Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 4985

STATE OF MINNESOTA

Journal of the House

EIGHTIETH SESSION 1997

__________________

SIXTY-THIRD DAY

Saint Paul, Minnesota, Monday, May 19, 1997

The House of Representatives convened at 9:30 a.m. and was called to order by Phil Carruthers, Speaker of the House.

Prayer was offered by the Reverend Ronald A. Smith, House Chaplain, St. Paul, Minnesota.

The members of the House gave the pledge of allegiance to the flag of the United States of America.

The National Anthem was performed by Kris Hasskamp from District 12A, Crosby, Minnesota.

The roll was called and the following members were present:

Abrams Evans Kalis Marko Peterson Tingelstad
Anderson, B. Farrell Kelso McCollum Pugh Tomassoni
Anderson, I. Finseth Kielkucki McElroy Rest Tompkins
Bakk Folliard Kinkel McGuire Reuter Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Ozment Stang
Dempsey Johnson, A. Macklin Paulsen Sviggum
Dorn Johnson, R. Mahon Pawlenty Swenson, D.
Entenza Juhnke Mares Paymar Swenson, H.
Erhardt Kahn Mariani Pelowski Sykora

A quorum was present.

Otremba was excused until 10:50 a.m.

The Chief Clerk proceeded to read the Journal of the preceding day. Mulder moved that further reading of the Journal

be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 4986

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 Evans Kalis Marko Peterson Tingelstad
Anderson, B. Farrell Kelso McCollum Pugh Tomassoni
Anderson, I. Finseth Kielkucki McElroy Rest Tompkins
Bakk Folliard Kinkel McGuire Reuter Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Ozment Stang
Dempsey Johnson, A. Macklin Paulsen Sviggum
Dorn Johnson, R. Mahon Pawlenty Swenson, D.
Entenza Juhnke Mares Paymar Swenson, H.
Erhardt Kahn Mariani Pelowski Sykora

Abrams 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.

PETITIONS AND COMMUNICATIONS

The following communication was received:

STATE OF MINNESOTA

OFFICE OF THE GOVERNOR

SAINT PAUL 55155

May 16, 1997

The Honorable Phil Carruthers

Speaker of the House of Representatives

The State of Minnesota

Dear Speaker Carruthers:

I have vetoed and am returning Chapter 163, House File No. 892, a bill which seeks to raise the minimum wage for employees of small Minnesota companies.

Since 1991, my administration has delivered a clear and unwavering position on the issue of the minimum wage. I will not accept changes to Minnesota's minimum wage law which do not conform to the federal law.

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Conformity to federal law goes beyond Chapyer 163 to include both a tip credit and an opportunity wage. I refuse to isolate the wage practices of Minnesota from those of our neighboring states. With the adoption of this language, Minnesota would be at an economic disadvantage with our neighbors. In fact, the lack of a tip credit would place Minnesota's mandated wage level as the highest in the region.

Minimum wage levels and policy are driven by national labor trends monitored by the federal government. Minnesota would be foolish to veer from such clear and well placed guidance.

Warmest regards,

Arne H. Carlson

Governor

Rukavina moved that H. F. No. 892, Chapter 163, be now reconsidered and repassed, the objections of the Governor notwithstanding, pursuant to Article IV, Section 23, of the Constitution of the State of Minnesota.

The question was taken on the motion to reconsider and repass H. F. No. 892, Chapter 163, the objections of the Governor notwithstanding, pursuant to Article IV, Section 23, of the Constitution of the State of Minnesota and the roll was called. There were 82 yeas and 52 nays as follows:

Those who voted in the affirmative were:

Anderson, I. Finseth Juhnke Mariani Ozment Smith
Bakk Folliard Kahn Marko Paymar Solberg
Biernat Garcia Kalis McCollum Pelowski Tomassoni
Boudreau Greenfield Kelso McGuire Peterson Trimble
Carlson Greiling Kinkel Milbert Pugh Tuma
Chaudhary Hasskamp Knoblach Mullery Rest Tunheim
Clark Hausman Koskinen Munger Rhodes Wagenius
Daggett Hilty Kubly Murphy Rostberg Wejcman
Dawkins Huntley Leighton Olson, E. Rukavina Wenzel
Delmont Jaros Leppik Opatz Schumacher Westrom
Dorn Jefferson Lieder Orfield Sekhon Winter
Entenza Jennings Long Osskopp Skare Spk. Carruthers
Evans Johnson, A. Luther Osthoff Skoglund
Farrell Johnson, R. Mahon Otremba Slawik

Those who voted in the negative were:

Abrams Dempsey Koppendrayer Molnau Seagren Tompkins
Anderson, B. Erhardt Kraus Mulder Seifert Van Dellen
Bettermann Goodno Krinkie Ness Stanek Vickerman
Bishop Gunther Kuisle Nornes Stang Weaver
Bradley Haas Larsen Olson, M. Sviggum Westfall
Broecker Harder Lindner Paulsen Swenson, D. Wolf
Commers Holsten Macklin Pawlenty Swenson, H. Workman
Davids Kielkucki Mares Reuter Sykora
Dehler Knight McElroy Rifenberg Tingelstad

Not having received the required two-thirds vote, the bill was not repassed.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 4988

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.

Reuter was excused between the hours of 1:30 p.m. and 7:40 p.m.

INTRODUCTION AND FIRST READING OF HOUSE BILLS

The following House Files were introduced:

Wagenius and Winter introduced:

H. F. No. 2242, A resolution memorializing Congress to amend the Constitution of the United States.

The bill was read for the first time and referred to the Committee on Rules and Legislative Administration.

Jefferson, Clark, Greenfield and Long introduced:

H. F. No. 2243, A bill for an act relating to public administration; providing for completion of the Minneapolis convention center; authorizing state bonds; providing for debt service; authorizing the city to expand the convention center; repealing expenditure limit on original construction; dealing with sales tax in several respects; appropriating money; amending Laws 1986, chapter 396, sections 2, subdivision 1, as amended; and 6; repealing Laws 1986, chapter 396, section 2, subdivision 2.

The bill was read for the first time and referred to the Committee on Economic Development and International Trade.

Kahn, Orfield, Mullery and Biernat introduced:

H. F. No. 2244, A bill for an act relating to public administration; providing for completion of the Minneapolis convention center; authorizing state bonds; providing for debt service; authorizing the city to expand the convention center; repealing expenditure limit on original construction; dealing with sales tax in several respects; appropriating money; amending Laws 1986, chapter 396, sections 2, subdivision 1, as amended; and 6; repealing Laws 1986, chapter 396, section 2, subdivision 2.

The bill was read for the first time and referred to the Committee on Economic Development and International Trade.

Wejcman, Garcia, Skoglund and Wagenius introduced:

H. F. No. 2245, A bill for an act relating to public administration; providing for completion of the Minneapolis convention center; authorizing state bonds; providing for debt service; authorizing the city to expand the convention center; repealing expenditure limit on original construction; dealing with sales tax in several respects; appropriating money; amending Laws 1986, chapter 396, sections 2, subdivision 1, as amended; and 6; repealing Laws 1986, chapter 396, section 2, subdivision 2.

The bill was read for the first time and referred to the Committee on Economic Development and International Trade.

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Boudreau, Jennings and Ozment introduced:

H. F. No. 2246, A bill for an act relating to professions; authorizing the board of electricity to grant rule variances; amending Minnesota Statutes 1996, section 326.241, subdivision 2.

The bill was read for the first time and referred to the Committee on Regulated Industries and Energy.

Olson, M.; Kuisle and Anderson, B., introduced:

H. F. No. 2247, A bill for an act relating to elections; changing certain registration and postelection reporting procedures; amending Minnesota Statutes 1996, section 201.061, subdivisions 3, 4, and by adding a subdivision.

The bill was read for the first time and referred to the Committee on General Legislation, Veterans Affairs and Elections.

Rhodes introduced:

H. F. No. 2248, A bill for an act relating to public improvements; authorizing the issuance of state bonds for the St. Louis Park arts center; appropriating money.

The bill was read for the first time and referred to the Committee on Economic Development and International Trade.

Rhodes introduced:

H. F. No. 2249, A bill for an act relating to public improvements; authorizing the issuance of state bonds for the Excelsior boulevard bridge project; appropriating money.

The bill was read for the first time and referred to the Committee on Transportation and Transit.

Boudreau, Biernat, Weaver, Skoglund and Pawlenty introduced:

H. F. No. 2250, A bill for an act relating to crime prevention; proposing an amendment to the Minnesota Constitution, article I, section 7, to permit courts to deny a defendant's release on bail when necessary to protect the safety of any individual or the public; providing procedures governing pretrial and postconviction release and detention decisions; providing for appellate review of release and detention orders; imposing criminal penalties for failure to appear in court as required and for commission of a crime while on release; amending Minnesota Statutes 1996, sections 589.16; 609.49, subdivision 3; 629.53; 629.63; 629.715, subdivision 1; and 629.72, subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 609; proposing coding for new law as Minnesota Statutes, chapter 629A; repealing Minnesota Statutes 1996, sections 609.49, subdivisions 1 and 2; 629.44; 629.45; 629.47; 629.48; 629.49; 629.54; 629.55; 629.58; 629.59; 629.60; 629.61; 629.62; and 629.64.

The bill was read for the first time and referred to the Committee on Judiciary.

Van Dellen, Slawik, Tompkins, Haas and Dorn introduced:

H. F. No. 2251, A bill for an act relating to health; limiting the use of allergenic latex in health care facilities; proposing coding for new law in Minnesota Statutes, chapter 144.

The bill was read for the first time and referred to the Committee on Health and Human Services.

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Olson, M.; Koppendrayer; Kinkel; Kielkucki and Juhnke introduced:

H. F. No. 2252, A bill for an act relating to education; establishing a statewide testing grant program; appropriating money.

The bill was read for the first time and referred to the Committee on Education.

Anderson, I.; Davids; Tomassoni; Bakk and Rukavina introduced:

H. F. No. 2253, A bill for an act relating to insurance; automobile; prohibiting discrimination based upon two or fewer minor traffic violations; amending Minnesota Statutes 1996, sections 65B.133, subdivision 5; 65B.14, subdivision 5; and 72A.20, subdivision 23.

The bill was read for the first time and referred to the Committee on Financial Institutions and Insurance.

Clark, Greenfield, Murphy and Kahn introduced:

H. F. No. 2254, A bill for an act relating to the legislature; providing for social security coverage; proposing coding for new law in Minnesota Statutes, chapter 3A.

The bill was read for the first time and referred to the Committee on Governmental Operations.

Skoglund, by request, introduced:

H. F. No. 2255, A bill for an act relating to crime; recodifying, clarifying, modifying, and relocating provisions relating to crimes; recodifying, clarifying, and relocating substance-related vehicular and other major traffic offenses; revising the nonfelony penalty structure by providing greater flexibility in distinguishing between the most serious and least serious nonfelony offenses and thereby achieving greater proportionality between penalties; authorizing efficiency measures to relieve court caseloads; providing criminal and civil penalties; amending Minnesota Statutes 1996, sections 3.739, subdivision 1; 3C.10, subdivision 1; 260.015, subdivision 21; 270A.03, subdivision 5; 340A.503, subdivision 1; 366.01, subdivision 10, and by adding subdivisions; 375.53; 412.231; 518B.01, subdivision 14; and 645.241; proposing coding for new law in Minnesota Statutes, chapters 97B; 410; and 609A; proposing coding for new law as Minnesota Statutes, chapters 169A; 169B; 169C; 609B; 609C; 609D; 609E; 609F; 609G; 609H; 609I; 609J; 609K; 609L; 609M; and 609N; repealing Minnesota Statutes 1996, chapters 152; 609; 611A; 617; and 624; sections 148A.01; 148A.02; 148A.03; 148A.04; 148A.05; 148A.06; 168.2701; 168.2702; 169.01; 169.02, subdivision 1; 169.022; 169.025; 169.03; 169.04; 169.05; 169.09; 169.10; 169.11; 169.121; 169.1211; 169.1215; 169.1216; 169.1217; 169.122; 169.123; 169.124; 169.125; 169.126; 169.1261; 169.1265; 169.128; 169.129; 169.13; 169.89; 169.891; 169.90; 169.901; 169.91; 169.92; 169.93; 169.94; 169.95; 169.96; 169.965; 169.966; 169.97; 169.98; 169.983; 169.985; 169.99; 299C.065, subdivisions 1a and 3a; 332.50; 332.51; 340A.503, subdivision 3; 626A.02; 626A.03; 626A.13; 626A.20; 626A.25; 626A.26; 626A.32; 626A.33; 626A.35; 626A.391; and 626A.40.

The bill was read for the first time and referred to the Committee on Judiciary.

HOUSE ADVISORIES

The following House Advisory was introduced:

Wejcman, Clark, McElroy, Rhodes and Dorn introduced:

H. A. No. 7, A proposal for a statewide housing strategy.

The advisory was referred to the Committee on Economic Development and International Trade.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 4991

The following Conference Committee Reports were received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 556

A bill for an act relating to health; permitting health data institute access to certain data; defining terms for vital statistics; modifying lead inspection provisions; modifying provisions for unique identifiers for health care providers, group purchasers, and patients; modifying birth data provisions; limiting access to certified copies of birth and death certificates; requiring standardized format for birth and death certificates; providing for recording and reporting of abortion data; amending Minnesota Statutes 1996, sections 62J.451, subdivision 6c; 62J.54; 144.212, by adding subdivisions; 144.215, by adding subdivisions; 144.225, by adding subdivisions; 144.9504, subdivision 2; and 145.411, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 145.

May 18, 1997

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. 556, report that we have agreed upon the items in dispute and recommend as follows:

That the House concur in the Senate amendment and that H. F. No. 556, as amended by the Senate Rule 49 amendment, be further amended as follows (The text of the amended House file is identical to S. F. No. 98):

Page 11, line 33, delete "the following" and insert "an"

Page 11, line 34, delete "individuals" and insert "individual"

Page 12, lines 1, 3, 16, and 20, delete "birth certificate or death"

We request adoption of this report and repassage of the bill.

House Conferees: Lee Greenfield, Kris Hasskamp and Kevin Goodno.

Senate Conferees: Don Betzold, Sheila M. Kiscaden and David J. Ten Eyck.

Greenfield moved that the report of the Conference Committee on H. F. No. 556 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 556, A bill for an act relating to health; permitting health data institute access to certain data; defining terms for vital statistics; modifying lead inspection provisions; modifying provisions for unique identifiers for health care providers, group purchasers, and patients; modifying birth data provisions; limiting access to certified copies of birth and death certificates; requiring standardized format for birth and death certificates; providing for recording and reporting of abortion data; amending Minnesota Statutes 1996, sections 62J.451, subdivision 6c; 62J.54; 144.212, by adding subdivisions; 144.215, by adding subdivisions; 144.225, by adding subdivisions; 144.9504, subdivision 2; and 145.411, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 145.

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.

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Winter moved that those not voting be excused from voting. The motion prevailed.

There were 110 yeas and 21 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Johnson, A. Marko Paymar Tomassoni
Anderson, B. Evans Johnson, R. McCollum Pelowski Trimble
Anderson, I. Finseth Juhnke McElroy Peterson Tunheim
Bakk Folliard Kalis McGuire Pugh Van Dellen
Biernat Garcia Kelso Milbert Rest Vickerman
Bishop Goodno Kinkel Molnau Rhodes Wagenius
Boudreau Greenfield Koskinen Mulder Rostberg Weaver
Bradley Greiling Kraus Mullery Rukavina Wejcman
Carlson Gunther Kubly Munger Schumacher Wenzel
Chaudhary Haas Kuisle Murphy Seifert Westfall
Clark Harder Leighton Ness Sekhon Westrom
Commers Hasskamp Leppik Nornes Skare Winter
Daggett Hausman Lieder Olson, E. Skoglund Wolf
Dawkins Hilty Long Opatz Slawik Workman
Dehler Holsten Luther Orfield Solberg Spk. Carruthers
Delmont Huntley Macklin Osthoff Stanek
Dempsey Jaros Mahon Otremba Sviggum
Dorn Jefferson Mares Ozment Swenson, D.
Entenza Jennings Mariani Pawlenty Tingelstad

Those who voted in the negative were:

Bettermann Knight Larsen Paulsen Stang Tuma
Broecker Knoblach Lindner Rifenberg Swenson, H.
Davids Koppendrayer Olson, M. Seagren Sykora
Kielkucki Krinkie Osskopp Smith Tompkins

The bill was repassed, as amended by Conference, and its title agreed to.

CONFERENCE COMMITTEE REPORT ON H. F. NO. 268

A bill for an act relating to corrections; modifying multiple occupancy requirements applicable to state prisons; amending the appropriation to build a close-custody correctional facility of at least 800 beds; providing that the new facility shall be at level four; deleting certain construction bid requirements; amending Minnesota Statutes 1996, section 243.53, subdivision 1; Laws 1996, chapter 463, section 16, subdivision 3; repealing Minnesota Statutes 1996, section 243.53, subdivision 2.

May 18, 1997

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. 268, 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. 268 be further amended as follows:

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Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 162.02, is amended by adding a subdivision to read:

Subd. 7a. [PROHIBITION AGAINST CERTAIN DESIGNATIONS.] Notwithstanding section 3, a county must follow the procedures established in chapter 162 for the establishment and designation of a county state-aid highway.

Sec. 2. Minnesota Statutes 1996, section 243.53, subdivision 1, is amended to read:

Subdivision 1. [SEPARATE CELLS.] (a) When there are sufficient cells sufficient available, each convict inmate shall be confined in a separate cell. Each inmate shall be confined in a separate cell in close, maximum, and high security facilities, including St. Cloud, Stillwater, and Oak Park Heights, but not including geriatric or honor dormitory-type facilities. institutions classified by the commissioner as custody level five and six institutions. This requirement does not apply to the following:

(1) geriatric dormitory-type facilities;

(2) honor dormitory-type facilities; and

(3) any other multiple occupancy facility at a custody level five or six institution that confines inmates who could be confined in an institution at custody level four or lower.

(b) Correctional institutions classified by the commissioner as custody level one, two, three, or four institutions must permit multiple occupancy, except segregation units, to the greatest extent possible. The commissioner shall annually publish a list of the custody levels of all correctional institutions.

Sec. 3. Laws 1996, chapter 463, section 16, subdivision 3, is amended to read:

Subd. 3. New Facility 89,000,000

To complete design and to construct, furnish, and equip a new close-custody correctional facility at custody level four to provide at least 800 beds.

The commissioner of administration shall develop a design alternative to bid and construct one of the six residential pods at the new facility to accommodate two inmates per cell. This would result in a total of 680 single occupancy close-custody cells, and 136 medium-custody double occupancy cells.

The commissioner of administration may use construction delivery methods as may be appropriate to minimize the cost of the facility and maximize the construction time savings.

Before final contract documents for this project are advertised for construction bids, the commissioners of administration and corrections shall certify to the chairs of the senate finance committee, the senate crime prevention finance division, the house ways and means committee, the house judiciary finance committee, and the house capital investment committee that the program scope of the project has not increased since the project budget was reviewed in accordance with Minnesota Statutes, section 16B.335.

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Upon receipt and evaluation of construction bids and before awarding contracts for the construction phase of the project, the commissioner of administration shall provide the bids and evaluation to the chairs of the senate finance committee and the house ways and means committee and the chairs of the policy committees and finance divisions having jurisdiction over criminal justice policy. Within 14 days after receiving them, the chairs shall advise the commissioner on which design should be constructed.

If the chairs advise the 952-bed option, but the legislature does not appropriate by April 15, 1997, any additional money that may be needed to complete the project with that option, the commissioner shall award the bids for the 800-bed single-cell close-custody facility in order to avoid delays that would further escalate the cost of the project.

Upon receipt and evaluation of construction bids and before awarding contracts for the construction phase of the project, the commissioners of administration and finance shall inform the same committee chairs of the house ways and means committee and the senate human resources finance committee and the chairs of the house and senate policy and finance committees and divisions having jurisdiction over criminal justice issues of the project budget necessary to complete that portion of the project. Any portion of this appropriation that exceeds the project budget shall be unallotted by the commissioner of finance.

By February 1 of each year, the commissioner shall report to the chairs of the house judiciary committee and senate crime prevention committee on efforts to recruit a workforce for the correctional facility that is proportional to the protected groups in the inmate population, the results of the efforts, and recommendations for achieving the goal of proportional representation of protected class employees in relation to the inmate population.

The commissioner of corrections shall construct an access road from state trunk highway 361 to the parking lot of the correctional facility. The commissioner of transportation shall construct any necessary improvements at the intersection of trunk highway 361 and the access road in order to facilitate ingress to and egress from the correctional facility.

Sec. 4. [OPERATION OF NEW CORRECTIONAL FACILITY.]

The custody level four correctional facility authorized in Laws 1996, chapter 463, section 16, subdivision 3, as amended by section 3, may not begin to house inmates until its opening is specifically authorized by law.

Sec. 5. [COUNTY STATE-AID HIGHWAY.]

A county state-aid highway is established in Chisago county beginning at the intersection of trunk highway 361 with the access road to be constructed pursuant to section 3, and continuing in an easterly direction to the parking lot of the Rush City correctional facility.

Sec. 6. [REPEALER.]

Minnesota Statutes 1996, section 243.53, subdivision 2, is repealed.

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Sec. 7. [EFFECTIVE DATE AND LOCAL APPROVAL.]

Sections 2, 3, 4, and 6 are effective the day following final enactment. Section 5 is effective the day after the commissioner of corrections completes construction of the access road or the governing body of the county of Chisago complies with Minnesota Statutes, section 645.021, subdivision 3, whichever occurs later."

Delete the title and insert:

"A bill for an act relating to corrections; amending the appropriation to build a close-custody correctional facility of at least 800 beds; providing that the new facility shall be at custody level four; deleting certain construction bid requirements; authorizing construction of an access road; forbidding inmates from being housed at the facility until its opening is specifically authorized by law; requiring trunk highway improvements; designating county state-aid highway; prohibiting certain designations; changing occupancy requirements applicable to state prisons; amending Minnesota Statutes 1996, sections 162.02, by adding a subdivision; and 243.53, subdivision 1; Laws 1996, chapter 463, section 16, subdivision 3; repealing Minnesota Statutes 1996, section 243.53, subdivision 2."

We request adoption of this report and repassage of the bill.

House Conferees: Mary Murphy, Thomas Pugh, Loren A. Solberg, Henry J. Kalis and Doug Swenson.

Senate Conferees: Randy C. Kelly, Allan H. Spear, Jane B. Ranum, Thomas M. Neuville and Warren Limmer.

Murphy moved that the report of the Conference Committee on H. F. No. 268 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 268, A bill for an act relating to corrections; modifying multiple occupancy requirements applicable to state prisons; amending the appropriation to build a close-custody correctional facility of at least 800 beds; providing that the new facility shall be at level four; deleting certain construction bid requirements; amending Minnesota Statutes 1996, section 243.53, subdivision 1; Laws 1996, chapter 463, section 16, subdivision 3; repealing Minnesota Statutes 1996, section 243.53, 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.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 130 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Kalis Marko Paymar Swenson, H.
Anderson, B. Evans Kelso McCollum Pelowski Sykora
Anderson, I. Finseth Kielkucki McElroy Peterson Tingelstad
Bakk Folliard Kinkel McGuire Pugh Tomassoni
Bettermann Garcia Knight Milbert Rest Tompkins
Biernat Goodno Knoblach Molnau Rhodes Trimble
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 4996
Bishop Greenfield Koppendrayer Mulder Rifenberg Tuma
Boudreau Greiling Koskinen Mullery Rostberg Tunheim
Bradley Gunther Kraus Munger Rukavina Van Dellen
Broecker Haas Krinkie Murphy Schumacher Vickerman
Carlson Harder Kubly Ness Seagren Wagenius
Chaudhary Hasskamp Kuisle Nornes Seifert Weaver
Clark Hausman Larsen Olson, E. Sekhon Wejcman
Commers Hilty Leighton Olson, M. Skare Wenzel
Daggett Holsten Leppik Opatz Skoglund Westfall
Davids Huntley Lieder Orfield Slawik Westrom
Dawkins Jaros Lindner Osskopp Smith Winter
Dehler Jefferson Long Osthoff Solberg Wolf
Delmont Jennings Luther Otremba Stanek Workman
Dempsey Johnson, A. Macklin Ozment Stang Spk. Carruthers
Dorn Johnson, R. Mahon Paulsen Sviggum
Entenza Juhnke Mares Pawlenty Swenson, D.

The bill was repassed, as amended by Conference, and its title agreed to.

CONFERENCE COMMITTEE REPORT ON H. F. NO. 241

A bill for an act relating to motor carriers; allowing personnel of departments of transportation and public safety to conduct joint or combined audits of motor carrier records; requiring commissioner of public safety to provide commissioner of transportation information on traffic accidents involving commercial motor vehicles; providing for enforcement authority of personnel of departments of transportation and public safety relating to motor carriers; conforming state statutes to federal motor carrier safety regulations; providing for the reauthorization of the uniform hazardous materials registration and permit program for an additional year; authorizing commissioner of transportation to accept electronic signatures for electronically transmitted motor carrier documents; amending Minnesota Statutes 1996, sections 168.187, subdivision 20; 169.09, subdivision 13; 169.85; 169.871, subdivisions 1 and 1a; 221.0314, subdivisions 2, 6, 7, 9, 10, and 11; 221.0355, subdivisions 5 and 15; 221.221, subdivisions 2 and 4; 296.17, subdivision 18; 296.171, subdivision 4; and 299D.06; Laws 1994, chapter 589, section 8, as amended; proposing coding for new law in Minnesota Statutes, chapter 221.

May 17, 1997

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. 241, 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. 241 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 168.187, subdivision 20, is amended to read:

Subd. 20. [JOINT OR RECIPROCAL AUDITS.] The commissioner of public safety may make arrangements with the commissioner of transportation and with agencies of other states administering motor vehicle registration laws for joint or reciprocal audits of any owner.

Sec. 2. Minnesota Statutes 1996, section 169.09, subdivision 13, is amended to read:

Subd. 13. [REPORTS CONFIDENTIAL; EVIDENCE, FEE, PENALTY, APPROPRIATION.] (a) All written reports and supplemental reports required under this section shall be for the use of the commissioner of public safety and other appropriate state, federal, county, and municipal governmental agencies for accident analysis purposes, except:

(1) the commissioner of public safety or any law enforcement agency shall, upon written request of any person involved in an accident or upon written request of the representative of the person's estate, surviving spouse, or one or more surviving next of kin, or a trustee appointed pursuant to section 573.02, disclose to the requester, the requester's legal counsel, or a representative of the requester's insurer the report required under subdivision 8;

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(2) the commissioner of public safety shall, upon written request, provide the driver filing a report under subdivision 7 with a copy of the report filed by the driver;

(3) the commissioner of public safety may verify with insurance companies vehicle insurance information to enforce sections 65B.48, 169.792, 169.793, 169.796, and 169.797;

(4) the commissioner of public safety may give to shall provide the commissioner of transportation the name and address of a carrier subject to section 221.031 for use in enforcing the information obtained for each traffic accident report requirements under chapter 221 involving a commercial motor vehicle, for purposes of administering commercial vehicle safety regulations; and

(5) the commissioner of public safety may give to the United States Department of Transportation commercial vehicle accident information in connection with federal grant programs relating to safety.

(b) Accident reports and data contained in the reports shall not be discoverable under any provision of law or rule of court. No report shall be used as evidence in any trial, civil or criminal, arising out of an accident, except that the commissioner of public safety shall furnish upon the demand of any person who has, or claims to have, made a report, or, upon demand of any court, a certificate showing that a specified accident report has or has not been made to the commissioner solely to prove compliance or failure to comply with the requirements that the report be made to the commissioner.

(c) Nothing in this subdivision prevents any person who has made a report pursuant to this section from providing information to any persons involved in an accident or their representatives or from testifying in any trial, civil or criminal, arising out of an accident, as to facts within the person's knowledge. It is intended by this subdivision to render privileged the reports required, but it is not intended to prohibit proof of the facts to which the reports relate.

(d) Disclosing any information contained in any accident report, except as provided in this subdivision, section 13.82, subdivision 3 or 4, or other statutes, is a misdemeanor.

(e) The commissioner of public safety may charge authorized persons a $5 fee for a copy of an accident report.

(f) The commissioner and law enforcement agencies may charge commercial users who request access to response or incident data relating to accidents a fee not to exceed 50 cents per report. "Commercial user" is a user who in one location requests access to data in more than five accident reports per month, unless the user establishes that access is not for a commercial purpose. Money collected by the commissioner under this paragraph is appropriated to the commissioner.

Sec. 3. Minnesota Statutes 1996, section 169.85, is amended to read:

169.85 [WEIGHING; PENALTY.]

The driver of a vehicle which has been lawfully stopped may be required by a peace an officer to submit the vehicle and load to a weighing by means of portable or stationary scales, and the peace officer may require that the vehicle be driven to the nearest available scales if the distance to the scales is no further than five miles, or if the distance from the point where the vehicle is stopped to the vehicle's destination is not increased by more than ten miles as a result of proceeding to the nearest available scales. Official traffic control devices as authorized by section 169.06 may be used to direct the driver to the nearest scale. When a truck weight enforcement operation is conducted by means of portable or stationary scales and signs giving notice of the operation are posted within the highway right-of-way and adjacent to the roadway within two miles of the operation, the driver of a truck or combination of vehicles registered for or weighing in excess of 12,000 pounds shall proceed to the scale site and submit the vehicle to weighing and inspection.

Upon weighing a vehicle and load, as provided in this section, an officer may require the driver to stop the vehicle in a suitable place and remain standing until a portion of the load is removed that is sufficient to reduce the gross weight of the vehicle to the limit permitted under section 169.825. A suitable place is a location where loading or tampering with the load is not prohibited by federal, state, or local law, rule or ordinance. A driver may be required to unload a vehicle only if the weighing officer determines that (a) on routes subject to the provisions of section 169.825, the weight on an axle exceeds the lawful gross weight prescribed by section 169.825, by 2,000 pounds or more, or the weight on a group of two or more

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consecutive axles in cases where the distance between the centers of the first and last axles of the group under consideration is ten feet or less exceeds the lawful gross weight prescribed by section 169.825, by 4,000 pounds or more; or (b) on routes designated by the commissioner in section 169.832, subdivision 11, the overall weight of the vehicle or the weight on an axle or group of consecutive axles exceeds the maximum lawful gross weights prescribed by section 169.825; or (c) the weight is unlawful on an axle or group of consecutive axles on a road restricted in accordance with section 169.87. Material unloaded must be cared for by the owner or driver of the vehicle at the risk of the owner or driver.

A driver of a vehicle who fails or refuses to stop and submit the vehicle and load to a weighing as required in this section, or who fails or refuses, when directed by an officer upon a weighing of the vehicle, to stop the vehicle and otherwise comply with the provisions of this section, is guilty of a misdemeanor.

When used in this section, the word "officer" means a peace officer or an employee of the department of public safety described in section 299D.06.

Sec. 4. Minnesota Statutes 1996, section 169.871, subdivision 1, is amended to read:

Subdivision 1. [CIVIL LIABILITY.] The owner or lessee of a vehicle that is operated with a gross weight in excess of a weight limit imposed under sections 169.825 and 169.832 to 169.851 and 169.87 or a shipper who ships or tenders goods for shipment in a single truck or combination vehicle that exceeds a weight limit imposed under sections 169.825 and 169.832 to 169.851 and 169.87 is liable for a civil penalty as follows:

(a) If the total gross excess weight is not more than 1,000 pounds, one cent per pound for each pound in excess of the legal limit;

(b) If the total gross excess weight is more than 1,000 pounds but not more than 3,000 pounds, $10 plus five cents per pound for each pound in excess of 1,000 pounds;

(c) If the total gross excess weight is more than 3,000 pounds but not more than 5,000 pounds, $110 plus ten cents per pound for each pound in excess of 3,000 pounds;

(d) If the total gross excess weight is more than 5,000 pounds but not more than 7,000 pounds, $310 plus 15 cents per pound for each pound in excess of 5,000 pounds;

(e) If the total gross excess weight is more than 7,000 pounds, $610 plus 20 cents per pound for each pound in excess of 7,000 pounds.

Any penalty imposed upon a defendant under this subdivision shall not exceed the penalty prescribed by this subdivision. Any fine paid by the defendant in a criminal overweight action that arose from the same overweight violation shall be applied toward payment of the civil penalty under this subdivision. A peace officer or department of public safety employee described in section 299D.06 who cites a driver for a violation of the weight limitations established by sections 169.81 to 169.851 and 169.87 shall give written notice to the driver that the driver or another may also be liable for the civil penalties provided herein in the same or separate proceedings.

Sec. 5. Minnesota Statutes 1996, section 169.871, subdivision 1a, is amended to read:

Subd. 1a. [SPECIAL PERMIT VIOLATIONS.] The owner or lessee of a vehicle that is operated with a gross weight in excess of a weight limit imposed by permit under sections 169.86 and 169.862 and a shipper who ships or tenders goods for shipment in a single truck or combination vehicle that exceeds a weight limit permitted under sections 169.86 or 169.862 is liable for a civil penalty at a rate of five cents per pound for each pound in excess of the weight permitted under section 169.86 or 169.862, or $100, whichever is greater.

Any penalty imposed upon a defendant under this subdivision shall not exceed the penalty prescribed by this subdivision. Any fine paid by the defendant in a criminal overweight action that arose from the same overweight violation may not be applied toward payment of the civil penalty under this subdivision. A peace officer or department of public safety employee described in section 299D.06 who cites a driver for a violation of the weight limitations established by permit pursuant to section 169.86 or 169.862 shall give written notice to the driver that the driver or another may also be liable for the civil penalty provided in this subdivision in the same or separate proceedings.

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Sec. 6. Minnesota Statutes 1996, section 171.041, as amended by Laws 1997, chapter 48, section 1, is amended to read:

171.041 [RESTRICTED LICENSES FOR FARM WORK.]

Notwithstanding any provisions of section 171.04 relating to the age of an applicant to the contrary, the commissioner may issue a restricted farm work license to operate a motor vehicle to a person who has attained the age of 15 years but who is under the age of 16 years and who, except for age, is qualified to hold a driver's license. The applicant is not required to comply with the six-month instruction permit possession provisions of sections 171.04, subdivision 1, clause (2), and 171.05, subdivision 2a. The restricted license shall be issued solely for the purpose of authorizing the person to whom the restricted license is issued to assist the person's parents or guardians with farm work. A person holding this restricted license may operate a motor vehicle only during daylight hours and only within a radius of 20 miles of the parent's or guardian's farmhouse; however, in no case may a person holding the restricted license operate a motor vehicle in a city of the first class. An applicant for a restricted license shall apply to the commissioner for the license on forms prescribed by the commissioner. The application shall be accompanied by:

(1) a copy of a property tax statement showing that the applicant's residence applicant owns land that is classified as agricultural land or a copy of a rental statement or agreement showing that the applicant rents land classified as agricultural land; and

(2) by a written verified statement by the applicant's parent or guardian setting forth the necessity for the license.

Sec. 6. Minnesota Statutes 1996, section 221.0314, subdivision 1, is amended to read:

Subdivision 1. [APPLICABILITY.] (a) Intrastate motor carriers, private carriers, and persons providing intrastate transportation described in section 221.025, must comply with the rules federal regulations incorporated in this section. Private carriers and persons providing intrastate transportation described in section 221.025, must comply with the federal regulations incorporated in this section to the extent required by section 221.031. Every carrier and its officers, agents, representatives, and employees responsible for managing, maintaining, equipping, operating, or driving motor vehicles, or hiring, supervising, training, assigning, or dispatching drivers, must be instructed in and comply with the rules incorporated in this section and shall require that its agents, representatives, drivers, and employees comply.

(b) In the rules incorporated in subdivisions 2 to 11:

(1) the term "motor carrier" means a carrier required to comply with this section by section 221.031;

(2) a reference to a federal agency or office means the Minnesota department of transportation; and

(3) a reference to a federal administrative officer means the commissioner of the Minnesota department of transportation.

Sec. 7. Minnesota Statutes 1996, section 221.0314, subdivision 2, is amended to read:

Subd. 2. [QUALIFICATIONS OF DRIVERS.] Code of Federal Regulations, title 49, part 391 and appendixes C, D, and E, are incorporated by reference except for sections 391.1; 391.2; 391.11, paragraph (b)(1); 391.47; 391.49, paragraphs (b) to (1); 391.51, paragraphs (f) and (g); 391.62; 391.64; 391.67; 391.68; 391.69; 391.71; and those sections incorporated in section 221.0313, subdivision 4 391.73. In addition, the cross references to Code of Federal Regulations, title 49, section 391.62, 391.67, or 391.71 or to part 391, subpart G, found in Code of Federal Regulations, title 49, sections 391.11, paragraphs (a) and (b); 391.21, paragraph (a); 391.23, paragraph (a); 391.25; 391.27, paragraph (a); 391.31, paragraph (a); 391.35, paragraph (a); 391.41, paragraph (a); and 391.45, sections or paragraphs not incorporated in this subdivision are not incorporated by reference.

Sec. 8. Minnesota Statutes 1996, section 221.0314, subdivision 6, is amended to read:

Subd. 6. [DRIVING OF MOTOR VEHICLES.] Code of Federal Regulations, title 49, part 392, is incorporated by reference, except that sections 392.1, 392.2, and 392.30, paragraph (a), of that part, are not incorporated.

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Sec. 9. Minnesota Statutes 1996, section 221.0314, subdivision 7, is amended to read:

Subd. 7. [PARTS AND ACCESSORIES NECESSARY FOR SAFE OPERATION.] Code of Federal Regulations, title 49, part 393, is incorporated by reference, except that sections 393.1, 393.3, and 393.5 of that part are not incorporated for paragraph (d) of section 393.43. In addition, despite the first paragraph of Code of Federal Regulations, title 49, section 393.95, a lightweight vehicle must carry a fire extinguisher meeting the requirements in Code of Federal Regulations, title 49, section 393.95.

Sec. 10. Minnesota Statutes 1996, section 221.0314, subdivision 9, is amended to read:

Subd. 9. [HOURS OF SERVICE OF DRIVERS.] Code of Federal Regulations, title 49, part 395, is incorporated by reference, except that sections 395.3, paragraphs (d) to (f); 395.8, paragraphs (k)(2) and (l)(2); paragraphs (a), (c), (d), (f), (i), (j), (l), (m), (n), and (o) of section 395.1 and section 395.13, of that part are not incorporated. In addition, the cross reference references to paragraph (e) in Code of Federal Regulations, title 49, section 395.3, paragraph (a), is sections or paragraphs not incorporated in this subdivision are not incorporated by reference. The requirements of Code of Federal Regulations, title 49, sections 395.3, paragraphs (a) and (b); and 395.8, paragraphs (a) to (k), part 395, do not apply to drivers of lightweight vehicles.

Sec. 11. Minnesota Statutes 1996, section 221.0314, subdivision 10, is amended to read:

Subd. 10. [INSPECTION, REPAIR, AND MAINTENANCE.] Code of Federal Regulations, title 49, part 396, is incorporated by reference, except that sections 396.1, 396.9, and; 396.11, paragraph (d); 396.17 to; 396.19; 396.21; and 396.23 of that part are not incorporated.

Sec. 12. Minnesota Statutes 1996, section 221.0314, subdivision 11, is amended to read:

Subd. 11. [TRANSPORTING HAZARDOUS MATERIALS; DRIVING AND PARKING.] A person who transports hazardous materials shall comply with this section and rules adopted under section 221.031 when that person is transporting a hazardous material, hazardous waste, or hazardous substance in a vehicle that must be marked or placarded in accordance with Code of Federal Regulations, title 49, section 172.504, incorporated by reference in section 221.033. Code of Federal Regulations, title 49, part 397, is incorporated by reference, except that sections 397.1 to 397.3 of that part are not incorporated. A petroleum transport driver shall not park on a public street adjacent to a bridge, tunnel, dwelling, building, or place where persons work, congregate, or assemble, except when necessary to unload.

Sec. 13. Minnesota Statutes 1996, section 221.0355, subdivision 5, is amended to read:

Subd. 5. [HAZARDOUS WASTE TRANSPORTERS.] (a) A carrier with its principal place of business in Minnesota or who designates Minnesota as its base state shall file a disclosure statement with and obtain a permit from the commissioner that specifically authorizes the transportation of hazardous waste before transporting a hazardous waste in Minnesota. A carrier that designates another participating state as its base state shall file a disclosure statement with and obtain a permit from that state that specifically authorizes the transportation of hazardous waste before transporting a hazardous waste in Minnesota. A registration is valid for one year from the date a notice of registration form is issued and a permit is valid for three years from the date issued or until a carrier fails to renew its registration, whichever occurs first.

(b) A disclosure statement must include the information contained in part III of the uniform application. A person who has direct management responsibility for a carrier's hazardous waste transportation operations shall submit a full set of the person's fingerprints, with the carrier's disclosure statement, for identification purposes and to enable the commissioner to determine whether the person has a criminal record. The commissioner shall send the person's fingerprints to the Federal Bureau of Investigation and shall request the bureau to conduct a check of the person's criminal record. The commissioner shall not issue a notice of registration or permit to a hazardous waste transporter who has not made a full and accurate disclosure of the required information or paid the fees required by this subdivision. Making a materially false or misleading statement in a disclosure statement is prohibited.

(c) The commissioner shall assess a carrier the actual costs incurred by the commissioner for conducting the uniform program's required investigation of the information contained in a disclosure statement.

(d) A permit under this subdivision becomes a license under section 221.035, subdivision 1, on August 1, 1997 1998, and is subject to the provisions of section 221.035 until it expires.

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Sec. 14. Minnesota Statutes 1996, section 221.0355, subdivision 15, is amended to read:

Subd. 15. [HAZARDOUS WASTE LICENSES.] (a) From October 1, 1994, until August 1, 1997 1998, the commissioner shall not register hazardous material transporters under section 221.0335 or license hazardous waste transporters under section 221.035. A person who is licensed under section 221.035 need not obtain a permit under subdivision 4 or 5 for the transportation of hazardous waste in Minnesota, until the person's license has expired. A carrier wishing to transport hazardous waste in another participating state shall obtain a permit under the uniform program authorizing the transportation.

(b) The commissioner may refund fees paid under section 221.035, minus a proportional amount calculated on a monthly basis for each month that a hazardous waste transporter license was valid, to a person who was issued a hazardous waste transporter license after May 5, 1994, who applied for a permit authorizing the transportation of hazardous waste under subdivisions 4 and 5 before October 1, 1994, and who was subsequently issued that permit under the uniform program.

Sec. 15. [221.173] [ELECTRONIC SIGNATURES.]

(a) The commissioner may accept in lieu of a required document completed on paper, an electronically transmitted document authenticated by an electronic signature.

(b) The commissioner shall consult with the commissioner of administration, who shall provide advice and assistance in establishing criteria and standards for authentication of electronic signatures and establishing to a reasonable certainty the validity, security, and linkage of a specific, unaltered, electronically transmitted document, its unforged signature, and its authorized signer.

(c) The commissioner may determine the technology or system to be used, which may include a private key/public key system, an encrypted or cryptology-based system, a pen-based, on-screen signature system that captures and verifies an autograph and links it to a specific document, or other system or technology or combination of systems.

(d) To the extent consistent with this section, laws and rules pertaining to paper-based documents also pertain to electronically transmitted documents.

Sec. 16. Minnesota Statutes 1996, section 221.221, subdivision 2, is amended to read:

Subd. 2. [POLICE OFFICER ENFORCEMENT POWERS.] Transportation representatives program specialists and hazardous material program specialists of the department, for the purpose of enforcing the provisions of this chapter, sections 169.781 to 169.783 relating to commercial vehicle inspections, and section 296.17, subdivisions 10 and 17, relating to motor carrier licenses and trip permits, and the applicable rules, orders, or directives of the commissioner, the commissioner of revenue, and the board issued under this chapter and chapter 296, but for no other purpose, have the powers conferred by law upon police officers. The powers include the authority to conduct inspections at designated highway weigh stations or under other appropriate circumstances.

Sec. 17. Minnesota Statutes 1996, section 221.221, subdivision 4, is amended to read:

Subd. 4. [INSPECTION OF DOCUMENTS.] Records, log books, certificates, licenses, shipping documents, or other papers or documents required to be maintained in the carrier's files or in vehicles subject to determine compliance with this chapter and rules adopted under this chapter, must be presented for inspection, upon request, to a peace officer or police officer or other person empowered to enforce the provisions of this chapter.

Sec. 18. [221.86] [PARTIAL IMMUNITY FOR MOTOR CARRIER EMPLOYERS.]

A motor carrier employer that discloses information in good faith about a present or former employee in response to a request pursuant to Code of Federal Regulations, title 49, section 382.413, is immune from civil liability, except in cases of knowing disclosure of false information or negligence, for the disclosure and the consequences proximately caused by the disclosure, provided that:

(1) the employer has and observes a written testing policy and procedure which complies with federal and state laws;

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(2) the employer uses a certified laboratory and lawful test procedures;

(3) the employer sends the information to the prospective employer who has requested the information, on a request and authorization form signed by the employee; and

(4) the employer sends only information on the employee for whom the information was requested, that:

(i) shows whether or not, during the preceding two years, the employee tested 0.04 or greater alcohol concentration, tested positive on a verified test for the presence of controlled substances, or refused to be tested for alcohol or controlled substances;

(ii) states the dates of any tests listed in item (i); and

(iii) includes any and all information on confirmatory tests requested by the employee.

Sec. 19. Minnesota Statutes 1996, section 296.17, subdivision 18, is amended to read:

Subd. 18. [COOPERATIVE AUDITS.] The commissioner may make arrangements with the commissioner of transportation and may enter into agreements with the appropriate authorities of other states having statutes similar to this act for the cooperative audit of motor carriers' reports and returns. In performing any such audit, or part thereof, the officers and employees of the department of transportation and the other state or states shall be deemed authorized agents of this state for such purpose, and such audits, or parts thereof, shall have the same effect as similar audits, or parts thereof, when made by the commissioner.

Sec. 20. Minnesota Statutes 1996, section 296.171, subdivision 4, is amended to read:

Subd. 4. [EXCHANGES OF INFORMATION.] The commissioner of public safety may make arrangements or agreements with the commissioner of transportation and other states to exchange information for audit and enforcement activities in connection with fuel tax licensing. The filing of fuel tax returns under this section is subject to the rights, terms, and conditions granted or contained in the applicable agreement or arrangement made by the commissioner under the authority of this section.

Sec. 21. Minnesota Statutes 1996, section 299D.06, is amended to read:

299D.06 [INSPECTIONS; WEIGHING.]

(a) Department personnel must be classified employees assigned to the division of state patrol if they are employed to enforce the:

(1) laws relating to motor vehicle equipment,; school bus equipment,; drivers license, drivers' licenses; motor vehicle registration,; motor vehicle size and weight,; motor carrier insurance, registration, and safety; and motor vehicle petroleum tax, to enforce public utilities commission rules relating to motor carriers, to enforce taxes;

(2) pollution control agency rules relating to motor vehicle noise abatement,; and to enforce

(3) laws relating to directing the movement of vehicles shall be classified employees of the commissioner of public safety assigned to the division of state patrol.

(b) Employees engaged in these duties, while actually on the job during their working hours only, shall have power to:

(1) issue citations in lieu of arrest and continued detention; and to

(2) prepare notices to appear in court for violation of these laws and rules, in the manner provided in section 169.91, subdivision 3.

They shall not be armed and, except as provided in this section, shall have none of the other powers and privileges reserved to peace officers including the power to enforce traffic laws and regulations.

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Sec. 22. Laws 1994, chapter 589, section 8, as amended by Laws 1996, chapter 455, article 3, section 33, is amended to read:

Sec. 8. [REPEALER.]

Minnesota Statutes 1992, section 221.033, subdivision 4, is repealed. Section 5 is repealed effective August 1, 1997 1998.

Sec. 23. [HAZARDOUS WASTE TRANSPORTER LICENSING.]

Unless, before Congress adjourns in 1997, Congress specifically reauthorizes the uniform hazardous materials permit program created in the Hazardous Materials Transportation Uniform Safety Act of 1990, United States Code, title 49 appendix, sections 18-19, subsection (c), the commissioner shall stop registering and permitting hazardous material and hazardous waste transporters on the date Congress adjourns in 1997, and shall revert to licensing hazardous waste transporters under Minnesota Statutes, section 221.0335. A permit under Minnesota Statutes, section 221.0355, becomes a hazardous waste transporter license under Minnesota Statutes, section 221.0335."

Delete the title and insert:

"A bill for an act relating to motor carriers; allowing personnel of departments of transportation and public safety to conduct joint or combined audits of motor carrier records; requiring commissioner of public safety to provide commissioner of transportation information on traffic accidents involving commercial motor vehicles; providing for enforcement authority of personnel of departments of transportation and public safety relating to motor carriers; modifying requirements to obtain restricted driver's license for farm work; conforming state statutes to federal motor carrier safety regulations; providing for the reauthorization of the uniform hazardous materials registration and permit program for an additional year; authorizing commissioner of transportation to accept electronic signatures for electronically transmitted motor carrier documents; providing immunity from civil liability for certain disclosures by motor carrier employers; providing for hazardous waste transporter licensing under state law; amending Minnesota Statutes 1996, sections 168.187, subdivision 20; 169.09, subdivision 13; 169.85; 169.871, subdivisions 1 and 1a; 171.041, as amended; 221.0314, subdivisions 1, 2, 6, 7, 9, 10, and 11; 221.0355, subdivisions 5 and 15; 221.221, subdivisions 2 and 4; 296.17, subdivision 18; 296.171, subdivision 4; and 299D.06; Laws 1994, chapter 589, section 8, as amended; proposing coding for new law in Minnesota Statutes, chapter 221."

We request adoption of this report and repassage of the bill.

House Conferees: Joe Mullery, Jean Wagenius and Jim Rhodes.

Senate Conferees: Dallas C. Sams, Janet B. Johnson and Dick Day.

Mullery moved that the report of the Conference Committee on H. F. No. 241 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 241, A bill for an act relating to motor carriers; allowing personnel of departments of transportation and public safety to conduct joint or combined audits of motor carrier records; requiring commissioner of public safety to provide commissioner of transportation information on traffic accidents involving commercial motor vehicles; providing for enforcement authority of personnel of departments of transportation and public safety relating to motor carriers; conforming state statutes to federal motor carrier safety regulations; providing for the reauthorization of the uniform hazardous materials registration and permit program for an additional year; authorizing commissioner of transportation to accept electronic signatures for electronically transmitted motor carrier documents; amending Minnesota Statutes 1996, sections 168.187, subdivision 20; 169.09, subdivision 13; 169.85; 169.871, subdivisions 1 and 1a; 221.0314, subdivisions 2, 6, 7, 9, 10, and 11; 221.0355, subdivisions 5 and 15; 221.221, subdivisions 2 and 4; 296.17, subdivision 18; 296.171, subdivision 4; and 299D.06; Laws 1994, chapter 589, section 8, as amended; proposing coding for new law in Minnesota Statutes, chapter 221.

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.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 133 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Tingelstad
Anderson, B. Farrell Kelso McCollum Peterson Tomassoni
Anderson, I. Finseth Kielkucki McElroy Pugh Tompkins
Bakk Folliard Kinkel McGuire Rest Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Otremba Stang
Dempsey Johnson, A. Macklin Ozment Sviggum
Dorn Johnson, R. Mahon Paulsen Swenson, D.
Entenza Juhnke Mares Pawlenty Swenson, H.
Erhardt Kahn Mariani Paymar Sykora

The bill was repassed, as amended by Conference, and its title agreed to.

CONFERENCE COMMITTEE REPORT ON H. F. NO. 1460

A bill for an act relating to government data practices; making certain welfare and housing data available to law enforcement agencies; requiring certain criminal conviction data to be available through the Internet; eliminating the requirement that government agencies pay a fee for commissioner's opinions; modifying school immunization and health record provisions; modifying patient consent to release of records for research; authorizing destruction of records of deceased patients; allowing certain voters to prevent public dissemination of their residence addresses; requiring notice of investigations to health board licensees; providing for retention of juvenile history records; providing for misdemeanor offense reports and access to certain adult criminal history data; providing for disclosure or inspection of certain tax data or return information; limiting disclosure of certain tax data under subpoena; providing criminal penalties; amending Minnesota Statutes 1996, sections 13.41, by adding a subdivision; 13.46, subdivision 2; 13.54, by adding a subdivision; 13.65, subdivision 2; 13.87, subdivision 2; 13.99, subdivision 53b, and by adding subdivisions; 123.70, subdivisions 5, 7, and 10; 144.29; 144.335, subdivision 3a, and by adding a subdivision; 201.091, subdivision 4; 214.10, subdivision 1; 260.161, subdivision 1a; 270.66, subdivision 3; 270B.01, subdivision 8; 270B.03, subdivisions 1, 3, and 4; 270B.08, subdivision 1; 270B.085, subdivision 1; 270B.09; 270B.12, subdivision 7; 270B.14, subdivision 1, and by adding subdivisions; 270B.16; 287.34; 299C.095; 299C.10, subdivision 1; and 299C.13; proposing coding for new law in Minnesota Statutes, chapters 214; and 270B; repealing Minnesota Statutes 1996, sections 13.072, subdivision 3; 13.71, subdivisions 18, 19, 20, and 21; and 13.99, subdivision 21d.

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May 16, 1997

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. 1460, 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. 1460 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 13.32, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] As used in this section:

(a) "Educational data" means data on individuals maintained by a public educational agency or institution or by a person acting for the agency or institution which relates to a student.

Records of instructional personnel which are in the sole possession of the maker thereof and are not accessible or revealed to any other individual except a substitute teacher, and are destroyed at the end of the school year, shall not be deemed to be government data.

Records of a law enforcement unit of a public educational agency or institution which are maintained apart from education data and are maintained solely for law enforcement purposes, and are not disclosed to individuals other than law enforcement officials of the jurisdiction are not educational data; provided, that education records maintained by the educational agency or institution are not disclosed to the personnel of the law enforcement unit. The University of Minnesota police department is a law enforcement agency for purposes of section 13.82 and other sections of Minnesota Statutes dealing with law enforcement records. Records of organizations providing security services to a public educational agency or institution must be administered consistent with section 13.861.

Records relating to a student who is employed by a public educational agency or institution which are made and maintained in the normal course of business, relate exclusively to the individual in that individual's capacity as an employee, and are not available for use for any other purpose are classified pursuant to section 13.43.

(b) "Juvenile justice system" includes criminal justice agencies and the judiciary when involved in juvenile justice activities.

(c) "Student" means an individual currently or formerly enrolled or registered, applicants for enrollment or registration at a public educational agency or institution, or individuals who receive shared time educational services from a public agency or institution.

(c) (d) "Substitute teacher" means an individual who performs on a temporary basis the duties of the individual who made the record, but does not include an individual who permanently succeeds to the position of the maker of the record.

Sec. 2. Minnesota Statutes 1996, section 13.32, subdivision 3, is amended to read:

Subd. 3. [PRIVATE DATA; WHEN DISCLOSURE IS PERMITTED.] Except as provided in subdivision 5, educational data is private data on individuals and shall not be disclosed except as follows:

(a) Pursuant to section 13.05;

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(b) Pursuant to a valid court order;

(c) Pursuant to a statute specifically authorizing access to the private data;

(d) To disclose information in health and safety emergencies pursuant to the provisions of United States Code, title 20, section 1232g(b)(1)(I) and Code of Federal Regulations, title 34, section 99.36 which are in effect on July 1, 1993;

(e) Pursuant to the provisions of United States Code, title 20, sections 1232g(b)(1), (b)(4)(A), (b)(4)(B), (b)(1)(B), (b)(3) and Code of Federal Regulations, title 34, sections 99.31, 99.32, 99.33, 99.34, and 99.35 which are in effect on July 1, 1993;

(f) To appropriate health authorities to the extent necessary to administer immunization programs and for bona fide epidemiologic investigations which the commissioner of health determines are necessary to prevent disease or disability to individuals in the public educational agency or institution in which the investigation is being conducted;

(g) When disclosure is required for institutions that participate in a program under title IV of the Higher Education Act, United States Code, title 20, chapter 1092, in effect on July 1, 1993;

(h) To the appropriate school district officials to the extent necessary under subdivision 6, annually to indicate the extent and content of remedial instruction, including the results of assessment testing and academic performance at a post-secondary institution during the previous academic year by a student who graduated from a Minnesota school district within two years before receiving the remedial instruction; or

(i) To appropriate authorities as provided in United States Code, title 20, section 1232g(b)(1)(E)(ii), if the data concern the juvenile justice system and the ability of the system to effectively serve, prior to adjudication, the student whose records are released; provided that the authorities to whom the data are released submit a written request for the data that certifies that the data will not be disclosed to any other person except as authorized by law without the written consent of the parent of the student and the request and a record of the release are maintained in the student's file; or

(i) (j) To volunteers who are determined to have a legitimate educational interest in the data and who are conducting activities and events sponsored by or endorsed by the educational agency or institution for students or former students.

Sec. 3. Minnesota Statutes 1996, section 13.32, is amended by adding a subdivision to read:

Subd. 8. [ACCESS BY JUVENILE JUSTICE SYSTEM.] Upon request, the following education data shall be disclosed under subdivision 3, clause (i), to the juvenile justice system: a student's full name, home address, telephone number, date of birth; a student's school schedule, attendance record, and photographs, if any; and parents' names, home addresses, and telephone numbers.

Sec. 4. Minnesota Statutes 1996, section 13.41, subdivision 2, is amended to read:

Subd. 2. [PRIVATE DATA; DESIGNATED ADDRESSES AND TELEPHONE NUMBERS.] (a) The following data collected, created or maintained by any licensing agency are classified as private, pursuant to section 13.02, subdivision 12: data, other than their names and designated addresses, submitted by applicants for licenses; the identity of complainants who have made reports concerning licensees or applicants which appear in inactive complaint data unless the complainant consents to the disclosure; the nature or content of unsubstantiated complaints when the information is not maintained in anticipation of legal action; the identity of patients whose medical records are received by any health licensing agency for purposes of review or in anticipation of a contested matter; inactive investigative data relating to violations of statutes or rules; and the record of any disciplinary proceeding except as limited by subdivision 4.

(b) An applicant for a license shall designate on the application a residence or business address and telephone number at which the applicant can be contacted in connection with the license application. A licensee who is subject to a health-related licensing board, as defined in section 214.01, subdivision 2, shall designate a residence or business address and telephone number at which the licensee can be contacted in connection with the license.

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Sec. 5. Minnesota Statutes 1996, section 13.46, subdivision 2, is amended to read:

Subd. 2. [GENERAL.] (a) Unless the data is summary data or a statute specifically provides a different classification, data on individuals collected, maintained, used, or disseminated by the welfare system is private data on individuals, and shall not be disclosed except:

(1) pursuant to section 13.05;

(2) pursuant to court order;

(3) pursuant to a statute specifically authorizing access to the private data;

(4) to an agent of the welfare system, including a law enforcement person, attorney, or investigator acting for it in the investigation or prosecution of a criminal or civil proceeding relating to the administration of a program;

(5) to personnel of the welfare system who require the data to determine eligibility, amount of assistance, and the need to provide services of additional programs to the individual;

(6) to administer federal funds or programs;

(7) between personnel of the welfare system working in the same program;

(8) the amounts of cash public assistance and relief paid to welfare recipients in this state, including their names, social security numbers, income, addresses, and other data as required, upon request by the department of revenue to administer the property tax refund law, supplemental housing allowance, early refund of refundable tax credits, and the income tax. "Refundable tax credits" means the dependent care credit under section 290.067, the Minnesota working family credit under section 290.0671, the property tax refund under section 290A.04, and, if the required federal waiver or waivers are granted, the federal earned income tax credit under section 32 of the Internal Revenue Code;

(9) to the Minnesota department of economic security for the purpose of monitoring the eligibility of the data subject for reemployment insurance, for any employment or training program administered, supervised, or certified by that agency, or for the purpose of administering any rehabilitation program, whether alone or in conjunction with the welfare system, and to verify receipt of energy assistance for the telephone assistance plan;

(10) to appropriate parties in connection with an emergency if knowledge of the information is necessary to protect the health or safety of the individual or other individuals or persons;

(11) data maintained by residential programs as defined in section 245A.02 may be disclosed to the protection and advocacy system established in this state pursuant to Part C of Public Law Number 98-527 to protect the legal and human rights of persons with mental retardation or other related conditions who live in residential facilities for these persons if the protection and advocacy system receives a complaint by or on behalf of that person and the person does not have a legal guardian or the state or a designee of the state is the legal guardian of the person;

(12) to the county medical examiner or the county coroner for identifying or locating relatives or friends of a deceased person;

(13) data on a child support obligor who makes payments to the public agency may be disclosed to the higher education services office to the extent necessary to determine eligibility under section 136A.121, subdivision 2, clause (5);

(14) participant social security numbers and names collected by the telephone assistance program may be disclosed to the department of revenue to conduct an electronic data match with the property tax refund database to determine eligibility under section 237.70, subdivision 4a;

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(15) the current address of a recipient of aid to families with dependent children may be disclosed to law enforcement officers who provide the name and social security number of the recipient and satisfactorily demonstrate notify the agency that:

(i) the recipient is:

(A) is a fugitive felon, including the grounds for this determination; fleeing to avoid prosecution, or custody or confinement after conviction, for a crime or attempt to commit a crime that is a felony under the laws of the jurisdiction from which the individual is fleeing; or

(B) is violating a condition of probation or parole imposed under state or federal law.

