provide space for the animal to: (1) roll with a minimum danger of being cast; or (2) easily stand, lie down, and turn around. Stalls must be cleaned and kept dry to the extent the animal is not required to lie or stand in fluids. Bedding must be provided in all stalls, kept reasonably clean, and periodically changed. The nature of the bedding must not pose a health hazard to the animal.

Sec. 5. [583.311] [VOLUNTARY ALTERNATIVE DISPUTE RESOLUTION.]

Sec. 6. Laws 1986, chapter 398, article 1, section 18, as amended by Laws 1987, chapter 292, section 37; Laws 1989, chapter 350, article 16, section 8; Laws 1990, chapter 525, section 1; Laws 1991, chapter 208, section 2; Laws 1993, First Special Session chapter 2, article 6, section 2; Laws 1995, chapter 212, article 2, section 11; and Laws 1997, chapter 183, article 3, section 29, is amended to read:

Sec. 18. [REPEALER.]

Sections 1 to 17 and Minnesota Statutes, section 336.9-501, subsections (6) and (7), and sections 583.284, 583.285, 583.286, and 583.305, are repealed on July 1, ~~1998~~ 1999.

Sec. 7. [REPORT.]

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We request adoption of this report and repassage of the bill.

Senate Conferees: Steve Dille, Steven Morse and Dallas C. Sams.

House Conferees: Ted Winter, Doug Peterson and Peg Larsen.

Winter moved that the report of the Conference Committee on S. F. No. 816 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 816, A bill for an act relating to animals; requiring court order issued on complaint of animal cruelty to require that peace officer be accompanied by veterinarian; allowing veterinarians to dock horses; modifying requirements for the care of equine animals; repealing restrictions on clipped animals; changing dog house specifications; amending Minnesota Statutes 1996, sections 343.22, subdivision 1; 343.25; 343.40, subdivision 2; and 346.38, subdivisions 4 and 5; repealing Minnesota Statutes 1996, section 343.26.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 129 yeas and 0 nays as follows:

Abrams Erickson Juhnke Mariani Paymar Sykora
Anderson, B. Evans Kahn Marko Pelowski Tingelstad
Anderson, I. Farrell Kalis McCollum Peterson Tomassoni
Bakk Finseth Kelso McElroy Pugh Tompkins
Bettermann Folliard Kielkucki McGuire Rest Trimble
Biernat Garcia Kinkel Milbert Reuter Tuma
Boudreau Goodno Knight Molnau Rhodes Tunheim
Bradley Greenfield Knoblach Mulder Rifenberg Van Dellen
Broecker Greiling Koskinen Mullery Rostberg Vandeveer
Chaudhary Gunther Kraus Munger Rukavina Wagenius
Clark, J. Haas Krinkie Murphy Schumacher Weaver
Clark, K. Harder Kubly Ness Seagren Wejcman
Commers Hasskamp Kuisle Nornes Seifert Wenzel
Daggett Hausman Larsen Olson, E. Sekhon Westfall
Davids Hilty Leighton Olson, M. Skare Westrom
Dawkins Holsten Leppik Opatz Skoglund Winter
Dehler Huntley Lieder Orfield Slawik Wolf
Delmont Jaros Lindner Osskopp Smith Workman
Dempsey Jefferson Long Otremba, M. Stanek Spk. Carruthers
Dorn Jennings Macklin Ozment Stang
Entenza Johnson, A. Mahon Paulsen Sviggum
Erhardt Johnson, R. Mares Pawlenty Swenson, H.

The bill was repassed, as amended by Conference, and its title agreed to.

The following Conference Committee Report was received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 3843

A bill for an act relating to public administration; authorizing spending for public purposes; authorizing spending to acquire and to better public land and buildings and other public improvements of a capital nature with certain conditions; authorizing state bonds; appropriating money; amending Minnesota Statutes 1996, sections 16A.105; 16A.11,

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9899

subdivision 3a, and by adding a subdivision; 16A.501; 16B.30; and 446A.072, by adding a subdivision; Minnesota Statutes 1997 Supplement, sections 16A.641, subdivision 4; 124C.498, subdivision 2; 268.917; and 462A.202, subdivision 3a; Laws 1986, chapter 396, section 2, subdivision 1, as amended; Laws 1994, chapter 643, section 2, subdivision 13; Laws 1996, chapter 463, sections 13, subdivision 4, as amended; and 22, subdivision 7; and Laws 1997, chapter 202, article 1, section 35, as amended; proposing coding for new law in Minnesota Statutes, chapter 116J; repealing Laws 1986, chapter 396, section 2, subdivision 2.

April 9, 1998

The Honorable Phil Carruthers

Speaker of the House of Representatives

The Honorable Allan H. Spear

President of the Senate

We, the undersigned conferees for H. F. No. 3843, report that we have agreed upon the items in dispute and recommend as follows:

That the Senate recede from its amendment and that H. F. No. 3843 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. [CAPITAL IMPROVEMENT APPROPRIATIONS.]

The sums in the column under "APPROPRIATIONS" are appropriated from the bond proceeds fund, or another named fund, to the state agencies or officials indicated, to be spent for public purposes including to acquire and to better public land and buildings and other public improvements of a capital nature, as specified in this act. Unless otherwise specified, the appropriations in this act are available until the project is completed or abandoned.

SUMMARY

UNIVERSITY OF MINNESOTA $ 138,300,000

MINNESOTA STATE COLLEGES AND UNIVERSITIES 143,080,000

CENTER FOR ARTS EDUCATION 1,395,000

CHILDREN, FAMILIES, AND LEARNING 62,405,000

FARIBAULT RESIDENTIAL ACADEMIES 9,225,000

NATURAL RESOURCES 130,251,000

OFFICE OF ENVIRONMENTAL ASSISTANCE 3,500,000

PUBLIC FACILITIES AUTHORITY 44,050,000

BOARD OF WATER AND SOIL RESOURCES 19,800,000

AGRICULTURE 500,000

ZOOLOGICAL GARDENS 1,750,000

ADMINISTRATION 46,250,000

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CAPITOL AREA ARCHITECTURAL AND PLANNING BOARD 9,544,000

AMATEUR SPORTS COMMISSION 11,020,000

MILITARY AFFAIRS 1,230,000

TRANSPORTATION 93,300,000

HUMAN SERVICES 19,975,000

VETERANS HOMES BOARD 12,055,000

CORRECTIONS 14,185,000

PUBLIC SAFETY 2,230,000

INDIAN AFFAIRS COUNCIL 1,700,000

TRADE AND ECONOMIC DEVELOPMENT 225,680,000

HOUSING FINANCE AGENCY 6,000,000

MINNESOTA HISTORICAL SOCIETY 13,110,000

BOND SALE EXPENSES 500,000

CANCELLATIONS (11,993,000)

TOTAL $ 999,042,000

Bond Proceeds Fund (General Fund Debt Service) 438,184,000

Bond Proceeds Fund (User Financed Debt Service) 25,611,000

Transportation Fund 34,000,000

General Fund 500,047,000

Trunk Highway Fund 1,200,000

Sec. 2. UNIVERSITY OF MINNESOTA

Subdivision 1. To the board of regents of the University of

Minnesota for the purposes specified in this section 138,300,000

Subd. 2. Higher Education Asset Preservation and Replacement 4,000,000

To be spent in accordance with Minnesota Statutes, section 135A.046. This appropriation is from the general fund.

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Subd. 3. Twin Cities - Minneapolis

(a) Amundson Hall 1,250,000

To construct, furnish, and equip an addition for the Chemical Engineering and Materials Science program and remodel existing space. This appropriation is contingent upon $2,488,000 of nonstate matching money. The nonstate money is in lieu of one-third debt service payments.

(b) Art Building 730,000

To design and prepare construction drawings for the construction of a new facility.

To predesign, design, and complete the following projects:

(1) $1,000,000 is to replace and upgrade the information technology infrastructure serving Mall District buildings. This appropriation is from the general fund.

(2) $2,500,000 is to separate the combined storm sewer and sanitary sewer systems and for air conditioning Mall District buildings using chilled water clusters.

(d) Folwell Hall Renovation 690,000

To design the renovation and upgrading of classrooms.

(e) Walter Digital Technology Center/Science and Engineering Library 53,600,000

To design, renovate, furnish, and equip the Walter Digital Technology Center/Science and Engineering Library on the Minneapolis campus.

Subd. 4. Twin Cities - St. Paul

(a) Gortner and Snyder Halls 4,000,000

To design and remodel selected biology laboratories.

(b) Greenhouse Renovation and Replacement 900,000

To design for upgrading plant growth facilities for teaching and research. The project will renovate or replace obsolete greenhouse and headhouse space and construct a biocontainment facility to support the teaching and research activities of both the university and the Minnesota department of agriculture.

To renovate, furnish, and equip classroom, research, and office space.

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Subd. 5. Use of Facilities

The board of regents is requested to use the molecular cellular biology building and the remodeled Gortner and Snyder Hall laboratories in a manner that increases the interdisciplinary opportunities for collaborative research to the benefit of plant, animal, and human health applications, and ensures that agriculture research and outreach is enhanced through the use of these facilities, programs, and services.

Subd. 6. Women's Athletics Fields and Facilities 3,000,000

To design and rebuild the soccer complex on the St. Paul campus, design and rebuild the softball complex on the Minneapolis campus, and design and construct women's athletics office space in the Bierman complex on the Minneapolis campus.

Subd. 7. Crookston

(a) Facility Improvements 3,800,000

To design, construct, furnish, and equip four projects:

(1) Early Child Development Center new construction;

(2) Knutson Hall remodeling;

(3) Owen Hall Addition remodeling; and

(4) University Teaching and Outreach Center stable expansion.

(b) Kiehle Building Renovation and Addition 180,000

To predesign and design the Kiehle building renovation and addition on the Crookston campus.

Subd. 8. Duluth

(a) Library 22,300,000

To construct, furnish, and equip a new library.

(b) Academic Space Renovation 200,000

To design the renovation of vacated academic and laboratory space on the Duluth campus in Heller Hall, MW Alworth Hall, Business and Economics, and the existing library building.

For capital repair, reconstruction, or replacement of the foundation and heating, ventilating, and air conditioning system of the Glensheen Mansion, subject to the requirements of Minnesota Statutes, section 16A.695.

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Subd. 9. Morris 28,200,000

To construct, furnish, and equip existing space and the additions and to demolish the physical education annex. This project consists of four components:

(1) an addition to the existing science building;

(2) renovation of the science auditorium/lecture hall;

(3) expansion of the heating plant; and

(4) an addition to the Physical Education Center in partnership with the Morris community.

Subd. 10. Agricultural Experiment Stations 4,400,000

To design, construct, furnish, and equip the following experiment station projects:

(1) $2,600,000 for swine research facilities at Morris and Waseca. $200,000 of this appropriation is for a low input systems research facility at Morris and $200,000 is for an extensive confinement (including Swedish deep bedded system) research facility at Morris;

(2) $700,000 for the Arboretum/Horticultural Research Center laboratory in Victoria;

(3) $800,000 for Cloquet Forestry Center dormitory remodeling; and

(4) $300,000 for Grand Rapids Administration Building addition.

In addition, the university shall contribute $833,000 of agency operating funds towards construction of these projects.

Subd. 11. Debt Service Responsibilities

(a) The projects in this section shall not be assessed one-third debt service if the board of regents completes the following projects by July 1, 2002:

(1) at a cost estimated at $35,000,000, design a new Molecular and Cellular Biology Building, construct the facility's shell, and demolish all or part of the existing Jackson-Owre-Millard-Lyon Hall complex;

(2) at a cost estimated at $14,600,000, design, construct, furnish, and equip an addition to the Architecture Building;

(3) at a cost estimated at $9,000,000, renovate Murphy Hall; and

(4) at a cost estimated at $9,900,000, renovate Ford Hall.

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(b) If the board of regents does not complete the projects specified in paragraph (a) by July 1, 2002, the board shall reimburse the state for one-third of the debt service previously paid and pay one-third of the debt service accruing after July 1, 2002, on state bonds sold to finance appropriations in this section except those in subdivision 3, paragraph (a) and paragraph (c), clause (2). After each sale of general obligation bonds, the commissioner of finance shall notify the board of regents of the amounts for which it is assessed each year for the life of the bonds.

(c) The commissioner shall reduce the board's assessment each year by one-third of the net income from investment of general obligation bond proceeds in proportion to the amount of principal and interest otherwise required to be paid by the board. The board shall pay its resulting net assessment to the commissioner of finance by December 1 each year. If the board fails to make a payment when due, the commissioner of finance shall reduce allotments for appropriations from the general fund otherwise available to the board and apply the amount of the reduction to cover the missed debt service payment. The commissioner of finance shall credit the payments received from the board to the bond debt service account in the state bond fund each December 1 before money is transferred from the general fund under Minnesota Statutes, section 16A.641, subdivision 10.

Subd. 12. Separate Account

The appropriations in this section are conditioned on the board of regents adopting a resolution establishing an account for regular repair and maintenance at the university, and into which appropriations from fiscal years 1999, 2000, 2001, and 2002 could be deposited.

Sec. 3. MINNESOTA STATE COLLEGES AND UNIVERSITIES

Subdivision 1. To the board of trustees of the Minnesota state

and universities for the purposes specified in this section 143,080,000

Subd. 2. Higher Education Asset Preservation and Replacement 43,000,000

This appropriation is for the purposes specified in Minnesota Statutes, section 135A.046. This appropriation is from the general fund.

$31,615,000 of this appropriation is for code compliance, including health and safety, ADA requirements, hazardous material abatement, air quality improvement, building or infrastructure repairs to preserve existing buildings systemwide. The chancellor shall determine project priorities as appropriate based on need. Priorities may include but are not limited to: Anoka-Ramsey Community College ($1,080,000); Riverland Community College ($1,339,000); St. Cloud Technical College ($1,378,000); Northland Community and

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Technical College ($1,546,000); Minneapolis Community and Technical College ($2,735,000); St. Cloud State University ($1,900,000); Southwest State University ($1,390,000); Metro State University ($1,148,000); Bemidji State University ($1,088,000); Mankato State University ($5,322,000); and Moorhead State University ($3,556,000).

$11,385,000 of this appropriation is for facilities replacement, as follows:

(1) $1,720,000 to construct a replacement classroom for the Staples West Campus of Central Lakes Technical College;

(2) $500,000 to design and construct an electrical distribution tunnel for St. Cloud State University;

(3) $305,000 to design and construct a Chiller Plant for Bemidji State University;

(4) $5,030,000 to design, construct, furnish, and equip a renovation of Nemzek Field House at Moorhead State University;

(5) $3,145,000 to design, construct, furnish, and equip a renovation of Dille Center for the Arts at Moorhead State University; and

(6) $685,000 to design, construct, furnish, and equip a renovation of Livingston Lord Library at Moorhead State University.

Subd. 3. Master Facilities Plans 1,400,000

Complete and update college and university master facilities plans. Of this appropriation, up to $400,000 is for Minnesota West Technical and Community College and Northwest Technical College. This appropriation is from the general fund.

Subd. 4. Anoka Hennepin Technical College and Century Community

and Technical College 800,000

To prepare regional academic and facilities master plans and predesign the facility needs for each college. The board is not restricted to current buildings in developing the plan. Anoka Hennepin College plans must be for facilities within Anoka county.

Subd. 5. Bemidji State University and Northwest Technical College,

Bemidji 1,000,000

To predesign and design facilities required to colocate all programs of the technical college and the state university's industrial technology and nursing programs. The board of trustees may consider, among other options, the remodeling of the former Bemidji high school. The board may acquire the former Bemidji high school and may convey the former technical college to the school district. Minnesota Statutes, sections 94.09 to 94.16 and 103F.535 do not apply to these real estate transactions.

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Subd. 6. Century Community and Technical College 3,200,000

To design and construct an all-season footbridge connecting Century's two campuses, traffic control measures, and reroute campus traffic.

The board and the department of transportation shall cooperate in the design and construction of this project.

Subd. 7. Fond du Lac Community and Tribal College

The board of trustees may design, through construction documents, a classroom addition using money from nonstate sources. The college is encouraged to seek additional nonstate matching money to offset a portion of the cost of construction. The total cost to construct, furnish, and equip the classroom addition must not exceed $7,500,000.

Subd. 8. Hibbing Community and Technical College 16,000,000

To construct a new facility, adjacent to the community college, for technical programs, administrative services, and customized training. Upon completion of this facility, the college must vacate all classroom buildings of the former technical college. The city shall provide sewer and water, and a perimeter street. The board of trustees shall dispose of the former technical college land and classroom buildings. The proceeds may be retained by the board pursuant to Minnesota Statutes, section 136F.71, subdivision 1. Minnesota Statutes, sections 94.09 to 94.16 and 103F.535 do not apply to these real estate transactions.

Subd. 9. Inver Hills Community College 11,000,000

To design and construct a new instructional building and renovate the existing science building. The new building will include space for the emergency health services program, chemistry and biology laboratories, an interactive television classroom, general instruction classrooms, activities/fitness rooms, faculty offices, small group meeting rooms, and conference rooms. Up to $600,000 may be spent for the new entrance to the college.

Subd. 10. Mankato State University 11,000,000

(a) This money is for: (1) the design of Phase I and Phase II of the project to renovate the indoor and outdoor athletic facilities, and (2) for construction and renovation work in Myers Field House, Pennington Foundation Building and tennis courts; add required chiller capacity at the utility plant; and selected remodeling in Otto Arena, Highland Center, Highland North, Blakeslee Stadium, and outdoor track. Phase II of the project consists of completion of the remaining construction and renovation work in Highland Center, Highland North, Otto Arena, Blakeslee Stadium, and the outdoor track. Money for Phase II of this project is not included in this appropriation.

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(b) Notwithstanding Laws 1997, chapter 183, article 3, section 37, subdivision 6, the Mankato state university foundation may build a black box theater on the Mankato state university campus at a site approved by the board. Prior to the beginning of construction, the board must approve the design and the foundation must agree to donate the theater to the state. Title to the building shall pass to the state immediately upon donation.

Subd. 11. Mesabi Community and Technical College 500,000

To predesign and design a new learning resource center and remodel classrooms, computer labs, and offices at the Virginia campus.

Subd. 12. Metropolitan State University 1,000,000

To design a new library and information access center on the university's St. Paul campus, including space for collections of the St. Paul public library and community library services.

Subd. 13. Minneapolis Community and Technical College 500,000

To design an addition and remodel the existing library and other space. The addition will include a library and media center and an instructional technology center. The remodeled space will include classrooms, laboratories, faculty offices, student services, and interactive television classrooms.

Subd. 14. Normandale Community College 240,000

To predesign and design the renovation or new construction of science facilities.

Subd. 15. North Hennepin Community College, Phase One 10,400,000

To predesign, design, construct, and equip an addition and remodel existing facilities for a science center. This appropriation is also to predesign and design phase two to remodel and renovate classroom and office space.

Subd. 16. Northland Community and Technical College 4,000,000

To design and construct an addition and remodel existing space for student services, women's center, bookstore, customized training, administrative services, and classrooms.

Subd. 17. Pine Technical College 1,700,000

To predesign, design, and renovate for a telecommunications/

media/technology center, student services, administrative services, classrooms, and a regional economic development center.

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Subd. 18. Red Wing/Winona Technical College 1,500,000

To design and construct a new classroom and garage facility for the truck driving program at the Winona campus. The facility may be separate from the main campus building, as appropriate to accommodate safety, traffic, and programmatic concerns.

Subd. 19. Ridgewater Community and Technical College 7,600,000

To design and construct a new addition and remodel existing facilities at the Hutchinson campus for nondestructive testing facilities, a library and media resource center, student support services, and child care center.

Subd. 20. Riverland Community and Technical College 1,000,000

(a) To design, construct, and remodel the Austin campus, including remodeling for student services and health science programs, and reconfiguration of building entryways, sidewalks, and roadways to better connect the two separate facilities.

(b) The board may enter into an agreement with the city of Austin whereby the city agrees to construct, improve, and maintain a road at city expense that provides access to and improves the safety of the north side of the Austin campus. In exchange for the city's services, the board may convey title to the roadway and a parcel of land not to exceed five acres that is not needed by the college for education purposes. The land shall be used to promote a technology center that is compatible with the college's education mission. City plans and actions for the land shall be developed in consultation with the college and the board. Minnesota Statutes, sections 94.09 to 94.16, and 103F.535, do not apply to these real estate transactions.

Subd. 21. Rochester Center 6,000,000

To predesign, design, and renovate existing facilities and install telecommunications infrastructure improvements to create an instructional development and digital media center to improve education in southeastern Minnesota. This appropriation is from the general fund and will be supplemented by an additional $3,237,000 from other sources.

Subd. 22. Rochester Regional Recreation and Sports Center 5,000,000

To predesign, design, and construct phase 1 of a regional community recreation and sports activity complex adjacent to the Rochester Center, including a field house, sport and fitness center, aquatics facility, outdoor football and soccer stadium, soccer and baseball fields, and surface parking lots. This appropriation is not available until the board of trustees has determined that an equal amount has been committed by the city of Rochester. Operating and management costs shall be shared by the city of Rochester and the Minnesota state colleges and universities in proportion to their relative use of the facility.

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Subd. 23. St. Cloud State University

St. Cloud State University may design and construct a building to house a bookstore and student services, following consultation with the university community, including the student senate and the bookstore committee. After submitting the design and the financing plan to the board, the board shall submit it to the legislature as provided in Minnesota Statutes, section 16B.335, subdivision 2.

Subd. 24. St. Cloud Technical College 1,000,000

To design and construct an addition and remodeling of graphic arts and dental space, including classrooms, and design remodeling of most of the remaining space.

Subd. 25. St. Paul Technical College 10,000,000

To design, construct, furnish, and equip an addition to the library and learning resource center and renovate existing space for student services, chemical technology laboratory, and to renovate the building control system.

Subd. 26. Southwest State University 40,000

To predesign the renovation of the library. The renovation will include replacement of HVAC systems and installation of wiring for computer technology.

Subd. 27. Winona State University 200,000

To design the remodeling of Maxwell Library into offices and classrooms.

Subd. 28. Land Acquisition 5,000,000

To acquire real property land adjacent to or near the state college and university campuses. Of this amount at least $2,500,000 is for Winona State University and $1,000,000 is for St. Cloud State University. The board of trustees shall report annually to the legislature on purchases made from this appropriation.

Subd. 29. Debt Service

(a) The board shall pay one-third of the debt service on state bonds sold to finance projects authorized by this section, except for subdivisions 10 and 22. After each sale of general obligation bonds, the commissioner of finance shall notify the board of the amounts assessed for each year for the life of the bonds.

(b) The commissioner shall reduce the board's assessment each year by one-third of the net income from investment of general obligation bond proceeds in proportion to the amount of principal and interest

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otherwise required to be paid by the board. The board shall pay its resulting net assessment to the commissioner of finance by December 1 each year. If the board fails to make a payment when due, the commissioner of finance shall reduce allotments for appropriations from the general fund otherwise available to the board and apply the amount of the reduction to cover the missed debt service payment. The commissioner of finance shall credit the payments received from the board to the bond debt service account in the state bond fund each December 1 before money is transferred from the general fund under Minnesota Statutes, section 16A.641, subdivision 10.

Subd. 30. Separate account

The appropriations in this section are conditioned on the board of trustees adopting a resolution establishing an account for regular repair and maintenance at the colleges and universities, and into which appropriations from fiscal years 1999, 2000, 2001, and 2002 could be deposited.

Sec. 4. CENTER FOR ARTS EDUCATION

Subdivision 1. To the commissioner of administration for the purposes

specified in this section 1,395,000

Subd. 2. Administration/Classroom Building Renovation 780,000

To design, furnish, equip, and renovate the administrative/classroom building. This project is to include upgrades to building hallways, conversion of a temporary student computer lab to a student commons area, reconfiguration of support and classroom spaces, and partial renovation of the cafeteria food service and seating areas.

Subd. 3. Asset Preservation 465,000

For asset preservation improvements on the campus including, but not limited to, design and construction of sprinkler systems, demolition of the main entry to the administration/classroom building, foundation repairs, reconstruction of campus roads and parking areas, and replacement of deteriorated sidewalks.

Subd. 4. GAIA Building Renovation 150,000

For the partial renovation of spaces currently used for student instruction to spaces that will be utilized for adult professional development and related administrative support services.

Sec. 5. CHILDREN, FAMILIES, AND LEARNING

Subdivision 1. To the commissioner of children, families, and

learning for the purposes specified in this section 62,405,000

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Subd. 2. Early Childhood Learning Facilities 5,000,000

For grants to state agencies, political subdivisions, Indian tribes, or private nonprofit organizations to construct or rehabilitate facilities for programs under Minnesota Statutes, section 268.917. Facilities financed with these grants may be owned by Indian tribes or private nonprofit organizations.

Subd. 3. Youth Enrichment 5,000,000

(a) For grants to local government units to design, furnish, equip, renovate, replace, or construct parks and recreation facilities and school facilities to provide youth, with preference for youth in grades 4 to 8, with regular enrichment activities during nonschool hours, including after school, evenings, weekends, and school vacation periods, and that will provide equal access and programming for all children. The buildings or facilities may be leased to nonprofit community organizations, subject to Minnesota Statutes, section 16A.695, for the same purposes. Enrichment programs include academic enrichment, homework assistance, computer and technology use, arts and cultural activities, clubs, school-to-work and workforce development, athletic, and recreational activities. Grants must be used to expand the number of children participating in enrichment programs or improve the quality or range of program offerings. The facilities must be fully available for programming sponsored by nonprofit and community groups serving youth, or school, county, or city programs, for maximum hours after school, evenings, weekends, summers, and other school vacation periods. Priority must be given to proposals that demonstrate collaborations among private, nonprofit, and public agencies, including regional entities dealing with at-risk youth, and community and parent organizations in arranging for programming, staffing, transportation, and equipment. All proposals must include an inventory of existing facilities and an assessment of programming needs in the community.

(b) $1,000,000 is for enrichment grants within the city of Minneapolis.

(d) $1,000,000 is for enrichment grants in metropolitan statistical areas outside of the cities of Minneapolis and St. Paul. Priority must be given to school attendance areas with high concentrations of children eligible for free or reduced school lunch and to government units demonstrating a commitment to collaborative youth efforts.

(e) $1,000,000 is for enrichment grants for areas outside of metropolitan statistical areas and outside of the cities of Minneapolis and St. Paul. Priority must be given to school attendance areas with high concentrations of children eligible for free or reduced school lunch and to government units demonstrating a commitment to collaborative youth efforts.

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(f) Each grant must be matched by one dollar from nonstate sources for each two dollars of state money. In-kind contributions of facilities may be used for the local match. The value of in-kind contributions must be determined by the commissioner of finance.

Subd. 4. Recreation and Community Center Grants 10,800,000

(a) Unless otherwise specifically provided, the commissioner may not make a grant from this appropriation until the commissioner has determined that at least an equal amount has been committed to the project from nonstate sources.

(b) The commissioner may not make a grant under this subdivision until the commissioner has determined that, if the center will charge a fee for use of the center's facilities, the plan for operating the center includes free or reduced-rate use of the facilities by individuals and families that have a household income at or below 150 percent of the federal poverty income guidelines.

(c) The commissioner may not make a grant under this subdivision until the commissioner has determined that the recipient has the ability and a plan to fund the program intended for the facility.

(d) Dawson-Boyd Educational and Community Center 1,000,000

For a grant to independent school district No. 378, Dawson-Boyd, to design, construct, furnish, and equip an educational and community center.

(e) Detroit Lakes Community Center 1,500,000

For a grant to the city of Detroit Lakes to design, construct, furnish, and equip the Detroit Lakes Community Center.

(f) Granite Falls Area Multipurpose Community Recreation and

Education Center 1,000,000

For a grant to the city of Granite Falls to design, construct, furnish, and equip a multipurpose community recreation and education building.

(g) Hallett Community Center, City of Crosby 300,000

For a grant to the city of Crosby to design, construct, furnish, and equip the Hallett Community Center.

(h) Hastings Municipal Water Park 500,000

For a grant to the city of Hastings to design, construct, furnish, and equip a municipal water park.

(i) Hermantown Community Indoor Sports and Physical Education Complex 1,000,000

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For a grant to independent school district No. 700, Hermantown, to design, construct, furnish, and equip a community indoor sports and physical education complex with an indoor track.

(j) Isle Community Center 1,000,000

For a grant to independent school district No. 473, Isle, to convert a school building into a community center. Programs located at the converted facility must include the alternative education program, early childhood family education programs, centralized school district kitchen facilities, and other community programs.

(k) Lake Crystal Area Recreation Center 1,500,000

For a grant to the city of Lake Crystal to design, construct, furnish, and equip the Lake Crystal Area Recreation Center.

(l) Proctor Community Activity Center 1,000,000

For a grant to the city of Proctor to design, construct, furnish, and equip a city community activity center designed to provide facilities for city government, library, arts, museum, and other public functions.

(m) Redwood Valley Multipurpose Education and Community Center 1,000,000

For a grant to independent school district No. 2758, Redwood Falls, to design, construct, furnish, and equip a multipurpose education and community center to be constructed and operated under a joint powers agreement with the city of Redwood Falls.

The center must provide: (1) expanded physical education curriculum for Redwood Valley students; (2) a latchkey program and an after-school program for at-risk youth; (3) expanded healthy lifestyle community education and recreation programs for all age groups in the community; and (4) community conference and meeting facilities.

(n) Windom Area Multipurpose Center 1,000,000

For a grant to the city of Windom to design, construct, furnish, and equip a multipurpose center.

Subd. 5. Metropolitan Magnet Schools 22,200,000

For awarding metropolitan magnet school grants to groups of qualified metropolitan school districts under Minnesota Statutes, section 124C.498.

$1,900,000 is for the completion of the Downtown Integration magnet school in Minneapolis.

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$3,800,000 is for planning, design, acquisition of land, architectural fees, and engineering fees for the East Metropolitan Integration magnet school in the East Metropolitan area. Of that amount, $2,800,000 is for land acquisition.

$14,500,000 is for the construction of the Metropolitan Integration magnet school in Robbinsdale.

$2,000,000 is for the Southwest Metropolitan Integration magnet school in Edina.

Subd. 6. Community Schools Partnership, St. Paul 14,030,000

For a grant to independent school district No. 625 to acquire and better achievement-plus facilities.

(a) $2,180,000 is to remodel and renovate the Monroe community school and $2,400,000 is to remodel and renovate the Dayton's Bluff elementary school. Neither of these two appropriations is available until the commissioner has determined that an amount equal to the total of the two has been committed from nonstate sources to either or both of the projects. Any amounts raised in excess of the amount needed as match for these two projects may be used to satisfy the match required for the project in paragraph (b).

(b) $9,450,000 is to acquire land for, design, construct, furnish, and equip a new achievement-plus facility. This appropriation is not available until the commissioner has determined that the following amounts have been committed to the project:

(1) $940,000 is available upon receipt of a commitment for an equal amount.

(2) $2,680,000 is available upon receipt of a commitment for an equal amount.

(3) $5,830,000 is available upon receipt of a commitment for an equal amount.

Subd. 7. Fridley Middle School Boiler and Windows 90,000

For a grant to independent school district No. 14, Fridley, for a new boiler and new exterior windows at Central Middle School. This appropriation is from the general fund.

Subd. 8. School Building Accessibility Grants 1,000,000

For school building accessibility grants under Minnesota Statutes, sections 124C.71 to 124C.74.

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Subd. 9. Mississippi Education Center 1,400,000

For a grant to independent school district No. 318, Grand Rapids, to design and construct a new library in Grand Rapids. This appropriation is not available until the commissioner determines that $4,820,000 has been committed from nonstate sources.

Subd. 10. Library Accessibility Grants 1,500,000

For library accessibility grants under Minnesota Statutes, section 134.45.

Subd. 11. McLeod West Interdistrict Cooperative 500,000

For a grant to the McLeod West Interdistrict Cooperative, made up of independent school district Nos. 421, Brownton, and 426, Stewart, to design and acquire land for a new prekindergarten through grade 12 educational facility.

Subd. 12. Little Falls Carnegie Library ADA Grant 500,000

For a grant to the city of Little Falls for design and construction of capital improvements for handicapped accessibility to the Little Falls Carnegie library. This appropriation is not available until the commissioner determines that $500,000 has been committed from nonstate sources.

Subd. 13. Minnesota Lake 385,000

For a grant to the fiscal agent for the public school building in Minnesota Lake for repair and improved energy conservation.

Sec. 6. RESIDENTIAL ACADEMIES AT FARIBAULT

Subdivision 1. To the commissioner of administration for the

purposes specified in this section 9,225,000

Subd. 2. Asset Preservation 725,000

For asset preservation improvements on both campuses at the Faribault residential academies including, but not limited to, asbestos removal and replacement of roofs, windows, fire protection systems, and sidewalks.

Subd. 3. Tate Hall Renovation 4,000,000

To design, remodel, furnish, and equip Tate Hall on the campus of the Minnesota State Academy for the Deaf. This project is to include asset preservation improvements, installation of a ventilation and humidity control system, remodeling to expand bathroom facilities, and renovation of new space for a home living skills center.

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Subd. 4. Lysen Expansion and Renovation 4,500,000

To design, construct, furnish, and equip an expansion and renovation of the Lysen learning building on the campus of the Minnesota State Academy for the Blind. This project is to include expansion or remodeling of classrooms, offices, recreation areas, and related spaces in this building.

Sec. 7. NATURAL RESOURCES

Subdivision 1. To the commissioner of natural resources for the

purposes specified in this section 130,251,000

Subd. 2. Office Facility Consolidation 7,391,000

To acquire land, design, construct, furnish, and equip offices and service facilities at consolidated office sites in Tower and Windom.

Subd. 3. Statewide Asset Preservation and State Park and

Recreation Area Building Rehabilitation 6,500,000

For repair and renovation of the department of natural resources land, buildings, or other improvements of a capital nature throughout the state; and to design, repair, rehabilitate, construct, or add to state park buildings throughout the state, according to the management plan required in Minnesota Statutes, chapter 86A. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 4. State Park and Recreation Area Building Development 5,535,000

To design, construct, furnish, and equip new buildings and associated utilities in the state park system, according to the management plan required in Minnesota Statutes, chapter 86A.

Subd. 5. State Park and Recreation Area Betterment and Rehabilitation 2,750,000

To upgrade, repair, or rehabilitate improvements of a capital nature at state park and recreation area facilities throughout the state, including, but not limited to, resource management projects, trail rehabilitation, campground rehabilitation, and road and bridge repair. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 6. State Park and Recreation Area Acquisition 2,250,000

For acquisition from willing sellers of private lands within state park and recreation area boundaries established by law. The commissioner shall determine project priorities as appropriate based upon need.

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Subd. 7. Metro Regional Park Acquisition and Betterment 14,400,000

(a) $9,000,000 is for payment to the metropolitan council. The commissioner shall pay the amount on a reimbursement basis to the metropolitan council upon receipt of a certified copy of a council resolution requesting payment. The appropriation must be used to pay the cost of rehabilitation, acquisition, and development by the council and local government units of regional recreational open-space lands in accordance with the council's policy plan as provided in Minnesota Statutes, section 473.315. This appropriation must not be used for research, planning, administration, or tax equivalency payments. This appropriation may be used for the purchase of homes only if the purchases are included in the work program required by law and they are expressly approved by the legislative commission on Minnesota resources.

$840,000 of this appropriation may be used by the metropolitan council to reimburse Washington county for acquiring St. Croix Bluffs regional park in 1997.

(b) $3,900,000 of this appropriation is for a grant to the metropolitan council to prepare a site for, design, construct, furnish, and equip, including utility infrastructure, the Como Park Education Resource Center, Phase One. The grant is contingent upon the city of St. Paul maintaining Como Park zoo as a free attraction for the life of the bonds. The city may, however, charge a fee for use of the Como Park golf course and the conservatory and for special event facility rentals at the park, including the zoo and the conservatory.

The center must report to the chair of the senate environment and agriculture budget division, the chair of the house environment and agriculture finance committee, and the chairs of the senate and house environment and natural resources policy committees as soon as the center has secured half of the total project costs from nonstate sources.

(c) $1,500,000 is for a grant to the metropolitan council for capital expenditures necessary to carry out the Harriet Island Redevelopment in accordance with the Lilydale/Harriet Island master plan. This appropriation is not available until the commissioner determines that an equal amount has been committed from nonstate sources.

Subd. 8. Dam Improvements 1,300,000

For the emergency repair, reconstruction, or removal of publicly owned dams. Up to $300,000 of this appropriation is for the Sauk River Dam and up to $100,000 of this appropriation is for a study of removal of the Rapidan Dam. Up to $300,000 of this appropriation is for a grant to the city of Appleton for removal of a dam located on the Pomme de Terre river in Swift county. The commissioner shall determine remaining project priorities as appropriate based upon need as provided in Minnesota Statutes, section 103G.511.

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Subd. 9. Flood Hazard Mitigation Grants 30,000,000

For the flood hazard mitigation grant program to local government units for publicly owned capital improvements to prevent or alleviate flood damages under Minnesota Statutes, section 103F.161.

$1,500,000 is to construct ring dikes, whether publicly or privately owned.

$500,000 is for a grant to Clay county to remove houses in the Crestwood addition in Kurtz township on the Red River that are endangered by the collapsing river bank.

The commissioner shall determine other project priorities as appropriate based upon need.

As soon as the United States Army Corps of Engineers section 205 flood control study for the city of Breckenridge is complete, the commissioner shall make a recommendation to the legislature for the funding necessary to complete flood hazard mitigation efforts in the city.

Subd. 10. Forest Road and Bridge Projects 2,000,000

For reconstruction, resurfacing, replacement, or construction of other improvements of a capital nature to state forest roads and bridges throughout the state. The commissioner shall determine project priorities as appropriate based upon need. Of this amount, $500,000 may be used for forest roads in northern Minnesota peat areas.

Subd. 11. Forestry Land Acquisition 800,000

To acquire private lands from willing sellers within established boundaries of state forests throughout the state. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 12. White Pine Management 300,000

For planting of stands of white pine and management of white pine resources.

Subd. 13. Forestry Recreation Facilities 750,000

For improvements of a capital nature to rehabilitate, improve, or develop forestry recreation facilities throughout the state. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 14. RIM Wildlife Management Areas, Critical Habitat, and

North American Waterfowl Management Plan 7,000,000

$1,000,000 of this appropriation is to acquire land for wildlife management areas under Minnesota Statutes, section 97A.135; $5,500,000 is for the critical habitat private sector matching account

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under Minnesota Statutes, section 84.943; and $500,000 is for acquisition and wetland restoration under the North American Waterfowl Management Plan. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 15. RIM Fish Hatchery Rehabilitation 1,000,000

For improvements of a capital nature to rehabilitate, improve, or develop fish culture facilities.

Subd. 16. RIM Wildlife, Habitat Improvements 2,500,000

For improvements of a capital nature to develop, protect, or improve wildlife management areas and other state lands throughout the state. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 17. Stream Protection and Restoration 1,000,000

For the acquisition of easements and aquatic management areas on streams for fisheries management purposes, and stream restoration on portions of the Whitewater river and Sandy river.

Subd. 18. Scientific and Natural Area and Prairie Bank Acquisition

and Improvement 3,000,000

To acquire land related to scientific and natural areas and prairie bank easements and for development, protection, or improvements of a capital nature to scientific and natural areas throughout the state. $2,200,000 is for scientific and natural area acquisition, $400,000 is for scientific and natural area restoration and development, and $400,000 is for Prairie Bank easements. The commissioner shall determine project priorities as appropriate based upon need.

Subd. 19. Metro Greenways and Natural Areas 4,000,000

To acquire and improve natural areas and greenways in the metro region through purchase of conservation easements or fee acquisition. The commissioner shall determine project priorities as appropriate based upon need and shall consult with representatives of local units of government, nonprofit organizations, and other interested parties.

Subd. 20. Accelerated Wildlife Habitat Management 500,000

For wildlife habitat improvement. Of this amount, $400,000 is for winter wildlife habitat improvement for pheasants and other grassland wildlife in key farmland areas and $100,000 is for brushland and forest habitat renewal for sharp-tailed grouse and other species of birds dependent on open brushlands in forest areas.

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Subd. 21. Water Access Acquisition and Development 2,000,000

For public water access acquisition development and rehabilitation on lakes and rivers, including water access through the provision of fishing piers and shoreline access.

Subd. 22. Trail Acquisition and Development 10,250,000

For acquisition and development of a capital nature on state trails as specified in Minnesota Statutes, section 85.015. Projects include $500,000 for the Willard Munger Trail, $1,000,000 for the Root River Trail, $140,000 for the Lanesboro Trailhead of the Root River Trail, $1,350,000 for the Luce Line, $500,000 for the Heartland Trail, $2,000,000 for the Paul Bunyan Trail, $1,050,000 for the Goodhue Pioneer Trail, $800,000 for the Blazing Star Trail, $1,310,000 for the Blufflands Trail development, and $350,000 for the Gateway Trail. The commissioner shall determine additional project priorities as appropriate based upon need. $1,250,000 of this appropriation is for the state targeting accessible recreation trails (START) project to complete the trail survey, prioritizing, and preengineering work for all 100 major recreation areas and to improve accessibility in up to 35 of these areas.

Subd. 23. Metro Regional Trails 5,000,000

For grants to the metropolitan council for acquisition and development of a capital nature of trail connections in the metropolitan area as specified in this subdivision. The purpose of the grants is to improve trails in the metropolitan park and open space system and connect them with existing state and regional trails. Priority shall be given to matching funds for an ISTEA grant.

The funds shall be allocated by the council as follows:

(1) $1,050,000 is allocated to Ramsey county as follows:

(i) $400,000 to complete six miles of trails between the Burlington Northern Regional Trail and Bald Eagle-Otter Lake Regional Park;

(ii) $150,000 to complete a one-mile connection between Birch Lake and the Lake Tamarack segment of Bald Eagle-Otter Lake Regional Park;

(iii) $500,000 to acquire real property and design and construct or renovate recreation facilities along the Mississippi River in cooperation with the city of St. Paul;

(2) $1,050,000 is allocated to the city of St. Paul as follows:

(i) $250,000 to construct a bridge over Lexington Parkway in Como Regional Park; and

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(ii) $800,000 to enhance amenities for the trailhead at the Lilydale-Harriet Island Regional Park pavilion;

(3) $1,400,000 is allocated to Anoka county as follows:

(i) $1,100,000 to construct a pedestrian tunnel under Highway 65 on the Rice Creek West Regional Trail in the city of Fridley; and

(ii) $300,000 to construct a pedestrian bridge on the Mississippi River Regional Trail crossing over Mississippi Street in the city of Fridley; and

(4) $1,500,000 is allocated to the suburban Hennepin regional park district as follows:

(i) $1,000,000 to connect North Hennepin Regional Trail to Luce Line State Trail and Medicine Lake; and

(ii) $500,000 is for the cost of development and acquisition of the Southwest regional trail in the city of St. Louis Park. The trail must connect the Minneapolis regional trail system at Cedar Lake park to the Hennepin parks regional trail system at the Hopkins trail head.

Subd. 24. Lake Superior Safe Harbors 5,000,000

For acquisition, design, and development of safe harbors and public accesses on Lake Superior. $1,500,000 is for Taconite Harbor and $3,500,000 is for Two Harbors. This appropriation is not available until an equal amount in federal matching funds has been committed.

Subd. 25. Lake Superior Zoo 1,300,000

To the commissioner of administration for a grant to the city of Duluth for capital improvements to the animal care center, including veterinary hospital, laboratory, clinic, and quarantine area, and the childrens' zoo at the Lake Superior Zoological Garden.

Subd. 26. Local Initiative Grants 8,000,000

For matching grants to be provided to local units of government for acquisition, development, or renovation of a capital nature of local parks, trails, and natural and scenic areas. Recipients must provide a match of at least one-half of total eligible project costs. The commissioner shall make payment to local units of government upon receiving documentation of reimbursable expenditures. The commissioner shall determine project priorities as appropriate based upon need.

$3,500,000 of this appropriation is for grants to units of government to acquire and develop outdoor recreation areas, and for grants to units of government to acquire and better natural and scenic areas under Minnesota Statutes, section 85.019, subdivision 4a.

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$1,000,000 of this appropriation is for cooperative trail grants of up to $50,000 per project to acquire or construct trail linkages between communities, trails, and parks.

$3,500,000 of this appropriation is for trail grants for the following locally funded publicly owned trails serving multiple communities: $1,400,000 for Beaver Island Trail in Stearns County, $1,400,000 for Skunk Hollow Trail in Yellow Medicine and Chippewa Counties, and $700,000 for Unity Trail in Faribault County.

Subd. 27. Environmental Learning Centers 2,350,000

$1,000,000 of this appropriation is for a grant to independent school district No. 621, Mounds View, to renovate the Laurentian environmental learning center located in the Superior National Forest. This portion of the appropriation must not be used to expand the bed capacity of the center. It may be used to renovate and replace existing facilities. $300,000 of this appropriation is available immediately. The balance is available to the extent matched by money expended from other sources after the date of final enactment of this act.

$1,350,000 of this appropriation is for a grant to Kandiyohi county to construct a trailhead at the Prairie Woods environmental learning center. This portion of the appropriation may not be used for overnight facilities.

Subd. 28. Sand Dunes State Forest Center 150,000

For predesign and design of an office facility/visitor center in Sand Dunes State Forest.

Subd. 29. Willernie Erosion Control 75,000

For a grant to the city of Willernie for publicly owned capital improvements to forestall erosion from a natural waterway. This appropriation must be equally matched by nonstate funds.

Subd. 30. Hartley Nature Center 1,500,000

For a grant to the city of Duluth for the purpose of constructing capital improvements to the Hartley Nature Center. This appropriation is not available until an equal amount has been committed from nonstate sources.

Subd. 31. International Wolf Center 350,000

To the commissioner of administration for capital improvements to the International Wolf Center, including repair of grounds and buildings, improvements to the heating and ventilation system, the wolf enclosure, and the children's exhibit room, and added facilities for vehicle garaging and a workshop.

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Subd. 32. Savage Water Supply System 800,000

For a grant to the city of Savage for a water supply system.

The Department of Health shall assign the amount of additional priority points necessary to place the city of Savage in the fundable range of the intended use plan for the Drinking Water Revolving Fund under Minnesota Statutes, section 446A.081, for a water supply and treatment system to protect the Savage Fen Wetland Complex. The amount of the loan shall be $10,000,000. The system must implement uniform demand management measures and provide for alternative sustainable water sources while protecting the Savage Fen Wetland Complex and the water resources of the aquifers. Conservation and demand reduction measures must be adopted. The system may be constructed under authority of Minnesota Statutes, section 471.59, 471.591, or other law. The alternative sources of water must be approved by the commissioner and comply with permit requirements under Minnesota Statutes, chapter 103G.

Subd. 33. Bald Eagle Center 500,000

To the commissioner of administration for a grant to the city of Wabasha for construction of the American bald eagle center. The city of Wabasha may enter into a lease or management agreement with a nonprofit corporation under Minnesota Statutes, section 16A.695. This appropriation is not available until at least $1,000,000 has been committed from nonstate sources.

Subd. 34. Work Program

The commissioner must submit a work program and semiannual progress reports in the form determined by the legislative commission on Minnesota resources and request its recommendation before spending any money appropriated by subdivision 3, 4, 5, 6, 7, 11, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 26, 27, 31, or 33 of this section. The commission's recommendation is advisory only. Failure to respond to a request within 60 days after receipt is a positive recommendation. Work programs involving land acquisition must include a land acquisition plan.

Sec. 8. OFFICE OF ENVIRONMENTAL ASSISTANCE 3,500,000

To the office of environmental assistance for the solid waste capital assistance grants program under Minnesota Statutes, section 115A.54. Grants under this section are exempt from the requirements of Minnesota Statutes, section 16B.335.

$375,000 is for a grant to the Prairieland Compost Facility Board, a public body, for an air emissions project at the Prairieland Compost Facility located in Martin county.

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Sec. 9. PUBLIC FACILITIES AUTHORITY

Subdivision 1. To the public facilities authority for the purposes

specified in this section 44,050,000

Subd. 2. Matching Money for Federal Grants 15,000,000

For state matching money for federal grants to capitalize the water pollution control fund and the drinking water revolving fund under Minnesota Statutes, sections 446A.07 and 446A.081.

The expenditure and allocation of state matching funds between funds shall be based on the amount of federal funds appropriated to the funds. This appropriation must be used for qualified capital projects.

Subd. 3. Wastewater Infrastructure Program 15,300,000

For supplemental assistance to municipalities under Minnesota Statutes, section 446A.072.

The authority shall reimburse the city of Isanti for costs it has incurred in construction of a project that reduced discharges into outstanding resource value waters in order to comply with more stringent wastewater standards required to protect those waters. The amount of the reimbursement shall be equal to the reimbursement the city would have received pursuant to Minnesota Statutes, section 446A.072, subdivision 4, as it is amended by the 1998 legislature.

To the greatest extent practicable, the authority should use the funds to first match grant funds on a 50 percent basis with USDA rural development projects prior to using the funds for non-USDA-eligible projects.

The authority shall also give priority to multijurisdictional projects connecting areas with failing on-site treatment systems with an existing wastewater treatment system.

The authority shall set aside up to $500,000 to provide 50 percent grant funding for the cost of equipment and installation into an existing municipal wastewater treatment system. The project must demonstrate the application of existing technology that currently is not being used in the treatment of municipal wastewater, but has the potential to improve the treatment of wastewater or make the treatment process more cost effective. The authority should work with the pollution control agency to solicit proposals from municipalities willing to share the risks and cost of removing the equipment if it does not perform.

$1,300,000 must be used to make a grant to the city of Hawley to repair and update sewer lagoons.

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Subd. 4. Storm Sewer Matching Funds, Stewart 1,000,000

For a loan to the city of Stewart for storm sewer projects as matching money for the federal small cities development program.

Subd. 5. City of St. Peter 3,000,000

To the commissioner of trade and economic development for a grant to the city of St. Peter for the construction of a new wastewater facility outside the floodplain.

Subd. 6. Planning Grants 100,000

For grants under Minnesota Statutes, section 446A.071. This appropriation is from the general fund.

Subd. 7. Bayport Sewer Reconstruction 650,000

For a grant to the city of Bayport to pay the cost of a preconstruction study and engineering for a storm sewer reconstruction project within and adjacent to the Minnesota correctional facility-Stillwater. The study and design of the project, including how the costs of the project will be assessed against property owners whose properties will be served by the project, must be reported to the chairs of the judiciary finance division in the house and the crime prevention and judiciary budget division in the senate by January 15, 1999. The assessment must include the costs of predesign, design, and construction, including this appropriation and amounts previously spent by the cities of Bayport and Oak Park Heights and the county of Washington. The benefit allocation of the costs of this improvement must include consideration of the allocable volume of water generated in the winter by the property owner and drained by the reconstructed storm sewer.

Subd. 8. State Revolving Fund Supplemental 9,000,000

For deposit in the water pollution control fund under Minnesota Statutes, section 446A.07, for the agricultural best management practices loan program under Minnesota Statutes, section 17.117, except that none of this appropriation may be used for conservation tillage equipment.

Sec. 10. BOARD OF WATER AND SOIL RESOURCES

Subdivision 1. To the board of water and soil resources for the

purposes specified in this section 19,800,000

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Subd. 2. RIM and PWP Conservation Easements 15,000,000

This appropriation is for the following purposes:

(1) to acquire conservation easements from landowners on marginal lands to protect soil and water quality and to support fish and wildlife habitat as provided in Minnesota Statutes, section 103F.515; and

(2) to acquire perpetual conservation easements on existing type 1, 2, 3, and 6 wetlands, adjacent lands, and for the establishment of permanent cover on adjacent lands, in accordance with Minnesota Statutes, section 103F.516.

Up to $250,000 may be used for the acquisition of flood storage easements that allow haying, grazing, or other activities approved by the board when the flood storage is not needed, and for the cost of constructing related dikes and other structures necessary to maintain water in the flood storage easement areas. Up to ten percent of the appropriation may be used for professional and technical services related to acquisition of the easement.

The board, in consultation with the commissioner of natural resources, must select at least two local government units for participation in the flood storage easement pilot program based on the potential and need for flood water storage in the local area. The board may acquire the easement directly or provide grants to the local government units for their acquisition of easements that conform with the requirements established by the board. A conservation easement must be for at least ten years. The board or the local government unit must make the following payments to the landowner for the conservation easement and agreement:

(1) to establish conservation practices required by the easement, up to 75 percent of the total eligible cost, not to exceed an average of $75 per acre; and

(2) 25 percent of the payment rate for 20-year easements acquired under Minnesota Statutes, section 103F.515; or

(3) an alternative payment system for easements as may be determined by the board, in consultation with the commissioner of natural resources.

By January 15, 2000, the board, in conjunction with the commissioner of natural resources, shall report to the senate environment and agriculture budget division and the house environment, natural resources, and agriculture finance committee on the acquisition of easements under this paragraph. The report must include an analysis of the benefit to expansion of the program in other areas of the state that are prone to flooding and on the adequacy of payments under the pilot program.

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Up to $1,000,000 is for professional and technical services necessary to administer the program.

Subd. 3. Local Government Road Replacement 2,750,000

To acquire land for wetlands or restore wetlands to be used to replace wetlands drained or filled as a result of the repair, maintenance, or rehabilitation of existing public roads, as provided in Minnesota Statutes, section 103G.222, subdivision 1, paragraph (m).

The purchase price paid for acquisition of land, fee or perpetual easement, shall be the amount deemed reasonable by the board. The board may enter into agreements with the federal government, other state agencies, political subdivisions, and nonprofit organizations or fee owners for acquisition of land and restoration and creation of wetlands with funds provided by this appropriation. Acquisition of or the conveyance of land may be in the name of the political subdivision.

Up to $400,000 is for professional and technical services necessary to administer the program.

Subd. 4. Quad-Lakes Restoration 300,000

For a grant to the Faribault county soil and water conservation district for the quad-lakes restoration project in Faribault and Blue Earth counties.

Subd. 5. Lakeshore Easements 250,000

To acquire conservation easements for sensitive shoreland and riparian areas on lakes.

Subd. 6. Area II Minnesota River Basin Grant-in-Aid Program 500,000

For grants to assist local governments in acquiring and constructing floodwater retention systems in area II of the Minnesota river basin. Projects may include flood control reservoirs, road retention structures, and other floodwater mitigation improvements. This appropriation must be matched by at least $333,000 from nonstate sources. Grants under this subdivision are exempt from the requirements of Minnesota Statutes, section 16B.335.

Subd. 7. Feedlot Water Quality 1,000,000

For grants to soil and water conservation districts for cost-sharing contracts for water quality management on feedlots. Priority must be given to feedlot operators who have received a notice of violation and for feedlots in counties that are conducting or have completed a level 2 or level 3 feedlot inventory.

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Subd. 8. Work Program

The board must submit a work program and semiannual progress reports in the form determined by the legislative commission on Minnesota resources and request its recommendation before spending any money appropriated by this section. The commission's recommendation is advisory only. Failure to respond to a request within 60 days after receipt is a positive recommendation. Work programs involving land acquisition must include a land acquisition plan.

Sec. 11. AGRICULTURE 500,000

For a grant to a political subdivision that is chosen as a site for a soybean oilseed processing and refining facility, constructed by a Minnesota-based cooperative. This appropriation is for site preparation, predevelopment, and other infrastructure improvements, including public and private utility improvements, that are necessary for development of the oilseed processing and refining facility. This appropriation is available until December 31, 2000.

Sec. 12. MINNESOTA ZOOLOGICAL GARDENS 1,750,000

To the Minnesota zoological gardens for design, repair, and reconstruction of roadways, pathways, parking lots, outdoor lighting, and public plaza areas. This appropriation is exempt from the requirements of Minnesota Statutes, section 16B.335.

Sec. 13. ADMINISTRATION

Subdivision 1. To the commissioner of administration for the

purposes specified in this section 46,250,000

Subd. 2. Capital Asset Preservation and Replacement (CAPRA) 15,000,000

To be spent in accordance with Minnesota Statutes, section 16A.632.

The commissioner of administration, in cooperation with the commissioner of finance, president of the University of Minnesota, and chancellor of the Minnesota state colleges and universities, shall review how state agencies and state higher education institutions plan and budget for ongoing asset preservation needs in capital and operating budgets, examine alternative methodologies and formulas for future agency requests, and report the commissioner's findings by January 15, 1999, to the chairs of the senate committees on finance and the house of representatives committees on ways and means and capital investment.

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The legislature intends to use the report in considering future capital and operating appropriations to state agencies and state higher education institutions for asset preservation, repair, and replacement budgets.

Subd. 3. Ely Revenue Building 2,200,000

This appropriation is to predesign, design, construct, furnish, and equip a new building for the department of revenue's Minnesota collection enterprise operations in Ely. The unencumbered balance of the appropriation of $650,000 in Laws 1997, chapter 202, article 1, section 12, subdivision 3, to acquire the building in Ely currently used by the department of revenue is canceled.

Subd. 4. Capitol Square Building 3,100,000

To relocate the department of children, families, and learning (CFL), and the higher education services office (HESO) and pay rent in a new facility and conduct a predesign study of future facilities for CFL and HESO. Notwithstanding Minnesota Statutes, section 16B.24, the commissioner of administration must retain the capitol square site.

Subd. 5. Labor Interpretive Center 6,000,000

For renovation and upgrades to the East Building of the Science Museum for use for the Minnesota Labor Interpretive Center.

Subd. 6. Department of Revenue Relocation 5,350,000

To relocate the department of revenue from a leased facility to a new state-owned facility in the Capitol complex. This appropriation includes staging equipment and furnishings necessary to complete the relocation and to continue critical operations at the new facility. Any computers replaced as a result of these relocations will be offered to the Center for the Arts in Golden Valley.

Subd. 7. Agency Relocation 2,490,000

For relocation of state agencies as determined by the commissioner of administration.

Subd. 8. Electrical Utility Infrastructure 5,350,000

To upgrade the primary electrical distribution system in the Capitol complex and to upgrade the mechanical infrastructure in the east Capitol area.

Subd. 9. Capitol Security and Plant Management Facility Predesign 45,000

To conduct a predesign of a new facility for the department of public safety's capitol security division and the department of administration's plant management division.

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Subd. 10. Real Property Acquisition 2,800,000

This appropriation is from the general fund for acquisition of land and to purchase options in order to hold properties that meet state development needs.

Subd. 11. Bureau of Criminal Apprehension Facility Design and Site

Acquisition 3,815,000

To design a new building for the bureau of criminal apprehension, including offices and forensic laboratories and to select and acquire a site for the building in St. Paul and predesign of a satellite laboratory facility in northern Minnesota.

Subd. 12. Dahl House Relocation 100,000

This appropriation is from the general fund to relocate the Dahl House near its original site, stabilize, and restore the structure. Up to $150,000 from the plaza percent for art budget may be used for the restoration and related art objects.

Subd. 13. Department of Human Services Consolidation

Within the limits of available appropriations, the commissioner of administration and the commissioner of human services may enter into a contract with a third party to consolidate the department of human services central office operations into one location.

Sec. 14. CAPITOL AREA ARCHITECTURAL AND PLANNING BOARD

Subdivision 1. To the commissioner of administration for the

purposes specified in this section 9,544,000

Subd. 2. Capitol Building Structural Stabilization 6,600,000

To stabilize the Capitol building's structure and provide related facility improvements.

Subd. 3. Capitol Building Accessibility 1,500,000

To design, construct, renovate, and replace exterior doors on the Capitol's ground, first, and second floors to meet code requirements.

The commissioner of administration and the capitol area architectural and planning board shall study and report to the legislature by January 15, 1999, on possible improvements of the stairs from the tunnel to the Capitol, so as to encourage greater use of stairs and less use of elevators.

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$150,000 of this appropriation is to predesign improvements to the heating, ventilation, and air conditioning system in the State Office Building hearing rooms. This appropriation is also to design and construct storage behind members' chairs in hearing rooms of the State Office Building and to design and construct improved access to the hearing rooms of the State Office Building.

Subd. 4. Security Lighting 734,000

To improve security lighting for pedestrians parking in lots and ramps north of the Capitol and, to the extent money is available, for pedestrian-scaled lighting on the mall south of the Capitol.

Subd. 5. Statuary Restoration 120,000

This appropriation is to restore the statuary immediately in front of the Capitol.

Subd. 6. Capitol Mall Memorials 440,000

This appropriation is to repair and rehabilitate the reflecting pool and sculpture at the veterans services building, the plaza and wall of the Floyd B. Olson memorial, and the paving stones at the Lindbergh memorial.

Subd. 7. Women's Suffrage Memorial Garden 150,000

This appropriation is to complete the Minnesota women's suffrage memorial garden.

Subd. 8. Greening the Mall

The capitol area architectural and planning board shall solicit contributions of labor, trees, and other landscape materials from individuals and groups willing to assist with replacing and increasing vegetation on the capitol mall in preparation for the Capitol's centennial celebration in 2005.

Sec. 15. AMATEUR SPORTS COMMISSION

Subdivision 1. To the amateur sports commission for the purposes

specified in this section 11,020,000

Subd. 2. National Sports Center 4,800,000

$1,700,000 is to purchase and develop land adjacent to the National Sports Center in Blaine for use as athletic fields.

$3,100,000 is to develop the National Children's Golf Course. The primary purpose of the National Children's Golf Course is to serve youth of 18 years and younger. Market rates must be charged for adult golf.

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Subd. 3. Giants Ridge Facility 690,000

For a grant to the Iron Range resources and rehabilitation board to enhance the Giants Ridge cross-country ski event facility.

Subd. 4. Minneapolis Urban Sports Center 600,000

For a grant to special school district No. 1, Minneapolis, to complete funding for an urban sports facility, to be owned by the district. This appropriation is in addition to the project appropriation of $3,400,000 in Laws 1996, chapter 463, section 14, subdivision 5, paragraph (a), and subject to the conditions contained therein.

Subd. 5. Tennis Facility 800,000

For a grant to the city of St. Paul to design a tennis center to offer indoor tennis facilities, subject to the requirements of Minnesota Statutes, section 16A.695. The center may be constructed only after endorsement by a national governing body member of the United States Olympic Committee.

Subd. 6. Ice Centers 2,000,000

For grants for ice centers under Minnesota Statutes, section 240A.09, of up to $250,000 each.

Subd. 7. Mt. Itasca Ski Area 130,000

For a grant to the Iron Range resources and rehabilitation board to expand the facilities at Mt. Itasca ski area.

Subd. 8. Richfield Athletic Fields 2,000,000

For a grant to the city of Richfield for planning, designing, constructing, and equipping recreational facilities needed to replace facilities lost due to improvements to Wold Chamberlain field. The city must spend the money in a manner consistent with the recreation asset replacement study of the Richfield community services department.

Sec. 16. MILITARY AFFAIRS

Subdivision 1. To the adjutant general or other named agency for the

purposes specified in this section 1,230,000

Subd. 2. Kitchen Renovation 880,000

To renovate kitchen facilities at National Guard training and community centers in Thief River Falls, Bemidji, Detroit Lakes, Marshall, Litchfield, Anoka, Fergus Falls, and Pine City. This appropriation is exempt from the requirements of Minnesota Statutes, section 16B.335.

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Subd. 3. Asset Preservation 250,000

For asset preservation improvements at military affairs facilities statewide.

Subd. 4. Military Affairs/Emergency Management Facility Predesign 100,000

To the commissioner of administration to predesign a joint military affairs/emergency management facility.

Sec. 17. TRANSPORTATION

Subdivision 1. To the commissioner of transportation for the

purposes specified in this section 93,300,000

Subd. 2. Local Bridge Replacement and Rehabilitation 34,000,000

This appropriation is from the state transportation fund as provided in Minnesota Statutes, section 174.50, to match federal funds and to replace or rehabilitate local deficient bridges.

Political subdivisions may use grants made under this section to construct or reconstruct bridges, including:

(1) matching federal-aid grants to construct or reconstruct key bridges;

(2) paying the costs of preliminary engineering and environmental studies authorized under Minnesota Statutes, section 174.50, subdivision 6a;

(3) paying the costs to abandon an existing bridge that is deficient and in need of replacement, but where no replacement will be made; and

(4) paying the costs to construct a road or street to facilitate the abandonment of an existing bridge determined by the commissioner to be deficient, if the commissioner determines that construction of the road or street is more cost efficient than the replacement of the existing bridge.

Subd. 3. Transitways 46,500,000

(a) This appropriation is to match federal and local funding for the planning, design, engineering, and construction of transitways in the metropolitan area.

(b) $40,000,000 is for the preliminary engineering, final design, and construction of light rail transit in the Hiawatha Avenue corridor from downtown Minneapolis through Minneapolis-St. Paul International Airport and the site of the former Met Center or surrounding area with a terminus in southern Hennepin or northern Dakota county.

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The Hiawatha Avenue corridor management committee created pursuant to Minnesota Statutes, section 473.3994, subdivision 10, shall establish an advisory committee of:

(1) individuals who reside near the proposed corridor;

(2) representatives of businesses located within one mile on either side of the corridor; and

(3) elected officials, including legislators, who represent the area in which the Hiawatha corridor is located.

The advisory committee shall advise the corridor management committee on issues relating to the preliminary engineering, final design, and construction of light rail facilities, including the proposed alignment for the corridor.

(c) The funds in this paragraph must be distributed as grants to appropriate county regional rail authorities as follows:

(1) $3,000,000 to match federal funding for a major investment study, engineering, and implementation in the Riverview corridor between the east side of St. Paul and the Minneapolis-St. Paul International Airport and the Mall of America;

(2) $1,500,000 to match federal funding for a major investment study, engineering, and implementation in the Northstar corridor linking downtown Minneapolis to the St. Cloud area and to study the feasibility of commuter rail and other transportation improvements within the corridor;

(3) $500,000 to study potential transit improvements and engineering studies in the Cedar Avenue corridor to link the Hiawatha, Riverview, and Northstar transit corridors with Dakota county; and

(4) $500,000 to develop engineering documents for a commuter rail line from Minneapolis to downtown St. Paul through southern Washington county to Hastings.

The commissioner of transportation, in coordination with the North Star Corridor Joint Powers Authority and the St. Cloud area planning agency, shall study the transportation needs within the St. Cloud metropolitan area.

(d) $1,000,000 is available as grants to appropriate county regional rail authorities to conduct major investment studies and to develop engineering documents for commuter rail lines in the following corridors:

(1) the Young America corridor from Carver county to Minneapolis and St. Paul;

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(2) the Bethel corridor linking Cambridge with the Northstar corridor in Anoka county;

(3) the Northwest corridor from downtown Minneapolis to the Northwest suburbs of Hennepin county; and

(4) other commuter rail corridors identified in phase II of the department of transportation's commuter rail service study, except for the corridors identified in paragraph (c).

The appropriation in this paragraph is not available until the completion of the commuter rail service study as provided in Laws 1997, chapter 159, article 2, section 51. The funds may be made available only after approval by the commissioner of transportation of an application submitted by county regional rail authorities that is consistent with the results of the commuter rail service study and demonstrates a coordinated implementation strategy.

Subd. 4. Rural Transit Assistance 5,000,000

$2,500,000 of this appropriation is for grants to local units of government to acquire rolling stock for transit systems under Minnesota Statutes, section 174.24. $1,500,000 is for public transit subsidy program grants to eligible recipients under Minnesota Statutes, section 174.24. Priority must be given to projects involving collaboration between transit operators and local government.

The following appropriations are not available until equal amounts have been committed from nonstate sources:

$675,000 is for renovation of the Duluth transit operating facility. $100,000 is for renovation and roof replacement at the Duluth Transit Center. $100,000 is to design and construct a transit hub on or near the campus of St. Cloud State University. $125,000 is to renovate the heating, ventilation, and air conditioning system at the Mankato transit building.

Subd. 5. Forest Highway 11 and CSAH No. 90 3,050,000

To fund the nonfederal matching requirement for Forest Highway 11 in St. Louis and Lake counties and County State Aid Highway No. 90 in Blue Earth county. The amount for Forest Highway 11 is $1,650,000 and the amount for County State Aid Highway No. 90 is $1,400,000.

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Subd. 6. Port Development Assistance 4,500,000

For port development assistance grants, the grants must be made to political subdivisions for capital improvements constructed after the effective date of this appropriation under the provisions of Minnesota Statutes, sections 457A.01 to 457A.06. Any improvements made with the proceeds of these grants must be publicly owned.

Subd. 7. Seaway Port Authority of Duluth 250,000

For a grant to the Seaway Port Authority of Duluth to design a new warehouse.

Notwithstanding any provision of Minnesota Statutes, chapter 398A, the Hennepin county regional railroad authority may expend up to $400,000 from its funds to fund a circulator vehicle pilot project in South Minneapolis. The funds may be used for capital or operating costs.

Subd. 8. Exception

Sec. 18. HUMAN SERVICES

Subdivision 1. To the commissioner of administration for the

purposes specified in this section 19,975,000

Subd. 2. Capital Roof Repairs and Replacement 1,900,000

For critical repairs of a capital nature and replacement to roofs of department of human services service facilities statewide.

Subd. 3. Asset Preservation 4,000,000

To be spent for asset preservation needs at state regional treatment centers. Priority must be given to fire alarm systems and sprinklers.

Subd. 4. People, Inc. North Side Community Support Program 375,000

For a grant to Hennepin county to purchase, remodel, and complete accessibility upgrades to an existing building to be used by the People, Inc. North Side Community Support Program which may provide office space for state employees.

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Subd. 5. METO Construction, Cambridge 1,500,000

To undertake site improvements including demolition, and to design construct, remodel, furnish, and equip 12 additional beds for the Minnesota extended treatment option (METO) program on the Cambridge regional human services center campus.

Subd. 6. Building Renovations, Moose Lake Sexual Psychopathic

Personality Center 8,000,000

To design, construct, furnish, and equip additional residential and ancillary service facilities for the Minnesota sexual psychopathic personality treatment center at Moose Lake. The facilities are expected to provide two 25-bed residential units plus eight beds in an isolation unit.

Subd. 7. Crisis and Respite Residential Capacity 1,200,000

To develop crisis and respite residential capacity. In the development of this capacity, the department shall consider the use of existing surplus space in the public and private human service system.

Debt service costs on the bonds sold to finance projects for crisis and respite capacity shall be paid to the commissioner of finance in accordance with Minnesota Statutes, section 16A.643, with funds appropriated to the commissioner for this purpose.

Subd. 8. Building Renovations, Willmar 3,000,000

To renovate building 3 (MTC) and building 14 at the Willmar regional treatment center.

Sec. 19. VETERANS HOMES BOARD

Subdivision 1. To the commissioner of administration for the

purposes specified in this section 12,055,000

Subd. 2. Minneapolis Veterans Home 6,340,000

For design and construction of capital infrastructure improvements to tunnels, piping systems, and utility systems at the campus of the Minneapolis veterans home.

Subd. 3. Hastings Veterans Home 5,715,000

For design and renovation of the power plant, boiler, and related utility infrastructure systems at the campus of the Hastings veterans home.

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Sec. 20. CORRECTIONS

Subdivision 1. To the commissioner of administration for

the purposes specified in this section 14,185,000

Subd. 2. Asset Preservation 3,500,000

For asset preservation needs at state correctional facilities. $1,250,000 of this appropriation is for fire/life safety needs at the Stillwater correctional facility. $1,225,000 of this appropriation is for new plumbing for the education building at the St. Cloud correctional facility. The remainder of the appropriation is for installing fire sprinklers and replacing roofs, where needed.

Subd. 3. Inmate Bed Expansion, Shakopee 4,645,000

To design, construct, furnish, and equip a two story 62-bed living unit at MCF-Shakopee and expansion and modification of related support service areas. The living units must be able to be double-bunked.

Subd. 4. Administrative Segregation Unit, Lino Lakes 340,000

To construct, furnish, and equip an 80-cell administrative segregation unit to provide more restrictive and staff-efficient housing for inmates who are unable to live in the general population. This appropriation is contingent upon $7,592,000 in federal matching funds.

Subd. 5. Health Care Improvements, Oak Park Heights 3,000,000

To convert Complex 4 from a 52-bed living unit to a 45-bed departmentwide mental health unit, convert an existing 42-bed unit to a 39-bed departmentwide infirmary, and provide predesign and partial design funds for a new 60-bed high security unit to replace beds lost in the previous improvements.

Subd. 6. Intake Center, St. Cloud 1,500,000

To design and renovate dayrooms into offices and inmate processing areas.

Subd. 7. Security Fence, Red Wing 1,200,000

To design and construct a security fence and purchase related lighting and security equipment at MCF-Red Wing. This subdivision is exempt from the requirements of Minnesota Statutes, sections 16B.33, subdivision 3, and 16B.335.

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Sec. 21. PUBLIC SAFETY

Subdivision 1. To the commissioner of public safety, or other

named official, for the purposes specified in this section 2,230,000

Subd. 2. State Patrol Camp Ripley Training Facility 1,200,000

To the commissioner of transportation to design, construct, furnish, and equip a state patrol training facility at Camp Ripley in Little Falls. This appropriation is from the trunk highway fund.

Subd. 3. Fire and Public Safety Training 150,000

To develop a statewide master plan for siting, ownership, and operation of fire and public safety training facilities. The commissioner of public safety will consult with the Minnesota state colleges and universities, the department of military affairs, and the peace officer standards and training board in preparation of the master plan.

Subd. 4. Regional Emergency Response and Industrial Training Center 880,000

For a grant to the Southwest Regional Development Commission for an award to a community for constructing a regional emergency response and fire training center following a site selection process. The community will contract with Minnesota West Technical College to provide instruction for the center. The community selected will operate and maintain the facility. This grant is not available until at least an equal amount has been committed from nonstate sources.

Sec. 22. INDIAN AFFAIRS COUNCIL 1,700,000

To the Indian affairs council for construction of the Battle Point Cultural and Education Center. The center must be publicly owned. The Indian affairs council may enter into a lease or management agreement for the center subject to Minnesota Statutes, chapter 16A.695.

Sec. 23. TRADE AND ECONOMIC DEVELOPMENT

Subdivision 1. To the commissioner of trade and economic

development or other named official for the purposes specified in

this section 225,680,000

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Subd. 2. Redevelopment Grant Program 4,000,000

For purposes of new Minnesota Statutes, sections 116J.561 to 116J.567.

Priority must be given to projects in areas of high unemployment, to projects that enhance the property tax base on the site or adjacent to it, and to grants that will be used in conjunction with remediation activities.

Subd. 3. Direct Reduction Iron Processing Facilities 10,000,000

For grants for construction of up to three direct reduction iron processing facilities. The commissioner of trade and economic development and natural resources must jointly agree on and issue the grants. This appropriation is from the general fund and does not cancel but is available until June 30, 2003.

Subd. 4. Phillips Neighborhood Job Creation, Green Institute 1,500,000

To the city of Minneapolis for a grant to the Green Institute to design, construct, furnish, and equip a building to house the Phillips Ecoenterprise Center in the Phillips neighborhood in south Minneapolis to create up to 200 jobs in businesses, many of which specialize in energy conservation, renewable energy, environmental technology, recycling, reuse, and related fields. One-half of the job openings must be targeted for persons on public assistance or below 150 percent of the federal poverty level. This grant must be matched on a one-to-one basis from nonstate sources of debt and equity. The city may enter into a lease or management agreement with the Green Institute subject to Minnesota Statutes, section 16A.695.

Subd. 5. Taconite Mining Grants 500,000

For the taconite mining grant program under Minnesota Statutes, section 116J.992.

Subd. 6. St. Paul RiverCentre Arena 65,000,000

This appropriation is from the general fund to the commissioner of finance for a loan to the city of St. Paul to demolish the existing St. Paul RiverCentre Arena and to design, construct, furnish, and equip a new arena. This appropriation is not available until the lessee to whom the city has leased the arena has agreed to make rental or other payments to the city under the terms set forth in this subdivision. The loan is repayable solely from and secured by the payments made to the city by the lessee. The loan is not a public debt and the full faith, credit, and taxing powers of the city are not pledged for its repayment.

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(a) $48,000,000 of the loan must be repaid to the commissioner, without interest, within 20 years from the date of substantial completion of the arena in accordance with the following schedule:

(1) no repayments are due in the first two years from the date of substantial completion;

(2) in each of the years three to five, the lessee must pay $1,250,000;

(3) in each of the years six to ten, the lessee must pay $1,500,000;

(4) in each of the years 11 to 13, the lessee must pay $2,000,000;

(5) in year 14, the lessee must pay $3,000,000;

(6) in year 15, the lessee must pay $4,000,000; and

(7) in each of the years 16 to 20, the lessee must pay $4,750,000.

(b) The commissioner must deposit the repayments in the state treasury and credit them to the youth activities account, which is hereby created in the special revenue fund. Money in the youth activities account is available for expenditure as appropriated by law.

(c) The loan may not be made until the commissioner has entered into an agreement with the city of St. Paul identifying the rental or other payments that will be made and establishing the dates on and the amounts in which the payments will be made to the city and by the city to the commissioner. The payments may include operating revenues and additional payments to be made by the lessee under agreements to be negotiated between the commissioner, the city, and the lessee. Those agreements may include, but are not limited to, an agreement whereby the lessee pledges to provide each year a letter of credit sufficient to guarantee the payment of the amount due for the next succeeding year; an agreement whereby the lessee agrees to maintain a net worth, certified each year by a financial institution or accounting firm satisfactory to the commissioner, that is greater than the balance due under the payment schedule in paragraph (a); and any other agreements the commissioner may deem necessary to ensure that the payments are made as scheduled.

(d) The agreements must provide that the failure of the lessee to make a payment due to the city under the agreement is an event of default under the lease between the city and the lessee and that the state is entitled to enforce the remedies of the lessor under the lease in the event of default. Those remedies must include, but need not be limited to, the obligation of the lessee to pay the balance due for the remainder of the payment schedule in the event the lessee ceases to operate a National Hockey League team in the arena.

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(e) By January 1, 1999, the commissioner shall report to the chair of the senate committee on state government finance and the chair of the house committee on ways and means the terms of an agreement between the lessee and the amateur sports commission whereby the lessee agrees to make the facilities of the arena available to the commission on terms satisfactory to the commission for amateur sports activities consistent with the purposes of Minnesota Statutes, chapter 240A, each year during the time the loan is outstanding. The amateur sports commission must negotiate in good faith and may be required to pay no more than actual out-of-pocket expenses for the time it uses the arena. The agreement may not become effective before February 1, 1999. During any calendar year after 1999 that an agreement under this paragraph is not in effect and a payment is due under the schedule, the lessee must pay to the commissioner a penalty of $750,000 for that year. If the amateur sports commission has not negotiated in good faith, no penalty is due.

Subd. 7. Minneapolis Convention Center 87,145,000

To the commissioner of finance for a grant to the city of Minneapolis to pay principal costs on city of Minneapolis' $178,985,000 general obligation sales tax refunding bonds, series 1992. It is the expectation of the legislature that the city will issue bonds and pay all capital and operating costs associated with an expansion of the existing Minneapolis Convention Center. This is the final state appropriation for this facility.

Subd. 8. Minneapolis Convention Center Circulator 220,000

To the Metropolitan Council in cooperation with the Office of Tourism at the Department of Trade and Economic Development and the Scenic Byways program at the Department of Transportation from the general fund for planning and start-up costs of a pilot transportation project:

(1) connecting the Minneapolis convention center and other locations in downtown Minneapolis with multicultural tourist, heritage, and cultural resources in Phillips, Stevens Square, Whittier, Central, Powderhorn, Seward, Loring Park, and Cedar-Riverside neighborhoods in Minneapolis and contributing to the revitalization of those neighborhoods by increasing urban tourism;

(2) generating additional spending by expanding the selection of tourism activities provided by the convention center and downtown Minneapolis; and

(3) promoting state and local tourism activities which provide a richer, more culturally diverse experience of Minneapolis urban life as an alternative to larger, more commercial attractions.

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Subd. 9. Duluth Entertainment and Convention Center 12,000,000

For a grant to the Duluth entertainment and convention center authority for the purpose of planning, designing, constructing, and equipping of capital improvements to the Duluth entertainment and convention center.

This appropriation is not available until the commissioner has determined that the necessary additional financing to complete a project with a total cost of at least $20,000,000 has been committed from nonstate sources.

Subd. 10. Mayo Civic Center in Rochester 2,800,000

For a grant to the city of Rochester to acquire land, design, construct, furnish, and equip an expansion and remodeling of the Mayo Civic Center. This appropriation is contingent upon demonstration of an equal amount in nonstate matching funds to the commissioner of finance.

Subd. 11. St. Cloud Community Event Center 6,100,000

For a grant to the city of St. Cloud for Phase I of the Central Minnesota Events Center, including predesign, design, land acquisition, site preparation, and construction.

Subd. 12. Fergus Falls Convention Center 1,500,000

For a grant to the city of Fergus Falls to acquire land, predesign, design, construct, furnish, and equip a convention center in Fergus Falls. This appropriation is contingent upon demonstration of $1,500,000 in nonstate matching funds to the commissioner.

Subd. 13. Hutchinson Community Civic Center 1,000,000

For a grant to the city of Hutchinson to design, construct, furnish, and equip a community civic center, subject to the requirements of Minnesota Statutes, section 16A.695. This appropriation is not available until the commissioner has determined that an equal amount has been committed from nonstate sources.

Subd. 14. Humboldt Avenue Greenway Project 7,000,000

To the commissioner of natural resources for a grant to Hennepin county as the state contribution for the Humboldt Avenue greenway project in accordance with the multijurisdictional reinvestment program plan established in Minnesota Statutes, section 383B.79. The purpose of the grant is to acquire land for green space and infrastructure improvements in the vicinity of Humboldt Avenue North; reclamation of wetland amenities for public use; and construction of a parkway. This appropriation is not available until the governmental jurisdictions participating in the multijurisdictional

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reinvestment program have committed in the aggregate $12,000,000 for the project. The governmental jurisdictions, however constituted, may use any nonstate money under their control to meet the match requirement.

Subd. 15. Prairieland Expo 3,000,000

To the commissioner of administration for a grant to the southwest regional development commission to construct and equip Prairieland Expo. The southwest regional development commission may enter into a lease or management agreement for Prairieland Expo subject to the requirements of Minnesota Statutes, section 16A.695. This appropriation is contingent upon demonstration of $1,500,000 in nonstate matching funds.

Subd. 16. Montevideo Downtown Revitalization 1,500,000

For a grant to the city of Montevideo for engineering, architecture, and development of a public capital improvement downtown revitalization project following the 1997 flood. This appropriation is not available until the commissioner has determined that $1,500,000 has been committed to the project from nonstate sources.

Subd. 17. Paramount Arts District Regional Arts Center 750,000

To the commissioner of administration for a grant to the city of St. Cloud to construct, furnish, and equip the paramount arts district regional arts center, subject to Minnesota Statutes, section 16A.695. This appropriation is not available until the commissioner has determined that the necessary additional financing to complete at least a $5,400,000 project has been committed by nonstate sources.

Subd. 18. Veterans Memorial Performing Arts Amphitheater 315,000

For a grant to the city of St. Louis Park to construct a veterans memorial performing arts amphitheater. This appropriation is for a portion of a larger project to which at least an equal amount of funds from nonstate sources must be committed.

Subd. 19. Brooklyn Center Earle Brown Heritage Center Restoration 2,500,000

To the commissioner of administration to make a grant to the city of Brooklyn Center to acquire land and improve it for parking and to design, construct, furnish, and equip an additional building, together with connecting structures and the remodeling of existing buildings at the Earle Brown Heritage Center.

Subd. 20. Valley Technology Park in Crookston 600,000

For a grant to the city of Crookston for capital development of its Valley Technology Park located adjacent to the campus of the University of Minnesota at Crookston. This appropriation is not available until an equal amount has been committed from nonstate sources.

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Subd. 21. Minnesota Agricultural Interpretive Center (Farmamerica) 1,500,000

For a grant to the Minnesota Agricultural Interpretive Center (Farmamerica) to construct its visitors' center. This appropriation is from the general fund.

Subd. 22. Owatonna Infrastructure 500,000

For a grant from the general fund to the city of Owatonna to defray costs of city infrastructure for the Heritage Halls Museum/Cabela's project.

Subd. 23. United States Hockey Hall of Fame 250,000

For a grant to the city of Eveleth for construction, remodeling, and renovation of displays celebrating boys and girls amateur and high school hockey in the United States at the United States Hockey Hall of Fame. This appropriation is not available until the commissioner has determined that an equal amount has been committed from nonstate sources.

Subd. 24. Minnesota African-American Performing Arts Center 2,250,000

To the commissioner of administration for a grant to the city of St. Paul to predesign, design, construct, furnish, and equip the Minnesota African-American performing arts and education center. The city of St. Paul may contract with a nonprofit organization to operate the center, subject to Minnesota Statutes, section 16A.695. This appropriation is not available until the commissioner has determined that an equal amount has been committed by nonstate sources.

Subd. 25. Phalen Corridor 3,850,000

For a grant to the St. Paul Port Authority for the removal of blight by property acquisition, site preparation, and redevelopment activities on and around the former Stroh brewery property and to acquire a roadway right-of-way in the Phalen corridor. The city shall consider the potential for connection with an adjoining transit hub and any connector roads.

Subd. 26. Sewer and Water to Community College 500,000

For a grant to the city of Cambridge for extension of pipe for sewer and water service including extension under the Rum River to the community college campus at Cambridge.

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Subd. 27. Red Lake Educational and Training Facility 2,600,000

For a grant to the Red Lake tribal council to construct an educational and training facility and a production facility on land assigned by the council on the Red Lake reservation. The educational and training facility will provide a site for Northwest technical college to offer basic skills and vocational training to adults to help them overcome the effects of underemployment and unemployment and to prepare them for meaningful employment. Training will utilize personalized, computerized programs designed to prepare participants for college and other further training as well as direct access to the work force.

Subd. 28. Headwaters Science Center 200,000

To the commissioner of administration for a grant to the city of Bemidji for design of the Headwaters Science Center.

Subd. 29. Little Falls Conference and Retreat Center 100,000

For a grant to the city of Little Falls to equip a conference center and retreat site on the Mississippi River in Little Falls.

Subd. 30. Itasca County School-to-Work Technology Center 2,000,000

For a grant to Itasca county to design and construct a school-to-work technology center in conjunction with the school district, the city of Nashwauk, and private industry. Each dollar of state money must be matched by $1 of nonstate money.

Subd. 31. Mankato Technology Center 4,500,000

For a grant to the city of Mankato to acquire real property, design, and construct a multiuse facility that includes a technology incubator, a community technology park, an education center, headquarters space for the Institute for Wireless Education, laboratories, and office and administrative space. This appropriation is not available until the commissioner has determined that at least $4,500,000 has been committed by the city of Mankato and other nonstate sources.

Sec. 24. HOUSING FINANCE AGENCY 6,000,000

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(a) $4,000,000 is for transfer to the housing development fund for the purpose of making loans or grants for temporary or transitional housing under Minnesota Statutes, section 462A.201, subdivision 2, including loans or grants for housing homeless youth, homeless families, battered women, and individuals leaving prostitution.

At least 25 percent of the appropriation under this section must utilize youthbuild, Minnesota Statutes, sections 268.361 to 268.366, or other youth employment and training programs. Eligible programs must consult with appropriate labor organizations to deliver education and training. In making grants under this section, the commissioner shall use a request for proposal process.

(b) $2,000,000 is for transfer to the housing development fund for the purpose of making loans for permanent housing under Minnesota Statutes, sections 462A.21, subdivision 8b, and 462A.206.

Sec. 25. MINNESOTA HISTORICAL SOCIETY

Subdivision 1. To the Minnesota Historical Society for the purposes

specified in this section 13,110,000

Subd. 2. Historic Site Preservation and Repair 1,500,000

For capital repair, reconstruction, or replacement of deferred maintenance needs at state historic sites, buildings, exhibits, markers, and monuments, including replacement of the permanent exhibit at the Lindbergh Historic Site Visitor Center. The society shall determine project priorities as appropriate based on need.

Subd. 3. County and Local Preservation Projects 1,150,000

To be allocated to county and local jurisdictions as matching money for historic preservation projects of a capital nature. Grant recipients must be public entities and must match state funds on at least an equal basis. The facilities must be publicly owned. $175,000 of this appropriation is for the Veterans Memorial Hall Project at the St. Louis County Heritage and Arts Center.

Subd. 4. Split Rock Lighthouse Visitor Center Improvements 780,000

To design, renovate, and expand public restrooms and related facilities at the Split Rock Lighthouse visitor center.

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Subd. 5. Northwest Company Fur Post Interpretive Center 1,500,000

To design, construct, furnish, and equip the North West Company Fur Post Interpretive Center.

Subd. 6. Historic Fort Snelling 600,000

For the abatement of hazardous materials at Historic Fort Snelling and design for the renovation of building no. 17 at Fort Snelling for its possible future use as the Fort Snelling International Hostel. Hosteling International of Minnesota must enter into a lease with the Minnesota historical society to operate the hostel. State operating funds must not be used for the operation and maintenance of the hostel.

Subd. 7. St. Anthony Falls Heritage Education Center 4,000,000

For structural stabilization, landscape improvements of a capital nature, and design in the St. Anthony Falls Historic District.

Subd. 8. Herman Monument in New Ulm 400,000

For a grant to the city of New Ulm for the restoration, enhancement, and protection of Herman Monument. The appropriation must be matched with nonstate contributions sufficient to provide and install the four decorative copper lions depicted in Julius Berndt's 1885 architectural drawings of the monument. The nonstate contribution may be any combination of materials, in-kind, or cash contributions. The city of New Ulm, in consultation with the director of the state historical society, must develop interpretive displays depicting the significance of Herman in the history of German people and their immigration to America and with the director of the office of tourism to develop and implement a program to inform and attract national and international visitors to New Ulm and Herman Monument. The appropriation is available proportionally as the match is raised by the city of New Ulm.

Subd. 9. Treaty Site History Center 400,000

For a grant to the Nicollet county historical society to design and construct a new central exhibit at the treaty site history center, subject to the requirements of Minnesota Statutes, section 16A.695. This appropriation is not available until an equal amount has been committed from nonstate sources.

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Subd. 10. Humphrey Museum and Learning Center, Waverly 1,000,000

For a grant to the city of Waverly to renovate the existing village hall as the Hubert H. Humphrey Museum and Learning Center. The city may enter into a lease or management agreement for the center subject to Minnesota Statutes, section 16A.695. It is expected that the city of Waverly will construct an addition to the building with funds from nonstate sources.

Subd. 11. Bemidji Historic Railroad Depot 650,000

For a grant to the city of Bemidji to pay up to one-half of the total costs, including acquisition, design, other preliminary work, construction costs, furniture, fixtures, and equipment, to convert an abandoned historic railroad depot within the city to a historical museum and facility for the Beltrami county historical society. This appropriation is in addition to the appropriation of $50,000 for the same project in Laws 1997, chapter 200, article 1, section 18, subdivision 5, paragraph (g).

Subd. 12. Montevideo Railroad Depot 130,000

For a grant to the city of Montevideo for exterior improvements to the city's historic railroad depot and for design and development of a related parking area, trailhead, and public facilities at the site.

Subd. 13. Red River Valley Center 1,000,000

For a grant to the city of Moorhead for capital remodeling and new construction to expand the Red River Valley Center under Minnesota Statutes, section 138.93. The state's share of the remodeling and expansion must not exceed 50 percent of the cost of the project.

Sec. 26. BOND SALE EXPENSES 500,000

To the commissioner of finance for bond sale expenses under Minnesota Statutes, section 16A.641, subdivision 8. This appropriation is from the bond proceeds fund.

Sec. 27. [BOND SALE AUTHORIZATIONS.]

Subdivision 1. [BOND PROCEEDS FUND.] To provide the money appropriated in this act from the bond proceeds fund, the commissioner of finance, on request of the governor, shall sell and issue bonds of the state in an amount up to $463,795,000 in the manner, upon the terms, and with the effect prescribed by Minnesota Statutes, sections 16A.631 to 16A.675, and by the Minnesota Constitution, article XI, sections 4 to 7.

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Subd. 2. [TRANSPORTATION FUND.] To provide the money appropriated in this act from the transportation fund, the commissioner of finance, on request of the governor, shall sell and issue bonds of the state in an amount up to $34,000,000 in the manner, upon the terms, and with the effect prescribed by Minnesota Statutes, sections 16A.631 to 16A.675, and by the Minnesota Constitution, article XI, sections 4 to 7. The proceeds of the bonds, except accrued interest and any premium received on the sale of the bonds, must be credited to a bond proceeds account in the state transportation fund.

Sec. 28. Minnesota Statutes 1996, section 16A.105, is amended to read:

16A.105 [DEBT CAPACITY FORECAST.]

~~By December 1 of each even-numbered~~ In February and November of each year the ~~governor~~ commissioner shall ~~submit to the legislature~~ prepare a debt capacity forecast to be delivered to the governor and legislature according to section 16A.103, subdivision 1. The debt capacity forecast must include statements of the indebtedness of the state for bonds, notes, and other forms of long-term general obligation indebtedness ~~that are not accounted for in proprietary or fiduciary funds, including general obligation bonds, moral obligation bonds, revenue bonds, loans, grants payable, and capital leases~~. The forecast must show the actual amount of the debt service for at least the past two completed fiscal years, and the estimated amount for the current fiscal year and the next six fiscal years, the debt authorized and unissued, ~~the condition of the sinking funds,~~ and the borrowing capacity for the next six fiscal years.

Sec. 29. Minnesota Statutes 1996, section 16A.11, subdivision 3a, is amended to read:

Subd. 3a. [PART THREE: DETAILED CAPITAL BUDGET.] The detailed capital budget must include recommendations for capital projects to be funded during the next six fiscal years. It must be submitted with projects ~~rank ordered in two ways: in order of importance among all budget projects as determined~~ recommended by the governor, and in order of importance among that agency's requests as determined by the agency originating the request.

Sec. 30. Minnesota Statutes 1996, section 16A.11, is amended by adding a subdivision to read:

Subd. 6. [BUILDING MAINTENANCE.] The detailed operating budget must include amounts necessary to maintain state buildings. The commissioner of finance, in consultation with the commissioner of administration, the board of trustees of the Minnesota state colleges and universities, and the regents of the University of Minnesota, shall establish budget guidelines for building maintenance appropriations. Unless otherwise provided by the commissioner of finance, the amount to be budgeted each year for building maintenance is two percent of the cost of the building, adjusted up or down depending on the age and condition of the building.

Sec. 31. Minnesota Statutes 1996, section 16A.501, is amended to read:

16A.501 [REPORT ON ~~MATCHING MONEY~~ EXPENDITURE OF BOND PROCEEDS.]

The commissioner of finance must report annually to the legislature on the degree to which entities receiving appropriations of bond proceeds ~~contingent upon obtaining matching money have been successful in raising~~ have encumbered or expended that money. The report must be submitted to the chairs of the house of representatives ways and means committee and the senate finance committee by February 1 of each year.

Sec. 32. Minnesota Statutes 1997 Supplement, section 16A.641, subdivision 4, is amended to read:

Subd. 4. [SALE AND ISSUANCE.] State bonds must be sold and issued upon ~~sealed~~ competitive bids in the manner and on the terms and conditions determined by the commissioner in accordance with the laws authorizing them and subject to the approval of the attorney general, but not subject to chapter 14, including section 14.386. For each series, in addition to provisions required by subdivision 3, the commissioner may determine:

(1) the time, place, and notice of sale and method of comparing bids;

(2) the price, not less than par for highway bonds;

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(3) the principal amount and date of issue;

(4) the interest rates and payment dates;

(5) the maturity amounts and dates, not more than 20 years from the date of issue, subject to subdivision 5;

(6) the terms, if any, on which the bonds may or must be redeemed before maturity, including notice, times, and redemption prices; and

(7) the form of the bonds and the method of execution, delivery, payment, registration, conversion, and exchange, in accordance with section 16A.672.

Sec. 33. Minnesota Statutes 1996, section 16B.30, is amended to read:

16B.30 [GENERAL AUTHORITY.]

(a) Subject to other provisions in this chapter, the commissioner shall supervise and control the making of all contracts for the construction of buildings and for other capital improvements to state buildings and structures, other than buildings and structures under the control of the board of trustees of the Minnesota state colleges and universities. Except as provided in paragraph (b), a state agency may not undertake improvements of a capital nature without specific legislative authority.

(b) Specific legislative authority is not required for repairs or minor capital projects financed with operating appropriations or agency receipts that:

(1) are undertaken for asset preservation or code compliance purposes;

(2) do not materially increase the net square footage of a facility; and

(3) do not materially increase the cost of agency programs.

Unless the commissioner determines that an urgency exists, the commissioner of an agency undertaking a project with a cost in excess of $50,000 pursuant to this paragraph shall notify the chairs of the senate finance committee, the house capital investment committee, the house ways and means committee, the appropriate house and senate finance divisions, and the director of the legislative coordinating commission prior to incurring any contractual obligation with regard to the project. Any agency undertaking any project pursuant to this paragraph during fiscal year 1999 must report all such projects to the legislature by January 1, 2000.

Sec. 34. Minnesota Statutes 1997 Supplement, section 16B.335, subdivision 1, is amended to read:

Subdivision 1. [CONSTRUCTION AND MAJOR REMODELING.] (a) The commissioner, or any other recipient to whom an appropriation is made to acquire or better public lands or buildings or other public improvements of a capital nature, must not prepare final plans and specifications for any construction, major remodeling, or land acquisition in anticipation of which the appropriation was made until the agency that will use the project has presented the program plan and cost estimates for all elements necessary to complete the project to the chair of the senate finance committee and the chair of the house ways and means committee and the chairs have made their recommendations, and the chair of the house capital investment committee is notified. "Construction or major remodeling" means construction of a new building or, a substantial ~~alteration of the exterior dimensions~~ addition to an existing building, or a substantial change to the interior configuration of an existing building. The presentation must note any significant changes in the work that will be done, or in its cost, since the appropriation for the project was enacted or from the predesign submittal. The program plans and estimates must be presented for review at least two weeks before a recommendation is needed. The recommendations are advisory only. Failure or refusal to make a recommendation is considered a negative recommendation. The chairs of the senate finance committee, the house capital investment committee, and the house ways and means committee must also be notified whenever there is a substantial change in a construction or major remodeling project, or in its cost.

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(b) Capital projects exempt from the requirements of this ~~section~~ subdivision include ~~construction, renovation, or improvements to dams,~~ demolition or decommissioning of state assets, hazardous material projects, utility infrastructure projects, environmental testing, parking lots, exterior lighting, fencing, highway rest areas, truck stations, storage facilities not consisting primarily of offices or heated work areas, roads, bridges, trails, ~~bike paths~~ pathways, campgrounds, athletic fields, dams, floodwater retention systems, water access sites, harbors, sewer separation projects, water and wastewater facilities, ~~campgrounds, roads, bridges,~~ port development projects for which the commissioner of transportation has entered into an assistance agreement under section 457A.04, ice centers, or any other capital project with a construction cost of less than ~~$200,000~~ $500,000.

Sec. 35. Minnesota Statutes 1996, section 85.019, subdivision 4a, is amended to read:

Subd. 4a. [NATURAL AND SCENIC AREAS.] The commissioner shall administer a program to provide grants to units of government and school districts for the acquisition and betterment of natural and scenic areas such as blufflands, prairies, shorelands, wetlands, and wooded areas. A grant may not exceed 50 percent or ~~$200,000~~ $500,000, whichever is less, of the costs of acquisition and betterment of land acquired under this subdivision.

Sec. 36. Minnesota Statutes 1996, section 103F.725, subdivision 1a, is amended to read:

Subd. 1a. [FINANCIAL ASSISTANCE; LOANS.] (a) Up to ~~$24,000,000~~ $36,000,000 of the balance in the water pollution control revolving fund in section 446A.07, as determined by the public facilities authority ~~shall be appropriated~~, may be provided to the commissioner for the establishment of a clean water partnership loan program.

(b) The agency may award loans for up to 100 percent of the costs associated with activities identified by the agency as best management practices pursuant to section 319 and section 320 of the federal Water Quality Act of 1987, as amended, including associated administrative costs.

(d) The interest rate, at or below market rate, and the term, not to exceed 20 years, shall be determined by the agency in consultation with the public facilities authority.

(e) The repayment must be deposited in the water pollution control revolving fund under section 446A.07.

(f) The local unit of government receiving the loan is responsible for repayment of the loan.

(g) For the purpose of obtaining a loan from the agency, a local government unit may provide to the agency its general obligation note. All obligations incurred by a local government unit in obtaining a loan from the agency must be in accordance with chapter 475, except that so long as the obligations are issued to evidence a loan from the agency to the local government unit, an election is not required to authorize the obligations issued, and the amount of the obligations shall not be included in determining the net indebtedness of the local government unit under the provisions of any law or chapter limiting the indebtedness.

Sec. 37. Minnesota Statutes 1996, section 116.16, subdivision 5, is amended to read:

Subd. 5. [RULES.] (a) The agency shall promulgate permanent rules for the administration of grants and loans authorized to be made under the water pollution control program, which rules, however, shall not be applicable to the issuance of bonds by the commissioner of finance as provided in section 116.17. The rules shall contain as a minimum:

(1) procedures for application by municipalities;

(2) conditions for the administration of the grant or loan;

(3) criteria for the ranking of projects in order of priority for grants or loans, based on factors including the extent and nature of pollution, technological feasibility, assurance of proper operation, maintenance and replacement, and participation in multimunicipal systems; and

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(4) such other matters as the agency and the commissioner find necessary to the proper administration of the grant program.

(b) The agency shall award the amount of additional priority points necessary to place a project in the fundable range of the intended use plan if the agency determines that the project would repair a facility that is an imminent threat to discharge untreated or partially treated sewage to the Boundary Waters Canoe Area Wilderness if it fails.

(c) For purposes of awarding independent state grants, the agency may by rule waive the federal 20-year planning requirement for municipalities with a population of less than 1,500.

Sec. 38. Minnesota Statutes 1997 Supplement, section 116.18, subdivision 3c, is amended to read:

(1) serves one or more dwellings and other establishments;

(2) discharges less than 10,000 gallons of water per day; and

(3) uses any treatment and disposal methods other than subsurface soil treatment and disposal.

(1) it has adopted and is enforcing the requirements of Minnesota Rules governing individual sewage treatment systems;

Sec. 39. Minnesota Statutes 1996, section 116.182, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] (a) For the purposes of this section, the terms defined in this subdivision have the meanings given them.

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(b) "Agency" means the pollution control agency.

(d) "Commissioner" means the commissioner of the pollution control agency.

(e) "Essential project components" means those components of a wastewater disposal system that are necessary to convey or treat a municipality's existing wastewater flows and loadings, and future wastewater flows and loadings based on 50 percent of the projected residential growth of the municipality for a 20-year period.

(f) "Municipality" means a county, home rule charter or statutory city, town, the metropolitan council, an Indian tribe or an authorized Indian tribal organization; or any other governmental subdivision of the state responsible by law for the prevention, control, and abatement of water pollution in any area of the state.

(g) "Outstanding international resource value waters" are the surface waters of the state in the Lake Superior Basin, other than Class 7 waters and those waters designated as outstanding resource value waters.

(h) "Outstanding resource value waters" are those that have high water quality, wilderness characteristics, unique scientific or ecological significance, exceptional recreation value, or other special qualities that warrant special protection.

Sec. 40. Minnesota Statutes 1996, section 116.182, is amended by adding a subdivision to read:

Subd. 3a. [NOTIFICATION OF OTHER GOVERNMENT UNITS.] In addition to other applicable statutes or rules that are required to receive financial assistance consistent with this subdivision, the commissioner may not approve or certify a project to the public facilities authority for wastewater financial assistance unless the following requirements are met:

(1) prior to the initiation of the public facilities planning process for a new wastewater treatment system, the project proposer gives written notice to all municipalities as defined in 116.82 within ten miles of the proposed project service area, including the county in which the project is located, the office of strategic and long-range planning, and the pollution control agency. The notice shall state the proposer's intent to begin the facilities planning process and provide a description of the need for the proposed project. The notice also shall request a response within 30 days of the notice date from all government units who wish to receive and comment on the future facilities plan for the proposed project;

(2) during development of the facility plan's analysis of service alternatives, the project proposer must request information from all municipalities and sanitary districts which have existing systems that have current capacity to meet the proposer's needs or can be upgraded to meet those needs. At a minimum, the proposer must notify in writing those municipalities and sanitary districts whose corporate limits or boundaries are within three miles of the proposed project's service area;

(3) 60 days prior to the municipality's public hearing on the facilities plan, a copy of the draft facilities plan and notice of the public hearing on the facilities plan must be given to the local government units who previously expressed interest in the proposed project under clause (1);

(4) for a proposed project located or proposed to be located outside the corporate limits of a city, the affected county has certified to the agency that the proposed project is consistent with the applicable county comprehensive plan and zoning and subdivision regulations; and

(5) copies of the notifications required under clauses (1) and (2), as well as the certification from the county and a summary of the comments received, must be included by the municipality in the submission of its facilities plan to the pollution control agency, along with other required items as specified in the agency's rules.

This subdivision does not apply to the western Lake Superior sanitary district or the metropolitan council.

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Sec. 41. [116J.561] [CREATION OF ACCOUNT.]

A redevelopment account is created in the general fund. Money in the account may be used to make grants as provided in section 116J.564 and to pay for the commissioner's costs in reviewing applications and making grants.

Sec. 42. [116J.562] [DEFINITIONS.]

Subdivision 1. [SCOPE OF APPLICATION.] For purposes of sections 116J.561 to 116J.565, the terms in subdivisions 2 to 5 have the meanings given.

Subd. 2. [REDEVELOPMENT COSTS OR COSTS.] "Redevelopment costs" or "costs" means the costs of land acquisition, demolition, infrastructure improvement, and ponding, or other environmental infrastructure.

Subd. 3. [DEVELOPMENT AUTHORITY.] "Development authority" includes a statutory or home rule charter city, county, housing and redevelopment authority, economic development authority, and port authority.

Subd. 4. [METROPOLITAN AREA.] "Metropolitan area" means the seven-county metropolitan area, as defined in section 473.121, subdivision 2.

Subd. 5. [MUNICIPALITY.] "Municipality" means the statutory or home rule charter city, town, or, in the case of unorganized territory, county in which the redevelopment is located.

Subd. 6. [PUBLIC BENEFITS.] "Public benefits" include job creation, environmental benefits to the state and region, efficient use of public transportation, efficient use of existing infrastructure, provision of affordable housing, multiuse development that constitutes community rebuilding rather than single-use development, crime reduction, blight reduction, community stabilization, and property tax base maintenance or improvement.

Sec. 43. [116J.563] [GRANT APPLICATIONS.]

Subdivision 1. [APPLICATION REQUIRED.] To obtain a redevelopment grant, the development authority shall apply to the commissioner. The governing body of the municipality must approve, by resolution, the application.

Subd. 2. [REQUIRED CONTENT.] The commissioner shall prescribe and provide the application form. The application must include at least the following information:

(1) identification of the site;

(2) a redevelopment plan for the site;

(3) a detailed estimate, along with necessary supporting evidence, of the total redevelopment costs for the site;

(4) an assessment of the development potential or likely use of the site after completion of the redevelopment plan, including any specific commitments from third parties to construct improvements on the site;

(5) the manner in which the municipality will meet the local match requirement; and

(6) any additional information or material that the commissioner prescribes.

Sec. 44. [116J.564] [GRANTS.]

The commissioner may make a grant to an applicant development authority to pay for up to 50 percent of the redevelopment costs for a qualifying site. The determination of whether to make a grant for a site is within the sole discretion of the commissioner, subject to sections 116J.561 to 116J.566 and available unencumbered money in the redevelopment account. The commissioner's decisions and application of the priorities under this section are not subject to judicial review, except for abuse of discretion.

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Sec. 45. [116J.565] [PRIORITIES.]

Subdivision 1. [CHARACTERISTICS.] (a) If applications for grants exceed the available appropriations, grants shall be made for sites that, in the commissioner's judgment, provide the highest return in public benefits for the public costs incurred. In making this judgment, the commissioner shall give priority to redevelopment projects with one or more of the following characteristics:

(1) the need for redevelopment in conjunction with contamination remediation needs;

(2) the redevelopment project meets current tax increment financing requirements for a redevelopment district and tax increments will contribute to the project;

(3) the redevelopment potential within the municipality;

(4) proximity to public transit if located in the metropolitan area; and

(5) multijurisdictional projects that take into account the need for affordable housing, transportation, and environmental impact.

(b) The factors in paragraph (a), clauses (1) to (5), are not listed in a rank order of priority; rather the commissioner may weigh each factor, depending upon the facts and circumstances, as the commissioner considers appropriate. The commissioner may consider other factors that affect the net return of public benefits for completion of the redevelopment plan. The commissioner, notwithstanding the listing of priorities and the goal of maximizing the return of public benefits, shall make grants that distribute available money to sites both within and outside of the metropolitan area. The commissioner shall provide a written statement of the supporting reasons for each grant. Unless sufficient applications are not received for qualifying sites outside of the metropolitan area, at least 25 percent of the money provided as grants must be made for sites located outside of the metropolitan area. The commissioner shall consult with the metropolitan council about metropolitan area grants.

Subd. 2. [APPLICATION CYCLES.] In making grants, the commissioner shall establish semiannual application deadlines in which grants will be authorized from all or part of the available money in the account.

Sec. 46. [116J.566] [LOCAL MATCH REQUIREMENT.]

In order to qualify for a grant under sections 116J.561 to 116J.567, the municipality must pay for at least one-half of the redevelopment costs as a local match from any money available to the municipality.

Sec. 47. [116J.567] [SALE OF LAND.]

Bond proceeds funds in the account may only be used for redevelopment costs for publicly owned property. Nonbond proceeds funds in the account may be used for redevelopment costs as defined in section 116J.562, subdivision 2, provided that the land upon which the improvements are made will ultimately be sold to a private developer at the fair market value of the land. Net sale proceeds, up to the amount of the grant, must be paid to the account by the development authority within two years of the sale.

Sec. 48. Minnesota Statutes 1997 Supplement, section 124C.498, subdivision 2, is amended to read:

Subd. 2. [APPROVAL AUTHORITY; APPLICATION FORMS.] To the extent money is available, the commissioner of children, families, and learning may approve projects from applications submitted under this section. The grant money must be used only to design, acquire, construct, expand, remodel, improve, furnish, or equip the building or site of a magnet school facility according to contracts entered into within 24 months after the date on which a grant is awarded.

Sec. 49. Minnesota Statutes 1997 Supplement, section 268.917, is amended to read:

268.917 [EARLY CHILDHOOD LEARNING AND CHILD PROTECTION FACILITIES.]

The commissioner may make grants to state agencies and political subdivisions to construct or rehabilitate facilities for Head Start, early childhood and family education programs, other early childhood intervention programs, or demonstration family service centers housing multiagency collaboratives, with priority to centers in counties or

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municipalities with the highest ~~number~~ percentage of children living in poverty. The commissioner may also make grants to state agencies and political subdivisions to construct or rehabilitate facilities for crisis nurseries or child visitation centers. The facilities must be owned by the state or a political subdivision, but may be leased under section 16A.695 to organizations that operate the programs. The commissioner shall prescribe the terms and conditions of the leases. A grant for an individual facility must not exceed $200,000 for each program that is housed in the facility, up to a maximum of $500,000 for a facility that houses three programs or more. The commissioner shall give priority to grants that involve collaboration among sponsors of programs under this section and may give priority to projects that collaborate with child care providers, including all-day and school-age child care programs, special needs care, sick child care, and nontraditional hour care. The commissioner may give priority to grants for programs that will increase their child care workers' wages as a result of the grant. At least 25 percent of the amounts appropriated for these grants ~~must be used in conjunction with the youth employment and training programs operated by the commissioner~~ up to $50,000 must utilize youthbuild under sections 268.361 to 268.366 or other youth employment and training programs for the labor portion of the construction. Eligible programs must consult with appropriate labor organizations to deliver education and training. State appropriations must be matched on a 50 percent basis with nonstate funds. The matching requirement must apply programwide and not to individual grants.

Sec. 50. Minnesota Statutes 1996, section 446A.072, subdivision 2, is amended to read:

Subd. 2. [TYPE OF SUPPLEMENTAL ASSISTANCE.] Supplemental assistance shall be in the form of ~~zero percent loans, with loan repayments beginning February 20 or August 20 following the scheduled date of the project obtaining~~ grants. If one year after the initiation of operation of the project, the project does not meet the operational performance standards established by the agency, the grant must be repaid. Upon receipt of notice from the agency that the project operational performance standards have been met, the authority will forgive the scheduled loan repayments made under this section. If not forgiven, loan Grant repayments shall be deferred upon request from the commissioner of the agency for six-month periods, provided the commissioner has determined that satisfactory progress is being made to achieve project performance or is developing or implementing a corrective action plan.

Sec. 51. Minnesota Statutes 1996, section 446A.072, subdivision 4, is amended to read:

Subd. 4. [FUNDING LEVEL.] (a) The authority shall provide supplemental assistance for essential project component costs as certified by the commissioner of the pollution control agency under section 116.182, subdivision 4.

(b) A municipality may not receive more than $4,000,000 under this section unless specifically approved by law.

(c) The authority will calculate the grant amount needed for the essential project component costs by first determining the amount needed to reduce a municipality's monthly residential sewer service charge to $25 or to an annual residential sewer service charge in excess of 1.5 percent of the municipality's median household income, whichever is less, and then multiplying that amount by 80 percent to determine the actual award amount to supplement loans under section 446A.07 or provide up to one-third of the amount of the grant funding level required by USDA/RECD for projects listed on the agency's intended use plan.

~~(d)~~ The authority shall provide supplemental assistance for up to one-half of the eligible grant funding level determined by the United States Department of Agriculture Rural Development funding for projects listed on the agency's project priority list, in priority order. For municipalities that are not eligible for United State Department of Agriculture Rural Development funding for wastewater, the authority shall provide supplemental assistance for: (1) essential project component costs calculated by first determining the amount needed to reduce a municipality's annual residential sewer costs to 1.4 percent of the municipality's median household income or $25 per month per household, whichever is greater, and then multiplying that amount by 80 percent to determine the actual award amount to supplement loans under section 446A.07; and (2) up to 50 percent of the incremental costs specifically identified by the agency as being attributable to more stringent wastewater standards required to protect outstanding resource value waters or outstanding international resource value waters.

(d) Notwithstanding paragraph (b), in the event that a municipality's monthly residential sewer service charges average above $50, the authority will provide 90 percent of the grant amount needed to reduce the average monthly sewer service charge to $50, provided the project is ranked in the top 50 percentile of the agency's intended use plan.

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(e) Notwithstanding paragraphs (b), (c), and (d), a municipality with an annual median household income of $40,000 or greater shall not be eligible for a grant, except for incremental costs specifically identified by the agency as being attributable to more stringent wastewater standards required to protect outstanding resource value waters or outstanding international resource value waters.

(f) The authority shall provide supplemental assistance to a municipality that would not otherwise qualify for supplemental assistance if:

(1) the municipality voluntarily accepts a sewer connection from another governmental unit to serve residential, industrial, or commercial developments that were completed before March 1, 1996, or are on lots whose plats were recorded before that date; and

(2) fees charged by the municipality for the connection must take into account state and federal grants used by the municipality for the construction of the treatment plant.

The amount of supplemental assistance under this paragraph must be sufficient to reduce debt service payments under section 446A.07 to an extent equivalent to a zero percent loan in an amount up to the other governmental unit's project costs necessary for connection. Eligibility for supplemental assistance under this paragraph ends three years after the agency certifies that the connection has met the operational performance standards established by the agency.

Sec. 52. Minnesota Statutes 1996, section 446A.072, is amended by adding a subdivision to read:

Subd. 13. [PLANNING GRANTS.] In order to determine the feasibility of providing wastewater treatment in unsewered areas and encourage multijurisdictional coordination, the authority may provide grants to local governments to prepare preliminary engineering plans and develop, as appropriate, intermunicipal agreements, joint powers boards, or sanitary sewer districts. Planning grants shall be equal to one-half of the eligible engineering, legal, and administrative costs as determined by the authority, up to a maximum of $50,000. The authority shall award planning grants based on the severity of the environmental need and the potential for cooperation among local governments.

Sec. 53. Minnesota Statutes 1997 Supplement, section 462A.202, subdivision 3a, is amended to read:

Subd. 3a. [PERMANENT RENTAL HOUSING.] The agency may make loans, with or without interest, to cities and counties to finance the construction, acquisition, or rehabilitation of affordable, permanent, publicly owned rental housing ~~located in the area designated under Presidential Declaration of Major Disaster, DR-1175~~. Loans made under this subdivision are subject to the restrictions of subdivision 7. In making loans under this subdivision, the agency shall give priority to projects that increase the supply of affordable family housing.

Sec. 54. Minnesota Statutes 1996, section 473.39, is amended by adding a subdivision to read:

Subd. 1e. [PROHIBITION OF CERTAIN OBLIGATIONS.] The council may not issue obligations for construction of light rail transit in the Hiawatha corridor.

Sec. 55. Minnesota Statutes 1996, section 473.399, is amended to read:

473.399 [LIGHT RAIL TRANSIT~~; REGIONAL PLAN~~ AND COMMUTER RAIL PLANNING.]

Subdivision 1. [GENERAL REQUIREMENTS.] (a) The council shall adopt a ~~regional light rail transit~~ plan to ensure that light rail transit facilities in the metropolitan area will be acquired, developed, owned, and capable of operation in an efficient, cost-effective, and coordinated manner ~~as an integrated and unified system on a multicounty basis~~ in coordination with buses and other transportation modes and facilities. The plan may be developed and adopted in phases corresponding to phasing of construction of light rail. To the extent practicable, the council shall incorporate into its plan appropriate elements of the plans of regional railroad authorities in order to avoid duplication of effort.

(b) The ~~regional~~ light rail transit plan or first phase of the plan required by this section must be adopted by the council before the commissioner of transportation may begin construction of light rail transit facilities ~~and before the commissioner may expend funds appropriated or obtained through bonding for constructing light rail transit facilities~~. Following

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adoption of the ~~regional~~ plan, each regional railroad authority and the commissioner of transportation shall act in conformity with the plan. The commissioner shall prepare or amend the final design plans as necessary to make the plans consistent with the ~~regional~~ light rail transit plan.

(c) Throughout the development and implementation of the plan, the council shall contract for or otherwise obtain engineering services to assure that the plan adequately addresses the technical aspects of light rail transit.

Sec. 56. Minnesota Statutes 1996, section 473.399, is amended by adding a subdivision to read:

Subd. 1a. [INTEGRATED TRANSPORTATION SYSTEM.] The commissioner of transportation, the metropolitan council, and the regional rail authorities shall ensure that the light rail transit and commuter rail facilities are planned, designed, and implemented: (1) to move commuters and transit users into and out of, as well as within, the metropolitan area, and (2) to ensure that rail transit lines will interface with each other and other transportation facilities and services so as to provide a unified, integrated, and efficient multimodal transportation system.

Sec. 57. Minnesota Statutes 1996, section 473.3994, subdivision 5, is amended to read:

Subd. 5. [FINAL DESIGN PLANS.] (a) If the final design plans incorporate a substantial change from the preliminary design plans with respect to location, length, or termini of routes; general dimension, elevation, or alignment of routes and crossings; location of tracks above ground, below ground, or at ground level; or station locations, before beginning construction, the commissioner shall submit the ~~physical design~~ changed component of final design plans to the governing body of each statutory and home rule city, county, and town in which the ~~route~~ changed component is proposed to be located. Within 60 days after the submission of the plans, the city, county, or town shall review and approve or disapprove the ~~plans for the route~~ changed component located in the city, county, or town. A local unit of government that disapproves the ~~plans~~ change shall describe specific amendments to the plans that, if adopted, would cause the local unit to withdraw its disapproval. Failure to approve or disapprove the changed plans in writing within the time period is deemed to be approval, unless an extension is agreed to by the city, county, or town and the commissioner.

(b) If the governing body of one or more cities, counties, or towns disapproves the changed plans within the period allowed under paragraph (a), the commissioner may refer the plans, along with any comments of local jurisdictions, to the metropolitan council. The council shall review the final design plans under the same procedure and with the same effect as provided in subdivision 4 for preliminary design plans.

Sec. 58. Minnesota Statutes 1996, section 473.3994, subdivision 10, is amended to read:

Subd. 10. [CORRIDOR MANAGEMENT COMMITTEE.] A corridor management committee shall be established to advise the commissioner of transportation in the design and construction of light rail transit in each corridor to be constructed. The corridor management committee shall consist of the following members of the light rail transit joint powers board established pursuant to section 473.3998 and one representative from each city in which the corridor is located. Additionally, the commissioner of transportation and three representatives of the metropolitan council shall each appoint a member to the committee. For the corridor between Minneapolis and St. Paul, the University of Minnesota shall appoint one member to the committee. A member representing the metropolitan council shall chair the committee:

(1) one member appointed by the joint powers board established under section 473.3998;

(2) one member appointed by each city and county in which the corridor is located;

(3) the commissioner of transportation or a designee of the commissioner;

(4) two members appointed by the metropolitan council, one of whom shall be designated as the chair of the committee;

(5) one member appointed by the metropolitan airports commission, if the designated corridor provides direct service to the Minneapolis-St. Paul international airport; and

(6) one member appointed by the president of the University of Minnesota, if the designated corridor provides direct service to the university.

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The corridor management committee shall advise the commissioner of transportation and the regional railroad authority or authorities in whose jurisdiction the line or lines are located on issues relating to the alternatives analysis, environmental review, preliminary design, preliminary engineering, final design, implementation method, and construction of light rail transit.

Sec. 59. Minnesota Statutes 1996, section 473.3994, subdivision 12, is amended to read:

Subd. 12. [ALTERNATIVES ANALYSIS; ENVIRONMENTAL REVIEW.] For light rail transit lines to be constructed in the metropolitan area, the regional railroad authority or authorities in whose jurisdiction a line or lines are to be constructed and the commissioner of transportation shall jointly prepare an alternatives analysis, the environmental review documents required, and the preliminary engineering plan. The council must approve the design for the alternatives analysis and the completed alternatives analysis. The department of transportation shall be the responsible governmental unit. An alternatives analysis is not required for the Hiawatha corridor.

Sec. 60. Minnesota Statutes 1996, section 473.3998, is amended to read:

473.3998 [LIGHT RAIL TRANSIT JOINT POWERS BOARD.]

A light rail transit joint powers board shall be formed under section 471.59 consisting of one voting member from the regional rail authorities of Hennepin, Ramsey, Anoka, Washington, Dakota, Scott, and Carver counties.

The board shall review and approve light rail transit system standards to be used by the commissioner in designing and building a light rail transit facility and shall review and approve the plan for community involvement and the marketing program. The board shall advise the corridor management committee established pursuant to section 473.3994, subdivision 10, and the commissioner on the method of implementation. All members of the board shall be members of the corridor management committee established pursuant to section 473.3994, subdivision 10.

Sec. 61. Laws 1963, chapter 305, section 1, is amended to read:

Section 1. [DULUTH, CITY OF; ~~ARENA-AUDITORIUM~~ ENTERTAINMENT AND CONVENTION CENTER.]

There is hereby created an ~~arena-auditorium administrative board~~ entertainment and convention center authority for the city of Duluth, hereinafter referred to as the ~~board~~ authority, which shall consist of ~~seven~~ the directors, who shall be appointed to membership on such ~~board~~ authority, and who shall have and exercise the powers, perform the duties, and be subject to the obligations, as hereinafter set forth in this act.

Sec. 62. Laws 1963, chapter 305, section 2, is amended to read:

Sec. 2. The ~~board~~ authority created under this act shall consist of ~~seven~~ 11 directors, ~~who shall~~ seven appointed by the city of Duluth and four appointed by the governor. The directors serve without compensation but ~~who~~ may be reimbursed for authorized out-of-pocket expenses incurred in the fulfillment of their duties. The original term of three of the directors shall be for one year; the original term of two of the directors shall be for two years; and the original term of two of the directors shall be for three years, and until their respective successors are appointed and qualified. Subsequent terms of directors appointed by the city shall be for three years. All terms shall expire on June 30 of the appropriate year. Directors appointed by the governor serve at the pleasure of the governor. Whenever a vacancy on such ~~board~~ authority shall occur by reason of resignation, death, removal from the city, or removal for failure or neglect to perform duties of a director, such vacancy shall be filled for the unexpired term. All appointments and removal of directors of the ~~board~~ authority appointed by the city shall be made by the mayor, with the approval of the city council, evidenced by resolution. Every appointee who shall fail, within ten days after notification of his appointment, to file with the city clerk his oath or affirmation to perform faithfully, honestly, and impartially the duties of his office, shall be deemed to have refused such appointment, and thereupon another person shall be appointed in the manner prescribed in this section.

Sec. 63. Laws 1963, chapter 305, section 3, is amended to read:

Sec. 3. Subdivision 1. Within 30 days after the members of the ~~board~~ authority shall have qualified for office, the ~~board~~ authority shall meet and organize, and adopt and thereafter may amend such rules and regulations for the conduct of the ~~board~~ authority as the ~~board~~ authority shall deem to be in the public interest and most likely to advance, enhance, foster,

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and promote the use of ~~such arena-auditorium~~ the entertainment and convention center and its facilities for activities, conventions, events, and athletic and cultural productions. Such rules and regulations shall at all times be in harmony with this act.

