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After months of negotiations, the House has passed its version of the independent Office of the Inspector General (OIG) bill. SF 856, authored by Reps. Patti Anderson (R, Dellwood) and Matt Norris (DFL, Blaine) and the most high-profile proposal to address fraud in state programs this session, passed 127-5 on May 7.
The legislation would create a new independent office within Minnesota’s executive branch to strengthen oversight, transparency, and fraud prevention across state government programs. The office would have authority to investigate fraud, evaluate agency performance, and issue public reports — with a particular focus on public assistance programs such as WIC and food support.
SF 856 also establishes an Anti-Fraud and Waste Bureau within the OIG with statewide investigative and law enforcement authority. The Inspector General would be appointed by the governor from recommendations made by a legislative advisory commission and could only be removed for cause following a public hearing.
The proposal requires state agencies and nonprofit organizations to make fraud reporting tools more visible online and outlines procedures for referring credible fraud allegations to state officials and the legislative auditor. The bill would take effect Jan. 1, 2027, or upon federal approval.
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WALZ STATE OF THE STATE ADDRESS
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In his final State of the State address, Gov. Tim Walz reflected on his nearly eight years in office. He discussed major events that shaped his time as governor, including the COVID-19 pandemic, social unrest in 2020, and ongoing political divisions. He also acknowledged recent tragedies — including the loss of Speaker Melissa Hortman and her husband, and the shooting of Sen. John Hoffman and his wife. He stressed Minnesota’s resilience and the importance of communities coming together during difficult times.
The governor highlighted legislation passed during his time in office, particularly investments made in the areas of education, children, families and economic development, arguing these policies have helped move the state forward despite recent crises. He also addressed criticism over fraud in state programs, defending his administration’s response while expressing support for stronger oversight and accountability measures.
Walz outlined several priorities he hopes lawmakers will address before his term ends. These include expanding financial support for families through measures like the child tax credit, exploring new policies related to emerging technologies such as artificial intelligence, and continuing economic support for communities facing uncertainty.
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SENATE PASSES FIREARMS BILL
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Less than a year after the Annunciation Catholic Church Shooting, the Senate has passed a sweeping gun bill. It would restrict ghost firearms without serial numbers and binary triggers in addition to outlawing assault weapons and high-capacity magazines. It would also promote school safety programs and mental health services. On the floor on Monday, Republicans introduced an amendment that would have eliminated the proposed gun bans while keeping funding for school safety and mental health programs, but the amendment was not adopted. The bill passed along party lines, 34-33. The bill faces an uncertain path; the House, where the chamber is tied, is divided on gun policy.
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DHS COMMISSIONER SHAKEUP
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This week, Gov. Walz announced that Minnesota Department of Human Services (DHS) Commissioner Shireen Gandhi would no longer hold that post. The governor appointed John Connolly as acting commissioner.
Questions surrounding this leadership shakeup at DHS intensified this week after the newly-appointed temporary commissioner disclosed he will be on medical leave for the next month while undergoing treatment for colon cancer.
Gov. Walz appointed Connolly on Monday, replacing Gandhi just before her scheduled Senate confirmation hearing. Gandhi was reassigned to a deputy commissioner role focused on Medicaid oversight and fraud prevention. During Connolly’s absence, DHS said Gandhi and Deputy Commissioner Andrew Johnson will manage day-to-day agency operations.
The transition comes as DHS faces mounting scrutiny over fraud in public assistance programs, and federal Medicaid funding freezes. In an internal memo, Connolly said his priority is maintaining continuity and strengthening oversight of Medicaid programs while he undergoes treatment.
Republicans criticized the timing of the move, arguing it allowed the administration to avoid public accountability over DHS’s handling of fraud investigations. The Walz administration defended Gandhi’s continued role, saying she has played a key part in efforts to strengthen oversight and combat fraud within the agency. Senate Democrats also said they will continue pressing DHS leadership for answers regarding fraud prevention and misuse of public funds.
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PERMANENT SCHOOL FUND
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The Minnesota Permanent School Fund is a constitutionally established endowment, funded largely by revenue from school trust lands. Approximately 2.5 million acres were granted to the state at statehood to support public education. As stipulated in the state constitution, the fund’s earnings are distributed annually to school districts and charter schools on a per-pupil basis, while the trust lands themselves generate ongoing revenue through timber sales, mineral leases, and other uses managed by the state.
This week, the House and Senate passed bipartisan legislation (SF3593/HF3900) to place a constitutional amendment on the November 2026 ballot to change the distribution formula, which ultimately could mean increased payments to schools from the state’s Permanent School Fund. The House bill passed unanimously with no amendments, but it had a different path in the Senate. There, it was amended to require that any future statutory changes to the distribution formula be approved by a two-thirds vote in both bodies, then was passed 59-8. Because the House and Senate versions now differ, the two chambers will need to reconcile the bills before final passage.
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OMNIBUS BILL PROGRESS
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SF 476 Human Services Policy: Passed Senate
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SF 2511 Liquor Omnibus: Signed by Governor
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SF 3295 Health and Human Services Policy: Passed House/Senate
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SF 4223 Senate Elections: Passed Senate
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HF 4240 House Elections: Passed House
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HF 4252 Higher Education: Passed House
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HF 4188 Commerce: Passed House/Senate
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Conference Committee: Koegel, Elkins, O’Driscoll, Perryman (Senate conferees still need to be named)
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HF 1141 Housing: Passed House/Senate
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SF 4807 Veterans: Passed House/Senate
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SF 4760 Public Safety: Passed House/Senate
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Conference Committee: Latz, Oumou Verbeten, Limmer, Novotny, Witte, Moller, Feist
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SF 4561 Agriculture Policy: Passed Senate
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SF 4555 State and Local Government: Passed Senate
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SF 4067 Firearms: Passed Senate
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SF 4059 Supplemental Finance: Passed Senate
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SF 3432 Safety and Security Measures: Passed House/Senate
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SF 3298 Health Professional Scope and Licensing: Passed Senate
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SF 2373 Labor: Passed Senate
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