(ii) the location or apprehension of the felon is within the law enforcement officer's official duties; and

(iii) the request is made in writing and in the proper exercise of those duties;

(16) the current address of a recipient of general assistance, work readiness, or general assistance medical care may be disclosed to probation officers and corrections agents who are supervising the recipient, and to law enforcement officers who are investigating the recipient in connection with a felony level offense;

(17) information obtained from food stamp applicant or recipient households may be disclosed to local, state, or federal law enforcement officials, upon their written request, for the purpose of investigating an alleged violation of the food stamp act, in accordance with Code of Federal Regulations, title 7, section 272.1(c);

(18) the address, social security number, and, if available, photograph of any member of a household receiving food stamps shall be made available, on request, to a local, state, or federal law enforcement officer if the officer furnishes the agency with the name of the member and notifies the agency that:

(i) the member:

(A) is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime or attempt to commit a crime that is a felony in the jurisdiction the member is fleeing;

(B) is violating a condition of probation or parole imposed under state or federal law; or

(C) has information that is necessary for the officer to conduct an official duty related to conduct described in subclause (A) or (B);

(ii) locating or apprehending the member is within the officer's official duties; and

(iii) the request is made in writing and in the proper exercise of the officer's official duty;

(19) data on a child support obligor who is in arrears may be disclosed for purposes of publishing the data pursuant to section 518.575;

(19) (20) data on child support payments made by a child support obligor may be disclosed to the obligee;

(20) (21) data in the work reporting system may be disclosed under section 256.998, subdivision 7;

(21) (22) to the department of children, families, and learning for the purpose of matching department of children, families, and learning student data with public assistance data to determine students eligible for free and reduced price meals, meal supplements, and free milk pursuant to United States Code, title 42, sections 1758, 1761, 1766, 1766a, 1772, and 1773; to produce accurate numbers of students receiving aid to families with dependent children as required by section 124.175; and to allocate federal and state funds that are distributed based on income of the student's family; or

(22) (23) the current address and telephone number of program recipients and emergency contacts may be released to the commissioner of health or a local board of health as defined in section 145A.02, subdivision 2, when the commissioner or local board of health has reason to believe that a program recipient is a disease case, carrier, suspect case, or at risk of illness, and the data are necessary to locate the person.

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(b) Information on persons who have been treated for drug or alcohol abuse may only be disclosed in accordance with the requirements of Code of Federal Regulations, title 42, sections 2.1 to 2.67.

(c) Data provided to law enforcement agencies under paragraph (a), clause (15), (16), or (17), or (18), or paragraph (b), are investigative data and are confidential or protected nonpublic while the investigation is active. The data are private after the investigation becomes inactive under section 13.82, subdivision 5, paragraph (a) or (b).

(d) Mental health data shall be treated as provided in subdivisions 7, 8, and 9, but is not subject to the access provisions of subdivision 10, paragraph (b).

Sec. 6. Minnesota Statutes 1996, section 13.54, is amended by adding a subdivision to read:

Subd. 6. [LAW ENFORCEMENT ACCESS TO CERTAIN DATA.] A public housing agency that enters a contract for assistance under United States Code, title 42, sections 1437 to 1440, shall furnish a local, state, or federal law enforcement officer, upon the officer's request, with the current address, social security number, and photograph, if available, of a recipient of assistance under United States Code, title 42, sections 1437 to 1440, if the officer:

(1) provides the name of the recipient to the housing agency; and

(2) notifies the agency that:

(i) the recipient:

(A) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the jurisdiction from which the individual is fleeing, for a crime which is a felony under the laws of that jurisdiction;

(B) is violating a condition of probation or parole imposed under state or federal law; or

(C) has information necessary for the officer to conduct the officer's official duties;

(ii) the location or apprehension of the individual is within the officer's official duties; and

(iii) the request is made in writing and in the proper exercise of the officer's official duties.

Sec. 7. [13.541] [EMERGENCY SERVICES FOR HOMELESS PERSONS; PRIVATE DATA.]

(a) "Grant recipient" includes a local government unit or nonprofit organization that receives grants from a state agency to provide emergency services for homeless persons.

(b) Data on individuals maintained by a grant recipient from which the identity of any individual receiving emergency services may be determined are private data on individuals and the grant recipient shall maintain the data in accordance with this chapter.

Sec. 8. Minnesota Statutes 1996, section 13.65, subdivision 2, is amended to read:

Subd. 2. [CONFIDENTIAL DATA; PROTECTED NONPUBLIC DATA.] The following data created, collected and maintained by the office of the attorney general are classified as confidential, pursuant to section 13.02, subdivision 3, or as protected nonpublic, pursuant to section 13.02, subdivision 13:

(1) data acquired through communications made in official confidence to members of the attorney general's staff where the public interest would suffer by disclosure of the data; and

(2) legislative and budget proposals, including preliminary drafts. After the budget is presented to the legislature, supporting data are public data. Supporting data do not include preliminary drafts. Legislative and budget proposals may be disclosed to the public if disclosure would aid in the consideration and preparation of the proposals.

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Sec. 9. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 6e. [AGRICULTURAL COMMODITIES PROMOTION COUNCIL.] Financial information on producers of agricultural commodities that is provided to the agricultural commodities promotion council is governed by section 17.62.

Sec. 10. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 13a. [LICENSED CURRENCY EXCHANGES.] Financial information in annual reports submitted to the commissioner of commerce by currency exchanges is classified in section 53A.081, subdivision 4.

Sec. 11. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 14b. [MATERIAL TRANSACTION REPORTS.] Reports required to be filed by insurers regarding certain material transactions are classified under section 60A.135, subdivision 4.

Sec. 12. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 14c. [RISK-BASED CAPITAL DATA.] Risk-based capital reports and related reports, data, and orders maintained by the commissioner of commerce are classified under section 60A.67.

Sec. 13. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 15a. [VIATICAL SETTLEMENTS DATA.] Viatical settlements data provided to the commissioner of commerce are classified under section 60A.968, subdivision 2.

Sec. 14. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 19k. [PREFERRED PROVIDER AGREEMENTS.] The terms and conditions of certain preferred provider agreements are classified in section 62E.13, subdivision 11.

Sec. 15. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 19l. [MINNESOTA RISK ADJUSTMENT ASSOCIATION.] Data privacy issues concerning the Minnesota risk adjustment association are governed by section 62Q.03, subdivision 9.

Sec. 16. Minnesota Statutes 1996, section 13.99, subdivision 53b, is amended to read:

Subd. 53b. [VETERINARY RECORDS.] Veterinary records on clients when a veterinarian is under investigation are classified under section 156.082. Records on the veterinarian are classified under section 156.125.

Sec. 17. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 59b. [IDENTITY OF EMPLOYEES MAKING COMPLAINTS.] The disclosure of the identity of employees making certain complaints is governed by section 181.932, subdivision 2.

Sec. 18. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 63a. [REGISTERED VOTER LISTS.] Access to registered voter lists is governed by section 201.091.

Sec. 19. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 95a. [MEDICAL EXAMINER INVESTIGATIONS.] Certain data on deceased persons collected or created by the Hennepin county medical examiner are classified under section 383B.225.

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Sec. 20. Minnesota Statutes 1996, section 53A.081, is amended by adding a subdivision to read:

Subd. 4. [CLASSIFICATION OF DATA.] Financial information on individuals and businesses that is submitted to the commissioner in the annual report under subdivision 1 are private data on individuals or nonpublic data.

Sec. 21. Minnesota Statutes 1996, section 123.70, subdivision 5, is amended to read:

Subd. 5. If a person transfers from one elementary or secondary school to another, the person shall be allowed school board of a public school district or the administrator of a nonpublic school may allow the person up to a maximum of 30 days to submit one or more of the statements as specified in subdivision 1 or 3, during which time the person may enroll in and attend the school. If a person enrolls in a child care facility in which at least 75 percent of children in the facility participate on a one-time only or occasional basis to a maximum of 45 hours per child, per month, or is placed in a facility by a crisis nursery, the person shall be exempt from all requirements of this section for up to five consecutive days, starting from the first day of attendance.

Sec. 22. Minnesota Statutes 1996, section 123.70, subdivision 7, is amended to read:

Subd. 7. Each school or child care facility shall maintain on file immunization records for all persons in attendance that contain the information required by subdivisions 1, 2, and 3. The school shall maintain the records for at least five years after the person attains the age of majority. The department of health and the board of health, as defined in section 145A.02, subdivision 2, in whose jurisdiction the school or child care facility is located, shall have access to the files maintained pursuant to this subdivision. When a person transfers to another elementary or secondary school or child care facility, the administrator or other person having general control and supervision of the school or child care facility shall assist the person's parent or guardian in the transfer of the immunization file to the person's new school or child care facility within 30 days of the transfer. Upon the request of a public or private post-secondary educational institution, as defined in section 135A.14, the administrator or other person having general control or supervision of a school shall assist in the transfer of a student's immunization file to the post-secondary institution.

Sec. 23. Minnesota Statutes 1996, section 123.70, subdivision 10, 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, 8, 9, and 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, 8, 9, 10, and 12 during the 1999-2000 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.

(e) for persons enrolled in grades 7 through 12 during the 2000-2001 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.

(f) (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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Sec. 24. Minnesota Statutes 1996, section 144.29, is amended to read:

144.29 [HEALTH RECORDS; CHILDREN OF SCHOOL AGE.]

It shall be the duty of every school nurse, school physician, school attendance officer, superintendent of schools, principal, teacher, and of the persons charged with the duty of compiling and keeping the school census records, to cause a permanent public health record to be kept for each child of school age. Such record shall be kept in such form that it may be transferred with the child to any school which the child shall attend within the state and transferred to the commissioner when the child ceases to attend school. It shall contain a record of such health matters as shall be prescribed by the commissioner, and of all mental and physical defects and handicaps which might permanently cripple or handicap the child student health data as defined in section 13.32, subdivision 2, paragraph (a), and shall be classified as private data as defined in section 13.32, subdivision 3. Nothing in sections 144.29 to 144.32 shall be construed to require any child whose parent or guardian objects in writing thereto to undergo a physical or medical examination or treatment. A copy shall be forwarded to the proper department of any state to which the child shall remove. Each district shall assign a teacher, school nurse, or other professional person to review, at the beginning of each school year, the health record of all pupils under the assignee's direction. Growth, results of vision and hearing screening, and findings obtained from health assessments must be entered periodically on the pupil's health record.

Sec. 25. Minnesota Statutes 1996, section 144.335, subdivision 3a, is amended to read:

Subd. 3a. [PATIENT CONSENT TO RELEASE OF RECORDS; LIABILITY.] (a) A provider, or a person who receives health records from a provider, may not release a patient's health records to a person without a signed and dated consent from the patient or the patient's legally authorized representative authorizing the release, unless the release is specifically authorized by law. Except as provided in paragraph (c) or (d), a consent is valid for one year or for a lesser period specified in the consent or for a different period provided by law.

(b) This subdivision does not prohibit the release of health records:

(1) for a medical emergency when the provider is unable to obtain the patient's consent due to the patient's condition or the nature of the medical emergency; or

(2) to other providers within related health care entities when necessary for the current treatment of the patient.

(c) Notwithstanding paragraph (a), if a patient explicitly gives informed consent to the release of health records for the purposes and pursuant to the restrictions in clauses (1) and (2), the consent does not expire after one year for:

(1) the release of health records to a provider who is being advised or consulted with in connection with the current treatment of the patient;

(2) the release of health records to an accident and health insurer, health service plan corporation, health maintenance organization, or third-party administrator for purposes of payment of claims, fraud investigation, or quality of care review and studies, provided that:

(i) the use or release of the records complies with sections 72A.49 to 72A.505;

(ii) further use or release of the records in individually identifiable form to a person other than the patient without the patient's consent is prohibited; and

(iii) the recipient establishes adequate safeguards to protect the records from unauthorized disclosure, including a procedure for removal or destruction of information that identifies the patient.

(d) Notwithstanding paragraph (a), health records may be released to a an external researcher solely for purposes of medical or scientific research only as follows:

(1) health records generated before January 1, 1997, may be released if the patient has not objected or does not elect to object after that date;

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(2) for health records generated on or after January 1, 1997, the provider must:

(i) disclose in writing to patients currently being treated by the provider that health records, regardless of when generated, may be released and that the patient may object, in which case the records will not be released; and

(ii) use reasonable efforts to obtain the patient's written general authorization that describes the release of records in item (i), which does not expire but may be revoked or limited in writing at any time by the patient or the patient's authorized representative; and

(3) authorization may be established if an authorization is mailed at least two times to the patient's last known address with a postage prepaid return envelope and a conspicuous notice that the patient's medical records may be released if the patient does not object, and at least 60 days have expired since the second notice was sent; and the provider must advise the patient of the rights specified in clause (4); and

(4) the provider must, at the request of the patient, provide information on how the patient may contact an external researcher to whom the health record was released and the date it was released.

In making a release for research purposes the provider shall make a reasonable effort to determine that:

(i) the use or disclosure does not violate any limitations under which the record was collected;

(ii) the use or disclosure in individually identifiable form is necessary to accomplish the research or statistical purpose for which the use or disclosure is to be made;

(iii) the recipient has established and maintains adequate safeguards to protect the records from unauthorized disclosure, including a procedure for removal or destruction of information that identifies the patient; and

(iv) further use or release of the records in individually identifiable form to a person other than the patient without the patient's consent is prohibited.

(e) A person who negligently or intentionally releases a health record in violation of this subdivision, or who forges a signature on a consent form, or who obtains under false pretenses the consent form or health records of another person, or who, without the person's consent, alters a consent form, is liable to the patient for compensatory damages caused by an unauthorized release, plus costs and reasonable attorney's fees.

(f) Upon the written request of a spouse, parent, child, or sibling of a patient being evaluated for or diagnosed with mental illness, a provider shall inquire of a patient whether the patient wishes to authorize a specific individual to receive information regarding the patient's current and proposed course of treatment. If the patient so authorizes, the provider shall communicate to the designated individual the patient's current and proposed course of treatment. Paragraph (a) applies to consents given under this paragraph.

(g) In cases where a provider releases health records without patient consent as authorized by law, the release must be documented in the patient's health record.

Sec. 26. Minnesota Statutes 1996, section 214.10, subdivision 1, is amended to read:

Subdivision 1. [RECEIPT OF COMPLAINT; NOTICE.] The executive director or executive secretary of a board, a board member or any other person who performs services for the board who receives a complaint or other communication, whether oral or written, which complaint or communication alleges or implies a violation of a statute or rule which the board is empowered to enforce, shall promptly forward the substance of the communication on a form prepared by the attorney general to the designee of the attorney general responsible for providing legal services to the board. Before proceeding further with the communication, the designee of the attorney general may require the complaining party to state the complaint in writing on a form prepared by the attorney general. Complaints which relate to matters within the jurisdiction of another governmental agency shall be forwarded to that agency by the executive director or executive secretary. An officer of that agency shall advise the executive director or executive secretary of the disposition of that complaint. A complaint received

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by another agency which relates to a statute or rule which a licensing board is empowered to enforce shall be forwarded to the executive director or executive secretary of the board to be processed in accordance with this section. No complaint alleging a matter within the jurisdiction of the board shall be dismissed by a board unless at least two board members have reviewed the matter. If a board makes a determination to investigate a complaint, it shall notify a licensee who is the subject of an investigation that an investigation has been initiated at a time when such notice will not compromise the investigation.

Sec. 27. Minnesota Statutes 1996, section 260.161, subdivision 1a, is amended to read:

Subd. 1a. [RECORD OF FINDINGS.] (a) The juvenile court shall forward to the bureau of criminal apprehension the following data in juvenile petitions involving felony- or gross misdemeanor-level offenses:

(1) the name and birthdate of the juvenile, including any of the juvenile's known aliases or street names;

(2) the act for which the juvenile was petitioned and date of the offense; and

(3) the date and county where the petition was filed.

(b) Upon completion of the court proceedings, the court shall forward the court's finding and case disposition to the bureau. Notwithstanding section 138.17, if the petition was dismissed or the juvenile was not found to have committed a gross misdemeanor or felony-level offense, the bureau and a person who received the data from the bureau shall destroy all data relating to the petition collected under paragraph (a). The bureau shall notify a person who received the data that the data must be destroyed.

(c) The bureau shall retain data on a juvenile found to have committed a felony- or gross misdemeanor-level offense until the offender reaches the age of 28. If the offender commits a felony violation as an adult, the bureau shall retain the data for as long as the data would have been retained if the offender had been an adult at the time of the juvenile offense. The court shall specify whether:

(1) the juvenile was referred to a diversion program;

(2) the petition was dismissed, continued for dismissal, or continued without adjudication; or

(3) the juvenile was adjudicated delinquent.

(d) (c) The juvenile court shall forward to the bureau, the sentencing guidelines commission, and the department of corrections the following data on individuals convicted as extended jurisdiction juveniles:

(1) the name and birthdate of the offender, including any of the juvenile's known aliases or street names;

(2) the crime committed by the offender and the date of the crime;

(3) the date and county of the conviction; and

(4) the case disposition.

The court shall notify the bureau, the sentencing guidelines commission, and the department of corrections whenever it executes an extended jurisdiction juvenile's adult sentence under section 260.126, subdivision 5.

(e) (d) The bureau, sentencing guidelines commission, and the department of corrections shall retain the extended jurisdiction juvenile data for as long as the data would have been retained if the offender had been an adult at the time of the offense. Data retained on individuals under this subdivision are private data under section 13.02, except that extended jurisdiction juvenile data becomes public data under section 13.87, subdivision 2, when the juvenile court notifies the bureau that the individual's adult sentence has been executed under section 260.126, subdivision 5.

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Sec. 28. Minnesota Statutes 1996, section 260.161, is amended by adding a subdivision to read:

Subd. 3a. [COUNTY ATTORNEY REFERRAL OF CHILD IN NEED OF PROTECTION OR SERVICES.] In a county in which the county attorney refers children who are in need of protection or services to community programs, the county attorney may provide a community program with data on a child who is a participant or being considered for participation in the program.

Sec. 29. [TAXPAYER'S PERSONAL INFORMATION; DISCLOSURE.]

(a) An owner of property in Washington or Ramsey county that is subject to property taxation must be informed in a clear and conspicuous manner in writing on a form sent to property taxpayers that the property owner's name, address, and other information may be used, rented, or sold for business purposes, including surveys, marketing, and solicitation.

(b) If the property owner so requests on the form provided, then any such list generated by the county and sold for business purposes must exclude the owner's name and address if the business purpose is conducting surveys, marketing, or solicitation.

(c) This section expires August 1, 1999.

Sec. 30. [LOCAL APPROVAL REQUIRED.]

Section 29 is effective in Washington or Ramsey county the day after the chief clerical officer of the affected county complies with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 31. [SCHOOL-BASED PROBATION PILOT PROJECT DATA.]

This section applies until December 31, 1999, to government data in a school-based probation pilot project established by the commissioner of corrections in Dakota or Anoka county. Data created, collected, used, or maintained by school-based probation officers and school officials participating in a pilot project are private data on individuals as defined in Minnesota Statutes, section 13.02, subdivision 12, and may be disseminated among personnel working with a school-based probation project and as follows:

(1) pursuant to Minnesota Statutes, section 13.05;

(2) pursuant to a valid court order;

(3) pursuant to a statute specifically authorizing access to the private data;

(4) as allowed in Code of Federal Regulations, title 34, part 99; or

(5) within the participating school district or educational entity as necessary to protect persons or property or to address the educational and other needs of students.

Sec. 32. Minnesota Statutes 1996, section 270.66, subdivision 3, is amended to read:

Subd. 3. [AGENCIES SHALL MAINTAIN RECORDS.] Notwithstanding any provision to the contrary, every person, organization, or corporation doing business (hereafter called vendor) with the state of Minnesota or any of its departments, agencies, or educational institutions including the University of Minnesota (all hereafter called agency) shall provide that agency with either their social security number, federal taxpayer identification number, or Minnesota tax identification number. The commissioner may verify to the agency the identifying information provided by a vendor. The agency shall maintain records of this information, and shall make these records available, on request, to the commissioner for the sole purpose of identifying people who have not filed state tax returns or who have not paid uncontested state tax liabilities (hereafter called delinquent taxpayer). When an agency is notified by the commissioner that a vendor is a delinquent taxpayer, payments shall not be made by the agency to the vendor until the commissioner notifies the agency that the vendor no longer is a delinquent taxpayer. Furthermore, if the vendor has an uncontested delinquent tax liability, the setoff provided in subdivision 1 may be implemented. The commissioner shall determine that a vendor no longer is a delinquent taxpayer when the vendor has filed all delinquent state tax returns, paid all uncontested state tax liabilities or entered into an agreement with the commissioner which provides for the payment of these liabilities.

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Sec. 33. Minnesota Statutes 1996, section 270B.01, subdivision 8, is amended to read:

Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this chapter only, "Minnesota tax laws" means the taxes, refunds, and fees administered by or paid to the commissioner under chapters 115B (except taxes imposed under sections 115B.21 to 115B.24), 289A (except taxes imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 291, and 297A and sections 295.50 to 295.59, or any similar Indian tribal tax administered by the commissioner pursuant to any tax agreement between the state and the Indian tribal government, and includes any laws for the assessment, collection, and enforcement of those taxes, refunds, and fees.

Sec. 34. Minnesota Statutes 1996, section 270B.03, subdivision 1, is amended to read:

Subdivision 1. [WHO MAY INSPECT.] Returns and return information must, on written request, be made open to inspection by or disclosure to the data subject. For purposes of this chapter, the following are the data subject:

(1) in the case of an individual return, that individual;

(2) in the case of an income tax return filed jointly, either of the individuals with respect to whom the return is filed;

(3) in the case of a partnership return, any person who was a member of the partnership during any part of the period covered by the return;

(4) in the case of the return of a corporation or its subsidiary:

(i) any person designated by resolution of the board of directors or other similar governing body;

(ii) any officer or employee of the corporation upon written request signed by any officer and attested to by the secretary or another officer;

(iii) any bona fide shareholder of record owning one percent or more of the outstanding stock of the corporation;

(iv) if the corporation is a corporation that has made an election under section 1362 of the Internal Revenue Code of 1986, as amended through December 31, 1988, any person who was a shareholder during any part of the period covered by the return during which an election was in effect; or

(v) if the corporation has been dissolved, any person authorized by state law to act for the corporation or any person who would have been authorized if the corporation had not been dissolved;

(5) in the case of an estate return:

(i) the personal representative or trustee of the estate; and

(ii) any heir at law, next of kin, or beneficiary of the estate, but only if the commissioner finds that the heir at law, next of kin, or beneficiary has a material interest that will be affected by information contained in the return as shown on the federal estate tax return;

(6) in the case of a trust return:

(i) the trustee or trustees, jointly or separately; and

(ii) any beneficiary of the trust, but only if the commissioner finds that the beneficiary has a material interest that will be affected by information contained in the return as shown in the trust instrument;

(7) if liability has been assessed to a transferee under section 289A.31, subdivision 3, the transferee is the data subject with regard to the returns and return information relating to the assessed liability;

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(8) in the case of an Indian tribal government or an Indian tribal government-owned entity,

(i) the chair of the tribal government, or

(ii) any person authorized by the tribal government; and

(9) in the case of a successor as defined in section 270.102, subdivision 1, paragraph (b), the successor is the data subject and information may be disclosed as provided by section 270.102, subdivision 4.

Sec. 35. Minnesota Statutes 1996, section 270B.03, subdivision 3, is amended to read:

Subd. 3. [DECEASED INDIVIDUALS.] Notwithstanding section 13.10, a return filed by or on behalf of a decedent is open to inspection by or disclosure to:

(1) the personal representative of the decedent's estate or trustee appointed under section 573.02, subdivision 3, or a similar law of another state; and

(2) any heir at law, next of kin, or beneficiary under the will of the decedent, or a donee of property, but only if the commissioner finds that the heir at law, next of kin, beneficiary, or donee has a material interest that will be affected by information contained in the return a claimant under section 290A.18, subdivision 1.

Sec. 36. Minnesota Statutes 1996, section 270B.03, subdivision 4, is amended to read:

Subd. 4. [TITLE 11 OF THE UNITED STATES CODE AND RECEIVERSHIP PROCEEDINGS.] (a) If the commissioner finds that the trustee or receiver, in that person's fiduciary capacity, has a material interest that will be affected by information contained in the return, A return is open to inspection by or disclosure to the trustee or receiver if:

(1) there is a trustee in a title 11 (United States Bankruptcy Code) case in which the debtor is the person with respect to whom the return is filed; or

(2) substantially all of the property of the person with respect to whom the return is filed is in the hands of a receiver.

(b) In an involuntary bankruptcy case of an individual, no disclosure may be made under paragraph (a) until the order for relief has been entered by the court having jurisdiction of the case, unless the court finds that disclosure is appropriate for purposes of determining whether an order for relief should be entered.

Sec. 37. Minnesota Statutes 1996, section 270B.08, subdivision 1, is amended to read:

Subdivision 1. [PERMIT INFORMATION.] The commissioner may disclose to any person making an inquiry regarding the issuance of a sales tax permit to a specific retailer whether a permit has been issued to the retailer, the name and address of the permit holder, the business name and location, the sales and use tax account number, and the date of issuance of the permit, and whether the permit has been canceled under section 297A.065.

Sec. 38. [270B.081] [SALES TAX EXEMPTION CERTIFICATES.]

The commissioner may disclose to any person making inquiry regarding the issuance of direct pay permits or certificates of exemption issued by the commissioner to a taxpayer whether the permit or certificate has been issued to the taxpayer, the business name and location, the permit or certificate number, the date of issuance of the permit or certificate, and whether the certificate is currently valid.

Sec. 39. Minnesota Statutes 1996, section 270B.085, subdivision 1, is amended to read:

Subdivision 1. [SEIZURE INFORMATION.] Following the execution of a writ of entry under section 16D.08, subdivision 2, or 270.70, the commissioner may disclose information identifying the individual or business subject to the writ, the basis for the writ, and the results of the execution, including lists of property seized.

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Sec. 40. Minnesota Statutes 1996, section 270B.09, is amended to read:

270B.09 [CONTRACTS WITH THE STATE OR POLITICAL SUBDIVISION; SETOFF.]

The commissioner may disclose to the department of finance or any state agency or political or governmental subdivision of the state making payment to a vendor as described in section 270.66 or a contractor or subcontractor as described in section 290.97 whether the vendor, contractor, or subcontractor has an uncontested delinquent tax liability owed to the commissioner and the amount of any liability. The commissioner may also disclose taxpayer identity information to the department of finance, to the department of human services, to an agency requesting verification pursuant to section 270.66, subdivision 3, and to the University of Minnesota, solely for vendor setoff purposes.

Sec. 41. Minnesota Statutes 1996, section 270B.12, subdivision 7, is amended to read:

Subd. 7. [LOTTERY DIVISION.] (a) The commissioner of revenue may disclose to the lottery the amount of delinquent state taxes, or debt as defined in section 270A.03, subdivision 5, of a winner of a lottery prize of $1,000 $600 or more, to the extent necessary to administer section 349A.08, subdivision 8.

(b) The commissioner of revenue may disclose to the lottery division that a retailer owes $500 or more in delinquent taxes as defined in section 270.72, to the extent necessary to administer section 349A.06, subdivision 2.

Sec. 42. Minnesota Statutes 1996, section 270B.14, subdivision 1, is amended to read:

Subdivision 1. [DISCLOSURE TO COMMISSIONER OF HUMAN SERVICES.] (a) On the request of the commissioner of human services, the commissioner shall disclose return information regarding taxes imposed by chapter 290, and claims for refunds under chapter 290A, to the extent provided in paragraph (b) and for the purposes set forth in paragraph (c).

(b) Data that may be disclosed are limited to data relating to the identity, whereabouts, employment, income, and property of a person owing or alleged to be owing an obligation of child support.

(c) The commissioner of human services may request data only for the purposes of carrying out the child support enforcement program and to assist in the location of parents who have, or appear to have, deserted their children. Data received may be used only as set forth in section 256.978.

(d) The commissioner shall provide the records and information necessary to administer the supplemental housing allowance to the commissioner of human services.

(e) At the request of the commissioner of human services, the commissioner of revenue shall electronically match the social security numbers and names of participants in the telephone assistance plan operated under sections 237.69 to 237.711, with those of property tax refund filers, and determine whether each participant's household income is within the eligibility standards for the telephone assistance plan.

(f) The commissioner may provide records and information collected under sections 295.50 to 295.59 to the commissioner of human services for purposes of the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991, Public Law Number 102-234. Upon the written agreement by the United States Department of Health and Human Services to maintain the confidentiality of the data, the commissioner may provide records and information collected under sections 295.50 to 295.59 to the Health Care Financing Administration section of the United States Department of Health and Human Services for purposes of meeting federal reporting requirements.

(g) The commissioner may provide records and information to the commissioner of human services as necessary to administer the early refund of refundable tax credits.

(h) The commissioner may disclose information to the commissioner of human services necessary to verify income for eligibility and premium payment under the MinnesotaCare program, pursuant to section 256.9355, subdivision 2.

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Sec. 43. Minnesota Statutes 1996, section 270B.14, is amended by adding a subdivision to read:

Subd. 15. [DISCLOSURE TO COMMISSIONER OF THE POLLUTION CONTROL AGENCY.] For purposes of administering and enforcing the dry cleaning and environmental response and reimbursement law of sections 115B.47 to 115B.51, the commissioner may disclose to the commissioner of the pollution control agency the names and addresses of the facilities, owners, and operators collected by the commissioner under section 115B.49, subdivision 4.

Sec. 44. Minnesota Statutes 1996, section 270B.14, is amended by adding a subdivision to read:

Subd. 16. [DISCLOSURE TO LAW ENFORCEMENT AUTHORITIES.] Under circumstances involving threat of death or physical injury to any individual, the commissioner may disclose return information to the extent necessary to apprise appropriate federal, state, or local law enforcement authorities of such circumstances. Data disclosed under this subdivision are classified under section 13.82 once they are received by the law enforcement authority.

Sec. 45. Minnesota Statutes 1996, section 270B.16, is amended to read:

270B.16 [DISCOVERY OF REVENUE DATA.]

Notwithstanding any law to the contrary, data collected by the department of revenue are not subject to discovery or subpoena in a legal action, other than an action or proceeding in connection with tax administration, unless disclosure of the data is authorized under this chapter.

Sec. 46. Minnesota Statutes 1996, section 287.34, is amended to read:

287.34 [VIOLATIONS.]

Any person who in any manner knowingly intentionally attempts to evade the a tax imposed by sections 287.21 to 287.33 this chapter, or who knowingly intentionally aids or abets in the evasion or attempted evasion of the such tax or who knowingly violates the provisions of sections 287.21 to 287.33 shall be guilty of a gross misdemeanor.

Sec. 47. Minnesota Statutes 1996, section 299C.095, is amended to read:

299C.095 [SYSTEM FOR IDENTIFICATION OF JUVENILE OFFENDERS.]

Subdivision 1. [ACCESS.] (a) The bureau shall administer and maintain the computerized juvenile history record system based on section 260.161 and other statutes requiring the reporting of data on juveniles. The data in the system are private data as defined in section 13.02, subdivision 12, but are accessible to criminal justice agencies as defined in section 13.02, subdivision 3a, to all trial courts and appellate courts, to a person who has access to the juvenile court records as provided in section 260.161 or under court rule and to criminal justice agencies in other states in the conduct of their official duties.

(b) Except for access authorized under paragraph (a), the bureau shall only disseminate a juvenile adjudication history record in connection with a background check required by statute or rule and performed on a licensee, license applicant, or employment applicant or performed under section 624.713. A consent for release of information from an individual who is the subject of a juvenile adjudication history is not effective and the bureau shall not release a juvenile adjudication history record and shall not release information in a manner that reveals the existence of the record.

Subd. 2. [RETENTION.] (a) Notwithstanding section 138.17, the bureau shall retain juvenile history records for the time periods provided in this subdivision. Notwithstanding contrary provisions of paragraphs (b) to (e), all data in a juvenile history record must be retained for the longest time period applicable to any item in the individual juvenile history record. If, before data are destroyed under this subdivision, the subject of the data is convicted of a felony as an adult, the individual's juvenile history record must be retained for the same time period as an adult criminal history record.

(b) Juvenile history data on a child who was arrested must be destroyed six months after the arrest if the child has not been referred to a diversion program and no petition has been filed against the child by that time.

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(c) Juvenile history data on a child against whom a delinquency petition was filed and subsequently dismissed must be destroyed upon receiving notice from the court that the petition was dismissed.

(d) Juvenile history data on a child who was referred to a diversion program or against whom a delinquency petition has been filed and continued for dismissal must be destroyed when the child reaches age 21.

(e) Juvenile history data on a child against whom a delinquency petition was filed and continued without adjudication, or a child who was found to have committed a felony or gross misdemeanor-level offense, must be destroyed when the child reaches age 28. If the offender commits a felony violation as an adult, the bureau shall retain the data for as long as the data would have been retained if the offender had been an adult at the time of the juvenile offense.

(f) The bureau shall retain extended jurisdiction juvenile data on an individual received under section 260.161, subdivision 1a, paragraph (c), for as long as the data would have been retained if the offender had been an adult at the time of the offense.

(g) Data retained on individuals under this subdivision are private data under section 13.02, except that extended jurisdiction juvenile data becomes public data under section 13.87, subdivision 2, when the juvenile court notifies the bureau that the individual's adult sentence has been executed under section 260.126, subdivision 5.

(h) A person who receives data on a juvenile under paragraphs (b) to (e) from the bureau shall destroy the data according to the schedule in this subdivision. The bureau shall include a notice of the destruction schedule with all data it disseminates on juveniles.

Sec. 48. Minnesota Statutes 1996, section 299C.10, subdivision 1, is amended to read:

Subdivision 1. [LAW ENFORCEMENT DUTY.] (a) It is hereby made the duty of the sheriffs of the respective counties, of the police officers in cities of the first, second, and third classes, under the direction of the chiefs of police in such cities, and of community corrections agencies operating secure juvenile detention facilities to take or cause to be taken immediately finger and thumb prints, photographs, distinctive physical mark identification data, and such other identification data as may be requested or required by the superintendent of the bureau;, of all the following:

(1) persons arrested for a felony, or gross misdemeanor, of all;

(2) juveniles committing arrested for or alleged to have committed felonies as distinguished from those committed by adult offenders, of all;

(3) persons reasonably believed by the arresting officer to be fugitives from justice, of all;

(4) persons in whose possession, when arrested, are found concealed firearms or other dangerous weapons, burglar tools or outfits, high-power explosives, or articles, machines, or appliances usable for an unlawful purpose and reasonably believed by the arresting officer to be intended for such purposes,; and

(5) juveniles referred by a law enforcement agency to a diversion program for a felony or gross misdemeanor offense.

Within 24 hours thereafter to forward such the fingerprint records and other identification data specified under this paragraph must be forwarded to the bureau of criminal apprehension on such forms and in such manner as may be prescribed by the superintendent of the bureau of criminal apprehension.

(b) Effective August 1, 1997, the identification reporting requirements shall also apply to persons committing arrested for or alleged to have committed targeted misdemeanor offenses, including violent and enhanceable crimes, and juveniles committing arrested for or alleged to have committed gross misdemeanors. In addition, the reporting requirements shall include any known aliases or street names of the offenders.

For purposes of this section, a targeted misdemeanor is a misdemeanor violation of section 169.121 (driving while intoxicated), 518B.01 (order for protection violation), 609.224 (fifth degree assault), 609.2242 (domestic assault), 609.746 (interference with privacy), 609.748 (harassment or restraining order violation), or 617.23 (indecent exposure).

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Sec. 49. Minnesota Statutes 1996, section 299C.13, is amended to read:

299C.13 [INFORMATION FURNISHED TO PEACE OFFICERS.]

Upon receipt of information data as to any arrested person, the bureau shall immediately ascertain whether the person arrested has a criminal record or is a fugitive from justice, and shall at once inform the arresting officer of the facts ascertained, including references to any adult court disposition data that is not in the criminal history system. Upon application by any sheriff, chief of police, or other peace officer in the state, or by an officer of the United States or by an officer of another state, territory, or government duly authorized to receive the same and effecting reciprocal interchange of similar information with the division, it shall be the duty of the bureau to furnish all information in its possession pertaining to the identification of any person. If the bureau has a sealed record on the arrested person, it shall notify the requesting peace officer of that fact and of the right to seek a court order to open the record for purposes of law enforcement. A criminal justice agency shall be notified, upon request, of the existence and contents of a sealed record containing conviction information about an applicant for employment. For purposes of this section a "criminal justice agency" means courts or a government agency that performs the administration of criminal justice under statutory authority.

Sec. 50. Minnesota Statutes 1996, section 626.556, subdivision 11, is amended to read:

Subd. 11. [RECORDS.] (a) Except as provided in paragraph (b) and subdivisions 10b, 10d, 10g, and 11b, all records concerning individuals maintained by a local welfare agency under this section, including any written reports filed under subdivision 7, shall be private data on individuals, except insofar as copies of reports are required by subdivision 7 to be sent to the local police department or the county sheriff. Reports maintained by any police department or the county sheriff shall be private data on individuals except the reports shall be made available to the investigating, petitioning, or prosecuting authority, including county medical examiners or county coroners. Section 13.82, subdivisions 5, 5a, and 5b, apply to law enforcement data other than the reports. The local social services agency shall make available to the investigating, petitioning, or prosecuting authority, including county medical examiners or county coroners or their professional delegates, any records which contain information relating to a specific incident of neglect or abuse which is under investigation, petition, or prosecution and information relating to any prior incidents of neglect or abuse involving any of the same persons. The records shall be collected and maintained in accordance with the provisions of chapter 13. In conducting investigations and assessments pursuant to this section, the notice required by section 13.04, subdivision 2, need not be provided to a minor under the age of ten who is the alleged victim of abuse or neglect. An individual subject of a record shall have access to the record in accordance with those sections, except that the name of the reporter shall be confidential while the report is under assessment or investigation except as otherwise permitted by this subdivision. Any person conducting an investigation or assessment under this section who intentionally discloses the identity of a reporter prior to the completion of the investigation or assessment is guilty of a misdemeanor. After the assessment or investigation is completed, the name of the reporter shall be confidential. The subject of the report may compel disclosure of the name of the reporter only with the consent of the reporter or upon a written finding by the court that the report was false and that there is evidence that the report was made in bad faith. This subdivision does not alter disclosure responsibilities or obligations under the rules of criminal procedure.

(b) Upon request of the legislative auditor, data on individuals maintained under this section must be released to the legislative auditor in order for the auditor to fulfill the auditor's duties under section 3.971. The auditor shall maintain the data in accordance with chapter 13.

Sec. 51. [PUBLIC DEFENDER ACCESS TO CRIMINAL HISTORY DATA.]

The criminal and juvenile justice information policy group shall facilitate remote electronic access to public criminal history data by public defenders.

Sec. 52. [ACCESS TO PUBLIC CONVICTION DATA.]

The bureau of criminal apprehension, in conjunction with the criminal and juvenile justice information policy group, shall report to the chairs of the committees on judiciary in the house of representatives and the senate and the chair of the committee on crime prevention in the senate by January 15, 1998, a plan for making public conviction data available at locations beyond the central office of the bureau of criminal apprehension.

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Sec. 53. [REPEALER.]

Minnesota Statutes 1996, sections 13.072, subdivision 3; 13.71, subdivisions 18, 19, 20, and 21; and 13.99, subdivision 21d, are repealed.

Sec. 54. [EFFECTIVE DATE.]

Sections 32 to 45 are effective the day following final enactment. Section 46 is effective for deeds executed and delivered, and mortgages submitted for recording, on or after July 1, 1997."

Delete the title and insert:

"A bill for an act relating to government data practices; classifying data; making certain welfare and housing data available to law enforcement agencies; classifying data on individuals who receive homeless services; eliminating the requirement that government agencies pay a fee for commissioner's opinions; modifying school immunization and health record provisions; modifying patient consent to release of records for research; authorizing destruction of records of deceased patients; requiring notice of investigations to health board licensees; providing for retention of juvenile history records; providing for juvenile justice system access to certain education data; providing for misdemeanor offense reports and access to certain adult criminal history data; providing for disclosure or inspection of certain tax data or return information; limiting disclosure of certain tax data under subpoena; indexing statutes that restrict data access and are located outside chapter 13; providing criminal penalties; amending Minnesota Statutes 1996, sections 13.32, subdivisions 1, 3, and by adding a subdivision; 13.41, subdivision 2; 13.46, subdivision 2; 13.54, by adding a subdivision; 13.65, subdivision 2; 13.99, subdivision 53b, and by adding subdivisions; 53A.081, by adding a subdivision; 123.70, subdivisions 5, 7, and 10; 144.29; 144.335, subdivision 3a; 214.10, subdivision 1; 260.161, subdivision 1a, and by adding a subdivision; 270.66, subdivision 3; 270B.01, subdivision 8; 270B.03, subdivisions 1, 3, and 4; 270B.08, subdivision 1; 270B.085, subdivision 1; 270B.09; 270B.12, subdivision 7; 270B.14, subdivision 1, and by adding subdivisions; 270B.16; 287.34; 299C.095; 299C.10, subdivision 1; 299C.13; and 626.556, subdivision 11; proposing coding for new law in Minnesota Statutes, chapters 13; and 270B; repealing Minnesota Statutes 1996, sections 13.072, subdivision 3; 13.71, subdivisions 18, 19, 20, and 21; and 13.99, subdivision 21d."

We request adoption of this report and repassage of the bill.

House Conferees: Mary Jo McGuire, Wesley J. "Wes" Skoglund and Len Biernat.

Senate Conferees: Don Betzold, Deanna L. Wiener and David J. Ten Eyck.

McGuire moved that the report of the Conference Committee on H. F. No. 1460 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 1460, A bill for an act relating to government data practices; making certain welfare and housing data available to law enforcement agencies; requiring certain criminal conviction data to be available through the Internet; eliminating the requirement that government agencies pay a fee for commissioner's opinions; modifying school immunization and health record provisions; modifying patient consent to release of records for research; authorizing destruction of records of deceased patients; allowing certain voters to prevent public dissemination of their residence addresses; requiring notice of investigations to health board licensees; providing for retention of juvenile history records; providing for misdemeanor offense reports and access to certain adult criminal history data; providing for disclosure or inspection of certain tax data or return information; limiting disclosure of certain tax data under subpoena; providing criminal penalties; amending Minnesota Statutes 1996, sections 13.41, by adding a subdivision; 13.46, subdivision 2; 13.54, by adding a subdivision; 13.65, subdivision 2; 13.87, subdivision 2; 13.99, subdivision 53b, and by adding subdivisions; 123.70, subdivisions 5, 7, and 10; 144.29; 144.335, subdivision 3a, and by adding a subdivision; 201.091, subdivision 4; 214.10, subdivision 1; 260.161, subdivision 1a; 270.66, subdivision 3; 270B.01, subdivision 8; 270B.03, subdivisions 1, 3, and 4; 270B.08, subdivision 1; 270B.085, subdivision 1; 270B.09; 270B.12, subdivision 7; 270B.14, subdivision 1, and by adding subdivisions; 270B.16; 287.34; 299C.095; 299C.10, subdivision 1; and 299C.13; proposing coding for new law in Minnesota Statutes, chapters 214; and 270B; repealing Minnesota Statutes 1996, sections 13.072, subdivision 3; 13.71, subdivisions 18, 19, 20, and 21; and 13.99, subdivision 21d.

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 84 yeas and 49 nays as follows:

Those who voted in the affirmative were:

Anderson, I. Evans Johnson, R. Mares Ozment Slawik
Bakk Farrell Juhnke Mariani Pawlenty Solberg
Biernat Folliard Kahn Marko Paymar Stanek
Bishop Garcia Kalis McCollum Pelowski Swenson, D.
Bradley Greenfield Kelso McGuire Peterson Tingelstad
Carlson Greiling Kinkel Milbert Pugh Tomassoni
Chaudhary Hasskamp Koskinen Mullery Rest Trimble
Clark Hausman Kubly Munger Rhodes Tunheim
Dawkins Hilty Leighton Murphy Rostberg Wagenius
Dehler Huntley Leppik Olson, E. Rukavina Weaver
Delmont Jaros Lieder Opatz Schumacher Wejcman
Dorn Jefferson Long Orfield Sekhon Wenzel
Entenza Jennings Luther Osthoff Skare Winter
Erhardt Johnson, A. Mahon Otremba Skoglund Spk. Carruthers

Those who voted in the negative were:

Abrams Finseth Koppendrayer Mulder Smith Westfall
Anderson, B. Goodno Kraus Ness Stang Westrom
Bettermann Gunther Krinkie Nornes Sviggum Wolf
Boudreau Haas Kuisle Olson, M. Swenson, H. Workman
Broecker Harder Larsen Osskopp Sykora
Commers Holsten Lindner Paulsen Tompkins
Daggett Kielkucki Macklin Rifenberg Tuma
Davids Knight McElroy Seagren Van Dellen
Dempsey Knoblach Molnau Seifert Vickerman

The bill was repassed, as amended by Conference, and its title agreed to.

MESSAGES FROM THE SENATE

The following messages were received from the Senate:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 117, A bill for an act relating to commerce; requiring local units of government to license the retail sale of tobacco; providing for mandatory penalties against license holders for sales to minors; amending Minnesota Statutes 1996, section 461.12; proposing coding for new law in Minnesota Statutes, chapter 461.

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.

Patrick E. Flahaven, Secretary of the Senate

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Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 735, A bill for an act relating to civil commitment; clarifying and reorganizing portions of the commitment act; allowing the designated agency to consent to voluntary treatment for certain incompetent persons; creating a new standard for court-ordered early intervention to provide less intrusive treatment; modifying standards and procedures for the administration of neuroleptic medications; providing for access to records; amending the provisional discharge procedures; requiring medical documentation of a patient's refusal to be examined and allowing determination of need for treatment based on other information; prohibiting prepetition screeners from filing commitment petitions; limiting use of prepetition screening reports in unrelated proceedings; requiring distribution to specified parties; increasing time for return after provisional discharge; modifying provisions governing special review boards; increasing time for hearing appeals; changing provisions for state liens for cost of care; amending Minnesota Statutes 1996, sections 13.42, subdivisions 2 and 3; 55.10, subdivision 4; 246B.01, subdivisions 3 and 4; 253B.01; 253B.02, subdivisions 2, 4, 4a, 7, 9, 13, 14, 15, 18, 18a, 18b, and by adding subdivisions; 253B.03, subdivisions 1, 2, 3, 4, 5, 6, 6b, 7, 8, and by adding a subdivision; 253B.04; 253B.05, subdivisions 1, 2, 3, 4, and by adding a subdivision; 253B.06; 253B.07, subdivisions 1, 2, 2a, 3, 4, 5, 7, and by adding subdivisions; 253B.08, subdivisions 1, 2, 3, 5, and by adding subdivisions; 253B.09, subdivisions 1, 2, 3, 5, and by adding a subdivision; 253B.095; 253B.10; 253B.11, subdivision 2; 253B.12, subdivisions 1, 3, 4, and by adding a subdivision; 253B.13, subdivisions 1 and 2; 253B.14; 253B.15, subdivisions 1, 1a, 2, 3, 5, 10, and by adding subdivisions; 253B.16, subdivision 1; 253B.17, subdivisions 1 and 3; 253B.18, subdivisions 1, 2, 3, 4, 4a, 4b, 5, 6, 7, 9, 12, 14, 15, and by adding a subdivision; 253B.185, subdivision 4; 253B.19, subdivisions 1, 2, 3, and 5; 253B.20, subdivisions 1, 3, 4, 6, and 7; 253B.21, subdivision 4; 253B.22, subdivision 1; 253B.23, subdivisions 1, 4, 6, 7, and 9; 256.015, subdivisions 1, 2, and 4; 256B.042, subdivisions 1, 2, and 4; 256B.37, subdivision 1; 514.71; 514.980, subdivision 2; 514.981, subdivision 2; 514.982, subdivisions 1 and 2; 514.985; 524.1-201; 524.3-801; 524.3-1004; 524.3-1201; and 524.6-207; proposing coding for new law in Minnesota Statutes, chapter 253B; repealing Minnesota Statutes 1996, sections 253B.03, subdivisions 6c and 9; 253B.05, subdivisions 2a and 5; 253B.07, subdivision 6; 253B.08, subdivisions 4 and 6; 253B.091; 253B.12, subdivisions 5 and 8; 253B.13, subdivision 3; 253B.15, subdivisions 4 and 6; 253B.18, subdivision 4; 253B.21, subdivision 5; and 253B.23, subdivision 1a.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 2150, A bill for an act relating to the organization and operation of state government; appropriating money for environmental, natural resource, and agricultural purposes; establishing and modifying certain programs; providing for regulation of certain activities and practices; providing for accounts, assessments, and fees; amending Minnesota Statutes 1996, sections 17.76, by adding a subdivision; 32.394, subdivision 11; 32.415; 84.0273; 84.0887, subdivision 2; 84.794, subdivision 1; 84.803, subdivision 1; 84.927, subdivision 2; 85.015, by adding a subdivision; 85.22, subdivision 2a; 85A.04, subdivision 4; 86A.23; 86B.415, subdivision 9; 92.06, subdivision 4; 92.16, subdivision 1; 92.46, by adding a subdivision; 94.10, subdivision 2; 94.165; 97B.667; 103C.501, subdivision 6; 103F.378, subdivision 1; 115.03, subdivision 5; 115A.54, subdivision 2a; 116.07, by adding a subdivision; 296.421, subdivision 5; 300.111, by adding a subdivision; 308A.101, by adding a subdivision; 308A.201, by adding a subdivision; 325E.10, subdivision 2, and by adding subdivisions; 325E.11; 325E.112, subdivision 2; 373.01, subdivision 1; Laws 1995, chapter 220, section 19, subdivision 11; and Laws 1996, chapters 351, section 2; and 463, section 7, subdivision 24; proposing coding for new law in Minnesota Statutes, chapters 4; 17; 92; 115; 116; and 219; repealing Minnesota Statutes 1996, sections 1.31; 1.32; 1.33; 1.34; 1.35; 1.36; 1.37; 1.38; 1.39; 1.40; 84B.11; and 115A.9523; Laws 1995, chapters 77, section 3; and 220, section 21; Minnesota Rules, part 7009.0060.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5025

Mr. Speaker:

I hereby announce that the Senate accedes to the request of the House for the appointment of a Conference Committee on the amendments adopted by the Senate to the following House File:

H. F. No. 632, A bill for an act relating to public administration; modifying requirements for spending to improve the capitol area and construct bridges, environmental learning centers, and community performing arts centers; appropriating money; amending Laws 1994, chapter 643, sections 3, subdivision 2; 15, subdivisions 2 and 4; and 23, subdivision 28, as amended; and Laws 1996, chapter 463, sections 13, subdivision 2; and 24, subdivision 8; repealing Laws 1996, chapter 463, section 7, subdivision 26.

The Senate has appointed as such committee:

Messrs. Morse; Cohen; Ms. Wiener; Messrs. Beckman and Frederickson.

Said House File is herewith returned to the House.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate refuses to concur in the House amendments to the following Senate File:

S. F. No. 1834, A bill for an act relating to agriculture; suspending the dairy trade practices laws during the month of June; amending Minnesota Statutes 1996, section 32.72, subdivision 2; repealing Minnesota Statutes 1996, section 32.73.

The Senate respectfully requests that a Conference Committee be appointed thereon. The Senate has appointed as such committee:

Mrs. Lourey; Messrs. Dille and Sams.

Said Senate File is herewith transmitted to the House with the request that the House appoint a like committee.

Patrick E. Flahaven, Secretary of the Senate

Trimble 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. 1834. The motion prevailed.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 164.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5026

CONFERENCE COMMITTEE REPORT ON S. F. NO. 164

A bill for an act relating to agriculture; conforming certain food rules with federal regulations; eliminating a requirement concerning llamas; regulating raising of bison; amending Minnesota Statutes 1996, sections 31.101; 31.102, subdivision 1; 31.103, subdivision 1; and 31.104; proposing coding for new law in Minnesota Statutes, chapter 17; repealing Minnesota Statutes 1996, section 17.456, subdivision 4.

May 16, 1997

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. 164, 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. 164 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 31.101, is amended to read:

31.101 [RULES; HEARINGS; UNIFORMITY WITH FEDERAL LAW.]

Subdivision 1. The authority to promulgate and amend rules for the efficient administration and enforcement of the Minnesota food law is vested in the commissioner and is in addition to authority granted in sections 31.10, 31.11, and 31.12. Such rules when applicable shall conform, insofar as practicable and consistent with state law, with those promulgated under the federal law.

Subd. 2. Hearings authorized or required by law shall be conducted by the commissioner or such officer, agent, or employee as the commissioner may designate for the purpose.

Subd. 3. Federal pesticide chemical regulations and amendments thereto in effect on April 1, 1994 1997, adopted under authority of the Federal Insecticide, Fungicide and Rodenticide Act, as provided by United States Code, title 7, chapter 6, are the pesticide chemical rules in this state. Such rules may be amended by the commissioner proceeding in accordance with the administrative procedure act.

Subd. 4. Federal food additive regulations and amendments thereto in effect on April 1, 1994 1997, as provided by Code of Federal Regulations, title 21, parts 170 to 199, are the food additive rules in this state. Such rules may be amended by the commissioner proceeding in accordance with the administrative procedure act.

Subd. 5. Federal color additive regulations and amendments thereto in effect on April 1, 1994 1997, as provided by Code of Federal Regulations, title 21, parts 70 to 82, are the color additive rules in this state. Such rules may be amended by the commissioner proceeding in accordance with the administrative procedure act.

Subd. 6. Federal special dietary use regulations and amendments thereto in effect on April 1, 1994 1997, as provided by Code of Federal Regulations, title 21, parts 104 and 105, are the special dietary use rules in this state. Such rules may be amended by the commissioner proceeding in accordance with the administrative procedure act.

Subd. 7. Federal regulations and amendments thereto in effect on April 1, 1994 1997, adopted under the Fair Packaging and Labeling Act, as provided by United States Code, title 15, sections 1451 to 1461, are the rules in this state. Such rules may be amended by the commissioner proceeding in accordance with the administrative procedure act; provided that the commissioner shall not adopt amendments to such rules or adopt other rules which are contrary to the labeling requirements for the net quantity of contents required pursuant to section 4 of the Fair Packaging and Labeling Act and the regulations promulgated thereunder.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5027

Subd. 8. Applicable federal regulations including recodification contained in Code of Federal Regulations, title 21, parts 0-1299, Food and Drugs, in effect April 1, 1994 1997, and not otherwise adopted herein, also are adopted as food rules of this state. Such rules may be amended by the commissioner in accordance with the administrative procedure act.

Subd. 9. [FISHERY PRODUCTS RULES.] Federal regulations in effect on April 1, 1994 1997, as provided by Code of Federal Regulations, title 50, parts 260 to 266 267, are incorporated as part of the fishery products rules in this state for state inspections performed under a cooperative agreement with the United States Department of Commerce, National Marine Fisheries Service. The rules may be amended by the commissioner under chapter 14.

Subd. 10. [MEAT AND POULTRY RULES.] Federal regulations in effect on April 1, 1997, as provided by Code of Federal Regulations, title 9, parts 301 to 362 and 381 to 391, with the exception of Subpart C-Exemptions, sections 381.10 to 381.15, are incorporated as part of the meat and poultry rules in this state. The rules may be amended by the commissioner under chapter 14.

Subd. 11. [STANDARDS FOR FRESH FRUITS, VEGETABLES, AND OTHER PRODUCTS.] Federal regulations in effect on April 1, 1997, as provided by Code of Federal Regulations, title 7, parts 51 and 52, are incorporated as part of the rules in this state. The rules may be amended by the commissioner under chapter 14.

Sec. 2. Minnesota Statutes 1996, section 31.102, subdivision 1, is amended to read:

Subdivision 1. Federal definitions and standards of identity, quality and fill of container and amendments thereto, in effect on April 1, 1994 1997, adopted under authority of the federal act, are the definitions and standards of identity, quality and fill of container in this state. Such rules may be amended by the commissioner proceeding in accordance with the administrative procedure act.

Sec. 3. Minnesota Statutes 1996, section 31.103, subdivision 1, is amended to read:

Subdivision 1. All labels of consumer commodities shall conform with the requirements for the declaration of net quantity of contents of section 4 of the Fair Packaging and Labeling Act (United States Code, title 15, section 1451 et seq.) and federal regulations in effect on April 1, 1994 1997, promulgated pursuant thereto, except to the extent that the commissioner shall exercise authority to amend such rules in accordance with the administrative procedure act. Consumer commodities exempted from the requirements of section 4 of the Fair Packaging and Labeling Act shall also be exempt from this subdivision.

Sec. 4. Minnesota Statutes 1996, section 31.104, is amended to read:

31.104 [FOOD LABELING EXEMPTION RULES.]

The commissioner shall promulgate rules exempting from any labeling requirement food which is, in accordance with the practice of the trade, to be processed, labeled or repacked in substantial quantities at establishments other than those where originally processed or packed, on condition that such food is not adulterated or misbranded upon removal from such processing, labeling or repacking establishment.

Federal regulations in effect on April 1, 1994 1997, adopted under authority of the federal act relating to such exemptions are effective in this state unless the commissioner shall exercise authority to amend such regulations. The commissioner also may promulgate amendments to existing rules concerning exemptions in accordance with the administrative procedure act.

Sec. 5. [REPEALER.]

Minnesota Statutes 1996, section 17.456, subdivision 4, is repealed."

Delete the title and insert:

"A bill for an act relating to agriculture; conforming certain food rules with federal regulations; eliminating a requirement concerning llamas; amending Minnesota Statutes 1996, sections 31.101; 31.102, subdivision 1; 31.103, subdivision 1; and 31.104; repealing Minnesota Statutes 1996, section 17.456, subdivision 4."

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5028

We request adoption of this report and repassage of the bill.

Senate Conferees: Charles W. Wiger, Dallas C. Sams and Steve Dille.

House Conferees: Al Juhnke, Stephen G. Wenzel and Bob Gunther.

Juhnke moved that the report of the Conference Committee on S. F. No. 164 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 164, A bill for an act relating to agriculture; conforming certain food rules with federal regulations; eliminating a requirement concerning llamas; regulating raising of bison; amending Minnesota Statutes 1996, sections 31.101; 31.102, subdivision 1; 31.103, subdivision 1; and 31.104; proposing coding for new law in Minnesota Statutes, chapter 17; repealing Minnesota Statutes 1996, section 17.456, subdivision 4.

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 131 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mares Pawlenty Swenson, D.
Anderson, B. Evans Kahn Mariani Paymar Swenson, H.
Anderson, I. Farrell Kelso Marko Pelowski Sykora
Bakk Finseth Kielkucki McCollum Peterson Tingelstad
Bettermann Folliard Kinkel McElroy Pugh Tomassoni
Biernat Garcia Knight McGuire Rest Tompkins
Bishop Goodno Knoblach Milbert Rhodes Trimble
Boudreau Greenfield Koppendrayer Molnau Rifenberg Tuma
Bradley Greiling Koskinen Mulder Rostberg Tunheim
Broecker Gunther Kraus Mullery Rukavina Van Dellen
Carlson Haas Krinkie Munger Schumacher Vickerman
Chaudhary Harder Kubly Ness Seagren Wagenius
Clark Hasskamp Kuisle Nornes Seifert Weaver
Commers Hausman Larsen Olson, E. Sekhon Wejcman
Daggett Hilty Leighton Olson, M. Skare Wenzel
Davids Holsten Leppik Opatz Skoglund Westfall
Dawkins Huntley Lieder Orfield Slawik Westrom
Dehler Jaros Lindner Osskopp Smith Winter
Delmont Jefferson Long Osthoff Solberg Wolf
Dempsey Jennings Luther Otremba Stanek Workman
Dorn Johnson, A. Macklin Ozment Stang Spk. Carruthers
Entenza Johnson, R. Mahon Paulsen Sviggum

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 184.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5029

CONFERENCE COMMITTEE REPORT ON S. F. NO. 184

A bill for an act relating to the environment; modifying requirements relating to toxics in products; amending Minnesota Statutes 1996, section 115A.9651.

May 17, 1997

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. 184, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendments.

We request adoption of this report and repassage of the bill.

Senate Conferees: Dan Stevens, Leonard R. Price and Ellen R. Anderson.

House Conferees: Jean Wagenius, Tom Rukavina and Harry Mares.

Wagenius moved that the report of the Conference Committee on S. F. No. 184 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 184, A bill for an act relating to the environment; modifying requirements relating to toxics in products; amending Minnesota Statutes 1996, section 115A.9651.