Subd. 2. Such directors shall elect from among their number a president and a vice-president, and shall also elect a secretary who may or may not be a member of such ~~board~~ authority. No two of such offices may be held by one director. The officers shall have the duties and powers usually attendant upon such officers, and such other duties and powers not inconsistent herewith as may be provided by the ~~board~~ authority.

Subd. 3. The authority shall select a specific site within the city of Duluth for location of a national class entertainment and convention center, and may spend money appropriated, or otherwise available to it for that purpose, to acquire property for the center and to plan, design, construct, equip, and furnish the center. The authority shall administer, promote, and operate the center as a state facility, but for which the state assumes no financial responsibility or liability beyond the amounts appropriated for the facility.

Sec. 64. Laws 1963, chapter 305, section 4, is amended to read:

Sec. 4. Subdivision 1. The city treasurer of the city of Duluth shall be the treasurer of the ~~board~~ authority. The treasurer shall receive and have the custody of all moneys of the ~~board~~ authority from whatever source derived, and the same shall be deemed public funds. The treasurer shall disburse such funds only upon written orders drawn against such funds, signed by the manager and approved by the president, or in his absence, the vice-president of such ~~board~~ authority; and each order shall state the name of the payee and the nature of the claim for which the same is issued. The treasurer shall keep an account of all monies coming into his hands, showing the source of all receipts and the nature, purpose, and authority of all disbursements, and at least four times each year, at times and in a form to be determined by the city council, the ~~board~~ authority shall file with the city clerk a financial statement of the ~~board~~ authority, showing all receipts and disbursements, the nature of the same, the moneys on hand, and the purposes for which the same are applicable, the credits and assets of the ~~board~~ authority, and its outstanding liabilities.

Subd. 2. The ~~board~~ authority has the exclusive power to receive, control, and order the expenditure of any and all moneys and funds pertaining to the ~~arena-auditorium~~ center operations.

Subd. 3. There are hereby created in the treasury of the city of Duluth a special ~~arena-auditorium~~ entertainment and convention center fund, hereinafter referred to as the special fund, and an ~~arena-auditorium~~ entertainment and convention center operating fund, hereinafter referred to as the operating fund. The moneys in the special fund shall be used solely for the acquisition and preparation of a site, and for the planning, construction, and equipping of the ~~arena-auditorium~~ center. The special fund shall consist of:

(1) All moneys derived from the sale of bonds by the city to provide funds for the acquisition and preparation of a site, and for the planning, construction, and equipping of ~~an arena-auditorium~~ the center.

(2) All moneys appropriated or made available to the city of Duluth for the acquisition and preparation of a site, and for the planning, construction, and equipping of the ~~arena-auditorium~~ center.

(3) The proceeds of all financial aid or assistance by the city or state governments for the acquisition and preparation of a site, and for the planning, construction, and equipping of the ~~arena-auditorium~~ center.

(4) All moneys received from the United States of America to aid in the acquisition and preparation of a site, and for the planning, construction, and equipping of the ~~arena-auditorium~~ center.

(5) All moneys received as gifts or contributions to the acquisition and preparation of a site, and for the planning, construction, and equipping of the ~~arena-auditorium~~ center.

The operating fund shall be used for maintenance, promotion, operation, or betterment of the ~~arena-auditorium~~ center, and for expenses of the ~~board~~ authority. The operating fund shall consist of all moneys of the ~~board~~ authority derived from any source other than moneys credited to the special fund as hereinabove provided.

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Subd. 4. At least once in each year the city auditor shall make, or cause to be made, at the expense of the ~~board~~ authority, a complete examination and audit of all books and accounts of the aforesaid ~~board~~ authority; and for such purpose the city auditor shall have the authority and power to inspect and examine such books and accounts at any time during regular business hours and such intervals as he may determine. One copy of such yearly audit shall be filed by the city auditor with the city clerk as a public document.

Subd. 5. The authority shall annually submit to the governor and the legislature a report detailing its activities and finances for the previous year. The report shall also include a proposed budget for the succeeding two years, showing in reasonable detail estimated operating and nonoperating revenues from all sources, and estimated expenditures for operation, administration, ordinary repair, and debt service.

Subd. 6. The legislative auditor shall make an annual audit of the authority's books and accounts once each year or as often as the legislative auditor's funds and personnel permit.

Sec. 65. Laws 1963, chapter 305, section 5, is amended to read:

Sec. 5. Subdivision 1. Wherever the word ~~"arena-auditorium" are~~ "center" is used in this act, ~~such words shall mean and include the municipal arena-auditorium cultural~~ it means the entertainment and convention center complex of the city of Duluth, including the land upon which it stands and land appurtenant thereto.

Subd. 2. Notwithstanding anything to the contrary contained in any law, or in the charter of the city of Duluth, or in any ordinance thereof, passed by the city council, or approved by the electors of the city, there is hereby conferred upon such ~~board~~ authority the power and duty to contract for and superintend the erection, construction, equipping and furnishing of ~~such arena-auditorium~~ the center, and to administer, promote, control, direct, manage, and operate ~~such arena-auditorium~~ the center as a municipal facility.

Sec. 66. Laws 1963, chapter 305, section 7, is amended to read:

Sec. 7. Subdivision 1. No motor vehicle, either privately or publicly owned, may be parked upon any parking lot or facility operated by the ~~board~~ authority except as authorized by this section. The operation and supervision of all such parking lots and facilities are vested in the ~~board~~ authority. It may fix and collect rents, charges, or fees in connection with and for the use of any parking lot or facility operated by the ~~board~~ authority.

Subd. 2. [RULES AND REGULATIONS.] The ~~board~~ authority may adopt and enforce rules and regulations governing the parking of motor vehicles upon any such parking lot or facility so operated by it. Such rules and regulations shall be approved as to form and validity by the city attorney, shall be published once in the official newspaper of the city, and a certified copy of such publication filed with the city clerk, and thereupon such rules and regulations shall have the force of law.

Subd. 3. [REMOVAL AND IMPOUNDING OF VEHICLES.] Any motor vehicle parked upon any parking lot or facility operated by the ~~board~~ authority not in conformity with the rules and regulations of the ~~board~~ authority governing the operation and use thereof shall be deemed a public nuisance and the ~~board~~ authority shall provide for the abatement of such nuisance by rules and regulations, including provision for the removal and impounding of such motor vehicle. The cost of such removal and impounding shall be a lien against the motor vehicle until paid.

Subd. 4. [VIOLATIONS.] Any person, city official, elective or appointed, firm, association, or corporation which violates any of the provisions of this section or any rule or regulation made by the ~~board~~ authority hereunder is guilty of a misdemeanor and upon conviction thereof shall be punished in the manner provided by law.

Subd. 5. [MONEYS COLLECTED.] All moneys collected by the ~~board~~ authority as rents, charges, or fees in connection with and for the use of any parking lot or facility shall be deposited in the ~~arena-auditorium~~ entertainment and convention center operating fund.

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Sec. 67. Laws 1963, chapter 305, section 8, is amended to read:

Sec. 8. The ~~board~~ authority shall have the power:

To adopt and alter all bylaws and rules and regulations which it shall from time to time deem best for the conduct of the business of the ~~board~~ authority, and for the use of the facilities of the ~~board~~ authority, and for the purposes of carrying out the objects of this act; but such bylaws, rules, and regulations shall not be in conflict with the terms of this act.

To appoint and remove a manager and such other employees as the ~~board~~ authority may deem necessary, who shall not be within the civil service classifications of the city, and to prescribe the duties and fix the compensation and other benefits of such manager and employees, without regard to any provision contained in the charter or any ordinance of the city relating to civil service, or to any provision contained in Minnesota Statutes 1961, Sections 197.45 to 197.47, inclusive.

To procure and provide for a policy or policies of insurance for the defense and indemnification of the city of Duluth, its officers and employees, and directors, manager, and employees of the ~~board~~ authority, against claims arising against them out of the performance of duty, whether such claims be groundless, or otherwise. Premiums for any policies of insurance required by this act shall be paid for out of the funds of the ~~arena-auditorium administrative board~~ entertainment convention center authority.

To implement and carry out the provisions of section 7 of this act.

To utilize the services and facilities of the city so far as the same are offered by appropriate city officials and accepted by the ~~board~~ authority, and to pay the city for all charges and costs for such services.

To operate and maintain and to lease from others all facilities necessary or convenient in connection with the ~~arena-auditorium~~ center and to contract for the operation and maintenance of any parts thereof or for services to be performed; to lease the whole or parts thereof, and grant concessions, all on such terms and conditions as the ~~board~~ authority may determine.

To authorize and direct the city treasurer to invest, in the manner provided by law, any funds held in reserve, or sinking funds, or any funds not required for immediate disbursement.

To fix, alter, charge, and collect rates, fees, and all other charges to be made for all services or facilities furnished by the ~~board~~ authority for the use of the ~~arena-auditorium~~ center facilities by any persons or public or private agencies utilizing such services or facilities.

To make and execute contracts, agreements, instruments, and other arrangements necessary or convenient to the exercise of its powers.

Sec. 68. Laws 1963, chapter 305, section 9, is amended to read:

Sec. 9. The manager of the ~~arena-auditorium~~ center shall be responsible for the custody and control of all moneys received and collected from the daily operations of the ~~arena-auditorium~~ center until such moneys are delivered to the city treasurer and he shall have obtained a receipt therefor, or until such moneys are deposited in a bank account under control of the city treasurer.

The manager shall give bond in favor of the city of Duluth in a sum equal to twice the amount of money which will probably be in his hands at any time during any one year, that amount to be determined at least annually by the ~~board~~ authority; such bond to be conditioned upon the faithful discharge of his official duties, and be approved as to form, correctness, and validity by the city attorney, and filed with the city auditor; such bond, however, shall not exceed $300,000. Premiums for such bonds shall be paid out of funds of the ~~board~~ authority.

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Sec. 69. Laws 1963, chapter 305, section 10, is amended to read:

Sec. 10. The ~~board~~ authority shall regulate the making of bids and the letting of contracts through procedure established by the ~~board~~ authority, subject to the following conditions:

(a) In all cases of work to be done by contract or the purchase of property of any kind, or the rendering of any service to the ~~board~~ authority other than professional services, competitive bids shall be secured before any purchase is made or any contract awarded where the amount involved exceeds the sum of $2,000.

(b) All bids shall be sealed when received, shall be opened in public at the hour stated in the notice; and all original bids, together with all documents pertaining to the award of the contract, shall be retained and made a part of the permanent file or record, and shall be open to public inspection.

(c) Purchases of $2,000 or less may, through procedure established by the ~~board~~ authority, be delegated to the ~~auditorium~~ center manager. Contracts involving more than $2,000 shall be awarded only after authorization by the ~~board~~ authority.

(d) The ~~board~~ authority may reject, or through procedure established by the ~~board~~ authority, authorize the ~~auditorium~~ center manager to reject, any and all bids.

(e) Contract shall be let to the lowest responsible bidder, and purchases shall be made from the responsible bidder who offers to furnish the article desired for the lowest sum.

(f) In determining the lowest responsible bidder, in addition to price, the following may be considered:

(1) The ability, capacity, and skill of the bidder to perform the contract or provide the service required.

(2) Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference.

(3) The character, integrity, reputation, judgment, experience and efficiency of the bidder.

(4) The quality of performance of previous contracts or services.

(5) The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service.

(6) The quality, availability, and adaptability of the supplies or contractual service to the particular use required.

(7) The ability of the bidder to provide future maintenance and service for the use of the subject of the contract.

(8) The number and scope of conditions attached to the bid.

(g) Specifications shall not be so prepared as to exclude all but one type or kind, but shall include competitive supplies and equipment; provided, however, that unique or noncompetitive articles which are determined by the ~~board~~ authority to be sufficiently superior for the service intended by the ~~board~~ authority, may be purchased without regard to other bids.

Sec. 70. Laws 1963, chapter 305, section 11, is amended to read:

Sec. 11. The ~~arena-auditorium board~~ authority shall not exercise the powers of eminent domain, but the city may acquire lands for the ~~arena-auditorium~~ authority by exercise of the power of eminent domain at the request and expense of the ~~board~~ authority. The ~~arena-auditorium board~~ authority shall not have the power to raise any moneys by taxation in any form whatsoever, nor to levy assessments for local improvements, nor have the power to pledge the full faith and credit of the city.

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Sec. 71. Laws 1986, chapter 396, section 2, subdivision 1, as amended by Laws 1987, chapter 55, section 4, and Laws 1989, chapter 54, section 2, is amended to read:

Subdivision 1. [ACTIVITIES; CONTRACTS.] The city may acquire, design, construct, equip, improve, expand, control, operate, and maintain the convention center and related facilities. The city shall have all powers necessary or convenient for those purposes and may enter into any contract for those purposes, including the financing of the convention center and any related facilities.

The city may contract for construction materials, supplies, and equipment in accordance with Minnesota Statutes, section 471.345, except that it may enter into contracts with persons, firms, or corporations to perform one or more or all of the functions of architect, engineer, and construction manager with respect to all or part of a project to build or remodel the convention center and related facilities. Contractors shall be selected through the process of public bidding provided that it shall be permissible for the city to narrow the listing of eligible bidders to those which the city determines to possess sufficient expertise to perform the intended functions and the city may negotiate with the three lowest responsible bidders to achieve the lowest possible bid. Notwithstanding any other law or charter provision to the contrary, the city may, at the discretion of the city council, enter into agreements relating to the convention center, related facilities or any other city construction project with appropriate labor organizations and contractors which provide that no strike or lockout may be ordered during the term of the agreements. These provisions and necessary procedures may be utilized for the purpose of maintaining employment stability and avoiding delay or interference with the performance of the ~~fast-track~~ construction schedule in connection with the project. The city may require any construction manager to certify a construction price and completion date to the city. The city may require the posting of a bond in an amount determined by the city to cover any costs which may be incurred over and above the certified price, including but not limited to costs incurred by the city or loss of revenues resulting from incomplete construction on the completion date and any other obligations the city may require the construction manager to bear. The city shall secure surety bonds as required in Minnesota Statutes, section 574.26, securing payment of just claims in connection with all public work undertaken by it. Persons entitled to the protection of the bonds may enforce them as provided in Minnesota Statutes, sections 574.28 to 574.32, and shall not be entitled to a lien on any property of the city under the provisions of Minnesota Statutes, sections 514.01 to 514.16.

Sec. 72. Laws 1990, chapter 610, article 1, section 16, subdivision 4, is amended to read:

Subd. 4. For the labor history center 550,000

This appropriation is to plan and design the Labor History Center. The society shall develop a facility program document that defines the space and programming needs of the center including operating expenses. The society shall determine, through a site location assessment study, the location of the center on a site adjacent to the history center and prepare working drawings for the project. Cost estimates for all elements necessary to complete the project must be submitted to the chairs of the agriculture, transportation, and semi-states divisions of the senate finance and house appropriations committees for their recommendations. The recommendations are advisory only. Failure or refusal to make a recommendation promptly is deemed a negative recommendation. The total cost of the project must not exceed ~~$12,500,000~~ $14,000,000. The project cost may include exhibits and audio-visual devices and systems.

Sec. 73. Laws 1994, chapter 643, section 2, subdivision 13, is amended to read:

Subd. 13. St. Louis County Heritage and Arts Center 750,000

This appropriation is for a grant to St. Louis county to construct an addition and improvements to the St. Louis county heritage and arts center in Duluth, subject to new Minnesota Statutes, section 16A.695.

This appropriation is available only as matched by $2 of nonstate money for every $1 of state money.

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Sec. 74. Laws 1996, chapter 463, section 13, subdivision 4, as amended by Laws 1997, chapter 246, section 29, is amended to read:

Subd. 4. Renovate Capitol Building 8,435,000

$4,800,000 is to predesign, design, and reconstruct the northeast ~~terrace and predesign~~ and ~~design the~~ northwest ~~terrace~~ terraces of the capitol building.

$1,400,000 is to renovate the lantern and related structures on the capitol dome.

$2,235,000 is to predesign, design, construct, furnish, and equip the renovation of the capitol cafeteria including full-service kitchen and related spaces. The appropriation is available after review and comment by the council on disability.

The balance of the appropriation in this subdivision that is not needed for the projects specified may be used for other structural stabilization projects at the capitol or to improve the capitol mall.

Sec. 75. Laws 1996, chapter 463, section 14, subdivision 2, is amended to read:

Subd. 2. Ice Center Grants 8,000,000

(a) $6,500,000 is for grants of up to $250,000 each to construct new ice arenas and renovate existing arenas throughout the state, according to criteria in Minnesota Statutes, section 240A.09.

(b) $500,000 is for renovation grants for arenas that are at least 20 years old, which may be in amounts up to $125,000.

(c) All new and renovated facilities receiving grants must be publicly owned. Projects receiving grants from appropriations in items (a) ~~and~~, (b), and (d) are exempt from the requirements of Minnesota Statutes, section 16B.335.

(d) $1,000,000 of this amount may be used only for a national curling center in the Virginia, Mountain Iron, Gilbert, and Eveleth area. The facility may only be constructed after endorsement by a national governing body member of the United States Olympic Committee.

Sec. 76. Laws 1996, chapter 463, section 14, subdivision 6, is amended to read:

Subd. 6. National Volleyball Center 2,300,000

For a grant to the city of Rochester to design, construct, furnish, and equip a national volleyball center~~, to be located on land owned by the city~~. This grant is contingent upon a local match of at least $2,300,000 from nonstate sources. The facility may be constructed only after endorsement by a national governing body member of the United States Olympic Committee. This project is exempt from the requirements of Minnesota Statutes, section 16B.335.

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Sec. 77. Laws 1996, chapter 463, section 22, subdivision 7, is amended to read:

Subd. 7. Battle Point 500,000

~~For a grant to independent school district No. 115, Cass Lake-Bena,~~ Notwithstanding subdivision 1, this appropriation is to the Indian Affairs Council for capital improvements at the Battle Point historic site. This appropriation may be supplemented with money from other sources.

Sec. 78. Laws 1997, chapter 202, article 1, section 35, as amended by Laws 1997, chapter 246, section 34, and Laws 1997, Second Special Session chapter 2, section 24, is amended to read:

Sec. 35. BOND SALE SCHEDULE

The commissioner of finance shall schedule the sale of state general obligation bonds so that, during the biennium ending June 30, 1999, no more than ~~$565,457,000~~ $554,691,000 will need to be transferred from the general fund to the state bond fund to pay principal and interest due and to become due on outstanding state general obligation bonds. During the biennium, before each sale of state general obligation bonds, the commissioner of finance shall calculate the amount of debt service payments needed on bonds previously issued and shall estimate the amount of debt service payments that will be needed on the bonds scheduled to be sold, the commissioner shall adjust the amount of bonds scheduled to be sold so as to remain within the limit set by this section. The commissioner may use the amount needed of this appropriation to redeem and prepay the state general obligation taxable state various purpose bonds dated July 1, 1988, and to also pay expenses related to redeeming and repaying these bonds. The amount needed to make the debt service payments is appropriated from the general fund as provided in Minnesota Statutes, section 16A.641.

Sec. 79. [ADVISORY COMMITTEE ON PUBLIC CONVENTION AND CIVIC CENTERS.]

Subdivision 1. [PURPOSE.] The state has a strong interest in the proper development, marketing, and coordinated planning for the use and funding of public convention and civic centers throughout Minnesota. The state further recognizes the need for a joint effort among convention and civic centers in planning and marketing the wide array of choices of state public centers to the convention and tourist business.

Subd. 2. [ESTABLISHMENT.] The advisory committee on public convention and civic centers is hereby established. The advisory committee will be made up of the following members:

(1) a chair appointed by the governor;

(2) one member from any political subdivision receiving a state subsidy for a convention or civic center, to be appointed by the city council or board of county commissioners;

(3) four members of the public, appointed by the governor, two of whom are representatives, members, or employees of convention bureaus or trade associations, and two of whom are representatives of other businesses or employee organizations that benefit from the operation of public convention and civic centers; and

(4) the commissioner of trade and economic development or the commissioner's designee.

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Subd. 3. [DUTIES.] The duties of the advisory committee include:

(1) development of methods and principles for coordinating the marketing and use of public convention and civic centers throughout the state;

(2) development of a plan to implement coordinated marketing of all the facilities in the state to national, regional, and state conventions and hospitality shows;

(3) development, in conjunction with the department of trade and economic development, of an electronic database that will promote the variety of state convention and civic centers to interested parties outside the state including national and international shows;

(4) solicitation of advice from the general public, convention and tourist organizations, state companies with an interest in displaying at conventions, and other individuals with regard to the improvement of the use of convention and civic centers; and

(5) review of proposals for state funding of new convention and civic centers or major remodeling or additions to existing facilities and preparation of funding recommendations to the governor and legislature.

Subd. 4. [OBLIGATIONS OF GRANT RECIPIENTS.] Any political subdivision that has accepted state funding for a convention or civic center shall:

(1) work cooperatively to determine the formula to be applied to economic impact estimates for convention and civic center usage in Minnesota;

(2) submit an annual report of the activity of the previous year including usage days; local, state, regional, national, and international conventions hosted; number of hotel room nights generated; and economic impact to the area based on the agreed upon formula; and

(3) work cooperatively to generate new meetings and convention business to Minnesota from outside the state and to avoid using the state subsidy to undercut existing in-state business from using other convention and civic center facilities throughout the state.

Sec. 80. [YOUTH ENRICHMENT AND COMMUNITY CENTER GRANTS.]

The commissioner of children, families, and learning shall consider establishing a youth enrichment and community center grant program. The commissioner shall report to the legislature by January 15, 1999, recommendations on whether the program should be established and what criteria should govern the program.

Sec. 81. [RIVERCENTRE ARENA; PROCUREMENT.]

(a) With respect to the construction of the RiverCentre Arena, the construction manager may: (1) guarantee a maximum cost of construction; and (2) provide payment and performance bonds or other security reasonably acceptable to the city in an amount equal to the guaranteed maximum cost of construction, and shall comply with all employment requirements applicable to other city contracts for construction, including prevailing wages, affirmative action, and outreach.

(b) The lessee under the arena lease described in paragraph (c) or the construction manager may enter into contracts with contractors for labor, materials, supplies, and equipment to demolish the existing arena and equip and construct the new RiverCentre Arena through the process of public bidding.

(c) The lessee or the construction manager may, with the consent of the city lease representative as defined in the arena lease among the city of St. Paul, the civic center authority, and a lessee, dated as of January 15, 1998: (1) limit the list of eligible bidders to those that the construction manager determines possess sufficient expertise to perform the intended functions; (2) award contracts to the contractors that the construction manager determines provide the best value, which shall not necessarily be the lowest responsible bidder; and (3) for work the construction manager determines to be critical

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to the completion schedule, the construction manager may award contracts on the basis of competitive proposals or perform work with its own forces without soliciting competitive bids if the construction manager provides evidence of competitive pricing.

Sec. 82. [RIVERCENTRE: LEASE; LICENSE; REAL ESTATE TAXES.]

Notwithstanding any contrary provisions of law or charter, the arena lease among the city, the civic center authority, and a lessee, dated as of January 15, 1998, is authorized and the civic center authority and the city of St. Paul may otherwise lease the use and operation of the civic center arena for any period of time by agreement in which the city retains title to the property. If the lease of January 15, 1998, is amended to provide that the lessee will make to the city a payment in lieu of taxes of at least $2,500,000 a year, increasing to over $6,000,000 by the end of the lease, the use and operation of the civic center arena, whether by the civic center authority or its licensee or lessee, including any use arising from the arena lease referred to in this section or demolition and construction of the arena, is declared a use, lease, or occupancy for public, governmental, and municipal purposes, and the civic center arena is exempt from taxation by the state or any political subdivision of the state during the use.

Sec. 83. [CANCELLATIONS.]

(a) $1,200,000 of the appropriation in Laws 1994, chapter 643, section 8, subdivision 2, for homes for state-operated waiver services is canceled. The bond sale authorization in Laws 1994, chapter 643, section 31, subdivision 1, is reduced by $1,200,000.

(b) The $10,000,000 appropriation from the state transportation fund in Laws 1994, chapter 643, section 15, subdivision 6, for light rail transit is canceled. The bond authorization in Laws 1994, chapter 643, section 31, subdivision 2, is reduced by $10,000,000.

(c) The $150,000 appropriation from the bond proceeds fund under Laws 1994, chapter 643, section 23, subdivision 31, as added by Laws 1997, chapter 246, section 25, to the commissioner of natural resources for a grant to the city of Taylors Falls to prepare a preliminary design for the St. Croix Valley heritage center is canceled. The bond sale authorization in Laws 1994, chapter 643, section 31, subdivision 1, is reduced by $150,000.

Sec. 84. [REPEALER.]

Minnesota Statutes 1996, section 473.3994, subdivision 11, is repealed.

Minnesota Statutes 1997 Supplement, section 446A.072, subdivision 4a, is repealed.

Laws 1985, First Special Session chapter 15, section 36, is repealed.

Laws 1986, chapter 396, section 2, subdivision 2, is repealed.

Sec. 85. [EFFECTIVE DATE.]

This act is effective the day after final enactment, except that section 30 is effective for all operating budgets and budget projections for the fiscal year beginning July 1, 1999, and thereafter, and sections 61 to 70 are effective the day after the governing body of the city of Duluth complies with Minnesota Statutes, section 645.021, subdivision 3."

"A bill for an act relating to public administration; authorizing spending for public purposes; authorizing spending to acquire and to better public land and buildings and other public improvements of a capital nature with certain conditions; authorizing state bonds; appropriating money; amending Minnesota Statutes 1996, sections 16A.105; 16A.11, subdivision 3a, and by adding a subdivision; 16A.501; 16B.30; 85.019, subdivision 4a; 103F.725, subdivision 1a; 116.16, subdivision 5; 116.182, subdivision 1, and by adding a subdivision; 446A.072, subdivisions 2, 4, and by adding a subdivision; 473.39, by adding a subdivision; 473.399; 473.3994, subdivisions 5, 10, and 12; and 473.3998; Minnesota

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Statutes 1997 Supplement, sections 16A.641, subdivision 4; 16B.335, subdivision 1; 116.18, subdivision 3c; 124C.498, subdivision 2; 268.917; and 462A.202, subdivision 3a; Laws 1963, chapter 305, sections 1, 2, 3, 4, 5, 7, 8, 9, 10, and 11; Laws 1986, chapter 396, section 2, subdivision 1, as amended; Laws 1990, chapter 610, article 1, section 16, subdivision 4; Laws 1994, chapter 643, section 2, subdivision 13; Laws 1996, chapter 463, sections 13, subdivision 4, as amended, 14, subdivisions 2 and 6, and 22, subdivision 7; and Laws 1997, chapter 202, article 1, section 35, as amended; proposing coding for new law in Minnesota Statutes, chapter 116J; repealing Minnesota Statutes 1996, section 473.3994, subdivision 11; Minnesota Statutes 1997 Supplement, section 446A.072, subdivision 4a; Laws 1985, First Special Session chapter 15, section 36; and Laws 1986, chapter 396, section 2, subdivision 2."

We request adoption of this report and repassage of the bill.

House Conferees: Henry J. Kalis, Loren A. Solberg, Steve Trimble, Karen Clark and Dave Bishop.

Senate Conferees: Keith Langseth, Linda Berglin, Richard J. Cohen, and Jerry R. Janezich.

Kalis moved that the report of the Conference Committee on H. F. No. 3843 be adopted and that the bill be repassed as amended by the Conference Committee.

Sviggum moved that the House refuse to adopt the Conference Committee report on H. F. No. 3843, and that the bill be returned to the Conference Committee.

The question was taken on the Sviggum motion and the roll was called. There were 51 yeas and 82 nays as follows:

Abrams Erickson Kuisle Ness Rostberg Tompkins
Anderson, B. Gunther Larsen Olson, M. Seagren Tuma
Bettermann Haas Leppik Osskopp Smith Van Dellen
Bradley Harder Lindner Ozment Stanek Vandeveer
Broecker Holsten Macklin Paulsen Stang Weaver
Clark, J. Kielkucki Mares Pawlenty Sviggum Workman
Commers Knight McElroy Reuter Swenson, H.
Dehler Knoblach Molnau Rhodes Sykora
Erhardt Krinkie Mulder Rifenberg Tingelstad

Anderson, I. Entenza Jefferson Long Osthoff Solberg
Bakk Evans Jennings Mahon Otremba, M. Tomassoni
Biernat Farrell Johnson, A. Mariani Paymar Trimble
Bishop Finseth Johnson, R. Marko Pelowski Tunheim
Boudreau Folliard Juhnke McCollum Peterson Wagenius
Carlson Garcia Kahn McGuire Pugh Wejcman
Chaudhary Goodno Kalis Milbert Rest Wenzel
Clark, K. Greenfield Kelso Mullery Rukavina Westfall
Daggett Greiling Kinkel Munger Schumacher Westrom
Davids Hasskamp Koskinen Murphy Seifert Winter
Dawkins Hausman Kraus Nornes Sekhon Wolf
Delmont Hilty Kubly Olson, E. Skare Spk. Carruthers
Dempsey Huntley Leighton Opatz Skoglund
Dorn Jaros Lieder Orfield Slawik

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The question recurred on the Kalis motion that the report of the Conference Committee on H. F. No. 3843 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 3843, A bill for an act relating to public administration; authorizing spending for public purposes; authorizing spending to acquire and to better public land and buildings and other public improvements of a capital nature with certain conditions; authorizing state bonds; appropriating money; amending Minnesota Statutes 1996, sections 16A.105; 16A.11, subdivision 3a, and by adding a subdivision; 16A.501; 16B.30; and 446A.072, by adding a subdivision; Minnesota Statutes 1997 Supplement, sections 16A.641, subdivision 4; 124C.498, subdivision 2; 268.917; and 462A.202, subdivision 3a; Laws 1986, chapter 396, section 2, subdivision 1, as amended; Laws 1994, chapter 643, section 2, subdivision 13; Laws 1996, chapter 463, sections 13, subdivision 4, as amended; and 22, subdivision 7; and Laws 1997, chapter 202, article 1, section 35, as amended; proposing coding for new law in Minnesota Statutes, chapter 116J; repealing Laws 1986, chapter 396, section 2, subdivision 2.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called. There were 86 yeas and 47 nays as follows:

Anderson, I. Entenza Jaros Long Orfield Tomassoni
Bakk Evans Jefferson Mahon Osthoff Trimble
Biernat Farrell Jennings Mares Otremba, M. Tunheim
Bishop Finseth Johnson, A. Mariani Paymar Wagenius
Boudreau Folliard Johnson, R. Marko Pelowski Wejcman
Bradley Garcia Juhnke McCollum Peterson Wenzel
Carlson Goodno Kahn McGuire Pugh Westfall
Chaudhary Greenfield Kalis Milbert Rhodes Westrom
Clark, J. Greiling Kelso Mullery Rukavina Winter
Clark, K. Gunther Kinkel Munger Schumacher Wolf
Daggett Harder Koskinen Murphy Sekhon Spk. Carruthers
Dawkins Hasskamp Kraus Ness Skare
Delmont Hausman Kubly Nornes Skoglund
Dempsey Hilty Leighton Olson, E. Slawik
Dorn Huntley Lieder Opatz Solberg

Abrams Erickson Larsen Osskopp Seagren Tingelstad
Anderson, B. Haas Leppik Ozment Seifert Tompkins
Bettermann Holsten Lindner Paulsen Smith Tuma
Broecker Kielkucki Macklin Pawlenty Stanek Van Dellen
Commers Knight McElroy Rest Stang Vandeveer
Davids Knoblach Molnau Reuter Sviggum Weaver
Dehler Krinkie Mulder Rifenberg Swenson, H. Workman
Erhardt Kuisle Olson, M. Rostberg Sykora

The bill was repassed, as amended by Conference, and its title agreed to.

Winter moved that the House recess subject to the call of the Chair. The motion prevailed.

RECESS

RECONVENED

The House reconvened and was called to order by the Speaker.

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MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 2592.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

CONFERENCE COMMITTEE REPORT ON S. F. NO. 2592

A bill for an act relating to transportation; authorizing advance payment when required by federal government for transportation project; permitting transfer or extinguishment of access rights; regulating snow fence easements, highway closures, and signs; providing payment for certain culverts; changing distributions from the highway user tax distribution fund; providing for the costs of town highways and bridges; permitting conveyances to public bodies; requiring owners to inventory and inspect certain bridges; providing for the revision of the state transportation plan; changing the scope of certain exemptions relating to motor carriers; regulating charges for air transportation services; modifying contractor bond requirements for certain transportation projects; authorizing conveyance of certain tax-forfeited and acquired land; making technical changes; removing a route from the trunk highway system; directing the metropolitan airports commission to convey certain land to the state; amending Minnesota Statutes 1996, sections 84.63; 117.21; 160.18, subdivision 1; 160.296, subdivision 1; 160.80, subdivision 1, and by adding a subdivision; 161.081, subdivision 1, and by adding a subdivision; 161.082, subdivisions 1 and 2a; 161.115, subdivisions 38 and 87; 161.44, subdivision 1; 162.081, subdivision 1; 165.03; 169.26, subdivision 1; 174.03, subdivisions 1a and 2; 174A.06; 221.025; 221.0314, subdivision 9a; 221.034, subdivisions 1 and 5; 222.63, subdivision 4; 270.077; 360.024; and 574.26, subdivision 1a; proposing coding for new law in Minnesota Statutes, chapter 16B; repealing Minnesota Statutes 1996, section 161.115, subdivision 57.

We, the undersigned conferees for S. F. No. 2592, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and that S. F. No. 2592 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. [16B.171] [EXCEPTION FOR FEDERAL TRANSPORTATION CONTRACTS.]

Notwithstanding section 16B.17 or other law to the contrary, the commissioner of transportation may, when required by a federal agency entering into an intergovernmental contract, negotiate contract terms providing for full or partial prepayment to the federal agency before work is performed or services are provided.

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Sec. 2. Minnesota Statutes 1996, section 84.63, is amended to read:

84.63 [CONVEYANCE OF INTERESTS IN LANDS TO STATE AND FEDERAL GOVERNMENTS.]

Notwithstanding any existing law to the contrary, the commissioner of natural resources is hereby authorized on behalf of the state to convey to the United States or to the state of Minnesota or any of its subdivisions, upon state-owned lands under the administration of the commissioner of natural resources, permanent or temporary easements for specified periods or otherwise for trails, highways, roads ~~and trails~~ including limitation of right of access from the lands to adjacent highways and roads, flowage for development of fish and game resources, stream protection, flood control, and necessary appurtenances thereto, such conveyances to be made upon such terms and conditions including provision for reversion in the event of nonuser as the commissioner of natural resources may determine.

Sec. 3. Minnesota Statutes 1996, section 117.21, is amended to read:

117.21 [EASEMENT TO MAY INCLUDE SNOW FENCES.]

When the right to establish a public road is acquired by the state, or by any of its agencies or political subdivisions, there ~~shall~~ may be included in the easement so acquired the power to erect and maintain temporary snow fences as required upon lands adjoining the highway part of which lands have been taken for road purposes. If included, the right to erect and maintain such fences shall be considered in awarding damages, and any award shall be conclusively presumed to include the damages, if any, caused by the right to erect and maintain such fences; provided, that, if the state, or agency or political subdivision thereof, shall file with its petition, or at any time before the question of damages is submitted to a jury, a written disclaimer of its desire and intention to acquire a right to erect and maintain snow fences as to any particular tract of land involved, then no such right shall be acquired in such proceeding and no consideration given to such fences as an element of damage.

Sec. 4. Minnesota Statutes 1996, section 160.18, subdivision 1, is amended to read:

Subdivision 1. [CULVERT ON EXISTING HIGHWAYS.] Except when the easement of access has been acquired, ~~the~~ a road ~~authorities~~ authority, ~~other than town boards and county boards,~~ as to ~~highways~~ a highway already established and constructed ~~shall furnish one substantial culvert to an abutting owner in cases where the culvert is necessary for~~ may grant by permit a suitable approach to ~~such~~ the highway. A town board shall furnish one substantial culvert to an abutting owner in cases where the culvert is necessary for suitable approach to a town road, provided that at any annual town meeting the electors of any town may by resolution authorize the town board to require that all or part of the costs of the furnishing of all culverts on the town roads of such town be paid by the abutting owner. A county board, by resolution, shall, before furnishing any culverts after August 1, 1975, establish The requesting abutting property owner shall pay for the cost and installation of any required culverts unless a road authority, other than the commissioner, adopts by resolution a policy for the furnishing of a culvert to an abutting owner when a culvert is necessary for suitable approach to a ~~county and state-aid~~ road~~, and such~~. The policy may include provisions for the payment of all or part of the costs of furnishing ~~such culverts~~ the culvert by the abutting landowner.

Sec. 5. Minnesota Statutes 1996, section 160.27, subdivision 7, as added by Laws 1998, chapter 283, section 2, is amended to read:

Subd. 7. [BICYCLE RACKS AND BICYCLE STORAGE FACILITIES.] In cities of the first class, advertisements, public art, and informational signs may be placed and maintained on bicycle racks and bicycle storage facilities, and on any enclosure around them, if (1) a road authority has ~~authorized~~ issued a permit to the city authorizing the bicycle racks and storage facilities to be placed within the right-of-way of a public highway, (2) the city has recommended and the road authority has authorized in the permit the placement of advertisements, public art, and informational signs on the bicycle racks and bicycle storage facilities, and (3) the placement does not create an unsafe situation. Advertisements, public art, and information signs authorized under this subdivision are subject to the terms and conditions imposed by the road authority authorizing their placement.

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Sec. 6. Minnesota Statutes 1996, section 160.27, is amended by adding a subdivision to read:

Subd. 8. [TRUNK HIGHWAY CLOSURE; AUTHORITY, NOTICE, CIVIL PENALTY.] (a) The commissioner may restrict the use of, or close, any state trunk highway for the protection and safety of the public or for the protection of the highway from damage during and after storms if there is danger of the road becoming impassable or if visibility is so limited that safe travel is unlikely.

(b) To notify the public that a trunk highway is closed or its use restricted, the commissioner shall give notice by one or more of the following methods:

(1) erect suitable barriers or obstructions on the highway;

(2) post warnings or notices of the closing or restricting of a trunk highway;

(3) place signs to warn, detour, direct, or otherwise control traffic on the highway; or

(4) place personnel to warn, detour, direct, or otherwise control traffic on the highway.

(c) A person is civilly liable for rescue costs if the person (1) fails to obey the direction or instruction of authorized personnel at the location of the closed highway, or (2) drives over, through, or around a barricade, fence, or obstruction erected to prevent traffic from passing over a portion of a highway closed to public travel. "Civilly liable for rescue costs" means that the person is liable to a state agency or political subdivision for costs incurred for the purpose of rescuing the person, any passengers, or the vehicle. Civil liability may be imposed under this subdivision in addition to the misdemeanor penalty imposed under subdivision 5. However, civil liability must not exceed $10,000. A fine paid by a defendant in a misdemeanor action that arose from the same violation may not be applied toward payment of the civil liability imposed under this subdivision.

(d) A state agency or political subdivision that incurs costs as described in paragraph (c) may bring an action to recover the civil liability and related legal, administrative, and court costs. A civil action may be commenced as is any civil action.

Sec. 7. Minnesota Statutes 1996, section 160.296, subdivision 1, is amended to read:

Subdivision 1. [PROCEDURE.] (a) A person who desires a specific service sign panel shall request the commissioner of transportation to install the sign. The commissioner of transportation may grant the request if the applicant qualifies for the sign panel and if space is available. All signs shall be fabricated, installed, maintained, replaced and removed by the commissioner of transportation. The applicant shall pay a fee to the commissioner of transportation to cover all costs for fabricating, installing, maintaining, replacing and removing. ~~The requests for specific service sign panels shall be renewed every three years.~~

(b) If the applicant desires to display a business panel, the business panel for each specific service sign panel shall be supplied by the applicant. All costs to fabricate business panels shall be paid by the applicant. All business panels shall be installed and removed by the appropriate road authority. The costs for installing and removing business sign panels on specific service signs located on nonfreeway trunk highways are included in the fee specified in paragraph (a). If a business panel is stolen or damaged beyond repair, the applicant shall supply a new business panel paid for by the applicant.

Sec. 8. Minnesota Statutes 1996, section 160.80, subdivision 1, is amended to read:

Subdivision 1. [COMMISSIONER MAY ESTABLISH PROGRAM.] (a) The commissioner of transportation may establish a sign franchise program for the purpose of providing on the right-of-way of interstate and controlled-access trunk highways specific information on gas, food, camping, and lodging, for the benefit of the motoring public.

(b) The sign franchise program must include urban interstate highways. The commissioner may implement policies that apply only to signs on interstate highways in urban areas, such as distance requirements from the interstate for eligible services, priority issues, and mixing of service logos.

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Sec. 9. Minnesota Statutes 1996, section 160.80, is amended by adding a subdivision to read:

Subd. 1a. [ELIGIBILITY CRITERIA FOR BUSINESS PANELS.] (a) To be eligible for a business panel on a logo sign panel, a business establishment must:

(1) be open for business;

(2) have a sign on site that both identifies the business and is visible to motorists;

(3) be open to everyone, regardless of race, religion, color, age, sex, national origin, creed, marital status, sexual orientation, or disability;

(4) not impose a cover charge or otherwise require customers to purchase additional products or services; and

(5) meet the appropriate criteria in paragraphs (b) to (e).

(b) Gas businesses must provide vehicle services including fuel and oil; restroom facilities and drinking water; continuous, staffed operation at least 12 hours a day, seven days a week; and public access to a telephone.

(c) Food businesses must serve at least two meals a day during normal mealtimes of breakfast, lunch, and dinner; provide a continuous, staffed food service operation at least ten hours a day, seven days a week except holidays as defined in section 645.44, subdivision 5, and except as provided for seasonal food service businesses; provide seating capacity for at least 20 people; serve meals prepared on the premises; and possess any required state or local licensing or approval. Reheated, prepackaged, ready-to-eat food is not "food prepared on the premises." Seasonal food service businesses must provide a continuous, staffed food service operation at least ten hours a day, seven days a week, during their months of operation.

(d) Lodging businesses must include sleeping accommodations; provide public access to a telephone; and possess any required state or local licensing or approval.

(e) Camping businesses must include sites for camping; include parking accommodations for each campsite; provide sanitary facilities and drinking water; and possess any required state or local licensing or approval.

(f) Businesses that do not meet the appropriate criteria in paragraphs (b) to (e) but that have a signed lease as of January 1, 1998, may retain the business panel until December 31, 2005, or until they withdraw from the program, whichever occurs first, provided they continue to meet the criteria in effect in the department's contract with the logo sign vendor on August 1, 1995. After December 31, 2005, or after withdrawing from the program, a business must meet the appropriate criteria in paragraphs (a) to (e) to qualify for a business panel.

(g) Seasonal businesses must indicate to motorists when they are open for business by either putting the full months of operation directly on the business panel or by having a "closed" plaque applied to the business panel when the business is closed for the season.

(h) The maximum distance that an eligible business in Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington county can be located from the interchange is: for gas businesses, one mile; for food businesses, two miles; for lodging businesses, three miles; and for camping businesses, ten miles.

(i) The maximum distance that an eligible business in any other county can be located from the interchange shall not exceed 15 miles in either direction.

(j) Logo sign panels must be erected so that motorists approaching an interchange view the panels in the following order: camping, lodging, food, gas.

(k) If there is insufficient space on a logo sign panel to display all eligible businesses for a specific type of service, the businesses closest to the interchange have priority over businesses farther away from the interchange.

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Sec. 10. Minnesota Statutes 1996, section 161.115, subdivision 38, is amended to read:

Subd. 38. [ROUTE NO. 107.] Beginning at the terminus of Route No. 10 on the westerly limits on the city of Minneapolis, thence extending in an easterly direction to a point ~~on Route No. 104 as herein established~~ at or near Washington Avenue in the city of Minneapolis.

Sec. 11. Minnesota Statutes 1996, section 161.115, subdivision 87, is amended to read:

Subd. 87. [ROUTE NO. 156.] Beginning at a point on Route No. ~~394~~ 105 in the city of Minneapolis and extending in a northerly and westerly direction to a point on Route No. 62 ~~easterly of the Great Northern Railway~~ at or near the city of Coon Rapids.

Sec. 12. Minnesota Statutes 1996, section 165.03, is amended to read:

165.03 [STRENGTH OF BRIDGES; INSPECTIONS.]

Subdivision 1. [STANDARDS GENERALLY.] Each bridge, including a privately owned bridge, must conform to the strength, width, clearance, and safety standards imposed by the commissioner for the connecting highway or street. This subdivision applies to a bridge that is constructed after August 1, 1989, on any public highway or street. The bridge must have sufficient strength to support with safety the maximum vehicle weights allowed under section 169.825 and must have the minimum width specified in section 165.04, subdivision 3.

Subd. 2. [INSPECTION AND INVENTORY RESPONSIBILITIES; RULES; FORMS.] The commissioner of transportation shall adopt official inventory and bridge inspection report forms for use in making bridge inspections by the owners or highway authorities specified by this subdivision. Bridge inspections shall be made at regular intervals, not to exceed two years, by the following ~~officials~~ owner or official:

(a) The commissioner of transportation for all bridges located wholly or partially within or over the right-of-way of a state trunk highway.

(b) The county highway engineer for all bridges located wholly or partially within or over the right-of-way of any county or township road, or any street within a municipality which does not have a city engineer regularly employed.

(c) The city engineer for all bridges located wholly or partially within or over the right-of-way of any street located within or along municipal limits.

(d) The commissioner of transportation in case of a toll bridge that is used by the general public and that is not inspected and certified under subdivision 6; provided, that the commissioner of transportation may assess the owner for the costs of such inspection.

(e) The owner of a bridge over a public highway or street or that carries a roadway designated for public use by a public authority, if not required to be inventoried and inspected under paragraph (a), (b), (c), or (d).

The commissioner of transportation shall prescribe the standards for bridge inspection and inventory by rules. The ~~specified~~ owner or highway ~~authorities~~ authority shall inspect and inventory in accordance with these standards and furnish the commissioner with such data as may be necessary to maintain a central inventory.

Subd. 3. [COUNTY INVENTORY AND INSPECTION RECORDS AND REPORTS.] The county engineer shall maintain a complete inventory record of all bridges as set forth in subdivision 2, paragraph (b), with the inspection reports thereof, and shall certify annually to the commissioner, as prescribed by the commissioner, that inspections have been made at regular intervals not to exceed two years. A report of the inspections shall be filed annually, on or before February 15 of each year, with the county auditor or ~~township~~ town clerk, or the governing body of the municipality. The report shall contain recommendations for the correction of, or legal posting of load limits on any bridge or structure that is found to be understrength or unsafe.

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Subd. 4. [MUNICIPAL INVENTORY AND INSPECTION RECORDS AND REPORTS.] The city engineer shall maintain a complete inventory record of all bridges as set forth in subdivision 2, paragraph (c), with the inspection reports thereof, and shall certify annually to the commissioner, as prescribed by the commissioner, that inspections have been made at regular intervals not to exceed two years. A report of the inspections shall be filed annually, on or before February 15 of each year, with the governing body of the municipality. The report shall contain recommendations for the correction of, or legal posting of load limits on any bridge or structure that is found to be understrength or unsafe.

Subd. 5. [AGREEMENTS.] Agreements may be made among the various units of governments, or between governmental units and qualified engineering personnel to carry out the responsibilities for the bridge inspections and reports, as established by subdivision 2.

Subd. 6. [~~TOLL~~ OTHER BRIDGES.] The owner of a toll bridge and the owner of a bridge described in subdivision 2, paragraph (e), shall certify to the commissioner, as prescribed by the commissioner, that inspections of the bridge have been made at regular intervals not to exceed two years. The certification shall be accompanied by a report of the inspection. The report shall contain recommendations for the correction of or legal posting of load limitations if the bridge is found to be understrength or unsafe.

Subd. 7. [DEPARTMENT OF NATURAL RESOURCES BRIDGES.] (a) Notwithstanding subdivision 2, the commissioners of transportation and natural resources shall negotiate a memorandum of understanding that governs the inspection of bridges owned, operated, or maintained by the commissioner of natural resources.

(b) The memorandum of understanding must provide for:

(1) the inspection and inventory of bridges subject to federal law or regulations;

(2) the frequency of inspection of bridges described in paragraph (a); and

(3) who may perform inspections required under the memorandum of understanding.

Sec. 13. Minnesota Statutes 1996, section 169.26, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENTS.] (a) When any person driving a vehicle approaches a railroad grade crossing under any of the circumstances stated in this paragraph, the driver shall stop the vehicle not less than ten feet from the nearest railroad track and shall not proceed until safe to do so. These requirements apply when:

(1) a clearly visible electric or mechanical signal device warns of the immediate approach of a railroad train; or

(2) ~~a crossing gate is lowered warning of the immediate approach or passage of a railroad train; or~~

~~(3)~~ an approaching railroad train is plainly visible and is in hazardous proximity.

(b) The fact that a moving train approaching a railroad grade crossing is visible from the crossing is prima facie evidence that it is not safe to proceed.

(c) The driver of a vehicle shall stop and remain stopped and not traverse the grade crossing when a human flagger signals the approach or passage of a train or when a crossing gate is lowered warning of the immediate approach or passage of a railroad train. No person may drive a vehicle past a flagger at a railroad crossing until the flagger signals that the way is clear to proceed or drive a vehicle past a lowered crossing gate.

Sec. 14. Minnesota Statutes 1996, section 169.81, subdivision 2, is amended to read:

Subd. 2. [LENGTH OF SINGLE VEHICLE; EXCEPTIONS.] (a) Statewide, no single vehicle may exceed 40 feet in overall length, including load and front and rear bumpers, except:

(1) mobile cranes, which may not exceed 48 feet in overall length; and

(2) buses, which may not exceed 45 feet in overall length.

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(b) Statewide, no semitrailer may exceed 48 feet in overall length, including bumper and load, but excluding non-cargo-carrying equipment, such as refrigeration units or air compressors, necessary for safe and efficient operation and located on the end of the semitrailer adjacent to the truck-tractor. However, statewide, a single semitrailer may exceed 48 feet, but not 53 feet, if the distance from the kingpin to the centerline of the rear axle group of the semitrailer does not exceed 41 43 feet.

Statewide, no single trailer may have an overall length exceeding 45 feet, including the tow bar assembly but exclusive of rear bumpers that do not increase the overall length by more than six inches.

For determining compliance with this subdivision, the length of the semitrailer or trailer must be determined separately from the overall length of the combination of vehicles.

(c) No semitrailer or trailer used in a three-vehicle combination may have an overall length in excess of 28-1/2 feet, exclusive of:

(1) non-cargo-carrying accessory equipment, including refrigeration units or air compressors and upper coupler plates, necessary for safe and efficient operation, located on the end of the semitrailer or trailer adjacent to the truck or truck-tractor;

(2) the tow bar assembly; and

(3) lower coupler equipment that is a fixed part of the rear end of the first semitrailer or trailer.

Sec. 15. Minnesota Statutes 1996, section 169.81, is amended by adding a subdivision to read:

Subd. 3d. [COMBINATIONS INCLUDING AUTOMOBILE TOW DOLLIES.] Notwithstanding subdivisions 2a and 3, a combination consisting of a single unit truck or a pickup truck and not more than two two-wheeled automobile tow dollies may be operated without a permit when:

(1) the combination is operated by an employee or agent of an automobile tow dolly manufacturer or a truck rental company;

(2) no vehicle is being transported on either dolly; and

(3) the combination does not exceed 50 feet in length.

Sec. 16. Minnesota Statutes 1996, section 169.82, subdivision 3, is amended to read:

Subd. 3. [HITCHES; CHAINS; CABLES.] (a) Every trailer or semitrailer must be hitched to the towing motor vehicle by a device approved by the commissioner of public safety.

(b) Every trailer and semitrailer must be equipped with safety chains or cables permanently attached to the trailer except in cases where the coupling device is a regulation fifth wheel and kingpin assembly approved by the commissioner of public safety. In towing, the chains or cables must be attached to the vehicles near the points of bumper attachments to the chassis of each vehicle, and must be of sufficient strength to control the trailer in the event of failure of the towing device. The length of chain or cable must be no more than necessary to permit free turning of the vehicles. A minimum fine of $25 must be imposed for a violation of this paragraph.

No person may be charged with a violation of this section solely by reason of violating a maximum speed prescribed in section 169.145 or 169.67.

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Sec. 17. Minnesota Statutes 1996, section 174.03, subdivision 1a, is amended to read:

Subd. 1a. [REVISION OF STATE TRANSPORTATION PLAN.] The commissioner shall revise the state transportation plan by January 1, 1996, January 1, 2000, and, if the requirements of clauses (1) and (2) have been met in the previous revision, by January 1 of ~~each odd-numbered~~ every third even-numbered year thereafter. Before final adoption of a revised plan, the commissioner shall hold a hearing to receive public comment on the preliminary draft of the revised plan. The revised state transportation plan must:

(1) incorporate the goals of the state transportation system in section 174.01; and

(2) establish objectives, policies, and strategies for achieving those goals.

Sec. 18. Minnesota Statutes 1996, section 174.03, subdivision 2, is amended to read:

Subd. 2. [IMPLEMENTATION OF PLAN.] After the adoption and each revision of the statewide transportation plan, the commissioner ~~and the transportation regulation board~~ shall take no action inconsistent with the revised plan.

Sec. 19. Minnesota Statutes 1996, section 174A.06, is amended to read:

174A.06 [CONTINUATION OF RULES.]

Orders and directives ~~heretofore~~ in force, issued, or promulgated ~~by the public service commission, public utilities commission, or the department of transportation~~ under authority of chapters 174A, 216A, 218, 219, ~~and~~ 221, and 222 remain and continue in force and effect until repealed, modified, or superseded by duly authorized orders or directives of the commissioner of transportation ~~regulation board~~. To the extent allowed under federal law or regulation, rules adopted ~~by the public service commission, public utilities commission or the department of transportation~~ under authority of the following sections are transferred to the commissioner of transportation ~~regulation board~~ and continue in force and effect until repealed, modified, or superseded by duly authorized rules of the ~~transportation regulation board~~ commissioner:

(1) section 218.041 except rules related to the form and manner of filing railroad rates, railroad accounting rules, and safety rules;

(2) section 219.40;

(3) rules relating to rates or tariffs, or the granting, limiting, or modifying of permits or certificates of convenience and necessity under section 221.031, subdivision 1;

(4) rules relating to the sale, assignment, pledge, or other transfer of a stock interest in a corporation holding authority to operate as a permit carrier as prescribed in section 221.151, subdivision 1, or a local cartage carrier under section 221.296, subdivision 8;

(5) rules relating to rates, charges, and practices under section 221.161, subdivision 4; and

(6) rules relating to rates, tariffs, or the granting, limiting, or modifying of permits under sections 221.121, 221.151, and 221.296 or certificates of convenience and necessity under section 221.071.

The ~~board~~ commissioner shall review the transferred rules, orders, and directives and, when appropriate, develop and adopt new rules, orders, or directives ~~within 18 months of July 1, 1985~~.

Sec. 20. Minnesota Statutes 1996, section 221.025, is amended to read:

221.025 [EXEMPTIONS.]

The provisions of this chapter requiring a certificate or permit to operate as a motor carrier do not apply to the intrastate transportation described below:

(a) the transportation of students to or from school or school activities in a school bus inspected and certified under section 169.451 and the transportation of children or parents to or from a Head Start facility or Head Start activity in a Head Start bus inspected and certified under section 169.451;

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(b) the transportation of solid waste, as defined in section 116.06, subdivision 22, including recyclable materials and waste tires, except that the term "hazardous waste" has the meaning given it in section 221.011, subdivision 31;

(d) authorized emergency vehicles as defined in section 169.01, subdivision 5, including ambulances; and tow trucks equipped with proper and legal warning devices when picking up and transporting (1) disabled or wrecked motor vehicles or (2) vehicles towed or transported under a towing order issued by a public employee authorized to issue a towing order;

(e) the transportation of grain samples under conditions prescribed by the board;

(f) the delivery of agricultural lime;

(g) the transportation of dirt and sod within an area having a 50-mile radius from the home post office of the person performing the transportation;

(h) the transportation of sand, gravel, bituminous asphalt mix, concrete ready mix, concrete blocks or tile and the mortar mix to be used with the concrete blocks or tile, or crushed rock to or from the point of loading or a place of gathering within an area having a 50-mile radius from that person's home post office or a 50-mile radius from the site of construction or maintenance of public roads and streets;

(i) the transportation of pulpwood, cordwood, mining timber, poles, posts, decorator evergreens, wood chips, sawdust, shavings, and bark from the place where the products are produced to the point where they are to be used or shipped;

(j) the transportation of fresh vegetables from farms to canneries or viner stations, from viner stations to canneries, or from canneries to canneries during the harvesting, canning, or packing season, or transporting sugar beets, wild rice, or rutabagas from the field of production to the first place of delivery or unloading, including a processing plant, warehouse, or railroad siding;

(k) the transportation of property or freight, other than household goods and petroleum products in bulk, entirely within the corporate limits of a city or between contiguous cities except as provided in section 221.296;

(l) the transportation of unprocessed dairy products in bulk within an area having a 100-mile radius from the home post office of the person providing the transportation;

(m) the transportation of agricultural, horticultural, dairy, livestock, or other farm products within an area having a ~~25-mile~~ 100-mile radius from the person's home post office and the carrier may transport other commodities within the ~~25-mile~~ 100-mile radius if the destination of each haul is a farm;

(n) passenger transportation service that is not charter service and that is under contract to and with operating assistance from the department or the metropolitan council;

(o) the transportation of newspapers, as defined in section 331A.01, subdivision 5, telephone books, handbills, circulars, or pamphlets in a vehicle with a gross vehicle weight of 10,000 pounds or less; and

(p) transportation of potatoes from the field of production, or a storage site owned or otherwise controlled by the producer, to the first place of processing.

The exemptions provided in this section apply to a person only while the person is exclusively engaged in exempt transportation.

Sec. 21. Minnesota Statutes 1996, section 221.0314, subdivision 9a, is amended to read:

Subd. 9a. [HOURS OF SERVICE EXEMPTION.] The federal regulations incorporated in subdivision 9 for maximum driving and on-duty time do not apply to drivers engaged in the interstate or intrastate transportation of:

(1) agricultural commodities or farm supplies for agricultural purposes in Minnesota during the planting and harvesting seasons from March 15 to December 15 of each year; or

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(2) sugar beets during the harvesting season for sugar beets from September 1 to March 15 of each year;

if the transportation is limited to an area within a 100-air-mile radius from the source of the commodities or the distribution point for the farm supplies.

Sec. 22. Minnesota Statutes 1996, section 221.034, subdivision 1, is amended to read:

Subdivision 1. [NOTICE REQUIRED.] At the earliest practicable moment, each person who transports hazardous materials, including hazardous wastes, shall give notice in accordance with subdivision 2 after each incident that occurs during the course of transportation including loading, unloading, and temporary storage, in which as a direct result of hazardous materials:

(1) a person is killed;

(2) a person receives injuries requiring hospitalization;

(3) estimated carrier or other property damage exceeds $50,000;

(4) an evacuation of the general public occurs lasting one or more hours;

(5) one or more major transportation arteries or facilities are closed or shut down for one hour or more;

(6) the operational flight pattern or routine of an aircraft is altered;

(7) fire, breakage, spillage, or suspected radioactive contamination occurs involving shipment of radioactive material;

(8) fire, breakage, spillage, or suspected contamination occurs involving shipment of etiologic agents; or

(9) a situation exists of such a nature that, in the judgment of the carrier, it should be reported in accordance with subdivision 2 even though it does not meet the criteria of clause (1), (2), or (3), but a continuing danger to life exists at the scene of the incident; or

(10) there has been a release of a marine pollutant in a quantity exceeding 450 liters (119 gallons) for liquids or 450 kilograms (882 pounds) for solids.

Sec. 23. Minnesota Statutes 1996, section 221.034, subdivision 5, is amended to read:

Subd. 5. [DISCHARGES NOT APPLICABLE.] Except as provided in subdivision 6, the requirements of subdivision 3 do not apply to incidents involving the unintentional release of hazardous materials being transported under the following proper shipping names:

(1) consumer commodity;

(2) battery, electric storage, wet, filled with acid or alkali;

(3) paint, enamel, lacquer, stain, shellac or varnish aluminum, bronze, gold, wood filler, and liquid or lacquer base liquid when shipped in packagings of five gallons or less; or

(4) materials prepared and transported as a limited quantity according to Code of Federal Regulations, title 49, subchapter C.

Sec. 24. Minnesota Statutes 1996, section 270.077, is amended to read:

270.077 [TAXES CREDITED TO STATE AIRPORTS FUND ~~CREATED~~.]

~~There is hereby created in the state treasury a fund to be known as the state airports fund to which shall be credited the proceeds of~~ All taxes levied under sections 270.071 to 270.079 ~~and all other moneys which may be deposited to the credit thereof pursuant to any other provision of law. All moneys in the state airports fund are hereby appropriated to the~~

~~Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9982~~

commissioner of transportation for the purpose of acquiring, constructing, improving, maintaining, and operating airports and other air navigation facilities for the state, and to assist municipalities within the state in the acquisition, construction, improvement, and maintenance of airports and other air navigation facilities must be credited to the state airports fund created in section 360.017.

Sec. 25. Minnesota Statutes 1996, section 574.26, subdivision 1a, is amended to read:

Subd. 1a. [~~EXEMPTION;~~ EXEMPTIONS: CERTAIN MANUFACTURERS; COMMISSIONER OF TRANSPORTATION.] (a) Sections 574.26 to 574.32 do not apply to a manufacturer of public transit buses that manufactures at least 100 public transit buses in a calendar year. For purposes of this section, "public transit bus" means a motor vehicle designed to transport people, with a design capacity for carrying more than 40 passengers, including the driver. The term "public transit bus" does not include a school bus, as defined in section 169.01, subdivision 6.

(b) At the discretion of the commissioner of transportation, sections 574.26 to 574.32 do not apply to any projects of the department of transportation (1) costing less than $75,000, or (2) involving the permanent or semipermanent installation of heavy machinery, fixtures, or other capital equipment to be used primarily for maintenance or repair.

Sec. 26. Laws 1997, chapter 159, article 2, section 51, subdivision 1, is amended to read:

Subdivision 1. [STUDY.] The commissioner of transportation, through the division of railroads and waterways, shall conduct a study of the potential of utilizing freight rail corridors in of the Twin Cities metropolitan area for commuter rail service. The commissioner shall perform the study in coordination with the metropolitan council and other affected metropolitan regional rail authorities ~~and~~, affected metropolitan railroad companies, and the designated representatives of organized railroad employees. At least one representative of regional rail authorities, of railroad management, of operating craft employees, and of nonoperating craft employees shall serve on the policy formulation body and all other bodies of the study committee. Both employee members shall be selected by representatives of rail employees. The study committee shall consider, among other things, the positive and negative effects of commuter rail service on surrounding neighborhoods.

Sec. 27. [SALE OF TAX-FORFEITED LAND; HENNEPIN COUNTY.]

(a) Notwithstanding Minnesota Statutes, sections 92.45 and 282.018, subdivision 1, Hennepin county may sell to the Minnesota department of transportation the tax-forfeited land bordering public water that is described in paragraph (c).

(b) The conveyance must be in the form approved by the attorney general.

(c) The land that may be conveyed is located in the city of Champlin, Hennepin county and is described as: That part of Lot 11, Block 5, Auditor's Subdivision No. 15, according to the plat thereof on file and of record in the office of the County Recorder in and for Hennepin County, Minnesota, lying south of a line run parallel with and distant 43 feet north of the south line of Government Lot 3, Section 19, Township 120 North, Range 21 West and lying east of a line run parallel with and distant 36.5 feet east of the west line of said Government Lot 3;

together with all right of access, being the right of ingress to and egress from said Lot 11 to U.S. Highway No. 169 and Hayden Lake Road.

Subject to permanent easement for sanitary sewers granted to the metropolitan council on March 2, 1995, by the Hennepin county auditor. Subject to easements of record.

Sec. 28. [REPEALER.]

(a) Minnesota Statutes 1996, section 161.115, subdivision 57, which describes legislative route No. 126, is repealed.

(b) Minnesota Statutes 1996, section 161.115, subdivision 219, is repealed when the transfer of jurisdiction of legislative route No. 288 is agreed to by the commissioner of transportation and the Anoka county board and a copy of the agreement, signed by the commissioner and the chair of the Anoka county board is filed in the office of the commissioner.

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Sec. 29. [INSTRUCTION TO THE REVISOR.]

(a) The revisor of statutes shall delete the route identified in section 28, paragraph (b), in the next publication of Minnesota Statutes unless the commissioner of transportation informs the revisor that the conditions required to transfer the route were not satisfied.

(b) The revisor of statutes is directed to change the terms "transportation regulation board," "board," "board's," "board or commissioner," "commissioner or board," "board or the commissioner," "commissioner or the board," "commissioner and the board," "commissioner and board," "board and the commissioner," "board and commissioner," "department and board," "board or department," and "board and the department," when referring to the transportation regulation board, to the term "commissioner," "commissioner's," or "commissioner of transportation," as appropriate, wherever those terms appear in Minnesota Statutes, chapters 218, 219, and 222.

Sec. 30. [DESCRIPTION OF ROUTE NO. 156 CHANGED; EFFECTIVE DATE.]

Section 11 is effective when the transfer of jurisdiction of a portion of route No. 156 is agreed to by the commissioner of transportation and Hennepin county and a copy of the agreement, signed by the commissioner and the chair of the Hennepin county board, has been filed in the office of the commissioner.

Sec. 31. [EFFECTIVE DATE.]

Sections 1, 5, 8, 9, 15, and 26 are effective the day following final enactment. Sections 4 and 25 are effective July 1, 1998."

"A bill for an act relating to transportation; authorizing advance payment when required by federal government for transportation project; permitting transfer or extinguishment of access rights; regulating snow fence easements, highway closures, signs, certain bicycle racks, semitrailer length, automobile tow dollies, railroad crossings, and transportation of hazardous materials; providing payment for certain culverts; requiring owners to inventory and inspect certain bridges; imposing minimum penalty for violating safety chain requirements; providing for the revision of the state transportation plan; changing the scope of certain exemptions relating to motor carriers; modifying contractor bond requirements for certain transportation projects; authorizing conveyance of certain tax-forfeited land; making technical changes; removing or modifying descriptions of certain routes of the trunk highway system; amending Minnesota Statutes 1996, sections 84.63; 117.21; 160.18, subdivision 1; 160.27, subdivision 7, as added, and by adding a subdivision; 160.296, subdivision 1; 160.80, subdivision 1, and by adding a subdivision; 161.115, subdivisions 38 and 87; 165.03; 169.26, subdivision 1; 169.81, subdivision 2, and by adding a subdivision; 169.82, subdivision 3; 174.03, subdivisions 1a and 2; 174A.06; 221.025; 221.0314, subdivision 9a; 221.034, subdivisions 1 and 5; 270.077; and 574.26, subdivision 1a; Laws 1997, chapter 159, article 2, section 51, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 16B; repealing Minnesota Statutes 1996, section 161.115, subdivisions 57 and 219."

We request adoption of this report and repassage of the bill.

Senate Conferees: Janet B. Johnson and Mark Ourada.

House Conferees: Jean Wagenius and Mark P. Mahon.

Wagenius moved that the report of the Conference Committee on S. F. No. 2592 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

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user tax distribution fund; providing for the costs of town highways and bridges; permitting conveyances to public bodies; requiring owners to inventory and inspect certain bridges; providing for the revision of the state transportation plan; changing the scope of certain exemptions relating to motor carriers; regulating charges for air transportation services; modifying contractor bond requirements for certain transportation projects; authorizing conveyance of certain tax-forfeited and acquired land; making technical changes; removing a route from the trunk highway system; directing the metropolitan airports commission to convey certain land to the state; amending Minnesota Statutes 1996, sections 84.63; 117.21; 160.18, subdivision 1; 160.296, subdivision 1; 160.80, subdivision 1, and by adding a subdivision; 161.081, subdivision 1, and by adding a subdivision; 161.082, subdivisions 1 and 2a; 161.115, subdivisions 38 and 87; 161.44, subdivision 1; 162.081, subdivision 1; 165.03; 169.26, subdivision 1; 174.03, subdivisions 1a and 2; 174A.06; 221.025; 221.0314, subdivision 9a; 221.034, subdivisions 1 and 5; 222.63, subdivision 4; 270.077; 360.024; and 574.26, subdivision 1a; proposing coding for new law in Minnesota Statutes, chapter 16B; repealing Minnesota Statutes 1996, section 161.115, subdivision 57.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 117 yeas and 14 nays as follows:

Abrams Erickson Johnson, R. Mares Pawlenty Tingelstad
Anderson, I. Evans Juhnke Mariani Paymar Tomassoni
Bakk Farrell Kahn Marko Peterson Tompkins
Biernat Finseth Kalis McCollum Pugh Trimble
Bishop Folliard Kelso McElroy Rest Tunheim
Boudreau Garcia Kielkucki McGuire Rhodes Van Dellen
Bradley Goodno Kinkel Milbert Rostberg Vandeveer
Carlson Greenfield Knoblach Molnau Rukavina Wagenius
Chaudhary Greiling Koskinen Mullery Schumacher Weaver
Clark, J. Gunther Kraus Munger Seagren Wejcman
Clark, K. Haas Kubly Murphy Sekhon Wenzel
Commers Harder Kuisle Ness Skare Westfall
Daggett Hasskamp Larsen Nornes Skoglund Westrom
Dawkins Hausman Leighton Olson, E. Slawik Winter
Dehler Hilty Leppik Opatz Smith Wolf
Delmont Holsten Lieder Orfield Solberg Workman
Dempsey Huntley Lindner Osthoff Stanek Spk. Carruthers
Dorn Jefferson Long Otremba, M. Sviggum
Entenza Jennings Macklin Ozment Swenson, H.
Erhardt Johnson, A. Mahon Paulsen Sykora

Anderson, B. Davids Mulder Reuter Stang Tuma
Bettermann Knight Olson, M. Rifenberg
Broecker Krinkie Osskopp Seifert

The bill was repassed, as amended by Conference, and its title agreed to.

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I hereby announce the passage by the Senate of the following House File, herewith returned, as amended by the Senate, in which amendments the concurrence of the House is respectfully requested:

H. F. No. 2654, A bill for an act relating to public safety; allowing personalized license plates to be issued for certain trucks resembling pickup trucks; authorizing special license plates for retired firefighters; providing for separate form for assignment of vehicle title; clarifying that juvenile's age as it relates to DWI-related driver's license revocation refers to the date of violation instead of the date of conviction; providing reasonable time to petition for driver's license reinstatement; ensuring uniformity of amount of handling charge allowed for certain driver's license reinstatements; amending Minnesota Statutes 1996, sections 168.12, subdivisions 2a and 2b; 168A.01, by adding a subdivision; and 168A.11, subdivision 1; Minnesota Statutes 1997 Supplement, sections 169.121, subdivision 4; 171.19; 171.20, subdivision 4; and 171.29, subdivision 2.

CONCURRENCE AND REPASSAGE

Mahon moved that the House concur in the Senate amendments to H. F. No. 2654 and that the bill be repassed as amended by the Senate.

Marko moved that the House refuse to concur in the Senate amendments to H. F. No. 2654, that the Speaker appoint a Conference Committee of 3 members of the House, and that the House requests that a like committee be appointed by the Senate to confer on the disagreeing votes of the two houses.

The Speaker called Long to the Chair.

The question was taken on the Marko motion and the roll was called. There were 61 yeas and 72 nays as follows:

Abrams Erickson Knoblach McElroy Rifenberg Van Dellen
Anderson, B. Goodno Koskinen Mulder Rostberg Vandeveer
Bettermann Gunther Kraus Ness Seagren Westfall
Boudreau Haas Krinkie Nornes Seifert Westrom
Bradley Harder Kubly Olson, M. Smith Wolf
Broecker Holsten Kuisle Osskopp Stang Workman
Chaudhary Jennings Larsen Paulsen Sviggum
Clark, J. Johnson, A. Leppik Pawlenty Sykora
Commers Juhnke Lindner Paymar Tingelstad
Davids Kielkucki Macklin Reuter Tompkins
Erhardt Knight Marko Rhodes Tuma

Anderson, I. Entenza Jaros Mariani Otremba, M. Solberg
Bakk Evans Jefferson McCollum Ozment Stanek
Biernat Farrell Johnson, R. McGuire Pelowski Swenson, H.
Bishop Finseth Kahn Milbert Peterson Tomassoni
Carlson Folliard Kalis Molnau Pugh Trimble
Clark, K. Garcia Kelso Mullery Rest Tunheim
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Daggett Greenfield Kinkel Munger Rukavina Wagenius
Dawkins Greiling Leighton Murphy Schumacher Weaver
Dehler Hasskamp Lieder Olson, E. Sekhon Wejcman
Delmont Hausman Long Opatz Skare Wenzel
Dempsey Hilty Mahon Orfield Skoglund Winter
Dorn Huntley Mares Osthoff Slawik Spk. Carruthers

The question recurred on the Mahon motion that the House concur in the Senate amendments to H. F. No. 2654 and that the bill be repassed as amended by the Senate. The motion prevailed.

H. F. No. 2654, A bill for an act relating to public safety; allowing personalized license plates to be issued for certain trucks resembling pickup trucks; providing for separate form for assignment of vehicle title; clarifying transfer from dealer provision; increasing allowable radius for transportation of certain farm products; specifying requirements for motor vehicle broker sign; driving while impaired; clarifying that juvenile's age as it relates to DWI-related driver's license revocation refers to the date of violation instead of the date of conviction; providing reasonable time to petition for driver's license reinstatement; ensuring uniformity of amount of handling charge allowed for certain driver's license reinstatements; clarifying reinstatement handling fee; amending Minnesota Statutes 1996, sections 168.12, subdivision 2a; 168A.01, by adding a subdivision; 168A.11, subdivision 1; and 221.025; Minnesota Statutes 1997 Supplement, sections 168.27, subdivision 10; 169.121, subdivision 4; 171.19; 171.20, subdivision 4; and 171.29, subdivision 2.

The bill was read for the third time, as amended by the Senate, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called. There were 68 yeas and 65 nays as follows:

Anderson, I. Evans Johnson, A. McGuire Pelowski Tomassoni
Bakk Farrell Johnson, R. Milbert Peterson Trimble
Biernat Folliard Kahn Molnau Pugh Tunheim
Bishop Garcia Kalis Mullery Rest Wagenius
Carlson Greenfield Kelso Munger Rukavina Wejcman
Chaudhary Greiling Kinkel Murphy Schumacher Wenzel
Clark, K. Hasskamp Leighton Olson, E. Sekhon Winter
Dawkins Hausman Lieder Opatz Skare Spk. Carruthers
Dehler Hilty Long Orfield Skoglund
Delmont Huntley Mahon Osthoff Slawik
Dorn Jaros Mariani Otremba, M. Solberg
Entenza Jefferson McCollum Paymar Swenson, H.

Abrams Erhardt Knight Mares Reuter Tingelstad
Anderson, B. Erickson Knoblach Marko Rhodes Tompkins
Bettermann Finseth Koskinen McElroy Rifenberg Tuma
Boudreau Goodno Kraus Mulder Rostberg Van Dellen
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9987
Bradley Gunther Krinkie Ness Seagren Vandeveer
Broecker Haas Kubly Nornes Seifert Weaver
Clark, J. Harder Kuisle Olson, M. Smith Westfall
Commers Holsten Larsen Osskopp Stanek Westrom
Daggett Jennings Leppik Ozment Stang Wolf
Davids Juhnke Lindner Paulsen Sviggum Workman
Dempsey Kielkucki Macklin Pawlenty Sykora

The bill was repassed, as amended by the Senate, and its title agreed to.

I hereby announce the passage by the Senate of the following House File, herewith returned, as amended by the Senate, in which amendments the concurrence of the House is respectfully requested:

H. F. No. 2985, A bill for an act relating to children; providing for child welfare reform; changing requirements and procedures; restricting release of certain information; establishing citizen review panels; clarifying jurisdiction; establishing programs for child abuse and neglect assessments and investigations and concurrent planning for permanent placement; providing for protection of children; requiring reviews; defining terms; imposing duties; amending Minnesota Statutes 1996, sections 3.153, by adding a subdivision; 13.391; 256.01, subdivision 12, and by adding a subdivision; 257.42; 257.43; 259.24, subdivision 1; 259.37, subdivision 2; 260.011, subdivision 2; 260.141, by adding a subdivision; 260.172, subdivision 1; 260.191, subdivision 1e; 260.221, as amended; and 626.556, subdivisions 10, 10h, 11a, and by adding subdivisions; Minnesota Statutes 1997 Supplement, sections 144.218, subdivision 2; 245A.03, subdivision 2; 245A.04, subdivisions 3b and 3d; 257.85, subdivision 5; 259.22, subdivision 4; 259.47, subdivision 3; 259.60, subdivision 2; 260.012; 260.015, subdivision 29; 260.191, subdivisions 1, 1a, and 3b; 260.241, subdivision 3; and 626.556, subdivisions 2, 10e, 11, and 11c; proposing coding for new law in Minnesota Statutes, chapters 257; and 626.

CONCURRENCE AND REPASSAGE

Entenza moved that the House concur in the Senate amendments to H. F. No. 2985 and that the bill be repassed as amended by the Senate. The motion prevailed.

H. F. No. 2985, A bill for an act relating to children; providing for child welfare reform; restricting release of certain information; establishing citizen review panels; clarifying jurisdiction; establishing programs for child abuse and neglect assessments and investigations and concurrent planning for permanent placement; defining terms; imposing duties; expanding certain case plans; providing for consideration of domestic abuse in child protection risk assessments; authorizing rulemaking; providing for sharing of certain data; changing records retention requirements; requiring review and audits; requiring task forces and a plan; appropriating money; amending Minnesota Statutes 1996, sections 144.226, subdivision 3; 245A.035, subdivision 4; 256.01, subdivision 12, and by adding a subdivision; 257.42; 257.43; 259.24, subdivision 1; 259.37, subdivision 2; 260.011, subdivision 2; 260.141, by adding a subdivision; 260.172, subdivision 1; 260.191, subdivision 1e; 260.221, as amended; and 626.556, subdivision 10, and by adding subdivisions; Minnesota Statutes 1997 Supplement, sections 144.218, subdivision 2; 144.226, subdivision 4; 245A.03, subdivision 2; 245A.04, subdivisions 3b and 3d; 256.82, subdivision 2; 257.071, subdivision 1d; 257.85, subdivision 5; 259.22, subdivision 4; 259.47, subdivision 3; 259.58; 259.60, subdivision 2; 260.012; 260.015, subdivisions 2a and 29; 260.161, subdivision 2; 260.191, subdivisions 1, 1a, 3a, and 3b; 260.241, subdivision 3; and 626.556, subdivisions 10e and 11c; proposing coding for new law in Minnesota Statutes, chapters 257; and 626.

The bill was read for the third time, as amended by the Senate, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called.

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Winter moved that those not voting be excused from voting. The motion prevailed.

There were 131 yeas and 1 nay as follows:

Abrams Erhardt Juhnke Mariani Pawlenty Sviggum
Anderson, B. Erickson Kahn Marko Paymar Swenson, H.
Anderson, I. Evans Kalis McCollum Pelowski Sykora
Bakk Farrell Kelso McElroy Peterson Tingelstad
Bettermann Finseth Kielkucki McGuire Pugh Tomassoni
Biernat Folliard Kinkel Milbert Rest Tompkins
Bishop Garcia Knight Molnau Reuter Trimble
Boudreau Goodno Knoblach Mulder Rhodes Tuma
Bradley Greenfield Koskinen Mullery Rifenberg Tunheim
Broecker Greiling Kraus Munger Rostberg Van Dellen
Carlson Gunther Krinkie Murphy Rukavina Vandeveer
Chaudhary Haas Kubly Ness Schumacher Wagenius
Clark, J. Harder Kuisle Nornes Seagren Weaver
Commers Hasskamp Larsen Olson, E. Seifert Wejcman
Daggett Hausman Leighton Olson, M. Sekhon Wenzel
Davids Hilty Leppik Opatz Skare Westfall
Dawkins Holsten Lieder Orfield Skoglund Westrom
Dehler Huntley Lindner Osskopp Slawik Winter
Delmont Jaros Long Osthoff Smith Wolf
Dempsey Jefferson Macklin Otremba, M. Solberg Workman
Dorn Johnson, A. Mahon Ozment Stanek Spk. Carruthers
Entenza Johnson, R. Mares Paulsen Stang

The bill was repassed, as amended by the Senate, and its title agreed to.

Jennings

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said House File is herewith returned to the House.

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I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 3346.

The Senate has repassed said bill in accordance with the recommendation and report of the Conference Committee. Said Senate File is herewith transmitted to the House.

CONFERENCE COMMITTEE REPORT ON S. F. NO. 3346

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256L.04, subdivisions 3, 4, 5, and 6; 256L.06, subdivisions 1 and 2; 256L.08; 256L.09, subdivision 3; 256L.13; and 256L.14; Laws 1997, chapter 85, article 1, sections 61 and 71; and article 3, section 55; Minnesota Rules (Exempt), parts 9500.9100; 9500.9110; 9500.9120; 9500.9130; 9500.9140; 9500.9150; 9500.9160; 9500.9170; 9500.9180; 9500.9190; 9500.9200; 9500.9210; and 9500.9220.

April 9, 1998

The Honorable Allan H. Spear

President of the Senate

The Honorable Phil Carruthers

Speaker of the House of Representatives

We, the undersigned conferees for S. F. No. 3346, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments and that S. F. No. 3346 be further amended as follows:

Delete everything after the enacting clause and insert:

Section 1. [HEALTH AND HUMAN SERVICES APPROPRIATIONS.]

The sums shown in the columns marked "APPROPRIATIONS" are appropriated from the general fund, or any other fund named, to the agencies and for the purposes specified in the following sections of this article, to be available for the fiscal years indicated for each purpose. The figures "1998" and "1999" where used in this article, mean that the appropriation or appropriations listed under them are available for the fiscal year ending June 30, 1998, or June 30, 1999, respectively. Where a dollar amount appears in parentheses, it means a reduction of an appropriation.

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APPROPRIATIONS BIENNIAL

1998 1999 TOTAL

General $ (139,959,000) $ (161,811,000)$ (301,770,000)

State Government Special Revenue 113,000 231,000 344,000

Health Care Access Fund (3,130,000) (14,203,000) (17,333,000)

TOTAL $ (142,976,000) $ (175,783,000) $ (318,759,000)

APPROPRIATIONS

Available for the Year

Ending June 30

1998 1999

Sec. 2. COMMISSIONER OF HUMAN SERVICES

Subdivision 1. Total Appropriation $ (143,089,000)$ (196,131,000)

Summary by Fund

General (139,959,000) (181,669,000)

Health Care Access (3,130,000) (14,462,000)

This appropriation is taken from the appropriation in Laws 1997, chapter 203, article 1, section 2.

The amounts that are added to or reduced from the appropriation for each program are specified in the following subdivisions.

Subd. 2. Children's Grants

-0- 1,618,000

[CRISIS NURSERY PROGRAMS.] Of this appropriation, $200,000 in fiscal year 1999 is from the general fund to the commissioner to contract for technical assistance with counties and private nonprofit agencies that are interested in developing a crisis nursery program. The technical assistance must be designed to assist interested counties in building capacity to develop and maintain a crisis nursery program in the county. The grant amounts must not exceed $20,000. To be eligible to receive a grant under this program, the county must not have an existing crisis nursery program and must not be a metropolitan county, as that term is defined in Minnesota Statutes, section 473.121. Grants must be distributed by award letters to agencies demonstrating a need for crisis nursery services and documenting community support for these efforts. This appropriation shall not become part of base level funding for the 2000-2001 biennium.

[CHILDREN'S MENTAL HEALTH SERVICES.] (a) Of this appropriation, $300,000 in fiscal year 1999 is from the general fund for the commissioner to award grants to counties that have a relatively low net tax capacity to provide children's mental health services to children and families residing outside of a metropolitan statistical area, as that term is defined by the United States Census Bureau. Funds shall be used to provide services according to an individual family community support plan as described in Minnesota Statutes, section 245.4881, subdivision 4. The plan must be developed using a process that enhances consumer empowerment. Counties with an approved children's mental health collaborative may integrate funds appropriated for fiscal years 1998 and 1999 with existing funds to meet the needs identified in the child's individual family community support plan.

(b) In awarding grants to counties under this provision, the commissioner shall follow the process established in Minnesota Statutes, section 245.4886, subdivision 2. The commissioner shall give priority for funding to counties that continued to spend for

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 9992

mental health services specified in Minnesota Statutes, sections 245.461 to 245.486 and 245.487 to 245.4888, according to generally accepted accounting principles, in an amount equal to the total expenditures shown in the county's approved 1987 CSSA plan for services to persons with mental illness plus the comparable figure for facilities licensed under Minnesota Rules, chapter 9545, for target populations other than mental illness in the county's approved 1989 CSSA plan. The commissioner shall ensure that grant funds are not used to replace existing funds.

[PRIMARY SUPPORT TO IMPLEMENT THE INDIAN FAMILY PRESERVATION ACT.] For fiscal year 1998, $100,000 of federal funds are transferred from the state's federal TANF block grant and added to the state's allocation of federal Title XX block grant funds. Notwithstanding the provisions of Minnesota Statutes 1997 Supplement, section 256E.07, the commissioner shall use $100,000 of the state's Title XX block grant funds for a grant under Minnesota Statutes, section 257.3571, subdivision 1, to an Indian organization licensed as an adoption agency. The grant must be used to provide primary support for implementation of the Minnesota Indian Family Preservation Act and compliance with the Indian Child Welfare Act. This appropriation must be used according to the requirements of United States Code, title 42, section 604(d)(3)(B). This appropriation is available until June 30, 1999.

[ADOPTION ASSISTANCE CARRYFORWARD.] Of the appropriation in Laws 1997, chapter 203, section 2, subdivision 3, for children's grants for fiscal year 1998, $600,000 of the amount appropriated for the adoption assistance program is available for the same purpose in fiscal year 1999. The amount carried forward shall become part of the base for the adoption assistance program in the 2000-2001 biennial budget.

[FAMILY PRESERVATION PROGRAM FUNDING.] $10,200,000 is transferred in fiscal year 1999 from the state's federal TANF block grant to the state's federal Title XX block grant. Notwithstanding the provisions of Minnesota Statutes 1997 Supplement, section 256E.07, in fiscal year 1999 the commissioner shall transfer $10,000,000 of the state's Title XX block grant funds to the family preservation program under Minnesota Statutes, chapter 256F. The commissioner shall transfer $200,000 to the commissioner of health for the program under Minnesota Statutes, section 145A.15, that funds home visiting projects; these transferred funds are available until expended. The commissioners shall ensure that money allocated to counties under this provision must be used in accordance with the requirements of United States Code, title 42, section 604(d)(3)(B). These are one-time appropriations that shall not be added to the base for these programs for the 2000-2001 biennial budget.

Subd. 3. Basic Health Care Grants

(97,529,000) (146,802,000)

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Summary by Fund

General (94,591,000) (128,833,000)

Health Care Access (2,938,000) (17,969,000)

The amounts that may be spent from this appropriation for each purpose are as follows:

(a) Minnesota Care Grants Health Care Access Fund

(2,938,000) (17,969,000)

[SUBSIDIZED FAMILY HEALTH COVERAGE.] Of this appropriation, $500,000 from the health care access fund in fiscal year 1999 is to implement the employer-subsidized health coverage program described in article 5, section 45.

(b) MA Basic Health Care Grants-Families and Children

General (32,047,000) (65,249,000)

[FETAL ALCOHOL SYNDROME MEDICAL ASSISTANCE FEDERAL MATCH.] The commissioner shall claim all available federal match under Title XIX for the fetal alcohol syndrome/fetal alcohol effect initiatives. Grants and projects shall be developed which focus treatment on community-based options which consider the availability of federal match.

General (25,643,000) (40,952,000)

(d) General Assistance Medical Care

General (36,901,000) (22,632,000)

[PRESCRIPTION DRUG BENEFIT.] (a) If, by September 15, 1998, federal approval is obtained to provide a prescription drug benefit for qualified Medicare beneficiaries at no less than 100 percent of the federal poverty guidelines and service-limited Medicare beneficiaries under Minnesota Statutes, section 256B.057, subdivision 3a, at no less than 120 percent of federal poverty guidelines, the commissioner of human services shall not implement the senior citizen drug program under Minnesota Statutes, section 256.955, but shall implement a drug benefit in accordance with the approved waiver. Upon approval of this waiver, the total appropriation for the senior citizen drug program under Laws 1997, chapter 225, article 7, section 2, shall be transferred to the medical assistance account to fund the federally approved coverage for eligible persons for fiscal year 1999.

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(b) The commissioner may seek approval for a higher copayment for eligible persons above 100 percent of the federal poverty guidelines.

(c) The commissioner shall report by October 15, 1998, to the chairs of the health and human services policy and fiscal committees of the house and senate whether the waiver referred to in paragraph (a) has been approved and will be implemented or whether the state senior citizen drug program will be implemented.

(d) If the commissioner does not receive federal waiver approval at or above the level of eligibility defined in paragraph (a), the commissioner shall implement the program under Minnesota Statutes, section 256.955.

[HEALTH CARE ACCESS FUND TRANSFERS TO THE GENERAL FUND.] Notwithstanding Laws 1997, chapter 203, article 1, section 2, subdivision 5, the commissioner shall transfer funds from the health care access fund to the general fund to offset the projected savings to general assistance medical care (GAMC) that would result from the transition of GAMC parents and adults without children to MinnesotaCare. For fiscal year 1998, the amount transferred from the health care access fund to the general fund shall be $13,700,000. The amount of transfer for fiscal year 1999 shall be $2,659,000.

Subd. 4. Basic Health Care Management

(192,000) 2,448,000

Health Care Access (192,000) 2,423,000

General -0- 25,000

The amounts that may be spent from this appropriation for each purpose are as follows:

(a) Health Care Policy Administration

General -0- 25,000

Health Care Access (192,000) 354,000

[DELAY IN TRANSFERRING GAMC CLIENTS.] Due to delaying the transfer of GAMC clients to MinnesotaCare until January 1, 2000, $192,000 in fiscal year 1998 health care access fund administrative funds, appropriated in Laws 1997, chapter 225, article 7, section 2, subdivision 1, are canceled.

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[HEALTH CARE MANUAL PRODUCTION COSTS.] For the biennium ending June 30, 1999, the commissioner may charge a fee for the health care manual. The difference between the cost of producing and distributing the department of human services health care manual, and the fees paid by individuals and private entities on January 1, 1998, is appropriated to the commissioner to defray manual production and distribution costs. The commissioner must provide the health care manual to government agencies and nonprofit agencies serving the legal and social service needs of clients at no cost to those agencies.

[TRANSFER.] For fiscal years 2000 and 2001, the commissioner of finance shall transfer from the health care access fund to the general fund an amount to cover the expenditures associated with the services provided to pregnant women and children under the age of two enrolled in the MinnesotaCare program. Notwithstanding section 7, this provision expires on July 1, 2001.

[FEDERAL CONTINGENCY RESERVE LIMIT.] Notwithstanding Minnesota Statutes, section 16A.76, subdivision 2, the federal contingency reserve limit shall be reduced for fiscal years 1999, 2000, and 2001 by the cumulative amount of the expenditures associated with services provided to pregnant women and children enrolled in the MinnesotaCare program in these fiscal years. Notwithstanding section 7, this provision expires on July 1, 2001.

[MINNESOTACARE OUTREACH FEDERAL MATCHING FUNDS.] Any federal matching funds received as a result of the MinnesotaCare outreach activities authorized by Laws 1997, chapter 225, article 7, section 2, subdivision 1, shall be deposited in the health care access fund and dedicated to the commissioner of human services to be used for those outreach purposes.

(b) Health Care Operations

Health Care Access -0- 2,069,000

[MINNESOTACARE OUTREACH.] Unexpended money in fiscal year 1998 for MinnesotaCare outreach activities appropriated in Laws 1997, chapter 225, article 7, section 2, subdivision 1, does not cancel, but is available for those purposes in fiscal year 1999.

Subd. 5. State-Operated Services

-0- (254,000)

The amounts that may be spent from this appropriation for each purpose are as follows:

(a) RTC Facilities

-0- 700,000

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[LEAVE LIABILITIES.] The accrued leave liabilities of state employees transferred to state-operated community services programs may be paid from the appropriation for state-operated services in Laws 1997, chapter 203, article 1, section 2, subdivision 7, paragraph (a). Funds set aside for this purpose shall not exceed the amount of the actual leave liability calculated as of June 30, 1999, and shall be available until expended. This provision is effective the day following final enactment.

[GRAVE MARKERS.] Of the $195,000 retained by the commissioner from the $200,000 appropriation in Laws 1997, chapter 203, article 1, section 2, subdivision 7, paragraph (a), for grave markers at regional treatment centers, $29,250 is for community organizing, coordination, fundraising, and administration.

[RTC BUILDING AND SPACE ANALYSIS.] Of this appropriation, $50,000 from the general fund in fiscal year 1999 is for the commissioner to conduct an analysis of surplus land and buildings on the regional treatment center campuses and to develop recommendations for future utilization of this property. The commissioner shall report to the legislature by January 15, 1999, with recommendations for an orderly process to sell, lease, demolish, transfer, or otherwise dispose of unneeded buildings and land.

(b) State-Operated Community Services - DD

-0- (954,000)

Subd. 6. Continuing Care and Community Support Grants

(36,806,000)(9,289,000)

The amounts that may be spent from this appropriation for each purpose are as follows:

(a) Community Services Block Grants

130,000 846,000

[WILKIN COUNTY FLOOD COSTS.] Of this appropriation, $130,000 for fiscal year 1998 is to reimburse Wilkin county for flood-related human service and public health costs which cannot be reimbursed through any other source.

(b) Aging Adult Service Grants

-0- 250,000

[METROPOLITAN AREA AGENCY ON AGING.] Of this appropriation, $100,000 in fiscal year 1999 from the general fund is for the commissioner for the metropolitan area agency on aging to

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provide technical support and planning services to enable older adults to remain living in the community. This appropriation shall not cancel but is available until expended.

[HOME SHARING.] Of this appropriation, $150,000 in fiscal year 1999 is from the general fund to the commissioner for the home-sharing program under Minnesota Statutes, section 256.973, which links elderly, disabled, and families together to share a home.

-0- 234,000

[SERVICES FOR DEAF-BLIND PERSONS.] Of this appropriation, $150,000 in fiscal year 1999 is for the following:

(1) $100,000 for a grant to Deaf Blind Services Minnesota, Inc., in order to provide services to deaf-blind children and their families. The services include providing intervenors to assist deaf-blind children in participating in their community and providing family education specialists to teach siblings and parents skills to support the deaf-blind child in the family.

(2) $50,000 is for a grant to Deaf Blind Services Minnesota, Inc., and Duluth Lighthouse for the Blind, Inc., in order to provide assistance to deaf-blind persons who are working toward establishing and maintaining independence.

(d) Mental Health Grants

100,000 1,803,000

[DD CRISIS INTERVENTION PROJECT.] Of this appropriation, $125,000 in fiscal year 1999 is from the general fund to the commissioner for start-up operating and training costs for the action, support, and prevention project of southeastern Minnesota. This appropriation is to provide crisis intervention through community-based services in the private sector to persons with developmental disabilities under Laws 1995, chapter 207, article 3, section 22. This appropriation shall not become part of base level funding for the 2000-2001 biennium.

[FLOOD COSTS.] Of this appropriation, $100,000 for fiscal year 1998 and $700,000 for fiscal year 1999 is to pay for flood-related mental health services and to reimburse mental health centers for the cost of disruptions in the mental health centers' other services that were caused by diversion of staff to flood efforts. Funding is limited to costs for services which cannot be reimbursed through any other source in counties officially declared as disaster areas.

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[COMPULSIVE GAMBLING CARRYFORWARD.] Unexpended funds appropriated to the commissioner for compulsive gambling programs for fiscal year 1998 do not cancel but are available for these purposes for fiscal year 1999.

(e) Developmental Disabilities Support Grants

-0- 162,000

(f) Medical Assistance Long-Term Care Waivers and Home Care

(3,936,000)(2,435,000)

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section 256B.0625, subdivisions 5 and 35, (b) therapeutic support of foster care under Minnesota Statutes, section 256B.0625, subdivisions 5 and 36, and (c) home-based treatment under Minnesota Rules, part 9505.0324; and community support services for deaf and hard-of-hearing adults with mental illness who use or wish to use sign language as their primary means of communication.

(2) Effective January 1, 1999, the commissioner shall increase capitation rates in the prepaid medical assistance program, prepaid general assistance medical care program, and prepaid MinnesotaCare program as appropriate to reflect the rate increases in paragraph (l).

(3) It is the intention of the legislature that the compensation packages of staff within each service be increased by three percent.

(4) Section 7, sunset of uncodified language, does not apply to this provision.

(g) Medical Assistance Long-Term Care Facilities

(24,318,000) (16,911,000)

[ICFs/MR AND NURSING FACILITY FLOOD-RELATED REPORTING.] For the reporting year ending December 31, 1997, for ICFs/MR that temporarily admitted victims of the flood of 1997, the resident days related to the temporary placement of persons not formally admitted who continued to be billed under the evacuated facility's provider number shall not be counted in the cost report submitted to calculate October 1, 1998, rates, and the additional expenditures shall be considered nonallowable.

For the reporting year ending September 30, 1997, for nursing facilities that temporarily admitted victims of the flood of 1997, the resident days related to the temporary placement of persons not formally admitted who continued to be billed under the evacuated facility's provider number shall not be counted in the cost report submitted to calculate July 1, 1998, rates, and the additional expenditures shall be considered nonallowable.

[ICF/MR DISALLOWANCES.] Of this appropriation, $65,000 in fiscal year 1999 is from the general fund to the commissioner for the purpose of reimbursing a 12-bed ICF/MR in Stearns county and a 12-bed ICF/MR in Sherburne county for disallowances resulting from field audit findings. The commissioner shall exempt these facilities from the provisions of Minnesota Statutes, section 256B.501, subdivision 5b, paragraph (d), clause (6), for the rate years beginning October 1, 1997, and October 1, 1998. Section 10, sunset of uncodified language, does not apply to this provision.

[NURSING HOME MORATORIUM EXCEPTIONS.] Base level funding for medical assistance long-term care facilities is increased by $255,000 in fiscal year 2000 and by $278,000 in fiscal year 2001

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for the additional medical assistance costs of the nursing home moratorium exceptions under Minnesota Statutes 1997 Supplement, section 144A.071, subdivision 4a, paragraphs (w) and (x). Notwithstanding the provisions of section 7, sunset of uncodified language, this provision shall not expire.

(h) Alternative Care Grants

-0- 22,663,000

(i) Group Residential Housing

(8,782,000)(8,408,000)

[SERVICES TO DEAF PERSONS WITH MENTAL ILLNESS.] Of this appropriation, $65,000 in fiscal year 1999 is from the general fund to the commissioner for a grant to a nonprofit agency that currently serves deaf and hard-of-hearing adults with mental illness through residential programs and supported housing outreach activities. The grant must be used to continue or maintain community support services for deaf and hard-of-hearing adults with mental illness who use or wish to use sign language as their primary means of communication. This appropriation is in addition to the appropriation in Laws 1997, chapter 203, article 1, section 2, subdivision 8, paragraph (d), for a grant to this nonprofit agency. This appropriation shall not become part of base level funding for the 2000-2001 biennium.

(j) Chemical Dependency Entitlement Grants

-0-(7,893,000)

[CHEMICAL DEPENDENCY RESERVE ACCOUNT.] For fiscal year 1999, $3,000,000 is canceled from the chemical dependency reserve account within the consolidated chemical dependency treatment fund to the general fund.

(k) Chemical Dependency Nonentitlement Grants

-0- 400,000

[MATCHING GRANT FOR YOUTH ALCOHOL TREATMENT.] Of this appropriation, $400,000 in fiscal year 1999 is from the general fund for the commissioner to provide a grant to the board of directors of the Minnesota Indian Primary Residential Treatment Center, Inc., to build a youth alcohol treatment wing at the Mash-Ka-Wisen Treatment Center. This appropriation is available only if matched by a $1,500,000 federal grant and a $100,000 grant from state Indian bands.

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[MATCHING GRANT FOR PROJECT TURNABOUT.] If money is appropriated in fiscal year 1999 to the commissioner from the lottery prize fund, the money shall be used to provide a grant for capital improvements to Project Turnabout in Granite Falls. A local match is required before the commissioner may release this appropriation to the facility. The facility shall receive state funds equal to the amount of local matching funds provided, up to the limit of this appropriation.

Subd. 7. Continuing Care and Community Support Management

-0- 25,000

[REGION 10 COMMISSION CARRYOVER AUTHORITY.] Any unspent portion of the appropriation to the commissioner in Laws 1997, chapter 203, article 1, section 2, subdivision 9, for the region 10 quality assurance commission for fiscal year 1998 shall not cancel but shall be available for the commission for fiscal year 1999.

[STUDY OF DAY TRAINING CAPITAL NEEDS.] (a) Of this appropriation, $25,000 in fiscal year 1999 is from the general fund to the commissioner to conduct a study to:

(1) determine the extent to which day training and habilitation programs have unmet capital improvement needs;

(2) ascertain the degree to which these unmet capital needs impact consumers of day training and habilitation programs;

(3) determine the state's role and responsibility in meeting the capital improvement needs of day training and habilitation programs; and

(4) examine the relationship among the state, counties, and community resources in meeting the capital improvement needs of day training and habilitation programs.

(b) The commissioner shall report to the legislature by January 15, 1999, the results of the study along with recommendations for involving the state, counties, and community resources in collaborative initiatives to assist in meeting the capital improvement needs of day training and habilitation programs.

Subd. 8. Economic Support Grants

(8,562,000) (44,961,000)

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The amounts that may be spent from this appropriation for each purpose are as follows:

(a) Assistance to Families Grants

1,173,000 (32,282,000)

[FEDERAL TANF FUNDS.] Notwithstanding any contrary provisions of Laws 1997, chapter 203, article 1, section 2, subdivision 12, federal TANF block grant funds are appropriated to the commissioner in amounts up to $230,200,000 in fiscal year 1998 and $285,990,000 in fiscal year 1999. Additional federal TANF funds may be expended but only to the extent that an equal amount of state funds have been transferred to the TANF reserve under Minnesota Statutes, section 256J.03.

[TRANSFER OF STATE MONEY FROM TANF RESERVE.] For fiscal year 1999, $5,416,000 is appropriated from the state money in the TANF reserve to the commissioner for the purposes of funding the Minnesota food assistance program under Minnesota Statutes, section 256D.053, and the eligibility of legal noncitizens who were not Minnesota residents on March 1, 1997, for the general assistance program under the amendments to Minnesota Statutes, section 256D.05, subdivision 8, in article 6.

[TRANSFER OF FEDERAL TANF FUNDS TO CHILD CARE DEVELOPMENT FUND.] $791,000 is transferred in fiscal year 1999 from the state's federal TANF block grant to the state's child care development fund, and is appropriated to the commissioner of children, families, and learning for the purposes of Minnesota Statutes, section 119B.05.

[TRANSFER FROM STATE TANF RESERVE.] Notwithstanding the provisions of Minnesota Statutes, section 256J.03, $7,799,000 is transferred from the state TANF reserve account to the general fund in fiscal year 2000. Notwithstanding section 7, this provision expires on July 1, 2000.

(b) Work Grants -0-(1,000,000)

[FOOD STAMP EMPLOYMENT AND TRAINING APPROPRIATION REDUCTION.] The appropriation in Laws 1997, chapter 203, article 1, section 2, subdivision 10, paragraph (b), for fiscal year 1999 for work grants is reduced by $1,000,000. This reduction shall be taken from the fiscal year 1999 appropriation for the food stamp employment and training program.

-0- (1,100,000)

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[CHILD SUPPORT CARRYOVER AUTHORITY.] Any unspent portion of the appropriation to the commissioner in Laws 1997, chapter 203, article 1, section 2, subdivision 10, for child support enforcement activities for fiscal year 1998 shall not cancel but shall be available to the commissioner for fiscal year 1999. The appropriation in Laws 1997, chapter 203, article 1, section 2, subdivision 10, for child support enforcement activities for fiscal year 1999 is reduced by $1,100,000. This reduction shall not reduce base level funding for these activities for the 2000-2001 biennium.

(d) General Assistance

(6,933,000)(6,321,000)

(e) Minnesota Supplemental Aid

(2,802,000)(4,258,000)

Subd. 9. Economic Support Management

Health Care Access -0- 1,084,000

[ASSESSMENT OF AFFORDABLE HOUSING SUPPLY.] The commissioner of human services shall assess the statewide supply of affordable housing for all MFIP-S and GA recipients, and report to the legislature by January 15, 1999, on the results of this assessment.

Sec. 3. COMMISSIONER OF HEALTH

Subdivision 1. Total Appropriation

-0- 20,147,000

Special Revenue -0- 108,000

General -0- 19,780,000

State Government

Health Care Access -0- 259,000

This appropriation is added to the appropriation in Laws 1997, chapter 203, article 1, section 3.

The amounts that may be spent from this appropriation for each program are specified in the following subdivisions.

Subd. 2. Health Systems and Special Populations

-0- 15,459,000

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Summary by Fund

General -0- 15,200,000

Health Care Access -0- 259,000

[FETAL ALCOHOL SYNDROME.] (a) Of this appropriation, $5,000,000 in fiscal year 1999 is from the general fund to the commissioner for the fetal alcohol syndrome/fetal alcohol effect (FAS/FAE) initiatives specified in paragraphs (b) to (k).

(b) Of the amount in paragraph (a), $200,000 is transferred to the commissioner of children, families, and learning for school-based pilot programs to identify and implement effective educational strategies for individuals with FAS/FAE.

(c) Of the amount in paragraph (a), $800,000 is for the public awareness campaign under Minnesota Statutes, section 145.9266, subdivision 1.

(d) Of the amount in paragraph (a), $400,000 is to develop a statewide network of regional FAS diagnostic clinics under Minnesota Statutes, section 145.9266, subdivision 2.

(e) Of the amount in paragraph (a), $150,000 is for professional training about FAS under Minnesota Statutes, section 145.9266, subdivision 3.

(f) Of the amount in paragraph (a), $350,000 is for the fetal alcohol coordinating board under Minnesota Statutes, section 145.9266, subdivision 6.

(g) Of the amount in paragraph (a), $800,000 is transferred to the commissioner of human services to expand the maternal and child health social service programs under Minnesota Statutes, section 254A.17, subdivision 1. Of this amount, $184,000 shall be used by the commissioner of human services to eliminate the asset standards for medical assistance eligibility for pregnant women.

(h) Of the amount in paragraph (a), $200,000 is for the commissioner to study the extent of fetal alcohol syndrome in the state.

(i) Of the amount in paragraph (a), $400,000 is transferred to the commissioner of human services for the intervention and advocacy program under Minnesota Statutes, section 254A.17, subdivision 1b.

(j) Of the amount in paragraph (a), $850,000 is for the FAS community grant program under Minnesota Statutes, section 145.9266, subdivision 4.

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(k) Of the amount in paragraph (a), $850,000 is transferred to the commissioner of human services to expand treatment services and halfway houses for pregnant women and women with children who abuse alcohol during pregnancy.

[RURAL PHYSICIAN LOAN FORGIVENESS BUDGET REQUEST.] The budget request for the rural physician loan forgiveness program in the 2000-2001 biennial budget shall detail the amount of funds carried forward and obligations canceled.

[CONSUMER ADVISORY BOARD.] Of the general fund appropriation for fiscal year 1999, $50,000 is to the commissioner to reimburse members of the consumer advisory board for travel, food, and lodging expenses incurred by board members in the course of conducting board duties.

[MEDICAL EDUCATION AND RESEARCH TRUST FUND.] Of the general fund appropriation, $10,000,000 in fiscal year 1999 is to the commissioner for the medical education and research trust fund. Of this amount, $5,000,000 shall become part of base level funding for the biennium beginning July 1, 1999.

[MERC FEDERAL FINANCIAL PARTICIPATION.] (1) The commissioner of human services shall seek to maximize federal financial participation for payments for medical education and research costs.

(2) If the commissioner of human services determines that federal financial participation is available for the fiscal year 1999 appropriation for the medical education and research trust fund under this subdivision, the commissioner of health shall transfer to the commissioner of human services the amount of state funds necessary to maximize the federal funds.

(3) The transferred amount, plus the federal financial participation amount, shall be distributed to medical assistance providers according to the distribution methodology of the medical education research trust fund established under Minnesota Statutes, section 62J.69.

[DIABETES PREVENTION.] Of this appropriation, $50,000 in fiscal year 1999 from the general fund is to the commissioner for statewide activities related to general diabetes prevention, the development and dissemination of prevention materials to health care providers, and for other statewide activities related to diabetes prevention and control for targeted populations who are at high risk for developing diabetes or health complications from diabetes.

Subd. 3. Health Protection

-0- 4,688,000

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Summary by Fund

General -0- 4,580,000

State Government

Special Revenue -0- 108,000

[FOOD, BEVERAGE, AND LODGING PROGRAM STAFF RESTORATION.] Of the appropriation from the state government special revenue fund, $101,000 in fiscal year 1999 is for the commissioner to restore staffing for the food, beverage, and lodging program.

[OCCUPATIONAL RESPIRATORY DISEASE INFORMATION SYSTEM.] Of the general fund appropriation, $250,000 in fiscal year 1999 is to design an occupational respiratory disease information system. This appropriation is available until expended. This appropriation is added to the base for the 2000-2001 biennial budget.

[LEAD-SAFE PROPERTY CERTIFICATION PROGRAM.] Of this appropriation, $75,000 in fiscal year 1999 is from the general fund to the commissioner for the purposes of the lead-safe property certification program under Minnesota Statutes, section 144.9511.

[INFECTION CONTROL.] Of the general fund appropriation, $200,000 in fiscal year 1999 is for infection control activities, including training and technical assistance of health care personnel to prevent and control disease outbreaks, and for hospital and public health laboratory testing and other activities to monitor trends in drug-resistant infections.

[CANCER SCREENING.] Of the general fund appropriation, $1,255,000 in fiscal year 1999 is for increased cancer screening and diagnostic services for women, particularly underserved women, and to improve cancer screening rates for the general population. Of this amount, at least $855,000 is for grants to support local boards of health in providing outreach and coordination and to reimburse health care providers for screening and diagnostic tests, and up to $400,000 is for technical assistance, consultation, and outreach.

[SEXUALLY TRANSMITTED DISEASE.] (a) of this appropriation, $300,000 in fiscal year 1999 is from the general fund to the commissioner to do the following, in consultation with the HIV/STD prevention task force and the commissioner of children, families, and learning:

(1) $100,000 to conduct a statewide assessment of need and capacity to prevent and treat sexually transmitted diseases and prepare a comprehensive plan for how to prevent and treat sexually transmitted diseases, including strategies for reducing infection and for increasing access to treatment;

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(2) $150,000 to conduct research on the prevalence of sexually transmitted diseases among populations at highest risk for infection. The research may be done in collaboration with the University of Minnesota and nonprofit community health clinics; and

(3) $50,000 to conduct laboratory screenings for sexually transmitted diseases at no charge to patients participating in epidemiological research activities specified in clause (2).

(b) This appropriation shall not become part of the base for the 2000-2001 biennium.

Sec. 4. HEALTH-RELATED BOARDS

Subdivision 1. Total Appropriation 113,000 123,000

This appropriation is added to the appropriation in Laws 1997, chapter 203, article 1, section 5.

The appropriations in this section are from the state government special revenue fund.

[NO SPENDING IN EXCESS OF REVENUES.] The commissioner of finance shall not permit the allotment, encumbrance, or expenditure of money appropriated in this section in excess of the anticipated biennial revenues or accumulated surplus revenues from fees collected by the boards. Neither this provision nor Minnesota Statutes, section 214.06, applies to transfers from the general contingent account.

Subd. 2. Board of Medical Practice 80,000 90,000

This appropriation is added to the appropriation in Laws 1997, chapter 203, article 1, section 5, subdivision 6, and is for the health professional services activity.

Subd. 3. Board of Veterinary Medicine 33,000 33,000

This appropriation is added to the appropriation in Laws 1997, chapter 203, article 1, section 5, subdivision 14, and is for national examination costs.

Sec. 5. EMERGENCY MEDICAL SERVICES BOARD

General -0- 78,000

This appropriation is added to the appropriation in Laws 1997, chapter 203, article 1, section 6.

[EMERGENCY MEDICAL SERVICES COMMUNICATIONS NEEDS ASSESSMENT.] (a) Of this appropriation, $78,000 in fiscal year 1999 is from the general fund to the board to conduct an emergency medical services needs assessment for areas outside the

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seven-county metropolitan area. The assessment shall determine the current status of and need for emergency medical services communications equipment. All regional emergency medical services programs designated by the board under Minnesota Statutes 1997 Supplement, section 144E.50, shall cooperate in the preparation of the assessment.

(b) The appropriation for this project shall be distributed through the emergency medical services system fund under Minnesota Statutes, section 144E.50, through a request-for-proposal process. The board must select a regional EMS program that receives at least 20 percent of its funding from nonstate sources to conduct the assessment. The request for proposals must be issued by August 1, 1998.

(d) This appropriation shall not become part of base level funding for the 2000-2001 biennium.

Sec. 6. [CARRYOVER LIMITATION.] None of the appropriations in this act which are allowed to be carried forward from fiscal year 1998 to fiscal year 1999 shall become part of the base level funding for the 2000-2001 biennial budget, unless specifically directed by the legislature.

Sec. 7. [SUNSET OF UNCODIFIED LANGUAGE.] All uncodified language contained in this article expires on June 30, 1999, unless a different expiration date is explicit.

Sec. 8. [EFFECTIVE DATE.]

The appropriations and reductions for fiscal year 1998 in this article are effective the day following final enactment.

HEALTH DEPARTMENT AND HEALTH PROFESSIONALS

Section 1. Minnesota Statutes 1997 Supplement, section 13.99, is amended by adding a subdivision to read:

Subd. 19m. [DATA HELD BY OFFICE OF HEALTH CARE CONSUMER ASSISTANCE, ADVOCACY, AND INFORMATION.] Consumer complaint data collected or maintained by the office of health care consumer assistance, advocacy, and information under sections 62J.77 and 62J.80 are classified under section 62J.79, subdivision 4.

Sec. 2. Minnesota Statutes 1997 Supplement, section 62D.11, subdivision 1, is amended to read:

Subdivision 1. [ENROLLEE COMPLAINT SYSTEM.] Every health maintenance organization shall establish and maintain a complaint system, as required under section 62Q.105 to provide reasonable procedures for the resolution of written complaints initiated by or on behalf of enrollees concerning the provision of health care services. "Provision of health services" includes, but is not limited to, questions of the scope of coverage, quality of care, and administrative operations. The health maintenance organization must inform enrollees that they may choose to use ~~alternative dispute~~

~~Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10009~~

~~resolution~~ arbitration to appeal a health maintenance organization's internal appeal decision. The health maintenance organization must also inform enrollees that they have the right to use arbitration to appeal a health maintenance organization's internal appeal decision not to certify an admission, procedure, service, or extension of stay under section 62M.06. If an enrollee chooses to use ~~an alternative dispute resolution process~~ arbitration, the health maintenance organization must participate.

Sec. 3. Minnesota Statutes 1996, section 62J.321, is amended by adding a subdivision to read:

Subd. 5a. [PRESCRIPTION DRUG PRICE DISCLOSURE DATA.] Notwithstanding subdivisions 1 and 5, data collected under section 62J.381 shall be classified as public data.

Sec. 4. [62J.381] [PRESCRIPTION DRUG PRICE DISCLOSURE.]

By April 1, 1999, and annually thereafter, hospitals licensed under chapter 144 and group purchasers required to file a full report under section 62J.38 and the rules promulgated thereunder, must submit to the commissioner of health the total amount of:

(1) aggregate purchases of or payments for prescription drugs; and

(2) aggregate cash rebates, discounts, other payments received, and any fees associated with education, data collection, research, training, or market share movement, which are received during the previous calendar year from a manufacturer as defined under section 151.44, paragraph (c), or wholesale drug distributor as defined under section 151.44, paragraph (d).

The data collected under this section shall be distributed through the information clearinghouse under section 62J.2930. The identification of individual manufacturers or wholesalers or specific drugs shall not be required under this section.

Sec. 5. Minnesota Statutes 1997 Supplement, section 62J.69, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For purposes of this section, the following definitions apply:

(a) "Medical education" means the accredited clinical training of physicians (medical students and residents), doctor of pharmacy practitioners, doctors of chiropractic, dentists, advanced practice nurses (clinical nurse specialist, certified registered nurse anesthetists, nurse practitioners, and certified nurse midwives), and physician assistants.

(b) "Clinical training" means accredited training for the health care practitioners listed in paragraph (a) that is funded ~~and was historically funded~~ in part by ~~inpatient~~ patient care revenues and that occurs in ~~both~~ either an inpatient ~~and~~ or ambulatory patient care ~~settings~~ training site.

(c) "Trainee" means students involved in an accredited clinical training program for medical education as defined in paragraph (a).

(d) "Eligible trainee" means a student involved in an accredited training program for medical education as defined in paragraph (a), which meets the definition of clinical training in paragraph (b), who is in a training site that is located in Minnesota and which has a medical assistance provider number.

(e) "Health care research" means approved clinical, outcomes, and health services investigations that are funded by patient out-of-pocket expenses or a third-party payer.

~~(e)~~ (f) "Commissioner" means the commissioner of health.

~~(f)~~ (g) "Teaching institutions" means any hospital, medical center, clinic, or other organization that currently sponsors or conducts accredited medical education programs or clinical research in Minnesota.

(h) "Accredited training" means training provided by a program that is accredited through an organization recognized by the department of education or the health care financing administration as the official accrediting body for that program.

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(i) "Sponsoring institution" means a hospital, school, or consortium located in Minnesota that sponsors and maintains primary organizational and financial responsibility for an accredited medical education program in Minnesota and which is accountable to the accrediting body.

Sec. 6. Minnesota Statutes 1997 Supplement, section 62J.69, subdivision 2, is amended to read:

Subd. 2. [ALLOCATION AND FUNDING FOR MEDICAL EDUCATION AND RESEARCH.] (a) The commissioner may establish a trust fund for the purposes of funding medical education and research activities in the state of Minnesota.

(b) By January 1, 1997, the commissioner may appoint an advisory committee to provide advice and oversight on the distribution of funds from the medical education and research trust fund. If a committee is appointed, the commissioner shall: (1) consider the interest of all stakeholders when selecting committee members; (2) select members that represent both urban and rural interest; and (3) select members that include ambulatory care as well as inpatient perspectives. The commissioner shall appoint to the advisory committee representatives of the following groups: medical researchers, public and private academic medical centers, managed care organizations, Blue Cross and Blue Shield of Minnesota, commercial carriers, Minnesota Medical Association, Minnesota Nurses Association, medical product manufacturers, employers, and other relevant stakeholders, including consumers. The advisory committee is governed by section 15.059, for membership terms and removal of members and will sunset on June 30, 1999.

(c) Eligible applicants for funds are accredited medical education teaching institutions, consortia, and programs operating in Minnesota. Applications must be submitted by the sponsoring institution on behalf of the teaching program, and must be received by September 30 of each year for distribution in January of the following year. An application for funds must include the following:

(1) the official name and address of the sponsoring institution and the official name and address of the facility or ~~program~~ programs on whose behalf the institution is applying for funding;

(2) the name, title, and business address of those persons responsible for administering the funds;

(3) ~~the total number, type, and specialty orientation of eligible Minnesota-based trainees in~~ for each accredited medical education program for which funds are being sought the type and specialty orientation of trainees in the program, the name, address, and medical assistance provider number of each training site used in the program, the total number of trainees at each site, and the total number of eligible trainees at each training site;

(4) audited clinical training costs per trainee for each medical education program where available or estimates of clinical training costs based on audited financial data;

(5) a description of current sources of funding for medical education costs including a description and dollar amount of all state and federal financial support, including Medicare direct and indirect payments;

(6) other revenue received for the purposes of clinical training; and

(7) ~~a statement identifying unfunded costs; and~~

~~(8)~~ other supporting information the commissioner, with advice from the advisory committee, determines is necessary for the equitable distribution of funds.

(d) The commissioner shall distribute medical education funds to all qualifying applicants based on the following basic criteria: (1) total medical education funds available; (2) total eligible trainees in each eligible education program; and (3) the statewide average cost per trainee, by type of trainee, in each medical education program. Funds distributed shall not be used to displace current funding appropriations from federal or state sources. Funds shall be distributed to the sponsoring institutions indicating the amount to be paid to each of the sponsor's medical education programs based on the criteria in this paragraph. Sponsoring institutions which receive funds from the trust fund must distribute approved funds to the medical education program according to the commissioner's approval letter. Further, programs must distribute funds

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among the sites of training ~~based on the percentage of total program training performed at each site.~~ as specified in the commissioner's approval letter. Any funds not distributed as directed by the commissioner's approval letter shall be returned to the medical education and research trust fund within 30 days of a notice from the commissioner. The commissioner shall distribute returned funds to the appropriate entities in accordance with the commissioner's approval letter.

(e) Medical education programs receiving funds from the trust fund must submit ~~annual cost and program reports~~ a medical education and research grant verification report (GVR) through the sponsoring institution based on criteria established by the commissioner. If the sponsoring institution fails to submit the GVR by the stated deadline, or to request and meet the deadline for an extension, the sponsoring institution is required to return the full amount of the medical education and research trust fund grant to the medical education and research trust fund within 30 days of a notice from the commissioner. The commissioner shall distribute returned funds to the appropriate entities in accordance with the commissioner's approval letter. The reports must include:

(1) the total number of eligible trainees in the program;

(2) the programs and residencies funded, the amounts of trust fund payments to each program, and within each program, the ~~percentage~~ dollar amount distributed to each training site; and

(3) ~~the average cost per trainee and a detailed breakdown of the components of those costs;~~

~~(4) other state or federal appropriations received for the purposes of clinical training;~~

~~(5) other revenue received for the purposes of clinical training; and~~

~~(6)~~ other information the commissioner, with advice from the advisory committee, deems appropriate to evaluate the effectiveness of the use of funds for clinical training.

The commissioner, with advice from the advisory committee, will provide an annual summary report to the legislature on program implementation due February 15 of each year.

(f) The commissioner is authorized to distribute funds made available through:

(1) voluntary contributions by employers or other entities;

(2) allocations for the department of human services to support medical education and research; and

(3) other sources as identified and deemed appropriate by the legislature for inclusion in the trust fund.

(g) The advisory committee shall continue to study and make recommendations on:

(1) the funding of medical research consistent with work currently mandated by the legislature and under way at the department of health; and

(2) the costs and benefits associated with medical education and research.

Sec. 7. Minnesota Statutes 1997 Supplement, section 62J.69, is amended by adding a subdivision to read:

Subd. 4. [TRANSFERS FROM THE COMMISSIONER OF HUMAN SERVICES.] (a) The amount transferred according to section 256B.69, subdivision 5c, shall be distributed to qualifying applicants based on a distribution formula that reflects a summation of two factors:

(1) an education factor, which is determined by the total number of eligible trainees and the total statewide average costs per trainee, by type of trainee, in each program; and

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(2) a public program volume factor, which is determined by the total volume of public program revenue received by each training site as a percentage of all public program revenue received by all training sites in the trust fund pool.

In this formula, the education factor shall be weighted at 50 percent and the public program volume factor shall be weighted at 50 percent.

(b) Public program revenue for the formula in paragraph (a) shall include revenue from medical assistance, prepaid medical assistance, general assistance medical care, and prepaid general assistance medical care.

(c) Training sites that receive no public program revenue shall be ineligible for payments from the prepaid medical assistance program transfer pool.

Sec. 8. Minnesota Statutes 1997 Supplement, section 62J.69, is amended by adding a subdivision to read:

Subd. 5. [REVIEW OF ELIGIBLE PROVIDERS.] (a) Provider groups added after January 1, 1998, to the list of providers eligible for the trust fund shall not receive funding from the trust fund without prior evaluation by the commissioner and the medical education and research costs advisory committee. The evaluation shall consider the degree to which the training of the provider group:

(1) takes place in patient care settings, which are consistent with the purposes of this section;

(2) is funded with patient care revenues;

(3) takes place in patient care settings, which face increased financial pressure as a result of competition with nonteaching patient care entities; and

(4) emphasizes primary care or specialties, which are in undersupply in Minnesota.

Results of this evaluation shall be reported to the legislative commission on health care access. The legislative commission on health care access must approve funding for the provider group prior to their receiving any funding from the trust fund. In the event that a reviewed provider group is not approved by the legislative commission on health care access, trainees in that provider group shall be considered ineligible trainees for the trust fund distribution.

(b) The commissioner and the medical education and research costs advisory committee may also review provider groups, which were added to the eligible list of provider groups prior to January 1, 1998, to assure that the trust fund money continues to be distributed consistent with the purpose of this section. The results of any such reviews must be reported to the legislative commission on health care access. Trainees in provider groups, which were added prior to January 1, 1998, and which are reviewed by the commissioner and the medical education and research costs advisory committee, shall be considered eligible trainees for purposes of the trust fund distribution unless and until the legislative commission on health care access disapproves their eligibility, in which case they shall be considered ineligible trainees.

Sec. 9. [62J.701] [GOVERNMENTAL PROGRAMS.]

