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Legislative Audit Commission Meeting


January 5, 2007

Members Present:

Representative Lyndon Carlson    Senator David Hann
Representative Sondra Erickson Senator James Metzen
Representative Rick Hansen Senator Ann Rest
Representative Connie Ruth Senator Claire Robling

Members Absent:

Representative Aaron Peterson    Senator Richard Cohen
Representative Torrey Westrom Senator Warren Limmer
  Senator Thomas Neuville

The Legislative Audit Commission meeting was called to order by Senator Ann Rest, Chair, at 10:06 a.m. in Room 107 of the State Capitol.  The purpose of the meeting was to release and review the program evaluation report, State Grants to Nonprofit Organizations.

Senator Rest mentioned the upcoming OLA reports that will be released during the month of January, and the opportunity for members to indicate if they would like to be briefed on any of these reports by filling out the form in their packets.  Senator Rest reminded the members about the law change from the previous session that 1) reduced the size of the commission to twelve and still kept it bipartisan, and 2) requires members to serve on the commission until new members are appointed by their respective authorities.  If a member does not return, that spot remains vacant until there is a replacement.  She encouraged those members who want to remain a member of the commission to communicate their interest to their respective appointing authorities.  Senator Rest also mentioned that the chair of the commission will revert back to a member of the House, and that an election will take place once all new members are appointed.

In response to a question by Representative Hansen, Senator Rest acknowledged that the commission will not be taking any actions today; therefore, attaining a quorum would not be necessary.  Mr. Nobles mentioned that the OLA will also seek other venues for releasing the remaining reports—such as standing committees with jurisdiction over the particular area of the report being released—unless otherwise requested by Senator Rest.  Senator Rest agreed that this would probably be important with the release of the pension reports.  Senator Metzen mentioned that it would be good to present the prevailing wages report to the Labor and Business Committee that he chairs.

Mr. Nobles directed the focus of the meeting to the main topic:  the release and review of State Grants to Nonprofit Organizations.  Mr. Nobles pointed out that there are hundreds of millions of dollars being granted each year to nonprofits by the Department of Human Services, and there should be better policies, procedures, and administration over the processing of these grants.

Mr. Nobles introduced Judy Randall, program evaluation project manager.  Ms. Randall stated that the overall conclusion of the report is that state grants should be more consistently and effectively managed.  Some reasons for this conclusion include inconsistent and inadequate agency grant policies and practices, limited executive branch grant policies, and weak oversight of legislatively-mandated grants.  In researching the report, OLA staff developed grant management best practices, including the following:  1) award grants through an open and fair competitive process, 2) have a written grant contract for all grants awarded, 3) conduct a formal site visit of all grantees at least once during the grant period, and 4) reconcile a sample of grantee expenditures with documentation at least once during the grant period.  The key recommendations of the evaluation are that the state should establish a Grants Management Office in the executive branch to strengthen accountability and improve management of state grants, and the Legislature should not name grant recipients in law but allow agencies to select recipients through a competitive process.

Senator Rest welcomed Mary Ellison, Deputy Commissioner of the Department of Public Safety.  Ms. Ellison stated that she has been involved with grants since the Carlson Administration, and that this is a topic that really gets her excited.  She said that this is a very critical issue, and there have been various committees that have been putting forward the same recommendations over the years that the evaluation report is recommending.  Ms. Ellison mentioned that the Department of Finance proposed the creation of a Grants Management Office during the 2006 Legislative session; however, it was left out of the final package that was passed.  She confirmed that the Executive Branch supports the creation of this office and grant management best practices.  The only concern she expressed is that the statute involving grants be separated from the professional/technical contracts because grant contracts are more complicated and need to be governed separately. 

Senator Rest said she was anxious to see what the Governor’s initiative would include regarding the creation of a Grants Management Office.  With no further business, the meeting was adjourned at 11:01 a.m.


Senator Ann H. Rest, Chair

Shelly Watterud, Recording Secretary


Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155