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 133 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Tingelstad
Anderson, B. Farrell Kelso McCollum Peterson Tomassoni
Anderson, I. Finseth Kielkucki McElroy Pugh Tompkins
Bakk Folliard Kinkel McGuire Rest Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5030
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Otremba Stang
Dempsey Johnson, A. Macklin Ozment Sviggum
Dorn Johnson, R. Mahon Paulsen Swenson, D.
Entenza Juhnke Mares Pawlenty Swenson, H.
Erhardt Kahn Mariani Paymar Sykora

The bill was repassed, as amended by Conference, and its title agreed to.

ANNOUNCEMENT BY THE SPEAKER

The Speaker announced the appointment of the following members of the House to a Conference Committee on S. F. No. 1834:

Trimble, Wenzel and Gunther.

MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 501.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 501

A bill for an act relating to commerce; providing powers and duties to the commissioner; regulating securities; modifying the real estate licensing exemption for closing agents; regulating real property appraisers; regulating residential building contractors and remodelers; modifying licensing requirements for collection agencies; regulating notaries public; making technical changes; amending Minnesota Statutes 1996, sections 45.011, subdivision 1; 45.028, subdivision 1; 80A.04, subdivisions 3, 4, and by adding a subdivision; 80A.05, subdivisions 4, 5, and by adding a subdivision; 80A.06, subdivisions 1, 2, and 3; 80A.08; 80A.12, by adding a subdivision; 80A.14, subdivisions 3, 4, and by adding subdivisions; 80A.15, subdivisions 1 and 2; 80A.16; 80A.28, subdivisions 1 and 2; 80C.01, subdivision 4; 82.19, by adding a subdivision; 82.20, subdivision 15; 82.22, subdivision 13; 82.24, subdivision 5; 82B.13, subdivisions 1, 4, and 5; 82B.14; 82B.19, subdivision 1; 326.83, subdivisions 11 and 19; 326.84, subdivision 3; 326.85, by adding a subdivision; 326.921; 332.33, subdivision 1, and by adding a subdivision; 332.34; 359.061; and 359.071; proposing coding for new law in Minnesota Statutes, chapters 45; 60K; and 80A; repealing Minnesota Statutes 1996, section 60K.07, subdivision 1.

May 17, 1997

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. 501, report that we have agreed upon the items in dispute and recommend as follows:

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5031

That the House recede from its amendments and that S. F. No. 501 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 45.011, subdivision 1, is amended to read:

Subdivision 1. [SCOPE.] As used in chapters 45 to 83, 155A, 309, 332, 345, and 359, and sections 326.83 to 326.98 326.991, and 386.61 to 386.78, unless the context indicates otherwise, the terms defined in this section have the meanings given them.

Sec. 2. [45.0111] [TEMPORARY LICENSES.]

Subdivision 1. [AUTHORITY.] The commissioner may grant a temporary license to an applicant who can demonstrate successful completion of all requirements for a permanent license. The temporary license will remain in effect until the earliest of:

(1) receipt by the applicant of the permanent license;

(2) the expiration of 45 days from the date on which the temporary license was granted; or

(3) denial by the commissioner of the permanent license.

Subd. 2. [NONAPPLICATION.] A temporary license as described in this section may not be issued to an applicant for licensure as a:

(1) currency exchange regulated under chapter 53A;

(2) collection agency regulated under sections 332.31 to 332.45;

(3) credit service organization regulated under sections 332.52 to 332.60; or

(4) broker dealer, investment advisor, or agent regulated under chapter 80A.

Sec. 3. [45.0112] [STREET ADDRESSES REQUIRED.]

Licensees or applicants for licenses issued by the commissioner shall provide to the commissioner a residence telephone number, a street address where the licensee actually resides, and a street address where the licensee's business is physically located. A post office box address is not sufficient to satisfy this requirement. The individual shall notify the department of any change in street address or residence telephone number within ten days.

Sec. 4. Minnesota Statutes 1996, section 45.028, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENT.] (a) When a person, including any nonresident of this state, engages in conduct prohibited or made actionable by chapters 45 to 83, 155A, 309, and 332, and section 326.83, or any rule or order under those chapters, and the person has not filed a consent to service of process under chapters 45 to 83, 155A, 309, and 332, and section 326.83, that conduct is equivalent to an appointment of the commissioner as the person's attorney to receive service of process in any noncriminal suit, action, or proceeding against the person which is based on that conduct and is brought under chapters 45 to 83, 155A, 309, and 332, and section 326.83, or any rule or order under those chapters.

(b) Subdivision 2 applies in all other cases under chapters 45 to 83, 155A, 309, and 332, and section 326.83, or any rule or order under those chapters, in which a person, including a nonresident of this state, has filed a consent to service of process. This paragraph supersedes any inconsistent provision of law.

(c) Subdivision 2 applies in all cases in which service of process is allowed to be made on the commissioner of commerce.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5032

Sec. 5. [45.0292] [LICENSE RECIPROCITY.]

The commissioner may waive all or part of the requirements of prelicense education, examination, and continuing education for individuals of other jurisdictions if:

(1) a written reciprocal licensing agreement is in effect between the commissioner and the licensing officials of that jurisdiction;

(2) the individual is licensed in that jurisdiction; and

(3) the licensing requirements of that jurisdiction are substantially similar to the corresponding licensing requirements of the commerce department.

Sec. 6. [45.0293] [REGULATION OF GROUP LIFE INSURANCE.]

The commissioner may waive all or part of the requirements of section 61A.09, subdivision 3, if:

(1) all the premiums under the group policy are paid by the group policyholder;

(2) the loans insured are first real estate residential mortgage loans owned or guaranteed by the group policyholder; and

(3) the group policy is in the best interests of insured debtors.

Sec. 7. [60K.20] [SOCIAL SECURITY NUMBERS OF LICENSED AGENTS; COMMISSIONER'S AUTHORITY TO PROVIDE TO NAIC.]

The commissioner may provide the social security numbers of licensed insurance agents to the National Association of Insurance Commissioners.

Sec. 8. Minnesota Statutes 1996, section 67A.231, is amended to read:

67A.231 [DEPOSIT OF FUNDS; INVESTMENT; LIMITATIONS.]

The directors of any township mutual insurance company may authorize the treasurer to invest any of its funds and accumulations in:

(a) Bonds, notes, mortgages, or other obligations guaranteed by the full faith and credit of the United States of America and those for which the credit of the United States is pledged to pay principal, interest or dividends, including United States agency and instrumentality bonds, debentures, or obligations;

(b) Bonds, notes, evidence of indebtedness, or other public authority obligations guaranteed by this state;

(c) Bonds, notes, evidence of the indebtedness or other obligations guaranteed by the full faith and credit of any county, municipality, school district, or other duly authorized political subdivision of this state;

(d) Bonds or other interest bearing obligations, payable from revenues, provided that the bonds or other interest bearing obligations are at the time of purchase rated among the highest four quality categories used by a nationally recognized rating agency for rating the quality of similar bonds or other interest bearing obligations, and are not rated lower by any other such agency; or obligations of a United States agency or instrumentality that have been rated in one of the two highest categories established by the Securities Valuation Office of the National Association of Insurance Commissioners. A company may not invest more than 20 percent of its admitted assets in the obligations of any one corporation. This is not applicable to bonds or other interest bearing obligations in default as to principal;

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5033

(e) Investments in the obligations stated in paragraphs (a), (b), (c), and (d), may be made either directly or in the form of securities of, or other interests in, an investment company registered under the Federal Investment Company Act of 1940. Investment company shares authorized pursuant to this subdivision shall not exceed 20 percent of the company's surplus. These obligations must be carried at the lower of cost or market on the annual statement filed with the commissioner and adjusted to market on an annual basis;

(f) Loans upon improved and unencumbered real property in this state worth at least twice the amount loaned thereon, not including buildings, unless insured by property insurance policies payable to and held by the security holder;

(g) Real estate, including land, buildings and fixtures, located in this state and used primarily as home office space for the insurance company;

(h) Demand or time deposits or savings accounts in federally insured depositories located in this state to the extent that the deposit or investment is insured by the Federal Deposit Insurance Corporation, Federal Savings and Loan Corporation, or the National Credit Union Administration. An additional deposit not to exceed 50 percent of the township mutual insurance company's policyholder surplus may be located in these depositories if covered by private deposit insurance written by an insurer licensed by the department of commerce;

(i) Guarantee fund certificates of a mutual insurer which reinsures the business of the township mutual insurance company. The commissioner may by rule limit the amount of guarantee fund certificates which the township mutual insurance company may purchase and this limit may be a function of the size of the township mutual insurance company; and

(j) Up to $1,500 in stock of an insurer which issues directors and officers liability insurance to township mutual insurance company directors and officers.

Sec. 9. Minnesota Statutes 1996, section 80A.02, subdivision 1, is amended to read:

Subdivision 1. [ADVISORY ACTIVITIES AND PRINCIPAL TRANSACTIONS.] (a) It is unlawful for any person who receives, directly or indirectly, any consideration from another primarily for advising the other as to the value of securities or their purchase or sale:

(a) (1) to employ any device, scheme, or artifice to defraud the other; or

(b) (2) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the other; or.

(c) (b) It is unlawful for an investment adviser to knowingly sell any security to or purchase any security from a client while acting as principal for the person's own account or knowingly effect any sale or purchase of any security for the account of a client while acting as broker for one other than the client, unless the person discloses to the client in writing before the execution of the transaction the capacity in which the person is acting and obtains the consent of the client to the transaction.

Sec. 10. Minnesota Statutes 1996, section 80A.04, subdivision 3, is amended to read:

Subd. 3. It is unlawful for any person to transact business in this state as an investment adviser unless that person is so licensed or licensed as a broker-dealer under this chapter or unless: (1) that person's only clients in this state are investment companies as defined in the Investment Company Act of 1940, other investment advisers, broker-dealers, banks, trust companies, savings associations, federal covered advisers insurance companies, employee benefit plans, corporations with a class of equity securities registered under section 12(b) or 12(g) of the Securities Exchange Act of 1934, small business investment companies, and government agencies or instrumentalities, whether acting for themselves or as trustees with investment control, or other institutional investors as are designated by rule or order of the commissioner. buyers; or (2) that person has no place of business in this state and during the preceding 12-month period has had fewer than six clients who are residents of this state.

Sec. 11. Minnesota Statutes 1996, section 80A.04, subdivision 4, is amended to read:

Subd. 4. Every license shall expire or notice filing expires on December 31 of each year unless an application for renewal has been received by the commissioner by November 15.

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Sec. 12. Minnesota Statutes 1996, section 80A.04, is amended by adding a subdivision to read:

Subd. 5. Except with respect to advisers whose only clients are those described in subdivision 3, clause (2), it is unlawful for a federal covered adviser to conduct advisory business in this state unless the person complies with section 80A.05, subdivision 1a.

Sec. 13. Minnesota Statutes 1996, section 80A.05, is amended by adding a subdivision to read:

Subd. 1a. [FEDERAL COVERED ADVISERS.] Except with respect to federal covered advisers whose only clients are those described in section 80A.04, subdivision 3, clause (2), a federal covered adviser shall file with the commissioner, before acting as a federal covered adviser in this state, all documents required by the commissioner that have been filed with the Securities and Exchange Commission. Notwithstanding any other provision of this section, until October 10, 1999, the commissioner may require the registration of any federal covered investment adviser who has failed to promptly pay the fees required by section 80A.28 after being notified in writing by the commissioner of the nonpayment or underpayment of such fees. A person shall be considered to have promptly paid such fees if the fees are remitted to the commissioner within 15 days following the receipt of written notification from the commissioner.

Sec. 14. Minnesota Statutes 1996, section 80A.05, subdivision 4, is amended to read:

Subd. 4. The commissioner may by rule require a minimum capital for broker-dealers, subject to the limitations of section 15 of the Securities Act of 1934, and establish minimum financial requirements for investment advisers and establish limitations on aggregate indebtedness of broker-dealers in relation to net capital., subject to the limitations of section 222 of the Investment Advisers Act of 1940 which may include different requirements for those investment advisers who maintain custody of clients' funds or securities or who have discretionary authority over the funds or securities and those investment advisers who do not.

Sec. 15. Minnesota Statutes 1996, section 80A.05, subdivision 5, is amended to read:

Subd. 5. The commissioner may by rule require licensed broker-dealers, agents and investment advisers who have custody of or discretionary authority over client funds or securities, to post surety bonds in amounts up to $25,000, as the commissioner may prescribe subject to the limitations of section 15 of the Securities Exchange Act of 1934 for broker-dealers and section 222 of the Investment Advisers Act of 1940 for investment advisers and may by rule or order determine their conditions. Any appropriate deposit of cash or securities shall be accepted in lieu of any bond so required. No bond may be required of any broker-dealer whose net capital, which may be defined by rule, exceeds $25,000 the amounts required by the commissioner. Every bond shall provide for suit thereon by any person who has a cause of action under section 80A.23 and, if the commissioner by rule or order requires, by any person who has a cause of action not arising under sections 80A.01 to 80A.31. Every bond shall provide that no suit may be maintained to enforce any liability on the bond unless brought within three years after the sale or other act upon which it is based.

Sec. 16. Minnesota Statutes 1996, section 80A.06, subdivision 1, is amended to read:

Subdivision 1. Every licensed broker-dealer and investment adviser shall make and keep all accounts, correspondence, memoranda, papers, books and other records which the commissioner by rule prescribes by rule or order, except as provided by section 15 of the Securities Act of 1934 in the case of a broker-dealer and section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser. All records required shall be preserved for three years unless the commissioner by rule prescribes otherwise for particular types of records. All required records shall be kept within the state or shall, at the request of the commissioner, be made available at any time for examination by the commissioner either in the principal office of the licensee or by production of exact copies thereof in this state.

Sec. 17. Minnesota Statutes 1996, section 80A.06, subdivision 2, is amended to read:

Subd. 2. Every licensed broker-dealer and investment adviser shall file such reports as the commissioner by rule or order prescribes except as provided in section 15 of the Securities Exchange Act of 1934 in the case of a broker-dealer and section 222 of the Investment Advisers Act of 1940 in the case of an investment adviser.

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Sec. 18. Minnesota Statutes 1996, section 80A.06, subdivision 3, is amended to read:

Subd. 3. If the information contained in any document filed with the commissioner is or becomes inaccurate or incomplete in any material respect, the licensee or federal covered adviser shall within 30 days file a correcting amendment unless notification of the correction has been given under section 80A.04, subdivision 2.

Sec. 19. Minnesota Statutes 1996, section 80A.08, is amended to read:

80A.08 [REGISTRATION REQUIREMENT.]

It is unlawful for any person to offer or sell any security in this state unless (a) it is registered under sections 80A.01 to 80A.31 or (b) the security or transaction is exempted under section 80A.15 or (c) it is a federal covered security.

Sec. 20. Minnesota Statutes 1996, section 80A.12, is amended by adding a subdivision to read:

Subd. 12. [COORDINATED REGISTRATION.] The commissioner may enter into cooperative and reciprocal agreements with members of a national securities regulatory organization composed of securities administrators of this and other states to participate in a coordinated review of securities offerings in lieu of conducting the commissioner's own review.

Sec. 21. [80A.122] [FEDERAL COVERED SECURITIES.]

Subdivision 1. [18(b)(2) FILINGS.] The commissioner may, by rule or otherwise, require the filing of any or all of the following documents with respect to a federal covered security under section 18(b)(2) of the Securities Act of 1933:

(1) prior to the initial offer of a federal covered security in this state, all documents that are part of a current federal registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, together with a fee and a consent to service of process;

(2) after the initial offer of a federal covered security in this state, all documents that are part of an amendment to a current federal registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, which must be filed concurrently with the commissioner;

(3) notices that increase the aggregate amount of securities offered or sold in this state, together with the fee.

Subd. 2. [18(b)(4)(D) FILINGS.] With respect to a security that is a federal covered security under section 18(b)(4)(D) of the Securities Act of 1933, the commissioner, by rule or otherwise, may require the issuer to file a notice on form D of the Securities and Exchange Commission, together with a fee and a consent to service of process no later than 15 days after the first sale of the covered security in this state.

Subd. 3. [18(b)(3) or (4) FILINGS.] The commissioner, by rule or otherwise, may require the filing of any document filed with the Securities and Exchange Commission under the Securities Act of 1933 with respect to a federal covered security under section 18(b)(3) or (4) of the Securities Act of 1933 together with the fee.

Subd. 4. [REGISTRATION.] Notwithstanding any other provision of this section, until October 10, 1999, the commissioner may require registration of a federal covered security for which the fees required by section 80A.28 have not been promptly paid after the issuer of such securities has been notified in writing by the commissioner of the nonpayment or underpayment of such fees. An issuer shall be considered to have promptly paid such fees if the fees are remitted to the commissioner within 15 days following the receipt of written notification from the commissioner.

Subd. 5. [STOP ORDERS.] The commissioner may issue a stop order suspending the offer and sale of a federal covered security, except a federal covered security under section 18(b)(1) of the Securities Act of 1933, if the commissioner finds that: (1) the order is in the public interest; and (2) there is a failure to comply with any condition established under this section.

Subd. 6. [COMMISSIONER'S WAIVER.] The commissioner may, by rule or otherwise, waive any or all of the provisions of this section.

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Sec. 22. Minnesota Statutes 1996, section 80A.14, subdivision 3, is amended to read:

Subd. 3. [AGENT.] "Agent" means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include:

(a) an individual who represents an issuer in:

(1) effecting transactions in a security exempted by section 80A.15, subdivision 1;

(2) effecting transactions exempted by section 80A.15, subdivision 2;

(3) effecting transactions with existing employees, partners or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state;

(4) effecting other transactions, if the individual is an officer or director of the issuer, no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, and, upon application, the individual is specifically authorized by name in an order issued by the commissioner; or

(5) effecting transactions in securities registered by notification under section 80A.09 if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state.; or

(6) effecting transactions in a federal covered security as described in sections 18(b)(3) and 18(b)(4) of the Securities Act of 1933; or

(b) an individual who represents a broker-dealer in effecting transactions in the state limited to those transactions described in section 15(h)(2) of the Securities Exchange Act of 1934.

A partner, officer or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if that person otherwise comes within this definition.

Sec. 23. Minnesota Statutes 1996, section 80A.14, subdivision 4, is amended to read:

Subd. 4. [BROKER-DEALER.] "Broker-dealer" means any person engaged in the business of effecting transactions in securities for the account of others or for that person's own account. "Broker-dealer" does not include:

(1) an agent;

(2) an issuer;

(3) a trust company; or

(4) a bank, savings institution, savings association, credit union:

(i) acting for the account of others, provided that such activities are conducted in compliance with such rules as may be adopted by the commissioner;

(ii) acting for its own account; or

(iii) acting in a fiduciary capacity pursuant to the powers and privileges described by sections 48.36 to 48.49 or United States Code, title 12, section 92(a);

(5) a person who has no place of business in this state if that person effects transactions in this state exclusively with or through (i) the issuers of the securities involved in the transactions, (ii) other broker-dealers, or (iii) banks, savings institutions, trust companies, insurance companies, investment companies as defined in the Investment Company Act of 1940, pension or profit sharing trusts, or other financial institutions or institutional buyers, or to broker-dealers, whether the purchaser is acting for itself or in some fiduciary capacity; or

(6) other persons not within the intent of this subsection whom the commissioner by rule or order designates.

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Sec. 24. Minnesota Statutes 1996, section 80A.14, is amended by adding a subdivision to read:

Subd. 5a. [FEDERAL COVERED ADVISER.] "Federal covered adviser" means a person who is: (1) registered under section 203 of the Investment Act of 1940; or (2) is excluded from the definition of "investment adviser" under section 202(a)(11).

Sec. 25. Minnesota Statutes 1996, section 80A.14, is amended by adding a subdivision to read:

Subd. 5b. [FEDERAL COVERED SECURITY.] "Federal covered security" means a security that is a covered security under section 18(b) of the Securities Act of 1933 or regulations adopted under that act.

Sec. 26. Minnesota Statutes 1996, section 80A.14, is amended by adding a subdivision to read:

Subd. 8a. [INSTITUTIONAL BUYER.] For the purposes of sections 80A.04, subdivision 3; 80A.14, subdivision 4, clause (5); and 80A.15, subdivision 2, paragraph (g), "institutional buyer" includes, but is not limited to, a corporation with a class of equity securities registered under section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, a "qualified institutional buyer" within the meaning of rule 144A, and an "accredited investor" within the meaning of rule 501(a) of regulation D.

Sec. 27. Minnesota Statutes 1996, section 80A.15, subdivision 1, is amended to read:

Subdivision 1. The following securities are exempted from sections 80A.08 and 80A.16:

(a) Any security, including a revenue obligation, issued or guaranteed by the United States, any state, any political subdivision of a state, or any agency or corporate or other instrumentality of one or more of the foregoing.; but this exemption does not apply to a security issued by any of the foregoing that is payable solely from payments to be received in respect of property or money used under a lease, sale, or loan arrangement by or for a nongovernmental industrial or commercial enterprise. Pursuant to section 106(c) of the Secondary Mortgage Market Enhancement Act of 1984, Public Law Number 98-440, this exemption does not apply to a security that is offered or sold pursuant to section 106(a)(1) or (2) of that act.

(b) Any security issued or guaranteed by Canada, any Canadian province, any political subdivision of any province, any agency or corporate or other instrumentality of one or more of the foregoing, if the security is recognized as a valid obligation by the issuer or guarantor; but this exemption shall not include any revenue obligation payable solely from payments to be made in respect of property or money used under a lease, sale or loan arrangement by or for a nongovernmental industrial or commercial enterprise.

(c) Any security issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution or trust company organized under the laws of any state and subject to regulation in respect of the issuance or guarantee of its securities by a governmental authority of that state.

(d) Any security issued by and representing an interest in or a debt of, or guaranteed by, any federal savings association, or any savings association or similar association organized under the laws of any state and authorized to do business in this state.

(e) Any security issued or guaranteed by any federal credit union or any credit union, or similar association organized and supervised under the laws of this state.

(f) Any security listed or approved for listing upon notice of issuance on the New York Stock Exchange, the American Stock Exchange, the Midwest Stock Exchange, the Pacific Stock Exchange, or the Chicago Board Options Exchange; any other security of the same issuer which is of senior or substantially equal rank; any security called for by subscription rights or warrants so listed or approved; or any warrant or right to purchase or subscribe to any of the foregoing. This exemption does not apply to second tier listings on any of the exchanges in this paragraph.

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(g) Any commercial paper which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which evidences an obligation to pay cash within nine months of the date of issuance, exclusive of days of grace, or any renewal of the paper which is likewise limited, or any guarantee of the paper or of any renewal which are not advertised for sale to the general public in newspapers or other publications of general circulation or otherwise, or by radio, television or direct mailing.

(h) Any interest in any employee's savings, stock purchase, pension, profit sharing or similar benefit plan, or a self-employed person's retirement plan.

(i) Any security issued or guaranteed by any railroad, other common carrier or public utility which is subject to regulation in respect to the issuance or guarantee of its securities by a governmental authority of the United States.

(j) Any interest in a common trust fund or similar fund maintained by a state bank or trust company organized and operating under the laws of Minnesota, or a national bank wherever located, for the collective investment and reinvestment of funds contributed thereto by the bank or trust company in its capacity as trustee, executor, administrator, or guardian; and any interest in a collective investment fund or similar fund maintained by the bank or trust company, or in a separate account maintained by an insurance company, for the collective investment and reinvestment of funds contributed thereto by the bank, trust company or insurance company in its capacity as trustee or agent, which interest is issued in connection with an employee's savings, pension, profit sharing or similar benefit plan, or a self-employed person's retirement plan.

(k) Any security which meets all of the following conditions:

(1) If the issuer is not organized under the laws of the United States or a state, it has appointed a duly authorized agent in the United States for service of process and has set forth the name and address of the agent in its prospectus;

(2) A class of the issuer's securities is required to be and is registered under section 12 of the Securities Exchange Act of 1934, and has been so registered for the three years immediately preceding the offering date;

(3) Neither the issuer nor a significant subsidiary has had a material default during the last seven years, or for the period of the issuer's existence if less than seven years, in the payment of (i) principal, interest, dividend, or sinking fund installment on preferred stock or indebtedness for borrowed money, or (ii) rentals under leases with terms of three years or more;

(4) The issuer has had consolidated net income, before extraordinary items and the cumulative effect of accounting changes, of at least $1,000,000 in four of its last five fiscal years including its last fiscal year; and if the offering is of interest bearing securities, has had for its last fiscal year, net income, before deduction for income taxes and depreciation, of at least 1-1/2 times the issuer's annual interest expense, giving effect to the proposed offering and the intended use of the proceeds. For the purposes of this clause "last fiscal year" means the most recent year for which audited financial statements are available, provided that such statements cover a fiscal period ended not more than 15 months from the commencement of the offering;

(5) If the offering is of stock or shares other than preferred stock or shares, the securities have voting rights and the rights include (i) the right to have at least as many votes per share, and (ii) the right to vote on at least as many general corporate decisions, as each of the issuer's outstanding classes of stock or shares, except as otherwise required by law; and

(6) If the offering is of stock or shares, other than preferred stock or shares, the securities are owned beneficially or of record, on any date within six months prior to the commencement of the offering, by at least 1,200 persons, and on that date there are at least 750,000 such shares outstanding with an aggregate market value, based on the average bid price for that day, of at least $3,750,000. In connection with the determination of the number of persons who are beneficial owners of the stock or shares of an issuer, the issuer or broker-dealer may rely in good faith for the purposes of this clause upon written information furnished by the record owners.

(l) Any certificate of indebtedness sold or issued for investment, other than a certificate of indebtedness pledged as a security for a loan made contemporaneously therewith, and any savings account or savings deposit issued, by an industrial loan and thrift company.

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(m) Any security designated or approved for designation upon notice of issuance on the NASDAQ/National Market System; any other security of the same issuer that is of senior or substantially equal rank; any security called for by subscription rights or warrants so designated or approved; or any warrant or right to purchase or subscribe to any of the securities referred to in this paragraph; provided that the National Market System provides the commissioner with notice of any material change in its designation requirements. The commissioner may revoke this exemption if the commissioner determines that the designation requirements are not enforced or are amended in a manner that lessens protection to investors.

Sec. 28. Minnesota Statutes 1996, section 80A.15, subdivision 2, is amended to read:

Subd. 2. The following transactions are exempted from sections 80A.08 and 80A.16:

(a) Any sales, whether or not effected through a broker-dealer, provided that:

(1) no person shall make more than ten sales of securities of the same issuer pursuant to this exemption, exclusive of sales according to clause (2), during any period of 12 consecutive months; provided further, that in the case of sales by an issuer, except sales of securities registered under the Securities Act of 1933 or exempted by section 3(b) of that act, (i) the seller reasonably believes that all buyers are purchasing for investment, and (ii) the securities are not advertised for sale to the general public in newspapers or other publications of general circulation or otherwise, or by radio, television, electronic means or similar communications media, or through a program of general solicitation by means of mail or telephone; and

(2) no issuer shall make more than 25 sales of its securities according to this exemption, exclusive of sales pursuant to clause (1), during any period of 12 consecutive months; provided further, that the issuer meets the conditions in clause (1) and, in addition meets the following additional conditions: (i) files with the commissioner, ten days before a sale according to this clause, a statement of issuer on a form prescribed by the commissioner; and (ii) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective buyers in this state in connection with a sale according to this clause except reasonable and customary commissions paid by the issuer to a broker-dealer licensed under this chapter.

(b) Any nonissuer distribution of an outstanding security if (1) either Moody's, Fitch's, or Standard & Poor's Securities Manuals, or other recognized manuals approved by the commissioner contains the names of the issuer's officers and directors, a balance sheet of the issuer as of a date not more than 18 months prior to the date of the sale, and a profit and loss statement for the fiscal year preceding the date of the balance sheet, and (2) the issuer or its predecessor has been in active, continuous business operation for the five-year period next preceding the date of sale, and (3) if the security has a fixed maturity or fixed interest or dividend provision, the issuer has not, within the three preceding fiscal years, defaulted in payment of principal, interest, or dividends on the securities.

(c) The execution of any orders by a licensed broker-dealer for the purchase or sale of any security, pursuant to an unsolicited offer to purchase or sell; provided that the broker-dealer acts as agent for the purchaser or seller, and has no direct material interest in the sale or distribution of the security, receives no commission, profit, or other compensation from any source other than the purchaser and seller and delivers to the purchaser and seller written confirmation of the transaction which clearly itemizes the commission, or other compensation.

(d) Any nonissuer sale of notes or bonds secured by a mortgage lien if the entire mortgage, together with all notes or bonds secured thereby, is sold to a single purchaser at a single sale.

(e) Any judicial sale, exchange, or issuance of securities made pursuant to an order of a court of competent jurisdiction.

(f) The sale, by a pledge holder, of a security pledged in good faith as collateral for a bona fide debt.

(g) Any offer or sale to a bank, savings institution, trust company, insurance company, investment company as defined in the Investment Company Act of 1940, pension or profit sharing trust, or other financial institution or institutional buyer, or to a broker-dealer, whether the purchaser is acting for itself or in some fiduciary capacity.

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(h) An offer or sale of securities by an issuer made in reliance on the exemptions provided by Rule 505 or 506 of Regulation D promulgated by the Securities and Exchange Commission, Code of Federal Regulations, title 17, sections 230.501 to 230.508, subject to the conditions and definitions provided by Rules 501 to 503 of Regulation D, if the offer and sale also satisfies the conditions and limitations in clauses (1) to (10).

(1) The exemption under this paragraph is not available for the securities of an issuer if any of the persons described in Rule 252(c) to (f) of Regulation A promulgated by the Securities and Exchange Commission, Code of Federal Regulations, title 17, sections 230.251 to 230.263:

(i) has filed a registration statement that is the subject of a currently effective order entered against the issuer, its officers, directors, general partners, controlling persons, or affiliates, according to any state's law within five years before the filing of the notice required under clause (5), denying effectiveness to, or suspending or revoking the effectiveness of, the registration statement;

(ii) has been convicted, within five years before the filing of the notice required under clause (5), of a felony or misdemeanor in connection with the offer, sale, or purchase of a security or franchise, or a felony involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud;

(iii) is subject to an effective administrative order or judgment entered by a state securities administrator within five years before the filing of the notice required under clause (5), that prohibits, denies, or revokes the use of an exemption from securities registration, that prohibits the transaction of business by the person as a broker-dealer or agent, or that is based on fraud, deceit, an untrue statement of a material fact, or an omission to state a material fact; or

(iv) is subject to an order, judgment, or decree of a court entered within five years before the filing of the notice required under clause (5), temporarily, preliminarily, or permanently restraining or enjoining the person from engaging in or continuing any conduct or practice in connection with the offer, sale, or purchase of a security, or the making of a false filing with a state.

A disqualification under paragraph (h) involving a broker-dealer or agent is waived if the broker-dealer or agent is or continues to be licensed in the state in which the administrative order or judgment was entered against the person or if the broker-dealer or agent is or continues to be licensed in this state as a broker-dealer or agent after notifying the commissioner of the act or event causing disqualification.

The commissioner may waive a disqualification under paragraph (h) upon a showing of good cause that it is not necessary under the circumstances that use of the exemption be denied.

A disqualification under paragraph (h) may be waived if the state securities administrator or agency of the state that created the basis for disqualification has determined, upon a showing of good cause, that it is not necessary under the circumstances that an exemption from registration of securities under the state's laws be denied.

It is a defense to a violation of paragraph (h) based upon a disqualification if the issuer sustains the burden of proof to establish that the issuer did not know, and in the exercise of reasonable care could not have known, that a disqualification under paragraph (h) existed.

(2) This exemption must not be available to an issuer with respect to a transaction that, although in technical compliance with this exemption, is part of a plan or scheme to evade registration or the conditions or limitations explicitly stated in paragraph (h).

(3) No commission, finder's fee, or other remuneration shall be paid or given, directly or indirectly, for soliciting a prospective purchaser, unless the recipient is appropriately registered licensed, or exempt from registration licensure, in this state as a broker-dealer.

(4) Nothing in this exemption is intended to or should be in any way construed as relieving issuers or persons acting on behalf of issuers from providing disclosure to prospective investors adequate to satisfy the antifraud provisions of the securities law of Minnesota.

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(5) The issuer shall file with the commissioner a notice on form D as adopted by the Securities and Exchange Commission according to Regulation D, Code of Federal Regulations, title 17, section 230.502. The notice must be filed not later than 15 days after the first sale in this state of securities in an offering under this exemption. Every notice on form D must be manually signed by a person duly authorized by the issuer and must be accompanied by a consent to service of process on a form prescribed by the commissioner.

(6) A failure to comply with a term, condition, or requirement of paragraph (h) will not result in loss of the exemption for an offer or sale to a particular individual or entity if the person relying on the exemption shows that: (i) the failure to comply did not pertain to a term, condition, or requirement directly intended to protect that particular individual or entity, and the failure to comply was insignificant with respect to the offering as a whole; and (ii) a good faith and reasonable attempt was made to comply with all applicable terms, conditions, and requirements of paragraph (h), except that, where an exemption is established only through reliance upon this provision, the failure to comply shall nonetheless constitute a violation of section 80A.08 and be actionable by the commissioner.

(7) The issuer, upon request by the commissioner, shall, within ten days of the request, furnish to the commissioner a copy of any and all information, documents, or materials furnished to investors or offerees in connection with the offer and sale according to paragraph (h).

(8) Neither compliance nor attempted compliance with the exemption provided by paragraph (h), nor the absence of an objection or order by the commissioner with respect to an offer or sale of securities undertaken according to this exemption, shall be considered to be a waiver of a condition of the exemption or considered to be a confirmation by the commissioner of the availability of this exemption.

(9) The commissioner may, by rule or order, increase the number of purchasers or waive any other condition of this exemption.

(10) The determination whether offers and sales made in reliance on the exemption set forth in paragraph (h) shall be integrated with offers and sales according to other paragraphs of this subdivision shall be made according to the integration standard set forth in Rule 502 of Regulation D promulgated by the Securities and Exchange Commission, Code of Federal Regulations, title 17, section 230.502. If not subject to integration according to that rule, offers and sales according to paragraph (h) shall not otherwise be integrated with offers and sales according to other exemptions set forth in this subdivision.

(i) Any offer (but not a sale) of a security for which a registration statement has been filed under sections 80A.01 to 80A.31, if no stop order or refusal order is in effect and no public proceeding or examination looking toward an order is pending; and any offer of a security if the sale of the security is or would be exempt under this section. The commissioner may by rule exempt offers (but not sales) of securities for which a registration statement has been filed as the commissioner deems appropriate, consistent with the purposes of sections 80A.01 to 80A.31.

(j) The offer and sale by a cooperative organized under chapter 308A or under the laws of another state, of its securities when the securities are offered and sold only to its members, or when the purchase of the securities is necessary or incidental to establishing membership in the cooperative, or when such securities are issued as patronage dividends. This paragraph applies to a cooperative organized under the laws of another state only if the cooperative has filed with the commissioner a consent to service of process under section 80A.27, subdivision 7, and has, not less than ten days prior to the issuance or delivery, furnished the commissioner with a written general description of the transaction and any other information that the commissioner requires by rule or otherwise.

(l) The issuance and delivery of any securities of one corporation to another corporation or its security holders in connection with a merger, exchange of shares, or transfer of assets whereby the approval of stockholders of the other corporation is required to be obtained, provided, that the commissioner has been furnished with a general description of the transaction and with other information as the commissioner by rule prescribes not less than ten days prior to the issuance and delivery.

(m) Any transaction between the issuer or other person on whose behalf the offering is made and an underwriter or among underwriters.

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(n) The distribution by a corporation of its or other securities to its own security holders as a stock dividend or as a dividend from earnings or surplus or as a liquidating distribution; or upon conversion of an outstanding convertible security; or pursuant to a stock split or reverse stock split.

(o) Any offer or sale of securities by an affiliate of the issuer thereof if: (1) a registration statement is in effect with respect to securities of the same class of the issuer and (2) the offer or sale has been exempted from registration by rule or order of the commissioner.

(p) Any transaction pursuant to an offer to existing security holders of the issuer, including persons who at the time of the transaction are holders of convertible securities, nontransferable warrants, or transferable warrants exercisable within not more than 90 days of their issuance, if: (1) no commission or other remuneration (other than a standby commission) is paid or given directly or indirectly for soliciting any security holder in this state; and (2) the commissioner has been furnished with a general description of the transaction and with other information as the commissioner may by rule prescribe no less than ten days prior to the transaction.

(q) Any nonissuer sales of any security, including a revenue obligation, issued by the state of Minnesota or any of its political or governmental subdivisions, municipalities, governmental agencies, or instrumentalities.

(r) Any transaction as to which the commissioner by rule or order finds that registration is not necessary in the public interest and for the protection of investors.

(s) An offer or sale of a security issued in connection with an employee's stock purchase, savings, option, profit sharing, pension, or similar employee benefit plan, if the following conditions are met:

(1) the issuer, its parent corporation or any of its majority-owned subsidiaries offers or sells the security according to a written benefit plan or written contract relating to the compensation of the purchaser; and

(2) the class of securities offered according to the plan or contract, or if an option or right to purchase a security, the class of securities to be issued upon the exercise of the option or right, is registered under section 12 of the Securities Exchange Act of 1934, or is a class of securities with respect to which the issuer files reports according to section 15(d) of the Securities Exchange Act of 1934; or

(3) the issuer fully complies with the provisions of Rule 701 as adopted by the Securities and Exchange Commission, Code of Federal Regulations, title 12, section 230.701.

The issuer shall file not less than ten days before the transaction, a general description of the transaction and any other information that the commissioner requires by rule or otherwise or, if applicable, a Securities and Exchange Form S-8. Annually, within 90 days after the end of the issuer's fiscal year, the issuer shall file a notice as provided with the commissioner.

(t) Any sale of a security of an issuer that is a pooled income fund, a charitable remainder trust, or a charitable lead trust that has a qualified charity as the only charitable beneficiary.

(u) Any sale by a qualified charity of a security that is a charitable gift annuity if the issuer has a net worth, otherwise defined as unrestricted fund balance, of not less than $300,000 and either: (1) has been in continuous operation for not less than three years; or (2) is a successor or affiliate of a qualified charity that has been in continuous operation for not less than three years.

Sec. 29. Minnesota Statutes 1996, section 80A.16, is amended to read:

80A.16 [FILING OF SALES AND ADVERTISING LITERATURE.]

The commissioner may by rule or order require the filing of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser or broker-dealer unless: (1) the security or transaction is exempted by section 80A.15; or (2) the security is a federal covered security.

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Sec. 30. Minnesota Statutes 1996, section 80A.28, subdivision 1, is amended to read:

Subdivision 1. (a) There shall be a filing fee of $100 for every application for registration or notice filing. There shall be an additional fee of one-tenth of one percent of the maximum aggregate offering price at which the registered securities are to be offered in this state, and the maximum combined fees shall not exceed $300.

(b) If the registration statement relates to redeemable securities issued by an open end management company or unit investment trust, as defined in the Investment Company Act of 1940, there shall be a filing fee of $100 for every application for registration. There shall be an additional fee of 1/20 of one percent of the maximum aggregate offering price at which the registered securities are to be offered in this state. There shall be no maximum fee for securities registered pursuant to this clause.

(c) When an application for registration is withdrawn before the effective date or a preeffective stop order is entered under section 80A.13, subdivision 1, all but the $100 filing fee shall be returned. If an application to register securities is denied, the total of all fees received shall be retained.

(c) Where a filing is made in connection with a federal covered security under section 18(b)(2) of the Securities Act of 1933, there is a fee of $100 for every initial filing. There is an additional fee of 1/20 of one percent of the maximum aggregate offering price at which the securities are to be offered in this state. There is no maximum fee for securities filings made according to this section.

Sec. 31. Minnesota Statutes 1996, section 80A.28, subdivision 2, is amended to read:

Subd. 2. Every applicant for an initial or renewal license shall pay a filing fee of $200 in the case of a broker-dealer, $50 in the case of an agent, and $100 in the case of an investment adviser. When an application is denied or withdrawn, the filing fee shall be retained. A licensed agent who has terminated employment with one broker-dealer shall, before beginning employment with another broker-dealer, pay a transfer fee of $25. The fee for a filing made according to section 80A.05, subdivision 1a, is $100.

Sec. 32. Minnesota Statutes 1996, section 80C.01, subdivision 4, is amended to read:

Subd. 4. "Franchise" means (a) a contract or agreement, either express or implied, whether oral or written, for a definite or indefinite period, between two or more persons:

(1) by which a franchisee is granted the right to engage in the business of offering or distributing goods or services using the franchisor's trade name, trademark, service mark, logotype, advertising, or other commercial symbol or related characteristics;

(2) in which the franchisor and franchisee have a community of interest in the marketing of goods or services at wholesale, retail, by lease, agreement, or otherwise; and

(3) for which the franchisee pays, directly or indirectly, a franchise fee; or

(b) a contract, lease, or other agreement, either express or implied, whether oral or written, for a definite or indefinite period, between two or more persons, whereby the franchisee is granted the right to market motor vehicle fuel using the franchisor's trade name, trademark, service mark, logotype, advertising, or other commercial symbol or related characteristics for which the franchisee pays a franchise fee; or

(c) the sale or lease of any products, equipment, chattels, supplies, or services to the purchaser, other than the sale of sales demonstration equipment, materials or samples for a total price of $500 or less to any one person, for the purpose of enabling the purchaser to start a business and in which the seller:

(1) represents that the seller, lessor, or an affiliate thereof will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, or similar devices, or currency operated amusement machines or devices, on premises neither owned or leased by the purchaser or seller; or

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(2) represents that the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using, in whole or in part, the supplies, services, or chattels sold to the purchaser; or

(3) guarantees that the purchaser will derive income from the business which exceeds the price paid to the seller; or

(d) an oral or written contract or agreement, either expressed or implied, for a definite or indefinite period, between two or more persons, under which a manufacturer, selling security systems through dealers or distributors in this state, requires regular payments from the distributor or dealer as royalties or residuals for products purchased and paid for by the dealer or distributor.

(e) "Franchise" does not include any business which is operated under a lease or license on the premises of the lessor or licensor as long as such business is incidental to the business conducted by the lessor or licensor on such premises, including, without limitation, leased departments, licensed departments, and concessions.

(f) "Franchise" does not include any contract, lease or other agreement whereby the franchisee is required to pay less than $100 on an annual basis, except those franchises identified in paragraph (b).

(g) "Franchise" does not include a contract, lease or other agreement between a new motor vehicle manufacturer, distributor, or factory branch and a franchisee whereby the franchisee is granted the right to market automobiles, motorcycles, trucks, truck tractors, or self-propelled motor homes or campers if the foregoing are designed primarily for the transportation of persons or property on public highways.

(h) "Franchise" does not include a contract, lease, or other agreement or arrangement between two or more air carriers, or between one or more air carriers and one or more foreign air carriers. The terms "air carrier" and "foreign air carrier" shall have the meanings assigned to them by the Federal Aviation Act, United States Code Appendix, title 49, sections 1301(3) and 1301(22), respectively.

Sec. 33. Minnesota Statutes 1996, section 82.19, is amended by adding a subdivision to read:

Subd. 9. [EXCLUSIVE AGENCY AGREEMENTS.] (a) Except as provided in paragraph (b), a licensee shall not negotiate the sale, exchange, lease, or listing of any real property directly with the owner or lessor knowing that the owner or lessor has executed a written exclusive listing contract or exclusive contract for nonagency services in connection with the property with another real estate broker, buyer, or lessee, nor shall a licensee negotiate the purchase, lease, or exchange of real property knowing that the buyer or lessee has executed a written exclusive buyer representation contract or exclusive contract for nonagency services for the purchase, lease, or exchange of the real property with another real estate broker.

(b) A licensee may discuss the terms upon which a listing or buyer representation contract or a contract for nonagency services may be entered into after expiration of any existing exclusive contract when the inquiry or discussion is initiated by the owner, lessor, buyer, or lessee. The licensee must inquire of the owner, lessor, buyer, or lessee whether such an exclusive contract exists.

Sec. 34. Minnesota Statutes 1996, section 82.20, subdivision 15, is amended to read:

Subd. 15. [EXEMPTION.] The following persons, when acting as closing agents, are exempt from the requirements of sections 82.19 and 82.24 unless otherwise required in this section or chapter:

(1) a direct employee of a title insurance company authorized to do business in this state, or a direct employee of a title company, or a person who has an agency agreement with a title insurance company or a title company in which the agent agrees to perform closing services on the title insurance company's or title company's behalf and the title insurance company or title company assumes responsibility for the actions of the agent as if the agent were a direct employee of the title insurance company or title company;

(2) a licensed attorney or a direct employee of a licensed attorney;

(3) a licensed real estate broker or salesperson;

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(4) a direct employee of a licensed real estate broker if the broker maintains all funds received in connection with the closing services in the broker's trust account;

(5) any bank, trust company, savings association, credit union, industrial loan and thrift company, regulated lender under chapter 56, public utility, or land mortgage or farm loan association organized under the laws of this state or the United States, when engaged in the transaction of businesses within the scope of its corporate powers as provided by law; and

(6) a title insurance company authorized to do business in this state or a title company which is the appointed agent of a title insurance company authorized to do business in this state.; and

(7) a title company that has a contractual agency relationship with a title insurance company authorized to do business in this state, where the title insurance company assumes responsibility for the actions of the title company and its employees or agents as if they were the employees or agents of the title insurance company.

Sec. 35. Minnesota Statutes 1996, section 82.22, subdivision 13, is amended to read:

Subd. 13. [CONTINUING EDUCATION.] (a) After their first renewal date, all real estate salespersons and all real estate brokers shall be required to successfully complete 30 hours of real estate continuing education, either as a student or a lecturer, in courses of study approved by the commissioner, during each 24-month license period. At least 15 of the 30 credit hours must be completed during the first 12 months of the 24-month licensing period. Salespersons and brokers whose initial license period extends more than 12 months are required to complete 15 hours of real estate continuing education during the initial license period. Those licensees who will receive a 12-month license on July 1, 1995, because of the staggered implementation schedule must complete 15 hours of real estate continuing education as a requirement for renewal on July 1, 1996. Licensees may not claim credit for continuing education not actually completed as of the date their report of continuing education compliance is filed.

(b) The commissioner shall adopt rules defining the standards for course and instructor approval, and may adopt rules for the proper administration of this subdivision. The commissioner may not approve a course which can be completed by the student at home or outside the classroom without the supervision of an instructor approved by the department of commerce. The commissioner has discretion to establish a pilot program to explore delivery of accredited courses using new delivery technology, including interactive technology. This pilot program expires on August 1, 2000.

(c) Any program approved by Minnesota continuing legal education shall be approved by the commissioner of commerce for continuing education for real estate brokers and salespeople if the program or any part thereof relates to real estate.

(d) As part of the continuing education requirements of this section, the commissioner shall require that all real estate brokers and salespersons receive:

(1) at least two hours of training during each license period in courses in laws or regulations on agency representation and disclosure; and

(2) at least two hours of training during each license period in courses in state and federal fair housing laws, regulations, and rules, or other antidiscrimination laws.

Clause (1) does not apply to real estate salespersons and real estate brokers engaged solely in the commercial real estate business who file with the commissioner a verification of this status along with the continuing education report required under paragraph (a).

(e) The commissioner is authorized to establish a procedure for renewal of course accreditation.

Sec. 36. Minnesota Statutes 1996, section 82.24, subdivision 5, is amended to read:

Subd. 5. [TRUST ACCOUNT RECORDS ACCOUNTS.] (a) Each broker or closing agent shall maintain and retain records of all trust funds and trust accounts. The commissioner may prescribe information to be included in the records by appropriate rules.

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(b) A check received from a potential buyer shall be deposited into the listing broker's trust account not later than the third business day after delivery of the check to the broker, except that the check may be held by the listing broker until acceptance or rejection of the offer if:

(1) the check by its terms is not negotiable by the broker or if the potential buyer has given written instructions that the check shall not be deposited nor cashed until acceptance or shall be immediately returned if the offer is rejected; and

(2) the potential seller is informed that the check is being so held before or at the time the offer is presented to that person for acceptance.

If the offer is accepted, the check shall be deposited in a neutral escrow depository or the trust fund account of the listing broker not later than the third business day following acceptance of the offer unless the broker has received written authorization from all parties to the transaction to continue to hold the check. If the offer is rejected, the check shall be returned to the potential buyer not later than the next business day after rejection.

Sec. 37. Minnesota Statutes 1996, section 82B.13, subdivision 1, is amended to read:

Subdivision 1. [REGISTERED REAL PROPERTY APPRAISER OR LICENSED REAL PROPERTY APPRAISER.] As a prerequisite for licensing as a registered real property appraiser or licensed real property appraiser, an applicant must present evidence satisfactory to the commissioner that the person has successfully completed at least 75 90 classroom hours of courses. The courses must consist of 60 75 hours of general real estate appraisal principles and 15 hours related to standards of professional appraisal practice and the provisions of this chapter.

Sec. 38. Minnesota Statutes 1996, section 82B.13, subdivision 4, is amended to read:

Subd. 4. [CERTIFIED RESIDENTIAL REAL PROPERTY APPRAISER.] As a prerequisite for licensing as a certified residential real property appraiser, an applicant must present evidence satisfactory to the commissioner that the person has successfully completed at least 165 120 classroom hours of courses, including 15 hours related to the standards of professional appraisal practice and the provisions of this chapter, with particular emphasis on the appraisal of one to four unit residential properties.

Sec. 39. Minnesota Statutes 1996, section 82B.13, subdivision 5, is amended to read:

Subd. 5. [CERTIFIED GENERAL REAL PROPERTY APPRAISER.] As a prerequisite for licensing as a certified general real property appraiser, an applicant must present evidence satisfactory to the commissioner that the person has successfully completed at least 165 180 classroom hours of courses, including 15 hours related to the standards of professional appraisal practice and the provisions of this chapter, with particular emphasis on the appraisal of nonresidential properties.

Sec. 40. Minnesota Statutes 1996, section 82B.14, is amended to read:

82B.14 [EXPERIENCE REQUIREMENT.]

(a) A license under section 82B.11, subdivision 3, 4, or 5, may not be issued to a person who does not have the equivalent of two years of experience in real property appraisal supported by adequate written reports or file memoranda. As a prerequisite for licensing as a registered real property appraiser or licensed real property appraiser, an applicant must present evidence satisfactory to the commissioner that the person has obtained 2,000 hours of experience in real property appraisal.

As a prerequisite for licensing as a certified residential real property appraiser, an applicant must present evidence satisfactory to the commissioner that the person has obtained 2,500 hours of experience in real property appraisal.

As a prerequisite for licensing as a certified general real property appraiser, an applicant must present evidence satisfactory to the commissioner that the person has obtained 3,000 hours of experience in real property appraisal.

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(b) Each applicant for license under section 82B.11, subdivision 3, 4, or 5, shall give under oath a detailed listing of the real estate appraisal reports or file memoranda for each year for which experience is claimed by the applicant. Upon request, the applicant shall make available to the commissioner for examination, a sample of appraisal reports that the applicant has prepared in the course of appraisal practice.

(c) Applicants may not receive credit for experience accumulated while unlicensed, if the experience is based on activities which required a license under this section.

Sec. 41. Minnesota Statutes 1996, section 82B.19, subdivision 1, is amended to read:

Subdivision 1. [LICENSE RENEWALS.] A licensed real estate appraiser shall present evidence satisfactory to the commissioner of having met the continuing education requirements of this chapter before the commissioner renews a license.

The basic continuing education requirement for renewal of a license is the completion by the applicant either as a student or as an instructor, during the immediately preceding term of licensing, of at least 30 classroom hours of instruction in courses or seminars that have received the approval of the commissioner. As part of the continuing education requirements of this section, the commissioner shall require that all real estate appraisers receive at least four hours of training each license period in courses in laws or regulations on standards of professional practice. If the applicant's immediately preceding term of licensing consisted of 12 or more months, but fewer than 24 months, the applicant must provide evidence of completion of 15 hours of instruction during the license period. If the immediately preceding term of licensing consisted of fewer than 12 months, no continuing education need be reported.

Sec. 42. Minnesota Statutes 1996, section 317A.141, is amended by adding a subdivision to read:

Subd. 4. [EFFECT OF AMENDMENTS ON CHARITABLE TRUST ASSETS.] Assets held by a corporation, including income or fees from services, are restricted to the uses and purposes for which the property was received and held.

Sec. 43. Minnesota Statutes 1996, section 317A.671, is amended to read:

317A.671 [CERTAIN ASSETS NOT TO BE DIVERTED.]

Except as provided in section 501B.31, when a corporation dissolves, merges, substantially changes the use or purposes for which it will use its assets, or consolidates, transfers its assets, or grants a mortgage or other security interest in its assets, assets of the corporation or a constituent corporation, and assets subsequently received by a single corporation after a merger or consolidation, may not be diverted from the uses and purposes for which the assets have been received and held, or from the uses and purposes expressed or intended by the original donor.

Sec. 44. [325E.58] [SIGN CONTRACTOR; BOND.]

(a) A sign contractor may post a compliance bond with the commissioner, conditioned that the sign contractor shall faithfully perform duties and comply with laws, ordinances, rules, and contracts entered into for the installation of signs. The bond must be renewed annually and maintained for so long as determined by the commissioner. The aggregate liability of the surety on the bond to any and all persons, regardless of the number of claims made against the bond, may not exceed the annual amount of the bond. The bond may be canceled as to future liability by the surety upon 30 days' written notice mailed to the commissioner by United States mail.

(b) The amount of the bond shall be $8,000. The bond may be drawn upon only by a local unit of government that requires sign installers to post a compliance bond. The bond is in lieu of any compliance bond required by a local unit of government.

(c) For purposes of this section, "sign" means a device, structure, fixture, or placard using graphics, symbols, or written copy that is erected on the premises of an establishment including the name of the establishment or identifying the merchandise, services, activities, or entertainment available on the premises.

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Sec. 45. Minnesota Statutes 1996, section 326.83, subdivision 11, is amended to read:

Subd. 11. [OWNER.] Except in section 326.91, subdivision 1, "owner" means a person who has any legal or equitable interest in real property. For purposes of sections 326.83 to 326.991, "owner" does not include a residential building contractor or residential remodeler who constructs or improves its own property for purposes of speculation. A residential building contractor or residential remodeler will be presumed to be building or improving for purposes of speculation if it constructs or improves more than one property within any 12-month 24-month period.

Sec. 46. Minnesota Statutes 1996, section 326.83, subdivision 19, is amended to read:

Subd. 19. [SPECIAL SKILL.] "Special skill" means one of the following eight categories:

(a) [EXCAVATION.] Excavation includes work in any of the following areas:

(1) excavation;

(2) trenching;

(3) grading; and

(4) site grading.

(b) [MASONRY AND CONCRETE.] Masonry and concrete includes work in any of the following areas:

(1) drain systems;

(2) poured walls;

(3) slabs and poured-in-place footings;

(4) masonry walls;

(5) masonry fireplaces;

(6) masonry veneer; and

(7) water resistance and waterproofing.

(c) [CARPENTRY.] Carpentry includes work in any of the following areas:

(1) rough framing;

(2) finish carpentry;

(3) siding;

(4) doors, windows, and skylights;

(5) exterior covering;

(6) (4) porches and decks, excluding footings;

(7) (5) wood foundations; and

(8) insulation and vapor barrier;

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(9) (6) drywall installation, excluding taping and finishing;.

(10) cabinet and counter top installation;

(11) wood floors;

(12) installation of roofing materials, excluding roofing; and

(13) soffit, fascia, and trim.

(d) [INTERIOR FINISHING.] Interior finishing includes work in any of the following areas:

(1) floor covering;

(2) wood floors;

(3) cabinet and counter top installation;

(4) insulation and vapor barriers;

(5) interior or exterior painting;

(6) ceramic, marble, and quarry tile;

(7) ornamental guardrail and installation of prefabricated stairs; and

(8) wallpapering.

(e) [EXTERIOR FINISHING.] Exterior finishing includes work in any of the following areas:

(1) siding;

(2) doors, skylights, and windows;

(3) soffit, fascia, and trim;

(4) (3) exterior plaster and stucco;

(5) (4) painting; and

(6) (5) rain carrying systems, including gutters and down spouts.

(f) [DRYWALL AND PLASTER.] Drywall and plaster includes work in any of the following areas:

(1) installation;

(2) taping;

(3) finishing;

(4) interior plaster;

(5) painting; and

(6) wallpapering.

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(g) [ROOFING.] Roofing includes work in any of the following areas:

(1) roof coverings;

(2) roof sheathing;

(3) roof weatherproofing and insulation; and

(4) repair of roof support system, but not construction of new roof support system.

(h) [GENERAL INSTALLATION SPECIALTIES.] Installation includes work in any of the following areas:

(1) garage doors and openers;

(2) pools, spas, and hot tubs;

(3) fireplaces and wood stoves;

(4) asphalt paving and seal coating;

(5) exterior plaster and stucco; and

(6) ornamental guardrail and prefabricated stairs.

Sec. 47. Minnesota Statutes 1996, section 326.84, subdivision 3, is amended to read:

Subd. 3. [EXEMPTIONS.] The license requirement does not apply to:

(1) an employee of a licensee performing work for the licensee;

(2) a material person, manufacturer, or retailer furnishing finished products, materials, or articles of merchandise who does not install or attach the items;

(3) an owner or owners of residential real estate who build or improve residential real estate and who do the work themselves or jointly with the owner's own bona fide employees. This exemption does not apply to a person who engages in a pattern of building or improving real estate for purposes of resale. Such a pattern is presumed to exist if the person constructs or improves more than one property within any 12-month 24-month period;

(4) an architect or engineer engaging in professional practice as defined in this chapter;

(5) a person whose total gross annual receipts from projects regulated under this section do not exceed $15,000;

(6) a mechanical contractor;

(7) a plumber, electrician, or other person whose profession is otherwise subject to statewide licensing, when engaged in the activity which is the subject of licensure;

(8) specialty contractors who provide only one special skill as defined in section 326.83;

(9) a school district, or a technical college governed under chapter 136F;

(10) manufactured housing installers; and

(11) Habitat for Humanity and Builders Outreach Foundation, and their individual volunteers when engaged in activities on their behalf.

To qualify for the exemption in clause (5), a person must obtain a certificate of exemption from licensing from the commissioner.

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A certificate of exemption will be issued upon the applicant's filing with the commissioner, an affidavit stating that the applicant does not expect to exceed $15,000 in gross annual receipts derived from contracting activities during the calendar year for which the exemption is requested.

To renew the exemption in clause (5), the applicant must file an affidavit stating that the applicant did not exceed $15,000 in gross annual receipts during the past calendar year, and the applicant does not expect to exceed $15,000 in gross annual receipts during the calendar year for which the exemption is requested.

If a person, operating under the exemption in clause (5), exceeds $15,000 in gross receipts during any calendar year, the person must immediately surrender the exemption certificate and apply for the appropriate license. The person must remain licensed until such time as the person's gross annual receipts during a calendar year fall below $15,000. The person may then apply for this exemption for the next calendar year.

Sec. 48. Minnesota Statutes 1996, section 326.85, is amended by adding a subdivision to read:

Subd. 4. [NONEXPIRATION.] The council is not subject to the expiration provisions of section 15.059, subdivision 5.

Sec. 49. Minnesota Statutes 1996, section 326.921, is amended to read:

326.921 [BUILDING PERMIT CONDITIONED ON LICENSURE.]

A political subdivision shall not issue a building permit to an unlicensed person who is required to be licensed under sections 326.83 to 326.991. A political subdivision that issues zoning or land use permits in lieu of a building permit shall not issue those permits to an unlicensed person who is required to be licensed under sections 326.83 to 326.911. The political subdivision shall report the person applying for a building the permit to the commissioner who may bring an action against the person.

Sec. 50. Minnesota Statutes 1996, section 332.33, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENT.] Except as otherwise provided in this chapter, no person shall conduct within this state a collection agency or engage within this state in the business of collecting claims for others as defined in sections 332.31 to 332.45, without having first applied for and obtained a collection agency license. A person acting under the authority of a collection agency, as a collector, must first obtain a Minnesota collector license. A licensed collector may use one additional assumed name only if the assumed name is registered with and approved by the commissioner.

Sec. 51. Minnesota Statutes 1996, section 332.33, is amended by adding a subdivision to read:

Subd. 7. [NOTICE.] A licensed collection agency or individual collector must give the commissioner written notice of a change in personal name, company name, address, or ownership not later than 15 days after the change occurs.

Sec. 52. Minnesota Statutes 1996, section 332.34, is amended to read:

332.34 [BOND.]

The commissioner of commerce shall require each collection agency licensee to annually file and maintain in force a corporate surety bond, in a form to be prescribed by, and acceptable to, the commissioner, and in the a sum of at least $20,000. An applicant for a new or renewal license may request that the amount of the bond be reduced to an amount not less than $5,000. This request may be granted upon a showing that the total dollar amount received from debtors by the collection agency in the preceding fiscal year did not exceed $30,000. A collection agency may deposit cash in and with a depository acceptable to the commissioner in an amount and in the manner prescribed and approved by the commissioner in lieu of a bond.