Beginning January 1, 1999, the provisions in paragraphs (a) to (d) apply.

(a) For purposes of sections 62J.695 to 62J.80, the requirements and other provisions that apply to health plan companies also apply to governmental programs.

(b) For purposes of this section, "governmental programs" means the medical assistance program, the MinnesotaCare program, the general assistance medical care program, the state employee group insurance program, the public employees insurance program under section 43A.316, and coverage provided by political subdivisions under section 471.617.

(c) Notwithstanding paragraph (a), section 62J.72 does not apply to the fee-for-service programs under medical assistance, MinnesotaCare, and general assistance medical care.

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(d) If a state commissioner or local unit of government contracts with a health plan company or a third party administrator, the contract may assign any obligations under paragraph (a) to the health plan company or third party administrator. Nothing in this paragraph shall be construed to remove or diminish any enforcement responsibilities of the commissioners of health or commerce provided in sections 62J.695 to 62J.80.

Sec. 10. Minnesota Statutes 1997 Supplement, section 62J.71, subdivision 1, is amended to read:

Subdivision 1. [PROHIBITED AGREEMENTS AND DIRECTIVES.] The following types of agreements and directives are contrary to state public policy, are prohibited under this section, and are null and void:

(1) any agreement or directive that prohibits a health care provider from communicating with an enrollee with respect to the enrollee's health status, health care, or treatment options, if the health care provider is acting in good faith and within the provider's scope of practice as defined by law;

(2) any agreement or directive that prohibits a health care provider from making a recommendation regarding the suitability or desirability of a health plan company, health insurer, or health coverage plan for an enrollee, unless the provider has a financial conflict of interest in the enrollee's choice of health plan company, health insurer, or health coverage plan;

(3) any agreement or directive that prohibits a provider from providing testimony, supporting or opposing legislation, or making any other contact with state or federal legislators or legislative staff or with state and federal executive branch officers or staff;

(4) any agreement or directive that prohibits a health care provider from disclosing accurate information about whether services or treatment will be paid for by a patient's health plan company or health insurer or health coverage plan; and

(5) any agreement or directive that prohibits a health care provider from informing an enrollee about the nature of the reimbursement methodology used by an enrollee's health plan company, health insurer, or health coverage plan to pay the provider.

Sec. 11. Minnesota Statutes 1997 Supplement, section 62J.71, subdivision 3, is amended to read:

Subd. 3. [RETALIATION PROHIBITED.] No person, health plan company, or other organization may take retaliatory action against a health care provider solely on the grounds that the provider:

(1) refused to enter into an agreement or provide services or information in a manner that is prohibited under this section or took any of the actions listed in subdivision 1;

(2) disclosed accurate information about whether a health care service or treatment is covered by an enrollee's health plan company, health insurer, or health coverage plan; or

(3) discussed diagnostic, treatment, or referral options that are not covered or are limited by the enrollee's health plan company, health insurer, or health coverage plan;

(4) criticized coverage of the enrollee's health plan company, health insurer, or health coverage plan; or

(5) expressed personal disagreement with a decision made by a person, organization, or health care provider regarding treatment or coverage provided to a patient of the provider, or assisted or advocated for the patient in seeking reconsideration of such a decision, provided the health care provider makes it clear that the provider is acting in a personal capacity and not as a representative of or on behalf of the entity that made the decision.

Sec. 12. Minnesota Statutes 1997 Supplement, section 62J.71, subdivision 4, is amended to read:

Subd. 4. [EXCLUSION.] (a) Nothing in this section prohibits ~~a health plan~~ an entity that is subject to this section from taking action against a provider if the ~~health plan~~ entity has evidence that the provider's actions are illegal, constitute medical malpractice, or are contrary to accepted medical practices.

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(b) Nothing in this section prohibits a contract provision or directive that requires any contracting party to keep confidential or to not use or disclose the specific amounts paid to a provider, provider fee schedules, provider salaries, and other proprietary information of a specific ~~health plan or health plan company~~ entity that is subject to this section.

Sec. 13. Minnesota Statutes 1997 Supplement, section 62J.72, subdivision 1, is amended to read:

Subdivision 1. [WRITTEN DISCLOSURE.] (a) A health plan company, as defined under section 62J.70, subdivision 3, a health care network cooperative as defined under section 62R.04, subdivision 3, and a health care provider as defined under section 62J.70, subdivision 2, shall, during open enrollment, upon enrollment, and annually thereafter, provide enrollees with a description of the general nature of the reimbursement methodologies used by the health plan company, health insurer, or health coverage plan to pay providers. The description must explain clearly any aspect of the reimbursement methodology that creates a financial incentive for the health care provider to limit or restrict the health care provided to enrollees. An entity required to disclose shall also disclose if no reimbursement methodology is used that creates a financial incentive for the health care provider to limit or restrict the health care provided to enrollees. This description may be incorporated into the member handbook, subscriber contract, certificate of coverage, or other written enrollee communication. The general reimbursement methodology shall be made available to employers at the time of open enrollment.

(b) Health plan companies, health care network cooperatives, and providers must, upon request, provide an enrollee with specific information regarding the reimbursement methodology, including, but not limited to, the following information:

(1) a concise written description of the provider payment plan, including any incentive plan applicable to the enrollee;

(2) a written description of any incentive to the provider relating to the provision of health care services to enrollees, including any compensation arrangement that is dependent on the amount of health coverage or health care services provided to the enrollee, or the number of referrals to or utilization of specialists; and

(3) a written description of any incentive plan that involves the transfer of financial risk to the health care provider.

(c) The disclosure statement describing the general nature of the reimbursement methodologies must comply with the Readability of Insurance Policies Act in chapter 72C~~. Notwithstanding any other law to the contrary, the disclosure statement may voluntarily be filed with the commissioner for approval~~ and must be filed with and approved by the commissioner prior to its use.

(d) A disclosure statement that has ~~voluntarily~~ been filed with the commissioner for approval under ~~chapter 72C or voluntarily filed with the commissioner for approval for purposes other than pursuant to chapter 72C~~ paragraph (c) is deemed approved 30 days after the date of filing, unless approved or disapproved by the commissioner on or before the end of that 30-day period.

(e) The disclosure statement describing the general nature of the reimbursement methodologies must be provided upon request in English, Spanish, Vietnamese, and Hmong. In addition, reasonable efforts must be made to provide information contained in the disclosure statement to other non-English-speaking enrollees.

(f) Health plan companies and providers may enter into agreements to determine how to respond to enrollee requests received by either the provider or the health plan company. This subdivision does not require disclosure of specific amounts paid to a provider, provider fee schedules, provider salaries, or other proprietary information of a specific health plan company or health insurer or health coverage plan or provider.

Sec. 14. Minnesota Statutes 1997 Supplement, section 62J.75, is amended to read:

62J.75 [CONSUMER ADVISORY BOARD.]

(a) The consumer advisory board consists of 18 members appointed in accordance with paragraph (b). All members must be public, consumer members who:

(1) do not have and never had a material interest in either the provision of health care services or in an activity directly related to the provision of health care services, such as health insurance sales or health plan administration;

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(2) are not registered lobbyists; and

(3) are not currently responsible for or directly involved in the purchasing of health insurance for a business or organization.

(b) The governor, the speaker of the house of representatives, and the subcommittee on committees of the committee on rules and administration of the senate shall each appoint ~~two~~ six members. The Indian affairs council, the council on affairs of Chicano/Latino people, the council on Black Minnesotans, the council on Asian-Pacific Minnesotans, mid-Minnesota legal assistance, and the Minnesota chamber of commerce shall each appoint one member. The member appointed by the Minnesota chamber of commerce must represent small business interests. The health care campaign of Minnesota, Minnesotans for affordable health care, and consortium for citizens with disabilities shall each appoint two members. Members serve without compensation or reimbursement for expenses. Members may be compensated in accordance with section 15.059, subdivision 3, except that members shall not receive per diem compensation or reimbursements for child care expenses.

(1) the needs of health care consumers and how to better serve and educate the consumers on health care concerns and recommend solutions to identified problems; and

(2) consumer protection issues in the self-insured market, including, but not limited to, public education needs.

The board also may make recommendations to the legislature on these issues.

(d) The board and this section expire June 30, 2001.

Sec. 15. [62J.77] [DEFINITIONS.]

Subdivision 1. [APPLICABILITY.] For purposes of sections 62J.77 to 62J.80, the terms defined in this section have the meanings given them.

Subd. 2. [ENROLLEE.] "Enrollee" means a natural person covered by a health plan company, health insurance, or health coverage plan and includes an insured, policyholder, subscriber, contract holder, member, covered person, or certificate holder.

Subd. 3. [PATIENT.] "Patient" means a former, current, or prospective patient of a health care provider.

Subd. 4. [COMMISSIONER.] "Commissioner" means the commissioner of health.

Sec. 16. [62J.78] [ESTABLISHMENT; ORGANIZATION.]

Subdivision 1. [GENERAL.] The commissioner shall establish within the department of health the office of health care consumer assistance, advocacy, and information to provide assistance, advocacy, and information to all health care consumers within the state. The office shall have no regulatory power or authority, shall be separated from all regulatory functions within the department of health, and shall not provide legal representation in a court of law.

Subd. 2. [EXECUTIVE DIRECTOR.] An executive director shall be appointed by the commissioner, in consultation with the consumer advisory board, and shall report directly to the commissioner. The executive director must be selected without regard to political affiliation and must be a person who has knowledge and experience concerning the needs and rights of health care consumers and must be qualified to analyze questions of law, administrative functions, and public policy. No person may serve as executive director while holding another public office. The director shall serve in the unclassified service.

Subd. 3. [STAFF.] The executive director shall appoint at least nine consumer advocates to discharge the responsibilities and duties of the office.

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Subd. 4. [TRAINING.] The executive director shall ensure that the consumer advocates are adequately trained.

Subd. 5. [STATEWIDE ADVOCACY.] The executive director shall assign a consumer advocate to represent each regional coordinating board's geographic area.

Subd. 6. [FINANCIAL INTEREST.] The executive director and staff must not have any direct personal financial interest in the health care system, except as an individual consumer of health care services.

Subd. 7. [ADMINISTRATION.] To the extent practical, the office of health care consumer assistance, advocacy, and information and all ombudsman offices with health care responsibilities shall have their telephone systems linked in order to facilitate immediate referrals.

Sec. 17. [62J.79] [DUTIES AND POWERS OF THE OFFICE OF HEALTH CARE CONSUMER ASSISTANCE, ADVOCACY, AND INFORMATION.]

Subdivision 1. [DUTIES.] (a) The office of health care consumer assistance, advocacy, and information shall provide information and assistance to all health care consumers by:

(1) assisting patients and enrollees in understanding and asserting their contractual and legal rights, including the rights under an alternative dispute resolution process. This assistance may include advocacy for enrollees in administrative proceedings or other formal or informal dispute resolution processes;

(2) assisting enrollees in obtaining health care referrals under their health plan company, health insurance, or health coverage plan;

(3) assisting patients and enrollees in accessing the services of governmental agencies, regulatory boards, and other state consumer assistance programs, ombudsman, or advocacy services whenever appropriate so that the patient or enrollee can take full advantage of existing mechanisms for resolving complaints;

(4) referring patients and enrollees to governmental agencies and regulatory boards for the investigation of health care complaints and for enforcement action;

(5) educating and training enrollees about their health plan company, health insurance, or health coverage plan in order to enable them to assert their rights and to understand their responsibilities;

(6) assisting enrollees in receiving a timely resolution of their complaints;

(7) monitoring health care complaints addressed by the office to identify specific complaint patterns or areas of potential improvement;

(8) recommending to health plan companies ways to identify and remove any barriers that might delay or impede the health plan company's effort to resolve consumer complaints; and

(9) in performing the duties specified in clauses (1) to (8), taking into consideration the special situations of patients and enrollees who have unique culturally defined needs.

(b) The executive director shall prioritize the duties listed in this subdivision within the appropriations allocated.

Subd. 2. [COMMUNICATION.] (a) The executive director shall meet at least six times per year with the consumer advisory board. The executive director shall share all public information obtained by the office of health care consumer assistance, advocacy, and information with the consumer advisory board in order to assist the consumer advisory board in its role of advising the commissioners of health and commerce and the legislature in accordance with section 62J.75.

(b) The executive director shall have the authority to make recommendations to the legislature on any issue related to the needs and interests of health care consumers.

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Subd. 3. [REPORTS.] Beginning July 1, 1999, the executive director, on at least a quarterly basis, shall provide data from the health care complaints addressed by the office to the commissioners of health and commerce, the consumer advisory board, the Minnesota council of health plans, and the Insurance Federation of Minnesota. Beginning January 15, 2000, the executive director must make an annual written report to the legislature regarding activities of the office, including recommendations on improving health care consumer assistance and complaint resolution processes.

Subd. 4. [DATA PRIVACY.] (a) Consumer complaint data, including medical records and other documentation, provided by a patient or enrollee to the office of health care consumer assistance, advocacy, and information shall be classified as private data on individuals under section 13.02, subdivision 12.

(b) Except as provided in paragraph (a), all data collected or maintained by the office in the course of assisting a patient or enrollee in resolving a complaint, including data collected or maintained for the purpose of assistance during a formal or informal dispute resolution process, shall be classified as investigative data under section 13.39 except that inactive investigative data shall be classified as private data on individuals under section 13.02, subdivision 12.

Sec. 18. [62J.80] [RETALIATION.]

A health plan company or health care provider shall not retaliate or take adverse action against an enrollee or patient who, in good faith, makes a complaint against a health plan company or health care provider. If retaliation is suspected, the executive director may report it to the appropriate regulatory authority.

Sec. 19. Minnesota Statutes 1996, section 62Q.095, subdivision 3, is amended to read:

Subd. 3. [MANDATORY OFFERING TO ENROLLEES.] (a) Each health plan company shall offer to enrollees the option of receiving covered services through the expanded network of allied independent health providers established under subdivisions 1 and 2. This expanded network option may be offered as a separate health plan. The network may establish separate premium rates and cost-sharing requirements for this expanded network plan, as long as these premium rates and cost-sharing requirements are actuarially justified and approved by the commissioner. This subdivision does not apply to Medicare, medical assistance, general assistance medical care, and MinnesotaCare. This subdivision is effective January 1, 1995, and applies to health plans issued or renewed, or offers of health plans to be issued or renewed, on or after January 1, 1995, except that this subdivision is effective January 1, 1996, for collective bargaining agreements of the department of employee relations and the University of Minnesota.

(b) Information on this expanded provider network option must be provided by each health plan company during open enrollment and upon enrollment.

Sec. 20. Minnesota Statutes 1997 Supplement, section 62Q.105, subdivision 1, is amended to read:

Subdivision 1. [ESTABLISHMENT.] Each health plan company shall establish and make available to enrollees, by July 1, ~~1998~~ 1999, an informal complaint resolution process that meets the requirements of this section. A health plan company must make reasonable efforts to resolve enrollee complaints, and must inform complainants in writing of the company's decision within 30 days of receiving the complaint. The complaint resolution process must treat the complaint and information related to it as required under sections 72A.49 to 72A.505.

Sec. 21. [62Q.107] [PROHIBITED PROVISION; EFFECT OF DENIAL OF CLAIM.]

Beginning January 1, 1999, no health plan, including the coverages described in section 62A.011, subdivision 3, clauses (7) and (10), may specify a standard of review upon which a court may review denial of a claim or of any other decision made by a health plan company with respect to an enrollee. This section prohibits limiting court review to a determination of whether the health plan company's decision is arbitrary and capricious, an abuse of discretion, or any other standard less favorable to the enrollee than a preponderance of the evidence.

Sec. 22. Minnesota Statutes 1997 Supplement, section 62Q.30, is amended to read:

62Q.30 [EXPEDITED FACT FINDING AND DISPUTE RESOLUTION PROCESS.]

The commissioner shall establish an expedited fact finding and dispute resolution process to assist enrollees of health plan companies with contested treatment, coverage, and service issues to be in effect July 1, ~~1998~~ 1999. If the disputed issue relates to whether a service is appropriate and necessary, the commissioner shall issue an order only after consulting

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with appropriate experts knowledgeable, trained, and practicing in the area in dispute, reviewing pertinent literature, and considering the availability of satisfactory alternatives. The commissioner shall take steps including but not limited to fining, suspending, or revoking the license of a health plan company that is the subject of repeated orders by the commissioner that suggests a pattern of inappropriate underutilization.

Sec. 23. Minnesota Statutes 1997 Supplement, section 103I.208, subdivision 2, is amended to read:

Subd. 2. [PERMIT FEE.] The permit fee to be paid by a property owner is:

(1) for a well that is not in use under a maintenance permit, $100 annually;

(2) for construction of a monitoring well, $120, which includes the state core function fee;

(3) for a monitoring well that is unsealed under a maintenance permit, $100 annually;

(4) for monitoring wells used as a leak detection device at a single motor fuel retail outlet or, a single petroleum bulk storage site excluding tank farms, or a single agricultural chemical facility site, the construction permit fee is $120, which includes the state core function fee, per site regardless of the number of wells constructed on the site, and the annual fee for a maintenance permit for unsealed monitoring wells is $100 per site regardless of the number of monitoring wells located on site;

(5) for a groundwater thermal exchange device, in addition to the notification fee for wells, $120, which includes the state core function fee;

(6) for a vertical heat exchanger, $120;

(7) for a dewatering well that is unsealed under a maintenance permit, $100 annually for each well, except a dewatering project comprising more than five wells shall be issued a single permit for $500 annually for wells recorded on the permit; and

(8) for excavating holes for the purpose of installing elevator shafts, $120 for each hole.

Sec. 24. Minnesota Statutes 1997 Supplement, section 123.70, subdivision 10, as amended by Laws 1998, chapter 305, section 4, is amended to read:

Subd. 10. A statement required to be submitted under subdivisions 1, 2, and 4 to document evidence of immunization shall include month, day, and year for immunizations administered after January 1, 1990.

(a) For persons enrolled in grades 7 and 12 during the 1996-1997 school term, the statement must indicate that the person has received a dose of tetanus and diphtheria toxoid no earlier than 11 years of age.

(b) Except as specified in paragraph (e), for persons enrolled in grades 7, 8, and 12 during the 1997-1998 school term, the statement must indicate that the person has received a dose of tetanus and diphtheria toxoid no earlier than 11 years of age.

(c) Except as specified in paragraph (e), for persons enrolled in grades 7 through 12 during the 1998-1999 school term and for each year thereafter, the statement must indicate that the person has received a dose of tetanus and diphtheria toxoid no earlier than 11 years of age.

(d) For persons enrolled in grades 7 through 12 during the 1996-1997 school year and for each year thereafter, the statement must indicate that the person has received at least two doses of vaccine against measles, mumps, and rubella, given alone or separately and given not less than one month apart.

(e) A person who has received at least three doses of tetanus and diphtheria toxoids, with the most recent dose given after age six and before age 11, is not required to have additional immunization against diphtheria and tetanus until ten years have elapsed from the person's most recent dose of tetanus and diphtheria toxoid.

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(f) The requirement for hepatitis B vaccination shall apply to persons enrolling in kindergarten beginning with the 2000-2001 school term.

(g) The requirement for hepatitis B vaccination shall apply to persons enrolling in ~~kindergarten through~~ grade 7 beginning with the ~~2007-2008~~ 2001-2002 school term.

Sec. 25. Minnesota Statutes 1997 Supplement, section 144.1494, subdivision 1, is amended to read:

Subdivision 1. [CREATION OF ACCOUNT.] A rural physician education account is established in the health care access fund. The commissioner shall use money from the account to establish a loan forgiveness program for medical residents agreeing to practice in designated rural areas, as defined by the commissioner. Appropriations made to this account do not cancel and are available until expended, except that at the end of each biennium the commissioner shall cancel to the health care access fund any remaining unobligated balance in this account.

Sec. 26. [144.6905] [OCCUPATIONAL RESPIRATORY DISEASE INFORMATION SYSTEM ADVISORY GROUP.]

Subdivision 1. [ADVISORY GROUP.] The commissioner of health shall convene an occupational respiratory disease advisory group and shall consult with the group on the development, implementation, and ongoing operation of an occupational respiratory disease information system. Membership in the group shall include representatives of academia, government, industry, labor, medicine, and consumers from areas of the state targeted by the information system. From members of the advisory group, the commissioner shall form a technical and medical committee to create information system protocols and a legal and policy committee to address data privacy issues. The advisory group is governed by section 15.059, except that members shall not receive per diem compensation.

Subd. 2. [DATA PROVISIONS.] No individually identifying data shall be collected or entered into the occupational respiratory disease information system without further action of the legislature.

Sec. 27. Minnesota Statutes 1996, section 144.701, subdivision 1, is amended to read:

Subdivision 1. [CONSUMER INFORMATION.] The commissioner of health shall ensure that the total costs, total revenues, overall utilization, and total services of each hospital and each outpatient surgical center are reported to the public in a form understandable to consumers.

Sec. 28. Minnesota Statutes 1996, section 144.701, subdivision 2, is amended to read:

Subd. 2. [DATA FOR POLICY MAKING.] The commissioner of health shall compile relevant financial and accounting, utilization, and services data concerning hospitals and outpatient surgical centers in order to have statistical information available for legislative policy making.

Sec. 29. Minnesota Statutes 1996, section 144.701, subdivision 4, is amended to read:

Subd. 4. [FILING FEES.] Each report which is required to be submitted to the commissioner of health under sections 144.695 to 144.703 and which is not submitted to a voluntary, nonprofit reporting organization in accordance with section 144.702 shall be accompanied by a filing fee in an amount prescribed by rule of the commissioner of health. ~~Fees received pursuant to this subdivision shall be deposited in the general fund of the state treasury.~~ Upon the withdrawal of approval of a reporting organization, or the decision of the commissioner to not renew a reporting organization, fees collected under section 144.702 shall be submitted to the commissioner ~~and deposited in the general fund~~. Fees received under this subdivision shall be deposited in a revolving fund and are appropriated to the commissioner of health for the purposes of sections 144.695 to 144.703. The commissioner shall report the termination or nonrenewal of the voluntary reporting organization to the chair of the health and human services subdivision of the appropriations committee of the house of representatives, to the chair of the health and human services division of the finance committee of the senate, and the commissioner of finance.

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Sec. 30. Minnesota Statutes 1996, section 144.702, subdivision 1, is amended to read:

Subdivision 1. [REPORTING THROUGH A REPORTING ORGANIZATION.] A hospital or outpatient surgical center may agree to submit its financial, utilization, and services reports to a voluntary, nonprofit reporting organization whose reporting procedures have been approved by the commissioner of health in accordance with this section. Each report submitted to the voluntary, nonprofit reporting organization under this section shall be accompanied by a filing fee.

Sec. 31. Minnesota Statutes 1996, section 144.702, subdivision 2, is amended to read:

Subd. 2. [APPROVAL OF ORGANIZATION'S REPORTING PROCEDURES.] The commissioner of health may approve voluntary reporting procedures consistent with written operating requirements for the voluntary, nonprofit reporting organization which shall be established annually by the commissioner. These written operating requirements shall specify reports, analyses, and other deliverables to be produced by the voluntary, nonprofit reporting organization, and the dates on which those deliverables must be submitted to the commissioner. These written operating requirements shall specify deliverable dates sufficient to enable the commissioner of health to process and report health care cost information system data to the commissioner of human services by August 15 of each year. The commissioner of health shall, by rule, prescribe standards for submission of data by hospitals and outpatient surgical centers to the voluntary, nonprofit reporting organization or to the commissioner. These standards shall provide for:

(a) the filing of appropriate financial, utilization, and services information with the reporting organization;

(b) adequate analysis and verification of that financial, utilization, and services information; and

(c) timely publication of the costs, revenues, and rates of individual hospitals and outpatient surgical centers prior to the effective date of any proposed rate increase. The commissioner of health shall annually review the procedures approved pursuant to this subdivision.

Sec. 32. Minnesota Statutes 1996, section 144.702, subdivision 8, is amended to read:

Subd. 8. [TERMINATION OR NONRENEWAL OF REPORTING ORGANIZATION.] The commissioner may withdraw approval of any voluntary, nonprofit reporting organization for failure on the part of the voluntary, nonprofit reporting organization to comply with the written operating requirements under subdivision 2. Upon the effective date of the withdrawal, all funds collected by the voluntary, nonprofit reporting organization under ~~section 144.701,~~ subdivision 4 1, but not expended shall be deposited in ~~the general fund~~ a revolving fund and are appropriated to the commissioner of health for the purposes of sections 144.695 to 144.703.

The commissioner may choose not to renew approval of a voluntary, nonprofit reporting organization if the organization has failed to perform its obligations satisfactorily under the written operating requirements under subdivision 2.

Sec. 33. [144.7022] [ADMINISTRATIVE PENALTY ORDERS FOR REPORTING ORGANIZATIONS.]

Subdivision 1. [AUTHORIZATION.] The commissioner may issue an order to the voluntary, nonprofit reporting organization requiring violations to be corrected and administratively assess monetary penalties for violations of sections 144.695 to 144.703 or rules, written operating requirements, orders, stipulation agreements, settlements, or compliance agreements adopted, enforced, or issued by the commissioner.

Subd. 2. [CONTENTS OF ORDER.] An order assessing an administrative penalty under this section must include:

(1) a concise statement of the facts alleged to constitute a violation;

(2) a reference to the section of law, rule, written operating requirement, order, stipulation agreement, settlement, or compliance agreement that has been violated;

(3) a statement of the amount of the administrative penalty to be imposed and the factors upon which the penalty is based;

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(4) a statement of the corrective actions necessary to correct the violation; and

(5) a statement of the right to request a hearing according to sections 14.57 to 14.62.

Subd. 3. [CONCURRENT CORRECTIVE ORDER.] The commissioner may issue an order assessing an administrative penalty and requiring the violations cited in the order be corrected within 30 calendar days from the date the order is received. Before the 31st day after the order was received, the voluntary, nonprofit reporting organization that is subject to the order shall provide the commissioner with information demonstrating that the violation has been corrected or that a corrective plan acceptable to the commissioner has been developed. The commissioner shall determine whether the violation has been corrected and notify the voluntary, nonprofit reporting organization of the commissioner's determination.

Subd. 4. [PENALTY.] If the commissioner determines that the violation has been corrected or an acceptable corrective plan has been developed, the penalty may be forgiven, except where there are repeated or serious violations, the commissioner may issue an order with a penalty that will not be forgiven after corrective action is taken. Unless there is a request for review of the order under subdivision 6 before the penalty is due, the penalty is due and payable:

(1) on the 31st calendar day after the order was received, if the voluntary, nonprofit reporting organization fails to provide information to the commissioner showing that the violation has been corrected or that appropriate steps have been taken toward correcting the violation;

(2) on the 20th day after the voluntary, nonprofit reporting organization receives the commissioner's determination that the information provided is not sufficient to show that either the violation has been corrected or that appropriate steps have been taken toward correcting the violation; or

(3) on the 31st day after the order was received where the penalty is for repeated or serious violations and according to the order issued, the penalty will not be forgiven after corrective action is taken.

All penalties due under this section are payable to the treasurer, state of Minnesota, and shall be deposited in the general fund.

Subd. 5. [AMOUNT OF PENALTY; CONSIDERATIONS.] (a) The maximum amount of an administrative penalty order is $5,000 for each specific violation identified in an inspection, investigation, or compliance review, up to an annual maximum total for all violations of ten percent of the fees collected by the voluntary, nonprofit reporting organization under section 144.702, subdivision 1. The annual maximum is based on a reporting year.

(b) In determining the amount of the administrative penalty, the commissioner shall consider the following:

(1) the willfulness of the violation;

(2) the gravity of the violation;

(3) the history of past violations;

(4) the number of violations;

(5) the economic benefit gained by the person allowing or committing the violation; and

(6) other factors as justice may require, if the commissioner specifically identifies the additional factors in the commissioner's order.

(c) In determining the amount of a penalty for a violation subsequent to an initial violation under paragraph (a), the commissioner shall also consider:

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(2) the time elapsed since the last violation; and

(3) the response of the voluntary, nonprofit reporting organization to the most recent previous violation.

Subd. 6. [REQUEST FOR HEARING; HEARING; AND FINAL ORDER.] A request for hearing must be in writing, delivered to the commissioner by certified mail within 20 calendar days after the receipt of the order, and specifically state the reasons for seeking review of the order. The commissioner must initiate a hearing within 30 calendar days from the date of receipt of the written request for hearing. The hearing shall be conducted pursuant to the contested case procedures in sections 14.57 to 14.62. No earlier than ten calendar days after and within 30 calendar days of receipt of the presiding administrative law judge's report, the commissioner shall, based on all relevant facts, issue a final order modifying, vacating, or making the original order permanent. If, within 20 calendar days of receipt of the original order, the voluntary, nonprofit reporting organization fails to request a hearing in writing, the order becomes the final order of the commissioner.

Subd. 7. [REVIEW OF FINAL ORDER AND PAYMENT OF PENALTY.] Once the commissioner issues a final order, any penalty due under that order shall be paid within 30 calendar days after the date of the final order, unless review of the final order is requested. The final order of the commissioner may be appealed in the manner prescribed in sections 14.63 to 14.69. If the final order is reviewed and upheld, the penalty shall be paid 30 calendar days after the date of the decision of the reviewing court. Failure to request an administrative hearing pursuant to subdivision 6 shall constitute a waiver of the right to further agency or judicial review of the final order.

Subd. 8. [REINSPECTIONS AND EFFECT OF NONCOMPLIANCE.] If, upon reinspection, or in the determination of the commissioner, it is found that any deficiency specified in the order has not been corrected or an acceptable corrective plan has not been developed, the voluntary, nonprofit reporting organization is in noncompliance. The commissioner shall issue a notice of noncompliance and may impose any additional remedy available under this chapter.

Subd. 9. [ENFORCEMENT.] The attorney general may proceed on behalf of the commissioner to enforce penalties that are due and payable under this section in any manner provided by law for the collection of debts.

Subd. 10. [TERMINATION OR NONRENEWAL OF REPORTING ORGANIZATION.] The commissioner may withdraw or not renew approval of any voluntary, nonprofit reporting organization for failure on the part of the voluntary, nonprofit reporting organization to pay penalties owed under this section.

Subd. 11. [CUMULATIVE REMEDY.] The authority of the commissioner to issue an administrative penalty order is in addition to other lawfully available remedies.

Subd. 12. [MEDIATION.] In addition to review under subdivision 6, the commissioner is authorized to enter into mediation concerning an order issued under this section if the commissioner and the voluntary, nonprofit reporting organization agree to mediation.

Sec. 34. Minnesota Statutes 1996, section 144.9501, subdivision 1, is amended to read:

Subdivision 1. [CITATION.] Sections 144.9501 to 144.9509 may be cited as the "~~childhood~~ Lead Poisoning Prevention Act."

Sec. 35. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 4a. [ASSESSING AGENCY.] "Assessing agency" means the commissioner or a board of health with authority and responsibility to conduct lead risk assessments in response to reports of children or pregnant women with elevated blood lead levels.

Sec. 36. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 6b. [CLEARANCE INSPECTION.] "Clearance inspection" means a visual identification of deteriorated paint and bare soil and a resampling and analysis of interior dust lead concentrations in a residence to ensure that the lead standards established in rules adopted under section 144.9508 are not exceeded.

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Sec. 37. Minnesota Statutes 1996, section 144.9501, subdivision 17, is amended to read:

Subd. 17. [LEAD HAZARD REDUCTION.] "Lead hazard reduction" means action undertaken ~~in response to a lead order~~ to make a residence, child care facility, school, or playground lead-safe by complying with the lead standards and methods adopted under section 144.9508, by:

(1) a property owner or ~~lead contractor complying~~ persons hired by the property owner to comply with a lead order issued under section 144.9504; or

(2) a swab team service provided in response to a lead order issued under section 144.9504; or

(3) a renter residing at a rental property or one or more volunteers to comply with a lead order issued under section 144.9504.

Sec. 38. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 17a. [LEAD HAZARD SCREEN.] "Lead hazard screen" means visual identification of the existence and location of any deteriorated paint, collection and analysis of dust samples, and visual identification of the existence and location of bare soil.

Sec. 39. Minnesota Statutes 1996, section 144.9501, subdivision 18, is amended to read:

Subd. 18. [LEAD INSPECTION.] "Lead inspection" means a ~~qualitative or~~ quantitative analytical inspection of a residence for deteriorated paint or bare soil and the collection of samples of deteriorated paint, bare soil, dust, or drinking water for analysis to determine if the lead concentrations in the samples exceed standards adopted under section 144.9508. Lead inspection includes the clearance inspection after the completion of a lead order measurement of the lead content of paint and a visual identification of the existence and location of bare soil.

Sec. 40. Minnesota Statutes 1996, section 144.9501, subdivision 20, is amended to read:

Subd. 20. [LEAD ORDER.] "Lead order" means a legal instrument to compel a property owner to engage in lead hazard reduction according to the specifications given by the ~~inspecting~~ assessing agency.

Sec. 41. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 20a. [LEAD PROJECT DESIGNER.] "Lead project designer" means an individual who is responsible for planning the site-specific performance of lead abatement or lead hazard reduction and who has been licensed by the commissioner under section 144.9505.

Sec. 42. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 20b. [LEAD RISK ASSESSMENT.] "Lead risk assessment" means a quantitative measurement of the lead content of paint, interior dust, and bare soil to determine compliance with the standards established under section 144.9508.

Sec. 43. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 20c. [LEAD RISK ASSESSOR.] "Lead risk assessor" means an individual who performs lead risk assessments or lead inspections and who has been licensed by the commissioner under section 144.9506.

Sec. 44. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 22a. [LEAD SUPERVISOR.] "Lead supervisor" means an individual who is responsible for the on-site performance of lead abatement or lead hazard reduction and who has been licensed by the commissioner under section 144.9505.

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Sec. 45. Minnesota Statutes 1996, section 144.9501, subdivision 23, is amended to read:

Subd. 23. [LEAD WORKER.] "Lead worker" means ~~any person who is certified~~ an individual who performs lead abatement or lead hazard reduction and who has been licensed by the commissioner under section 144.9505.

Sec. 46. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 25a. [PLAY AREA.] "Play area" means any established area where children play, or on residential property, any established area where children play or bare soil is accessible to children.

Sec. 47. Minnesota Statutes 1996, section 144.9501, is amended by adding a subdivision to read:

Subd. 28a. [STANDARD.] "Standard" means a quantitative assessment of lead in any environmental media or consumer product, or a work practice or method that reduces the likelihood of lead exposure.

Sec. 48. Minnesota Statutes 1996, section 144.9501, subdivision 30, is amended to read:

Subd. 30. [SWAB TEAM WORKER.] "Swab team worker" means ~~a person who is certified~~ an individual who performs swab team services and who has been licensed by the commissioner as a lead worker under section 144.9505.

Sec. 49. Minnesota Statutes 1996, section 144.9501, subdivision 32, is amended to read:

Subd. 32. [VOLUNTARY LEAD HAZARD REDUCTION.] "Voluntary lead hazard reduction" means ~~action undertaken by a property owner with the intention to engage in lead hazard reduction or abatement~~ lead hazard reduction activities defined in subdivision 17, but not undertaken in response to the issuance of a lead order.

Sec. 50. Minnesota Statutes 1996, section 144.9502, subdivision 3, is amended to read:

Subd. 3. [REPORTS OF BLOOD LEAD ANALYSIS REQUIRED.] (a) Every hospital, medical clinic, medical laboratory, or other facility, or individual performing blood lead analysis shall report the results after the analysis of each specimen analyzed, for both capillary and venous specimens, and epidemiologic information required in this section to the commissioner of health, within the time frames set forth in clauses (1) and (2):

(1) within two working days by telephone, fax, or electronic transmission, with written or electronic confirmation within one month, for a venous blood lead level equal to or greater than 15 micrograms of lead per deciliter of whole blood; or

(2) within one month in writing or by electronic transmission, for a any capillary result or for a venous blood lead level less than 15 micrograms of lead per deciliter of whole blood.

(b) If a blood lead analysis is performed outside of Minnesota and the facility performing the analysis does not report the blood lead analysis results and epidemiological information required in this section to the commissioner, the provider who collected the blood specimen must satisfy the reporting requirements of this section. For purposes of this section, "provider" has the meaning given in section 62D.02, subdivision 9.

(c) The commissioner shall coordinate with hospitals, medical clinics, medical laboratories, and other facilities performing blood lead analysis to develop a universal reporting form and mechanism.

The reporting requirements of this subdivision shall expire on December 31, 1997. Beginning January 1, 1998, every hospital, medical clinic, medical laboratory, or other facility performing blood lead analysis shall report the results within two working days by telephone, fax, or electronic transmission, with written or electronic confirmation within one month, for capillary or venous blood lead level equal to the level for which reporting is recommended by the Center for Disease Control.

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Sec. 51. Minnesota Statutes 1996, section 144.9502, subdivision 4, is amended to read:

Subd. 4. [BLOOD LEAD ANALYSES AND EPIDEMIOLOGIC INFORMATION.] The blood lead analysis reports required in this section must specify:

(1) whether the specimen was collected as a capillary or venous sample;

(2) the date the sample was collected;

(3) the results of the blood lead analysis;

(4) the date the sample was analyzed;

(5) the method of analysis used;

(6) the full name, address, and phone number of the laboratory performing the analysis;

(7) the full name, address, and phone number of the physician or facility requesting the analysis;

(8) the full name, address, and phone number of the person with the ~~elevated~~ blood lead level, and the person's birthdate, gender, and race.

Sec. 52. Minnesota Statutes 1996, section 144.9502, subdivision 9, is amended to read:

Subd. 9. [CLASSIFICATION OF DATA.] Notwithstanding any law to the contrary, including section 13.05, subdivision 9, data collected by the commissioner of health about persons with ~~elevated~~ blood lead levels, including analytic results from samples of paint, soil, dust, and drinking water taken from the individual's home and immediate property, shall be private and may only be used by the commissioner of health, the commissioner of labor and industry, authorized agents of Indian tribes, and authorized employees of local boards of health for the purposes set forth in this section.

Sec. 53. Minnesota Statutes 1996, section 144.9503, subdivision 4, is amended to read:

Subd. 4. [SWAB TEAM SERVICES.] Primary prevention must include the use of swab team services in census tracts identified at high risk for toxic lead exposure as identified by the commissioner under this section. The swab team services may be provided based on ~~visual inspections~~ lead hazard screens whenever possible and must at least include lead hazard ~~management~~ reduction for deteriorated interior lead-based paint, bare soil, and dust.

Sec. 54. Minnesota Statutes 1996, section 144.9503, subdivision 6, is amended to read:

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Sec. 55. Minnesota Statutes 1996, section 144.9503, subdivision 7, is amended to read:

Subd. 7. [LEAD-SAFE INFORMATIONAL DIRECTIVES.] (a) By July 1, 1995, and amended and updated as necessary, the commissioner shall develop in cooperation with the commissioner of administration provisions and procedures to define lead-safe informational directives for residential remodeling, renovation, installation, and rehabilitation activities that are not lead hazard reduction, but may disrupt lead-based paint surfaces.

(b) The provisions and procedures shall define lead-safe directives for nonlead hazard reduction activities including preparation, cleanup, and disposal procedures. The directives shall be based on the different levels and types of work involved and the potential for lead hazards. The directives shall address activities including painting; remodeling; weatherization; installation of cable, wire, plumbing, and gas; and replacement of doors and windows. The commissioners of health and administration shall consult with representatives of builders, weatherization providers, nonprofit rehabilitation organizations, each of the affected trades, and housing and redevelopment authorities in developing the directives and procedures. This group shall also make recommendations for consumer and contractor education and training. The commissioner of health shall report to the legislature by February 15, 1996, regarding development of the provisions required under this ~~subdivision~~ paragraph.

(c) By January 1, 1999, the commissioner, in cooperation with interested and informed persons and using the meeting structure and format developed in paragraph (b), shall develop lead-safe informational directives on the following topics:

(1) maintaining floors, walls, and ceilings;

(2) maintaining and repairing porches;

(3) conducting a risk evaluation for lead; and

(4) prohibited practices when working with lead.

The commissioner shall report to the legislature by January 1, 1999, regarding development of the provisions required under this paragraph.

Sec. 56. Minnesota Statutes 1996, section 144.9504, subdivision 1, is amended to read:

Subdivision 1. [JURISDICTION.] (a) A board of health serving cities of the first class must conduct lead ~~inspections~~ risk assessments for purposes of secondary prevention, according to the provisions of this section. A board of health not serving cities of the first class must conduct lead ~~inspections~~ risk assessments for the purposes of secondary prevention, unless they ~~certify~~ certified in writing to the commissioner by January 1, 1996, that they ~~desire~~ desired to relinquish these duties back to the commissioner. At the discretion of the commissioner, a board of health may relinquish the authority and duty to perform lead risk assessments for secondary prevention by so certifying in writing to the commissioner by December 31, 1999. At the discretion of the commissioner, a board of health may, upon written request to the commissioner, resume these duties.

(b) ~~Inspections~~ Lead risk assessments must be conducted by a board of health serving a city of the first class. The commissioner must conduct lead ~~inspections~~ risk assessments in any area not including cities of the first class where a board of health has relinquished to the commissioner the responsibility for lead ~~inspections~~ risk assessments. The commissioner shall coordinate with the board of health to ensure that the requirements of this section are met.

(c) The commissioner may assist boards of health by providing technical expertise, equipment, and personnel to boards of health. The commissioner may provide laboratory or field lead-testing equipment to a board of health or may reimburse a board of health for direct costs associated with lead ~~inspections~~ risk assessments.

(d) The commissioner shall enforce the rules under section 144.9508 in cases of voluntary lead hazard reduction.

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Sec. 57. Minnesota Statutes 1997 Supplement, section 144.9504, subdivision 2, is amended to read:

Subd. 2. [LEAD ~~INSPECTION~~ RISK ASSESSMENT.] (a) An ~~inspecting~~ assessing agency shall conduct a lead ~~inspection~~ risk assessment of a residence according to the venous blood lead level and time frame set forth in clauses (1) to (5) for purposes of secondary prevention:

(1) within 48 hours of a child or pregnant female in the residence being identified to the agency as having a venous blood lead level equal to or greater than 70 micrograms of lead per deciliter of whole blood;

(2) within five working days of a child or pregnant female in the residence being identified to the agency as having a venous blood lead level equal to or greater than 45 micrograms of lead per deciliter of whole blood;

(3) within ten working days of a child in the residence being identified to the agency as having a venous blood lead level equal to or greater than 20 micrograms of lead per deciliter of whole blood;

(4) within ten working days of a child in the residence being identified to the agency as having a venous blood lead level that persists in the range of 15 to 19 micrograms of lead per deciliter of whole blood for 90 days after initial identification; or

(5) within ten working days of a pregnant female in the residence being identified to the agency as having a venous blood lead level equal to or greater than ten micrograms of lead per deciliter of whole blood.

(b) Within the limits of available state and federal appropriations, an ~~inspecting~~ assessing agency may also conduct a lead ~~inspection~~ risk assessment for children with any elevated blood lead level.

(c) In a building with two or more dwelling units, an ~~inspecting~~ assessing agency shall inspect the individual unit in which the conditions of this section are met and shall also inspect all common areas. If a child visits one or more other sites such as another residence, or a residential or commercial child care facility, playground, or school, the ~~inspecting~~ assessing agency shall also inspect the other sites. The ~~inspecting~~ assessing agency shall have one additional day added to the time frame set forth in this subdivision to complete the lead ~~inspection~~ risk assessment for each additional site.

(d) Within the limits of appropriations, the ~~inspecting~~ assessing agency shall identify the known addresses for the previous 12 months of the child or pregnant female with venous blood lead levels of at least 20 micrograms per deciliter for the child or at least ten micrograms per deciliter for the pregnant female; notify the property owners, landlords, and tenants at those addresses that an elevated blood lead level was found in a person who resided at the property; and give them a copy of the lead ~~inspection~~ risk assessment guide. The ~~inspecting~~ assessing agency shall provide the notice required by this subdivision without identifying the child or pregnant female with the elevated blood lead level. The ~~inspecting~~ assessing agency is not required to obtain the consent of the child's parent or guardian or the consent of the pregnant female for purposes of this subdivision. This information shall be classified as private data on individuals as defined under section 13.02, subdivision 12.

(e) The ~~inspecting~~ assessing agency shall conduct the lead ~~inspection~~ risk assessment according to rules adopted by the commissioner under section 144.9508. An ~~inspecting~~ assessing agency shall have lead ~~inspections~~ risk assessments performed by lead ~~inspectors~~ risk assessors licensed by the commissioner according to rules adopted under section 144.9508. If a property owner refuses to allow ~~an inspection~~ a lead risk assessment, the ~~inspecting~~ assessing agency shall begin legal proceedings to gain entry to the property and the time frame for conducting a lead ~~inspection~~ risk assessment set forth in this subdivision no longer applies. ~~An inspector~~ A lead risk assessor or ~~inspecting~~ assessing agency may observe the performance of lead hazard reduction in progress and shall enforce the provisions of this section under section 144.9509. Deteriorated painted surfaces, bare soil, and dust~~, and drinking water~~ must be tested with appropriate analytical equipment to determine the lead content, except that deteriorated painted surfaces or bare soil need not be tested if the property owner agrees to engage in lead hazard reduction on those surfaces. The lead content of drinking water must be measured if a probable source of lead exposure is not identified by measurement of lead in paint, bare soil, or dust. Within a standard metropolitan statistical area, an assessing agency may order lead hazard reduction of bare soil without measuring the lead content of the bare soil if the property is in a census tract in which soil sampling has been performed according to rules established by the commissioner and at least 25 percent of the soil samples contain lead concentrations above the standard in section 144.9508.

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(f) A lead ~~inspector~~ risk assessor shall notify the commissioner and the board of health of all violations of lead standards under section 144.9508, that are identified in a lead ~~inspection~~ risk assessment conducted under this section.

(g) Each ~~inspecting~~ assessing agency shall establish an administrative appeal procedure which allows a property owner to contest the nature and conditions of any lead order issued by the ~~inspecting~~ assessing agency. ~~Inspecting~~ Assessing agencies must consider appeals that propose lower cost methods that make the residence lead safe.

(h) Sections 144.9501 to 144.9509 neither authorize nor prohibit an ~~inspecting~~ assessing agency from charging a property owner for the cost of a lead ~~inspection~~ risk assessment.

Sec. 58. Minnesota Statutes 1996, section 144.9504, subdivision 3, is amended to read:

Subd. 3. [LEAD EDUCATION STRATEGY.] At the time of a lead ~~inspection~~ risk assessment or following a lead order, the ~~inspecting~~ assessing agency shall ensure that a family will receive a visit at their residence by a swab team worker or public health professional, such as a nurse, sanitarian, public health educator, or other public health professional. The swab team worker or public health professional shall inform the property owner, landlord, and the tenant of the health-related aspects of lead exposure; nutrition; safety measures to minimize exposure; methods to be followed before, during, and after the lead hazard reduction process; and community, legal, and housing resources. If a family moves to a temporary residence during the lead hazard reduction process, lead education services should be provided at the temporary residence whenever feasible.

Sec. 59. Minnesota Statutes 1996, section 144.9504, subdivision 4, is amended to read:

Subd. 4. [LEAD ~~INSPECTION~~ RISK ASSESSMENT GUIDES.] (a) The commissioner of health shall develop or purchase lead ~~inspection~~ risk assessment guides that enable parents and other caregivers to assess the possible lead sources present and that suggest lead hazard reduction actions. The guide must provide information on lead hazard reduction and disposal methods, sources of equipment, and telephone numbers for additional information to enable the persons to either select ~~a lead contractor~~ persons licensed by the commissioner under section 144.9505 or 144.9506 to perform lead hazard reduction or perform the lead hazard reduction themselves. The guides must explain:

(1) the requirements of this section and rules adopted under section 144.9508;

(2) information on the administrative appeal procedures required under this section;

(3) summary information on lead-safe directives;

(4) be understandable at an eighth grade reading level; and

(5) be translated for use by non-English-speaking persons.

(b) An ~~inspecting~~ assessing agency shall provide the lead ~~inspection~~ risk assessment guides at no cost to:

(1) parents and other caregivers of children who are identified as having blood lead levels of at least ten micrograms of lead per deciliter of whole blood;

(2) all property owners who are issued housing code or lead orders requiring lead hazard reduction of lead sources and all occupants of those properties; and

(3) occupants of residences adjacent to the inspected property.

(c) An ~~inspecting~~ assessing agency shall provide the lead ~~inspection~~ risk assessment guides on request to owners or occupants of residential property, builders, contractors, inspectors, and the public within the jurisdiction of the ~~inspecting~~ assessing agency.

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Sec. 60. Minnesota Statutes 1996, section 144.9504, subdivision 5, is amended to read:

Subd. 5. [LEAD ORDERS.] An ~~inspecting~~ assessing agency, after conducting a lead ~~inspection~~ risk assessment, shall order a property owner to perform lead hazard reduction on all lead sources that exceed a standard adopted according to section 144.9508. If lead ~~inspections~~ risk assessments and lead orders are conducted at times when weather or soil conditions do not permit the lead ~~inspection~~ risk assessment or lead hazard reduction, external surfaces and soil lead shall be inspected, and lead orders complied with, if necessary, at the first opportunity that weather and soil conditions allow. If the paint standard under section 144.9508 is violated, but the paint is intact, the ~~inspecting~~ assessing agency shall not order the paint to be removed unless the intact paint is a known source of actual lead exposure to a specific person. Before the ~~inspecting~~ assessing agency may order the intact paint to be removed, a reasonable effort must be made to protect the child and preserve the intact paint by the use of guards or other protective devices and methods. Whenever windows and doors or other components covered with deteriorated lead-based paint have sound substrate or are not rotting, those components should be repaired, sent out for stripping or be planed down to remove deteriorated lead-based paint or covered with protective guards instead of being replaced, provided that such an activity is the least cost method. However, a property owner who has been ordered to perform lead hazard reduction may choose any method to address deteriorated lead-based paint on windows, doors, or other components, provided that the method is approved in rules adopted under section 144.9508 and that it is appropriate to the specific property. Lead orders must require that any source of damage, such as leaking roofs, plumbing, and windows, be repaired or replaced, as needed, to prevent damage to lead-containing interior surfaces. The ~~inspecting~~ assessing agency is not required to pay for lead hazard reduction. Lead orders must be issued within 30 days of receiving the blood lead level analysis. The ~~inspecting~~ assessing agency shall enforce the lead orders issued to a property owner under this section. A copy of the lead order must be forwarded to the commissioner.

Sec. 61. Minnesota Statutes 1996, section 144.9504, subdivision 6, is amended to read:

Subd. 6. [SWAB TEAM SERVICES.] After a lead ~~inspection~~ risk assessment or after issuing lead orders, the ~~inspecting~~ assessing agency, within the limits of appropriations and availability, shall offer the property owner the services of a swab team free of charge and, if accepted, shall send a swab team within ten working days to the residence to perform swab team services as defined in section 144.9501. If the ~~inspecting~~ assessing agency provides swab team services after a lead ~~inspection~~ risk assessment, but before the issuance of a lead order, swab team services do not need to be repeated after the issuance of the lead order if the swab team services fulfilled the lead order. Swab team services are not considered completed until the clearance inspection required under this section shows that the property is lead safe.

Sec. 62. Minnesota Statutes 1996, section 144.9504, subdivision 7, is amended to read:

Subd. 7. [RELOCATION OF RESIDENTS.] (a) Within the limits of appropriations, the ~~inspecting~~ assessing agency shall ensure that residents are relocated from rooms or dwellings during a lead hazard reduction process that generates leaded dust, such as removal or disruption of lead-based paint or plaster that contains lead. Residents shall not remain in rooms or dwellings where the lead hazard reduction process is occurring. An ~~inspecting~~ assessing agency is not required to pay for relocation unless state or federal funding is available for this purpose. The ~~inspecting~~ assessing agency shall make an effort to assist the resident in locating resources that will provide assistance with relocation costs. Residents shall be allowed to return to the residence or dwelling after completion of the lead hazard reduction process. An ~~inspecting~~ assessing agency shall use grant funds under section 144.9507 if available, in cooperation with local housing agencies, to pay for moving costs and rent for a temporary residence for any low-income resident temporarily relocated during lead hazard reduction. For purposes of this section, "low-income resident" means any resident whose gross household income is at or below 185 percent of federal poverty level.

(b) A resident of rental property who is notified by an ~~inspecting~~ assessing agency to vacate the premises during lead hazard reduction, notwithstanding any rental agreement or lease provisions:

(1) shall not be required to pay rent due the landlord for the period of time the tenant vacates the premises due to lead hazard reduction;

(2) may elect to immediately terminate the tenancy effective on the date the tenant vacates the premises due to lead hazard reduction; and

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(3) shall not, if the tenancy is terminated, be liable for any further rent or other charges due under the terms of the tenancy.

(1) allow a tenant to return to the dwelling unit after lead hazard reduction and clearance inspection, required under this section, is completed, unless the tenant has elected to terminate the tenancy as provided for in paragraph (b); and

(2) return any security deposit due under section 504.20 within five days of the date the tenant vacates the unit, to any tenant who terminates tenancy as provided for in paragraph (b).

Sec. 63. Minnesota Statutes 1996, section 144.9504, subdivision 8, is amended to read:

Subd. 8. [PROPERTY OWNER RESPONSIBILITY.] Property owners shall comply with lead orders issued under this section within 60 days or be subject to enforcement actions as provided under section 144.9509. For orders or portions of orders concerning external lead hazards, property owners shall comply within 60 days, or as soon thereafter as weather permits. If the property owner does not ~~use a lead contractor~~ hire a person licensed by the commissioner under section 144.9505 for compliance with the lead orders, the property owner shall submit a work plan to the ~~inspecting~~ assessing agency within 30 days after receiving the orders. The work plan must include the details required in section 144.9505 as to how the property owner intends to comply with the lead orders and notice as to when lead hazard reduction activities will begin. Within the limits of appropriations, the commissioner shall review plans and shall approve or disapprove them as to compliance with the requirements in section 144.9505, subdivision 5. Renters and volunteers performing lead abatement or lead hazard reduction must be trained and licensed as lead supervisors or lead workers under section 144.9505.

Sec. 64. Minnesota Statutes 1996, section 144.9504, subdivision 9, is amended to read:

Subd. 9. [CLEARANCE INSPECTION.] After completion of swab team services and compliance with the lead orders by the property owner, including any repairs ordered by a local housing or building inspector, the ~~inspecting~~ assessing agency shall conduct a clearance inspection by ~~visually inspecting the residence for~~ visual identification of deteriorated paint and bare soil and retest the dust lead concentration in the residence to assure that violations of the lead standards under section 144.9508 no longer exist. The ~~inspecting~~ assessing agency is not required to test a dwelling unit after lead hazard reduction that was not ordered by the ~~inspecting~~ assessing agency.

Sec. 65. Minnesota Statutes 1996, section 144.9504, subdivision 10, is amended to read:

Subd. 10. [CASE CLOSURE.] A lead ~~inspection~~ risk assessment is completed and the responsibility of the ~~inspecting~~ assessing agency ends when all of the following conditions are met:

(1) lead orders are written on all known sources of violations of lead standards under section 144.9508;

(2) compliance with all lead orders has been completed; and

(3) clearance inspections demonstrate that no deteriorated lead paint, bare soil, or lead dust levels exist that exceed the standards adopted under section 144.9508.

Sec. 66. Minnesota Statutes 1996, section 144.9505, subdivision 1, is amended to read:

Subdivision 1. [LICENSING AND CERTIFICATION.] (a) ~~Lead contractors~~ A person shall, before performing abatement or lead hazard reduction or providing planning services for lead abatement or lead hazard reduction, obtain a license from the commissioner as a lead supervisor, lead worker, or lead project designer. ~~Workers for lead contractors shall obtain certification from the commissioner.~~ The commissioner shall specify training and testing requirements for licensure and certification as required in section 144.9508 and shall charge a fee for the cost of issuing a license or certificate and for training provided by the commissioner. ~~Fees collected under this section shall be set in amounts to be determined by the commissioner to cover but not exceed the costs of adopting rules under section 144.9508, the costs of~~

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~~licensure, certification, and training, and the costs of enforcing licenses and certificates under this section.~~ License fees shall be nonrefundable and must be submitted with each application in the amount of $50 for each lead supervisor, lead worker, or lead inspector and $100 for each lead project designer, lead risk assessor, or certified firm. All fees received shall be paid into the state treasury and credited to the lead abatement licensing and certification account and are appropriated to the commissioner to cover costs incurred under this section and section 144.9508.

(b) ~~Contractors~~ Persons shall not advertise or otherwise present themselves as lead ~~contractors~~ supervisors, lead workers, or lead project designers unless they have ~~lead contractor~~ licenses issued by the ~~department of health~~ commissioner under section 144.9505.

Sec. 67. Minnesota Statutes 1996, section 144.9505, subdivision 4, is amended to read:

Subd. 4. [NOTICE OF LEAD ABATEMENT OR LEAD HAZARD REDUCTION WORK.] (a) At least five working days before starting work at each lead abatement or lead hazard reduction worksite, the person performing the lead abatement or lead hazard reduction work shall give written notice and an approved work plan as required in this section to the commissioner and the appropriate board of health. Within the limits of appropriations, the commissioner shall review plans and shall approve or disapprove them as to compliance with the requirements in subdivision 5.

(b) This provision does not apply to swab team workers performing work under an order of an ~~inspecting~~ assessing agency.

Sec. 68. Minnesota Statutes 1996, section 144.9505, subdivision 5, is amended to read:

Subd. 5. [ABATEMENT OR LEAD HAZARD REDUCTION WORK PLANS.] (a) A ~~lead contractor~~ person who performs lead abatement or lead hazard reduction shall present a lead abatement or lead hazard reduction work plan to the property owner with each bid or estimate for lead abatement or lead hazard reduction work. The work plan does not replace or supersede more stringent contractual agreements. A written lead abatement or lead hazard reduction work plan must be prepared which describes the equipment and procedures to be used throughout the lead abatement or lead hazard reduction work project. At a minimum, the work plan must describe:

(1) the building area and building components to be worked on;

(2) the amount of lead-containing material to be removed, encapsulated, or enclosed;

(3) the schedule to be followed for each work stage;

(4) the workers' personal protection equipment and clothing;

(5) the dust suppression and debris containment methods;

(6) the lead abatement or lead hazard reduction methods to be used on each building component;

(7) cleaning methods;

(8) temporary, on-site waste storage, if any; and

(9) the methods for transporting waste material and its destination.

(b) ~~A lead contractor~~ The work plan shall itemize the costs for each item listed in paragraph (a) and for any other expenses associated with the lead abatement or lead hazard reduction work and shall ~~present these costs~~ be presented to the property owner with any bid or estimate for lead abatement or lead hazard reduction work.

(c) ~~A lead contractor~~ The person performing the lead abatement or lead hazard reduction shall keep a copy of the work plan readily available at the worksite for the duration of the project and present it to the ~~inspecting~~ assessing agency on demand.

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(d) ~~A lead contractor~~ The person performing the lead abatement or lead hazard reduction shall keep a copy of the work plan on record for one year after completion of the project and shall present it to the ~~inspecting~~ assessing agency on demand.

(e) This provision does not apply to swab team workers performing work under an order of an ~~inspecting~~ assessing agency or providing services at no cost to a property owner with funding under a state or federal grant.

Sec. 69. Minnesota Statutes 1997 Supplement, section 144.9506, subdivision 1, is amended to read:

Subdivision 1. [LICENSE REQUIRED.] (a) A ~~lead inspector~~ person shall obtain a license as a lead inspector or a lead risk assessor before performing lead inspections, lead hazard screens, or lead risk assessments and shall renew it ~~annually~~ as required in rules adopted under section 144.9508. The commissioner shall charge a fee and require ~~annual~~ refresher training, as specified in this section. A lead inspector or lead risk assessor shall have the lead inspector's license or lead risk assessor's license readily available at all times at an a lead inspection site or lead risk assessment site and make it available, on request, for ~~inspection~~ examination by the ~~inspecting~~ assessing agency with jurisdiction over the site. A license shall not be transferred. License fees shall be nonrefundable and must be submitted with each application in the amount of $50 for each lead inspector and $100 for each lead risk assessor.

(b) Individuals shall not advertise or otherwise present themselves as lead inspectors or lead risk assessors unless licensed by the commissioner.

(c) An individual may use sodium rhodizonate to test paint for the presence of lead without obtaining a lead inspector or lead risk assessor license, but must not represent the test as a lead inspection or lead risk assessment.

Sec. 70. Minnesota Statutes 1996, section 144.9506, subdivision 2, is amended to read:

Subd. 2. [LICENSE APPLICATION.] An application for a license or license renewal shall be on a form provided by the commissioner and shall include:

(1) a ~~$50~~ nonrefundable fee, in a form approved by the commissioner; and

(2) evidence that the applicant has successfully completed a lead inspector training course approved under this section or from another state with which the commissioner has established reciprocity. The fee required in this section is waived for federal, state, or local government employees within Minnesota.

Sec. 71. Minnesota Statutes 1996, section 144.9507, subdivision 2, is amended to read:

Subd. 2. [LEAD ~~INSPECTION~~ RISK ASSESSMENT CONTRACTS.] The commissioner shall, within available federal or state appropriations, contract with boards of health to conduct lead ~~inspections~~ risk assessments to determine sources of lead contamination and to issue and enforce lead orders according to section 144.9504.

Sec. 72. Minnesota Statutes 1996, section 144.9507, subdivision 3, is amended to read:

Subd. 3. [TEMPORARY LEAD-SAFE HOUSING CONTRACTS.] The commissioner shall, within the limits of available appropriations, contract with boards of health for temporary housing, to be used in meeting relocation requirements in section 144.9504, and award grants to boards of health for the purposes of paying housing and relocation costs under section 144.9504. The commissioner may use up to 15 percent of the available appropriations to provide temporary lead-safe housing in areas of the state in which the commissioner has the duty under section 144.9504 to perform secondary prevention.

Sec. 73. Minnesota Statutes 1996, section 144.9507, subdivision 4, is amended to read:

Subd. 4. [~~LEAD CLEANUP EQUIPMENT AND MATERIAL~~ GRANTS TO NONPROFIT ORGANIZATIONS.] (a) The commissioner shall, within the limits of available state or federal appropriations, provide funds for lead cleanup equipment and materials under a grant program to nonprofit community-based organizations in areas at high risk for toxic lead exposure, as provided for in section 144.9503.

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(b) Nonprofit community-based organizations in areas at high risk for toxic lead exposure may apply for grants from the commissioner to purchase lead cleanup equipment and materials and to pay for training for staff and volunteers for lead licensure under sections 144.9505 and 144.9506.

(c) For purposes of this section, lead cleanup equipment and materials means high efficiency particle accumulator (HEPA) and wet vacuum cleaners, wash water filters, mops, buckets, hoses, sponges, protective clothing, drop cloths, wet scraping equipment, secure containers, dust and particle containment material, and other cleanup and containment materials to remove loose paint and plaster, patch plaster, control household dust, wax floors, clean carpets and sidewalks, and cover bare soil.

(d) The grantee's staff and volunteers may make lead cleanup equipment and materials available to residents and property owners and instruct them on the proper use of the equipment. Lead cleanup equipment and materials must be made available to low-income households, as defined by federal guidelines, on a priority basis at no fee. Other households may be charged on a sliding fee scale.

(e) The grantee shall not charge a fee for services performed using the equipment or materials.

(f) Any funds appropriated for purposes of this subdivision that are not awarded, due to a lack of acceptable proposals for the full amount appropriated, may be used for any purpose authorized in this section.

Sec. 74. Minnesota Statutes 1996, section 144.9508, subdivision 1, is amended to read:

Subdivision 1. [SAMPLING AND ANALYSIS.] The commissioner shall adopt, by rule, ~~visual inspection and sampling and analysis~~ methods for:

(1) lead inspections ~~under section 144.9504~~, lead hazard screens, lead risk assessments, and clearance inspections;

(2) environmental surveys of lead in paint, soil, dust, and drinking water to determine census tracts that are areas at high risk for toxic lead exposure;

(3) soil sampling for soil used as replacement soil; ~~and~~

(4) drinking water sampling, which shall be done in accordance with lab certification requirements and analytical techniques specified by Code of Federal Regulations, title 40, section 141.89; and

(5) sampling to determine whether at least 25 percent of the soil samples collected from a census tract within a standard metropolitan statistical area contain lead in concentrations that exceed 100 parts per million.

Sec. 75. Minnesota Statutes 1996, section 144.9508, is amended by adding a subdivision to read:

Subd. 2a. [LEAD STANDARDS FOR EXTERIOR SURFACES AND STREET DUST.] The commissioner may, by rule, establish lead standards for exterior horizontal surfaces, concrete or other impervious surfaces, and street dust on residential property to protect the public health and the environment.

Sec. 76. Minnesota Statutes 1996, section 144.9508, subdivision 3, is amended to read:

Subd. 3. [~~LEAD CONTRACTORS AND WORKERS~~ LICENSURE AND CERTIFICATION.] The commissioner shall adopt rules to license lead ~~contractors and to certify~~ supervisors, lead workers ~~of lead contractors who perform lead abatement or lead hazard reduction~~, lead project designers, lead inspectors, and lead risk assessors. The commissioner shall also adopt rules requiring certification of firms that perform lead abatement, lead hazard reduction, lead hazard screens, or lead risk assessments. The commissioner shall require periodic renewal of licenses and certificates and shall establish the renewal periods.

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Sec. 77. Minnesota Statutes 1996, section 144.9508, subdivision 4, is amended to read:

Subd. 4. [LEAD TRAINING COURSE.] The commissioner shall establish by rule a permit fee to be paid by a training course provider on application for a training course permit or renewal period for each lead-related training course required for certification or licensure. The commissioner shall establish criteria in rules for the content and presentation of training courses intended to qualify trainees for licensure under subdivision 3. Training course permit fees shall be nonrefundable and must be submitted with each application in the amount of $500 for an initial training course, $250 for renewal of a permit for an initial training course, $250 for a refresher training course, and $125 for renewal of a permit of a refresher training course.

Sec. 78. Minnesota Statutes 1996, section 144.9509, subdivision 2, is amended to read:

Subd. 2. [DISCRIMINATION.] A person who discriminates against or otherwise sanctions an employee who complains to or cooperates with the ~~inspecting~~ assessing agency in administering sections 144.9501 to 144.9509 is guilty of a petty misdemeanor.

Sec. 79. [144.9511] [LEAD-SAFE PROPERTY CERTIFICATION.]

Subdivision 1. [LEAD-SAFE PROPERTY CERTIFICATION PROGRAM ESTABLISHED.] (a) The commissioner shall establish, within the limits of available appropriations, recommended protocols for a voluntary lead-safe property certification program for residential properties. This program shall involve an initial property certification process, a property condition report, and a lead-safe property certification booklet.

(b) The commissioner shall establish recommended protocols for an initial property certification process composed of the following:

(1) a lead hazard screen, which shall include a visual evaluation of a residential property for both deteriorated paint and bare soil; and

(2) a quantitative measure of lead in dust within the structure and in common areas as determined by rule adopted under authority of section 144.9508.

(c) The commissioner shall establish forms, checklists, and protocols for conducting a property condition report. A property condition report is an evaluation of property components, without regard to aesthetic considerations, to determine whether any of the following conditions are likely to occur within one year of the report:

(1) that paint will become chipped, flaked, or cracked;

(2) that structural defects in the roof, windows, or plumbing will fail and cause paint to deteriorate;

(3) that window wells or window troughs will not be cleanable and washable;

(4) that windows will generate dust due to friction;

(5) that cabinet, room, and threshold doors will rub against casings or have repeated contact with painted surfaces;

(6) that floors will not be smooth and cleanable and carpeted floors will not be cleanable;

(7) that soil will not remain covered;

(8) that bare soil in vegetable and flower gardens will not (i) be inaccessible to children or (ii) be tested to determine if it is below the soil standard under section 144.9508;

(9) that parking areas will not remain covered by an impervious surface or gravel;

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(10) that covered soil will erode, particularly in play areas; and

(11) that gutters and down spouts will not function correctly.

(d) The commissioner shall develop a lead-safe property certification booklet that contains the following:

(1) information on how property owners and their maintenance personnel can perform essential maintenance practices to correct any of the property component conditions listed in paragraph (c) that may occur;

(2) the lead-safe work practices fact sheets created under section 144.9503, subdivision 7;

(3) forms, checklists, and copies of recommended lead-safe property certification certificates; and

(4) an educational sheet for landlords to give to tenants on the importance of having tenants inform property owners or designated maintenance staff of one or more of the conditions listed in paragraph (c).

Subd. 2. [CONDITIONS FOR CERTIFICATION.] A property shall be certified as lead safe only if the following conditions are met:

(1) the property passes the initial certification process in subdivision 1;

(2) the property owner agrees in writing to perform essential maintenance practices;

(3) the property owner agrees in writing to use lead-safe work practices, as provided for under section 144.9503, subdivision 7;

(4) the property owner performs essential maintenance as the need arises or uses maintenance personnel who have completed a U.S. Environmental Protection Agency- or Minnesota department of health-approved maintenance training program or course to perform essential maintenance;

(5) the lead-safe property certification booklet is distributed to the property owner, maintenance personnel, and tenants at the completion of the initial certification process; and

(6) a copy of the lead-safe property certificate is filed with the commissioner along with a $5 filing fee.

Subd. 3. [LEAD STANDARDS.] Lead standards used in this section shall be those approved by the commissioner under section 144.9508.

Subd. 4. [LEAD RISK ASSESSORS.] Lead-safe property certifications shall only be performed by lead risk assessors licensed by the commissioner under section 144.9506.

Subd. 5. [EXPIRATION.] Lead-safe property certificates are valid for one year.

Subd. 6. [LIST OF CERTIFIED PROPERTIES.] Within the limits of available appropriations, the commissioner shall maintain a list of all properties certified as lead-safe under this section and make it freely available to the public.

Subd. 7. [RE-APPLICATION.] Properties failing the initial property certification may re-apply for a lead-safe property certification by having a new initial certification process performed and by correcting any condition listed by the licensed lead risk assessor in the property condition report. Properties that fail the initial property certification process must have the condition corrected by the property owner, by trained maintenance staff, or by a contractor with personnel licensed for lead hazard reduction or lead abatement work by the commissioner under section 144.9505, in order to have the property certified.

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Sec. 80. Minnesota Statutes 1996, section 144.99, subdivision 1, is amended to read:

Subdivision 1. [REMEDIES AVAILABLE.] The provisions of chapters 103I and 157 and sections 115.71 to 115.77; 144.12, subdivision 1, paragraphs (1), (2), (5), (6), (10), (12), (13), (14), and (15); 144.121; 144.1222; 144.35; 144.381 to 144.385; 144.411 to 144.417; ~~144.491;~~ 144.495; 144.71 to 144.74; 144.9501 to 144.9509; 144.992; 326.37 to 326.45; 326.57 to 326.785; 327.10 to 327.131; and 327.14 to 327.28 and all rules, orders, stipulation agreements, settlements, compliance agreements, licenses, registrations, certificates, and permits adopted or issued by the department or under any other law now in force or later enacted for the preservation of public health may, in addition to provisions in other statutes, be enforced under this section.

Sec. 81. Minnesota Statutes 1996, section 144A.44, subdivision 2, is amended to read:

Subd. 2. [INTERPRETATION AND ENFORCEMENT OF RIGHTS.] These rights are established for the benefit of persons who receive home care services. "Home care services" means home care services as defined in section 144A.43, subdivision 3. A home care provider may not require a person to surrender these rights as a condition of receiving services. A guardian or conservator or, when there is no guardian or conservator, a designated person, may seek to enforce these rights. This statement of rights does not replace or diminish other rights and liberties that may exist relative to persons receiving home care services, persons providing home care services, or providers licensed under Laws 1987, chapter 378. A copy of these rights must be provided to an individual at the time home care services are initiated. The copy shall also contain the address and phone number of the office of health facility complaints and the office of the ombudsman for older Minnesotans and a brief statement describing how to file a complaint with ~~that office~~ these offices. Information about how to contact the office of the ombudsman for older Minnesotans shall be included in notices of change in client fees and in notices where home care providers initiate transfer or discontinuation of services.

Sec. 82. Minnesota Statutes 1997 Supplement, section 144A.4605, subdivision 4, is amended to read:

Subd. 4. [LICENSE REQUIRED.] (a) A housing with services establishment registered under chapter 144D that is required to obtain a home care license must obtain an assisted living home care license according to this section or a class A or class E license according to rule. A housing with services establishment that obtains a class E license under this subdivision remains subject to the payment limitations in sections 256B.0913, subdivision 5, paragraph (h), and 256B.0915, subdivision 3, paragraph (g).

(b) A board and lodging establishment registered for special services as of December 31, 1996, and also registered as a housing with services establishment under chapter 144D, must deliver home care services according to sections 144A.43 to 144A.49, and may apply for a waiver from requirements under Minnesota Rules, parts 4668.0002 to 4668.0240, to operate a licensed agency under the standards of section 157.17. Such waivers as may be granted by the department will expire upon promulgation of home care rules implementing section 144A.4605.

(c) An adult foster care provider licensed by the department of human services and registered under chapter 144D may continue to provide health-related services under its foster care license until the promulgation of home care rules implementing this section.

Sec. 83. [145.905] [LOCATION FOR BREAST-FEEDING.]

A mother may breast-feed in any location, public or private, where the mother and child are otherwise authorized to be, irrespective of whether the nipple of the mother's breast is uncovered during or incidental to the breast-feeding.

Sec. 84. [145.926] [ABSTINENCE EDUCATION GRANT PROGRAM.]

The commissioner of health shall expend federal funds for abstinence education programs provided under United States Code, title 42, section 710, and state matching funds for abstinence education programs only to an abstinence education program that complies with the state plan that has been submitted to and approved by the federal Department of Health and Human Services.

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Sec. 85. [145.9266] [FETAL ALCOHOL SYNDROME.]

Subdivision 1. [PUBLIC AWARENESS.] The commissioner of health shall design and implement an ongoing statewide campaign to raise public awareness about fetal alcohol syndrome and other effects of prenatal alcohol exposure. The campaign shall include messages directed to the general population as well as culturally specific and community-based messages. A toll-free resource and referral telephone line shall be included in the messages. The commissioner of health shall conduct an evaluation to determine the effectiveness of the campaign.

Subd. 2. [STATEWIDE NETWORK OF FAS DIAGNOSTIC CLINICS.] A statewide network of regional fetal alcohol syndrome diagnostic clinics shall be developed between the department of health and the University of Minnesota. This collaboration shall be based on a statewide needs assessment and shall include involvement from consumers, providers, and payors. By the end of calendar year 1998, a plan shall be developed for the clinic network, and shall include a comprehensive evaluation component. Sites shall be established in calendar year 1999. The commissioner shall not access or collect individually identifiable data for the statewide network of regional fetal alcohol syndrome diagnostic clinics. Data collected at the clinics shall be maintained according to applicable data privacy laws, including section 144.335.

Subd. 3. [PROFESSIONAL TRAINING ABOUT FAS.] (a) The commissioner of health, in collaboration with the board of medical practice, the board of nursing, and other professional boards and state agencies, shall develop curricula and materials about fetal alcohol syndrome for professional training of health care providers, social service providers, educators, and judicial and corrections systems professionals. The training and curricula shall increase knowledge and develop practical skills of professionals to help them address the needs of at-risk pregnant women and the needs of individuals affected by fetal alcohol syndrome or fetal alcohol effects and their families.

(c) Training for social service providers shall focus on resources for assessing, referring, and treating at-risk pregnant women, changes in the mandatory reporting and commitment laws, and resources for affected children and their families.

Subd. 4. [FAS COMMUNITY GRANT PROGRAM.] The commissioner of health shall administer a grant program to provide money to community organizations and coalitions to collaborate on fetal alcohol syndrome prevention and intervention strategies and activities. The commissioner shall disburse grant money through a request for proposal process or sole-source distribution where appropriate, and shall include at least one grant award for transitional skills and services for individuals with fetal alcohol syndrome or fetal alcohol effects.

(b) One grant shall be awarded in each of the following age categories:

(1) birth to three years;

(2) three to five years;

(3) six to 12 years; and

(4) 13 to 18 years.

(c) Grant proposals must include an evaluation plan, demonstrate evidence of a collaborative or multisystem approach, provide parent education and support, and show evidence of a child- and family-focused approach consistent with research-based educational practices and other guidelines developed by the department of children, families, and learning.

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Subd. 6. [FETAL ALCOHOL COORDINATING BOARD; DUTIES.] (a) The fetal alcohol coordinating board consists of:

(1) the commissioners of health, human services, corrections, public safety, economic security, and children, families, and learning;

(2) the director of the office of strategic and long-range planning;

(3) the chair of the maternal and child health advisory task force established by section 145.881, or the chair's designee;

(4) a representative of the University of Minnesota academic health center, appointed by the provost;

(5) five members from the general public appointed by the governor, one of whom must be a family member of an individual with fetal alcohol syndrome or fetal alcohol effect; and

(6) one member from the judiciary appointed by the chief justice of the supreme court.

(b) Board duties include:

(1) reviewing programs of state agencies that involve fetal alcohol syndrome and coordinating those that are interdepartmental in nature;

(2) providing an integrated and comprehensive approach to fetal alcohol syndrome prevention and intervention strategies both at a local and statewide level;

(3) approving on an annual basis the statewide public awareness campaign as designed and implemented by the commissioner of health under subdivision 1;

(4) reviewing fetal alcohol syndrome community grants administered by the commissioner of health under subdivision 4; and

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Sec. 86. Minnesota Statutes 1996, section 145A.15, subdivision 2, is amended to read:

Subd. 2. [GRANT RECIPIENTS.] (a) The commissioner is authorized to award grants to programs that meet the requirements of subdivision 3 and include a strong child abuse and neglect prevention focus for families in need of services. Priority will be given to families considered to be in need of additional services. These families include, but are not limited to, families with:

(1) adolescent parents;

(2) a history of alcohol and other drug abuse;

(3) a history of child abuse, domestic abuse, or other types of violence in the family of origin;

(4) a history of domestic abuse, rape, or other forms of victimization;

(5) reduced cognitive functioning;

(6) a lack of knowledge of child growth and development stages;

(7) low resiliency to adversities and environmental stresses; or

(8) lack of sufficient financial resources to meet their needs.

(b) Grants made under this section shall be used to fund existing and new home visiting programs. In awarding grants under this section, the commissioner shall give priority to new home visiting programs with local matching funds.

Sec. 87. Minnesota Statutes 1996, section 157.15, subdivision 9, is amended to read:

Subd. 9. [MOBILE FOOD UNIT.] "Mobile food unit" means a food and beverage service establishment that is a vehicle mounted unit, either motorized or trailered, operating no more than 14 21 days annually at any one place or is operated in conjunction with a permanent business licensed under this chapter or chapter 28A at the site of the permanent business by the same individual or company, and readily movable, without disassembling, for transport to another location.

Sec. 88. Minnesota Statutes 1996, section 157.15, subdivision 12, is amended to read:

Subd. 12. [RESTAURANT.] "Restaurant" means a food and beverage service establishment, whether the establishment serves alcoholic or nonalcoholic beverages, which operates from a location for more than 14 21 days annually. Restaurant does not include a food cart or a mobile food unit.

Sec. 89. Minnesota Statutes 1996, section 157.15, subdivision 12a, is amended to read:

Subd. 12a. [SEASONAL PERMANENT FOOD STAND.] "Seasonal permanent food stand" means a food and beverage service establishment which is a permanent food service stand or building, but which operates no more than 14 21 days annually.

Sec. 90. Minnesota Statutes 1996, section 157.15, subdivision 13, is amended to read:

Subd. 13. [SEASONAL TEMPORARY FOOD STAND.] "Seasonal temporary food stand" means a food and beverage service establishment that is a food stand which is disassembled and moved from location to location, but which operates no more than 14 21 days annually at any one location.

Sec. 91. Minnesota Statutes 1996, section 157.15, subdivision 14, is amended to read:

Subd. 14. [SPECIAL EVENT FOOD STAND.] "Special event food stand" means a food and beverage service establishment which is used in conjunction with celebrations and special events, and which operates ~~once or twice~~ no more than three times annually for no more than ~~seven~~ ten total days.

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Sec. 92. Minnesota Statutes 1997 Supplement, section 157.16, subdivision 3, is amended to read:

Subd. 3. [ESTABLISHMENT FEES; DEFINITIONS.] (a) The following fees are required for food and beverage service establishments, hotels, motels, lodging establishments, and resorts licensed under this chapter. Food and beverage service establishments must pay the highest applicable fee under paragraph (e), clause (1), (2), (3), or (4), and establishments serving alcohol must pay the highest applicable fee under paragraph (e), clause (6) or (7).

(b) All food and beverage service establishments, except special event food stands, and all hotels, motels, lodging establishments, and resorts shall pay an annual base fee of $100.

(c) A special event food stand shall pay a flat fee of ~~$60~~ $30 annually. "Special event food stand" means a fee category where food is prepared or served in conjunction with celebrations, county fairs, or special events from a special event food stand as defined in section 157.15.

(d) ~~A special event food stand-limited shall pay a flat fee of $30.~~

~~(e)~~ In addition to the base fee in paragraph (b), each food and beverage service establishment, other than a special event food stand, and each hotel, motel, lodging establishment, and resort shall pay an additional annual fee for each fee category as specified in this paragraph:

(1) Limited food menu selection, $30. "Limited food menu selection" means a fee category that provides one or more of the following:

(i) prepackaged food that receives heat treatment and is served in the package;

(ii) frozen pizza that is heated and served;

(iii) a continental breakfast such as rolls, coffee, juice, milk, and cold cereal;

(iv) soft drinks, coffee, or nonalcoholic beverages; or

(v) cleaning for eating, drinking, or cooking utensils, when the only food served is prepared off site.

(2) Small establishment, including boarding establishments, $55. "Small establishment" means a fee category that has no salad bar and meets one or more of the following:

(i) possesses food service equipment that consists of no more than a deep fat fryer, a grill, two hot holding containers, and one or more microwave ovens;

(ii) serves dipped ice cream or soft serve frozen desserts;

(iii) serves breakfast in an owner-occupied bed and breakfast establishment;

(iv) is a boarding establishment; or

(v) meets the equipment criteria in clause (3), item (i) or (ii), and has a maximum patron seating capacity of not more than 50.

(3) Medium establishment, $150. "Medium establishment" means a fee category that meets one or more of the following:

(i) possesses food service equipment that includes a range, oven, steam table, salad bar, or salad preparation area;

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(ii) possesses food service equipment that includes more than one deep fat fryer, one grill, or two hot holding containers; or

(iii) is an establishment where food is prepared at one location and served at one or more separate locations.

Establishments meeting criteria in clause (2), item (v), are not included in this fee category.

(4) Large establishment, $250. "Large establishment" means either:

(i) a fee category that (A) meets the criteria in clause (3), items (i) or (ii), for a medium establishment, (B) seats more than 175 people, and (C) offers the full menu selection an average of five or more days a week during the weeks of operation; or

(ii) a fee category that (A) meets the criteria in clause (3), item (iii), for a medium establishment, and (B) prepares and serves 500 or more meals per day.

(5) Other food and beverage service, including food carts, mobile food units, seasonal temporary food stands, and seasonal permanent food stands, $30.

(6) Beer or wine table service, $30. "Beer or wine table service" means a fee category where the only alcoholic beverage service is beer or wine, served to customers seated at tables.

(7) Alcoholic beverage service, other than beer or wine table service, $75.

"Alcohol beverage service, other than beer or wine table service" means a fee category where alcoholic mixed drinks are served or where beer or wine are served from a bar.

(8) Lodging per sleeping accommodation unit, $4, including hotels, motels, lodging establishments, and resorts, up to a maximum of $400. "Lodging per sleeping accommodation unit" means a fee category including the number of guest rooms, cottages, or other rental units of a hotel, motel, lodging establishment, or resort; or the number of beds in a dormitory.

(9) First public swimming pool, $100; each additional public swimming pool, $50. "Public swimming pool" means a fee category that has the meaning given in Minnesota Rules, part 4717.0250, subpart 8.

(10) First spa, $50; each additional spa, $25. "Spa pool" means a fee category that has the meaning given in Minnesota Rules, part 4717.0250, subpart 9.

(11) Private sewer or water, $30. "Individual private water" means a fee category with a water supply other than a community public water supply as defined in Minnesota Rules, chapter 4720. "Individual private sewer" means a fee category with an individual sewage treatment system which uses subsurface treatment and disposal.

~~(f)~~ (e) A fee is not required for a food and beverage service establishment operated by a school as defined in sections 120.05 and 120.101.

~~(g)~~ (f) A fee of $150 for review of the construction plans must accompany the initial license application for food and beverage service establishments, hotels, motels, lodging establishments, or resorts.

~~(h)~~ (g) When existing food and beverage service establishments, hotels, motels, lodging establishments, or resorts are extensively remodeled, a fee of $150 must be submitted with the remodeling plans.

~~(i)~~ (h) Seasonal temporary food stands, and special event food stands~~, and special event food stands-limited~~ are not required to submit construction or remodeling plans for review.

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Sec. 93. Minnesota Statutes 1996, section 214.03, is amended to read:

214.03 [STANDARDIZED TESTS.]

Subdivision 1. [STANDARDIZED TESTS USED.] All state examining and licensing boards, other than the state board of law examiners, the state board of professional responsibility or any other board established by the supreme court to regulate the practice of law and judicial functions, shall use national standardized tests for the objective, nonpractical portion of any examination given to prospective licensees to the extent that such national standardized tests are appropriate, except when the subject matter of the examination relates to the application of Minnesota law to the profession or calling being licensed.

Subd. 2. [HEALTH-RELATED BOARDS; SPECIAL ACCOUNT.] An account is established in the special revenue fund where a health-related licensing board may deposit applicants' payments for national or regional standardized tests. Money in the account is appropriated to each board that has deposited monies into the account, in an amount equal to the amount deposited by the board, to pay for the use of national or regional standardized tests.

Sec. 94. Minnesota Statutes 1997 Supplement, section 214.32, subdivision 1, is amended to read:

Subdivision 1. [MANAGEMENT.] (a) A health professionals services program committee is established, consisting of one person appointed by each participating board, with each participating board having one vote. The committee shall designate one board to provide administrative management of the program, set the program budget and the pro rata share of program expenses to be borne by each participating board, provide guidance on the general operation of the program, including hiring of program personnel, and ensure that the program's direction is in accord with its authority. No more than half plus one of the members of the committee may be of one gender. If the participating boards change which board is designated to provide administrative management of the program, any appropriation remaining for the program shall transfer to the newly designated board on the effective date of the change. The participating boards must inform the appropriate legislative committees and the commissioner of finance of any change in the administrative management of the program, and the amount of any appropriation transferred under this provision.

(b) The designated board, upon recommendation of the health professional services program committee, shall hire the program manager and employees and pay expenses of the program from funds appropriated for that purpose. The designated board may apply for grants to pay program expenses and may enter into contracts on behalf of the program to carry out the purposes of the program. The participating boards shall enter into written agreements with the designated board.

(1) one member appointed by each of the following: the Minnesota Academy of Physician Assistants, the Minnesota Dental Association, the Minnesota Chiropractic Association, the Minnesota Licensed Practical Nurse Association, the Minnesota Medical Association, the Minnesota Nurses Association, and the Minnesota Podiatric Medicine Association;

(2) one member appointed by each of the professional associations of the other professions regulated by a participating board not specified in clause (1); and

(3) two public members, as defined by section 214.02.

Members of the advisory committee shall be appointed for two years and members may be reappointed.

No more than half plus one of the members of the committee may be of one gender.

The advisory committee expires June 30, 2001.

Sec. 95. Minnesota Statutes 1996, section 254A.17, subdivision 1, is amended to read:

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and coordination of medical, educational, and social services through a child's preschool years. Programs shall also include research and evaluation to identify methods most effective in improving outcomes among this high-risk population. The commissioner shall ensure that the programs are available on a statewide basis to the extent possible with available funds.

Sec. 96. Minnesota Statutes 1996, section 254A.17, is amended by adding a subdivision to read:

Subd. 1b. [INTERVENTION AND ADVOCACY PROGRAM.] Within the limits of money available, the commissioner of human services shall fund voluntary hospital-based outreach programs targeted at women who deliver children affected by prenatal alcohol or drug use. The program shall help women obtain treatment, stay in recovery, and plan any future pregnancies. An advocate shall be assigned to each woman in the program to provide guidance and advice with respect to treatment programs, child safety and parenting, housing, family planning, and any other personal issues that are barriers to remaining free of chemical dependence. The commissioner shall develop an evaluation component and provide centralized coordination of the evaluation process.

Sec. 97. Minnesota Statutes 1996, section 268.92, subdivision 4, is amended to read:

Subd. 4. [LEAD ~~CONTRACTORS~~ SUPERVISOR OR CERTIFIED FIRM.] (a) Eligible organizations and lead ~~contractors~~ supervisors or certified firms may participate in the swab team program. An eligible organization receiving a grant under this section must assure that all participating lead ~~contractors~~ supervisors or certified firms are licensed and that all swab team workers are certified by the department of health under section 144.9505. Eligible organizations and lead ~~contractors~~ supervisors or certified firms may distinguish between interior and exterior services in assigning duties and may participate in the program by:

(1) providing on-the-job training for swab team workers;

(2) providing swab team services to meet the requirements of sections 144.9503, subdivision 4, and 144.9504, subdivision 6;

(3) providing a removal and replacement component using skilled craft workers under subdivision 7;

(4) providing lead testing according to subdivision 7a;

(5) providing lead dust cleaning supplies, as described in section ~~144.9503~~ 144.9507, subdivision 5 4, paragraph ~~(b)~~ (c), to residents; or

(6) having a swab team worker instruct residents and property owners on appropriate lead control techniques, including the lead-safe directives developed by the commissioner of health.

(b) Participating lead ~~contractors~~ supervisors or certified firms must:

(1) demonstrate proof of workers' compensation and general liability insurance coverage;

(2) be knowledgeable about lead abatement requirements established by the Department of Housing and Urban Development and the Occupational Safety and Health Administration and lead hazard reduction requirements and lead-safe directives of the commissioner of health;

(3) demonstrate experience with on-the-job training programs;

(4) demonstrate an ability to recruit employees from areas at high risk for toxic lead exposure; and

(5) demonstrate experience in working with low-income clients.

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Sec. 98. [REPORT BY THE UNIVERSITY OF MINNESOTA ACADEMIC HEALTH CENTER.]

The University of Minnesota academic health center, after consultation with the health care community and the medical education and research costs advisory committee, is requested to report to the commissioner of health and the legislative commission on health care access by January 15, 1999, on plans for the strategic direction and vision of the academic health center. The report shall address plans for the ongoing assessment of health provider workforce needs; plans for the ongoing assessment of the educational needs of health professionals and the implications for their education and training programs; and plans for ongoing, meaningful input from the health care community on health-related research and education programs administered by the academic health center.

Sec. 99. [ADVICE AND RECOMMENDATIONS.]

The commissioners of health and commerce shall convene an ad hoc advisory panel of selected representatives of health plan companies, purchasers, and provider groups engaged in the practice of health care in Minnesota, and interested legislators. This advisory panel shall meet and assist the commissioners in developing measures to prevent discrimination against providers and provider groups in managed care in Minnesota and clarify the requirements of Minnesota Statutes, section 62Q.23, paragraph (c). Any such measures shall be reported to the legislature prior to November 15, 1998.

Sec. 100. [OMBUDSMAN STUDY.]

The ombudsman for mental health and mental retardation and the ombudsman for older Minnesotans shall convene a work group to develop recommendations for interagency cooperation and/or the consolidation of all health-related ombudsman and advocacy programs provided by state agencies and to address issues to improve ombudsmen and advocacy services to health care consumers, including ease of access, timeliness of response, and quality of outcome. In developing its recommendations, the work group shall consider the unique needs of different populations of health care consumers. It shall also consider:

(1) seamless access for health care consumers;

(2) consumer outreach methods;

(3) opportunities to share resources and training;

(4) nonduplication of effort; and

(5) the feasibility of colocation.

In developing its recommendations, the work group shall confer with and have representatives of consumers, advocacy organizations, the consumer advisory board, the office of health care consumer assistance, advocacy, and information, affected state agencies, the board on aging, and the advisory committee to the ombudsman for mental health and mental retardation. The work group shall make recommendations on how to better coordinate consumer services and submit a report to the legislature by December 15, 1999.

Sec. 101. [COMPLAINT PROCESS STUDY.]

The complaint process work group established by the commissioners of health and commerce as required under Laws 1997, chapter 237, section 20, shall continue to meet to develop a complaint resolution process for health plan companies to make available to enrollees as required under Minnesota Statutes, sections 62Q.105, 62Q.11, and 62Q.30. The commissioners of health and commerce shall submit a progress report to the legislative commission on health care access by September 15, 1998, and shall submit final recommendations to the legislature, including draft legislation on developing such a process by November 15, 1998. The recommendations must also include, in consultation with the work group, a permanent method of financing the office of health care consumer assistance, advocacy, and information.

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Sec. 102. [RESIDENTIAL HOSPICE ADVISORY TASK FORCE.]

The commissioner of health shall convene an advisory task force to study issues related to the building codes and safety standards that residential hospice facilities must meet for licensure and to make recommendations on changes to these standards. Task force membership shall include representatives of residential hospices, pediatric residential hospices, the Minnesota hospice organization, the Minnesota department of health, and other interested parties. The task force is governed by Minnesota Statutes, section 15.059, subdivision 6. The task force shall submit recommendations and any draft legislation to the legislature by January 15, 1999.

Sec. 103. [TEMPORARY LICENSURE WAIVER FOR DIETITIANS.]

Until October 31, 1998, the board of dietetics and nutrition practice may waive the requirements for licensure as a dietitian established in Minnesota Statutes, section 148.624, subdivision 1, clause (1), and may issue a license to an applicant who meets the qualifications for licensure specified in Minnesota Statutes, section 148.627, subdivision 1. A waiver may be granted in cases in which unusual or extraordinary job-related circumstances prevented an applicant from applying for licensure during the transition period specified in Minnesota Statutes, section 148.627, subdivision 1. An applicant must request a waiver in writing and must explain the circumstances that prevented the applicant from applying for licensure during the transition period.

Sec. 104. [UNITED STATES NUCLEAR REGULATORY COMMISSION AGREEMENT.]

Subdivision 1. [AGREEMENT AUTHORIZED.] In order to have a comprehensive program to protect the public from radiation hazards, the governor may enter into an agreement with the United States Nuclear Regulatory Commission, under the Atomic Energy Act of 1954, United States Code, title 42, section 2021, paragraph (b). The agreement may allow the state to assume regulation over nonpower plant radiation hazards including certain by-product, source, and special nuclear materials not sufficient to form a critical mass. The agreement must be approved in law prior to being implemented.

Subd. 2. [HEALTH DEPARTMENT DESIGNATED LEAD.] The department of health is designated as the lead agency to pursue an agreement on behalf of the governor, and for any assumption of specified licensing and regulatory authority from the Nuclear Regulatory Commission under an agreement. The commissioner may enter into negotiations with the Nuclear Regulatory Commission for that purpose. The commissioner of health shall establish an advisory group to assist in preparing the state to meet the requirements for achieving an agreement.

Subd. 3. [RULES.] The commissioner of health may adopt rules for the state assumption of regulation under an agreement under this section, including the licensing and regulation of by-product, source, and special nuclear material not sufficient to form a critical mass.

Subd. 4. [TRANSITION.] A person who, on the effective date of an agreement under this section, possesses a Nuclear Regulatory Commission license that is subject to the agreement shall be deemed to possess a similar license issued by the department of health. Licenses shall expire on the expiration date specified in the federal license.

Subd. 5. [SUNSET.] An agreement entered into before August 2, 2002, shall remain in effect until terminated or suspended under the Atomic Energy Act of 1954, United States Code, title 42, section 2021, paragraph (j). The governor may not enter into an initial agreement with the Nuclear Regulatory Commission after August 1, 2002. If an agreement is not entered into, any rules adopted under this section are repealed on that date.

Sec. 105. [STUDY OF EXTENT OF FETAL ALCOHOL SYNDROME.]

The commissioner of health shall conduct a study of the incidence and prevalence of fetal alcohol syndrome in Minnesota. The commissioner shall not collect individually identifiable data for this study.

Sec. 106. [MEDICAL EDUCATION AND RESEARCH TRUST FUND STUDY.]

The commissioner of health shall review the current medical education and research costs advisory committee structure and composition and recommend methods to ensure balanced and appropriate representation of major training programs. The commissioner shall also review the statutory formula for the prepaid medical assistance carve out to determine if any

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adjustments should be made to correct existing or potential inequities on current training programs. The commissioner shall determine if there should be other criteria for weighting future distributions of medical education and research funds beyond the current statutory criteria, including the criteria that trainees continue to practice in Minnesota. The commissioner shall report the findings and recommendations to the legislative commission on health care access by December 15, 1998.

Sec. 107. [FUNDING FOR IMMUNIZATIONS.]

The commissioner of health, in consultation with the commissioner of children, families, and learning, representatives of school nurses, and other interested parties, shall develop recommendations on how to provide ongoing funding for school districts to implement the provisions of Minnesota Statutes, section 123.70. These recommendations shall specify any statutory changes needed for their implementation. The commissioners of health and of children, families, and learning shall consider the recommendations in developing their budget requests for the 2000-2001 biennial budget. The recommendations and any draft legislation needed to implement the recommendations shall be submitted to the chairs of the senate health and family security budget division, the house health and human services finance division, the senate K-12 education budget division, and the house K-12 education finance division by December 15, 1998.

Sec. 108. [BOARD OF REHABILITATION THERAPY.]

The commissioner of health shall convene a work group to study the feasibility and need of creating a separate board of rehabilitation therapy to regulate rehabilitation therapy occupations, including physical therapists, occupational therapists, speech-language pathologists, audiologists, and hearing instrument dispensers. The work group shall consist of members representing physical therapists, occupational therapists, speech-language pathologists, audiologists, hearing instrument dispensers, and any other related occupation group that the commissioner determines should be included. The commissioner, in consultation with the work group, shall submit to the legislature by January 15, 1999, recommendations on establishing a board of rehabilitation therapy and on the appropriate occupational groups to be regulated by this board.

Sec. 109. [REPEALER.]

Minnesota Statutes 1996, sections 62J.685; 144.491; 144.9501, subdivisions 12, 14, and 16; and 144.9503, subdivisions 5, 8, and 9; and 157.15, subdivision 15, are repealed.

Sec. 110. [EFFECTIVE DATES.]

(a) Sections 2, 8, 20, 22, 34 to 80, 93, 94, and 97 to 108 are effective the day following final enactment.

(b) Sections 9 to 13, 21, and 81 are effective January 1, 1999.

Section 1. Minnesota Statutes 1996, section 144A.04, subdivision 5, is amended to read:

LONG-TERM CARE

Subd. 5. [ADMINISTRATORS.] Except as otherwise provided by this subdivision, a nursing home must have a full time licensed nursing home administrator serving the facility. In any nursing home of less than 25 31 beds, the director of nursing services may also serve as the licensed nursing home administrator. Two nursing homes under common ownership having a total of 150 beds or less and located within 75 miles of each other may share the services of a licensed administrator if the administrator divides full-time work week between the two facilities in proportion to the number of beds in each facility. Every nursing home shall have a person-in-charge on the premises at all times in the absence of the licensed administrator. The name of the person in charge must be posted in a conspicuous place in the facility. The commissioner of health shall by rule promulgate minimum education and experience requirements for persons-in-charge, and may promulgate rules specifying the times of day during which a licensed administrator must be on the nursing home's premises. In the absence of rules adopted by the commissioner governing the division of an administrator's time between two nursing homes, the administrator shall designate and post the times the administrator will be on site in each home on

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a regular basis. A nursing home may employ as its administrator the administrator of a hospital licensed pursuant to sections 144.50 to 144.56 if the individual is licensed as a nursing home administrator pursuant to section 144A.20 and the nursing home and hospital have a combined total of 150 beds or less and are located within one mile of each other. A nonproprietary retirement home having fewer than 15 licensed nursing home beds may share the services of a licensed administrator with a nonproprietary nursing home, having fewer than 150 licensed nursing home beds, that is located within 25 miles of the retirement home. A nursing home which is located in a facility licensed as a hospital pursuant to sections 144.50 to 144.56, may employ as its administrator the administrator of the hospital if the individual meets minimum education and long term care experience criteria set by rule of the commissioner of health.

Sec. 2. Minnesota Statutes 1997 Supplement, section 144A.071, subdivision 4a, is amended to read:

Subd. 4a. [EXCEPTIONS FOR REPLACEMENT BEDS.] It is in the best interest of the state to ensure that nursing homes and boarding care homes continue to meet the physical plant licensing and certification requirements by permitting certain construction projects. Facilities should be maintained in condition to satisfy the physical and emotional needs of residents while allowing the state to maintain control over nursing home expenditure growth.

The commissioner of health in coordination with the commissioner of human services, may approve the renovation, replacement, upgrading, or relocation of a nursing home or boarding care home, under the following conditions:

(a) to license or certify beds in a new facility constructed to replace a facility or to make repairs in an existing facility that was destroyed or damaged after June 30, 1987, by fire, lightning, or other hazard provided:

(i) destruction was not caused by the intentional act of or at the direction of a controlling person of the facility;

(ii) at the time the facility was destroyed or damaged the controlling persons of the facility maintained insurance coverage for the type of hazard that occurred in an amount that a reasonable person would conclude was adequate;

(iii) the net proceeds from an insurance settlement for the damages caused by the hazard are applied to the cost of the new facility or repairs;

(iv) the new facility is constructed on the same site as the destroyed facility or on another site subject to the restrictions in section 144A.073, subdivision 5;

(v) the number of licensed and certified beds in the new facility does not exceed the number of licensed and certified beds in the destroyed facility; and

(vi) the commissioner determines that the replacement beds are needed to prevent an inadequate supply of beds.

Project construction costs incurred for repairs authorized under this clause shall not be considered in the dollar threshold amount defined in subdivision 2;

(b) to license or certify beds that are moved from one location to another within a nursing home facility, provided the total costs of remodeling performed in conjunction with the relocation of beds does not exceed $750,000;

(d) to license or certify beds that are moved from an existing state nursing home to a different state facility, provided there is no net increase in the number of state nursing home beds;

(e) to certify and license as nursing home beds boarding care beds in a certified boarding care facility if the beds meet the standards for nursing home licensure, or in a facility that was granted an exception to the moratorium under section 144A.073, and if the cost of any remodeling of the facility does not exceed $750,000. If boarding care beds are licensed as nursing home beds, the number of boarding care beds in the facility must not increase beyond the number remaining at the time of the upgrade in licensure. The provisions contained in section 144A.073 regarding the upgrading of the facilities do not apply to facilities that satisfy these requirements;

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(f) to license and certify up to 40 beds transferred from an existing facility owned and operated by the Amherst H. Wilder Foundation in the city of St. Paul to a new unit at the same location as the existing facility that will serve persons with Alzheimer's disease and other related disorders. The transfer of beds may occur gradually or in stages, provided the total number of beds transferred does not exceed 40. At the time of licensure and certification of a bed or beds in the new unit, the commissioner of health shall delicense and decertify the same number of beds in the existing facility. As a condition of receiving a license or certification under this clause, the facility must make a written commitment to the commissioner of human services that it will not seek to receive an increase in its property-related payment rate as a result of the transfers allowed under this paragraph;

(g) to license and certify nursing home beds to replace currently licensed and certified boarding care beds which may be located either in a remodeled or renovated boarding care or nursing home facility or in a remodeled, renovated, newly constructed, or replacement nursing home facility within the identifiable complex of health care facilities in which the currently licensed boarding care beds are presently located, provided that the number of boarding care beds in the facility or complex are decreased by the number to be licensed as nursing home beds and further provided that, if the total costs of new construction, replacement, remodeling, or renovation exceed ten percent of the appraised value of the facility or $200,000, whichever is less, the facility makes a written commitment to the commissioner of human services that it will not seek to receive an increase in its property-related payment rate by reason of the new construction, replacement, remodeling, or renovation. The provisions contained in section 144A.073 regarding the upgrading of facilities do not apply to facilities that satisfy these requirements;

(h) to license as a nursing home and certify as a nursing facility a facility that is licensed as a boarding care facility but not certified under the medical assistance program, but only if the commissioner of human services certifies to the commissioner of health that licensing the facility as a nursing home and certifying the facility as a nursing facility will result in a net annual savings to the state general fund of $200,000 or more;

(i) to certify, after September 30, 1992, and prior to July 1, 1993, existing nursing home beds in a facility that was licensed and in operation prior to January 1, 1992;

(j) to license and certify new nursing home beds to replace beds in a facility ~~condemned~~ acquired by the Minneapolis community development agency as part of ~~an economic~~ redevelopment ~~plan~~ activities in a city of the first class, provided the new facility is located within ~~one mile~~ three miles of the site of the old facility. Operating and property costs for the new facility must be determined and allowed under ~~existing reimbursement rules~~ section 256B.431 or 256B.434;

(k) to license and certify up to 20 new nursing home beds in a community-operated hospital and attached convalescent and nursing care facility with 40 beds on April 21, 1991, that suspended operation of the hospital in April 1986. The commissioner of human services shall provide the facility with the same per diem property-related payment rate for each additional licensed and certified bed as it will receive for its existing 40 beds;

(l) to license or certify beds in renovation, replacement, or upgrading projects as defined in section 144A.073, subdivision 1, so long as the cumulative total costs of the facility's remodeling projects do not exceed $750,000;

(m) to license and certify beds that are moved from one location to another for the purposes of converting up to five four-bed wards to single or double occupancy rooms in a nursing home that, as of January 1, 1993, was county-owned and had a licensed capacity of 115 beds;

(n) to allow a facility that on April 16, 1993, was a 106-bed licensed and certified nursing facility located in Minneapolis to layaway all of its licensed and certified nursing home beds. These beds may be relicensed and recertified in a newly-constructed teaching nursing home facility affiliated with a teaching hospital upon approval by the legislature. The proposal must be developed in consultation with the interagency committee on long-term care planning. The beds on layaway status shall have the same status as voluntarily delicensed and decertified beds, except that beds on layaway status remain subject to the surcharge in section 256.9657. This layaway provision expires July 1, 1998;

(o) to allow a project which will be completed in conjunction with an approved moratorium exception project for a nursing home in southern Cass county and which is directly related to that portion of the facility that must be repaired, renovated, or replaced, to correct an emergency plumbing problem for which a state correction order has been issued and which must be corrected by August 31, 1993;

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(p) to allow a facility that on April 16, 1993, was a 368-bed licensed and certified nursing facility located in Minneapolis to layaway, upon 30 days prior written notice to the commissioner, up to 30 of the facility's licensed and certified beds by converting three-bed wards to single or double occupancy. Beds on layaway status shall have the same status as voluntarily delicensed and decertified beds except that beds on layaway status remain subject to the surcharge in section 256.9657, remain subject to the license application and renewal fees under section 144A.07 and shall be subject to a $100 per bed reactivation fee. In addition, at any time within three years of the effective date of the layaway, the beds on layaway status may be:

(1) relicensed and recertified upon relocation and reactivation of some or all of the beds to an existing licensed and certified facility or facilities located in Pine River, Brainerd, or International Falls; provided that the total project construction costs related to the relocation of beds from layaway status for any facility receiving relocated beds may not exceed the dollar threshold provided in subdivision 2 unless the construction project has been approved through the moratorium exception process under section 144A.073;

(2) relicensed and recertified, upon reactivation of some or all of the beds within the facility which placed the beds in layaway status, if the commissioner has determined a need for the reactivation of the beds on layaway status.

(q) to license and certify beds in a renovation and remodeling project to convert 12 four-bed wards into 24 two-bed rooms, expand space, and add improvements in a nursing home that, as of January 1, 1994, met the following conditions: the nursing home was located in Ramsey county; had a licensed capacity of 154 beds; and had been ranked among the top 15 applicants by the 1993 moratorium exceptions advisory review panel. The total project construction cost estimate for this project must not exceed the cost estimate submitted in connection with the 1993 moratorium exception process;

(r) to license and certify up to 117 beds that are relocated from a licensed and certified 138-bed nursing facility located in St. Paul to a hospital with 130 licensed hospital beds located in South St. Paul, provided that the nursing facility and hospital are owned by the same or a related organization and that prior to the date the relocation is completed the hospital ceases operation of its inpatient hospital services at that hospital. After relocation, the nursing facility's status under section 256B.431, subdivision 2j, shall be the same as it was prior to relocation. The nursing facility's property-related payment rate resulting from the project authorized in this paragraph shall become effective no earlier than April 1, 1996. For purposes of calculating the incremental change in the facility's rental per diem resulting from this project, the allowable appraised value of the nursing facility portion of the existing health care facility physical plant prior to the renovation and relocation may not exceed $2,490,000;

(s) to license and certify two beds in a facility to replace beds that were voluntarily delicensed and decertified on June 28, 1991;

(t) to allow 16 licensed and certified beds located on July 1, 1994, in a 142-bed nursing home and 21-bed boarding care home facility in Minneapolis, notwithstanding the licensure and certification after July 1, 1995, of the Minneapolis facility as a 147-bed nursing home facility after completion of a construction project approved in 1993 under section 144A.073, to be laid away upon 30 days' prior written notice to the commissioner. Beds on layaway status shall have the same status as voluntarily delicensed or decertified beds except that they shall remain subject to the surcharge in section 256.9657. The 16 beds on layaway status may be relicensed as nursing home beds and recertified at any time within five years of the effective date of the layaway upon relocation of some or all of the beds to a licensed and certified facility located in Watertown, provided that the total project construction costs related to the relocation of beds from layaway status for the Watertown facility may not exceed the dollar threshold provided in subdivision 2 unless the construction project has been approved through the moratorium exception process under section 144A.073.

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(u) to license and certify beds that are moved within an existing area of a facility or to a newly constructed addition which is built for the purpose of eliminating three- and four-bed rooms and adding space for dining, lounge areas, bathing rooms, and ancillary service areas in a nursing home that, as of January 1, 1995, was located in Fridley and had a licensed capacity of 129 beds;

(v) to relocate 36 beds in Crow Wing county and four beds from Hennepin county to a 160-bed facility in Crow Wing county, provided all the affected beds are under common ownership;

(w) to license and certify a total replacement project of up to 49 beds located in Norman county that are relocated from a nursing home destroyed by flood and whose residents were relocated to other nursing homes. The operating cost payment rates for the new nursing facility shall be determined based on the interim and settle-up payment provisions of Minnesota Rules, part 9549.0057, and the reimbursement provisions of section 256B.431, except that subdivision 26, paragraphs (a) and (b), shall not apply until the second rate year after the settle-up cost report is filed. Property-related reimbursement rates shall be determined under section 256B.431, taking into account any federal or state flood-related loans or grants provided to the facility;

(x) to license and certify a total replacement project of up to 129 beds located in Polk county that are relocated from a nursing home destroyed by flood and whose residents were relocated to other nursing homes. The operating cost payment rates for the new nursing facility shall be determined based on the interim and settle-up payment provisions of Minnesota Rules, part 9549.0057, and the reimbursement provisions of section 256B.431, except that subdivision 26, paragraphs (a) and (b), shall not apply until the second rate year after the settle-up cost report is filed. Property-related reimbursement rates shall be determined under section 256B.431, taking into account any federal or state flood-related loans or grants provided to the facility; or

(y) to license and certify beds in a renovation and remodeling project to convert 13 three-bed wards into 13 two-bed rooms and 13 single-bed rooms, expand space, and add improvements in a nursing home that, as of January 1, 1994, met the following conditions: the nursing home was located in Ramsey county, was not owned by a hospital corporation, had a licensed capacity of 64 beds, and had been ranked among the top 15 applicants by the 1993 moratorium exceptions advisory review panel. The total project construction cost estimate for this project must not exceed the cost estimate submitted in connection with the 1993 moratorium exception process.;

(z) to license and certify up to 150 nursing home beds to replace an existing 285 bed nursing facility located in St. Paul. The replacement project shall include both the renovation of existing buildings and the construction of new facilities at the existing site. The reduction in the licensed capacity of the existing facility shall occur during the construction project as beds are taken out of service due to the construction process. Prior to the start of the construction process, the facility shall provide written information to the commissioner of health describing the process for bed reduction, plans for the relocation of residents, and the estimated construction schedule. The relocation of residents shall be in accordance with the provisions of law and rule; or

(aa) to allow the commissioner of human services to license an additional 36 beds to provide residential services for the physically handicapped under Minnesota Rules, parts 9570.2000 to 9570.3400, in a 198-bed nursing home located in Red Wing, provided that the total number of licensed and certified beds at the facility does not increase.

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Sec. 3. Minnesota Statutes 1996, section 144A.09, subdivision 1, is amended to read:

Subdivision 1. [SPIRITUAL MEANS FOR HEALING.] ~~No rule established~~ Sections 144A.04, subdivision 5, and 144A.18 to 144A.27, and rules adopted under sections 144A.01 to 144A.16 other than a rule relating to sanitation and safety of premises, to cleanliness of operation, or to physical equipment ~~shall~~ do not apply to a nursing home conducted by and for the adherents of any recognized church or religious denomination for the purpose of providing care and treatment for those who select and depend upon spiritual means through prayer alone, in lieu of medical care, for healing.

Sec. 4. Minnesota Statutes 1996, section 256B.431, subdivision 2i, is amended to read:

Subd. 2i. [OPERATING COSTS AFTER JULY 1, 1988.] (a) [OTHER OPERATING COST LIMITS.] For the rate year beginning July 1, 1988, the commissioner shall increase the other operating cost limits established in Minnesota Rules, part 9549.0055, subpart 2, item E, to 110 percent of the median of the array of allowable historical other operating cost per diems and index these limits as in Minnesota Rules, part 9549.0056, subparts 3 and 4. The limits must be established in accordance with subdivision 2b, paragraph (d). For rate years beginning on or after July 1, 1989, the adjusted other operating cost limits must be indexed as in Minnesota Rules, part 9549.0056, subparts 3 and 4. For the rate period beginning October 1, 1992, and for rate years beginning after June 30, 1993, the amount of the surcharge under section 256.9657, subdivision 1, shall be included in the plant operations and maintenance operating cost category. The surcharge shall be an allowable cost for the purpose of establishing the payment rate.

(c) [SALARY ADJUSTMENT PER DIEM.] ~~For the rate period~~ Effective ~~October~~ July 1, ~~1988~~ 1998, to June 30, ~~1990~~ 2000, the commissioner shall ~~add the appropriate~~ make available the salary adjustment per diem calculated in clause (1) or (2) to the total operating cost payment rate of each nursing facility reimbursed under this section or section 256B.434. The salary adjustment per diem for each nursing facility must be determined as follows:

(1) For each nursing facility that reports salaries for registered nurses, licensed practical nurses, and aides, orderlies and attendants separately, the commissioner shall determine the salary adjustment per diem by multiplying the total salaries, payroll taxes, and fringe benefits allowed in each operating cost category, except management fees and administrator and central office salaries and the related payroll taxes and fringe benefits, by ~~3.5~~ 3.0 percent and then dividing the resulting amount by the nursing facility's actual resident days~~; and~~.

(2) For each nursing facility that does not report salaries for registered nurses, licensed practical nurses, aides, orderlies, and attendants separately, the salary adjustment per diem is the weighted average salary adjustment per diem increase determined under clause (1).

Each nursing facility that receives a salary adjustment per diem pursuant to this subdivision shall adjust nursing facility employee salaries by a minimum of the amount determined in clause (1) or (2). The commissioner shall review allowable salary costs, including payroll taxes and fringe benefits, for the reporting year ending September 30, 1989, to determine whether or not each nursing facility complied with this requirement. The commissioner shall report the extent to which each nursing facility complied with the legislative commission on long-term care by August 1, 1990.

(3) A nursing facility may apply for the salary adjustment per diem calculated under clauses (1) and (2). The application must be made to the commissioner and contain a plan by which the nursing facility will distribute the salary adjustment to employees of the nursing facility. In order to apply for a salary adjustment, a nursing facility reimbursed under section 256B.434, must report the information required by clause (1) or (2) in the application, in the manner specified by the commissioner. For nursing facilities in which the employees are represented by an exclusive bargaining representative, an agreement negotiated and agreed to by the employer and the exclusive bargaining representative, after

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July 1, 1998, may constitute the plan for the salary distribution. The commissioner shall review the plan to ensure that the salary adjustment per diem is used solely to increase the compensation of nursing home facility employees. To be eligible, a facility must submit its plan for the salary distribution by December 31, 1998. If a facility's plan for salary distribution is effective for its employees after July 1, 1998, the salary adjustment cost per diem shall be effective the same date as its plan.

(4) Additional costs incurred by nursing facilities as a result of this salary adjustment are not allowable costs for purposes of the September 30, 1998, cost report.

(d) [NEW BASE YEAR.] The commissioner shall establish new base years for both the reporting year ending September 30, 1989, and the reporting year ending September 30, 1990. In establishing new base years, the commissioner must take into account:

(1) statutory changes made in geographic groups;

(2) redefinitions of cost categories; and

(3) reclassification, pass-through, or exemption of certain costs such as public employee retirement act contributions.

(e) [NEW BASE YEAR.] The commissioner shall establish a new base year for the reporting years ending September 30, 1991, and September 30, 1992. In establishing a new base year, the commissioner must take into account:

(1) statutory changes made in geographic groups;

(2) redefinitions of cost categories; and

(3) reclassification, pass-through, or exemption of certain costs.

Sec. 5. Minnesota Statutes 1996, section 256B.431, is amended by adding a subdivision to read:

Subd. 2s. [NONALLOWABLE COST.] Costs incurred for any activities which are directed at or are intended to influence or dissuade employees in the exercise of their legal rights to freely engage in the process of selecting an exclusive representative for the purpose of collective bargaining with their employer shall not be allowable for purposes of setting payment rates.

Sec. 6. Minnesota Statutes 1997 Supplement, section 256B.431, subdivision 3f, is amended to read:

Subd. 3f. [PROPERTY COSTS AFTER JULY 1, 1988.] (a) [INVESTMENT PER BED LIMIT.] For the rate year beginning July 1, 1988, the replacement-cost-new per bed limit must be $32,571 per licensed bed in multiple bedrooms and $48,857 per licensed bed in a single bedroom. For the rate year beginning July 1, 1989, the replacement-cost-new per bed limit for a single bedroom must be $49,907 adjusted according to Minnesota Rules, part 9549.0060, subpart 4, item A, subitem (1). Beginning January 1, 1990, the replacement-cost-new per bed limits must be adjusted annually as specified in Minnesota Rules, part 9549.0060, subpart 4, item A, subitem (1). Beginning January 1, 1991, the replacement-cost-new per bed limits will be adjusted annually as specified in Minnesota Rules, part 9549.0060, subpart 4, item A, subitem (1), except that the index utilized will be the Bureau of the Census: Composite fixed-weighted price index as published in the C30 Report, Value of New Construction Put in Place.

(b) [RENTAL FACTOR.] For the rate year beginning July 1, 1988, the commissioner shall increase the rental factor as established in Minnesota Rules, part 9549.0060, subpart 8, item A, by 6.2 percent rounded to the nearest 100th percent for the purpose of reimbursing nursing facilities for soft costs and entrepreneurial profits not included in the cost valuation services used by the state's contracted appraisers. For rate years beginning on or after July 1, 1989, the rental factor is the amount determined under this paragraph for the rate year beginning July 1, 1988.

(c) [OCCUPANCY FACTOR.] For rate years beginning on or after July 1, 1988, in order to determine property-related payment rates under Minnesota Rules, part 9549.0060, for all nursing facilities except those whose average length of stay in a skilled level of care within a nursing facility is 180 days or less, the commissioner shall use 95

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percent of capacity days. For a nursing facility whose average length of stay in a skilled level of care within a nursing facility is 180 days or less, the commissioner shall use the greater of resident days or 80 percent of capacity days but in no event shall the divisor exceed 95 percent of capacity days.

(d) [EQUIPMENT ALLOWANCE.] For rate years beginning on July 1, 1988, and July 1, 1989, the commissioner shall add ten cents per resident per day to each nursing facility's property-related payment rate. The ten-cent property-related payment rate increase is not cumulative from rate year to rate year. For the rate year beginning July 1, 1990, the commissioner shall increase each nursing facility's equipment allowance as established in Minnesota Rules, part 9549.0060, subpart 10, by ten cents per resident per day. For rate years beginning on or after July 1, 1991, the adjusted equipment allowance must be adjusted annually for inflation as in Minnesota Rules, part 9549.0060, subpart 10, item E. For the rate period beginning October 1, 1992, the equipment allowance for each nursing facility shall be increased by 28 percent. For rate years beginning after June 30, 1993, the allowance must be adjusted annually for inflation.

(e) [POST CHAPTER 199 RELATED-ORGANIZATION DEBTS AND INTEREST EXPENSE.] For rate years beginning on or after July 1, 1990, Minnesota Rules, part 9549.0060, subpart 5, item E, shall not apply to outstanding related organization debt incurred prior to May 23, 1983, provided that the debt was an allowable debt under Minnesota Rules, parts 9510.0010 to 9510.0480, the debt is subject to repayment through annual principal payments, and the nursing facility demonstrates to the commissioner's satisfaction that the interest rate on the debt was less than market interest rates for similar arms-length transactions at the time the debt was incurred. If the debt was incurred due to a sale between family members, the nursing facility must also demonstrate that the seller no longer participates in the management or operation of the nursing facility. Debts meeting the conditions of this paragraph are subject to all other provisions of Minnesota Rules, parts 9549.0010 to 9549.0080.

(f) [BUILDING CAPITAL ALLOWANCE FOR NURSING FACILITIES WITH OPERATING LEASES.] For rate years beginning on or after July 1, 1990, a nursing facility with operating lease costs incurred for the nursing facility's buildings shall receive its building capital allowance computed in accordance with Minnesota Rules, part 9549.0060, subpart 8. If an operating lease provides that the lessee's rent is adjusted to recognize improvements made by the lessor and related debt, the costs for capital improvements and related debt shall be allowed in the computation of the lessee's building capital allowance, provided that reimbursement for these costs under an operating lease shall not exceed the rate otherwise paid.

Sec. 7. Minnesota Statutes 1996, section 256B.431, subdivision 4, is amended to read:

Subd. 4. [SPECIAL RATES.] (a) For the rate years beginning July 1, 1983, and July 1, 1984, a newly constructed nursing facility or one with a capacity increase of 50 percent or more may, upon written application to the commissioner, receive an interim payment rate for reimbursement for property-related costs calculated pursuant to the statutes and rules in effect on May 1, 1983, and for operating costs negotiated by the commissioner based upon the 60th percentile established for the appropriate group under subdivision 2a, to be effective from the first day a medical assistance recipient resides in the facility or for the added beds. For newly constructed nursing facilities which are not included in the calculation of the 60th percentile for any group, subdivision 2f, the commissioner shall establish by rule procedures for determining interim operating cost payment rates and interim property-related cost payment rates. The interim payment rate shall not be in effect for more than 17 months. The commissioner shall establish, by emergency and permanent rules, procedures for determining the interim rate and for making a retroactive cost settle-up after the first year of operation; the cost settled operating cost per diem shall not exceed 110 percent of the 60th percentile established for the appropriate group. Until procedures determining operating cost payment rates according to mix of resident needs are established, the commissioner shall establish by rule procedures for determining payment rates for nursing facilities which provide care under a lesser care level than the level for which the nursing facility is certified.

(b) For the rate years beginning on or after July 1, 1985, a newly constructed nursing facility or one with a capacity increase of 50 percent or more may, upon written application to the commissioner, receive an interim payment rate for reimbursement for property related costs, operating costs, and real estate taxes and special assessments calculated under rules promulgated by the commissioner.

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(c) For rate years beginning on or after July 1, 1983, the commissioner may exclude from a provision of 12 MCAR S 2.050 any facility that is licensed by the commissioner of health only as a boarding care home, certified by the commissioner of health as an intermediate care facility, is licensed by the commissioner of human services under Minnesota Rules, parts 9520.0500 to 9520.0690, and has less than five percent of its licensed boarding care capacity reimbursed by the medical assistance program. Until a permanent rule to establish the payment rates for facilities meeting these criteria is promulgated, the commissioner shall establish the medical assistance payment rate as follows:

(1) The desk audited payment rate in effect on June 30, 1983, remains in effect until the end of the facility's fiscal year. The commissioner shall not allow any amendments to the cost report on which this desk audited payment rate is based.

(2) For each fiscal year beginning between July 1, 1983, and June 30, 1985, the facility's payment rate shall be established by increasing the desk audited operating cost payment rate determined in clause (1) at an annual rate of five percent.

(3) For fiscal years beginning on or after July 1, 1985, but before January 1, 1988, the facility's payment rate shall be established by increasing the facility's payment rate in the facility's prior fiscal year by the increase indicated by the consumer price index for Minneapolis and St. Paul.

(4) For the fiscal year beginning on January 1, 1988, the facility's payment rate must be established using the following method: The commissioner shall divide the real estate taxes and special assessments payable as stated in the facility's current property tax statement by actual resident days to compute a real estate tax and special assessment per diem. Next, the prior year's payment rate must be adjusted by the higher of (1) the percentage change in the consumer price index (CPI-U U.S. city average) as published by the Bureau of Labor Statistics between the previous two Septembers, new series index (1967-100), or (2) 2.5 percent, to determine an adjusted payment rate. The facility's payment rate is the adjusted prior year's payment rate plus the real estate tax and special assessment per diem.