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Sec. 53. Minnesota Statutes 1996, section 333.01, is amended to read:

333.01 [COMMERCIAL ASSUMED NAMES; CERTIFICATE.]

Subdivision 1. [CERTIFICATE.] No person shall hereafter carry on or conduct or transact a commercial business in this state under any designation, name, or style, which does not set forth the true name of every person interested in such business unless such person shall file in the office of the secretary of state, a certificate setting forth the name and business address under which the business is conducted or transacted, or is to be conducted or transacted, and the true name of each person conducting or transacting the same, with the address of such person. The name of the business must not include any of the following phrases or their abbreviations: corporation, incorporated, limited, chartered, professional cooperative, association, limited partnership, limited liability company, professional limited liability company, limited liability partnership, or professional limited liability partnership, except to the extent that an entity filing a certificate would be authorized to use the phrase or abbreviation. The certificate shall be executed by one of the persons conducting, or intending to conduct, the business. The certificate shall be published after it has been filed with the secretary of state in a qualified newspaper in the county in which the person has a principal or registered office for two successive issues.

Subd. 2. [INTENTIONAL MISREPRESENTATION PROHIBITED.] No person shall use an assumed or fictitious name in the conduct of its business to intentionally misrepresent its geographic origin or location.

Sec. 54. [333.065] [PENALTY FOR VIOLATION.]

A person who violates any provision of sections 333.01 to 333.06 is subject to the penalties and remedies provided in section 8.31.

The relief provided in this section is in addition to the remedies or penalties otherwise available.

Sec. 55. Minnesota Statutes 1996, section 359.061, is amended to read:

359.061 [RECORD OF COMMISSION; CERTIFICATE.]

The commission of every notary shall be recorded in the office of the court administrator of the district court of the notary's county of residence, in a record kept for that purpose. The commission of a nonresident notary must be recorded in the office of the court administrator of the district court of the Minnesota county that borders the county in which the nonresident notary resides. The court administrator, when requested, shall certify to official acts in the manner and for the fees prescribed by statute or court rule.

Sec. 56. Minnesota Statutes 1996, section 359.071, is amended to read:

359.071 [CHANGE OF NAME OR ADDRESS.]

A notary shall notify the commissioner of any name or address change within 30 days of the change.

Sec. 57. Minnesota Statutes 1996, section 501B.35, subdivision 3, is amended to read:

Subd. 3. [CHARITABLE TRUST.] "Charitable trust" means a fiduciary relationship with respect to property that arises as a result of a manifestation of an intention to create it, and that subjects the person by whom the property is held to equitable duties to deal with the property for a charitable purpose. As used in this definition, property includes all income derived from fees for services.

Sec. 58. Minnesota Statutes 1996, section 507.401, subdivision 2, is amended to read:

Subd. 2. [CERTIFICATE OF RELEASE.] An officer or duly appointed agent of a title insurance company may, on behalf of a mortgagor or a person who acquired from the mortgagor title to all or a part of the property described in a mortgage, execute a certificate of release that complies with the requirements of this section and record the certificate of release in the real property records of each county in which the mortgage is recorded if: (i) a satisfaction or release of the mortgage has

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not been executed and recorded within 60 days after the date payment in full of the loan secured by the mortgage was sent in accordance with a payoff statement furnished by the mortgagee or the mortgage servicer, and (ii) the title insurance company, its officer, or agent has sent to the last known address of the mortgagee or the mortgage servicer, at least 30 days prior to executing the certificate of release, written notice of its intention to execute and record a certificate of release in accordance with this section after the expiration of the 60-day period.

Sec. 59. Minnesota Statutes 1996, section 507.401, subdivision 3, is amended to read:

Subd. 3. [CONTENTS.] A certificate of release executed under this section must contain substantially all of the following:

(1) the name of the mortgagor, the name of the original mortgagee, and, if applicable, the mortgage servicer, the date of the mortgage, the date of recording, and volume and page or document number in the real property records where the mortgage is recorded, together with similar information for the last recorded assignment of the mortgage;

(2) a statement that the mortgage was in the original principal amount of $500,000 or less;

(3) a statement that the person executing the certificate of release is an officer or a duly appointed agent of a title insurance company authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 68A;

(4) a statement that the certificate of release is made on behalf of the mortgagor or a person who acquired title from the mortgagor to all or a part of the property described in the mortgage;

(5) a statement that the mortgagee or mortgage servicer provided a payoff statement which was used to make payment in full of the unpaid balance of the loan secured by the mortgage; and

(6) a statement that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the written or verbal payoff statement., and received by the mortgagee or mortgage servicer, as evidenced by one or more of the following in the records of the title insurance company or its agent:

(i) a bank check, certified check, escrow account check from the title company or title insurance agent, or attorney trust account check that has been negotiated by the mortgagee or mortgage servicer; or

(ii) other documentary evidence of payment to the mortgagee or mortgage servicer;

(7) a statement that more than 60 days have elapsed since the date payment in full was sent;

(8) a statement that after the expiration of the 60-day period referred to in subdivision 2, the title insurance company, its officer, or agent sent to the last known address of the mortgagee or mortgage servicer, at least 30 days prior to executing the certificate of release, notice in writing of its intention to execute and record a certificate of release in accordance with this section, with an unexecuted copy of the proposed certificate of release attached to the written notice; and

(9) a statement that the title insurance company, its officer, or agent has not received notification in writing of any reason why the certificate of release should not be executed and recorded after the expiration of the 30-day notice period referred to in subdivision 2.

Sec. 60. [REPEALER.]

Minnesota Statutes 1996, section 60K.07, subdivision 1, is repealed.

Sec. 61. [EFFECTIVE DATE.]

Section 32, paragraph (h), is effective the day following final enactment and shall apply to all agreements or arrangements regardless of the date they were entered into or renewed.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5054

Sections 4, 6, 7, 42, 43, 46, 48, and 57 are effective the day following final enactment.

Sections 53 and 54 are effective the day following final enactment and apply to causes of action arising from incidents occurring on or after that date."

Delete the title and insert:

"A bill for an act relating to commerce; providing powers and duties to the commissioner; regulating investments by certain licensees; regulating securities; modifying the real estate licensing exemption for closing agents; regulating real property appraisers; regulating residential building contractors and remodelers; requiring a compliance bond for sign contractors; modifying licensing requirements for collection agencies; regulating charitable trusts; regulating notaries public; regulating certificates of release by title insurance companies; making technical changes; amending Minnesota Statutes 1996, sections 45.011, subdivision 1; 45.028, subdivision 1; 67A.231; 80A.02, subdivision 1; 80A.04, subdivisions 3, 4, and by adding a subdivision; 80A.05, subdivisions 4, 5, and by adding a subdivision; 80A.06, subdivisions 1, 2, and 3; 80A.08; 80A.12, by adding a subdivision; 80A.14, subdivisions 3, 4, and by adding subdivisions; 80A.15, subdivisions 1 and 2; 80A.16; 80A.28, subdivisions 1 and 2; 80C.01, subdivision 4; 82.19, by adding a subdivision; 82.20, subdivision 15; 82.22, subdivision 13; 82.24, subdivision 5; 82B.13, subdivisions 1, 4, and 5; 82B.14; 82B.19, subdivision 1; 317A.141, by adding a subdivision; 317A.671; 326.83, subdivisions 11 and 19; 326.84, subdivision 3; 326.85, by adding a subdivision; 326.921; 332.33, subdivision 1, and by adding a subdivision; 332.34; 333.01; 359.061; 359.071; 501B.35, subdivision 3; and 507.401, subdivisions 2 and 3; proposing coding for new law in Minnesota Statutes, chapters 45; 60K; 80A; 325E; and 333; repealing Minnesota Statutes 1996, section 60K.07, subdivision 1."

We request adoption of this report and repassage of the bill.

Senate Conferees: Sam G. Solon, Dave Johnson and William V. Belanger, Jr.

House Conferees: Matt Entenza, Jim Tunheim and Tim Commers.

Entenza moved that the report of the Conference Committee on S. F. No. 501 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 501, A bill for an act relating to commerce; providing powers and duties to the commissioner; regulating securities; modifying the real estate licensing exemption for closing agents; regulating real property appraisers; regulating residential building contractors and remodelers; modifying licensing requirements for collection agencies; regulating notaries public; making technical changes; amending Minnesota Statutes 1996, sections 45.011, subdivision 1; 45.028, subdivision 1; 80A.04, subdivisions 3, 4, and by adding a subdivision; 80A.05, subdivisions 4, 5, and by adding a subdivision; 80A.06, subdivisions 1, 2, and 3; 80A.08; 80A.12, by adding a subdivision; 80A.14, subdivisions 3, 4, and by adding subdivisions; 80A.15, subdivisions 1 and 2; 80A.16; 80A.28, subdivisions 1 and 2; 80C.01, subdivision 4; 82.19, by adding a subdivision; 82.20, subdivision 15; 82.22, subdivision 13; 82.24, subdivision 5; 82B.13, subdivisions 1, 4, and 5; 82B.14; 82B.19, subdivision 1; 326.83, subdivisions 11 and 19; 326.84, subdivision 3; 326.85, by adding a subdivision; 326.921; 332.33, subdivision 1, and by adding a subdivision; 332.34; 359.061; and 359.071; proposing coding for new law in Minnesota Statutes, chapters 45; 60K; and 80A; repealing Minnesota Statutes 1996, section 60K.07, subdivision 1.

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.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5055

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 130 yeas and 3 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mariani Pawlenty Swenson, H.
Anderson, B. Evans Kahn Marko Paymar Sykora
Anderson, I. Farrell Kalis McCollum Pelowski Tingelstad
Bakk Finseth Kelso McElroy Peterson Tomassoni
Bettermann Folliard Kielkucki McGuire Pugh Tompkins
Biernat Garcia Kinkel Milbert Rest Trimble
Bishop Goodno Knoblach Molnau Rhodes Tuma
Boudreau Greenfield Koppendrayer Mulder Rifenberg Tunheim
Bradley Greiling Koskinen Mullery Rostberg Van Dellen
Broecker Gunther Kraus Munger Rukavina Vickerman
Carlson Haas Kubly Murphy Schumacher Wagenius
Chaudhary Harder Kuisle Ness Seagren Weaver
Clark Hasskamp Larsen Nornes Seifert Wejcman
Commers Hausman Leighton Olson, E. Sekhon Wenzel
Daggett Hilty Leppik Olson, M. Skare Westfall
Davids Holsten Lieder Opatz Skoglund Westrom
Dawkins Huntley Lindner Orfield Slawik Winter
Dehler Jaros Long Osskopp Solberg Wolf
Delmont Jefferson Luther Osthoff Stanek Workman
Dempsey Jennings Macklin Otremba Stang Spk. Carruthers
Dorn Johnson, A. Mahon Ozment Sviggum
Entenza Johnson, R. Mares Paulsen Swenson, D.

Those who voted in the negative were:

Knight Krinkie Smith

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 739.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 739

A bill for an act relating to telecommunications; providing policies to carry out the state's role in telecommunications regulation; providing for a state policy encouraging high speed telecommunication services and greater capacity for services; providing for a single statewide local access and transport area (LATA); amending Minnesota Statutes 1996, sections 8.33, subdivision 2; 237.12, by adding a subdivision; 237.121; 237.16, subdivision 9; 237.761, subdivisions 4 and 8; 237.762, subdivisions 1, 3, and by adding a subdivision; 237.764, subdivision 1; 237.765; 237.766; and 237.769; proposing coding for new law in Minnesota Statutes, chapter 237.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5056

May 16, 1997

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. 739, report that we have agreed upon the items in dispute and recommend as follows:

That the Senate concur in the House amendments and that S. F. No. 739 be further amended as follows:

Page 5, after line 32, insert:

"Sec. 8. [237.162] [UNIVERSAL SERVICE DISCOUNTS FOR SCHOOLS AND LIBRARIES.]

The commission shall establish intrastate service discounts for schools and libraries by order to the extent and within the time frame necessary to enable schools and libraries to begin receiving federally supported discounts at the earliest date permitted by the Federal Communications Commission."

Page 13, line 6, delete "19" and insert "20"

Renumber the sections in sequence

We request adoption of this report and repassage of the bill.

Senate Conferees: Steve Kelley, Steven G. Novak and Mark Ourada.

House Conferees: Loren Jennings, Mike Delmont and Barb Vickerman.

Jennings moved that the report of the Conference Committee on S. F. No. 739 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 739, A bill for an act relating to telecommunications; providing policies to carry out the state's role in telecommunications regulation; providing for a state policy encouraging high speed telecommunication services and greater capacity for services; providing for a single statewide local access and transport area (LATA); amending Minnesota Statutes 1996, sections 8.33, subdivision 2; 237.12, by adding a subdivision; 237.121; 237.16, subdivision 9; 237.761, subdivisions 4 and 8; 237.762, subdivisions 1, 3, and by adding a subdivision; 237.764, subdivision 1; 237.765; 237.766; and 237.769; proposing coding for new law in Minnesota Statutes, chapter 237.

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 128 yeas and 5 nays as follows:

Those who voted in the affirmative were:

Anderson, B. Farrell Kalis McCollum Pelowski Sykora
Anderson, I. Finseth Kelso McElroy Peterson Tingelstad
Bakk Folliard Kielkucki McGuire Pugh Tomassoni
Bettermann Garcia Kinkel Milbert Rest Tompkins
Biernat Goodno Knoblach Molnau Rhodes Trimble
Bishop Greenfield Koppendrayer Mulder Rifenberg Tuma
Boudreau Greiling Koskinen Mullery Rostberg Tunheim
Bradley Gunther Kraus Munger Rukavina Van Dellen
Broecker Haas Kubly Murphy Schumacher Vickerman
Carlson Harder Kuisle Ness Seagren Wagenius
Chaudhary Hasskamp Larsen Nornes Seifert Weaver
Clark Hausman Leighton Olson, E. Sekhon Wejcman
Commers Hilty Leppik Olson, M. Skare Wenzel
Daggett Holsten Lieder Opatz Skoglund Westrom
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5057
Davids Huntley Lindner Orfield Slawik Winter
Dawkins Jaros Long Osskopp Smith Wolf
Delmont Jefferson Luther Osthoff Solberg Workman
Dempsey Jennings Macklin Otremba Stanek Spk. Carruthers
Dorn Johnson, A. Mahon Ozment Stang
Entenza Johnson, R. Mares Paulsen Sviggum
Erhardt Juhnke Mariani Pawlenty Swenson, D.
Evans Kahn Marko Paymar Swenson, H.

Those who voted in the negative were:

Abrams Dehler Knight Krinkie Westfall

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 1255.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 1255

A bill for an act relating to campaign finance; clarifying limits on contributions to candidates for local elected office; amending Minnesota Statutes 1996, section 211A.12.

May 16, 1997

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. 1255, report that we have agreed upon the items in dispute and recommend as follows:

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5058

That the House recede from its amendment and that S. F. No. 1255 be further amended as follows:

Page 2, after line 1, insert:

"Sec. 2. [211A.14] [CONTRIBUTIONS AND SOLICITATIONS DURING LEGISLATIVE SESSION.]

A legislator or state constitutional officer who is a candidate for a county, city, or town office, the candidate's principal campaign committee, and any other political committee with the candidate's name or title may not solicit or accept a contribution from a political fund or registered lobbyist during a regular session of the legislature."

Page 2, line 2, delete "2" and insert "3"

Amend the title as follows:

Page 1, line 3, after the semicolon, insert "prohibiting solicitation and acceptance of certain contributions during legislative sessions;"

Page 1, line 4, before the period, insert "; proposing coding for new law in Minnesota Statutes, chapter 211A"

We request adoption of this report and repassage of the bill.

Senate Conferees: William V. Belanger, Jr., Pat Pariseau and John Marty.

House Conferees: Mark P. Mahon, Gail Skare and Jim Knoblach.

Mahon moved that the report of the Conference Committee on S. F. No. 1255 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 1255, A bill for an act relating to campaign finance; clarifying limits on contributions to candidates for local elected office; amending Minnesota Statutes 1996, section 211A.12.

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 133 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Tingelstad
Anderson, B. Farrell Kelso McCollum Peterson Tomassoni
Anderson, I. Finseth Kielkucki McElroy Pugh Tompkins
Bakk Folliard Kinkel McGuire Rest Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5059
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Otremba Stang
Dempsey Johnson, A. Macklin Ozment Sviggum
Dorn Johnson, R. Mahon Paulsen Swenson, D.
Entenza Juhnke Mares Pawlenty Swenson, H.
Erhardt Kahn Mariani Paymar Sykora

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. 2163

A bill for an act relating to the financing and operation of state and local government; providing for property tax reform; providing for education financing; limiting education revenue referenda for 1997; changing property tax refunds for homeowners and renters; changing truth-in-taxation requirements; providing for joint truth-in-taxation hearings; imposing levy limits on cities and counties; changing fiscal note requirements for state mandates; providing for reimbursement for costs of state mandates; providing for certain property tax exemptions; establishing a property tax reform account; providing a refundable credit for 1997 property taxes; making miscellaneous property tax changes; providing a senior citizens property tax deferral program; changing aids to local governments; changing tax increment financing provisions; authorizing certain tax increment districts; exempting certain tax increment districts from certain requirements; authorizing local taxes, levies, and abatements; conforming certain income tax laws with changes in federal law; providing income tax credits; modifying the application of sales and excise taxes; exempting certain purchases from the sales tax; modifying waste management tax and taconite tax provisions; increasing the budget reserve; revising the law governing regional development commissions; providing for certain payments to counties; making miscellaneous technical changes and corrections; requiring studies; appropriating money; amending Minnesota Statutes 1996, sections 6.76; 16A.152, subdivision 2; 69.021, subdivision 7; 93.41; 103D.905, subdivisions 4, 5, and by adding a subdivision; 115A.554; 116.07, subdivision 10; 117.155; 121.15, by adding a subdivision; 122.247, subdivision 3; 122.45, subdivision 3a; 122.531, subdivisions 4a and 9; 122.533; 122.535, subdivision 6; 124.2131, subdivision 1; 124.239, subdivision 5, and by adding subdivisions; 124.2601, subdivisions 2 and 3; 124.2711, subdivisions 1 and 5; 124.2713, subdivision 1; 124.2714; 124.2715, subdivision 1; 124.2716, subdivision 2; 124.2725, subdivisions 2, 6, 13, and 14; 124.2726, subdivisions 1 and 3; 124.2727, subdivision 6a; 124.312, subdivision 5; 124.313; 124.4945; 124.83, subdivision 3; 124.91, subdivisions 1, 2, 5, and 7; 124.912, subdivisions 1, 3, 6, and 7; 124.914, subdivisions 1, 2, 3, and 4; 124.916, subdivisions 1, 3, and 4; 124.918, subdivision 8; 124.95, subdivision 1; 124A.03, subdivision 1g; 124A.23, subdivision 1; 124A.292, subdivision 2; 161.45, by adding a subdivision; 216B.16, by adding subdivisions; 270.60, by adding a subdivision; 270B.02, by adding a subdivision; 270B.12, by adding a subdivision; 271.01, subdivision 5; 271.19; 272.02, subdivision 1, and by adding a subdivision; 272.115; 273.11, subdivisions 1a, 16, and by adding a subdivision; 273.111, subdivisions 3 and 6; 273.112, by adding a subdivision; 273.121; 273.124, subdivisions 1, 14, and by adding a subdivision; 273.13, subdivisions 1, 22, 23, 24, 25, 31, and by adding subdivisions; 273.135, subdivision 2; 273.1391, subdivision 2; 273.1398, subdivisions 1, 1a, 6, 8, and by adding subdivisions; 273.18; 274.01; 274.13, by adding subdivisions; 275.065, subdivisions 1, 3, 5a, 6, 8, and by adding subdivisions; 275.07, subdivision 4; 275.08, subdivision 1b; 276.04, subdivision 2; 276A.04; 276A.05, subdivisions 1 and 5; 276A.06, subdivisions 2, 3, 5, and 9; 278.07; 281.13; 281.23, subdivision 6; 281.273; 281.276; 282.01, subdivision 8; 282.04, subdivision 1; 287.22; 289A.02, subdivision 7; 289A.26, subdivisions 2, 3, 6, and 7; 289A.56, subdivision 4; 290.01, subdivisions 19, 19a, 19b, 19c, 19d, 19g, and 31; 290.014, subdivisions 2 and 3; 290.015, subdivision 5; 290.06, subdivision 22, and by adding subdivisions; 290.067, subdivision 1; 290.068, subdivision 1; 290.0922, subdivision 1; 290.17, subdivision 1; 290.371, subdivision 2; 290.92, by adding a subdivision; 290.9725; 290.9727, subdivision 1; 290.9728, subdivision 1; 290A.03, subdivisions 6, 7, 11, and 13; 290A.04, subdivisions 1, 2, 6, and by adding a subdivision; 290A.19; 291.005, subdivision 1; 295.50, subdivision 6; 295.58; 296.141, subdivision 4; 296.18, subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, 15, and 16; 297A.02, subdivision 2; 297A.14, subdivision 4; 297A.211, subdivision 1; 297A.25, subdivisions 2, 3, 7, 11, 56, 59, and by adding subdivisions; 297A.45; 297B.01, subdivisions 7 and 8; 297E.02, subdivision 6; 297E.04, subdivision 3; 298.24, subdivision 1; 298.28, subdivisions 2, 3, 4, 5, 9a, and by adding subdivisions; 298.2961, subdivision 1; 298.75, subdivisions 1, 4, and by adding a subdivision; 325D.33, subdivision 3; 349.12, subdivision 26a; 349.154, subdivision 2; 349.163, subdivision 8; 349.19, subdivision 2a; 349.191, subdivision 1b;

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5060

373.40, subdivision 7; 398A.04, subdivision 1; 462.381; 462.383; 462.384, subdivision 5; 462.385; 462.386, subdivision 1; 462.387; 462.388; 462.389, subdivisions 1, 3, and 4; 462.39, subdivisions 2 and 3; 462.391, subdivision 5, and by adding subdivisions; 462.393; 462.394; 462.396; 462.398; 469.012, subdivision 1; 469.033, subdivision 6; 469.040, subdivision 3, and by adding a subdivision; 469.174, subdivisions 10, 19, and by adding subdivisions; 469.175, subdivision 3, and by adding subdivisions; 469.176, subdivisions 1b, 2, 4c, 4g, 4j, and 6; 469.177, subdivisions 1, 3, and 4; 473F.06; 473F.07, subdivisions 1 and 5; 473F.08, subdivisions 2, 3, 5, and 8a; 477A.011, subdivisions 20, 34, 35, 36, 37, and by adding subdivisions; 477A.013, subdivisions 1 and 9; 477A.03, subdivision 2; and 477A.05; Laws 1992, chapter 511, article 2, section 52; Laws 1993, chapter 375, article 9, section 45, subdivisions 2, 3, 4, and by adding a subdivision; Laws 1995, chapter 264, article 5, sections 44, subdivision 4, as amended; and 45, subdivision 1, as amended; Laws 1997, chapter 34, section 2; proposing coding for new law in Minnesota Statutes, chapters 3; 14; 16A; 124; 124A; 270; 273; 275; 290; 297A; 383A; 383B; 458D; 462A; 469; 477A; proposing coding for new law as Minnesota Statutes, chapter 290B; repealing Minnesota Statutes 1996, sections 3.982; 124.2131, subdivision 3a; 124.2134; 124.225, subdivisions 1, 3a, 7a, 7b, 7d, 7e, 7f, 8a, 8k, 8l, 8m, 9, 10, 13, 14, 15, 16, and 17; 124.226; 124.2442; 124.2601, subdivisions 4, 5, and 6; 124.2711, subdivisions 2a and 3; 124.2713, subdivisions 6, 6a, 6b, and 7; 124.2715, subdivisions 2 and 3; 124.2716, subdivisions 3 and 4; 124.2725, subdivisions 3, 4, 5, and 7; 124.2727, subdivisions 6b, 6c, and 9; 124.314, subdivision 2; 124.321; 124.91, subdivisions 2, 4, and 7; 124.912, subdivision 2; 124A.029; 124A.03, subdivisions 2a and 3b; 124A.0311; 124A.22, subdivisions 4a, 4b, 8a, 8b, 13d, and 13e; 124A.23, subdivisions 1, 2, 3, and 4; 124A.26, subdivisions 2 and 3; 124A.292, subdivisions 3 and 4; 270B.12, subdivision 11; 273.13, subdivisions 21a and 32; 273.1315; 273.1317; 273.1318; 273.1398, subdivisions 2, 2c, 2d, 3, and 3a; 273.1399; 273.166; 275.08, subdivisions 1c and 1d; 275.61; 276.012; 276A.06, subdivision 9; 290A.03, subdivisions 12a and 14; 290A.055; 290A.26; 297A.01, subdivisions 20 and 21; 297A.02, subdivision 5; 297A.25, subdivision 29; 462.384, subdivision 7; 462.385, subdivision 2; 462.389, subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; 462.392; 469.176, subdivisions 1a and 5; 469.1782, subdivision 1; 469.181; 473F.08, subdivision 8a; and 645.34; Laws 1995, chapter 264, article 4, as amended.

May 17, 1997

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. 2163, 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. 2163 be further amended as follows:

Delete everything after the enacting clause and insert:

"ARTICLE 1

PROPERTY TAX REFORM

Section 1. Minnesota Statutes 1996, section 124.239, is amended by adding a subdivision to read:

Subd. 3a. [DEBT SERVICE COSTS QUALIFYING FOR AID.] Annual debt service costs up to an amount equal to the 1997 debt service costs for bonds outstanding on the effective date of this act qualify for alternative facilities aid under subdivision 5.

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Sec. 2. Minnesota Statutes 1996, section 124.239, subdivision 5, is amended to read:

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 received under subdivision 5; 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.

Sec. 3. Minnesota Statutes 1996, section 124.239, is amended by adding a subdivision 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 qualifying for aid under subdivision 3a.

Sec. 4. [273.126] [QUALIFYING LOW-INCOME RENTAL HOUSING.]

Subdivision 1. [QUALIFYING RULES.] The market value of a rental housing unit qualifies for assessment under class 4d if:

(1) it is occupied by individuals meeting the income limits under subdivision 2;

(2) a rent restriction agreement under subdivision 3 applies;

(3) the unit meets the minimum housing quality standards under subdivision 4; and

(4) the Minnesota housing finance agency certifies to the local assessor that the unit qualifies.

Subd. 2. [INCOME LIMITS.] (a) In order to qualify under class 4d, a unit must be occupied by an individual or individuals whose income is at or below 60 percent of the median area gross income. If the resident's income met the requirement when the resident first occupied the unit, the income of the resident continues to qualify. If an individual first occupied a unit before January 1, 1998, the individual's income for purposes of the preceding sentence is the income for calendar year 1996.

(b) For purposes of this section, "median area gross income" means the greater of (1) the median gross income for the area determined under section 42 of the Internal Revenue Code of 1986, as amended through December 31, 1996, or (2) the median gross income for the state.

(c) The median gross income must be adjusted for family size.

(d) Vacant units qualify as meeting the requirements of this subdivision in the same proportion that total units in the building are subject to rent restriction agreements under subdivision 3 and meet minimum housing standards under subdivision 4. This paragraph applies only to the extent that units subject to a rent restriction agreement and meeting the minimum housing quality standards are vacant.

(e) The owner or manager of the property may comply with this subdivision by obtaining written statements from the residents that their incomes are at or below the limit.

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.

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(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.

(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.

Subd. 4. [MINIMUM HOUSING STANDARDS.] In order to qualify under class 4d, a unit must be certified by the housing finance agency to meet the minimum housing standards established under section 462A.071.

Subd. 5. [MONITORING RENT LEVELS.] The housing finance agency is directed to monitor changes in rent levels and the use of section 8 certificates in units qualifying under class 4d.

Subd. 6. [PENALTIES.] Notwithstanding the provisions of section 273.01, 274.01, or any other law, if the Minnesota housing finance agency notifies the assessor that the provisions of this section have not been met for any period during which a unit was classified under class 4d, a penalty is imposed as provided in section 462A.071, subdivision 8.

Sec. 5. [273.127] [TRANSITION CLASS RATES; LOW-INCOME HOUSING.]

Subdivision 1. [TAXES PAYABLE IN 1998.] For taxes payable in 1998, low-income housing property classified as class 4c shall have a class rate of two percent, and property classified as class 4d shall have a class rate of 1.9 percent.

Subd. 2. [APPLICATION.] (a) The class rates under subdivisions 3 and 4 apply to the market value of properties:

(1)(i) which were classified as class 4c or class 4d for taxes payable in 1998; or

(ii) which are constructed or substantially rehabilitated during calendar year 1997 and would have qualified as class 4c or class 4d for taxes payable in 1999 absent the amendments to those classes in section 8; and

(2) which do not qualify as class 4d property as a result of the eligibility criteria specified in section 273.126.

(b) To qualify for the class rates under this section, the building's owner must annually certify to the assessor in writing that the property, building, or unit continues to qualify under the laws in effect and applicable to its classification for taxes payable in 1998.

(c) A property no longer qualifies under this section:

(1) if it is transferred or sold; or

(2) if loans, that have a principal amount equal to more than 25 percent of the property's market value and that are secured by the property, are refinanced.

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 percent applies for taxes payable in 2000.

Subd. 4. [CLASS 4D 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 2.2 percent applies for taxes payable in 1999 and a class rate of 2.5 applies for taxes payable in 2000.

Sec. 6. Minnesota Statutes 1996, 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.

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For taxes payable in 1998 and thereafter, the first $72,000 $75,000 of market value of class 1a property has a net class rate of one percent of its market value and a gross class rate of 2.17 percent of its market value. For taxes payable in 1992,; and the market value of class 1a property that exceeds $72,000 but does not exceed $115,000 $75,000 has a class rate of two 1.85 percent of its market value; and the market value of class 1a property that exceeds $115,000 has a class rate of 2.5 percent of its market value. For taxes payable in 1993 and thereafter, the market value of class 1a property that exceeds $72,000 has a class rate of two percent.

(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

(C) workers' compensation based on a finding of total and permanent disability; 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

(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 150 275 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.

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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 and a gross class rate of .87 percent of its market value. The remaining market value of class 1b property has a gross or 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 for taxes payable in 1993 and thereafter 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.

(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).

Sec. 7. Minnesota Statutes 1996, 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. It Each parcel has a class rate of three 2.7 percent of the first $100,000 tier of market value for taxes payable in 1993 and thereafter, and 5.06 4.0 percent of the remaining market value over $100,000, 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 state-assessed commercial, industrial, and utility property owned by one person or entity, only one parcel has a reduced class rate on the first $100,000 of market value. In the case of other commercial, industrial, and utility property owned by one person or entity, only one parcel in each county has a reduced class rate on the first $100,000 tier of market value, except that:.

(1) if the market value of the parcel is less than $100,000, and additional parcels are owned by the same person or entity in the same city or town within that county, the reduced class rate shall be applied up to a combined total market value of $100,000 for all parcels owned by the same person or entity in the same city or town within the county;

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(2) in the case of grain, fertilizer, and feed elevator facilities, as defined in section 18C.305, subdivision 1, or 232.21, subdivision 8, the limitation to one parcel per owner per county for the reduced class rate shall not apply, but there shall be a limit of $100,000 of preferential value per site of contiguous parcels owned by the same person or entity. Only the value of the elevator portion of each parcel shall qualify for treatment under this clause. For purposes of this subdivision, contiguous parcels include parcels separated only by a railroad or public road right-of-way; and

(3) in the case of 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, 1993, if the property is used as a business incubator, the limitation to one parcel per owner per county for the reduced class rate shall not apply, provided that the reduced rate applies only to the first $100,000 of value per parcel owned by the organization. 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.

To receive the reduced class rate on additional parcels under clause (1), (2), or (3), the taxpayer must notify the county assessor that the taxpayer owns more than one parcel that qualifies under clause (1), (2), or (3).

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.

(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 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 $100,000 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 of four equal to 85 percent of the class rate of the second tier of the commercial property rate under paragraph (a) on that any portion of the market value in excess of $100,000 and any market value under $100,000 that does not qualify for the three percent 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 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. 8. Minnesota Statutes 1996, section 273.13, subdivision 25, 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 percent of market value for taxes payable in 1996 and thereafter. All other class 4a property has a class rate of 3.4 2.9 percent of market value for taxes payable in 1996 and thereafter. For purposes of this paragraph, population has the same meaning given in section 477A.011, subdivision 3.

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(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 2.8 percent of market value for taxes payable in 1992, 2.5 percent of market value for taxes payable in 1993, and 2.3 2.1 percent of market value for taxes payable in 1994 and thereafter.

(c) Class 4bb includes:

(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).

Class 4bb has a class rate of 1.9 percent on the first $75,000 of market value and a class rate of 2.1 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.

(c) (d) Class 4c property includes:

(1) a structure that is:

(i) situated on real property that is used for housing for the elderly or for low- and moderate-income families as defined in Title II, as amended through December 31, 1990, of the National Housing Act or the Minnesota housing finance agency law of 1971, as amended, or rules promulgated by the agency and financed by a direct federal loan or federally insured loan made pursuant to Title II of the Act; or

(ii) situated on real property that is used for housing the elderly or for low- and moderate-income families as defined by the Minnesota housing finance agency law of 1971, as amended, or rules adopted by the agency pursuant thereto and financed by a loan made by the Minnesota housing finance agency pursuant to the provisions of the act.

This clause applies only to property of a nonprofit or limited dividend entity. Property is classified as class 4c under this clause for 15 years from the date of the completion of the original construction or substantial rehabilitation, or for the original term of the loan.

(2) a structure that is:

(i) situated upon real property that is used for housing lower income families or elderly or handicapped persons, as defined in section 8 of the United States Housing Act of 1937, as amended; and

(ii) owned by an entity which has entered into a housing assistance payments contract under section 8 which provides assistance for 100 percent of the dwelling units in the structure, other than dwelling units intended for management or maintenance personnel. Property is classified as class 4c under this clause for the term of the housing assistance payments contract, including all renewals, or for the term of its permanent financing, whichever is shorter; and

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(3) a qualified low-income building as defined in section 42(c)(2) of the Internal Revenue Code of 1986, as amended through December 31, 1990, that (i) receives a low-income housing credit under section 42 of the Internal Revenue Code of 1986, as amended through December 31, 1990; or (ii) meets the requirements of that section and receives public financing, except financing provided under sections 469.174 to 469.179, which contains terms restricting the rents; or (iii) meets the requirements of section 273.1317. Classification pursuant to this clause is limited to a term of 15 years. The public financing received must be from at least one of the following sources: government issued bonds exempt from taxes under section 103 of the Internal Revenue Code of 1986, as amended through December 31, 1993, the proceeds of which are used for the acquisition or rehabilitation of the building; programs under section 221(d)(3), 202, or 236, of Title II of the National Housing Act; rental housing program funds under Section 8 of the United States Housing Act of 1937 or the market rate family graduated payment mortgage program funds administered by the Minnesota housing finance agency that are used for the acquisition or rehabilitation of the building; public financing provided by a local government used for the acquisition or rehabilitation of the building, including grants or loans from federal community development block grants, HOME block grants, or residential rental bonds issued under chapter 474A; or other rental housing program funds provided by the Minnesota housing finance agency for the acquisition or rehabilitation of the building.

For all properties described in clauses (1), (2), and (3) and in paragraph (d), the market value determined by the assessor must be based on the normal approach to value using normal unrestricted rents unless the owner of the property elects to have the property assessed under Laws 1991, chapter 291, article 1, section 55. If the owner of the property elects to have the market value determined on the basis of the actual restricted rents, as provided in Laws 1991, chapter 291, article 1, section 55, the property will be assessed at the rate provided for class 4a or class 4b property, as appropriate. Properties described in clauses (1)(ii), (3), and (4) may apply to the assessor for valuation under Laws 1991, chapter 291, article 1, section 55. The land on which these structures are situated has the class rate given in paragraph (b) if the structure contains fewer than four units, and the class rate given in paragraph (a) if the structure contains four or more units. This clause applies only to the property of a nonprofit or limited dividend entity.

(4) a parcel of land, not to exceed one acre, and its improvements or a parcel of unimproved land, not to exceed one acre, if it is owned by a neighborhood real estate trust and at least 60 percent of the dwelling units, if any, on all land owned by the trust are leased to or occupied by lower income families or individuals. This clause does not apply to any portion of the land or improvements used for nonresidential purposes. For purposes of this clause, a lower income family is a family with an income that does not exceed 65 percent of the median family income for the area, and a lower income individual is an individual whose income does not exceed 65 percent of the median individual income for the area, as determined by the United States Secretary of Housing and Urban Development. For purposes of this clause, "neighborhood real estate trust" means an entity which is certified by the governing body of the municipality in which it is located to have the following characteristics:

(a) it is a nonprofit corporation organized under chapter 317A;

(b) it has as its principal purpose providing housing for lower income families in a specific geographic community designated in its articles or bylaws;

(c) it limits membership with voting rights to residents of the designated community; and

(d) it has a board of directors consisting of at least seven directors, 60 percent of whom are members with voting rights and, to the extent feasible, 25 percent of whom are elected by resident members of buildings owned by the trust; and

(5) 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 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 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

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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. 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 first $100,000 of the market value of the remainder of the cabins or units and a proportionate share of the land on which they are located shall have a class rate of three percent. 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 or the county;

(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) 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.

(6) (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 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;

(7) (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

(8) (5) manufactured home parks as defined in section 327.14, subdivision 3.

Class 4c property has a class rate of 2.3 2.1 percent of market value, except that (i) for each parcel of seasonal residential recreational property not used for commercial purposes under clause (5) the first $72,000 $75,000 of market value on each parcel has a class rate of 1.75 percent for taxes payable in 1997 and 1.5 1.4 percent for taxes payable in 1998 and thereafter, and the market value of each parcel that exceeds $72,000 $75,000 has a class rate of 2.5 percent, and (ii) manufactured home parks assessed under clause (8) (5) have a class rate of two percent for taxes payable in 1996, and thereafter.

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(d) (e) Class 4d property includes:

(1) a structure that is:

(i) situated on real property that is used for housing for the elderly or for low and moderate income families as defined by the Farmers Home Administration;

(ii) located in a municipality of less than 10,000 population; and

(iii) financed by a direct loan or insured loan from the Farmers Home Administration. Property is classified under this clause for 15 years from the date of the completion of the original construction or for the original term of the loan.

The class rates in paragraph (c), clauses (1), (2), and (3) and this clause apply to the properties described in them, only in proportion to occupancy of the structure by elderly or handicapped persons or low and moderate income families as defined in the applicable laws unless construction of the structure had been commenced prior to January 1, 1984; or the project had been approved by the governing body of the municipality in which it is located prior to June 30, 1983; or financing of the project had been approved by a federal or state agency prior to June 30, 1983. For those properties, 4c or 4d classification is available only for those units meeting the requirements of section 273.1318.

Classification under this clause is only available to property of a nonprofit or limited dividend entity.

In the case of a structure financed or refinanced under any federal or state mortgage insurance or direct loan program exclusively for housing for the elderly or for housing for the handicapped, a unit shall be considered occupied so long as it is actually occupied by an elderly or handicapped person or, if vacant, is held for rental to an elderly or handicapped person.

(2) For taxes payable in 1992, 1993, and 1994, only, buildings and appurtenances, together with the land upon which they are located, leased by the occupant under the community lending model lease-purchase mortgage loan program administered by the Federal National Mortgage Association, provided the occupant's income is no greater than 60 percent of the county or area median income, adjusted for family size and the building consists of existing single family or duplex housing. The lease agreement must provide for a portion of the lease payment to be escrowed as a nonrefundable down payment on the housing. To qualify under this clause, the taxpayer must apply to the county assessor by May 30 of each year. The application must be accompanied by an affidavit or other proof required by the assessor to determine qualification under this clause.

(3) Qualifying buildings and appurtenances, together with the land upon which they are located, leased for a period of up to five years by the occupant under a lease-purchase program administered by the Minnesota housing finance agency or a housing and redevelopment authority authorized under sections 469.001 to 469.047, provided the occupant's income is no greater than 80 percent of the county or area median income, adjusted for family size, and the building consists of two or less dwelling units. The lease agreement must provide for a portion of the lease payment to be escrowed as a nonrefundable down payment on the housing. The administering agency shall verify the occupants income eligibility and certify to the county assessor that the occupant meets the income criteria under this paragraph. To qualify under this clause, the taxpayer must apply to the county assessor by May 30 of each year. For purposes of this section, "qualifying buildings and appurtenances" shall be defined as one or two unit residential buildings which are unoccupied and have been abandoned and boarded for at least six months 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 two one percent of market value except that property classified under clause (3), shall have the same class rate as class 1a property.

(e) Residential rental property that would otherwise be assessed as class 4 property under paragraph

(a); paragraph (b), clauses

(1) and (3); paragraph (c), clause (1), (2), (3), or (4), is assessed at the class rate applicable to it under Minnesota Statutes 1988, section 273.13, if it is found to be a substandard building under section 273.1316. Residential rental property that would otherwise be assessed as class 4 property under paragraph (d) is assessed at 2.3 percent of market value if it is found to be a substandard building under section 273.1316.

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(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.

Sec. 9. Minnesota Statutes 1996, 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 5.06 4.0 percent of market value for taxes payable in 1998 and thereafter.

Sec. 10. Minnesota Statutes 1996, section 273.13, subdivision 32, is amended to read:

Subd. 32. [TARGET CLASS RATE RATES.] (a) All classes of property with a class rate of 5.06 4 percent have a target class rate of four 3.5 percent. Class 4a shall have a target class rate of 2.5 percent. Class 4bb has a target class rate of 1.25 percent of the first $75,000 of market value and a target class rate of 1.85 percent of the market value in excess of $75,000.

(b) By the fourth Tuesday in January of 1998 and at the time of submission of the biennial budget under section 16A.11 in each biennium thereafter, the governor shall must recommend the effective class rate schedule for all properties for taxes payable in 1999 for the schedule submitted in 1998 and for the following two calendar years by designating a "phase-in percentage," equal to the proportion of the effective class rate that will be based on the target class rate of four percent, with the remaining proportion based on the class rate of 5.06 percent in each biennium thereafter. The class rate schedule must include reductions in the class rates of the classes designated in paragraph

(a) until such time as the target class rates are reached unless the governor recommends no change in the class rate schedule for all properties. As part of the recommendation, the governor shall identify recommend appropriation of monies from the property tax reform account under section 16A.1521 and include within the budget additional funding for the increased expenditures for the education homestead and agricultural credit aid over the amount of expenditures for homestead and agricultural credit aid provided in Laws 1989, First Special Session chapter 1, that are estimated to result from the recommendation. At that time, the property tax refund under chapter 290A and education aids under chapters 124 and 124A to the extent those aids will be used to reduce property tax levies. The governor may propose alternative programs other than homestead and agricultural credit aid to prevent other taxpayers' the taxes of classes other than those designated in paragraph (a) from increasing as a result of the governor's recommended increase in the phase-in percentage. The effective net class rate is the sum of the products of:

(1) the phase-in percentage adopted by the legislature multiplied by four percent; and

(2) 100 percent minus the phase-in percentage multiplied by 5.06 percent.

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The phase-in percentage in any year cannot be less than it was in the prior year. The phase-in percentage is ten percent for taxes payable in 1991, 29.2 percent for taxes payable in 1992, 34.0 percent for taxes payable in 1993, and 43.4 percent for taxes payable in 1994 and thereafter.

Beginning in 1991, the commissioner of revenue shall annually set the effective class rate to use for taxes payable in the following year as provided in this subdivision and announce it by June 1. For purposes of any aid, levy limitation, debt limit, or salary limitation, and property tax administration, net tax capacity must be computed with reference to the effective class rate for the properties affected by this subdivision class rate schedule.

Sec. 11. [273.1319] [SINGLE FAMILY HOUSING; NONCOMPLIANCE; MINNEAPOLIS AND ST. PAUL.]

(a) If the city determines that a residential rental property classified as class 4bb under section 273.13, subdivision 25, is not in compliance with the city's applicable rental licensing requirements and housing codes, the city shall notify the property owner of the specific items that are not in compliance. The owner has 60 days to correct the noncompliance items identified by the city. If they have not been corrected within the 60-day time period to the satisfaction of the city, the city shall notify the assessor that the property is out of compliance and is no longer eligible for the class 4bb property classification. Notwithstanding any other provision of law, the assessor shall reclassify the property for the current assessment year, for taxes payable in the following year as class 4b property. The assessor shall notify the property owner of the action.

(b) This section applies only to property located in the cities of Minneapolis and St. Paul.

(c) This section is effective for each of the cities of Minneapolis and St. Paul upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the governing body of the city.

Sec. 12. [273.1382] [EDUCATION HOMESTEAD CREDIT.]

Subdivision 1. [EDUCATION HOMESTEAD CREDIT.] Each year, beginning with property taxes payable in 1998, the respective county auditors shall determine the local tax rate for each school district for the general education levy certified under section 124A.23, subdivision 2 or 3. That rate 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 percent 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. 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.

Subd. 2. [CREDIT REIMBURSEMENTS.]

(a) The commissioner of revenue shall determine the tax reductions allowed under this section for each taxes payable year, and for each school district based upon a review of the abstracts of tax lists submitted by the county auditors under section 275.29, and from any other information which the commissioner deems relevant. The commissioner of revenue shall generally compute the tax reductions at the unique taxing jurisdiction level, however the commissioner may compute the tax reductions at a higher geographic level if that would have a negligible impact, or if changes in the composition of unique taxing jurisdictions do not permit computation at the unique taxing jurisdiction level. The commissioner's determinations under this paragraph are not rules.

(b) The commissioner of revenue shall certify the total of the tax reductions granted under this section for each taxes payable year within each school district to the commissioner of children, families, and learning after July 1 and on or before August 1 of the taxes payable year. The commissioner of children, families, and learning shall reimburse each affected school district for the amount of the property tax reductions allowed under this section as provided in section 273.1392. The commissioner of children, families, and learning shall treat the reimbursement payments as entitlements for the same state fiscal year as certified, including with each district's initial payment all amounts that would have been paid up to that date, computed as if 90 percent of the annual reimbursement amount for the district were being paid one-twelfth in each month of the fiscal year.

Subd. 3. [APPROPRIATION.] An amount sufficient to make the payments required by this section is annually appropriated from the general fund to the commissioner of children, families, and learning.

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Sec. 13. Minnesota Statutes 1996, section 273.1393, is amended to read:

273.1393 [COMPUTATION OF NET PROPERTY TAXES.]

Notwithstanding any other provisions to the contrary, "net" property taxes are determined by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in section 273.123;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) education homestead credit as provided in section 273.1382;

(8) taconite homestead credit as provided in section 273.135; and

(8) (9) supplemental homestead credit as provided in section 273.1391.

The combination of all property tax credits must not exceed the gross tax amount.

Sec. 14. Minnesota Statutes 1996, 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 before reductions made under section 273.13 but after deductions made under sections 273.135, 273.1391, 273.1382, 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 the amount of the gross rent paid in the preceding year for the site on which the homestead is located, which is attributable to the net tax paid on the site. The amount attributable to property taxes shall be determined by multiplying the net tax on the parcel by a fraction, the numerator of which is the gross rent paid for the calendar year for the site and the denominator of which is the gross rent paid for the calendar year for the parcel. 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 273.13, subdivision 22 or 23, 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.

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Sec. 15. [462A.071] [CERTIFICATION OF HOUSING QUALIFYING FOR REDUCED PROPERTY TAX RATE.]

Subdivision 1. [CERTIFICATION.] By June 30 of each year, the agency must certify to local assessors the units of low-income rental properties that qualify for class 4d under sections 273.126 and 273.13. In making these certifications, the agency may rely on the application and supporting information supplied by the property owner as to compliance with the income limits under section 273.126, subdivision 2, and satisfaction of the minimum housing quality standards under subdivision 4.

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.

(b) Each application must include:

(1) the property tax identification number;

(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 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 fund.

Subd. 3. [AGREEMENT TO RESTRICT RENTS.] The agency may prescribe one or more standard form agreements to restrict rents that meet the requirements of section 273.126, subdivision 3. The agreements must be in recordable form. The agency may require applicants to execute a rent restriction agreement in this form as a condition of entering an agreement to restrict rents.

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 the housing quality standards adopted by the United States Department of Housing and Urban Development.

(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.

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Subd. 5. [HOUSING INSPECTORS.] (a) Housing inspections required by this section may be conducted only by persons designated by the agency. The agency may designate one or more persons to conduct inspections for all or part of the state. A designated inspector may charge a fee for an inspection up to a maximum amount approved by the agency. The inspector must be independent of the owner or manager of the inspected property.

(b) The agency must maintain a list of persons eligible to conduct housing inspections under this section.

Subd. 6. [SECTION 8 AND TAX CREDIT 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.

(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).

Subd. 7. [MONITORING COMPLIANCE.] (a) The agency must monitor compliance by building owners with the requirements of section 273.126 and this section. The agency must annually conduct on-site examinations of a sample of the buildings receiving class 4d taxation to monitor compliance. The agency may contract with third parties to monitor compliance.

(b) An inspector, designated by the agency under subdivision 5, shall notify the agency if, in conducting an inspection under subdivision 4, the inspector finds that:

(1) a unit is receiving class 4d taxation;

(2) the unit is not in compliance with the requirements of subdivision 4; and

(3) the owner or manager fails or refuses to cure the violations within a reasonable time after receiving notification of the violation.

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.

(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, a penalty applies equal to the increased taxes that would have been imposed if the property 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 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.

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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.

Subd. 9. [TAX COURT REVIEW.] (a) An owner may appeal to tax court as provided in section 271.06:

(1) a denial of a request for certification of a property as qualifying for class 4d taxation;

(2) imposition of a penalty under this section; or

(3) denial of a request to abate a penalty.

(b) The county attorney shall represent the public in opposing the appeal.

Subd. 10. [INTERAGENCY CONTRACTING AUTHORITY.] The agency may contract with the department of revenue or any other state agency or a private entity to carry out administrative functions under this section.

Subd. 11. [RULEMAKING.] (a) The agency may adopt administrative rules under chapter 14 to carry out the provisions of this section, including establishing standards for abating penalties, violations that are inadvertent and insubstantial, selection of inspectors, selection of persons to monitor compliance, and establishing rent restriction agreement terms.

(b) Pending final rulemaking, and in order to implement this section by January 1, 1998, the agency shall be allowed to make determinations regarding selection of inspectors, rent restriction agreement terms, fees, application information, application deadlines, required documentation, exemptions from inspection requirements, and deeming of eligibility. Any determinations adopted under this authority expire on January 1, 1999.

Sec. 16. [PROPERTY TAX REBATE.]

(a) A credit is allowed against the tax imposed on an individual under Minnesota Statutes, chapter 290 equal to 20 percent of the qualified property tax paid in calendar year 1997 for taxes assessed in 1996.

(b) For property owned and occupied by the taxpayer, qualified tax means property taxes payable as defined in Minnesota Statutes, section 290A.03, subdivision 13, assessed in 1996 and payable in 1997.

(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.

Sec. 17. [GENERAL EDUCATION LEVY REDUCTION.]

Notwithstanding the provisions of Minnesota Statutes, section 124A.23, subdivision 1, the general education levy shall be reduced by $93,000,000 for taxes payable in 1998 and subsequent years. The amount necessary to offset the costs of the levy reductions contained in this section is annually appropriated from the general fund to the commissioner of children, families, and learning.

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Sec. 18. [TEMPORARY EXEMPTIONS FROM INSPECTION REQUIREMENTS.]

(a) The Minnesota housing finance agency may provide a temporary exemption to the inspection requirement under Minnesota Statutes, sections 273.126, subdivision 4, and 462A.071, if the agency finds that:

(1) the property owner made a good faith effort to obtain an inspection; and

(2) the owner was unable to obtain an inspection in time to apply because the designated inspectors were unable to conduct all the requested inspections.

(b) If a unit that is exempted under this section does not ultimately obtain a certification from a designated inspector that it is in compliance with the minimum housing quality standards, the additional taxes under Minnesota Statutes, section 273.126, subdivision 5, apply.

(c) Procedures or rules for granting exemptions under this section are not subject to the administrative rulemaking under Minnesota Statutes, chapter 14.

(d) The authority under this section expires December 31, 2000.

Sec. 19. [TIF GRANTS; APPROPRIATIONS.]

Subdivision 1. [TIF GRANTS.] (a) The commissioner of revenue shall pay grants to municipalities for deficits in tax increment financing districts caused by the changes in class rates under this act. Municipalities must submit applications for the grants in a form prescribed by the commissioner by no later than March 1 for grants payable during the calendar year. The maximum grant equals the lesser of:

(1) for taxes payable in the year before the grant is paid, the reduction in the tax increment financing district's revenues derived from increment resulting from the class rate changes in this article; or

(2) the municipality's total tax increments, including unspent increments from previous years, less the amount due during the calendar year to pay (i) bonds issued and sold before the day following final enactment of this act and (ii) binding contracts entered into before the day following final enactment of this act.

(b) The commissioner of revenue may require applicants for grants or pooling authority under this section to provide any information the commissioner deems appropriate. The commissioner shall calculate the amount under paragraph (a), clause (2), based on the reports for the tax increment financing district or districts filed with the state auditor on or before July 1 of the year before the year in which the grant is to be paid.

(c) This subdivision applies only to deficits in tax increment financing districts for which:

(1) the request for certification was made before the enactment date of this act; and

(2) all timely reports have been filed with the state auditor, as required by Minnesota Statutes, section 469.175.

(d) The commissioner shall pay the grants under this subdivision by December 26 of the year.

(e) $2,000,000 is appropriated to the commissioner of revenue to make grants under this section. This appropriation is available until expended or this section expires under subdivision 3, whichever is earlier. If the amount of grant entitlements for a year exceed the appropriation, the commissioner shall reduce each grant proportionately so the total equals the amount available.

Subd. 2. [ADDITIONAL POOLING AUTHORITY.] Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision 2, and the provisions of the tax increment financing act in effect for districts for which the request for certification was made before June 30, 1982, revenues derived from increments may be spent on activities located outside of the district to pay binding obligations entered into before the day following final enactment. The amount qualifying under

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this subdivision to be spent outside the district is limited to an amount necessary to meet a binding obligation of the other district that cannot be paid by the other district because of the reduction in class rates under this section. Use of increments under this authority must be approved, in writing, by the commissioner of revenue.

Subd. 3. [EXPIRATION.] This section expires on January 1, 2001.

Sec. 20. [APPROPRIATION.]

(a) $450,000 is appropriated for fiscal year 1998 from the general fund to the housing finance agency for purposes of administering the certification of qualifying low-income residential properties for property taxation under class 4d.

The cost ceiling for the Minnesota housing finance agency, as otherwise provided by legislation enacted in 1997 without regard to whether the legislation is enacted before or after this act, is increased by $142,000 for fiscal year 1998 and by $118,000 for fiscal year 1999.

(b) $15,300,000 is appropriated from the general fund to the commissioner of children, families, and learning for fiscal year 1999 for alternative facilities aid under section 3.

Sec. 21. [REPEALER.]

(a) Minnesota Statutes, section 124.2134, is repealed.

(b) Minnesota Statutes, sections 273.1317; and 273.1318, are repealed.

Sec. 22. [EFFECTIVE DATES.]

Sections 1, 2, 5, 6, 7, 8, 9, 11, 12, 13, 14, 17, and 21, paragraph (a), are effective for taxes levied in 1997, payable in 1998 and subsequent years, except that the low-income housing provisions in class 4c and 4d are effective for taxes payable in 1999 and thereafter and the provisions in sections 6 and 8 relating to class 1c and 4c seasonal residential property that specify percentages of lodging receipts and bookings of at least two consecutive nights are effective for taxes payable in 1999 and thereafter.

Sections 4, 15, and 21, paragraph (b), are effective for taxes payable in 1999 and subsequent years.

Sections 3 and 20 are effective July 1, 1997.

Section 19 is effective for taxes payable in 1998, 1999, and 2000.

ARTICLE 2

PROPERTY TAX

Section 1. Minnesota Statutes 1996, section 69.021, subdivision 7, is amended to read:

Subd. 7. [APPORTIONMENT OF FIRE STATE AID TO MUNICIPALITIES AND RELIEF ASSOCIATIONS.] (a) The commissioner shall apportion the fire state aid relative to the premiums reported on the Minnesota Firetown Premium Reports filed under this chapter to each municipality and/or firefighters' relief association.

(b) The commissioner shall calculate an initial fire state aid allocation amount for each municipality or fire department under paragraph (c) and a minimum fire state aid allocation amount for each municipality or fire department under paragraph (d). The municipality or fire department must receive the larger fire state aid amount.

(c) The initial fire state aid allocation amount is the amount available for apportionment as fire state aid under subdivision 5, without inclusion of any additional funding amount to support a minimum fire state aid amount under section 423A.02, subdivision 3, allocated one-half in proportion to the population as shown in the last official statewide

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federal census for each fire town and one-half in proportion to the market value of each fire town, including (1) the market value of tax exempt property and (2) the market value of natural resources lands receiving in lieu payments under sections 477A.11 to 477A.14, but excluding the market value of minerals. In the case of incorporated or municipal fire departments furnishing fire protection to other cities, towns, or townships as evidenced by valid fire service contracts filed with the commissioner, the distribution must be adjusted proportionately to take into consideration the crossover fire protection service. Necessary adjustments shall be made to subsequent apportionments. In the case of municipalities or independent fire departments qualifying for the aid, the commissioner shall calculate the state aid for the municipality or relief association on the basis of the population and the market value of the area furnished fire protection service by the fire department as evidenced by duly executed and valid fire service agreements filed with the commissioner. If one or more fire departments are furnishing contracted fire service to a city, town, or township, only the population and market value of the area served by each fire department may be considered in calculating the state aid and the fire departments furnishing service shall enter into an agreement apportioning among themselves the percent of the population and the market value of each service area. The agreement must be in writing and must be filed with the commissioner.

(d) The minimum fire state aid allocation amount is the amount in addition to the initial fire state allocation amount that is derived from any additional funding amount to support a minimum fire state aid amount under section 423A.02, subdivision 3, and allocated to municipalities with volunteer firefighter relief associations based on the number of active volunteer firefighters who are members of the relief association as reported in the annual financial reporting for the calendar year 1993 to the office of the state auditor, but not to exceed 30 active volunteer firefighters, so that all municipalities or fire departments with volunteer firefighter relief associations receive in total at least a minimum fire state aid amount per 1993 active volunteer firefighter to a maximum of 30 firefighters.

(e) The fire state aid must be paid to the treasurer of the municipality where the fire department is located and the treasurer of the municipality shall, within 30 days of receipt of the fire state aid, transmit the aid to the relief association if the relief association has filed a financial report with the treasurer of the municipality and has met all other statutory provisions pertaining to the aid apportionment.

(f) The commissioner may make rules to permit the administration of the provisions of this section. Any adjustments needed to correct prior misallocations must be made to subsequent apportionments.

Sec. 2. Minnesota Statutes 1996, section 103D.905, subdivision 4, is amended to read:

Subd. 4. [BOND FUND.] A bond fund consists of the proceeds of special assessments, storm water charges, loan repayments, and ad valorem tax levies pledged by the watershed district for the payment of bonds or notes issued by the watershed district secured by the property of the watershed district that is producing or is likely to produce a regular income. The bond fund is to be used for the payment of the purchase price of the property or the value of the property as determined by the court in proper proceedings and for the improvement and development of the property principal of, premium or administrative surcharge, if any, and interest on the bonds and notes issued by the watershed district and for payments required to be made to the federal government under section 148(f) of the Internal Revenue Code of 1986, as amended through December 31, 1996.

Sec. 3. Minnesota Statutes 1996, section 103D.905, subdivision 5, is amended to read:

Subd. 5. [CONSTRUCTION OR IMPLEMENTATION FUND.] (a) A construction or implementation fund consists of:

(1) the proceeds of watershed district bonds or notes or of the sale of county bonds;

(2) construction or implementation loans from the pollution control agency under sections 103F.701 to 103F.761, or from any agency of the federal government; and

(3) special assessments, storm water charges, loan repayments, and ad valorem tax levies levied or to be levied to supply funds for the construction or implementation of the projects of the watershed district, including reservoirs, ditches, dikes, canals, channels, storm water facilities, sewage treatment facilities, wells, and other works, and the expenses incident to and connected with the construction or implementation.

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(b) Construction or implementation loans from the pollution control agency under sections 103F.701 to 103F.761, or from an agency of the federal government may be repaid from money collected by the proceeds of watershed district bonds or notes or from the collections of storm water charges, loan repayments, ad valorem tax levies, or special assessments on properties benefited by the project.

Sec. 4. Minnesota Statutes 1996, section 103D.905, is amended by adding a subdivision to read:

Subd. 9. [PROJECT TAX LEVY.] In addition to other tax levies provided in this section or in any other law, a watershed district may levy a tax:

(1) to pay the costs of projects undertaken by the watershed district which are to be funded, in whole or in part, with the proceeds of grants or construction or implementation loans under sections 103F.701 to 103F.761;

(2) to pay the principal of, or premium or administrative surcharge, if any, and interest on, the bonds and notes issued by the watershed district pursuant to section 103F.725; or

(3) to repay the construction or implementation loans under sections 103F.701 to 103F.761.

Taxes levied with respect to payment of bonds and notes shall comply with section 475.61.

Sec. 5. Minnesota Statutes 1996, section 216B.16, is amended by adding a subdivision to read:

Subd. 6d. [WIND ENERGY; PROPERTY TAX.] An owner of a wind energy conversion facility which is required to pay property taxes under section 272.02, subdivision 1, paragraph (21), or a public utility regulated by the public utilities commission which purchases the wind generated electricity may petition the commission to include in any power purchase agreement between the owner of the facility and the public utility the amount of property taxes paid by the owner of the facility. The public utilities commission shall require the public utility to amend the power purchase agreement to include the property taxes paid by the owner of the facility in the price paid by the utility for wind generated electricity if the commission finds:

(a) the owner of the facility has paid the property taxes required by this subdivision;

(b) the power purchase agreement between the public utility and the owner does not already require the utility to pay the amount of property taxes the owner has paid under this subdivision; and

(c) the commission has approved a rate schedule containing provisions for the automatic adjustment of charges for utility service in direct relation to the charges ordered by the commission under section 272.02, subdivision 1, paragraph (21).

Sec. 6. Minnesota Statutes 1996, section 271.01, subdivision 5, is amended to read:

Subd. 5. [JURISDICTION.] The tax court shall have statewide jurisdiction. Except for an appeal to the supreme court or any other appeal allowed under this subdivision, the tax court shall be the sole, exclusive, and final authority for the hearing and determination of all questions of law and fact arising under the tax laws of the state, as defined in this subdivision, in those cases that have been appealed to the tax court and in any case that has been transferred by the district court to the tax court. The tax court shall have no jurisdiction in any case that does not arise under the tax laws of the state or in any criminal case or in any case determining or granting title to real property or in any case that is under the probate jurisdiction of the district court. The small claims division of the tax court shall have no jurisdiction in any case dealing with property valuation or assessment for property tax purposes until the taxpayer has appealed the valuation or assessment to the county board of equalization, and in those towns and cities which have not transferred their duties to the county, the town or city board of equalization and to the county board of equalization, except for those taxpayers whose original assessments are determined by the commissioner of revenue. The tax court shall have no jurisdiction in any case involving an order of the state board of equalization unless a taxpayer contests the valuation of property. Laws governing taxes, aids, and related matters administered by the commissioner of revenue, laws dealing with property valuation, assessment or taxation of property for property tax purposes, and any other laws that contain provisions authorizing review of taxes, aids, and related

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matters by the tax court shall be considered tax laws of this state subject to the jurisdiction of the tax court. This subdivision shall not be construed to prevent an appeal, as provided by law, to an administrative agency, board of equalization, review under section 274.13, subdivision 1c, or to the commissioner of revenue. Wherever used in this chapter, the term commissioner shall mean the commissioner of revenue, unless otherwise specified.

Sec. 7. Minnesota Statutes 1996, 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), 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;

(c) personal property defined in section 272.03, subdivision 2, clause (3);

(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;

(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.

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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.

(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 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.

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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 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, as defined in section 216C.06, subdivision 12, installed after January 1, 1991, and before January 2, 1995, and used as an electric power source, are exempt.

(b) "Small scale wind energy conversion systems" are wind energy conversion systems, as defined in section 216C.06, subdivision 12, installed after January 1, 1995, 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, are exempt.

(c) (b) Medium scale wind energy conversion systems, as defined in section 216C.06, subdivision 12, installed after January 1, 1995 1991, and used as an electric power source but not exempt under item (b), 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

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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;

(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.

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(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.

Sec. 8. Minnesota Statutes 1996, section 272.02, is amended by adding a subdivision to read:

Subd. 9. [PERSONAL PROPERTY; BIOMASS FACILITY.] (a) Notwithstanding clause (8), item (a), of subdivision 1, attached machinery and other personal property, excluding transmission and distribution lines, that is part of a system that generates biomass electric energy that satisfies the mandate, in whole or in part, established in section 216B.2424, or a system that generates electric energy using waste wood, is exempt if it meets the requirements of this subdivision.

(b) The governing bodies of the county, city or town, and school district must each approve, by resolution, the exemption of the personal property under this subdivision. Each of the governing bodies shall file a copy of the resolution with the county auditor. The county auditor shall publish the resolutions in newspapers of general circulation within the county. The voters of the county may request a referendum on the proposed exemption by filing a petition within 30 days after the resolutions are published. The petition must be signed by voters who reside in the county. The number of signatures must equal at least ten percent of the number of persons voting in the county in the last general election. If such a petition is timely filed, the resolutions are not effective until they have been submitted to the voters residing in the county at a general or special election and a majority of votes cast on the question of approving the resolution are in the affirmative. The commissioner of revenue shall prepare a suggested form of question to be presented at the referendum.

(c) The exemption under this subdivision is limited to a maximum of five years, beginning with the assessment year immediately following the year during which the personal property is put in operation.

Sec. 9. Minnesota Statutes 1996, section 272.115, is amended to read:

272.115 [CERTIFICATE OF VALUE; FILING.]

Subdivision 1. [REQUIREMENT.] Except as otherwise provided in subdivision 5, whenever any real estate is sold for a consideration in excess of $1,000, whether by warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor, grantee or the legal agent of either shall file a certificate of value with the county auditor in the county in which the property is located when the deed or other document is presented for recording. Contract for deeds are subject to recording under section 507.235, subdivision 1. Value shall, in the case of any deed not a gift, be the amount of the full actual consideration thereof, paid or to be paid, including the amount of any lien or liens assumed. The items and value of personal property transferred with the real property must be listed and deducted from the sale price. The certificate of value shall include the classification to which the property belongs for the purpose of determining the fair market value of the property. The certificate shall include financing terms and conditions of the sale which are necessary to determine the actual, present value of the sale price for purposes of the sales ratio study. The commissioner of revenue shall promulgate administrative rules specifying the financing terms and conditions which must be included on the certificate. Pursuant to the authority of the commissioner of revenue in section 270.066, the certificate of value must include the social security number or the federal employer identification number of the grantors and grantees. The identification numbers of the grantors and grantees are private data on individuals or nonpublic data as defined in section 13.02, subdivisions 9 and 12, but, notwithstanding that section, the private or nonpublic data may be disclosed to the commissioner of revenue for purposes of tax administration.

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Subd. 2. [FORM; INFORMATION REQUIRED.] The certificate of value shall require such facts and information as may be determined by the commissioner to be reasonably necessary in the administration of the state education aid formulas. The form of the certificate of value shall be prescribed by the department of revenue which shall provide an adequate supply of forms to each county auditor.

Subd. 3. [COPIES TRANSMITTED; HOMESTEAD STATUS.] The county auditor shall transmit two true copies of the certificate of value to the assessor who shall insert the most recent market value and when available, the year of original construction of each parcel of property on both copies and shall transmit one copy to the department of revenue. Upon the request of a city council located within the county, a copy of each certificate of value for property located in that city shall be made available to the governing body of the city. The assessor shall remove the homestead classification for the following assessment year from a property which is sold or transferred, unless the grantee or the person to whom the property is transferred completes a homestead application under section 273.124, subdivision 13, and qualifies for homestead status.

Subd. 4. [ELIGIBILITY FOR HOMESTEAD STATUS.] No real estate sold or transferred on or after January 1, 1993, under subdivision 1 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.

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, 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. 10. Minnesota Statutes 1996, section 273.11, subdivision 1a, is amended to read:

Subd. 1a. [LIMITED MARKET VALUE.] In the case of all property classified as agricultural homestead or nonhomestead, residential homestead or nonhomestead, or noncommercial seasonal recreational residential, the assessor shall compare the value with that determined in the preceding assessment. The amount of the increase entered in the current assessment shall not exceed the greater of (1) ten percent of the value in the preceding assessment, or (2) one-third one-fourth of the difference between the current assessment and the preceding assessment. This limitation shall not apply to increases in value due to improvements. For purposes of this subdivision, the term "assessment" means the value prior to any exclusion under subdivision 16.

The provisions of this subdivision shall be in effect only for assessment years 1993 through 1997 2001.

For purposes of the assessment/sales ratio study conducted under section 124.2131, and the computation of state aids paid under chapters 124, 124A, and 477A, market values and net tax capacities determined under this subdivision and subdivision 16, shall be used.

Sec. 11. Minnesota Statutes 1996, section 273.11, subdivision 16, is amended to read:

Subd. 16. [VALUATION EXCLUSION FOR CERTAIN IMPROVEMENTS.] Improvements to homestead property made before January 2, 2003, shall be fully or partially excluded from the value of the property for assessment purposes provided that (1) the house is at least 35 years old at the time of the improvement and (2) either

(a) the assessor's estimated market value of the house on January 2 of the current year is equal to or less than $150,000, or

(b) if the estimated market value of the house is over $150,000 market value but is less than $300,000 on January 2 of the current year, the property qualifies if

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(i) it is located in a city or town in which 50 percent or more of the owner-occupied housing units were constructed before 1960 based upon the 1990 federal census, and

(ii) the city or town's median family income based upon the 1990 federal census is less than the statewide median family income based upon the 1990 federal census, or

(c) if the estimated market value of the house is $300,000 or more on January 2 of the current year, the property qualifies if

(i) it is located in a city or town in which 45 percent or more of the homes were constructed before 1940 based upon the 1990 federal census, and

(ii) it is located in a city or town in which 45 percent or more of the housing units were rental based upon the 1990 federal census, and

(iii) the city or town's median value of owner-occupied housing units based upon the 1990 federal census is less than the statewide median value of owner-occupied housing units based upon the 1990 federal census.

For purposes of determining this eligibility, "house" means land and buildings.

The age of a residence is the number of years that the residence has existed at its present site since the original year of its construction. In the case of a residence that is relocated, the relocation must be from a location within the state and the only improvements eligible for exclusion under this subdivision are (1) those for which building permits were issued to the homeowner after the residence was relocated to its present site, and (2) those undertaken during or after the year the residence is initially occupied by the homeowner, excluding any market value increase relating to basic improvements that are necessary to install the residence on its foundation and connect it to utilities at its present site. In the case of an owner-occupied duplex or triplex, the improvement is eligible regardless of which portion of the property was improved.

If the property lies in a jurisdiction which is subject to a building permit process, a building permit must have been issued prior to commencement of the improvement. Any improvement must add at least $1,000 to the value of the property to be eligible for exclusion under this subdivision. Only improvements to the structure which is the residence of the qualifying homesteader or construction of or improvements to no more than one two-car garage per residence qualify for the provisions of this subdivision. If an improvement was begun between January 2, 1992, and January 2, 1993, any value added from that improvement for the January 1994 and subsequent assessments shall qualify for exclusion under this subdivision provided that a building permit was obtained for the improvement between January 2, 1992, and January 2, 1993. Whenever a building permit is issued for property currently classified as homestead, the issuing jurisdiction shall notify the property owner of the possibility of valuation exclusion under this subdivision. The assessor shall require an application, including documentation of the age of the house from the owner, if unknown by the assessor. The application may be filed subsequent to the date of the building permit provided that the application must be filed within three years of the date the building permit was issued for the improvement. If the property lies in a jurisdiction which is not subject to a building permit process, the application must be filed within three years of the date the improvement was made. The assessor may require proof from the taxpayer of the date the improvement was made. Applications must be received prior to July 1 of any year in order to be effective for taxes payable in the following year.

No exclusion may be granted for an improvement by a local board of review or county board of equalization and no abatement of the taxes for qualifying improvements may be granted by the county board unless (1) a building permit was issued prior to the commencement of the improvement if the jurisdiction requires a building permit, and (2) an application was completed.

The assessor shall note the qualifying value of each improvement on the property's record, and the sum of those amounts shall be subtracted from the value of the property in each year for ten years after the improvement has been made, at which time an amount equal to 20 percent of the qualifying value shall be added back in each of the five subsequent assessment years. If an application is filed after the first assessment date at which an improvement could have been subject to the valuation exclusion under this subdivision, the ten-year period during which the value is subject to exclusion is reduced by the number of years that have elapsed since the property would have qualified initially. The valuation exclusion shall

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terminate whenever (1) the property is sold, or (2) the property is reclassified to a class which does not qualify for treatment under this subdivision. Improvements made by an occupant who is the purchaser of the property under a conditional purchase contract do not qualify under this subdivision unless the seller of the property is a governmental entity. The qualifying value of the property shall be computed based upon the increase from that structure's market value as of January 2 preceding the acquisition of the property by the governmental entity.

The total qualifying value for a homestead may not exceed $50,000. The total qualifying value for a homestead with a house that is less than 70 years old may not exceed $25,000. The term "qualifying value" means the increase in estimated market value resulting from the improvement if the improvement occurs when the house is at least 70 years old, or one-half of the increase in estimated market value resulting from the improvement otherwise. The $25,000 and $50,000 maximum qualifying value under this subdivision may result from up to three separate improvements to the homestead. The application shall state, in clear language, that if more than three improvements are made to the qualifying property, a taxpayer may choose which three improvements are eligible, provided that after the taxpayer has made the choice and any valuation attributable to those improvements has been excluded from taxation, no further changes can be made by the taxpayer.

If 50 percent or more of the square footage of a structure is voluntarily razed or removed, the valuation increase attributable to any subsequent improvements to the remaining structure does not qualify for the exclusion under this subdivision. If a structure is unintentionally or accidentally destroyed by a natural disaster, the property is eligible for an exclusion under this subdivision provided that the structure was not completely destroyed. The qualifying value on property destroyed by a natural disaster shall be computed based upon the increase from that structure's market value as determined on January 2 of the year in which the disaster occurred. A property receiving benefits under the homestead disaster provisions under section 273.123 is not disqualified from receiving an exclusion under this subdivision. If any combination of improvements made to a structure after January 1, 1993, increases the size of the structure by 100 percent or more, the valuation increase attributable to the portion of the improvement that causes the structure's size to exceed 100 percent does not qualify for exclusion under this subdivision.

Sec. 12. Minnesota Statutes 1996, section 273.111, subdivision 3, is amended to read:

Subd. 3. (a) Real estate consisting of ten acres or more or a nursery or greenhouse, and qualifying for classification as class 1b, 2a, or 2b under section 273.13, subdivision 23, paragraph (d), shall be entitled to valuation and tax deferment under this section only if it is actively and exclusively primarily devoted to agricultural use as defined, and meets the qualifications in subdivision 6, and either:

(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the owner or is real estate which is farmed with the real estate which contains the homestead property; or

(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling, or any combination thereof, for a period of at least seven years prior to application for benefits under the provisions of this section, or is real estate which is farmed with the real estate which qualifies under this clause and is within two townships or cities or combination thereof from the qualifying real estate; or

(3) is the homestead of a shareholder in a family farm corporation as defined in section 500.24, notwithstanding the fact that legal title to the real estate may be held in the name of the family farm corporation; or

(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor, partnership, or corporation which also owns the nursery or greenhouse operations on the parcel or parcels.

(b) Valuation of real estate under this section is limited to parcels the ownership of which is in noncorporate entities except for:

(1) family farm corporations organized pursuant to section 500.24; and

(2) corporations that derive 80 percent or more of their gross receipts from the wholesale or retail sale of horticultural or nursery stock.

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Corporate entities who previously qualified for tax deferment pursuant to this section and who continue to otherwise qualify under subdivisions 3 and 6 for a period of at least three years following the effective date of Laws 1983, chapter 222, section 8, will not be required to make payment of the previously deferred taxes, notwithstanding the provisions of subdivision 9. Special assessments are payable at the end of the three-year period or at time of sale, whichever comes first.

(c) Land that previously qualified for tax deferment pursuant to under this section and no longer qualifies because it is not classified as primarily used for agricultural land purposes but would otherwise qualify under subdivisions 3 and 6 for a period of at least three years will not be required to make payment of the previously deferred taxes, notwithstanding the provisions of subdivision 9. Sale of the land prior to the expiration of the three-year period requires payment of deferred taxes as follows: sale in the year the land no longer qualifies requires payment of the current year's deferred taxes plus payment of deferred taxes for the two prior years; sale during the second year the land no longer qualifies requires payment of the current year's deferred taxes plus payment of the deferred taxes for the prior year; and sale during the third year the land no longer qualifies requires payment of the current year's deferred taxes. Deferred taxes shall be paid even if the land qualifies pursuant to subdivision 11a. When such property is sold or no longer qualifies under this paragraph, or at the end of the three-year period, whichever comes first, all deferred special assessments plus interest are payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvement for which the assessments were levied. If the bonds have matured, the deferred special assessments plus interest are payable within 90 days. The provisions of section 429.061, subdivision 2, apply to the collection of these installments. Penalties are not imposed on any such special assessments if timely paid.

Sec. 13. Minnesota Statutes 1996, section 273.111, subdivision 6, is amended to read:

Subd. 6. Real property qualifying under subdivision 3 shall be considered to be in agricultural use provided that annually:

(1) at least 33-1/3 percent of the total family income of the owner is derived therefrom, or the total production income including rental from the property is $300 plus $10 per tillable acre; and

(2) it is devoted to the production for sale of agricultural products as defined in section 273.13, subdivision 23, paragraph (e).

Slough, wasteland, and woodland contiguous to or surrounded by land that is entitled to valuation and tax deferment under this section is considered to be in agricultural use if under the same ownership and management.

Sec. 14. Minnesota Statutes 1996, 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. 15. Minnesota Statutes 1996, 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 uses and 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;

(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

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(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, in the case of real estate devoted to golf, for use 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. 16. Minnesota Statutes 1996, 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. 17. Minnesota Statutes 1996, section 273.121, is amended to read:

273.121 [VALUATION OF REAL PROPERTY, NOTICE.]

Any county assessor or city assessor having the powers of a county assessor, valuing or classifying taxable real property shall in each year notify those persons whose property is to be assessed or reclassified that year if the person's address is known to the assessor, otherwise the occupant of the property. The notice shall be in writing and shall be sent by ordinary mail at least ten days before the meeting of the local board of review or equalization under section 274.01 or the review process established under section 274.13, subdivision 1c. It shall contain: (1) the market value, (2) the limited market value under section 273.11, subdivision 1a, (3) the qualifying amount of any improvements under section 273.11, subdivision 16, (4) the market value subject to taxation after subtracting the amount of any qualifying improvements, (5) the new classification, (6) a note that if the property is homestead and at least 35 years old, improvements made to the property may be eligible for a valuation exclusion under section 273.11, subdivision 16, (7) the assessor's office address, and (8) the dates, places, and times set for the meetings of the local board of review or equalization, the review process established under section 274.13, subdivision 1c, and the county board of equalization. If the assessment roll is not complete, the notice shall be sent by ordinary mail at least ten days prior to the date on which the board of review has adjourned. The assessor shall

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attach to the assessment roll a statement that the notices required by this section have been mailed. Any assessor who is not provided sufficient funds from the assessor's governing body to provide such notices, may make application to the commissioner of revenue to finance such notices. The commissioner of revenue shall conduct an investigation and, if satisfied that the assessor does not have the necessary funds, issue a certification to the commissioner of finance of the amount necessary to provide such notices. The commissioner of finance shall issue a warrant for such amount and shall deduct such amount from any state payment to such county or municipality. The necessary funds to make such payments are hereby appropriated. Failure to receive the notice shall in no way affect the validity of the assessment, the resulting tax, the procedures of any board of review or equalization, or the enforcement of delinquent taxes by statutory means.

Sec. 18. Minnesota Statutes 1996, section 273.124, subdivision 1, is amended to read:

Subdivision 1. [GENERAL RULE.] (a) Residential real estate that is occupied and used for the purposes of a homestead by its owner, who must be a Minnesota resident, is a residential homestead.

Agricultural land, as defined in section 273.13, subdivision 23, that is occupied and used as a homestead by its owner, who must be a Minnesota resident, is an agricultural homestead.

Dates for establishment of a homestead and homestead treatment provided to particular types of property are as provided in this section.

Property of a trustee, beneficiary, or grantor of a trust is not disqualified from receiving homestead benefits if the homestead requirements under this chapter are satisfied.

The assessor shall require proof, as provided in subdivision 13, of the facts upon which classification as a homestead may be determined. Notwithstanding any other law, the assessor may at any time require a homestead application to be filed in order to verify that any property classified as a homestead continues to be eligible for homestead status. Notwithstanding any other law to the contrary, the department of revenue may, upon request from an assessor, verify whether an individual who is requesting or receiving homestead classification has filed a Minnesota income tax return as a resident for the most recent taxable year for which the information is available.

When there is a name change or a transfer of homestead property, the assessor may reclassify the property in the next assessment unless a homestead application is filed to verify that the property continues to qualify for homestead classification.

(b) For purposes of this section, homestead property shall include property which is used for purposes of the homestead but is separated from the homestead by a road, street, lot, waterway, or other similar intervening property. The term "used for purposes of the homestead" shall include but not be limited to uses for gardens, garages, or other outbuildings commonly associated with a homestead, but shall not include vacant land held primarily for future development. In order to receive homestead treatment for the noncontiguous property, the owner shall apply for it to the assessor by July 1 of the year when the treatment is initially sought. After initial qualification for the homestead treatment, additional applications for subsequent years are not required.

(c) Residential real estate that is occupied and used for purposes of a homestead by a relative of the owner is a homestead but only to the extent of the homestead treatment that would be provided if the related owner occupied the property. For purposes of this paragraph and paragraph (f) (g), "relative" means a parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, or aunt. This relationship may be by blood or marriage. 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 will not be reclassified as a homestead unless it is occupied as a homestead by the owner; this prohibition also applies to property that, in the absence of this paragraph, would have been classified as seasonal recreational residential property at the time when the residence was constructed. Neither the related occupant nor the owner of the property may claim a property tax refund under chapter 290A for a homestead occupied by a relative. In the case of a residence located on agricultural land, only the house, garage, and immediately surrounding one acre of land shall be classified as a homestead under this paragraph, except as provided in paragraph (d).

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(d) Agricultural property that is occupied and used for purposes of a homestead by a relative of the owner, is a homestead, only to the extent of the homestead treatment that would be provided if the related owner occupied the property, and only if all of the following criteria are met:

(1) the relative who is occupying the agricultural property is a son, daughter, father, or mother of the owner of the agricultural property or a son or daughter of the spouse of the owner of the agricultural property,

(2) the owner of the agricultural property must be a Minnesota resident,

(3) the owner of the agricultural property must not receive homestead treatment on any other agricultural property in Minnesota, and

(4) the owner of the agricultural property is limited to only one agricultural homestead per family under this paragraph.

Neither the related occupant nor the owner of the property may claim a property tax refund under chapter 290A for a homestead occupied by a relative qualifying under this paragraph. For purposes of this paragraph, "agricultural property" means the house, garage, other farm buildings and structures, and agricultural land.

Application must be made to the assessor by the owner of the agricultural property to receive homestead benefits under this paragraph. The assessor may require the necessary proof that the requirements under this paragraph have been met.

(e) In the case of property owned by a property owner who is married, the assessor must not deny homestead treatment in whole or in part if only one of the spouses occupies the property and the other spouse is absent due to: (1) marriage dissolution proceedings, (2) legal separation, (3) employment or self-employment in another location, or (4) residence in a nursing home or boarding care facility, or (5) other personal circumstances causing the spouses to live separately, not including an intent to obtain two homestead classifications for property tax purposes. To qualify under clause (3), the spouse's place of employment or self-employment must be at least 50 miles distant from the other spouse's place of employment, and the homesteads must be at least 50 miles distant from each other. Homestead treatment, in whole or in part, shall not be denied to the owner's spouse who previously occupied the residence with the owner if the absence of the owner is due to one of the exceptions provided in this paragraph.

(f) The assessor must not deny homestead treatment in whole or in part if:

(1) in the case of a property owner who is not married, the owner is absent due to residence in a nursing home or boarding care facility and the property is not otherwise occupied; or

(2) in the case of a property owner who is married, the owner or the owner's spouse or both are absent due to residence in a nursing home or boarding care facility and the property is not occupied or is occupied only by the owner's spouse.

(g) If an individual is purchasing property with the intent of claiming it as a homestead and is required by the terms of the financing agreement to have a relative shown on the deed as a coowner, the assessor shall allow a full homestead classification. This provision only applies to first-time purchasers, whether married or single, or to a person who had previously been married and is purchasing as a single individual for the first time. The application for homestead benefits must be on a form prescribed by the commissioner and must contain the data necessary for the assessor to determine if full homestead benefits are warranted.

Sec. 19. Minnesota Statutes 1996, section 273.124, is amended by adding a subdivision to read:

Subd. 19. [LEASE-PURCHASE PROGRAM.] Qualifying buildings and appurtenances, together with the land on which they are located, are classified as homesteads, if the following qualifications are met:

(1) the property is leased for up to a five-year period by the occupant under a lease-purchase program administered by the Minnesota housing finance agency or a housing and redevelopment authority under sections 469.001 to 469.047;

(2) the occupant's income is no greater than 80 percent of the county or area median income, adjusted for family size;

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(3) the building consists of one or two dwelling units;

(4) the lease agreement provides that part of the lease payment is escrowed as a nonrefundable down payment on the housing;

(5) the administering agency verifies the occupant's income eligibility and certifies to the county assessor that the occupant meets the income standards; and

(6) the property owner applies to the county assessor by May 30 of each year.

For purposes of this subdivision, "qualifying buildings and appurtenances" means a one- or two-unit residential building which was unoccupied, abandoned, and boarded for at least six months.

Sec. 20. Minnesota Statutes 1996, 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 .45 0.4 percent of market value and a gross class rate of 1.75 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 one 0.9 percent of market value, and a gross class rate of 2.25 percent of market value. The remaining property over the $115,000 market value in excess of 320 acres has a class rate of 1.5 1.4 percent of market value, and a gross class rate of 2.25 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 1.5 1.4 percent of market value, and a gross class rate of 2.25 percent of market value.

(c) Agricultural land as used in this section means contiguous acreage of ten acres or more, primarily used during the preceding year for agricultural purposes. Agricultural use may include "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, and or land included in state or federal farm or conservation programs. "Agricultural purposes" as used in this section means the raising or cultivation of agricultural products. Land enrolled in the Reinvest in Minnesota program under sections 103F.505 to 103F.531 or the federal Conservation Reserve Program as contained in Public Law Number 99-198, and consisting of a minimum of ten contiguous acres, shall be classified as agricultural. Agricultural classification for property shall be determined with respect to the use of the whole parcel, 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 principally for raising or cultivating agricultural products, shall be considered as agricultural land, if it is not used primarily for residential purposes.

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.

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(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.

(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.

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Sec. 21. Minnesota Statutes 1996, section 273.13, is amended by adding a subdivision to read:

Subd. 25a. [ELDERLY ASSISTED LIVING FACILITY PROPERTY.] "Elderly assisted living facility property" means residential real estate containing more than one unit held for use by the tenants or lessees as a residence for periods of 30 days or more, along with community rooms, lounges, activity rooms, and related facilities, designed to meet the housing, health, and financial security needs of the elderly. The real estate may be owned by an individual, partnership, limited partnership, for-profit corporation or nonprofit corporation exempt from federal income taxation under United States Code, title 26, section 501(c)(3) or related sections.

An admission or initiation fee may be required of tenants. Monthly charges may include charges for the residential unit, meals, housekeeping, utilities, social programs, a health care alert system, or any combination of them. On-site health care may be provided by in-house staff or an outside health care provider.

The assessor shall classify elderly assisted living facility property, depending upon the property's ownership, occupancy, and use. The applicable class rates shall apply based on its classification, if taxable.

Sec. 22. Minnesota Statutes 1996, section 273.18, is amended to read:

273.18 [LISTING, VALUATION, AND ASSESSMENT OF EXEMPT PROPERTY BY COUNTY AUDITORS.]

(a) In every sixth year after the year 1926, the county auditor shall enter, in a separate place in the real estate assessment books, the description of each tract of real property exempt by law from taxation, with the name of the owner, if known, and the assessor shall value and assess the same in the same manner that other real property is valued and assessed, and shall designate in each case the purpose for which the property is used.

(b) For purposes of the apportionment of fire state aid under section 69.021, subdivision 7, the county auditor shall include on the abstract of assessment of exempt real property filed under this section, the total number of acres of all natural resources lands for which in lieu payments are made under sections 477A.11 to 477A.14. The assessor shall estimate its market value, provided that if the assessor is not able to estimate the market value of the land on a per parcel basis, the assessor shall furnish the commissioner of revenue with an estimate of the average value per acre of this land within the county.

Sec. 23. Minnesota Statutes 1996, section 274.01, is amended to read:

274.01 [BOARD OF REVIEW.]

Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, GRIEVANCES.] (a) The town board of a town, or the council or other governing body of a city, is the board of review except (1) in cities whose charters provide for a board of equalization or (2) in any city or town that has transferred its local board of review power and duties to the county board as provided in subdivision 3. The county assessor shall fix a day and time when the board or the board of equalization shall meet in the assessment districts of the county. On or before February 15 of each year the assessor shall give written notice of the time to the city or town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings must be held between April 1 and May 31 each year. The clerk shall give published and posted notice of the meeting at least ten days before the date of the meeting.

If in any county, at least 25 percent of the total net tax capacity of a city or town is noncommercial seasonal residential recreational property classified under section 273.13, subdivision 25, the county must hold two countywide informational meetings on Saturdays. The meetings will allow noncommercial seasonal residential recreational taxpayers to discuss their property valuation with the appropriate assessment staff. These Saturday informational meetings must be scheduled to allow the owner of the noncommercial seasonal residential recreational property the opportunity to attend one of the meetings prior to the scheduled board of review for their city or town. The Saturday meeting dates must be contained on the notice of valuation of real property under section 273.121.

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The board shall meet at the office of the clerk to review the assessment and classification of property in the town or city. No changes in valuation or classification which are intended to correct errors in judgment by the county assessor may be made by the county assessor after the board of review or the county board of equalization has adjourned in those cities or towns that hold a local board of review; however, corrections of errors that are merely clerical in nature or changes that extend homestead treatment to property are permitted after adjournment until the tax extension date for that assessment year. The changes must be fully documented and maintained in the assessor's office and must be available for review by any person. A copy of the changes made during this period in those cities or towns that hold a local board of review must be sent to the county board no later than December 31 of the assessment year.

(b) The board shall determine whether the taxable property in the town or city has been properly placed on the list and properly valued by the assessor. If real or personal property has been omitted, the board shall place it on the list with its market value, and correct the assessment so that each tract or lot of real property, and each article, parcel, or class of personal property, is entered on the assessment list at its market value. No assessment of the property of any person may be raised unless the person has been duly notified of the intent of the board to do so. On application of any person feeling aggrieved, the board shall review the assessment or classification, or both, and correct it as appears just.

(c) A local board of review may reduce assessments upon petition of the taxpayer but the total reductions must not reduce the aggregate assessment made by the county assessor by more than one percent. If the total reductions would lower the aggregate assessments made by the county assessor by more than one percent, none of the adjustments may be made. The assessor shall correct any clerical errors or double assessments discovered by the board of review without regard to the one percent limitation.

(d) A majority of the members may act at the meeting, and adjourn from day to day until they finish hearing the cases presented. The assessor shall attend, with the assessment books and papers, and take part in the proceedings, but must not vote. The county assessor, or an assistant delegated by the county assessor shall attend the meetings. The board shall list separately, on a form appended to the assessment book, all omitted property added to the list by the board and all items of property increased or decreased, with the market value of each item of property, added or changed by the board, placed opposite the item. The county assessor shall enter all changes made by the board in the assessment book.

(e) Except as provided in subdivision 3, if a person fails to appear in person, by counsel, or by written communication before the board after being duly notified of the board's intent to raise the assessment of the property, or if a person feeling aggrieved by an assessment or classification fails to apply for a review of the assessment or classification, the person may not appear before the county board of equalization for a review of the assessment or classification. This paragraph does not apply if an assessment was made after the board meeting, as provided in section 273.01, or if the person can establish not having received notice of market value at least five days before the local board of review meeting.

(f) The board of review or the board of equalization must complete its work and adjourn within 20 days from the time of convening stated in the notice of the clerk, unless a longer period is approved by the commissioner of revenue. No action taken after that date is valid. All complaints about an assessment or classification made after the meeting of the board must be heard and determined by the county board of equalization. A nonresident may, at any time, before the meeting of the board of review file written objections to an assessment or classification with the county assessor. The objections must be presented to the board of review at its meeting by the county assessor for its consideration.

Subd. 2. [SPECIAL BOARD; DUTIES DELEGATED.] The governing body of a city, including a city whose charter provides for a board of equalization, may appoint a special board of review. The city may delegate to the special board of review all of the powers and duties in subdivision 1. The special board of review shall serve at the direction and discretion of the appointing body, subject to the restrictions imposed by law. The appointing body shall determine the number of members of the board, the compensation and expenses to be paid, and the term of office of each member. At least one member of the special board of review must be an appraiser, realtor, or other person familiar with property valuations in the assessment district.

Subd. 3. [LOCAL BOARD DUTIES TRANSFERRED TO COUNTY.] The town board of any town or the governing body of any home rule charter or statutory city may transfer its powers and duties under subdivision 1 to the county board, and no longer perform the function of a local board. Before the town board or the governing body of a city transfers the powers and duties to the county board, the town board or city's governing body shall give public notice of the meeting at

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which the proposal for transfer is to be considered. The public notice shall follow the procedure contained in section 471.705, subdivision 1c, paragraph (b). A transfer of duties as permitted under this subdivision must be communicated to the county assessor, in writing, before December 1 of any year to be effective for the following year's assessment. This transfer of duties to the county may either be permanent or for a specified number of years, provided that the transfer cannot be for less than three years. Its length must be stated in writing. A town or city may renew its option to transfer. The option to transfer duties under this subdivision is only available to a town or city whose assessment is done by the county.

Sec. 24. Minnesota Statutes 1996, section 274.13, is amended by adding a subdivision to read:

Subd. 1b. [ASSESSMENT CHANGES.] No changes in valuation or classification that are intended to correct errors in judgment by the county assessor may be made by the county assessor after the county board of equalization has adjourned; however, corrections of errors that are merely clerical in nature or changes that extend homestead treatment to property are permitted after adjournment until the tax extension date for that assessment year. The changes must be fully documented and maintained in the assessor's office and must be available for review by any person.

Sec. 25. Minnesota Statutes 1996, section 274.13, is amended by adding a subdivision to read:

Subd. 1c. [ALTERNATIVE REVIEW OPTION.] The county shall notify taxpayers whose town or city elected to transfer its powers and duties under section 274.01 to the county. Prior to the time of the county board of equalization, the county shall make available to those taxpayers a procedure for a review of its assessments, including, but not limited to, open book meetings. This alternative review process shall take place in April and May.

Sec. 26. Minnesota Statutes 1996, section 281.13, is amended to read:

281.13 [NOTICE OF EXPIRATION OF REDEMPTION.]

Every person holding a tax certificate after expiration of three years, or the redemption period specified in section 281.17 if shorter, after the date of the tax sale under which the same was issued, may present such certificate to the county auditor; and thereupon the auditor shall prepare, under the auditor's hand and official seal, a notice, directed to the person or persons in whose name such lands are assessed, specifying the description thereof, the amount for which the same was sold, the amount required to redeem the same, exclusive of the costs to accrue upon such notice, and the time when the redemption period will expire. If, at the time when any tax certificate is so presented, such lands are assessed in the name of the holder of the certificate, such notice shall be directed also to the person or persons in whose name title in fee of such land appears of record in the office of the county recorder. The auditor shall deliver such notice to the party applying therefor, who shall deliver it to the sheriff of the proper county or any other person not less than 18 years of age for service. Within 20 days after receiving it, the sheriff or other person serving the notice shall serve such notice upon the persons to whom it is directed, if to be found in the sheriff's county, in the manner prescribed for serving a summons in a civil action; if not so found, then upon the person in possession of the land, and make return thereof to the auditor. In the case of land held in joint tenancy the notice shall be served upon each joint tenant. If one or more of the persons to whom the notice is directed cannot be found in the county, and there is no one in possession of the land, of each of which facts the return of the sheriff or other person serving the notice so specifying shall be prima facie evidence, service shall be made upon those persons that can be found and service shall also be made by two weeks' published notice, proof of which publication shall be filed with the auditor.

When the records in the office of the county recorder show that any lot or tract of land is encumbered by an unsatisfied mortgage or other lien, and show the post office address of the mortgagee or lienee, or if the same has been assigned, the post office address of the assignee, the person holding such tax certificate shall serve a copy of such notice upon such mortgagee, lienee, or assignee by certified mail addressed to such mortgagee, lienee, or assignee at the post office address of the mortgagee, lienee, or assignee as disclosed by the records in the office of the county recorder, at least 60 days prior to the time when the redemption period will expire.

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The notice herein provided for shall be sufficient if substantially in the following form:

"NOTICE OF EXPIRATION OF REDEMPTION

Office of the County Auditor

County of . . . . . . . . . . . . . . . . . . . . . . ., State of Minnesota.

To . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

You are hereby notified that the following described piece or parcel of land, situated in the county of . . . . . . . . . . . . . . . . . . . . . . ., and State of Minnesota, and known and described as follows: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , is now assessed in your name; that on the . . . . . . . . . . . . . . . . . . . . . . . . day of May, . . . . . . . . . . . . . . . . . . . . ., at the sale of land pursuant to the real estate tax judgment, duly given and made in and by the district court in and for said county of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , on the . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . day of March, . . . . . . . . . . . . . . , in proceedings to enforce the payment of taxes delinquent upon real estate for the year . . . . . . . . . . . . . . for said county of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., the above described. .

Sec. 27. Minnesota Statutes 1996, section 281.23, is amended by adding a subdivision to read:

Subd. 5a. [DEFINITION.] In this section, "occupied parcel" means a parcel containing a structure subject to property taxation.

Sec. 28. Minnesota Statutes 1996, section 281.23, subdivision 6, is amended to read:

Subd. 6. [SERVICE BY SHERIFF OF NOTICE.] (a) Forthwith after the commencement of such publication or mailing the county auditor shall deliver to the sheriff of the county or any other person not less than 18 years of age a sufficient number of copies of such notice of expiration of redemption for service upon the persons in possession of all parcels of such land as are actually occupied and documentation if the certified mail notice was returned as undeliverable or the notice was not mailed to the address associated with the property. Within 30 days after receipt thereof, the sheriff or other person serving the notice shall make such investigation as may be necessary to ascertain whether or not the parcels covered by such notice are actually occupied or not parcels, and shall serve a copy of such notice of expiration of redemption upon the person in possession of each parcel found to be so an occupied parcel, in the manner prescribed for serving summons in a civil action. The sheriff or other person serving the notice shall make prompt return to the auditor as to all notices so served and as to all parcels found vacant and unoccupied. Such return shall be made upon a copy of such notice and shall be prima facie evidence of the facts therein stated.

Unless compensation for such services is otherwise provided by law, If the notice is served by the sheriff, the sheriff shall receive from the county, in addition to other compensation prescribed by law, such fees and mileage for service on persons in possession as are prescribed by law for such service in other cases, and shall also receive such compensation for making investigation and return as to vacant and unoccupied lands as the county board may fix, subject to appeal to the district court as in case of other claims against the county. As to either service upon persons in possession or return as to vacant lands, the sheriff shall charge mileage only for one trip if the occupants of more than two tracts are served simultaneously, and in such case mileage shall be prorated and charged equitably against all such owners.

(b) The secretary of state shall receive sheriff's service for all out-of-state interests.

Sec. 29. Minnesota Statutes 1996, section 281.273, is amended to read:

281.273 [EXPIRATION OF TIME OF REDEMPTION ON LANDS OWNED BY PERSONS IN MILITARY SERVICE.]

When a county sheriff or other person serves notice of expiration of the time for redemption of any parcel of real property from delinquent taxes upon any occupant of the real property, the sheriff or other person shall inquire of the occupant and otherwise as the sheriff or other person may deem proper whether the real property was owned and occupied for dwelling, professional, business or agricultural purposes by a person in the military service of the United States as defined in the

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Soldiers' and Sailors' Civil Relief Act of 1940, as amended, or the person's dependents at the commencement of the period of military service. On finding that the real property is so owned, the sheriff or other person shall make a certificate to the county auditor, setting forth the description of the property, the name of the owner, the particulars of the owner's military service so far as ascertained or claimed, and the names and addresses of the persons of whom the sheriff or other person made inquiry. The certificate shall be filed with the county auditor and shall be prima facie evidence of the facts stated. If the real property described in the certificate becomes forfeited to the state, it shall be withheld from sale or conveyance as tax-forfeited property in accordance with and subject to the provisions of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, except that the requirement in United States Code, title 50, section 560, that the property be occupied by the dependent or employee of the person in military service does not apply. The period of withholding from sale or conveyance shall be no longer than is required by that act. If upon further investigation the sheriff or other person finds at any time that the certificate is erroneous in any particular, the sheriff or other person shall file a supplemental certificate referring to the matter in error and stating the facts as found. The supplemental certificate shall be prima facie evidence of the facts stated, and shall supersede any prior certificate so far as in conflict therewith. If it appears from the supplemental certificate that the owner of the real property affected is not entitled to have the same withheld from sale under the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, the property shall not be withheld from sale further under this section.

Sec. 30. Minnesota Statutes 1996, section 281.276, is amended to read:

281.276 [RETURN OF SHERIFF MUST SHOW MILITARY SERVICE.]

Unless a sheriff's certificate showing military service is filed as required by section 281.273, it shall be presumed that the owner of the property described in the notice of expiration of the time for redemption from delinquent taxes is not in such service. The filing of the sheriff's certificate provided for in section 281.273 shall not affect the forfeiture of the real property described in such notice of the expiration of the time for redemption from delinquent taxes or their proceedings relating thereto except as expressly herein provided.

Sec. 31. Minnesota Statutes 1996, section 373.40, subdivision 7, is amended to read:

Subd. 7. [REPEALER.] This section is repealed effective for bonds issued after July 1, 1998 2003, but continues to apply to bonds issued before that date.

Sec. 32. Minnesota Statutes 1996, section 375.192, subdivision 2, is amended to read:

Subd. 2. [PROCEDURE, CONDITIONS.] Upon written application by the owner of any property, the county board may grant the reduction or abatement of estimated market valuation or taxes and of any costs, penalties, or interest on them as the board deems just and equitable and order the refund in whole or part of any taxes, costs, penalties, or interest which have been erroneously or unjustly paid. Except as provided in sections 469.1812 to 469.1815, no reduction or abatement may be granted on the basis of providing an incentive for economic development or redevelopment. Except as provided in section 375.194, the county board is authorized to consider and grant reductions or abatements on applications only as they relate to taxes payable in the current year and the two prior years; provided that reductions or abatements for the two prior years shall be considered or granted only for (i) clerical errors, or (ii) when the taxpayer fails to file for a reduction or an adjustment due to hardship, as determined by the county board. The application must include the social security number of the applicant. The social security number is private data on individuals as defined by section 13.02, subdivision 12. All applications must be approved by the county assessor, or, if the property is located in a city of the first or second class having a city assessor, by the city assessor, and by the county auditor before consideration by the county board, except that the part of the application which is for the abatement of penalty or interest must be approved by the county treasurer and county auditor. Approval by the county or city assessor is not required for abatements of penalty or interest. No reduction, abatement, or refund of any special assessments made or levied by any municipality for local improvements shall be made unless it is also approved by the board of review or similar taxing authority of the municipality. Before taking action on any reduction or abatement where the reduction of taxes, costs, penalties, and interest exceed $10,000, the county board shall give 20 days' notice to the school board and the municipality in which the property is located. The notice must describe the property involved, the actual amount of the reduction being sought, and the reason for the reduction. If the school board or the municipality object to the granting of the reduction or abatement, the county board must refer the abatement or reduction to the commissioner of revenue with its recommendation. The commissioner shall consider the abatement or reduction under section 270.07, subdivision 1.

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An appeal may not be taken to the tax court from any order of the county board made in the exercise of the discretionary authority granted in this section.

The county auditor shall notify the commissioner of revenue of all abatements resulting from the erroneous classification of real property, for tax purposes, as nonhomestead property. For the abatements relating to the current year's tax processed through June 30, the auditor shall notify the commissioner on or before July 31 of that same year of all abatement applications granted. For the abatements relating to the current year's tax processed after June 30 through the balance of the year, the auditor shall notify the commissioner on or before the following January 31 of all applications granted. The county auditor shall submit a form containing the social security number of the applicant and such other information the commissioner prescribes.

Sec. 33. Minnesota Statutes 1996, section 465.71, is amended to read:

465.71 [INSTALLMENT AND LEASE PURCHASES; CITIES; COUNTIES; SCHOOL DISTRICTS.]

A home rule charter city, statutory city, county, town, or school district may purchase personal property under an installment contract, or lease real or personal property with an option to purchase under a lease-purchase agreement, by which contract or agreement title is retained by the seller or vendor or assigned to a third party as security for the purchase price, including interest, if any, but such purchases are subject to statutory and charter provisions applicable to the purchase of real or personal property. For purposes of the bid requirements contained in section 471.345, "the amount of the contract" shall include the total of all lease payments for the entire term of the lease under a lease-purchase agreement. The obligation created by a lease-purchase agreement for personal property or a lease-purchase agreement for real property if the amount of the contract for purchase of the real property is less than $1,000,000 shall not be included in the calculation of net debt for purposes of section 475.53, and shall not constitute debt under any other statutory provision. No election shall be required in connection with the execution of a lease-purchase agreement authorized by this section. The city, county, town, or school district must have the right to terminate a lease- purchase agreement at the end of any fiscal year during its term.

Sec. 34. Minnesota Statutes 1996, section 465.81, subdivision 1, is amended to read:

Subdivision 1. [SCOPE.] Sections 465.81 to 465.87 establish procedures to be used by counties, cities, or towns that adopt by resolution an agreement providing a plan to provide combined services during an initial cooperation period that may not exceed two years and then:

(1) to merge into a single unit of government over the succeeding two-year period; or

(2) to agree to apportion the entire area of at least one local government unit between or among two or more local government units contiguous to the unit to be apportioned, resulting in the elimination of at least one local government unit over the succeeding two years.

Sec. 35. Minnesota Statutes 1996, section 465.81, subdivision 3, is amended to read:

Subd. 3. [COMBINATION REQUIREMENTS.] Counties may combine with one or more other counties. Cities may combine with one or more other cities or with one or more towns. Towns may combine with one or more other towns or with one or more cities. Units that combine must be contiguous. A county, through the adoption of a resolution by all county boards that are affected by the combination, may apportion its territory between or among two or more counties contiguous to the county that is to be apportioned. A city, through the adoption of a resolution by all city councils that are affected by the combination, may apportion its territory between or among two or more cities contiguous to the city that is to be apportioned. A township, through the adoption of a resolution by all town boards or city councils that are affected by the combination, may apportion its territory between or among two or more townships or cities contiguous to the township that is to be apportioned.

Sec. 36. Minnesota Statutes 1996, section 465.82, subdivision 1, is amended to read:

Subdivision 1. [ADOPTION AND STATE AGENCY REVIEW.] Each governing body that proposes to combine take part in a combination under sections 465.81 to 465.87 must adopt by resolution adopt a plan for cooperation and combination. The plan must address each item in this section. The plan must be specific for any item that will occur within

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three years and may be general or set forth alternative proposals for an item that will occur more than three years in the future. The plan must be submitted to the board of government innovation and cooperation for review and comment. For a metropolitan area local government unit, the plan must also be submitted to the metropolitan council for review and comment. The council may point out any resources or technical assistance it may be able to provide a governing body submitting a plan under this subdivision. Significant modifications and specific resolutions of items must be submitted to the board and council, if appropriate, for review and comment. In the official newspaper of each local government unit proposed for proposing to take part in the combination, the governing body must shall publish at least a summary of the adopted plans, each significant modification and resolution of items, and, if appropriate, the results of each board and council, if appropriate, review and comment. If a territory of a unit is to be apportioned between or among two or more units contiguous to the unit that is to be apportioned, the plan must specify the area that will become a part of each remaining unit.

Sec. 37. Minnesota Statutes 1996, section 465.82, subdivision 2, is amended to read:

Subd. 2. [CONTENTS OF PLAN.] The plan must state:

(1) the specific cooperative activities the units will engage in during the first two years of the venture;

(2) the steps to be taken to effect the merger of the governmental units, with completion no later than four years after the process begins;

(3) the steps by which a single governing body will be created or, when the entire territory of a unit will be apportioned between or among two or more units contiguous to the unit that is to be apportioned, the steps to be taken by the governing bodies of the remaining units to provide for representation of the residents of the apportioned unit;

(4) changes in services provided, facilities used, and administrative operations and staffing required to effect the preliminary cooperative activities and the final merger, and a two-, five-, and ten-year projection of expenditures for each unit if it combined and if it remained separate;

(5) treatment of employees of the merging governmental units, specifically including provisions for reassigning employees, dealing with unions exclusive representatives, and providing financial incentives to encourage early retirements;

(6) financial arrangements for the merger, specifically including responsibility for debt service on outstanding obligations of the merging entities units;

(7) one- and two-year impact analysis analyses, prepared by the granting state agency at the request of the local government unit, of major state aid revenues received for each unit if it combined and if it remained separate. This would also include, including an impact analysis, prepared by the department of revenue, of any property tax revenue implications, if any, associated with tax increment financing districts and fiscal disparities under chapter 276A or 473F resulting from the merger;

(8) procedures for a referendum to be held before the proposed combination to approve combining the local government units, specifically stating whether a majority of those voting in each district proposed for combination or a majority of those voting on the question in the entire area proposed for combination would be is needed to pass the referendum; and

(9) a time schedule for implementation.

Notwithstanding clause (3) or any other law to the contrary, all current members of the governing bodies of the local governmental government units that propose to combine under sections 465.81 to 465.88 may serve on the initial governing body of the combined unit until a gradual reduction in membership is achieved by foregoing election of new members when terms expire until the number permitted by other law is reached.

Sec. 38. Minnesota Statutes 1996, section 465.82, is amended by adding a subdivision to read:

Subd. 3. [INTERIM GOVERNING BODY.] The plan for cooperation and combination adopted in accordance with subdivision 1 may establish an interim governing body to act on behalf of the new local government unit before the effective date of the combination. If established, the interim governing body must consist of at least a majority of the elected officials

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from each local government unit taking part in the combination. If the plan establishes an interim governing body, the governing body of each unit taking part in the combination shall appoint its representatives to serve on the interim governing body. An interim governing body may not take any official action on behalf of the new local government unit before approval of the combination through the referendum required by section 465.84. After approval of the combination through the referendum, and before the effective date of the combination, an interim governing body may exercise all statutory authority of the governing body of the new local government unit, including the authority to enter into contracts and adopt policies and local ordinances.

Sec. 39. Minnesota Statutes 1996, section 465.87, subdivision 1a, is amended to read:

Subd. 1a. [ADDITIONAL ELIGIBILITY.] A local government unit is eligible to apply for aid under this section if it has combined with another unit of government in accordance with any process within chapter 414 that results in the elimination of at least one local government unit and a copy of the municipal board's order or orders combining the two units of government is forwarded to the board. If the municipal board issues two or more orders within 30 days for the annexation of the area of an entire township by two or more cities contiguous to the township, the cities subject to the board's order are eligible to receive pro rata shares, on the basis of their populations, of the total amount of cooperation and combination aid all participating units of government would be eligible to receive under subdivision 2. If two units of government cooperate in the orderly annexation of the entire area of a third unit of government which has a population of at least 8,000 people, the two units of government are each eligible for the amount of aid specified in subdivision 2.

Sec. 40. Minnesota Statutes 1996, section 465.87, subdivision 2, is amended to read:

Subd. 2. [AMOUNT OF AID.] The annual amount of aid to be paid to each eligible local government unit may not exceed the following per capita amounts, based on the combined population of the units, as estimated by the state demographer, or $100,000, whichever is less.

Combined Population Aid

after Combination Per Capita

0 -2,500 $25

2,500 -5,000 20

5,000 - 20,000 15

over 20,000 10

If two or more units are eligible for a single award under this subdivision, the award must be divided among the units in pro rata shares based on each unit's population. Payments must be made on the dates provided for payments of local government aid under section 477A.013, beginning in the year during which substantial cooperative activities under the plan initially occur, unless those activities begin after July 1, in which case the initial aid payment must be made in the following calendar year. Payments to a local government unit that qualifies for aid under subdivision 1a must be made on the dates provided for payments of local government aids under section 477A.013, beginning in the calendar year during which a combination in any form is expected to be ordered by the Minnesota municipal board as evidenced in a resolution adopted by July 1 by the affected local government units declaring their intent to combine. The resolutions must certify that the combination agreement addressing all issues relative to the combination is substantially complete. The total amount of aid paid may not exceed the amount appropriated to the board for purposes of this section.

Sec. 41. Minnesota Statutes 1996, section 465.88, is amended to read:

465.88 [PLANNING AID FOR CONSOLIDATION STUDIES.]

Two or more local units of government with a combined population of 2,500 30,000 or less based on the most recent decennial census may apply to the board for aid to assist in the study of a possible consolidation or combination. To be eligible for receipt of aid under this section, the two local units of government must be subject to a municipal board motion proceeding to form a consolidation commission under section 414.041, subdivision 2, or the governing bodies of the local units of government must have approved a resolution expressing their intent to develop and submit a combination plan for consideration by the board. The application must be on a form prescribed by the board and must provide a proposed budget detailing how the requested aid shall is to be used. The governing bodies of the local units of government must shall also

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approve resolutions certifying that the requested aid is essential for paying a portion of the costs associated with the consolidation or combination study. The board may grant up to $10,000 in aid for each application received. Two or more local government units with a combined population of at least 2,500 but not greater than 30,000, based on the most recent decennial census, must agree to provide at least $1 for the study of a possible consolidation or combination for each dollar of aid granted by the board under this section.

Sec. 42. Minnesota Statutes 1996, section 469.012, subdivision 1, is amended to read:

Subdivision 1. [SCHEDULE OF POWERS.] An authority shall be a public body corporate and politic and shall have all the powers necessary or convenient to carry out the purposes of sections 469.001 to 469.047, except that the power to levy and collect taxes or special assessments is limited to the power provided in sections 469.027 to 469.033. Its powers include the following powers in addition to others granted in sections 469.001 to 469.047:

(1) to sue and be sued; to have a seal, which shall be judicially noticed, and to alter it; to have perpetual succession; and to make, amend, and repeal rules consistent with sections 469.001 to 469.047;

(2) to employ an executive director, technical experts, and officers, agents, and employees, permanent and temporary, that it requires, and determine their qualifications, duties, and compensation; for legal services it requires, to call upon the chief law officer of the city or to employ its own counsel and legal staff; so far as practicable, to use the services of local public bodies in its area of operation, provided that those local public bodies, if requested, shall make the services available;

(3) to delegate to one or more of its agents or employees the powers or duties it deems proper;

(4) within its area of operation, to undertake, prepare, carry out, and operate projects and to provide for the construction, reconstruction, improvement, extension, alteration, or repair of any project or part thereof;

(5) subject to the provisions of section 469.026, to give, sell, transfer, convey, or otherwise dispose of real or personal property or any interest therein and to execute leases, deeds, conveyances, negotiable instruments, purchase agreements, and other contracts or instruments, and take action that is necessary or convenient to carry out the purposes of these sections;

(6) within its area of operation, to acquire real or personal property or any interest therein by gifts, grant, purchase, exchange, lease, transfer, bequest, devise, or otherwise, and by the exercise of the power of eminent domain, in the manner provided by chapter 117, to acquire real property which it may deem necessary for its purposes, after the adoption by it of a resolution declaring that the acquisition of the real property is necessary to eliminate one or more of the conditions found to exist in the resolution adopted pursuant to section 469.003 or to provide decent, safe, and sanitary housing for persons of low and moderate income, or is necessary to carry out a redevelopment project. Real property needed or convenient for a project may be acquired by the authority for the project by condemnation pursuant to this section. This includes any property devoted to a public use, whether or not held in trust, notwithstanding that the property may have been previously acquired by condemnation or is owned by a public utility corporation, because the public use in conformity with the provisions of sections 469.001 to 469.047 shall be deemed a superior public use. Property devoted to a public use may be so acquired only if the governing body of the municipality has approved its acquisition by the authority. An award of compensation shall not be increased by reason of any increase in the value of the real property caused by the assembly, clearance or reconstruction, or proposed assembly, clearance or reconstruction for the purposes of sections 469.001 to 469.047 of the real property in an area;

(7) within its area of operation, and without the adoption of an urban renewal plan, to acquire, by all means as set forth in clause (6) but without the adoption of a resolution provided for in clause (6), real property, and to demolish, remove, rehabilitate, or reconstruct the buildings and improvements or construct new buildings and improvements thereon, or to so provide through other means as set forth in Laws 1974, chapter 228, or to grade, fill, and construct foundations or otherwise prepare the site for improvements. The authority may dispose of the property pursuant to section 469.029, provided that the provisions of section 469.029 requiring conformance to an urban renewal plan shall not apply. The authority may finance these activities by means of the redevelopment project fund or by means of tax increments or tax increment bonds or by the methods of financing provided for in section 469.033 or by means of contributions from the municipality provided for in section 469.041, clause (9), or by any combination of those means. Real property with buildings or improvements thereon shall only be acquired under this clause when the buildings or improvements are substandard. The exercise of the power

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of eminent domain under this clause shall be limited to real property which contains, or has contained within the three years immediately preceding the exercise of the power of eminent domain and is currently vacant, buildings and improvements which are vacated and substandard. Notwithstanding the prior sentence, in cities of the first class the exercise of the power of eminent domain under this clause shall be limited to real property which contains, or has contained within the three years immediately preceding the exercise of the power of eminent domain, buildings and improvements which are substandard. For the purpose of this clause, substandard buildings or improvements mean hazardous buildings as defined in section 463.15, subdivision 3, or buildings or improvements that are dilapidated or obsolescent, faultily designed, lack adequate ventilation, light, or sanitary facilities, or any combination of these or other factors that are detrimental to the safety or health of the community;

(8) within its area of operation, to determine the level of income constituting low or moderate family income. The authority may establish various income levels for various family sizes. In making its determination, the authority may consider income levels that may be established by the Department of Housing and Urban Development or a similar or successor federal agency for the purpose of federal loan guarantees or subsidies for persons of low or moderate income. The authority may use that determination as a basis for the maximum amount of income for admissions to housing development projects or housing projects owned or operated by it;

(9) to provide in federally assisted projects any relocation payments and assistance necessary to comply with the requirements of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and any amendments or supplements thereto;

(10) to make an agreement with the governing body or bodies creating the authority which provides exemption from all ad valorem real and personal property taxes levied or imposed by the state, city, county, or other political subdivisions, for which the authority shall make payments in lieu of taxes to the state, city, county, or other political subdivisions as provided in section 469.040 body or bodies creating the authority. The governing body shall agree on behalf of all the applicable governing bodies affected that local cooperation as required by the federal government shall be provided by the local governing body or bodies in whose jurisdiction the project is to be located, at no cost or at no greater cost than the same public services and facilities furnished to other residents;

(11) to cooperate with or act as agent for the federal government, the state or any state public body, or any agency or instrumentality of the foregoing, in carrying out any of the provisions of sections 469.001 to 469.047 or of any other related federal, state, or local legislation; and upon the consent of the governing body of the city to purchase, lease, manage, or otherwise take over any housing project already owned and operated by the federal government;

(12) to make plans for carrying out a program of voluntary repair and rehabilitation of buildings and improvements, and plans for the enforcement of laws, codes, and regulations relating to the use of land and the use and occupancy of buildings and improvements, and to the compulsory repair, rehabilitation, demolition, or removal of buildings and improvements. The authority may develop, test, and report methods and techniques, and carry out demonstrations and other activities for the prevention and elimination of slums and blight;

(13) to borrow money or other property and accept contributions, grants, gifts, services, or other assistance from the federal government, the state government, state public bodies, or from any other public or private sources;

(14) to include in any contract for financial assistance with the federal government any conditions that the federal government may attach to its financial aid of a project, not inconsistent with purposes of sections 469.001 to 469.047, including obligating itself (which obligation shall be specifically enforceable and not constitute a mortgage, notwithstanding any other laws) to convey to the federal government the project to which the contract relates upon the occurrence of a substantial default with respect to the covenants or conditions to which the authority is subject; to provide in the contract that, in case of such conveyance, the federal government may complete, operate, manage, lease, convey, or otherwise deal with the project until the defaults are cured if the federal government agrees in the contract to reconvey to the authority the project as then constituted when the defaults have been cured;

(15) to issue bonds for any of its corporate purposes and to secure the bonds by mortgages upon property held or to be held by it or by pledge of its revenues, including grants or contributions;

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(16) to invest any funds held in reserves or sinking funds, or any funds not required for immediate disbursement, in property or securities in which savings banks may legally invest funds subject to their control or in the manner and subject to the conditions provided in section 118A.04 for the deposit and investment of public funds;

(17) within its area of operation, to determine where blight exists or where there is unsafe, unsanitary, or overcrowded housing;

(18) to carry out studies of the housing and redevelopment needs within its area of operation and of the meeting of those needs. This includes study of data on population and family groups and their distribution according to income groups, the amount and quality of available housing and its distribution according to rentals and sales prices, employment, wages, desirable patterns for land use and community growth, and other factors affecting the local housing and redevelopment needs and the meeting of those needs; to make the results of those studies and analyses available to the public and to building, housing, and supply industries;

(19) if a local public body does not have a planning agency or the planning agency has not produced a comprehensive or general community development plan, to make or cause to be made a plan to be used as a guide in the more detailed planning of housing and redevelopment areas;

(20) to lease or rent any dwellings, accommodations, lands, buildings, structures, or facilities included in any project and, subject to the limitations contained in sections 469.001 to 469.047 with respect to the rental of dwellings in housing projects, to establish and revise the rents or charges therefor;

(21) to own, hold, and improve real or personal property and to sell, lease, exchange, transfer, assign, pledge, or dispose of any real or personal property or any interest therein;

(22) to insure or provide for the insurance of any real or personal property or operations of the authority against any risks or hazards;

(23) to procure or agree to the procurement of government insurance or guarantees of the payment of any bonds or parts thereof issued by an authority and to pay premiums on the insurance;

(24) to make expenditures necessary to carry out the purposes of sections 469.001 to 469.047;

(25) to enter into an agreement or agreements with any state public body to provide informational service and relocation assistance to families, individuals, business concerns, and nonprofit organizations displaced or to be displaced by the activities of any state public body;

(26) to compile and maintain a catalog of all vacant, open and undeveloped land, or land which contains substandard buildings and improvements as that term is defined in clause (7), that is owned or controlled by the authority or by the governing body within its area of operation and to compile and maintain a catalog of all authority owned real property that is in excess of the foreseeable needs of the authority, in order to determine and recommend if the real property compiled in either catalog is appropriate for disposal pursuant to the provisions of section 469.029, subdivisions 9 and 10;

(27) to recommend to the city concerning the enforcement of the applicable health, housing, building, fire prevention, and housing maintenance code requirements as they relate to residential dwelling structures that are being rehabilitated by low- or moderate-income persons pursuant to section 469.029, subdivision 9, for the period of time necessary to complete the rehabilitation, as determined by the authority;

(28) to recommend to the city the initiation of municipal powers, against certain real properties, relating to repair, closing, condemnation, or demolition of unsafe, unsanitary, hazardous, and unfit buildings, as provided in section 469.041, clause (5);

(29) to sell, at private or public sale, at the price or prices determined by the authority, any note, mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or securing a loan made for the purpose of economic development, job creation, redevelopment, or community revitalization by a public agency to a business, for-profit or nonprofit organization, or an individual;

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(30) within its area of operation, to acquire and sell real property that is benefited by federal housing assistance payments, other rental subsidies, interest reduction payments, or interest reduction contracts for the purpose of preserving the affordability of low- and moderate-income multifamily housing;

(31) to apply for, enter into contracts with the federal government, administer, and carry out a section 8 program. Authorization by the governing body creating the authority to administer the program at the authority's initial application is sufficient to authorize operation of the program in its area of operation for which it was created without additional local governing body approval. Approval by the governing body or bodies creating the authority constitutes approval of a housing program for purposes of any special or general law requiring local approval of section 8 programs undertaken by city, county, or multicounty authorities; and

(32) to secure a mortgage or loan for a rental housing project by obtaining the appointment of receivers or assignments of rents and profits under sections 559.17 and 576.01, except that the limitation relating to the minimum amounts of the original principal balances of mortgages specified in sections 559.17, subdivision 2, clause (2); and 576.01, subdivision 2, does not apply.