(5) For fiscal years beginning on or after January 1, 1989, the facility's payment rate must be established using the following method: The commissioner shall divide the real estate taxes and special assessments payable as stated in the facility's current property tax statement by actual resident days to compute a real estate tax and special assessment per diem. Next, the prior year's payment rate less the real estate tax and special assessment per diem must be adjusted by the higher of (1) the percentage change in the consumer price index (CPI-U U.S. city average) as published by the Bureau of Labor Statistics between the previous two Septembers, new series index (1967-100), or (2) 2.5 percent, to determine an adjusted payment rate. The facility's payment rate is the adjusted payment rate plus the real estate tax and special assessment per diem.

~~(6) For the purpose of establishing payment rates under this paragraph, the facility's rate and reporting years coincide with the facility's fiscal year.~~

~~(d) A facility that meets the criteria of paragraph (c) shall submit annual cost reports on forms prescribed by the commissioner.~~

~~(e)~~ (c) For the rate year beginning July 1, 1985, each nursing facility total payment rate must be effective two calendar months from the first day of the month after the commissioner issues the rate notice to the nursing facility. From July 1, 1985, until the total payment rate becomes effective, the commissioner shall make payments to each nursing facility at a temporary rate that is the prior rate year's operating cost payment rate increased by 2.6 percent plus the prior rate year's property-related payment rate and the prior rate year's real estate taxes and special assessments payment rate. The commissioner shall retroactively adjust the property-related payment rate and the real estate taxes and special assessments payment rate to July 1, 1985, but must not retroactively adjust the operating cost payment rate.

~~(f)~~ (d) For the purposes of Minnesota Rules, part 9549.0060, subpart 13, item F, the following types of transactions shall not be considered a sale or reorganization of a provider entity:

(1) the sale or transfer of a nursing facility upon death of an owner;

(2) the sale or transfer of a nursing facility due to serious illness or disability of an owner as defined under the social security act;

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(3) the sale or transfer of the nursing facility upon retirement of an owner at 62 years of age or older;

(4) any transaction in which a partner, owner, or shareholder acquires an interest or share of another partner, owner, or shareholder in a nursing facility business provided the acquiring partner, owner, or shareholder has less than 50 percent ownership after the acquisition;

(5) a sale and leaseback to the same licensee which does not constitute a change in facility license;

(6) a transfer of an interest to a trust;

(7) gifts or other transfers for no consideration;

(8) a merger of two or more related organizations;

(9) a transfer of interest in a facility held in receivership;

(10) a change in the legal form of doing business other than a publicly held organization which becomes privately held or vice versa;

(11) the addition of a new partner, owner, or shareholder who owns less than 20 percent of the nursing facility or the issuance of stock; or

(12) an involuntary transfer including foreclosure, bankruptcy, or assignment for the benefit of creditors.

Any increase in allowable debt or allowable interest expense or other cost incurred as a result of the foregoing transactions shall be a nonallowable cost for purposes of reimbursement under Minnesota Rules, parts 9549.0010 to 9549.0080.

Sec. 8. Minnesota Statutes 1996, section 256B.431, subdivision 11, is amended to read:

Subd. 11. [SPECIAL PROPERTY RATE SETTING PROCEDURES FOR CERTAIN NURSING FACILITIES.] (a) Notwithstanding Minnesota Rules, part 9549.0060, subpart 13, item H, to the contrary, for the rate year beginning July 1, 1990, a nursing facility leased prior to January 1, 1986, and currently subject to adverse licensure action under section 144A.04, subdivision 4, paragraph (a), or section 144A.11, subdivision 2, and whose ownership changes prior to July 1, 1990, shall be allowed a property-related payment equal to the lesser of its current lease obligation divided by its capacity days as determined in Minnesota Rules, part 9549.0060, subpart 11, as modified by subdivision 3f, paragraph (c), or the frozen property-related payment rate in effect for the rate year beginning July 1, 1989. For rate years beginning on or after July 1, 1991, the property-related payment rate shall be its rental rate computed using the previous owner's allowable principal and interest expense as allowed by the department prior to that prior owner's sale and lease-back transaction of December 1985.

(b) Notwithstanding other provisions of applicable law, a nursing facility licensed for 122 beds on January 1, 1998, and located in Columbia Heights shall have its property-related payment rate set under this subdivision. The commissioner shall make a rate adjustment by adding $2.41 to the facility's July 1, 1997, property-related payment rate. The adjusted property-related payment rate shall be effective for rate years beginning on or after July 1, 1998. The adjustment in this paragraph shall remain in effect so long as the facility's rates are set under this section. If the facility participates in the alternative payment system under section 256B.434, the adjustment in this paragraph shall be included in the facility's contract payment rate. If historical rates or property costs recognized under this section become the basis for future medical assistance payments to the facility under a managed care, capitation, or other alternative payment system, the adjustment in this paragraph shall be included in the computation of the facility's payments.

Sec. 9. Minnesota Statutes 1996, section 256B.431, subdivision 22, is amended to read:

Subd. 22. [CHANGES TO NURSING FACILITY REIMBURSEMENT.] The nursing facility reimbursement changes in paragraphs (a) to (e) apply to Minnesota Rules, parts 9549.0010 to 9549.0080, and this section, and are effective for rate years beginning on or after July 1, 1993, unless otherwise indicated.

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(a) In addition to the approved pension or profit sharing plans allowed by the reimbursement rule, the commissioner shall allow those plans specified in Internal Revenue Code, sections 403(b) and 408(k).

(b) The commissioner shall allow as workers' compensation insurance costs under section 256B.421, subdivision 14, the costs of workers' compensation coverage obtained under the following conditions:

(1) a plan approved by the commissioner of commerce as a Minnesota group or individual self-insurance plan as provided in section 79A.03;

(2) a plan in which:

(i) the nursing facility, directly or indirectly, purchases workers' compensation coverage in compliance with section 176.181, subdivision 2, from an authorized insurance carrier;

(iii) all of the conditions in clause (4) are met;

(3) a plan in which:

(i) the nursing facility, directly or indirectly, purchases workers' compensation coverage in compliance with section 176.181, subdivision 2, from an authorized insurance carrier;

(ii) the insurance premium is calculated retrospectively, including a maximum premium limit, and paid using the paid loss retro method; and

(iii) all of the conditions in clause (4) are met;

(4) additional conditions are:

(i) the costs of the plan are allowable under the federal Medicare program;

(ii) the reserves for the plan are maintained in an account controlled and administered by a person which is not a related organization to the nursing facility;

(iii) the reserves for the plan cannot be used, directly or indirectly, as collateral for debts incurred or other obligations of the nursing facility or related organizations to the nursing facility;

(iv) if the plan provides workers' compensation coverage for non-Minnesota nursing facilities, the plan's cost methodology must be consistent among all nursing facilities covered by the plan, and if reasonable, is allowed notwithstanding any reimbursement laws regarding cost allocation to the contrary;

(v) central, affiliated, corporate, or nursing facility costs related to their administration of the plan are costs which must remain in the nursing facility's administrative cost category and must not be allocated to other cost categories; ~~and~~

(vi) required security deposits, whether in the form of cash, investments, securities, assets, letters of credit, or in any other form are not allowable costs for purposes of establishing the facilities payment rate.; and

(vii) for the rate year beginning on July 1, 1998, a group of nursing facilities related by common ownership that self-insures workers' compensation may allocate its directly identified costs of self-insuring its Minnesota nursing facility workers among those nursing facilities in the group that are reimbursed under this section or section 256B.434. The method of cost allocation shall be based on the ratio of each nursing facility's total allowable salaries and wages to that of the nursing facility group's total allowable salaries and wages, then similarly allocated within each nursing facility's operating cost categories. The costs associated with the administration of the group's self-insurance plan must remain

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classified in the nursing facility's administrative cost category. A written request of the nursing facility group's election to use this alternate method of allocation of self-insurance costs must be received by the commissioner no later than May 1, 1998, to take effect July 1, 1998, or such costs shall continue to be allocated under the existing cost allocation methods. Once a nursing facility group elects this method of cost allocation for its workers' compensation self-insurance costs, it shall remain in effect until such time as the group no longer self-insures these costs;

(5) any costs allowed pursuant to clauses (1) to (3) are subject to the following requirements:

(i) if the nursing facility is sold or otherwise ceases operations, the plan's reserves must be subject to an actuarially based settle-up after 36 months from the date of sale or the date on which operations ceased. The facility's medical assistance portion of the total excess plan reserves must be paid to the state within 30 days following the date on which excess plan reserves are determined;

(ii) any distribution of excess plan reserves made to or withdrawals made by the nursing facility or a related organization are applicable credits and must be used to reduce the nursing facility's workers' compensation insurance costs in the reporting period in which a distribution or withdrawal is received;

(iii) if reimbursement for the plan is sought under the federal Medicare program, and is audited pursuant to the Medicare program, the nursing facility must provide a copy of Medicare's final audit report, including attachments and exhibits, to the commissioner within 30 days of receipt by the nursing facility or any related organization. The commissioner shall implement the audit findings associated with the plan upon receipt of Medicare's final audit report. The department's authority to implement the audit findings is independent of its authority to conduct a field audit.

(c) In the determination of incremental increases in the nursing facility's rental rate as required in subdivisions 14 to 21, except for a refinancing permitted under subdivision 19, the commissioner must adjust the nursing facility's property-related payment rate for both incremental increases and decreases in recomputations of its rental rate;

(d) A nursing facility's administrative cost limitation must be modified as follows:

(1) if the nursing facility's licensed beds exceed 195 licensed beds, the general and administrative cost category limitation shall be 13 percent;

(2) if the nursing facility's licensed beds are more than 150 licensed beds, but less than 196 licensed beds, the general and administrative cost category limitation shall be 14 percent; or

(3) if the nursing facility's licensed beds is less than 151 licensed beds, the general and administrative cost category limitation shall remain at 15 percent.

(f) For the rate year beginning on July 1, 1998, a group of nursing facilities related by common ownership that self-insures group health, dental, or life insurance may allocate its directly identified costs of self-insuring its Minnesota nursing facility workers among those nursing facilities in the group that are reimbursed under this section or section 256B.434. The method of cost allocation shall be based on the ratio of each nursing facility's total allowable salaries and wages to that of the nursing facility group's total allowable salaries and wages, then similarly allocated within each nursing facility's operating cost categories. The costs associated with the administration of the group's self-insurance plan must remain classified in the nursing facility's administrative cost category. A written request of the nursing facility group's election to use this alternate method of allocation of self-insurance costs must be received by the commissioner no later than May 1, 1998, to take effect July 1, 1998, or those self-insurance costs shall continue to be allocated under the existing cost allocation methods. Once a nursing facility group elects this method of cost allocation for its group health, dental, or life insurance self-insurance costs, it shall remain in effect until such time as the group no longer self-insures these costs.

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Sec. 10. Minnesota Statutes 1997 Supplement, section 256B.431, subdivision 26, is amended to read:

Subd. 26. [CHANGES TO NURSING FACILITY REIMBURSEMENT BEGINNING JULY 1, 1997.] The nursing facility reimbursement changes in paragraphs (a) to (f) shall apply in the sequence specified in Minnesota Rules, parts 9549.0010 to 9549.0080, and this section, beginning July 1, 1997.

(a) For rate years beginning on or after July 1, 1997, the commissioner shall limit a nursing facility's allowable operating per diem for each case mix category for each rate year. The commissioner shall group nursing facilities into two groups, freestanding and nonfreestanding, within each geographic group, using their operating cost per diem for the case mix A classification. A nonfreestanding nursing facility is a nursing facility whose other operating cost per diem is subject to the hospital attached, short length of stay, or the rule 80 limits. All other nursing facilities shall be considered freestanding nursing facilities. The commissioner shall then array all nursing facilities in each grouping by their allowable case mix A operating cost per diem. In calculating a nursing facility's operating cost per diem for this purpose, the commissioner shall exclude the raw food cost per diem related to providing special diets that are based on religious beliefs, as determined in subdivision 2b, paragraph (h). For those nursing facilities in each grouping whose case mix A operating cost per diem:

(1) is at or below the median of the array, the commissioner shall limit the nursing facility's allowable operating cost per diem for each case mix category to the lesser of the prior reporting year's allowable operating cost per diem as specified in Laws 1996, chapter 451, article 3, section 11, paragraph (h), plus the inflation factor as established in paragraph (d), clause (2), increased by two percentage points, or the current reporting year's corresponding allowable operating cost per diem; or

(2) is above the median of the array, the commissioner shall limit the nursing facility's allowable operating cost per diem for each case mix category to the lesser of the prior reporting year's allowable operating cost per diem as specified in Laws 1996, chapter 451, article 3, section 11, paragraph (h), plus the inflation factor as established in paragraph (d), clause (2), increased by one percentage point, or the current reporting year's corresponding allowable operating cost per diem.

For purposes of paragraph (a), if a nursing facility reports on its cost report a reduction in cost due to a refund or credit for a rate year beginning on or after July 1, 1998, the commissioner shall increase that facility's spend-up limit for the rate year following the current rate year by the amount of the cost reduction divided by its resident days for the reporting year preceding the rate year in which the adjustment is to be made.

(c) For rate years beginning on or after July 1, 1997, the commissioner shall determine a nursing facility's efficiency incentive by first computing the allowable difference, which is the lesser of $4.50 or the amount by which the facility's other operating cost limit exceeds its nonadjusted other operating cost per diem for that rate year. The commissioner shall compute the efficiency incentive by:

(1) subtracting the allowable difference from $4.50 and dividing the result by $4.50;

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(2) multiplying 0.20 by the ratio resulting from clause (1), and then;

(3) adding 0.50 to the result from clause (2); and

(4) multiplying the result from clause (3) times the allowable difference.

The nursing facility's efficiency incentive payment shall be the lesser of $2.25 or the product obtained in clause (4).

(d) For rate years beginning on or after July 1, 1997, the forecasted price index for a nursing facility's allowable operating cost per diem shall be determined under clauses (1) and (2) using the change in the Consumer Price Index-All Items (United States city average) (CPI-U) as forecasted by Data Resources, Inc. The commissioner shall use the indices as forecasted in the fourth quarter of the calendar year preceding the rate year, subject to subdivision 2l, paragraph (c).

(1) The CPI-U forecasted index for allowable operating cost per diem shall be based on the 21-month period from the midpoint of the nursing facility's reporting year to the midpoint of the rate year following the reporting year.

(2) For rate years beginning on or after July 1, 1997, the forecasted index for operating cost limits referred to in subdivision 21, paragraph (b), shall be based on the CPI-U for the 12-month period between the midpoints of the two reporting years preceding the rate year.

(e) After applying these provisions for the respective rate years, the commissioner shall index these allowable operating cost per diem by the inflation factor provided for in paragraph (d), clause (1), and add the nursing facility's efficiency incentive as computed in paragraph (c).

(f) For rate years beginning on or after July 1, 1997, the total operating cost payment rates for a nursing facility shall be the greater of the total operating cost payment rates determined under this section or the total operating cost payment rates in effect on June 30, 1997, subject to rate adjustments due to field audit or rate appeal resolution. This provision shall not apply to subsequent field audit adjustments of the nursing facility's operating cost rates for rate years beginning on or after July 1, 1997.

(g) For the rate years beginning on July 1, 1997, ~~and~~ July 1, 1998, and July 1, 1999, a nursing facility licensed for 40 beds effective May 1, 1992, with a subsequent increase of 20 Medicare/Medicaid certified beds, effective January 26, 1993, in accordance with an increase in licensure is exempt from paragraphs (a) and (b).

(h) For a nursing facility whose construction project was authorized according to section 144A.073, subdivision 5, paragraph (g), the operating cost payment rates for the third location shall be determined based on Minnesota Rules, part 9549.0057. Paragraphs (a) and (b) shall not apply until the second rate year after the settle-up cost report is filed. Notwithstanding subdivision 2b, paragraph (g), real estate taxes and special assessments payable by the third location, a 501(c)(3) nonprofit corporation, shall be included in the payment rates determined under this subdivision for all subsequent rate years.

(i) For the rate year beginning July 1, 1997, the commissioner shall compute the payment rate for a nursing facility licensed for 94 beds on September 30, 1996, that applied in October 1993 for approval of a total replacement under the moratorium exception process in section 144A.073, and completed the approved replacement in June 1995, with other operating cost spend-up limit under paragraph (a), increased by $3.98, and after computing the facility's payment rate according to this section, the commissioner shall make a one-year positive rate adjustment of $3.19 for operating costs related to the newly constructed total replacement, without application of paragraphs (a) and (b). The facility's per diem, before the $3.19 adjustment, shall be used as the prior reporting year's allowable operating cost per diem for payment rate calculation for the rate year beginning July 1, 1998. A facility described in this paragraph is exempt from paragraph (b) for the rate years beginning July 1, 1997, and July 1, 1998.

(j) For the purpose of applying the limit stated in paragraph (a), a nursing facility in Kandiyohi county licensed for 86 beds that was granted hospital-attached status on December 1, 1994, shall have the prior year's allowable care-related per diem increased by $3.207 and the prior year's other operating cost per diem increased by $4.777 before adding the inflation in paragraph (d), clause (2), for the rate year beginning on July 1, 1997.

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(k) For the purpose of applying the limit stated in paragraph (a), a 117 bed nursing facility located in Pine county shall have the prior year's allowable other operating cost per diem increased by $1.50 before adding the inflation in paragraph (d), clause (2), for the rate year beginning on July 1, 1997.

(l) For the purpose of applying the limit under paragraph (a), a nursing facility in Hibbing licensed for 192 beds shall have the prior year's allowable other operating cost per diem increased by $2.67 before adding the inflation in paragraph (d), clause (2), for the rate year beginning July 1, 1997.

Sec. 11. Minnesota Statutes 1996, section 256B.431, is amended by adding a subdivision to read:

Subd. 27. [CHANGES TO NURSING FACILITY REIMBURSEMENT BEGINNING JULY 1, 1998.] (a) For the purpose of applying the limit stated in subdivision 26, paragraph (a), a nursing facility in Hennepin county licensed for 181 beds on September 30, 1996, shall have the prior year's allowable care-related per diem increased by $1.455 and the prior year's other operating cost per diem increased by $0.439 before adding the inflation in subdivision 26, paragraph (d), clause (2), for the rate year beginning on July 1, 1998.

(b) For the purpose of applying the limit stated in subdivision 26, paragraph (a), a nursing facility in Hennepin county licensed for 161 beds on September 30, 1996, shall have the prior year's allowable care-related per diem increased by $1.154 and the prior year's other operating cost per diem increased by $0.256 before adding the inflation in subdivision 26, paragraph (d), clause (2), for the rate year beginning on July 1, 1998.

(c) For the purpose of applying the limit stated in subdivision 26, paragraph (a), a nursing facility in Ramsey county licensed for 176 beds on September 30, 1996, shall have the prior year's allowable care-related per diem increased by $0.803 and the prior year's other operating cost per diem increased by $0.272 before adding the inflation in subdivision 26, paragraph (d), clause (2), for the rate year beginning on July 1, 1998.

(d) For the purpose of applying the limit stated in subdivision 26, paragraph (a), a nursing facility in Brown county licensed for 86 beds on September 30, 1996, shall have the prior year's allowable care-related per diem increased by $0.850 and the prior year's other operating cost per diem increased by $0.275 before adding the inflation in subdivision 26, paragraph (d), clause (2), for the rate year beginning on July 1, 1998.

(e) For the rate year beginning July 1, 1998, the commissioner shall compute the payment rate for a nursing facility, which was licensed for 110 beds on May 1, 1997, was granted approval in January 1994 for a replacement and remodeling project under the moratorium exception process in section 144A.073, and completed the approved replacement and remodeling project on March 14, 1997, by increasing the other operating cost spend-up limit under paragraph (a) by $1.64. After computing the facility's payment rate for the rate year beginning July 1, 1998, according to this section, the commissioner shall make a one-year positive rate adjustment of 48 cents for increased real estate taxes resulting from completion of the moratorium exception project, without application of paragraphs (a) and (b).

(f) For the rate year beginning July 1, 1998, the commissioner shall compute the payment rate for a nursing facility exempted from care-related limits under subdivision 2b, paragraph (d), clause (2), with a minimum of three-quarters of its beds licensed to provide residential services for the physically handicapped under Minnesota Rules, parts 9570.2000 to 9570.3400, with the care-related spend-up limit under subdivision 26, paragraph (a), increased by $13.21 for the rate year beginning July 1, 1998, without application of subdivision 26, paragraph (b). For rate years beginning on or after July 1, 1999, the commissioner shall exclude that amount in calculating the facility's operating cost per diem for purposes of applying subdivision 26, paragraph (b).

(g) For the rate year beginning July 1, 1998, a nursing facility in Canby, Minnesota, licensed for 75 beds shall be reimbursed without the limitation imposed under subdivision 26, paragraph (a), and for rate years beginning on or after July 1, 1999, its base costs shall be calculated on the basis of its September 30, 1997, cost report.

(h) The nursing facility reimbursement changes in paragraphs (i) and (j) shall apply in the sequence specified in this section and Minnesota Rules, parts 9549.0010 to 9549.0080, beginning July 1, 1998.

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(i) For rate years beginning on or after July 1, 1998, the operating cost limits established in subdivisions 2, 2b, 2i, 3c, and 22, paragraph (d), and any previously effective corresponding limits in law or rule shall not apply, except that these cost limits shall still be calculated for purposes of determining efficiency incentive per diems. For rate years beginning on or after July 1, 1998, the total operating cost payment rates for a nursing facility shall be the greater of the total operating cost payment rates determined under this section or the total operating cost payment rates in effect on June 30, 1998, subject to rate adjustments due to field audit or rate appeal resolution.

(j) For rate years beginning on or after July 1, 1998, the operating cost per diem referred to in subdivision 26, paragraph (a), clauses (1) and (2), is the sum of the care-related and other operating per diems for a given case mix class. Any reductions to the combined operating per diem shall be divided proportionately between the care-related and other operating per diems.

(k) For rate years beginning on or after July 1, 1998, the commissioner shall modify the determination of the spend-up limits referred to in subdivision 26, paragraph (a), by indexing each group's previous year's median value by the factor in subdivision 26, paragraph (d), clause (2), plus one percentage point.

(l) For rate years beginning on or after July 1, 1998, the commissioner shall modify the determination of the high cost limits referred to in subdivision 26, paragraph (b), by indexing each group's previous year's high cost per diem limits at .5 and one standard deviations above the median by the factor in subdivision 26, paragraph (d), clause (2), plus one percentage point.

Sec. 12. Minnesota Statutes 1997 Supplement, section 256B.433, subdivision 3a, is amended to read:

Subd. 3a. [EXEMPTION FROM REQUIREMENT FOR SEPARATE THERAPY BILLING.] The provisions of subdivision 3 do not apply to nursing facilities that are reimbursed according to the provisions of section 256B.431 and are located in a county participating in the prepaid medical assistance program. Nursing facilities that are reimbursed according to the provisions of section 256B.434 and are located in a county participating in the prepaid medical assistance program are exempt from the maximum therapy rent revenue provisions of subdivision 3, paragraph (c).

Sec. 13. Minnesota Statutes 1997 Supplement, section 256B.434, subdivision 10, is amended to read:

Subd. 10. [EXEMPTIONS.] (a) To the extent permitted by federal law, (1) a facility that has entered into a contract under this section is not required to file a cost report, as defined in Minnesota Rules, part 9549.0020, subpart 13, for any year after the base year that is the basis for the calculation of the contract payment rate for the first rate year of the alternative payment demonstration project contract; and (2) a facility under contract is not subject to audits of historical costs or revenues, or paybacks or retroactive adjustments based on these costs or revenues, except audits, paybacks, or adjustments relating to the cost report that is the basis for calculation of the first rate year under the contract.

(b) A facility that is under contract with the commissioner under this section is not subject to the moratorium on licensure or certification of new nursing home beds in section 144A.071, unless the project results in a net increase in bed capacity or involves relocation of beds from one site to another. Contract payment rates must not be adjusted to reflect any additional costs that a nursing facility incurs as a result of a construction project undertaken under this paragraph. In addition, as a condition of entering into a contract under this section, a nursing facility must agree that any future medical assistance payments for nursing facility services will not reflect any additional costs attributable to the sale of a nursing facility under this section and to construction undertaken under this paragraph that otherwise would not be authorized under the moratorium in section 144A.073. Nothing in this section prevents a nursing facility participating in the alternative payment demonstration project under this section from seeking approval of an exception to the moratorium through the process established in section 144A.073, and if approved the facility's rates shall be adjusted to reflect the cost of the project. Nothing in this section prevents a nursing facility participating in the alternative payment demonstration project from seeking legislative approval of an exception to the moratorium under section 144A.071, and, if enacted, the facility's rates shall be adjusted to reflect the cost of the project.

(c) Notwithstanding section 256B.48, subdivision 6, paragraphs (c), (d), and (e), and pursuant to any terms and conditions contained in the facility's contract, a nursing facility that is under contract with the commissioner under this section is in compliance with section 256B.48, subdivision 6, paragraph (b), if the facility is Medicare certified.

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(d) Notwithstanding paragraph (a), if by April 1, 1996, the health care financing administration has not approved a required waiver, or the health care financing administration otherwise requires cost reports to be filed prior to the waiver's approval, the commissioner shall require a cost report for the rate year.

(e) A facility that is under contract with the commissioner under this section shall be allowed to change therapy arrangements from an unrelated vendor to a related vendor during the term of the contract. The commissioner may develop reasonable requirements designed to prevent an increase in therapy utilization for residents enrolled in the medical assistance program.

Sec. 14. [256B.435] [NURSING FACILITY REIMBURSEMENT SYSTEM EFFECTIVE JULY 1, 2000.]

Subdivision 1. [IN GENERAL.] Effective July 1, 2000, the commissioner shall implement a performance-based contracting system to replace the current method of setting operating cost payment rates under sections 256B.431 and 256B.434 and Minnesota Rules, parts 9549.0010 to 9549.0080. A nursing facility in operation on May 1, 1998, with payment rates not established under section 256B.431 or 256B.434 on that date, is ineligible for this performance-based contracting system. In determining prospective payment rates of nursing facility services, the commissioner shall distinguish between operating costs and property-related costs. The commissioner of finance shall include an annual inflationary adjustment in operating costs for nursing facilities using the inflation factor specified in subdivision 3 as a budget change request in each biennial detailed expenditure budget submitted to the legislature under section 16A.11. Property related payment rates, including real estate taxes and special assessments, shall be determined under section 256B.431 or 256B.434 or under a new property-related reimbursement system, if one is implemented by the commissioner under subdivision 3.

Subd. 2. [CONTRACT PROVISIONS.] (a) The performance-based contract with each nursing facility must include provisions that:

(1) apply the resident case mix assessment provisions of Minnesota Rules, parts 9549.0051, 9549.0058, and 9549.0059, or another assessment system, with the goal of moving to a single assessment system;

(2) monitor resident outcomes through various methods, such as quality indicators based on the minimum data set and other utilization and performance measures;

(3) require the establishment and use of a continuous quality improvement process that integrates information from quality indicators and regular resident and family satisfaction interviews;

(4) require annual reporting of facility statistical information, including resident days by case mix category, productive nursing hours, wages and benefits, and raw food costs for use by the commissioner in the development of facility profiles that include trends in payment and service utilization;

(5) require from each nursing facility an annual certified audited financial statement consisting of a balance sheet, income and expense statements, and an opinion from either a licensed or certified public accountant, if a certified audit was prepared, or unaudited financial statements if no certified audit was prepared; and

(6) establish additional requirements and penalties for nursing facilities not meeting the standards set forth in the performance-based contract.

(b) The commissioner may develop additional incentive-based payments for achieving outcomes specified in each contract. The specified facility-specific outcomes must be measurable and approved by the commissioner.

(c) The commissioner may also contract with nursing facilities in other ways through requests for proposals, including contracts on a risk or nonrisk basis, with nursing facilities or consortia of nursing facilities, to provide comprehensive long-term care coverage on a premium or capitated basis.

Subd. 3. [PAYMENT RATE PROVISIONS.] (a) For rate years beginning on or after July 1, 2000, within the limits of appropriations specifically for this purpose, the commissioner shall determine operating cost payment rates for each licensed and certified nursing facility by indexing its operating cost payment rates in effect on June 30, 2000, for inflation.

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The inflation factor to be used must be based on the change in the Consumer Price Index-All Items, United States city average (CPI-U) as forecasted by Data Resources, Inc. in the fourth quarter preceding the rate year. The CPI-U forecasted index for operating cost payment rates shall be based on the 12-month period from the midpoint of the nursing facility's prior rate year to the midpoint of the rate year for which the operating payment rate is being determined.

(b) Beginning July 1, 2000, each nursing facility subject to a performance-based contract under this section shall choose one of two methods of payment for property related costs:

(1) the method established in section 256B.434; or

(2) the method established in section 256B.431.

Once the nursing facility has made the election in paragraph (b), that election shall remain in effect for at least four years or until an alternative property payment system is developed.

(c) For rate years beginning on or after July 1, 2000, the commissioner may implement a new method of payment for property related costs that addresses the capital needs of nursing facilities. Notwithstanding paragraph (b), the new property payment system or systems, if implemented, shall replace the current method of setting property payment rates under sections 256B.431 and 256B.434.

Sec. 15. Minnesota Statutes 1996, section 256B.501, subdivision 12, is amended to read:

Subd. 12. [ICF/MR SALARY ADJUSTMENTS.] ~~For the rate period beginning January~~ Effective July 1, ~~1992~~ 1998, ~~and ending September 30, 1993~~ to September 30, 2000, the commissioner shall ~~add~~ make available the appropriate salary adjustment cost per diem calculated in paragraphs (a) to ~~(d)~~ (e) to the total operating cost payment rate of each facility subject to reimbursement under this section and Laws 1993 First Special Session, chapter 1, article 4, section 11. The salary adjustment cost per diem must be determined as follows:

(a) [COMPUTATION AND REVIEW GUIDELINES.] ~~Except as provided in paragraph (c),~~ A state-operated community service, and any facility whose payment rates are governed by closure agreements, receivership agreements, or Minnesota Rules, part 9553.0075, ~~are~~ is not eligible for a salary adjustment otherwise granted under this subdivision. For purposes of the salary adjustment per diem computation and reviews in this subdivision, the term "salary adjustment cost" means the facility's allowable program operating cost category employee training expenses, and the facility's allowable salaries, payroll taxes, and fringe benefits. The term does not include these same salary-related costs for both administrative or central office employees.

For the purpose of determining the amount of salary adjustment to be granted under this subdivision, the commissioner must use the reporting year ending December 31, ~~1990~~ 1996, as the base year for the salary adjustment per diem computation. For the purpose of both years' salary adjustment cost review, the commissioner must use the facility's salary adjustment cost for the reporting year ending December 31, 1991, as the base year. If the base year and the reporting years subject to review include salary cost reclassifications made by the department, the commissioner must reconcile those differences before completing the salary adjustment per diem review.

(b) [SALARY ADJUSTMENT PER DIEM COMPUTATION.] For the rate period beginning ~~January 1, 1992~~ July 1, 1998, each facility shall receive a salary adjustment cost per diem equal to its salary adjustment costs multiplied by ~~1-1/2~~ 3.0 percent, and then divided by the facility's resident days.

(c) [ADJUSTMENTS FOR NEW FACILITIES.] For newly constructed or newly established facilities, except for state-operated community services, whose payment rates are governed by Minnesota Rules, part 9553.0075, if the settle-up cost report includes a reporting year which is subject to review under this subdivision, the commissioner shall adjust the rule provision governing the maximum settle-up payment rate by increasing the .4166 percent for each full month of the settle-up cost report to .7083. For any subsequent rate period which is authorized for salary adjustments under this subdivision, the commissioner shall compute salary adjustment cost per diems by annualizing the salary adjustment costs for the settle-up cost report period and treat that period as the base year for purposes of reviewing salary adjustment cost per diems.

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(d) [SALARY ADJUSTMENT PER DIEM REVIEW.] The commissioner shall review the implementation of the salary adjustments on a per diem basis. For reporting years ending December 31, 1992, and December 31, 1993, the commissioner must review and determine the amount of change in salary adjustment costs in both of the above reporting years over the base year after the reporting year ending December 31, 1993. The commissioner must inflate the base year's salary adjustment costs by the cumulative percentage increase granted in paragraph (b), plus three percentage points for each of the two years reviewed. The commissioner must then compare each facility's salary adjustment costs for the reporting year divided by the facility's resident days for both reporting years to the base year's inflated salary adjustment cost divided by the facility's resident days for the base year. If the facility has had a one-time program operating cost adjustment settle-up during any of the reporting years subject to review, the commissioner must remove the per diem effect of the one-time program adjustment before completing the review and per diem comparison.

The review and per diem comparison must be done by the commissioner after the reporting year ending December 31, 1993. If the salary adjustment cost per diem for the reporting years being reviewed is less than the base year's inflated salary adjustment cost per diem, the commissioner must recover the difference within 120 days after the date of written notice. The amount of the recovery shall be equal to the per diem difference multiplied by the facility's resident days in the reporting years being reviewed. Written notice of the amount subject to recovery must be given by the commissioner following both reporting years reviewed. Interest charges must be assessed by the commissioner after the 120th day of that notice at the same interest rate the commissioner assesses for other balance outstanding.

(c) [SUBMITTAL OF PLAN.] A facility may apply for the salary adjustment per diem calculated under this subdivision. The application must be made to the commissioner and contain a plan by which the facility will distribute the salary adjustment to employees of the facility. For facilities in which the employees are represented by an exclusive bargaining representative, an agreement negotiated and agreed to by the employer and the exclusive bargaining representative, after July 1, 1998, may constitute the plan for the salary distribution. The commissioner shall review the plan to ensure that the salary adjustment per diem is used solely to increase the compensation of facility employees. To be eligible, a facility must submit its plan for the salary distribution by December 31, 1998. If a facility's plan for salary distribution is effective for its employees after July 1, 1998, the salary adjustment cost per diem shall be effective the same date as its plan.

(d) [COST REPORT.] Additional costs incurred by facilities as a result of this salary adjustment are not allowable costs for purposes of the December 31, 1998, cost report.

(e) [SALARY ADJUSTMENT.] In order to apply for a salary adjustment, a facility reimbursed under Laws 1993, First Special Session chapter 1, article 4, section 11, must report the information referred to in paragraph (a) in the application, in the manner specified by the commissioner.

Sec. 16. [256B.5011] [ICF/MR REIMBURSEMENT SYSTEM EFFECTIVE OCTOBER 1, 2000.]

Subdivision 1. [IN GENERAL.] Effective October 1, 2000, the commissioner shall implement a performance-based contracting system to replace the current method of setting total cost payment rates under section 256B.501 and Minnesota Rules, parts 9553.0010 to 9553.0080. In determining prospective payment rates of intermediate care facilities for persons with mental retardation or related conditions, the commissioner shall index each facility's total payment rate by an inflation factor as described in subdivision 3. The commissioner of finance shall include annual inflation adjustments in operating costs for intermediate care facilities for persons with mental retardation and related conditions as a budget change request in each biennial detailed expenditure budget submitted to the legislature under section 16A.11.

Subd. 2. [CONTRACT PROVISIONS.] The performance-based contract with each intermediate care facility must include provisions for:

(1) modifying payments when significant changes occur in the needs of the consumers;

(2) monitoring service quality using performance indicators that measure consumer outcomes;

(3) the establishment and use of continuous quality improvement processes using the results attained through service quality monitoring;

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(4) the annual reporting of facility statistical information on all supervisory personnel, direct care personnel, specialized support personnel, hours, wages and benefits, staff-to-consumer ratios, and staffing patterns;

(5) annual aggregate facility financial information or an annual certified audited financial statement, including a balance sheet and income and expense statements for each facility, if a certified audit was prepared; and

(6) additional requirements and penalties for intermediate care facilities not meeting the standards set forth in the performance-based contract.

Subd. 3. [PAYMENT RATE PROVISIONS.] For rate years beginning on or after October 1, 2000, within the limits of appropriations specifically for this purpose, the commissioner shall determine the total payment rate for each licensed and certified intermediate care facility by indexing the total payment rate in effect on September 30, 2000, for inflation. The inflation factor to be used must be based on the change in the Consumer Price Index-All Items, United States city average (CPI-U) as forecasted by Data Resources, Inc. in the first quarter of the calendar year during which the rate year begins. The CPI-U forecasted index for total payment rates shall be based on the 12-month period from the midpoint of the facility's prior rate year to the midpoint of the rate year for which the operating payment rate is being determined.

Sec. 17. Minnesota Statutes 1996, section 256B.69, is amended by adding a subdivision to read:

Subd. 26. [CONTINUATION OF PAYMENTS THROUGH DISCHARGE.] In the event a medical assistance recipient or beneficiary enrolled in a health plan under this section is denied nursing facility services after residing in the facility for more than 180 days, any denial of medical assistance payment to a provider under this section shall be prospective only and payments to the provider shall continue until the resident is discharged or 30 days after the effective date of the service denial, whichever is sooner.

Sec. 18. Minnesota Statutes 1996, section 256I.04, subdivision 1, is amended to read:

Subdivision 1. [INDIVIDUAL ELIGIBILITY REQUIREMENTS.] An individual is eligible for and entitled to a group residential housing payment to be made on the individual's behalf if the county agency has approved the individual's residence in a group residential housing setting and the individual meets the requirements in paragraph (a) or (b).

(a) The individual is aged, blind, or is over 18 years of age and disabled as determined under the criteria used by the title II program of the Social Security Act, and meets the resource restrictions and standards of the supplemental security income program, and the individual's countable income after deducting the (1) exclusions and disregards of the SSI program ~~and~~, (2) the medical assistance personal needs allowance under section 256B.35, and (3) an amount equal to the income actually made available to a community spouse by an elderly waiver recipient under the provisions of sections 256B.0575, paragraph (a), clause (4), and 256B.058, subdivision 2, is less than the monthly rate specified in the county agency's agreement with the provider of group residential housing in which the individual resides.

(b) The individual meets a category of eligibility under section 256D.05, subdivision 1, paragraph (a), and the individual's resources are less than the standards specified by section 256D.08, and the individual's countable income as determined under sections 256D.01 to 256D.21, less the medical assistance personal needs allowance under section 256B.35 is less than the monthly rate specified in the county agency's agreement with the provider of group residential housing in which the individual resides.

Sec. 19. Minnesota Statutes 1996, section 256I.04, subdivision 3, is amended to read:

Subd. 3. [MORATORIUM ON THE DEVELOPMENT OF GROUP RESIDENTIAL HOUSING BEDS.] (a) County agencies shall not enter into agreements for new group residential housing beds with total rates in excess of the MSA equivalent rate except: (1) for group residential housing establishments meeting the requirements of subdivision 2a, clause (2) with department approval; (2) for group residential housing establishments licensed under Minnesota Rules, parts 9525.0215 to 9525.0355, provided the facility is needed to meet the census reduction targets for persons with mental retardation or related conditions at regional treatment centers; (3) to ensure compliance with the federal Omnibus Budget Reconciliation Act alternative disposition plan requirements for inappropriately placed persons with mental retardation or related conditions or mental illness; (4) up to 80 beds in a single, specialized facility located in Hennepin county that

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will provide housing for chronic inebriates who are repetitive users of detoxification centers and are refused placement in emergency shelters because of their state of intoxication., and planning for the specialized facility must have been initiated before July 1, 1991, in anticipation of receiving a grant from the housing finance agency under section 462A.05, subdivision 20a, paragraph (b); or (5) notwithstanding the provisions of subdivision 2a, for up to ~~180~~ 190 supportive housing units in Anoka, Dakota, Hennepin, or Ramsey county for homeless adults with a mental illness, a history of substance abuse, or human immunodeficiency virus or acquired immunodeficiency syndrome. For purposes of this section, "homeless adult" means a person who is living on the street or in a shelter ~~or is evicted from a dwelling unit~~ or discharged from a regional treatment center, community hospital, or residential treatment program and has no appropriate housing available and lacks the resources and support necessary to access appropriate housing. At least 70 percent of the supportive housing units must serve homeless adults with mental illness, substance abuse problems, or human immunodeficiency virus or acquired immunodeficiency syndrome who are about to be or, within the previous six months, has been discharged from a regional treatment center, or a state-contracted psychiatric bed in a community hospital, or a residential mental health or chemical dependency treatment program. If a person meets the requirements of subdivision 1, paragraph (a), and receives a federal ~~Section 8~~ or state housing subsidy, the group residential housing rate for that person is limited to the supplementary rate under section 256I.05, subdivision 1a, and is determined by subtracting the amount of the person's countable income that exceeds the MSA equivalent rate from the group residential housing supplementary rate. A resident in a demonstration project site who no longer participates in the demonstration program shall retain eligibility for a group residential housing payment in an amount determined under section 256I.06, subdivision 8, using the MSA equivalent rate. Service funding under section 256I.05, subdivision 1a, will end June 30, 1997, if federal matching funds are available and the services can be provided through a managed care entity. If federal matching funds are not available, then service funding will continue under section 256I.05, subdivision 1a.

(b) A county agency may enter into a group residential housing agreement for beds with rates in excess of the MSA equivalent rate in addition to those currently covered under a group residential housing agreement if the additional beds are only a replacement of beds with rates in excess of the MSA equivalent rate which have been made available due to closure of a setting, a change of licensure or certification which removes the beds from group residential housing payment, or as a result of the downsizing of a group residential housing setting. The transfer of available beds from one county to another can only occur by the agreement of both counties.

Sec. 20. Minnesota Statutes 1996, section 256I.04, is amended by adding a subdivision to read:

Subd. 4. [RENTAL ASSISTANCE.] For participants in the Minnesota supportive housing demonstration program under subdivision 3, paragraph (a), clause (5), notwithstanding the provisions of section 256I.06, subdivision 8, the amount of the group residential housing payment for room and board must be calculated by subtracting 30 percent of the recipient's adjusted income as defined by the United States Department of Housing and Urban Development for the Section 8 program from the fair market rent established for the recipient's living unit by the federal Department of Housing and Urban Development. This payment shall be regarded as a state housing subsidy for the purposes of subdivision 3. Notwithstanding the provisions of section 256I.06, subdivision 6, the recipient's countable income will only be adjusted when a change of greater than $100 in a month occurs or upon annual redetermination of eligibility, whichever is sooner. The commissioner is directed to study the feasibility of developing a rental assistance program to serve persons traditionally served in group residential housing settings and report to the legislature by February 15, 1999.

Sec. 21. Minnesota Statutes 1996, section 256I.05, subdivision 2, is amended to read:

Subd. 2. [MONTHLY RATES; EXEMPTIONS.] The maximum group residential housing rate does not apply to a residence that on August 1, 1984, was licensed by the commissioner of health only as a boarding care home, certified by the commissioner of health as an intermediate care facility, and licensed by the commissioner of human services under Minnesota Rules, parts 9520.0500 to 9520.0690. Notwithstanding the provisions of subdivision 1c, the rate paid to a facility reimbursed under this subdivision shall be determined under ~~Minnesota Rules, parts 9510.0010 to 9510.0480~~ section 256B.431, or under section 256B.434 if the facility is accepted by the commissioner for participation in the alternative payment demonstration project.

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Sec. 22. Laws 1997, chapter 207, section 7, is amended to read:

Sec. 7. [PRIVATE SALE OF TAX-FORFEITED LAND; CARLTON COUNTY.]

(a) Notwithstanding Minnesota Statutes, sections 92.45 and 282.018, subdivision 1, and the public sale provisions of Minnesota Statutes, chapter 282, Carlton county may sell by private sale the tax-forfeited land described in paragraph (d) under the remaining provisions of Minnesota Statutes, chapter 282.

(b) The land described in paragraph (d) may be sold by private sale. The consideration ~~for the conveyance must include the taxes due on the property and any penalties, interest, and costs~~ shall be the appraised value of the land. If the lands are sold, the conveyance must reserve ~~to the state~~ a ~~conservation~~ perpetual easement, in a form prescribed by the commissioner of natural resources, for the land within 100 feet of the ordinary high water level of Slaughterhouse creek for public angler access and stream habitat protection and enhancement for the benefit of the state of Minnesota, department of natural resources, over the following lands:

A strip of land lying in the North 6.66 acres of the West Half of the Northeast Quarter of the Southwest Quarter of Section 6, Township 48 North, Range 16 West, Carlton county. Said strip lying 100 feet on each side of the centerline of Slaughterhouse Creek.

(d) The land to be conveyed is located in Carlton county and is described as:

North 6.66 acres of the West Half of the Northeast Quarter of the Southwest Quarter, subject to pipeline easement, Section 6, Township 48 North, Range 16 West, City of Carlton.

(e) Carlton county has determined that this sale best serves the land management interests of Carlton county.

Sec. 23. [RECOMMENDATIONS TO IMPLEMENT NEW REIMBURSEMENT SYSTEM.]

(a) By January 15, 1999, the commissioner shall make recommendations to the chairs of the health and human services policy and fiscal committees on the repeal of specific statutes and rules as well as any other additional recommendations related to implementation of sections 11 and 12.

(b) In developing recommendations for nursing facility reimbursement, the commissioner shall consider making each nursing facility's total payment rates, both operating and property rate components, prospective. The commissioner shall involve nursing facility industry and consumer representatives in the development of these recommendations.

(c) In making recommendations for ICF/MR reimbursement, the commissioner may consider methods of establishing payment rates that take into account individual client costs and needs, include provisions to establish links between performance indicators and reimbursement and other performance incentives, and allow local control over resources necessary for local agencies to set rates and contract with ICF/MR facilities. In addition, the commissioner may establish methods that provide information to consumers regarding service quality as measured by performance indicators. The commissioner shall involve ICF/MR industry and consumer representatives in the development of these recommendations.

Sec. 24. [APPROVAL EXTENDED.]

Notwithstanding Minnesota Statutes, section 144A.073, subdivision 3, the commissioner of health shall grant an additional 18 months of approval for a proposed exception to the nursing home licensure and certification moratorium, if the proposal is to replace a 96-bed nursing home facility in Carlton county and if initial approval for the proposal was granted in November 1996.

Sec. 25. [EFFECTIVE DATE.]

Sections 1, 3, 22, and 24 are effective the day following final enactment.

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HEALTH CARE PROGRAMS, INCLUDING MA AND GAMC

Section 1. Minnesota Statutes 1997 Supplement, section 171.29, subdivision 2, is amended to read:

Subd. 2. [FEES, ALLOCATION.] (a) A person whose driver's license has been revoked as provided in subdivision 1, except under section 169.121 or 169.123, shall pay a $30 fee before the driver's license is reinstated.

(b) A person whose driver's license has been revoked as provided in subdivision 1 under section 169.121 or 169.123 shall pay a $250 fee plus a $10 surcharge before the driver's license is reinstated. The $250 fee is to be credited as follows:

(1) Twenty percent shall be credited to the trunk highway fund.

(2) Fifty-five percent shall be credited to the general fund.

(3) Eight percent shall be credited to a separate account to be known as the bureau of criminal apprehension account. Money in this account may be appropriated to the commissioner of public safety and the appropriated amount shall be apportioned 80 percent for laboratory costs and 20 percent for carrying out the provisions of section 299C.065.

(4) Twelve percent shall be credited to a separate account to be known as the alcohol-impaired driver education account. Money in the account is appropriated as follows:

(i) The first $200,000 in a fiscal year is to the commissioner of children, families, and learning for programs in elementary and secondary schools.

(ii) The remainder credited in a fiscal year is appropriated to the commissioner of transportation to be spent as grants to the Minnesota highway safety center at St. Cloud State University for programs relating to alcohol and highway safety education in elementary and secondary schools.

(5) Five percent shall be credited to a separate account to be known as the traumatic brain injury and spinal cord injury account. ~~$100,000 is annually appropriated from the account to the commissioner of human services for traumatic brain injury case management services.~~ The ~~remaining~~ money in the account is annually appropriated to the commissioner of health to be used as follows: 35 percent for a contract with a qualified community-based organization to provide information, resources, and support to assist persons with traumatic brain injury and their families to access services, and 65 percent to ~~establish and~~ maintain the traumatic brain injury and spinal cord injury registry created in section 144.662 ~~and to reimburse the commissioner of economic security for the reasonable cost of services provided under section 268A.03, clause (o)~~. For the purposes of this clause, a "qualified community-based organization" is a private, not-for-profit organization of consumers of traumatic brain injury services and their family members. The organization must be registered with the United States Internal Revenue Service under the provisions of section 501(c)(3) as a tax exempt organization and must have as its purposes:

(i) the promotion of public, family, survivor, and professional awareness of the incidence and consequences of traumatic brain injury;

(ii) the provision of a network of support for persons with traumatic brain injury, their families, and friends;

(iii) the development and support of programs and services to prevent traumatic brain injury;

(iv) the establishment of education programs for persons with traumatic brain injury; and

(v) the empowerment of persons with traumatic brain injury through participation in its governance.

No patient's name, identifying information or identifiable medical data will be disclosed to the organization without the informed voluntary written consent of the patient or patient's guardian, or if the patient is a minor, of the parent or guardian of the patient.

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(c) The $10 surcharge shall be credited to a separate account to be known as the remote electronic alcohol monitoring pilot program account. The commissioner shall transfer the balance of this account to the commissioner of finance on a monthly basis for deposit in the general fund.

Sec. 2. Minnesota Statutes 1996, section 245.462, subdivision 4, is amended to read:

Subd. 4. [CASE MANAGER.] (a) "Case manager" means an individual employed by the county or other entity authorized by the county board to provide case management services specified in section 245.4711. A case manager must have a bachelor's degree in one of the behavioral sciences or related fields from an accredited college or university and have at least 2,000 hours of supervised experience in the delivery of services to adults with mental illness, must be skilled in the process of identifying and assessing a wide range of client needs, and must be knowledgeable about local community resources and how to use those resources for the benefit of the client. The case manager shall meet in person with a mental health professional at least once each month to obtain clinical supervision of the case manager's activities. Case managers with a bachelor's degree but without 2,000 hours of supervised experience in the delivery of services to adults with mental illness must complete 40 hours of training approved by the commissioner of human services in case management skills and in the characteristics and needs of adults with serious and persistent mental illness and must receive clinical supervision regarding individual service delivery from a mental health professional at least once each week until the requirement of 2,000 hours of supervised experience is met. Clinical supervision must be documented in the client record.

Until June 30, 1999, ~~a refugee~~ an immigrant who does not have the qualifications specified in this subdivision may provide case management services to adult ~~refugees~~ immigrants with serious and persistent mental illness who are members of the same ethnic group as the case manager if the person: (1) is actively pursuing credits toward the completion of a bachelor's degree in one of the behavioral sciences or a related field from an accredited college or university; (2) completes 40 hours of training as specified in this subdivision; and (3) receives clinical supervision at least once a week until the requirements of ~~obtaining a bachelor's degree and 2,000 hours of supervised experience~~ this subdivision are met.

(b) The commissioner may approve waivers submitted by counties to allow case managers without a bachelor's degree but with 6,000 hours of supervised experience in the delivery of services to adults with mental illness if the person:

(1) meets the qualifications for a mental health practitioner in subdivision 26;

(2) has completed 40 hours of training approved by the commissioner in case management skills and in the characteristics and needs of adults with serious and persistent mental illness; and

(3) demonstrates that the 6,000 hours of supervised experience are in identifying functional needs of persons with mental illness, coordinating assessment information and making referrals to appropriate service providers, coordinating a variety of services to support and treat persons with mental illness, and monitoring to ensure appropriate provision of services. The county board is responsible to verify that all qualifications, including content of supervised experience, have been met.

Sec. 3. Minnesota Statutes 1996, section 245.462, subdivision 8, is amended to read:

Subd. 8. [DAY TREATMENT SERVICES.] "Day treatment," "day treatment services," or "day treatment program" means a structured program of treatment and care provided to an adult in or by: (1) a hospital accredited by the joint commission on accreditation of health organizations and licensed under sections 144.50 to 144.55; (2) a community mental health center under section 245.62; or (3) an entity that is under contract with the county board to operate a program that meets the requirements of section 245.4712, subdivision 2, and Minnesota Rules, parts 9505.0170 to 9505.0475. Day treatment consists of group psychotherapy and other intensive therapeutic services that are provided at least one day a week ~~for a minimum three-hour time block~~ by a multidisciplinary staff under the clinical supervision of a mental health professional. The services are aimed at stabilizing the adult's mental health status, providing mental health services, and developing and improving the adult's independent living and socialization skills. The goal of day treatment is to reduce or relieve mental illness and to enable the adult to live in the community. Day treatment services are not a part of inpatient or residential treatment services. Day treatment services are distinguished from day care by their structured therapeutic program of psychotherapy services. The commissioner may limit medical assistance reimbursement for day treatment to 15 hours per week per person instead of the three hours per day per person specified in Minnesota Rules, part 9505.0323, subpart 15.

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Sec. 4. Minnesota Statutes 1996, section 245.4871, subdivision 4, is amended to read:

Subd. 4. [CASE MANAGER.] (a) "Case manager" means an individual employed by the county or other entity authorized by the county board to provide case management services specified in subdivision 3 for the child with severe emotional disturbance and the child's family. A case manager must have experience and training in working with children.

(b) A case manager must:

(1) have at least a bachelor's degree in one of the behavioral sciences or a related field from an accredited college or university;

(2) have at least 2,000 hours of supervised experience in the delivery of mental health services to children;

(3) have experience and training in identifying and assessing a wide range of children's needs; and

(4) be knowledgeable about local community resources and how to use those resources for the benefit of children and their families.

(c) The case manager may be a member of any professional discipline that is part of the local system of care for children established by the county board.

(d) The case manager must meet in person with a mental health professional at least once each month to obtain clinical supervision.

(e) Case managers with a bachelor's degree but without 2,000 hours of supervised experience in the delivery of mental health services to children with emotional disturbance must:

(1) begin 40 hours of training approved by the commissioner of human services in case management skills and in the characteristics and needs of children with severe emotional disturbance before beginning to provide case management services; and

(2) receive clinical supervision regarding individual service delivery from a mental health professional at least once each week until the requirement of 2,000 hours of experience is met.

(f) Clinical supervision must be documented in the child's record. When the case manager is not a mental health professional, the county board must provide or contract for needed clinical supervision.

(g) The county board must ensure that the case manager has the freedom to access and coordinate the services within the local system of care that are needed by the child.

(h) Until June 30, 1999, ~~a refugee~~ an immigrant who does not have the qualifications specified in this subdivision may provide case management services to child ~~refugees~~ immigrants with severe emotional disturbance of the same ethnic group as the ~~refugee~~ immigrant if the person:

(1) is actively pursuing credits toward the completion of a bachelor's degree in one of the behavioral sciences or related fields at an accredited college or university;

(2) completes 40 hours of training as specified in this subdivision; and

(3) receives clinical supervision at least once a week until the requirements of obtaining a bachelor's degree and 2,000 hours of supervised experience are met.

(i) The commissioner may approve waivers submitted by counties to allow case managers without a bachelor's degree but with 6,000 hours of supervised experience in the delivery of services to children with severe emotional disturbance if the person:

(1) meets the qualifications for a mental health practitioner in subdivision 26;

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(2) has completed 40 hours of training approved by the commissioner in case management skills and in the characteristics and needs of children with severe emotional disturbance; and

(3) demonstrates that the 6,000 hours of supervised experience are in identifying functional needs of children with severe emotional disturbance, coordinating assessment information and making referrals to appropriate service providers, coordinating a variety of services to support and treat children with severe emotional disturbance, and monitoring to ensure appropriate provision of services. The county board is responsible to verify that all qualifications, including content of supervised experience, have been met.

Sec. 5. Minnesota Statutes 1996, section 256.01, is amended by adding a subdivision to read:

Subd. 15. [INFORMATION FOR PERSONS WITH LIMITED ENGLISH-LANGUAGE PROFICIENCY.] By July 1, 1998, the commissioner shall implement a procedure for public assistance applicants and recipients to identify a language preference other than English in order to receive information pertaining to the public assistance programs in that preferred language.

Sec. 6. [256.9364] [POST-KIDNEY TRANSPLANT DRUG PROGRAM.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of human services shall establish and administer a program to pay for costs of drugs prescribed exclusively for post-kidney transplant maintenance when those costs are not otherwise reimbursed by a third-party payer. The commissioner may contract with a nonprofit entity to administer this program.

Subd. 2. [ELIGIBILITY REQUIREMENTS.] To be eligible for the program, an applicant must satisfy the following requirements:

(1) the applicant's family gross income must not exceed 275 percent of the federal poverty level; and

(2) the applicant must be a Minnesota resident who has resided in Minnesota for at least 12 months.

An applicant shall not be excluded because the applicant received the transplant outside the state of Minnesota, so long as the other requirements are met.

Subd. 3. [PAYMENT AMOUNTS.] (a) The amount of the payments made for each eligible recipient shall be based on the following:

(1) available funds; and

(2) the cost of the post-kidney transplant maintenance drugs.

(b) The payment rate under this program must be no greater than the medical assistance reimbursement rate for the prescribed drug.

(c) Payments shall be made to or on behalf of an eligible recipient for the cost of the post-kidney transplant maintenance drugs that is not covered, reimbursed, or eligible for reimbursement by any other third party or government entity, including, but not limited to, private or group health insurance, medical assistance, Medicare, the Veterans Administration, the senior citizen drug program established under section 256.955, or under any waiver arrangement received by the state to provide a prescription drug benefit for qualified Medicare beneficiaries or service-limited Medicare beneficiaries.

(d) The commissioner may restrict or categorize payments to meet the appropriation allocated for this program.

(e) Any cost of the post-kidney transplant maintenance drugs that is not reimbursed under this program is the responsibility of the program recipient.

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Subd. 4. [DRUG FORMULARY.] The commissioner shall maintain a drug formulary that includes all drugs eligible for reimbursement by the program. The commissioner may use the drug formulary established under section 256B.0625, subdivision 13. The commissioner shall establish an internal review procedure for updating the formulary that allows for the addition and deletion of drugs to the formulary. The drug formulary must be reviewed at least quarterly per fiscal year.

Subd. 5. [PRIVATE DONATIONS.] The commissioner may accept funding from other public or private sources.

Subd. 6. [SUNSET.] This program expires on July 1, 2000.

Sec. 7. Minnesota Statutes 1997 Supplement, section 256.9657, subdivision 3, is amended to read:

Subd. 3. [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 1992, each health maintenance organization with a certificate of authority issued by the commissioner of health under chapter 62D and each community integrated service network licensed by the commissioner under chapter 62N shall pay to the commissioner of human services a surcharge equal to six-tenths of one percent of the total premium revenues of the health maintenance organization or community integrated service network as reported to the commissioner of health according to the schedule in subdivision 4.

(b) For purposes of this subdivision, total premium revenue means:

(1) premium revenue recognized on a prepaid basis from individuals and groups for provision of a specified range of health services over a defined period of time which is normally one month, excluding premiums paid to a health maintenance organization or community integrated service network from the Federal Employees Health Benefit Program;

(2) premiums from Medicare wrap-around subscribers for health benefits which supplement Medicare coverage;

(3) Medicare revenue, as a result of an arrangement between a health maintenance organization or a community integrated service network and the health care financing administration of the federal Department of Health and Human Services, for services to a Medicare beneficiary, excluding Medicare revenue that states are prohibited from taxing under sections 4001 and 4002 of Public Law Number 105-33 received by a health maintenance organization or community integrated service network through risk sharing or Medicare Choice Plus contracts; and

(4) medical assistance revenue, as a result of an arrangement between a health maintenance organization or community integrated service network and a Medicaid state agency, for services to a medical assistance beneficiary.

If advance payments are made under clause (1) or (2) to the health maintenance organization or community integrated service network for more than one reporting period, the portion of the payment that has not yet been earned must be treated as a liability.

(c) When a health maintenance organization or community integrated service network merges or consolidates with or is acquired by another health maintenance organization or community integrated service network, the surviving corporation or the new corporation shall be responsible for the annual surcharge originally imposed on each of the entities or corporations subject to the merger, consolidation, or acquisition, regardless of whether one of the entities or corporations does not retain a certificate of authority under chapter 62D or a license under chapter 62N.

(d) Effective July 1 of each year, the surviving corporation's or the new corporation's surcharge shall be based on the revenues earned in the second previous calendar year by all of the entities or corporations subject to the merger, consolidation, or acquisition regardless of whether one of the entities or corporations does not retain a certificate of authority under chapter 62D or a license under chapter 62N until the total premium revenues of the surviving corporation include the total premium revenues of all the merged entities as reported to the commissioner of health.

(e) When a health maintenance organization or community integrated service network, which is subject to liability for the surcharge under this chapter, transfers, assigns, sells, leases, or disposes of all or substantially all of its property or assets, liability for the surcharge imposed by this chapter is imposed on the transferee, assignee, or buyer of the health maintenance organization or community integrated service network.

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(f) In the event a health maintenance organization or community integrated service network converts its licensure to a different type of entity subject to liability for the surcharge under this chapter, but survives in the same or substantially similar form, the surviving entity remains liable for the surcharge regardless of whether one of the entities or corporations does not retain a certificate of authority under chapter 62D or a license under chapter 62N.

(g) The surcharge assessed to a health maintenance organization or community integrated service network ends when the entity ceases providing services for premiums and the cessation is not connected with a merger, consolidation, acquisition, or conversion.

Sec. 8. Minnesota Statutes 1997 Supplement, section 256.9685, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY.] The commissioner shall establish procedures for determining medical assistance and general assistance medical care payment rates under a prospective payment system for inpatient hospital services in hospitals that qualify as vendors of medical assistance. The commissioner shall establish, by rule, procedures for implementing this section and sections 256.9686, 256.969, and 256.9695. The medical assistance payment rates must be based on methods and standards that the commissioner finds are adequate to provide for the costs that must be incurred for the care of recipients in efficiently and economically operated hospitals. Services must meet the requirements of section 256B.04, subdivision 15, or 256D.03, subdivision 7, paragraph (b), to be eligible for payment.

Sec. 9. Minnesota Statutes 1996, section 256.969, subdivision 16, is amended to read:

Subd. 16. [INDIAN HEALTH SERVICE FACILITIES.] ~~Indian health service~~ Facilities of the Indian health service and facilities operated by a tribe or tribal organization under funding authorized by title III of the Indian Self-Determination and Education Assistance Act, Public Law Number 93-638, or by United States Code, title 25, chapter 14, subchapter II, sections 450f to 450n, are exempt from the rate establishment methods required by this section and shall be ~~reimbursed at charges as limited to the amount allowed under federal law~~ paid according to the rate published by the United States assistant secretary for health under authority of United States Code, title 42, sections 248A and 248B.

Sec. 10. Minnesota Statutes 1996, section 256.969, subdivision 17, is amended to read:

Subd. 17. [OUT-OF-STATE HOSPITALS IN LOCAL TRADE AREAS.] Out-of-state hospitals that are located within a Minnesota local trade area and that have more than 20 admissions in the base year shall have rates established using the same procedures and methods that apply to Minnesota hospitals. For this subdivision and subdivision 18, local trade area means a county contiguous to Minnesota and located in a metropolitan statistical area as determined by Medicare for October 1 prior to the most current rebased rate year. Hospitals that are not required by law to file information in a format necessary to establish rates shall have rates established based on the commissioner's estimates of the information. Relative values of the diagnostic categories shall not be redetermined under this subdivision until required by rule. Hospitals affected by this subdivision shall then be included in determining relative values. However, hospitals that have rates established based upon the commissioner's estimates of information shall not be included in determining relative values. This subdivision is effective for hospital fiscal years beginning on or after July 1, 1988. A hospital shall provide the information necessary to establish rates under this subdivision at least 90 days before the start of the hospital's fiscal year.

Sec. 11. Minnesota Statutes 1996, section 256B.03, subdivision 3, is amended to read:

Subd. 3. [~~AMERICAN INDIAN HEALTH FUNDING~~ TRIBAL PURCHASING MODEL.] (a) Notwithstanding subdivision 1 and sections 256B.0625 and 256D.03, subdivision 4, paragraph ~~(f)~~ (i), the commissioner may make payments to federally recognized Indian tribes with a reservation in the state to provide medical assistance and general assistance medical care to Indians, as defined under federal law, who reside on or near the reservation. The payments may be made in the form of a block grant or other payment mechanism determined in consultation with the tribe. Any alternative payment mechanism agreed upon by the tribes and the commissioner under this subdivision is not dependent upon county or health plan agreement but is intended to create a direct payment mechanism between the state and the tribe for the administration of the medical assistance ~~program~~ and general assistance medical care programs, and for covered services.

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(b) A tribe that implements a purchasing model under this subdivision shall report to the commissioner at least annually on the operation of the model. The commissioner and the tribe shall cooperatively determine the data elements, format, and timetable for the report.

(c) For purposes of this subdivision, "Indian tribe" means a tribe, band, or nation, or other organized group or community of Indians that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians and for which a reservation exists as is consistent with Public Law Number 100-485, as amended.

(d) Payments under this subdivision may not result in an increase in expenditures that would not otherwise occur in the medical assistance program under this chapter or the general assistance medical care program under chapter 256D.

Sec. 12. [256B.038] [PROVIDER RATE INCREASES AFTER JUNE 30, 1999.]

(a) For fiscal years beginning on or after July 1, 1999, the commissioner of finance shall include an annual inflationary adjustment in payment rates for the services listed in paragraph (b) as a budget change request in each biennial detailed expenditure budget submitted to the legislature under section 16A.11. The adjustment shall be accomplished by indexing the rates in effect for inflation based on the change in the Consumer Price Index-All Items (United States city average)(CPI-U) as forecasted by Data Resources, Inc., in the fourth quarter of the prior year for the calendar year during which the rate increase occurs.

(c) The commissioner shall increase prepaid medical assistance program capitation rates as appropriate to reflect the rate increases in this section.

(d) In implementing this section, the commissioner shall consider proposing a schedule to equalize rates paid by different programs for the same service.

Sec. 13. Minnesota Statutes 1996, section 256B.055, subdivision 7, is amended to read:

Subd. 7. [AGED, BLIND, OR DISABLED PERSONS.] Medical assistance may be paid for a person who meets the categorical eligibility requirements of the supplemental security income program or, who would meet those requirements except for excess income or assets, and who meets the other eligibility requirements of this section.

Effective February 1, 1989, and to the extent allowed by federal law the commissioner shall deduct state and federal income taxes and federal insurance contributions act payments withheld from the individual's earned income in determining eligibility under this subdivision.

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Sec. 14. Minnesota Statutes 1996, section 256B.055, is amended by adding a subdivision to read:

Subd. 7a. [SPECIAL CATEGORY FOR DISABLED CHILDREN.] Medical assistance may be paid for a person who is under age 18 and who meets income and asset eligibility requirements of the Supplemental Security Income program if the person was receiving Supplemental Security Income payments on the date of enactment of section 211(a) of Public Law Number 104-193, the Personal Responsibility and Work Opportunity Act of 1996, and the person would have continued to receive the payments except for the change in the childhood disability criteria in section 211(a) of Public Law Number 104-193.

Sec. 15. Minnesota Statutes 1997 Supplement, section 256B.056, subdivision 1a, is amended to read:

Subd. 1a. [INCOME AND ASSETS GENERALLY.] Unless specifically required by state law or rule or federal law or regulation, the methodologies used in counting income and assets to determine eligibility for medical assistance for persons whose eligibility category is based on blindness, disability, or age of 65 or more years, the methodologies for the supplemental security income program shall be used, except that payments made according to a court order for the support of children shall be excluded from income in an amount not to exceed the difference between the applicable income standard used in the state's medical assistance program for aged, blind, and disabled persons and the applicable income standard used in the state's medical assistance program for families with children. Exclusion of court-ordered child support payments is subject to the condition that if there has been a change in the financial circumstances of the person with the legal obligation to pay support since the support order was entered, the person with the legal obligation to pay support has petitioned for modification of the support order. For families and children, which includes all other eligibility categories, the methodologies under the state's AFDC plan in effect as of July 16, 1996, as required by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Public Law Number 104-193, shall be used. Effective upon federal approval, in-kind contributions to, and payments made on behalf of, a recipient, by an obligor, in satisfaction of or in addition to a temporary or permanent order for child support or maintenance, shall be considered income to the recipient. For these purposes, a "methodology" does not include an asset or income standard, or accounting method, or method of determining effective dates.

Sec. 16. Minnesota Statutes 1997 Supplement, section 256B.056, subdivision 4, is amended to read:

Subd. 4. [INCOME.] To be eligible for medical assistance, a person must not have, or anticipate receiving, semiannual income in excess of 120 percent of the income standards by family size used under the aid to families with dependent children state plan as of July 16, 1996, as required by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Public Law Number 104-193, except that eligible under section 256B.055, subdivision 7, and families and children may have an income up to 133-1/3 percent of the AFDC income standard in effect under the July 16, 1996, AFDC state plan. For rate years beginning on or after July 1, 1999, the commissioner shall consider increasing the base AFDC standard in effect July 16, 1996, by an amount equal to the percent change in the Consumer Price Index for all urban consumers for the previous October compared to one year earlier. In computing income to determine eligibility of persons who are not residents of long-term care facilities, the commissioner shall disregard increases in income as required by Public Law Numbers 94-566, section 503; 99-272; and 99-509. Veterans aid and attendance benefits and Veterans Administration unusual medical expense payments are considered income to the recipient.

Sec. 17. Minnesota Statutes 1996, section 256B.057, subdivision 3a, is amended to read:

Subd. 3a. [ELIGIBILITY FOR PAYMENT OF MEDICARE PART B PREMIUMS.] A person who would otherwise be eligible as a qualified Medicare beneficiary under subdivision 3, except the person's income is in excess of the limit, is eligible for medical assistance reimbursement of Medicare Part B premiums if the person's income is less than ~~110~~ 120 percent of the official federal poverty guidelines for the applicable family size. ~~The income limit shall increase to 120 percent of the official federal poverty guidelines for the applicable family size on January 1, 1995.~~

Sec. 18. Minnesota Statutes 1996, section 256B.057, is amended by adding a subdivision to read:

Subd. 3b. [QUALIFYING INDIVIDUALS.] Beginning July 1, 1998, to the extent of the federal allocation to Minnesota, a person, who would otherwise be eligible as a qualified Medicare beneficiary under subdivision 3, except that the person's income is in excess of the limit, is eligible as a qualifying individual according to the following criteria:

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(1) if the person's income is greater than 120 percent, but less than 135 percent of the official federal poverty guidelines for the applicable family size, the person is eligible for medical assistance reimbursement of Medicare Part B premiums; or

(2) if the person's income is equal to or greater than 135 percent but less than 175 percent of the official federal poverty guidelines for the applicable family size, the person is eligible for medical assistance reimbursement of that portion of the Medicare Part B premium attributable to an increase in Part B expenditures which resulted from the shift of home care services from Medicare Part A to Medicare Part B under Public Law Number 105-33, section 4732, the Balanced Budget Act of 1997.

The commissioner shall limit enrollment of qualifying individuals under this subdivision according to the requirements of Public Law Number 105-33, section 4732.

Sec. 19. Minnesota Statutes 1997 Supplement, section 256B.06, subdivision 4, is amended to read:

Subd. 4. [CITIZENSHIP REQUIREMENTS.] (a) Eligibility for medical assistance is limited to citizens of the United States, qualified noncitizens as defined in this subdivision, and other persons residing lawfully in the United States.

(b) "Qualified noncitizen" means a person who meets one of the following immigration criteria:

(1) admitted for lawful permanent residence according to United States Code, title 8;

(2) admitted to the United States as a refugee according to United States Code, title 8, section 1157;

(3) granted asylum according to United States Code, title 8, section 1158;

(4) granted withholding of deportation according to United States Code, title 8, section 1253(h);

(5) paroled for a period of at least one year according to United States Code, title 8, section 1182(d)(5);

(6) granted conditional entrant status according to United States Code, title 8, section 1153(a)(7); or

(7) determined to be a battered noncitizen by the United States Attorney General according to the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, title V of the Omnibus Consolidated Appropriations Bill, Public Law Number 104-200;

(8) is a child of a noncitizen determined to be a battered noncitizen by the United States Attorney General according to the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, title V, of the Omnibus Consolidated Appropriations Bill, Public Law Number 104-200; or

(9) determined to be a Cuban or Haitian entrant as defined in section 501(e) of Public Law Number 96-422, the Refugee Education Assistance Act of 1980.

(c) All qualified noncitizens who were residing in the United States before August 22, 1996, who otherwise meet the eligibility requirements of chapter 256B, are eligible for medical assistance with federal financial participation.

(d) All qualified noncitizens who entered the United States on or after August 22, 1996, and who otherwise meet the eligibility requirements of chapter 256B, are eligible for medical assistance with federal financial participation through November 30, 1996.

Beginning December 1, 1996, qualified noncitizens who entered the United States on or after August 22, 1996, and who otherwise meet the eligibility requirements of chapter 256B are eligible for medical assistance with federal participation for five years if they meet one of the following criteria:

(i) refugees admitted to the United States according to United States Code, title 8, section 1157;

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(ii) persons granted asylum according to United States Code, title 8, section 1158;

(iii) persons granted withholding of deportation according to United States Code, title 8, section 1253(h);

(iv) veterans of the United States Armed Forces with an honorable discharge for a reason other than noncitizen status, their spouses and unmarried minor dependent children; or

(v) persons on active duty in the United States Armed Forces, other than for training, their spouses and unmarried minor dependent children.

Beginning December 1, 1996, qualified noncitizens who do not meet one of the criteria in items (i) to (v) are eligible for medical assistance without federal financial participation as described in paragraph (j).

(e) Noncitizens who are not qualified noncitizens as defined in paragraph (b), who are lawfully residing in the United States and who otherwise meet the eligibility requirements of chapter 256B, are eligible for medical assistance under clauses (1) to (3). These individuals must cooperate with the Immigration and Naturalization Service to pursue any applicable immigration status, including citizenship, that would qualify them for medical assistance with federal financial participation.

(1) Persons who were medical assistance recipients on August 22, 1996, are eligible for medical assistance with federal financial participation through December 31, 1996.

(2) Beginning January 1, 1997, persons described in clause (1) are eligible for medical assistance without federal financial participation as described in paragraph (j).

(3) Beginning December 1, 1996, persons residing in the United States prior to August 22, 1996, who were not receiving medical assistance and persons who arrived on or after August 22, 1996, are eligible for medical assistance without federal financial participation as described in paragraph (j).

(f) Nonimmigrants who otherwise meet the eligibility requirements of chapter 256B are eligible for the benefits as provided in paragraphs (g) to (i). For purposes of this subdivision, a "nonimmigrant" is a person in one of the classes listed in United States Code, title 8, section 1101(a)(15).

(g) Payment shall also be made for care and services that are furnished to noncitizens, regardless of immigration status, who otherwise meet the eligibility requirements of chapter 256B, if such care and services are necessary for the treatment of an emergency medical condition, except for organ transplants and related care and services and routine prenatal care.

(h) For purposes of this subdivision, the term "emergency medical condition" means a medical condition that meets the requirements of United States Code, title 42, section 1396b(v).

(i) Pregnant noncitizens who are undocumented or nonimmigrants, who otherwise meet the eligibility requirements of chapter 256B, are eligible for medical assistance payment without federal financial participation for care and services through the period of pregnancy, and 60 days postpartum, except for labor and delivery.

(j) Qualified noncitizens as described in paragraph (d), and all other noncitizens lawfully residing in the United States as described in paragraph (e), who are ineligible for medical assistance with federal financial participation and who otherwise meet the eligibility requirements of chapter 256B and of this paragraph, are eligible for medical assistance without federal financial participation. Qualified noncitizens as described in paragraph (d) are only eligible for medical assistance without federal financial participation for five years from their date of entry into the United States.

(k) The commissioner shall submit to the legislature by December 31, 1998, a report on the number of recipients and cost of coverage of care and services made according to paragraphs (i) and (j).

Sec. 20. Minnesota Statutes 1996, section 256B.0625, is amended by adding a subdivision to read:

Subd. 3a. [GENDER REASSIGNMENT SURGERY.] Gender reassignment surgery and other gender reassignment medical procedures including drug therapy for gender reassignment are not covered unless the individual began receiving gender reassignment services prior to July 1, 1998.

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Sec. 21. Minnesota Statutes 1996, section 256B.0625, subdivision 7, is amended to read:

Sec. 22. Minnesota Statutes 1996, section 256B.0625, subdivision 17, is amended to read:

Subd. 17. [TRANSPORTATION COSTS.] (a) Medical assistance covers transportation costs incurred solely for obtaining emergency medical care or transportation costs incurred by nonambulatory persons in obtaining emergency or nonemergency medical care when paid directly to an ambulance company, common carrier, or other recognized providers of transportation services. For the purpose of this subdivision, a person who is incapable of transport by taxicab or bus shall be considered to be nonambulatory.

(b) Medical assistance covers special transportation, as defined in Minnesota Rules, part 9505.0315, subpart 1, item F, if the provider receives and maintains a current physician's order by the recipient's attending physician certifying that the recipient has a physical or mental impairment that would prohibit the recipient from safely accessing and using a bus, taxi, other commercial transportation, or private automobile. Special transportation includes driver-assisted service to eligible individuals. Driver-assisted service includes passenger pickup at and return to the individual's residence or place of business, assistance with admittance of the individual to the medical facility, and assistance in passenger securement or in securing of wheelchairs or stretchers in the vehicle. The commissioner shall establish maximum medical assistance reimbursement rates for special transportation services for persons who need a wheelchair lift van or stretcher-equipped vehicle and for those who do not need a wheelchair lift van or stretcher-equipped vehicle. The average of these two rates per trip must not exceed ~~$14~~ $15 for the base rate and ~~$1.10~~ $1.20 per mile. Special transportation provided to nonambulatory persons who do not need a wheelchair lift van or stretcher-equipped vehicle, may be reimbursed at a lower rate than special transportation provided to persons who need a wheelchair lift van or stretcher-equipped vehicle.

Sec. 23. Minnesota Statutes 1996, section 256B.0625, is amended by adding a subdivision to read:

Subd. 17a. [PAYMENT FOR AMBULANCE SERVICES.] Effective for services rendered on or after July 1, 1999, medical assistance payments for ambulance services shall be increased by five percent.

Sec. 24. Minnesota Statutes 1996, section 256B.0625, subdivision 19a, is amended to read:

Subd. 19a. [PERSONAL CARE SERVICES.] Medical assistance covers personal care services in a recipient's home. To qualify for personal care services, recipients or responsible parties must be able to identify the recipient's needs, direct and evaluate task accomplishment, and provide for health and safety. Approved hours may be used outside the home when normal life activities take them outside the home and when, without the provision of personal care, their health and safety would be jeopardized. To use personal care services at school, the recipient or responsible party must provide written authorization in the care plan identifying the chosen provider and the daily amount of services to be used at school. Total hours for services, whether actually performed inside or outside the recipient's home, cannot exceed that which is otherwise allowed for personal care services in an in-home setting according to section 256B.0627. Medical assistance does not cover personal care services for residents of a hospital, nursing facility, intermediate care facility, health care facility licensed by the commissioner of health, or unless a resident who is otherwise eligible is on leave from the facility

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and the facility either pays for the personal care services or forgoes the facility per diem for the leave days that personal care services are used. All personal care services must be provided according to section 256B.0627. Personal care services may not be reimbursed if the personal care assistant is the spouse or legal guardian of the recipient or the parent of a recipient under age 18, or the responsible party or the foster care provider of a recipient who cannot direct the recipient's own care unless, in the case of a foster care provider, a county or state case manager visits the recipient as needed, but not less than every six months, to monitor the health and safety of the recipient and to ensure the goals of the care plan are met. Parents of adult recipients, adult children of the recipient or adult siblings of the recipient may be reimbursed for personal care services if they are not the recipient's legal guardian and are granted a waiver under section 256B.0627.

Sec. 25. Minnesota Statutes 1996, section 256B.0625, subdivision 20, is amended to read:

Subd. 20. [MENTAL ~~ILLNESS~~ HEALTH CASE MANAGEMENT.] (a) To the extent authorized by rule of the state agency, medical assistance covers case management services to persons with serious and persistent mental illness ~~or subject to federal approval,~~ and children with severe emotional disturbance. Services provided under this section must meet the relevant standards in sections 245.461 to 245.4888, the Comprehensive Adult and Children's Mental Health Acts, Minnesota Rules, parts 9520.0900 to 9520.0926, and 9505.0322, excluding subpart 10.

(b) Entities meeting program standards set out in rules governing family community support services as defined in section 245.4871, subdivision 17, are eligible for medical assistance reimbursement for case management services for children with severe emotional disturbance when these services meet the program standards in Minnesota Rules, parts 9520.0900 to 9520.0926 and 9505.0322, excluding ~~subpart 6~~ subparts 6 and 10.

(b) In counties where fewer than 50 percent of children estimated to be eligible under medical assistance to receive case management services for children with severe emotional disturbance actually receive these services in state fiscal year 1995, community mental health centers serving those counties, entities meeting program standards in Minnesota Rules, parts 9520.0570 to 9520.0870, and other entities authorized by the commissioner are eligible for medical assistance reimbursement for case management services for children with severe emotional disturbance when these services meet the program standards in Minnesota Rules, parts 9520.0900 to 9520.0926 and 9505.0322, excluding subpart 6.

(c) Medical assistance and MinnesotaCare payment for mental health case management shall be made on a monthly basis. In order to receive payment for an eligible child, the provider must document at least a face-to-face contact with the child, the child's parents, or the child's legal representative. To receive payment for an eligible adult, the provider must document at least a face-to-face contact with the adult or the adult's legal representative.

(d) Payment for mental health case management provided by county or state staff shall be based on the monthly rate methodology under section 256B.094, subdivision 6, paragraph (b), with separate rates calculated for child welfare and mental health, and within mental health, separate rates for children and adults.

(e) Payment for mental health case management provided by county-contracted vendors shall be based on a monthly rate negotiated by the host county. The negotiated rate must not exceed the rate charged by the vendor for the same service to other payers. If the service is provided by a team of contracted vendors, the county may negotiate a team rate with a vendor who is a member of the team. The team shall determine how to distribute the rate among its members. No reimbursement received by contracted vendors shall be returned to the county, except to reimburse the county for advance funding provided by the county to the vendor.

(f) If the service is provided by a team which includes contracted vendors and county or state staff, the costs for county or state staff participation in the team shall be included in the rate for county-provided services. In this case, the contracted vendor and the county may each receive separate payment for services provided by each entity in the same month. In order to prevent duplication of services, the county must document, in the recipient's file, the need for team case management and a description of the roles of the team members.

(g) The commissioner shall calculate the nonfederal share of actual medical assistance and general assistance medical care payments for each county, based on the higher of calendar year 1995 or 1996, by service date, project that amount forward to 1999, and transfer one-half of the result from medical assistance and general assistance medical care to each

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county's mental health grants under sections 245.4886 and 256E.12 for calendar year 1999. The annualized minimum amount added to each county's mental health grant shall be $3,000 per year for children and $5,000 per year for adults. The commissioner may reduce the statewide growth factor in order to fund these minimums. The annualized total amount transferred shall become part of the base for future mental health grants for each county.

(h) Any net increase in revenue to the county as a result of the change in this section must be used to provide expanded mental health services as defined in sections 245.461 to 245.4888, the Comprehensive Adult and Children's Mental Health Acts, excluding inpatient and residential treatment. For adults, increased revenue may also be used for services and consumer supports which are part of adult mental health projects approved under Laws 1997, chapter 203, article 7, section 25. For children, increased revenue may also be used for respite care and nonresidential individualized rehabilitation services as defined in section 245.492, subdivisions 17 and 23. "Increased revenue" has the meaning given in Minnesota Rules, part 9520.0903, subpart 3.

(i) Notwithstanding section 256B.19, subdivision 1, the nonfederal share of costs for mental health case management shall be provided by the recipient's county of responsibility, as defined in sections 256G.01 to 256G.12, from sources other than federal funds or funds used to match other federal funds.

(j) The commissioner may suspend, reduce, or terminate the reimbursement to a provider that does not meet the reporting or other requirements of this section. The county of responsibility, as defined in sections 256G.01 to 256G.12, is responsible for any federal disallowances. The county may share this responsibility with its contracted vendors.

(k) The commissioner shall set aside a portion of the federal funds earned under this section to repay the special revenue maximization account under section 256.01, subdivision 2, clause (15). The repayment is limited to:

(1) the costs of developing and implementing this section; and

(2) programming the information systems.

(l) Notwithstanding section 256.025, subdivision 2, payments to counties for case management expenditures under this section shall only be made from federal earnings from services provided under this section. Payments to contracted vendors shall include both the federal earnings and the county share.

(m) Notwithstanding section 256B.041, county payments for the cost of mental health case management services provided by county or state staff shall not be made to the state treasurer. For the purposes of mental health case management services provided by county or state staff under this section, the centralized disbursement of payments to counties under section 256B.041 consists only of federal earnings from services provided under this section.

(n) Case management services under this subdivision do not include therapy, treatment, legal, or outreach services.

(o) If the recipient is a resident of a nursing facility, intermediate care facility, or hospital, and the recipient's institutional care is paid by medical assistance, payment for case management services under this subdivision is limited to the last 30 days of the recipient's residency in that facility and may not exceed more than two months in a calendar year.

(p) Payment for case management services under this subdivision shall not duplicate payments made under other program authorities for the same purpose.

(q) By July 1, 2000, the commissioner shall evaluate the effectiveness of the changes required by this section, including changes in number of persons receiving mental health case management, changes in hours of service per person, and changes in caseload size.

(r) For each calendar year beginning with the calendar year 2001, the annualized amount of state funds for each county determined under paragraph (g) shall be adjusted by the county's percentage change in the average number of clients per month who received case management under this section during the fiscal year that ended six months prior to the calendar year in question, in comparison to the prior fiscal year.

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Sec. 26. Minnesota Statutes 1997 Supplement, section 256B.0625, subdivision 31a, is amended to read:

Subd. 31a. [AUGMENTATIVE AND ALTERNATIVE COMMUNICATION SYSTEMS.] (a) Medical assistance covers augmentative and alternative communication systems consisting of electronic or nonelectronic devices and the related components necessary to enable a person with severe expressive communication limitations to produce or transmit messages or symbols in a manner that compensates for that disability.

(b) By January 1, 1998, the commissioner, in cooperation with the commissioner of administration, shall establish an augmentative and alternative communication system purchasing program within a state agency or by contract with a qualified private entity. The purpose of this service is to facilitate ready availability of the augmentative and alternative communication systems needed to meet the needs of persons with severe expressive communication limitations in an efficient and cost-effective manner. This program shall:

~~(1) coordinate purchase and rental of augmentative and alternative communication systems;~~

~~(2) negotiate agreements with manufacturers and vendors for purchase of components of these systems, for warranty coverage, and for repair service;~~

~~(3) when efficient and cost-effective, maintain and refurbish if needed, an inventory of components of augmentative and alternative communication systems for short- or long-term loan to recipients;~~

~~(4) facilitate training sessions for service providers, consumers, and families on augmentative and alternative communication systems; and~~

~~(5) develop a recycling program for used augmentative and alternative communications systems to be reissued and used for trials and short-term use, when appropriate.~~

~~The availability of components of augmentative and alternative communication systems through this program is subject to prior authorization requirements established under subdivision 25~~ Until the volume of systems purchased increases to allow a discount price, the commissioner shall reimburse augmentative and alternative communication manufacturers and vendors at the manufacturer's suggested retail price for augmentative and alternative communication systems and related components. The commissioner shall separately reimburse providers for purchasing and integrating individual communication systems which are unavailable as a package from an augmentative and alternative communication vendor.

(c) Reimbursement rates established by this purchasing program are not subject to Minnesota Rules, part 9505.0445, item S or T.

Sec. 27. Minnesota Statutes 1996, section 256B.0625, subdivision 34, is amended to read:

Subd. 34. [AMERICAN INDIAN HEALTH SERVICES FACILITIES.] Medical assistance payments to ~~American Indian health services facilities for outpatient medical services billed after June 30, 1990, must be~~ facilities of the Indian health service and facilities operated by a tribe or tribal organization under funding authorized by United States Code, title 25, sections 450f to 450n, or title III of the Indian Self-Determination and Education Assistance Act, Public Law Number 93-638, shall be at the option of the facility in accordance with the rate published by the United States Assistant Secretary for Health under the authority of United States Code, title 42, sections 248(a) and 249(b). General assistance medical care payments to facilities of the American Indian health services and facilities operated by a tribe or tribal organization for the provision of outpatient medical care services billed after June 30, 1990, must be in accordance with the general assistance medical care rates paid for the same services when provided in a facility other than ~~an American~~ a facility of the Indian health service or a facility operated by a tribe or tribal organization.

Sec. 28. Minnesota Statutes 1996, section 256B.0625, subdivision 38, is amended to read:

Subd. 38. [PAYMENTS FOR MENTAL HEALTH SERVICES.] Payments for mental health services covered under the medical assistance program that are provided by masters-prepared mental health professionals shall be 80 percent of the rate paid to doctoral-prepared professionals. Payments for mental health services covered under the medical assistance

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program that are provided by masters-prepared mental health professionals employed by community mental health centers shall be 100 percent of the rate paid to doctoral-prepared professionals. For purposes of reimbursement of mental health professionals under the medical assistance program, all social workers who:

(1) have received a master's degree in social work from a program accredited by the council on social work education;

(2) are licensed at the level of graduate social worker or independent social worker; and

(3) are practicing clinical social work under appropriate supervision, as defined by section 148B.18; meet all requirements under Minnesota Rules, part 9505.0323, subpart 24, and shall be paid accordingly.

Sec. 29. Minnesota Statutes 1996, section 256B.0627, subdivision 4, is amended to read:

Subd. 4. [PERSONAL CARE SERVICES.] (a) The personal care services that are eligible for payment are the following:

(1) bowel and bladder care;

(2) skin care to maintain the health of the skin;

(3) repetitive maintenance range of motion, muscle strengthening exercises, and other tasks specific to maintaining a recipient's optimal level of function;

(4) respiratory assistance;

(5) transfers and ambulation;

(6) bathing, grooming, and hairwashing necessary for personal hygiene;

(7) turning and positioning;

(8) assistance with furnishing medication that is self-administered;

(9) application and maintenance of prosthetics and orthotics;

(10) cleaning medical equipment;

(11) dressing or undressing;

(12) assistance with eating and meal preparation and necessary grocery shopping;

(13) accompanying a recipient to obtain medical diagnosis or treatment;

(14) assisting, monitoring, or prompting the recipient to complete the services in clauses (1) to (13);

(15) redirection, monitoring, and observation that are medically necessary and an integral part of completing the personal care services described in clauses (1) to (14);

(16) redirection and intervention for behavior, including observation and monitoring;

(17) interventions for seizure disorders, including monitoring and observation if the recipient has had a seizure that requires intervention within the past three months; ~~and~~

(18) tracheostomy suctioning using a clean procedure if the procedure is properly delegated by a registered nurse. Before this procedure can be delegated to a personal care assistant, a registered nurse must determine that the tracheostomy suctioning can be accomplished utilizing a clean rather than a sterile procedure and must ensure that the personal care assistant has been taught the proper procedure; and

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(19) incidental household services that are an integral part of a personal care service described in clauses (1) to ~~(17)~~ (18).

For purposes of this subdivision, monitoring and observation means watching for outward visible signs that are likely to occur and for which there is a covered personal care service or an appropriate personal care intervention. For purposes of this subdivision, a clean procedure refers to a procedure that reduces the numbers of microorganisms or prevents or reduces the transmission of microorganisms from one person or place to another. A clean procedure may be used beginning 14 days after insertion.

(b) The personal care services that are not eligible for payment are the following:

(1) services not ordered by the physician;

(2) assessments by personal care provider organizations or by independently enrolled registered nurses;

(3) services that are not in the service plan;

(4) services provided by the recipient's spouse, legal guardian for an adult or child recipient, or parent of a recipient under age 18;

(5) services provided by a foster care provider of a recipient who cannot direct the recipient's own care, unless monitored by a county or state case manager under section 256B.0625, subdivision 19a;

(6) services provided by the residential or program license holder in a residence for more than four persons;

(7) services that are the responsibility of a residential or program license holder under the terms of a service agreement and administrative rules;

(8) sterile procedures;

(9) injections of fluids into veins, muscles, or skin;

(10) services provided by parents of adult recipients, adult children or adult siblings of the recipient, unless these relatives meet one of the following hardship criteria and the commissioner waives this requirement:

(i) the relative resigns from a part-time or full-time job to provide personal care for the recipient;

(ii) the relative goes from a full-time to a part-time job with less compensation to provide personal care for the recipient;

(iii) the relative takes a leave of absence without pay to provide personal care for the recipient;

(iv) the relative incurs substantial expenses by providing personal care for the recipient; or

(v) because of labor conditions or intermittent hours of care needed, the relative is needed in order to provide an adequate number of qualified personal care assistants to meet the medical needs of the recipient;

(11) homemaker services that are not an integral part of a personal care services;

(12) home maintenance, or chore services;

(13) services not specified under paragraph (a); and

(14) services not authorized by the commissioner or the commissioner's designee.

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Sec. 30. Minnesota Statutes 1997 Supplement, section 256B.0627, subdivision 5, is amended to read:

Subd. 5. [LIMITATION ON PAYMENTS.] Medical assistance payments for home care services shall be limited according to this subdivision.

(a) [LIMITS ON SERVICES WITHOUT PRIOR AUTHORIZATION.] A recipient may receive the following home care services during a calendar year:

(1) any initial assessment;

(2) up to two reassessments per year done to determine a recipient's need for personal care services; and

(3) up to five skilled nurse visits.

(b) [PRIOR AUTHORIZATION; EXCEPTIONS.] All home care services above the limits in paragraph (a) must receive the commissioner's prior authorization, except when:

(1) the home care services were required to treat an emergency medical condition that if not immediately treated could cause a recipient serious physical or mental disability, continuation of severe pain, or death. The provider must request retroactive authorization no later than five working days after giving the initial service. The provider must be able to substantiate the emergency by documentation such as reports, notes, and admission or discharge histories;

(2) the home care services were provided on or after the date on which the recipient's eligibility began, but before the date on which the recipient was notified that the case was opened. Authorization will be considered if the request is submitted by the provider within 20 working days of the date the recipient was notified that the case was opened;

(3) a third-party payor for home care services has denied or adjusted a payment. Authorization requests must be submitted by the provider within 20 working days of the notice of denial or adjustment. A copy of the notice must be included with the request;

(4) the commissioner has determined that a county or state human services agency has made an error; or

(5) the professional nurse determines an immediate need for up to 40 skilled nursing or home health aide visits per calendar year and submits a request for authorization within 20 working days of the initial service date, and medical assistance is determined to be the appropriate payer.

(c) [RETROACTIVE AUTHORIZATION.] A request for retroactive authorization will be evaluated according to the same criteria applied to prior authorization requests.

(d) [ASSESSMENT AND SERVICE PLAN.] Assessments under section 256B.0627, subdivision 1, paragraph (a), shall be conducted initially, and at least annually thereafter, in person with the recipient and result in a completed service plan using forms specified by the commissioner. Within 30 days of recipient or responsible party request for home care services, the assessment, the service plan, and other information necessary to determine medical necessity such as diagnostic or testing information, social or medical histories, and hospital or facility discharge summaries shall be submitted to the commissioner. For personal care services:

(1) The amount and type of service authorized based upon the assessment and service plan will follow the recipient if the recipient chooses to change providers.

(2) If the recipient's medical need changes, the recipient's provider may assess the need for a change in service authorization and request the change from the county public health nurse. Within 30 days of the request, the public health nurse will determine whether to request the change in services based upon the provider assessment, or conduct a home visit to assess the need and determine whether the change is appropriate.

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(3) To continue to receive personal care services when the recipient displays no significant change, the county public health nurse has the option to review with the commissioner, or the commissioner's designee, the service plan on record and receive authorization for up to an additional 12 months at a time for up to three years. after the first year, the recipient or the responsible party, in conjunction with the public health nurse, may complete a service update on forms developed by the commissioner. The service update may substitute for the annual reassessment described in subdivision 1.

(e) [PRIOR AUTHORIZATION.] The commissioner, or the commissioner's designee, shall review the assessment, the service plan, and any additional information that is submitted. The commissioner shall, within 30 days after receiving a complete request, assessment, and service plan, authorize home care services as follows:

(1) [HOME HEALTH SERVICES.] All home health services provided by a licensed nurse or a home health aide must be prior authorized by the commissioner or the commissioner's designee. Prior authorization must be based on medical necessity and cost-effectiveness when compared with other care options. When home health services are used in combination with personal care and private duty nursing, the cost of all home care services shall be considered for cost-effectiveness. The commissioner shall limit nurse and home health aide visits to no more than one visit each per day.

(2) [PERSONAL CARE SERVICES.] (i) All personal care services and registered nurse supervision must be prior authorized by the commissioner or the commissioner's designee except for the assessments established in paragraph (a). The amount of personal care services authorized must be based on the recipient's home care rating. A child may not be found to be dependent in an activity of daily living if because of the child's age an adult would either perform the activity for the child or assist the child with the activity and the amount of assistance needed is similar to the assistance appropriate for a typical child of the same age. Based on medical necessity, the commissioner may authorize:

(A) up to two times the average number of direct care hours provided in nursing facilities for the recipient's comparable case mix level; or

(B) up to three times the average number of direct care hours provided in nursing facilities for recipients who have complex medical needs or are dependent in at least seven activities of daily living and need physical assistance with eating or have a neurological diagnosis; or

(C) up to 60 percent of the average reimbursement rate, as of July 1, 1991, for care provided in a regional treatment center for recipients who have Level I behavior, plus any inflation adjustment as provided by the legislature for personal care service; or

(D) up to the amount the commissioner would pay, as of July 1, 1991, plus any inflation adjustment provided for home care services, for care provided in a regional treatment center for recipients referred to the commissioner by a regional treatment center preadmission evaluation team. For purposes of this clause, home care services means all services provided in the home or community that would be included in the payment to a regional treatment center; or

(E) up to the amount medical assistance would reimburse for facility care for recipients referred to the commissioner by a preadmission screening team established under section 256B.0911 or 256B.092; and

(F) a reasonable amount of time for the provision of nursing supervision of personal care services.

(ii) The number of direct care hours shall be determined according to the annual cost report submitted to the department by nursing facilities. The average number of direct care hours, as established by May 1, 1992, shall be calculated and incorporated into the home care limits on July 1, 1992. These limits shall be calculated to the nearest quarter hour.

(iii) The home care rating shall be determined by the commissioner or the commissioner's designee based on information submitted to the commissioner by the county public health nurse on forms specified by the commissioner. The home care rating shall be a combination of current assessment tools developed under sections 256B.0911 and 256B.501 with an addition for seizure activity that will assess the frequency and severity of seizure activity and with adjustments, additions, and clarifications that are necessary to reflect the needs and conditions of recipients who need home care including children and adults under 65 years of age. The commissioner shall establish these forms and protocols under this section and shall use an advisory group, including representatives of recipients, providers, and counties, for consultation in establishing and revising the forms and protocols.

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(iv) A recipient shall qualify as having complex medical needs if the care required is difficult to perform and because of recipient's medical condition requires more time than community-based standards allow or requires more skill than would ordinarily be required and the recipient needs or has one or more of the following:

(A) daily tube feedings;

(B) daily parenteral therapy;

(D) postural drainage, percussion, nebulizer treatments, suctioning, tracheotomy care, oxygen, mechanical ventilation;

(E) catheterization;

(F) ostomy care;

(G) quadriplegia; or

(H) other comparable medical conditions or treatments the commissioner determines would otherwise require institutional care.

(v) A recipient shall qualify as having Level I behavior if there is reasonable supporting evidence that the recipient exhibits, or that without supervision, observation, or redirection would exhibit, one or more of the following behaviors that cause, or have the potential to cause:

(A) injury to the recipient's own body;

(B) physical injury to other people; or

(vi) Time authorized for personal care relating to Level I behavior in subclause (v), items (A) to (C), shall be based on the predictability, frequency, and amount of intervention required.

(vii) A recipient shall qualify as having Level II behavior if the recipient exhibits on a daily basis one or more of the following behaviors that interfere with the completion of personal care services under subdivision 4, paragraph (a):

(A) unusual or repetitive habits;

(B) withdrawn behavior; or

(viii) A recipient with a home care rating of Level II behavior in subclause (vii), items (A) to (C), shall be rated as comparable to a recipient with complex medical needs under subclause (iv). If a recipient has both complex medical needs and Level II behavior, the home care rating shall be the next complex category up to the maximum rating under subclause (i), item (B).

(3) [PRIVATE DUTY NURSING SERVICES.] All private duty nursing services shall be prior authorized by the commissioner or the commissioner's designee. Prior authorization for private duty nursing services shall be based on medical necessity and cost-effectiveness when compared with alternative care options. The commissioner may authorize medically necessary private duty nursing services in quarter-hour units when:

(i) the recipient requires more individual and continuous care than can be provided during a nurse visit; or

(ii) the cares are outside of the scope of services that can be provided by a home health aide or personal care assistant.

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The commissioner may authorize:

(A) up to two times the average amount of direct care hours provided in nursing facilities statewide for case mix classification "K" as established by the annual cost report submitted to the department by nursing facilities in May 1992;

(B) private duty nursing in combination with other home care services up to the total cost allowed under clause (2);

(C) up to 16 hours per day if the recipient requires more nursing than the maximum number of direct care hours as established in item (A) and the recipient meets the hospital admission criteria established under Minnesota Rules, parts 9505.0500 to 9505.0540.

The commissioner may authorize up to 16 hours per day of medically necessary private duty nursing services or up to 24 hours per day of medically necessary private duty nursing services until such time as the commissioner is able to make a determination of eligibility for recipients who are cooperatively applying for home care services under the community alternative care program developed under section 256B.49, or until it is determined by the appropriate regulatory agency that a health benefit plan is or is not required to pay for appropriate medically necessary health care services. Recipients or their representatives must cooperatively assist the commissioner in obtaining this determination. Recipients who are eligible for the community alternative care program may not receive more hours of nursing under this section than would otherwise be authorized under section 256B.49.

(4) [VENTILATOR-DEPENDENT RECIPIENTS.] If the recipient is ventilator-dependent, the monthly medical assistance authorization for home care services shall not exceed what the commissioner would pay for care at the highest cost hospital designated as a long-term hospital under the Medicare program. For purposes of this clause, home care services means all services provided in the home that would be included in the payment for care at the long-term hospital. "Ventilator-dependent" means an individual who receives mechanical ventilation for life support at least six hours per day and is expected to be or has been dependent for at least 30 consecutive days.

(f) [PRIOR AUTHORIZATION; TIME LIMITS.] The commissioner or the commissioner's designee shall determine the time period for which a prior authorization shall be effective. If the recipient continues to require home care services beyond the duration of the prior authorization, the home care provider must request a new prior authorization. Under no circumstances, other than the exceptions in paragraph (b), shall a prior authorization be valid prior to the date the commissioner receives the request or for more than 12 months. A recipient who appeals a reduction in previously authorized home care services may continue previously authorized services, other than temporary services under paragraph (h), pending an appeal under section 256.045. The commissioner must provide a detailed explanation of why the authorized services are reduced in amount from those requested by the home care provider.

(g) [APPROVAL OF HOME CARE SERVICES.] The commissioner or the commissioner's designee shall determine the medical necessity of home care services, the level of caregiver according to subdivision 2, and the institutional comparison according to this subdivision, the cost-effectiveness of services, and the amount, scope, and duration of home care services reimbursable by medical assistance, based on the assessment, primary payer coverage determination information as required, the service plan, the recipient's age, the cost of services, the recipient's medical condition, and diagnosis or disability. The commissioner may publish additional criteria for determining medical necessity according to section 256B.04.

(h) [PRIOR AUTHORIZATION REQUESTS; TEMPORARY SERVICES.] The agency nurse, the independently enrolled private duty nurse, or county public health nurse may request a temporary authorization for home care services by telephone. The commissioner may approve a temporary level of home care services based on the assessment, and service or care plan information, and primary payer coverage determination information as required. Authorization for a temporary level of home care services including nurse supervision is limited to the time specified by the commissioner, but shall not exceed 45 days, unless extended because the county public health nurse has not completed the required assessment and service plan, or the commissioner's determination has not been made. The level of services authorized under this provision shall have no bearing on a future prior authorization.

(i) [PRIOR AUTHORIZATION REQUIRED IN FOSTER CARE SETTING.] Home care services provided in an adult or child foster care setting must receive prior authorization by the department according to the limits established in paragraph (a).

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The commissioner may not authorize:

(1) home care services that are the responsibility of the foster care provider under the terms of the foster care placement agreement and administrative rules. Requests for home care services for recipients residing in a foster care setting must include the foster care placement agreement and determination of difficulty of care;

(2) personal care services when the foster care license holder is also the personal care provider or personal care assistant unless the recipient can direct the recipient's own care, or case management is provided as required in section 256B.0625, subdivision 19a;

(3) personal care services when the responsible party is an employee of, or under contract with, or has any direct or indirect financial relationship with the personal care provider or personal care assistant, unless case management is provided as required in section 256B.0625, subdivision 19a;

(4) home care services when the number of foster care residents is greater than four unless the county responsible for the recipient's foster placement made the placement prior to April 1, 1992, requests that home care services be provided, and case management is provided as required in section 256B.0625, subdivision 19a; or

(5) home care services when combined with foster care payments, other than room and board payments that exceed the total amount that public funds would pay for the recipient's care in a medical institution.

Sec. 31. Minnesota Statutes 1997 Supplement, section 256B.0627, subdivision 8, is amended to read:

Subd. 8. [PERSONAL CARE ASSISTANT SERVICES; SHARED CARE.] (a) Medical assistance payments for personal care assistance shared care shall be limited according to this subdivision.

(b) Recipients of personal care assistant services may share staff and the commissioner shall provide a rate system for shared personal care assistant services. For two persons sharing care, the rate ~~system~~ paid to a provider shall not exceed 1-1/2 times the ~~amount~~ rate paid for ~~providing services to one person~~ serving a single individual, and ~~shall increase incrementally by one-half the cost of serving a single person, for each person served. A personal care assistant may not serve more than three children in a single setting.~~ for three persons sharing care, the rate paid to a provider shall not exceed twice the rate paid for serving a single individual. These rates apply only to situations in which all recipients were present and received shared care on the date for which the service is billed. No more than three persons may receive shared care from a personal care assistant in a single setting.

(c) Shared care is the provision of personal care services by a personal care assistant to two or three recipients at the same time and in the same setting. For the purposes of this subdivision, "setting" means:

(1) the home or foster care home of one of the individual recipients; or

(2) a child care program in which all recipients served by one personal care assistant are participating, which is licensed under chapter 245A or operated by a local school district or private school.

The provisions of this subdivision do not apply when a personal care assistant is caring for multiple recipients in more than one setting.

(d) The recipient or the recipient's responsible party, in conjunction with the county public health nurse, shall determine:

(1) whether shared care is an appropriate option based on the individual needs and preferences of the recipient; and

(2) the amount of shared care allocated as part of the overall authorization of personal care services.

The recipient or the responsible party, in conjunction with the supervising registered nurse, shall approve the setting, grouping, and arrangement of shared care based on the individual needs and preferences of the recipients. Decisions on the selection of recipients to share care must be based on the ages of the recipients, compatibility, and coordination of their care needs.

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(e) The following items must be considered by the recipient or the responsible party and the supervising nurse, and documented in the recipient's care plan:

(1) the additional qualifications needed by the personal care assistant to provide care to several recipients in the same setting;

(2) the additional training and supervision needed by the personal care assistant to ensure that the needs of the recipient are met appropriately and safely. The provider must provide on-site supervision by a registered nurse within the first 14 days of shared care, and monthly thereafter;

(3) the setting in which the shared care will be provided;

(4) the ongoing monitoring and evaluation of the effectiveness and appropriateness of the service and process used to make changes in service or setting; and

(5) a contingency plan which accounts for absence of the recipient in a shared care setting due to illness or other circumstances and staffing contingencies.

(f) The provider must offer the recipient or the responsible party the option of shared or individual personal care assistant care. The recipient or the responsible party can withdraw from participating in a shared care arrangement at any time.

(g) In addition to documentation requirements under Minnesota Rules, part 9505.2175, a personal care provider must meet documentation requirements for shared personal care services and must document the following in the health service record for each individual recipient sharing care:

(1) authorization by the recipient or the recipient's responsible party, if any, for the maximum number of shared care hours per week chosen by the recipient;

(2) authorization by the recipient or the recipient's responsible party, if any, for personal care services provided outside the recipient's residence;

(3) authorization by the recipient or the recipient's responsible party, if any, for others to receive shared care in the recipient's residence;

(4) revocation by the recipient or the recipient's responsible party, if any, of the shared care authorization, or the shared care to be provided to others in the recipient's residence, or the shared care to be provided outside the recipient's residence;

(5) supervision of the shared care by the supervisory nurse, including the date, time of day, number of hours spent supervising the provision of shared care services, whether the supervision was face-to-face or another method of supervision, changes in the recipient's condition, shared care scheduling issues and recommendations;

(6) documentation by the personal care assistant of telephone calls or other discussions with the supervisory nurse regarding services being provided to the recipient; and

(7) daily documentation of the shared care services provided by each identified personal care assistant including:

(i) the names of each recipient receiving shared care together;

(ii) the setting for the day's care, including the starting and ending times that the recipient received shared care; and

(iii) notes by the personal care assistant regarding changes in the recipient's condition, problems that may arise from the sharing of care, scheduling issues, care issues, and other notes as required by the supervising nurse.

(h) Unless otherwise provided in this subdivision, all other statutory and regulatory provisions relating to personal care services apply to shared care services.

Nothing in this subdivision shall be construed to reduce the total number of hours authorized for an individual recipient.

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Sec. 32. Minnesota Statutes 1997 Supplement, section 256B.0645, is amended to read:

256B.0645 [PROVIDER PAYMENTS; RETROACTIVE CHANGES IN ELIGIBILITY.]

Payment to a provider for a health care service provided to a general assistance medical care recipient who is later determined eligible for medical assistance or MinnesotaCare according to section ~~256L.14~~ 256L.03, subdivision 1a, for the period in which the health care service was provided, ~~shall be considered payment in full, and shall not~~ may be adjusted due to the change in eligibility. This section ~~applies~~ does not apply to ~~both fee-for-service payments and~~ payments made to health plans on a prepaid capitated basis.

Sec. 33. Minnesota Statutes 1997 Supplement, section 256B.0911, subdivision 2, is amended to read:

Subd. 2. [PERSONS REQUIRED TO BE SCREENED; EXEMPTIONS.] All applicants to Medicaid certified nursing facilities must be screened prior to admission, regardless of income, assets, or funding sources, except the following:

(1) patients who, having entered acute care facilities from certified nursing facilities, are returning to a certified nursing facility;

(2) residents transferred from other certified nursing facilities located within the state of Minnesota;

(3) individuals who have a contractual right to have their nursing facility care paid for indefinitely by the veteran's administration;

(4) individuals who are enrolled in the Ebenezer/Group Health social health maintenance organization project, or enrolled in a demonstration project under section 256B.69, subdivision 18 8, at the time of application to a nursing home;

(5) individuals previously screened and currently being served under the alternative care program or under a home and community-based services waiver authorized under section 1915(c) of the Social Security Act; or

(6) individuals who are admitted to a certified nursing facility for a short-term stay, which, based upon a physician's certification, is expected to be 14 days or less in duration, and who have been screened and approved for nursing facility admission within the previous six months. This exemption applies only if the screener determines at the time of the initial screening of the six-month period that it is appropriate to use the nursing facility for short-term stays and that there is an adequate plan of care for return to the home or community-based setting. If a stay exceeds 14 days, the individual must be referred no later than the first county working day following the 14th resident day for a screening, which must be completed within five working days of the referral. Payment limitations in subdivision 7 will apply to an individual found at screening to not meet the level of care criteria for admission to a certified nursing facility.

Regardless of the exemptions in clauses (2) to (6), persons who have a diagnosis or possible diagnosis of mental illness, mental retardation, or a related condition must receive a preadmission screening before admission unless the admission prior to screening is authorized by the local mental health authority or the local developmental disabilities case manager, or unless authorized by the county agency according to Public Law Number 101-508.

Before admission to a Medicaid certified nursing home or boarding care home, all persons must be screened and approved for admission through an assessment process. The nursing facility is authorized to conduct case mix assessments which are not conducted by the county public health nurse under Minnesota Rules, part 9549.0059. The designated county agency is responsible for distributing the quality assurance and review form for all new applicants to nursing homes.

Other persons who are not applicants to nursing facilities must be screened if a request is made for a screening.

Sec. 34. Minnesota Statutes 1996, section 256B.0911, subdivision 4, is amended to read:

Subd. 4. [RESPONSIBILITIES OF THE COUNTY AND THE SCREENING TEAM.] (a) The county shall:

(1) provide information and education to the general public regarding availability of the preadmission screening program;

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(2) accept referrals from individuals, families, human service and health professionals, and hospital and nursing facility personnel;

(3) assess the health, psychological, and social needs of referred individuals and identify services needed to maintain these persons in the least restrictive environments;

(4) determine if the individual screened needs nursing facility level of care;

(5) assess specialized service needs based upon an evaluation by:

(i) a qualified independent mental health professional for persons with a primary or secondary diagnosis of a serious mental illness; and

(ii) a qualified mental retardation professional for persons with a primary or secondary diagnosis of mental retardation or related conditions. For purposes of this clause, a qualified mental retardation professional must meet the standards for a qualified mental retardation professional in Code of Federal Regulations, title 42, section 483.430;

(6) make recommendations for individuals screened regarding cost-effective community services which are available to the individual;

(7) make recommendations for individuals screened regarding nursing home placement when there are no cost-effective community services available;

(8) develop an individual's community care plan and provide follow-up services as needed; and

(9) prepare and submit reports that may be required by the commissioner of human services.

(b) The screener shall document that the most cost-effective alternatives available were offered to the individual or the individual's legal representative. For purposes of this section, "cost-effective alternatives" means community services and living arrangements that cost the same or less than nursing facility care.

(c) ~~Screeners shall adhere to the level of care criteria for admission to a certified nursing facility established under section 144.0721.~~

~~(d)~~ For persons who are eligible for medical assistance or who would be eligible within 180 days of admission to a nursing facility and who are admitted to a nursing facility, the nursing facility must include a screener or the case manager in the discharge planning process for those individuals who the team has determined have discharge potential. The screener or the case manager must ensure a smooth transition and follow-up for the individual's return to the community.

Screeners shall cooperate with other public and private agencies in the community, in order to offer a variety of cost-effective services to the disabled and elderly. The screeners shall encourage the use of volunteers from families, religious organizations, social clubs, and similar civic and service organizations to provide services.

Sec. 35. Minnesota Statutes 1997 Supplement, section 256B.0911, subdivision 7, is amended to read:

Subd. 7. [REIMBURSEMENT FOR CERTIFIED NURSING FACILITIES.] (a) Medical assistance reimbursement for nursing facilities shall be authorized for a medical assistance recipient only if a preadmission screening has been conducted prior to admission or the local county agency has authorized an exemption. Medical assistance reimbursement for nursing facilities shall not be provided for any recipient who the local screener has determined does not meet the level of care criteria for nursing facility placement or, if indicated, has not had a level II PASARR evaluation completed unless an admission for a recipient with mental illness is approved by the local mental health authority or an admission for a recipient with mental retardation or related condition is approved by the state mental retardation authority. The county preadmission screening team may deny certified nursing facility admission using the level of care criteria established under section 144.0721 and deny medical assistance reimbursement for certified nursing facility care. Persons receiving care in a certified nursing facility or certified boarding care home who are reassessed by the commissioner of health according

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to section 144.0722 and determined to no longer meet the level of care criteria for a certified nursing facility or certified boarding care home may no longer remain a resident in the certified nursing facility or certified boarding care home and must be relocated to the community if the persons were admitted on or after July 1, 1998.

(b) Persons receiving services under section 256B.0913, subdivisions 1 to 14, or 256B.0915 who are reassessed and found to not meet the level of care criteria for admission to a certified nursing facility or certified boarding care home may no longer receive these services if persons were admitted to the program on or after July 1, 1998. The commissioner shall make a request to the health care financing administration for a waiver allowing screening team approval of Medicaid payments for certified nursing facility care. An individual has a choice and makes the final decision between nursing facility placement and community placement after the screening team's recommendation, except as provided in paragraphs (b) and (c).

(c) The local county mental health authority or the state mental retardation authority under Public Law Numbers 100-203 and 101-508 may prohibit admission to a nursing facility, if the individual does not meet the nursing facility level of care criteria or needs specialized services as defined in Public Law Numbers 100-203 and 101-508. For purposes of this section, "specialized services" for a person with mental retardation or a related condition means "active treatment" as that term is defined in Code of Federal Regulations, title 42, section 483.440(a)(1).

(d) Upon the receipt by the commissioner of approval by the Secretary of Health and Human Services of the waiver requested under paragraph (a), the local screener shall deny medical assistance reimbursement for nursing facility care for an individual whose long-term care needs can be met in a community-based setting and whose cost of community-based home care services is less than 75 percent of the average payment for nursing facility care for that individual's case mix classification, and who is either:

(i) a current medical assistance recipient being screened for admission to a nursing facility; or

(ii) an individual who would be eligible for medical assistance within 180 days of entering a nursing facility and who meets a nursing facility level of care.

(e) Appeals from the screening team's recommendation or the county agency's final decision shall be made according to section 256.045, subdivision 3.

Sec. 36. Minnesota Statutes 1997 Supplement, section 256B.0913, subdivision 14, is amended to read:

Subd. 14. [REIMBURSEMENT AND RATE ADJUSTMENTS.] (a) Reimbursement for expenditures for the alternative care services as approved by the client's case manager shall be through the invoice processing procedures of the department's Medicaid Management Information System (MMIS). To receive reimbursement, the county or vendor must submit invoices within 12 months following the date of service. The county agency and its vendors under contract shall not be reimbursed for services which exceed the county allocation.

(b) If a county collects less than 50 percent of the client premiums due under subdivision 12, the commissioner may withhold up to three percent of the county's final alternative care program allocation determined under subdivisions 10 and 11.

(c) For fiscal years beginning on or after July 1, 1993, the commissioner of human services shall not provide automatic annual inflation adjustments for alternative care services. The commissioner of finance shall include as a budget change request in each biennial detailed expenditure budget submitted to the legislature under section 16A.11 annual adjustments in reimbursement rates for alternative care services based on the forecasted percentage change in the Home Health Agency Market Basket of Operating Costs, for the fiscal year beginning July 1, compared to the previous fiscal year, unless otherwise adjusted by statute. The Home Health Agency Market Basket of Operating Costs is published by Data Resources, Inc. The forecast to be used is the one published for the calendar quarter beginning January 1, six months prior to the beginning of the fiscal year for which rates are set.

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~~(d)~~ The county shall negotiate individual rates with vendors and may be reimbursed for actual costs up to the greater of the county's current approved rate or 60 percent of the maximum rate in fiscal year 1994 and 65 percent of the maximum rate in fiscal year 1995 for each alternative care service. Notwithstanding any other rule or statutory provision to the contrary, the commissioner shall not be authorized to increase rates by an annual inflation factor, unless so authorized by the legislature.

~~(e)~~ (d) On July 1, 1993, the commissioner shall increase the maximum rate for home delivered meals to $4.50 per meal.

Sec. 37. Minnesota Statutes 1997 Supplement, section 256B.0915, subdivision 1d, is amended to read:

Subd. 1d. [POSTELIGIBILITY TREATMENT OF INCOME AND RESOURCES FOR ELDERLY WAIVER.] (a) Notwithstanding the provisions of section 256B.056, the commissioner shall make the following amendment to the medical assistance elderly waiver program effective July 1, ~~1997~~ 1999, or upon federal approval, whichever is later.

A recipient's maintenance needs will be an amount equal to the Minnesota supplemental aid equivalent rate as defined in section 256I.03, subdivision 5, plus the medical assistance personal needs allowance as defined in section 256B.35, subdivision 1, paragraph (a), when applying posteligibility treatment of income rules to the gross income of elderly waiver recipients, except for individuals whose income is in excess of the special income standard according to Code of Federal Regulations, title 42, section 435.236. Recipient maintenance needs shall be adjusted under this provision each July 1.

(b) The commissioner of human services shall secure approval of additional elderly waiver slots sufficient to serve persons who will qualify under the revised income standard described in paragraph (a) before implementing section 256B.0913, subdivision 16.

(c) In implementing this subdivision, the commissioner shall consider allowing persons who would otherwise be eligible for the alternative care program but would qualify for the elderly waiver with a spenddown to remain on the alternative care program.

Sec. 38. Minnesota Statutes 1997 Supplement, section 256B.0915, subdivision 3, is amended to read:

Subd. 3. [LIMITS OF CASES, RATES, REIMBURSEMENT, AND FORECASTING.] (a) The number of medical assistance waiver recipients that a county may serve must be allocated according to the number of medical assistance waiver cases open on July 1 of each fiscal year. Additional recipients may be served with the approval of the commissioner.

(b) The monthly limit for the cost of waivered services to an individual waiver client shall be the statewide average payment rate of the case mix resident class to which the waiver client would be assigned under the medical assistance case mix reimbursement system. If medical supplies and equipment or adaptations are or will be purchased for an elderly waiver services recipient, the costs may be prorated on a monthly basis throughout the year in which they are purchased. If the monthly cost of a recipient's other waivered services exceeds the monthly limit established in this paragraph, the annual cost of the waivered services shall be determined. In this event, the annual cost of waivered services shall not exceed 12 times the monthly limit calculated in this paragraph. The statewide average payment rate is calculated by determining the statewide average monthly nursing home rate, effective July 1 of the fiscal year in which the cost is incurred, less the statewide average monthly income of nursing home residents who are age 65 or older, and who are medical assistance recipients in the month of March of the previous state fiscal year. The annual cost divided by 12 of elderly or disabled waivered services for a person who is a nursing facility resident at the time of requesting a determination of eligibility for elderly or disabled waivered services shall be the greater of the monthly payment for: (i) the resident class assigned under Minnesota Rules, parts 9549.0050 to 9549.0059, for that resident in the nursing facility where the resident currently resides; or (ii) the statewide average payment of the case mix resident class to which the resident would be assigned under the medical assistance case mix reimbursement system, provided that the limit under this clause only applies to persons discharged from a nursing facility and found eligible for waivered services on or after July 1, 1997. The following costs must be included in determining the total monthly costs for the waiver client:

(1) cost of all waivered services, including extended medical supplies and equipment; and

(2) cost of skilled nursing, home health aide, and personal care services reimbursable by medical assistance.

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(c) Medical assistance funding for skilled nursing services, private duty nursing, home health aide, and personal care services for waiver recipients must be approved by the case manager and included in the individual care plan.

(d) For both the elderly waiver and the nursing facility disabled waiver, a county may purchase extended supplies and equipment without prior approval from the commissioner when there is no other funding source and the supplies and equipment are specified in the individual's care plan as medically necessary to enable the individual to remain in the community according to the criteria in Minnesota Rules, part 9505.0210, items A and B. A county is not required to contract with a provider of supplies and equipment if the monthly cost of the supplies and equipment is less than $250.

(e) For the fiscal year beginning on July 1, 1993, and for subsequent fiscal years, the commissioner of human services shall not provide automatic annual inflation adjustments for home and community-based waivered services. The commissioner of finance shall include as a budget change request in each biennial detailed expenditure budget submitted to the legislature under section 16A.11, annual adjustments in reimbursement rates for home and community-based waivered services, based on the forecasted percentage change in the Home Health Agency Market Basket of Operating Costs, for the fiscal year beginning July 1, compared to the previous fiscal year, unless otherwise adjusted by statute. The Home Health Agency Market Basket of Operating Costs is published by Data Resources, Inc. The forecast to be used is the one published for the calendar quarter beginning January 1, six months prior to the beginning of the fiscal year for which rates are set. The adult foster care rate shall be considered a difficulty of care payment and shall not include room and board.

~~(f)~~ The adult foster care daily rate for the elderly and disabled waivers shall be negotiated between the county agency and the foster care provider. The rate established under this section shall not exceed the state average monthly nursing home payment for the case mix classification to which the individual receiving foster care is assigned; the rate must allow for other waiver and medical assistance home care services to be authorized by the case manager.

~~(g)~~ (f) The assisted living and residential care service rates for elderly and community alternatives for disabled individuals (CADI) waivers shall be made to the vendor as a monthly rate negotiated with the county agency based on an individualized service plan for each resident. The rate shall not exceed the nonfederal share of the greater of either the statewide or any of the geographic groups' weighted average monthly medical assistance nursing facility payment rate of the case mix resident class to which the elderly or disabled client would be assigned under Minnesota Rules, parts 9549.0050 to 9549.0059, unless the services are provided by a home care provider licensed by the department of health and are provided in a building that is registered as a housing with services establishment under chapter 144D and that provides 24-hour supervision. For alternative care assisted living projects established under Laws 1988, chapter 689, article 2, section 256, monthly rates may not exceed 65 percent of the greater of either the statewide or any of the geographic groups' weighted average monthly medical assistance nursing facility payment rate for the case mix resident class to which the elderly or disabled client would be assigned under Minnesota Rules, parts 9549.0050 to 9549.0059. The rate may not cover direct rent or food costs.

~~(h)~~ (g) The county shall negotiate individual rates with vendors and may be reimbursed for actual costs up to the greater of the county's current approved rate or 60 percent of the maximum rate in fiscal year 1994 and 65 percent of the maximum rate in fiscal year 1995 for each service within each program.

~~(i)~~ (h) On July 1, 1993, the commissioner shall increase the maximum rate for home-delivered meals to $4.50 per meal.

~~(j)~~ (i) Reimbursement for the medical assistance recipients under the approved waiver shall be made from the medical assistance account through the invoice processing procedures of the department's Medicaid Management Information System (MMIS), only with the approval of the client's case manager. The budget for the state share of the Medicaid expenditures shall be forecasted with the medical assistance budget, and shall be consistent with the approved waiver.

~~(k)~~ (j) Beginning July 1, 1991, the state shall reimburse counties according to the payment schedule in section 256.025 for the county share of costs incurred under this subdivision on or after January 1, 1991, for individuals who are receiving medical assistance.

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~~(l)~~ (k) For the community alternatives for disabled individuals waiver, and nursing facility disabled waivers, county may use waiver funds for the cost of minor adaptations to a client's residence or vehicle without prior approval from the commissioner if there is no other source of funding and the adaptation:

(1) is necessary to avoid institutionalization;

(2) has no utility apart from the needs of the client; and

(3) meets the criteria in Minnesota Rules, part 9505.0210, items A and B.

For purposes of this subdivision, "residence" means the client's own home, the client's family residence, or a family foster home. For purposes of this subdivision, "vehicle" means the client's vehicle, the client's family vehicle, or the client's family foster home vehicle.

~~(m)~~ (l) The commissioner shall establish a maximum rate unit for baths provided by an adult day care provider that are not included in the provider's contractual daily or hourly rate. This maximum rate must equal the home health aide extended rate and shall be paid for baths provided to clients served under the elderly and disabled waivers.

Sec. 39. Minnesota Statutes 1996, section 256B.0916, is amended to read:

256B.0916 [EXPANSION OF HOME AND COMMUNITY-BASED SERVICES; MANAGEMENT AND ALLOCATION RESPONSIBILITIES.]

(a) The commissioner shall expand availability of home and community-based services for persons with mental retardation and related conditions to the extent allowed by federal law and regulation and shall assist counties in transferring persons from semi-independent living services to home and community-based services. The commissioner may transfer funds from the state semi-independent living services account available under section 252.275, subdivision 8, and state community social services aids available under section 256E.15 to the medical assistance account to pay for the nonfederal share of nonresidential and residential home and community-based services authorized under section 256B.092 for persons transferring from semi-independent living services.

(b) Upon federal approval, county boards are not responsible for funding semi-independent living services as a social service for those persons who have transferred to the home and community-based waiver program as a result of the expansion under this subdivision. The county responsibility for those persons transferred shall be assumed under section 256B.092. Notwithstanding the provisions of section 252.275, the commissioner shall continue to allocate funds under that section for semi-independent living services and county boards shall continue to fund services under sections 256E.06 and 256E.14 for those persons who cannot access home and community-based services under section 256B.092.

(c) Eighty percent of the state funds made available to the commissioner under section 252.275 as a result of persons transferring from the semi-independent living services program to the home and community-based services program shall be used to fund additional persons in the semi-independent living services program.

(d) Beginning August 1, 1998, the commissioner shall issue an annual report on the home and community-based waiver for persons with mental retardation or related conditions, that includes a list of the counties in which less than 95 percent of the allocation provided, excluding the county waivered services reserve, has been committed for two or more quarters during the previous state fiscal year. For each listed county, the report shall include the amount of funds allocated but not used, the number and ages of individuals screened and waiting for services, the services needed, a description of the technical assistance provided by the commissioner to assist the counties in jointly planning with other counties in order to serve more persons, and additional actions which will be taken to serve those screened and waiting for services.

(e) The commissioner shall make available to interested parties, upon request, financial information by county including the amount of resources allocated for the home and community-based waiver for persons with mental retardation and related conditions, the resources committed, the number of persons screened and waiting for services, the type of services requested by those waiting, and the amount of allocated resources not committed.

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Sec. 40. Minnesota Statutes 1997 Supplement, section 256B.0951, is amended by adding a subdivision to read:

Subd. 7. [WAIVER OF RULES.] The commissioner of health may exempt residents of intermediate care facilities for persons with mental retardation (ICFs/MR) who participate in the three-year quality assurance pilot project established in section 256B.095 from the requirements of Minnesota Rules, chapter 4665, upon approval by the federal government of a waiver of federal certification requirements for ICFs/MR. The commissioners of health and human services shall apply for any necessary waivers as soon as practicable and shall submit the concept paper to the federal government by June 1, 1998.

Sec. 41. Minnesota Statutes 1996, section 256B.41, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY.] The commissioner shall establish, by rule, procedures for determining rates for care of residents of nursing facilities which qualify as vendors of medical assistance, and for implementing the provisions of this section and sections 256B.421, 256B.431, 256B.432, 256B.433, 256B.47, 256B.48, 256B.50, and 256B.502. The procedures shall be based on methods and standards that the commissioner finds are adequate to provide for the costs that must be incurred for the care of residents in efficiently and economically operated nursing facilities and shall specify the costs that are allowable for establishing payment rates through medical assistance.

Sec. 42. Minnesota Statutes 1996, section 256B.431, subdivision 2b, is amended to read:

Subd. 2b. [OPERATING COSTS, AFTER JULY 1, 1985.] (a) For rate years beginning on or after July 1, 1985, the commissioner shall establish procedures for determining per diem reimbursement for operating costs.

(b) The commissioner shall contract with an econometric firm with recognized expertise in and access to national economic change indices that can be applied to the appropriate cost categories when determining the operating cost payment rate.

(c) The commissioner shall analyze and evaluate each nursing facility's cost report of allowable operating costs incurred by the nursing facility during the reporting year immediately preceding the rate year for which the payment rate becomes effective.

(d) The commissioner shall establish limits on actual allowable historical operating cost per diems based on cost reports of allowable operating costs for the reporting year that begins October 1, 1983, taking into consideration relevant factors including resident needs, geographic location, and size of the nursing facility~~, and the costs that must be incurred for the care of residents in an efficiently and economically operated nursing facility~~. In developing the geographic groups for purposes of reimbursement under this section, the commissioner shall ensure that nursing facilities in any county contiguous to the Minneapolis-St. Paul seven-county metropolitan area are included in the same geographic group. The limits established by the commissioner shall not be less, in the aggregate, than the 60th percentile of total actual allowable historical operating cost per diems for each group of nursing facilities established under subdivision 1 based on cost reports of allowable operating costs in the previous reporting year. For rate years beginning on or after July 1, 1989, facilities located in geographic group I as described in Minnesota Rules, part 9549.0052, on January 1, 1989, may choose to have the commissioner apply either the care related limits or the other operating cost limits calculated for facilities located in geographic group II, or both, if either of the limits calculated for the group II facilities is higher. The efficiency incentive for geographic group I nursing facilities must be calculated based on geographic group I limits. The phase-in must be established utilizing the chosen limits. For purposes of these exceptions to the geographic grouping requirements, the definitions in Minnesota Rules, parts 9549.0050 to 9549.0059 (Emergency), and 9549.0010 to 9549.0080, apply. The limits established under this paragraph remain in effect until the commissioner establishes a new base period. Until the new base period is established, the commissioner shall adjust the limits annually using the appropriate economic change indices established in paragraph (e). In determining allowable historical operating cost per diems for purposes of setting limits and nursing facility payment rates, the commissioner shall divide the allowable historical operating costs by the actual number of resident days, except that where a nursing facility is occupied at less than 90 percent of licensed capacity days, the commissioner may establish procedures to adjust the computation of the per diem to an imputed occupancy level at or below 90 percent. The commissioner shall establish efficiency incentives as appropriate. The commissioner may establish efficiency incentives for different operating cost categories. The commissioner shall consider

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establishing efficiency incentives in care related cost categories. The commissioner may combine one or more operating cost categories and may use different methods for calculating payment rates for each operating cost category or combination of operating cost categories. For the rate year beginning on July 1, 1985, the commissioner shall:

(1) allow nursing facilities that have an average length of stay of 180 days or less in their skilled nursing level of care, 125 percent of the care related limit and 105 percent of the other operating cost limit established by rule; and

(2) exempt nursing facilities licensed on July 1, 1983, by the commissioner to provide residential services for the physically handicapped under Minnesota Rules, parts 9570.2000 to 9570.3600, from the care related limits and allow 105 percent of the other operating cost limit established by rule.

For the purpose of calculating the other operating cost efficiency incentive for nursing facilities referred to in clause (1) or (2), the commissioner shall use the other operating cost limit established by rule before application of the 105 percent.

(e) The commissioner shall establish a composite index or indices by determining the appropriate economic change indicators to be applied to specific operating cost categories or combination of operating cost categories.

(f) Each nursing facility shall receive an operating cost payment rate equal to the sum of the nursing facility's operating cost payment rates for each operating cost category. The operating cost payment rate for an operating cost category shall be the lesser of the nursing facility's historical operating cost in the category increased by the appropriate index established in paragraph (e) for the operating cost category plus an efficiency incentive established pursuant to paragraph (d) or the limit for the operating cost category increased by the same index. If a nursing facility's actual historic operating costs are greater than the prospective payment rate for that rate year, there shall be no retroactive cost settle-up. In establishing payment rates for one or more operating cost categories, the commissioner may establish separate rates for different classes of residents based on their relative care needs.

(g) The commissioner shall include the reported actual real estate tax liability or payments in lieu of real estate tax of each nursing facility as an operating cost of that nursing facility. Allowable costs under this subdivision for payments made by a nonprofit nursing facility that are in lieu of real estate taxes shall not exceed the amount which the nursing facility would have paid to a city or township and county for fire, police, sanitation services, and road maintenance costs had real estate taxes been levied on that property for those purposes. For rate years beginning on or after July 1, 1987, the reported actual real estate tax liability or payments in lieu of real estate tax of nursing facilities shall be adjusted to include an amount equal to one-half of the dollar change in real estate taxes from the prior year. The commissioner shall include a reported actual special assessment, and reported actual license fees required by the Minnesota department of health, for each nursing facility as an operating cost of that nursing facility. For rate years beginning on or after July 1, 1989, the commissioner shall include a nursing facility's reported public employee retirement act contribution for the reporting year as apportioned to the care-related operating cost categories and other operating cost categories multiplied by the appropriate composite index or indices established pursuant to paragraph (e) as costs under this paragraph. Total adjusted real estate tax liability, payments in lieu of real estate tax, actual special assessments paid, the indexed public employee retirement act contribution, and license fees paid as required by the Minnesota department of health, for each nursing facility (1) shall be divided by actual resident days in order to compute the operating cost payment rate for this operating cost category, (2) shall not be used to compute the care-related operating cost limits or other operating cost limits established by the commissioner, and (3) shall not be increased by the composite index or indices established pursuant to paragraph (e), unless otherwise indicated in this paragraph.

(h) For rate years beginning on or after July 1, 1987, the commissioner shall adjust the rates of a nursing facility that meets the criteria for the special dietary needs of its residents and the requirements in section 31.651. The adjustment for raw food cost shall be the difference between the nursing facility's allowable historical raw food cost per diem and 115 percent of the median historical allowable raw food cost per diem of the corresponding geographic group.

The rate adjustment shall be reduced by the applicable phase-in percentage as provided under subdivision 2h.

(i) For the cost report year ending September 30, 1996, and for all subsequent reporting years, certified nursing facilities must identify, differentiate, and record resident day statistics for residents in case mix classification A who, on or after July 1, 1996, meet the modified level of care criteria in section 144.0721. The resident day statistics shall be separated into case mix classification A-1 for any resident day meeting the high-function class A level of care criteria and case mix classification A-2 for other case mix class A resident days.

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Sec. 43. Minnesota Statutes 1996, section 256B.501, subdivision 2, is amended to read:

Subd. 2. [AUTHORITY.] The commissioner shall establish procedures and rules for determining rates for care of residents of intermediate care facilities for persons with mental retardation or related conditions which qualify as providers of medical assistance and waivered services. Approved rates shall be established on the basis of methods and standards that the commissioner finds adequate to provide for the costs that must be incurred for the quality care of residents in efficiently and economically operated facilities and services. The procedures shall specify the costs that are allowable for payment through medical assistance. The commissioner may use experts from outside the department in the establishment of the procedures.

Sec. 44. Minnesota Statutes 1997 Supplement, section 256B.69, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] For the purposes of this section, the following terms have the meanings given.

(a) "Commissioner" means the commissioner of human services. For the remainder of this section, the commissioner's responsibilities for methods and policies for implementing the project will be proposed by the project advisory committees and approved by the commissioner.

(b) "Demonstration provider" means a health maintenance organization or, community integrated service network, or accountable provider network authorized and operating under chapter 62D or, 62N, or 62T that participates in the demonstration project according to criteria, standards, methods, and other requirements established for the project and approved by the commissioner. Notwithstanding the above, Itasca county may continue to participate as a demonstration provider until July 1, 2000.

(c) "Eligible individuals" means those persons eligible for medical assistance benefits as defined in sections 256B.055, 256B.056, and 256B.06.

(d) "Limitation of choice" means suspending freedom of choice while allowing eligible individuals to choose among the demonstration providers.

(e) This paragraph supersedes paragraph (c) as long as the Minnesota health care reform waiver remains in effect. When the waiver expires, this paragraph expires and the commissioner of human services shall publish a notice in the State Register and notify the revisor of statutes. "Eligible individuals" means those persons eligible for medical assistance benefits as defined in sections 256B.055, 256B.056, and 256B.06. Notwithstanding sections 256B.055, 256B.056, and 256B.06, an individual who becomes ineligible for the program because of failure to submit income reports or recertification forms in a timely manner, shall remain enrolled in the prepaid health plan and shall remain eligible to receive medical assistance coverage through the last day of the month following the month in which the enrollee became ineligible for the medical assistance program.

Sec. 45. Minnesota Statutes 1997 Supplement, section 256B.69, subdivision 3a, is amended to read:

Subd. 3a. [COUNTY AUTHORITY.] (a) The commissioner, when implementing the general assistance medical care, or medical assistance prepayment program within a county, must include the county board in the process of development, approval, and issuance of the request for proposals to provide services to eligible individuals within the proposed county. County boards must be given reasonable opportunity to make recommendations regarding the development, issuance, review of responses, and changes needed in the request for proposals. The commissioner must provide county boards the opportunity to review each proposal based on the identification of community needs under chapters 145A and 256E and county advocacy activities. If a county board finds that a proposal does not address certain community needs, the county board and commissioner shall continue efforts for improving the proposal and network prior to the approval of the contract. The county board shall make recommendations regarding the approval of local networks and their operations to ensure adequate availability and access to covered services. The provider or health plan must respond directly to county advocates and the state prepaid medical assistance ombudsperson regarding service delivery and must be accountable to the state regarding contracts with medical assistance and general assistance medical care funds. The county board may recommend a maximum number of participating health plans after considering the size of the enrolling population; ensuring adequate access and capacity; considering the client and county administrative complexity; and considering the

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need to promote the viability of locally developed health plans. The county board or a single entity representing a group of county boards and the commissioner shall mutually select health plans for participation at the time of initial implementation of the prepaid medical assistance program in that county or group of counties and at the time of contract renewal. The commissioner shall also seek input for contract requirements from the county or single entity representing a group of county boards at each contract renewal and incorporate those recommendations into the contract negotiation process. The commissioner, in conjunction with the county board, shall actively seek to develop a mutually agreeable timetable prior to the development of the request for proposal, but counties must agree to initial enrollment beginning on or before January 1, 1999, in either the prepaid medical assistance and general assistance medical care programs or county-based purchasing under section 256B.692. At least 90 days before enrollment in the medical assistance and general assistance medical care prepaid programs begins in a county in which the prepaid programs have not been established, the commissioner shall provide a report to the chairs of senate and house committees having jurisdiction over state health care programs which verifies that the commissioner complied with the requirements for county involvement that are specified in this subdivision.

(b) The commissioner shall seek a federal waiver to allow a fee-for-service plan option to MinnesotaCare enrollees. The commissioner shall develop an increase of the premium fees required under section 256L.06 up to 20 percent of the premium fees for the enrollees who elect the fee-for-service option. Prior to implementation, the commissioner shall submit this fee schedule to the chair and ranking minority member of the senate health care committee, the senate health care and family services funding division, the house of representatives health and human services committee, and the house of representatives health and human services finance division.

(c) At the option of the county board, the board may develop contract requirements related to the achievement of local public health goals to meet the health needs of medical assistance and general assistance medical care enrollees. These requirements must be reasonably related to the performance of health plan functions and within the scope of the medical assistance and general assistance medical care benefit sets. If the county board and the commissioner mutually agree to such requirements, the department shall include such requirements in all health plan contracts governing the prepaid medical assistance and general assistance medical care programs in that county at initial implementation of the program in that county and at the time of contract renewal. The county board may participate in the enforcement of the contract provisions related to local public health goals.

(d) For counties in which prepaid medical assistance and general assistance medical care programs have not been established, the commissioner shall not implement those programs if a county board submits acceptable and timely preliminary and final proposals under section 256B.692, until county-based purchasing is no longer operational in that county. For counties in which prepaid medical assistance and general assistance medical care programs are in existence on or after September 1, 1997, the commissioner must terminate contracts with health plans according to section 256B.692, subdivision 5, if the county board submits and the commissioner accepts preliminary and final proposals according to that subdivision. The commissioner is not required to terminate contracts that begin on or after September 1, 1997, according to section 256B.692 until two years have elapsed from the date of initial enrollment.

(e) In the event that a county board or a single entity representing a group of county boards and the commissioner cannot reach agreement regarding: (i) the selection of participating health plans in that county; (ii) contract requirements; or (iii) implementation and enforcement of county requirements including provisions regarding local public health goals, the commissioner shall resolve all disputes after taking into account the recommendations of a three-person mediation panel. The panel shall be composed of one designee of the president of the association of Minnesota counties, one designee of the commissioner of human services, and one designee of the commissioner of health.

(f) If a county which elects to implement county-based purchasing ceases to implement county-based purchasing, it is prohibited from assuming the responsibility of county-based purchasing for a period of five years from the date it discontinues purchasing.

(g) Notwithstanding the requirement in this subdivision that a county must agree to initial enrollment on or before January 1, 1999, the commissioner shall grant a delay of up to nine months in the implementation of the county-based purchasing authorized in section 256B.692 if the county or group of counties has submitted a preliminary proposal for county-based purchasing by September 1, 1997, has not already implemented the prepaid medical assistance program

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before January 1, 1998, and has submitted a written request for the delay to the commissioner by July 1, 1998. In order for the delay to be continued, the county or group of counties must also submit to the commissioner the following information by December 1, 1998. The information must:

(1) identify the proposed date of implementation, not later than October 1, 1999;

(2) include copies of the county board resolutions which demonstrate the continued commitment to the implementation of county-based purchasing by the proposed date. County board authorization may remain contingent on the submission of a final proposal which meets the requirements of section 256B.692, subdivision 5, paragraph (b);

(3) demonstrate actions taken for the establishment of a governance structure between the participating counties and describe how the fiduciary responsibilities of county-based purchasing will be allocated between the counties, if more than one county is involved in the proposal;

(4) describe how the risk of a deficit will be managed in the event expenditures are greater than total capitation payments. This description must identify how any of the following strategies will be used:

(i) risk contracts with licensed health plans;

(ii) risk arrangements with providers who are not licensed health plans;

(iii) risk arrangements with other licensed insurance entities; and

(iv) funding from other county resources;

(5) include, if county-based purchasing will not contract with licensed health plans or provider networks, letters of interest from local providers in at least the categories of hospital, physician, mental health, and pharmacy which express interest in contracting for services. These letters must recognize any risk transfer identified in clause (4), item (ii); and

(6) describe the options being considered to obtain the administrative services required in section 256B.692, subdivision 3, clauses (3) and (5).

(h) For counties which receive a delay under this subdivision, the final proposals required under section 256B.692, subdivision 5, paragraph (b), must be submitted at least six months prior to the requested implementation date. Authority to implement county-based purchasing remains contingent on approval of the final proposal as required under section 256B.692.

(i) If the commissioner is unable to provide county-specific, individual-level fee-for-service claims to counties by June 4, 1998, the commissioner shall grant a delay under paragraph (g) of up to 12 months in the implementation of county-based purchasing, and shall require implementation not later than January 1, 2000. In order to receive an extension of the proposed date of implementation under this paragraph, a county or group of counties must submit a written request for the extension to the commissioner by August 1, 1998, must submit the information required under paragraph (g) by December 1, 1998, and must submit a final proposal as provided under paragraph (h).

Sec. 46. Minnesota Statutes 1996, section 256B.69, subdivision 22, is amended to read:

Subd. 22. [IMPACT ON PUBLIC OR TEACHING HOSPITALS AND COMMUNITY CLINICS.] (a) Before implementing prepaid programs in counties with a county operated or affiliated public teaching hospital or a hospital or clinic operated by the University of Minnesota, the commissioner shall consider the risks the prepaid program creates for the hospital and allow the county or hospital the opportunity to participate in the program, provided the terms of participation in the program are competitive with the terms of other participants.

(b) Prepaid health plans serving counties with a nonprofit community clinic or community health services agency must contract with the clinic or agency to provide services to clients who choose to receive services from the clinic or agency, if the clinic or agency agrees to payment rates that are competitive with rates paid to other health plan providers for the same or similar services.

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(c) For purposes of this subdivision, "nonprofit community clinic" includes, but is not limited to, a community mental health center as defined in sections 245.62 and 256B.0625, subdivision 5.

Sec. 47. Minnesota Statutes 1996, section 256B.69, is amended by adding a subdivision to read:

Subd. 25. [AMERICAN INDIAN RECIPIENTS.] (a) Beginning on or after January 1, 1999, for American Indian recipients of medical assistance who are required to enroll with a demonstration provider under subdivision 4 or in a county-based purchasing entity, if applicable, under section 256B.692, medical assistance shall cover health care services provided at American Indian health services facilities and facilities operated by a tribe or tribal organization under funding authorized by United States Code, title 25, sections 450f to 450n, or title III of the Indian Self-Determination and Education Assistance Act, Public Law Number 93-638, if those services would otherwise be covered under section 256B.0625. Payments for services provided under this subdivision shall be made on a fee-for-service basis, and may, at the option of the tribe or tribal organization, be made according to rates authorized under sections 256.969, subdivision 16, and 256B.0625, subdivision 34. Implementation of this purchasing model is contingent on federal approval.

(b) The commissioner of human services, in consultation with the tribal governments, shall develop a plan for tribes to assist in the enrollment process for American Indian recipients enrolled in the prepaid medical assistance program under this section or the prepaid general assistance medical care program under section 256D.03, subdivision 4, paragraph (d). This plan also shall address how tribes will be included in ensuring the coordination of care for American Indian recipients between Indian health service or tribal providers and other providers.

(c) For purposes of this subdivision, "American Indian" has the meaning given to persons to whom services will be provided for in Code of Federal Regulations, title 42, section 36.12.

(d) This subdivision also applies to American Indian recipients of general assistance medical care and to the prepaid general assistance medical care program under section 256D.03, subdivision 4, paragraph (d).

Sec. 48. Minnesota Statutes 1996, section 256B.69, is amended by adding a subdivision to read:

Subd. 26. [INFORMATION FOR PERSONS WITH LIMITED ENGLISH-LANGUAGE PROFICIENCY.] Managed care contracts entered into under this section and sections 256D.03, subdivision 4, paragraph (d), and 256L.12 must require demonstration providers to inform enrollees that upon request the enrollee can obtain a certificate of coverage in the following languages: Spanish, Hmong, Laotian, Russian, Somali, Vietnamese, or Cambodian. Upon request, the demonstration provider must provide the enrollee with a certificate of coverage in the specified language of preference.

Sec. 49. Minnesota Statutes 1997 Supplement, section 256B.692, subdivision 2, is amended to read:

Subd. 2. [DUTIES OF THE COMMISSIONER OF HEALTH.] Notwithstanding chapters 62D and 62N, a county that elects to purchase medical assistance and general assistance medical care in return for a fixed sum without regard to the frequency or extent of services furnished to any particular enrollee is not required to obtain a certificate of authority under chapter 62D or 62N. A county that elects to purchase medical assistance and general assistance medical care services under this section must satisfy the commissioner of health that the requirements of chapter 62D, applicable to health maintenance organizations, or chapter 62N, applicable to community integrated service networks, will be met. A county must also assure the commissioner of health that the requirements of ~~section~~ sections 62J.041; 62J.48; 62J.71 to 62J.73; 62M.01 to 62M.16; all applicable provisions of chapter 62Q, including sections 62Q.07; 62Q.075; 62Q.105; 62Q.1055; 62Q.106; 62Q.11; 62Q.12; 62Q.135; 62Q.14; 62Q.145; 62Q.19; 62Q.23, paragraph (c); 62Q.30; 62Q.43; 62Q.47; 62Q.50; 62Q.52 to 62Q.56; 62Q.58; 62Q.64; and 72A.201 will be met. All enforcement and rulemaking powers available under chapters 62D ~~and~~, 62J, 62M, 62N, and 62Q are hereby granted to the commissioner of health with respect to counties that purchase medical assistance and general assistance medical care services under this section.

Sec. 50. Minnesota Statutes 1997 Supplement, section 256B.692, subdivision 5, is amended to read:

Subd. 5. [COUNTY PROPOSALS.] (a) On or before September 1, 1997, a county board that wishes to purchase or provide health care under this section must submit a preliminary proposal that substantially demonstrates the county's ability to meet all the requirements of this section in response to criteria for proposals issued by the department on or

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before July 1, 1997. Counties submitting preliminary proposals must establish a local planning process that involves input from medical assistance and general assistance medical care recipients, recipient advocates, providers and representatives of local school districts, labor, and tribal government to advise on the development of a final proposal and its implementation.

(b) The county board must submit a final proposal on or before July 1, 1998, that demonstrates the ability to meet all the requirements of this section, including beginning enrollment on January 1, 1999, unless a delay has been granted under section 256B.69, subdivision 3a, paragraph (g).

(c) After January 1, 1999, for a county in which the prepaid medical assistance program is in existence, the county board must submit a preliminary proposal at least 15 months prior to termination of health plan contracts in that county and a final proposal six months prior to the health plan contract termination date in order to begin enrollment after the termination. Nothing in this section shall impede or delay implementation or continuation of the prepaid medical assistance and general assistance medical care programs in counties for which the board does not submit a proposal, or submits a proposal that is not in compliance with this section.

(d) The commissioner is not required to terminate contracts for the prepaid medical assistance and prepaid general assistance medical care programs that begin on or after September 1, 1997, in a county for which a county board has submitted a proposal under this paragraph, until two years have elapsed from the date of initial enrollment in the prepaid medical assistance and prepaid general assistance medical care programs.

Sec. 51. Minnesota Statutes 1997 Supplement, section 256B.77, subdivision 3, is amended to read:

Subd. 3. [ASSURANCES TO THE COMMISSIONER OF HEALTH.] A county authority that elects to participate in a demonstration project for people with disabilities under this section is not required to obtain a certificate of authority under chapter 62D or 62N. A county authority that elects to participate in a demonstration project for people with disabilities under this section must assure the commissioner of health that the requirements of chapters 62D and 62N, and section 256B.692, subdivision 2, are met. All enforcement and rulemaking powers available under chapters 62D ~~and~~, 62J, 62M, 62N, and 62Q are granted to the commissioner of health with respect to the county authorities that contract with the commissioner to purchase services in a demonstration project for people with disabilities under this section.

Sec. 52. Minnesota Statutes 1997 Supplement, section 256B.77, subdivision 7a, is amended to read:

Subd. 7a. [ELIGIBLE INDIVIDUALS.] (a) Persons are eligible for the demonstration project as provided in this subdivision.

(b) "Eligible individuals" means those persons living in the demonstration site who are eligible for medical assistance and are disabled based on a disability determination under section 256B.055, subdivisions 7 and 12, or who are eligible for medical assistance and have been diagnosed as having:

(1) serious and persistent mental illness as defined in section 245.462, subdivision 20;

(2) severe emotional disturbance as defined in section 245.487, subdivision 6; or

(3) mental retardation, or being a mentally retarded person as defined in section 252A.02, or a related condition as defined in section 252.27, subdivision 1a.

Other individuals may be included at the option of the county authority based on agreement with the commissioner.

(c) Eligible individuals residing on a federally recognized Indian reservation may be excluded from participation in the demonstration project at the discretion of the tribal government based on agreement with the commissioner, in consultation with the county authority.

(d) Eligible individuals include individuals in excluded time status, as defined in chapter 256G. Enrollees in excluded time at the time of enrollment shall remain in excluded time status as long as they live in the demonstration site and shall be eligible for 90 days after placement outside the demonstration site if they move to excluded time status in a county within Minnesota other than their county of financial responsibility.

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(e) A person who is a sexual psychopathic personality as defined in section 253B.02, subdivision 18a, or a sexually dangerous person as defined in section 253B.02, subdivision 18b, is excluded from enrollment in the demonstration project.

Sec. 53. Minnesota Statutes 1997 Supplement, section 256B.77, subdivision 10, is amended to read:

Subd. 10. [CAPITATION PAYMENT.] (a) The commissioner shall pay a capitation payment to the county authority and, when applicable under subdivision 6, paragraph (a), to the service delivery organization for each medical assistance eligible enrollee. The commissioner shall develop capitation payment rates for the initial contract period for each demonstration site in consultation with an independent actuary, to ensure that the cost of services under the demonstration project does not exceed the estimated cost for medical assistance services for the covered population under the fee-for-service system for the demonstration period. For each year of the demonstration project, the capitation payment rate shall be based on 96 percent of the projected per person costs that would otherwise have been paid under medical assistance fee-for-service during each of those years. Rates shall be adjusted within the limits of the available risk adjustment technology, as mandated by section 62Q.03. In addition, the commissioner shall implement appropriate risk and savings sharing provisions with county administrative entities and, when applicable under subdivision 6, paragraph (a), service delivery organizations within the projected budget limits. Capitation rates shall be adjusted, at least annually, to include any rate increases and payments for expanded or newly covered services for eligible individuals. The initial demonstration project rate shall include an amount in addition to the fee-for-service payments to adjust for underutilization of dental services. Any savings beyond those allowed for the county authority, county administrative entity, or service delivery organization shall be first used to meet the unmet needs of eligible individuals. Payments to providers participating in the project are exempt from the requirements of sections 256.966 and 256B.03, subdivision 2.

(b) The commissioner shall monitor and evaluate annually the effect of the discount on consumers, the county authority, and providers of disability services. Findings shall be reported and recommendations made, as appropriate, to ensure that the discount effect does not adversely affect the ability of the county administrative entity or providers of services to provide appropriate services to eligible individuals, and does not result in cost shifting of eligible individuals to the county authority.

Sec. 54. Minnesota Statutes 1997 Supplement, section 256B.77, subdivision 12, is amended to read:

Subd. 12. [SERVICE COORDINATION.] (a) For purposes of this section, "service coordinator" means an individual selected by the enrollee or the enrollee's legal representative and authorized by the county administrative entity or service delivery organization to work in partnership with the enrollee to develop, coordinate, and in some instances, provide supports and services identified in the personal support plan. Service coordinators may only provide services and supports if the enrollee is informed of potential conflicts of interest, is given alternatives, and gives informed consent. Eligible service coordinators are individuals age 18 or older who meet the qualifications as described in paragraph (b). Enrollees, their legal representatives, or their advocates are eligible to be service coordinators if they have the capabilities to perform the activities and functions outlined in paragraph (b). Providers licensed under chapter 245A to provide residential services, or providers who are providing residential services covered under the group residential housing program may not act as service coordinator for enrollees for whom they provide residential services. This does not apply to providers of short-term detoxification services. Each county administrative entity or service delivery organization may develop further criteria for eligible vendors of service coordination during the demonstration period and shall determine whom it contracts with or employs to provide service coordination. County administrative entities and service delivery organizations may pay enrollees or their advocates or legal representatives for service coordination activities.

(b) The service coordinator shall act as a facilitator, working in partnership with the enrollee to ensure that their needs are identified and addressed. The level of involvement of the service coordinator shall depend on the needs and desires of the enrollee. The service coordinator shall have the knowledge, skills, and abilities to, and is responsible for:

(1) arranging for an initial assessment, and periodic reassessment as necessary, of supports and services based on the enrollee's strengths, needs, choices, and preferences in life domain areas;

(2) developing and updating the personal support plan based on relevant ongoing assessment;

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(3) arranging for and coordinating the provisions of supports and services, including knowledgeable and skilled specialty services and prevention and early intervention services, within the limitations negotiated with the county administrative entity or service delivery organization;

(4) assisting the enrollee and the enrollee's legal representative, if any, to maximize informed choice of and control over services and supports and to exercise the enrollee's rights and advocate on behalf of the enrollee;

(5) monitoring the progress toward achieving the enrollee's outcomes in order to evaluate and adjust the timeliness and adequacy of the implementation of the personal support plan;

(6) facilitating meetings and effectively collaborating with a variety of agencies and persons, including attending individual family service plan and individual education plan meetings when requested by the enrollee or the enrollee's legal representative;

(7) soliciting and analyzing relevant information;

(8) communicating effectively with the enrollee and with other individuals participating in the enrollee's plan;

(9) educating and communicating effectively with the enrollee about good health care practices and risk to the enrollee's health with certain behaviors;

(10) having knowledge of basic enrollee protection requirements, including data privacy;

(11) informing, educating, and assisting the enrollee in identifying available service providers and accessing needed resources and services beyond the limitations of the medical assistance benefit set covered services; and

(12) providing other services as identified in the personal support plan.

(c) For the demonstration project, the qualifications and standards for service coordination in this section shall replace comparable existing provisions of existing statutes and rules governing case management for eligible individuals.

(d) The provisions of this subdivision apply only to the demonstration sites ~~that begin implementation on July 1, 1998~~ designated by the commissioner under subdivision 5. All other demonstration sites must comply with laws and rules governing case management services for eligible individuals in effect when the site begins the demonstration project.

Sec. 55. Minnesota Statutes 1996, section 256D.03, subdivision 4, is amended to read:

Subd. 4. [GENERAL ASSISTANCE MEDICAL CARE; SERVICES.] (a) For a person who is eligible under subdivision 3, paragraph (a), clause (3), general assistance medical care covers, except as provided in paragraph (c):

(1) inpatient hospital services;

(2) outpatient hospital services;

(3) services provided by Medicare certified rehabilitation agencies;

(4) prescription drugs and other products recommended through the process established in section 256B.0625, subdivision 13;

(5) equipment necessary to administer insulin and diagnostic supplies and equipment for diabetics to monitor blood sugar level;

(6) eyeglasses and eye examinations provided by a physician or optometrist;

(7) hearing aids;

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(8) prosthetic devices;

(9) laboratory and X-ray services;

(10) physician's services;

(11) medical transportation;

(12) chiropractic services as covered under the medical assistance program;

(13) podiatric services;

(14) dental services;

(15) outpatient services provided by a mental health center or clinic that is under contract with the county board and is established under section 245.62;

(16) day treatment services for mental illness provided under contract with the county board;

(17) prescribed medications for persons who have been diagnosed as mentally ill as necessary to prevent more restrictive institutionalization;

(18) ~~case management services for a person with serious and persistent mental illness who would be eligible for medical assistance except that the person resides in an institution for mental diseases;~~

~~(19)~~ psychological services, medical supplies and equipment, and Medicare premiums, coinsurance and deductible payments;

~~(20)~~ (19) medical equipment not specifically listed in this paragraph when the use of the equipment will prevent the need for costlier services that are reimbursable under this subdivision;

~~(21)~~ (20) services performed by a certified pediatric nurse practitioner, a certified family nurse practitioner, a certified adult nurse practitioner, a certified obstetric/gynecological nurse practitioner, or a certified geriatric nurse practitioner in independent practice, if the services are otherwise covered under this chapter as a physician service, and if the service is within the scope of practice of the nurse practitioner's license as a registered nurse, as defined in section 148.171; and

~~(22)~~ (21) services of a certified public health nurse or a registered nurse practicing in a public health nursing clinic that is a department of, or that operates under the direct authority of, a unit of government, if the service is within the scope of practice of the public health nurse's license as a registered nurse, as defined in section 148.171.

(b) Except as provided in paragraph (c), for a recipient who is eligible under subdivision 3, paragraph (a), clause (1) or (2), general assistance medical care covers the services listed in paragraph (a) with the exception of special transportation services.

(c) Gender reassignment surgery and related services are not covered services under this subdivision unless the individual began receiving gender reassignment services prior to July 1, 1995.

(d) In order to contain costs, the commissioner of human services shall select vendors of medical care who can provide the most economical care consistent with high medical standards and shall where possible contract with organizations on a prepaid capitation basis to provide these services. The commissioner shall consider proposals by counties and vendors for prepaid health plans, competitive bidding programs, block grants, or other vendor payment mechanisms designed to provide services in an economical manner or to control utilization, with safeguards to ensure that necessary services are provided. Before implementing prepaid programs in counties with a county operated or affiliated public teaching hospital or a hospital or clinic operated by the University of Minnesota, the commissioner shall consider the risks the prepaid program creates for the hospital and allow the county or hospital the opportunity to participate in the program in a manner

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that reflects the risk of adverse selection and the nature of the patients served by the hospital, provided the terms of participation in the program are competitive with the terms of other participants considering the nature of the population served. Payment for services provided pursuant to this subdivision shall be as provided to medical assistance vendors of these services under sections 256B.02, subdivision 8, and 256B.0625. For payments made during fiscal year 1990 and later years, the commissioner shall consult with an independent actuary in establishing prepayment rates, but shall retain final control over the rate methodology. Notwithstanding the provisions of subdivision 3, an individual who becomes ineligible for general assistance medical care because of failure to submit income reports or recertification forms in a timely manner, shall remain enrolled in the prepaid health plan and shall remain eligible for general assistance medical care coverage through the last day of the month in which the enrollee became ineligible for general assistance medical care.

(e) The commissioner of human services may reduce payments provided under sections 256D.01 to 256D.21 and 261.23 in order to remain within the amount appropriated for general assistance medical care, within the following restrictions.:

(i) For the period July 1, 1985 to December 31, 1985, reductions below the cost per service unit allowable under section 256.966, are permitted only as follows: payments for inpatient and outpatient hospital care provided in response to a primary diagnosis of chemical dependency or mental illness may be reduced no more than 30 percent; payments for all other inpatient hospital care may be reduced no more than 20 percent. Reductions below the payments allowable under general assistance medical care for the remaining general assistance medical care services allowable under this subdivision may be reduced no more than ten percent.

(ii) For the period January 1, 1986 to December 31, 1986, reductions below the cost per service unit allowable under section 256.966 are permitted only as follows: payments for inpatient and outpatient hospital care provided in response to a primary diagnosis of chemical dependency or mental illness may be reduced no more than 20 percent; payments for all other inpatient hospital care may be reduced no more than 15 percent. Reductions below the payments allowable under general assistance medical care for the remaining general assistance medical care services allowable under this subdivision may be reduced no more than five percent.

(iii) For the period January 1, 1987 to June 30, 1987, reductions below the cost per service unit allowable under section 256.966 are permitted only as follows: payments for inpatient and outpatient hospital care provided in response to a primary diagnosis of chemical dependency or mental illness may be reduced no more than 15 percent; payments for all other inpatient hospital care may be reduced no more than ten percent. Reductions below the payments allowable under medical assistance for the remaining general assistance medical care services allowable under this subdivision may be reduced no more than five percent.

(iv) For the period July 1, 1987 to June 30, 1988, reductions below the cost per service unit allowable under section 256.966 are permitted only as follows: payments for inpatient and outpatient hospital care provided in response to a primary diagnosis of chemical dependency or mental illness may be reduced no more than 15 percent; payments for all other inpatient hospital care may be reduced no more than five percent. Reductions below the payments allowable under medical assistance for the remaining general assistance medical care services allowable under this subdivision may be reduced no more than five percent.

(v) For the period July 1, 1988 to June 30, 1989, reductions below the cost per service unit allowable under section 256.966 are permitted only as follows: payments for inpatient and outpatient hospital care provided in response to a primary diagnosis of chemical dependency or mental illness may be reduced no more than 15 percent; payments for all other inpatient hospital care may not be reduced. Reductions below the payments allowable under medical assistance for the remaining general assistance medical care services allowable under this subdivision may be reduced no more than five percent.

(f) There shall be no copayment required of any recipient of benefits for any services provided under this subdivision. A hospital receiving a reduced payment as a result of this section may apply the unpaid balance toward satisfaction of the hospital's bad debts.

~~(f)~~ (g) Any county may, from its own resources, provide medical payments for which state payments are not made.

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~~(g)~~ (h) Chemical dependency services that are reimbursed under chapter 254B must not be reimbursed under general assistance medical care.

~~(h)~~ (i) The maximum payment for new vendors enrolled in the general assistance medical care program after the base year shall be determined from the average usual and customary charge of the same vendor type enrolled in the base year.

~~(i)~~ (j) The conditions of payment for services under this subdivision are the same as the conditions specified in rules adopted under chapter 256B governing the medical assistance program, unless otherwise provided by statute or rule.

Sec. 56. Minnesota Statutes 1996, section 256D.03, is amended by adding a subdivision to read:

Subd. 9. [PAYMENT FOR AMBULANCE SERVICES.] Effective for services rendered on or after July 1, 1999, general assistance medical care payments for ambulance services shall be increased by five percent.

Sec. 57. Laws 1997, chapter 195, section 5, is amended to read:

Sec. 5. [PERSONAL CARE ASSISTANT PROVIDERS.]

The commissioner of health shall create a unique category of licensure as appropriate for providers offering, providing, or arranging personal care assistant services to more than one individual. The commissioner shall work with the department of human services, providers, consumers, and advocates in developing the licensure standards. The licensure standards must include requirements for providers to provide consumers advance written notice of service termination, a service transition plan, and an appeal process. If the commissioner determines there are costs related to rulemaking under this section, the commissioner shall include a budget request for this item in the 2000-2001 biennial budget. Prior to promulgating the rule, the commissioner shall submit the proposed rule to the legislature by January 15, 1999.

Sec. 58. Laws 1997, chapter 203, article 4, section 64, is amended to read:

Sec. 64. [STUDY OF ELDERLY WAIVER EXPANSION.]

The commissioner of human services shall appoint a task force that includes representatives of counties, health plans, consumers, and legislators to study the impact of the expansion of the elderly waiver program under section 4 and to make recommendations for any changes in law necessary to facilitate an efficient and equitable relationship between the elderly waiver program and the Minnesota senior health options project. Based on the results of the task force study, the commissioner may seek any federal waivers needed to improve the relationship between the elderly waiver and the Minnesota senior health options project. The commissioner shall report the results of the task force study to the legislature by ~~January 15, 1998~~ July 1, 2000.

Sec. 59. [OFFSET OF HMO SURCHARGE.]

Beginning October 1, 1998, and ending December 31, 1998, the commissioner of human services shall offset monthly charges for the health maintenance organization surcharge by the monthly amount the health maintenance organization overpaid from August 1, 1997, to September 30, 1998, due to taxation of Medicare revenues prohibited by Minnesota Statutes, section 256.9657, subdivision 3.

Sec. 60. [MR/RC WAIVER PROPOSAL.]

By November 15, 1998, the commissioner of human services shall provide to the chairs of the house health and human services finance division and the senate health and family security finance division a detailed budget proposal for providing services under the home and community-based waiver for persons with mental retardation or related conditions to those individuals who are screened and waiting for services.

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Sec. 61. [HIV HEALTH CARE ACCESS STUDY.]

The commissioner of human services shall study, in consultation with the commissioner of health and a task force of affected community stakeholders, the impact of positive patient responses to new HIV treatment on re-entry to the workplace, including, but not limited to, addressing continued access to health care and disability benefits. The commissioner shall submit a report on the study with recommendations to the legislature by January 15, 1999.

Sec. 62. [MENTAL HEALTH REPORT.]

(a) By December 1, 1998, the commissioner of human services shall report to the legislature on recommendations to maximize federal funding for mental health services for children and adults. In developing the recommendations, the commissioner shall seek advice from a children's and adults' mental health services stakeholders advisory group including representatives of state and county government, private and state-operated mental health providers, mental health consumers, family members, and advocates.

(b) The report shall include a proposal developed in conjunction with the counties that does not shift caseload growth to counties after July 1, 1999, and recommendations on whether the state should directly participate in medical assistance mental health case management by funding a portion of the nonfederal share of Medicaid.

Sec. 63. [CONSUMER PRICE INDEX REPORT.]

By January 15, 1999, and each year thereafter, the commissioner of human services shall report to the chair of the senate health and family security budget division and the chair of the house health and human services budget division on the cost of increasing the income standard under Minnesota Statutes, section 256B.056, subdivision 4, and the provider rates under Minnesota Statutes, section 256B.038, by an amount equal to the percent change in the Consumer Price Index for all urban consumers for the previous October compared to one year earlier.

Sec. 64. [TRANSLATING AND INTERPRETING INFORMATION FOR PERSONS WITH LIMITED ENGLISH-LANGUAGE PROFICIENCY.]

(a) The commissioner shall develop a plan to serve public assistance applicants and recipients who have limited English-language proficiency that ensures that the state is in compliance with title VI of the Civil Rights Act and Minnesota Statutes, section 363.073, and any other laws or regulations that prohibit discrimination.

(b) The commissioner shall convene an advisory committee that consists of members of bilingual community groups, county human service agencies, health plans, health care providers, advocacy groups, and other state agencies to assist in developing the plan.

(c) The commissioner shall submit the plan and any fiscal estimates necessary to implement the plan to the chairs of the health and human services policy and finance divisions by December 15, 1998.

(d) Until the plan under paragraph (c) is implemented, the commissioner is required to include a language block on notices from county agencies that deny, reduce, or terminate benefits which states:

"IMPORTANT! This notice affects your rights and should be translated immediately. If you need help translating this notice, call your county worker."

Notices from MinnesotaCare that deny, reduce, or terminate benefits must include a language block which states:

"IMPORTANT! This notice affects your rights and should be translated immediately. If you need help translating this notice, call your enrollment representative."

The notice must include a telephone number for the MinnesotaCare enrollment representative.

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(e) Until the plan under paragraph (c) is implemented, the commissioner shall require a managed care plan under contract with the commissioner of human services that issues a notice that denies, reduces, or terminates coverage to include a language block, which states:

"IMPORTANT! This notice affects your rights and should be translated immediately."

The notice shall include the telephone number of a person to contact who can assist the enrollee in translating the notice.

Sec. 65. [UNCOMPENSATED CARE STUDY.]

The commissioner of health, in consultation with the commissioner of human services, associations representing Minnesota counties, consumer advocates, associations representing health care providers and institutions, and representatives of institutions providing a disproportionate share of uncompensated medical care shall submit to the legislature by January 15, 1999, a report and recommendations on the provision and financing of uncompensated care in Minnesota. The report must:

(1) document the extent of uncompensated care provided in Minnesota;

(2) discuss the feasibility of and evaluate options for financing uncompensated care, including but not limited to:

(i) modifying the eligibility standards for the MinnesotaCare and general assistance medical care programs; and

(ii) allowing providers to bill other counties for uncompensated care provided to residents of those counties;

(3) evaluate approaches used by other states to monitor and finance uncompensated care; and

(4) describe alternative approaches to encourage health care coverage.

Sec. 66. [COVERAGE OF REHABILITATIVE AND THERAPEUTIC SERVICES.]

(a) The threshold limits for fee-for-service medical assistance rehabilitative and therapeutic services for January 1, 1998 through June 30, 1999, shall be the limits prescribed in the department of human services health care programs provider manual for calendar year 1997. Rehabilitative and therapeutic services are: occupational therapy services provided to medical assistance recipients pursuant to Minnesota Statutes, section 256B.0625, subdivision 8a; physical therapy services provided to medical assistance recipients pursuant to Minnesota Statutes, section 256B.0625, subdivision 8; and speech language pathology services provided to medical assistance recipients pursuant to Minnesota Rules, part 9505.0390.

(b) The commissioner of human services, in consultation with the department of human services rehabilitative work group, shall report to the chair of the senate health and family security committee and the chair of the house health and human services committee by January 15, 1999, recommendations and proposed legislation for the appropriate level of rehabilitative services delivered to medical assistance recipients before prior authorization. The recommendations shall also include proposed legislation to clarify the rehabilitative and therapeutic benefit set for medical assistance, as well as the appropriate response time for requests for prior authorization.

Sec. 67. [DENTAL SERVICES REIMBURSEMENT AND ACCESS STUDY.]

(a) The commissioner of human services, in consultation with the commissioner of health, shall report to the legislature by December 15, 1998, on the costs of providing dental care services to recipients of the medical assistance, general assistance medical care and MinnesotaCare programs and the reimbursement level of those programs under fee-for-service and under managed care plans. Costs shall include both base level and incremental costs of providing services to public program recipients. In completing the study, the commissioner shall review existing dental practice literature on dental practice expenses, and conduct a random survey of dental practices in the state to establish usual and customary fees for a subset of common dental procedures. The commissioner shall compare private insurance reimbursement for a subset of common dental procedures with reimbursement levels for public programs. In determining private insurance reimbursement, the commissioner may obtain reimbursement data from health plans insuring or providing dental care

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services. Data obtained by the commissioner shall be nonpublic and subject to Minnesota Statutes, section 62J.321. The commissioner may include in the report related information on the costs of other health care professionals and reimbursement levels by public and private payers.

(b) The commissioner of human services shall present recommendations to the legislature by February 1, 1999, on how access to dental services for medical assistance, general assistance medical care, and MinnesotaCare recipients can be expanded. The commissioner shall also determine which areas of the state are experiencing a significant access problem. In developing recommendations, the commissioner shall evaluate the feasibility of a disproportionate share adjustment for dental services.

Sec. 68. [RECYCLING PILOT PROJECT.]

The commissioner of human services, in cooperation with the system of technology to achieve results (STAR) program, shall award a grant on a competitive basis to a qualified agency for the establishment of a pilot project to:

(1) obtain, refurbish, and recycle augmentative and alternative communication systems in order to allow their reuse for trials and short-term use by persons with severe expressive communication limitations; and

(2) provide training related to the use of augmentative and alternative communication systems.

The commissioner shall award the grant as soon as possible after July 1, 1998, and shall report to the legislature by January 15, 1999, on the activities of the grantee.

Sec. 69. [REPEALER.]

Minnesota Statutes 1996, section 144.0721, subdivision 3a; and Minnesota Statutes 1997 Supplement, sections 144.0721, subdivision 3; and 256B.0913, subdivision 15, are repealed.

Sec. 70. [EFFECTIVE DATES.]

(a) Sections 5, 31, 40, 45, 50, and 66 are effective the day following final enactment.

(b) Sections 10 and 48 are effective January 1, 1999.

(d) Sections 14 and 19 are effective retroactive to July 1, 1997.

(e) Section 7 is effective retroactive to August 1, 1997.

(f) Sections 3 and 44 are effective 30 days following final enactment.

(g) Section 32 is effective for changes in eligibility that occur on or after July 1, 1998.

Section 1. Minnesota Statutes 1997 Supplement, section 60A.15, subdivision 1, is amended to read:

MINNESOTACARE

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(1) for all life insurance, two percent;

(2) for town and farmers' mutual insurance companies and for mutual property and casualty companies with total assets of $5,000,000 or less, on all other coverages, one percent; and

(3) for mutual property and casualty companies with total assets on December 31, 1989, of $1,600,000,000 or less, on all other coverages, 1.26 percent.

(h) For calendar years 1998 and 1999, the installments for health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations must be based on an amount equal to one percent of premiums described under paragraph (b). Health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations that have met the cost containment goals established under section 62J.04 in the individual and small employer market for calendar year 1996 are exempt from payment of the tax imposed under this section for premiums paid after March 30, 1997, and before April 1, 1998. Health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations that have met the cost containment goals established under section 62J.04 in the individual and small employer market for calendar year 1997 are exempt from payment of the tax imposed under this section for premiums paid after March 30, 1998, and before April 1, 1999.

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Sec. 2. Minnesota Statutes 1997 Supplement, section 256B.04, subdivision 18, is amended to read:

Subd. 18. [APPLICATIONS FOR MEDICAL ASSISTANCE.] The state agency may take applications for medical assistance and conduct eligibility determinations for MinnesotaCare enrollees ~~who are required to apply for medical assistance according to section 256L.03, subdivision 3, paragraph (b)~~.

Sec. 3. Minnesota Statutes 1996, section 256B.057, is amended by adding a subdivision to read:

Subd. 1c. [NO ASSET TEST FOR PREGNANT WOMEN.] Beginning September 30, 1998, eligibility for medical assistance for a pregnant woman must be determined without regard to asset standards established in section 256B.056, subdivision 3.

Sec. 4. Minnesota Statutes 1996, section 256B.057, is amended by adding a subdivision to read:

Subd. 7. [WAIVER OF MAINTENANCE OF EFFORT REQUIREMENT.] Unless a federal waiver of the maintenance of effort requirement of section 2105(d) of title XXI of the Balanced Budget Act of 1997, Public Law Number 105-33, Statutes at Large, volume 111, page 251, is granted by the federal Department of Health and Human Services by September 30, 1998, eligibility for children under age 21 must be determined without regard to asset standards established in section 256B.056, subdivision 3. The commissioner of human services shall publish a notice in the State Register upon receipt of a federal waiver.

Sec. 5. Minnesota Statutes 1996, section 256B.057, is amended by adding a subdivision to read:

Subd. 8. [CHILDREN UNDER AGE TWO.] Medical assistance may be paid for a child under two years of age whose countable family income is above 275 percent of the federal poverty guidelines for the same size family but less than or equal to 280 percent of the federal poverty guidelines for the same size family.

Sec. 6. Minnesota Statutes 1997 Supplement, section 256D.03, subdivision 3, is amended to read:

Subd. 3. [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] (a) General assistance medical care may be paid for any person who is not eligible for medical assistance under chapter 256B, including eligibility for medical assistance based on a spenddown of excess income according to section 256B.056, subdivision 5, or MinnesotaCare as defined in ~~clause (4)~~ paragraph (b), except as provided in paragraph ~~(b)~~ (c); and:

(1) who is receiving assistance under section 256D.05, except for families with children who are eligible under Minnesota family investment program-statewide (MFIP-S), who is having a payment made on the person's behalf under sections 256I.01 to 256I.06, or who resides in group residential housing as defined in chapter 256I and can meet a spenddown using the cost of remedial services received through group residential housing; or

(2)(i) who is a resident of Minnesota; and whose equity in assets is not in excess of $1,000 per assistance unit. Exempt assets, the reduction of excess assets, and the waiver of excess assets must conform to the medical assistance program in chapter 256B, with the following exception: the maximum amount of undistributed funds in a trust that could be distributed to or on behalf of the beneficiary by the trustee, assuming the full exercise of the trustee's discretion under the terms of the trust, must be applied toward the asset maximum; and

(ii) who has countable income not in excess of the assistance standards established in section 256B.056, subdivision 4, or whose excess income is spent down according to section 256B.056, subdivision 5, using a six-month budget period. The method for calculating earned income disregards and deductions for a person who resides with a dependent child under age 21 shall follow section 256B.056, subdivision 1a. However, if a disregard of $30 and one-third of the remainder has been applied to the wage earner's income, the disregard shall not be applied again until the wage earner's income has not been considered in an eligibility determination for general assistance, general assistance medical care, medical

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assistance, or MFIP-S for 12 consecutive months. The earned income and work expense deductions for a person who does not reside with a dependent child under age 21 shall be the same as the method used to determine eligibility for a person under section 256D.06, subdivision 1, except the disregard of the first $50 of earned income is not allowed; or

(3) who would be eligible for medical assistance except that the person resides in a facility that is determined by the commissioner or the federal Health Care Financing Administration to be an institution for mental diseases.; or

(4) who is ineligible for medical assistance under chapter 256B or general assistance medical care under any other provision of this section, and is receiving care and rehabilitation services from a nonprofit center established to serve victims of torture. These individuals are eligible for general assistance medical care only for the period during which they are receiving services from the center. During this period of eligibility, individuals eligible under this clause shall not be required to participate in prepaid general assistance medical care.

~~(4)~~ (b) Beginning ~~July 1, 1998~~ January 1, 2000, applicants or recipients who meet all eligibility requirements of MinnesotaCare as defined in sections 256L.01 to 256L.16, and are:

(i) adults with dependent children under 21 whose gross family income is equal to or less than 275 percent of the federal poverty guidelines; or

(ii) adults without children with earned income and whose family gross income is between 75 percent of the federal poverty guidelines and the amount set by section 256L.04, subdivision 7, shall be terminated from general assistance medical care upon enrollment in MinnesotaCare.

~~(b)~~ (c) For services rendered on or after July 1, 1997, eligibility is limited to one month prior to application if the person is determined eligible in the prior month. A redetermination of eligibility must occur every 12 months. Beginning ~~July 1, 1998~~ January 1, 2000, Minnesota health care program applications completed by recipients and applicants who are persons described in paragraph ~~(a)~~ (b), ~~clause (4),~~ may be returned to the county agency to be forwarded to the department of human services or sent directly to the department of human services for enrollment in MinnesotaCare. If all other eligibility requirements of this subdivision are met, eligibility for general assistance medical care shall be available in any month during which a MinnesotaCare eligibility determination and enrollment are pending. Upon notification of eligibility for MinnesotaCare, notice of termination for eligibility for general assistance medical care shall be sent to an applicant or recipient. If all other eligibility requirements of this subdivision are met, eligibility for general assistance medical care shall be available until enrollment in MinnesotaCare subject to the provisions of paragraph ~~(d)~~ (e).

~~(c)~~ (d) The date of an initial Minnesota health care program application necessary to begin a determination of eligibility shall be the date the applicant has provided a name, address, and social security number, signed and dated, to the county agency or the department of human services. If the applicant is unable to provide an initial application when health care is delivered due to a medical condition or disability, a health care provider may act on the person's behalf to complete the initial application. The applicant must complete the remainder of the application and provide necessary verification before eligibility can be determined. The county agency must assist the applicant in obtaining verification if necessary.

~~(d)~~ (e) County agencies are authorized to use all automated databases containing information regarding recipients' or applicants' income in order to determine eligibility for general assistance medical care or MinnesotaCare. Such use shall be considered sufficient in order to determine eligibility and premium payments by the county agency.

~~(e)~~ (f) General assistance medical care is not available for a person in a correctional facility unless the person is detained by law for less than one year in a county correctional or detention facility as a person accused or convicted of a crime, or admitted as an inpatient to a hospital on a criminal hold order, and the person is a recipient of general assistance medical care at the time the person is detained by law or admitted on a criminal hold order and as long as the person continues to meet other eligibility requirements of this subdivision.

~~(f)~~ (g) General assistance medical care is not available for applicants or recipients who do not cooperate with the county agency to meet the requirements of medical assistance. General assistance medical care is limited to payment of emergency services only for applicants or recipients as described in paragraph ~~(a)~~ (b), ~~clause (4),~~ whose MinnesotaCare coverage is denied or terminated for nonpayment of premiums as required by sections 256L.06 ~~to 256L.08~~ and 256L.07.

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~~(g)~~ (h) In determining the amount of assets of an individual, there shall be included any asset or interest in an asset, including an asset excluded under paragraph (a), that was given away, sold, or disposed of for less than fair market value within the 60 months preceding application for general assistance medical care or during the period of eligibility. Any transfer described in this paragraph shall be presumed to have been for the purpose of establishing eligibility for general assistance medical care, unless the individual furnishes convincing evidence to establish that the transaction was exclusively for another purpose. For purposes of this paragraph, the value of the asset or interest shall be the fair market value at the time it was given away, sold, or disposed of, less the amount of compensation received. For any uncompensated transfer, the number of months of ineligibility, including partial months, shall be calculated by dividing the uncompensated transfer amount by the average monthly per person payment made by the medical assistance program to skilled nursing facilities for the previous calendar year. The individual shall remain ineligible until this fixed period has expired. The period of ineligibility may exceed 30 months, and a reapplication for benefits after 30 months from the date of the transfer shall not result in eligibility unless and until the period of ineligibility has expired. The period of ineligibility begins in the month the transfer was reported to the county agency, or if the transfer was not reported, the month in which the county agency discovered the transfer, whichever comes first. For applicants, the period of ineligibility begins on the date of the first approved application.

~~(h)~~ (i) When determining eligibility for any state benefits under this subdivision, the income and resources of all noncitizens shall be deemed to include their sponsor's income and resources as defined in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, title IV, Public Law Number 104-193, sections 421 and 422, and subsequently set out in federal rules.

~~(i)~~ (j)(1) An undocumented noncitizen or a nonimmigrant is ineligible for general assistance medical care other than emergency services. For purposes of this subdivision, a nonimmigrant is an individual in one or more of the classes listed in United States Code, title 8, section 1101(a)(15), and an undocumented noncitizen is an individual who resides in the United States without the approval or acquiescence of the Immigration and Naturalization Service.

~~(j)~~ (2) This paragraph does not apply to a child under age 18, to a Cuban or Haitian entrant as defined in Public Law Number 96-422, section 501(e)(1) or (2)(a), or to a noncitizen who is aged, blind, or disabled as defined in Code of Federal Regulations, title 42, sections 435.520, 435.530, 435.531, 435.540, and 435.541, or effective October 1, 1998, to an individual eligible for general assistance medical care under paragraph (a), clause (4), who cooperates with the Immigration and Naturalization Service to pursue any applicable immigration status, including citizenship, that would qualify the individual for medical assistance with federal financial participation.

~~(k)~~ (3) For purposes of ~~paragraphs (f) and (i)~~ this paragraph, "emergency services" has the meaning given in Code of Federal Regulations, title 42, section 440.255(b)(1), except that it also means services rendered because of suspected or actual pesticide poisoning.

~~(l)~~ (k) Notwithstanding any other provision of law, a noncitizen who is ineligible for medical assistance due to the deeming of a sponsor's income and resources, is ineligible for general assistance medical care.

Sec. 7. Minnesota Statutes 1997 Supplement, section 256L.01, is amended to read:

256L.01 [DEFINITIONS.]

Subdivision 1. [SCOPE.] For purposes of sections 256L.01 to ~~256L.10~~ 256L.18, the following terms shall have the meanings given them.

Subd. 1a. [CHILD.] "Child" means an individual under 21 years of age, including the unborn child of a pregnant woman, an emancipated minor, and an emancipated minor's spouse.

Subd. 2. [COMMISSIONER.] "Commissioner" means the commissioner of human services.

Subd. 3. [ELIGIBLE PROVIDERS.] "Eligible providers" means those health care providers who provide covered health services to medical assistance recipients under rules established by the commissioner for that program.

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Subd. 3a. [FAMILY WITH CHILDREN.] (a) "Family with children" means:

(1) parents, their children, and dependent siblings residing in the same household; or

(2) grandparents, foster parents, relative caretakers as defined in the medical assistance program, or legal guardians; their wards who are children; and dependent siblings residing in the same household.

(b) The term includes children and dependent siblings who are temporarily absent from the household in settings such as schools, camps, or visitation with noncustodial parents.

(c) For purposes of this subdivision, a dependent sibling means an unmarried child who is a full-time student under the age of 25 years who is financially dependent upon a parent, grandparent, foster parent, relative caretaker, or legal guardian. Proof of school enrollment is required.

Subd. 4. [GROSS INDIVIDUAL OR GROSS FAMILY INCOME.] "Gross individual or gross family income" for farm and nonfarm self-employed means income calculated using as the baseline the adjusted gross income reported on the applicant's federal income tax form for the previous year and adding back in reported depreciation, carryover loss, and net operating loss amounts that apply to the business in which the family is currently engaged. Applicants shall report the most recent financial situation of the family if it has changed from the period of time covered by the federal income tax form. The report may be in the form of percentage increase or decrease.

Subd. 5. [INCOME.] "Income" has the meaning given for earned and unearned income for families and children in the medical assistance program, according to the state's aid to families with dependent children plan in effect as of July 16, 1996. The definition does not include medical assistance income methodologies and deeming requirements. The earned income of full-time and part-time students under age 19 is not counted as income. Public assistance payments and supplemental security income are not excluded income.

Sec. 8. Minnesota Statutes 1997 Supplement, section 256L.02, subdivision 3, is amended to read:

Subd. 3. [FINANCIAL MANAGEMENT.] (a) The commissioner shall manage spending for the MinnesotaCare program in a manner that maintains a minimum reserve in accordance with section 16A.76. As part of each state revenue and expenditure forecast, the commissioner must make ~~a quarterly~~ an assessment of the expected expenditures for the covered services for the remainder of the current biennium and for the following biennium. The estimated expenditure, including the reserve requirements described in section 16A.76, shall be compared to an estimate of the revenues that will be ~~deposited~~ available in the health care access fund. Based on this comparison, and after consulting with the chairs of the house ways and means committee and the senate finance committee, and the legislative commission on health care access, the commissioner shall, as necessary, make the adjustments specified in paragraph (b) to ensure that expenditures remain within the limits of available revenues for the remainder of the current biennium and for the following biennium. The commissioner shall not hire additional staff using appropriations from the health care access fund until the commissioner of finance makes a determination that the adjustments implemented under paragraph (b) are sufficient to allow MinnesotaCare expenditures to remain within the limits of available revenues for the remainder of the current biennium and for the following biennium.

(b) The adjustments the commissioner shall use must be implemented in this order: first, stop enrollment of single adults and households without children; second, upon 45 days' notice, stop coverage of single adults and households without children already enrolled in the MinnesotaCare program; third, upon 90 days' notice, decrease the premium subsidy amounts by ten percent for families with gross annual income above 200 percent of the federal poverty guidelines; fourth, upon 90 days' notice, decrease the premium subsidy amounts by ten percent for families with gross annual income at or below 200 percent; and fifth, require applicants to be uninsured for at least six months prior to eligibility in the MinnesotaCare program. If these measures are insufficient to limit the expenditures to the estimated amount of revenue, the commissioner shall further limit enrollment or decrease premium subsidies.

Sec. 9. Minnesota Statutes 1997 Supplement, section 256L.02, is amended by adding a subdivision to read:

Subd. 4. [FUNDING FOR PREGNANT WOMEN AND CHILDREN UNDER AGE TWO.] For fiscal years beginning on or after July 1, 1999, the state cost of health care services provided to MinnesotaCare enrollees who are pregnant women or children under age two shall be paid out of the general fund rather than the health care access fund.

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If the commissioner of finance decides to pay for these costs using a source other than the general fund, the commissioner shall include the change as a budget initiative in the biennial or supplemental budget, and shall not change the funding source through a forecast modification.

Sec. 10. Minnesota Statutes 1997 Supplement, section 256L.03, subdivision 1, is amended to read:

Subdivision 1. [COVERED HEALTH SERVICES.] "Covered health services" means the health services reimbursed under chapter 256B, with the exception of inpatient hospital services, special education services, private duty nursing services, adult dental care services other than preventive services, orthodontic services, nonemergency medical transportation services, personal care assistant and case management services, nursing home or intermediate care facilities services, inpatient mental health services, and chemical dependency services. Effective July 1, 1998, adult dental care for nonpreventive services with the exception of orthodontic services is available to persons who qualify under section 256L.04, subdivisions 1 to 7, ~~or 256L.13,~~ with family gross income equal to or less than 175 percent of the federal poverty guidelines. Outpatient mental health services covered under the MinnesotaCare program are limited to diagnostic assessments, psychological testing, explanation of findings, medication management by a physician, day treatment, partial hospitalization, and individual, family, and group psychotherapy.

No public funds shall be used for coverage of abortion under MinnesotaCare except where the life of the female would be endangered or substantial and irreversible impairment of a major bodily function would result if the fetus were carried to term; or where the pregnancy is the result of rape or incest.

Covered health services shall be expanded as provided in this section.

Sec. 11. Minnesota Statutes 1997 Supplement, section 256L.03, is amended by adding a subdivision to read:

Subd. 1a. [COVERED SERVICES FOR PREGNANT WOMEN AND CHILDREN UNDER MINNESOTACARE HEALTH CARE REFORM WAIVER.] Beginning January 1, 1999, children and pregnant women are eligible for coverage of all services that are eligible for reimbursement under the medical assistance program according to chapter 256B, except that abortion services under MinnesotaCare shall be limited as provided under section 256L.03, subdivision 1. Pregnant women and children are exempt from the provisions of subdivision 5, regarding copayments. Pregnant women and children who are lawfully residing in the United States but who are not "qualified noncitizens" under title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Public Law Number 104-193, Statutes at Large, volume 110, page 2105, are eligible for coverage of all services provided under the medical assistance program according to chapter 256B.

Sec. 12. Minnesota Statutes 1997 Supplement, section 256L.03, is amended by adding a subdivision to read:

Subd. 1b. [PREGNANT WOMEN; ELIGIBILITY FOR FULL MEDICAL ASSISTANCE SERVICES.] Beginning January 1, 1999, a woman who is enrolled in MinnesotaCare when her pregnancy is diagnosed is eligible for coverage of all services provided under the medical assistance program according to chapter 256B retroactive to the date the pregnancy is medically diagnosed. Copayments totaling $30 or more, paid after the date the pregnancy is diagnosed, shall be refunded.

Sec. 13. Minnesota Statutes 1997 Supplement, section 256L.03, subdivision 3, is amended to read:

Subd. 3. [INPATIENT HOSPITAL SERVICES.] (a) ~~Beginning July 1, 1993,~~ Covered health services shall include inpatient hospital services, including inpatient hospital mental health services and inpatient hospital and residential chemical dependency treatment, subject to those limitations necessary to coordinate the provision of these services with eligibility under the medical assistance spenddown. Prior to July 1, 1997, the inpatient hospital benefit for adult enrollees is subject to an annual benefit limit of $10,000. ~~Effective July 1, 1997,~~ The inpatient hospital benefit for adult enrollees who qualify under section 256L.04, subdivision 7, or who qualify under section 256L.04, subdivisions 1 ~~to 6~~ and 2, ~~or 256L.13~~ with family gross income that exceeds 175 percent of the federal poverty guidelines and who are not pregnant, is subject to an annual limit of $10,000.

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(b) Enrollees who qualify under section 256L.04, subdivision 7, or who qualify under section 256L.04, subdivisions 1 to 6, or 256L.13 with family gross income that exceeds 175 percent of the federal poverty guidelines and who are not pregnant, and are determined by the commissioner to have a basis of eligibility for medical assistance shall apply for and cooperate with the requirements of medical assistance by the last day of the third month following admission to an inpatient hospital. If an enrollee fails to apply for medical assistance within this time period, the enrollee and the enrollee's family shall be disenrolled from the plan and they may not reenroll until 12 calendar months have elapsed. Enrollees and enrollees' families disenrolled for not applying for or not cooperating with medical assistance may not reenroll.

~~(c)~~ Admissions for inpatient hospital services paid for under section 256L.11, subdivision 3, must be certified as medically necessary in accordance with Minnesota Rules, parts 9505.0500 to 9505.0540, except as provided in clauses (1) and (2):

(1) all admissions must be certified, except those authorized under rules established under section 254A.03, subdivision 3, or approved under Medicare; and

(2) payment under section 256L.11, subdivision 3, shall be reduced by five percent for admissions for which certification is requested more than 30 days after the day of admission. The hospital may not seek payment from the enrollee for the amount of the payment reduction under this clause.

(d) Any enrollee or family member of an enrollee who has previously been permanently disenrolled from MinnesotaCare for not applying for and cooperating with medical assistance shall be eligible to reenroll if 12 calendar months have elapsed since the date of disenrollment.

Sec. 14. Minnesota Statutes 1997 Supplement, section 256L.03, is amended by adding a subdivision to read:

Subd. 3a. [INTERPRETER SERVICES.] Covered services include sign and spoken language interpreter services that assist an enrollee in obtaining covered health care services.

Sec. 15. Minnesota Statutes 1997 Supplement, section 256L.03, subdivision 4, is amended to read:

Subd. 4. [COORDINATION WITH MEDICAL ASSISTANCE.] The commissioner shall coordinate the provision of hospital inpatient services under the MinnesotaCare program with enrollee eligibility under the medical assistance spenddown~~, and shall apply to the secretary of health and human services for any necessary federal waivers or approvals~~.

Sec. 16. Minnesota Statutes 1997 Supplement, section 256L.03, subdivision 5, is amended to read:

Subd. 5. [COPAYMENTS AND COINSURANCE.] The MinnesotaCare benefit plan shall include the following copayments and coinsurance requirements:

(1) ten percent of the paid charges for inpatient hospital services for adult enrollees ~~not eligible for medical assistance~~, subject to an annual inpatient out-of-pocket maximum of $1,000 per individual and $3,000 per family;

(2) $3 per prescription for adult enrollees;

(3) $25 for eyeglasses for adult enrollees; and

(4) effective July 1, 1998, 50 percent of the fee-for-service rate for adult dental care services other than preventive care services for persons eligible under section 256L.04, subdivisions 1 to 7, ~~or 256L.13,~~ with income equal to or less than 175 percent of the federal poverty guidelines.

Prior to July 1, 1997, enrollees who are not eligible for medical assistance with or without a spenddown shall be financially responsible for the coinsurance amount and amounts which exceed the $10,000 benefit limit. Effective July 1, 1997, adult enrollees ~~who qualify under section 256L.04, subdivision 7, or who qualify under section 256L.04, subdivisions 1 to 6, or 256L.13~~ with family gross income that exceeds 175 percent of the federal poverty guidelines and who are not pregnant~~, and who are not eligible for medical assistance with or without a spenddown,~~ shall be financially responsible for the coinsurance amount and amounts which exceed the $10,000 inpatient hospital benefit limit.

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When a MinnesotaCare enrollee becomes a member of a prepaid health plan, or changes from one prepaid health plan to another during a calendar year, any charges submitted towards the $10,000 annual inpatient benefit limit, and any out-of-pocket expenses incurred by the enrollee for inpatient services, that were submitted or incurred prior to enrollment, or prior to the change in health plans, shall be disregarded.

Sec. 17. Minnesota Statutes 1997 Supplement, section 256L.04, subdivision 1, is amended to read:

Subdivision 1. [~~CHILDREN; EXPANSION AND CONTINUATION OF ELIGIBILITY~~ FAMILIES WITH CHILDREN.] (a) [CHILDREN.] Prior to October 1, 1992, "eligible persons" means children who are one year of age or older but less than 18 years of age who have gross family incomes that are equal to or less than 185 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B and who are not otherwise insured for the covered services. The period of eligibility extends from the first day of the month in which the child's first birthday occurs to the last day of the month in which the child becomes 18 years old. Families with children with family income equal to or less than 275 percent of the federal poverty guidelines for the applicable family size shall be eligible for MinnesotaCare according to this section. All other provisions of sections 256L.01 to 256L.18, including the insurance-related barriers to enrollment under section 256L.07, shall apply unless otherwise specified.

(b) [EXPANSION OF ELIGIBILITY.] Eligibility for MinnesotaCare shall be expanded as provided in subdivisions 3 to 7, except children who meet the criteria in this subdivision shall continue to be enrolled pursuant to this subdivision. The enrollment requirements in this paragraph apply to enrollment under subdivisions 1 to 7. Parents who enroll in the MinnesotaCare program must also enroll their children and dependent siblings, if the children and their dependent siblings are eligible. Children and dependent siblings may be enrolled separately without enrollment by parents. However, if one parent in the household enrolls, both parents must enroll, unless other insurance is available. If one child from a family is enrolled, all children must be enrolled, unless other insurance is available. If one spouse in a household enrolls, the other spouse in the household must also enroll, unless other insurance is available. Families cannot choose to enroll only certain uninsured members. For purposes of this section, a "dependent sibling" means an unmarried child who is a full-time student under the age of 25 years who is financially dependent upon a parent. Proof of school enrollment will be required.

(c) [CONTINUATION OF ELIGIBILITY.] Individuals who initially enroll in the MinnesotaCare program under the eligibility criteria in subdivisions 3 to 7 remain eligible for the MinnesotaCare program, regardless of age, place of residence, or the presence or absence of children in the same household, as long as all other eligibility criteria are met and residence in Minnesota and continuous enrollment in the MinnesotaCare program or medical assistance are maintained. In order for either parent or either spouse in a household to remain enrolled, both must remain enrolled, unless other insurance is available.

Sec. 18. Minnesota Statutes 1997 Supplement, section 256L.04, subdivision 2, is amended to read:

Subd. 2. [COOPERATION IN ESTABLISHING THIRD PARTY LIABILITY, PATERNITY, AND OTHER MEDICAL SUPPORT.] (a) To be eligible for MinnesotaCare, individuals and families must cooperate with the state agency to identify potentially liable third party payers and assist the state in obtaining third party payments. "Cooperation" includes, but is not limited to, identifying any third party who may be liable for care and services provided under MinnesotaCare to the enrollee, providing relevant information to assist the state in pursuing a potentially liable third party, and completing forms necessary to recover third party payments.

(b) A parent, guardian, or child enrolled in the MinnesotaCare program must cooperate with the department of human services and the local agency in establishing the paternity of an enrolled child and in obtaining medical care support and payments for the child and any other person for whom the person can legally assign rights, in accordance with applicable laws and rules governing the medical assistance program. A child shall not be ineligible for or disenrolled from the MinnesotaCare program solely because the child's parent or guardian fails to cooperate in establishing paternity or obtaining medical support.

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Sec. 19. Minnesota Statutes 1997 Supplement, section 256L.04, subdivision 7, is amended to read:

Subd. 7. [~~ADDITION OF~~ SINGLE ADULTS AND HOUSEHOLDS WITH NO CHILDREN.] (a) Beginning October 1, 1994, the definition of "eligible persons" is expanded to include all individuals and households with no children who have gross family incomes that are equal to or less than 125 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B.

~~(b) Beginning July 1, 1997,~~ The definition of eligible persons ~~is expanded to include~~ includes all individuals and households with no children who have gross family incomes that are equal to or less than 175 percent of the federal poverty guidelines ~~and who are not eligible for medical assistance without a spenddown under chapter 256B~~.

(c) All eligible persons under paragraphs (a) and (b) are eligible for coverage through the MinnesotaCare program but must pay a premium as determined under sections 256L.07 and 256L.08. Individuals and families whose income is greater than the limits established under section 256L.08 may not enroll in the MinnesotaCare program.

Sec. 20. Minnesota Statutes 1997 Supplement, section 256L.04, is amended by adding a subdivision to read:

Subd. 7a. [INELIGIBILITY.] Applicants whose income is greater than the limits established under this section may not enroll in the MinnesotaCare program.

Sec. 21. Minnesota Statutes 1997 Supplement, section 256L.04, subdivision 8, is amended to read:

Subd. 8. [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL ASSISTANCE.] (a) Individuals who ~~apply for MinnesotaCare~~ receive supplemental security income or retirement, survivors, or disability benefits due to a disability, or other disability-based pension, who qualify under section 256L.04, subdivision 7, but who are potentially eligible for medical assistance without a spenddown shall be allowed to enroll in MinnesotaCare for a period of 60 days, so long as the applicant meets all other conditions of eligibility. The commissioner shall identify and refer the applications of such individuals to their county social service agency. The county and the commissioner shall cooperate to ensure that the individuals obtain medical assistance coverage for any months for which they are eligible.

(b) The enrollee must cooperate with the county social service agency in determining medical assistance eligibility within the 60-day enrollment period. Enrollees who do not ~~apply for and~~ cooperate with medical assistance within the 60-day enrollment period~~, and their other family members,~~ shall be disenrolled from the plan within one calendar month. Persons disenrolled for nonapplication for medical assistance may not reenroll until they have obtained a medical assistance eligibility determination ~~for the family member or members who were referred to the county agency~~. Persons disenrolled for noncooperation with medical assistance may not reenroll until they have cooperated with the county agency and have obtained a medical assistance eligibility determination.

(c) Beginning January 1, 2000, counties that choose to become MinnesotaCare enrollment sites shall consider MinnesotaCare applications of individuals described in paragraph (a) to also be applications for medical assistance and shall first determine whether medical assistance eligibility exists. Adults with children with family income under 175 percent of the federal poverty guidelines for the applicable family size, pregnant women, and children who qualify under subdivision 1 who are potentially eligible for medical assistance without a spenddown may choose to enroll in either MinnesotaCare or medical assistance.

(d) The commissioner shall redetermine provider payments made under MinnesotaCare to the appropriate medical assistance payments for those enrollees who subsequently become eligible for medical assistance.

Sec. 22. Minnesota Statutes 1997 Supplement, section 256L.04, subdivision 9, is amended to read:

Subd. 9. [GENERAL ASSISTANCE MEDICAL CARE.] A person cannot have coverage under both MinnesotaCare and general assistance medical care in the same month. Eligibility for MinnesotaCare cannot be replaced by eligibility for general assistance medical care, and eligibility for general assistance medical care cannot be replaced by eligibility for MinnesotaCare.

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Sec. 23. Minnesota Statutes 1997 Supplement, section 256L.04, subdivision 10, is amended to read:

Subd. 10. [SPONSOR'S INCOME AND RESOURCES DEEMED AVAILABLE; DOCUMENTATION.] When determining eligibility for any federal or state benefits under sections 256L.01 to ~~256L.16~~ 256L.18, the income and resources of all noncitizens whose sponsor signed an affidavit of support as defined under United States Code, title 8, section 1183a, shall be deemed to include their sponsors' income and resources as defined in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, title IV, Public Law Number 104-193, sections 421 and 422, and subsequently set out in federal rules. To be eligible for the program, noncitizens must provide documentation of their immigration status.

Sec. 24. Minnesota Statutes 1997 Supplement, section 256L.04, is amended by adding a subdivision to read:

Subd. 12. [PERSONS IN DETENTION.] Beginning January 1, 1999, an applicant residing in a correctional or detention facility is not eligible for MinnesotaCare. An enrollee residing in a correctional or detention facility is not eligible at renewal of eligibility under section 256L.05, subdivision 3b.

Sec. 25. Minnesota Statutes 1997 Supplement, section 256L.04, is amended by adding a subdivision to read:

Subd. 13. [FAMILIES WITH GRANDPARENTS, RELATIVE CARETAKERS, FOSTER PARENTS, OR LEGAL GUARDIANS.] Beginning January 1, 1999, in families that include a grandparent, relative caretaker as defined in the medical assistance program, foster parent, or legal guardian, the grandparent, relative caretaker, foster parent, or legal guardian may apply as a family or may apply separately for the children. If the caretaker applies separately for the children, only the children's income is counted. If the grandparent, relative caretaker, foster parent, or legal guardian applies with the children, their income is included in the gross family income for determining eligibility and premium amount.

Sec. 26. Minnesota Statutes 1997 Supplement, section 256L.05, is amended by adding a subdivision to read:

Subd. 1a. [PERSON AUTHORIZED TO APPLY ON APPLICANT'S BEHALF.] Beginning January 1, 1999, a family member who is age 18 or over or who is an authorized representative, as defined in the medical assistance program, may apply on an applicant's behalf.

Sec. 27. Minnesota Statutes 1997 Supplement, section 256L.05, subdivision 2, is amended to read:

Subd. 2. [COMMISSIONER'S DUTIES.] The commissioner shall use individuals' social security numbers as identifiers for purposes of administering the plan and conduct data matches to verify income. Applicants shall submit evidence of individual and family income, earned and unearned, ~~including~~ such as the most recent income tax return, wage slips, or other documentation that is determined by the commissioner as necessary to verify income eligibility. The commissioner shall perform random audits to verify reported income and eligibility. The commissioner may execute data sharing arrangements with the department of revenue and any other governmental agency in order to perform income verification related to eligibility and premium payment under the MinnesotaCare program.

Sec. 28. Minnesota Statutes 1997 Supplement, section 256L.05, subdivision 3, is amended to read:

Subd. 3. [EFFECTIVE DATE OF COVERAGE.] The effective date of coverage is the first day of the month following the month in which eligibility is approved and the first premium payment has been received. As provided in section 256B.057, coverage for newborns is automatic from the date of birth and must be coordinated with other health coverage. The effective date of coverage for ~~eligible newborns or~~ eligible newly adoptive children added to a family receiving covered health services is the date of entry into the family. The effective date of coverage for other new recipients added to the family receiving covered health services is the first day of the month following the month in which eligibility is approved ~~and the first premium payment has been received~~ or at renewal, whichever the family receiving covered health services prefers. All eligibility criteria must be met by the family at the time the new family member is added. The income of the new family member is included with the family's gross income and the adjusted premium begins in the month the new family member is added. The premium must be received eight working days prior to the end of the month for coverage to begin the following month. Benefits are not available until the day following discharge if an enrollee is

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hospitalized on the first day of coverage. Notwithstanding any other law to the contrary, benefits under sections 256L.01 to ~~256L.10~~ 256L.18 are secondary to a plan of insurance or benefit program under which an eligible person may have coverage and the commissioner shall use cost avoidance techniques to ensure coordination of any other health coverage for eligible persons. The commissioner shall identify eligible persons who may have coverage or benefits under other plans of insurance or who become eligible for medical assistance.

Sec. 29. Minnesota Statutes 1997 Supplement, section 256L.05, is amended by adding a subdivision to read:

Subd. 3a. [RENEWAL OF ELIGIBILITY.] Beginning January 1, 1999, an enrollee's eligibility must be renewed every 12 months. The 12-month period begins in the month after the month the application is approved.

Sec. 30. Minnesota Statutes 1997 Supplement, section 256L.05, is amended by adding a subdivision to read:

Subd. 3b. [REAPPLICATION.] Beginning January 1, 1999, families and individuals must reapply after a lapse in coverage of one calendar month or more and must meet all eligibility criteria.

Sec. 31. Minnesota Statutes 1997 Supplement, section 256L.05, subdivision 4, is amended to read:

Subd. 4. [APPLICATION PROCESSING.] The commissioner of human services shall determine an applicant's eligibility for MinnesotaCare no more than 30 days from the date that the application is received by the department of human services. Beginning January 1, 2000, this requirement also applies to local county human services agencies that determine eligibility for MinnesotaCare. To prevent processing delays, applicants who, from the information provided on the application, appear to meet eligibility requirements shall be enrolled. The enrollee must provide all required verifications within 30 days of enrollment or coverage from the program shall be terminated. Enrollees who are determined to be ineligible when verifications are provided shall be disenrolled from the program.

Sec. 32. Minnesota Statutes 1997 Supplement, section 256L.06, subdivision 3, is amended to read:

Subd. 3. [ADMINISTRATION AND COMMISSIONER'S DUTIES.] (a) Premiums are dedicated to the commissioner for MinnesotaCare. ~~The commissioner shall make an annual redetermination of continued eligibility and identify people who may become eligible for medical assistance.~~

(b) The commissioner shall develop and implement procedures to: (1) require enrollees to report changes in income; (2) adjust sliding scale premium payments, based upon changes in enrollee income; and (3) disenroll enrollees from MinnesotaCare for failure to pay required premiums. Beginning July 1, 1998, failure to pay includes payment with a dishonored check and the commissioner may demand a guaranteed form of payment as the only means to replace a dishonored check.

(c) Premiums are calculated on a calendar month basis and may be paid on a monthly, quarterly, or annual basis, with the first payment due upon notice from the commissioner of the premium amount required. The commissioner shall inform applicants and enrollees of these premium payment options. Premium payment is required before enrollment is complete and to maintain eligibility in MinnesotaCare.

(d) Nonpayment of the premium will result in disenrollment from the plan within one calendar month after the due date. Persons disenrolled for nonpayment or who voluntarily terminate coverage from the program may not reenroll until four calendar months have elapsed. Persons disenrolled for nonpayment or who voluntarily terminate coverage from the program may not reenroll for four calendar months unless the person demonstrates good cause for nonpayment. Good cause does not exist if a person chooses to pay other family expenses instead of the premium. The commissioner shall define good cause in rule.

Sec. 33. Minnesota Statutes 1997 Supplement, section 256L.07, is amended to read:

256L.07 [ELIGIBILITY FOR SUBSIDIZED PREMIUMS BASED ON SLIDING SCALE.]

Subdivision 1. [GENERAL REQUIREMENTS.] Families and individuals who enroll on or after October 1, 1992, are eligible for subsidized premium payments based on a sliding scale under section 256L.08 only if the family or individual meets the requirements in subdivisions 2 and 3. Children already enrolled in the children's health plan as of September 30, 1992, eligible under section 256L.04, subdivision 1, paragraph (a), children who enroll in the

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MinnesotaCare program after September 30, 1992, pursuant to Laws 1992, chapter 549, article 4, section 17, and children who enroll under section 256L.04, subdivision 6, are eligible for subsidized premium payments without meeting these requirements, as long as they maintain continuous coverage in the MinnesotaCare plan or medical assistance. (a) Children enrolled in the original children's health plan as of September 30, 1992, children who enrolled in the MinnesotaCare program after September 30, 1992, pursuant to Laws 1992, chapter 549, article 4, section 17, and children who have family gross incomes that are equal to or less than 150 percent of the federal poverty guidelines are eligible for subsidized premium payments without meeting the requirements of subdivision 2, as long as they maintain continuous coverage in the MinnesotaCare program or medical assistance. Children who apply for MinnesotaCare on or after the implementation date of the employer-subsidized health coverage program as described in section 45, who have family gross incomes that are equal to or less than 150 percent of the federal poverty guidelines, must meet the requirements of subdivision 2 to be eligible for MinnesotaCare.

(b) Families and individuals who initially enrolled in MinnesotaCare under section 256L.04, and whose income increases above the limits established in section 256L.08, may continue enrollment and pay the full cost of coverage. Families enrolled in MinnesotaCare under section 256L.04, subdivision 1, whose income increases above 275 percent of the federal poverty guidelines, are no longer eligible for the program and shall be disenrolled by the commissioner. Individuals enrolled in MinnesotaCare under section 256L.04, subdivision 7, whose income increases above 175 percent of the federal poverty guidelines are no longer eligible for the program and shall be disenrolled by the commissioner. For persons disenrolled under this subdivision, MinnesotaCare coverage terminates the last day of the calendar month following the month in which the commissioner determines that the income of a family or individual, determined over a four-month period as required by section 256L.15, subdivision 2, exceeds program income limits.

(c) Notwithstanding paragraph (b), individuals and families may remain enrolled in MinnesotaCare if ten percent of their annual income is less than the annual premium for a policy with a $500 deductible available through the Minnesota comprehensive health association. Individuals and families who are no longer eligible for MinnesotaCare under this subdivision shall be given an 18-month notice period from the date that ineligibility is determined before disenrollment.

(b) For purposes of this requirement, subsidized health coverage means health coverage for which the employer pays at least 50 percent of the cost of coverage for the employee~~, excluding dependent coverage~~ or dependent, or a higher percentage as specified by the commissioner. Children are eligible for employer-subsidized coverage through either parent, including the noncustodial parent. The commissioner must treat employer contributions to Internal Revenue Code Section 125 plans and any other employer benefits intended to pay health care costs as qualified employer subsidies toward the cost of health coverage for employees for purposes of this subdivision.

Subd. 3. [~~PERIOD UNINSURED~~ OTHER HEALTH COVERAGE.] ~~To be eligible for subsidized premium payments based on a sliding scale,~~ (a) Families and individuals ~~initially~~ enrolled in the MinnesotaCare program ~~under section 256L.04, subdivisions 5 and 7,~~ must have ~~had~~ no health coverage while enrolled or for at least four months prior to application and renewal. Children enrolled in the original children's health plan and children in families with income equal to or less than 150 percent of the federal poverty guidelines, who have other health insurance, are eligible if the other

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health coverage meets the requirements of Minnesota Rules, part 9506.0020, subpart 3, item B. The commissioner may change this eligibility criterion for sliding scale premiums in order to remain within the limits of available appropriations. The requirement of ~~at least four months of~~ no health coverage ~~prior to application for the MinnesotaCare program~~ does not apply to: newborns.

(1) families, children, and individuals who apply for the MinnesotaCare program upon termination from or as required by the medical assistance program, general assistance medical care program, or coverage under a regional demonstration project for the uninsured funded under section 256B.73, the Hennepin county assured care program, or the Group Health, Inc., community health plan;

~~(2) families and individuals initially enrolled under section 256L.04, subdivisions 1, paragraph (a), and 3;~~

~~(3) children enrolled pursuant to Laws 1992, chapter 549, article 4, section 17; or~~

(4) individuals currently serving or who have served in the military reserves, and dependents of these individuals, if these individuals: (i) reapply for MinnesotaCare coverage after a period of active military service during which they had been covered by the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); (ii) were covered under MinnesotaCare immediately prior to obtaining coverage under CHAMPUS; and (iii) have maintained continuous coverage.

(b) For purposes of this section, medical assistance, general assistance medical care, and civilian health and medical program of the uniformed service, CHAMPUS, are not considered insurance or health coverage.

(c) For purposes of this section, Medicare part A or B coverage under title XVIII of the Social Security Act, United States Code, title 42, sections 1395c to 1395w-4, is considered health coverage. An applicant or enrollee may not refuse Medicare coverage to establish eligibility for MinnesotaCare.

Sec. 34. Minnesota Statutes 1997 Supplement, section 256L.09, subdivision 2, is amended to read:

Subd. 2. [RESIDENCY REQUIREMENT.] (a) ~~Prior to July 1, 1997, to be eligible for health coverage under the MinnesotaCare program, families and individuals must be permanent residents of Minnesota.~~

~~(b) Effective July 1, 1997,~~ To be eligible for health coverage under the MinnesotaCare program, adults without children must be permanent residents of Minnesota.

~~(c) Effective July 1, 1997,~~ (b) To be eligible for health coverage under the MinnesotaCare program, pregnant women, families, and children must meet the residency requirements as provided by Code of Federal Regulations, title 42, section 435.403, except that the provisions of section 256B.056, subdivision 1, shall apply upon receipt of federal approval.

Sec. 35. Minnesota Statutes 1997 Supplement, section 256L.09, subdivision 4, is amended to read:

Subd. 4. [ELIGIBILITY AS MINNESOTA RESIDENT.] (a) For purposes of this section, a permanent Minnesota resident is a person who has demonstrated, through persuasive and objective evidence, that the person is domiciled in the state and intends to live in the state permanently.

(b) To be eligible as a permanent resident, ~~all applicants~~ an applicant must demonstrate the requisite intent to live in the state permanently by:

(1) showing that the applicant maintains a residence at a verified address other than a place of public accommodation, through the use of evidence of residence described in section 256D.02, subdivision 12a, clause (1);

(2) demonstrating that the applicant has been continuously domiciled in the state for no less than 180 days immediately before the application; and

(3) signing an affidavit declaring that (A) the applicant currently resides in the state and intends to reside in the state permanently; and (B) the applicant did not come to the state for the primary purpose of obtaining medical coverage or treatment.

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(c) A person who is temporarily absent from the state does not lose eligibility for MinnesotaCare. "Temporarily absent from the state" means the person is out of the state for a temporary purpose and intends to return when the purpose of the absence has been accomplished. A person is not temporarily absent from the state if another state has determined that the person is a resident for any purpose. If temporarily absent from the state, the person must follow the requirements of the health plan in which he or she is enrolled to receive services.

Sec. 36. Minnesota Statutes 1997 Supplement, section 256L.09, subdivision 6, is amended to read:

Subd. 6. [12-MONTH PREEXISTING EXCLUSION.] If the 180-day requirement in subdivision 4, paragraph (b), clause (2), is determined by a court to be unconstitutional, the commissioner of human services shall impose a 12-month preexisting condition exclusion on coverage for persons who have been domiciled in the state for less than 180 days.

Sec. 37. Minnesota Statutes 1997 Supplement, section 256L.11, subdivision 6, is amended to read:

Subd. 6. [ENROLLEES 18 OR OLDER.] Payment by the MinnesotaCare program for inpatient hospital services provided to MinnesotaCare enrollees eligible under section 256L.04, subdivision 7, or who qualify under section 256L.04, subdivisions 1 ~~to 6~~ and 2, ~~or 256L.13~~ with family gross income that exceeds 175 percent of the federal poverty guidelines and who are not pregnant, who are 18 years old or older on the date of admission to the inpatient hospital must be in accordance with paragraphs (a) and (b). Payment for adults who are not pregnant and are eligible under section 256L.04, subdivisions 1 ~~to 6~~ and 2, ~~or 256L.13,~~ and whose incomes are equal to or less than 175 percent of the federal poverty guidelines, shall be as provided for under paragraph (c).

(a) If the medical assistance rate minus any copayment required under section 256L.03, subdivision 4, is less than or equal to the amount remaining in the enrollee's benefit limit under section 256L.03, subdivision 3, payment must be the medical assistance rate minus any copayment required under section 256L.03, subdivision 4. The hospital must not seek payment from the enrollee in addition to the copayment. The MinnesotaCare payment plus the copayment must be treated as payment in full.

(b) If the medical assistance rate minus any copayment required under section 256L.03, subdivision 4, is greater than the amount remaining in the enrollee's benefit limit under section 256L.03, subdivision 3, payment must be the lesser of:

(1) the amount remaining in the enrollee's benefit limit; or

(2) charges submitted for the inpatient hospital services less any copayment established under section 256L.03, subdivision 4.

The hospital may seek payment from the enrollee for the amount by which usual and customary charges exceed the payment under this paragraph. If payment is reduced under section 256L.03, subdivision 3, paragraph ~~(c)~~ (b), the hospital may not seek payment from the enrollee for the amount of the reduction.

(c) For admissions occurring during the period of July 1, 1997, through June 30, 1998, for adults who are not pregnant and are eligible under section 256L.04, subdivisions 1 ~~to 6~~ and 2, ~~or 256L.13,~~ and whose incomes are equal to or less than 175 percent of the federal poverty guidelines, the commissioner shall pay hospitals directly, up to the medical assistance payment rate, for inpatient hospital benefits in excess of the $10,000 annual inpatient benefit limit.

Sec. 38. Minnesota Statutes 1997 Supplement, section 256L.12, subdivision 5, is amended to read:

Subd. 5. [ELIGIBILITY FOR OTHER STATE PROGRAMS.] MinnesotaCare enrollees who become eligible for medical assistance or general assistance medical care will remain in the same managed care plan if the managed care plan has a contract for that population. Effective January 1, 1998, MinnesotaCare enrollees who were formerly eligible for general assistance medical care pursuant to section 256D.03, subdivision 3, within six months of MinnesotaCare enrollment and were enrolled in a prepaid health plan pursuant to section 256D.03, subdivision 4, paragraph (d), must remain in the same managed care plan if the managed care plan has a contract for that population. Contracts between the department of human services and managed care plans must include MinnesotaCare, and medical assistance and may, at the option of the commissioner of human services, also include general assistance medical care. Managed care plans must participate in the MinnesotaCare and general assistance medical care programs under a contract with the department of human services in service areas where they participate in the medical assistance program.

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Sec. 39. Minnesota Statutes 1997 Supplement, section 256L.15, is amended to read:

256L.15 [PREMIUMS.]

Subdivision 1. [PREMIUM DETERMINATION.] Families ~~and~~ with children ~~enrolled according to sections 256L.13 to 256L.16~~ and individuals shall pay a premium determined according to a sliding fee based on the cost of coverage as a percentage of the family's gross family income. Pregnant women and children under age two are exempt from the provisions of section 256L.06, subdivision 3, paragraph (b), clause (3), requiring disenrollment for failure to pay premiums. For pregnant women, this exemption continues until the first day of the month following the 60th day postpartum. Women who remain enrolled during pregnancy or the postpartum period, despite nonpayment of premiums, shall be disenrolled on the first of the month following the 60th day postpartum for the penalty period that otherwise applies under section 256L.06, unless they begin paying premiums.

Subd. 1a. [PAYMENT OPTIONS.] The commissioner may offer the following payment options to an enrollee:

(1) payment by check;

(2) payment by credit card;

(3) payment by recurring automatic checking withdrawal;

(4) payment by one-time electronic transfer of funds;

(5) payment by wage withholding with the consent of the employer and the employee; or

(6) payment by using state tax refund payments.

At application or reapplication, a MinnesotaCare applicant or enrollee may authorize the commissioner to use the Revenue Recapture Act in chapter 270A to collect funds from the applicant's or enrollee's state income tax refund for the purposes of meeting all or part of the applicant's or enrollee's MinnesotaCare premium obligation for the forthcoming year. The applicant or enrollee may authorize the commissioner to apply for the state working family tax credit on behalf of the applicant or enrollee. The setoff due under this subdivision shall not be subject to the $10 fee under section 270A.07, subdivision 1.

Subd. 1b. [PAYMENTS NONREFUNDABLE.] MinnesotaCare premiums are not refundable.

Subd. 2. [SLIDING SCALE TO DETERMINE PERCENTAGE OF GROSS INDIVIDUAL OR FAMILY INCOME.] The commissioner shall establish a sliding fee scale to determine the percentage of gross individual or family income that households at different income levels must pay to obtain coverage through the MinnesotaCare program. The sliding fee scale must be based on the enrollee's gross individual or family income during the previous four months. The sliding fee scale begins with a premium of 1.5 percent of gross individual or family income for individuals or families with incomes below the limits for the medical assistance program for families and children and proceeds through the following evenly spaced steps: 1.8, 2.3, 3.1, 3.8, 4.8, 5.9, 7.4, and 8.8 percent. These percentages are matched to evenly spaced income steps ranging from the medical assistance income limit for families and children to 275 percent of the federal poverty guidelines for the applicable family size. The sliding fee scale and percentages are not subject to the provisions of chapter 14. If a family or individual reports increased income after enrollment, premiums shall not be adjusted until eligibility renewal.

Subd. 3. [EXCEPTIONS TO SLIDING SCALE.] An annual premium of $48 is required for all children ~~who are eligible according to section 256L.13, subdivision 4~~ in families with income at or less than 150 percent of federal poverty guidelines.

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Sec. 40. Minnesota Statutes 1997 Supplement, section 256L.17, is amended by adding a subdivision to read:

Subd. 6. [WAIVER OF MAINTENANCE OF EFFORT REQUIREMENT.] Unless a federal waiver of the maintenance of effort requirements of section 2105(d) of title XXI of the Balanced Budget Act of 1997, Public Law Number 105-33, Statutes at Large, volume 111, page 251, is granted by the federal Department of Health and Human Services by September 30, 1998, this section does not apply to children. The commissioner shall publish a notice in the State Register upon receipt of a federal waiver.

Sec. 41. Minnesota Statutes 1997 Supplement, section 270A.03, subdivision 5, is amended to read:

Subd. 5. [DEBT.] "Debt" means a legal obligation of a natural person to pay a fixed and certain amount of money, which equals or exceeds $25 and which is due and payable to a claimant agency. The term includes criminal fines imposed under section 609.10 or 609.125 and restitution. A debt may arise under a contractual or statutory obligation, a court order, or other legal obligation, but need not have been reduced to judgment.

A debt includes any legal obligation of a current recipient of assistance which is based on overpayment of an assistance grant where that payment is based on a client waiver or an administrative or judicial finding of an intentional program violation; or where the debt is owed to a program wherein the debtor is not a client at the time notification is provided to initiate recovery under this chapter and the debtor is not a current recipient of food stamps, transitional child care, or transitional medical assistance.

A debt does not include any legal obligation to pay a claimant agency for medical care, including hospitalization if the income of the debtor at the time when the medical care was rendered does not exceed the following amount:

(1) for an unmarried debtor, an income of $6,400 or less;

(2) for a debtor with one dependent, an income of $8,200 or less;

(3) for a debtor with two dependents, an income of $9,700 or less;

(4) for a debtor with three dependents, an income of $11,000 or less;

(5) for a debtor with four dependents, an income of $11,600 or less; and

(6) for a debtor with five or more dependents, an income of $12,100 or less.

The income amounts in this subdivision shall be adjusted for inflation for debts incurred in calendar years 1991 and thereafter. The dollar amount of each income level that applied to debts incurred in the prior year shall be increased in the same manner as provided in section 290.06, subdivision 2d, for the expansion of the tax rate brackets.

Debt also includes an agreement to pay a MinnesotaCare premium, regardless of the dollar amount of the premium authorized under section 256L.15, subdivision 1a.

Sec. 42. Laws 1997, chapter 225, article 2, section 64, is amended to read:

Sec. 64. [EFFECTIVE DATE.]

Sec. 43. [FEDERAL EARNED INCOME TAX CREDIT.]

The commissioner of human services shall seek a federal waiver from the appropriate federal agency to allow the state to use the federal earned income tax credit for payment of state subsidized health care premiums.

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Sec. 44. [INPATIENT HOSPITAL COPAYMENT.]

If federal approval of a waiver to obtain federal Medicaid funding for coverage provided to parents enrolled in the MinnesotaCare program is contingent upon not applying the inpatient hospital services copayment under Minnesota Statutes, section 256L.03, subdivision 5, clause (1), then the inpatient hospital services copayment shall not be applied to enrollees for whom the state receives federal Medicaid funding.

Sec. 45. [EMPLOYER-SUBSIDIZED HEALTH COVERAGE PROGRAM.]

Subdivision 1. [PLAN SUBMITTAL.] The commissioner of human services shall submit to the health care financing administration a plan to obtain federal funding, according to section 2105(c)(3) of the Balanced Budget Act of 1997, Public Law Number 105-33, to subsidize health insurance coverage for families who are ineligible for the MinnesotaCare program, due to the availability of employer-subsidized insurance as defined in Minnesota Statutes, section 256L.07, subdivision 2. The program shall pay the difference between:

(1) what the family would have paid under the sliding premium scale specified in Minnesota Statutes, section 256L.15, subdivision 2, up to a maximum of five percent of the family's income, had the family been covered under MinnesotaCare; and

(2) the required employee contribution for employer-subsidized health coverage.

Subd. 2. [CONSULTATION AND PLAN SUBMITTAL.] In developing the plan, the commissioner shall consult with the legislative commission on health care access. The commissioner shall submit the plan and draft legislation to the legislature by December 15, 1998, and shall not implement the plan without legislative approval.

Subd. 3. [PHASE-OUT OF MINNESOTACARE ELIGIBILITY.] As part of the plan submitted to the legislature under subdivision 2, the commissioner shall include a process to phase out MinnesotaCare eligibility for children who have access to employer-subsidized health coverage as defined under Minnesota Statutes, section 256L.07, subdivision 2, and who:

(1) enrolled in the original children's health plan as of September 30, 1992;

(2) enrolled in the MinnesotaCare program after September 30, 1992, according to Laws 1992, chapter 549, article 4, section 17; or

(3) have family gross incomes that are equal to or less than 150 percent of the federal poverty guidelines.

Sec. 46. [STATE CHILDREN'S HEALTH INSURANCE PROGRAM.]

Subdivision 1. [AUTHORITY.] The commissioner is authorized to claim enhanced federal matching funds under sections 2105(a)(2) and 2110 of the Balanced Budget Act of 1997, Public Law Number 105-33, for any and all state or local expenditures eligible as child health assistance for targeted low-income children and health service initiatives for low-income children. If required by federal law or regulations, the commissioner is authorized to establish accounts, make appropriate payments, and receive reimbursement from state and local entities providing child health assistance or health services for low-income children, in order to obtain enhanced federal matching funds. Enhanced federal matching funds received as a result of providing health care coverage authorized under this section shall be deposited in the health care access fund. Enhanced federal matching funds received as a result of outreach activities described in subdivision 2, clause (2), shall be dedicated to the commissioner of human services to be used for those outreach purposes.

Subd. 2. [ENHANCED MATCHING FUNDS FOR CHILDREN'S HEALTH CARE INITIATIVES.] The commissioner shall submit to the health care financing administration all plans and waiver requests necessary to obtain enhanced matching funds under the state children's health insurance program established as Title 21 of the Balanced Budget Act of 1997, Public Law Number 105-33, for:

(1) expenditures made under Minnesota Statutes, section 256B.057, subdivision 8;

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(2) MinnesotaCare outreach activities authorized by Laws 1997, chapter 225, article 7, section 2, subdivision 1; and

(3) expenditures made under the MinnesotaCare program, the medical assistance program, or any initiative authorized by the legislature including an initiative to subsidize health insurance coverage for families who are ineligible for MinnesotaCare due to the availability of employer-subsidized insurance.

The commissioner shall submit to the legislature, by January 15, 1999, all statutory changes necessary to receive enhanced federal matching funds.

Sec. 47. [REVISOR'S INSTRUCTION.]

In each section of Minnesota Statutes referred to in column A, the revisor of statutes shall delete the reference in column B and insert the reference in column C.

Column A Column B Column C

256B.057, subd. 1a 256L.08 256L.15

256B.0645 256L.14 256L.03, subd. 1a

256L.16 256L.14 256L.03, subd. 1a

Sec. 48. [REPEALER.]

Minnesota Statutes 1997 Supplement, sections 256B.057, subdivision 1a; 256L.04, subdivisions 3, 4, 5, and 6; 256L.06, subdivisions 1 and 2; 256L.08; 256L.09, subdivision 3; 256L.13; and 256L.14, are repealed.

Sec. 49. [EFFECTIVE DATES.]

(a) Sections 2, 7, 8, 10, 13, 15, 16, 17 to 23, 27, 28, 31 to 39, 41, 47, and 48 are effective January 1, 1999.

(b) Sections 4, 5, and 40 are effective September 30, 1998.

(d) Sections 14 and 42 to 46 are effective the day following final enactment.

WELFARE REFORM; WORK FIRST; ASSISTANCE PROGRAM

AND CHILD SUPPORT CHANGES; AND LICENSING

Section 1. Minnesota Statutes 1997 Supplement, section 119B.01, subdivision 16, is amended to read:

Subd. 16. [TRANSITION YEAR FAMILIES.] "Transition year families" means families who have received AFDC, or who were eligible to receive AFDC after choosing to discontinue receipt of the cash portion of MFIP-S assistance under section 256J.31, subdivision 12, for at least three of the last six months before losing eligibility for AFDC due to increased hours of employment, or increased income from employment or child or spousal support~~, or the loss of income disregards due to time limitations~~.

Sec. 2. Minnesota Statutes 1997 Supplement, section 119B.02, is amended to read:

119B.02 [DUTIES OF COMMISSIONER.]

Subdivision 1. [CHILD CARE SERVICES.] The commissioner shall develop standards for county and human services boards to provide child care services to enable eligible families to participate in employment, training, or education programs. Within the limits of available appropriations, the commissioner shall distribute money to counties to reduce the costs of child care for eligible families. The commissioner shall adopt rules to govern the program in accordance with

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this section. The rules must establish a sliding schedule of fees for parents receiving child care services. The rules shall provide that funds received as a lump sum payment of child support arrearages shall not be counted as income to a family in the month received but shall be prorated over the 12 months following receipt and added to the family income during those months. In the rules adopted under this section, county and human services boards shall be authorized to establish policies for payment of child care spaces for absent children, when the payment is required by the child's regular provider. The rules shall not set a maximum number of days for which absence payments can be made, but instead shall direct the county agency to set limits and pay for absences according to the prevailing market practice in the county. County policies for payment of absences shall be subject to the approval of the commissioner. The commissioner shall maximize the use of federal money in section 256.736 and other programs that provide federal or state reimbursement for child care services for low-income families who are in education, training, job search, or other activities allowed under those programs. Money appropriated under this section must be coordinated with the programs that provide federal reimbursement for child care services to accomplish this purpose. Federal reimbursement obtained must be allocated to the county that spent money for child care that is federally reimbursable under programs that provide federal reimbursement for child care services. The counties shall use the federal money to expand child care services. The commissioner may adopt rules under chapter 14 to implement and coordinate federal program requirements.

Subd. 2. [CONTRACTUAL AGREEMENTS WITH TRIBES.] The commissioner may enter into contractual agreements with a federally recognized Indian tribe with a reservation in Minnesota to carry out the responsibilities of county human service agencies to the extent necessary for the tribe to operate child care assistance programs under sections 119B.03 and 119B.05. An agreement may allow for the tribe to be reimbursed for child care assistance services provided under section 119B.05. The commissioner shall consult with the affected county or counties in the contractual agreement negotiations, if the county or counties wish to be included, in order to avoid the duplication of county and tribal child care services. Funding to support services under section 119B.03 may be transferred to the federally recognized Indian tribe with a reservation in Minnesota from allocations available to counties in which reservation boundaries lie. When funding is transferred under section 119B.03, the amount shall be commensurate to estimates of the proportion of reservation residents with characteristics identified in section 119B.03, subdivision 6, to the total population of county residents with those same characteristics.

Sec. 3. Minnesota Statutes 1996, section 245A.03, is amended by adding a subdivision to read:

Subd. 2b. [EXCEPTION.] The provision in subdivision 2, clause (2), does not apply to:

(1) a child care provider who as an applicant for licensure or as a license holder has received a license denial under section 245A.05, a fine under section 245A.06, or a sanction under section 245A.07 from the commissioner that has not been reversed on appeal; or

(2) a child care provider, or a child care provider who has a household member who, as a result of a licensing process, has a disqualification under this chapter that has not been set aside by the commissioner.

Sec. 4. Minnesota Statutes 1996, section 245A.03, is amended by adding a subdivision to read:

Subd. 4. [EXCLUDED CHILD CARE PROGRAMS; RIGHT TO SEEK LICENSURE.] Nothing in this section shall prohibit a child care program that is excluded from licensure under subdivision 2, clause (2), or under Laws 1997, chapter 248, section 46, as amended by Laws 1997, First Special Session chapter 5, section 10, from seeking a license under this chapter. The commissioner shall ensure that any application received from such an excluded provider is processed in the same manner as all other applications for licensed family day care.

Sec. 5. Minnesota Statutes 1996, section 245A.14, subdivision 4, is amended to read:

Subd. 4. [SPECIAL FAMILY DAY CARE HOMES.] Nonresidential child care programs serving 14 or fewer children that are conducted at a location other than the license holder's own residence shall be licensed under this section and the rules governing family day care or group family day care if:

(a) the license holder is the primary provider of care;

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~~(b)~~ and the nonresidential child care program is conducted in a dwelling that is located on a residential lot; ~~and~~ or

~~(c) the license holder complies with all other requirements of sections 245A.01 to 245A.15 and the rules governing family day care or group family day care.~~

(b) the license holder is an employer who may or may not be the primary provider of care, and the purpose for the child care program is to provide child care services to children of the license holder's employees.

Sec. 6. Minnesota Statutes 1997 Supplement, section 245B.06, subdivision 2, is amended to read:

Subd. 2. [RISK MANAGEMENT PLAN.] The license holder must develop and document in writing a risk management plan that incorporates the individual abuse prevention plan as required in ~~chapter 245C~~ section 245A.65. License holders jointly providing services to a consumer shall coordinate and use the resulting assessment of risk areas for the development of this plan. Upon initiation of services, the license holder will have in place an initial risk management plan that identifies areas in which the consumer is vulnerable, including health, safety, and environmental issues and the supports the provider will have in place to protect the consumer and to minimize these risks. The plan must be changed based on the needs of the individual consumer and reviewed at least annually.

Sec. 7. Minnesota Statutes 1997 Supplement, section 256.01, subdivision 2, is amended to read:

Subd. 2. [SPECIFIC POWERS.] Subject to the provisions of section 241.021, subdivision 2, the commissioner of human services shall:

(1) Administer and supervise all forms of public assistance provided for by state law and other welfare activities or services as are vested in the commissioner. Administration and supervision of human services activities or services includes, but is not limited to, assuring timely and accurate distribution of benefits, completeness of service, and quality program management. In addition to administering and supervising human services activities vested by law in the department, the commissioner shall have the authority to:

(a) require county agency participation in training and technical assistance programs to promote compliance with statutes, rules, federal laws, regulations, and policies governing human services;

(b) monitor, on an ongoing basis, the performance of county agencies in the operation and administration of human services, enforce compliance with statutes, rules, federal laws, regulations, and policies governing welfare services and promote excellence of administration and program operation;

(c) develop a quality control program or other monitoring program to review county performance and accuracy of benefit determinations;

(d) require county agencies to make an adjustment to the public assistance benefits issued to any individual consistent with federal law and regulation and state law and rule and to issue or recover benefits as appropriate;

(e) delay or deny payment of all or part of the state and federal share of benefits and administrative reimbursement according to the procedures set forth in section 256.017; ~~and~~

(f) make contracts with and grants to public and private agencies and organizations, both profit and nonprofit, and individuals, using appropriated funds; and

(g) enter into contractual agreements with federally recognized Indian tribes with a reservation in Minnesota to the extent necessary for the tribe to operate a federally approved family assistance program or any other program under the supervision of the commissioner. The commissioner shall consult with the affected county or counties in the contractual agreement negotiations, if the county or counties wish to be included, in order to avoid the duplication of county and tribal assistance program services. The commissioner may establish necessary accounts for the purposes of receiving and disbursing funds as necessary for the operation of the programs.

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(2) Inform county agencies, on a timely basis, of changes in statute, rule, federal law, regulation, and policy necessary to county agency administration of the programs.

(3) Administer and supervise all child welfare activities; promote the enforcement of laws protecting handicapped, dependent, neglected and delinquent children, and children born to mothers who were not married to the children's fathers at the times of the conception nor at the births of the children; license and supervise child-caring and child-placing agencies and institutions; supervise the care of children in boarding and foster homes or in private institutions; and generally perform all functions relating to the field of child welfare now vested in the state board of control.

(4) Administer and supervise all noninstitutional service to handicapped persons, including those who are visually impaired, hearing impaired, or physically impaired or otherwise handicapped. The commissioner may provide and contract for the care and treatment of qualified indigent children in facilities other than those located and available at state hospitals when it is not feasible to provide the service in state hospitals.

(5) Assist and actively cooperate with other departments, agencies and institutions, local, state, and federal, by performing services in conformity with the purposes of Laws 1939, chapter 431.

(6) Act as the agent of and cooperate with the federal government in matters of mutual concern relative to and in conformity with the provisions of Laws 1939, chapter 431, including the administration of any federal funds granted to the state to aid in the performance of any functions of the commissioner as specified in Laws 1939, chapter 431, and including the promulgation of rules making uniformly available medical care benefits to all recipients of public assistance, at such times as the federal government increases its participation in assistance expenditures for medical care to recipients of public assistance, the cost thereof to be borne in the same proportion as are grants of aid to said recipients.

(7) Establish and maintain any administrative units reasonably necessary for the performance of administrative functions common to all divisions of the department.

(8) Act as designated guardian of both the estate and the person of all the wards of the state of Minnesota, whether by operation of law or by an order of court, without any further act or proceeding whatever, except as to persons committed as mentally retarded. For children under the guardianship of the commissioner whose interests would be best served by adoptive placement, the commissioner may contract with a licensed child-placing agency to provide adoption services. A contract with a licensed child-placing agency must be designed to supplement existing county efforts and may not replace existing county programs, unless the replacement is agreed to by the county board and the appropriate exclusive bargaining representative or the commissioner has evidence that child placements of the county continue to be substantially below that of other counties.

(9) Act as coordinating referral and informational center on requests for service for newly arrived immigrants coming to Minnesota.

(10) The specific enumeration of powers and duties as hereinabove set forth shall in no way be construed to be a limitation upon the general transfer of powers herein contained.

(11) Establish county, regional, or statewide schedules of maximum fees and charges which may be paid by county agencies for medical, dental, surgical, hospital, nursing and nursing home care and medicine and medical supplies under all programs of medical care provided by the state and for congregate living care under the income maintenance programs.

(12) Have the authority to conduct and administer experimental projects to test methods and procedures of administering assistance and services to recipients or potential recipients of public welfare. To carry out such experimental projects, it is further provided that the commissioner of human services is authorized to waive the enforcement of existing specific statutory program requirements, rules, and standards in one or more counties. The order establishing the waiver shall provide alternative methods and procedures of administration, shall not be in conflict with the basic purposes, coverage, or benefits provided by law, and in no event shall the duration of a project exceed four years. It is further provided that no order establishing an experimental project as authorized by the provisions of this section shall become effective until the following conditions have been met:

(a) The secretary of health, education, and welfare of the United States has agreed, for the same project, to waive state plan requirements relative to statewide uniformity.

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(b) A comprehensive plan, including estimated project costs, shall be approved by the legislative advisory commission and filed with the commissioner of administration.

(13) According to federal requirements, establish procedures to be followed by local welfare boards in creating citizen advisory committees, including procedures for selection of committee members.

(14) Allocate federal fiscal disallowances or sanctions which are based on quality control error rates for the aid to families with dependent children, Minnesota family investment program-statewide, medical assistance, or food stamp program in the following manner:

(a) One-half of the total amount of the disallowance shall be borne by the county boards responsible for administering the programs. For the medical assistance, MFIP-S, and AFDC programs, disallowances shall be shared by each county board in the same proportion as that county's expenditures for the sanctioned program are to the total of all counties' expenditures for the AFDC, MFIP-S, and medical assistance programs. For the food stamp program, sanctions shall be shared by each county board, with 50 percent of the sanction being distributed to each county in the same proportion as that county's administrative costs for food stamps are to the total of all food stamp administrative costs for all counties, and 50 percent of the sanctions being distributed to each county in the same proportion as that county's value of food stamp benefits issued are to the total of all benefits issued for all counties. Each county shall pay its share of the disallowance to the state of Minnesota. When a county fails to pay the amount due hereunder, the commissioner may deduct the amount from reimbursement otherwise due the county, or the attorney general, upon the request of the commissioner, may institute civil action to recover the amount due.

(b) Notwithstanding the provisions of paragraph (a), if the disallowance results from knowing noncompliance by one or more counties with a specific program instruction, and that knowing noncompliance is a matter of official county board record, the commissioner may require payment or recover from the county or counties, in the manner prescribed in paragraph (a), an amount equal to the portion of the total disallowance which resulted from the noncompliance, and may distribute the balance of the disallowance according to paragraph (a).

(15) Develop and implement special projects that maximize reimbursements and result in the recovery of money to the state. For the purpose of recovering state money, the commissioner may enter into contracts with third parties. Any recoveries that result from projects or contracts entered into under this paragraph shall be deposited in the state treasury and credited to a special account until the balance in the account reaches $1,000,000. When the balance in the account exceeds $1,000,000, the excess shall be transferred and credited to the general fund. All money in the account is appropriated to the commissioner for the purposes of this paragraph.

(16) Have the authority to make direct payments to facilities providing shelter to women and their children according to section 256D.05, subdivision 3. Upon the written request of a shelter facility that has been denied payments under section 256D.05, subdivision 3, the commissioner shall review all relevant evidence and make a determination within 30 days of the request for review regarding issuance of direct payments to the shelter facility. Failure to act within 30 days shall be considered a determination not to issue direct payments.

(17) Have the authority to establish and enforce the following county reporting requirements:

(a) The commissioner shall establish fiscal and statistical reporting requirements necessary to account for the expenditure of funds allocated to counties for human services programs. When establishing financial and statistical reporting requirements, the commissioner shall evaluate all reports, in consultation with the counties, to determine if the reports can be simplified or the number of reports can be reduced.

(b) The county board shall submit monthly or quarterly reports to the department as required by the commissioner. Monthly reports are due no later than 15 working days after the end of the month. Quarterly reports are due no later than 30 calendar days after the end of the quarter, unless the commissioner determines that the deadline must be shortened to 20 calendar days to avoid jeopardizing compliance with federal deadlines or risking a loss of federal funding. Only reports that are complete, legible, and in the required format shall be accepted by the commissioner.

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(c) If the required reports are not received by the deadlines established in clause (b), the commissioner may delay payments and withhold funds from the county board until the next reporting period. When the report is needed to account for the use of federal funds and the late report results in a reduction in federal funding, the commissioner shall withhold from the county boards with late reports an amount equal to the reduction in federal funding until full federal funding is received.

(d) A county board that submits reports that are late, illegible, incomplete, or not in the required format for two out of three consecutive reporting periods is considered noncompliant. When a county board is found to be noncompliant, the commissioner shall notify the county board of the reason the county board is considered noncompliant and request that the county board develop a corrective action plan stating how the county board plans to correct the problem. The corrective action plan must be submitted to the commissioner within 45 days after the date the county board received notice of noncompliance.

(e) The final deadline for fiscal reports or amendments to fiscal reports is one year after the date the report was originally due. If the commissioner does not receive a report by the final deadline, the county board forfeits the funding associated with the report for that reporting period and the county board must repay any funds associated with the report received for that reporting period.

(f) The commissioner may not delay payments, withhold funds, or require repayment under paragraph (c) or (e) if the county demonstrates that the commissioner failed to provide appropriate forms, guidelines, and technical assistance to enable the county to comply with the requirements. If the county board disagrees with an action taken by the commissioner under paragraph (c) or (e), the county board may appeal the action according to sections 14.57 to 14.69.

(g) Counties subject to withholding of funds under paragraph (c) or forfeiture or repayment of funds under paragraph (e) shall not reduce or withhold benefits or services to clients to cover costs incurred due to actions taken by the commissioner under paragraph (c) or (e).

(18) Allocate federal fiscal disallowances or sanctions for audit exceptions when federal fiscal disallowances or sanctions are based on a statewide random sample for the foster care program under title IV-E of the Social Security Act, United States Code, title 42, in direct proportion to each county's title IV-E foster care maintenance claim for that period.

(19) Be responsible for ensuring the detection, prevention, investigation, and resolution of fraudulent activities or behavior by applicants, recipients, and other participants in the human services programs administered by the department.

(20) Require county agencies to identify overpayments, establish claims, and utilize all available and cost-beneficial methodologies to collect and recover these overpayments in the human services programs administered by the department.