Sec. 43. Minnesota Statutes 1996, section 469.033, subdivision 6, is amended to read:

Subd. 6. [OPERATION AREA AS TAXING DISTRICT, SPECIAL TAX.] All of the territory included within the area of operation of any authority shall constitute a taxing district for the purpose of levying and collecting special benefit taxes as provided in this subdivision. All of the taxable property, both real and personal, within that taxing district shall be deemed to be benefited by projects to the extent of the special taxes levied under this subdivision. Subject to the consent by resolution of the governing body of the city in and for which it was created, an authority may levy a tax upon all taxable property within that taxing district. The tax shall be extended, spread, and included with and as a part of the general taxes for state, county, and municipal purposes by the county auditor, to be collected and enforced therewith, together with the penalty, interest, and costs. As the tax, including any penalties, interest, and costs, is collected by the county treasurer it shall be accumulated and kept in a separate fund to be known as the "housing and redevelopment project fund." The money in the fund shall be turned over to the authority at the same time and in the same manner that the tax collections for the city are turned over to the city, and shall be expended only for the purposes of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of the authority or an authorized representative. The amount of the levy shall be an amount approved by the governing body of the city, but shall not exceed 0.0131 0.0144 percent of taxable market value. The authority may levy an additional levy, not to exceed 0.0013 percent of taxable market value, to be used to defray costs of providing informational service and relocation assistance as set forth in section 469.012, subdivision 1. The authority shall each year formulate and file a budget in accordance with the budget procedure of the city in the same manner as required of executive departments of the city or, if no budgets are required to be filed, by August 1. The amount of the tax levy for the following year shall be based on that budget.

Sec. 44. Minnesota Statutes 1996, section 469.040, subdivision 3, is amended to read:

Subd. 3. [STATEMENT FILED WITH ASSESSOR; PERCENTAGE TAX ON RENTALS.] Notwithstanding the provisions of subdivision 1, after a housing project or a housing development project carried on under sections 469.016 to 469.026 has become occupied, in whole or in part, an authority shall file with the assessor, on or before April 15 of each year, a statement of the aggregate shelter rentals of that project collected during the preceding calendar year. Unless a greater amount has been agreed upon between the authority and the governing body or bodies for which the authority was created, in whose jurisdiction the project is located, five percent of the aggregate shelter rentals shall be charged to the authority as a service charge for the services and facilities to be furnished with respect to that project. The service charge shall be collected from the authority in the manner provided by law for the assessment and collection of taxes. The amount so collected shall be distributed to the several taxing bodies in the same proportion as the tax rate of each bears to the total tax rate of those taxing bodies. The governing body or bodies for which the authority has been created, in whose jurisdiction the project is located, may agree with the authority for the payment of a service charge for a housing project or a housing development project in an amount greater than five percent of the aggregate annual shelter rentals of any project, upon the basis of shelter rentals or upon another basis agreed upon. The service charge may not exceed the amount which would be payable in taxes were the property not exempt. If such an agreement is made, the service charge so agreed upon shall be collected and distributed in the manner above provided. If the project has become occupied, or if the land upon which the project is to be constructed has been acquired, the agreement shall specify the location of the project for which the agreement

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is made. "Shelter rental" means the total rentals of a housing project exclusive of any charge for utilities and special services such as heat, water, electricity, gas, sewage disposal, or garbage removal. "Service charge" means payment in lieu of taxes. The records of each housing project shall be open to inspection by the proper assessing officer.

Sec. 45. [469.1812] [DEFINITIONS.]

Subdivision 1. [SCOPE.] For purposes of sections 469.1812 to 469.1815, the following terms have the meanings given.

Subd. 2. [GOVERNING BODY.] "Governing body" means, for a city, the city council; for a school district, the school board; for a county, the county board; and for a town, the annual meeting of the town.

Subd. 3. [MUNICIPALITY.] "Municipality" means a statutory or home rule charter city or a town.

Subd. 4. [POLITICAL SUBDIVISION OR SUBDIVISION.] "Political subdivision" or "subdivision" means a statutory or home rule charter city, town, school district, or county.

Sec. 46. [469.1813] [ABATEMENT AUTHORITY.]

Subdivision 1. [AUTHORITY.] The governing body of a political subdivision may grant an abatement of the taxes imposed by the political subdivision on a parcel of property, if:

(a) it expects the benefits to the political subdivision of the proposed abatement agreement to at least equal the costs to the political subdivision of the proposed agreement; and

(b) it finds that doing so is in the public interest because it will:

(1) increase or preserve tax base;

(2) provide employment opportunities in the political subdivision;

(3) provide or help acquire or construct public facilities;

(4) help redevelop or renew blighted areas; or

(5) help provide access to services for residents of the political subdivision.

Subd. 2. [ABATEMENT RESOLUTION.] The governing body of a political subdivision may grant an abatement only by adopting an abatement resolution, specifying the terms of the abatement. The resolution must also include a specific statement as to the nature and extent of the public benefits which the governing body expects to result from the agreement. The abatement may reduce all or part of the property tax levied by the political subdivision on the parcel. The political subdivision may limit the abatement:

(1) to a specific dollar amount per year or in total;

(2) to the increase in property taxes resulting from improvement of the property;

(3) to the increases in property taxes resulting from increases in the market value or tax capacity of the property; or

(4) in any other manner the governing body of the subdivision determines is appropriate.

The political subdivision may not abate tax attributable to the value of the land or the areawide tax under chapter 276A or 473F.

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Subd. 3. [SCHOOL DISTRICT ABATEMENT PROCEDURE.] Notwithstanding the amounts in subdivision 2, a school district that grants an abatement under this section must limit the abatement for any property to not more than an amount equal to the product of: (1) the property's net tax capacity, and (2) the difference between the district's total tax rate for that year and one-half of the general education tax rate for that year. An abatement granted under this section is not an abatement for purposes of state aid or local levy under chapter 124.

Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING DISTRICTS.] The governing body of a governmental subdivision may not enter into a property tax abatement agreement under sections 469.1812 to 469.1815 if the property is located in a tax increment financing district.

Subd. 5. [NOTICE AND PUBLIC HEARING.] (a) The governing body of the political subdivision may approve an abatement under sections 469.1812 to 469.1815 only after holding a public hearing on the abatement.

(b) Notice of the hearing must be published in a newspaper of general circulation in the political subdivision at least once more than ten days but less than 30 days before the hearing. The newspaper must be one of general interest and readership in the community, and not one of limited subject matter. The newspaper must be published at least once per week. The notice must indicate that the governing body will consider granting a property tax abatement, identify the property or properties for which an abatement is under consideration, and the total estimated amount of the abatement.

Subd. 6. [DURATION LIMIT.] (a) A political subdivision other than a school district may grant an abatement for a period no longer than ten years. The subdivision may specify in the abatement resolution a shorter duration. If the resolution does not specify a period of time, the abatement is for eight years. If an abatement has been granted to a parcel of property and the period of the abatement has expired, the political subdivision that granted the abatement may not grant another abatement for eight years after the expiration of the first abatement. This prohibition does not apply to improvements added after and not subject to the first abatement.

(b) A school district may grant an abatement for only one year at a time. Once a school district has authorized an abatement for a property, it may reauthorize the abatement in any subsequent year for the next seven years, or nine years if provided in the original abatement agreement. This prohibition does not apply to improvements added after and not subject to the original abatement agreement.

Subd. 7. [REVIEW AND MODIFICATION OF ABATEMENTS.] The political subdivision may provide in the abatement resolution that the abatement may not be modified or changed during its term. If the abatement resolution does not provide that the abatement may not be modified or changed, the governing body of the political subdivision may review and modify the abatement every second year after it was approved.

Subd. 8. [LIMITATION ON ABATEMENTS.] In any year, the total amount of property taxes abated by a political subdivision under this section may not exceed (1) five percent of the current levy, or (2) $100,000, whichever is greater.

Sec. 47. [469.1814] [BONDING AUTHORITY.]

Subdivision 1. [AUTHORITY.] A political subdivision may issue bonds or other obligations to provide an amount equal to the sum of the abatements granted for a property under section 469.1813. The maximum principal amount of these bonds may not exceed the estimated sum of the abatements for the property for the years authorized. The bonds may be general obligations of the political subdivision if the governing body of the political subdivision elects to pledge the full faith and credit of the subdivision in the resolution issuing the bonds.

Subd. 2. [BOND CODE APPLIES.] Chapter 475 applies to the obligations authorized by this section, except bonds are excluded from the calculation of the net debt limit.

Subd. 3. [MUNICIPAL ISSUE FOR COMBINED ABATEMENTS.] If two or more political subdivisions decide to grant abatements for the same property, the municipality in which the property is located may issue bonds to provide an amount equal to the sum of the abatements for each of the jurisdictions that agrees. The governing body of each of the other jurisdictions must guarantee and pledge to pay annually to the municipality the amount of the abatement. This pledge and guarantee is a binding obligation of the political subdivision and must be included in the abatement resolution.

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Subd. 4. [BONDED ABATEMENTS NOT SUBJECT TO REVIEW.] If bonds are issued to provide advance payment of abatements under this section, the amount of abatement is not subject to periodic review by the political subdivision under section 469.1813, subdivision 7.

Subd. 5. [USE OF PROCEEDS.] The proceeds of bonds issued under this section may be used to (1) pay for public improvements that benefit the property, (2) to acquire and convey land or other property, as provided under this section, (3) to reimburse the property owner for the cost of improvements made to the property, or (4) to pay the costs of issuance of the bonds.

Sec. 48. [469.1815] [ADMINISTRATIVE.]

Subdivision 1. [INCLUSION IN PROPOSED AND FINAL LEVIES.] The political subdivision must add to its levy amount for the current year under sections 275.065 and 275.07 the total estimated amount of all current year abatements granted. The tax amounts shown on the proposed notice under section 275.065, subdivision 3, and on the property tax statement under section 276.04, subdivision 2, are the total amounts before the reduction of any abatements that will be granted on the property.

Subd. 2. [PROPERTY TAXES; ABATEMENT PAYMENT.] The total property taxes shall be levied on the property and shall be due and payable to the county at the times provided under section 279.01. The political subdivision will pay the abatement to the property owner, lessee, or a representative of the bondholders, as provided by the abatement resolution.

Sec. 49. Minnesota Statutes 1996, section 477A.011, subdivision 36, is amended to read:

Subd. 36. [CITY AID BASE.] (a) Except as provided in paragraphs (b) and, (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.

(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.

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Sec. 50. Laws 1992, chapter 511, article 2, section 52, 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 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, and 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 costs incurred in connection with the development and maintenance of cost-sharing projects with the United States Army Corps of Engineers. The board of managers shall make the levy for the administrative fund in accordance with Minnesota Statutes, section 103D.915.

Sec. 51. Laws 1997, chapter 75, section 2, is amended to read:

Sec. 2. [EFFECTIVE DATE; EXPIRATION.]

Section 1 is effective May 2, 1997, and expires January 1, 1998.

Sec. 52. [VALUATION EXCLUSION FOR IMPROVEMENTS TO CERTAIN BUSINESS PROPERTY.]

Property classified under Minnesota Statutes, section 273.13, subdivision 24, which is eligible for the preferred class rate on the market value up to $150,000, shall qualify for a valuation exclusion for assessment purposes, provided all of the following conditions are met:

(1) the building must be at least 50 years old at the time of the improvement or damaged by the 1997 floods;

(2) the building must be located in a city or town with a population of 10,000 or less that is located outside the seven-county metropolitan area, as defined in section 473.121, subdivision 2;

(3) the total estimated market value of the land and buildings must be $100,000 or less prior to the improvement and prior to the damage caused by the 1997 floods;

(4) the current year's estimated market value of the property must be equal to or less than the property's estimated market value in each of the two previous years' assessments;

(5) a building permit must have been issued prior to the commencement of the improvement, or if the building is located in a city or town which does not have a building permit process, the property owner must notify the assessor prior to the commencement of the improvement;

(6) the property, including its improvements, has received no public assistance, grants or financing;

(7) the property is not receiving a property tax abatement under section 469.1813; and

(8) the improvements are made after the effective date of this act and prior to January 1, 1999.

The assessor shall estimate the market value of the building in the assessment year immediately following the year that (1) the building permit was taken out, or (2) the taxpayer notified the assessor that an improvement was to be made. If the estimated market value of the building has increased over the prior year's assessment, the assessor shall note the amount of the increase on the property's record, and that amount shall be subtracted from the value of the property in each year for five years after the improvement has been made, at which time an amount equal to 20 percent of the excluded value shall be added back in each of the five subsequent assessment years.

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For any property, there can be no more than two improvements qualifying for exclusion under this subdivision. The maximum amount of value that can be excluded from any property under this subdivision is $50,000.

The assessor shall require an application, including documentation of the age of the building from the owner, if unknown by the assessor. Applications must be received prior to July 1 of any year in order to be effective for taxes payable in the following year.

For purposes of this subdivision, "population" has the same meaning given in Minnesota Statutes, section 477A.011, subdivision 3.

Sec. 53. [CITY OF DULUTH; REASSESSMENTS OF CANCELED SPECIAL ASSESSMENTS.]

Subdivision 1. [AUTHORIZATION.] Notwithstanding any law, city charter provision, or ordinance to the contrary, if a parcel of tax-forfeited land located in the city of Duluth is returned to private ownership and the parcel is benefited by an improvement for which special assessments were canceled because of the forfeiture, the city council may, upon notice and hearing as provided for in the original assessment, make a reassessment or a new assessment as to the parcel in an amount equal to the amount remaining unpaid on the original assessment.

Subd. 2. [LOCAL APPROVAL REQUIRED.] This section is effective upon approval by the governing body of the city of Duluth and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 54. [FLOODWOOD JOINT RECREATION BOARD TAX.]

Subdivision 1. [LEVY AUTHORIZATION.] Each year, the Floodwood joint recreation board may levy a tax not to exceed $25,000 on the value of property situated in the territory of independent school district No. 698 in accordance with this section. Property in territory in the school district may be made subject to the tax permitted by this section by the agreement of the governing body or town board of the city or town where it is located. The agreement may be by resolution of a governing body or town board or by a joint powers agreement pursuant to Minnesota Statutes, section 471.59. If levied, the tax is in addition to all other taxes on the property subject to it permitted to be levied for park and recreation purposes by the cities and towns other than for the support of the joint recreation board. It shall be disregarded in the calculation of all other mill rate or per capita tax levy limitations imposed by law or charter upon them. A city or town may withdraw its agreement to future taxes by notice to the recreation board and the county auditor unless provided otherwise by a joint powers agreement. The tax shall be collected by the applicable county auditor and treasurer and paid directly to the Floodwood joint recreation board.

Subd. 2. [LOCAL APPROVAL.] This section is effective in the city of Floodwood, the towns of Arrowhead, Fine Lakes, Floodwood, Halden, Van Buren, Cedar Valley, Prairie Lake, and Unorganized Township 52-21 in St. Louis county, and Unorganized Township 52-22 in Aitkin county the day after compliance with Minnesota Statutes, section 645.021, subdivision 3, by the governing body of each. This section is effective for each city, town, and unorganized township regardless of the action of the others.

Approval of this section is not agreement to be subject to the tax permitted by it. Agreement to the tax must be by separate action in accordance with subdivision 1.

Sec. 55. [SAUK RIVER WATERSHED DISTRICT.]

Subdivision 1. [LEVY AUTHORIZATION.] Notwithstanding Minnesota Statutes, section 103D.905, subdivision 3, the Sauk River watershed district may levy up to $150,000 for its administrative fund for taxes levied in 1997, payable in 1998.

Subd. 2. [EFFECTIVE DATE.] This section is effective the day following final enactment.

Sec. 56. [VIRGINIA AREA AMBULANCE DISTRICT.]

Subdivision 1. [AGREEMENT; POWERS; GENERAL DESCRIPTION.] (a) The cities of Virginia, Mountain Iron, and Gilbert, and the towns of Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, Ellsburg, Wouri, Lavell, Cotton, and Embarrass, may by resolution of their city councils and town boards establish the Virginia area ambulance district.

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(b) The St. Louis county board may by resolution provide that property located in unorganized townships described in clauses (1) to (6) may be included within the district:

(1) Township 61 North, Range 17 West;

(2) Township 59 North, Ranges 16 and 18 West;

(3) Township 56 North, Range 16 West;

(4) Township 60 North, Range 18 West;

(5) Township 55 North, Range 15; and

(6) Township 57, Range 16.

(c) The district shall make payments of the proceeds of the tax authorized in this section to the city of Virginia, which shall provide ambulance services throughout the district and may exercise all the powers of the cities and towns that relate to ambulance service anywhere within its territory.

(d) Any other contiguous town or home rule charter or statutory city may join the district with the agreement of the cities and towns that comprise the district at the time of its application to join. Action to join the district may be taken by the city council or town board of the city or town.

Subd. 2. [BOARD.] The district shall be governed by a board composed of one member appointed by the city council or town board of each city and town in the district. A district board member may, but is not required to, be a member of a city council or town board. Except as provided in this section, members shall serve two-year terms ending the first Monday in January and until their successors are appointed and qualified. Of the members first appointed, as far as possible, the terms of one-half shall expire on the first Monday in January in the first year following appointment and one-half the first Monday in January in the second year. The terms of those initially appointed must be determined by lot. If an additional member is added because an additional city or town joins the district, the member's term must be fixed so that, as far as possible, the terms of one-half of all the members expire on the same date.

Subd. 3. [TAX.] The district may impose a property tax on real and personal property in the district in an amount sufficient to discharge its operating expenses and debt payable in each year, but not to exceed .0528 percent of the district's taxable market value. The St. Louis county auditor shall collect the tax and distribute it to the Virginia area ambulance district.

Subd. 4. [EXPENDITURES.] The taxes collected under subdivision 3 shall be used for licensed ambulance services and first responders. Licensed ambulance services shall receive 80 percent of the available funds and first responders shall receive 20 percent of the available funds. The amounts allocated to first responders shall be used for education, training, and reimbursement for their allowable expenses. Only education and training that meets the recognized education and training guidelines set by the emergency medical services regulatory board under Minnesota Statutes, chapter 144E, shall be reimbursable under this subdivision.

Subd. 5. [PUBLIC INDEBTEDNESS.] The district may incur debt in the manner provided for a municipality by Minnesota Statutes, chapter 475, when necessary to accomplish a duty charged to it.

Subd. 6. [WITHDRAWAL.] Upon two years' notice, a city or town may withdraw from the district. Its territory shall remain subject to taxation for debt incurred prior to its withdrawal under Minnesota Statutes, chapter 475.

Subd. 7. [EFFECTIVE DATE.] This section is effective (1) in the cities of Virginia, Mountain Iron, and Gilbert, and the towns of Pike, Clinton, McDavitt, Colvin, Sandy, Cherry, Ellsburg, Wouri, Lavell, Cotton, and Embarrass, the day after compliance with Minnesota Statutes, section 645.021, subdivision 2, by the governing body of each, and (2) for unorganized townships described in subdivision 1, paragraph (b), clauses (1) to (6), the day after compliance with Minnesota Statutes, section 645.021, subdivision 2, by the St. Louis county board, provided that the district must be established by September 1, 2000. Any of the cities, towns, and unorganized townships listed in subdivision 1 that do not join the district initially may join the district after its establishment.

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Sec. 57. [ST. LOUIS COUNTY; UTILITY PERSONAL PROPERTY EXEMPTION.]

(a) An electric generating facility with a capacity of 110,000 kilowatts located in St. Louis County whose operation is integral to the development and operation of a new, adjacent industrial park is exempt from property taxes on attached machinery and other personal property for replacement equipment and improvements installed after July 1, 1997. If the industrial park is not built by July 1, 2001, this exemption expires.

(b) The governing bodies of the county, city or town, and school district must each approve by resolution the exemption of the personal property under this section. The resolution shall contain the number of years for which the exemption is granted. Each of the governing bodies shall file a copy of the resolution with the county auditor. The county auditor shall publish the resolutions in newspapers of general circulation within the county. The voters of the county may request a referendum on the proposed exemption by filing a petition within 30 days after the resolutions are published. The petition must be signed by voters who reside in the county. The number of signatures must equal at least ten percent of the number of persons voting in the county in the last general election. If such a petition is timely filed, the resolutions are not effective until they have been submitted to the voters residing in the county at a general or special election and a majority of votes cast on the question of approving the resolution are in the affirmative. The commissioner of revenue shall prepare a suggested form of question to be presented at the referendum.

(c) The exemption under this section is limited to a maximum of five years, beginning with the assessment year immediately following when the personal property is put in operation and expires thereafter.

Sec. 58. [WASHINGTON COUNTY; LEVY TO FUND THE COUNTY HOUSING AND REDEVELOPMENT AUTHORITY.]

Subdivision 1. [AUTHORIZATION.] In addition to all other levies authorized by law, Washington county may levy an amount not to exceed $2,000,000 over a ten-year period beginning in 1997 for taxes payable in 1998, and transfer the proceeds of the levy to the Washington county housing and redevelopment authority to be used to support the activities of the authority, which may include refinancing of indebtedness of the authority, in the city of Landfall.

Subd. 2. [LOCAL APPROVAL.] This section is effective upon approval by the governing body of Washington county and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 59. [BROOKLYN PARK; CERTIFICATION OF CHARGES; DEFINITIONS.]

Subdivision 1. [SCOPE.] For the purpose of sections 60 and 61, the terms defined in this section have the meanings given them.

Subd. 2. [ASSOCIATION.] "Association" has the meaning given it in Minnesota Statutes, section 515B.1-103, paragraph (4).

Subd. 3. [AUTHORITY.] "Authority" means the Brooklyn Park economic development authority.

Subd. 4. [COMMON ELEMENTS.] "Common elements" has the meaning given it in Minnesota Statutes, section 515B.1-103, paragraph (7).

Subd. 5. [COMMON ELEMENT IMPROVEMENTS.] "Common element improvements" means any physical repair, replacement, or modification of, or addition to, the common elements of a common interest community.

Subd. 6. [COMMON INTEREST COMMUNITY.] "Common interest community" has the meaning given it in Minnesota Statutes, section 515B.1-103, paragraph (10).

Subd. 7. [UNIT.] "Unit" has the meaning given it in Minnesota Statutes, section 515B.1-103, paragraph (33).

Subd. 8. [UNIT OWNER.] "Unit owner" has the meaning given it in Minnesota Statutes, section 515B.1-103, paragraph (35).

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Sec. 60. [BROOKLYN PARK; AUTHORITY GRANTED.]

If:

(1) the authority lends or agrees to lend funds to an association for the provision or construction of common element improvements;

(2) the association has duly levied common expense assessments against the units in order to provide the association with funds to:

(i) pay principal and interest on the loan;

(ii) provide coverage in excess of principal and interest payments on the loan;

(iii) create or replenish reserve funds pledged as security for the loan; or

(iv) pay expenses related to the loan or the assessments that are identified in the loan agreement between the authority and the association;

(3) a unit owner has become delinquent in the payment of any assessment installment; and

(4) the association has declared the entire amount of the assessment due and owing pursuant to Minnesota Statutes, section 515B.3-115, paragraph (k), then

the authority may certify the delinquent assessment, together with interest and penalties, to the county auditor for collection to the same extent and in the same manner provided by law for the assessment and collection of real estate taxes.

Sec. 61. [BROOKLYN PARK; DISCLOSURE REQUIRED.]

For any common interest community located in the city of Brooklyn Park, the disclosure statement required under Minnesota Statutes, section 515B.4-102, must include a description of the potential applicability and consequences of section 60.

Sec. 62. [MINNEAPOLIS UTILITY CHARGE ASSESSMENTS.]

Subdivision 1. [BECOMES LIEN WHEN DELINQUENT.] An assessment levied by the city of Minneapolis for delinquent utility charges, and interest and penalties on the charges under Minnesota Statutes, section 272.32; Laws 1969, chapter 499; Laws 1973, chapter 320; or Laws 1994, chapter 587, article 9, section 4, with accruing interest, is a lien upon all property included in the assessment, concurrent with general taxes, from the date the utility charges become delinquent, regardless of the date the assessment is levied. The time of effect of a lien attached for delinquent utility charge assessments supersedes any contrary law in Minnesota Statutes, section 272.32 or 429.061.

Subd. 2. [WHEN DELINQUENT; STATEMENT REQUIRED.] Utility charges become delinquent for the purposes of this section when they are set forth in a statement sent by the city of Minneapolis to the current billpayer of the property subject to the utility charges and are not paid in full on or before the due date stated in the statement. The utility billing office of the city of Minneapolis shall provide a written summary of unpaid utility statements within ten business days of receipt of a written request for a specified real property title transaction. If a summary is not provided by the utility billing office within the requested time or a previous statement charge is omitted, those charges and the lien under subdivision 1 are not enforceable against third parties who rely upon the summary for real property transaction purposes.

Subd. 3. [UTILITY CHARGES DEFINED.] "Utility charges," in this section, includes all fees, taxes, special charges, or other charges imposed by the city of Minneapolis in connection with the provision of services for sewer, water, solid waste collection and management, nuisance abatement, or other services or improvements specified in Minnesota Statutes, section 429.101; Laws 1969, chapter 499; and Laws 1973, chapter 320.

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Subd. 4. [NOT CONVEYANCES.] The statement issued by the city of Minneapolis for utility charges or any instrument in writing created in connection with any assessment for delinquent utility charges subject to this section are not conveyances as defined in Minnesota Statutes, section 507.01, and are not subject to the requirements of Minnesota Statutes, chapter 507, regarding conveyances of real estate.

Sec. 63. [BROOKLYN CENTER, RICHFIELD, AND ST. LOUIS PARK; APARTMENT EXCLUSIONS.]

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, 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 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 per unit minimum.

Subd. 2. [EFFECTIVE DATE.] This section 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.

Sec. 64. [PROPERTY TAX ABATEMENTS; FLOOD PROPERTY.]

Subdivision 1. [AUTHORIZATION.] Notwithstanding the requirements of Minnesota Statutes, section 375.192, the county board of a qualified county may grant abatements of the full amount of taxes on eligible property for taxes payable in 1997 as provided in this section. The owner of the property is not required to apply for the abatement.

Subd. 2. [DEFINITIONS.] (a) As used in this section, the terms defined in this subdivision have the meanings given them.

(b) "Qualified county" means any county that has been designated between April 1, 1997, and May 1, 1997, by the director of the Federal Emergency Management Agency as eligible for federal aid due to flooding.

(c) "Eligible property" means a parcel of taxable property located in a qualified county that contains a structure that has been determined by the assessor to have lost over 50 percent of its estimated market value due to flooding and flood damage. In the case of agricultural property, the abatement is limited to the taxes on the parcel attributable to the value of the house, garage, and surrounding one acre, if the house has lost over 50 percent of its estimated market value, and the tax attributable to the value of any farm buildings and structures that have lost over 50 percent of their estimated market value.

Subd. 3. [ASSESSORS' DUTIES.] As soon as practicable, local and county assessors in qualified counties shall notify the county board and property owners of parcels of eligible property.

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Sec. 65. [DISASTER AREA; DUE DATE EXTENDED FOR BUSINESS PROPERTY TAXES.]

(a) Notwithstanding Minnesota Statutes, section 279.01, subdivision 1, a penalty shall not accrue if (1) because of a natural disaster, a taxpayer is unable to pay the first half of the payable 1997 property taxes on class 3a or 3b property, classified under Minnesota Statutes, section 273.13, subdivision 24, located in an area designated by the Federal Emergency Management Agency pursuant to a major disaster declaration issued for Minnesota by President Clinton between April 1, 1997, and April 14, 1997, and (2) the taxpayer pays the first half of the payable 1997 taxes by October 15, 1997.

(b) If the first one half payment is paid after October 15, 1997, then all penalties that would have occurred on the due date under Minnesota Statutes, section 279.01, subdivision 1, shall be charged on the amount of the unpaid tax.

(c) The property taxpayer shall attach to the payment a statement that the property is located in a disaster area and qualified for an extension under this section.

Sec. 66. [DELAY OF FINANCIAL REPORT FILING; DISASTER AREAS.]

For any city or town located in whole or in part within a county that has been designated between April 1, 1997, and May 1, 1997, by the director of the Federal Emergency Management Agency as eligible for federal aid due to flooding, the deadline by which financial reports are required to be filed under Minnesota Statutes, section 471.697 or 471.698, is extended by 90 days.

Sec. 67. [LOW-INCOME HOUSING CREDITS; PRIORITY IN DISASTER AREAS.]

For its 1998 allocation of low-income housing tax credits through the greater Minnesota pool under Minnesota Statutes, section 462A.222, the Minnesota housing finance agency must give priority to projects located in areas that have lost low-income housing due to the floods that occurred in this state during 1997.

Sec. 68. [ELDERLY ASSISTED LIVING FACILITIES.]

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.

Subd. 2. [REPORT BY COMMISSIONER OF REVENUE.] The commissioner of revenue shall survey all county assessors on the tax status of all elderly assisted living facilities as defined in Minnesota Statutes, section 273.13, subdivision 25a, located in the state, and report the findings to the chairs of the house and senate tax committees by February 1, 1998. The survey must include, but is not limited to, estimates of the amount of charitable contributions, if any, for each elderly assisted living facility and the relative portion of those charitable contributions to the total operating costs of the elderly assisted living facility.

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;

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

(3) a change in market value.

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(c) This subdivision expires and no longer applies on the earlier of:

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

(2) final adjournment of the 1998 legislature.

Subd. 4. [DEFINITION.] For purposes of this section, "elderly assisted living facility" has the meaning given in Minnesota Statutes, section 273.13, subdivision 25a.

Sec. 69. [INSTRUCTION TO THE REVISOR.]

The revisor of statutes shall change the phrase "implicit price deflator for state and local government purchases of goods and services" wherever it appears in the next edition of Minnesota Statutes and Minnesota Rules to "implicit price deflator for government consumption expenditures and gross investment for state and local governments" unless the reference is to the implicit price deflator as of a specified date before January 1, 1996.

Sec. 70. [REPEALER.]

(a) Minnesota Statutes 1996, sections 270B.12, subdivision 11; 276.012; 290A.055; and 290A.26; and Laws 1995, chapter 264, article 4, as amended by Laws 1996, chapter 471, article 3, are repealed. Notwithstanding Minnesota Statutes, section 645.34, the sections of statutes amended by the repealed Laws 1995, chapter 264, article 4, as amended, remain in effect as if not so amended.

(b) Minnesota Statutes 1996, section 469.181, is repealed.

(c) Minnesota Statutes 1996, sections 276.20; and 276.21, are repealed.

Sec. 71. [EFFECTIVE DATE.]

Section 1 is effective for aids distributed in 1999 and thereafter.

Sections 2 to 4, 6, 17, 23 to 25, 32, 51, 57, 64 to 67, and 70, paragraph (a), are effective the day following final enactment.

Sections 7, 8, 12 to 16, 18, 20, 21, 45 to 48, and 70, paragraph (c), are effective for the 1997 assessment and thereafter, for taxes payable in 1998 and thereafter.

Section 10 is effective beginning with the 1997 assessment.

Section 11 is effective beginning with the 1997 assessment and ending with the 2002 assessment, for qualifying improvements made after January 2, 1993, to a residence that has been relocated; provided, that any residence that originally qualifies in that time period is allowed to receive the benefits provided under section 11 for the full ten-year time period. In order to qualify for a market value exclusion under Minnesota Statutes, section 273.11, subdivision 10, for the 1997 assessment for improvements made to a relocated residence, a homeowner must notify the assessor by July 1, 1997.

Section 19 is effective payable 1999 and thereafter.

Section 22 is effective for the abstracts of exempt real property filed in 1998, and thereafter.

Sections 33 and 42 are effective for agreements executed on or after the day following final enactment.

Section 44 is effective the day following final enactment for all housing development projects.

Section 49 is effective for aids payable in 1998 and thereafter.

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Sections 59 to 61 are effective the day after the governing body of Brooklyn Park complies with Minnesota Statutes, section 645.021, subdivision 3.

Section 70, paragraph (b), is effective for property tax deferrals granted after June 30, 1997.

ARTICLE 3

LEVY LIMITS

Section 1. Minnesota Statutes 1996, section 275.16, is amended to read:

275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.]

If any such municipality shall return to the county auditor a levy greater than permitted by chapters 124, 124A, 124B, 136C, and 136D, and sections 275.124 to 275.16, and sections 275.70 to 275.74, such county auditor shall extend only such amount of taxes as the limitations herein prescribed will permit; provided, if such levy shall include any levy for the payment of bonded indebtedness or judgments, such levies for bonded indebtedness or judgments shall be extended in full, and the remainder of the levies shall be reduced so that the total thereof, including levies for bonds and judgments, shall not exceed such amount as the limitations herein prescribed will permit.

Sec. 2. Minnesota Statutes 1996, section 275.62, subdivision 1, is amended to read:

Subdivision 1. [REPORT ON TAXES LEVIED.] The commissioner of revenue shall establish procedures for the annual reporting of local government levies. Each local governmental unit shall submit a report to the commissioner by December 30 of the year in which the tax is levied. The report shall include, but is not limited to, information on the amount of the tax levied by the governmental unit for the following purposes:

(1) debt, which includes taxes levied for the purposes defined in Minnesota Statutes 1991 Supplement, section 275.50, subdivision 5, clauses (b), (c), (d), and (e);

(2) social services and related programs, which include taxes levied for the purposes defined in Minnesota Statutes 1991 Supplement, section 275.50, subdivision 5, clauses (a), (j), and (v);

(3) libraries, which include taxes levied for the purposes defined in Minnesota Statutes 1991 Supplement, section 275.50, subdivision 5, clause (n); and

(4) for counties only, the amount of levy needed to fund increased county costs associated with the welfare reform under Minnesota Laws 1997, chapter 85, including increased administration and program costs of the income maintenance programs and also related support services as they relate directly to the welfare reform; and

(5) other levies, which include the taxes levied for all purposes not included in clause (1), (2), or (3), or (4).

Sec. 3. [275.70] [LEVY LIMITATIONS; DEFINITIONS.]

Subdivision 1. [APPLICATION.] For the purposes of sections 275.70 to 275.74, the following terms shall have the meanings given them, unless provided otherwise.

Subd. 2. [IMPLICIT PRICE DEFLATOR.] "Implicit price deflator" means the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the bureau of economic analysis of the United States Department of Commerce for the 12-month period ending March 31 of the levy year.

Subd. 3. [LOCAL GOVERNMENTAL UNIT.] "Local governmental unit" means a county, or a statutory or home rule charter city with a population greater than 2,500.

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Subd. 4. [POPULATION AND HOUSEHOLD ESTIMATES.] "Population" or "number of households" means the population or number of households for the local governmental unit as established by the last federal census, by a census taken under section 275.14, or by an estimate made by the metropolitan council or by the state demographer under section 4A.02, whichever is most recent as to the stated date of the count or estimate up to and including July 1 of the current levy year.

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);

(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 April 21, 1997, for the amount of tax dollars lost due to abatements authorized under section 273.123, subdivision 7, to the extent that they are related to the major disaster;

(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).

Sec. 4. [275.71] [LEVY LIMITS.]

Subdivision 1. [LIMIT ON LEVIES.] Notwithstanding any other provision of law or municipal charter to the contrary which authorize ad valorem taxes in excess of the limits established by sections 275.70 to 275.74, the provision of this section shall apply to local governmental units for all purposes other than those for which special levies and special assessments are made.

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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;

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

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

(6) the amount of any adjustments authorized under section 275.72.

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 to its adjusted levy limit base in the previous year, subject to any adjustments under section 275.72.

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, 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.

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.

Subd. 5. [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy made by a city or county exceeds the levy limit provided in sections 275.70 to 275.74, except when the excess levy is due to the rounding of the rate in accordance with section 275.28, the county auditor shall only extend the amount of taxes permitted under sections 275.70 to 275.74, as provided for in section 275.16.

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Sec. 5. [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION AND ANNEXATION.]

Subdivision 1. [ADJUSTMENTS FOR CONSOLIDATION.] If all of the area included in two or more local governmental units is consolidated, merged, or otherwise combined to constitute a single governmental unit, the levy limit base for the resulting governmental unit in the first levy year in which the consolidation is effective shall be equal to (1) the highest tax rate in any of the merging governmental units in the previous year multiplied by the net tax capacity of all the merging governmental units in the previous year, minus (2) the sum of all levies in the merging governmental units in the previous year that qualify as special levies under section 275.70, subdivision 3.

Subd. 2. [ADJUSTMENTS FOR ANNEXATION.] If a local governmental unit increases its tax base through annexation of an area which is not the area of an entire local governmental unit, the levy limit base of the local governmental unit in the first year in which the annexation is effective shall be equal to its adjusted levy limit base from the previous year multiplied by the ratio of the net tax capacity in the local governmental unit after the annexation compared to its net tax capacity before the annexation.

Subd. 3. [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a function or service of one local governmental unit is transferred to another local governmental unit, the levy limits established under section 275.71 shall be adjusted by the commissioner of revenue in such manner so as to fairly and equitably reflect the reduced or increased property tax burden resulting from the transfer. The aggregate of the adjusted limitations shall not exceed the aggregate of the limitations prior to adjustment.

Subd. 4. [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] Annexations, mergers, and shifts in services and functional responsibilities that are effective by June 30 of the levy year are included in the calculation of the levy limit for that levy year. Annexations, mergers, and shifts in services and functional responsibilities that are effective after June 30 of a levy year are not included in the calculation of the levy limit until the subsequent levy year.

Sec. 6. [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.]

Subdivision 1. [ADDITIONAL LEVY AUTHORIZATION.] Notwithstanding the provisions of sections 275.70 to 275.72, but subject to other law or charter provisions establishing other limitations on the amount of property taxes a local governmental unit may levy, a local governmental unit may levy an additional levy in any amount which is approved by the majority of voters of the governmental unit voting on the question at a general or special election. Notwithstanding section 275.61, any levy authorized under this section shall be levied against net tax capacity unless the levy required voter approval under another general or special law or any charter provisions. When the governing body of the local governmental unit resolves to increase the levy pursuant to this section, it shall provide for submission of the proposition of an additional levy at a general or special election. Notice of the election shall be given in the manner required by law. The notice shall state the purpose and the maximum yearly amount of the additional levy.

Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy approved under subdivision 1 at a general or special election held prior to September 1 in any levy year may be levied in that same levy year and subsequent levy years. An additional levy approved under subdivision 1 at a general or special election held after August 31 in any levy year shall not be levied in that same levy but may be levied in subsequent levy years.

Sec. 7. [275.74] [STATE REGULATION OF LEVIES.]

(a) The commissioner of revenue shall make all necessary calculations for determining levy limits for local governmental units and notify the affected governmental units of their levy limits directly by August 1 of each levy year. The local governmental unit shall report by September 15, in a manner prescribed by the commissioner, the maximum amount of taxes it plans to levy for each of the purposes listed under special levies and any additional levy authorized under section 275.73, along with any necessary documentation. The commissioner shall review the proposed special levies and make any adjustments needed. The commissioner's decision is final. The final allowed special levy amounts and any levy limit adjustments shall be certified back to the local governments by December 10. In addition, the commissioner of revenue shall notify all county auditors on or before five working days after December 20 of the sum of the levy limit plus the total of allowed special levies for each local governmental unit located within their boundaries so that they may fix the levies as required in section 275.16. The local governmental units shall provide the commissioner of revenue with all information that the commissioner deems necessary to make the calculations provided for in sections 275.70 to 275.73.

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(b) A local governmental unit may request authorization to levy under section 275.70, subdivision 5, clause (5), if (i) the governmental unit is 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 April 21, 1997, and (ii) the amount of direct unreimbursed costs incurred by the governmental unit related to the flooding and its clean up, including emergency disaster assistance to residents, exceeds five percent of its levy in 1997. A local governmental unit may request authorization to levy for unreimbursed costs for other natural disasters, except the 1997 floods, under section 275.70, subdivision 5, clause (9). The local governmental unit must submit a request to levy under section 275.70, subdivision 5, clause (5) or (9), to the commissioner of revenue by September 15 of the levy year and the request must include information documenting the estimated unreimbursed costs. The commissioner of revenue may grant levy authority, up to the amount requested based on the documentation submitted. All decisions of the commissioner are final. The commissioner shall send a report to the chairs of the house and senate tax committees on the levies authorized and levied under this provision by February 28 of the year following the levy year.

Sec. 8. [FARIBAULT COUNTY; CITY OF BLUE EARTH; SPECIAL LEVY.]

The amount of taxes levied by Faribault county and by the city of Blue Earth is a special levy for the purposes of levy limits under Minnesota Statutes, sections 275.70 to 275.73, if the levy's purpose is to raise the matching funds required to receive restitution funds awarded by plea agreement in the case of United States v. Darling International, Inc., for developing environmental projects that will improve water quality in the Blue Earth and Minnesota rivers.

Sec. 9. [EFFECTIVE DATE.]

Sections 1 to 7 are effective for taxes levied in 1997 and 1998, payable in 1998 and 1999.

Upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by the governing body of Faribault county or the city of Blue Earth, section 8 is effective for taxes levied in 1997 and 1998 in the county or city that approves it.

ARTICLE 4

TRUTH IN TAXATION

Section 1. Minnesota Statutes 1996, section 275.065, subdivision 1, is amended to read:

Subdivision 1. [PROPOSED LEVY.] (a) Notwithstanding any law or charter to the contrary, on or before September 15, each taxing authority, other than a school district, shall adopt a proposed budget and shall certify to the county auditor the proposed or, in the case of a town, the final property tax levy for taxes payable in the following year.

(b) On or before September 30, each school district shall certify to the county auditor the proposed property tax levy for taxes payable in the following year. The school district may shall certify the proposed levy as:

(1) a specific dollar amount; or the state determined school levy amount as prescribed under section 124A.23, subdivision 2;

(2) voter approved referendum and debt levies; and

(2) an amount equal to (3) the sum of the remaining school levies, or the maximum levy limitation certified by the commissioner of children, families, and learning to the county auditor according to section 124.918, subdivision 1, less the amounts levied under clauses (1) and (2).

(c) If the board of estimate and taxation or any similar board that establishes maximum tax levies for taxing jurisdictions within a first class city certifies the maximum property tax levies for funds under its jurisdiction by charter to the county auditor by September 15, the city shall be deemed to have certified its levies for those taxing jurisdictions.

(d) For purposes of this section, "taxing authority" includes all home rule and statutory cities, towns, counties, school districts, and special taxing districts as defined in section 275.066. Intermediate school districts that levy a tax under chapter 124 or 136D, joint powers boards established under sections 124.491 to 124.495, and common school districts No. 323, Franconia, and No. 815, Prinsburg, are also special taxing districts for purposes of this section.

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Sec. 2. Minnesota Statutes 1996, section 275.065, is amended by adding a subdivision to read:

Subd. 1a. [LEVY; SHARED, MERGED, CONSOLIDATED SERVICES.] If two or more taxing authorities are in the process of negotiating an agreement for sharing, merging, or consolidating services between those taxing authorities at the time the proposed levy is to be certified under subdivision 1, each taxing authority involved in the negotiation shall certify its total proposed levy as provided in that subdivision, including a notification to the county auditor of the specific service involved in the agreement which is not yet finalized. The affected taxing authorities may amend their proposed levies under subdivision 1 until October 10 for levy amounts relating only to the specific service involved.

Sec. 3. Minnesota Statutes 1996, 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 and, in the case of a town, final 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 other than a town proposes to collect for taxes payable the following year and, for a town, the amount of its final levy. It 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; 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, school district excess referenda levy state determined school tax net of the education homestead credit under section 273.1382, remaining voter approved school levy, other local school district levy, regional library district, if in existence, the total of the metropolitan special taxing districts as defined in paragraph (i) and the sum of the remaining special taxing districts, and as a total of the all taxing authorities, including all special taxing districts, the proposed or, for a town, final net tax on the property for taxes payable the following year and the actual tax for taxes payable the current year:

(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

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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. For the purposes of this subdivision, "school district excess referenda levy" means school district taxes for operating purposes approved at referendums, including those taxes based on net tax capacity as well as those based on market value. "School district excess referenda levy" does not include school district taxes for capital expenditures approved at referendums or school district taxes to pay for the debt service on bonds approved at referenda. 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 in the amounts in clause (2) from between the total taxes payable in the current year to and the total proposed or, for a town, final taxes payable the following year taxes, expressed as a dollar amount and as a percentage.

(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 the homeowner provides satisfactory documentation to the county assessor that the property is owned and used as the owner's homestead, 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;

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(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) For taxes levied in 1996, payable in 1997 only, in the case of a statutory or home rule charter city or town that exercises the local levy option provided in section 473.388, subdivision 7, the notice of its proposed taxes may include a statement of the amount by which its proposed tax increase for taxes payable in 1997 is attributable to its exercise of that option, together with a statement that the levy of the metropolitan council was decreased by a similar amount because of the exercise of that option.

Sec. 4. Minnesota Statutes 1996, section 275.065, is amended by adding a subdivision to read:

Subd. 3a. [CONSTANT SPENDING LEVY AMOUNT.] (a) For purposes of this section, "constant spending levy amount" for a county, city, town, or special taxing district means the property tax levy that the taxing authority would need to levy so that the sum of (i) its levy, including its fiscal disparities distribution levy under section 276A.06, subdivision 3, clause (a), or 473F.08, subdivision 3, clause (a), plus (ii) its property tax aid amounts, would remain constant from the current year to the proposed year, taking into account the fiscal disparities distribution levy amounts and the property tax aid amounts that have been certified for the proposed year. For the purposes of this paragraph, property tax aids include homestead and agricultural credit aid under section 273.1398, subdivision 2, local government aid under section 477A.013, local performance aid under section 477A.05, county criminal justice aid under section 477A.0121, and family preservation aid under section 477A.0122.

(b) For the state determined school tax, "constant spending levy amount" is the same as the proposed tax.

(c) For the voter approved school levy, "constant spending levy amount" is the result of the following computation: (i) compute the current year's revenue per pupil in average daily membership as the ratio of the voter approved referendum and debt service levy plus aid revenue to the number of pupils in average daily membership, as estimated at the time of levy certification the previous December; (ii) compute the proposed year's levy ratio as ratio of the proposed year's levy limitation for voter approved referendum and debt service revenue to the maximum referendum and debt service levy plus aid revenue for the proposed year, at the time of proposed levy certification in September; and (iii) compute the "constant spending levy amount" as the product of the current year's revenue per pupil from clause (i) times the proposed year's levy ratio from clause (ii) times the proposed year's pupils in average daily membership.

(d) For the sum of all other school levies not included in paragraph (b) or (c), "constant spending levy amount" is the result of the following computation: (i) compute the current year's revenue per pupil in average daily membership as the ratio of the levy plus associated aid revenue to the number of pupils in average daily membership, as estimated at the time of levy certification the previous December; (ii) compute the proposed year's levy ratio as ratio of the proposed year's levy limitation to the maximum levy plus associated aid revenue for the proposed year, estimated at the time of proposed levy certification in September; and (iii) compute the "constant spending levy amount" as the product of the current year's revenue per pupil from clause (i) times the proposed year's levy ratio from clause (ii) times the proposed year's pupils in average daily membership.

(e) Each year, the commissioner of children, families, and learning must compute and report to the county auditor each school district's constant spending levy amounts by September 30. In no case shall a constant spending levy amount be less than $0. For the purposes of this subdivision, school homestead and agricultural credit aid under section 273.1398, subdivision 2, shall be included in the other school levy category. For purposes of this subdivision, the school fiscal disparities distribution levy shall be apportioned proportionately among levy categories.

(f) For the tax increment financing tax, and the fiscal disparities tax, the "constant spending levy amount" is the same as the proposed tax.

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Sec. 5. Minnesota Statutes 1996, section 275.065, subdivision 5a, is amended to read:

Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a population of more than 2,500, county, a metropolitan special taxing district as defined in subdivision 3, paragraph (i), a regional library district established under section 134.201, or school district shall advertise in a newspaper a notice of its intent to adopt a budget and property tax levy or, in the case of a school district, to review its current budget and proposed property taxes payable in the following year, at a public hearing. The notice must be published not less than two business days nor more than six business days before the hearing.

The advertisement must be at least one-eighth page in size of a standard-size or a tabloid-size newspaper. The advertisement must not be placed in the part of the newspaper where legal notices and classified advertisements appear. The advertisement must be published in an official newspaper of general circulation in the taxing authority. The newspaper selected must be one of general interest and readership in the community, and not one of limited subject matter. The advertisement must appear in a newspaper that is published at least once per week.

For purposes of this section, the metropolitan special taxing district's advertisement must only be published in the Minneapolis Star and Tribune and the Saint Paul Pioneer Press.

(b) The advertisement for school districts, metropolitan special taxing districts, and regional library districts must be in the following form, except that the notice for a school district may include references to the current budget in regard to proposed property taxes.

"NOTICE OF

PROPOSED PROPERTY TAXES

(City/County/School District/Metropolitan

Special Taxing District/Regional

Library District) of . . . . . . . . .

The governing body of . . . . . . . . will soon hold budget hearings and vote on the property taxes for (city/county/metropolitan special taxing district/regional library district services that will be provided in 199_ (year)/school district services that will be provided in 199_ (year) and 199_ (year)).

NOTICE OF PUBLIC HEARING:

All concerned citizens are invited to attend a public hearing and express their opinions on the proposed (city/county/school district/metropolitan special taxing district/regional library district) budget and property taxes, or in the case of a school district, its current budget and proposed property taxes, payable in the following year. The hearing will be held on (Month/Day/Year) at (Time) at (Location, Address)."

(c) The advertisement for cities and counties must be in the following form.

"NOTICE OF PROPOSED

TOTAL BUDGET AND PROPERTY TAXES

The (city/county) governing body or board of commissioners will hold a public hearing to discuss the budget and to vote on the amount of property taxes to collect for services the (city/county) will provide in (year).

SPENDING: The total budget amounts below compare (city's/county's) (year) total actual budget with the amount the (city/county) proposes to spend in (year).

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(Year) Total Proposed (Year) Change from

Actual Budget Budget (Year)-(Year)

$.. . . . . . $.. . . . . . . . .%

TAXES: The property tax amounts below compare that portion of the current budget levied in property taxes in (city/county) for (year) with the property taxes the (city/county) proposes to collect in (year).

(Year) Property Proposed (Year) Change from

Taxes Property Taxes (Year)-(Year)

$.. . . . . . $.. . . . . . . . .%

ATTEND THE PUBLIC HEARING

All (city/county) residents are invited to attend the public hearing of the (city/county) to express your opinions on the budget and the proposed amount of (year) property taxes. The hearing will be held on:

(Month/Day/Year/Time)

(Location/Address)

If the discussion of the budget cannot be completed, a time and place for continuing the discussion will be announced at the hearing. You are also invited to send your written comments to:

(City/County)

(Location/Address)"

(d) For purposes of this subdivision, the budget amounts listed on the advertisement mean:

(1) for cities, the total government fund expenditures, as defined by the state auditor under section 471.6965, less any expenditures for improvements or services that are specially assessed or charged under chapter 429, 430, 435, or the provisions of any other law or charter; and

(2) for counties, the total government fund expenditures, as defined by the state auditor under section 375.169, less any expenditures for direct payments to recipients or providers for the human service aids listed below:

(1) aid to families with dependent children under sections 256.82, subdivision 1, and 256.935, subdivision 1;

(2) medical assistance under sections 256B.041, subdivision 5, and 256B.19, subdivision 1;

(3) general assistance medical care under section 256D.03, subdivision 6;

(4) general assistance under section 256D.03, subdivision 2;

(5) emergency assistance under section 256.871, subdivision 6;

(6) Minnesota supplemental aid under section 256D.36, subdivision 1;

(7) preadmission screening under section 256B.0911, and alternative care grants under section 256B.0913;

(8) general assistance medical care claims processing, medical transportation and related costs under section 256D.03, subdivision 4;

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(9) medical transportation and related costs under section 256B.0625, subdivisions 17 to 18a;

(10) group residential housing under 256I.05, subdivision 8, transferred from programs in clauses (4) and (6); or

(11) any successor programs to those listed in clauses (1) to (10).

(c) (e) A city with a population of over 500 but not more than 2,500 must advertise by posted notice as defined in section 645.12, subdivision 1. The advertisement must be posted at the time provided in paragraph (a). It must be in the form required in paragraph (b).

(d) (f) For purposes of this subdivision, the population of a city is the most recent population as determined by the state demographer under section 4A.02.

(e) (g) The commissioner of revenue, subject to the approval of the chairs of the house and senate tax committees, shall prescribe the form and format of the advertisement.

(f) For calendar year 1993, each taxing authority required to publish an advertisement must include on the advertisement a statement that information on the increases or decreases of the total budget, including employee and independent contractor compensation in the prior year, current year, and proposed budget year will be discussed at the hearing.

(g) Notwithstanding paragraph (f), for 1993, the commissioner of revenue shall prescribe the form, format, and content of an advertisement comparing current and proposed expense budgets for the metropolitan council, the metropolitan airports commission, and the metropolitan mosquito control commission. The expense budget must include occupancy, personnel, contractual and capital improvement expenses. The form, format, and content of the advertisement must be approved by the chairs of the house and senate tax committees prior to publication.

Sec. 6. Minnesota Statutes 1996, 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 a 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 a 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.

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(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 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 of December. A continuation hearing, if necessary, shall be held on the second Monday of December even if that second Monday 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.

(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. If a city does not certify these 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.

(l) At a subsequent hearing, each county, school district, city over 500 population, and metropolitan special taxing district may amend its proposed property tax levy and must adopt a final property tax levy. Each county, city over 500 population, and metropolitan special taxing district may also amend its proposed budget and must adopt a final budget at the subsequent hearing. The final property tax levy must be adopted prior to adopting the final budget. A school district is not required to adopt its final budget at the subsequent hearing. The subsequent hearing of a taxing authority must be held on a date subsequent to the date of the taxing authority's initial public hearing, or subsequent to the date of its continuation hearing. If a continuation hearing is held, the subsequent hearing must be held either immediately following the continuation hearing or on a date subsequent to the continuation hearing. The subsequent hearing may be held at a regularly scheduled board or council meeting or at a special meeting scheduled for the purposes of the subsequent hearing. The subsequent hearing of

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a taxing authority does not have to be coordinated by the county auditor to prevent a conflict with an initial hearing, a continuation hearing, or a subsequent hearing of any other taxing authority. All subsequent hearings must be held prior to five working days after December 20 of the levy year. The date, time, and place of the subsequent hearing must be announced at the initial public hearing or at the continuation hearing.

(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.

At the 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 subsequent hearing held as provided in this subdivision, the governing body, other than the governing body of a school district, shall adopt its final property tax levy prior to adopting its final budget.

If the 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 continued hearing must be held at least five business days but no more than 14 business days after the original hearing.

The hearing must be held after 5:00 p.m. if scheduled on a day other than Saturday. No hearing may be held on a Sunday. The governing body of a county shall hold a hearing on the second Tuesday in December each year, and may hold additional 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 continued 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. The county auditor shall provide for the coordination of hearing dates for all cities and school districts within the county.

The metropolitan special taxing districts shall hold a joint public hearing on the first Monday of December. A continuation hearing, if necessary, shall be held on the second Monday of December.

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 hearings and any continuations. If a school board or regional library district does not certify the dates by August 10, the auditor will assign the hearing date. The dates elected or assigned must not conflict with the hearing dates of the county or the metropolitan special taxing districts. By August 20, the county auditor shall notify the clerks of the cities within the county of the dates

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on which school districts and regional library districts have elected to hold their 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 hearings and any continuations. For its initial hearing and for the subsequent hearing at which the final property tax levy will be adopted, the city must not select dates that conflict with the county hearing dates, metropolitan special taxing district dates, or with those elected by or assigned to the school districts or regional library district in which the city is located. For continuation hearings, the city may select dates that conflict with other taxing authorities' dates if the city deems it necessary.

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

(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.

Sec. 7. Minnesota Statutes 1996, section 275.065, is amended by adding a subdivision to read:

Subd. 6b. [JOINT PUBLIC HEARINGS.] Notwithstanding any other provision of law, any city with a population of 10,000 and over, may conduct a more comprehensive public hearing than is contained in subdivision 6 by including a board member from the county, a board member from the school district located within the city's boundary, and a representative of the metropolitan council, if the city is in the metropolitan area, as defined in section 473.121, subdivision 2, at the city's public hearing. All provisions regarding the public hearings under subdivision 6 are applicable to the joint public hearings under this subdivision.

Upon the adoption of a resolution by the governing body of the city to hold a joint hearing, the city shall notify the county, the school district, and the metropolitan council if the city is in the metropolitan area, of the decision to hold a joint public hearing and request a board member from each of those taxing authorities, and the member or the designee of the metropolitan council if applicable, to be at the joint hearing. If the city is located in more than one county, the city may choose to request a county board member from each county or only from the county containing the majority of the city's market value. If more than one school district is partially or totally located within the city, the city may choose to request a school district board member from each school district, or a board member only from the school district containing the majority of the city's market value. If, as a result of requests under this subdivision, there are not sufficient board members in the county or the school district to attend the joint hearing, the county or school district may send a nonelected person working for its taxing authority to speak on the authority's behalf. The city may also invite each state senator and representative who represents the city, or a portion of the city, to come to the joint hearing.

The primary purpose of the joint hearing is to discuss the city's budget and property tax levy. The county and school district officials, and metropolitan council representative, if the city is in the metropolitan area, should be prepared to answer questions relevant to its budget and levy and the effect that its levy has on the property owners in the city.

If a city conducts a hearing under this subdivision, this hearing is in lieu of the initial hearing required under subdivision 6. However, the city is still required to adopt its proposed property tax levy at a subsequent hearing as provided under subdivision 6. The hearings under this subdivision do not relieve a county, school district, or the metropolitan council of the requirement to hold its individual hearing under subdivision 6.