(21) Have the authority to administer a drug rebate program for drugs purchased pursuant to the senior citizen drug program established under section 256.955 after the beneficiary's satisfaction of any deductible established in the program. The commissioner shall require a rebate agreement from all manufacturers of covered drugs as defined in section 256B.0625, subdivision 13. For each drug, the amount of the rebate shall be equal to the basic rebate as defined for purposes of the federal rebate program in United States Code, title 42, section 1396r-8(c)(1). This basic rebate shall be applied to single-source and multiple-source drugs. The manufacturers must provide full payment within 30 days of receipt of the state invoice for the rebate within the terms and conditions used for the federal rebate program established pursuant to section 1927 of title XIX of the Social Security Act. The manufacturers must provide the commissioner with any information necessary to verify the rebate determined per drug. The rebate program shall utilize the terms and conditions used for the federal rebate program established pursuant to section 1927 of title XIX of the Social Security Act.

Sec. 8. Minnesota Statutes 1996, section 256.014, subdivision 1, is amended to read:

Subdivision 1. [ESTABLISHMENT OF SYSTEMS.] The commissioner of human services shall establish and enhance computer systems necessary for the efficient operation of the programs the commissioner supervises, including:

(1) management and administration of the food stamp and income maintenance programs, including the electronic distribution of benefits;

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(2) management and administration of the child support enforcement program; and

(3) administration of medical assistance and general assistance medical care.

The commissioner shall distribute the nonfederal share of the costs of operating and maintaining the systems to the commissioner and to the counties participating in the system in a manner that reflects actual system usage, except that the nonfederal share of the costs of the MAXIS computer system and child support enforcement systems shall be borne entirely by the commissioner. Development costs must not be assessed against county agencies.

The commissioner may enter into contractual agreements with federally recognized Indian tribes with a reservation in Minnesota to participate in state-operated computer systems related to the management and administration of the food stamp, income maintenance, child support enforcement, and medical assistance and general assistance medical care programs to the extent necessary for the tribe to operate a federally approved family assistance program or any other program under the supervision of the commissioner.

Sec. 9. Minnesota Statutes 1997 Supplement, section 256.031, subdivision 6, is amended to read:

Subd. 6. [END OF FIELD TRIALS.] (a) Upon agreement with the federal government, the field trials of the Minnesota family investment plan will end June 30, 1998.

(b) Families in the comparison group under subdivision 3, paragraph (d), clause (i), receiving aid to families with dependent children under sections 256.72 to 256.87, and STRIDE services under section 256.736 will continue in those programs until June 30, 1998. After June 30, 1998, families who cease receiving assistance under the Minnesota family investment plan and comparison group families who cease receiving assistance under AFDC and STRIDE who are eligible for the Minnesota family investment program-statewide (MFIP-S), medical assistance, general assistance medical care, or the food stamp program shall be placed with their consent on the programs for which they are eligible.

(c) Families who cease receiving assistance under the MFIP and comparison families who cease receiving assistance under AFDC and STRIDE who are ineligible for MFIP-S due to increased income from employment, or increased child or spousal support or a combination of employment income and child or spousal support, shall be eligible for transition year child care under section 119B.05, and extended medical assistance under section 256B.0635. For the purpose of assistance for transition year child care and determining receipt of extended medical assistance, receipt of AFDC and MFIP shall be considered to be the same as receipt of MFIP-S.

Sec. 10. Minnesota Statutes 1997 Supplement, section 256.741, is amended by adding a subdivision to read:

Subd. 2a. [FAMILIES-FIRST DISTRIBUTION OF CHILD SUPPORT ARREARAGES.] When the public authority collects support arrearages on behalf of an individual who is receiving assistance provided under MFIP or MFIP-R under this chapter, MFIP-S under chapter 256J, or work first under chapter 256K, and the public authority has the option of applying the collection to arrears permanently assigned to the state or to arrears temporarily assigned to the state, the public authority shall first apply the collection to satisfy those arrears that are permanently assigned to the state.

Sec. 11. Minnesota Statutes 1997 Supplement, section 256.9864, is amended to read:

256.9864 [REPORTS BY RECIPIENT.]

(a) An assistance unit with a recent work history or with earned income shall report monthly to the county agency on income received and other circumstances affecting eligibility or assistance amounts. All other assistance units shall report on income and other circumstances affecting eligibility and assistance amounts, as specified by the state agency.

(b) An assistance unit required to submit a report on the form designated by the commissioner and within ten days of the due date or the date of the significant change, whichever is later, or otherwise report significant changes which would affect eligibility or assistance amounts, is considered to have continued its application for assistance effective the date the required report is received by the county agency, if a complete report is received within a calendar month in which assistance was received~~, except that no assistance shall be paid for the period beginning with the end of the month in which the report was due and ending with the date the report was received by the county agency~~.

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Sec. 12. Minnesota Statutes 1997 Supplement, section 256B.062, is amended to read:

256B.062 [CONTINUED ELIGIBILITY.]

Medical assistance may be paid for persons who received aid to families with dependent children in at least three of the six months preceding the month in which the person became ineligible for aid to families with dependent children, if the ineligibility was due to an increase in hours of employment or employment income or due to the loss of an earned income disregard. A person who is eligible for extended medical assistance is entitled to six months of assistance without reapplication, unless the assistance unit ceases to include a dependent child. For a person under 21 years of age, medical assistance may not be discontinued within the six-month period of extended eligibility until it has been determined that the person is not otherwise eligible for medical assistance. Medical assistance may be continued for an additional six months if the person meets all requirements for the additional six months, according to Title XIX of the Social Security Act, as amended by section 303 of the Family Support Act of 1988, Public Law Number 100-485. This section is repealed effective ~~March 31~~ July 1, 1998.

Sec. 13. Minnesota Statutes 1997 Supplement, section 256B.0635, is amended by adding a subdivision to read:

Subd. 3. [MEDICAL ASSISTANCE FOR MFIP-S PARTICIPANTS WHO OPT TO DISCONTINUE MONTHLY CASH ASSISTANCE.] Upon federal approval, medical assistance is available to persons who received MFIP-S in at least three of the six months preceding the month in which the person opted to discontinue receiving MFIP-S cash assistance under section 256J.31, subdivision 12. A person who is eligible for medical assistance under this section may receive medical assistance without reapplication as long as the person meets MFIP-S eligibility requirements, unless the assistance unit does not include a dependent child. Medical assistance may be paid pursuant to subdivisions 1 and 2 for persons who are no longer eligible for MFIP-S due to increased employment or child support. A person may be eligible for MinnesotaCare due to increased employment or child support, and as such must be informed of the option to transition onto MinnesotaCare.

Sec. 14. Minnesota Statutes 1997 Supplement, section 256D.05, subdivision 8, is amended to read:

Subd. 8. [CITIZENSHIP.] (a) Effective July 1, 1997, citizenship requirements for applicants and recipients under sections 256D.01 to 256D.03, subdivision 2, and 256D.04 to 256D.21 shall be determined the same as under section 256J.11, except that legal noncitizens who are applicants or recipients must have been residents of Minnesota on March 1, 1997. Legal noncitizens who arrive in Minnesota after March 1, 1997, and become elderly or disabled after that date, and are otherwise eligible for general assistance can receive benefits under this section. The income and assets of sponsors of noncitizens shall be deemed available to general assistance applicants and recipients according to the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Public Law Number 104-193, title IV, sections 421 and 422, and subsequently set out in federal rules.

(b) As a condition of eligibility, each legal adult noncitizen in the assistance unit who has resided in the country for four years or more and who is under 70 years of age must:

(1) be enrolled in a literacy class, English as a second language class, or a citizen class;

(2) be applying for admission to a literacy class, English as a second language class, and is on a waiting list;

(3) be in the process of applying for a waiver from the Immigration and Naturalization Service of the English language or civics requirements of the citizenship test;

(4) have submitted an application for citizenship to the Immigration and Naturalization Service and is waiting for a testing date or a subsequent swearing in ceremony; or

(5) have been denied citizenship due to a failure to pass the test after two attempts or because of an inability to understand the rights and responsibilities of becoming a United States citizen, as documented by the Immigration and Naturalization Service or the county.

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If the county social service agency determines that a legal noncitizen subject to the requirements of this subdivision will require more than one year of English language training, then the requirements of clause (1) or (2) shall be imposed after the legal noncitizen has resided in the country for three years. Individuals who reside in a facility licensed under chapter 144A, 144D, 245A, or 256I are exempt from the requirements of this section.

Sec. 15. Minnesota Statutes 1996, section 256D.051, is amended by adding a subdivision to read:

Subd. 18. [WAIVER OF SERVICE COST REIMBURSEMENT LIMIT FOR PARTICIPANTS WITH SIGNIFICANT BARRIERS TO EMPLOYMENT.]

(a) To the extent of available resources, the commissioner may waive the $400 service cost limit specified in subdivision 6 for county agencies who propose to provide enhanced services under the food stamp employment and training program to hard-to-employ individuals. A "hard-to-employ individual" is defined as:

(1) a recipient of general assistance under chapter 256D; or

(2) an individual with at least one of the following three barriers to employment:

(i) the individual has not completed secondary school or obtained a general equivalency development diploma or an adult diploma, and has low skills in reading or mathematics;

(ii) the individual requires substance abuse treatment for employment; and

(iii) the individual has a poor work history.

(b) To obtain a waiver, the county agency must submit a waiver request to the commissioner. The request must specify:

(1) the number of hard-to-employ individuals the agency plans to serve;

(2) the nature of the enhanced employment and training services the agency will provide; and

(3) the agency's plan for providing referrals for substance abuse assessment and treatment for hard-to-employ individuals who require substance abuse treatment for employment.

Sec. 16. [256D.053] [MINNESOTA FOOD ASSISTANCE PROGRAM.]

Subdivision 1. [PROGRAM ESTABLISHED.] For the period of July 1, 1998, to June 30, 1999, the Minnesota food assistance program is established to provide food assistance to legal noncitizens residing in this state who are ineligible to participate in the federal Food Stamp Program solely due to the provisions of section 402 or 403 of Public Law Number 104-193, as authorized by Title VII of the 1997 Emergency Supplemental Appropriations Act, Public Law Number 105-18.

Subd. 2. [ELIGIBILITY REQUIREMENTS.] To be eligible for the Minnesota food assistance program, all of the following conditions must be met:

(1) the applicant must meet the initial and ongoing eligibility requirements for the federal Food Stamp Program, except for the applicant's ineligible immigration status;

(2) the applicant must be either a qualified noncitizen as defined in section 256J.08, subdivision 73, or a noncitizen otherwise residing lawfully in the United States;

(3) the applicant must be a resident of the state; and

(4) the applicant must not be receiving assistance under the MFIP-S or the work first program.

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Subd. 3. [PROGRAM ADMINISTRATION.] (a) The rules for the Minnesota food assistance program shall follow exactly the regulations for the federal Food Stamp Program, except for the provisions pertaining to immigration status under sections 402 or 403 of Public Law Number 104-193.

(b) The county agency shall use the income, budgeting, and benefit allotment regulations of the federal Food Stamp Program to calculate an eligible recipient's monthly Minnesota food assistance program benefit. Until September 30, 1998, eligible recipients under this subdivision shall receive the average per person food stamp issuance in Minnesota in the fiscal year ending June 30, 1997. Beginning October 1, 1998, eligible recipients shall receive the same level of benefits as those provided by the federal Food Stamp Program to similarly situated citizen recipients. The monthly Minnesota food assistance program benefits shall not exceed an amount equal to the amount of federal Food Stamp Program benefits the household would receive if all members of the household were eligible for the federal Food Stamp Program.

(c) Minnesota food assistance program benefits must be disregarded as income in all programs that do not count food stamps as income.

(d) The county agency must redetermine a Minnesota food assistance program recipient's eligibility for the federal Food Stamp Program when the agency receives information that the recipient's legal immigration status has changed in such a way that would make the recipient potentially eligible for the federal Food Stamp Program.

(e) Until October 1, 1998, the commissioner may provide benefits under this section in cash.

Subd. 4. [STATE PLAN REQUIRED.] The commissioner shall submit a state plan to the secretary of agriculture to allow the commissioner to purchase federal Food Stamp Program benefits for each Minnesota food assistance program recipient who is ineligible to participate in the federal Food Stamp Program solely due to the provisions of section 402 or 403 of Public Law Number 104-193, as authorized by Title VII of the 1997 Emergency Supplemental Appropriations Act, Public Law Number 105-18. The commissioner shall enter into a contract as necessary with the secretary to use the existing federal Food Stamp Program benefits delivery system for the purposes of administering the Minnesota food assistance program under this section.

Sec. 17. Minnesota Statutes 1996, section 256D.46, subdivision 2, is amended to read:

Subd. 2. [INCOME AND RESOURCE TEST.] All income and resources available to the recipient must be considered in determining the recipient's ability to meet the emergency need. Property that can be liquidated in time to resolve the emergency and income, (excluding ~~Minnesota supplemental aid issued for current month's need)~~ an amount equal to the Minnesota supplemental aid standard of assistance, that is normally disregarded or excluded under the Minnesota supplemental aid program must be considered available to meet the emergency need.

Sec. 18. Minnesota Statutes 1997 Supplement, section 256J.02, subdivision 4, is amended to read:

Subd. 4. [AUTHORITY TO TRANSFER.] Subject to limitations of title I of Public Law Number 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, as amended, the legislature may transfer money from the TANF block grant to the child care fund under chapter 119B, or the Title XX block grant under section 256E.07.

Sec. 19. Minnesota Statutes 1997 Supplement, section 256J.03, is amended to read:

256J.03 [TANF RESERVE ACCOUNT.]

Subdivision 1. The ~~Minnesota family investment program-statewide/TANF~~ TANF reserve account is created in the state treasury. Funds retained or deposited in the TANF reserve shall include: (1) funds designated by the legislature ~~and~~; (2) unexpended state funds resulting from the acceleration of TANF expenditures under subdivision 2; (3) earnings available from the federal TANF block grant appropriated to the commissioner but not expended in the biennium beginning July 1, 1997~~, shall be retained~~; and (4) TANF funds available in fiscal years 1998, 1999, 2000, and 2001 that are not spent or not budgeted to be spent in those years.

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Funds deposited in the reserve account to must be expended for the Minnesota family investment program-statewide ~~in fiscal year 2000 and subsequent fiscal years~~ and directly related state programs for the purposes in subdivision 3.

Subd. 2. [AUTHORIZATION TO ACCELERATE EXPENDITURE OF TANF FUNDS.] The commissioner may expend federal TANF block grant funds in excess of appropriated levels for the purpose of accelerating federal funding of the MFIP program. By the end of the fiscal year in which the additional federal expenditures are made, the commissioner must deposit into the reserve account an amount of unexpended state funds appropriated for assistance to families grants, AFDC, and MFIP equal to the additional federal expenditures. Reserve funds may be spent as TANF appropriations if insufficient TANF funds are available because of acceleration.

Subd. 3. [ALLOWED TRANSFER PURPOSE.] Funds from the reserve account may be used for the following purposes:

(1) unanticipated TANF block grant maintenance of effort shortfalls;

(2) MFIP cost increases due to reduced federal revenues and federal law changes;

(3) one-half of the MFIP general fund cost increase in fiscal year 2000 and subsequent fiscal years due to caseload increases over fiscal year 1999; and

(4) transfers allowed under section 256J.02, subdivision 4.

Sec. 20. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 11, is amended to read:

Subd. 11. [CAREGIVER.] "Caregiver" means a minor child's natural or adoptive parent or parents and stepparent who live in the home with the minor child. For purposes of determining eligibility for this program, caregiver also means any of the following individuals, if adults, who live with and provide care and support to a minor child when the minor child's natural or adoptive parent or parents or stepparents do not reside in the same home: legal ~~custodians~~ custodian or guardian, grandfather, grandmother, brother, sister, ~~stepfather, stepmother,~~ stepbrother, stepsister, uncle, aunt, first cousin or first cousin once removed, nephew, niece, person of preceding generation as denoted by prefixes of "great," "great-great," or "great-great-great," or a spouse of any person named in the above groups even after the marriage ends by death or divorce.

Sec. 21. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 24a. [DISQUALIFIED.] "Disqualified" means being ineligible to receive MFIP-S due to noncooperation with program requirements. Except for persons whose disqualification is based on fraud, a disqualified person can take action to correct the reason for ineligibility.

Sec. 22. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 26, is amended to read:

Subd. 26. [EARNED INCOME.] "Earned income" means cash or in-kind income earned through the receipt of wages, salary, commissions, profit from employment activities, net profit from self-employment activities, payments made by an employer for regularly accrued vacation or sick leave, and any other profit from activity earned through effort or labor. The income must be in return for, or as a result of, legal activity.

Sec. 23. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 28, is amended to read:

Subd. 28. [EMERGENCY.] "Emergency" means a situation or a set of circumstances that causes or threatens to cause destitution to a ~~minor child~~ family with a child under age 21.

Sec. 24. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 40, is amended to read:

Subd. 40. [GROSS EARNED INCOME.] "Gross earned income" means earned income from employment before mandatory and voluntary payroll deductions. Gross earned income includes salaries, wages, tips, gratuities, commissions, incentive payments from work or training programs, payments made by an employer for regularly accrued vacation or sick

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leave, and profits from other activity earned by an individual's effort or labor. Gross earned income includes uniform and meal allowances if federal income tax is deducted from the allowance. Gross earned income includes flexible work benefits received from an employer if the employee has the option of receiving the benefit or benefits in cash. For self-employment, gross earned income is the nonexcluded income minus expenses for the business.

Sec. 25. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 50a. [INTERSTATE TRANSITIONAL STANDARD.] "Interstate transitional standard" means a combination of the cash assistance a family with no other income would have received in the state of previous residence and the Minnesota food portion for the appropriate size family.

Sec. 26. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 51a. [LEGAL CUSTODIAN.] "Legal custodian" means any person who is under a legal obligation to provide care for a minor and who is in fact providing care for a minor. For an Indian child, "custodian" means any Indian person who has legal custody of an Indian child under tribal law or custom, under state law, or to whom temporary physical care, custody, and control has been transferred by the parent of the child, as provided in section 257.351, subdivision 8.

Sec. 27. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 60, is amended to read:

Subd. 60. [MINOR CHILD.] "Minor child" means a child who is living in the same home of a parent or other caregiver, is not the parent of a child in the home, and is either less than 18 years of age or is under the age of 19 years and is ~~regularly attending as~~ a full-time student ~~and is expected to complete a high school or~~ in a secondary school or pursuing a full-time secondary level course of vocational or technical training designed to fit students for gainful employment ~~before reaching age 19~~.

Sec. 28. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 61a. [NONCUSTODIAL PARENT.] "Noncustodial parent" means a minor child's parent who does not live in the same home as the child.

Sec. 29. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 68, is amended to read:

Subd. 68. [PERSONAL PROPERTY.] "Personal property" means an item of value that is not real property, including the value of a contract for deed held by a seller, assets held in trust on behalf of members of an assistance unit, ~~cash surrender value of life insurance,~~ value of a prepaid burial, savings account, value of stocks and bonds, and value of retirement accounts.

Sec. 30. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 73, is amended to read:

Subd. 73. [QUALIFIED NONCITIZEN.] "Qualified noncitizen" means a person:

(1) who was lawfully admitted for permanent residence pursuant to United States Code, title 8;

(2) who was admitted to the United States as a refugee pursuant to United States Code, title 8; section 1157;

(3) whose deportation is being withheld pursuant to United States Code, title 8, section 1253(h);

(4) who was paroled for a period of at least one year pursuant to United States Code, title 8, section 1182(d)(5);

(5) who was granted conditional entry pursuant to United State Code, title 8, section 1153(a)(7);

(6) who was granted asylum pursuant to United States Code, title 8, section 1158; or

(7) determined to be a battered noncitizen by the United States Attorney General according to the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Title V of the Omnibus Consolidated Appropriations Bill, Public Law Number 104-208;

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(8) who is a child of a noncitizen determined to be a battered noncitizen by the United States Attorney General according to the Illegal Immigration Reform and Responsibility Act of 1996, title V, Public Law Number 104-200; or

(9) who was admitted as a Cuban or Haitian entrant.

Sec. 31. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 82a. [SHARED HOUSEHOLD STANDARD.] "Shared household standard" means the basic standard used when the household includes an unrelated member. The cash portion of the shared household standard is equal to 90 percent of the cash portion of the transitional standard. The cash portion of the shared household standard plus the food portion equals the full shared household standard.

Sec. 32. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 82b. [SHELTER COSTS.] "Shelter costs" means rent, manufactured home lot rental costs, or monthly principal, interest, insurance premiums, and property taxes due for mortgages or contracts for deed.

Sec. 33. Minnesota Statutes 1997 Supplement, section 256J.08, subdivision 83, is amended to read:

Subd. 83. [SIGNIFICANT CHANGE.] "Significant change" means a decline in gross income of 35 36 percent or more from the income used to determine the grant for the current month.

Sec. 34. Minnesota Statutes 1997 Supplement, section 256J.08, is amended by adding a subdivision to read:

Subd. 86a. [UNRELATED MEMBER.] "Unrelated member" means an individual in the household who does not meet the definition of an eligible caregiver, but does not include an individual who provides child care to a child in the assistance unit.

Sec. 35. Minnesota Statutes 1997 Supplement, section 256J.09, subdivision 6, is amended to read:

Subd. 6. [INVALID REASON FOR DELAY.] A county agency must not delay a decision on eligibility or delay issuing the assistance payment except to establish state residence as provided in section 256J.12 by:

(1) treating the 30-day processing period as a waiting period;

(2) delaying approval or issuance of the assistance payment pending the decision of the county board; or

(3) awaiting the result of a referral to a county agency in another county when the county receiving the application does not believe it is the county of financial responsibility.

Sec. 36. Minnesota Statutes 1997 Supplement, section 256J.09, subdivision 9, is amended to read:

Subd. 9. [ADDENDUM TO AN EXISTING APPLICATION.] (a) An addendum to an existing application must be used to add persons to an assistance unit regardless of whether the persons being added are required to be in the assistance unit. When a person is added by addendum to an assistance unit, eligibility for that person begins on the first of the month the addendum was filed except as provided in section 256J.74, subdivision 2, clause (1).

(b) An overpayment must be determined when a change in household composition is not reported within the deadlines in section 256J.30, subdivision 9. Any overpayment must be calculated from the month of the change including the needs, income, and assets of any individual who is required to be included in the assistance unit under section 256J.24, subdivision 2. Individuals not included in the assistance unit who are identified in section 256J.37, subdivisions 1 to 2, must have their income and assets considered when determining the amount of the overpayment.

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Sec. 37. Minnesota Statutes 1997 Supplement, section 256J.11, subdivision 2, as amended by Laws 1997, Third Special Session chapter 1, is amended to read:

Subd. 2. [NONCITIZENS; FOOD PORTION.] (a) For the period September 1, 1997, to October 31, 1997, noncitizens who do not meet one of the exemptions in section 412 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, but were residing in this state as of July 1, 1997, are eligible for the 6/10 of the average value of food stamps for the same family size and composition until MFIP-S is operative in the noncitizen's county of financial responsibility and thereafter, the 6/10 of the food portion of MFIP-S. However, federal food stamp dollars cannot be used to fund the food portion of MFIP-S benefits for an individual under this subdivision.

(b) For the period November 1, 1997, to June 30, ~~1998~~ 1999, noncitizens who do not meet one of the exemptions in section 412 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, ~~but were residing in this state as of July 1, 1997,~~ and are receiving cash assistance under the AFDC, family general assistance, MFIP or MFIP-S programs are eligible for the average value of food stamps for the same family size and composition until MFIP-S is operative in the noncitizen's county of financial responsibility and thereafter, the food portion of MFIP-S. However, federal food stamp dollars cannot be used to fund the food portion of MFIP-S benefits for an individual under this subdivision. The assistance provided under this subdivision, which is designated as a supplement to replace lost benefits under the federal food stamp program, must be disregarded as income in all programs that do not count food stamps as income where the commissioner has the authority to make the income disregard determination for the program.

(c) The commissioner shall submit a state plan to the secretary of agriculture to allow the commissioner to purchase federal Food Stamp Program benefits in an amount equal to the MFIP-S food portion for each legal noncitizen receiving MFIP-S assistance who is ineligible to participate in the federal Food Stamp Program solely due to the provisions of section 402 or 403 of Public Law Number 104-193, as authorized by Title VII of the 1997 Emergency Supplemental Appropriations Act, Public Law Number 105-18. The commissioner shall enter into a contract as necessary with the secretary to use the existing federal Food Stamp Program benefits delivery system for the purposes of administering the food portion of MFIP-S under this subdivision.

Sec. 38. Minnesota Statutes 1997 Supplement, section 256J.12, is amended to read:

256J.12 [MINNESOTA RESIDENCE.]

Subdivision 1. [SIMPLE RESIDENCY.] To be eligible for AFDC or MFIP-S, whichever is in effect, ~~a family~~ an assistance unit must have established residency in this state which means the ~~family~~ assistance unit is present in the state and intends to remain here. A person who lives in this state and who entered this state with a job commitment or to seek employment in this state, whether or not that person is currently employed, meets the criteria in this subdivision.

Subd. 1a. [30-DAY RESIDENCY REQUIREMENT.] ~~A family~~ An assistance unit is considered to have established residency in this state only when a child or caregiver has resided in this state for at least 30 days with the intention of making the person's home here and not for any temporary purpose. The birth of a child in Minnesota to a member of the assistance unit does not automatically establish the residency in this state under this subdivision of the other members of the assistance unit. Time spent in a shelter for battered women shall count toward satisfying the 30-day residency requirement.

Subd. 2. [EXCEPTIONS.] (a) A county shall waive the 30-day residency requirement where unusual hardship would result from denial of assistance.

(b) For purposes of this section, unusual hardship means ~~a family~~ an assistance unit:

(1) is without alternative shelter; or

(2) is without available resources for food.

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(c) For purposes of this subdivision, the following definitions apply (1) "metropolitan statistical area" is as defined by the U.S. Census Bureau; (2) "alternative shelter" includes any shelter that is located within the metropolitan statistical area containing the county and for which the family is eligible, provided the ~~family~~ assistance unit does not have to travel more than 20 miles to reach the shelter and has access to transportation to the shelter. Clause (2) does not apply to counties in the Minneapolis-St. Paul metropolitan statistical area.

(d) Applicants are considered to meet the residency requirement under subdivision 1a if they once resided in Minnesota and:

(1) joined the United States armed services, returned to Minnesota within 30 days of leaving the armed services, and intend to remain in Minnesota; or

(2) left to attend school in another state, paid nonresident tuition or Minnesota tuition rates under a reciprocity agreement, and returned to Minnesota within 30 days of graduation with the intent to remain in Minnesota.

(e) The 30-day residence requirement is met when:

(1) a minor child or a minor caregiver moves from another state to the residence of a relative caregiver;

(2) the minor caregiver applies for and receives family cash assistance;

(3) the relative caregiver chooses not to be part of the MFIP-S assistance unit; and

(4) the relative caregiver has resided in Minnesota for at least 30 days prior to the date the assistance unit applies for cash assistance.

(f) Ineligible mandatory unit members who have resided in Minnesota for 12 months immediately before the unit's date of application establish the other assistance unit members' eligibility for the MFIP-S transitional standard.

Subd. 2a. [MIGRANT WORKERS.] Migrant workers, as defined in section 256J.08, and their immediate families are exempt from the requirements of subdivisions 1 and 1a, provided the migrant worker provides verification that the migrant family worked in this state within the last 12 months and earned at least $1,000 in gross wages during the time the migrant worker worked in this state.

Subd. 3. [PAYMENT PLAN FOR NEW RESIDENTS.] Assistance paid to an eligible ~~family~~ assistance unit in which all members have resided in this state for fewer than 12 consecutive calendar months immediately preceding the date of application shall be at the standard and in the form specified in section 256J.43.

Subd. 4. [SEVERABILITY CLAUSE.] If any subdivision in this section is enjoined from implementation or found unconstitutional by any court of competent jurisdiction, the remaining subdivisions shall remain valid and shall be given full effect.

Sec. 39. Minnesota Statutes 1997 Supplement, section 256J.14, is amended to read:

256J.14 [ELIGIBILITY FOR PARENTING OR PREGNANT MINORS.]

(a) The definitions in this paragraph only apply to this subdivision.

(1) "Household of a parent, legal guardian, or other adult relative" means the place of residence of:

(i) a natural or adoptive parent;

(ii) a legal guardian according to appointment or acceptance under section 260.242, 525.615, or 525.6165, and related laws; or

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(iii) a caregiver as defined in section 256J.08, subdivision 11; or

(iv) an appropriate adult relative designated by a county agency.

(2) "Adult-supervised supportive living arrangement" means a private family setting which assumes responsibility for the care and control of the minor parent and minor child, or other living arrangement, not including a public institution, licensed by the commissioner of human services which ensures that the minor parent receives adult supervision and supportive services, such as counseling, guidance, independent living skills training, or supervision.

(b) A minor parent and the minor child who is in the care of the minor parent must reside in the household of a parent, legal guardian, other ~~appropriate~~ adult relative, ~~or other caregiver,~~ or in an adult-supervised supportive living arrangement in order to receive MFIP-S unless:

(1) the minor parent has no living parent, other ~~appropriate~~ adult relative, or legal guardian whose whereabouts is known;

(2) no living parent, other ~~appropriate~~ adult relative, or legal guardian of the minor parent allows the minor parent to live in the parent's, ~~appropriate~~ other adult relative's, or legal guardian's home;

(3) the minor parent lived apart from the minor parent's own parent or legal guardian for a period of at least one year before either the birth of the minor child or the minor parent's application for MFIP-S;

(4) the physical or emotional health or safety of the minor parent or minor child would be jeopardized if the minor parent and the minor child resided in the same residence with the minor parent's parent, other ~~appropriate~~ adult relative, or legal guardian; or

(5) an adult supervised supportive living arrangement is not available for the minor parent and ~~the dependent~~ child in the county in which the minor parent and child currently ~~resides~~ reside. If an adult supervised supportive living arrangement becomes available within the county, the minor parent and child must reside in that arrangement.

(c) Minor applicants must be informed orally and in writing about the eligibility requirements and their rights and obligations under the MFIP-S program. The county must advise the minor of the possible exemptions and specifically ask whether one or more of these exemptions is applicable. If the minor alleges one or more of these exemptions, then the county must assist the minor in obtaining the necessary verifications to determine whether or not these exemptions apply.

(d) If the county worker has reason to suspect that the physical or emotional health or safety of the minor parent or minor child would be jeopardized if they resided with the minor parent's parent, other adult relative, or legal guardian, then the county worker must make a referral to child protective services to determine if paragraph (b), clause (4), applies. A new determination by the county worker is not necessary if one has been made within the last six months, unless there has been a significant change in circumstances which justifies a new referral and determination.

(e) If a minor parent is not living with a parent or, legal guardian, or other adult relative due to paragraph (b), clause (1), (2), or (4), the minor parent must reside, when possible, in a living arrangement that meets the standards of paragraph (a), clause (2).

(f) When a minor parent and minor child live with ~~another~~ a parent, other adult relative, legal guardian, or in an adult-supervised supportive living arrangement, MFIP-S must be paid, when possible, in the form of a protective payment on behalf of the minor parent and minor child ~~in accordance with~~ according to section 256J.39, subdivisions 2 to 4.

Sec. 40. Minnesota Statutes 1997 Supplement, section 256J.15, subdivision 2, is amended to read:

Subd. 2. [ELIGIBILITY DURING LABOR DISPUTES.] To receive assistance ~~under MFIP-S,~~ when a member of an assistance unit ~~who~~ is on strike, or when an individual identified under section 256J.37, subdivisions 1 to 2, whose income and assets must be considered when determining the unit's eligibility is on strike, the assistance unit must have been an receiving MFIP-S ~~participant on the day before the strike,~~ or have been eligible for MFIP-S on the day before the strike.

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The county agency must count the striker's prestrike earnings as current earnings. ~~When~~ A significant change cannot be invoked when a member of an assistance unit, or an individual identified under section 256J.37, subdivisions 1 to 2, is on strike. A member of an assistance unit ~~who~~, or an individual identified under section 256J.37, subdivisions 1 to 2, is not considered a striker when that person is not in the bargaining unit that voted for the strike and does not cross the picket line for fear of personal injury, the assistance unit member is not a striker. Except for a member of an assistance unit who is not in the bargaining unit that voted for the strike and who does not cross the picket line for fear of personal injury, a significant change cannot be invoked as a result of a labor dispute.

Sec. 41. Minnesota Statutes 1997 Supplement, section 256J.20, subdivision 2, is amended to read:

Subd. 2. [REAL PROPERTY LIMITATIONS.] Ownership of real property by an applicant or participant is subject to the limitations in paragraphs (a) and (b).

(a) A county agency shall exclude the homestead of an applicant or participant according to clauses (1) to ~~(4)~~ (5):

(1) an applicant or participant who is purchasing real property through a contract for deed and using that property as a home is considered the owner of real property;

(2) the total amount of land that can be excluded under this subdivision is limited to surrounding property which is not separated from the home by intervening property owned by others. Additional property must be assessed as to its legal and actual availability according to subdivision 1;

(3) when real property that has been used as a home by a participant is sold, the county agency must treat the cash proceeds from the sale as excluded property for six months when the participant intends to reinvest the proceeds in another home and maintains those proceeds, unused for other purposes, in a separate account; ~~and~~

(4) when the homestead is jointly owned, but the client does not reside in it because of legal separation, pending divorce, or battering or abuse by the spouse or partner, the homestead is excluded.; and

(5) the homestead shall continue to be excluded if it is temporarily unoccupied due to employment, illness, or as the result of compliance with a county-approved employability plan. The education, training, or job search must be within the state, but can be outside the immediate geographic area. A homestead temporarily unoccupied because it is not habitable due to a casualty or natural disaster is excluded. The homestead is excluded during periods only if the client intends to return to it.

(b) The equity value of real property that is not excluded under paragraph (a) and which is legally available must be applied against the limits in subdivision 3. When the equity value of the real property exceeds the limits under subdivision 3, the applicant or participant may qualify to receive assistance when the applicant or participant continues to make a good faith effort to sell the property and signs a legally binding agreement to repay the amount of assistance, less child support collected by the agency. Repayment must be made within five working days after the property is sold. Repayment to the county agency must be in the amount of assistance received or the proceeds of the sale, whichever is less.

Sec. 42. Minnesota Statutes 1997 Supplement, section 256J.20, subdivision 3, is amended to read:

Subd. 3. [OTHER PROPERTY LIMITATIONS.] To be eligible for MFIP-S, the equity value of all nonexcluded real and personal property of the assistance unit must not exceed $2,000 for applicants and $5,000 for ongoing ~~recipients~~ participants. The value of assets in clauses (1) to ~~(18)~~ (20) must be excluded when determining the equity value of real and personal property:

(1) a licensed ~~vehicles~~ vehicle up to a ~~total market~~ loan value of less than or equal to $7,500. The county agency shall apply any excess ~~market~~ loan value as if it were equity value to the asset limit described in this section. If the assistance unit owns more than one licensed vehicle, the county agency shall determine the vehicle with the highest ~~market~~ loan value and count only the ~~market~~ loan value over $7,500. The county agency shall count the ~~market~~ loan value of all other vehicles and apply this amount as if it were equity value to the asset limit described in this section. The value of special equipment for a handicapped member of the assistance unit is excluded. To establish the ~~market~~ loan value of vehicles,

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a county agency must use the N.A.D.A. Official Used Car Guide, Midwest Edition, for newer model cars. ~~The N.A.D.A. Official Used Car Guide, Midwest Edition, is incorporated by reference.~~ When a vehicle is not listed in the guidebook, or when the applicant or participant disputes the loan value listed in the guidebook as unreasonable given the condition of the particular vehicle, the county agency may require the applicant or participant to document the loan value by securing a written statement from a motor vehicle dealer licensed under section 168.27, stating the amount that the dealer would pay to purchase the vehicle. The county agency shall reimburse the applicant or participant for the cost of a written statement that documents a lower loan value;

(2) the value of life insurance policies for members of the assistance unit;

(3) one burial plot per member of an assistance unit;

(4) the value of personal property needed to produce earned income, including tools, implements, farm animals, inventory, business loans, business checking and savings accounts used at least annually and used exclusively for the operation of a self-employment business, and any motor vehicles if the vehicles are essential for the self-employment business;

(5) the value of personal property not otherwise specified which is commonly used by household members in day-to-day living such as clothing, necessary household furniture, equipment, and other basic maintenance items essential for daily living;

(6) the value of real and personal property owned by a recipient of Supplemental Security Income or Minnesota supplemental aid;

(7) the value of corrective payments, but only for the month in which the payment is received and for the following month;

(8) a mobile home used by an applicant or participant as the applicant's or participant's home;

(9) money in a separate escrow account that is needed to pay real estate taxes or insurance and that is used for this purpose;

(10) money held in escrow to cover employee FICA, employee tax withholding, sales tax withholding, employee worker compensation, business insurance, property rental, property taxes, and other costs that are paid at least annually, but less often than monthly;

(11) monthly assistance ~~and~~, emergency assistance, and diversionary payments for the current month's needs;

(12) the value of school loans, grants, or scholarships for the period they are intended to cover;

(13) payments listed in section 256J.21, subdivision 2, clause (9), which are held in escrow for a period not to exceed three months to replace or repair personal or real property;

(14) income received in a budget month through the end of the ~~budget~~ payment month;

(15) savings from earned income of a minor child or a minor parent that are set aside in a separate account designated specifically for future education or employment costs;

(16) the federal earned income ~~tax~~ credit ~~and~~, Minnesota working family credit, state and federal income tax refunds, state homeowners and renters credits under chapter 290A, property tax rebates under Laws 1997, chapter 231, article 1, section 16, and other federal or state tax rebates in the month received and the following month;

(17) payments excluded under federal law as long as those payments are held in a separate account from any nonexcluded funds; ~~and~~

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(18) money received by a participant of the corps to career program under section 84.0887, subdivision 2, paragraph (b), as a postservice benefit under the federal Americorps Act;

(19) the assets of children ineligible to receive MFIP-S benefits because foster care or adoption assistance payments are made on their behalf; and

(20) the assets of persons whose income is excluded under section 256J.21, subdivision 2, clause 43.

Sec. 43. Minnesota Statutes 1997 Supplement, section 256J.21, is amended to read:

256J.21 [INCOME LIMITATIONS.]

Subdivision 1. [INCOME INCLUSIONS.] To determine MFIP-S eligibility, the county agency must evaluate income received by members of an assistance unit, or by other persons whose income is considered available to the assistance unit, and only count income that is available to the member of the assistance unit. Income is available if the individual has legal access to the income. All payments, unless specifically excluded in subdivision 2, must be counted as income.

Subd. 2. [INCOME EXCLUSIONS.] (a) The following must be excluded in determining a family's available income:

(1) payments for basic care, difficulty of care, and clothing allowances received for providing family foster care to children or adults under Minnesota Rules, parts 9545.0010 to 9545.0260 and 9555.5050 to 9555.6265, and payments received and used for care and maintenance of a third-party beneficiary who is not a household member;

(2) reimbursements for employment training received through the Job Training Partnership Act, United States Code, title 29, chapter 19, sections 1501 to 1792b;

(3) reimbursement for out-of-pocket expenses incurred while performing volunteer services, jury duty, or employment;

(4) all educational assistance, except the county agency must count graduate student teaching assistantships, fellowships, and other similar paid work as earned income and, after allowing deductions for any unmet and necessary educational expenses, shall count scholarships or grants awarded to graduate students that do not require teaching or research as unearned income;

(5) loans, regardless of purpose, from public or private lending institutions, governmental lending institutions, or governmental agencies;

(6) loans from private individuals, regardless of purpose, provided an applicant or participant documents that the lender expects repayment;

(7)(i) state ~~and federal~~ income tax refunds; and

(ii) federal income tax refunds;

(8)(i) ~~state and~~ federal earned income credits;

(ii) Minnesota working family credits;

(iii) state homeowners and renters credits under chapter 290A;

(iv) property tax rebates under Laws 1997, chapter 231, article 1, section 16; and

(v) other federal or state tax rebates;

(9) funds received for reimbursement, replacement, or rebate of personal or real property when these payments are made by public agencies, awarded by a court, solicited through public appeal, or made as a grant by a federal agency, state or local government, or disaster assistance organizations, subsequent to a presidential declaration of disaster;

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(10) the portion of an insurance settlement that is used to pay medical, funeral, and burial expenses, or to repair or replace insured property;

(11) reimbursements for medical expenses that cannot be paid by medical assistance;

(12) payments by a vocational rehabilitation program administered by the state under chapter 268A, except those payments that are for current living expenses;

(13) in-kind income, including any payments directly made by a third party to a provider of goods and services;

(14) assistance payments to correct underpayments, but only for the month in which the payment is received;

(15) emergency assistance payments;

(16) funeral and cemetery payments as provided by section 256.935;

(17) nonrecurring cash gifts of $30 or less, not exceeding $30 per participant in a calendar month;

(18) any form of energy assistance payment made through Public Law Number 97-35, Low-Income Home Energy Assistance Act of 1981, payments made directly to energy providers by other public and private agencies, and any form of credit or rebate payment issued by energy providers;

(19) Supplemental Security Income, including retroactive payments;

(20) Minnesota supplemental aid, including retroactive payments;

(21) proceeds from the sale of real or personal property;

(22) adoption assistance payments under section 259.67;

(23) state-funded family subsidy program payments made under section 252.32 to help families care for children with mental retardation or related conditions;

(24) interest payments and dividends from property that is not excluded from and that does not exceed the asset limit;

(25) rent rebates;

(26) income earned by a minor caregiver or minor child who is at least a half-time student in an approved secondary education program;

(27) income earned by a caregiver under age 20 who is at least a half-time student in an approved secondary education program;

(28) MFIP-S child care payments under section 119B.05;

(29) all other payments made through MFIP-S to support a caregiver's pursuit of greater self-support;

(30) income a participant receives related to shared living expenses;

(31) reverse mortgages;

(32) benefits provided by the Child Nutrition Act of 1966, United States Code, title 42, chapter 13A, sections 1771 to 1790;

(33) benefits provided by the women, infants, and children (WIC) nutrition program, United States Code, title 42, chapter 13A, section 1786;

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(34) benefits from the National School Lunch Act, United States Code, title 42, chapter 13, sections 1751 to 1769e;

(35) relocation assistance for displaced persons under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, United States Code, title 42, chapter 61, subchapter II, section 4636, or the National Housing Act, United States Code, title 12, chapter 13, sections 1701 to 1750jj;

(36) benefits from the Trade Act of 1974, United States Code, title 19, chapter 12, part 2, sections 2271 to 2322;

(37) war reparations payments to Japanese Americans and Aleuts under United States Code, title 50, sections 1989 to 1989d;

(38) payments to veterans or their dependents as a result of legal settlements regarding Agent Orange or other chemical exposure under Public Law Number 101-239, section 10405, paragraph (a)(2)(E);

(39) income that is otherwise specifically excluded from the MFIP-S program consideration in federal law, state law, or federal regulation;

(40) security and utility deposit refunds;

(41) American Indian tribal land settlements excluded under Public Law Numbers 98-123, 98-124, and 99-377 to the Mississippi Band Chippewa Indians of White Earth, Leech Lake, and Mille Lacs reservations and payments to members of the White Earth Band, under United States Code, title 25, chapter 9, section 331, and chapter 16, section 1407;

(42) all income of the minor parent's parent and stepparent when determining the grant for the minor parent in households that include a minor parent living with a parent or stepparent on MFIP-S with other ~~dependent~~ children; and

(43) income of the minor parent's parent and stepparent equal to 200 percent of the federal poverty guideline for a family size not including the minor parent and the minor parent's child in households that include a minor parent living with a parent or stepparent not on MFIP-S when determining the grant for the minor parent. The remainder of income is deemed as specified in section 256J.37, subdivision 1 1b;

(44) payments made to children eligible for relative custody assistance under section 257.85;

(45) vendor payments for goods and services made on behalf of a client unless the client has the option of receiving the payment in cash; and

(46) the principal portion of a contract for deed payment.

Subd. 3. [INITIAL INCOME TEST.] The county agency shall determine initial eligibility by considering all earned and unearned income that is not excluded under subdivision 2. To be eligible for MFIP-S, the assistance unit's countable income minus the disregards in paragraphs (a) and (b) must be below the transitional standard of assistance according to section 256J.24 for that size assistance unit.

(a) The initial eligibility determination must disregard the following items:

(1) the employment disregard is 18 percent of the gross earned income whether or not the member is working full time or part time;

(2) dependent care costs must be deducted from gross earned income for the actual amount paid for dependent care up to ~~the~~ a maximum ~~disregard allowed~~ of $200 per month for each child less than two years of age, and $175 per month for each child two years of age and older under this chapter and chapter 119B; ~~and~~

(3) all payments made according to a court order for spousal support or the support of children not living in the assistance unit's household shall be disregarded from the income of the person with the legal obligation to pay support, provided that, if there has been a change in the financial circumstances of the person with the legal obligation to pay support since the support order was entered, the person with the legal obligation to pay support has petitioned for a modification of the support order; and

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(4) an allocation for the unmet need of an ineligible spouse or an ineligible child under the age of 21 for whom the caregiver is financially responsible and who lives with the caregiver according to section 256J.36.

(b) Notwithstanding paragraph (a), when determining initial eligibility for ~~applicants who have~~ applicant units when at least one member has received AFDC, family general assistance, MFIP, MFIP-R, work first, or MFIP-S in this state within four months of the most recent application for MFIP-S, the employment disregard for all unit members is 36 percent of the gross earned income.

After initial eligibility is established, the assistance payment calculation is based on the monthly income test.

Subd. 4. [MONTHLY INCOME TEST AND DETERMINATION OF ASSISTANCE PAYMENT.] The county agency shall determine ongoing eligibility and the assistance payment amount according to the monthly income test. To be eligible for MFIP-S, the result of the computations in paragraphs (a) to (e) must be at least $1.

(a) Apply a 36 percent income disregard to gross earnings and subtract this amount from the family wage level. If the difference is equal to or greater than the transitional standard, the assistance payment is equal to the transitional standard. If the difference is less than the transitional standard, the assistance payment is equal to the difference. The employment disregard in this paragraph must be deducted every month there is earned income.

(b) All payments made according to a court order for spousal support or the support of children not living in the assistance unit's household must be disregarded from the income of the person with the legal obligation to pay support, provided that, if there has been a change in the financial circumstances of the person with the legal obligation to pay support since the support order was entered, the person with the legal obligation to pay support has petitioned for a modification of the court order.

(c) An allocation for the unmet need of an ineligible spouse or an ineligible child under the age of 21 for whom the caregiver is financially responsible and who lives with the caregiver must be made according to section 256J.36.

(d) Subtract unearned income dollar for dollar from the transitional standard to determine the assistance payment amount.

~~(d)~~ (e) When income is both earned and unearned, the amount of the assistance payment must be determined by first treating gross earned income as specified in paragraph (a). After determining the amount of the assistance payment under paragraph (a), unearned income must be subtracted from that amount dollar for dollar to determine the assistance payment amount.

~~(e)~~ (f) When the monthly income is greater than the transitional or family wage level standard after applicable deductions and the income will only exceed the standard for one month, the county agency must suspend the assistance payment for the payment month.

Subd. 5. [DISTRIBUTION OF INCOME.] The income of all members of the assistance unit must be counted. Income may also be deemed from ineligible persons to the assistance unit. Income must be attributed to the person who earns it or to the assistance unit according to paragraphs (a) to (c).

(a) Funds distributed from a trust, whether from the principal holdings or sale of trust property or from the interest and other earnings of the trust holdings, must be considered income when the income is legally available to an applicant or participant. Trusts are presumed legally available unless an applicant or participant can document that the trust is not legally available.

(b) Income from jointly owned property must be divided equally among property owners unless the terms of ownership provide for a different distribution.

(c) Deductions are not allowed from the gross income of a financially responsible household member or by the members of an assistance unit to meet a current or prior debt.

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Sec. 44. Minnesota Statutes 1997 Supplement, section 256J.24, subdivision 1, is amended to read:

Subdivision 1. [MFIP-S ASSISTANCE UNIT.] An MFIP-S assistance unit is either a group of individuals with at least one minor child who live together whose needs, assets, and income are considered together and who receive MFIP-S assistance, or a pregnant woman and her spouse who ~~receives~~ receive MFIP-S assistance.

Individuals identified in subdivision 2 must be included in the MFIP-S assistance unit. Individuals identified in subdivision 3 ~~must be excluded from the assistance unit~~ are ineligible to receive MFIP-S. Individuals identified in subdivision 4 may be included in the assistance unit at their option. Individuals not included in the assistance unit who are identified in section 256J.37, ~~subdivision~~ subdivisions 1 or to 2, must have their income and assets considered when determining eligibility and benefits for an MFIP-S assistance unit. All assistance unit members, whether mandatory or elective, who live together and for whom one caregiver or two caregivers apply must be included in a single assistance unit.

Sec. 45. Minnesota Statutes 1997 Supplement, section 256J.24, subdivision 2, is amended to read:

Subd. 2. [MANDATORY ASSISTANCE UNIT COMPOSITION.] Except for minor caregivers and their children who ~~are~~ must be in a separate assistance unit from the other persons in the household, when the following individuals live together, they must be included in the assistance unit:

(1) a minor child, including a pregnant minor;

(2) the minor child's siblings, half-siblings, and step-siblings; ~~and~~

(3) the minor child's natural, adoptive parents, and stepparents; and

(4) the spouse of a pregnant woman.

Sec. 46. Minnesota Statutes 1997 Supplement, section 256J.24, subdivision 3, is amended to read:

Subd. 3. [INDIVIDUALS WHO MUST BE EXCLUDED FROM AN ASSISTANCE UNIT.] (a) The following individuals ~~must be excluded from an assistance unit~~ who are part of the assistance unit determined under subdivision 2 are ineligible to receive MFIP-S:

(1) individuals receiving Supplemental Security Income or Minnesota supplemental aid;

(2) individuals living at home while performing court-imposed, unpaid community service work due to a criminal conviction;

(3) individuals disqualified from the food stamp program or MFIP-S, until the disqualification ends;

(4) children on whose behalf federal, state or local foster care payments ~~under title IV-E of the Social Security Act~~ are made, except as provided in ~~section~~ sections 256J.13, subdivision 2, and 256J.74, subdivision 2; and

(5) children receiving ongoing monthly adoption assistance payments under section ~~269.67~~ 259.67.

(b) The exclusion of a person under this subdivision does not alter the mandatory assistance unit composition.

Sec. 47. Minnesota Statutes 1997 Supplement, section 256J.24, subdivision 4, is amended to read:

Subd. 4. [INDIVIDUALS WHO MAY ELECT TO BE INCLUDED IN THE ASSISTANCE UNIT.] (a) The minor child's eligible caregiver may choose to be in the assistance unit, if the caregiver is not required to be in the assistance unit under subdivision 2. If the ~~relative~~ eligible caregiver chooses to be in the assistance unit, that person's spouse must also be in the unit.

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(b) Any minor child not related as a sibling, stepsibling, or adopted sibling to the minor child in the unit, but for whom there is an eligible caregiver may elect to be in the unit.

(c) A foster care provider of a minor child who is receiving federal, state, or local foster care maintenance payments may elect to receive MFIP-S if the provider meets the definition of caregiver under section 256J.08, subdivision 11. If the provider chooses to receive MFIP-S, the spouse of the provider must also be included in the assistance unit with the provider. The provider and spouse are eligible for assistance even if the only minor child living in the provider's home is receiving foster care maintenance payments.

(d) The adult caregiver or caregivers of a minor parent are eligible to be a separate assistance unit from the minor parent and the minor parent's child when:

(1) the adult caregiver or caregivers have no other minor children in the household;

(2) the minor parent and the minor parent's child are living together with the adult caregiver or caregivers; and

(3) the minor parent and the minor parent's child receive MFIP-S, or would be eligible to receive MFIP-S, if they were not receiving SSI benefits.

Sec. 48. Minnesota Statutes 1997 Supplement, section 256J.24, is amended by adding a subdivision to read:

Subd. 5a. [FOOD PORTION OF MFIP-S TRANSITIONAL STANDARD.] The commissioner shall adjust the food portion of the MFIP-S transitional standard by October 1 each year beginning October 1998 to reflect the cost-of-living adjustments to the Food Stamp Program. The commissioner shall annually publish in the State Register the transitional standard for an assistance unit of sizes 1 to 10.

Sec. 49. Minnesota Statutes 1997 Supplement, section 256J.24, subdivision 7, is amended to read:

Subd. 7. [FAMILY WAGE LEVEL STANDARD.] The family wage level standard is 110 percent of the transitional standard under subdivision 5 and is the standard used when there is earned income in the assistance unit. As specified in section 256J.21, earned income is subtracted from the family wage level to determine the amount of the assistance payment. Assistance payments may not exceed the shared household standard or the transitional standard for the assistance unit, whichever is less.

Sec. 50. Minnesota Statutes 1997 Supplement, section 256J.24, is amended by adding a subdivision to read:

Subd. 8. [ASSISTANCE PAID TO ELIGIBLE ASSISTANCE UNITS.] Payments for shelter up to the amount of the cash portion of MFIP-S benefits for which the assistance unit is eligible shall be vendor paid for as many months as the assistance unit is eligible or six months, whichever comes first. The residual amount of the grant after vendor payment, if any, must be paid to the MFIP-S caregiver.

Sec. 51. Minnesota Statutes 1997 Supplement, section 256J.24, is amended by adding a subdivision to read:

Subd. 9. [SHARED HOUSEHOLD STANDARD; MFIP-S.] (a) Except as prohibited in paragraph (b), the county agency must use the shared household standard when the household includes one or more unrelated members, as that term is defined in section 256J.08, subdivision 86a. The county agency must use the shared household standard, unless a member of the assistance unit is a victim of domestic violence and has an approved safety plan, regardless of the number of unrelated members in the household.

(b) The county agency must not use the shared household standard when all unrelated members are one of the following:

(1) a recipient of public assistance benefits, including food stamps, Supplemental Security Income, adoption assistance, relative custody assistance, or foster care payments;

(2) a roomer or boarder, or a person to whom the assistance unit is paying room or board;

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(3) a minor;

(4) a minor caregiver living with the minor caregiver's parents or in an approved supervised living arrangement; or

(5) a caregiver who is not the parent of the minor child in the assistance unit.

(c) The shared household standard must be discontinued if it is not approved by the United States Department of Agriculture under the MFIP-S waiver.

Sec. 52. Minnesota Statutes 1997 Supplement, section 256J.26, subdivision 1, is amended to read:

Subdivision 1. [PERSON CONVICTED OF DRUG OFFENSES.] (a) Applicants or ~~recipients~~ participants who have been convicted of a drug offense after July 1, 1997, may, if otherwise eligible, receive AFDC or MFIP-S benefits subject to the following conditions:

(1) Benefits for the entire assistance unit must be paid in vendor form for shelter and utilities during any time the applicant is part of the assistance unit;.

(2) The convicted applicant or ~~recipient~~ participant shall be subject to random drug testing as a condition of continued eligibility and ~~is subject to sanctions under section 256J.46~~ following any positive test for an illegal controlled substance~~, except that the grant must continue to be vendor paid under clause (1).~~

~~For purposes of this subdivision, section 256J.46 is effective July 1, 1997.~~

~~This subdivision also applies to persons who receive food stamps under section 115 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.~~ is subject to the following sanctions:

(i) for failing a drug test the first time, the participant's grant shall be reduced by ten percent of the MFIP-S transitional standard, the shared household standard, or the interstate transitional standard, whichever is applicable prior to making vendor payments for shelter and utility costs; or

(ii) for failing a drug test two or more times, the residual amount of the participant's grant after making vendor payments for shelter and utility costs, if any, must be reduced by an amount equal to 30 percent of the MFIP-S transitional standard, the shared household standard, or the interstate transitional standard, whichever is applicable.

(b) Applicants or participants who have been convicted of a drug offense after July 1, 1997, may, if otherwise eligible, receive food stamps if the convicted applicant or participant is subject to random drug testing as a condition of continued eligibility. Following a positive test for an illegal controlled substance, the applicant is subject to the following sanctions:

(1) for failing a drug test the first time, food stamps shall be reduced by ten percent of the applicable food stamp allotment; and

(2) for failing a drug test two or more times, food stamps shall be reduced by an amount equal to 30 percent of the applicable food stamp allotment.

~~(b)~~ (c) For the purposes of this subdivision, "drug offense" means a conviction that occurred after July 1, 1997, of sections 152.021 to 152.025, 152.0261, or 152.096. Drug offense also means a conviction in another jurisdiction of the possession, use, or distribution of a controlled substance, or conspiracy to commit any of these offenses, if the offense occurred after July 1, 1997, and the conviction is a felony offense in that jurisdiction, or in the case of New Jersey, a high misdemeanor.

Sec. 53. Minnesota Statutes 1997 Supplement, section 256J.26, subdivision 2, is amended to read:

Subd. 2. [PAROLE VIOLATORS.] An individual violating a condition of probation or parole or supervised release imposed under federal law or the law of any state is ~~ineligible to receive~~ disqualified from receiving AFDC or MFIP-S.

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Sec. 54. Minnesota Statutes 1997 Supplement, section 256J.26, subdivision 3, is amended to read:

Subd. 3. [FLEEING FELONS.] An individual who is fleeing to avoid prosecution, or custody, or confinement after conviction for a crime that is a felony under the laws of the jurisdiction from which the individual flees, or in the case of New Jersey, is a high misdemeanor, is ~~ineligible to receive~~ disqualified from receiving AFDC or MFIP-S.

Sec. 55. Minnesota Statutes 1997 Supplement, section 256J.26, subdivision 4, is amended to read:

Subd. 4. [DENIAL OF ASSISTANCE FOR TEN YEARS TO A PERSON FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCY.] An individual who is convicted in federal or state court of having made a fraudulent statement or representation with respect to the place of residence of the individual in order to receive assistance simultaneously from two or more states is ~~ineligible to receive~~ disqualified from receiving AFDC or MFIP-S for ten years beginning on the date of the conviction.

Sec. 56. Minnesota Statutes 1997 Supplement, section 256J.28, subdivision 1, is amended to read:

Subdivision 1. [EXPEDITED ISSUANCE OF FOOD STAMP ASSISTANCE.] The following households are entitled to expedited issuance of food stamp assistance:

(1) households with less than $150 in monthly gross income provided their liquid assets do not exceed $100;

(2) migrant or seasonal farm worker households who are destitute as defined in Code of Federal Regulations, title 7, subtitle B, chapter 2, subchapter C, part 273, section 273.10, paragraph (e)(3), provided their liquid assets do not exceed $100; and

(3) eligible households whose combined monthly gross income and liquid resources are less than the household's monthly rent or mortgage and utilities.

The benefits issued through expedited issuance of food stamp assistance must be deducted from the amount of the full monthly MFIP-S assistance payment and a supplemental payment for the difference must be issued. For any month an individual receives expedited Food Stamp Program benefits, the individual is not eligible for the MFIP-S food portion of assistance.

Sec. 57. Minnesota Statutes 1997 Supplement, section 256J.28, subdivision 2, is amended to read:

Subd. 2. [FOOD STAMPS FOR HOUSEHOLD MEMBERS NOT IN THE ASSISTANCE UNIT.] (a) For household members who purchase and prepare food with the MFIP-S assistance unit but are not part of the assistance unit, the county agency must determine a separate food stamp benefit based on regulations agreed upon with the United States Department of Agriculture.

~~(b) This subdivision does not apply to optional members who have chosen not to be in the assistance unit.~~

~~(c)~~ (b) Fair hearing requirements for persons who receive food stamps under this subdivision are governed by section 256.045, and Code of Federal Regulations, title 7, subtitle B, chapter II, part 273, section 273.15.

Sec. 58. Minnesota Statutes 1997 Supplement, section 256J.28, is amended by adding a subdivision to read:

Subd. 5. [FOOD STAMPS FOR PERSONS RESIDING IN A BATTERED WOMAN'S SHELTER.] Members of an MFIP-S assistance unit residing in a battered woman's shelter may receive food stamps or the food portion twice in a month if the unit that initially received the food stamps or food portion included the alleged abuser.

Sec. 59. Minnesota Statutes 1997 Supplement, section 256J.30, subdivision 10, is amended to read:

Subd. 10. [COOPERATION WITH HEALTH CARE BENEFITS.] (a) The caregiver of a minor child must cooperate with the county agency to identify and provide information to assist the county agency in pursuing third-party liability for medical services.

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(b) A caregiver must assign to the department any rights to health insurance policy benefits the caregiver has during the period of MFIP-S eligibility.

(c) A caregiver must identify any third party who may be liable for care and services available under the medical assistance program on behalf of the applicant or participant and all other assistance unit members.

(d) When a participant refuses to identify any third party who may be liable for care and services, the recipient must be sanctioned as provided in section 256J.46, subdivision 1. The recipient is also ineligible for medical assistance ~~for a minimum of one month and~~ until the recipient cooperates with the requirements of this subdivision.

Sec. 60. Minnesota Statutes 1997 Supplement, section 256J.30, subdivision 11, is amended to read:

Subd. 11. [REQUIREMENT TO ASSIGN SUPPORT AND MAINTENANCE RIGHTS.] ~~To be eligible~~ An assistance unit is ineligible for MFIP-S, unless the caregiver ~~must assign~~ assigns all rights to child support and spousal maintenance benefits according to ~~sections 256.74, subdivision 5, and~~ section 256.741~~, if enacted~~.

Sec. 61. Minnesota Statutes 1997 Supplement, section 256J.31, subdivision 5, is amended to read:

Subd. 5. [MAILING OF NOTICE.] The notice of adverse action shall be issued according to paragraphs (a) to (c).

(a) A county agency shall mail a notice of adverse action at least ten days before the effective date of the adverse action, except as provided in paragraphs (b) and (c).

(b) A county agency must mail a notice of adverse action at least five days before the effective date of the adverse action when the county agency has factual information that requires an action to reduce, suspend, or terminate assistance based on probable fraud.

(c) A county agency shall mail a notice of adverse action before or on the effective date of the adverse action when the county agency:

(1) receives the caregiver's signed monthly MFIP-S household report form that includes information that requires payment reduction, suspension, or termination;

(2) is informed of the death of a participant or the payee;

(3) receives a signed statement from the caregiver that assistance is no longer wanted;

(4) receives a signed statement from the caregiver that provides information that requires the termination or reduction of assistance;

(5) verifies that a member of the assistance unit is absent from the home and does not meet temporary absence provisions in section 256J.13;

(6) verifies that a member of the assistance unit has entered a regional treatment center or a licensed residential facility for medical or psychological treatment or rehabilitation;

(7) verifies that a member of an assistance unit has been placed in foster care, and the provisions of section 256J.13, subdivision 2, paragraph ~~(b)~~ (c), clause (2), do not apply;

(8) verifies that a member of an assistance unit has been approved to receive assistance by another state; or

(9) cannot locate a caregiver.

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Sec. 62. Minnesota Statutes 1997 Supplement, section 256J.31, subdivision 10, is amended to read:

Subd. 10. [PROTECTION FROM GARNISHMENT.] MFIP-S grants or earnings of a caregiver ~~while participating in full or part-time employment or training~~ shall be protected from garnishment. This protection for earnings shall extend for a period of six months from the date of termination from MFIP-S.

Sec. 63. Minnesota Statutes 1997 Supplement, section 256J.31, is amended by adding a subdivision to read:

Subd. 12. [RIGHT TO DISCONTINUE CASH ASSISTANCE.] A participant may discontinue receipt of the cash assistance portion of MFIP-S assistance and retain eligibility for child care assistance under section 119B.05 and for medical assistance under sections 256B.055, subdivision 3a, and 256B.0635.

Sec. 64. Minnesota Statutes 1997 Supplement, section 256J.32, subdivision 4, is amended to read:

Subd. 4. [FACTORS TO BE VERIFIED.] The county agency shall verify the following at application:

(1) identity of adults;

(2) presence of the minor child in the home, if questionable;

(3) relationship of a minor child to caregivers in the assistance unit;

(4) age, if necessary to determine MFIP-S eligibility;

(5) immigration status;

(6) social security number ~~in accordance with~~ according to the requirements of section 256J.30, subdivision 12;

(7) income;

(8) self-employment expenses used as a deduction;

(9) source and purpose of deposits and withdrawals from business accounts;

(10) spousal support and child support payments made to persons outside the household;

(11) real property;

(12) vehicles;

(13) checking and savings accounts;

(14) savings certificates, savings bonds, stocks, and individual retirement accounts;

(15) pregnancy, if related to eligibility;

(16) inconsistent information, if related to eligibility;

(17) medical insurance;

(18) anticipated graduation date of an 18-year-old;

(19) burial accounts;

(20) school attendance, if related to eligibility; ~~and~~

(21) residence;

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(22) a claim of domestic violence if used as a basis for a deferral or exemption from the 60-month time limit in section 256J.42 or employment and training services requirements in section 256J.56; and

(23) disability if used as an exemption from employment and training services requirements under section 256J.56.

Sec. 65. Minnesota Statutes 1997 Supplement, section 256J.32, subdivision 6, is amended to read:

Subd. 6. [RECERTIFICATION.] The county agency shall recertify eligibility in an annual face-to-face interview with the participant and verify the following:

(1) presence of the minor child in the home, if questionable;

(2) income, unless excluded, including self-employment expenses used as a deduction or deposits or withdrawals from business accounts;

(3) assets when the value is within $200 of the asset limit; and

(4) inconsistent information, if related to eligibility.

Sec. 66. Minnesota Statutes 1997 Supplement, section 256J.32, is amended by adding a subdivision to read:

Subd. 7. [NOTICE TO UNDOCUMENTED PERSONS; RELEASE OF PRIVATE DATA.] County agencies in consultation with the commissioner of human services shall provide notification to undocumented persons regarding the release of personal data to the Immigration and Naturalization Service and develop protocol regarding the release or sharing of data about undocumented persons with the Immigration and Naturalization Service as required under sections 404, 434, and 411A of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Sec. 67. Minnesota Statutes 1997 Supplement, section 256J.33, subdivision 1, is amended to read:

Subdivision 1. [DETERMINATION OF ELIGIBILITY.] A county agency must determine MFIP-S eligibility prospectively for a payment month based on retrospectively assessing income and the county agency's best estimate of the circumstances that will exist in the payment month.

Except as described in section 256J.34, subdivision 1, when prospective eligibility exists, a county agency must calculate the amount of the assistance payment using retrospective budgeting. To determine MFIP-S eligibility and the assistance payment amount, a county agency must apply countable income, described in section 256J.37, subdivisions 3 to 10, received by members of an assistance unit or by other persons whose income is counted for the assistance unit, described under sections 256J.21 and 256J.37, subdivisions 1 ~~and~~ to 2.

This income must be applied to the transitional standard, shared household standard, or family wage standard subject to this section and sections 256J.34 to 256J.36. Income received in a calendar month and not otherwise excluded under section 256J.21, subdivision 2, must be applied to the needs of an assistance unit.

Sec. 68. Minnesota Statutes 1997 Supplement, section 256J.33, subdivision 4, is amended to read:

Subd. 4. [MONTHLY INCOME TEST.] A county agency must apply the monthly income test retrospectively for each month of MFIP-S eligibility. An assistance unit is not eligible when the countable income equals or exceeds the transitional standard, the shared household standard, or the family wage level for the assistance unit. The income applied against the monthly income test must include:

(1) gross earned income from employment, prior to mandatory payroll deductions, voluntary payroll deductions, wage authorizations, and after the disregards in section 256J.21, subdivision 3 4, and the allocations in section 256J.36, unless the employment income is specifically excluded under section 256J.21, subdivision 2;

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(2) gross earned income from self-employment less deductions for self-employment expenses in section 256J.37, subdivision 5, but prior to any reductions for personal or business state and federal income taxes, personal FICA, personal health and life insurance, and after the disregards in section 256J.21, subdivision 3 4, and the allocations in section 256J.36;

(3) unearned income after deductions for allowable expenses in section 256J.37, subdivision 9, and allocations in section 256J.36, unless the income has been specifically excluded in section 256J.21, subdivision 2;

(4) gross earned income from employment as determined under clause (1) which is received by a member of an assistance unit who is a minor child or minor caregiver and less than a half-time student;

(5) child support and spousal support received or anticipated to be received by an assistance unit;

(6) the income of a parent when that parent is not included in the assistance unit;

(7) the income of an eligible relative and spouse who seek to be included in the assistance unit; and

(8) the unearned income of a minor child included in the assistance unit.

Sec. 69. Minnesota Statutes 1997 Supplement, section 256J.35, is amended to read:

256J.35 [AMOUNT OF ASSISTANCE PAYMENT.]

Except as provided in paragraphs (a) to ~~(c)~~ (d), the amount of an assistance payment is equal to the difference between the transitional standard, shared household standard, or the Minnesota family wage level in section 256J.24, whichever is less, and countable income.

(a) When MFIP-S eligibility exists for the month of application, the amount of the assistance payment for the month of application must be prorated from the date of application or the date all other eligibility factors are met for that applicant, whichever is later. This provision applies when an applicant loses at least one day of MFIP-S eligibility.

(b) MFIP-S overpayments to an assistance unit must be recouped according to section 256J.38, subdivision 4.

(d) An individual whose needs have been otherwise provided for in another state, in whole or in part by county, state, or federal dollars during a month, is ineligible to receive MFIP-S for the month.

Sec. 70. Minnesota Statutes 1997 Supplement, section 256J.36, is amended to read:

256J.36 [ALLOCATION FOR UNMET NEED OF OTHER HOUSEHOLD MEMBERS.]

Except as prohibited in paragraphs (a) and (b), an allocation of income is allowed from the caregiver's income to meet the unmet need of an ineligible spouse or an ineligible child under the age of 21 for whom the caregiver is financially responsible who also lives with the caregiver. ~~An allocation is allowed from the caregiver's income to meet the need of an ineligible or excluded person.~~ That allocation is allowed in an amount up to the difference between the MFIP-S ~~family allowance~~ transitional standard for the assistance unit when that ~~excluded or~~ ineligible person is included in the assistance unit and the MFIP-S family allowance for the assistance unit when the ~~excluded or~~ ineligible person is not included in the assistance unit. These allocations must be deducted from the caregiver's counted earnings and from unearned income subject to paragraphs (a) and (b).

(a) Income of a minor child in the assistance unit must not be allocated to meet the need of a an ineligible person ~~who is not a member of the assistance unit~~, including the child's parent, even when that parent is the payee of the child's income.

(b) Income of ~~an assistance unit~~ a caregiver must not be allocated to meet the needs of a disqualified person ineligible for failure to cooperate with program requirements including child support requirements, a person ineligible due to fraud, or a relative caregiver and the caregiver's spouse who opt out of the assistance unit.

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Sec. 71. Minnesota Statutes 1997 Supplement, section 256J.37, subdivision 1, is amended to read:

Subdivision 1. [DEEMED INCOME FROM INELIGIBLE HOUSEHOLD MEMBERS.] Unless otherwise provided under subdivision 1a or 1b, the income of ineligible household members must be deemed after allowing the following disregards:

(1) the first 18 percent of the ~~excluded~~ ineligible family member's gross earned income;

(2) amounts the ineligible person actually paid to individuals not living in the same household but whom the ineligible person claims or could claim as dependents for determining federal personal income tax liability;

(3) ~~child or spousal support paid to a person who lives outside of the household~~ all payments made by the ineligible person according to a court order for spousal support or the support of children not living in the assistance unit's household, provided that, if there has been a change in the financial circumstances of the ineligible person since the support order was entered, the ineligible person has petitioned for a modification of the support order; and

(4) an amount for the needs of the ineligible person and other persons who live in the household but are not included in the assistance unit and are or could be claimed by an ineligible person as dependents for determining federal personal income tax liability. This amount is equal to the difference between the MFIP-S ~~need~~ transitional standard when the ~~excluded~~ ineligible person is included in the assistance unit and the MFIP-S ~~need~~ transitional standard when the ~~excluded~~ ineligible person is not included in the assistance unit.

Sec. 72. Minnesota Statutes 1997 Supplement, section 256J.37, is amended by adding a subdivision to read:

Subd. 1a. [DEEMED INCOME FROM DISQUALIFIED MEMBERS.] The income of disqualified members must be deemed after allowing the following disregards:

(1) the first 18 percent of the disqualified member's gross earned income;

(2) amounts the disqualified member actually paid to individuals not living in the same household but whom the disqualified member claims or could claim as dependents for determining federal personal income tax liability;

(3) all payments made by the disqualified member according to a court order for spousal support or the support of children not living in the assistance unit's household, provided that, if there has been a change in the financial circumstances of the disqualified member's legal obligation to pay support since the support order was entered, the disqualified member has petitioned for a modification of the support order; and

(4) an amount for the needs of other persons who live in the household but are not included in the assistance unit and are or could be claimed by the disqualified member as dependents for determining federal personal income tax liability. This amount is equal to the difference between the MFIP-S transitional standard when the ineligible person is included in the assistance unit and the MFIP-S transitional standard when the ineligible person is not included in the assistance unit. An amount shall not be allowed for the needs of a disqualified member.

Sec. 73. Minnesota Statutes 1997 Supplement, section 256J.37, is amended by adding a subdivision to read:

Subd. 1b. [DEEMED INCOME FROM PARENTS OF MINOR CAREGIVERS.] In households where minor caregivers live with a parent or parents who do not receive MFIP-S, the income of the parents must be deemed after allowing the following disregards:

(1) income of the parents equal to 200 percent of the federal poverty guideline for a family size not including the minor parent and the minor parent's child in the household according to section 256J.21, subdivision 2, clause (43);

(2) 18 percent of the parents' gross earned income;

(3) amounts the parents actually paid to individuals not living in the same household but whom the parents claim or could claim as dependents for determining federal personal income tax liability; and

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(4) all payments made by parents according to a court order for spousal support or the support of children not living in the parent's household, provided that, if there has been a change in the financial circumstances of the parent's legal obligation to pay support since the support order was entered, the parents have petitioned for a modification of the support order.

Sec. 74. Minnesota Statutes 1997 Supplement, section 256J.37, subdivision 2, is amended to read:

Subd. 2. [DEEMED INCOME AND ASSETS OF SPONSOR OF NONCITIZENS.] All income and assets of a sponsor, or sponsor's spouse, who executed an affidavit of support for a noncitizen must be deemed to be unearned income of the noncitizen as specified in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, title IV, Public Law Number 104-193, sections 421 and 422, and subsequently set out in federal rules. If a noncitizen applies for or receives MFIP-S, the county must deem the income and assets of the noncitizen's sponsor and the sponsor's spouse who have signed an affidavit of support for the noncitizen as specified in Public Law Number 104-193, title IV, sections 421 and 422, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The income of a sponsor and the sponsor's spouse is considered unearned income of the noncitizen. The assets of a sponsor and the sponsor's spouse are considered available assets of the noncitizen.

Sec. 75. Minnesota Statutes 1997 Supplement, section 256J.37, subdivision 9, is amended to read:

Subd. 9. [UNEARNED INCOME.] (a) The county agency must apply unearned income~~, including housing subsidies as in paragraph (b),~~ to the transitional standard. When determining the amount of unearned income, the county agency must deduct the costs necessary to secure payments of unearned income. These costs include legal fees, medical fees, and mandatory deductions such as federal and state income taxes.

(b) Effective July 1, ~~1998~~ 1999, the county agency shall count $100 of the value of public and assisted rental subsidies provided through the Department of Housing and Urban Development (HUD) as unearned income. The full amount of the subsidy must be counted as unearned income when the subsidy is less than $100.

Sec. 76. Minnesota Statutes 1997 Supplement, section 256J.38, subdivision 1, is amended to read:

Subdivision 1. [SCOPE OF OVERPAYMENT.] When a participant or former participant receives an overpayment due to agency, client, or ATM error, or due to assistance received while an appeal is pending and the participant or former participant is determined ineligible for assistance or for less assistance than was received, the county agency must recoup or recover the overpayment ~~under~~ using the ~~conditions of this section.~~ following methods:

(1) reconstruct each affected budget month and corresponding payment month;

(2) use the policies and procedures that were in effect for the payment month; and

(3) do not allow employment disregards in section 256J.21, subdivision 3 or 4, in the calculation of the overpayment when the unit has not reported within two calendar months following the end of the month in which the income was received.

Sec. 77. Minnesota Statutes 1997 Supplement, section 256J.39, subdivision 2, is amended to read:

Subd. 2. [PROTECTIVE AND VENDOR PAYMENTS.] Alternatives to paying assistance directly to a participant may be used when:

(1) a county agency determines that a vendor payment is the most effective way to resolve an emergency situation pertaining to basic needs;

(2) a caregiver makes a written request to the county agency asking that part or all of the assistance payment be issued by protective or vendor payments for shelter and utility service only. The caregiver may withdraw this request in writing at any time;

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(3) ~~a caregiver has exhibited a continuing pattern of mismanaging funds as determined by the county agency;~~

~~(4)~~ the vendor payment is part of a sanction under section 256J.46~~, subdivision 2~~; or

~~(5)~~ (4) the vendor payment is required under section 256J.24, subdivision 8, 256J.26, or 256J.43;

(5) protective payments are required for minor parents under section 256J.14; or

(6) a caregiver has exhibited a continuing pattern of mismanaging funds as determined by the county agency.

The director of a county agency must approve a proposal for protective or vendor payment for money mismanagement when there is a pattern of mismanagement under clause (6). During the time a protective or vendor payment is being made, the county agency must provide services designed to alleviate the causes of the mismanagement.

The continuing need for and method of payment must be documented and reviewed every 12 months. The director of a county agency must approve the continuation of protective or vendor payments. when it appears that the need for protective or vendor payments will continue or is likely to continue beyond two years because the county agency's efforts have not resulted in sufficiently improved use of assistance on behalf of the minor child, judicial appointment of a legal guardian or other legal representative must be sought by the county agency.

Sec. 78. Minnesota Statutes 1997 Supplement, section 256J.395, is amended to read:

256J.395 [VENDOR PAYMENT OF ~~RENT~~ SHELTER COSTS AND UTILITIES.]

Subdivision 1. [VENDOR PAYMENT.] (a) Effective July 1, 1997, when a county is required to provide assistance to a ~~recipient~~ participant in vendor form for ~~rent~~ shelter costs and utilities under this chapter, or chapter 256, 256D, or 256K, the cost of utilities for a given family may be assumed to be:

(1) the average of the actual monthly cost of utilities for that family for the prior 12 months at the family's current residence, if applicable;

(2) the monthly plan amount, if any, set by the local utilities for that family at the family's current residence; or

(3) the estimated monthly utility costs for the dwelling in which the family currently resides.

(b) For purposes of this section, "utility" means any of the following: municipal water and sewer service; electric, gas, or heating fuel service; or wood, if that is the heating source.

(c) In any instance where a vendor payment for rent is directed to a landlord not legally entitled to the payment, the county social services agency shall immediately institute proceedings to collect the amount of the vendored rent payment, which shall be considered a debt under section 270A.03, subdivision 5.

Subd. 2. [VENDOR PAYMENT NOTIFICATION.] (a) When a county agency is required to provide assistance to a participant in vendor payment form for shelter costs or utilities under subdivision 1, and the participant does not give the agency the information needed to pay the vendor, the county agency shall notify the participant of the intent to terminate assistance by mail at least ten days before the effective date of the adverse action.

(b) The notice of action shall include a request for information about:

(1) the amount of the participant's shelter costs or utilities;

(2) the due date of the shelter costs or utilities; and

(3) the name and address of the landlord, contract for deed holder, mortgage company, and utility vendor.

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(c) If the participant fails to provide the requested information by the effective date of the adverse action, the county must terminate the MFIP-S grant. If the applicant or participant verifies they do not have shelter costs or utility obligations, the county shall not terminate assistance if the assistance unit is otherwise eligible.

Subd. 3. [DISCONTINUING VENDOR PAYMENTS DUE TO DISPUTE WITH LANDLORD.] The county agency shall discontinue vendor payments for shelter costs imposed under this chapter when the vendor payment interferes with the participant's right to withhold rent due to a dispute with the participant's landlord in accordance with federal, state, or local housing laws.

Sec. 79. Minnesota Statutes 1997 Supplement, section 256J.42, is amended to read:

256J.42 [60-MONTH TIME LIMIT.]

Subdivision 1. [TIME LIMIT.] (a) Except for the exemptions in this section and in section 256J.11, subdivision 2, an assistance unit in which any adult caregiver has received 60 months of cash assistance funded in whole or in part by the TANF block grant in this or any other state or United States territory, MFIP-S, AFDC, or family general assistance, funded in whole or in part by state appropriations, is ineligible to receive MFIP-S. Any cash assistance funded with TANF dollars in this or any other state or United States territory, or MFIP-S assistance funded in whole or in part by state appropriations, that was received by the unit on or after the date TANF was implemented, including any assistance received in states or United States territories of prior residence, counts toward the 60-month limitation. The 60-month limit applies to a minor who is the head of a household or who is married to the head of a household except under subdivision 5. The 60-month time period does not need to be consecutive months for this provision to apply.

(b) Months before July 1998 in which individuals receive assistance as part of an MFIP, MFIP-R, or MFIP or MFIP-R comparison group family under sections 256.031 to 256.0361 or sections 256.047 to 256.048 are not included in the 60-month time limit.

Subd. 2. [ASSISTANCE FROM ANOTHER STATE.] An individual whose needs have been otherwise provided for in another state, in whole or in part by the TANF block grant during a month, is ineligible to receive MFIP-S for the month.

Subd. 3. [ADULTS LIVING ON AN INDIAN RESERVATION.] In determining the number of months for which an adult has received assistance under MFIP-S, the county agency must disregard any month during which the adult lived on an Indian reservation if, during the month:

~~(1) at least 1,000 individuals were living on the reservation; and~~

~~(2)~~ at least 50 percent of the adults living on the reservation were ~~unemployed~~ not employed.

Subd. 4. [VICTIMS OF DOMESTIC VIOLENCE.] Any cash assistance received by an assistance unit in a month when a caregiver is complying with a safety plan under the MFIP-S employment and training component does not count toward the 60-month limitation on assistance.

Subd. 5. [EXEMPTION FOR CERTAIN FAMILIES.] (a) Any cash assistance received by an assistance unit does not count toward the 60-month limit on assistance during a month in which the ~~parental~~ caregiver is in the category in section 256J.56, clause (1). The exemption applies for the period of time the caregiver belongs to one of the categories specified in this subdivision.

(b) From July 1, 1997, until the date MFIP-S is operative in the caregiver's county of financial responsibility, any cash assistance received by a caregiver who is complying with sections 256.73, subdivision 5a, and 256.736, if applicable, does not count toward the 60-month limit on assistance. Thereafter, any cash assistance received by a minor caregiver who is complying with the requirements of sections 256J.14 and 256J.54, if applicable, does not count towards the 60-month limit on assistance.

(d) Any cash assistance received by an 18- or 19-year-old caregiver who is complying with the requirements of section 256J.54 does not count toward the 60-month limit.

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Sec. 80. Minnesota Statutes 1997 Supplement, section 256J.43, is amended to read:

256J.43 [INTERSTATE PAYMENT STANDARDS.]

Subdivision 1. [PAYMENT.] (a) Effective July 1, 1997, the amount of assistance paid to an eligible ~~family~~ unit in which all members have resided in this state for fewer than 12 consecutive calendar months immediately preceding the date of application shall be the lesser of either the ~~payment~~ interstate transitional standard that would have been received by the ~~family~~ assistance unit from the state of immediate prior residence, or the amount calculated in accordance with AFDC or MFIP-S standards. The lesser payment must continue until the ~~family~~ assistance unit meets the 12-month requirement. An assistance unit that has not resided in Minnesota for 12 months from the date of application is not exempt from the interstate payment provisions solely because a child is born in Minnesota to a member of the assistance unit. Payment must be calculated by applying this state's budgeting policies, and the unit's net income must be deducted from the payment standard in the other state or in this state, whichever is lower. Payment shall be made in vendor form for ~~rent~~ shelter and utilities, up to the limit of the grant amount, and residual amounts, if any, shall be paid directly to the assistance unit.

(b) During the first 12 months ~~a family~~ an assistance unit resides in this state, the number of months that a ~~family~~ unit is eligible to receive AFDC or MFIP-S benefits is limited to the number of months the ~~family~~ assistance unit would have been eligible to receive similar benefits in the state of immediate prior residence.

(c) This policy applies whether or not the ~~family~~ assistance unit received similar benefits while residing in the state of previous residence.

(d) When ~~a family~~ an assistance unit moves to this state from another state where the ~~family~~ assistance unit has exhausted that state's time limit for receiving benefits under that state's TANF program, the ~~family~~ unit will not be eligible to receive any AFDC or MFIP-S benefits in this state for 12 months from the date the ~~family~~ assistance unit moves here.

(e) For the purposes of this section, "state of immediate prior residence" means:

(1) the state in which the applicant declares the applicant spent the most time in the 30 days prior to moving to this state; or

(2) the state in which an applicant who is a migrant worker maintains a home.

(f) The commissioner shall annually verify and update all other states' payment standards as they are to be in effect in July of each year.

(g) Applicants must provide verification of their state of immediate prior residence, in the form of tax statements, a driver's license, automobile registration, rent receipts, or other forms of verification approved by the commissioner.

(h) Migrant workers, as defined in section 256J.08, and their immediate families are exempt from this section, provided the migrant worker provides verification that the migrant family worked in this state within the last 12 months and earned at least $1,000 in gross wages during the time the migrant worker worked in this state.

Subd. 2. [TEMPORARY ABSENCE FROM MINNESOTA.] (a) For an assistance unit that has met the requirements of section 256J.12, the number of months that the assistance unit receives benefits under the interstate payment standards in this section is not affected by an absence from Minnesota for fewer than 30 consecutive days.

(b) For an assistance unit that has met the requirements of section 256J.12, the number of months that the assistance unit receives benefits under the interstate payment standards in this section is not affected by an absence from Minnesota for more than 30 consecutive days but fewer than 90 consecutive days, provided the assistance unit continues to maintain a residence in Minnesota during the period of absence.

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Subd. 3. [EXCEPTIONS TO THE INTERSTATE PAYMENT POLICY.] Applicants who lived in another state in the 12 months prior to applying for assistance are exempt from the interstate payment policy for the months that a member of the unit:

(1) served in the United States armed services, provided the person returned to Minnesota within 30 days of leaving the armed forces, and intends to remain in Minnesota;

(2) attended school in another state, paid nonresident tuition or Minnesota tuition rates under a reciprocity agreement, provided the person left Minnesota specifically to attend school and returned to Minnesota within 30 days of graduation with the intent to remain in Minnesota; or

(3) meets the following criteria:

(i) a minor child or a minor caregiver moves from another state to the residence of a relative caregiver;

(ii) the minor caregiver applies for and receives family cash assistance;

(iii) the relative caregiver chooses not to be part of the MFIP-S assistance unit; and

(iv) the relative caregiver has resided in Minnesota for at least 12 months from the date the assistance unit applies for cash assistance.

Subd. 4. [INELIGIBLE MANDATORY UNIT MEMBERS.] Ineligible mandatory unit members who have resided in Minnesota for 12 months immediately before the unit's date of application establish the other assistance unit members' eligibility for the MFIP-S transitional standard.

Sec. 81. Minnesota Statutes 1997 Supplement, section 256J.45, subdivision 1, is amended to read:

Subdivision 1. [COUNTY AGENCY TO PROVIDE ORIENTATION.] A county agency must provide each MFIP-S caregiver with a face-to-face orientation. The caregiver must attend the orientation. The county agency must inform the caregiver that failure to attend the orientation is considered ~~a first~~ an occurrence of noncompliance with program requirements, and will result in the imposition of a sanction under section 256J.46. If the client complies with the orientation requirement prior to the first day of the month in which the grant reduction is proposed to occur, the orientation sanction shall be lifted.

Sec. 82. Minnesota Statutes 1997 Supplement, section 256J.45, subdivision 2, is amended to read:

Subd. 2. [GENERAL INFORMATION.] The MFIP-S orientation must consist of a presentation that informs caregivers of:

(1) the necessity to obtain immediate employment;

(2) the work incentives under MFIP-S;

(3) the requirement to comply with the employment plan and other requirements of the employment and training services component of MFIP-S, including a description of the range of work and training activities that are allowable under MFIP-S to meet the individual needs of participants;

(4) the consequences for failing to comply with the employment plan and other program requirements, and that the county agency may not impose a sanction when failure to comply is due to the unavailability of child care or other circumstances where the participant has good cause under section 256J.45, subdivision 3;

(5) the rights, responsibilities, and obligations of participants;

(6) the types and locations of child care services available through the county agency;

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(7) the availability and the benefits of the early childhood health and developmental screening under sections 123.701 to 123.74;

(8) the caregiver's eligibility for transition year child care assistance under section 119B.05;

(9) the caregiver's eligibility for extended medical assistance when the caregiver loses eligibility for MFIP-S due to increased earnings or increased child or spousal support; ~~and~~

(10) the caregiver's option to choose an employment and training provider and information about each provider, including but not limited to, services offered, program components, job placement rates, job placement wages, and job retention rates;

(11) the caregiver's option to request approval of an education and training plan according to section 256J.52; and

(12) the work study programs available under the higher educational system.

Sec. 83. Minnesota Statutes 1997 Supplement, section 256J.45, is amended by adding a subdivision to read:

Subd. 3. [GOOD CAUSE EXEMPTIONS FOR NOT ATTENDING ORIENTATION.] (a) The county agency shall not impose the sanction under section 256J.46 if it determines that the participant has good cause for failing to attend orientation. Good cause exists when:

(1) appropriate child care is not available;

(2) the participant is ill or injured;

(3) a family member is ill and needs care by the participant that prevents the participant from attending orientation;

(4) the caregiver is unable to secure necessary transportation;

(5) the caregiver is in an emergency situation that prevents orientation attendance;

(6) the orientation conflicts with the caregiver's work, training, or school schedule; or

(7) the caregiver documents other verifiable impediments to orientation attendance beyond the caregiver's control.

(b) Counties must work with clients to provide child care and transportation necessary to ensure a caregiver has every opportunity to attend orientation.

Sec. 84. Minnesota Statutes 1997 Supplement, section 256J.46, subdivision 1, is amended to read:

Subdivision 1. [SANCTIONS FOR PARTICIPANTS NOT COMPLYING WITH PROGRAM REQUIREMENTS.] (a) A participant who fails without good cause to comply with the requirements of this chapter, and who is not subject to a sanction under subdivision 2, shall be subject to a sanction as provided in this subdivision.

A sanction under this subdivision becomes effective ~~ten days after~~ the month following the month in which a required notice is given. A sanction must not be imposed when a participant comes into compliance with the requirements for orientation under section 256J.45 or third party liability for medical services under section 256J.30, subdivision 10, prior to the effective date of the sanction. A sanction must not be imposed when a participant comes into compliance with the requirements for employment and training services under sections 256J.49 to 256J.72 ten days prior to the effective date of the sanction. For purposes of this subdivision, each month that a participant fails to comply with a requirement of this chapter shall be considered a separate occurrence of noncompliance. A participant who has had one or more sanctions imposed must remain in compliance with the provisions of this chapter for six months in order for a subsequent occurrence of noncompliance to be considered a first occurrence.

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(b) Sanctions for noncompliance shall be imposed as follows:

(1) For the first occurrence of noncompliance by a participant in a single-parent household or by one participant in a two-parent household, the ~~participant's~~ assistance unit's grant shall be reduced by ten percent of the ~~applicable~~ MFIP-S transitional standard, the shared household standard, or the interstate transitional standard for an assistance unit of the same size, whichever is applicable, with the residual paid to the participant. The reduction in the grant amount must be in effect for a minimum of one month and shall be removed in the month following the month that the participant returns to compliance.

(2) For a second or subsequent occurrence of noncompliance, or when both participants in a two-parent household are out of compliance at the same time, the ~~participant's rent~~ assistance unit's shelter costs shall be vendor paid up to the amount of the cash portion of the MFIP-S grant for which the participant's assistance unit is eligible. At county option, the ~~participant's~~ assistance unit's utilities may also be vendor paid up to the amount of the cash portion of the MFIP-S grant remaining after vendor payment of the ~~participant's rent~~ assistance unit's shelter costs. ~~The vendor payment of rent and, if in effect, utilities, must be in effect for six months from the date that a sanction is imposed under this clause.~~ The residual amount of the grant after vendor payment, if any, must be reduced by an amount equal to 30 percent of the ~~applicable~~ MFIP-S transitional standard, the shared household standard, or the interstate transitional standard for an assistance unit of the same size, whichever is applicable, before the residual is paid to the ~~participant~~ assistance unit. The reduction in the grant amount must be in effect for a minimum of one month and shall be removed in the month following the month that ~~the~~ a participant in a one-parent household returns to compliance. In a two-parent household, the grant reduction must be in effect for a minimum of one month and shall be removed in the month following the month both participants return to compliance. The vendor payment of ~~rent~~ shelter costs and, if applicable, utilities shall be removed six months after the month in which the participant ~~returns~~ or participants return to compliance.

(c) No later than during the second month that a sanction under paragraph (b), clause (2), is in effect due to noncompliance with employment services, the participant's case file must be reviewed to determine if:

(i) the continued noncompliance can be explained and mitigated by providing a needed preemployment activity, as defined in section 256J.49, subdivision 13, clause (16);

(ii) the participant qualifies for a good cause exception under section 256J.57; or

(iii) the participant qualifies for an exemption under section 256J.56.

If the lack of an identified activity can explain the noncompliance, the county must work with the participant to provide the identified activity, and the county must restore the participant's grant amount to the full amount for which the assistance unit is eligible. The grant must be restored retroactively to the first day of the month in which the participant was found to lack preemployment activities or to qualify for an exemption or good cause exception.

If the participant is found to qualify for a good cause exception or an exemption, the county must restore the participant's grant to the full amount for which the assistance unit is eligible. If the participant's grant is restored under this paragraph, the vendor payment of rent and if applicable, utilities, shall be removed six months after the month in which the sanction was imposed and the county must consider a subsequent occurrence of noncompliance to be a first occurrence.

Sec. 85. Minnesota Statutes 1997 Supplement, section 256J.46, subdivision 2, is amended to read:

Subd. 2. [SANCTIONS FOR REFUSAL TO COOPERATE WITH SUPPORT REQUIREMENTS.] The grant of an MFIP-S caregiver who refuses to cooperate, as determined by the child support enforcement agency, with support requirements under section 256.741, ~~if enacted,~~ shall be subject to sanction as specified in this subdivision. The assistance unit's grant must be reduced by 25 percent of the applicable transitional standard. The residual amount of the grant, if any, must be paid to the caregiver. A sanction under this subdivision becomes effective ~~ten days after~~ the first month following the month in which a required notice is given. A sanction must not be imposed when a caregiver comes into compliance with the requirements under section 256.741 prior to the effective date of the sanction. The sanction ~~must be in effect for a minimum of one month and~~ shall be removed ~~only when~~ in the month following the month that the caregiver cooperates

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with the support requirements. Each month that an MFIP-S caregiver fails to comply with the requirements of section 256.741 must be considered a separate occurrence of noncompliance. An MFIP-S caregiver who has had one or more sanctions imposed must remain in compliance with the requirements of section 256.741 for six months in order for a subsequent sanction to be considered a first occurrence.

Sec. 86. Minnesota Statutes 1997 Supplement, section 256J.46, subdivision 2a, is amended to read:

Subd. 2a. [DUAL SANCTIONS.] (a) Notwithstanding the provisions of subdivisions 1 and 2, for a participant subject to a sanction for refusal to comply with child support requirements under subdivision 2 and subject to a concurrent sanction for refusal to cooperate with other program requirements under subdivision 1, sanctions shall be imposed in the manner prescribed in this subdivision.

A participant who has had one or more sanctions imposed under this subdivision must remain in compliance with the provisions of this chapter for six months in order for a subsequent occurrence of noncompliance to be considered a first occurrence. Any vendor payment of ~~rent~~ shelter costs or utilities under this subdivision must remain in effect for six months after the month in which the participant is no longer subject to sanction under subdivision 1.

(b) If the participant was subject to sanction for:

(i) noncompliance under subdivision 1 before being subject to sanction for noncooperation under subdivision 2; or

(ii) noncooperation under subdivision 2 before being subject to sanction for noncompliance under subdivision 1;

the participant shall be sanctioned as provided in subdivision 1, paragraph (b), clause (2), and the requirement that the county conduct a review as specified in subdivision 1, paragraph (c), remains in effect.

(c) A participant who first becomes subject to sanction under both subdivisions 1 and 2 in the same month is subject to sanction as follows:

(i) in the first month of noncompliance and noncooperation, the participant's grant must be reduced by 25 percent of the applicable transitional standard, with any residual amount paid to the participant;

(ii) in the second and subsequent months of noncompliance and noncooperation, the participant shall be sanctioned as provided in subdivision 1, paragraph (b), clause (2).

The requirement that the county conduct a review as specified in subdivision 1, paragraph (c), remains in effect.

(d) A participant remains subject to sanction under subdivision 2 if the participant:

(i) returns to compliance and is no longer subject to sanction under subdivision 1; or

(ii) has the sanction under subdivision 1, paragraph (b), removed upon completion of the review under subdivision 1, paragraph (c).

A participant remains subject to sanction under subdivision 1, paragraph (b), if the participant cooperates and is no longer subject to sanction under subdivision 2.

Sec. 87. Minnesota Statutes 1997 Supplement, section 256J.47, subdivision 4, is amended to read:

Subd. 4. [INELIGIBILITY FOR MFIP-S; EMERGENCY ASSISTANCE; AND EMERGENCY GENERAL ASSISTANCE.] Upon receipt of diversionary assistance, the family is ineligible for MFIP-S, emergency assistance, and emergency general assistance for a period of time. To determine the period of ineligibility, the county shall use the following formula: regardless of household changes, the county agency must calculate the number of days of ineligibility by dividing the diversionary assistance issued by the transitional standard a family of the same size and composition would have received under MFIP-S, or if applicable the interstate transitional standard, multiplied by 30, truncating the result. The ineligibility period begins the date the diversionary assistance is issued.

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Sec. 88. Minnesota Statutes 1997 Supplement, section 256J.48, subdivision 2, is amended to read:

Subd. 2. [ELIGIBILITY.] Notwithstanding other eligibility provisions of this chapter, any family without resources immediately available to meet emergency needs identified in subdivision 3 shall be eligible for an emergency grant under the following conditions:

(1) a family member has resided in this state for at least 30 days;

(2) the family is without resources immediately available to meet emergency needs;

(3) assistance is necessary to avoid destitution or provide emergency shelter arrangements; ~~and~~

(4) the family's destitution or need for shelter or utilities did not arise because the child or relative caregiver refused without good cause under section 256J.57 to accept employment or training for employment in this state or another state; and

(5) at least one child or pregnant woman in the emergency assistance unit meets MFIP-S citizenship requirements in section 256J.11.

Sec. 89. Minnesota Statutes 1997 Supplement, section 256J.48, subdivision 3, is amended to read:

Subd. 3. [EMERGENCY NEEDS.] Emergency needs are limited to the following:

(a) [RENT.] A county agency may deny assistance to prevent eviction from rented or leased shelter of an otherwise eligible applicant when the county agency determines that an applicant's anticipated income will not cover continued payment for shelter, subject to conditions in clauses (1) to (3):

(1) a county agency must not deny assistance when an applicant can document that the applicant is unable to locate habitable shelter, unless the county agency can document that one or more habitable shelters are available in the community that will result in at least a 20 percent reduction in monthly expense for shelter and that this shelter will be cost-effective for the applicant;

(2) when no alternative shelter can be identified by either the applicant or the county agency, the county agency shall not deny assistance because anticipated income will not cover rental obligation; and

(3) when cost-effective alternative shelter is identified, the county agency shall issue assistance for moving expenses as provided in paragraph ~~(d)~~ (e).

(b) [DEFINITIONS.] For purposes of paragraph (a), the following definitions apply (1) "metropolitan statistical area" is as defined by the United States Census Bureau; (2) "alternative shelter" includes any shelter that is located within the metropolitan statistical area containing the county and for which the applicant is eligible, provided the applicant does not have to travel more than 20 miles to reach the shelter and has access to transportation to the shelter. Clause (2) does not apply to counties in the Minneapolis-St. Paul metropolitan statistical area.

(c) [MORTGAGE AND CONTRACT FOR DEED ARREARAGES.] A county agency shall issue assistance for mortgage or contract for deed arrearages on behalf of an otherwise eligible applicant according to clauses (1) to (4):

(1) assistance for arrearages must be issued only when a home is owned, occupied, and maintained by the applicant;

(2) assistance for arrearages must be issued only when no subsequent foreclosure action is expected within the 12 months following the issuance;

(3) assistance for arrearages must be issued only when an applicant has been refused refinancing through a bank or other lending institution and the amount payable, when combined with any payments made by the applicant, will be accepted by the creditor as full payment of the arrearage;

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(4) costs paid by a family which are counted toward the payment requirements in this clause are: principal and interest payments on mortgages or contracts for deed, balloon payments, homeowner's insurance payments, manufactured home lot rental payments, and tax or special assessment payments related to the homestead. Costs which are not counted include closing costs related to the sale or purchase of real property.

To be eligible for assistance for costs specified in clause (4) which are outstanding at the time of foreclosure, an applicant must have paid at least 40 percent of the family's gross income toward these costs in the month of application and the 11-month period immediately preceding the month of application.

When an applicant is eligible under clause (4), a county agency shall issue assistance up to a maximum of four times the MFIP-S transitional standard for a comparable assistance unit.

(d) [DAMAGE OR UTILITY DEPOSITS.] A county agency shall issue assistance for damage or utility deposits when necessary to alleviate the emergency. The county may require that assistance paid in the form of a damage deposit ~~or a utility deposit~~, less any amount retained by the landlord to remedy a tenant's default in payment of rent or other funds due to the landlord under a rental agreement, or to restore the premises to the condition at the commencement of the tenancy, ordinary wear and tear excepted, be returned to the county when the individual vacates the premises or be paid to the recipient's new landlord as a vendor payment. The county may require that assistance paid in the form of a utility deposit less any amount retained to satisfy outstanding utility costs be returned to the county when the person vacates the premises, or be paid for the person's new housing unit as a vendor payment. The vendor payment of returned funds shall not be considered a new use of emergency assistance.

(e) [MOVING EXPENSES.] A county agency shall issue assistance for expenses incurred when a family must move to a different shelter according to clauses (1) to (4):

(1) moving expenses include the cost to transport personal property belonging to a family, the cost for utility connection, and the cost for securing different shelter;

(2) moving expenses must be paid only when the county agency determines that a move is cost-effective;

(3) moving expenses must be paid at the request of an applicant, but only when destitution or threatened destitution exists; and

(4) moving expenses must be paid when a county agency denies assistance to prevent an eviction because the county agency has determined that an applicant's anticipated income will not cover continued shelter obligation in paragraph (a).

(f) [HOME REPAIRS.] A county agency shall pay for repairs to the roof, foundation, wiring, heating system, chimney, and water and sewer system of a home that is owned and lived in by an applicant.

The applicant shall document, and the county agency shall verify the need for and method of repair.

The payment must be cost-effective in relation to the overall condition of the home and in relation to the cost and availability of alternative housing.

(g) [UTILITY COSTS.] Assistance for utility costs must be made when an otherwise eligible family has had a termination or is threatened with a termination of municipal water and sewer service, electric, gas or heating fuel service, or lacks wood when that is the heating source, subject to the conditions in clauses (1) and (2):

(1) a county agency must not issue assistance unless the county agency receives confirmation from the utility provider that assistance combined with payment by the applicant will continue or restore the utility; and

(2) a county agency shall not issue assistance for utility costs unless a family paid at least eight percent of the family's gross income toward utility costs due during the preceding 12 months.

Clauses (1) and (2) must not be construed to prevent the issuance of assistance when a county agency must take immediate and temporary action necessary to protect the life or health of a child.

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(h) [SPECIAL DIETS.] Effective January 1, 1998, a county shall pay for special diets or dietary items for MFIP-S participants. Persons receiving emergency assistance funds for special diets or dietary items are also eligible to receive emergency assistance for shelter and utility emergencies, if otherwise eligible. The need for special diets or dietary items must be prescribed by a licensed physician. Costs for special diets shall be determined as percentages of the allotment for a one-person household under the Thrifty Food Plan as defined by the United States Department of Agriculture. The types of diets and the percentages of the Thrifty Food Plan that are covered are as follows:

(1) high protein diet, at least 80 grams daily, 25 percent of Thrifty Food Plan;

(2) controlled protein diet, 40 to 60 grams and requires special products, 100 percent of Thrifty Food Plan;

(3) controlled protein diet, less than 40 grams and requires special products, 125 percent of Thrifty Food Plan;

(4) low cholesterol diet, 25 percent of Thrifty Food Plan;

(5) high residue diet, 20 percent of Thrifty Food Plan;

(6) pregnancy and lactation diet, 35 percent of Thrifty Food Plan;

(7) gluten-free diet, 25 percent of Thrifty Food Plan;

(8) lactose-free diet, 25 percent of Thrifty Food Plan;

(9) antidumping diet, 15 percent of Thrifty Food Plan;

(10) hypoglycemic diet, 15 percent of Thrifty Food Plan; or

(11) ketogenic diet, 25 percent of Thrifty Food Plan.

Sec. 90. Minnesota Statutes 1997 Supplement, section 256J.49, subdivision 4, is amended to read:

Subd. 4. [EMPLOYMENT AND TRAINING SERVICE PROVIDER.] "Employment and training service provider" means:

(1) a public, private, or nonprofit employment and training agency certified by the commissioner of economic security under sections 268.0122, subdivision 3, and 268.871, subdivision 1, or is approved under section 256J.51 and is included in the county plan submitted under section 256J.50, subdivision 7; or

(2) a public, private, or nonprofit agency that is not certified by the commissioner under clause (1), but with which a county has contracted to provide employment and training services and which is included in the county's plan submitted under section 256J.50, subdivision 7; or

(3) a county agency, if the county ~~is certified under clause (1)~~ has opted to provide employment and training services and the county has indicated that fact in the plan submitted under section 256J.50, subdivision 7.

Notwithstanding section 268.871, an employment and training services provider meeting this definition may deliver employment and training services under this chapter.

Sec. 91. Minnesota Statutes 1997 Supplement, section 256J.50, subdivision 5, is amended to read:

Subd. 5. [PARTICIPATION REQUIREMENTS FOR SINGLE-PARENT AND TWO-PARENT CASES.] (a) A county must establish a uniform schedule for requiring participation by single parents. Mandatory participation must be required within six months of eligibility for cash assistance. For two-parent cases, participation is required concurrent with the receipt of MFIP-S cash assistance.

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(b) Beginning January 1, 1998, with the exception of caregivers required to attend high school under the provisions of section 256J.54, subdivision 5, MFIP caregivers, upon completion of the secondary assessment, must develop an employment plan and participate in work activities.

(1) In single-parent families with no children under six years of age, the job counselor and the caregiver must develop an employment plan that includes 20 to 35 hours per week of work activities for the period January 1, 1998, to September 30, 1998; 25 to 35 hours of work activities per week in federal fiscal year 1999; and 30 to 35 hours per week of work activities in federal fiscal year 2000 and thereafter.

(2) In single-parent families with a child under six years of age, the job counselor and the caregiver must develop an employment plan that includes 20 to 35 hours per week of work activities.

(3) In two-parent families, the job counselor and the caregivers must develop employment plans which result in a combined total of at least 55 hours per week of work activities.

Sec. 92. Minnesota Statutes 1997 Supplement, section 256J.50, is amended by adding a subdivision to read:

Subd. 10. [REQUIRED NOTIFICATION TO VICTIMS OF DOMESTIC VIOLENCE.] County agencies and their contractors must provide universal notification to all applicants and recipients of MFIP-S that:

(1) referrals to counseling and supportive services are available for victims of domestic violence;

(2) nonpermanent resident battered individuals married to United States citizens or permanent residents may be eligible to petition for permanent residency under the federal Violence Against Women Act, and that referrals to appropriate legal services are available;

(3) victims of domestic violence are exempt from the 60-month limit on assistance while the individual is complying with an approved safety plan, as defined in section 256J.49, subdivision 11; and

(4) victims of domestic violence may choose to be exempt or deferred from work requirements for up to 12 months while the individual is complying with an approved safety plan as defined in section 256J.49, subdivision 11.

Notification must be in writing and orally at the time of application and recertification, when the individual is referred to the title IV-D child support agency, and at the beginning of any job training or work placement assistance program.

Sec. 93. Minnesota Statutes 1997 Supplement, section 256J.50, is amended by adding a subdivision to read:

Subd. 11. [COORDINATION.] The county agency and the county agency's employment and training providers must consult and coordinate with other providers of employment and training services to identify existing resources, in order to prevent duplication of services, to assure that other programs' services are available to enable participants to achieve self-sufficiency, and to assure that costs for these other services for which participants are eligible are not incurred by MFIP-S. At a minimum, the county agency and its providers must coordinate with Jobs Training and Partnership Act providers and with any other relevant employment, training, and education programs in the county.

Sec. 94. Minnesota Statutes 1997 Supplement, section 256J.515, is amended to read:

256J.515 [OVERVIEW OF EMPLOYMENT AND TRAINING SERVICES.]

During the first meeting with participants, job counselors must ensure that an overview of employment and training services is provided that: (1) stresses the necessity and opportunity of immediate employment,; (2) outlines the job search resources offered,; (3) outlines education or training opportunities available; (4) describes the range of work activities, including activities under section 256J.49, subdivision 13, clause (18), that are allowable under MFIP-S to meet the individual needs of participants; (5) explains the requirements to comply with an employment plan ~~and~~; (6) explains the consequences for failing to comply,; and (7) explains the services that are available to support job search and work and education.

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Sec. 95. Minnesota Statutes 1997 Supplement, section 256J.52, subdivision 4, is amended to read:

Subd. 4. [SECONDARY ASSESSMENT.] (a) The job counselor must conduct a secondary assessment for those participants who:

(1) in the judgment of the job counselor, have barriers to obtaining employment that will not be overcome with a job search support plan under subdivision 3;

(2) have completed eight weeks of job search under subdivision 3 without obtaining suitable employment; or

(3) have not received a secondary assessment, are working at least 20 hours per week, and the participant, job counselor, or county agency requests a secondary assessment; or

(4) have an existing job search plan or employment plan developed for another program or are already involved in training or education activities under section 256J.55, subdivision 5.

(b) In the secondary assessment the job counselor must evaluate the participant's skills and prior work experience, family circumstances, interests and abilities, need for preemployment activities, supportive or educational services, and the extent of any barriers to employment. The job counselor must use the information gathered through the secondary assessment to develop an employment plan under subdivision 5.

(c) The provider shall make available to participants information regarding additional vendors or resources which provide employment and training services that may be available to the participant under a plan developed under this section. The information must include a brief summary of services provided and related performance indicators. Performance indicators must include, but are not limited to, the average time to complete program offerings, placement rates, entry and average wages, and retention rates. To be included in the information given to participants, a vendor or resource must provide counties with relevant information in the format required by the county.

Sec. 96. Minnesota Statutes 1997 Supplement, section 256J.52, is amended by adding a subdivision to read:

Subd. 8. [ADMINISTRATIVE SUPPORT FOR POSTEMPLOYMENT EDUCATION AND TRAINING.] After a caregiver receiving MFIP-S has been employed for six consecutive months, during which time the caregiver works on average more than 20 hours per week, the caregiver's job counselor shall inform the caregiver that the caregiver may request a secondary assessment described in subdivision 4 and shall provide information about:

(1) part-time education and training options available to the caregiver; and

(2) child care and transportation resources available to support postemployment education and training.

Sec. 97. Minnesota Statutes 1997 Supplement, section 256J.52, is amended by adding a subdivision to read:

Subd. 9. [TRAINING CONCURRENT WITH EMPLOYMENT.] An MFIP caregiver who is meeting the minimum hourly work participation requirements under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 through employment must be allowed to meet any additional MFIP-S hourly work participation requirements through training or education that meets the requirements of section 256J.53.

Sec. 98. Minnesota Statutes 1997 Supplement, section 256J.54, subdivision 2, is amended to read:

Subd. 2. [RESPONSIBILITY FOR ASSESSMENT AND EMPLOYMENT PLAN.] For caregivers who are under age 18 without a high school diploma or its equivalent, the assessment under subdivision 1 and the employment plan under subdivision 3 must be completed by the social services agency under section 257.33. For caregivers who are age 18 or 19 without a high school diploma or its equivalent, the assessment under subdivision 1 and the employment plan under subdivision 3 must be completed by the job counselor. The social services agency or the job counselor shall consult with representatives of educational agencies that are required to assist in developing educational plans under section 126.235.

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Sec. 99. Minnesota Statutes 1997 Supplement, section 256J.54, subdivision 3, is amended to read:

Subd. 3. [EDUCATIONAL OPTION DEVELOPED.] If the job counselor or county social services agency identifies an appropriate educational option for a caregiver under the age of 20 without a high school diploma or its equivalent, it the job counselor or agency must develop an employment plan which reflects the identified option. The plan must specify that participation in an educational activity is required, what school or educational program is most appropriate, the services that will be provided, the activities the caregiver will take part in, including child care and supportive services, the consequences to the caregiver for failing to participate or comply with the specified requirements, and the right to appeal any adverse action. The employment plan must, to the extent possible, reflect the preferences of the caregiver.

Sec. 100. Minnesota Statutes 1997 Supplement, section 256J.54, subdivision 4, is amended to read:

Subd. 4. [NO APPROPRIATE EDUCATIONAL OPTION.] If the job counselor determines that there is no appropriate educational option for a caregiver who is age 18 or 19 without a high school diploma or its equivalent, the job counselor must develop an employment plan, as defined in section 256J.49, subdivision 5, for the caregiver. If the county social services agency determines that school attendance is not appropriate for a caregiver under age 18 without a high school diploma or its equivalent, the county agency shall refer the caregiver to social services for services as provided in section 257.33.

Sec. 101. Minnesota Statutes 1997 Supplement, section 256J.54, subdivision 5, is amended to read:

Subd. 5. [SCHOOL ATTENDANCE REQUIRED.] (a) Notwithstanding the provisions of section 256J.56, minor parents, or 18- or 19-year-old parents without a high school diploma or its equivalent must attend school unless:

(1) transportation services needed to enable the caregiver to attend school are not available;

(2) appropriate child care services needed to enable the caregiver to attend school are not available;

(3) the caregiver is ill or incapacitated seriously enough to prevent attendance at school; or

(4) the caregiver is needed in the home because of the illness or incapacity of another member of the household. This includes a caregiver of a child who is younger than six weeks of age.

(b) The caregiver must be enrolled in a secondary school and meeting the school's attendance requirements. The county, social service agency, or job counselor must verify at least once per quarter that the caregiver is meeting the school's attendance requirements. An enrolled caregiver is considered to be meeting the attendance requirements when the school is not in regular session, including during holiday and summer breaks.

Sec. 102. Minnesota Statutes 1997 Supplement, section 256J.55, subdivision 5, is amended to read:

Subd. 5. [OPTION TO UTILIZE EXISTING PLAN.] With job counselor approval, if a participant is already complying with a job search support or employment plan that was developed for a different program or is already involved in education or training activities, the participant may ~~utilize~~ continue that plan ~~and that program's services, subject to the requirements of subdivision 3, to be in compliance with sections 256J.52 to 256J.57 so long as~~ or activity if the plan meets, or is modified to meet, the requirements of ~~those~~ sections 256J.52 to 256J.57, and if the participant is concurrently employed and the combination of the hours spent in education or training and employment meets the hourly participation requirements. The participant is not required to be employed if the number of hours per week the participant is in education or training meets the hourly work participation requirements.

Sec. 103. Minnesota Statutes 1997 Supplement, section 256J.56, is amended to read:

256J.56 [EMPLOYMENT AND TRAINING SERVICES COMPONENT; EXEMPTIONS.]

(a) An MFIP-S caregiver is exempt from the requirements of sections 256J.52 to 256J.55 if the caregiver belongs to any of the following groups:

(1) individuals who are age 60 or older;

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(2) individuals who are suffering from a professionally certified permanent or temporary illness, injury, or incapacity which is expected to continue for more than 30 days and which prevents the person from obtaining or retaining employment. Persons in this category with a temporary illness, injury, or incapacity must be reevaluated at least quarterly;

(3) caregivers whose presence in the home is required because of the professionally certified illness or incapacity of another member in the assistance unit, a relative in the household, or a foster child in the household;

(4) women who are pregnant, if the pregnancy has resulted in a professionally certified incapacity that prevents the woman from obtaining or retaining employment;

(5) caregivers of a child under the age of one year who personally provide full-time care for the child. This exemption may be used for only 12 months in a lifetime. In two-parent households, only one parent or other relative may qualify for this exemption;

(6) individuals who are single parents, or one parent in a two-parent family, employed at least ~~40 hours per week or at least 30 hours per week and engaged in job search for at least an additional ten~~ 35 hours per week;

(7) individuals experiencing a personal or family crisis that makes them incapable of participating in the program, as determined by the county agency. If the participant does not agree with the county agency's determination, the participant may seek professional certification, as defined in section 256J.08, that the participant is incapable of participating in the program.

Persons in this exemption category must be reevaluated every 60 days; or

(8) second parents in two-parent families~~, provided the second parent is~~ employed for 20 or more hours per week, provided the first parent is employed at least 35 hours per week.

A caregiver who is exempt under clause (5) must enroll in and attend an early childhood and family education class, a parenting class, or some similar activity, if available, during the period of time the caregiver is exempt under this section. Notwithstanding section 256J.46, failure to attend the required activity shall not result in the imposition of a sanction.

(b) The county agency must provide employment and training services to MFIP-S caregivers who are exempt under this section, but who volunteer to participate. Exempt volunteers may request approval for any work activity under section 256J.49, subdivision 13. The hourly participation requirements for nonexempt caregivers under section 256J.50, subdivision 5, do not apply to exempt caregivers who volunteer to participate.

Sec. 104. Minnesota Statutes 1997 Supplement, section 256J.57, subdivision 1, is amended to read:

Subdivision 1. [GOOD CAUSE FOR FAILURE TO COMPLY.] The county agency shall not impose the sanction under section 256J.46 if it determines that the participant has good cause for failing to comply with the requirements of ~~section 256J.45 or~~ sections 256J.52 to 256J.55. Good cause exists when:

(1) appropriate child care is not available;

(2) the job does not meet the definition of suitable employment;

(3) the participant is ill or injured;

(4) a ~~family~~ member of the assistance unit, a relative in the household, or a foster child in the household is ill and needs care by the participant that prevents the participant from complying with the job search support plan or employment plan;

(5) the parental caregiver is unable to secure necessary transportation;

(6) the parental caregiver is in an emergency situation that prevents compliance with the job search support plan or employment plan;

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(7) the schedule of compliance with the job search support plan or employment plan conflicts with judicial proceedings;

(8) the parental caregiver is already participating in acceptable work activities;

(9) the employment plan requires an educational program for a caregiver under age 20, but the educational program is not available;

(10) activities identified in the job search support plan or employment plan are not available;

(11) the parental caregiver is willing to accept suitable employment, but suitable employment is not available; or

(12) the parental caregiver documents other verifiable impediments to compliance with the job search support plan or employment plan beyond the parental caregiver's control.

Sec. 105. Minnesota Statutes 1997 Supplement, section 256J.645, subdivision 3, is amended to read:

Subd. 3. [FUNDING.] If the commissioner and an Indian tribe are parties to an agreement under this subdivision, the agreement may annually provide to the Indian tribe the funding amount in clause (1) or (2):

(1) if the Indian tribe operated a tribal STRIDE program during state fiscal year 1997, the amount to be provided is the amount the Indian tribe received from the state for operation of its tribal STRIDE program in state fiscal year 1997, except that the amount provided for a fiscal year may increase or decrease in the same proportion that the total amount of state and federal funds available for MFIP-S employment and training services increased or decreased that fiscal year; or

(2) if the Indian tribe did not operate a tribal STRIDE program during state fiscal year 1997, the commissioner may provide to the Indian tribe for the first year of operations the amount determined by multiplying the state allocation for MFIP-S employment and training services to each county agency in the Indian tribe's service delivery area by the percentage of MFIP-S recipients in that county who were members of the Indian tribe during the previous state fiscal year. The resulting amount shall also be the amount that the commissioner may provide to the Indian tribe annually thereafter through an agreement under this subdivision, except that the amount provided for a fiscal year may increase or decrease in the same proportion that the total amount of state and federal funds available for MFIP-S employment and training services increased or decreased that fiscal year.

Sec. 106. Minnesota Statutes 1997 Supplement, section 256J.74, subdivision 2, is amended to read:

Subd. 2. [CONCURRENT ELIGIBILITY, LIMITATIONS.] A county agency must not count an applicant or participant as a member of more than one assistance unit in a given payment month, except as provided in clauses (1) and (2).

(1) A participant who is a member of an assistance unit in this state is eligible to be included in a second assistance unit in the first full month ~~that~~ after the month the participant ~~leaves the first assistance unit and lives with a~~ joins the second ~~assistance~~ unit.

(2) An applicant whose needs are met through foster care that is reimbursed under title IV-E of the Social Security Act for the first part of an application month is eligible to receive assistance for the remaining part of the month in which the applicant returns home. Title IV-E payments and adoption assistance payments must be considered prorated payments rather than a duplication of MFIP-S need.

Sec. 107. Minnesota Statutes 1997 Supplement, section 256J.74, is amended by adding a subdivision to read:

Subd. 5. [FOOD STAMPS.] For any month an individual receives Food Stamp Program benefits, the individual is not eligible for the MFIP-S food portion of assistance, except as provided under section 256J.28, subdivision 5.

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Sec. 108. [256J.77] [AGING OF CASH BENEFITS.]

Cash benefits under chapters 256D, 256J, and 256K by warrants or electronic benefit transfer that have not been accessed within 90 days of issuance shall be canceled. Cash benefits may be replaced after they are canceled, for up to one year after the date of issuance, if failure to do so would place the client or family at risk. For purposes of this section, "accessed" means cashing a warrant or making at least one withdrawal from benefits deposited in an electronic benefit account.

Sec. 109. Minnesota Statutes 1997 Supplement, section 256K.03, subdivision 5, is amended to read:

Subd. 5. [EXEMPTION CATEGORIES.] (a) The applicant will be exempt from the job search requirements and development of a job search plan and an employability development plan under subdivisions 3, 4, and 8 if the applicant belongs to any of the following groups:

(1) ~~caregivers under age 20 who have not completed a high school education and are attending high school on a full-time basis;~~

~~(2)~~ individuals who are age 60 or older;

~~(3)~~ (2) individuals who are suffering from a professionally certified permanent or temporary illness, injury, or incapacity which is expected to continue for more than 30 days and which prevents the person from obtaining or retaining employment. Persons in this category with a temporary illness, injury, or incapacity must be reevaluated at least quarterly;

~~(4)~~ (3) caregivers whose presence in the home is needed because of the professionally certified illness or incapacity of another member in the assistance unit, a relative in the household, or a foster child in the household;

~~(5)~~ (4) women who are pregnant, if it the pregnancy has ~~been medically verified~~ resulted in a professionally certified incapacity that ~~the child is expected to be born within the next six months~~ prevents the woman from obtaining and retaining employment;

~~(6)~~ (5) caregivers ~~or other caregiver relatives~~ of a child under the age of ~~three~~ one year who personally provide full-time care for the child. This exemption may be used for only 12 months in a lifetime. In two-parent households, only one parent or other relative may qualify for this exemption;

~~(7)~~ (6) individuals who are single parents or one parent in a two-parent family employed at least 30 35 hours per week;

~~(8) individuals for whom participation would require a round trip commuting time by available transportation of more than two hours, excluding transporting of children for child care;~~

(9) individuals for whom lack of proficiency in English is a barrier to employment, provided such individuals are participating in an intensive program which lasts no longer than six months and is designed to remedy their language deficiency;

(10) individuals who, because of advanced age or lack of ability, are incapable of gaining proficiency in English, as determined by the county social worker, shall continue to be exempt under this subdivision and are not subject to the requirement that they be participating in a language program;

~~(11)~~ (7) individuals ~~under such duress that they are incapable of participating in the program, as determined by the county social worker~~ experiencing a personal or family crisis that makes them incapable of participating in the program, as determined by the county agency. If the participant does not agree with the county agency's determination, the participant may seek professional certification, as defined in section 256J.08, that the participant is incapable of participating in the program. Persons in this exemption category must be reevaluated every 60 days; or

~~(12) individuals in need of refresher courses for purposes of obtaining professional certification or licensure.~~

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~~(b) In a two-parent family, only one caregiver may be exempted under paragraph (a), clauses (4) and (6).~~

(8) second parents in two-parent families employed for 20 or more hours per week provided the first parent is employed at least 35 hours per week.

(b) A caregiver who is exempt under clause (5) must enroll in and attend an early childhood and family education class, a parenting class, or some similar activity, if available, during the period of time the caregiver is exempt under this section. Notwithstanding section 256J.46, failure to attend the required activity shall not result in the imposition of a sanction.

Sec. 110. Minnesota Statutes 1996, section 268.88, is amended to read:

268.88 [LOCAL SERVICE UNIT PLANS.]