Sec. 8. Minnesota Statutes 1996, section 275.065, subdivision 8, is amended to read:

Subd. 8. [HEARING.] Notwithstanding any other provision of law, Ramsey county, the city of St. Paul, and independent school district No. 625 are authorized to and shall hold their initial public hearing jointly. The hearing must be held on the second Tuesday of December each year. The advertisement required in subdivision 5a may be a joint advertisement. The hearing is otherwise subject to the requirements of this section.

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Ramsey county is authorized to hold an additional initial hearing or hearings as provided under this section, provided that any additional hearings must not conflict with the initial or continuation hearing dates of the other taxing districts. However, if Ramsey county elects not to hold such additional initial hearing or hearings, the joint initial hearing required by this subdivision must be held in a St. Paul location convenient to residents of Ramsey county.

Sec. 9. Minnesota Statutes 1996, section 275.07, subdivision 4, is amended to read:

Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before October 8 of each year, the county auditor shall report to the commissioner of revenue the proposed levy certified by local units of government under section 275.065, subdivision 1. If any taxing authorities have notified the county auditor that they are in the process of negotiating an agreement for sharing, merging, or consolidating services but that when the proposed levy was certified under section 275.065, subdivision 1a, the agreement was not yet finalized, the county auditor shall supply that information to the commissioner when filing the report under this section and shall recertify the affected levies as soon as practical after October 10.

(b) On or before January 15 of each year, the county auditor shall report to the commissioner of revenue the final levy certified by local units of government under subdivision 1.

(c) The levies must be reported in the manner prescribed by the commissioner. The reports must show a total levy and the amount of each special levy.

Sec. 10. Minnesota Statutes 1996, 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 due 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), school district excess referenda levy, remaining school district levy, and the total of other voter approved referenda levies based on market value under section 275.61 must be separately stated. The amounts due all other special taxing districts, if any, may be aggregated. For the purposes of this subdivision, "school district excess referenda levy" means school district taxes for operating purposes approved at referenda, including those taxes based on net tax capacity as well as those based on market value. "School district excess referenda levy" does not include school district taxes for capital expenditures approved at referendums or school district taxes to pay for the debt service on bonds approved at referenda. 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 sentence 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.

(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 multiplying the property's gross tax capacity times the total local tax rate and adding the property's total property tax to the result the sum of the aids enumerated in clause (4);

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(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; and

(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 and agricultural credit aid apportioned to the property. This amount is obtained by multiplying the total local tax rate by the difference between the property's gross and net tax capacities under section 273.13. This amount must be separately stated and identified as "homestead and agricultural credit." For purposes of comparison with the previous year's amount for the statement for taxes payable in 1990, the statement must show the homestead credit for taxes payable in 1989 under section 273.13, and the agricultural credit under section 273.132 for taxes payable in 1989 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) 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 clauses (3) and clause (4) that local governments will receive in the following year. In the case of a county containing a city of the first class, for taxes levied in 1991, and for all counties for taxes levied in 1992 and thereafter, The commissioner must certify this amount by September January 1 of each year.

Sec. 11. Minnesota Statutes 1996, section 383A.75, subdivision 3, is amended to read:

Subd. 3. [DUTIES.] The committee is authorized to and shall meet from time to time to make appropriate recommendations for the efficient and effective use of property tax dollars raised by the jurisdictions for programs, buildings, and operations. In addition, the committee shall:

(1) identify trends and factors likely to be driving budget outcomes over the next five years with recommendations for how the jurisdictions should manage those trends and factors to increase efficiency and effectiveness;

(2) agree, by September October 1 of each year, on the appropriate level of overall property tax levy for the three jurisdictions and publicly report such to the governing bodies of each jurisdiction for ratification or modification by resolution;

(3) plan for the joint truth-in-taxation hearings under section 275.065, subdivision 8; and

(4) identify, by December 31 of each year, areas of the budget to be targeted in the coming year for joint review to improve services or achieve efficiencies.

In carrying out its duties, the committee shall consult with public employees of each jurisdiction and with other stakeholders of the city, county, and school district, as appropriate.

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Sec. 12. Laws 1993, chapter 375, article 7, section 29, is amended to read:

Sec. 29. [EFFECTIVE DATE.]

Sections 1, 6 to 8, 13, 15 to 25, 27, and 28 are effective for taxes levied in 1993, payable in 1994 and thereafter.

Section 3, subdivision 5, and the provisions of sections 9 to 11 relating to regional library districts are effective for property taxes levied in 1994, payable in 1995, and thereafter. The other provisions of sections 9 to 11 are effective for property taxes levied in 1993, payable in 1994 and thereafter.

Sections 12 and 14 are effective the day following final enactment and without local approval, as provided in Minnesota Statutes, section 645.023, subdivision 1, clause (a), and shall expire after December 31, 1997.

Section 26 is effective beginning with aids payable in calendar year 1993.

Sec. 13. [EXCEPTION FOR TAXES PAYABLE IN 1998.]

(a) Notwithstanding Minnesota Statutes, section 275.065, subdivision 3, for taxes payable in 1998 only, the commissioner of revenue may allow a county auditor, upon request, to prepare notices of proposed property taxes that do not itemize school district levies as required by that section, if the county determines that it is not able to compute the separate levies for the actual tax payable in 1997.

(b) Notwithstanding Minnesota Statutes, section 276.04, subdivision 2, for taxes payable in 1998 only, the commissioner of revenue may allow a county treasurer, upon request, to prepare property tax statements that (i) do not itemize school levies as required by that section, and (ii) do not include homestead and agricultural credit aid as required by paragraph (c), clause (4), if the county determines that it is not able to compute the separate items for the tax payable in 1997.

Sec. 14. [APPROPRIATION.]

$1,000,000 is appropriated for fiscal year 1998 to the commissioner of revenue for distribution to the 87 counties for implementing the various provisions of this act, including the added expenses of the truth in taxation provisions. The commissioner shall distribute the dollars using the following formula: 25 percent shall be distributed equally, 25 percent shall be distributed based on population within each county, and the remaining 50 percent shall be distributed based on the number of property tax statements within each county.

Sec. 15. [EFFECTIVE DATE.]

Sections 1 to 4 and 9 are effective for levies and notices for taxes payable in 1998, and thereafter.

Section 5 is effective for newspaper advertisements prepared in 1997 for taxes payable in 1998, and thereafter.

Sections 6 to 8 are effective for public hearings held in 1997, and thereafter.

Section 10 is effective for property tax statements prepared in 1998, and thereafter.

ARTICLE 5

INCOME TAXES AND PROPERTY TAX REFUNDS

Section 1. Minnesota Statutes 1996, section 270B.02, is amended by adding a subdivision to read:

Subd. 6. [CLIENT LISTS; THIRD-PARTY BULK FILERS.] Client lists required under section 290.92, subdivision 30, are classified as private data on individuals or nonpublic data, as defined in section 13.02, subdivisions 9 and 12.

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Sec. 2. Minnesota Statutes 1996, 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 not to exceed $650 for each dependent in grades kindergarten to 6 and $1,000 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. 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. "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. In order to qualify for the subtraction under this clause the taxpayer must elect to itemize deductions under section 63(e) of the Internal Revenue Code;

(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); and

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

(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.

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Sec. 3. Minnesota Statutes 1996, 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 windfall profits tax deducted under section 164 or 471 of the Internal Revenue Code;

(5) 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;

(6) (5) the amount of any special deductions taken for federal income tax purposes under sections 241 to 247 of the Internal Revenue Code;

(7) (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;

(8) (7) the amount of any capital losses deducted for federal income tax purposes under sections 1211 and 1212 of the Internal Revenue Code;

(9) (8) the amount of any charitable contributions deducted for federal income tax purposes under section 170 of the Internal Revenue Code;

(10) (9) the exempt foreign trade income of a foreign sales corporation under sections 921(a) and 291 of the Internal Revenue Code;

(11) (10) the amount of percentage depletion deducted under sections 611 through 614 and 291 of the Internal Revenue Code;

(12) (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; and

(13) (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.

Sec. 4. Minnesota Statutes 1996, section 290.01, subdivision 19d, is amended to read:

Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL TAXABLE INCOME.] For corporations, there shall be subtracted from federal taxable income after the increases provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal income tax purposes under section 78 of the Internal Revenue Code;

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(2) the amount of salary expense not allowed for federal income tax purposes due to claiming the federal jobs credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the taxable year by a national or state bank to the United States, or to any instrumentality of the United States exempt from federal income taxes, on the preferred stock of the bank owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between this chapter and the Internal Revenue Code in taxable years beginning before January 1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986, capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986, a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryback to each of the three taxable years preceding the loss year, subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987, a capital loss carryover to each of the five taxable years succeeding the loss year to the extent such loss was not used in a prior taxable year and subject to the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a reasonable allowance for depletion based on actual cost. In the case of leases the deduction must be apportioned between the lessor and lessee in accordance with rules prescribed by the commissioner. In the case of property held in trust, the allowable deduction must be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the trust, or if there is no provision in the instrument, on the basis of the trust's income allocable to each;

(8) 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, an amount equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, subdivision 7;

(9) the amount included in federal taxable income attributable to the credits provided in Minnesota Statutes 1986, section 273.1314, subdivision 9, or Minnesota Statutes, section 469.171, subdivision 6;

(10) amounts included in federal taxable income that are due to refunds of 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 a foreign country or possession of the United States to the extent that the taxes were added to federal taxable income under section 290.01, subdivision 19c, clause (1), in a prior taxable year;

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(11) the following percentage 80 percent of royalties, fees, or other like income accrued or received from a foreign operating corporation or a foreign corporation which is part of the same unitary business as the receiving corporation:

Taxable Year

Beginning After . . . . . . . . . . Percentage

December 31, 1988 . . . . . . . . 50 percent

December 31, 1990 . . . . . . . . 80 percent;

(12) income or gains from the business of mining as defined in section 290.05, subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

(13) the amount of handicap access expenditures in the taxable year which are not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(14) the amount of qualified research expenses not allowed for federal income tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that the amount exceeds the amount of the credit allowed under section 290.068; and

(15) the amount of salary expenses not allowed for federal income tax purposes due to claiming the Indian employment credit under section 45A(a) of the Internal Revenue Code; and

(16) the amount of any refund of environmental taxes paid under section 59A of the Internal Revenue Code.

Sec. 5. Minnesota Statutes 1996, section 290.06, is amended by adding a subdivision to read:

Subd. 26. [CREDIT FOR PROPERTY TAXES PAID ON SEASONAL RESIDENTIAL RECREATIONAL PROPERTY.] A taxpayer may take as a credit against the tax due from the taxpayer and a spouse, if any, under this chapter the credit allowed under section 290A.04, subdivision 2j. The credit allowed may not exceed the tax due under this chapter. In the case of a nonresident, or a part-year resident, the credit must be allocated based on the ratio in subdivision 2c.

Sec. 6. Minnesota Statutes 1996, section 290.067, subdivision 1, is amended to read:

Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take as a credit against the tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the dependent care credit for which the taxpayer is eligible pursuant to the provisions of section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 2 except that in determining whether the child qualified as a dependent, income received as an aid to families with dependent children grant or allowance to or on behalf of the child, or as a grant or allowance to or on behalf of the child under the successor program pursuant to Public Law 104-193, must not be taken into account in determining whether the child received more than half of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of the Internal Revenue Code do not apply.

(b) If a child who has not attained the age of six years at the close of the taxable year is cared for at a licensed family day care home operated by the child's parent, the taxpayer is deemed to have paid employment-related expenses. If the child is 16 months old or younger at the close of the taxable year, the amount of expenses deemed to have been paid equals the maximum limit for one qualified individual under section 21(c) and (d) of the Internal Revenue Code. If the child is older than 16 months of age but has not attained the age of six years at the close of the taxable year, the amount of expenses deemed to have been paid equals the amount the licensee would charge for the care of a child of the same age for the same number of hours of care.

(c) If a married couple:

(1) has a child who has not attained the age of one year at the close of the taxable year;

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(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section 129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i) the combined earned income of the couple or (ii) $2,400 will be deemed to be the employment related expense paid for that child. The earned income limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These deemed amounts apply regardless of whether any employment-related expenses have been paid.

(d) If the taxpayer is not required and does not file a federal individual income tax return for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included on the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence, the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information required.

In the case of a nonresident, part-year resident, or a person who has earned income not subject to tax under this chapter, the credit determined under section 21 of the Internal Revenue Code must be allocated based on the ratio by which the earned income of the claimant and the claimant's spouse from Minnesota sources bears to the total earned income of the claimant and the claimant's spouse.

Sec. 7. [290.0672] [LONG-TERM CARE INSURANCE CREDIT.]

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

(b) "Long-term care insurance" means a policy that:

(1) qualifies for a deduction under section 213 of the Internal Revenue Code, disregarding the 7.5 percent income test; or meets the requirements given in section 62A.46; or provides similar coverage issued under the laws of another jurisdiction; and

(2) does not have a lifetime long-term care benefit limit of less than $100,000; and

(3) includes inflation protection that meets or exceeds the inflation protection requirements of the long-term care insurance model regulation cited under section 7702B(g)(2)(A)(i)(x) of the Internal Revenue Code.

(c) "Qualified beneficiary" means the taxpayer or the taxpayer's spouse.

(d) "Premiums deducted in determining federal taxable income" means the lesser of (1) long-term care insurance premiums that qualify as deductions under section 213 of the Internal Revenue Code; and (2) the total amount deductible for medical care under section 213 of the Internal Revenue Code.

Subd. 2. [CREDIT.] A taxpayer is allowed a credit against the tax imposed by this chapter for long-term care insurance policy premiums paid during the tax year. The credit for each policy equals the lesser of (1) 25 percent of premiums paid to the extent not deducted in determining federal taxable income; or (2) $100. A taxpayer may claim a credit for only one policy for each qualified beneficiary. Only one credit may be claimed by any taxpayer for each policy. The maximum total credit allowed per year is $200 for married couples filing joint returns and $100 for all other filers. For a nonresident or part-year resident, the credit determined under this section must be allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph (e).

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Sec. 8. [290.0673] [JOB TRAINING PROGRAM CREDIT.]

Subdivision 1. [CREDIT ALLOWED.] (a) A credit is allowed against the tax imposed by section 290.06, subdivision 1, equal to the sum of:

(1) placement fees paid to a job training program upon hiring a qualified graduate of the program; and

(2) retention fees paid to a job training program for retention of a qualified graduate of the program.

(b) The maximum placement fee qualifying for a credit under this section is $8,000 per qualified graduate in the year hired. The maximum retention fee qualifying for a credit under this section is $6,000 per qualified graduate retained as an employee per year. Only retention fees paid in the second and third years after the qualified graduate is hired qualify for the credit.

(c) A credit is allowed only up to the dollar amount of certificates, issued under subdivision 4, and provided by the job training program to the taxpayer.

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 per year in the last two years;

(iii) have assets of no more than $5,000, 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 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.

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Subd. 3. [QUALIFIED GRADUATE.] A qualified graduate is a graduate of a job training program qualifying under subdivision 1, who is placed in a job in Minnesota that pays at least $9 per hour or its equivalent. To qualify for a credit under this section for a retention fee, a job in which the graduate is retained must pay at least $10 per hour at the end for the first and second years of employment. A business, other than the business that originally hired the graduate, may pay a retention fee for the graduate and qualify for the credit.

Subd. 4. [DUTIES OF PROGRAM.] (a) Each program certified by the commissioner under subdivision 2 must comply with the requirements of this subdivision.

(b) Each program must maintain records for each graduate for which the program provides a credit certificate to an employer. These records must include information sufficient to verify the graduate's eligibility under this section, identify the employer, describe the job including its compensation rate and benefits, and determine the amount of placement and retention fees received.

(c) Each program must report to the commissioner of revenue by January 1, 1999, and by January 1, 2001, on its use of the credit. Each report must include, at least, information on:

(1) the number of graduates placed;

(2) demographic information on the graduates;

(3) the types of position in which each graduate is placed, including compensation information;

(4) the tenure of each graduate at the placed position or in other jobs;

(5) the amount of employer fees paid to the program;

(6) the amount of money raised by the program from other sources; and

(7) the types and sizes of employers with which graduates have been placed and retained.

(d) The commissioner shall compile and summarize this information and report to the legislature by February 15, 1999, and February 15, 2001.

Subd. 5. [ISSUANCE OF CREDIT CERTIFICATES.] (a) The total amount of credits under this section is limited to $1,200,000 for taxable years beginning after December 31, 1996, and before January 1, 2002. The commissioner may issue under paragraph (b) no more than the specified amount of certificates for taxable years beginning during each calendar year:

1997 $100,000

1998 $200,000

1999 $300,000

2000 $300,000

2001 $300,000

Unused certificates for a taxable year carry over and may be used for a later taxable year, regardless of when issued by the commissioner.

(b) Upon application, the commissioner of children, families, and learning shall issue certificates to job training programs, certified under subdivision 2, up to the dollar amount available for the taxable year. The certificates must be in a dollar amount that is no greater than the dollar amount applied for, and reflects the commissioner's estimate of the job training program's projected fees for placements and retentions of qualifying graduates. The commissioner shall issue the certificates in the order in which applications are received until the available authority has been issued.

(c) To the extent available, the job training program must provide to employers of its qualified graduates certificates issued by the commissioner of children, families, and learning under this subdivision.

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Subd. 6. [NONREFUNDABLE.] The taxpayer must use the tax credit for the taxable year in which the certificate is issued to the employer. The credit for the taxable year may not exceed the liability for tax under section 290.06, subdivision 1, for the taxable year, before reduction by the nonrefundable credits allowed under this chapter.

Subd. 7. [MANNER OF CLAIMING.] The commissioner shall prescribe the manner in which the credit may be claimed. This may include allowing the credit only as a separately processed claim for a refund.

Subd. 8. [EXPIRATION.] This section expires effective for taxable years beginning after December 31, 2001.

Sec. 9. Minnesota Statutes 1996, section 290.191, subdivision 4, is amended to read:

Subd. 4. [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER BUSINESSES.] If the business of a corporation, partnership, or proprietorship consists exclusively of the selling of tangible personal property and services in response to orders received by United States mail or, telephone, facsimile, or other electronic media, and 99 percent of the taxpayer's property and payroll is within Minnesota, then the taxpayer may apportion net income to Minnesota based solely upon the percentage that the sales made within this state in connection with its trade or business during the tax period are of the total sales wherever made in connection with the trade or business during the tax period. Property and payroll factors are disregarded. In determining eligibility for this subdivision:

(1) the sale not in the ordinary course of business of tangible or intangible assets used in conducting business activities must be disregarded; and

(2) property and payroll at a distribution center outside of Minnesota are disregarded if the sole activity at the distribution center is the filling of orders, and no solicitation of orders occurs at the distribution center.

Sec. 10. Minnesota Statutes 1996, section 290.92, is amended by adding a subdivision to read:

Subd. 30. [REGISTRATION; THIRD-PARTY BULK FILER.] (a) For purposes of this subdivision, the following terms have the meanings given:

(1) Notwithstanding section 290.01, "person" means an individual, fiduciary, partnership, corporation, limited liability company, association, or other entity organized under the laws of this state or any other jurisdiction.

(2) "Third-party bulk filer" means a person that collects withholding taxes from more than one employer for the purpose of filing returns and depositing the withheld taxes with the commissioner.

(b) A person shall not act as a third-party bulk filer unless the person is registered with the commissioner under this subdivision.

(c) A person may apply to the commissioner, on a form prescribed by the commissioner, for registration as a third-party bulk filer under this subdivision, and the commissioner shall grant the application if the application indicates that the person will comply with this subdivision.

(d) A third-party bulk filer must:

(1) keep client funds held for payment of federal or state withholding taxes or other client obligations in an account separate from the third-party bulk filer's own funds;

(2) permit the commissioner to conduct scheduled or unscheduled audits of the third-party bulk filer's books and records relating to compliance with this subdivision and fully cooperate with the audits or, at the discretion of the commissioner, submit an audit conducted by a certified public accountant;

(3) file returns electronically and make deposits electronically with the commissioner in compliance with the commissioner's requirements for electronic filing and depositing;

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(4) provide to the commissioner at least monthly, in the form requested by the commissioner, an updated client list that includes at least the name, address, tax identification number, and federal deposit frequency of each client. The address listed for the client must be the client's actual street or post office box address and not the third-party bulk filer's address;

(5) disclose in writing to prospective clients that:

(i) the third-party bulk filer may invest client funds prior to depositing them with the commissioner and with the Internal Revenue Service and that earnings from those investments will be the property of the third-party bulk filer;

(ii) if the third-party bulk filer incurs losses on those investments or uses the client's funds for other purposes, the third-party bulk filer will still be liable to the client for the amounts withheld but will be able to make required tax deposits on behalf of the client only by using the third-party bulk filer's own funds or other assets to replace the funds lost through the investments or used for other purposes; and

(iii) no state or federal agency monitors or assumes any responsibility for the financial solvency of third-party bulk filers;

(6) timely file all returns and timely make all tax deposits required under its contracts with its clients;

(7) upon request, provide to the commissioner, within the time specified in the request, a copy of any contract with a client; and

(8) comply with all other requirements of this section or of rules adopted under this section.

(e) When the commissioner sends an order of assessment issued under section 289A.37, in either paper or electronic form, to a third-party bulk filer regarding a client, the commissioner shall also send a paper copy of the order of assessment to the client.

(f) If the commissioner determines that a required deposit appears not to have been made, the commissioner shall send a written notice of the delinquency, in electronic or paper form, to the third-party bulk filer, and a copy to the client as required under paragraph (e).

(g) If the commissioner determines that a required deposit has not been made, and that continued operation of the third-party bulk filer would present a risk of loss to its clients, the commissioner may, upon ten business days' written notice by certified mail to the third-party bulk filer, suspend the registration of the third-party bulk filer for an indefinite period, and notify the third-party bulk filer's clients that the registration has been suspended. A registration may not be suspended if the failure to make a deposit was caused by the client's failure to deposit funds or provide the information necessary to calculate appropriate tax withholding payments. The commissioner shall, upon request, provide the third-party bulk filer with the opportunity for an administrative appeal under section 289A.65, subdivisions 1, 4, and 10, prior to suspension; the hearing, if any, on the administrative appeal must occur within the ten-day period unless the commissioner, in the commissioner's sole discretion, agrees to delay the suspension to permit a later hearing. The 60-day period specified in section 289A.65, subdivision 4, does not apply to a proceeding under this paragraph. Within 30 days after the beginning of a suspension under this paragraph, the commissioner may commence a proceeding to suspend or revoke under paragraph (h); if the commissioner fails to do so, the suspension under this paragraph terminates.

(h) If the commissioner determines, in compliance with paragraph (i), that a third-party bulk filer has violated this section without reasonable cause or is no longer eligible for registration under this subdivision, the commissioner may suspend or revoke the third-party bulk filer's registration or may assess a civil penalty upon the third-party bulk filer, not to exceed $5,000 per violation. A suspension of registration may be for any period of less than six months and may include conditions for reinstatement. If the commissioner revokes the registration, the third-party bulk filer may not apply for reregistration for six months after the revocation. If the commissioner suspends or revokes a registration, the commissioner shall notify the former registrant's clients that the registration has been suspended or revoked. If the commissioner assesses a civil penalty, the commissioner shall not notify the third-party bulk filer's clients of the assessment.

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(i) Prior to a suspension, revocation, or assessment of a civil penalty under paragraph (h), the commissioner shall first provide 30 days' written notice to the third-party bulk filer, specifying the violations and informing the third-party bulk filer that the commissioner intends, based upon those violations, to take action against the third-party bulk filer as permitted under this paragraph and paragraph (h). The notice shall advise the third-party bulk filer of the right to contest the suspension, revocation, or assessment of a civil penalty and of the general procedures for a contested case hearing under chapter 14. The notice may be served personally or by mail in the manner prescribed for service of an order of assessment issued under section 289A.37. A suspension or revocation of registration under this paragraph is effective when the commissioner serves a notice of suspension or revocation upon the third-party bulk filer after 30 days have passed following the date of the notice of intent to suspend or revoke without the third-party bulk filer requesting a hearing. If a hearing is timely requested and held, the suspension or revocation is effective upon service by the commissioner of an order of suspension or revocation under section 14.62, subdivision 1.

(j) A third-party bulk filer may terminate its registration by written notice to the commissioner, but the termination does not affect the commissioner's authority to begin or continue a proceeding to take action permitted under paragraph (h). The commissioner shall notify the third-party bulk filer's clients of a termination of registration under this paragraph.

(k) The commissioner shall remind employers at least annually, through the department's regular informational publications that it sends to employers, that employers may telephone the department to determine whether a required filing or deposit has been made by a third-party bulk filer.

Sec. 11. Minnesota Statutes 1996, section 290A.03, subdivision 7, is amended to read:

Subd. 7. [DEPENDENT.] "Dependent" means any person who is considered a dependent under sections 151 and 152 of the Internal Revenue Code. In the case of a son, stepson, daughter, or stepdaughter of the claimant, amounts received as an aid to families with dependent children grant, allowance to or on behalf of the child, or as a grant or allowance to or on behalf of the child under the successor program pursuant to Public Law Number 104-193, surplus food, or other relief in kind supplied by a governmental agency must not be taken into account in determining whether the child received more than half of the child's support from the claimant.

Sec. 12. Minnesota Statutes 1996, section 290A.03, subdivision 11, is amended to read:

Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent constituting property taxes" means the amount of gross rent actually paid in cash, or its equivalent, which is attributable (a) to the property tax paid on the unit or (b) to the amount 18 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. The amount of rent attributable to property taxes paid or payments in lieu made on the unit shall be determined by multiplying the gross rent paid by the claimant for the calendar year for the unit by a fraction, the numerator of which is the net tax on the property where the unit is located and the denominator of which is the total scheduled rent. In no case may the rent constituting property taxes exceed 50 percent of the gross rent paid by the claimant during that calendar year. In the case of a claimant who resides in a unit for which (1) a rent subsidy is paid to, or for, the claimant based on the income of the claimant or the claimant's family, or (2) a subsidy is paid to a public housing authority that owns or operates the claimant's rental unit, pursuant to United States Code, title 42, section 1437c, 20 percent of gross rent actually paid in cash or its equivalent shall be the claimant's "rent constituting property taxes paid." For purposes of this subdivision, "rent subsidy" does not include any housing assistance received under aid to families with dependent children, general assistance, Minnesota supplemental assistance, supplemental security income, or similar income maintenance programs.

Sec. 13. Minnesota Statutes 1996, 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 before reductions made under section 273.13 but after deductions made under sections 273.135, 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

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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 the amount 18 percent of the gross rent paid in the preceding year for the site on which the homestead is located, which is attributable to the net tax paid on the site. The amount attributable to property taxes shall be determined by multiplying the net tax on the parcel by a fraction, the numerator of which is the gross rent paid for the calendar year for the site and the denominator of which is the gross rent paid for the calendar year for the parcel. 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 273.13, subdivision 22 or 23 273.124, 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. 14. Minnesota Statutes 1996, section 290A.04, is amended by adding a subdivision to read:

Subd. 2j. [SEASONAL RESIDENTIAL RECREATIONAL CREDIT.] If the net property taxes payable on a seasonal residential recreational property not used for commercial purposes, classified under section 273.13, subdivision 25, increase more than ten percent over its net property taxes payable in the previous year, and if the amount of the increase is $100 or more, a claimant who is an owner of the property in both years is allowed a credit under section 290.06, subdivision 26, equal to 75 percent of the first $300 of the excess of the increase over ten percent. This subdivision does not apply to the portion of an increase in taxes payable that are attributable to improvements to the property.

In addition to the other proofs required by this chapter, each claimant under this subdivision shall file with the application a copy of the property tax statement for property taxes payable in the current year and the previous year and any other documents required by the commissioner.

For purposes of this subdivision, "net property taxes payable" means property taxes payable minus credit amounts for which a claimant qualify's under this subdivision for the previous year.

The credit under this subdivision is effective for property taxes payable in 1998, for credits under section 290.06, subdivision 26, for tax year 1998, income tax returns filed in 1999; and for property taxes payable in 1999, for credits under section 290.06, subdivision 26, for tax year 1999, income tax returns filed in 2000.

Sec. 15. Minnesota Statutes 1996, section 290A.19, is amended to read:

290A.19 [OWNER OR MANAGING AGENT TO FURNISH RENT CERTIFICATE.]

(a) The owner or managing agent of any property for which rent is paid for occupancy as a homestead must furnish a certificate of rent constituting property tax paid to a person who is a renter on December 31, in the form prescribed by the commissioner. If the renter moves before December 31, the owner or managing agent may give the certificate to the renter at the time of moving, or mail the certificate to the forwarding address if an address has been provided by the renter. The certificate must be made available to the renter before February 1 of the year following the year in which the rent was paid. The owner or managing agent must retain a duplicate of each certificate or an equivalent record showing the same information for a period of three years. The duplicate or other record must be made available to the commissioner upon request. For the purposes of this section, "owner" includes a park owner as defined under section 327C.01, subdivision 6, and "property" includes a lot as defined under section 327C.01, subdivision 3.

(b) The certificate of rent constituting property taxes must include the address of the property, including the county, and the property tax parcel identification number and any additional information that the commissioner determines is appropriate.

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(c) If the owner or managing agent fails to provide the renter with a certificate of rent constituting property taxes, the commissioner shall allocate the net tax on the building to the unit on a square footage basis or other appropriate basis as the commissioner determines. The renter shall supply the commissioner with a statement from the county treasurer that gives the amount of property tax on the parcel, the address and property tax parcel identification number of the property, and the number of units in the building.

(d) By January 31 of the year following the year in which the rent was collected, each owner or managing agent shall report to the commissioner on a form prescribed by the commissioner the net tax pertaining to the rental residential part of the property, the total scheduled rent, and the fraction computed under section 290A.03, subdivision 11. A copy of the property tax statement for taxes payable in that year must be attached.

Sec. 16. Laws 1995, chapter 255, article 3, section 2, subdivision 1, as amended by Laws 1996, chapter 464, article 4, section 1, 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.

Sec. 17. Laws 1997, chapter 34, section 2, is amended to read:

Sec. 2. [EFFECTIVE DATE.]

Section 1 is effective the day following final enactment for time limitations which expire or due dates specified in Minnesota Statutes, section 289A.20, which fall in the period between March 31, 1997, and May 30, 1997.

Sec. 18. [LEGISLATIVE TAX STUDIES.]

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 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.

Subd. 2. [BUSINESS TAX STUDY.] The study of business taxes must analyze the following taxes paid by businesses:

(1) the corporate franchise tax;

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(2) the sales tax on capital or other business inputs;

(3) the personal property tax on utility property;

(4) the real property tax on commercial and industrial property.

The study must consider the impact of alternative methods of taxing business and the impact of doing so on the fairness, efficiency, simplicity, elasticity, and stability of revenues, and competitiveness of Minnesota's taxation of business.

Subd. 3. [APPROPRIATION.] $50,000 is appropriated from the general fund for fiscal years 1998 and 1999 to the legislative coordinating commission to study alternative methods of taxing businesses. This appropriation may be used to hire a consultant or consultants to prepare all or part of the study and is fully available in either fiscal year.

Subd. 4. [TELECOMMUNICATIONS STUDY.] The commission and the working group shall:

(1) study existing and emerging tax policies, both federally and nationally, that apply to telecommunications and computer industries and identify any inequities which may exist in the current system of taxation as it applies to those industries;

(2) identify potential for erosion of the sales tax base as a result of evolving technologies in the telecommunications and computer industries;

(3) consider methods of addressing potential impediments to extension of state taxes to emerging technologies;

(4) suggest options for changing the tax system to maintain or broaden the sales tax base and to provide equitable tax treatment for users of existing and emerging technologies.

Subd. 5. [STAFFING.] The department of revenue shall provide administrative and staff assistance when requested by the commissions or working groups.

Sec. 19. [REPEALER.]

Minnesota Statutes 1996, section 290A.03, subdivisions 12a and 14, are repealed.

Sec. 20. [EFFECTIVE DATE.]

Sections 1, 5, 6, 11, 16, and 18 are effective the day following final enactment.

Sections 2 to 4, and 9 are effective for taxable years beginning after December 31, 1996.

Section 7 is effective for taxable years beginning after December 31, 1998.

Section 8 is effective for tax credit certificates issued after December 31, 1996, and used in taxable years beginning after December 31, 1996.

Section 10 is effective January 1, 1998.

Sections 12, 13, 15, and 19 are effective beginning for property tax refunds based on rent paid after December 31, 1996.

Section 17 is effective April 16, 1997.

ARTICLE 6

FEDERAL UPDATE

Section 1. Minnesota Statutes 1996, section 289A.02, subdivision 7, is amended to read:

Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically defined otherwise, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through March 22 December 31, 1996, and includes the provisions of section 1(a) and (b) of Public Law Number 104-117.

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Sec. 2. Minnesota Statutes 1996, 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; and

(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, and 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, shall be effective at the time they become effective for federal income tax purposes.

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, and 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.

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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, 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, 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, and 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, shall become effective at the time they become effective for federal purposes.

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, 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 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.

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.

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Sec. 3. Minnesota Statutes 1996, 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; and

(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.

Sec. 4. Minnesota Statutes 1996, 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;

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(3) the amount paid to others not to exceed $650 for each dependent in grades kindergarten to 6 and $1,000 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. 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. "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. In order to qualify for the subtraction under this clause the taxpayer must elect to itemize deductions under section 63(e) of the Internal Revenue Code;

(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); and

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

(10) 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.

Sec. 5. Minnesota Statutes 1996, 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) and, (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.

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(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.

(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.

Sec. 6. Minnesota Statutes 1996, section 290.01, subdivision 19g, is amended to read:

Subd. 19g. [ACRS MODIFICATION FOR INDIVIDUALS.] (a) An individual is allowed a subtraction from federal taxable income for the amount of accelerated cost recovery system deductions that were added to federal adjusted gross income in computing Minnesota gross income for taxable year 1981, 1982, 1983, or 1984 and that were not deducted in a later taxable year. The deduction is allowed beginning in the first taxable year after the entire allowable deduction for the property has been allowed under federal law or the first taxable year beginning after December 31, 1987, whichever is later.

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The amount of the deduction is computed by deducting the amount added to federal adjusted gross income in computing Minnesota gross income (less any deduction allowed under Minnesota Statutes 1986, section 290.01, subdivision 20f) in equal annual amounts over five years.

(b) In the event of a sale or exchange of the property, a deduction is allowed equal to the lesser of (1) the remaining amount that would be allowed as a deduction under paragraph (a) or (2) the amount of capital gain recognized and the amount of cost recovery deductions that were subject to recapture under sections 1245 and 1250 of the Internal Revenue Code of 1986 for the taxable year.

(c) In the case of a corporation electing S corporation status under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725, the amount of the corporation's cost recovery allowances that have been deducted in computing federal tax, but have been added to federal taxable income or not deducted in computing tax under this chapter as a result of the application of subdivision 19e, paragraphs (a) and (c) or Minnesota Statutes 1986, section 290.09, subdivision 7, is allowed as a deduction to the shareholders under the provisions of paragraph (a).

Sec. 7. Minnesota Statutes 1996, 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 March 22 December 31, 1996, and includes the provisions of section 1(a) and (b) of Public Law Number 104-117.

Sec. 8. Minnesota Statutes 1996, section 290.014, subdivision 2, is amended to read:

Subd. 2. [NONRESIDENT INDIVIDUALS.] Except as provided in section 290.015, a nonresident individual is subject to the return filing requirements and to tax as provided in this chapter to the extent that the income of the nonresident individual is:

(1) allocable to this state under section 290.17, 290.191, or 290.20;

(2) taxed to the individual under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in the individual's capacity as a beneficiary of an estate with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 662(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the individual directly from the source from which realized by the estate;

(3) taxed to the individual under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character that is taxable under this chapter) in the individual's capacity as a beneficiary or grantor or other person treated as a substantial owner of a trust with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 652(b), 662(b), or 664(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the individual directly from the source from which realized by the trust;

(4) taxed to the individual under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in the individual's capacity as a limited or general partner in a partnership with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 702(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the individual directly from the source from which realized by the partnership; or

(5) taxed to the individual under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in the individual's capacity as a shareholder of a corporation having a valid election in effect under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725, and income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 1366(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the individual directly from the source from which realized by the corporation.

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Sec. 9. Minnesota Statutes 1996, section 290.014, subdivision 3, is amended to read:

Subd. 3. [TRUSTS AND ESTATES.] Except as provided in section 290.015, a trust or estate, whether resident or nonresident, is subject to the return filing requirements and to tax as provided in this chapter to the extent that the income of the trust or estate is:

(1) allocable to this state under section 290.17, 290.191, or 290.20;

(2) taxed to the trust or estate under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a beneficiary of a trust or estate with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 662(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the trust or beneficiary estate directly from the source from which realized by the distributing estate;

(3) taxed to the trust or estate under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a beneficiary or grantor or other person treated as a substantial owner of a trust with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 652(b), 662(b), or 664(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the beneficiary trust or estate directly from the source from which realized by the distributing trust;

(4) taxed to the trust or estate under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a limited or general partner in a partnership with income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 702(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the trust or estate directly from the source from which realized by the partnership; or

(5) taxed to the trust or estate under the Internal Revenue Code (or not taxed under the Internal Revenue Code by reason of its character but of a character which is taxable under this chapter) in its capacity as a shareholder of a corporation having a valid election in effect under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725, and income allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into account the income character provisions of section 1366(b) of the Internal Revenue Code, would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the trust or estate directly from the source from which realized by the corporation.

Sec. 10. Minnesota Statutes 1996, section 290.015, subdivision 3, is amended to read:

Subd. 3. [EXCEPTIONS.] (a) A person is not subject to tax under this chapter if the person is engaged in the business of selling tangible personal property and taxation of that person under this chapter is precluded by Public Law Number 86-272, United States Code, title 15, sections 381 to 384, or would be so precluded except for the fact that the person stored tangible personal property in a state licensed facility under chapter 231.

(b) Ownership of an interest in the following types of property (including those contacts with this state reasonably required to evaluate and complete the acquisition or disposition of the property, the servicing of the property or the income from it, the collection of income from the property, or the acquisition or liquidation of collateral relating to the property) shall not be a factor in determining whether the owner is subject to tax under this chapter:

(1) an interest in a real estate mortgage investment conduit, a real estate investment trust, a financial asset securitization investment trust, or a regulated investment company or a fund of a regulated investment company, as those terms are defined in the Internal Revenue Code;

(2) an interest in money market instruments or securities as defined in section 290.191, subdivision 6, paragraphs (c) and (d);

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(3) an interest in a loan-backed, mortgage-backed, or receivable-backed security representing either: (i) ownership in a pool of promissory notes, mortgages, or receivables or certificates of interest or participation in such notes, mortgages, or receivables, or (ii) debt obligations or equity interests which provide for payments in relation to payments or reasonable projections of payments on the notes, mortgages, or receivables;

(4) an interest acquired from a person in assets described in section 290.191, subdivision 11, paragraphs (e) to (l), subject to the provisions of paragraph (c), clause (2)(A);

(5) an interest acquired from a person in the right to service, or collect income from any assets described in section 290.191, subdivision 11, paragraphs (e) to (l), subject to the provisions of paragraph (c), clause (2)(A);

(6) an interest acquired from a person in a funded or unfunded agreement to extend or guarantee credit whether conditional, mandatory, temporary, standby, secured, or otherwise, subject to the provisions of paragraph (c), clause (2)(A);

(7) an interest of a person other than an individual, estate, or trust, in any intangible, tangible, real, or personal property acquired in satisfaction, whether in whole or in part, of any asset embodying a payment obligation which is in default, whether secured or unsecured, the ownership of an interest in which would be exempt under the preceding provisions of this subdivision, provided the property is disposed of within a reasonable period of time; or

(8) amounts held in escrow or trust accounts, pursuant to and in accordance with the terms of property described in this subdivision.

(c)(1) For purposes of paragraph (b), clauses (4) to (6), an interest in the type of assets or credit agreements described is deemed to exist at the time the owner becomes legally obligated, conditionally or unconditionally, to fund, acquire, renew, extend, amend, or otherwise enter into the credit arrangement.

(2)(A) An owner has acquired an interest from a person in paragraph (b), clauses (4) to (6), assets if:

(i) the owner at the time of the acquisition of the asset does not own, directly or indirectly, 15 percent or more of the outstanding stock or in the case of a partnership 15 percent or more of the capital or profit interests of the person from whom it acquired the asset;

(ii) the person from whom the owner acquired the asset regularly sells, assigns, or transfers interests in paragraph (b), clauses (4) to (6), assets during the 12 calendar months immediately preceding the month of acquisition to three or more persons; and

(iii) the person from whom the owner acquired the asset does not sell, assign, or transfer 75 percent or more of its paragraph (b), clauses (4) to (6), assets during the 12 calendar months immediately preceding the month of acquisition to the owner.

For purposes of determining indirect ownership under item (i), the owner is deemed to own all stock, capital, or profit interests owned by another person if the owner directly owns 15 percent or more of the stock, capital, or profit interests in the other person. The owner is also deemed to own through any intermediary parties all stock, capital, and profit interests directly owned by a person to the extent there exists a 15 percent or more chain of ownership of stock, capital, or profit interests between the owner, intermediary parties and the person.

(B) If the owner of the asset is a member of the unitary group, paragraph (b), clauses (4) to (8), do not apply to an interest acquired from another member of the unitary group. If the interest in the asset was originally acquired from a nonunitary member and at that time qualified as a section 290.015, subdivision 3, paragraph (b), asset, the foregoing limitation does not apply.

Sec. 11. Minnesota Statutes 1996, section 290.015, subdivision 5, is amended to read:

Subd. 5. [DETERMINATION AT ENTITY LEVEL.] Determinations under this section with respect to trades or businesses conducted by a partnership, trust, estate, or corporation with an election in effect under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725, or any other entity, the income of which is or

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may be taxed to its owners or beneficiaries must be made with respect to the entity carrying on the trade or business and not with respect to owners or beneficiaries of the trade or business, the taxability of which under this chapter must be determined under section 290.014.

Sec. 12. Minnesota Statutes 1996, section 290.06, subdivision 22, is amended to read:

Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A taxpayer who is liable for taxes on or measured by net income to another state or province or territory of Canada, as provided in paragraphs (b) through (f), upon income allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state or province or territory of Canada if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who is a resident of this state pursuant to section 290.01, subdivision 7, clause (2), and who is subject to income tax as a resident in the state of the individual's domicile is not allowed this credit unless the state of domicile does not allow a similar credit.

(b) For an individual, estate, or trust, the credit is determined by multiplying the tax payable under this chapter by the ratio derived by dividing the income subject to tax in the other state or province or territory of Canada that is also subject to tax in Minnesota while a resident of Minnesota by the taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue Code, modified by the addition required by section 290.01, subdivision 19a, clause (1), and the subtraction allowed by section 290.01, subdivision 19b, clause (1), to the extent the income is allocated or assigned to Minnesota under sections 290.081 and 290.17.

(c) If the taxpayer is an athletic team that apportions all of its income under section 290.17, subdivision 5, paragraph (c), the credit is determined by multiplying the tax payable under this chapter by the ratio derived from dividing the total net income subject to tax in the other state or province or territory of Canada by the taxpayer's Minnesota taxable income.

(d) The credit determined under paragraph (b) or (c) shall not exceed the amount of tax so paid to the other state or province or territory of Canada on the gross income earned within the other state or province or territory of Canada subject to tax under this chapter, nor shall the allowance of the credit reduce the taxes paid under this chapter to an amount less than what would be assessed if such income amount was excluded from taxable net income.

(e) In the case of the tax assessed on a lump sum distribution under section 290.032, the credit allowed under paragraph (a) is the tax assessed by the other state or province or territory of Canada on the lump sum distribution that is also subject to tax under section 290.032, and shall not exceed the tax assessed under section 290.032. To the extent the total lump sum distribution defined in section 290.032, subdivision 1, includes lump sum distributions received in prior years or is all or in part an annuity contract, the reduction to the tax on the lump sum distribution allowed under section 290.032, subdivision 2, includes tax paid to another state that is properly apportioned to that distribution.

(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax in such other state or province or territory of Canada on that same income after the Minnesota statute of limitations has expired, the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any statute of limitations to the contrary. The claim for the credit must be submitted within one year from the date the taxes were paid to the other state or province or territory of Canada. The taxpayer must submit sufficient proof to show entitlement to a credit.

(g) For the purposes of this subdivision, a resident shareholder of a corporation having a valid election in effect under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share of any net income tax paid by the S corporation to another state. For the purposes of the preceding sentence, the term "net income tax" means any tax imposed on or measured by a corporation's net income.

(h) For the purposes of this subdivision, a resident member of a limited liability company taxed as a partnership under the Internal Revenue Code must be considered to have paid a tax imposed on the member in an amount equal to the member's pro rata share of any net income tax paid by the limited liability company to a state that does not measure the income of the member of the limited liability company by reference to the income of the limited liability company. For purposes of the preceding sentence, the term "net income" tax means any tax imposed on or measured by a limited liability company's net income.

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Sec. 13. Minnesota Statutes 1996, section 290.068, subdivision 1, is amended to read:

Subdivision 1. [CREDIT ALLOWED.] A corporation, other than a corporation with a valid election in effect under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725, is allowed a credit against the portion of the franchise tax computed under section 290.06, subdivision 1, for the taxable year equal to:

(a) 5 percent of the first $2 million of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) 2.5 percent on all of such excess expenses over $2 million.

Sec. 14. Minnesota Statutes 1996, section 290.0922, subdivision 1, is amended to read:

Subdivision 1. [IMPOSITION.] (a) In addition to the tax imposed by this chapter without regard to this section, the franchise tax imposed on a corporation required to file under section 289A.08, subdivision 3, other than a corporation having a valid election in effect under section 1362 of the Internal Revenue Code treated as an "S" corporation under section 290.9725 for the taxable year includes a tax equal to the following amounts:

If the sum of the corporation's

Minnesota property, payrolls, and sales

or receipts is: the tax equals:

less than $500,000 $0

$ 500,000 to $ 999,999 $100

$ 1,000,000 to $ 4,999,999 $300

$ 5,000,000 to $ 9,999,999 $1,000

$10,000,000 to $19,999,999 $2,000

$20,000,000 or more $5,000

(b) A tax is imposed for each taxable year on a corporation required to file a return under section 289A.12, subdivision 3, that has a valid election in effect for the taxable year under section 1362 of the Internal Revenue Code is treated as an "S" corporation under section 290.9725 and on a partnership required to file a return under section 289A.12, subdivision 3, other than a partnership that derives over 80 percent of its income from farming. The tax imposed under this paragraph is due on or before the due date of the return for the taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe the return to be used for payment of this tax. The tax under this paragraph is equal to the following amounts:

If the sum of the S corporation's or partnership's

Minnesota property, payrolls, and sales

or receipts is: the tax equals:

less than $500,000 $0

$ 500,000 to $ 999,999 $100

$ 1,000,000 to $ 4,999,999 $300

$ 5,000,000 to $ 9,999,999 $1,000

$10,000,000 to $19,999,999 $2,000

$20,000,000 or more $5,000

Sec. 15. Minnesota Statutes 1996, section 290.17, subdivision 1, is amended to read:

Subdivision 1. [SCOPE OF ALLOCATION RULES.] (a) The income of resident individuals is not subject to allocation outside this state. The allocation rules apply to nonresident individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders of corporations having a valid election in effect under section 1362 of the Internal Revenue Code

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treated as "S" corporations under section 290.9725, and all corporations not having such an election in effect. If a partnership or corporation would not otherwise be subject to the allocation rules, but conducts a trade or business that is part of a unitary business involving another legal entity that is subject to the allocation rules, the partnership or corporation is subject to the allocation rules.

(b) Expenses, losses, and other deductions (referred to collectively in this paragraph as "deductions") must be allocated along with the item or class of gross income to which they are definitely related for purposes of assignment under this section or apportionment under section 290.191, 290.20, 290.35, or 290.36. Deductions not definitely related to any item or class of gross income are assigned to the taxpayer's domicile.

(c) In the case of an individual who is a resident for only part of a taxable year, the individual's income, gains, losses, and deductions from the distributive share of a partnership, S corporation, trust, or estate are not subject to allocation outside this state to the extent of the distributive share multiplied by a ratio, the numerator of which is the number of days the individual was a resident of this state during the tax year of the partnership, S corporation, trust, or estate, and the denominator of which is the number of days in the taxable year of the partnership, S corporation, trust, or estate.

Sec. 16. Minnesota Statutes 1996, 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;

(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 has a valid election in effect under section 1362 of the Internal Revenue Code is an "S" corporation under section 290.9725.

Sec. 17. Minnesota Statutes 1996, section 290.9725, is amended to read:

290.9725 [S CORPORATION.]

For purposes of this chapter, the term "S corporation" means any corporation having a valid election in effect for the taxable year under section 1362 of the Internal Revenue Code, except that a corporation which either:

(1) is a financial institution to which either section 585 or section 593 of the Internal Revenue Code applies; or

(2) has a wholly owned subsidiary which is a financial institution as described above

is not an "S" corporation for the purposes of this chapter. An S corporation shall not be subject to the taxes imposed by this chapter, except the taxes imposed under sections 290.0922, 290.92, 290.9727, 290.9728, and 290.9729.

Sec. 18. Minnesota Statutes 1996, section 290.9727, subdivision 1, is amended to read:

Subdivision 1. [TAX IMPOSED.] For a an "S" corporation electing S corporation status pursuant to section 1362 of the Internal Revenue Code after December 31, 1986, and having a recognized built-in gain as defined in section 1374 of the Internal Revenue Code, there is imposed a tax on the taxable income of such S corporation, as defined in this section, at the rate prescribed by section 290.06, subdivision 1. This subdivision does not apply to any corporation having an S election in effect for each of its taxable years. An S corporation and any predecessor corporation must be treated as one corporation for purposes of the preceding sentence.

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Sec. 19. Minnesota Statutes 1996, section 290.9728, subdivision 1, is amended to read:

Subdivision 1. [TAX IMPOSED.] There is imposed a tax on the taxable income of a an "S" corporation that has:

(1) elected S corporation status pursuant to section 1362 of the Internal Revenue Code of 1986, as amended through December 31, 1986, before January 1, 1987;

(2) a net capital gain for the taxable year (i) in excess of $25,000 and (ii) exceeding 50 percent of the corporation's federal taxable income for the taxable year; and

(3) federal taxable income for the taxable year exceeding $25,000.

The tax is imposed at the rate prescribed by section 290.06, subdivision 1. For purposes of this section, "federal taxable income" means federal taxable income determined under section 1374(4)(d) of the Internal Revenue Code. This section does not apply to an S corporation which has had an election under section 1362 of the Internal Revenue Code of 1954, in effect for the three immediately preceding taxable years. This section does not apply to an S corporation that has been in existence for less than four taxable years and has had an election in effect under section 1362 of the Internal Revenue Code of 1954 for each of the corporation's taxable years. For purposes of this section, an S corporation and any predecessor corporation are treated as one corporation.

Sec. 20. [290.9743] [ELECTION BY FASIT.]

An entity having a valid election as a financial asset securitization investment trust in effect for a taxable year under section 860L(a) of the Internal Revenue Code shall not be subject to the taxes imposed by this chapter, except the tax imposed under section 290.92.

Sec. 21. [290.9744] [FASIT INCOME TAXABLE TO HOLDERS OF INTERESTS.]

The income of a financial asset securitization investment trust is taxable to the holders of interests in the financial asset securitization investment trust as provided in sections 860H to 860L of the Internal Revenue Code. The income of the holders must be computed under the provisions of this chapter.

Sec. 22. Minnesota Statutes 1996, 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.

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(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 March 22 December 31, 1996, and includes the provisions of section 1(a)(4) of Public Law Number 104-117.

Sec. 23. [FEDERAL CHANGES.]

The changes made by sections 1118(a), 1305, 1603, 1702(e), and 1702(f) of the Small Business Job Protection Act, Public Law Number 104-188, sections 451(a), 451(b), 909, and 910 of the Personal Responsibility and Work Opportunity Reconciliation Act, Public Law Number 104-193, and the federal changes to taxable income of section 2 of this article which affect the Minnesota definition of wages under Minnesota Statutes, section 290.92, subdivision 1, S corporation status under Minnesota Statutes, section 290.9725, unrelated business income tax under Minnesota Statutes, section 290.05, subdivision 3, corporate alternative minimum tax under Minnesota Statutes, section 290.0921, subdivision 3, estate tax under Minnesota Statutes, sections 291.005 and 291.03, the Minnesota working family credit under Minnesota Statutes, section 290.0671, subdivision 1, and the definition of income under Minnesota Statutes, section 290A.03, subdivision 3, shall become effective at the same time the changes become effective for federal purposes.

Sec. 24. [INSTRUCTION TO REVISOR.]

In the next edition of Minnesota Statutes, the revisor of statutes shall substitute the phrase "Internal Revenue Code of 1986, as amended through December 31, 1996," for the words "Internal Revenue Code of 1986, as amended through April 15, 1995," wherever the phrase occurs in chapters 290A, 297, 298, and 469.

Sec. 25. [EFFECTIVE DATE.]

Sections 3 to 5, 7 to 20 and the provision of section 2 dealing with regulated investment companies are effective for tax years beginning after December 31, 1996. The remainder of this article is effective at the same time and for the same years as the federal changes made in 1996 were effective for federal purposes.

ARTICLE 7

SALES AND SPECIAL TAXES

Section 1. Minnesota Statutes 1996, section 289A.56, subdivision 4, is amended to read:

Subd. 4. [CAPITAL EQUIPMENT REFUNDS; REFUNDS TO PURCHASERS.] Notwithstanding subdivision 3, for refunds payable under sections section 297A.15, subdivision 5, and 289A.50, subdivision 2a, interest is computed from the date the refund claim is filed with the commissioner. For refunds payable under section 289A.50, subdivision 2a, interest is computed from the 20th day of the month following the month of the invoice date for the purchase which is the subject of the refund.

Sec. 2. Minnesota Statutes 1996, section 296.141, subdivision 4, is amended to read:

Subd. 4. [CREDIT OR REFUND OF TAX PAID.] The commissioner shall allow the distributor credit or refund of the tax paid on gasoline and special fuel:

(1) exported or sold for export from the state, other than in the supply tank of a motor vehicle or of an aircraft;

(2) sold to the United States government to be used exclusively in performing its governmental functions and activities or to any "cost plus a fixed fee" contractor employed by the United States government on any national defense project;

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(3) if the fuel is placed in a tank used exclusively for residential heating;

(4) destroyed by accident while in the possession of the distributor;

(5) in error;

(6) in the case of gasoline only, sold for storage in an on-farm bulk storage tank, if the tax was not collected on the sale; and

(6) (7) in such other cases as the commissioner may permit, not inconsistent with the provisions of this chapter and other laws relating to the gasoline and special fuel excise taxes.

Sec. 3. Minnesota Statutes 1996, section 296.18, subdivision 1, is amended to read:

Subdivision 1. [CLAIM; FUEL USED IN OTHER VEHICLES.] Any person who shall buy and use gasoline for a qualifying purpose other than use in motor vehicles, snowmobiles except as provided in clause (2), or motorboats, or special fuel for a qualifying purpose other than use in licensed motor vehicles, and who shall have paid the Minnesota excise tax directly or indirectly through the amount of the tax being included in the price of the gasoline or special fuel, or otherwise, shall be reimbursed and repaid the amount of the tax paid upon filing with the commissioner a claim in the form and manner prescribed by the commissioner, and containing the information the commissioner shall require. By signing any such claim which is false or fraudulent, the applicant shall be subject to the penalties provided in this section for knowingly making a false claim. The claim shall set forth the total amount of the gasoline so purchased and used by the applicant other than in motor vehicles, or special fuel so purchased and used by the applicant other than in licensed motor vehicles, and shall state when and for what purpose it was used. When a claim contains an error in computation or preparation, the commissioner is authorized to adjust the claim in accordance with the evidence shown on the claim or other information available to the commissioner. The commissioner, on being satisfied that the claimant is entitled to the payments, shall approve the claim and transmit it to the commissioner of finance. No repayment shall be made unless the claim and invoice shall be filed with the commissioner within one year from the date of the purchase. The postmark on the envelope in which a written claim is mailed shall determine its date of filing. The words "gasoline" or "special fuel" as used in this subdivision do not include aviation gasoline or special fuel for aircraft. Gasoline or special fuel bought and used for a "qualifying purpose" means:

(1) Gasoline or special fuel used in carrying on a trade or business, used on a farm situated in Minnesota, and used for a farming purpose. "Farm" and "farming purpose" have the meanings given them in section 6420(c)(2), (3), and (4) of the Internal Revenue Code of 1986, as amended through December 31, 1988.

(2) Gasoline or special fuel used for off-highway business use. "Off-highway business use" means any use off the public highway by a person in that person's trade, business, or activity for the production of income. "Off-highway business use" includes:

(a) use of a passenger snowmobile off the public highways as part of the operations of a resort as defined in section 157.15.; and

(b) use of gasoline or special fuel to operate a power takeoff unit on a vehicle, but not including fuel consumed during idling time.

"Off-highway business use" does not include use as a fuel in a motor vehicle which, at the time of use, is registered or is required to be registered for highway use under the laws of any state or foreign country.

(3) Gasoline or special fuel placed in the fuel tanks of new motor vehicles, manufactured in Minnesota, and shipped by interstate carrier to destinations in other states or foreign countries.

By July 1, 1998, the commissioner shall adopt rules that determine the rates and percentages necessary to develop formulas for calculating and administering the refund under clause (2)(b).

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Sec. 4. Minnesota Statutes 1996, section 297A.01, subdivision 3, is amended to read:

Subd. 3. A "sale" and a "purchase" includes, but is not limited to, each of the following transactions:

(a) Any transfer of title or possession, or both, of tangible personal property, whether absolutely or conditionally, and the leasing of or the granting of a license to use or consume tangible personal property other than manufactured homes used for residential purposes for a continuous period of 30 days or more, for a consideration in money or by exchange or barter;

(b) The production, fabrication, printing, or processing of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the production, fabrication, printing, or processing;

(c) The furnishing, preparing, or serving for a consideration of food, meals, or drinks. "Sale" or "purchase" does not include:

(1) meals or drinks served to patients, inmates, or persons residing at hospitals, sanitariums, nursing homes, senior citizens homes, and correctional, detention, and detoxification facilities;

(2) meals or drinks purchased for and served exclusively to individuals who are 60 years of age or over and their spouses or to the handicapped and their spouses by governmental agencies, nonprofit organizations, agencies, or churches or pursuant to any program funded in whole or part through 42 USCA sections 3001 through 3045, wherever delivered, prepared or served; or

(3) meals and lunches served at public and private schools, universities, or colleges.

Notwithstanding section 297A.25, subdivision 2, taxable food or meals include, but are not limited to, the following:

(i) heated food or drinks; prepared by the retailer for immediate consumption either on or off the retailer's premises. For purposes of this subdivision, "food or drinks prepared for immediate consumption" includes any food product upon which an act of preparation including, but not limited to, cooking, mixing, sandwich making, blending, heating, or pouring has been performed by the retailer so the food product may be immediately consumed by the purchaser. For purposes of this subdivision, "premises" means the total space and facilities, including buildings, grounds, and parking lots that are made available or that are available for use by the retailer or customer for the purpose of sale or consumption of prepared food and drinks. Food and drinks sold within a building or grounds which require an admission charge for entrance are presumed to be sold for consumption on the premises. The premises of a caterer is the place where the catered food or drinks are served;

(ii) sandwiches prepared by the retailer;

(iii) single sales of prepackaged ice cream or ice milk novelties prepared by the retailer;

(iv) hand-prepared or dispensed ice cream or ice milk ice cream, ice milk, or frozen yogurt products including novelties, cones, sundaes, and snow cones, sold in single or individual servings. For purposes of this subdivision, "single or individual servings" does not include products prepackaged and sold in bulk containers or packaging;

(v) (iii) soft drinks and other beverages prepared or served by the retailer; including all carbonated and noncarbonated beverages or drinks sold in liquid form except beverages or drinks which contain milk or milk products, beverages or drinks containing 15 or more percent fruit juice, or noncarbonated and noneffervescent bottled water sold in individual containers of one-half gallon or more in size;

(vi) (iv) gum;, candy, and candy products, except when sold for fundraising purposes by a nonprofit organization that provides educational and social activities primarily for young people 18 years of age and under;

(vii) (v) ice;

(viii) (vi) all food sold in from vending machines, pushcarts, lunch carts, motor vehicles, or any other form of vehicle except home delivery vehicles;

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(ix) (vii) party trays prepared by the retailers; and

(x) (viii) all meals and single servings of packaged snack food, single cans or bottles of pop, sold in restaurants and bars; and

(ix) bakery products prepared by the retailer for consumption on the retailer's premises;

(d) The granting of the privilege of admission to places of amusement, recreational areas, or athletic events, except a world championship football game sponsored by the national football league, and the privilege of having access to and the use of amusement devices, tanning facilities, reducing salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;

(e) The furnishing for a consideration of lodging and related services by a hotel, rooming house, tourist court, motel or trailer camp and of the granting of any similar license to use real property other than the renting or leasing thereof for a continuous period of 30 days or more;

(f) The furnishing for a consideration of electricity, gas, water, or steam for use or consumption within this state, or local exchange telephone service, intrastate toll service, and interstate toll service, if that service originates from and is charged to a telephone located in this state. Telephone service does not include services purchased with prepaid telephone calling cards. Telephone service includes paging services and private communication service, as defined in United States Code, title 26, section 4252(d), as amended through December 31, 1991, except for private communication service purchased by an agent acting on behalf of the state lottery. The furnishing for a consideration of access to telephone services by a hotel to its guests is a sale under this clause. Sales by municipal corporations in a proprietary capacity are included in the provisions of this clause. The furnishing of water and sewer services for residential use shall not be considered a sale. The sale of natural gas to be used as a fuel in vehicles propelled by natural gas shall not be considered a sale for the purposes of this section;

(g) The furnishing for a consideration of cable television services, including charges for basic service, charges for premium service, and any other charges for any other pay-per-view, monthly, or similar television services;

(h) The furnishing for a consideration of parking services, whether on a contractual, hourly, or other periodic basis, except for parking at a meter;

(i) The furnishing for a consideration of services listed in this paragraph:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services provided by coin-operated facilities operated by the customer, and rustproofing, undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting and exterminating services;

(iv) detective services, security services, burglar, fire alarm, and armored car services; but not including services performed within the jurisdiction they serve by off-duty licensed peace officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit organization for monitoring and electronic surveillance of persons placed on in-home detention pursuant to court order or under the direction of the Minnesota department of corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor plant care; tree, bush, shrub and stump removal; and tree trimming for public utility lines. Services performed under a construction contract for the installation of shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

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(vii) mixed municipal solid waste management services as described in section 297A.45;

(viii) massages, except when provided by a licensed health care facility or professional or upon written referral from a licensed health care facility or professional for treatment of illness, injury, or disease; and

(ix) the furnishing for consideration of lodging, board and care services for animals in kennels and other similar arrangements, but excluding veterinary and horse boarding services.