(a) By April 15, ~~1991~~ 1999, and by April 15 of each second year thereafter, local service units shall prepare and submit to the commissioner a plan that covers the next two state fiscal years. At least 30 days prior to submission of the plan, the local service unit shall solicit comments from the public on the contents of the proposed plan. The commissioner shall notify each local service unit within 60 days of receipt of its plan that the plan has been approved or disapproved. The plan must include:

(1) a statement of objectives for the employment and training services the local service unit administers;

(2) the establishment of job placement and job retention goals, the establishment of public assistance caseload reduction goals, and the strategies and programs that will be used to achieve these goals;

(3) a statement of whether the goals from the preceding year were met and an explanation if the local service unit failed to meet the goals;

(4) the amount proposed to be allocated to each employment and training service;

(5) the proposed types of employment and training services the local service unit plans to utilize;

(6) a description of how the local service unit will use funds provided under section 256.736 to meet the requirements of that section. The description must include the two work programs required by section 256.736, subdivision 10, paragraph (a), clause (13), what services will be provided, number of clients served, per service expenditures, type of clients served, and projected outcomes chapter 256J to meet the requirements of that chapter. The description must include what services will be provided, per service expenditures, an estimate of how many employment and training slots the local service unit will provide, how many dollars the local service unit will provide per slot per provider, how many participants per slot, an estimate of the ratio of participants per job counselor, and proposed uses for any residual funds not included in slot allocations to providers;

(7) a report on the use of wage subsidies, grant diversions, community investment programs, and other services administered under this chapter;

(8) a performance review of the employment and training service providers delivering employment and training services for the local service unit;

(9) a copy of any contract between the local service unit and an employment and training service provider including expected outcomes and service levels for public assistance clients; ~~and~~

(10) a copy of any other agreements between educational institutions, family support services, and child care providers; and

(11) a description of how the local service unit ensures compliance with section 256J.06, requiring community involvement in the administration of MFIP-S.

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(b) In counties with a city of the first class, the county and the city shall develop and submit a joint plan. The plan may not be submitted until agreed to by both the city and the county. The plan must provide for the direct allocation of employment and training money to the city and the county unless waived by either. If the county and the city cannot concur on a plan, the commissioner shall resolve their dispute. In counties in which a federally recognized Indian tribe is operating an employment and training program under an agreement with the commissioner of human services, the plan must provide that the county will coordinate its employment and training programs, including developing a system for referrals, sanctions, and the provision of supporting services such as access to child care funds and transportation with programs operated by the Indian tribe. The plan may not be given final approval by the commissioner until the tribal unit and county have submitted written agreement on these provisions in the plan. If the county and Indian tribe cannot agree on these provisions, the local service unit shall notify the commissioner of economic security and the commissioners of economic security and human services shall resolve the dispute.

(c) The commissioner may withhold the distribution of employment and training money from a local service unit that does not submit a plan to the commissioner by the date set by this section, and shall withhold the distribution of employment and training money from a local service unit whose plan has been disapproved by the commissioner until an acceptable amended plan has been submitted.

(d) Beginning April 15, 1992, and by April 15 of each second year thereafter, local service units must prepare and submit to the commissioner an interim year plan update that deals with performance in that state fiscal year and changes anticipated for the second year of the biennium. The update must include information about employment and training programs addressed in the local service unit's two-year plan and shall be completed in accordance with criteria established by the commissioner.

Sec. 111. Laws 1997, chapter 203, article 9, section 21, is amended to read:

Sec. 21. [INELIGIBILITY FOR STATE FUNDED PROGRAMS.]

(a) Beginning July 1, ~~1999~~ 2000, the following persons will be ineligible for general assistance and general assistance medical care under Minnesota Statutes, chapter 256D, group residential housing under Minnesota Statutes, chapter 256I, and MFIP-S assistance under Minnesota Statutes, chapter 256J, funded with state money:

(1) persons who are terminated from or denied Supplemental Security Income due to the 1996 changes in the federal law making persons whose alcohol or drug addiction is a material factor contributing to the person's disability ineligible for Supplemental Security Income, and are eligible for general assistance under Minnesota Statutes, section 256D.05, subdivision 1, paragraph (a), clause (17), general assistance medical care under Minnesota Statutes, chapter 256D, or group residential housing under Minnesota Statutes, chapter 256I;

(2) legal noncitizens who are ineligible for Supplemental Security Income due to the 1996 changes in federal law making certain noncitizens ineligible for these programs due to their noncitizen status; and

(3) legal noncitizens who are eligible for MFIP-S assistance, either the cash assistance portion or the food assistance portion, funded entirely with state money.

(b) State money that remains unspent ~~on June 30, 1999,~~ due to changes in federal law enacted after May 12, 1997, that reduce state spending for legal noncitizens or for persons whose alcohol or drug addiction is a material factor contributing to the person's disability, or enacted after February 1, 1998, that reduce state spending for food benefits for legal noncitizens shall not cancel and shall be deposited in the TANF reserve account.

Sec. 112. Laws 1997, chapter 248, section 46, as amended by Laws 1997, First Special Session chapter 5, section 10, is amended to read:

Sec. 46. [UNLICENSED CHILD CARE PROVIDERS; INTERIM EXPANSION.]

(a) Notwithstanding Minnesota Statutes, section 245A.03, subdivision 2, clause (2), until June 30, 1999, nonresidential child care programs or services that are provided by an unrelated individual to persons from two or three other unrelated families are excluded from the licensure provisions of Minnesota Statutes, chapter 245A, provided that:

(1) the individual provides services at any one time to no more than four children who are unrelated to the individual;

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(2) no more than two of the children are under two years of age; and

(3) the total number of children being cared for at any one time does not exceed five.

(b) Paragraph (a), clauses (1) to (3), do not apply to:

(1) nonresidential programs that are provided by an unrelated individual to persons from a single related family.;

(2) a child care provider whose child care services meet the criteria in paragraph (a), clauses (1) to (3), but who chooses to apply for licensure;

(3) a child care provider who, as an applicant for licensure or as a license holder, has received a license denial under Minnesota Statutes, section 245A.05, a fine under Minnesota Statutes, section 245A.06, or a sanction under Minnesota Statutes, section 245A.07, from the commissioner that has not been reversed on appeal; or

(4) a child care provider, or a child care provider who has a household member who, as a result of a licensing process, has a disqualification under Minnesota Statutes, chapter 245A, that has not been set aside by the commissioner.

Sec. 113. [REPORT REQUIRED.]

Beginning January 1, 1999, the commissioner shall report annually to the legislature on January 15 on the percent, for each of the four quarters of the immediate preceding year, of the MFIP-S caseload participants who are exempt from work under the provisions of Minnesota Statutes, section 256J.56, clause (2) or (3).

Sec. 114. [REPORT; NONCERTIFIED PROVIDERS.]

Beginning January 15, 1999, the commissioner of economic security, in conjunction with the commissioner of human services, shall report annually on the use in MFIP-S of employment and training providers. The report shall include information on the number and types of noncertified providers.

Sec. 115. [SCREENING AND REFERRAL GUIDELINES FOR PARTICIPANTS WITH DRUG AND ALCOHOL PROBLEMS.]

The commissioner of human services shall develop guidelines for county agencies and their contractors to identify participants who have alcohol or drug problems that require treatment. The guidelines must provide for:

(1) the use of simplified written and verbal screening tools as part of the intake process;

(2) referral for clinical assessment and appropriate treatment, if needed; and

(3) training for caseworkers to administer the screening protocols and refer participants to services.

Sec. 116. [EBT TRANSACTION COSTS; APPROVAL FROM LEGISLATURE.]

The commissioner of human services shall request and receive approval from the legislature before adjusting the payment to retailers for electronic benefit transfer transaction costs.

Sec. 117. [STUDY; MFIP-S EXIT LEVEL; ELIMINATION OF SHELTER EXPENSE DEDUCTION.]

The commissioner shall consider recommending to the 1999 legislature:

(1) adjustments to the MFIP-S earned income disregard, family wage level, or transitional standard, which will ensure that participants do not lose eligibility for MFIP-S until their income reaches at least 120 percent of the 1999 federal poverty level; and

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(2) proposals responding to the effect of the elimination of the food stamp shelter expense deduction on food spending and food sufficiency of MFIP-S families paying greater than 50 percent of their income toward housing costs. The commissioner's recommendations should include information on the number of families losing greater than 20 percent of their food benefits, the number losing between ten percent and 20 percent and the number losing zero percent to ten percent, and the characteristics of families receiving less food assistance under MFIP-S. The commissioner may collaborate with private or nonprofit entities, if necessary, to provide this information.

Sec. 118. [REPEALER.]

(a) Minnesota Statutes 1997 Supplement, section 256J.28, subdivision 4, is repealed effective January 1, 1998.

(b) Minnesota Statutes 1997 Supplement, section 256J.25; and Laws 1997, chapter 85, article 1, sections 61 and 71, and article 3, section 55, are repealed.

(c) Minnesota Statutes 1996, sections 256.031, subdivisions 1, 2, 3, and 4; 256.032; 256.033, subdivisions 2, 3, 4, 5, and 6; 256.034; 256.035; 256.036; 256.0361; 256.047; 256.0475; 256.048; and 256.049; and Minnesota Statutes 1997 Supplement, sections 256.031, subdivisions 5 and 6; 256.033, subdivisions 1 and 1a; 256B.062; 256J.32, subdivision 5; and 256J.34, subdivision 5, are repealed effective July 1, 1998.

(d) Minnesota Rules (Exempt), parts 9500.9100; 9500.9110; 9500.9120; 9500.9130; 9500.9140; 9500.9150; 9500.9160; 9500.9170; 9500.9180; 9500.9190; 9500.9200; 9500.9210; and 9500.9220, are repealed effective July 1, 1998.

Sec. 119. [EFFECTIVE DATES.]

(a) Sections 2, 4, 7, 8, 19, 90, 95, and 102 are effective the day following final enactment.

(b) Section 9 is effective June 1, 1998.

(d) Section 50 is effective for all applications for MFIP-S made on or after July 1, 1998.

(e) Section 12 is effective March 30, 1998.

(f) Section 51 is effective for MFIP-S applications received on or after January 1, 1999, and for all MFIP-S recertifications occurring on or after January 1, 1999.

REGIONAL TREATMENT CENTERS

Section 1. [CONVEYANCE OF STATE LAND; ANOKA COUNTY.]

Subdivision 1. [CONVEYANCE AUTHORIZED.] Notwithstanding Minnesota Statutes, sections 92.45, 94.09, 94.10, and 103F.335, subdivision 3, or any other law to the contrary, the commissioner of administration may convey all, or any part of, the land and associated buildings described in subdivision 3 to Anoka county after the commissioner of human services declares said property surplus to its needs.

Subd. 2. [FORM.] (a) The conveyance shall be in a form approved by the attorney general.

(b) The conveyance is subject to a scenic easement, as defined in Minnesota Statutes, section 103F.311, subdivision 6, to be under the custodial control of the commissioner of natural resources, on that portion of the conveyed land that is designated for inclusion in the wild and scenic river system under Minnesota Statutes, section 103F.325. The scenic easement shall allow for continued use of the structures located within the easement and for development of a walking path within the easement.

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(c) The conveyance shall restrict use of the land to governmental, including recreational, purposes and shall provide that ownership of any portion of the land that ceases to be used for such purposes shall revert to the state of Minnesota.

(d) The commissioner of administration may convey any part of the property described in subdivision 3 any time after the land is declared surplus by the commissioner of human services and the execution and recording of the scenic easement under paragraph (b) has been completed.

(e) Notwithstanding any law, regulation, or ordinance to the contrary, the instrument of conveyance to Anoka county may be recorded in the office of the Anoka county recorder without compliance with any subdivision requirement.

Subd. 3. [LAND DESCRIPTION.] Subject to right-of-way for Grant Street, Northview Lane, Garfield Street, 5th Avenue, and state trunk highway No. 288, also known as 4th Avenue, the land to be conveyed may include all, or part of, that which is described as follows:

(1) all that part of Government Lots 3 and 4 and that part of the Southeast Quarter of the Southwest Quarter, all in Section 31, Township 32 North, Range 24 West, Anoka county, Minnesota, described as follows:

Beginning at the southwest corner of said Southeast Quarter of the Southwest Quarter of Section 31; thence North 13 degrees 16 minutes 11 seconds East, assumed bearing, 473.34 feet; thence North 07 degrees 54 minutes 43 seconds East 186.87 feet; thence North 14 degrees 08 minutes 33 seconds West 154.77 feet; thence North 62 degrees 46 minutes 44 seconds West 526.92 feet; thence North 25 degrees 45 minutes 30 seconds East 74.43 feet; thence northerly 88.30 feet along a tangential curve concave to the west having a radius of 186.15 feet and a central angle of 27 degrees 10 minutes 50 seconds; thence North 01 degrees 25 minutes 20 seconds West, tangent to said curve, 140.53 feet; thence North 71 degrees 56 minutes 34 seconds West to the southeasterly shoreline of the Rum river; thence southwesterly along said shoreline to the south line of said Government Lot 4; thence easterly along said south line to the point of beginning. For the purpose of this description the south line of said Southeast Quarter of the Southwest Quarter of Section 31 has an assumed bearing of North 89 degrees 08 minutes 19 seconds East;

(2) Government Lot 1, Section 6, Township 31 North, Range 24 West, Anoka county, Minnesota; EXCEPT that part platted as Grant Properties, Anoka county, Minnesota; ALSO EXCEPT that part lying southerly of the westerly extension of the south line of Block 6, Woodbury's Addition to the city of Anoka, Anoka county, Minnesota, and lying westerly of the west line of said plat of Grant Properties, said line also being the centerline of 4th Avenue;

(3) all that part of said Block 6, Woodbury's Addition to the city of Anoka lying westerly of Northview 1st Addition, Anoka county, Minnesota;

(4) all that part of said Northview 1st Addition lying westerly of the east line of Lots 11 through 20, Block 1, inclusive, thereof; and

(5) all that part of the Northeast Quarter of the Northwest Quarter of said Section 6, Township 31 North, Range 24 West, Anoka county, Minnesota, lying northerly of the centerline of Grant Street as defined by said plat of Grant Properties and lying westerly of said east line of Lots 11 through 20, Block 1, inclusive, Northview 1st Addition and said line's extension north and south.

Subd. 4. [DETERMINATION.] The commissioner of human services has determined that the land described in subdivision 3 will no longer be needed for the Anoka metro regional treatment center upon the completion of the state facilities currently under construction and the completion of renovation work to state buildings that are not located on the land described in subdivision 3. The state's land and building management interests may best be served by conveying all, or part of, the land and associated buildings located on the land described in subdivision 3.

Sec. 2. [CONVEYANCE OF STATE LAND; CROW WING COUNTY.]

Subdivision 1. [CONVEYANCE AUTHORIZED.] Notwithstanding Minnesota Statutes, sections 92.45, 94.09, 94.10, and 103F.335, subdivision 3, or any other law to the contrary, the commissioner of administration may convey all, or any part of, the land and the state building located on the land described in subdivision 3, to Crow Wing county after the commissioner of human services declares the property surplus to its needs.

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Subd. 2. [FORM.] (a) The conveyance shall be in a form approved by the attorney general.

(b) The conveyance shall restrict use of the land to county governmental purposes, including community corrections programs, and shall provide that ownership of any portion of the land or building that ceases to be used for such purposes shall revert to the state of Minnesota.

Subd. 3. [LAND DESCRIPTION.] That part of the Northeast Quarter (NE l/4) of Section 30, Township 45 North, Range 30 West, Crow Wing county, Minnesota, described as follows:

Commencing at the southeast corner of said Northeast quarter; thence North 00 degrees 46 minutes 05 seconds West, bearing based on the Crow Wing county Coordinate Database NAD 83/94, 1520.06 feet along the east line of said Northeast quarter to the point of beginning; thence continue North 00 degrees 46 minutes 05 seconds West 634.14 feet along said east line of the Northeast quarter; thence South 89 degrees 13 minutes 20 seconds West 550.00 feet; thence South 18 degrees 57 minutes 23 seconds East 115.59 feet; thence South 42 degrees 44 minutes 39 seconds East 692.37 feet; thence South 62 degrees 46 minutes 19 seconds East 20.24 feet; thence North 89 degrees 13 minutes 55 seconds East 33.00 feet to the point of beginning. Containing 4.69 acres, more or less. Subject to the right-of-way of the Township road along the east side thereof, subject to other easements, reservations, and restrictions of record, if any.

Subd. 4. [DETERMINATION.] The commissioner of human services has determined that the land described in subdivision 3 and the building on the land will not be needed for future operations of the Brainerd regional human services center. The state's land management interests would best be served by conveying the land to Crow Wing county for governmental use.

COMPULSIVE GAMBLING AND MISCELLANEOUS

Section 1. Minnesota Statutes 1996, section 62A.65, subdivision 5, is amended to read:

Subd. 5. [PORTABILITY OF COVERAGE.] (a) No individual health plan may be offered, sold, issued, or with respect to children age 18 or under renewed, to a Minnesota resident that contains a preexisting condition limitation, preexisting condition exclusion, or exclusionary rider, unless the limitation or exclusion is permitted under this subdivision, provided that, except for children age 18 or under, underwriting restrictions may be retained on individual contracts that are issued without evidence of insurability as a replacement for prior individual coverage that was sold before May 17, 1993. The individual may be subjected to an 18-month preexisting condition limitation, unless the individual has maintained continuous coverage as defined in section 62L.02. The individual must not be subjected to an exclusionary rider. An individual who has maintained continuous coverage may be subjected to a one-time preexisting condition limitation of up to 12 months, with credit for time covered under qualifying coverage as defined in section 62L.02, at the time that the individual first is covered under an individual health plan by any health carrier. Credit must be given for all qualifying coverage with respect to all preexisting conditions, regardless of whether the conditions were preexisting with respect to any previous qualifying coverage. The individual must not be subjected to an exclusionary rider. Thereafter, the individual must not be subject to any preexisting condition limitation, preexisting condition exclusion, or exclusionary rider under an individual health plan by any health carrier, except an unexpired portion of a limitation under prior coverage, so long as the individual maintains continuous coverage as defined in section 62L.02.

(b) A health carrier must offer an individual health plan to any individual previously covered under a group health plan issued by that health carrier, regardless of the size of the group, so long as the individual maintained continuous coverage as defined in section 62L.02. Beginning January 1, 1999, if the individual has available any continuation coverage provided under sections 62A.146; 62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 62D.101; or 62D.105, or continuation coverage provided under federal law, the health carrier need not offer coverage under this paragraph until the individual has exhausted the continuation coverage. The offer must not be subject to underwriting, except as permitted under this paragraph. A health plan issued under this paragraph must be a qualified plan as defined in section 62E.02 and must not contain any preexisting condition limitation, preexisting condition exclusion, or exclusionary rider, except for any unexpired limitation or exclusion under the previous coverage. The individual health plan must cover pregnancy on the same basis as any other covered illness under the individual health plan. The initial

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premium rate for the individual health plan must comply with subdivision 3. The premium rate upon renewal must comply with subdivision 2. In no event shall the premium rate exceed 90 percent of the premium charged for comparable individual coverage by the Minnesota comprehensive health association, and the premium rate must be less than that amount if necessary to otherwise comply with this section. An individual health plan offered under this paragraph to a person satisfies the health carrier's obligation to offer conversion coverage under section 62E.16, with respect to that person. Coverage issued under this paragraph must provide that it cannot be canceled or nonrenewed as a result of the health carrier's subsequent decision to leave the individual, small employer, or other group market. Section 72A.20, subdivision 28, applies to this paragraph.

Sec. 2. Minnesota Statutes 1996, section 62D.042, subdivision 2, is amended to read:

Subd. 2. [~~BEGINNING ORGANIZATIONS~~ NET WORTH REQUIREMENTS.] (a) Beginning organizations shall maintain net worth of at least 8-1/3 percent of the sum of all expenses expected to be incurred in the 12 months following the date the certificate of authority is granted, or $1,500,000, whichever is greater.

(b) After the first full calendar year of operation, organizations shall maintain net worth of at least 8-1/3 percent and at most ~~16-2/3~~ 25 percent of the sum of all expenses incurred during the most recent calendar year, but in no case shall net worth fall below $1,000,000.

(c) Notwithstanding paragraphs (a) and (b), any health maintenance organization owned by a political subdivision of this state, which has a higher than average percentage of enrollees who are enrolled in medical assistance or general assistance medical care, may exceed the maximum net worth limits provided in paragraphs (a) and (b), with the advance approval of the commissioner.

Sec. 3. Minnesota Statutes 1996, section 62E.16, is amended to read:

62E.16 [POLICY CONVERSION RIGHTS.]

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shall not be deemed to be an individual enrollment contract for the purposes of section 62D.10. An individual health plan offered under section 62A.65, subdivision 5, paragraph (b), to a person satisfies the health carrier's obligation to offer conversion coverage under this section with respect to that person.

Sec. 4. [62Q.096] [CREDENTIALING OF PROVIDERS.]

If a health plan company has initially credentialed, as providers in its provider network, individual providers employed by or under contract with an entity that: (1) is authorized to bill under section 256B.0625, subdivision 5; (2) meets the requirements of Minnesota Rules, parts 9520.0750 to 9520.0870; (3) is designated an essential community provider under section 62Q.19; and (4) is under contract with the health plan company to provide mental health services, the health plan company must continue to credential at least the same number of providers from that entity, as long as those providers meet the health plan company's credentialing standards. A health plan company shall not refuse to credential these providers on the grounds that their provider network has a sufficient number of providers of that type.

Sec. 5. [245.982] [PROGRAM SUPPORT.]

In order to address the problem of gambling in this state, the compulsive gambling fund should attempt to assess the beneficiaries of gambling, on a percentage basis according to the revenue they receive from gambling, for the costs of programs to help problem gamblers and their families. In that light, the governor is requested to contact the chairs of the 11 tribal governments in this state and request a contribution of funds for the compulsive gambling program. The governor should seek a total supplemental contribution of $643,000. Funds received from the tribal governments in this state shall be deposited in the Indian gaming revolving account.

Sec. 6. Minnesota Statutes 1997 Supplement, section 256F.05, subdivision 8, is amended to read:

Subd. 8. [USES OF FAMILY PRESERVATION FUND GRANTS.] (a) A county which has not demonstrated that year that its family preservation core services are developed as provided in subdivision 1a, must use its family preservation fund grant exclusively for family preservation services defined in section 256F.03, subdivision 5, paragraphs (a), (b), (c), and (e).

(b) A county which has demonstrated that year that its family preservation core services are developed becomes eligible either to continue using its family preservation fund grant as provided in paragraph (a), or to exercise the expanded service option under paragraph (c).

(c) The expanded service option permits an eligible county to use its family preservation fund grant for child welfare preventive services. For purposes of this section, child welfare preventive services are those services directed toward a specific child or family that further the goals of section 256F.01 and include assessments, family preservation services, service coordination, community-based treatment, crisis nursery services when the parents retain custody and there is no voluntary placement agreement with a child-placing agency, respite care except when it is provided under a medical assistance waiver, home-based services, and other related services. For purposes of this section, child welfare preventive services shall not include shelter care or other placement services under the authority of the court or public agency to address an emergency. To exercise this option, an eligible county must notify the commissioner in writing of its intention to do so no later than 30 days into the quarter during which it intends to begin or in its county plan, as provided in section 256F.04, subdivision 2. Effective with the first day of that quarter, the county must maintain its base level of expenditures for child welfare preventive services and use the family preservation fund to expand them. The base level of expenditures for a county shall be that established under section 256F.10, subdivision 7. For counties which have no such base established, a comparable base shall be established with the base year being the calendar year ending at least two calendar quarters before the first calendar quarter in which the county exercises its expanded service option. The commissioner shall, at the request of the counties, reduce, suspend, or eliminate either or both of a county's obligations to continue the base level of expenditures and to expand child welfare preventive services under extraordinary circumstances.

(d) Notwithstanding paragraph (a), a county that is participating in the child protection assessments or investigations community collaboration pilot program under section 626.5560, or in the concurrent permanency planning pilot program under section 257.0711, may use its family preservation fund grant for those programs.

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Sec. 7. Minnesota Statutes 1996, section 609.115, subdivision 9, is amended to read:

Subd. 9. [COMPULSIVE GAMBLING ASSESSMENT REQUIRED.] (a) If a person is convicted of ~~a felony for~~ theft under section 609.52, embezzlement of public funds under section 609.54, or forgery under section 609.625, 609.63, or 609.631, the probation officer shall determine in the report prepared under subdivision 1 whether or not compulsive gambling contributed to the commission of the offense. If so, the report shall contain the results of a compulsive gambling assessment conducted in accordance with this subdivision. The probation officer shall make an appointment for the offender to undergo the assessment if so indicated.

(b) The compulsive gambling assessment report must include a recommended level of treatment for the offender if the assessor concludes that the offender is in need of compulsive gambling treatment. The assessment must be conducted by an assessor qualified under section 245.98, subdivision 2a, to perform these assessments or to provide compulsive gambling treatment. An assessor providing a compulsive gambling assessment may not have any direct or shared financial interest or referral relationship resulting in shared financial gain with a treatment provider. If an independent assessor is not available, the probation officer may use the services of an assessor with a financial interest or referral relationship as authorized under rules adopted by the commissioner of human services under section 245.98, subdivision 2a.

(c) The commissioner of human services shall reimburse the assessor for the costs associated with a compulsive gambling assessment at a rate established by the commissioner up to a maximum of $100 for each assessment. The commissioner shall reimburse these costs after receiving written verification from the probation officer that the assessment was performed and found acceptable.

Sec. 8. Laws 1994, chapter 633, article 7, section 3, is amended to read:

Sec. 3. [INDIAN GAMING REVOLVING ACCOUNT.]

Funds received from the ~~attorney general~~ Indian tribal governments and the Minnesota state lottery shall ~~deposit~~ be deposited in a separate account in the state treasury ~~all money received from Indian tribal governments~~ for the purpose of ~~defraying the attorney general's costs in providing legal services with respect to Indian gaming. Money in the account is appropriated to the attorney general for that purpose~~ contributing to the compulsive gambling program.

Sec. 9. [PREVALENCE STUDY.]

If funding is available, the compulsive gambling program shall provide baseline prevalence studies to identify those at highest risk of developing a compulsive gambling problem, including a replication in 1999 of the 1994 adult prevalence survey.

Sec. 10. [EXTENDING ASSESSMENTS TO BANKRUPTCY AND FAMILY COURT PROCEEDINGS.]

If funding is available, the commissioner of human services shall study whether problem gambling assessments should be provided or required for individuals involved in bankruptcy or family court proceedings, and report to the legislature by December 15, 1998.

Sec. 11. [COMPULSIVE GAMBLING APPROPRIATION.]

(a) In addition to any other appropriations, $340,000 is appropriated annually from the Minnesota lottery prize fund to the Indian gaming revolving account in Laws 1994, chapter 633, article 7, section 3, and transferred to the commissioner of human services for the compulsive gambling program. The funds provided under Minnesota Statutes, section 245.982, are to be transferred from the Indian gaming revolving account to the commissioner of human services for purposes of paragraph (d).

(b) Of the funds appropriated under this section, $290,000 in fiscal year 1999 is appropriated for the establishment of fee-for-service projects. Fee-for-service funds under this appropriation may be awarded on a per-client basis to existing treatment centers and may be in addition to grants the centers currently receive. Baseline grants based on the last fiscal year client numbers and units of services provided constitute minimum appropriations to existing treatment centers, and upon meeting the contracted level of services, the treatment centers are eligible for fee-for-service funds on a per-client basis in addition to grants.

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(c) Of the funds appropriated under this section, $50,000 in fiscal year 1999 is appropriated for the operation of prevention and education programs aimed at helping adult and adolescent gamblers.

(d) Of the funds provided under Minnesota Statutes, section 245.982, up to $30,000 in fiscal year 1999 may be used for the completion of the prevalence study in section 9, up to $10,000 in fiscal year 1999 may be used for the study in section 10 related to extending assessments to bankruptcy and family court proceedings, and up to $50,000 in fiscal year 1999 may be used for the operation of the hotline. The commissioner may prioritize the initiatives under this paragraph as the commissioner deems appropriate. Any funding remaining must be used for purposes of treatment under paragraph (b) and prevention under paragraph (c), and the funds must be appropriated at a two-to-one ratio, respectively.

Sec. 12. [TOWN OF WHITE, ST. LOUIS COUNTY.]

Subdivision 1. [TRANSFER.] Notwithstanding any provision of Minnesota Statutes to the contrary, the town of White is hereby authorized to transfer the following property and any buildings, equipment, and other improvements located thereon to the White community hospital corporation, a nonprofit corporation organized and existing under Minnesota Statutes, chapter 317:

That part of the southeast quarter of southwest quarter (SE 1/4 of SW 1/4), section 10, township 58 north of range 15 west of the fourth principal meridian, according to the United States government survey thereof, St. Louis county, Minnesota, described as follows:

Commencing at the southeast corner of said SE 1/4 of SW 1/4, section 10, township 58, range 15, thence proceeding north along the east line thereof for a distance of 550 feet; thence west and parallel to the south line thereof for a distance of 800 feet; thence south and parallel to the east line thereof, for a distance of 550 feet to the south line; thence east along said south line thereof, for a distance of 800 feet to the point of beginning.

Subd. 2. [NO CONSIDERATION OR ELECTION REQUIRED.] The transfer authorized by subdivision 1 shall be without consideration and no vote of the electors of the town of White or city of Aurora shall be required.

Subd. 3. [USE; PUBLIC PROPERTY.] The property legally described in subdivision 1 shall be used for health care and related purposes and shall be considered public property for purposes of Minnesota Statutes, section 16A.695. The activities conducted on the property described in subdivision 1 by the White community hospital corporation, its successors and assigns shall be considered a governmental program as authorized by Minnesota Statutes, chapter 447.

Subd. 4. [NAME.] The public name of the buildings and improvements located on the real property legally described in subdivision 1 shall always include the words "White community."

Sec. 13. [CITY OF EVELETH; LOAN FORGIVENESS.]

Notwithstanding the provisions of any other law or charter, the city of Eveleth may, by resolution of its city council, forgive all or any portion of the principal and interest due or to become due to the city, pursuant to any loan or loans made by the city, in an amount not exceeding $100,000, prior to January 1, 1998, to any hospital, nursing home, other health care facility or corporation, partnership, or limited liability company operating such a facility within the city of Eveleth.

Sec. 14. [REPEALER.]

(a) Minnesota Rules, part 2740.1600, subpart 1, is repealed.

(b) Minnesota Statutes 1997 Supplement, section 62D.042, subdivision 3, is repealed.

Sec. 15. [EFFECTIVE DATES.]

(a) Sections 2 and 4 are effective January 1, 1999.

(b) Section 3 is effective January 1, 1999, and applies to any individual who has continuation coverage available on or after that date.

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(d) Section 13 is effective the day following final enactment without local approval according to Minnesota Statutes, section 645.023, subdivision 1, clause (a).

(e) Section 14, paragraph (a), is effective January 1, 1999.

(f) Section 14, paragraph (b), is effective the day following final enactment.

CHILD WELFARE MODIFICATIONS

Section 1. Minnesota Statutes 1997 Supplement, section 144.218, subdivision 2, is amended to read:

Subd. 2. [ADOPTION OF FOREIGN PERSONS.] In proceedings for the adoption of a person who was born in a foreign country, the court, upon evidence presented by the commissioner of human services from information secured at the port of entry, or upon evidence from other reliable sources, may make findings of fact as to the date and place of birth and parentage. Upon receipt of certified copies of the court findings and the order or decree of adoption or a certified copy of a decree issued under section 259.60, the state registrar shall register a birth certificate in the new name of the adopted person. The certified copies of the court findings and the order or, decree of adoption, or decree issued under section 259.60 are confidential, pursuant to section 13.02, subdivision 3, and shall not be disclosed except pursuant to court order or section 144.1761. The birth certificate shall state the place of birth as specifically as possible, and that the certificate is not evidence of United States citizenship.

Sec. 2. Minnesota Statutes 1996, section 144.226, subdivision 3, is amended to read:

Subd. 3. [BIRTH CERTIFICATE COPY SURCHARGE.] In addition to any fee prescribed under subdivision 1, there shall be a surcharge of $3 for each certified copy of a birth certificate, and for a certification that the record cannot be found. The local or state registrar shall forward this amount to the commissioner of finance for deposit into the account for the children's trust fund for the prevention of child abuse established under section 119A.12. This surcharge shall not be charged under those circumstances in which no fee for a certified copy of a birth certificate is permitted under subdivision 1, paragraph (a). Upon certification by the commissioner of finance that the assets in that fund exceed $20,000,000, this surcharge shall be discontinued.

Sec. 3. Minnesota Statutes 1997 Supplement, section 144.226, subdivision 4, is amended to read:

Subd. 4. [VITAL RECORDS SURCHARGE.] In addition to any fee prescribed under subdivision 1, there is a nonrefundable surcharge of $3 for each certified and noncertified birth or death record, and for a certification that the record cannot be found. The local or state registrar shall forward this amount to the state treasurer to be deposited into the state government special revenue fund. This surcharge shall not be charged under those circumstances in which no fee for a birth or death record is permitted under subdivision 1, paragraph (a). This surcharge requirement expires June 30, 2002.

Sec. 4. Minnesota Statutes 1997 Supplement, section 245A.03, subdivision 2, is amended to read:

Subd. 2. [EXCLUSION FROM LICENSURE.] Sections 245A.01 to 245A.16 do not apply to:

(1) residential or nonresidential programs that are provided to a person by an individual who is related unless the residential program is a child foster care placement made by a local social services agency or a licensed child-placing agency, except as provided in subdivision 2a;

(2) nonresidential programs that are provided by an unrelated individual to persons from a single related family;

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(3) residential or nonresidential programs that are provided to adults who do not abuse chemicals or who do not have a chemical dependency, a mental illness, mental retardation or a related condition, a functional impairment, or a physical handicap;

(4) sheltered workshops or work activity programs that are certified by the commissioner of economic security;

(5) programs for children enrolled in kindergarten to the 12th grade and prekindergarten special education in a school as defined in section 120.101, subdivision 4, and programs serving children in combined special education and regular prekindergarten programs that are operated or assisted by the commissioner of children, families, and learning;

(6) nonresidential programs primarily for children that provide care or supervision, without charge for ten or fewer days a year, and for periods of less than three hours a day while the child's parent or legal guardian is in the same building as the nonresidential program or present within another building that is directly contiguous to the building in which the nonresidential program is located;

(7) nursing homes or hospitals licensed by the commissioner of health except as specified under section 245A.02;

(8) board and lodge facilities licensed by the commissioner of health that provide services for five or more persons whose primary diagnosis is mental illness who have refused an appropriate residential program offered by a county agency. This exclusion expires on July 1, 1990;

(9) homes providing programs for persons placed there by a licensed agency for legal adoption, unless the adoption is not completed within two years;

(10) programs licensed by the commissioner of corrections;

(11) recreation programs for children or adults that operate for fewer than 40 calendar days in a calendar year or programs operated by a park and recreation board of a city of the first class whose primary purpose is to provide social and recreational activities to school age children, provided the program is approved by the park and recreation board;

(12) programs operated by a school as defined in section 120.101, subdivision 4, whose primary purpose is to provide child care to school-age children, provided the program is approved by the district's school board;

(13) Head Start nonresidential programs which operate for less than 31 days in each calendar year;

(14) noncertified boarding care homes unless they provide services for five or more persons whose primary diagnosis is mental illness or mental retardation;

(15) nonresidential programs for nonhandicapped children provided for a cumulative total of less than 30 days in any 12-month period;

(16) residential programs for persons with mental illness, that are located in hospitals, until the commissioner adopts appropriate rules;

(17) the religious instruction of school-age children; Sabbath or Sunday schools; or the congregate care of children by a church, congregation, or religious society during the period used by the church, congregation, or religious society for its regular worship;

(18) camps licensed by the commissioner of health under Minnesota Rules, chapter 4630;

(19) mental health outpatient services for adults with mental illness or children with emotional disturbance;

(20) residential programs serving school-age children whose sole purpose is cultural or educational exchange, until the commissioner adopts appropriate rules;

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(22) respite care services provided as a home and community-based service to a person with mental retardation or a related condition, in the person's primary residence;

(23) community support services programs as defined in section 245.462, subdivision 6, and family community support services as defined in section 245.4871, subdivision 17;

(24) the placement of a child by a birth parent or legal guardian in a preadoptive home for purposes of adoption as authorized by section 259.47; or

(25) settings registered under chapter 144D which provide home care services licensed by the commissioner of health to fewer than seven adults.

For purposes of clause (6), a building is directly contiguous to a building in which a nonresidential program is located if it shares a common wall with the building in which the nonresidential program is located or is attached to that building by skyway, tunnel, atrium, or common roof.

Sec. 5. Minnesota Statutes 1996, section 245A.035, subdivision 4, is amended to read:

Subd. 4. [APPLICANT STUDY.] When the county agency has received the information required by section 245A.04, subdivision 3, paragraph (b), the county agency shall begin an applicant study according to the procedures in section 245A.04, subdivision 3. The commissioner may issue an emergency license upon recommendation of the county agency once the initial inspection has been successfully completed and the information necessary to begin the applicant background study has been provided. If the county agency does not recommend that the emergency license be granted, the agency shall notify the relative in writing that the agency is recommending denial to the commissioner; shall remove any child who has been placed in the home prior to licensure; and shall inform the relative in writing of the procedure to request review pursuant to subdivision 6. An emergency license shall be effective until a child foster care license is granted or denied, but shall in no case remain in effect more than 90 120 days from the date of placement.

Sec. 6. Minnesota Statutes 1997 Supplement, section 245A.04, subdivision 3b, is amended to read:

Subd. 3b. [RECONSIDERATION OF DISQUALIFICATION.] (a) The individual who is the subject of the disqualification may request a reconsideration of the disqualification.

The individual must submit the request for reconsideration to the commissioner in writing. A request for reconsideration for an individual who has been sent a notice of disqualification under subdivision 3a, paragraph (b), clause (1) or (2), must be submitted within 30 calendar days of the disqualified individual's receipt of the notice of disqualification. A request for reconsideration for an individual who has been sent a notice of disqualification under subdivision 3a, paragraph (b), clause (3), must be submitted within 15 calendar days of the disqualified individual's receipt of the notice of disqualification. Removal of a disqualified individual from direct contact shall be ordered if the individual does not request reconsideration within the prescribed time, and for an individual who submits a timely request for reconsideration, if the disqualification is not set aside. The individual must present information showing that:

(1) the information the commissioner relied upon is incorrect or inaccurate. If the basis of a reconsideration request is that a maltreatment determination or disposition under section 626.556 or 626.557 is incorrect, and the commissioner has issued a final order in an appeal of that determination or disposition under section 256.045, the commissioner's order is conclusive on the issue of maltreatment; or

(2) the subject of the study does not pose a risk of harm to any person served by the applicant or license holder.

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(b) The commissioner may set aside the disqualification under this section if the commissioner finds that the information the commissioner relied upon is incorrect or the individual does not pose a risk of harm to any person served by the applicant or license holder. In determining that an individual does not pose a risk of harm, the commissioner shall consider the consequences of the event or events that lead to disqualification, whether there is more than one disqualifying event, the vulnerability of the victim at the time of the event, the time elapsed without a repeat of the same or similar event, documentation of successful completion by the individual studied of training or rehabilitation pertinent to the event, and any other information relevant to reconsideration. In reviewing a disqualification under this section, the commissioner shall give preeminent weight to the safety of each person to be served by the license holder or applicant over the interests of the license holder or applicant.

(c) Unless the information the commissioner relied on in disqualifying an individual is incorrect, the commissioner may not set aside the disqualification of an individual in connection with a license to provide family day care for children, foster care for children in the provider's own home, or foster care or day care services for adults in the provider's own home if:

(1) less than ten years have passed since the discharge of the sentence imposed for the offense; and the individual has been convicted of a violation of any offense listed in sections 609.20 (manslaughter in the first degree), 609.205 (manslaughter in the second degree), criminal vehicular homicide under 609.21 (criminal vehicular homicide and injury), 609.215 (aiding suicide or aiding attempted suicide), felony violations under 609.221 to 609.2231 (assault in the first, second, third, or fourth degree), 609.713 (terroristic threats), 609.235 (use of drugs to injure or to facilitate crime), 609.24 (simple robbery), 609.245 (aggravated robbery), 609.25 (kidnapping), 609.255 (false imprisonment), 609.561 or 609.562 (arson in the first or second degree), 609.71 (riot), burglary in the first or second degree under 609.582 (burglary), 609.66 (dangerous weapon), 609.665 (spring guns), 609.67 (machine guns and short-barreled shotguns), 609.749 (harassment; stalking), 152.021 or 152.022 (controlled substance crime in the first or second degree), 152.023, subdivision 1, clause (3) or (4), or subdivision 2, clause (4) (controlled substance crime in the third degree), 152.024, subdivision 1, clause (2), (3), or (4) (controlled substance crime in the fourth degree), 609.224, subdivision 2, paragraph (c) (fifth-degree assault by a caregiver against a vulnerable adult), 609.228 (great bodily harm caused by distribution of drugs), 609.23 (mistreatment of persons confined), 609.231 (mistreatment of residents or patients), 609.2325 (criminal abuse of a vulnerable adult), 609.233 (criminal neglect of a vulnerable adult), 609.2335 (financial exploitation of a vulnerable adult), 609.234 (failure to report), 609.265 (abduction), 609.2664 to 609.2665 (manslaughter of an unborn child in the first or second degree), 609.267 to 609.2672 (assault of an unborn child in the first, second, or third degree), 609.268 (injury or death of an unborn child in the commission of a crime), 617.293 (disseminating or displaying harmful material to minors), 609.378 (neglect or endangerment of a child), a gross misdemeanor offense under 609.377 (malicious punishment of a child), 609.72, subdivision 3 (disorderly conduct against a vulnerable adult); or an attempt or conspiracy to commit any of these offenses, as each of these offenses is defined in Minnesota Statutes; or an offense in any other state, the elements of which are substantially similar to the elements of any of the foregoing offenses;

(2) regardless of how much time has passed since the discharge of the sentence imposed for the offense, the individual was convicted of a violation of any offense listed in sections 609.185 to 609.195 (murder in the first, second, or third degree), 609.2661 to 609.2663 (murder of an unborn child in the first, second, or third degree), a felony offense under 609.377 (malicious punishment of a child), 609.322 (solicitation, inducement, and promotion of prostitution), 609.323 (receiving profit derived from prostitution), 609.342 to 609.345 (criminal sexual conduct in the first, second, third, or fourth degree), 609.352 (solicitation of children to engage in sexual conduct), 617.246 (use of minors in a sexual performance), 617.247 (possession of pictorial representations of a minor), 609.365 (incest), a felony offense under 609.2242 and 609.2243 (domestic assault), a felony offense of spousal abuse, a felony offense of child abuse or neglect, a felony offense of a crime against children, or an attempt or conspiracy to commit any of these offenses as defined in Minnesota Statutes, or an offense in any other state, the elements of which are substantially similar to any of the foregoing offenses;

(3) within the seven years preceding the study, the individual committed an act that constitutes maltreatment of a child under section 626.556, subdivision 10e, and that resulted in substantial bodily harm as defined in section 609.02, subdivision 7a, or substantial mental or emotional harm as supported by competent psychological or psychiatric evidence; or

(4) within the seven years preceding the study, the individual was determined under section 626.557 to be the perpetrator of a substantiated incident of maltreatment of a vulnerable adult that resulted in substantial bodily harm as defined in section 609.02, subdivision 7a, or substantial mental or emotional harm as supported by competent psychological or psychiatric evidence.

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In the case of any ground for disqualification under clauses (1) to (4), if the act was committed by an individual other than the applicant or license holder residing in the applicant's or license holder's home, the applicant or license holder may seek reconsideration when the individual who committed the act no longer resides in the home.

The disqualification periods provided under clauses (1), (3), and (4) are the minimum applicable disqualification periods. The commissioner may determine that an individual should continue to be disqualified from licensure because the license holder or applicant poses a risk of harm to a person served by that individual after the minimum disqualification period has passed.

(d) The commissioner shall respond in writing or by electronic transmission to all reconsideration requests for which the basis for the request is that the information relied upon by the commissioner to disqualify is incorrect or inaccurate within 30 working days of receipt of a request and all relevant information. If the basis for the request is that the individual does not pose a risk of harm, the commissioner shall respond to the request within 15 working days after receiving the request for reconsideration and all relevant information. If the disqualification is set aside, the commissioner shall notify the applicant or license holder in writing or by electronic transmission of the decision.

(e) Except as provided in subdivision 3c, the commissioner's decision to disqualify an individual, including the decision to grant or deny a rescission or set aside a disqualification under this section, is the final administrative agency action and shall not be subject to further review in a contested case under chapter 14 involving a negative licensing appeal taken in response to the disqualification or involving an accuracy and completeness appeal under section 13.04.

Sec. 7. Minnesota Statutes 1997 Supplement, section 245A.04, subdivision 3d, is amended to read:

Subd. 3d. [DISQUALIFICATION.] When a background study completed under subdivision 3 shows any of the following: a conviction of one or more crimes listed in clauses (1) to (4); the individual has admitted to or a preponderance of the evidence indicates the individual has committed an act or acts that meet the definition of any of the crimes listed in clauses (1) to (4); or an administrative determination listed under clause (4), the individual shall be disqualified from any position allowing direct contact with persons receiving services from the license holder:

(1) regardless of how much time has passed since the discharge of the sentence imposed for the offense, and unless otherwise specified, regardless of the level of the conviction, the individual was convicted of any of the following offenses: sections 609.185 (murder in the first degree); 609.19 (murder in the second degree); 609.195 (murder in the third degree); 609.2661 (murder of an unborn child in the first degree); 609.2662 (murder of an unborn child in the second degree); 609.2663 (murder of an unborn child in the third degree); 609.322 (solicitation, inducement, and promotion of prostitution); 609.323 (receiving profit derived from prostitution); 609.342 (criminal sexual conduct in the first degree); 609.343 (criminal sexual conduct in the second degree); 609.344 (criminal sexual conduct in the third degree); 609.345 (criminal sexual conduct in the fourth degree); 609.352 (solicitation of children to engage in sexual conduct); 609.365 (incest); felony offense under 609.377 (malicious punishment of a child); 617.246 (use of minors in sexual performance prohibited); 617.247 (possession of pictorial representations of minors); a felony offense under 609.2242 and 609.2243 (domestic assault), a felony offense of spousal abuse, a felony offense of child abuse or neglect, a felony offense of a crime against children; or attempt or conspiracy to commit any of these offenses as defined in Minnesota Statutes, or an offense in any other state or country, where the elements are substantially similar to any of the offenses listed in this clause;

(2) if less than 15 years have passed since the discharge of the sentence imposed for the offense; and the individual has received a felony conviction for a violation of any of these offenses: sections 609.20 (manslaughter in the first degree); 609.205 (manslaughter in the second degree); 609.21 (criminal vehicular homicide and injury); 609.215 (suicide); 609.221 to 609.2231 (assault in the first, second, third, or fourth degree); repeat offenses under 609.224 (assault in the fifth degree); ~~609.2242 and 609.2243 (domestic assault; sentencing; repeat domestic assault);~~ repeat offenses under 609.3451 (criminal sexual conduct in the fifth degree); 609.713 (terroristic threats); 609.235 (use of drugs to injure or facilitate crime); 609.24 (simple robbery); 609.245 (aggravated robbery); 609.25 (kidnapping); 609.255 (false imprisonment); 609.561 (arson in the first degree); 609.562 (arson in the second degree); 609.563 (arson in the third degree); repeat offenses under 617.23 (indecent exposure; penalties); repeat offenses under 617.241 (obscene materials and performances; distribution and exhibition prohibited; penalty); 609.71 (riot); 609.66 (dangerous weapons); 609.67 (machine guns and short-barreled shotguns); 609.749 (harassment; stalking; penalties); 609.228 (great bodily harm caused by distribution of drugs); 609.2325 (criminal abuse of a vulnerable adult); 609.2664 (manslaughter of an unborn child

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in the first degree); 609.2665 (manslaughter of an unborn child in the second degree); 609.267 (assault of an unborn child in the first degree); 609.2671 (assault of an unborn child in the second degree); 609.268 (injury or death of an unborn child in the commission of a crime); 609.378 (neglect or endangerment of a child); 609.324, subdivision 1 (other prohibited acts); 609.52 (theft); 609.2335 (financial exploitation of a vulnerable adult); 609.521 (possession of shoplifting gear); 609.582 (burglary); 609.625 (aggravated forgery); 609.63 (forgery); 609.631 (check forgery; offering a forged check); 609.635 (obtaining signature by false pretense); 609.27 (coercion); 609.275 (attempt to coerce); 609.687 (adulteration); 260.221 (grounds for termination of parental rights); and chapter 152 (drugs; controlled substance). An attempt or conspiracy to commit any of these offenses, as each of these offenses is defined in Minnesota Statutes; or an offense in any other state or country, the elements of which are substantially similar to the elements of the offenses in this clause. If the individual studied is convicted of one of the felonies listed in this clause, but the sentence is a gross misdemeanor or misdemeanor disposition, the look-back period for the conviction is the period applicable to the disposition, that is the period for gross misdemeanors or misdemeanors;

(3) if less than ten years have passed since the discharge of the sentence imposed for the offense; and the individual has received a gross misdemeanor conviction for a violation of any of the following offenses: sections 609.224 (assault in the fifth degree); 609.2242 and 609.2243 (domestic assault); violation of an order for protection under 518B.01, subdivision 14; 609.3451 (criminal sexual conduct in the fifth degree); repeat offenses under 609.746 (interference with privacy); repeat offenses under 617.23 (indecent exposure); 617.241 (obscene materials and performances); 617.243 (indecent literature, distribution); 617.293 (harmful materials; dissemination and display to minors prohibited); 609.71 (riot); 609.66 (dangerous weapons); 609.749 (harassment; stalking; penalties); 609.224, subdivision 2, paragraph (c) (assault in the fifth degree by a caregiver against a vulnerable adult); 609.23 (mistreatment of persons confined); 609.231 (mistreatment of residents or patients); 609.2325 (criminal abuse of a vulnerable adult); 609.233 (criminal neglect of a vulnerable adult); 609.2335 (financial exploitation of a vulnerable adult); 609.234 (failure to report maltreatment of a vulnerable adult); 609.72, subdivision 3 (disorderly conduct against a vulnerable adult); 609.265 (abduction); 609.378 (neglect or endangerment of a child); 609.377 (malicious punishment of a child); 609.324, subdivision 1a (other prohibited acts; minor engaged in prostitution); 609.33 (disorderly house); 609.52 (theft); 609.582 (burglary); 609.631 (check forgery; offering a forged check); 609.275 (attempt to coerce); or an attempt or conspiracy to commit any of these offenses, as each of these offenses is defined in Minnesota Statutes; or an offense in any other state or country, the elements of which are substantially similar to the elements of any of the offenses listed in this clause. If the defendant is convicted of one of the gross misdemeanors listed in this clause, but the sentence is a misdemeanor disposition, the look-back period for the conviction is the period applicable to misdemeanors; or

(4) if less than seven years have passed since the discharge of the sentence imposed for the offense; and the individual has received a misdemeanor conviction for a violation of any of the following offenses: sections 609.224 (assault in the fifth degree); 609.2242 (domestic assault); violation of an order for protection under 518B.01 (Domestic Abuse Act); violation of an order for protection under 609.3232 (protective order authorized; procedures; penalties); 609.746 (interference with privacy); 609.79 (obscene or harassing phone calls); 609.795 (letter, telegram, or package; opening; harassment); 617.23 (indecent exposure; penalties); 609.2672 (assault of an unborn child in the third degree); 617.293 (harmful materials; dissemination and display to minors prohibited); 609.66 (dangerous weapons); 609.665 (spring guns); 609.2335 (financial exploitation of a vulnerable adult); 609.234 (failure to report maltreatment of a vulnerable adult); 609.52 (theft); 609.27 (coercion); or an attempt or conspiracy to commit any of these offenses, as each of these offenses is defined in Minnesota Statutes; or an offense in any other state or country, the elements of which are substantially similar to the elements of any of the offenses listed in this clause; failure to make required reports under section 626.556, subdivision 3, or 626.557, subdivision 3, for incidents in which: (i) the final disposition under section 626.556 or 626.557 was substantiated maltreatment, and (ii) the maltreatment was recurring or serious; or substantiated serious or recurring maltreatment of a minor under section 626.556 or of a vulnerable adult under section 626.557 for which there is a preponderance of evidence that the maltreatment occurred, and that the subject was responsible for the maltreatment. For the purposes of this section, serious maltreatment means sexual abuse; maltreatment resulting in death; or maltreatment resulting in serious injury or harm which reasonably requires the care of a physician whether or not the care of a physician was sought~~, including:~~; or abuse resulting in serious injury. For purposes of this section, abuse resulting in serious injury means: bruises, bites, skin laceration or tissue damage; fractures; dislocations; evidence of internal injuries; head injuries with loss of consciousness; extensive second-degree or third-degree burns and other burns for which complications are present; extensive second-degree or third-degree frostbite, and others for which complications are present; irreversible mobility or avulsion of teeth; injuries to the eyeball; ingestion of foreign substances and objects that are harmful; near drowning; and heat exhaustion or sunstroke. For purposes of this section, "care of a physician" is treatment received or

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ordered by a physician, but does not include diagnostic testing, assessment, or observation. For the purposes of this section, recurring maltreatment means more than one incident of maltreatment for which there is a preponderance of evidence that the maltreatment occurred, and that the subject was responsible for the maltreatment.

Sec. 8. Minnesota Statutes 1996, section 256.01, subdivision 12, is amended to read:

Subd. 12. [CHILD MORTALITY REVIEW PANEL.] (a) The commissioner shall establish a child mortality review panel ~~for reviewing~~ to review deaths of children in Minnesota, including deaths attributed to maltreatment or in which maltreatment may be a contributing cause and to review near fatalities as defined in section 626.556, subdivision 11d. The commissioners of health, children, families, and learning, and public safety and the attorney general shall each designate a representative to the child mortality review panel. Other panel members shall be appointed by the commissioner, including a board-certified pathologist and a physician who is a coroner or a medical examiner. The purpose of the panel shall be to make recommendations to the state and to county agencies for improving the child protection system, including modifications in statute, rule, policy, and procedure.

(b) The commissioner may require a county agency to establish a local child mortality review panel. The commissioner may establish procedures for conducting local reviews and may require that all professionals with knowledge of a child mortality case participate in the local review. In this section, "professional" means a person licensed to perform or a person performing a specific service in the child protective service system. "Professional" includes law enforcement personnel, social service agency attorneys, educators, and social service, health care, and mental health care providers.

(c) If the commissioner of human services has reason to believe that a child's death was caused by maltreatment or that maltreatment was a contributing cause, the commissioner has access to not public data under chapter 13 maintained by state agencies, statewide systems, or political subdivisions that are related to the child's death or circumstances surrounding the care of the child. The commissioner shall also have access to records of private hospitals as necessary to carry out the duties prescribed by this section. Access to data under this paragraph is limited to police investigative data; autopsy records and coroner or medical examiner investigative data; hospital, public health, or other medical records of the child; hospital and other medical records of the child's parent that relate to prenatal care; and records created by social service agencies that provided services to the child or family within three years preceding the child's death. A state agency, statewide system, or political subdivision shall provide the data upon request of the commissioner. Not public data may be shared with members of the state or local child mortality review panel in connection with an individual case.

(d) Notwithstanding the data's classification in the possession of any other agency, data acquired by a local or state child mortality review panel in the exercise of its duties is protected nonpublic or confidential data as defined in section 13.02, but may be disclosed as necessary to carry out the purposes of the review panel. The data is not subject to subpoena or discovery. The commissioner may disclose conclusions of the review panel, but shall not disclose data that was classified as confidential or private data on decedents, under section 13.10, or private, confidential, or protected nonpublic data in the disseminating agency, except that the commissioner may disclose local social service agency data as provided in section 626.556, subdivision 11d, on individual cases involving a fatality or near fatality of a person served by the local social service agency prior to the date of death.

(e) A person attending a child mortality review panel meeting shall not disclose what transpired at the meeting, except to carry out the purposes of the mortality review panel. The proceedings and records of the mortality review panel are protected nonpublic data as defined in section 13.02, subdivision 13, and are not subject to discovery or introduction into evidence in a civil or criminal action against a professional, the state or a county agency, arising out of the matters the panel is reviewing. Information, documents, and records otherwise available from other sources are not immune from discovery or use in a civil or criminal action solely because they were presented during proceedings of the review panel. A person who presented information before the review panel or who is a member of the panel shall not be prevented from testifying about matters within the person's knowledge. However, in a civil or criminal proceeding a person shall not be questioned about the person's presentation of information to the review panel or opinions formed by the person as a result of the review meetings.

Sec. 9. Minnesota Statutes 1996, section 256.01, is amended by adding a subdivision to read:

Subd. 15. [CITIZEN REVIEW PANELS.] (a) The commissioner shall establish a minimum of three citizen review panels to examine the policies and procedures of state and local welfare agencies to evaluate the extent to which the agencies are effectively discharging their child protection responsibilities. Local social service agencies shall cooperate and work with the citizen review panels. Where appropriate, the panels may examine specific cases to evaluate the

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effectiveness of child protection activities. The panels must examine the extent to which the state and local agencies are meeting the requirements of the federal Child Abuse Prevention and Treatment Act and the Reporting of Maltreatment of Minors Act. The commissioner may authorize mortality review panels or child protection teams to carry out the duties of a citizen review panel if membership meets or is expanded to meet the requirements of this section.

(b) The panel membership must include volunteers who broadly represent the community in which the panel is established, including members who have expertise in the prevention and treatment of child abuse and neglect, child protection advocates, and representatives of the councils of color and ombudsperson for families.

(c) A citizen review panel has access to the following data for specific case review under this paragraph: police investigative data; autopsy records and coroner or medical examiner investigative data; hospital, public health, or other medical records of the child; hospital and other medical records of the child's parent that relate to prenatal care; records created by social service agencies that provided services to the child or family; and personnel data related to an employee's performance in discharging child protection responsibilities. A state agency, statewide system, or political subdivision shall provide the data upon request of the commissioner. Not public data may be shared with members of the state or local citizen review panel in connection with an individual case.

(d) Notwithstanding the data's classification in the possession of any other agency, data acquired by a local or state citizen review panel in the exercise of its duties are protected nonpublic or confidential data as defined in section 13.02, but may be disclosed as necessary to carry out the purposes of the review panel. The data are not subject to subpoena or discovery. The commissioner may disclose conclusions of the review panel, but may not disclose data on individuals that were classified as confidential or private data on individuals in the possession of the state agency, statewide system, or political subdivision from which the data were received, except that the commissioner may disclose local social service agency data as provided in section 626.556, subdivision 11d, on individual cases involving a fatality or near fatality of a person served by the local social service agency prior to the date of death.

(e) A person attending a citizen review panel meeting may not disclose what transpired at the meeting, except to carry out the purposes of the review panel. The proceedings and records of the review panel are protected nonpublic data as defined in section 13.02, subdivision 13, and are not subject to discovery or introduction into evidence in a civil or criminal action against a professional, the state, or county agency arising out of the matters the panel is reviewing. Information, documents, and records otherwise available from other sources are not immune from discovery or use in a civil or criminal action solely because they were presented during proceedings of the review panel. A person who presented information before the review panel or who is a member of the panel is not prevented from testifying about matters within the person's knowledge. However, in a civil or criminal proceeding, a person must not be questioned about the person's presentation of information to the review panel or opinions formed by the person as a result of the review panel meetings.

Sec. 10. Minnesota Statutes 1997 Supplement, section 256.82, subdivision 2, is amended to read:

Subd. 2. [FOSTER CARE MAINTENANCE PAYMENTS.] Notwithstanding subdivision 1, for the purposes of foster care maintenance payments under title IV-E of the federal Social Security Act, United States Code, title 42, sections 670 to 676, during the period beginning July 1, 1985, and ending December 31, 1985, the county paying the maintenance costs shall be reimbursed for the costs from those federal funds available for that purpose together with an amount of state funds equal to a percentage of the difference between the total cost and the federal funds made available for payment. This percentage shall not exceed the percentage specified in subdivision 1 for the aid to families with dependent children program. In the event that the state appropriation for this purpose is less than the state percentage set in subdivision 1, the reimbursement shall be ratably reduced to the county. Beginning January 1, 1986, for the purpose of foster care maintenance payments under title IV-E of the Social Security Act, United States Code, title 42, sections 670 to 676, the county paying the maintenance costs must be reimbursed for the costs from the federal money available for the purpose. Beginning July 1, 1997, for the purposes of determining a child's eligibility under title IV-E of the Social Security Act, the placing agency shall use AFDC requirements in effect on ~~June 1, 1995~~ July 16, 1996.

Sec. 11. Minnesota Statutes 1997 Supplement, section 257.071, subdivision 1d, is amended to read:

Subd. 1d. [RELATIVE SEARCH; NATURE.] (a) Within six months after a child is initially placed in a residential facility, the local social service agency shall identify any relatives of the child and notify them of the need for a foster care home for the child and of the possibility of the need for a permanent out-of-home placement of the child~~, and~~. Relatives

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should also be notified that a decision not to be a placement resource at the beginning of the case may affect the ~~relative's right to have~~ relative being considered for placement of the child ~~placed~~ with that relative later. The relatives must be notified that they must keep the local social service agency informed of their current address in order to receive notice ~~of any~~ that a permanent placement ~~hearing~~ is being sought for the child. A relative who fails to provide a current address to the local social service agency forfeits the right to notice of the possibility of permanent placement.

(b) Unless relieved of this duty by the court because the child is placed with an appropriate relative who wishes to provide a permanent home for the child, when the agency determines that it is necessary to prepare for the permanent placement determination hearing, or in anticipation of filing a termination of parental rights petition, the agency shall send notice to the relatives, any adult with whom the child is currently residing, any adult with whom the child has resided for one year or longer in the past, and any adults who have maintained a relationship or exercised visitation with the child as identified in the agency case plan. The notice must state that a permanent home is sought for the child and that the individuals receiving the notice may indicate to the agency their interest in providing a permanent home. The notice must contain an advisory that if the relative chooses not to be a placement resource at the beginning of the case, this may affect the relative's rights to have the child placed with that relative permanently later on. The notice must state that within 30 days of receipt of the notice an individual receiving the notice must indicate to the agency the individual's interest in providing a permanent home for the child or that the individual may lose the opportunity to be considered for a permanent placement. This notice need not be sent if the child is placed with an appropriate relative who wishes to provide a permanent home for the child.

Sec. 12. Minnesota Statutes 1996, section 257.42, is amended to read:

257.42 [APPROPRIATE PUBLIC AUTHORITY DEFINED.]

The "appropriate public authorities" as used in article 3 of the interstate compact on the placement of children shall, with reference to this state, mean the ~~Minnesota department~~ commissioner of human services ~~and said department~~. The commissioner of human services or the commissioner's delegate shall receive and act with reference to notices required by said article 3.

Sec. 13. Minnesota Statutes 1996, section 257.43, is amended to read:

257.43 [APPROPRIATE AUTHORITY IN RECEIVING STATE DEFINED.]

As used in paragraph (a) of article 5 of the interstate compact on the placement of children, the phrase "appropriate authority in the receiving state" with reference to this state shall mean the commissioner of human services or the commissioner's delegate.

Sec. 14. Minnesota Statutes 1997 Supplement, section 257.85, subdivision 5, is amended to read:

Subd. 5. [RELATIVE CUSTODY ASSISTANCE AGREEMENT.] (a) A relative custody assistance agreement will not be effective, unless it is signed by the local agency and the relative custodian no later than 30 days after the date of the order establishing permanent legal and physical custody with the relative, except that a local agency may enter into a relative custody assistance agreement with a relative custodian more than 30 days after the date of the order if it certifies that the delay in entering the agreement was through no fault of the relative custodian. There must be a separate agreement for each child for whom the relative custodian is receiving relative custody assistance.

(b) Regardless of when the relative custody assistance agreement is signed by the local agency and relative custodian, the effective date of the agreement shall be ~~the first day of the month following~~ the date of the order establishing permanent legal and physical custody ~~or the date that the last party signs the agreement, whichever occurs later~~.

(c) If MFIP-S is not the applicable program for a child at the time that a relative custody assistance agreement is entered on behalf of the child, when MFIP-S becomes the applicable program, if the relative custodian had been receiving custody assistance payments calculated based upon a different program, the amount of relative custody assistance payment under subdivision 7 shall be recalculated under the MFIP-S program.

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(d) The relative custody assistance agreement shall be in a form specified by the commissioner and shall include provisions relating to the following:

(1) the responsibilities of all parties to the agreement;

(2) the payment terms, including the financial circumstances of the relative custodian, the needs of the child, the amount and calculation of the relative custody assistance payments, and that the amount of the payments shall be reevaluated annually;

(3) the effective date of the agreement, which shall also be the anniversary date for the purpose of submitting the annual affidavit under subdivision 8;

(4) that failure to submit the affidavit as required by subdivision 8 will be grounds for terminating the agreement;

(5) the agreement's expected duration, which shall not extend beyond the child's eighteenth birthday;

(6) any specific known circumstances that could cause the agreement or payments to be modified, reduced, or terminated and the relative custodian's appeal rights under subdivision 9;

(7) that the relative custodian must notify the local agency within 30 days of any of the following:

(i) a change in the child's status;

(ii) a change in the relationship between the relative custodian and the child;

(iii) a change in composition or level of income of the relative custodian's family;

(iv) a change in eligibility or receipt of benefits under AFDC, MFIP-S, or other assistance program; and

(v) any other change that could affect eligibility for or amount of relative custody assistance;

(8) that failure to provide notice of a change as required by clause (7) will be grounds for terminating the agreement;

(9) that the amount of relative custody assistance is subject to the availability of state funds to reimburse the local agency making the payments;

(10) that the relative custodian may choose to temporarily stop receiving payments under the agreement at any time by providing 30 days' notice to the local agency and may choose to begin receiving payments again by providing the same notice but any payments the relative custodian chooses not to receive are forfeit; and

(11) that the local agency will continue to be responsible for making relative custody assistance payments under the agreement regardless of the relative custodian's place of residence.

Sec. 15. Minnesota Statutes 1997 Supplement, section 259.22, subdivision 4, is amended to read:

Subd. 4. [TIME FOR FILING PETITION.] A petition shall be filed not later than 24 12 months after a child is placed in a prospective adoptive home. If a petition is not filed by that time, the agency that placed the child, or, in a direct adoptive placement, the agency that is supervising the placement shall file with the district court in the county where the prospective adoptive parent resides a motion for an order and a report recommending one of the following:

(1) that the time for filing a petition be extended because of the child's special needs as defined under title IV-E of the Social Security Act, United States Code, title 42, section 673;

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(2) that, based on a written plan for completing filing of the petition, including a specific timeline, to which the prospective adoptive parents have agreed, the time for filing a petition be extended long enough to complete the plan because such an extension is in the best interests of the child and additional time is needed for the child to adjust to the adoptive home; or

(3) that the child be removed from the prospective adoptive home.

The prospective adoptive parent must reimburse an agency for the cost of preparing and filing the motion and report under this section, unless the costs are reimbursed by the commissioner under section 259.67 or 259.73.

Sec. 16. Minnesota Statutes 1996, section 259.24, subdivision 1, is amended to read:

Subdivision 1. [EXCEPTIONS.] No child shall be adopted without the consent of the child's parents and the child's guardian, if there be one, except in the following instances:

(a) Consent shall not be required of a parent not entitled to notice of the proceedings.

(b) Consent shall not be required of a parent who has abandoned the child, or of a parent who has lost custody of the child through a divorce decree or a decree of dissolution, and upon whom notice has been served as required by section 259.49.

(c) Consent shall not be required of a parent whose parental rights to the child have been terminated by a juvenile court or who has lost custody of a child through a final commitment of the juvenile court or through a decree in a prior adoption proceeding.

(d) If there be no parent or guardian qualified to consent to the adoption, the consent may be given by the commissioner.

(e) The commissioner or agency having authority to place a child for adoption pursuant to section 259.25, subdivision 1, shall have the exclusive right to consent to the adoption of such child. Notwithstanding any rule to the contrary, the commissioner may delegate the right to consent to the adoption or separation of siblings, if it is in the child's best interest, to a local social services agency.

Sec. 17. Minnesota Statutes 1996, section 259.37, subdivision 2, is amended to read:

Subd. 2. [DISCLOSURE TO BIRTH PARENTS AND ADOPTIVE PARENTS.] An agency shall provide a disclosure statement written in clear, plain language to be signed by the prospective adoptive parents and birth parents, except that in intercountry adoptions, the signatures of birth parents are not required. The disclosure statement must contain the following information:

(1) fees charged to the adoptive parent, including any policy on sliding scale fees or fee waivers and an itemization of the amount that will be charged for the adoption study, counseling, postplacement services, family of origin searches, birth parent expenses authorized under section 259.55, or any other services;

(2) timeline for the adoptive parent to make fee payments;

(3) likelihood, given the circumstances of the prospective adoptive parent and any specific program to which the prospective adoptive parent is applying, that an adoptive placement may be made and the estimated length of time for making an adoptive placement. These estimates must be based on adoptive placements made with prospective parents in similar circumstances applying to a similar program with the agency during the immediately preceding three to five years. If an agency has not been in operation for at least three years, it must provide summary data based on whatever adoptive placements it has made and may include a statement about the kind of efforts it will make to achieve an adoptive placement, including a timetable it will follow in seeking a child. The estimates must include a statement that the agency cannot guarantee placement of a child or a time by which a child will be placed;

(4) a statement of the services the agency will provide the birth and adoptive parents;

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(5) a statement prepared by the commissioner under section 259.39 that explains the child placement and adoption process and the respective legal rights and responsibilities of the birth parent and prospective adoptive parent during the process including a statement that the prospective adoptive parent is responsible for filing an adoption petition not later than 24 12 months after the child is placed in the prospective adoptive home;

(6) a statement regarding any information the agency may have about attorney referral services, or about obtaining assistance with completing legal requirements for an adoption; and

(7) an acknowledgment to be signed by the birth parent and prospective adoptive parent that they have received, read, and had the opportunity to ask questions of the agency about the contents of the disclosure statement.

Sec. 18. Minnesota Statutes 1997 Supplement, section 259.47, subdivision 3, is amended to read:

Subd. 3. [PREADOPTIVE CUSTODY ORDER.] (a) Before a child is placed in a prospective adoptive home by a birth parent or legal guardian, other than an agency, the placement must be approved by the district court in the county where the prospective adoptive parent resides. An order under this subdivision or subdivision 6 shall state that the prospective adoptive parent's right to custody of the child is subject to the birth parent's right to custody until the consents to the child's adoption become irrevocable. At the time of placement, prospective adoptive parents must have for the child qualifying existing coverage as defined in section 62L.02, subdivision 24, or other similar comprehensive health care coverage. The preadoptive custody order must include any agreement reached between the prospective adoptive parent and the birth parent regarding authority to make decisions for medical care of the child and responsibility for payment not provided by the adoptive parent's existing health care coverage. The prospective adoptive parent must meet the residence requirements of section 259.22, subdivision 1, and must file with the court an affidavit of intent to remain a resident of the state for at least three months after the child is placed in the prospective adoptive home. The prospective adoptive parent shall file with the court a notice of intent to file an adoption petition and submit a written motion seeking an order granting temporary preadoptive custody. The notice and motion required under this subdivision may be considered by the court ex parte, without a hearing. The prospective adoptive parent shall serve a copy of the notice and motion upon any parent whose consent is required under section 259.24 or who is named in the affidavit required under paragraph (b) if that person's mailing address is known. The motion may be filed up to 60 days before the placement is to be made and must include:

(1) the adoption study required under section 259.41;

(2) affidavits from the birth parents indicating their support of the motion, or, if there is no affidavit from the birth father, an affidavit from the birth mother under paragraph (b);

(3) an itemized statement of expenses that have been paid and an estimate of expenses that will be paid by the prospective adoptive parents to the birth parents, any agency, attorney, or other party in connection with the prospective adoption;

(4) the name of counsel for each party, if any;

(5) a statement that the birth parents:

(i) have provided the social and medical history required under section 259.43 to the prospective adoptive parent;

(ii) have received the written statement of their legal rights and responsibilities under section 259.39; and

(iii) have been notified of their right to receive counseling under subdivision 4; and

(6) the name of the agency chosen by the adoptive parent to supervise the adoptive placement and complete the postplacement assessment required by section 259.53, subdivision 2.

The court shall review the expense statement submitted under this subdivision to determine whether payments made or to be made by the prospective adoptive parent are lawful and in accordance with section 259.55, subdivision 1.

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(b) If the birth mother submits the affidavit required in paragraph (a), clause (2), but the birth father fails to do so, the birth mother must submit an additional affidavit that describes her good faith efforts or efforts made on her behalf to identify and locate the birth father for purposes of securing his consent. In the following circumstances the birth mother may instead submit an affidavit stating on which ground she is exempt from making efforts to identify and locate the father:

(1) the child was conceived as the result of incest or rape;

(2) efforts to locate the father by the affiant or anyone acting on the affiant's behalf could reasonably result in physical harm to the birth mother or child; or

(3) efforts to locate the father by the affiant or anyone acting on the affiant's behalf could reasonably result in severe emotional distress of the birth mother or child.

A court shall consider the motion for temporary preadoptive custody within 30 days of receiving the motion or by the anticipated placement date stated in the motion, whichever comes sooner.

Sec. 19. Minnesota Statutes 1997 Supplement, section 259.58, is amended to read:

259.58 [COMMUNICATION OR CONTACT AGREEMENTS.]

Adoptive parents and a birth relative may enter an agreement regarding communication with or contact between an adopted minor, adoptive parents, and a birth relative under this section. An agreement may be entered between:

(1) adoptive parents and a birth parent;

(2) adoptive parents and a any other birth relative with whom the child resided before being adopted; or

~~(2)~~ (3) adoptive parents and any other birth relative if the child is adopted by a birth relative upon the death of both birth parents.

For purposes of this section, "birth relative" means a parent, stepparent, grandparent, brother, sister, uncle, or aunt of a minor adoptee. This relationship may be by blood or marriage. For an Indian child, birth relative includes members of the extended family as defined by the law or custom of the Indian child's tribe or, in the absence of laws or custom, nieces, nephews, or first or second cousins, as provided in the Indian Child Welfare Act, United States Code, title 25, section 1903.

(a) An agreement regarding communication with or contact between minor adoptees, adoptive parents, and a birth relative is not legally enforceable unless the terms of the agreement are contained in a written court order entered in accordance with this section. An order must be sought at the same time a petition for adoption is filed. The court shall not enter a proposed order unless the terms of the order have been approved in writing by the prospective adoptive parents, a birth relative who desires to be a party to the agreement, and, if the child is in the custody of or under the guardianship of an agency, a representative of the agency. An agreement under this section need not disclose the identity of the parties to be legally enforceable. The court shall not enter a proposed order unless the court finds that the communication or contact between the minor adoptee, the adoptive parents, and a birth relative as agreed upon and contained in the proposed order would be in the minor adoptee's best interests.

(b) Failure to comply with the terms of an agreed order regarding communication or contact that has been entered by the court under this section is not grounds for:

(1) setting aside an adoption decree; or

(2) revocation of a written consent to an adoption after that consent has become irrevocable.

(c) An agreed order entered under this section may be enforced by filing a petition or motion with the family court that includes a certified copy of the order granting the communication, contact, or visitation, but only if the petition or motion is accompanied by an affidavit that the parties have mediated or attempted to mediate any dispute under the agreement

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or that the parties agree to a proposed modification. The prevailing party may be awarded reasonable attorney's fees and costs. The court shall not modify an agreed order under this section unless it finds that the modification is necessary to serve the best interests of the minor adoptee, and:

(1) the modification is agreed to by the adoptive parent and the birth relative; or

(2) exceptional circumstances have arisen since the agreed order was entered that justify modification of the order.

Sec. 20. Minnesota Statutes 1997 Supplement, section 259.60, subdivision 2, is amended to read:

Subd. 2. [AMENDED BIRTH CERTIFICATE; PROCEDURE AND ORDER; DECREE RECOGNIZING ADOPTION.] (a) Under the procedures in paragraph (b), a person, whose adoption of a child under the laws of a foreign country is valid in this state under subdivision 1, may petition the district court in the county where the adoptive parent resides for a decree confirming and recognizing the adoption, changing the child's legal name, if requested in the petition, and ~~for~~ authorizing the commissioner of health to issue a new birth certificate for the child under section 144.218, subdivision 2.

(b) A court shall issue the decree ~~and birth certificate~~ described in paragraph (a) upon receipt of the following documents:

(1) a petition by the adoptive parent ~~requesting that the court issue a Minnesota birth certificate, and~~ stating that the adoptive parent completed adoption of the child under the laws of a foreign country and that the adoption is valid in this state under subdivision 1 and requesting that the court issue a decree confirming and recognizing the adoption, changing the child's legal name, if desired, and authorizing the commissioner of health to issue a new birth certificate for the child under section 144.218, subdivision 2. The petition must be in the form of a signed, sworn, and notarized statement;

(2) a copy of the child's original birth certificate, if available;

(3) a copy of the final adoption certificate or equivalent as issued by the foreign jurisdiction;

(4) a copy of the child's passport including the United States visa indicating IR-3 immigration status; and

(5) certified English translations of any of the documents in clauses (2) to (4) that are not written in the English language.

(c) Upon issuing a decree under this section, the court shall forward to the commissioners of health and human services a copy of the decree. The court shall also complete and forward to the commissioner of health the certificate of adoption, unless another form has been specified by the commissioner of health.

Sec. 21. Minnesota Statutes 1996, section 259.67, subdivision 1, is amended to read:

Subdivision 1. [ADOPTION ASSISTANCE.] (a) The commissioner of human services shall enter into an adoption assistance agreement with an adoptive parent or parents who adopt a child who meets the eligibility requirements under title IV-E of the Social Security Act, United States Code, title 42, sections 670 to 679a, or who otherwise meets the requirements in subdivision 4.

(b) Notwithstanding any provision to the contrary, no child on whose behalf federal title IV-E adoption assistance payments are to be made may be placed in an adoptive home unless a criminal background check under section 259.41, subdivision 3, paragraph (b), has been completed on the prospective adoptive parents and no disqualifying condition exists. A disqualifying condition exists if:

(1) a criminal background check reveals a felony conviction for child abuse; for spousal abuse; for a crime against children (including child pornography); or for a crime involving violence, including rape, sexual assault, or homicide, but not including other physical assault or battery; or

(2) a criminal background check reveals a felony conviction within the past five years for physical assault, battery, or a drug-related offense.

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Sec. 22. Minnesota Statutes 1996, section 260.011, subdivision 2, is amended to read:

Subd. 2. (a) The paramount consideration in all proceedings concerning a child alleged or found to be in need of protection or services is the health, safety, and best interests of the child. In proceedings involving an American Indian child, as defined in section 257.351, subdivision 6, the best interests of the child must be determined consistent with sections 257.35 to 257.3579 and the Indian Child Welfare Act, United States Code, title 25, sections 1901 to 1923. The purpose of the laws relating to juvenile courts is to secure for each child alleged or adjudicated in need of protection or services and under the jurisdiction of the court, the care and guidance, preferably in the child's own home, as will best serve the spiritual, emotional, mental, and physical welfare of the child; to provide judicial procedures which protect the welfare of the child; to preserve and strengthen the child's family ties whenever possible and in the child's best interests, removing the child from the custody of parents only when the child's welfare or safety cannot be adequately safeguarded without removal; and, when removal from the child's own family is necessary and in the child's best interests, to secure for the child custody, care and discipline as nearly as possible equivalent to that which should have been given by the parents.

(b) The purpose of the laws relating to termination of parental rights is to ensure that:

(1) reasonable efforts have been made by the social service agency to reunite the child with the child's parents in a placement that is safe and permanent; and

(2) if placement with the parents is not reasonably foreseeable, to secure for the child a safe and permanent placement, preferably with adoptive parents.

Nothing in this section requires reasonable efforts to be made in circumstances where the court has determined that the child has been subjected to egregious harm or the parental rights of the parent to a sibling have been involuntarily terminated.

The paramount consideration in all proceedings for the termination of parental rights is the best interests of the child. In proceedings involving an American Indian child, as defined in section 257.351, subdivision 6, the best interests of the child must be determined consistent with the Indian Child Welfare Act of 1978, United States Code, title 25, section 1901, et seq.

(c) The purpose of the laws relating to children alleged or adjudicated to be delinquent is to promote the public safety and reduce juvenile delinquency by maintaining the integrity of the substantive law prohibiting certain behavior and by developing individual responsibility for lawful behavior. This purpose should be pursued through means that are fair and just, that recognize the unique characteristics and needs of children, and that give children access to opportunities for personal and social growth.

(d) The laws relating to juvenile courts shall be liberally construed to carry out these purposes.

Sec. 23. Minnesota Statutes 1997 Supplement, section 260.012, is amended to read:

260.012 [DUTY TO ENSURE PLACEMENT PREVENTION AND FAMILY REUNIFICATION; REASONABLE EFFORTS.]

(a) If a child in need of protection or services is under the court's jurisdiction, the court shall ensure that reasonable efforts including culturally appropriate services by the social service agency are made to prevent placement or to eliminate the need for removal and to reunite the child with the child's family at the earliest possible time, consistent with the best interests, safety, and protection of the child. The court may, upon motion and hearing, order the cessation of reasonable efforts if the court finds that provision of services or further services for the purpose of rehabilitation and reunification is futile and therefore unreasonable under the circumstances. In determining reasonable efforts to be made with respect to a child and in making those reasonable efforts, the child's health and safety must be of paramount concern. Reasonable efforts are not required if the court determines that:

(1) a termination of parental rights petition has been filed stating a prima facie case that the parent has subjected the child to egregious harm as defined in section 260.015, subdivision 29, or the parental rights of the parent to a sibling have been terminated involuntarily; or

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(2) a determination not to proceed with a termination of parental rights petition on these grounds was made under section 260.221, subdivision 1b, paragraph (b), and a permanency hearing is held within 30 days of the determination.

In the case of an Indian child, in proceedings under sections 260.172, 260.191, and 260.221 the juvenile court must make findings and conclusions consistent with the Indian Child Welfare Act of 1978, United States Code, title 25, section 1901 et seq., as to the provision of active efforts. If a child is under the court's delinquency jurisdiction, it shall be the duty of the court to ensure that reasonable efforts are made to reunite the child with the child's family at the earliest possible time, consistent with the best interests of the child and the safety of the public.

(b) "Reasonable efforts" means the exercise of due diligence by the responsible social service agency to use appropriate and available services to meet the needs of the child and the child's family in order to prevent removal of the child from the child's family; or upon removal, services to eliminate the need for removal and reunite the family. Services may include those listed under section 256F.07, subdivision 3, and other appropriate services available in the community. The social service agency has the burden of demonstrating that it has made reasonable efforts or that provision of services or further services for the purpose of rehabilitation and reunification is futile and therefore unreasonable under the circumstances. Reunification of a surviving child with a parent is not required if the parent has been convicted of:

(1) a violation of, or an attempt or conspiracy to commit a violation of, sections 609.185 to 609.20; 609.222, subdivision 2; or 609.223 in regard to another child of the parent;

(2) a violation of section 609.222, subdivision 2; or 609.223, in regard to the surviving child; or

(3) a violation of, or an attempt or conspiracy to commit a violation of, United States Code, title 18, section 1111(a) or 1112(a), in regard to another child of the parent.

(c) The juvenile court, in proceedings under sections 260.172, 260.191, and 260.221 shall make findings and conclusions as to the provision of reasonable efforts. When determining whether reasonable efforts have been made, the court shall consider whether services to the child and family were:

(1) relevant to the safety and protection of the child;

(2) adequate to meet the needs of the child and family;

(3) culturally appropriate;

(4) available and accessible;

(5) consistent and timely; and

(6) realistic under the circumstances.

In the alternative, the court may determine that provision of services or further services for the purpose of rehabilitation is futile and therefore unreasonable under the circumstances or that reasonable efforts are not required as provided in paragraph (a).

(d) This section does not prevent out-of-home placement for treatment of a child with a mental disability when the child's diagnostic assessment or individual treatment plan indicates that appropriate and necessary treatment cannot be effectively provided outside of a residential or inpatient treatment program.

(e) If continuation of reasonable efforts described in paragraph (b) is determined to be inconsistent with the permanency plan for the child, reasonable efforts must be made to place the child in a timely manner in accordance with the permanency plan and to complete whatever steps are necessary to finalize the permanency plan for the child.

(f) Reasonable efforts to place a child for adoption or in another permanent placement may be made concurrently with reasonable efforts as described in paragraphs (a) and (b).

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Sec. 24. Minnesota Statutes 1997 Supplement, section 260.015, subdivision 2a, is amended to read:

Subd. 2a. [CHILD IN NEED OF PROTECTION OR SERVICES.] "Child in need of protection or services" means a child who is in need of protection or services because the child:

(1) is abandoned or without parent, guardian, or custodian;

(2)(i) has been a victim of physical or sexual abuse, (ii) resides with or has resided with a victim of domestic child abuse as defined in subdivision 24, (iii) resides with or would reside with a perpetrator of domestic child abuse or child abuse as defined in subdivision 28, or (iv) is a victim of emotional maltreatment as defined in subdivision 5a;

(3) is without necessary food, clothing, shelter, education, or other required care for the child's physical or mental health or morals because the child's parent, guardian, or custodian is unable or unwilling to provide that care;

(4) is without the special care made necessary by a physical, mental, or emotional condition because the child's parent, guardian, or custodian is unable or unwilling to provide that care;

(5) is medically neglected, which includes, but is not limited to, the withholding of medically indicated treatment from a disabled infant with a life-threatening condition. The term "withholding of medically indicated treatment" means the failure to respond to the infant's life-threatening conditions by providing treatment, including appropriate nutrition, hydration, and medication which, in the treating physician's or physicians' reasonable medical judgment, will be most likely to be effective in ameliorating or correcting all conditions, except that the term does not include the failure to provide treatment other than appropriate nutrition, hydration, or medication to an infant when, in the treating physician's or physicians' reasonable medical judgment:

(i) the infant is chronically and irreversibly comatose;

(ii) the provision of the treatment would merely prolong dying, not be effective in ameliorating or correcting all of the infant's life-threatening conditions, or otherwise be futile in terms of the survival of the infant; or

(iii) the provision of the treatment would be virtually futile in terms of the survival of the infant and the treatment itself under the circumstances would be inhumane;

(6) is one whose parent, guardian, or other custodian for good cause desires to be relieved of the child's care and custody;

(7) has been placed for adoption or care in violation of law;

(8) is without proper parental care because of the emotional, mental, or physical disability, or state of immaturity of the child's parent, guardian, or other custodian;

(9) is one whose behavior, condition, or environment is such as to be injurious or dangerous to the child or others. An injurious or dangerous environment may include, but is not limited to, the exposure of a child to criminal activity in the child's home;

(10) has engaged in prostitution as defined in section 609.321, subdivision 9;

~~(10)~~ (11) has committed a delinquent act before becoming ten years old;

~~(11)~~ (12) is a runaway;

~~(12)~~ (13) is an habitual truant;

~~(13)~~ (14) has been found incompetent to proceed or has been found not guilty by reason of mental illness or mental deficiency in connection with a delinquency proceeding, a certification under section 260.125, an extended jurisdiction juvenile prosecution, or a proceeding involving a juvenile petty offense;

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~~(14)~~ (15) is one whose custodial parent's parental rights to another child have been involuntarily terminated within the past five years; or

~~(15)~~ (16) has been found by the court to have committed domestic abuse perpetrated by a minor under Laws 1997, chapter 239, article 10, sections 2 to 26, has been ordered excluded from the child's parent's home by an order for protection/minor respondent, and the parent or guardian is either unwilling or unable to provide an alternative safe living arrangement for the child.

Sec. 25. Minnesota Statutes 1997 Supplement, section 260.015, subdivision 29, is amended to read:

Subd. 29. [EGREGIOUS HARM.] "Egregious harm" means the infliction of bodily harm to a child or neglect of a child which demonstrates a grossly inadequate ability to provide minimally adequate parental care. The egregious harm need not have occurred in the state or in the county where a termination of parental rights action is otherwise properly venued. Egregious harm includes, but is not limited to:

(1) conduct towards a child that constitutes a violation of sections 609.185 to 609.21, 609.222, subdivision 2, 609.223, or any other similar law of any other state;

(2) the infliction of "substantial bodily harm" to a child, as defined in section 609.02, subdivision 8;

(3) conduct towards a child that constitutes felony malicious punishment of a child under section 609.377;

(4) conduct towards a child that constitutes felony unreasonable restraint of a child under section 609.255, subdivision 3;

(5) conduct towards a child that constitutes felony neglect or endangerment of a child under section 609.378;

(6) conduct towards a child that constitutes assault under section 609.221, 609.222, or 609.223;

(7) conduct towards a child that constitutes solicitation, inducement, or promotion of prostitution under section 609.322;

(8) conduct towards a child that constitutes receiving profit derived from prostitution under section 609.323; or

(9) conduct toward a child that constitutes ~~a violation of~~ murder or voluntary manslaughter as defined by United States Code, title 18, section 1111(a) or 1112(a); or

(10) conduct toward a child that constitutes aiding or abetting, attempting, conspiring, or soliciting to commit a murder or voluntary manslaughter that constitutes a violation of United States Code, title 18, section 1111(a) or 1112(a).

Sec. 26. Minnesota Statutes 1996, section 260.141, is amended by adding a subdivision to read:

Subd. 4. [NOTICE TO FOSTER PARENTS AND PREADOPTIVE PARENTS AND RELATIVES.] The foster parents, if any, of a child and any preadoptive parent or relative providing care for the child must be provided notice of and an opportunity to be heard in any review or hearing to be held with respect to the child. Any other relative may also request, and must be granted, a notice and the opportunity to be heard under this section. This subdivision does not require that a foster parent, preadoptive parent, or relative providing care for the child be made a party to a review or hearing solely on the basis of the notice and opportunity to be heard.

Sec. 27. Minnesota Statutes 1997 Supplement, section 260.161, subdivision 2, is amended to read:

Subd. 2. [PUBLIC INSPECTION OF RECORDS.] ~~Except as otherwise provided in this section, and except for~~ (a) Legal records arising from proceedings or portions of proceedings that are public under section 260.155, subdivision 1, are open to public inspection.

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(b) The following records from proceedings or portions of proceedings involving a child in need of protection or services that are open to the public as authorized by supreme court order and court rules are accessible to the public unless the court determines that access should be restricted because of the intensely personal nature of the information:

(1) the summons and petition;

(2) affidavits of publication and service;

(3) certificates of representation;

(4) court orders;

(5) hearing and trial notices, witness lists, and subpoenas;

(6) motions and legal memoranda;

(7) exhibits introduced at hearings or trial that are not inaccessible under paragraph (c);

(8) birth certificates; and

(9) all other documents not listed as inaccessible to the public under paragraph (c).

(1) written, audiotaped, or videotaped information from the social service agency, except to the extent the information appears in the petition, court orders, or other documents that are accessible under paragraph (b);

(2) child protection intake or screening notes;

(3) documents identifying reporters of maltreatment, unless the names and other identifying information are redacted;

(4) guardian ad litem reports;

(5) victim statements and addresses and telephone numbers;

(6) documents identifying nonparty witnesses under the age of 18, unless the names and other identifying information are redacted;

(7) transcripts of testimony taken during closed hearing;

(8) fingerprinting materials;

(9) psychological, psychiatric, and chemical dependency evaluations;

(10) presentence evaluations of juveniles and probation reports;

(11) medical records and test results;

(12) reports issued by sexual predator programs;

(13) diversion records of juveniles; and

(14) any document which the court, upon its own motion or upon motion of a party, orders inaccessible to serve the best interests of the child.

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In addition, records that are accessible to the public under paragraph (b) become inaccessible to the public if one year has elapsed since either the proceeding was dismissed or the court's jurisdiction over the matter was terminated.

(d) Except as otherwise provided by this section, none of the records of the juvenile court and none of the records relating to an appeal from a nonpublic juvenile court proceeding, except the written appellate opinion, shall be open to public inspection or their contents disclosed except (a) by order of a court, (b) as required by sections 245A.04, 611A.03, 611A.04, 611A.06, and 629.73, or (c) the name of a juvenile who is the subject of a delinquency petition shall be released to the victim of the alleged delinquent act upon the victim's request; unless it reasonably appears that the request is prompted by a desire on the part of the requester to engage in unlawful activities. The records of juvenile probation officers and county home schools are records of the court for the purposes of this subdivision. Court services data relating to delinquent acts that are contained in records of the juvenile court may be released as allowed under section 13.84, subdivision 5a. This subdivision applies to all proceedings under this chapter, including appeals from orders of the juvenile court, except that this subdivision does not apply to proceedings under section 260.255, 260.261, or 260.315 when the proceeding involves an adult defendant. The court shall maintain the confidentiality of adoption files and records in accordance with the provisions of laws relating to adoptions. In juvenile court proceedings any report or social history furnished to the court shall be open to inspection by the attorneys of record and the guardian ad litem a reasonable time before it is used in connection with any proceeding before the court.

(e) When a judge of a juvenile court, or duly authorized agent of the court, determines under a proceeding under this chapter that a child has violated a state or local law, ordinance, or regulation pertaining to the operation of a motor vehicle on streets and highways, except parking violations, the judge or agent shall immediately report the violation to the commissioner of public safety. The report must be made on a form provided by the department of public safety and must contain the information required under section 169.95.

Sec. 28. Minnesota Statutes 1996, section 260.172, subdivision 1, is amended to read:

Subdivision 1. [HEARING AND RELEASE REQUIREMENTS.] (a) If a child was taken into custody under section 260.165, subdivision 1, clause (a) or (c)(2), the court shall hold a hearing within 72 hours of the time the child was taken into custody, excluding Saturdays, Sundays, and holidays, to determine whether the child should continue in custody.

(b) In all other cases, the court shall hold a detention hearing:

(1) within 36 hours of the time the child was taken into custody, excluding Saturdays, Sundays, and holidays, if the child is being held at a juvenile secure detention facility or shelter care facility; or

(2) within 24 hours of the time the child was taken into custody, excluding Saturdays, Sundays, and holidays, if the child is being held at an adult jail or municipal lockup.

(c) Unless there is reason to believe that the child would endanger self or others, not return for a court hearing, run away from the child's parent, guardian, or custodian or otherwise not remain in the care or control of the person to whose lawful custody the child is released, or that the child's health or welfare would be immediately endangered, the child shall be released to the custody of a parent, guardian, custodian, or other suitable person, subject to reasonable conditions of release including, but not limited to, a requirement that the child undergo a chemical use assessment as provided in section 260.151, subdivision 1. In determining whether the child's health or welfare would be immediately endangered, the court shall consider whether the child would reside with a perpetrator of domestic child abuse. In a proceeding regarding a child in need of protection or services, the court, before determining whether a child should continue in custody, shall also make a determination, consistent with section 260.012 as to whether reasonable efforts, or in the case of an Indian child, active efforts, according to the Indian Child Welfare Act of 1978, United States Code, title 25, section 1912(d), were made to prevent placement or to reunite the child with the child's family, or that reasonable efforts were not possible. The court shall also determine whether there are available services that would prevent the need for further detention.

If the court finds the social services agency's preventive or reunification efforts have not been reasonable but further preventive or reunification efforts could not permit the child to safely remain at home, the court may nevertheless authorize or continue the removal of the child.

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The court may determine at the detention hearing, or at any time prior to an adjudicatory hearing, that reasonable efforts are not required because the facts, if proved, will demonstrate that the parent has subjected the child to egregious harm as defined in section 260.015, subdivision 29, or the parental rights of the parent to a sibling of the child have been terminated involuntarily.

Sec. 29. Minnesota Statutes 1997 Supplement, section 260.191, subdivision 1, is amended to read:

Subdivision 1. [DISPOSITIONS.] (a) If the court finds that the child is in need of protection or services or neglected and in foster care, it shall enter an order making any of the following dispositions of the case:

(1) place the child under the protective supervision of the local social services agency or child-placing agency in the child's own home under conditions prescribed by the court directed to the correction of the child's need for protection or services;

(2) transfer legal custody to one of the following:

(i) a child-placing agency; or

(ii) the local social services agency.

In placing a child whose custody has been transferred under this paragraph, the agencies shall follow the order of preference stated in section 260.181, subdivision 3;

(3) if the child is in need of special treatment and care for reasons of physical or mental health, the court may order the child's parent, guardian, or custodian to provide it. If the parent, guardian, or custodian fails or is unable to provide this treatment or care, the court may order it provided. The court shall not transfer legal custody of the child for the purpose of obtaining special treatment or care solely because the parent is unable to provide the treatment or care. If the court's order for mental health treatment is based on a diagnosis made by a treatment professional, the court may order that the diagnosing professional not provide the treatment to the child if it finds that such an order is in the child's best interests; or

(4) if the court believes that the child has sufficient maturity and judgment and that it is in the best interests of the child, the court may order a child 16 years old or older to be allowed to live independently, either alone or with others as approved by the court under supervision the court considers appropriate, if the county board, after consultation with the court, has specifically authorized this dispositional alternative for a child.

(b) If the child was adjudicated in need of protection or services because the child is a runaway or habitual truant, the court may order any of the following dispositions in addition to or as alternatives to the dispositions authorized under paragraph (a):

(1) counsel the child or the child's parents, guardian, or custodian;

(2) place the child under the supervision of a probation officer or other suitable person in the child's own home under conditions prescribed by the court, including reasonable rules for the child's conduct and the conduct of the parents, guardian, or custodian, designed for the physical, mental, and moral well-being and behavior of the child; or with the consent of the commissioner of corrections, place the child in a group foster care facility which is under the commissioner's management and supervision;

(3) subject to the court's supervision, transfer legal custody of the child to one of the following:

(i) a reputable person of good moral character. No person may receive custody of two or more unrelated children unless licensed to operate a residential program under sections 245A.01 to 245A.16; or

(ii) a county probation officer for placement in a group foster home established under the direction of the juvenile court and licensed pursuant to section 241.021;

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(4) require the child to pay a fine of up to $100. The court shall order payment of the fine in a manner that will not impose undue financial hardship upon the child;

(5) require the child to participate in a community service project;

(6) order the child to undergo a chemical dependency evaluation and, if warranted by the evaluation, order participation by the child in a drug awareness program or an inpatient or outpatient chemical dependency treatment program;

(7) if the court believes that it is in the best interests of the child and of public safety that the child's driver's license or instruction permit be canceled, the court may order the commissioner of public safety to cancel the child's license or permit for any period up to the child's 18th birthday. If the child does not have a driver's license or permit, the court may order a denial of driving privileges for any period up to the child's 18th birthday. The court shall forward an order issued under this clause to the commissioner, who shall cancel the license or permit or deny driving privileges without a hearing for the period specified by the court. At any time before the expiration of the period of cancellation or denial, the court may, for good cause, order the commissioner of public safety to allow the child to apply for a license or permit, and the commissioner shall so authorize;

(8) order that the child's parent or legal guardian deliver the child to school at the beginning of each school day for a period of time specified by the court; or

(9) require the child to perform any other activities or participate in any other treatment programs deemed appropriate by the court.

To the extent practicable, the court shall enter a disposition order the same day it makes a finding that a child is in need of protection or services or neglected and in foster care, but in no event more than 15 days after the finding unless the court finds that the best interests of the child will be served by granting a delay. If the child was under eight years of age at the time the petition was filed, the disposition order must be entered within ten days of the finding and the court may not grant a delay unless good cause is shown and the court finds the best interests of the child will be served by the delay.

(c) If a child who is 14 years of age or older is adjudicated in need of protection or services because the child is a habitual truant and truancy procedures involving the child were previously dealt with by a school attendance review board or county attorney mediation program under section 260A.06 or 260A.07, the court shall order a cancellation or denial of driving privileges under paragraph (b), clause (7), for any period up to the child's 18th birthday.

(d) In the case of a child adjudicated in need of protection or services because the child has committed domestic abuse and been ordered excluded from the child's parent's home, the court shall dismiss jurisdiction if the court, at any time, finds the parent is able or willing to provide an alternative safe living arrangement for the child, as defined in Laws 1997, chapter 239, article 10, section 2.

Sec. 30. Minnesota Statutes 1997 Supplement, section 260.191, subdivision 1a, is amended to read:

Subd. 1a. [WRITTEN FINDINGS.] Any order for a disposition authorized under this section shall contain written findings of fact to support the disposition ordered, and shall also set forth in writing the following information:

(a) Why the best interests of the child are served by the disposition ordered;

(b) What alternative dispositions were considered by the court and why such dispositions were not appropriate in the instant case;

(d) Whether reasonable efforts consistent with section 260.012 were made to prevent or eliminate the necessity of the child's removal and to reunify the family after removal. The court's findings must include a brief description of what preventive and reunification efforts were made and why further efforts could not have prevented or eliminated the necessity of removal or that reasonable efforts were not required under section 260.012 or 260.172, subdivision 1.

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If the court finds that the social services agency's preventive or reunification efforts have not been reasonable but that further preventive or reunification efforts could not permit the child to safely remain at home, the court may nevertheless authorize or continue the removal of the child.

Sec. 31. Minnesota Statutes 1997 Supplement, section 260.191, subdivision 3a, is amended to read:

Subd. 3a. [COURT REVIEW OF OUT-OF-HOME PLACEMENTS.] (a) If the court places a child in a residential facility, as defined in section 257.071, subdivision 1, the court shall review the out-of-home placement at least every six months to determine whether continued out-of-home placement is necessary and appropriate or whether the child should be returned home. The court shall review agency efforts pursuant to section 257.072, subdivision 1, and order that the efforts continue if the agency has failed to perform the duties under that section. The court shall review the case plan and may modify the case plan as provided under subdivisions 1e and 2. If the court orders continued out-of-home placement, the court shall notify the parents of the provisions of subdivision 3b.

(b) When the court determines that a permanent placement hearing is necessary because there is a likelihood that the child will not return to a parent's care, the court may authorize the agency with custody of the child to send the notice provided in this paragraph to any adult with whom the child is currently residing, any adult with whom the child has resided for one year or longer in the past, any adult who has maintained a relationship or exercised visitation with the child as identified in the agency case plan for the child or demonstrated an interest in the child, and any relative who has provided a current address to the local social service agency. This notice must not be provided to a parent whose parental rights to the child have been terminated under section 260.221, subdivision 1. The notice must state that a permanent home is sought for the child and that individuals receiving the notice may indicate to the agency within 30 days their interest in providing a permanent home section 257.071, subdivision 1d, paragraph (b), or may modify the requirements of the agency under section 257.071, subdivision 1d, paragraph (b), or may completely relieve the responsible social service agency of the requirements of section 257.071, subdivision 1d, paragraph (b), when the child is placed with an appropriate relative who wishes to provide a permanent home for the child. The actions ordered by the court under this section must be consistent with the best interests, safety, and welfare of the child.

Sec. 32. Minnesota Statutes 1997 Supplement, section 260.191, subdivision 3b, is amended to read:

Subd. 3b. [REVIEW OF COURT ORDERED PLACEMENTS; PERMANENT PLACEMENT DETERMINATION.] (a) The court shall conduct a hearing to determine the permanent status of a child not later than 12 months after the child is placed out of the home of the parent, except that if the child was under eight years of age at the time a petition that the child is in need of protection or services was filed, the hearing must be conducted no later than six months after the child is placed out of the home of the parents.

For purposes of this subdivision, the date of the child's placement out of the home of the parent is the earlier of the first court-ordered placement or ~~the first court-approved placement under section 257.071, subdivision 3, of a child who had been in voluntary placement~~ 60 days after the date on which the child has been voluntarily placed out of the home.

For purposes of this subdivision, 12 months is calculated as follows:

(1) during the pendency of a petition alleging that a child is in need of protection or services, all time periods when a child is placed out of the home of the parent are cumulated;

(2) if a child has been placed out of the home of the parent within the previous five years in connection with one or more prior petitions for a child in need of protection or services, the lengths of all prior time periods when the child was placed out of the home within the previous five years and under the current petition, are cumulated. If a child under this clause has been out of the home for 12 months or more, the court, if it is in the best interests of the child, may extend the total time the child may continue out of the home under the current petition up to an additional six months before making a permanency determination.

(b) Not later than ten days prior to this hearing, the responsible social service agency shall file pleadings to establish the basis for the permanent placement determination. Notice of the hearing and copies of the pleadings must be provided pursuant to section 260.141. If a termination of parental rights petition is filed before the date required for the permanency

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planning determination, no hearing need be conducted under this subdivision. The court shall determine whether the child is to be returned home or, if not, what permanent placement is consistent with the child's best interests. The "best interests of the child" means all relevant factors to be considered and evaluated.

(c) At a hearing under this subdivision, if the child was under eight years of age at the time a petition that the child is in need of protection or services was filed, the court shall review the progress of the case and the case plan, including the provision of services. The court may order the local social service agency to show cause why it should not file a termination of parental rights petition. Cause may include, but is not limited to, the following conditions:

(1) the parents or guardians have maintained regular contact with the child, the parents are complying with the court-ordered case plan, and the child would benefit from continuing this relationship;

(2) grounds for termination under section 260.221 do not exist; or

(3) the permanent plan for the child is transfer of permanent legal and physical custody to a relative.

(d) If the child is not returned to the home, the dispositions available for permanent placement determination are:

(1) permanent legal and physical custody to a relative in the best interests of the child. In transferring permanent legal and physical custody to a relative, the juvenile court shall follow the standards and procedures applicable under chapter 257 or 518. An order establishing permanent legal or physical custody under this subdivision must be filed with the family court. A transfer of legal and physical custody includes responsibility for the protection, education, care, and control of the child and decision making on behalf of the child. The social service agency may petition on behalf of the proposed custodian;

(2) termination of parental rights and adoption; the social service agency shall file a petition for termination of parental rights under section 260.231 and all the requirements of sections 260.221 to 260.245 remain applicable. An adoption completed subsequent to a determination under this subdivision may include an agreement for communication or contact under section 259.58; or

(3) long-term foster care; transfer of legal custody and adoption are preferred permanency options for a child who cannot return home. The court may order a child into long-term foster care only if it finds that neither an award of legal and physical custody to a relative, nor termination of parental rights nor adoption is in the child's best interests. Further, the court may only order long-term foster care for the child under this section if it finds the following:

(i) the child has reached age 12 and reasonable efforts by the responsible social service agency have failed to locate an adoptive family for the child; or

(ii) the child is a sibling of a child described in clause (i) and the siblings have a significant positive relationship and are ordered into the same long-term foster care home; or

(4) foster care for a specified period of time may be ordered only if:

(i) the sole basis for an adjudication that a child is in need of protection or services is that the child is a runaway, is an habitual truant, or committed a delinquent act before age ten; and

(ii) the court finds that foster care for a specified period of time is in the best interests of the child.

(d) In ordering a permanent placement of a child, the court must be governed by the best interests of the child, including a review of the relationship between the child and relatives and the child and other important persons with whom the child has resided or had significant contact.

(e) Once a permanent placement determination has been made and permanent placement has been established, further court reviews and dispositional hearings are only necessary if the placement is made under paragraph (c), clause (4), review is otherwise required by federal law, an adoption has not yet been finalized, or there is a disruption of the permanent or long-term placement.

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(f) An order under this subdivision must include the following detailed findings:

(1) how the child's best interests are served by the order;

(2) the nature and extent of the responsible social service agency's reasonable efforts, or, in the case of an Indian child, active efforts, to reunify the child with the parent or parents;

(3) the parent's or parents' efforts and ability to use services to correct the conditions which led to the out-of-home placement;

(4) whether the conditions which led to the out-of-home placement have been corrected so that the child can return home; and

(5) if the child cannot be returned home, whether there is a substantial probability of the child being able to return home in the next six months.

(g) An order for permanent legal and physical custody of a child may be modified under sections 518.18 and 518.185. The social service agency is a party to the proceeding and must receive notice. An order for long-term foster care is reviewable upon motion and a showing by the parent of a substantial change in the parent's circumstances such that the parent could provide appropriate care for the child and that removal of the child from the child's permanent placement and the return to the parent's care would be in the best interest of the child.

Sec. 33. Minnesota Statutes 1996, section 260.221, as amended by Laws 1997, chapters 218, sections 10 and 11, and 239, article 6, section 30, is amended to read:

260.221 [~~GROUNDS FOR~~ TERMINATION OF PARENTAL RIGHTS.]

Subdivision 1. [VOLUNTARY AND INVOLUNTARY.] The juvenile court may upon petition, terminate all rights of a parent to a child:

(a) with the written consent of a parent who for good cause desires to terminate parental rights; or

(b) if it finds that one or more of the following conditions exist:

(1) that the parent has abandoned the child; or

(2) that the parent has substantially, continuously, or repeatedly refused or neglected to comply with the duties imposed upon that parent by the parent and child relationship, including but not limited to providing the child with necessary food, clothing, shelter, education, and other care and control necessary for the child's physical, mental, or emotional health and development, if the parent is physically and financially able, and reasonable efforts by the social service agency have failed to correct the conditions that formed the basis of the petition; or

(3) that a parent has been ordered to contribute to the support of the child or financially aid in the child's birth and has continuously failed to do so without good cause. This clause shall not be construed to state a grounds for termination of parental rights of a noncustodial parent if that parent has not been ordered to or cannot financially contribute to the support of the child or aid in the child's birth; or

(4) that a parent is palpably unfit to be a party to the parent and child relationship because of a consistent pattern of specific conduct before the child or of specific conditions directly relating to the parent and child relationship either of which are determined by the court to be of a duration or nature that renders the parent unable, for the reasonably foreseeable future, to care appropriately for the ongoing physical, mental, or emotional needs of the child. It is presumed that a parent is palpably unfit to be a party to the parent and child relationship upon a showing that:

(i) the child was adjudicated in need of protection or services due to circumstances described in section 260.015, subdivision 2a, clause (1), (2), (3), (5), or (8); and

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(ii) the parent's parental rights to one or more other children were involuntarily terminated under clause (1), (2), (4), or (7), or under clause (5) if the child was initially determined to be in need of protection or services due to circumstances described in section 260.015, subdivision 2a, clause (1), (2), (3), (5), or (8); or

(5) that following upon a determination of neglect or dependency, or of a child's need for protection or services, reasonable efforts, under the direction of the court, have failed to correct the conditions leading to the determination. It is presumed that reasonable efforts under this clause have failed upon a showing that:

(i) a child has resided out of the parental home under court order for a cumulative period of more than one year within a five-year period following an adjudication of dependency, neglect, need for protection or services under section 260.015, subdivision 2a, clause (1), (2), (3), (6), (8), or (9), or neglected and in foster care, and an order for disposition under section 260.191, including adoption of the case plan required by section 257.071;

(ii) conditions leading to the determination will not be corrected within the reasonably foreseeable future. It is presumed that conditions leading to a child's out-of-home placement will not be corrected in the reasonably foreseeable future upon a showing that the parent or parents have not substantially complied with the court's orders and a reasonable case plan, and the conditions which led to the out-of-home placement have not been corrected; and

(iii) reasonable efforts have been made by the social service agency to rehabilitate the parent and reunite the family.

This clause does not prohibit the termination of parental rights prior to one year after a child has been placed out of the home.

It is also presumed that reasonable efforts have failed under this clause upon a showing that:

(i) the parent has been diagnosed as chemically dependent by a professional certified to make the diagnosis;

(ii) the parent has been required by a case plan to participate in a chemical dependency treatment program;

(iii) the treatment programs offered to the parent were culturally, linguistically, and clinically appropriate;

(iv) the parent has either failed two or more times to successfully complete a treatment program or has refused at two or more separate meetings with a caseworker to participate in a treatment program; and

(v) the parent continues to abuse chemicals.

Provided, that this presumption applies only to parents required by a case plan to participate in a chemical dependency treatment program on or after July 1, 1990; or

(6) that a child has experienced egregious harm in the parent's care which is of a nature, duration, or chronicity that indicates a lack of regard for the child's well-being, such that a reasonable person would believe it contrary to the best interest of the child or of any child to be in the parent's care; or

(7) that in the case of a child born to a mother who was not married to the child's father when the child was conceived nor when the child was born the person is not entitled to notice of an adoption hearing under section 259.49 and the person has not registered with the putative fathers' adoption registry under section 259.52; or

(8) that the child is neglected and in foster care; or

(9) that the parent has been convicted of a crime listed in section 260.012, paragraph (b), clauses (1) to (3).

In an action involving an American Indian child, sections 257.35 to 257.3579 and the Indian Child Welfare Act, United States Code, title 25, sections 1901 to 1923, control to the extent that the provisions of this section are inconsistent with those laws.

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Subd. 1a. [EVIDENCE OF ABANDONMENT.] For purposes of subdivision 1, paragraph (b), clause (1):

(a) Abandonment is presumed when:

(1) the parent has had no contact with the child on a regular basis and not demonstrated consistent interest in the child's well-being for six months; and

~~(2)~~ the social service agency has made reasonable efforts to facilitate contact, unless the parent establishes that an extreme financial or physical hardship or treatment for mental disability or chemical dependency or other good cause prevented the parent from making contact with the child. This presumption does not apply to children whose custody has been determined under chapter 257 or 518. The court is not prohibited from finding abandonment in the absence of this presumption; or

(2) the child is an infant under two years of age and has been deserted by the parent under circumstances that show an intent not to return to care for the child.

(b) The following are prima facie evidence of abandonment where adoption proceedings are pending and there has been a showing that the person was not entitled to notice of an adoption proceeding under section 259.49:

(1) failure to register with the putative fathers' adoption registry under section 259.52; or

(2) if the person registered with the putative fathers' adoption registry under section 259.52:

(i) filing a denial of paternity within 30 days of receipt of notice under section 259.52, subdivision 8;

(ii) failing to timely file an intent to claim parental rights with entry of appearance form within 30 days of receipt of notice under section 259.52, subdivision 10; or

(iii) timely filing an intent to claim parental rights with entry of appearance form within 30 days of receipt of notice under section 259.52, subdivision 10, but failing to initiate a paternity action within 30 days of receiving the putative fathers' adoption registry notice where there has been no showing of good cause for the delay.

Subd. 1b. [REQUIRED TERMINATION OF PARENTAL RIGHTS.] (a) The county attorney shall file a termination of parental rights petition within 30 days of a child's placement in out-of-home care if the child has been subjected to egregious harm as defined in section 260.015, subdivision 29, is the sibling of another child of the parent who was subjected to egregious harm, or is an abandoned infant as defined in subdivision 1a, paragraph (a), clause (2). The local social services agency shall concurrently identify, recruit, process, and approve an adoptive family for the child. If a termination of parental rights petition has been filed by another party the local social services agency shall be joined as a party to the petition. If criminal charges have been filed against a parent arising out of the conduct alleged to constitute egregious harm, the county attorney shall determine which matter should proceed to trial first, consistent with the best interests of the child and subject to the defendant's right to a speedy trial.

(b) This requirement does not apply if the county attorney determines and files with the court its determination that a transfer of permanent legal and physical custody to a relative is in the best interests of the child or there is a compelling reason documented by the local social services agency that filing the petition would not be in the best interests of the child.

Subd. 1c. [CURRENT FOSTER CARE CHILDREN.] The county attorney shall file a termination of parental rights petition or other permanent placement proceeding under section 260.191, subdivision 3b, for all children determined to be in need of protection or services who are placed in out-of-home care for reasons other than care or treatment of the child's disability, and who are in out-of-home placement on the day following final enactment of this section, and have been in out-of-home care for 15 of the most recent 22 months.

Subd. 2. [ADOPTIVE PARENT.] For purposes of subdivision 1, clause (a), an adoptive parent may not terminate parental rights to an adopted child for a reason that would not apply to a birth parent seeking termination of parental rights to a child under subdivision 1, clause (a).

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Subd. 3. [WHEN PRIOR FINDING REQUIRED.] For purposes of subdivision 1, clause (b), no prior judicial finding of dependency, neglect, need for protection or services, or neglected and in foster care is required, except as provided in subdivision 1, clause (b), item (5).

Subd. 4. [BEST INTERESTS OF CHILD PARAMOUNT.] In any proceeding under this section, the best interests of the child must be the paramount consideration, provided that the conditions in subdivision 1, clause (a), or at least one condition in subdivision 1, clause (b), are found by the court. In proceedings involving an American Indian child, as defined in section 257.351, subdivision 6, the best interests of the child must be determined consistent with the Indian Child Welfare Act of 1978, United States Code, title 25, section 1901, et seq. Where the interests of parent and child conflict, the interests of the child are paramount.

Subd. 5. [FINDINGS REGARDING REASONABLE EFFORTS.] In any proceeding under this section, the court shall make specific findings:

(1) regarding the nature and extent of efforts made by the social service agency to rehabilitate the parent and reunite the family;

(2) that provision of services or further services for the purpose of rehabilitation and reunification is futile and therefore unreasonable under the circumstances; or

(3) that reasonable efforts at reunification is are not required ~~because the parent has been convicted of a crime listed in section 260.012, paragraph (b), clauses (1) to (3)~~ as provided under section 260.012.

Sec. 34. Minnesota Statutes 1997 Supplement, section 260.241, subdivision 3, is amended to read:

Subd. 3. [ORDER; RETENTION OF JURISDICTION.] (a) A certified copy of the findings and the order terminating parental rights, and a summary of the court's information concerning the child shall be furnished by the court to the commissioner or the agency to which guardianship is transferred. The orders shall be on a document separate from the findings. The court shall furnish the individual to whom guardianship is transferred a copy of the order terminating parental rights.

(b) The court shall retain jurisdiction in a case where adoption is the intended permanent placement disposition. The guardian ad litem and counsel for the child shall continue on the case until an adoption decree is entered. A hearing must be held every 90 days following termination of parental rights for the court to review progress toward an adoptive placement and the specific recruitment efforts the agency has taken to find an adoptive family or other placement living arrangement for the child and to finalize the adoption or other permanency plan.

(c) The court shall retain jurisdiction in a case where long-term foster care is the permanent disposition. The guardian ad litem and counsel for the child must be dismissed from the case on the effective date of the permanent placement order. However, the foster parent and the child, if of sufficient age, must be informed how they may contact a guardian ad litem if the matter is subsequently returned to court.

Sec. 35. Minnesota Statutes 1996, section 626.556, is amended by adding a subdivision to read:

Subd. 11d. [DISCLOSURE IN CHILD FATALITY OR NEAR FATALITY CASES.] (a) The definitions in this paragraph apply to this section.

(1) "Child fatality" means the death of a child from suspected abuse, neglect, or maltreatment.

(2) "Near fatality" means a case in which a physician determines that a child is in serious or critical condition as the result of sickness or injury caused by suspected abuse, neglect, or maltreatment.

(3) "Findings and information" means a written summary described in paragraph (c) of actions taken or services rendered by a local social services agency following receipt of a report.

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(b) Notwithstanding any other provision of law and subject to this subdivision, a public agency shall disclose to the public, upon request, the findings and information related to a child fatality or near fatality if:

(1) a person is criminally charged with having caused the child fatality or near fatality; or

(2) a county attorney certifies that a person would have been charged with having caused the child fatality or near fatality but for that person's death.

(c) Findings and information disclosed under this subdivision consist of a written summary that includes any of the following information the agency is able to provide:

(1) the dates, outcomes, and results of any actions taken or services rendered;

(2) the results of any review of the state child mortality review panel, a local child mortality review panel, a local community child protection team, or any public agency; and

(3) confirmation of the receipt of all reports, accepted or not accepted, by the local welfare agency for assessment of suspected child abuse, neglect, or maltreatment, including confirmation that investigations were conducted, the results of the investigations, a description of the conduct of the most recent investigation and the services rendered, and a statement of the basis for the agency's determination.

(d) Nothing in this subdivision authorizes access to the private data in the custody of a local social services agency, or the disclosure to the public of the records or content of any psychiatric, psychological, or therapeutic evaluations, or the disclosure of information that would reveal the identities of persons who provided information related to suspected abuse, neglect, or maltreatment of the child.

(e) A person whose request is denied may apply to the appropriate court for an order compelling disclosure of all or part of the findings and information of the public agency. The application must set forth, with reasonable particularity, factors supporting the application. The court has jurisdiction to issue these orders. Actions under this section must be set down for immediate hearing, and subsequent proceedings in those actions must be given priority by the appellate courts.

(f) A public agency or its employees acting in good faith in disclosing or declining to disclose information under this section are immune from criminal or civil liability that might otherwise be incurred or imposed for that action.

Sec. 36. [EFFECTIVE DATE.]

Sections 1 to 18, and 20 to 35 are effective the day following final enactment. Section 19 is effective retroactive to July 1, 1997, and applies to communication or contact agreements entered into on or after that date.

ARTICLE 10

HEALTH DATA REPORTING

Section 1. Minnesota Statutes 1996, section 145.411, is amended by adding a subdivision to read:

Subd. 6. [COMMISSIONER.] "Commissioner" means the commissioner of health.

Sec. 2. [145.4131] [RECORDING AND REPORTING ABORTION DATA.]

Subdivision 1. [FORMS.] (a) Within 90 days of the effective date of this section, the commissioner shall prepare a reporting form for use by physicians or facilities performing abortions. A copy of this section shall be attached to the form. A physician or facility performing an abortion shall obtain a form from the commissioner.

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(b) The form shall require the following information:

(1) the number of abortions performed by the physician in the previous calendar year, reported by month;

(2) the method used for each abortion;

(3) the approximate gestational age expressed in one of the following increments:

(i) less than nine weeks;

(ii) nine to ten weeks;

(iii) 11 to 12 weeks;

(iv) 13 to 15 weeks;

(v) 16 to 20 weeks;

(vi) 21 to 24 weeks;

(vii) 25 to 30 weeks;

(viii) 31 to 36 weeks; or

(ix) 37 weeks to term;

(4) the age of the woman at the time the abortion was performed;

(5) the specific reason for the abortion, including, but not limited to, the following:

(i) the pregnancy was a result of rape;

(ii) the pregnancy was a result of incest;

(iii) economic reasons;

(iv) the woman does not want children at this time;

(v) the woman's emotional health is at stake;

(vi) the woman's physical health is at stake;

(vii) the woman will suffer substantial and irreversible impairment of a major bodily function if the pregnancy continues;

(viii) the pregnancy resulted in fetal anomalies; or

(ix) unknown or the woman refused to answer;

(6) the number of prior induced abortions;

(7) the number of prior spontaneous abortions;

(8) whether the abortion was paid for by:

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(i) private coverage;

(ii) public assistance health coverage; or

(iii) self-pay;

(9) whether coverage was under:

(i) a fee-for-service plan;

(ii) a capitated private plan; or

(iii) other;

(10) complications, if any, for each abortion and for the aftermath of each abortion. Space for a description of any complications shall be available on the form; and

(11) the medical specialty of the physician performing the abortion.

Subd. 2. [SUBMISSION.] A physician performing an abortion or a facility at which an abortion is performed shall complete and submit the form to the commissioner no later than April 1 for abortions performed in the previous calendar year. The annual report to the commissioner shall include the methods used to dispose of fetal tissue and remains.

Subd. 3. [ADDITIONAL REPORTING.] Nothing in this section shall be construed to preclude the voluntary or required submission of other reports or forms regarding abortions.

Sec. 3. [145.4132] [RECORDING AND REPORTING ABORTION COMPLICATION DATA.]

Subdivision 1. [FORMS.] (a) Within 90 days of the effective date of this section, the commissioner shall prepare an abortion complication reporting form for all physicians licensed and practicing in the state. A copy of this section shall be attached to the form.

(b) The board of medical practice shall ensure that the abortion complication reporting form is distributed:

(1) to all physicians licensed to practice in the state, within 120 days after the effective date of this section and by December 1 of each subsequent year; and

(2) to a physician who is newly licensed to practice in the state, at the same time as official notification to the physician that the physician is so licensed.

Subd. 2. [REQUIRED REPORTING.] A physician licensed and practicing in the state who knowingly encounters an illness or injury that, in the physician's medical judgment, is related to an induced abortion or the facility where the illness or injury is encountered shall complete and submit an abortion complication reporting form to the commissioner.

Subd. 3. [SUBMISSION.] A physician or facility required to submit an abortion complication reporting form to the commissioner shall do so as soon as practicable after the encounter with the abortion related illness or injury.

Subd. 4. [ADDITIONAL REPORTING.] Nothing in this section shall be construed to preclude the voluntary or required submission of other reports or forms regarding abortion complications.

Sec. 4. [145.4133] [REPORTING OUT-OF-STATE ABORTIONS.]

The commissioner of human services shall report to the commissioner by April 1 each year the following information regarding abortions paid for with state funds and performed out of state in the previous calendar year:

(1) the total number of abortions performed out of state and partially or fully paid for with state funds through the medical assistance, general assistance medical care, or MinnesotaCare program, or any other program;

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(2) the total amount of state funds used to pay for the abortions and expenses incidental to the abortions; and

(3) the gestational age at the time of abortion.

Sec. 5. [145.4134] [COMMISSIONER'S PUBLIC REPORT.]

(a) By July 1 of each year, except for 1998 and 1999 information, the commissioner shall issue a public report providing statistics for the previous calendar year compiled from the data submitted under sections 145.4131 to 145.4133. For 1998 and 1999 information, the report shall be issued October 1, 2000. Each report shall provide the statistics for all previous calendar years, adjusted to reflect any additional information from late or corrected reports. The commissioner shall ensure that none of the information included in the public reports can reasonably lead to identification of an individual having performed or having had an abortion. All data included on the forms under sections 145.4131 to 145.4133 must be included in the public report except that the commissioner shall maintain as confidential, data which alone or in combination may constitute information from which an individual having performed or having had an abortion may be identified using epidemiologic principles. The commissioner shall submit the report to the senate health and family security committee and the house health and human services committee.

(b) The commissioner may, by rules adopted under chapter 14, alter the submission dates established under sections 145.4131 to 145.4133 for administrative convenience, fiscal savings, or other valid reason, provided that physicians or facilities and the commissioner of human services submit the required information once each year and the commissioner issues a report once each year.

Sec. 6. [145.4135] [ENFORCEMENT; PENALTIES.]

(a) If the commissioner finds that a physician or facility has failed to submit the required form under section 145.4131 within 60 days following the due date, the commissioner shall notify the physician or facility that the form is late. A physician or facility who fails to submit the required form under section 145.4131 within 30 days following notification from the commissioner that a report is late is subject to a late fee of $500 for each 30-day period, or portion thereof, that the form is overdue. If a physician or facility required to report under this section does not submit a report, or submits only an incomplete report, more than one year following the due date, the commissioner may take action to fine the physician or facility or may bring an action to require that the physician or facility be directed by a court of competent jurisdiction to submit a complete report within a period stated by court order or be subject to sanctions for civil contempt. Notwithstanding section 13.39 to the contrary, action taken by the commissioner to enforce the provision of this section shall be treated as private if the data related to this action, alone or in combination, may constitute information from which an individual having performed or having had an abortion may be identified using epidemiologic principles.

(b) If the commissioner fails to issue the public report required under section 145.4134 or fails in any way to enforce this section, a group of 100 or more citizens of the state may seek an injunction in a court of competent jurisdiction against the commissioner requiring that a complete report be issued within a period stated by court order or requiring that enforcement action be taken.

(c) A physician or facility reporting in good faith and exercising due care shall have immunity from civil, criminal, or administrative liability that might otherwise result from reporting. A physician who knowingly or recklessly submits a false report under this section is guilty of a misdemeanor.

(d) The commissioner may take reasonable steps to ensure compliance with sections 145.4131 to 145.4133 and to verify data provided, including but not limited to, inspection of places where abortions are performed in accordance with chapter 14.

(e) The commissioner shall develop recommendations on appropriate penalties and methods of enforcement for physicians or facilities who fail to submit the report required under section 145.4132, submit an incomplete report, or submit a late report. The commissioner shall also assess the effectiveness of the enforcement methods and penalties provided in paragraph (a) and shall recommend appropriate changes, if any. These recommendations shall be reported to the chairs of the senate health and family security committee and the house health and human services committee by November 15, 1998.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10218

Sec. 7. [145.4136] [SEVERABILITY.]

If any one or more provision, section, subdivision, sentence, clause, phrase, or word in sections 145.4131 to 145.4135, or the application thereof to any person or circumstance is found to be unconstitutional, the same is hereby declared to be severable and the balance of sections 145.4131 to 145.4135 shall remain effective notwithstanding such unconstitutionality. The legislature hereby declares that it would have passed sections 145.4131 to 145.4135, and each provision, section, subdivision, sentence, clause, phrase, or word thereof, irrespective of the fact that any one or more provision, section, subdivision, sentence, clause, phrase, or word be declared unconstitutional."

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10219

subdivision 5; 256L.01; 256L.02, subdivision 3, and by adding a subdivision; 256L.03, subdivisions 1, 3, 4, 5, and by adding subdivisions; 256L.04, subdivisions 1, 2, 7, 8, 9, 10, and by adding subdivisions; 256L.05, subdivisions 2, 3, 4, and by adding subdivisions; 256L.06, subdivision 3; 256L.07; 256L.09, subdivisions 2, 4, and 6; 256L.11, subdivision 6; 256L.12, subdivision 5; 256L.15; 256L.17, by adding a subdivision; 257.071, subdivision 1d; 257.85, subdivision 5; 259.22, subdivision 4; 259.47, subdivision 3; 259.58; 259.60, subdivision 2; 260.012; 260.015, subdivisions 2a and 29; 260.161, subdivision 2; 260.191, subdivisions 1, 1a, 3a, and 3b; 260.241, subdivision 3; and 270A.03, subdivision 5; Laws 1994, chapter 633, article 7, section 3; Laws 1997, chapter 195, section 5; chapter 203, article 4, section 64; article 9, section 21; chapter 207, section 7; chapter 225, article 2, section 64; and chapter 248, section 46, as amended; proposing coding for new law in Minnesota Statutes, chapters 62J; 62Q; 144; 145; 245; 256; 256B; 256D; and 256J; repealing Minnesota Statutes 1996, sections 62J.685; 144.0721, subdivision 3a; 144.491; 144.9501, subdivisions 12, 14, and 16; 144.9503, subdivisions 5, 8, and 9; 157.15, subdivision 15; 256.031, subdivisions 1, 2, 3, and 4; 256.032; 256.033, subdivisions 2, 3, 4, 5, and 6; 256.034; 256.035; 256.036; 256.0361; 256.047; 256.0475; 256.048; and 256.049; Minnesota Statutes 1997 Supplement, sections 62D.042, subdivision 3; 144.0721, subdivision 3; 256.031, subdivisions 5 and 6; 256.033, subdivisions 1 and 1a; 256B.057, subdivision 1a; 256B.062; 256B.0913, subdivision 15; 256J.25; 256J.28, subdivision 4; 256J.32, subdivision 5; 256J.34, subdivision 5; 256L.04, subdivisions 3, 4, 5, and 6; 256L.06, subdivisions 1 and 2; 256L.08; 256L.09, subdivision 3; 256L.13; and 256L.14; Laws 1997, chapter 85, article 1, sections 61 and 71; and article 3, section 55."

We request adoption of this report and repassage of the bill.

Senate Conferees: Don Samuelson, Linda Berglin, Dan Stevens and Sheila M. Kiscaden.

House Conferees: Lee Greenfield, John Dorn and Carlos Mariani.

Greenfield moved that the report of the Conference Committee on S. F. No. 3346 be adopted and that the bill be repassed as amended by the Conference Committee.

Sviggum moved that the House refuse to adopt the Conference Committee report on S. F. No. 3346, and that the bill be returned to the Conference Committee.

The question was taken on the Sviggum motion and the roll was called. There were 58 yeas and 75 nays as follows:

Abrams Dehler Kielkucki Molnau Rifenberg Tompkins
Anderson, B. Dempsey Knight Mulder Seagren Tuma
Bettermann Erhardt Knoblach Ness Seifert Van Dellen
Boudreau Erickson Kraus Nornes Smith Vandeveer
Bradley Finseth Krinkie Olson, M. Stanek Westfall
Broecker Goodno Kuisle Osskopp Stang Westrom
Clark, J. Gunther Larsen Ozment Sviggum Wolf
Commers Haas Lindner Paulsen Swenson, H. Workman
Daggett Harder Macklin Pawlenty Sykora
Davids Holsten Mares Reuter Tingelstad

Anderson, I. Folliard Juhnke Marko Paymar Solberg
Bakk Garcia Kahn McCollum Pelowski Tomassoni
Biernat Greenfield Kalis McElroy Peterson Trimble
Bishop Greiling Kelso McGuire Pugh Tunheim
Carlson Hasskamp Kinkel Milbert Rest Wagenius
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10220
Chaudhary Hausman Koskinen Mullery Rhodes Weaver
Clark, K. Hilty Kubly Munger Rostberg Wejcman
Dawkins Huntley Leighton Murphy Rukavina Wenzel
Delmont Jaros Leppik Olson, E. Schumacher Winter
Dorn Jefferson Lieder Opatz Sekhon Spk. Carruthers
Entenza Jennings Long Orfield Skare
Evans Johnson, A. Mahon Osthoff Skoglund
Farrell Johnson, R. Mariani Otremba, M. Slawik

The question recurred on the Greenfield motion that the report of the Conference Committee on S. F. No. 3346 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

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256J; and 256L; repealing Minnesota Statutes 1996, sections 144.0721, subdivision 3a; 256.031, subdivisions 1, 2, 3, and 4; 256.032; 256.033, subdivisions 2, 3, 4, 5, and 6; 256.034; 256.035; 256.036; 256.0361; 256.047; 256.0475; 256.048; 256.049; and 256B.501, subdivision 3g; Minnesota Statutes 1997 Supplement, sections 62J.685; 144.0721, subdivision 3; 256.031, subdivisions 5 and 6; 256.033, subdivisions 1 and 1a; 256B.057, subdivision 1a; 256B.062; 256B.0913, subdivision 15; 256J.25; 256J.28, subdivision 4; 256J.32, subdivision 5; 256J.34, subdivision 5; 256J.76; 256L.04, subdivisions 3, 4, 5, and 6; 256L.06, subdivisions 1 and 2; 256L.08; 256L.09, subdivision 3; 256L.13; and 256L.14; Laws 1997, chapter 85, article 1, sections 61 and 71; and article 3, section 55; Minnesota Rules (Exempt), parts 9500.9100; 9500.9110; 9500.9120; 9500.9130; 9500.9140; 9500.9150; 9500.9160; 9500.9170; 9500.9180; 9500.9190; 9500.9200; 9500.9210; and 9500.9220.

The bill was read for the third time, as amended by Conference, and placed upon its repassage.

The question was taken on the repassage of the bill and the roll was called. There were 99 yeas and 34 nays as follows:

Anderson, I. Erickson Jennings Mares Paymar Swenson, H.
Bakk Evans Johnson, A. Mariani Pelowski Tomassoni
Bettermann Farrell Johnson, R. Marko Peterson Trimble
Biernat Finseth Juhnke McCollum Pugh Tuma
Bishop Folliard Kahn McGuire Rest Tunheim
Carlson Garcia Kalis Milbert Rhodes Vandeveer
Chaudhary Goodno Kelso Mullery Rukavina Wagenius
Clark, J. Greenfield Kinkel Munger Schumacher Weaver
Clark, K. Greiling Knoblach Murphy Seagren Wejcman
Daggett Gunther Koskinen Ness Seifert Wenzel
Dawkins Harder Kubly Nornes Sekhon Westfall
Dehler Hasskamp Leighton Olson, E. Skare Westrom
Delmont Hausman Leppik Opatz Skoglund Winter
Dempsey Hilty Lieder Orfield Slawik Spk. Carruthers
Dorn Huntley Long Osthoff Smith
Entenza Jaros Macklin Otremba, M. Solberg
Erhardt Jefferson Mahon Pawlenty Stang

Abrams Davids Krinkie Mulder Rifenberg Tompkins
Anderson, B. Haas Kuisle Olson, M. Rostberg Van Dellen
Boudreau Holsten Larsen Osskopp Stanek Wolf
Bradley Kielkucki Lindner Ozment Sviggum Workman
Broecker Knight McElroy Paulsen Sykora
Commers Kraus Molnau Reuter Tingelstad

The bill was repassed, as amended by Conference, and its title agreed to.

The Speaker resumed the Chair.

REPORT FROM THE COMMITTEE ON RULES AND

LEGISLATIVE ADMINISTRATION

Winter from the Committee on Rules and Legislative Administration, pursuant to rule 1.09, designated the following bill as a Special Order to be acted upon today:

S. F. No. 90.

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SPECIAL ORDERS

S. F. No. 90 was reported to the House.

Trimble; Clark, K., and Kinkel moved to amend S. F. No. 90, the second unofficial engrossment, as follows:

Delete everything after the enacting clause and insert:

FAMILY AND EARLY CHILDHOOD POLICY

Section 1. Minnesota Statutes 1997 Supplement, section 119B.01, subdivision 16, is amended to read:

Subd. 16. [TRANSITION YEAR FAMILIES.] "Transition year families" means families who have received AFDC for at least three of the last six months before losing eligibility for AFDC or MFIP-S due to increased hours of employment, increased income from employment or child or spousal support, or the loss of income disregards due to time limitations. Transition year child care may be used to support employment or job search.

Sec. 2. Minnesota Statutes 1997 Supplement, section 119B.02, is amended to read:

119B.02 [DUTIES OF COMMISSIONER.]

Subdivision 1. [RESPONSIBILITY FOR CHILD CARE SERVICES.] The commissioner shall develop standards for county and human services boards to provide child care services to enable eligible families to participate in employment, training, or education programs. Within the limits of available appropriations, the commissioner shall distribute money to counties to reduce the costs of child care for eligible families. The commissioner shall adopt rules to govern the program in accordance with this section. The rules must establish a sliding schedule of fees for parents receiving child care services. The rules shall provide that funds received as a lump sum payment of child support arrearages shall not be counted as income to a family in the month received but shall be prorated over the 12 months following receipt and added to the family income during those months. In the rules adopted under this section, county and human services boards shall be authorized to establish policies for payment of child care spaces for absent children, when the payment is required by the child's regular provider. The rules shall not set a maximum number of days for which absence payments can be made, but instead shall direct the county agency to set limits and pay for absences according to the prevailing market practice in the county. County policies for payment of absences shall be subject to the approval of the commissioner. The commissioner shall maximize the use of federal money in section 256.736 and other programs that provide federal or state reimbursement for child care services for low-income families who are in education, training, job search, or other activities allowed under those programs. Money appropriated under this section must be coordinated with the programs that provide federal reimbursement for child care services to accomplish this purpose. Federal reimbursement obtained must be allocated to the county that spent money for child care that is federally reimbursable under programs that provide federal reimbursement for child care services. The counties shall use the federal money to expand child care services. The commissioner may adopt rules under chapter 14 to implement and coordinate federal program requirements.

Subd. 2. [SUPERVISION OF COUNTIES.] The commissioner shall supervise child care programs administered by the counties through standard-setting, technical assistance to the counties, approval of county plans, and distribution of public money for services. The commissioner shall provide training and other support services to assist counties in planning for and implementing child care assistance programs. The commissioner shall establish minimum administrative and service standards for the provision of child care social services by county boards of commissioners through the promulgation of a permanent administrative rule under chapter 14.

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Sec. 3. Minnesota Statutes 1997 Supplement, section 119B.061, subdivision 1, is amended to read:

Subdivision 1. [ESTABLISHMENT.] Beginning July 1, 1998, a family ~~receiving or eligible to~~ in which a parent provides care for the family's infant child may receive a subsidy in lieu of assistance if the family is eligible for, or is receiving assistance under the basic sliding fee program ~~is eligible for assistance for a parent to provide short-term child care for the family's infant child~~. An eligible family must meet the eligibility factors under section 119B.09, the income criteria under section 119B.12, and the requirements of this section. The commissioner shall establish a pool of up to seven percent of the annual appropriation for the basic sliding fee program to provide assistance under the at-home infant child care program. At the end of the fiscal year, any unspent funds must be used for assistance under the basic sliding fee program.

Sec. 4. Minnesota Statutes 1997 Supplement, section 119B.061, subdivision 2, is amended to read:

Subd. 2. [ELIGIBLE FAMILIES.] A family with an infant under the age of one year is eligible for assistance if:

(1) the family is not receiving MFIP-S, other cash assistance, or other child care assistance;

(2) the family has not previously received all of the one-year exemption from the work requirement for infant care under the MFIP-S program;

(3) the family has not previously received a life-long total of 12 months of assistance under this section; and

(4) the family is participating in the basic sliding fee program or, for the first child in a family, provides verification of employment at the time of application and meets the program requirements.

Sec. 5. Minnesota Statutes 1997 Supplement, section 119B.061, subdivision 3, is amended to read:

Subd. 3. [ELIGIBLE PARENT.] ~~Only~~ A family is eligible for assistance under this section if one parent~~, in a two-parent family, is eligible for assistance~~ cares for the family's infant child. The eligible parent must:

(1) be over the age of 18;

(2) ~~provide~~ care for the infant full-time ~~care for the child~~ in the child's home; and

(3) ~~provide child~~ care for any other children in the family ~~that~~ who are eligible for child care assistance under chapter 119B.

Sec. 6. Minnesota Statutes 1997 Supplement, section 119B.061, subdivision 4, is amended to read:

Subd. 4. [ASSISTANCE.] (a) A family is limited to a lifetime total of 12 months of assistance under this section. The maximum rate of assistance must be at 75 percent of the rate established under section 119B.13 for care of infants in licensed family day care in the applicant's county of residence. Assistance must be calculated to reflect the copay requirement and the family's income level.

(b) A participating family must continue to report income and other family changes as specified in the county's plan under section 119B.08, subdivision 3. The family must treat any assistance received under this section as unearned income.

(c) Participation in the at-home infant child care program must be considered participation in the basic sliding fee program for purposes of continuing eligibility under section 119B.03, subdivision 3.

(d) The time that a family ~~that~~ receives assistance under this section ~~is ineligible for~~ must be deducted from the one-year exemption from work requirements under the MFIP-S program.

(e) Assistance under this section does not establish an employer-employee relationship between any member of the assisted family and the county or state.

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Sec. 7. Minnesota Statutes 1997 Supplement, section 119B.075, is amended to read:

119B.075 [CHILD CARE RESERVE ACCOUNT.]

A reserve account must be created within the general fund for all unexpended basic sliding fee child care, TANF child care, or other child care funds under the jurisdiction of the commissioner. Any funds for those purposes that are unexpended at the end of a biennium must be deposited in this reserve account, and may be appropriated on an ongoing basis by the commissioner for basic sliding fee child care or TANF child care. A child care reserve account is created in the state treasury. Funds appropriated for child care assistance and development to the commissioner that are not expended in the biennium beginning July 1, 1997, must be retained in the reserve account to be expended for child care programs in fiscal year 2000 and subsequent fiscal years.

Sec. 8. Minnesota Statutes 1997 Supplement, section 119B.10, subdivision 1, is amended to read:

Subdivision 1. [ASSISTANCE FOR PERSONS SEEKING AND RETAINING EMPLOYMENT.] (a) Persons who are seeking employment and who are eligible for assistance under this section are eligible to receive up to 240 hours of child care assistance per calendar year.

(b) Employed persons who work at least an average of 20 and full-time students who work at least an average of ten hours a week and receive at least a minimum wage for all hours worked are eligible for continued child care assistance for employment. Child care assistance during employment must be authorized as provided in paragraphs (c) and (d).

(c) When the caregiver works for an hourly wage and the hourly wage is equal to or greater than the applicable minimum wage, child care assistance shall be provided for the actual hours of employment, break, and mealtime during the employment and travel time up to two hours per day.

(d) When the caregiver does not work for an hourly wage, child care assistance must be provided for the lesser of:

(1) the amount of child care determined by dividing gross earned income by the applicable minimum wage, up to one hour every eight hours for meals and break time, plus up to two hours per day for travel time; or

(2) the amount of child care equal to the actual amount of child care used during employment, including break and mealtime during employment, and travel time up to two hours per day.

Sec. 9. Minnesota Statutes 1996, section 119B.10, is amended by adding a subdivision to read:

Subd. 3. [SELF-EMPLOYMENT EXCEPTION.] For assistance under section 119B.03, a caregiver who has a business plan for self-employment is exempt for up to six months from the minimum wage requirements under subdivision 1, paragraph (d), clause (1). The caregiver must demonstrate that the business plan has been developed and reviewed by an organization that specializes in business assistance including, but not limited to, a community development corporation, a small business assistance center, or an organization affiliated with the Minnesota Micro Enterprise Association. The caregiver must meet all other eligibility requirements for assistance under the basic sliding fee program.

Sec. 10. Minnesota Statutes 1997 Supplement, section 119B.13, subdivision 1, is amended to read:

Subdivision 1. [SUBSIDY RESTRICTIONS.] Effective July 1, 1991, the maximum rate paid for child care assistance under the child care fund is the maximum rate eligible for federal reimbursement. The rate may not exceed the 75th percentile rate for like-care arrangements in the county as surveyed by the commissioner. A rate which includes a provider bonus paid under subdivision 2 or a special needs rate paid under subdivision 3 may be in excess of the maximum rate allowed under this subdivision. The department of children, families, and learning shall monitor the effect of this paragraph on provider rates. The county shall pay the provider's full charges for every child in care up to the maximum established. The commissioner shall determine the maximum rate for each type of care, including special needs and handicapped care. Not less than once every two years, the county shall evaluate ~~rates~~ market practices for payment of ~~absent spaces~~ absences and shall establish policies for payment of absent days that reflect current market practice.

When the provider charge is greater than the maximum provider rate allowed, the parent is responsible for payment of the difference in the rates in addition to any family copayment fee.

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Sec. 11. Minnesota Statutes 1997 Supplement, section 119B.13, subdivision 6, is amended to read:

Subd. 6. [PROVIDER PAYMENTS.] Counties shall make vendor payments to the child care provider, or may pay the parent directly for eligible child care expenses if the county has established procedures and requires documentation to ensure that the payment is used for child care. A parent who receives a direct child care payment must provide the documentation, as required by the county, that the payment was used for eligible child care expenses. If payments for child care assistance are made to providers, the provider shall bill the county for services provided within ten days of the end of the month of service. If bills are submitted in accordance with the provisions of this subdivision, a county shall issue payment to the provider of child care under the child care fund within 30 days of receiving an invoice from the provider. Counties may establish policies that make payments on a more frequent basis. A county's payment policies must be included in the county's child care plan under section 119B.08, subdivision 3.

Sec. 12. Minnesota Statutes 1996, section 119B.18, subdivision 2, is amended to read:

Subd. 2. [DUTIES.] The regional resource and referral program shall have the duties specified in section 119B.19. In addition, the regional program shall be responsible for establishing new or collaborating with existing community-based committees such as interagency early intervention committees or neighborhood groups to advocate for child care needs in the community, including school-age care needs, as well as serve as important local resources for children and their families.

Sec. 13. Minnesota Statutes 1996, section 119B.18, is amended by adding a subdivision to read:

Subd. 4. [BUSINESS PRACTICES ASSISTANCE.] The regional resource and referral programs may provide technical assistance on sound business practices to start-up and established child care providers. The assistance may include business planning and effective business management practices for family child care providers, business-based providers, child care centers, providers who offer care during nonstandard hours, and other child care facilities.

Sec. 14. Minnesota Statutes 1996, section 119B.18, is amended by adding a subdivision to read:

Subd. 5. [PRELICENSING ASSISTANCE.] The regional child care resource and referral programs may act as a liaison and provide technical assistance to start-up and expanding child care providers. Assistance to achieve licensure for child care facilities may include identifying the necessary code and licensing requirements and coordinating prelicensing conferences or prelicensing assessments with state and local officials.

Sec. 15. Minnesota Statutes 1996, section 119B.19, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY.] The commissioner of children, families, and learning may make grants to public or private nonprofit agencies for the planning, establishment, expansion, improvement, or operation of child care resource and referral programs and child care services, including school-age care programs, according to the provisions of this section and may make grants to county boards to carry out the purposes of sections 119B.19 to 119B.21.

Sec. 16. Minnesota Statutes 1996, section 119B.19, is amended by adding a subdivision to read:

Subd. 3a. [PROGRAM SERVICES; SCHOOL-AGE CARE.] The commissioner may make grants to public or private nonprofit entities to fund school-age care programs. School-age care programs shall meet the requirements of section 121.88, subdivision 10.

Sec. 17. Minnesota Statutes 1996, section 119B.19, subdivision 4, is amended to read:

Subd. 4. [GRANT REQUIREMENTS AND PRIORITY.] Priority for awarding resource and referral grants shall be given in the following order:

(1) start up resource and referral programs in areas of the state where they do not exist; and

(2) improve resource and referral programs.

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Resource and referral programs shall meet the following requirements:

(a) Each program shall identify all existing child care services through information provided by all relevant public and private agencies in the areas of service, and shall develop a resource file of the services which shall be maintained and updated at least quarterly. These services must include family day care homes; public and private day care programs; full-time and part-time programs; infant, preschool, and extended care programs; and programs for school-age children.

The resource file must include: the type of program, hours of program service, ages of children served, fees, location of the program, eligibility requirements for enrollment, special needs services, and transportation available to the program. The file may also include program information and special program features.

(b) Each resource and referral program shall establish a referral process which responds to parental need for information and which fully recognizes confidentiality rights of parents. The referral process must afford parents maximum access to all referral information. This access must include telephone referral available for no less than 20 hours per week.

Each child care resource and referral agency shall publicize its services through popular media sources, agencies, employers, and other appropriate methods.

(c) Each resource and referral program shall maintain ongoing documentation of requests for service. All child care resource and referral agencies must maintain documentation of the number of calls and contacts to the child care information and referral agency or component. A resource and referral program shall collect and maintain the following information:

(1) ages of children served;

(2) time category of child care request for each child;

(3) special time category, such as nights, weekends, and swing shift; and

(4) reason that the child care is needed.

(d) Each resource and referral program shall make available the following information as an educational aid to parents:

(1) information on aspects of evaluating the quality and suitability of child care services, including licensing regulation, financial assistance available, child abuse reporting procedures, appropriate child development information;

(2) information on available parent, early childhood, and family education programs in the community.

(e) On or after one year of operation a resource and referral program shall provide technical assistance to employers and existing and potential providers of all types of child care services. This assistance shall include:

(1) information on all aspects of initiating new child care services including licensing, zoning, program and budget development, and assistance in finding information from other sources;

(2) information and resources which help existing child care providers to maximize their ability to serve the children and parents of their community;

(3) dissemination of information on current public issues affecting the local and state delivery of child care services;

(4) facilitation of communication between existing child care providers and child-related services in the community served;

(5) recruitment of licensed providers; and

(6) options, and the benefits available to employers utilizing the various options, to expand child care services to employees.

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Services prescribed by this section must be designed to maximize parental choice in the selection of child care and to facilitate the maintenance and development of child care services and resources.

(f) Child care resource and referral information must be provided to all persons requesting services and to all types of child care providers and employers.

(g) Each resource and referral program shall coordinate early childhood training for child care providers in that program's service delivery area. The resource and referral program shall convene an early childhood care and education training advisory committee to assist in the following activities:

(1) assess the early childhood care and education training needs of child care center staff and family and group family child care providers, including both the needs related to early childhood development and to the development of school-age children;

(2) coordinate existing both early childhood and school-age care and education training;

(3) develop new early childhood and school-age care and education training opportunities; and

(4) publicize all early childhood and school-age training classes and workshops to child care center staff and family and group family child care providers in the service delivery area.

(h) Public or private entities may apply to the commissioner for funding. A local match of up to 25 percent is required.

Sec. 18. Minnesota Statutes 1996, section 119B.19, is amended by adding a subdivision to read:

Subd. 4a. [GRANT REQUIREMENTS.] (a) Each school-age care program shall work with the resource and referral program in the geographic region to coordinate training for school-age care providers in that program's service delivery area.

(b) Public or private entities may apply to the commissioner for funding. A local match of up to 25 percent is required.

Sec. 19. Minnesota Statutes 1997 Supplement, section 119B.21, subdivision 2, is amended to read:

Subd. 2. [DISTRIBUTION OF FUNDS.] (a) The commissioner shall allocate grant money appropriated for child care service development among the development regions designated by the governor under section 462.385, considering the following factors for each economic development region:

(1) the number of children under 13 14 years of age needing child care in the service area;

(2) the geographic area served by the agency;

(3) the ratio of children under 13 14 years of age needing child care to the number of licensed spaces in the service area;

(4) the number of licensed child care providers and ~~extended day~~ school-age ~~child~~ care programs in the service area; and

(b) Out of the amount allocated for each economic development region, the commissioner shall award grants based on the recommendation of the child care regional advisory committees. In addition, the commissioner shall award no more than 75 percent of the money either to child care facilities for the purpose of facility improvement or interim financing or to child care workers for staff training expenses.

(c) Any funds unobligated may be used by the commissioner to award grants to proposals that received funding recommendations by the regional advisory committees but were not awarded due to insufficient funds.

(d) The commissioner may allocate grants under this section for a two-year period and may carry forward funds from the first year as necessary.

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Sec. 20. Minnesota Statutes 1997 Supplement, section 119B.21, subdivision 4, is amended to read:

Subd. 4. [DISTRIBUTION OF FUNDS FOR CHILD CARE RESOURCE AND REFERRAL PROGRAMS.] (a) The commissioner shall allocate funds appropriated for child care resource and referral services considering the following factors for each economic development region served by the child care resource and referral agency:

(1) the number of children under 13 14 years of age needing child care in the service area;

(2) the geographic area served by the agency;

(3) the ratio of children under 13 14 years of age needing care to the number of licensed spaces in the service area;

(4) the number of licensed child care providers and ~~extended day~~ school-age ~~child~~ care programs in the service area; and

(b) The commissioner may renew grants to existing resource and referral agencies that have met state standards and have been designated as the child care resource and referral service for a particular geographical area. The recipients of renewal grants are exempt from the proposal review process.

Sec. 21. Minnesota Statutes 1997 Supplement, section 119B.21, subdivision 5, is amended to read:

Subd. 5. [PURPOSES FOR WHICH A CHILD CARE SERVICES GRANT MAY BE AWARDED.] The commissioner may award grants for:

(1) child care service development grants for the following purposes:

(i) for creating new licensed day care facilities and expanding existing facilities, including, but not limited to, supplies, equipment, facility renovation, and remodeling;

(ii) for improving licensed day care facility programs, including, but not limited to, center accreditation, incentives for staff retention, staff specialists, staff training, supplies, equipment, and facility renovation and remodeling;

(iii) for supportive child development services including, but not limited to, in-service training, curriculum development, consulting specialist, resource centers, and program and resource materials;

(iv) for carrying out programs including, but not limited to, staff, supplies, equipment, facility renovation, and training;

(v) for interim financing;

(vi) family child care technical assistance awards; ~~and~~

(vii) for capacity building through the purchase of appropriate technology and software, and staff training to create, enhance, and maintain financial systems for facilities; and

(viii) for promoting cooperation and coordination in school-age care programs between school districts, community education, park boards, after school programs, and other programs serving school-age children;

(2) child care resource and referral program services identified in section 119B.19, subdivision 3; or

(3) targeted recruitment initiatives to expand and build capacity of the child care system, including, but not limited to, increasing child care services during nonstandard hours; or

(4) school-age care programs.

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Sec. 22. Minnesota Statutes 1997 Supplement, section 119B.21, subdivision 11, is amended to read:

Subd. 11. [ADVISORY TASK FORCE.] The commissioner may convene a statewide advisory task force which shall advise the commissioner on grants or other child care issues. The following constituent groups must be represented: ~~family~~ child care providers, ~~center providers,~~ parent users, health services, social services, Head Start, public schools, employers, and other citizens with demonstrated interest in child care issues. Each regional grant review committee formed under subdivision 3, shall appoint a representative to the advisory task force. Additional members may be appointed by the commissioner. The commissioner may convene meetings of the task force as needed. Terms of office and removal from office are governed by the appointing body. The commissioner may compensate members for their travel, child care, and child care provider substitute expenses for meetings of the task force.

Sec. 23. Minnesota Statutes 1996, section 120.1701, subdivision 5, is amended to read:

Subd. 5. [INTERAGENCY EARLY INTERVENTION COMMITTEES.] (a) A school district, group of districts, or special education cooperative, in cooperation with the health and human service agencies located in the county or counties in which the district or cooperative is located, shall establish an interagency early intervention committee for children with disabilities under age five and their families. Committees shall include representatives of local and regional health, education, and county human service agencies; county boards; school boards; early childhood family education programs; child care programs and providers; parents of young children with disabilities under age 12; current service providers; and may also include representatives from other private or public agencies. The committee shall elect a chair from among its members and shall meet at least quarterly.

(b) The committee shall develop and implement interagency policies and procedures concerning the following ongoing duties:

(1) develop public awareness systems designed to inform potential recipient families of available programs and services;

(2) implement interagency child find systems designed to actively seek out, identify, and refer infants and young children with, or at risk of, disabilities and their families;

(5) implement a process for assuring that services involve cooperating agencies at all steps leading to individualized programs;

(6) facilitate the development of a transitional plan if a service provider is not recommended to continue to provide services;

(7) identify the current services and funding being provided within the community for children with disabilities under age five and their families;

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(10) identify the child care services available in the community for children with disabilities and facilitate a process for the integration and coordination of child care services with other services provided to children with disabilities.

(1) participate in needs assessments and program planning activities conducted by local social service, health and education agencies for young children with disabilities and their families;

The departments of children, families, and learning, health, and human services must provide assistance to the local agencies in developing cooperative plans for providing services.

Sec. 24. Minnesota Statutes 1996, section 121.8355, is amended by adding a subdivision to read:

Subd. 2b. [INSURANCE.] The commissioner of children, families, and learning may designate one collaborative to act as a lead collaborative for purposes of obtaining liability coverage for participating collaboratives.

Sec. 25. Minnesota Statutes 1997 Supplement, section 121.88, subdivision 10, is amended to read:

Subd. 10. [~~EXTENDED DAY~~ SCHOOL-AGE CARE PROGRAMS.] (a) A school board may offer, as part of a community education program, ~~an extended day~~ a school-age care program for children from kindergarten through grade 6 for the purpose of expanding students' learning opportunities. If the school board chooses not to offer a school-age care program, it may allow an appropriate insured community group, for profit entity or nonprofit organization to use available school facilities for the purpose of offering a school-age care program.

(b) A school-age care program must include the following:

(1) adult supervised programs while school is not in session;

(2) parental involvement in program design and direction;

(3) partnerships with the K-12 system, and other public, private, or nonprofit entities; ~~and~~

(4) opportunities for trained secondary school pupils to work with younger children in a supervised setting as part of a community service program.; and

(5) access to available school facilities, including the gymnasium, sports equipment, computer labs, and media centers, when not otherwise in use as part of the operation of the school. The school district may establish reasonable rules relating to access to these facilities and may require that:

(i) the organization request access to the facilities and prepare and maintain a schedule of proposed use;

(ii) the organization provide evidence of adequate insurance to cover the activities to be conducted in the facilities; and

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(iii) the organization prepare and maintain a plan demonstrating the adequacy and training of staff to supervise the use of the facilities.

~~(b)~~ (c) The district may charge a sliding fee based upon family income for ~~extended day~~ school-age care programs. The district may receive money from other public or private sources for the ~~extended day~~ school-age care program. The school board of the district shall develop standards for school-age child care programs. Districts with programs in operation before July 1, 1990, must adopt standards before October 1, 1991. All other districts must adopt standards within one year after the district first offers services under a program authorized by this subdivision. The state board of education may not adopt rules for ~~extended day~~ school-age care programs.

~~(c)~~ (d) The district shall maintain a separate account within the community services fund for all funds related to the ~~extended day~~ school-age care program.

(e) A district is encouraged to coordinate the school-age care program with its special education, vocational education, adult basic education, early childhood family education programs, K-12 instruction and curriculum services, youth development and youth service agencies, and with related services provided by other governmental agencies and nonprofit agencies.

Sec. 26. Minnesota Statutes 1996, section 124.26, subdivision 1c, is amended to read:

Subd. 1c. [PROGRAM APPROVAL.] (a) To receive aid under this section, a district, a consortium of districts, or a private nonprofit organization must submit an application by June 1 describing the program, on a form provided by the department. The program must be approved by the commissioner according to the following criteria:

(1) how the needs of different levels of learning will be met;

(2) for continuing programs, an evaluation of results;

(3) anticipated number and education level of participants;

(4) coordination with other resources and services;

(5) participation in a consortium, if any, and money available from other participants;

(6) management and program design;

(7) volunteer training and use of volunteers;

(8) staff development services;

(9) program sites and schedules; and

(10) program expenditures that qualify for aid.

(b) The commissioner may grant adult basic education funds to a private, nonprofit organization to provide services that are not offered by a district or that are supplemental to a district's program. ~~The~~ A program provided under this provision must be approved and funded according to the ~~same~~ criteria ~~used for district programs~~ under paragraph (c).

(c) The commissioner may use up to two percent of the annual state appropriation for adult basic education for grants to nonprofit organizations to provide statewide support services, including, but not limited to:

(1) training literacy volunteers;

(2) coordinating volunteer literacy programs in schools and other locations;

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(3) operating a toll-free telephone referral service for adult students and volunteers; and

(4) promoting literacy awareness.

In making a grant under this paragraph, the commissioner shall consider an organization's prior experience and capacity to provide services throughout the state.

(d) Adult basic education programs may be approved under this subdivision for up to five years. Five-year program approval shall be granted to an applicant who has demonstrated the capacity to:

(1) offer comprehensive learning opportunities and support service choices appropriate for and accessible to adults at all basic skill need levels;

(2) provide a participatory and experiential learning approach based on the strengths, interests, and needs of each adult, that enables adults with basic skill needs to:

(i) identify, plan for, and evaluate their own progress toward achieving their defined educational and occupational goals;

(ii) master the basic academic reading, writing, and computational skills, as well as the problem-solving, decision making, interpersonal effectiveness, and other life and learning skills they need to function effectively in a changing society;

(iii) locate and be able to use the health, governmental, and social services and resources they need to improve their own and their families' lives; and

(iv) continue their education, if they desire, to at least the level of secondary school completion, with the ability to secure and benefit from continuing education that will enable them to become more employable, productive, and responsible citizens;

(3) plan, coordinate, and develop cooperative agreements with community resources to address the needs that the adults have for support services, such as transportation, flexible course scheduling, convenient class locations, and child care;

(4) collaborate with business, industry, labor unions, and employment-training agencies, as well as with family and occupational education providers, to arrange for resources and services through which adults can attain economic self-sufficiency;

(5) provide sensitive and well trained adult education personnel who participate in local, regional, and statewide adult basic education staff development events to master effective adult learning and teaching techniques;

(6) participate in regional adult basic education peer program reviews and evaluations; and

(7) submit accurate and timely performance and fiscal reports.

Sec. 27. Minnesota Statutes 1996, section 245A.06, subdivision 2, is amended to read:

Subd. 2. [RECONSIDERATION OF CORRECTION ORDERS.] If the applicant or license holder believes that the contents of the commissioner's correction order are in error, the applicant or license holder may ask the department of human services to reconsider the parts of the correction order that are alleged to be in error. For a family day care facility or a child care program, the commissioner's correction order given to the applicant or license holder must inform the applicant or license holder of the right to request reconsideration by the commissioner. The request for reconsideration must be in writing and received by the commissioner within 20 calendar days after receipt of the correction order by the applicant or license holder, and:

(1) specify the parts of the correction order that are alleged to be in error;

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(2) explain why they are in error; and

(3) include documentation to support the allegation of error.

A request for reconsideration does not stay any provisions or requirements of the correction order. The commissioner's disposition of a request for reconsideration is final and not subject to appeal under chapter 14.

Sec. 28. Minnesota Statutes 1996, section 256.045, is amended by adding a subdivision to read:

Subd. 3c. [FINAL ORDER IN HEARING UNDER SECTION 119B.16.] The state human services referee shall recommend an order to the commissioner of children, families, and learning in an appeal under section 119B.16. The commissioner shall affirm, reverse, or modify the order. An order issued under this subdivision is conclusive on the parties unless an appeal is taken under subdivision 7.

Sec. 29. Minnesota Statutes 1996, section 256.045, subdivision 6, is amended to read:

Subd. 6. [ADDITIONAL POWERS OF THE COMMISSIONER; SUBPOENAS.] (a) The commissioner of human services, or the commissioner of health for matters within the commissioner's jurisdiction under subdivision 3b, or the commissioner of children, families, and learning for matters within the commissioner's jurisdiction under subdivision 3, may initiate a review of any action or decision of a county agency and direct that the matter be presented to a state human services referee for a hearing held under subdivision 3, 3a, 3b, or 4a. In all matters dealing with human services committed by law to the discretion of the county agency, the commissioner's judgment may be substituted for that of the county agency. The commissioner may order an independent examination when appropriate.

(b) Any party to a hearing held pursuant to subdivision 3, 3a, 3b, or 4a may request that the commissioner issue a subpoena to compel the attendance of witnesses at the hearing. The issuance, service, and enforcement of subpoenas under this subdivision is governed by section 357.22 and the Minnesota Rules of Civil Procedure.

(c) The commissioner may issue a temporary order staying a proposed demission by a residential facility licensed under chapter 245A while an appeal by a recipient under subdivision 3 is pending or for the period of time necessary for the county agency to implement the commissioner's order.

Sec. 30. Minnesota Statutes 1997 Supplement, section 256.045, subdivision 7, is amended to read:

Subd. 7. [JUDICIAL REVIEW.] Except for a prepaid health plan, any party who is aggrieved by an order of the commissioner of human services, or the commissioner of health in appeals within the commissioner's jurisdiction under subdivision 3b, or the commissioner of children, families, and learning in appeals within the commissioner's jurisdiction under subdivision 3, may appeal the order to the district court of the county responsible for furnishing assistance, or, in appeals under subdivision 3b, the county where the maltreatment occurred, by serving a written copy of a notice of appeal upon the commissioner and any adverse party of record within 30 days after the date the commissioner issued the order, the amended order, or order affirming the original order, and by filing the original notice and proof of service with the court administrator of the district court. Service may be made personally or by mail; service by mail is complete upon mailing; no filing fee shall be required by the court administrator in appeals taken pursuant to this subdivision, with the exception of appeals taken under subdivision 3b. The commissioner may elect to become a party to the proceedings in the district court. Except for appeals under subdivision 3b, any party may demand that the commissioner furnish all parties to the proceedings with a copy of the decision, and a transcript of any testimony, evidence, or other supporting papers from the hearing held before the human services referee, by serving a written demand upon the commissioner within 30 days after service of the notice of appeal. Any party aggrieved by the failure of an adverse party to obey an order issued by the commissioner under subdivision 5 may compel performance according to the order in the manner prescribed in sections 586.01 to 586.12.

Sec. 31. [268.372] [DELIVERED FUEL CASH FLOW ACCOUNT.]

Subdivision 1. [ESTABLISHMENT.] There is established a cash flow account in the state treasury from which the commissioner of finance may use general fund reserves. These reserves may only be used to meet cash demands of increasing energy assistance for low-income households who receive energy assistance through the federal energy

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assistance program. The commissioner of finance shall administer this account according to the provisions of section 16A.129. Money in the account from anticipated receivables is available to the commissioner of children, families, and learning for the biennium for the purposes in this section.

Subd. 2. [USES OF THE ACCOUNT.] The commissioner may advance money from the delivered fuel account to participating energy assistance delivery agencies to establish a voluntary preseason fuel purchase program. All money advanced from the account must be used for preseason fuel purchases or contracts.

Subd. 3. [DELIVERY AGENCY DUTIES.] Energy assistance delivery agencies may request advances from the account to obtain preseason delivered fuels through participating fuel vendors. The agencies must ensure that any money advanced from the account is used to benefit households that are eligible for the federal low-income energy assistance program. The energy assistance delivery agencies must recruit local fuel vendors to participate in the prepurchase program, negotiate fuel price and delivery terms, and coordinate services for low-income households. Nothing in this section requires fuel vendors to participate in a preseason purchase program.

Subd. 4. [COMMISSIONER RESPONSIBILITY.] The commissioner must establish a prepurchase propane program and summer fill program for fuel oil to increase the energy assistance available to low-income households. The commissioner may advance funds to participating energy assistance agencies for the purposes of the program. The commissioner must repay the amount of any advances from the delivered fuel cash flow account upon receipt of federal funds for the low-income energy assistance program. The commissioner must annually estimate the amount of federal payments that will be available to repay advances for the prepurchase fuel program. Advances from the delivered fuel cash flow account must not exceed the amount that can be repaid from federal funds.

Sec. 32. Minnesota Statutes 1996, section 268.52, subdivision 1, is amended to read:

Subdivision 1. [AUTHORIZATION.] The commissioner of ~~economic security~~ children, families, and learning may provide financial assistance for community action agencies, Indian reservations ~~and the statewide migrant seasonal farmworker organization known as the Minnesota migrant council~~, and migrant and seasonal farmworker organizations to carry out community action programs as described in section 268.54 in accordance with the omnibus reconciliation act of 1981, Public Law Number 97-35, as amended in 1984, Public Law Number 98-558, state law, and federal law and regulation.

Sec. 33. Minnesota Statutes 1996, section 268.52, subdivision 2, is amended to read:

Subd. 2. [ALLOCATION OF MONEY.] (a) State money appropriated and community service block grant money allotted to the state and all money transferred to the community service block grant from other block grants shall be allocated annually to community action agencies and Indian reservation governments under clauses (b) and (c), and to ~~the Minnesota migrant council~~ migrant and seasonal farmworker organizations under clause (d).

(b) The available annual money will provide base funding to all community action agencies and the Indian reservations. Base funding amounts per agency are as follows: for agencies with low income populations up to 3,999, $25,000; 4,000 to 23,999, $50,000; and 24,000 or more, $100,000.

(c) All remaining money of the annual money available after the base funding has been determined must be allocated to each agency and reservation in proportion to the size of the poverty level population in the agency's service area compared to the size of the poverty level population in the state.

(d) Allocation of money to ~~the Minnesota migrant council~~ migrant and seasonal farmworker organizations must not exceed three percent of the total annual money available. Base funding allocations must be made for all community action agencies and Indian reservations that received money under this subdivision, in fiscal year 1984, and for community action agencies designated under this section with a service area population of 35,000 or greater.

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Sec. 34. Minnesota Statutes 1997 Supplement, section 268.53, subdivision 5, is amended to read:

Subd. 5. [FUNCTIONS; POWERS.] A community action agency shall:

(a) Plan systematically for an effective community action program; develop information as to the problems and causes of poverty in the community; determine how much and how effectively assistance is being provided to deal with those problems and causes; and establish priorities among projects, activities and areas as needed for the best and most efficient use of resources;

(b) Encourage agencies engaged in activities related to the community action program to plan for, secure, and administer assistance available under section 268.52 or from other sources on a common or cooperative basis; provide planning or technical assistance to those agencies; and generally, in cooperation with community agencies and officials, undertake actions to improve existing efforts to reduce poverty, such as improving day-to-day communications, closing service gaps, focusing resources on the most needy, and providing additional opportunities to low-income individuals for regular employment or participation in the programs or activities for which those community agencies and officials are responsible;

(c) Initiate and sponsor projects responsive to needs of the poor which are not otherwise being met, with particular emphasis on providing central or common services that can be drawn upon by a variety of related programs, developing new approaches or new types of services that can be incorporated into other programs, and filling gaps pending the expansion or modification of those programs;

(d) Establish effective procedures by which the poor and area residents concerned will be enabled to influence the character of programs affecting their interests, provide for their regular participation in the implementation of those programs, and provide technical and other support needed to enable the poor and neighborhood groups to secure on their own behalf available assistance from public and private sources;

(e) Join with and encourage business, labor and other private groups and organizations to undertake, together with public officials and agencies, activities in support of the community action program which will result in the additional use of private resources and capabilities, with a view to developing new employment opportunities, stimulating investment that will have a measurable impact on reducing poverty among residents of areas of concentrated poverty, and providing methods by which residents of those areas can work with private groups, firms, and institutions in seeking solutions to problems of common concern.

Community action agencies, ~~the Minnesota migrant council~~ migrant and seasonal farmworker organizations, and the Indian reservations, may enter into cooperative purchasing agreements and self-insurance programs with local units of government. Nothing in this section expands or limits the current private or public nature of a local community action agency.

(f) Adopt policies that require the agencies to refer area residents and community action program constituents to education programs that increase literacy, improve parenting skills, and address the needs of children from families in poverty. These programs include, but are not limited to, early childhood family education programs, adult basic education programs, and other life-long learning opportunities. The agencies and agency programs, including Head Start, shall collaborate with child care and other early childhood education programs to ensure smooth transitions to work for parents.

Sec. 35. Minnesota Statutes 1996, section 268.54, subdivision 2, is amended to read:

Subd. 2. [COMPONENTS.] The components of a community action program shall be designed to assist participants, including homeless individuals and families, migrant and seasonal farmworkers, and the elderly poor to achieve increased self-sufficiency and greater participation in the affairs of the community by providing services and programs not sufficiently provided in the community by any governmental unit, any public institution, or any other publicly funded agency or corporation. Community action agencies, governmental units, public institutions or other publicly funded agencies or corporations shall consult on whether or not a program or service is sufficiently provided in the community.

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Sec. 36. Minnesota Statutes 1997 Supplement, section 466.01, subdivision 1, is amended to read:

Subdivision 1. [MUNICIPALITY.] For the purposes of sections 466.01 to 466.15, "municipality" means any city, whether organized under home rule charter or otherwise, any county, town, public authority, public corporation, nonprofit firefighting corporation that has associated with it a relief association as defined in section 424A.001, subdivision 4, special district, school district, however organized, county agricultural society organized pursuant to chapter 38, joint powers board or organization created under section 471.59 or other statute, public library, regional public library system, multicounty multitype library system, the following local collaboratives whose plans have been approved by the children's cabinet: family services ~~collaborative~~ collaboratives established under section 121.8355, children's mental health collaboratives established under sections 245.491 to 245.496, or a collaborative established by the merger of a children's mental health collaborative and a family services collaborative, other political subdivision, or community action agency.

Sec. 37. Laws 1997, chapter 248, section 47, subdivision 1, is amended to read:

Subdivision 1. [INTERIM AGE GROUPINGS; FAMILY DAY CARE.] Notwithstanding Minnesota Rules, part 9502.0315, subparts 22, 28 and 30, ~~until June 30, 1998,~~ for the purposes of family day care and group family day care licensure the following definitions apply:

(1) "Preschooler" means a child who is at least 24 months old up to the age of being eligible to enter kindergarten within the next four months.

(2) "Toddler" means a child who is at least 12 months old but less than 24 months old, except that for purposes of specialized infant and toddler family and group family day care, "toddler" means a child who is at least 12 months old but less than 30 months old.

(3) "School age" means a child who is at least of sufficient age to have attended the first day of kindergarten, or is eligible to enter kindergarten within the next four months, but is younger than 11 years of age.

Sec. 38. Laws 1997, First Special Session chapter 4, article 10, section 3, subdivision 2, is amended to read:

Subd. 2. [DEPARTMENT.] For the department of children, families, and learning:

$24,360,000 . . . . . 1998

$23,978,000 . . . . . 1999

(a) Any balance in the first year does not cancel but is available in the second year.

(b) $21,000 each year is from the trunk highway fund.

(d) $207,000 in 1998 and $210,000 in 1999 is for the state board of education.

(e) $230,000 in 1998 and $234,000 in 1999 is for the board of teaching.

(f) The expenditures of federal grants and aids as shown in the biennial budget document and its supplements are approved and appropriated and shall be spent as indicated.

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(j) ~~In preparing the department budget for fiscal years 2000-2001, the department shall shift all administrative funding from aids appropriations into the appropriation for the department.~~

~~(k)~~ Reallocations of excesses under Minnesota Statutes, section 124.14, subdivision 7, from appropriations within this act shall only be made to deficiencies in programs with appropriations contained within this act.

~~(l)~~ (k) $850,000 each year is for litigation costs and may only be used for those purposes. These appropriations are one-time only.

~~(m)~~ (l) Collaborative efforts between the department of children, families, and learning and the office of technology, as specified in Minnesota Statutes, section 237A.015, include:

(1) advising the commissioner of children, families, and learning on new and emerging technologies, potential business partnerships, and technical standards;

(2) assisting the commissioner of children, families, and learning in the sharing of data between state agencies relative to children's programs; and

The commissioner of children, families, and learning shall have final approval for prekindergarten through grade 12 programs and lifelong learning programs, grant awards, and funding decisions.

Sec. 39. [MINNESOTA FAMILY ASSETS FOR INDEPENDENCE PILOT PROJECT ESTABLISHMENT.]

The Minnesota family assets for independence initiative is established to provide incentives for low-income families to accrue assets for education, housing, and economic development purposes.

Sec. 40. [DEFINITIONS.]

Subdivision 1. [APPLICATION.] The definitions in this section apply to sections 40 to 45.

Subd. 2. [FAMILY ASSET ACCOUNT.] "Family asset account" means a savings account opened by a household participating in the Minnesota family assets for independence initiative.

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Subd. 3. [COMMISSIONER.] "Commissioner" means the commissioner of children, families, and learning.

Subd. 4. [FIDUCIARY ORGANIZATION.] "Fiduciary organization" means:

(1) a community action agency that has obtained recognition under section 268.53;

(2) a federal community development credit union serving the seven-county metropolitan area; or

(3) a women-oriented economic development agency serving the seven-county metropolitan area.

Subd. 5. [FINANCIAL INSTITUTION.] "Financial institution" means a bank, bank and trust, savings bank, savings association, or credit union, the deposits of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.

Subd. 6. [PERMISSIBLE USE.] "Permissible use" means:

(1) post-secondary educational expenses at an accredited public post-secondary institution including books, supplies, and equipment required for courses of instruction;

(2) acquisition costs of acquiring, constructing, or reconstructing a residence, including any usual or reasonable settlement, financing, or other closing costs;

(3) business capitalization expenses for expenditures on capital, plant, equipment, working capital, and inventory expenses of a legitimate business pursuant to a business plan approved by the fiduciary organization; and

(4) acquisition costs of a principal residence within the meaning of section 1034 of the Internal Revenue Code of 1986 which do not exceed 100 percent of the average area purchase price applicable to the residence determined according to section 143(e)(2) and (3) of the Internal Revenue Code of 1986.

Subd. 7. [HOUSEHOLD.] "Household" means all individuals who share use of a dwelling unit as primary quarters for living and eating separate from other individuals.

Sec. 41. [GRANTS AWARDED.]

The commissioner shall allocate funds to participating fiduciary organizations to provide family asset services. Grant awards must be based on a plan submitted by a statewide organization representing fiduciary organizations. The statewide organization must ensure that any interested unrepresented fiduciary organization have input into the development of the plan. The plan must equitably distribute funds to achieve geographic balance and document the capacity of participating fiduciary organizations to manage the program and to raise the private match.

Sec. 42. [DUTIES.]

A participating fiduciary organization must:

(1) provide separate accounts for the immediate deposit of program funds;

(2) establish a process to select participants and describe any priorities for participation;

(3) enter into a family asset agreement with the household to establish the terms of participation;

(4) provide households with economic literacy education;

(5) provide households with information on early childhood family education;

(6) provide matching deposits for participating households;

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(7) coordinate with other related public and private programs; and

(8) establish a process to appeal and mediate disputes.

Sec. 43. [HOUSEHOLD ELIGIBILITY; PARTICIPATION.]

Subdivision 1. [INITIAL ELIGIBILITY.] To be eligible for the family assets for independence initiative, a household must have income at or below 200 percent of the federal poverty level and assets of $25,000 or less. An individual who is a dependent of another person for federal income tax purposes may not be a separate eligible household for purposes of establishing a family asset account. An individual who is a debtor for a judgment resulting from nonpayment of a court-ordered child support obligation may not participate in this program. Income and assets are determined according to eligibility guidelines for the energy assistance program.

Subd. 2. [CONTINUED PARTICIPATION.] A participating household whose income exceeds 200 percent of the poverty level may continue to make contributions to the savings account. The amount of any contributions made during the time when a participating household's income is greater than 200 percent of the poverty level is not eligible for the match under section 44.

Subd. 3. [FAMILY PARTICIPATION.] Each participating household must sign a family asset agreement that includes the amount of scheduled deposits into its savings account, the proposed use, and the proposed savings goal. A participating household must agree to complete an economic literacy training program.

Participating households may only deposit money that is derived from household earned income or from state and federal income tax credits.

Sec. 44. [WITHDRAWAL; MATCHING; PERMISSIBLE USES.]

Subdivision 1. [WITHDRAWAL OF FUNDS.] To receive a match, a participating household must transfer funds withdrawn from a family asset account to a fiduciary organization, according to the family asset agreement. The fiduciary organization must determine if the match request is for a permissible use consistent with the household's family asset agreement.

A fiduciary organization must match the balance in the household's account, including interest, at the time of an approved withdrawal. Matches must be provided as follows:

(1) from state grant funds a matching contribution of $2 for every $1 of funds withdrawn from the family asset account equal to the lesser of $720 per year or a $3,000 lifetime limit; and

(2) from nonstate funds, a matching contribution of no less than $2 for every $1 of funds withdrawn from the family asset account equal to the lesser of $720 per year or a $3,000 lifetime limit.

Subd. 2. [VENDOR PAYMENT OF WITHDRAWN FUNDS.] Upon receipt of withdrawn funds, the fiduciary organization must make a direct payment to the vendor of the goods or services for the permissible use.

Sec. 45. [PROGRAM REPORTING.]

Each fiduciary organization operating a family assets for independence initiative must annually report to the commissioner of children, families, and learning the number of accounts, the amount of savings and matches for each account, the uses of the account, and the number of businesses, homes, and educational services paid for with money from the account, as well as other information that may be required for the state to operate the program effectively.

Sec. 46. [MULTICULTURAL OUTREACH.]

The commissioner shall contract for or provide child care licensing information and child care application and selection information in all of the predominant non-English languages in Minnesota. The commissioner shall coordinate or contract for services to provide technical assistance and training to legally unlicensed child care providers in Minnesota's communities of color. The commissioner shall also coordinate or provide developmental training and business support and assist providers in becoming licensed.

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Sec. 47. [NONSTANDARD HOUR CHILD CARE PILOT PROJECT.]

The commissioner of children, families, and learning shall establish a program to develop family child care during nonstandard hours. The program may pay a guaranteed subsidy for up to one year of providing nonstandard hour child care in a family child care home. Any subsidy must be reduced by the amount of income the provider receives from nonstandard hour child care. The program must include start-up assistance for new nonstandard hour child care providers, including mentoring, technical assistance, marketing, and provider training. The program may also make start-up grants to participating nonstandard hour providers to purchase toys and equipment for nonstandard hour care. The commissioner may provide grants for developing nonstandard hour child care under this section.

Sec. 48. [FEASIBILITY OF PREPAID CHILD CARE ASSISTANCE.]

The commissioner of children, families, and learning must consider ways to ensure full payment to child care providers while maintaining fiscal accountability to county, state, and federal governments, including the feasibility of:

(1) providing prepayment of child care assistance to parents so that they may prepay child care expenses;

(2) standardizing county billing forms and billing cycles;

(3) improving and streamlining approval and reauthorization process; and

(4) allowing providers to use accrediting bodies other than the National Association for the Education of Young Children to qualify for the reimbursement bonus.

Sec. 49. [CHILD CARE TRANSITION.]

The commissioner of children, families, and learning shall implement procedures to ensure that all families completing transition year child care assistance in fiscal year 1999 move to basic sliding fee child care assistance without interruption in service.

Sec. 51. [MINIMUM STANDARDS FOR CARE OF SPECIAL NEEDS CHILDREN.]

The commissioner shall review the need to establish statewide minimum training standards for providers who receive a special rate for caring for children with special needs and make recommendations to the legislature by January 15, 1999. The recommendations must consider the impact of any statewide standards on the supply of child care for children with special needs.

Sec. 52. [PROGRAM TRANSFER.]

The homeless youth facilities grants under Minnesota Statutes, section 268.918, are transferred from the department of economic security to the department of children, families, and learning. This grant program must be transferred according to the requirements of Minnesota Statutes, sections 119A.04, subdivisions 6 and 7; and 119A.15, subdivision 5a.

Sec. 53. [REVISOR'S INSTRUCTION.]

The revisor of statutes shall change the phrase "school-age child care" to "school-age care" wherever it appears in the next edition of Minnesota Statutes and Minnesota Rules.

Sec. 54. [REPEALER.]

Sections 40 to 45 are repealed effective July 1, 2002.

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Sec. 55. [EFFECTIVE DATE.]

(a) Sections 1, 7, 28 to 31, and 49 are effective the day following final enactment.

(b) Sections 32 to 35 are effective October 1, 1998.

FAMILY AND EARLY CHILDHOOD APPROPRIATIONS

Sec. 2. Laws 1997, chapter 162, article 3, section 8, subdivision 3, is amended to read:

Subd. 3. [TRANSITIONAL HOUSING PROGRAMS.] For transitional housing programs according to Minnesota Statutes, section 268.38:

$1,728,000 . . . . . 1998

~~$1,728,000~~ $2,728,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Of this appropriation, up to five percent each year may be used for administrative costs. A portion of this appropriation may be used for the emergency services grant program under section 7.

Any increase in the fiscal year 1999 appropriation is a one-time appropriation for fiscal year 1999 only.

Sec. 3. Laws 1997, chapter 162, article 4, section 63, subdivision 2, is amended to read:

Subd. 2. [BASIC SLIDING FEE CHILD CARE.] For child care assistance according to Minnesota Statutes, section 119B.03:

$41,751,000 . . . . . 1998

~~$50,751,000~~ $53,251,000 . . . . . 1999

Any balance in the first year does not cancel but is available the second year.

Of this appropriation, the department shall allocate the amount necessary to administer the at-home child care program under section 22.

Funds appropriated but not expended in the biennium beginning July 1, 1997, do not cancel and must be deposited in the child care reserve account under Minnesota Statutes, section 119B.075.

Sec. 5. [APPROPRIATIONS.]

Subdivision 1. [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.] The sums indicated in this section are appropriated from the general fund to the commissioner of children, families, and learning for the fiscal years and for the purposes indicated.

Subd. 3. [EMERGENCY SERVICES GRANTS.] For emergency services grants under Laws 1997, chapter 162, article 3, section 7:

$ 900,000 . . . . . 1999

This is a one-time appropriation for fiscal year 1999.

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Subd. 4. [FAMILY ASSETS FOR INDEPENDENCE.] To establish the Minnesota family assets for independence initiative under article 1, sections 40 to 46:

$ 500,000 . . . . . 1999

Sec. 6. [APPROPRIATION; ADMINISTRATION OF ABUSED CHILDREN PROGRAMS.]

Of the amount appropriated under Laws 1997, chapter 162, article 2, section 31, subdivision 8, up to $134,000 for fiscal year 1998 and up to $134,000 for fiscal year 1999 may be used for state costs to administer abused children programs under Minnesota Statutes, sections 119A.20 to 119A.23.

Sec. 7. [APPROPRIATION; ADMINISTRATION OF DRUG POLICY AND VIOLENCE PREVENTION PROGRAMS.]

Of the amount appropriated under Laws 1997, chapter 162, article 2, section 31, subdivision 9, up to $305,000 for fiscal year 1998 and up to $305,000 for fiscal year 1999 may be used for state costs to administer drug policy and violence prevention programs under Minnesota Statutes, sections 119A.25 to 119A.29 and 119A.32 to 119A.34.

Sec. 8. [APPROPRIATION; ADMINISTRATION OF THE CHILDREN'S TRUST FUND.]

Of the amount appropriated under Laws 1997, chapter 162, article 2, section 31, subdivision 10, up to $22,000 for fiscal year 1998 and up to $22,000 for fiscal year 1999 may be used for state costs to administer the children's trust fund under Minnesota Statutes, sections 119A.10 to 119A.17.

Of the amount in the special revenue account from fees under Minnesota Statutes, section 144.226, subdivision 3, up to $120,000 for fiscal year 1998 and $120,000 for fiscal year 1999 may be used for operating costs of the children's trust fund.

Sec. 9. [FEDERAL TANF TRANSFERS.]

Subdivision 1. [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.] The sums indicated in this section are transferred from the federal TANF fund to the child care and development fund and appropriated to the department of children, families, and learning for fiscal year 1999. These appropriations do not cancel and are available until September 30, 2000.

Subd. 2. [CHILD CARE DATA MANAGEMENT PROJECT.] For the design and implementation of a statewide child care data management system for child care assistance programs:

$1,500,000 . . . . . 1999

Subd. 3. [CHILD CARE SERVICE DEVELOPMENT.] For child care service development grants according to Minnesota Statutes, section 119B.21:

$2,200,000 . . . . . 1999

This appropriation may be used for but is not limited to the following purposes: business practices assistance; prelicensing assistance; and multicultural outreach.

Subd. 4. [LOAN FORGIVENESS.] To provide funds to forgive all or part of child development education and training loans under Minnesota Statutes, section 119B.18, subdivision 3:

$ 300,000 . . . . . 1999

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Subd. 5. [CHILD CARE DEVELOPMENT.] For grants to public and private agencies to: (1) respond to locally determined needs to increase child care capacity including nonstandard hour care and care for specific groups of children; and (2) collect, analyze, and report data to support research to guide the development of child care and welfare reform policy:

$ 500,000 . . . . . 1999

Of this amount, up to $100,000 is for grants to develop nonstandard hour family child care under article 1, section 48.

Subd. 6. [SCHOOL-AGE GRANTS.] For grants to expand and improve school-age care programs in school districts, community education, park boards, after school programs, and other entities and programs serving school-age children:

$ 500,000 . . . . . 1999

Subd. 7. [BASIC SLIDING FEE.] For child care assistance under Minnesota Statutes, section 119B.03 to provide uninterrupted assistance under article 1, section 29.

$2,000,000 . . . . . 1999

Sec. 10. [EFFECTIVE DATE.]

Sections 6 to 8 are effective the day following final enactment.

Section 1. [ECONOMIC DEVELOPMENT APPROPRIATIONS.]

ECONOMIC DEVELOPMENT

To the extent the commissioner of finance determines that moneys in the general fund otherwise available for appropriation are not appropriated by other acts of the legislature in 1998, those funds are appropriated from the general fund in the fiscal year indicated.

General $ 359,000 9,695,000

Workers' Compensation Fund 50,000 (50,000)

Special Revenue Fund -0- 300,000

TOTAL $ . . . . . . . . . .

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Available for the Year

Ending June 30

Sec. 2. DEPARTMENT OF TRADE AND ECONOMIC

DEVELOPMENT $ -0- . . .

The amounts that may be spent from this appropriation for each purpose is specified in the following paragraphs.

(a) Millennium Screen Writing Festival

$50,000 in 1999 is for planning for the millennium screen writing festival, and to enhance the film making industry in Minnesota by providing grants to local screenwriters. This appropriation, is added to the department's budget base.

(b) Tourism Advertising and Marketing

$500,000 in 1999 is for additional tourism advertising, is available immediately, is added to the appropriation for tourism provided in Laws 1997, chapter 200, article 1, section 2, subdivision 4, This is a one-time appropriation and is not added to the department's budget base.

$1,100,000 in 1999 is for transfer to the revolving loan fund under Minnesota Statutes, section 116J.545. This is a one-time appropriation and is not added to the department's budget base.

(d) Neighborhood Development Center, Inc.

$90,000 in 1999 making a grant to the Neighborhood Development Center, Inc. The center shall use the grant for the purpose of expanding and improving its neighborhood and ethnic-based entrepreneur training, lending, and support programs in the poorest communities of Minneapolis and St. Paul. This appropriation is added to the department's budget base.

(e) Minnesota Trade Office

The appropriation in Laws 1997, chapter 200, article 1, section 2, subdivision 3, to the department of trade and economic development for the Minnesota trade office for a multifaceted program to develop trade with China is available until June 30, 1999.

Sec. 3. MINNESOTA WORLD TRADE CENTER CORPORATION 155,000 -0-

$155,000 is appropriated in 1998 for full and final payments of the remaining 1988 debt of the Minnesota World Trade Center Corporation which was incurred for conference center furniture, fixtures, and equipment. This appropriation is available immediately. This is a one-time appropriation and is not added to the department's budget base.

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Sec. 4. DEPARTMENT OF ECONOMIC SECURITY -0- 6,486,000

The amounts that may be spent from this appropriation for each purpose are specified in the following paragraphs.

(a) Vocational Rehabilitation

$1,000,000 in 1999 to the vocational rehabilitation program to be added to the appropriation for rehabilitation services provided in Laws 1997, chapter 200, article 1, section 5, subdivision 2, and is a one-time appropriation and is not added to the department's budget base.

(b) Alien Labor Certification

$160,000 in 1999 is to administer the alien labor certification program. This is a one-time appropriation and is not added to the department's budget base.

$400,000 in 1999 is for grants to fund youth intervention programs under Minnesota Statutes, section 268.30, and is in addition to the appropriation made by Laws 1997, chapter 200, article 1, section 5, subdivision 4, and is added to the department's budget base. It is available until June 30, 1999.

(d) Summer Youth Employment

$1,500,000 in 1999 is for summer youth employment programs. This is a one-time appropriation and is available immediately and is available until June 30, 1999.

(e) Advocating Change Together, Inc.

$126,000 in 1999 is for a grant to Advocating Change Together, Inc. (ACT). The grant must be used for (1) the training and empowerment of individuals with developmental and other mental health disabilities, including mental illnesses that are serious and persistent, that are chronic, or that pose a risk of hospitalization; (2) the maintenance of related data; or (3) technical assistance for work advancement or additional workforce training. This is a one-time appropriation and is not added to the department's budget base.

(f) Displaced Homemakers

$400,000 in 1999 is for displaced homemaker programs under Minnesota Statutes, section 268.96, and is a one-time appropriation and not added to the department's budget base. Of this appropriation, $100,000 is for grants to operate a community work empowerment support group demonstration project and is in addition to the

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appropriation for that purpose contained in Laws 1997, chapter 200, article 1, section 4, subdivision 4. Of this appropriation, $300,000 is for the costs of training recommended for clients of displaced homemaker programs under Minnesota Statutes, section 268.96.

(g) Fund Transfer

Notwithstanding Minnesota Statutes, section 268.022, subdivision 2, the commissioner of finance shall transfer $300,000 to the general fund in fiscal year 1999 from the fund established in Minnesota Statutes, section 268.022.

Sec. 8. PUBLIC UTILITIES COMMISSION 204,000 189,000

This appropriation is for costs associated with the regulation of utilities and is added to the commission's budget base.

Sec. 9. DEPARTMENT OF PUBLIC SERVICE -0- 130,000

This appropriation is for planning and analysis of the regulation of the electric industry and is added to the department's budget base.

Sec. 11. MINNESOTA HISTORICAL SOCIETY -0- 550,000

The amounts that may be spent from this appropriation for each purpose are specified in the following paragraphs.

(a) Salary Adjustment

$500,000 in 1999 is for salary adjustments. This appropriation is added to the historical society's budget base.

(d) Hmong Archives

$50,000 in 1999 is for start-up costs for the Hmong history and culture archival project. The society may make grants to nonprofit organizations for planning, training, and purchase of supplies and equipment. This appropriation is added to the society's budget base to assist with the creation of archives and collections for other underrepresented groups.

Sec. 16. [JUDY GARLAND CHILDREN'S MUSEUM.]

The appropriation in Laws 1997, chapter 200, article 1, section 2, subdivision 2, to the commissioner of trade and economic development for the Judy Garland Children's Museum is available until and may be matched until June 30, 1999.

Sec. 17. [LEROY NIEMAN MUSEUM OF ART.]

The appropriation in Laws 1997, chapter 200, article 1, section 2, subdivision 4, to the commissioner of trade and economic development for a grant to the LeRoy Nieman Museum of Art is available until and may be matched until June 30, 1999.

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Sec. 18. [NEWPORT.]

The city of Newport may include in-kind resources and money raised or contributed during a period beginning January 1, 1993, in determining its required match for the appropriation to the city in Laws 1997, chapter 200, article 1, section 2, subdivision 2.

Sec. 20. [TRAINING FOR HMONG AND LAOTIAN WOMEN.]

$100,000 of the appropriation in fiscal year 1999 for the Job Training Partnership Act program in Laws 1997, chapter 200, article 1, section 5, subdivision 4, is available to the Women's Association of Hmong and Lao to provide employment and training to eligible Hmong and Laotian women.

Sec. 22. Minnesota Statutes 1996, section 16B.06, subdivision 2, is amended to read:

Subd. 2. [VALIDITY OF STATE CONTRACTS.] (a) A state contract or lease is not valid and the state is not bound by it until:

(1) it has first been executed by the head of the agency or a delegate which is a party to the contract;

(2) it has been approved by the commissioner or a delegate, under this section;

(3) it has been approved by the attorney general or a delegate as to form and execution; and

(4) the account system shows an allotment or encumbrance balance for the full amount of the contract liability.

(b) Paragraph (a), clause (2), does not apply to contracts between state agencies, contracts awarding grants, or contracts making loans, or bond purchase agreements by the department of trade and economic development or the Minnesota public facilities authority.

(c) The head of the agency may delegate the execution of specific contracts or specific types of contracts to a designated subordinate within the agency if the delegation has been approved by the commissioner of administration and filed with the secretary of state. The fully executed copy of every contract or lease must be kept on file at the contracting agency.

Sec. 23. Minnesota Statutes 1996, section 16B.08, subdivision 7, is amended to read:

Subd. 7. [SPECIFIC PURCHASES.] (a) The following may be purchased without regard to the competitive bidding requirements of this chapter:

(1) merchandise for resale at state park refectories or facility operations;

(2) farm and garden products, which may be sold at the prevailing market price on the date of the sale;

(3) meat for other state institutions from the technical college maintained at Pipestone by independent school district No. 583; ~~and~~

(4) products and services from the Minnesota correctional facilities; and

(5) merchandise for resale at office of tourism locations.

(b) Supplies, materials, equipment, and utility services for use by a community-based residential facility operated by the commissioner of human services may be purchased or rented without regard to the competitive bidding requirements of this chapter.

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(c) Supplies, materials, or equipment to be used in the operation of a hospital licensed under sections 144.50 to 144.56 that are purchased under a shared service purchasing arrangement whereby more than one hospital purchases supplies, materials, or equipment with one or more other hospitals, either through one of the hospitals or through another entity, may be purchased without regard to the competitive bidding requirements of this chapter if the following conditions are met:

(1) the hospital's governing authority authorizes the arrangement;

(2) the shared services purchasing program purchases items available from more than one source on the basis of competitive bids or competitive quotations of prices; and

(3) the arrangement authorizes the hospital's governing authority or its representatives to review the purchasing procedures to determine compliance with these requirements.

Sec. 24. Minnesota Statutes 1997 Supplement, section 115C.09, subdivision 3f, is amended to read:

Subd. 3f. [REIMBURSEMENTS; SMALL GASOLINE RETAILERS.] (a) As used in this subdivision, "small gasoline retailer" means a ~~responsible person~~ tank owner or operator who owns ~~no more than~~ only one location in this state, and no locations in any other state, where motor fuel was dispensed to the public into motor vehicles, watercraft, or aircraft ~~in the previous year~~, and who dispensed motor fuel at that location.

(b) Notwithstanding subdivision 1, paragraph (b), clause (1), for eligible applicants who are small gasoline retailers that have dispensed less than 500,000 gallons of motor fuel during the most recent calendar year that petroleum products were dispensed at the location owned by the retailer, the board shall reimburse the applicant for 90 percent of the applicant's total reimbursable cost for tank removal projects started after January 1, ~~1997~~ 1996, including, but not limited to, tank removal, closure in place, backfill, resurfacing, and utility service restoration costs, regardless of whether a release has occurred at the site, provided that the tank involved is a regulated underground storage tank.

(c) Notwithstanding subdivision 1, paragraph (b), clause (1), for eligible applicants who are small gasoline retailers that have dispensed less than 250,000 gallons of motor fuel during the most recent calendar year that petroleum products were dispensed at the location owned by the retailer, provided that the tank involved is a regulated underground storage tank, the board shall reimburse the applicant for 95 percent of the following costs:

(1) tank removal costs described in paragraph (b); and

(2) petroleum contamination cleanup as provided under subdivision 1 incurred during or after the tank removal project.

(d) An applicant who owns only one location in this or any other state where motor fuel was dispensed to the public into motor vehicles, watercraft, or aircraft but who did not dispense motor fuel at that location may qualify as a small gasoline retailer if:

(1) the previous tank owner or operator at the location was a small gasoline retailer that dispensed less than 500,000 gallons of motor fuel during the most recent calendar year that petroleum products were dispensed at the location; and

(2) the applicant acquired legal or equitable title to the property after January 1, 1996.

(e) This subdivision expires January 1, 2000.

Sec. 25. Minnesota Statutes 1996, section 115C.09, is amended by adding a subdivision to read:

Subd. 3g. [REIMBURSEMENTS; SMALL BUSINESS OWNERS.] (a) As used in this subdivision, "small business owner" means a person:

(1) who has no more than $250,000 per year in sales;

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(2) who owns no more than one location where motor fuel was previously dispensed to the public into motor vehicles;

(3) who did not dispense motor fuel at that location; and

(4) whose tanks were never registered with the state.

(b) Notwithstanding subdivision 1, paragraph (b), clause (1), the board shall reimburse an eligible applicant who is a small business owner for 90 percent of the applicant's total reimbursable cost for tank removal projects started after January 1, 1998, including, but not limited to, tank removal, closure in place, backfill, resurfacing, and utility service restoration costs, regardless of whether a release has occurred at the site, and provided that the person does not intend to replace the tanks.

Sec. 26. Minnesota Statutes 1996, section 116.182, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] (a) For the purposes of this section, the terms defined in this subdivision have the meanings given them.

(b) "Agency" means the pollution control agency.

(d) "Commissioner" means the commissioner of the pollution control agency.

Sec. 27. Minnesota Statutes 1996, section 116.182, is amended by adding a subdivision to read:

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This subdivision does not apply to the western Lake Superior sanitary district or the metropolitan council.

Sec. 28. Minnesota Statutes 1996, section 116J.415, subdivision 5, is amended to read:

Subd. 5. [LOAN CRITERIA.] The following criteria apply to loans made under the challenge grant program:

(1) loans must be made to businesses that are not likely to undertake a project for which loans are sought without assistance from the challenge grant program;

(2) a loan must be used for a project designed principally to benefit low-income persons through the creation of job or business opportunities for them;

(3) the minimum loan is $5,000 and the maximum is ~~$100,000~~ $200,000;

(4) a loan may not exceed 50 percent of the total cost of an individual project;

(5) a loan may not be used for a retail development project; and

(6) a business applying for a loan, except a microenterprise loan under subdivision 6, must be sponsored by a resolution of the governing body of the local governmental unit within whose jurisdiction the project is located.

Sec. 29. Minnesota Statutes 1997 Supplement, section 116J.421, subdivision 1, is amended to read:

Subdivision 1. [ESTABLISHED.] The rural policy and development center is established at Mankato State University.

The center may be established by the board as a nonprofit corporation under section 501(c)3 of the Internal Revenue Code or the board may organize and operate the center in a manner and form that the board determines best allows the center to carry out its duties.

Sec. 30. Minnesota Statutes 1997 Supplement, section 116J.421, is amended by adding a subdivision to read:

Subd. 5. [POWERS.] The board has the power to do all things reasonable and necessary to carry out the duties of the center including, without limitation, the power to:

(1) enter into contracts for goods or services with individuals and private and public entities;

(2) sue and be sued;

(3) acquire, hold, lease, and transfer any interest in real and personal property;

(4) accept appropriations, gifts, grants, and bequests;

(5) hire employees; and

(6) delegate any of its powers.

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Sec. 31. [116J.544] [DEFINITIONS.]

Subdivision 1. [TERMS.] For the purposes of sections 116J.544 to 116J.545, the following terms have the meanings given them.

Subd. 2. [BOARD.] "Board" means the Minnesota film board.

Subd. 3. [COMMISSIONER.] "Commissioner" means the commissioner of trade and economic development.

Sec. 32. [116J.5445] [DUTIES; REPORTS.]

The commissioner shall enter into a contract with the board to implement the revolving loan fund created in section 116J.545. The contract shall include a description of the board's responsibilities in reviewing, approving, and monitoring of projects funded by the loan fund. The commissioner shall submit an annual report to the legislature by January 1 of each year describing each loan made under section 116J.545, including information on the production and distribution status of each project for which a loan has been made, the repayment status of each loan, the number of jobs created in Minnesota, the amount of expenditures in Minnesota, and the amount and source of matching funds.

Sec. 33. [116J.545] [MINNESOTA FILM AND TELEVISION REVOLVING LOAN FUND.]

Subdivision 1. [ELIGIBLE PROJECTS.] An eligible project is a feature film, long form television project, or television series. At least one of the project's principals must be a Minnesota resident. The principals are defined as the project's director, producer, or company chief executive officer.

Subd. 2. [REVOLVING LOAN FUND.] The commissioner shall establish a revolving loan fund in the special revenue fund for the purpose of making loans to finance eligible projects. Loan applications given preliminary approval by the board must be forwarded to the commissioner for final approval. Funds for the loan will be disbursed by the commissioner to the board after this approval.

Subd. 3. [BUSINESS LOAN CRITERIA.] (a) The criteria in this subdivision apply to loans made under the Minnesota film and television revolving loan fund.

(b) Loans must only be made for projects that the board determines would not be undertaken without assistance from the loan fund.

(c) The minimum loan is $50,000 and the maximum loan is $500,000. The board will determine the interest rate, terms, maturity, and collateral for each loan. The interest rate must be at least three percent.

(d) The amount of a loan may not exceed 50 percent of each project.

(e) Funded projects will be required to spend 120 percent of the amount of the loan in Minnesota. These expenditures may include direct production or postproduction costs as well as talent, producer, or director fees.

(f) The commissioner may adopt rules to implement this section.

Subd. 4. [REVOLVING LOAN FUND ADMINISTRATION.] (a) Loan repayment amounts must be returned by the board to the commissioner and deposited in a revolving loan fund for additional loans to be made by the board.

(b) Administrative expenses of the board incurred to operate the loan program, not to exceed $50,000 per year, may be paid to the board from the revolving loan fund.

Subd. 5. [REPORTING REQUIREMENTS.] The board shall:

(1) submit an annual report to the commissioner by September 30 of each year that includes a description of projects funded for the preceding 12 months as of June 30 of the same year. The report shall include a description of projects supported by the revolving loan fund, the production and distribution status of each project for which a loan has been

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made, the terms of each loan and the repayment status of each loan, the number of jobs created in Minnesota and the amount of expenditures in Minnesota, and the amount and source of matching funds. A description of the administrative expenses incurred by the board shall also be included; and

(2) provide for an independent annual audit to be performed in accordance with generally accepted accounting practices and auditing standards and submit a copy of each annual audit report to the commissioner.

Sec. 34. Minnesota Statutes 1996, section 116J.553, subdivision 2, is amended to read:

Subd. 2. [REQUIRED CONTENT.] (a) The commissioner shall prescribe and provide the application form. Except as provided in paragraphs (b) and (c), the application must include at least the following information:

(1) identification of the site;

(2) an approved response action plan for the site, including the results of engineering and other tests showing the nature and extent of the release or threatened release of contaminants at the site;

(3) a detailed estimate, along with necessary supporting evidence, of the total cleanup costs for the site;

(4) an appraisal of the current market value of the property, separately taking into account the effect of the contaminants on the market value, prepared by a qualified independent appraiser using accepted appraisal methodology;

(5) an assessment of the development potential or likely use of the site after completion of the response action plan, including any specific commitments from third parties to construct improvements on the site;

(6) the manner in which the municipality will meet the local match requirement; and

(7) any additional information or material that the commissioner prescribes.

(b) An application for a grant under section 116J.554, subdivision 1, paragraph (b), must include a detailed estimate of the cost of the actions for which the grant is sought, but need not include the information specified in paragraph (a), clauses (2) to (4) and (6).

(c) A response action plan is not required as a condition to receive a grant under section 116J.554, subdivision 1, paragraph (c).

Sec. 35. Minnesota Statutes 1996, section 116L.03, subdivision 5, is amended to read:

Subd. 5. [TERMS AND COMPENSATION.] The terms of appointed members shall be for four years except for the initial appointments. The initial appointments of the governor shall have the following terms: two members each for one, two, three, and four years. Compensation of members shall be as provided in section 15.0575, subdivision 3.

Sec. 36. Minnesota Statutes 1997 Supplement, section 179A.03, subdivision 7, is amended to read:

Subd. 7. [ESSENTIAL EMPLOYEE.] "Essential employee" means firefighters, peace officers subject to licensure under sections 626.84 to 626.863, guards at correctional facilities, confidential employees, supervisory employees, assistant county attorneys, assistant city attorneys, principals, and assistant principals. However, for state employees, "essential employee" means all employees in law enforcement, health care professionals, correctional guards, professional engineering, and supervisory collective bargaining units, irrespective of severance, and no other employees. For University of Minnesota employees, "essential employee" means all employees in law enforcement, nursing professional and supervisory units, irrespective of severance, and no other employees. "Firefighters" means salaried employees of a fire department whose duties include, directly or indirectly, controlling, extinguishing, preventing, detecting, or investigating fires.

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Sec. 37. [181.636] [EMPLOYEE NOTICE OF RIGHTS; FOREIGN LANGUAGES.]

Subdivision 1. [EMPLOYER DEFINED.] For the purposes of this section, "employer" means any person employing one or more employees.

Subd. 2. [EMPLOYEE RIGHTS FORM.] The commissioner of labor and industry shall provide a single brochure for use in providing the notice required in subdivision 3. The single form must contain the disclosure in English and in ten other languages that the commissioner determines are the most commonly spoken as the dominant language by Minnesota employees.

Subd. 3. [EMPLOYEE RIGHTS NOTICE.] An employer shall provide a brochure provided by the department of labor and industry within ten days of the first day of work that notifies the job offeree that:

(1) there are state and federal laws that regulate minimum wages and maximum hours of work; prohibit unsafe working conditions and discrimination; prohibit employers from making false statements in order to induce someone into employment; and require the terms and conditions of employment be provided in writing to migrant farm workers and persons employed in the food processing industry; and

(2) the employee may call the department of labor and industry and the department of human rights at a telephone number indicated on the brochure to learn about those laws and the employee's rights.

Sec. 38. Minnesota Statutes 1996, section 383B.79, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM CREATED.] A multijurisdictional reinvestment program involving Hennepin county, the cities of Minneapolis, Brooklyn Center, and other interested statutory or home rule charter cities in Hennepin county, the Minneapolis park board, and the suburban Hennepin county park district is created. The multijurisdictional program must include plans for housing rehabilitation and removals, industrial polluted land cleanup, water ponding, environmental cleanup, community corridor connections, corridor planning, creation of green space, acquisition of property, development and redevelopment of parks and open space, water quality and lakeshore improvement, development and redevelopment of housing and existing commercial projects, and job creation.

Sec. 39. Minnesota Statutes 1996, section 383B.79, is amended by adding a subdivision to read:

Subd. 6. [ADMINISTRATION.] The board of county commissioners shall administer the program and funds and bond for projects in this section either as a county board or a housing and redevelopment authority. The board of county commissioners may acquire property in connection with the project known as the Humboldt Avenue Greenway from any funds under its control.

Sec. 40. Minnesota Statutes 1996, section 446A.072, subdivision 2, is amended to read:

Sec. 41. Minnesota Statutes 1996, section 446A.072, subdivision 4, is amended to read:

(b) A municipality may not receive more than $4,000,000 under this section unless specifically approved by law.

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(f) The authority shall provide supplemental assistance to a municipality that would not otherwise qualify for supplemental assistance if:

(2) fees charged by the municipality for the connection must take into account state and federal grants used by the municipality for the construction of the treatment plant.

Sec. 42. Minnesota Statutes 1996, section 469.303, is amended to read:

469.303 [ELIGIBILITY REQUIREMENTS.]

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Sec. 43. Laws 1997, chapter 200, article 1, section 12, subdivision 2, is amended to read:

Subd. 2. Workers' Compensation

~~12,152,000~~ 12,202,000 ~~12,160,000~~ 12,110,000

This appropriation is from the workers' compensation fund.

$125,000 the first year and $125,000 the second year is for grants to the Vinland Center for rehabilitation service.

Notwithstanding Minnesota Statutes, section 79.253, the following appropriations are made from the assigned risk safety account in the special compensation fund to the commissioner of labor and industry:

(a) $77,000 the first year and $73,000 in the second year are for the purpose of hiring one occupational safety and health inspector. The inspector shall perform safety consultations for employers through labor-management committees as defined in Minnesota Statutes, section 179.81, subdivision 2, under an interagency agreement entered into between the commissioners of labor and industry and mediation services.

(b) $95,000 the first year and $75,000 the second year are for the purpose of providing information to employers regarding the prevention of violence in the workplace.

(c) $25,000 the first year and $25,000 the second year are for the purpose of safety training and other safety programs for youth apprentices.

Sec. 44. Laws 1997, chapter 200, article 1, section 33, subdivision 1, is amended to read:

Subdivision 1. [STUDY.] ~~The commissioners of trade and economic development, labor and industry, and economic security~~ The governor's workforce development council shall conduct a ~~joint~~ study of job-training programs funded wholly or partly with ~~state~~ public funds. ~~The commissioners~~ The governor's workforce development council must report annually to the governor and legislature on the development of the study ~~by January 15, 1998, and make a final report on the study by January 15, 1998~~.

Sec. 45. [LOCAL APPROVAL; EFFECTIVE DATE.]

Sections 38 and 39 are effective the day after the Hennepin county board complies with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 46. [REPEALER.]

(a) Minnesota Statutes 1997 Supplement, section 446A.072, subdivision 4a, is repealed.

(b) Laws 1991, chapter 275, section 3, is repealed.

Sec. 47. [EFFECTIVE DATE.]

All provisions making appropriations for fiscal year 1998, are effective the day following final enactment.

Section 35 is effective retroactive to July 1, 1997.

Section 37 is effective January 1, 1999.

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Section 1. [HOUSING APPROPRIATIONS.]

HOUSING

General $ -0- $ 2,700,000

TOTAL $ -0- $ 2,700,000

Available for the Year

Ending June 30

Sec. 2. MINNESOTA HOUSING FINANCE AGENCY -0-. . . . . . . . .

The amounts that may be spent from this appropriation for certain programs are specified below.

This appropriation is for transfer to the housing development fund for the programs specified. Except as otherwise indicated, this transfer is part of the agency's budget base.

(a) Affordable Rental Investment Fund

$850,000 in 1999 is for the affordable rental investment fund program under Minnesota Statutes, section 462A.21, subdivision 8b, to be allocated according to the geographic distribution requirements in the appropriation for the affordable rental investment program in Laws 1997, chapter 200, article 1, section 6.

(b) Family Homeless Prevention and Assistance Program

$340,000 in 1999 is for the family homeless prevention and assistance program under Minnesota Statutes, section 462A.204 and is added to the appropriation for this program in Laws 1997, chapter 200, article 1, section 6.

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$850,000 in 1999 is for the community rehabilitation program, under Minnesota Statutes, section 462A.206. Notwithstanding section 462A.206, this appropriation shall be used to provide housing for families and persons with incomes less than or equal to 80 percent of the Twin Cities metropolitan area median income applied statewide. The agency must give preference to economically viable projects in which there is a contribution from nonstate sources. Of this amount, the agency may use up to $500,000 to fund projects in cities of the first class if the projects use innovative urban design elements, comprehensive community planning, or help leverage federal funds from the federal home ownership zone program.

(d) Home Ownership Counseling

$70,000 in 1999 is for full-cycle home ownership and purchase-rehabilitation lending initiatives under Minnesota Statutes, section 462A.209. This appropriation must be used to make a grant to a statewide organization that advocates on behalf of persons with developmental disabilities or related conditions. The grant must be used to provide prepurchase and postpurchase counseling to persons with disabilities who are participating in the Fannie Mae Homechoice demonstration project and other projects designed to encourage home ownership among persons with disabilities.

(e) Mental Illness/Rental Assistance

$300,000 in 1999 is for the purposes of the rental housing assistance program for persons with a mental illness or families with an adult member with a mental illness, under Minnesota Statutes, section 462A.2097.

(f) Nonprofit Capacity Building Grants

$65,000 in 1999 is for nonprofit capacity building grants under Minnesota Statutes, section 462A.21, subdivision 3b. This appropriation is for grants to supplement resources from the corporation for national service in support of placement of VISTA volunteers with nonprofit housing agencies.

(g) Chemical Sensitivity Grants or Loans

The agency may use up to $65,000 of the fiscal year 1999 appropriation for the housing trust fund in Laws 1997, chapter 200, article 1, section 6, for grants or loans for housing for households that include a member diagnosed with chemical sensitivity.

(h) Lead hazard reduction program For the lead abatement program under Minnesota Statutes, section 268.92, $100,000 for fiscal year 1999.

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This appropriation must be used for the swab team service program to provide lead cleanup and lead hazard reduction services in geographic areas where the residents have a high risk of elevated blood lead levels.

Of this amount, 25 percent is for a grant to the city of St. Louis Park to conduct lead testing and cleanup in the residential neighborhoods contaminated by an industrial lead site. The remaining amount is for a nonprofit organization that is currently operating the CLEARCorps lead hazard reduction project and is willing to expand its geographic service area.

Sec. 3. DEPARTMENT OF COMMERCE -0- 125,000

$125,000 in 1999 is for the healthy homes pilot project in section 4. This is a one-time appropriation and is not added to the department's budget base.

Sec. 4. [HEALTHY HOMES PILOT PROJECT.]

(a) The commissioner of commerce shall establish a Minnesota healthy homes pilot project to provide training and technical assistance to selected building code officials, and low-income housing developers and their contractors in the pilot communities to address the problem of defective homes and to develop a model program for education, training, and technical assistance to be replicated statewide. The project must be implemented in up to four demonstration sites (two urban, one suburban, and one in greater Minnesota) and work with building code officials from the selected municipalities, and selected low-income housing developers and their building contractors. The project must:

(1) provide up to four low-income housing developers with education and implementation guidelines to produce healthy homes, including on-site training during the actual construction phase;

(2) demonstrate the use of mechanical ventilation systems as a strategy for healthy indoor air while allowing for a tightly constructed building, including design, installation, and testing of this approach;

(3) conduct classroom and on-site training at designated building sites to provide inspectors and builders with practical training and experience from the ground up;

(4) conduct integrated performance testing of homes throughout the construction process;

(5) establish a protocol utilizing the results of the pilot project, which can be used statewide as a guideline for healthy home construction;

(6) develop an educational program for homeowners in the pilot communities on how to operate and maintain their homes in order to prevent contributing to indoor air quality problems that lead to unhealthy houses; and

(7) report to the house and senate finance and policy committees with jurisdiction over housing on the progress and results of the pilot project by March 15, 1999.

(b) The commissioner of commerce shall make a grant to Sustainable Resources Center, a nonprofit organization with expertise and certification in indoor air quality diagnostics and remediating sick homes, to design, implement, and manage the pilot project.

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(c) The department of commerce, in conjunction with representatives from the office of environmental assistance, Minnesota state colleges and universities, the department of wood and paper science at the University of Minnesota, the Sustainable Resources Center, the Builders Association of Minnesota, the Center for Energy and Environment, and representatives from other appropriate organizations, shall develop recommendations for the creation of a building technology center to conduct applied research, provide technological development, and offer training regarding technologies and methods that assure safe, affordable buildings. The recommendations shall be made to the legislature by January 20, 1999.

Sec. 5. [METRO STATE UNIVERSITY HOUSING PROJECT.]

The housing finance agency shall consult with the Minnesota state colleges and universities system, the city of St. Paul, the Dayton's Bluff neighborhood housing service, the district 4 council, the east side neighborhood development corporation, the swede hollow land trust organization, east metro women's resource center, and other interested parties concerning the feasibility of a project to acquire and/or rehabilitate existing housing structures for use as rental housing for low-income students at Metro State University. The housing finance agency shall report to the house and senate finance and policy committees with jurisdiction over housing and education during the 1999 legislative session on the feasibility of the project, and identify the barriers to the project and the potential sources of funding.

Sec. 6. Minnesota Statutes 1996, section 462A.05, subdivision 14, is amended to read:

Subd. 14. [REHABILITATION LOANS.] It may agree to purchase, make, or otherwise participate in the making, and may enter into commitments for the purchase, making, or participation in the making, of eligible loans for rehabilitation to persons and families of low and moderate income, and to owners of existing residential housing for occupancy by such persons and families, for the rehabilitation of existing residential housing owned by them. The loans may be insured or uninsured and may be made with security, or may be unsecured, as the agency deems advisable. The loans may be in addition to or in combination with long-term eligible mortgage loans under subdivision 3. They may be made in amounts sufficient to refinance existing indebtedness secured by the property, if refinancing is determined by the agency to be necessary to permit the owner to meet the owner's housing cost without expending an unreasonable portion of the owner's income thereon. No loan for rehabilitation shall be made unless the agency determines that the loan will be used primarily to make the housing more desirable to live in, to increase the market value of the housing, for compliance with state, county or municipal building, housing maintenance, fire, health or similar codes and standards applicable to housing, or to accomplish energy conservation related improvements. In unincorporated areas and municipalities not having codes and standards, the agency may, solely for the purpose of administering the provisions of this chapter, establish codes and standards. Except for accessibility improvements under this subdivision and subdivisions 14a and 24, clause (1), no secured loan for rehabilitation of any property shall be made in an amount which, with all other existing indebtedness secured by the property, would exceed 110 percent of its market value, as determined by the agency. No loan under this subdivision shall be denied solely because the loan will not be used for placing the residential housing in full compliance with all state, county, or municipal building, housing maintenance, fire, health, or similar codes and standards applicable to housing. Rehabilitation loans shall be made only when the agency determines that financing is not otherwise available, in whole or in part, from private lenders upon equivalent terms and conditions. Accessibility rehabilitation loans authorized under this subdivision may be made to eligible persons and families without limitations relating to the maximum incomes of the borrowers if:

(1) the borrower or a member of the borrower's family requires a level of care provided in a hospital, skilled nursing facility, or intermediate care facility for persons with mental retardation or related conditions;

(2) home care is appropriate; and

(3) the improvement will enable the borrower or a member of the borrower's family to reside in the housing.

Sec. 7. Minnesota Statutes 1997 Supplement, section 462A.205, subdivision 1, is amended to read:

Subdivision 1. [FAMILY STABILIZATION DEMONSTRATION PROJECT.] The agency, in consultation with the department of human services, may establish a rent assistance for family stabilization demonstration project. The purpose of the project is to provide rental assistance to families who, at the time of initial eligibility for rental assistance under this

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section, were receiving public assistance, and had a caretaker parent ~~participating in a self-sufficiency program~~ who was complying with the parent's job search support plan or employment plan and at least one minor child and to provide rental assistance to families who, at the time of initial eligibility for rental assistance under this section, were receiving public assistance, and had a caretaker parent who had earned income and with at least one minor child. The demonstration project is limited to counties with high average housing costs. The program must offer two options: a voucher option and a project-based voucher option. The funds may be distributed on a request for proposal basis.

Sec. 8. Minnesota Statutes 1997 Supplement, section 462A.205, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] For the purposes of this section, the following terms have the meanings given them.

(a) "Caretaker parent" means a parent, relative caretaker, or minor caretaker as defined by the aid to families with dependent children program, sections 256.72 to 256.87, or its successor program.

(b) "County agency" means the agency designated by the county board to implement financial assistance for current public assistance programs and for the Minnesota family investment program statewide.

(c) "Counties with high average housing costs" means counties whose average federal section 8 fair market rents as determined by the Department of Housing and Urban Development are in the highest one-third of average rents in the state.

(d) "Designated rental property" is rental property (1) that is made available by a self-sufficiency program for use by participating families and meets federal section 8 existing quality standards, or (2) that has received federal, state, or local rental rehabilitation assistance since January 1, 1987, and meets federal section 8 existing housing quality standards.

(e) "Earned income" for a family receiving rental assistance under this section means cash or in-kind income earned through the receipt of wages, salary, commissions, profit from employment activities, net profit from self-employment activities, payments made by an employer for regularly accrued vacation or sick leave, and any other profit from activity earned through effort or labor.

(f) "Employment and training service provider" means a provider as defined in chapter 256J.

(g) "Employment plan" means a plan as defined in chapter 256J.

(h) "Family or participating family" means a family that at the time it begins receiving rent assistance has at least one member who is a recipient of public assistance, and:

(1) a family with a caretaker parent who is ~~participating in a self-sufficiency program~~ complying with the parent's job search support plan or employment plan and with at least one minor child;

(2) a family that, at the time it began receiving rent assistance under this section, had a caretaker parent ~~participating in a self-sufficiency program~~ complying with the parent's job search support plan or employment plan and had at least one minor child;

(3) a family with a caretaker parent who is receiving public assistance and has earned income and with at least one minor child; or

(4) a family that, at the time it began receiving rent assistance under this section, had a caretaker parent who had earned income and at least one minor child.

~~(g)~~ (i) "Gross family income" for a family receiving rental assistance under this section means the gross amount of the wages, salaries, social security payments, pensions, workers' compensation, reemployment insurance, the cash assistance portion of public assistance payments, alimony, and child support~~, and income from assets received by the family~~.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10261

~~(h)~~ (j) "Local housing organization" means the agency of local government responsible for administering the Department of Housing and Urban Development's section 8 existing voucher and certificate program or a nonprofit or for-profit organization experienced in housing management.

~~(i)~~ (k) "Public assistance" means aid to families with dependent children, or its successor program, family general assistance, or its successor program, or family work readiness, or its successor program.

(j) "Self-sufficiency program" means a program operated by an employment and training service provider as defined in chapter 256J, an employability program administered by a community action agency, or courses of study at an accredited institution of higher education pursued with at least half-time student status.

Sec. 9. Minnesota Statutes 1997 Supplement, section 462A.205, subdivision 5, is amended to read:

Subd. 5. [VOUCHER OPTION.] At least one-half of the appropriated funds must be made available for a voucher option. Under the voucher option, the Minnesota housing finance agency, in consultation with the department of human services, will award a number of vouchers to ~~self-sufficiency program administrators~~ employment and training service providers for participating families ~~and to county agencies for participating families with earned income~~. Families may use the voucher for any rental housing that is certified by the local housing organization as meeting section 8 existing housing quality standards.

Sec. 10. Minnesota Statutes 1997 Supplement, section 462A.205, subdivision 6, is amended to read:

Subd. 6. [PROJECT-BASED VOUCHER OPTION.] A portion of the appropriated funds must be made available for a project-based voucher option. Under the project-based voucher option, the Minnesota housing finance agency, in consultation with the department of human services, will award a number of vouchers to ~~self-sufficiency program administrators and to county agencies~~ employment and training service providers for participating families who live in designated rental property that is certified by a local housing organization as meeting section 8 existing housing quality standards.

Sec. 11. Minnesota Statutes 1997 Supplement, section 462A.205, subdivision 9, is amended to read:

Subd. 9. [VOUCHERS FOR FAMILIES WITH A CARETAKER PARENT WITH EARNED INCOME.] (a) Applications to provide the rental assistance for families with a caretaker parent with earned income under either the voucher or project-based option must be submitted jointly by a local housing organization and ~~a county agency~~ an employment and training service provider. The application must include a description of how the caretaker parent participants will be selected.

(b) ~~County agencies~~ Employment and training service providers awarded vouchers must select the caretaker parents with earned income whose families will receive the rental assistance. The ~~county agency~~ employment and training service provider must notify the local housing organization and the agency if:

(1) at the time of annual recertification, the caretaker parent no longer has earned income and is not in compliance with the caretaker parent's employment plan or job search plan; and

(2) for a period of six months after the annual recertification, the caretaker parent has no earned income and has failed to comply with the job search support plan or employment plan.

(c) The ~~county agency~~ local housing organization must provide the caretaker parent who, at the time of annual recertification, has no earned income and is not in compliance with the job search support plan or employment plan with the notice specified in Minnesota Rules, part 4900.3379. The ~~county agency~~ local housing organization must send a subsequent notice to the caretaker parent~~, the local housing organization,~~ and the Minnesota housing finance agency 60 days before the termination of rental assistance.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10262

(d) If the local housing organization receives notice from ~~a county agency~~ an employment and training service provider that a caretaker parent whose initial eligibility for rental assistance was based on the receipt of earned income no longer has earned income and for a period of six months after ~~the termination of earned income~~ the annual recertification has failed to comply with the caretaker parent's job search plan or employment plan, the local housing organization must notify the property owner that rental assistance may terminate and notify the caretaker parent of the termination of rental assistance under Minnesota Rules, part 4900.3380.

(e) The ~~county agency~~ employment and training service provider awarded vouchers for families with a caretaker parent with earned income must comply with the provisions of Minnesota Rules, part 4900.3377.

(f) For families whose initial eligibility for rental assistance was based on the receipt of earned income, rental assistance must be terminated under any of the following conditions:

(1) the family is evicted from the property for cause;

(2) the caretaker parent no longer has earned income and, ~~after~~ six months after an annual recertification, is not in compliance with the parent's job search or employment plan;

(3) 30 percent of the family's gross income equals or exceeds the amount of the housing costs for two or more consecutive months;

(4) the family has received rental assistance under this section for a ~~36-month~~ 60-month period; or

(5) the rental unit no longer meets federal section 8 existing housing quality standards, the owner refused to make necessary repairs or alterations to bring the rental unit into compliance within a reasonable time, and the caretaker parent refused to relocate to a qualifying unit.

(g) If ~~a county agency~~ an employment and training service provider determines that a caretaker parent no longer has earned income and is not in compliance with the parent's job search or employment plan, the ~~county agency~~ employment and training service provider must notify the caretaker parent of that determination. The notice must be in writing and must explain the effect of not having earned income or failing to be in compliance with the job search or employment plan will have on the rental assistance. The notice must:

(1) state that rental assistance will end six months after ~~earned income has ended~~ an annual recertification;

(2) specify the date the rental assistance will end;

(3) explain that after the date specified, the caretaker parent will be responsible for the total housing costs;

(4) describe the actions the caretaker parent may take to avoid termination of rental assistance; and

(5) inform the caretaker parent of the caretaker parent's responsibility to notify the ~~county agency~~ employment and training service provider if the caretaker parent has earned income.

Sec. 12. Minnesota Statutes 1996, section 462A.21, is amended by adding a subdivision to read:

Subd. 25. [FULL CYCLE HOMEOWNERSHIP.] It may spend money for the purposes of the full cycle homeownership services program under section 462A.209, and may pay the costs and expenses necessary and incidental to the development and operation of the program.

Sec. 20. [BOUNDARY EXTENSION.]

The boundaries of the North Mississippi Regional Park are extended to include 49th Avenue North and adjacent property from Humboldt Avenue east to the Mississippi river. Funds appropriated for the North Mississippi Regional Park may be expended to create a trail or greenway as part of the Hennepin county multijurisdictional program on 49th Avenue North and adjacent property as an entrance to the North Mississippi Regional Park.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10263

Sec. 13. [EFFECTIVE DATES.]

Section 4 is effective the day following final enactment."

Renumber the sections in order

Correct internal references

Adjust fund totals

Sviggum raised a point of order pursuant to rule 3.09 that the Trimble et al amendment was not in order.

Pursuant to section 245 of "Mason's Manual of Legislative Procedure" the Speaker submitted the following question to the House:

"Is it the judgment of the House that the point of order is well taken?"

The question was taken on the Sviggum point of order and the roll was called. There were 64 yeas and 69 nays as follows:

Anderson, I. Folliard Johnson, R. Mariani Otremba, M. Solberg
Bakk Garcia Juhnke Marko Paymar Tomassoni
Biernat Greenfield Kahn McCollum Pelowski Trimble
Carlson Greiling Kalis McGuire Peterson Tunheim
Chaudhary Hasskamp Kelso Milbert Pugh Wagenius
Clark, K. Hausman Kinkel Mullery Rest Wejcman
Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10264
Dawkins Hilty Koskinen Munger Rukavina Wenzel
Delmont Huntley Kubly Murphy Schumacher Winter
Dorn Jaros Leighton Olson, E. Sekhon Spk. Carruthers
Entenza Jefferson Lieder Opatz Skare
Evans Jennings Long Orfield Skoglund
Farrell Johnson, A. Mahon Osthoff Slawik

So it was the judgment of the House that the Sviggum point of order was not well taken and the Trimble et al amendment in order.

MOTION TO ADJOURN SESSION SINE DIE

Knight moved that the House adjourn sine die.

Opatz raised a point of order pursuant to rule 3.03 relating to the motion to adjourn. The Speaker ruled the point of order not well taken.

The question recurred on the Knight motion and the roll was called. There were 62 yeas and 70 nays as follows:

Those who voted in the affirmative were:

Abrams Dempsey Kraus Ness Seagren Van Dellen
Anderson, B. Erhardt Krinkie Nornes Seifert Vandeveer
Bettermann Erickson Kuisle Olson, M. Smith Weaver
Boudreau Finseth Larsen Osskopp Stanek Westfall
Bradley Goodno Leppik Ozment Stang Westrom
Broecker Gunther Lindner Paulsen Sviggum Wolf
Clark, J. Haas Macklin Pawlenty Swenson, H. Workman
Commers Harder Mares Reuter Sykora
Daggett Holsten McElroy Rhodes Tingelstad
Davids Kielkucki Molnau Rifenberg Tompkins
Dehler Knight Mulder Rostberg Tuma

Those who voted in the negative were:

Anderson, I. Farrell Johnson, A. Mahon Osthoff Slawik
Bakk Folliard Johnson, R. Mariani Otremba, M. Solberg
Biernat Garcia Juhnke Marko Paymar Tomassoni
Bishop Greenfield Kahn McCollum Pelowski Trimble
Carlson Greiling Kalis McGuire Peterson Tunheim
Chaudhary Hasskamp Kinkel Milbert Pugh Wagenius
Clark, K. Hausman Knoblach Mullery Rest Wejcman
Dawkins Hilty Koskinen Munger Rukavina Wenzel
Delmont Huntley Kubly Murphy Schumacher Winter
Dorn Jaros Leighton Olson, E. Sekhon Spk. Carruthers
Entenza Jefferson Lieder Opatz Skare
Evans Jennings Long Orfield Skoglund

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10265

The question recurred on the Trimble et al amendment and the roll was called. There were 69 yeas and 63 nays as follows:

Anderson, I. Folliard Johnson, A. Mahon Otremba, M. Solberg
Bakk Garcia Johnson, R. Mariani Paymar Tomassoni
Biernat Greenfield Juhnke Marko Pelowski Trimble
Bishop Greiling Kahn McCollum Peterson Tunheim
Carlson Gunther Kalis McGuire Pugh Wagenius
Clark, K. Hasskamp Kelso Milbert Rhodes Wejcman
Dawkins Hausman Kinkel Mullery Rukavina Wenzel
Delmont Hilty Koskinen Munger Schumacher Winter
Dorn Huntley Kubly Murphy Sekhon Spk. Carruthers
Entenza Jaros Leighton Opatz Skare
Evans Jefferson Lieder Orfield Skoglund
Farrell Jennings Long Osthoff Slawik

Abrams Dehler Knoblach Mulder Rostberg Tuma
Anderson, B. Dempsey Kraus Ness Seagren Van Dellen
Bettermann Erhardt Krinkie Nornes Seifert Vandeveer
Boudreau Erickson Kuisle Olson, M. Smith Weaver
Bradley Finseth Larsen Osskopp Stanek Westfall
Broecker Goodno Leppik Ozment Stang Westrom
Chaudhary Haas Lindner Paulsen Sviggum Wolf
Clark, J. Harder Macklin Pawlenty Swenson, H. Workman
Commers Holsten Mares Rest Sykora
Daggett Kielkucki McElroy Reuter Tingelstad
Davids Knight Molnau Rifenberg Tompkins

The motion prevailed and the amendment was adopted.

Solberg moved to amend S. F. No. 90, the second unofficial engrossment, as amended, as follows:

Page 41, after line 47, insert:

"(e) Biomass Energy Project

$800,000 in 1999 is for a grant to the Granite Falls economic development authority for the development of a farm-grown, closed loop biomass energy project. The grant may be used to manage the development, seek financing and equity participation, reimburse costs of third-party due diligence exercises, and perform environmental review and permitting. This is a one-time appropriation and is not added to the department's budget base."

Adjust the fund totals accordingly

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10266

The question was taken on the Solberg amendment and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 74 yeas and 56 nays as follows:

Anderson, I. Farrell Johnson, A. Marko Pelowski Trimble
Bakk Folliard Johnson, R. McCollum Peterson Tunheim
Biernat Garcia Juhnke McGuire Pugh Wagenius
Bishop Greenfield Kahn Milbert Rest Wejcman
Carlson Greiling Kalis Mullery Rukavina Wenzel
Chaudhary Gunther Kinkel Munger Schumacher Westfall
Clark, J. Harder Koskinen Murphy Seifert Westrom
Clark, K. Hasskamp Kubly Olson, E. Sekhon Winter
Dawkins Hilty Leighton Opatz Skare Spk. Carruthers
Delmont Huntley Lieder Orfield Skoglund
Dorn Jaros Long Osthoff Slawik
Entenza Jefferson Mahon Otremba, M. Solberg
Evans Jennings Mariani Paymar Tomassoni

Abrams Dempsey Kraus Mulder Rostberg Tuma
Anderson, B. Erhardt Krinkie Ness Seagren Van Dellen
Bettermann Erickson Kuisle Nornes Smith Vandeveer
Boudreau Finseth Larsen Olson, M. Stanek Weaver
Bradley Goodno Leppik Osskopp Stang Wolf
Broecker Haas Lindner Paulsen Sviggum Workman
Commers Holsten Macklin Pawlenty Swenson, H.
Daggett Kielkucki Mares Reuter Sykora
Davids Knight McElroy Rhodes Tingelstad
Dehler Knoblach Molnau Rifenberg Tompkins

The motion prevailed and the amendment was adopted.

Knoblach moved to amend S. F. No. 90, the second unofficial engrossment, as amended, as follows:

Page 55, after line 32, insert:

"Section 38. [181.958] [REFERENCE CHECKS; CAUSES OF ACTION.]

Subdivision 1. [CAUSES OF ACTION.] No action may be brought against an employer, designated employee, or agent who discloses information regarding a former or current employee to a prospective employer as provided under this section. This subdivision does not preclude a charge or action under chapter 363 or an action arising from a disclosure that the plaintiff proves, by clear and convincing evidence, was made fraudulently or with deliberate disregard as to its truth or falsity.

Subd. 2. [REFERENCE CHECKS.] (a) Upon the written request of a prospective employer, and with the written authorization of the current or former employee, an employer may disclose the following information in writing to the prospective employer:

(1) dates of employment;

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10267

(2) pay level;

(3) job description and duties;

(4) wage history;

(5) written evaluations; and

(6) reasons for separation from employment, in the case of a former employee.

(b) The former or current employer must provide a written copy of the disclosure to the current or former employee upon request. The prospective employer must notify the employee in writing of the right to dispute the contents of the disclosure under sections 181.960 to 181.966."

Page 72, after line 28, insert:

"Section 38 is effective August 1, 1998, and applies to causes of action arising on or after that date."

Renumber the sections in sequence and correct internal references

Dawkins raised a point of order pursuant to rule 3.09 that the Knoblach amendment was not in order.

Pursuant to section 245 of "Mason's Manual of Legislative Procedure" the Speaker submitted the following question to the House:

"Is it the judgment of the House that the point of order is well taken?"

The question was taken on the Dawkins point of order and the roll was called. There were 55 yeas and 78 nays as follows:

Bakk Folliard Kalis McCollum Peterson Tunheim
Biernat Garcia Kelso McGuire Pugh Wagenius
Carlson Greenfield Kinkel Mullery Rest Wejcman
Chaudhary Greiling Koskinen Munger Rukavina Winter
Clark, K. Hausman Kubly Olson, E. Sekhon Spk. Carruthers
Dawkins Jaros Leighton Orfield Skare
Delmont Jefferson Lieder Osthoff Skoglund
Dorn Johnson, A. Long Otremba, M. Slawik
Entenza Johnson, R. Mahon Paymar Solberg
Evans Juhnke Marko Pelowski Tomassoni

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10268

Abrams Dempsey Jennings Mariani Pawlenty Sykora
Anderson, B. Erhardt Kahn McElroy Reuter Tingelstad
Anderson, I. Erickson Kielkucki Milbert Rhodes Tompkins
Bettermann Farrell Knight Molnau Rifenberg Trimble
Bishop Finseth Knoblach Mulder Rostberg Tuma
Boudreau Goodno Kraus Murphy Schumacher Van Dellen
Bradley Gunther Krinkie Ness Seagren Vandeveer
Broecker Haas Kuisle Nornes Seifert Weaver
Clark, J. Harder Larsen Olson, M. Smith Wenzel
Commers Hasskamp Leppik Opatz Stanek Westfall
Daggett Hilty Lindner Osskopp Stang Westrom
Davids Holsten Macklin Ozment Sviggum Wolf
Dehler Huntley Mares Paulsen Swenson, H. Workman

So it was the judgment of the House that the Dawkins point of order was not well taken and the Knoblach amendment in order.

The question recurred on the Knoblach amendment and the roll was called.

McCollum moved that those not voting be excused from voting. The motion prevailed.

There were 66 yeas and 66 nays as follows:

Abrams Dehler Kielkucki McElroy Reuter Sykora
Anderson, B. Dempsey Knight Molnau Rhodes Tingelstad
Bettermann Erhardt Knoblach Mulder Rifenberg Tompkins
Bishop Erickson Kraus Ness Rostberg Tuma
Boudreau Finseth Krinkie Nornes Seagren Van Dellen
Bradley Goodno Kuisle Olson, M. Seifert Vandeveer
Broecker Gunther Larsen Opatz Smith Weaver
Clark, J. Haas Leppik Osskopp Stanek Westfall
Commers Harder Lindner Ozment Stang Westrom
Daggett Holsten Macklin Paulsen Sviggum Wolf
Davids Jennings Mares Pawlenty Swenson, H. Workman

Anderson, I. Farrell Johnson, A. Long Orfield Skoglund
Bakk Folliard Johnson, R. Mahon Osthoff Slawik
Biernat Garcia Juhnke Mariani Otremba, M. Solberg
Carlson Greenfield Kahn Marko Paymar Tomassoni
Chaudhary Greiling Kalis McCollum Pelowski Trimble
Clark, K. Hasskamp Kelso McGuire Peterson Tunheim
Dawkins Hausman Kinkel Milbert Pugh Wagenius
Delmont Hilty Koskinen Mullery Rest Wejcman
Dorn Huntley Kubly Munger Rukavina Wenzel
Entenza Jaros Leighton Murphy Sekhon Winter
Evans Jefferson Lieder Olson, E. Skare Spk. Carruthers

The motion did not prevail and the amendment was not adopted.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10269

Holsten moved to amend S. F. No. 90, the second unofficial engrossment, as amended, as follows:

Page 60, after line 11, insert:

"Sec. 45. [FISH STOCKING.]

The commissioner of natural resources shall stock 90,000 pounds of walleye fingerlings in 1998. These fish must be stocked in accordance with fisheries management plans for individual waters. The commissioner shall evaluate the potential to improve walleye stocking. Public input shall be provided through interim hearings by the appropriate legislative committees. The committees shall report to the legislature by March 1, 1999, on any recommendations for continued stocking efforts."

Renumber the sections in sequence and correct internal references

Rukavina moved that S. F. No. 90, the second unofficial engrossment, as amended, be returned to General Orders. The motion prevailed.

There being no objection, the order of business reverted to House Advisories.

HOUSE ADVISORIES

The following House Advisory was introduced:

Murphy, Kalis, Solberg, Stanek and Broecker introduced:

H. A. No. 26, A proposal to study police and firefighter training centers.

The advisory was referred to the Committee on Judiciary.

MESSAGES FROM THE SENATE

The following message was received from the Senate:

I hereby announce the passage by the Senate of the following Senate Files, herewith transmitted:

S. F. Nos. 3416 and 3396.

Patrice Dworak, First Assistant Secretary of the Senate

FIRST READING OF SENATE BILLS

S. F. No. 3416, A bill for an act relating to civil actions; clarifying effect of the economic loss statute on actions based upon fraud or misrepresentation; amending Minnesota Statutes 1996, section 604.10.

The bill was read for the first time.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10270

SUSPENSION OF RULES

Pursuant to Article IV, Section 19, of the Constitution of the state of Minnesota, Tunheim moved that the rule therein be suspended and an urgency be declared so that S. F. No. 3416 be given its second and third readings and be placed upon its final passage.

The question was taken on the Tunheim motion and the roll was called. There were 77 yeas and 54 nays as follows:

Abrams Entenza Kielkucki Molnau Rest Swenson, H.
Anderson, B. Erhardt Knight Mulder Reuter Sykora
Bettermann Erickson Knoblach Ness Rhodes Tingelstad
Boudreau Finseth Kraus Nornes Rifenberg Tompkins
Bradley Goodno Kuisle Olson, E. Rostberg Tuma
Broecker Gunther Larsen Olson, M. Seagren Tunheim
Carlson Haas Lieder Osskopp Seifert Vandeveer
Clark, J. Harder Lindner Ozment Skoglund Weaver
Commers Holsten Long Paulsen Smith Westfall
Daggett Huntley Macklin Pawlenty Solberg Westrom
Davids Johnson, R. Mares Pelowski Stanek Wolf
Dehler Kalis McElroy Peterson Stang Spk. Carruthers
Dempsey Kelso Milbert Pugh Sviggum

Anderson, I. Folliard Jennings Leppik Opatz Slawik
Bakk Garcia Johnson, A. Mahon Orfield Tomassoni
Biernat Greenfield Juhnke Mariani Osthoff Trimble
Chaudhary Greiling Kahn Marko Otremba, M. Van Dellen
Clark, K. Hasskamp Kinkel McCollum Paymar Wagenius
Delmont Hausman Koskinen McGuire Rukavina Wejcman
Dorn Hilty Krinkie Mullery Schumacher Wenzel
Evans Jaros Kubly Munger Sekhon Winter
Farrell Jefferson Leighton Murphy Skare Workman

Not having received the consitutionally required 2/3s vote the motion did not prevail.

S. F. No. 3416 was referred to the Committee on Rules and Legislative Administration.

FIRST READING OF SENATE BILLS, Continued

S. F. No. 3396, A bill for an act relating to legislative enactments; correcting miscellaneous noncontroversial oversights, inconsistencies, ambiguities, unintended results, and technical errors; amending Minnesota Statutes 1996, section 115C.08, subdivision 3.

The bill was read for the first time.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10271

SUSPENSION OF RULES

Pursuant to Article IV, Section 19, of the Constitution of the state of Minnesota, Skoglund moved that the rule therein be suspended and an urgency be declared so that S. F. No. 3396 be given its second and third readings and be placed upon its final passage. The motion prevailed.

Skoglund moved that the rules of the House be so far suspended that S. F. No. 3396 be given its second and third readings and be placed upon its final passage. The motion prevailed.

S. F. No. 3396 was read for the second time.

The bill was read for the third time and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 124 yeas and 8 nays as follows:

Abrams Entenza Johnson, A. Mariani Paymar Swenson, H.
Anderson, I. Erhardt Johnson, R. Marko Pelowski Sykora
Bakk Erickson Juhnke McCollum Peterson Tingelstad
Bettermann Farrell Kahn McElroy Pugh Tomassoni
Biernat Finseth Kalis McGuire Rest Tompkins
Bishop Folliard Kelso Milbert Reuter Trimble
Boudreau Garcia Kinkel Molnau Rhodes Tuma
Bradley Goodno Knoblach Mulder Rifenberg Tunheim
Broecker Greenfield Koskinen Mullery Rostberg Van Dellen
Carlson Greiling Kraus Munger Rukavina Vandeveer
Chaudhary Gunther Kubly Murphy Schumacher Wagenius
Clark, J. Haas Kuisle Ness Seagren Weaver
Clark, K. Harder Larsen Nornes Seifert Wejcman
Commers Hasskamp Leighton Olson, E. Sekhon Wenzel
Daggett Hausman Leppik Opatz Skare Westfall
Davids Hilty Lieder Orfield Skoglund Westrom
Dawkins Holsten Lindner Osthoff Slawik Winter
Dehler Huntley Long Otremba, M. Smith Wolf
Delmont Jaros Macklin Ozment Solberg Spk. Carruthers
Dempsey Jefferson Mahon Paulsen Stanek
Dorn Jennings Mares Pawlenty Sviggum

Anderson, B. Knight Olson, M. Stang Workman
Kielkucki Krinkie Osskopp

The bill was passed and its title agreed to.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10272

Winter moved that the House recess subject to the call of the Chair. The motion prevailed.

RECESS

RECONVENED

The House reconvened and was called to order by the Speaker.

There being no objection, the order of business reverted to Messages from the Senate.

MESSAGES FROM THE SENATE

The following messages were received from the Senate:

I hereby announce the adoption by the Senate of the following Senate Concurrent Resolution, herewith transmitted:

Senate Concurrent Resolution No. 14, A senate concurrent resolution relating to the delivery of bills to the governor after final adjournment.

Winter moved that the rules be so far suspended that Senate Concurrent Resolution No. 14 be now considered and be placed upon its adoption. The motion prevailed.

SUSPENSION OF RULES

SENATE CONCURRENT RESOLUTION NO. 14

A Senate concurrent resolution relating to the delivery of bills to the governor after final adjournment.

Whereas, the Minnesota Constitution, Article IV, Section 23, authorizes the presentation to the Governor after sine die adjournment of bills that passed in the last three days of the Session; Now, Therefore,

Be It Resolved by the Senate of the State of Minnesota, the House of Representatives concurring, that upon adjournment sine die of the 80th regular session of the Legislature, bills shall be presented to the Governor as follows:

(a) The Speaker of the House of Representatives, the Chief Clerk of the House of Representatives, the President of the Senate, and the Secretary of the Senate shall certify and sign each bill in the same manner and upon the same certification as each bill is signed for presentation to the Governor prior to adjournment sine die, and each of those officers shall continue in his designated capacity during the three days following the date of final adjournment.

(b) The Chief Clerk of the House of Representatives and the Secretary of the Senate, in accordance with the rules of the respective bodies and under the supervision and direction of the standing Committee on Rules and Legislative Administration and the standing Committee on Rules and Administration, shall carefully enroll each bill and present them to the Governor in the same manner as each bill is enrolled and presented to the Governor prior to the adjournment of the Legislature sine die.

Journal of the House - 109th Day - Thursday, April 9, 1998 - Top of Page 10273

(c) The Revisor of Statutes shall continue to assist in all of the functions relating to enrollment of bills of the House of Representatives and of the Senate under the supervision of the Chief Clerk of the House of Representatives and the Secretary of the Senate in the same manner that the assistance was rendered prior to the adjournment of the Legislature sine die.

Be It Further Resolved that the Secretary of the Senate is directed to deliver copies of this resolution to the Governor and the Secretary of State.

Winter moved that Senate Concurrent Resolution No. 14 be now adopted. The motion prevailed and Senate Concurrent Resolution No. 14 was adopted.

This is to notify you that the Senate is about to adjourn the Eightieth Legislative Session sine die.