The services listed in this paragraph are taxable under section 297A.02 if the service is performed wholly within Minnesota or if the service is performed partly within and partly without Minnesota and the greater proportion of the service is performed in Minnesota, based on the cost of performance. In applying the provisions of this chapter, the terms "tangible personal property" and "sales at retail" include taxable services and the provision of taxable services, unless specifically provided otherwise. Services performed by an employee for an employer are not taxable under this paragraph. Services performed by a partnership or association for another partnership or association are not taxable under this paragraph if one of the entities owns or controls more than 80 percent of the voting power of the equity interest in the other entity. Services performed between members of an affiliated group of corporations are not taxable. For purposes of this section, "affiliated group of corporations" includes those entities that would be classified as a member of an affiliated group under United States Code, title 26, section 1504, as amended through December 31, 1987, and who are eligible to file a consolidated tax return for federal income tax purposes;

(j) A "sale" and a "purchase" includes the transfer of computer software, meaning information and directions that dictate the function performed by data processing equipment. A "sale" and a "purchase" does not include the design, development, writing, translation, fabrication, lease, or transfer for a consideration of title or possession of a custom computer program; and

(k) The granting of membership in a club, association, or other organization if:

(1) the club, association, or other organization makes available for the use of its members sports and athletic facilities (without regard to whether a separate charge is assessed for use of the facilities); and

(2) use of the sports and athletic facilities is not made available to the general public on the same basis as it is made available to members.

Granting of membership includes both one-time initiation fees and periodic membership dues. Sports and athletic facilities include golf courses, tennis, racquetball, handball and squash courts, basketball and volleyball facilities, running tracks, exercise equipment, swimming pools, and other similar athletic or sports facilities. The provisions of this paragraph do not apply to camps or other recreation facilities owned and operated by an exempt organization under section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1992, for educational and social activities for young people primarily age 18 and under.

Sec. 5. Minnesota Statutes 1996, section 297A.01, subdivision 4, is amended to read:

Subd. 4. (a) A "retail sale" or "sale at retail" means a sale for any purpose other than resale in the regular course of business.

(b) Property utilized by the owner only by leasing such property to others or by holding it in an effort to so lease it, and which is put to no use by the owner other than resale after such lease or effort to lease, shall be considered property purchased for resale.

(c) Master computer software programs that are purchased and used to make copies for sale or lease are considered property purchased for resale.

(d) Sales of building materials, supplies and equipment to owners, contractors, subcontractors or builders for the erection of buildings or the alteration, repair or improvement of real property are "retail sales" or "sales at retail" in whatever quantity sold and whether or not for purpose of resale in the form of real property or otherwise.

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(e) A sale of carpeting, linoleum, or other similar floor covering which includes installation of the carpeting, linoleum, or other similar floor covering is a contract for the improvement of real property.

(f) A sale of shrubbery, plants, sod, trees, and similar items that includes installation of the shrubbery, plants, sod, trees, and similar items is a contract for the improvement of real property.

(g) Aircraft and parts for the repair thereof purchased by a nonprofit, incorporated flying club or association utilized solely by the corporation by leasing such aircraft to shareholders of the corporation shall be considered property purchased for resale. The leasing of the aircraft to the shareholders by the flying club or association shall be considered a sale. Leasing of aircraft utilized by a lessee for the purpose of leasing to others, whether or not the lessee also utilizes the aircraft for flight instruction where no separate charge is made for aircraft rental or for charter service, shall be considered a purchase for resale; provided, however, that a proportionate share of the lease payment reflecting use for flight instruction or charter service is subject to tax pursuant to section 297A.14.

(h) Tangible personal property that is awarded as prizes shall not be considered property purchased for resale.

(i) Tangible personal property that is utilized or employed in the furnishing or providing of services under section 297A.01, subdivision 3, paragraph (d), or in conducting lawful gambling under chapter 349 or the state lottery under chapter 349A, including property given as promotional items, shall not be considered property purchased for resale. Machines, equipment, or devices that are used to furnish, provide, or dispense goods or services, including coin-operated devices, shall not be considered property purchased for resale.

Sec. 6. Minnesota Statutes 1996, section 297A.01, subdivision 7, is amended to read:

Subd. 7. "Storage" and "use" do not include the keeping, or retaining or exercising of any right or power over in a public warehouse of tangible personal property or tickets or admissions to places of amusement or athletic events when shipped or brought into Minnesota by common carrier, for the purpose of subsequently being transported outside Minnesota and thereafter used solely outside Minnesota, except in the course of interstate commerce, or for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into other tangible personal property to be transported outside Minnesota and not thereafter returned to a point within Minnesota, except in the course of interstate commerce.

Sec. 7. Minnesota Statutes 1996, section 297A.01, subdivision 11, is amended to read:

Subd. 11. "Tangible personal property" means corporeal personal property of any kind whatsoever, including property which is to become real property as a result of incorporation, attachment, or installation following its acquisition.

Personal property does not include:

(a) large ponderous machinery and equipment used in a business or production activity which at common law would be considered to be real property;

(b) property which is subject to an ad valorem property tax;

(c) property described in section 272.02, subdivision 1, clause (8), paragraphs (a) to (d);

(d) property described in section 272.03, subdivision 2, clauses (3) and (5).

Tangible personal property includes computer software, whether contained on tape, discs, cards, or other devices. Tangible personal property also includes prepaid telephone calling cards.

Sec. 8. Minnesota Statutes 1996, 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.

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(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; or

(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.

(c) Capital equipment does not include the following:

(1) repair or replacement parts, including accessories, whether purchased as spare parts, repair parts, or as upgrades or modifications, and whether purchased before or after the machinery or equipment is placed into service. Parts or accessories are treated as capital equipment only to the extent that they are a part of and are essential to the operation of the machinery or equipment as initially purchased;

(2) motor vehicles taxed under chapter 297B;

(3) (2) machinery or equipment used to receive or store raw materials;

(4) (3) building materials;

(5) (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;

(6) (5) "farm machinery" as defined by subdivision 15, and "aquaculture production equipment" as defined by subdivision 19, and "replacement capital equipment" as defined by subdivision 20; or

(7) (6) any other item that is not essential to the integrated process of manufacturing, fabricating, mining, or refining.

(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.

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(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.

(f) Notwithstanding prior provisions of this subdivision, machinery and equipment purchased or leased to replace machinery and equipment used in the mining or production of taconite shall qualify as capital equipment.

Sec. 9. Minnesota Statutes 1996, section 297A.09, is amended to read:

297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.]

For the purpose of the proper administration of sections 297A.01 to 297A.44 and to prevent evasion of the tax, it shall be presumed that all gross receipts are subject to the tax until the contrary is established. The burden of proving that a sale is not a sale at retail is upon the person who makes the sale, but that person may take from the purchaser, at the time the exempt purchase occurs, an exemption certificate to the effect that the property purchased is for resale or that the sale is otherwise exempt from the application of the tax imposed by sections 297A.01 to 297A.44. A person asserting a claim that certain sales are exempt, who does not have the required exemption certificates in their possession, shall acquire the certificates within 60 days after receiving written notice from the commissioner that the certificates are required. If the certificates are not obtained within the 60-day period, the sales are deemed taxable sales under this chapter.

Sec. 10. Minnesota Statutes 1996, section 297A.15, subdivision 7, is amended to read:

Subd. 7. [REFUND; APPROPRIATION; ADULT AND JUVENILE CORRECTIONAL FACILITIES.] (a) If construction materials and supplies described in paragraph (b) section 297A.25, subdivision 63, are purchased by a contractor, subcontractor, or builder as part of a lump-sum contract or similar type of contract with a price covering both labor and materials for use in the project, a refund equal to 20 percent of the taxes paid by the contractor, subcontractor, or builder must be paid to the governmental subdivision. The tax must be imposed and collected as if the sales were taxable and the rate under section 297A.02, subdivision 1, applied. An application for refund must be submitted by the governmental subdivision and must include sufficient information to permit the commissioner to verify the sales taxes paid for the project. The contractor, subcontractor, or builder must furnish to the governmental subdivision a statement of the cost of the construction materials and supplies and the sales taxes paid on them. The amount required to make the refunds is annually appropriated to the commissioner. Interest must be paid on the refund at the rate in section 270.76 from 60 days after the date the refund claim is filed with the commissioner.

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(b) Construction materials and supplies qualify for the refund under this section if: (1) the materials and supplies are for use in a project to construct or improve an adult or juvenile correctional facility in a county, home rule charter city, or statutory city, and (2) the project is mandated by state or federal law, rule, or regulation. The refund applies regardless of whether the materials and supplies are purchased by the city or county, or by a contractor, subcontractor, or builder under a contract with the city or county.

Sec. 11. Minnesota Statutes 1996, section 297A.211, subdivision 1, is amended to read:

Subdivision 1. Every person, as defined in this chapter, who is engaged in interstate for-hire transportation of tangible personal property or passengers by motor vehicle may at their option, under rules prescribed by the commissioner, register as retailers and pay the taxes imposed by this chapter in accordance with this section. Any taxes paid under this section are deemed use taxes, except local sales taxes when no corresponding local use tax is imposed. Persons referred to herein are: (1) persons possessing a certificate or permit or having completed a registration process that authorizes for-hire transportation of property or passengers from the United States Department of Transportation, the transportation regulation board, or the department of transportation; or (2) persons transporting commodities defined as "exempt" in for-hire transportation in interstate commerce; or (3) persons who, pursuant to contracts with persons described in clause (1) or (2) above, transport tangible personal property in interstate commerce. Persons qualifying under clauses (2) and (3) must maintain on a current basis the same type of mileage records that are required by persons specified in clause (1) by the United States Department of Transportation. Persons who in the course of their business are transporting solely their own goods in interstate commerce may also register as retailers pursuant to rules prescribed by the commissioner and pay the taxes imposed by this chapter in accordance with this section.

Sec. 12. [297A.213] [DIRECT PAYMENT BY PURCHASERS PERMITTED.]

The commissioner may permit purchasers to pay taxes imposed by this chapter directly to the commissioner. Any taxes paid by purchasers under this section are deemed use taxes, except local sales taxes when no corresponding local use tax is imposed.

Sec. 13. Minnesota Statutes 1996, section 297A.25, subdivision 2, is amended to read:

Subd. 2. [FOOD PRODUCTS.] The gross receipts from the sale of food products including but not limited to cereal and cereal products, butter, cheese, milk and milk products, oleomargarine, meat and meat products, fish and fish products, eggs and egg products, vegetables and vegetable products, fruit and fruit products, spices and salt, sugar and sugar products, coffee and coffee substitutes, tea, cocoa and cocoa products, and food products which are not taxable pursuant to section 297A.01, subdivision 3, clause (c) are exempt. This exemption does not include the following:

(1) candy and candy products, except when sold for fundraising purposes by a nonprofit organization that provides educational and social activities for young people primarily aged 18 and under;

(2) carbonated beverages, beverages commonly referred to as soft drinks containing less than 15 percent fruit juice, or bottled water other than noncarbonated and noneffervescent bottled water sold in individual containers of one-half gallon or more in size.

Sec. 14. Minnesota Statutes 1996, section 297A.25, subdivision 3, is amended to read:

Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts from the sale 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.

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Sec. 15. Minnesota Statutes 1996, section 297A.25, subdivision 5, is amended to read:

Subd. 5. [OUTSTATE TRANSPORT OR DELIVERY.] The gross receipts from the following sales of, and storage, use, or consumption of, tangible personal property are exempt:

(1) property which, without intermediate use, is shipped or transported outside Minnesota by the purchaser and thereafter used in a trade or business or is stored, processed, fabricated or manufactured into, attached to or incorporated into other tangible personal property transported or shipped outside Minnesota and thereafter used in a trade or business outside Minnesota, and which is not thereafter returned to a point within Minnesota, except in the course of interstate commerce (storage shall not constitute intermediate use); provided that the property is not subject to tax in that state or country to which it is transported for storage or use and provided further that sales of tangible personal property to be used in other states or countries as part of a maintenance contract shall be specifically exempt; or

(2) property which the seller delivers to a common carrier for delivery outside Minnesota, places in the United States mail or parcel post directed to the purchaser outside Minnesota, or delivers to the purchaser outside Minnesota by means of the seller's own delivery vehicles, and which is not thereafter returned to a point within Minnesota, except in the course of interstate commerce.

Sec. 16. Minnesota Statutes 1996, section 297A.25, subdivision 7, is amended to read:

Subd. 7. [PETROLEUM PRODUCTS.] The gross receipts from the sale of and storage, use or consumption of the following petroleum products are exempt:

(1) products upon which a tax has been imposed and paid under the provisions of chapter 296, and no refund has been or will be allowed because the buyer used the fuel for nonhighway use;

(2) products which are used in the improvement of agricultural land by constructing, maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water impoundment, and other erosion control structures;

(3) products purchased by a transit system receiving financial assistance under section 174.24 or 473.384; or

(4) products used in a passenger snowmobile, as defined in section 296.01, subdivision 27a, for off-highway business use as part of the operations of a resort as provided under section 296.18, subdivision 1, clause (2); or

(5) products purchased by a state or a political subdivision of a state for use in motor vehicles exempt from registration under section 168.012, subdivision 1, paragraph (b).

Sec. 17. Minnesota Statutes 1996, section 297A.25, subdivision 56, is amended to read:

Subd. 56. [FIREFIGHTERS PERSONAL PROTECTIVE EQUIPMENT.] The gross receipts from the sale of and storage, use, or consumption of firefighters personal protective equipment are exempt if purchased by, or when authorized by and for the use of, an organized fire department, fire protection district, or fire company, regularly charged with the responsibility of providing fire protection to the state or a political subdivision. For purposes of this subdivision, "personal protective equipment" includes: helmets (including face shields, chin straps, and neck liners), bunker coats and pants (including pant suspenders), boots, gloves, head covers or hoods, wildfire jackets, protective coveralls, goggles, self-contained breathing apparatuses, canister filter masks, personal alert safety systems, spanner belts, optical or thermal imaging search devices, and all safety equipment required by the Occupational Safety and Health Administration.

Sec. 18. Minnesota Statutes 1996, section 297A.25, subdivision 59, is amended to read:

Subd. 59. [FARM MACHINERY.] From July 1, 1994, until June 30, 1997, The gross receipts from the sale of used farm machinery are exempt.

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Sec. 19. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 62. [MATERIALS USED IN PROVIDING TAXABLE SERVICES.] (a) The gross receipts from the sale of and the storage, use, or consumption of all materials used or consumed in providing a taxable service intended to be sold ultimately at retail are exempt.

(b) This exemption includes, but is not limited to:

(1) chemicals, lubricants, packaging materials, seeds, trees, fertilizers, and herbicides, used or consumed in providing the taxable service;

(2) chemicals used to treat waste generated as a result of providing the taxable service; and

(3) accessory tools, equipment, and other items that are separate detachable units used in providing the service and that have an ordinary useful life of less than 12 months.

(c) This exemption does not include:

(1) machinery, equipment, implements, tools, accessories, appliances, contrivances, furniture, and fixtures used in providing the taxable service; and

(2) fuel, electricity, gas, and steam used for space heating or lighting.

(d) For purposes of this subdivision, "taxable services" means the services listed in section 297A.01, subdivision 3, paragraph (i).

Sec. 20. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 63. [HOSPITALS.] The gross receipts from the sale of tangible personal property to, and the storage, use, or consumption of such property by, a hospital are exempt, if the property purchased is to be used in providing hospital services to human beings. For purposes of this subdivision, "hospital" means a hospital organized and operated for charitable purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and licensed under chapter 144 or by any other jurisdiction. For purposes of this subdivision, "hospital services" are services authorized or required to be performed by a "hospital" under chapter 144 and regulations thereunder or under the applicable licensure law of any other jurisdiction. This exemption does not apply to purchases made by a clinic, physician's office, or any other medical facility not operating as a hospital, even though the clinic, office, or facility may be owned and operated by a hospital. Sales exempted by this subdivision do not include sales under section 297A.01, subdivision 3, paragraphs (c) and (e). This exemption does 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 hospital. This exemption does not apply to construction materials to be used in constructing buildings or facilities which will not be used principally by a hospital. This exemption does not apply to the leasing of a motor vehicle as defined in section 297B.01, subdivision 5.

Sec. 21. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 64. [COPIES OF COURT REPORTER DOCUMENTS.] The gross receipts from sales of, and use, storage, or consumption of, transcripts or copies of transcripts of verbatim testimony produced and sold by court reporters or other transcribers of legal proceedings to individuals or entities that are parties to or representatives of parties to the proceeding to which the transcript relates, are exempt.

Sec. 22. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 65. [CONSTRUCTION MATERIALS FOR CORRECTIONAL FACILITIES.] The gross receipts from the sale of and storage, use, or consumption of construction materials and supplies are exempt from the tax imposed under this chapter if purchased for use in a project to construct or improve an adult or juvenile correctional facility in a county, home

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rule charter city, or statutory city, and if the project is mandated by state or federal law, rule, or regulation. The exemption applies regardless of whether the materials and supplies are purchased by the city or county, or by a contractor, subcontractor, or builder under a contract with the city or county.

Sec. 23. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 66. [CONSTRUCTION MATERIALS; LAKE SUPERIOR CENTER.] Construction materials and supplies are exempt from the tax imposed under this chapter, regardless of whether purchased by the owner, a contractor, subcontractor, or builder, provided the materials and supplies are used or consumed in constructing the Lake Superior Center.

Sec. 24. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 67. [CONSTRUCTION MATERIALS; SCIENCE MUSEUM.] Construction materials and supplies are exempt from the tax imposed under this chapter, regardless of whether purchased by the owner, a contractor, subcontractor, or builder, provided the materials and supplies are used or consumed in constructing the Science Museum of Minnesota.

Sec. 25. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 68. [CONSTRUCTION MATERIALS; BUSINESS INCUBATOR AND INDUSTRIAL PARK FACILITY.] Materials and supplies used or consumed in constructing, or incorporated into the construction of, an exempted facility as defined in this subdivision are exempt from the taxes imposed under this chapter and from any sales and use tax imposed by a local unit of government, notwithstanding any ordinance or city charter provision.

As used in this subdivision, an "exempted facility" is a facility that includes a business incubator and industrial park that:

(1) is owned and operated by a nonprofit charitable organization that qualifies for tax exemption under section 501(c)(3) of the Internal Revenue Code;

(2) is 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 and job creation in the area served by the organization, and emphasizes development of businesses that manufacture products from materials found in the waste stream, or manufacture alternative energy and conservation systems, or make use of emerging environmental technologies;

(3) includes in its structure systems of material and energy exchanges that use waste products from one industrial process as sources of energy and material for other processes; and

(4) makes use of solar and wind energy technology and incorporates salvaged materials in its construction.

Sec. 26. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 69. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION SYSTEM; PRODUCTS AND SERVICES.] The gross receipts from the sale of, and the storage, use, or consumption of, products and services including end user equipment used for construction, ownership, operation, maintenance, and enhancement of the backbone system of the regionwide public safety radio communication system established under sections 473.891 to 473.905, are exempt. For purposes of this subdivision, backbone system is defined in section 473.891, subdivision 9.

Sec. 27. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 70. [ALFALFA PROCESSING FACILITIES CONSTRUCTION MATERIALS.] 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 which either (i) develops market-value agricultural products made from alfalfa leaf material, or (ii) produces biomass energy fuel or electricity from alfalfa stems in accordance with the biomass mandate imposed under section 216B.2424; and

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(2) the total capital investment made in the value-added agricultural products and biomass electric generation facilities is at least $50,000,000; or

(3) the materials and supplies are used or consumed in constructing, equipping or modifying a district heating and cooling system cogeneration facility that:

(i) utilizes wood waste as a primary fuel source; and

(ii) satisfies the requirements of the biomass mandate in section 216B.2424, subdivision 5.

Sec. 28. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 71. [FIREWOOD.] The gross receipts from the sale of and the storage, use, or consumption of wood used for fires for heating, cooking, or any other purpose, except for the generation of electricity, steam, or heat to be sold at retail, are exempt.

Sec. 29. Minnesota Statutes 1996, section 297A.25, is amended by adding a subdivision to read:

Subd. 72. [WIND ENERGY CONVERSION SYSTEMS.] The gross receipts from the sale of and the storage, use, or consumption of wind energy conversion systems, as defined in section 216C.06, subdivision 12, and the materials used to manufacture, install, construct, repair, or replace them are exempt if the systems are used as an electric power source.

Sec. 30. [297A.48] [LOCAL SALES TAX RULES.]

Subdivision 1. [AUTHORIZATION; SCOPE.] (a) A political subdivision of this state may impose a general sales tax if permitted by special law or if the subdivision enacted and imposed the tax before the effective date of section 477A.016 and its predecessor provision.

(b) This section governs the imposition of a general sales tax by the political subdivision. The provisions of this section preempt the provisions of any special law:

(1) enacted before its effective date, or

(2) enacted after its effective date that does not explicitly exempt the special law provision from this section's rules by reference.

(c) This section does not apply to or preempt a sales tax on motor vehicles or a special excise tax on motor vehicles.

Subd. 2. [TAX BASE.] (a) The tax applies to sales taxable under this chapter that occur within the political subdivision.

(b) Taxable services are subject to a political subdivision's sales tax, if they are performed either:

(1) within the political subdivision, or

(2) partly within and partly without the political subdivision and more of the service is performed within the political subdivision, based on the cost of performance.

Subd. 3. [TAX RATE.] (a) The tax rate is as specified in the special law authorization and as imposed by the political subdivision.

(b) The full political subdivision rate applies to any sales that are taxed at a state rate less than or more than the state general sales and use tax rate.

Subd. 4. [USE TAX.] A compensating use tax applies, at the same rate as the sales tax, on the use, storage, distribution, or consumption of tangible personal property or taxable services.

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Subd. 5. [EXEMPTIONS.] (a) All goods or services that are otherwise exempt from taxation under this chapter are exempt from a political subdivision's tax.

(b) The gross receipts from the sale of tangible personal property that meets the requirement of section 297A.25, subdivision 5, are exempt, except the qualification test applies based on the boundaries of the political subdivision instead of the state of Minnesota.

(c) All mobile transportation equipment, and parts and accessories attached to or to be attached to the equipment are exempt, if purchased by a holder of a motor carrier direct pay permit under section 297A.211.

Subd. 6. [CREDIT FOR OTHER LOCAL TAXES.] If a person paid sales or use tax to another political subdivision on tangible personal property or another item subject to tax under this section, a credit applies against the tax imposed under this section. The credit equals the tax the person paid to the other political subdivision for the item.

Subd. 7. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] (a) The commissioner of revenue shall collect the taxes subject to this section. The commissioner may collect the tax with the state sales and use tax. All taxes under this section are subject to the same penalties, interest, and enforcement provisions as apply to the state sales and use tax.

(b) A request for a refund of state sales tax paid in excess of the amount of tax legally due includes a request for a refund of the political subdivision taxes paid on the goods or services. The commissioner must refund to the taxpayer the full amount of the political subdivision taxes paid on exempt sales or use.

(c) A political subdivision that is collecting and administering its own sales and use tax before January 1, 1998, may elect to be exempt from this subdivision and subdivision 8.

Subd. 8. [REVENUES; COST OF COLLECTION.] The commissioner shall remit the proceeds of the tax, less refunds and a proportionate share of the cost of collection, at least quarterly, to the political subdivision. The commissioner shall deduct from the proceeds remitted an amount that equals

(1) the direct and indirect costs of the department to administer, audit, and collect the political subdivision's tax, plus

(2) the political subdivision's proportionate share of the indirect cost of administering all taxes under this section.

Subd. 9. [EFFECTIVE DATES; NOTIFICATION.] (a) A political subdivision may impose a tax under this section starting only on the first day of a calendar quarter. A political subdivision may repeal a tax under this section stopping only on the last day of a calendar quarter.

(b) The political subdivision must notify the commissioner of revenue at least 90 days before imposing or repealing a tax under this section.

Subd. 10. [APPLICATION.] This section applies to all local sales taxes authorized on or after the day of enactment of this act. Starting January 1, 2000, this section applies to all local sales tax that were authorized before the day of enactment of this act.

Sec. 31. Minnesota Statutes 1996, section 297B.01, subdivision 7, is amended to read:

Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR ACQUIRED.] "Sale," "sells," "selling," "purchase," "purchased," or "acquired" means any transfer of title of any motor vehicle, whether absolutely or conditionally, for a consideration in money or by exchange or barter for any purpose other than resale in the regular course of business. Any motor vehicle utilized by the owner only by leasing such vehicle to others or by holding it in an effort to so lease it, and which is put to no other use by the owner other than resale after such lease or effort to lease, shall be considered property purchased for resale. The terms also shall include any transfer of title or ownership of a motor vehicle by way of gift or by any other manner or by any other means whatsoever, for or without consideration, except that these terms shall not include:

(a) the acquisition of a motor vehicle by inheritance from or by bequest of, a decedent who owned it;

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(b) the transfer of a motor vehicle which was previously licensed in the names of two or more joint tenants and subsequently transferred without monetary consideration to one or more of the joint tenants;

(c) the transfer of a motor vehicle by way of gift between a husband and wife or parent and child; or

(d) the voluntary or involuntary transfer of a motor vehicle between a husband and wife in a divorce proceeding.; or

(e) the transfer of a motor vehicle by way of a gift to an organization that is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code, as amended through December 31, 1996, when the motor vehicle will be used exclusively for religious, charitable, or educational purposes.

Sec. 32. Minnesota Statutes 1996, section 297B.01, subdivision 8, is amended to read:

Subd. 8. [PURCHASE PRICE.] "Purchase price" means the total consideration valued in money for a sale, whether paid in money or otherwise. The purchase price excludes the amount of a manufacturer's rebate paid or payable to the purchaser. If a motor vehicle is taken in trade as a credit or as part payment on a motor vehicle taxable under this chapter, the credit or trade-in value allowed by the person selling the motor vehicle shall be deducted from the total selling price to establish the purchase price of the vehicle being sold and the trade-in allowance allowed by the seller shall constitute the purchase price of the motor vehicle accepted as a trade-in. The purchase price in those instances where the motor vehicle is acquired by gift or by any other transfer for a nominal or no monetary consideration shall also include the average value of similar motor vehicles, established by standards and guides as determined by the motor vehicle registrar. The purchase price in those instances where a motor vehicle is manufactured by a person who registers it under the laws of this state shall mean the manufactured cost of such motor vehicle and manufactured cost shall mean the amount expended for materials, labor and other properly allocable costs of manufacture, except that in the absence of actual expenditures for the manufacture of a part or all of the motor vehicle, manufactured costs shall mean the reasonable value of the completed motor vehicle.

The term "purchase price" shall not include the portion of the value of a motor vehicle due solely to modifications necessary to make the motor vehicle handicapped accessible. The term "purchase price" shall not include the transfer of a motor vehicle by way of gift between a husband and wife or parent and child, or to a nonprofit organization as provided under section 297B.01, paragraph (e), nor shall it include the transfer of a motor vehicle by a guardian to a ward when there is no monetary consideration and the title to such vehicle was registered in the name of the guardian, as guardian, only because the ward was a minor. There shall not be included in "purchase price" the amount of any tax imposed by the United States upon or with respect to retail sales whether imposed upon the retailer or the consumer.

The term "purchase price" shall not include the transfer of a motor vehicle as a gift between a foster parent and foster child. For purposes of this subdivision, a foster relationship exists, regardless of the age of the child, if (1) a foster parent's home is or was licensed as a foster family home under Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the county verifies that the child was a state ward or in permanent foster care.

Sec. 33. Minnesota Statutes 1996, section 349.154, subdivision 2, is amended to read:

Subd. 2. [NET PROFIT REPORTS.] (a) Each licensed organization must report monthly to the board on a form prescribed by the board each expenditure and contribution of net profits from lawful gambling. The reports must provide for each expenditure or contribution:

(1) the name, address, and telephone number of the recipient of the expenditure or contribution;

(2) the date the contribution was approved by the organization;

(3) the date, amount, and check number of the expenditure or contribution;

(4) a brief description of how the expenditure or contribution meets one or more of the purposes in section 349.12, subdivision 25; and

(5) in the case of expenditures authorized under section 349.12, subdivision 25, paragraph (a), clause (7), whether the expenditure is for a facility or activity that primarily benefits male or female participants.

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(b) The board shall make available to the commissioners of revenue and public safety copies of reports received under this subdivision and requested by them.

(c) The report required under this subdivision must provide for a separate accounting for all expenditures made from the reporting organization's tax refund and or credit account authorized under section 297E.02, subdivision 4, paragraph (d).

Sec. 34. Minnesota Statutes 1996, section 349.19, subdivision 2a, is amended to read:

Subd. 2a. [TAX REFUND AND OR CREDIT ACCOUNT.] (a) Each organization that receives a refund or credit under section 297E.02, subdivision 4, paragraph (d), must establish a separate account designated as the tax and credit refund account. The organization must (1) within four business days of receiving a refund under that paragraph deposit the refund in the organization's gambling account, and (2) within four business days of filing a tax return that claims a credit under that paragraph, transfer from the separate account established under subdivision 2 to the tax refund and credit account an amount equal to the tax credit.

(b) The name and address of the bank, the account number for the tax refund and credit account, and the names of organization members authorized as signatories on the account must be provided to the board within 30 days of the date when the organization establishes the account. Changes in the information must be submitted to the board at least ten days before the change is made.

(c) (b) The organization may expend money in the account the tax refund or credit issued under section 297E.02, subdivision 4, paragraph (d), only for lawful purposes, other than lawful purposes described in section 349.012, subdivision 25, paragraph (a), clauses (8), (9), and (12). Amounts in the account received as refunds or allowed as credits must be spent for qualifying lawful purposes no later than one year after the refund or credit is deposited received.

Sec. 35. Minnesota Statutes 1996, section 349.191, subdivision 1b, is amended to read:

Subd. 1b. [CREDIT AND SALES TO DELINQUENT DISTRIBUTORS.] (a) If a manufacturer does not receive payment in full from a distributor within 30 35 days of the delivery of gambling equipment, the manufacturer must notify the board in writing of the delinquency.

(b) If a manufacturer who has notified the board under paragraph (a) has not received payment in full from the distributor within 60 days of the notification under paragraph (a), the manufacturer must notify the board of the continuing delinquency.

(c) On receipt of a notice under paragraph (a), the board shall order all manufacturers that until further notice from the board, they may sell gambling equipment to the delinquent distributor only on a cash basis with no credit extended. On receipt of a notice under paragraph (b), the board shall order all manufacturers not to sell any gambling equipment to the delinquent distributor.

(d) No manufacturer may extend credit or sell gambling equipment to a distributor in violation of an order under paragraph (c) until the board has authorized such credit or sale.

Sec. 36. Laws 1993, chapter 375, article 9, section 45, subdivision 2, is amended to read:

Subd. 2. [USE OF REVENUES.] (a) Revenues received from taxes authorized by subdivision 1 shall be used by Cook county to pay the cost of collecting the tax and to pay all or a portion of the costs of expanding and improving the health care facility located in the county and known as North Shore hospital. Authorized costs include, but are not limited to, securing or paying debt service on bonds or other obligations issued to finance the expansion and improvement of North Shore hospital. The total capital expenditures payable from bond proceeds, excluding investment earnings on bond proceeds and tax revenues, shall not exceed $4,000,000.

(b) Additional revenues received from taxes authorized by subdivision 1 may be used by Cook county to pay all or a portion of the costs of betterment of North Shore care center and providing additional improvements to North Shore hospital. Authorized costs include, but are not limited to, securing or paying debt service on bonds or other obligations issued to finance the remodeling of North Shore care center and additional improvements to North Shore hospital. The total capital expenditures payable from bond proceeds, excluding investment earnings on bond proceeds and tax revenues, shall not exceed $2,200,000.

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Sec. 37. Laws 1993, chapter 375, article 9, section 45, subdivision 3, is amended to read:

Subd. 3. [EXPIRATION OF TAXING AUTHORITY AND EXPENDITURE LIMITATION.] The authority granted by subdivision 1 to Cook county to impose a sales tax shall expire when the principal and interest on any bonds or obligations issued under subdivision 4, paragraph (a), to finance the expansion and improvement of North Shore hospital described in subdivision 2, paragraph (a), have been paid, or at an earlier time as the county shall, by resolution, determine. Any funds remaining after completion of the improvements and retirement or redemption of the bonds may be placed in the general fund of the county.

Sec. 38. Laws 1993, chapter 375, article 9, section 45, subdivision 4, is amended to read:

Subd. 4. [BONDS.] (a) Cook county may issue general obligation bonds in an amount not to exceed $4,000,000 for the expansion and improvement of North Shore hospital,.

(b) Additionally, Cook county may issue general obligation bonds in an amount not to exceed $2,200,000 for the betterment of North Shore care center and additional improvements to North Shore hospital.

(c) The bonds may be issued without election under Minnesota Statutes, chapter 475, on the question of issuance of the bonds or a property tax to pay them. The debt represented by the bonds issued for the expansion and improvement of North Shore hospital shall not be included in computing any debt limitations applicable to Cook county, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay principal of and interest on the bonds shall not be subject to any levy limitation or be included in computing or applying any levy limitation applicable to the county.

Sec. 39. Laws 1993, chapter 375, article 9, section 45, is amended by adding a subdivision to read:

Subd. 5a. [REFERENDUM.] If the governing body of Cook county intends to use the sales tax proceeds as authorized by subdivision 2, paragraph (b), it shall conduct a referendum on the issue. The question of so using the tax proceeds must be submitted to the voters at a special or general election. The tax proceeds may not be used as provided in subdivision 2, paragraph (b), unless a majority of votes cast on the question are in the affirmative. The commissioner of revenue shall prepare a suggested form of question to be presented at the election. The referendum must be held at a special or general election before December 1, 1997.

Sec. 40. 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.

(b) The remainder of the funds must be spent for:

(1) capital projects to further residential, cultural, commercial, and economic development in both downtown St. Paul and St. Paul neighborhoods; and

(2) the operating expenses of cultural organizations in the city, provided that the amount spent under this clause may not exceed ten percent of the total amount spent under this paragraph.

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. 41. [CITY OF WILLMAR; TAXES.]

Subdivision 1. [SALES AND USE TAX AUTHORIZED.] Pursuant to the approval of the city voters at the general election held on November 5, 1996, the city of Willmar may, by ordinance, impose, for the purposes specified in subdivision 3, a 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.

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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 Willmar may, by ordinance, impose, 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 to pay the costs of collecting the taxes, and to pay all or a part of the capital and administrative costs of the acquisition, construction, and improvement of public library facilities, including securing or paying debt service on bonds issued for the project under subdivision 4. The total capital and administrative expenditures payable from bond proceeds and revenues received from the taxes authorized by subdivisions 1 and 2, excluding investment earnings thereon, must not exceed $4,500,000.

Subd. 4. [BONDS.] The city of Willmar, pursuant to the approval of the city voters at the general election held on November 5, 1996, may issue without additional election general obligation bonds of the city in an amount not to exceed $4,500,000 to pay capital and administrative expenses for the acquisition, construction, and improvement of public library facilities. The debt represented by the bonds must not be included in computing any debt limitations applicable to the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal of and interest on the bonds must not be subject to any levy limitation or be included in computing or applying any levy limitation applicable to 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 public library 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 August 1, 1997, upon compliance by the governing body of the city of Willmar with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 42. [STATEMENT OF PURPOSE.]

The purpose of section 5, paragraph (i), is to confirm and clarify the original intent of the legislature in enacting an exemption from the sales tax for property to be resold in the normal course of business. Section 5, paragraph (i), ratifies the existing state interpretation that a resale requires the transfer of title to the property or the complete transfer of possession and control over the property. This section does not apply to litigation currently pending before the Minnesota Supreme Court.

Sec. 43. [RECODIFICATION.]

In coordination with legislative staff, the revisor of statutes shall prepare a bill for introduction in the 1998 session of the legislature that clarifies and recodifies chapter 297A. The department of revenue shall assist in the preparation of the legislation as requested by the revisor. The revisor may consult professional groups and other interested persons in preparing the legislation.

Sec. 44. [EXPIRATION.]

Minnesota Statutes, section 297A.24, subdivision 3, as added by Laws 1997, chapter 84, article 3, section 5, expires January 1, 2000.

Sec. 45. [APPLICATION.]

Section 26 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.

Sec. 46. [REPEALER.]

Minnesota Statutes 1996, sections 297A.01, subdivision 20; and 297A.02, subdivision 5, are repealed.

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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 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.

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.

Section 40 is effective for STAR funds collected after June 30, 1997.

ARTICLE 8

MINERALS TAXES

Section 1. Minnesota Statutes 1996, section 93.41, is amended to read:

93.41 [STATE-OWNED IRON-BEARING MATERIALS.]

Subdivision 1. [USE FOR ROAD CONSTRUCTION AND OTHER PURPOSES.] In case the commissioner of natural resources shall determine that any paint rock, taconite, or other iron-bearing material belonging to the state and containing not more than 45 percent dried iron by analysis is needed and suitable for use in the construction or maintenance of any road,

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tailings basin, settling basin, dike, dam, bank fill, or other works on public or private property, and that such use would be in the best interests of the public, the commissioner may authorize the disposal of such material therefor as hereinafter provided.

Subd. 2. [MATERIALS SUBJECT TO STATE IRON ORE MINING LEASE.] If such material is subject to an existing state iron ore mining lease or located on property subject to an existing state iron ore mining lease, the commissioner, by written agreement with the holder of the lease, may authorize the use of the material for any purpose specified in subdivision 1 that will facilitate the mining and disposal of the iron ore therein on such terms as the commissioner may prescribe consistent with the interests of the state, or may authorize the holder of the lease to dispose of the material otherwise for any purpose specified in subdivision 1 upon payment of an amount therefor equivalent to the royalty that would be payable under the terms of the lease if the material were shipped or otherwise disposed of as iron ore, but not less than the applicable minimum rate prescribed by section 93.20.

Subd. 3. [ISSUANCE OF LEASES, ROYALTIES.] If such material, whether in the ground or in stockpile, is not subject to an existing lease, the commissioner may issue leases for the taking and removal thereof for the purposes specified in subdivision 1 in like manner as provided by section 92.50 for leases for the taking and removal of sand, gravel, and other materials specified in said section, and subject to all the provisions thereof, so far as applicable; provided, that the amount payable for such material shall be at least equivalent to the minimum royalty that would be payable therefor under the provisions of section 93.20.

Subd. 4. [SALE OF STOCKPILED IRON-BEARING MATERIAL IN PLACE.] If such material is in stockpile and is not subject to an existing lease, the commissioner may sell stockpiled iron-bearing material in place. The sale must be to a person holding an interest in the surface of the property upon which the stockpile is located or to a person holding an interest in publicly or privately owned stockpiled iron-bearing material located in the same stockpile.

Sec. 2. Minnesota Statutes 1996, section 273.11, subdivision 1, is amended to read:

Subdivision 1. [GENERALLY.] Except as provided in this section or section 273.17, subdivision 1, all property shall be valued at its market value. The market value as determined pursuant to this section shall be stated such that any amount under $100 is rounded up to $100 and any amount exceeding $100 shall be rounded to the nearest $100. In estimating and determining such value, the assessor shall not adopt a lower or different standard of value because the same is to serve as a basis of taxation, nor shall the assessor adopt as a criterion of value the price for which such property would sell at a forced sale, or in the aggregate with all the property in the town or district; but the assessor shall value each article or description of property by itself, and at such sum or price as the assessor believes the same to be fairly worth in money. The assessor shall take into account the effect on the market value of property of environmental factors in the vicinity of the property. In assessing any tract or lot of real property, the value of the land, exclusive of structures and improvements, shall be determined, and also the value of all structures and improvements thereon, and the aggregate value of the property, including all structures and improvements, excluding the value of crops growing upon cultivated land. In valuing real property upon which there is a mine or quarry, it shall be valued at such price as such property, including the mine or quarry, would sell for at a fair, voluntary sale, for cash, if the material being mined or quarried is not subject to taxation under section 298.015 and the mine or quarry is not exempt from the general property tax under section 298.25. In valuing real property which is vacant, platted property shall be assessed as provided in subdivision 14. All property, or the use thereof, which is taxable under section 272.01, subdivision 2, or 273.19, shall be valued at the market value of such property and not at the value of a leasehold estate in such property, or at some lesser value than its market value.

Sec. 3. Minnesota Statutes 1996, section 273.12, is amended to read:

273.12 [ASSESSMENT OF REAL PROPERTY.]

It shall be the duty of every assessor and board, in estimating and determining the value of lands for the purpose of taxation, to consider and give due weight to every element and factor affecting the market value thereof, including its location with reference to roads and streets and the location of roads and streets thereon or over the same, and to take into consideration a reduction in the acreage of each tract or lot sufficient to cover the amount of land actually used for any improved public highway and the reduction in area of land caused thereby. It shall be the duty of every assessor and board, in estimating and determining the value of lands for the purpose of taxation, to consider and give due weight to lands which

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are comparable in character, quality, and location, to the end that all lands similarly located and improved will be assessed upon a uniform basis and without discrimination and, for agricultural lands, to consider and give recognition to its earning potential as measured by its free market rental rate.

When mineral, clay, or gravel deposits exist on a property, and their extent, quality, and costs of extraction are sufficiently well known so as to influence market value, such deposits shall be recognized in valuing the property; except for mineral and energy-resource deposits which are subject to taxation under section 298.015, and except for taconite and iron-sulphide deposits which are exempt from the general property tax under section 298.25.

Sec. 4. [273.1651] [TAXATION AND FORFEITURE OF STOCKPILED METALLIC MINERALS MATERIAL.]

Subdivision 1. [DEFINITION.] "Stockpiled metallic minerals material" for purposes of this section, means surface overburden, rock, lean ore, tailings, or other material that has been removed from the ground and deposited elsewhere on the surface in the process of iron ore, taconite, or other metallic minerals mining, or in the process of beneficiation. Stockpiled metallic minerals material does not include processed metallic minerals concentrates in the form of pellets, chips, briquettes, fines, or other form which have been prepared for or are in the process of shipment.

Subd. 2. [PURPOSE.] The purpose of this section is to clarify the ownership of stockpiled metallic minerals material in this state. Depending on the intent of the person who extracted the material from the ground, stockpiled metallic minerals material may or may not be owned separately and apart from the fee title to the surface of the real property. The legislature finds that the uncertainty of ownership of stockpiled metallic minerals material located on real property that becomes tax forfeited has created a burden on the public owner of the surface of the real property and an impediment to productive management or use of a public resource.

Subd. 3. [TAXATION AND FORFEITURE.] From and after the effective date of this section, for purposes of taxation, the definition of "real property," as contained in section 272.03, subdivision 1, includes stockpiled metallic minerals material. Nothing in this subdivision shall be construed to subject stockpiled metallic minerals material to the general property tax when the stockpiled metallic minerals material is exempt from the general property tax pursuant to section 298.015 or 298.25. If the surface of the real property forfeits for delinquent taxes, stockpiled metallic minerals material located on the real property forfeits with the surface of the property.

Subd. 4. [PRIOR FORFEITURE.] Stockpiled metallic minerals material located on real property that forfeited prior to the effective date of this section or forfeits due to a judgment for delinquent taxes issued prior to the effective date of this section shall be assessed and taxed as real property. The tax applies only to stockpiled metallic minerals material located on real property that remains in the ownership of the state or a political subdivision of the state. The tax shall be based on the market value of the rental of the property for storage of stockpiled metallic minerals material.

Subd. 5. [EXCEPTIONS; TAX LAWS.] (a) The tax imposed pursuant to this section shall not be imposed on the following:

(1) stockpiled metallic minerals material valued and taxed under other laws relating to the taxation of minerals, gas, coal, oil, or other similar interests;

(2) stockpiled metallic minerals material that is exempt from taxation pursuant to constitutional or related statutory provisions; or

(3) stockpiled metallic minerals material that is owned by the state.

(b) All laws for the enforcement of taxes on real property shall apply to the tax imposed pursuant to this section on stockpiled metallic minerals material.

Subd. 6. [FEE OWNER.] For purposes of section 276.041, the owner of stockpiled metallic minerals material is a fee owner.

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Sec. 5. Minnesota Statutes 1996, section 282.01, subdivision 8, is amended to read:

Subd. 8. [MINERALS IN TAX-FORFEITED LAND AND TAX-FORFEITED STOCKPILED METALLIC MINERALS MATERIAL SUBJECT TO MINING; PROCEDURES.] In case the commissioner of natural resources shall notify the county auditor of any county in writing that the minerals in any tax-forfeited land or tax-forfeited stockpiled metallic minerals material located on tax-forfeited land in such county have been designated as a mining unit as provided by law, or that such minerals or tax-forfeited stockpiled metallic minerals material are subject to a mining permit or lease issued therefor as provided by law, the surface of such tax-forfeited land shall be subject to disposal and use for mining purposes pursuant to such designation, permit, or lease, and shall be withheld from sale or lease by the county auditor until the commissioner shall notify the county auditor that such land has been removed from the list of mining units or that any mining permit or lease theretofore issued thereon is no longer in force; provided, that the surface of such tax-forfeited land may be leased by the county auditor as provided by law, with the written approval of the commissioner, subject to disposal and use for mining purposes as herein provided and to any special conditions relating thereto that the commissioner may prescribe, also subject to cancellation for mining purposes on three months written notice from the commissioner to the county auditor.

Sec. 6. Minnesota Statutes 1996, section 282.04, subdivision 1, is amended to read:

Subdivision 1. [TIMBER SALES; LAND LEASES AND USES.] (a) The county auditor may sell timber upon any tract that may be approved by the natural resources commissioner. Such sale of timber shall be made for cash at not less than the appraised value determined by the county board to the highest bidder after not less than one week's published notice in an official paper within the county. Any timber offered at such public sale and not sold may thereafter be sold at private sale by the county auditor at not less than the appraised value thereof, until such time as the county board may withdraw such timber from sale. The appraised value of the timber and the forestry practices to be followed in the cutting of said timber shall be approved by the commissioner of natural resources.

(b) Payment of the full sale price of all timber sold on tax-forfeited lands shall be made in cash at the time of the timber sale, except in the case of oral or sealed bid auction sales, the down payment shall be no less than 15 percent of the appraised value, and the balance shall be paid prior to entry. In the case of auction sales that are partitioned and sold as a single sale with predetermined cutting blocks, the down payment shall be no less than 15 percent of the appraised price of the entire timber sale which may be held until the satisfactory completion of the sale or applied in whole or in part to the final cutting block. The value of each separate block must be paid in full before any cutting may begin in that block. With the permission of the county administrator the purchaser may enter unpaid blocks and cut necessary timber incidental to developing logging roads as may be needed to log other blocks provided that no timber may be removed from an unpaid block until separately scaled and paid for.

(c) The county board may require final settlement on the basis of a scale of cut products. Any parcels of land from which timber is to be sold by scale of cut products shall be so designated in the published notice of sale above mentioned, in which case the notice shall contain a description of such parcels, a statement of the estimated quantity of each species of timber thereon and the appraised price of each specie of timber for 1,000 feet, per cord or per piece, as the case may be. In such cases any bids offered over and above the appraised prices shall be by percentage, the percent bid to be added to the appraised price of each of the different species of timber advertised on the land. The purchaser of timber from such parcels shall pay in cash at the time of sale at the rate bid for all of the timber shown in the notice of sale as estimated to be standing on the land, and in addition shall pay at the same rate for any additional amounts which the final scale shows to have been cut or was available for cutting on the land at the time of sale under the terms of such sale. Where the final scale of cut products shows that less timber was cut or was available for cutting under terms of such sale than was originally paid for, the excess payment shall be refunded from the forfeited tax sale fund upon the claim of the purchaser, to be audited and allowed by the county board as in case of other claims against the county. No timber, except hardwood pulpwood, may be removed from such parcels of land or other designated landings until scaled by a person or persons designated by the county board and approved by the commissioner of natural resources. Landings other than the parcel of land from which timber is cut may be designated for scaling by the county board by written agreement with the purchaser of the timber. The county board may, by written agreement with the purchaser and with a consumer designated by the purchaser when the timber is sold by the county auditor, and with the approval of the commissioner of natural resources, accept the consumer's scale of cut products delivered at the consumer's landing. No timber shall be removed until fully paid for in cash. Small amounts of timber not exceeding $3,000 in appraised valuation may be sold for not less than the full appraised value at private sale

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to individual persons without first publishing notice of sale or calling for bids, provided that in case of such sale involving a total appraised value of more than $200 the sale shall be made subject to final settlement on the basis of a scale of cut products in the manner above provided and not more than two such sales, directly or indirectly to any individual shall be in effect at one time.

(d) As directed by the county board, the county auditor may lease tax-forfeited land to individuals, corporations or organized subdivisions of the state at public or private vendue, and at such prices and under such terms as the county board may prescribe, for use as cottage and camp sites and for agricultural purposes and for the purpose of taking and removing of hay, stumpage, sand, gravel, clay, rock, marl, and black dirt therefrom, and for garden sites and other temporary uses provided that no leases shall be for a period to exceed ten years; provided, further that any leases involving a consideration of more than $1,500 per year, except to an organized subdivision of the state shall first be offered at public sale in the manner provided herein for sale of timber. Upon the sale of any such leased land, it shall remain subject to the lease for not to exceed one year from the beginning of the term of the lease. Any rent paid by the lessee for the portion of the term cut off by such cancellation shall be refunded from the forfeited tax sale fund upon the claim of the lessee, to be audited and allowed by the county board as in case of other claims against the county.

(e) As directed by the county board, the county auditor may lease tax-forfeited land to individuals, corporations, or organized subdivisions of the state at public or private vendue, at such prices and under such terms as the county board may prescribe, for the purpose of taking and removing for use for road construction and other purposes tax-forfeited stockpiled iron-bearing material. The county auditor must determine that the material is needed and suitable for use in the construction or maintenance of a road, tailings basin, settling basin, dike, dam, bank fill, or other works on public or private property, and that the use would be in the best interests of the public. No lease shall exceed ten years. The use of a stockpile for these purposes must first be approved by the commissioner of natural resources. The request shall be deemed approved unless the requesting county is notified to the contrary by the commissioner of natural resources within six months after receipt of a request for approval for use of a stockpile. Once use of a stockpile has been approved, the county may continue to lease it for these purposes until approval is withdrawn by the commissioner of natural resources.

(f) The county auditor, with the approval of the county board is authorized to grant permits, licenses, and leases to tax-forfeited lands for the depositing of stripping, lean ores, tailings, or waste products from mines or ore milling plants, upon such conditions and for such consideration and for such period of time, not exceeding 15 years, as the county board may determine; said permits, licenses, or leases to be subject to approval by the commissioner of natural resources.

(g) Any person who removes any timber from tax-forfeited land before said timber has been scaled and fully paid for as provided in this subdivision is guilty of a misdemeanor.

(h) The county auditor may, with the approval of the county board, and without first offering at public sale, grant leases, for a term not exceeding 25 years, for the removal of peat from tax-forfeited lands upon such terms and conditions as the county board may prescribe. Any lease for the removal of peat from tax-forfeited lands must first be reviewed and approved by the commissioner of natural resources if the lease covers 320 or more acres. No lease for the removal of peat shall be made by the county auditor pursuant to this section without first holding a public hearing on the auditor's intention to lease. One printed notice in a legal newspaper in the county at least ten days before the hearing, and posted notice in the courthouse at least 20 days before the hearing shall be given of the hearing.

Sec. 7. Minnesota Statutes 1996, section 298.24, subdivision 1, is amended to read:

Subdivision 1. (a) For concentrate produced in 1992, 1993, 1994, and 1995 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 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 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

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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) (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.

(d) (e) If the tax or any part of the tax imposed by this subdivision is held to be unconstitutional, a tax of $2.054 per gross ton of merchantable iron ore concentrate produced shall be imposed.

(e) (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.

(f) (g) (1) Notwithstanding any other provision of this subdivision, for the first five years of a plant's production of direct reduced ore, the rate of the tax on direct reduced ore is determined under this paragraph 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 first 500,000 of taxable tons for the production year, and 50 percent of the rate otherwise determined for any remainder. If the taxpayer had no production in the two years prior to the current production year, the tonnage eligible to be taxed at 25 percent of the rate otherwise determined under this subdivision is the first 166,667 tons. If the taxpayer had some production in the year prior to the current production year but no production in the second prior year, the tonnage eligible to be taxed at 25 percent of the rate otherwise determined under this subdivision is the first 333,333 tons. 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. 8. Minnesota Statutes 1996, 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 20.4 cents per ton for distributions in 1997, 1998, and 1999 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. 9. Minnesota Statutes 1996, section 298.28, is amended by adding a subdivision to read:

Subd. 9b. [TACONITE ENVIRONMENTAL FUND.] Five cents per ton for distributions in 1998 and 1999 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.

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Sec. 10. Minnesota Statutes 1996, section 298.296, subdivision 4, is amended to read:

Subd. 4. [TEMPORARY LOAN AUTHORITY.] (a) The board may recommend that up to $10,000,000 $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, whichever is earlier.

(c) Additionally, the board may recommend that up to $3,000,000 $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.

Sec. 11. Minnesota Statutes 1996, section 298.2961, subdivision 1, is amended to read:

Subdivision 1. [APPROPRIATION.] (a) $10,000,000 is appropriated from the northeast Minnesota economic protection trust fund to a special account in the taconite area environmental protection fund for grants or loans to producers on a project-by-project basis as provided in this section.

(b) The proceeds of the tax designated under section 298.28, subdivision 9b, are appropriated for grants and loans to producers on a project-by-project basis as provided in this section.

Sec. 12. Minnesota Statutes 1996, section 298.75, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] Except as may otherwise be provided, the following words, when used in this section, shall have the meanings herein ascribed to them.

(1) "Aggregate material" shall mean nonmetallic natural mineral aggregate including, but not limited to sand, silica sand, gravel, building stone, crushed rock, limestone, and granite. Aggregate material shall not include dimension stone and dimension granite. Aggregate material must be measured or weighed after it has been extracted from the pit, quarry, or deposit.

(2) "Person" shall mean any individual, firm, partnership, corporation, organization, trustee, association, or other entity.

(3) "Operator" shall mean any person engaged in the business of removing aggregate material from the surface or subsurface of the soil, for the purpose of sale, either directly or indirectly, through the use of the aggregate material in a marketable product or service.

(4) "Extraction site" shall mean a pit, quarry, or deposit containing aggregate material and any contiguous property to the pit, quarry, or deposit which is used by the operator for stockpiling the aggregate material.

(5) "Importer" shall mean any person who buys aggregate material produced from a county not listed in paragraph (6) or another state and causes the aggregate material to be imported into a county in this state which imposes a tax on aggregate material.

(6) "County" shall mean the counties of Pope, Stearns, Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley, Hennepin, Washington, Chisago, and Ramsey.

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Sec. 13. Minnesota Statutes 1996, section 298.75, subdivision 4, is amended to read:

Subd. 4. If the county auditor has not received the report by the 15th day after the last day of each calendar quarter from the operator or importer as required by subdivision 3 or has received an erroneous report, the county auditor shall estimate the amount of tax due and notify the operator or importer by registered mail of the amount of tax so estimated within the next 14 days. An operator or importer may, within 30 days from the date of mailing the notice, and upon payment of the amount of tax determined to be due, file in the office of the county auditor a written statement of objections to the amount of taxes determined to be due. The statement of objections shall be deemed to be a petition within the meaning of chapter 278, and shall be governed by sections 278.02 to 278.13.

Sec. 14. Minnesota Statutes 1996, section 298.75, is amended by adding a subdivision to read:

Subd. 8. The county auditor or its duly authorized agent may examine records, including computer records, maintained by an importer or operator. The term "record" includes, but is not limited to, all accounts of an importer or operator. The county auditor must have access at all reasonable times to inspect and copy all business records related to an importer's or operator's collection, transportation, and disposal of aggregate to the extent necessary to ensure that all aggregate material production taxes required to be paid have been remitted to the county. The records must be maintained by the importer or operator for no less than six years.

Sec. 15. [ST. LOUIS COUNTY TOWNS.]

Subdivision 1. [TAX MAY BE IMPOSED; CONDITIONS.] If the St. Louis county board does not approve section 12, as provided in section 18, each of the following towns in St. Louis county may impose the aggregate materials tax under Minnesota Statutes, section 298.75: the towns of Alden, Brevator, Canosia, Duluth, Fredenberg, Gnesen, Grand Lake, Industrial, Lakewood, Midway, Normanna, North Star, Rice Lake, and Solway.

Subd. 2. [PROVISIONS THAT APPLY.] For purposes of exercising the powers contained in Minnesota Statutes, section 298.75, the "town" is deemed to be the "county."

In those towns located in St. Louis County that impose the tax under Minnesota Statutes, section 298.75, all provisions in that section shall apply to those towns, except that in lieu of the distribution of the tax proceeds under subdivision 7, all proceeds from this tax shall be retained by each of the towns that impose the tax.

Subd. 3. [APPROVAL.] A tax imposed under this section is effective in the town that approves it the day after compliance by the town with the requirements of Minnesota Statutes, section 645.021, subdivision 3.

Sec. 16. [USE OF PRODUCTION TAX PROCEEDS.]

The amount distributed to the iron range resources and rehabilitation board under Minnesota Statutes, section 298.28, subdivision 7, that is attributable to the tax increase due to the implicit price deflator increase as provided in Minnesota Statutes, section 298.24, subdivision 1, paragraph (c), for concentrates produced in 1997 shall be used by the board to make a grant to the city of Hoyt Lakes to be used for the establishment of an industrial park in the city.

Sec. 17. [SALES OF LANDS BY SCOTT COUNTY; AGGREGATE MATERIALS.]

Minerals subject to reservation by Scott county under Minnesota Statutes, section 373.01, subdivision 1, clause (1), do not include minerals defined as aggregate material by Minnesota Statutes, section 298.75, subdivision 1, that are present in and upon the following described property:

All that part of the East Half of the Southwest Quarter in Section 33, Township 115, Range 23, Scott County MN; which lies westerly of the westerly right of way line of the Chicago, St. Paul, Minneapolis, and Omaha Railway Company (Chicago and NorthWestern Railway),

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Together with all that part of the East Half of the Southwest Quarter of Section 33, Township 115, Range 23, Scott County, MN; lying easterly of the easterly right of way line of the Chicago, St. Paul, Minneapolis and Omaha Railway Company (Chicago and NorthWestern Railway); and all that part of the West Half of the Southeast Quarter of said Section 33 lying westerly of the westerly right of way line of the Minneapolis and St. Louis Railroad; excepting therefrom the following described parcel:

EXCEPTION:

Commencing at the Southwest corner of the Southeast Quarter of said Section 33; thence on an assumed bearing of North 87 degrees 25 minutes 08 seconds East along the South line of said Southeast Quarter a distance of 501.49 feet; thence North 02 degrees 24 minutes 52 seconds West a distance of 750.00 feet; thence South 87 degrees 12 minutes 56 seconds East a distance of 750.00 feet; thence South 02 degrees 34 minutes 52 seconds East a distance of 750.00 feet to the South line of said East Half of the Southwest Quarter; thence North 86 degrees 48 minutes 19 seconds East along said South line of the East Half of the Southwest Quarter a distance of 248.52 feet to the point of beginning.

Together with Tract A, Registered Land Survey Number 86; and Tract C, Registered Land Survey Number 136; as filed in the office of the Registrar of Titles, Scott County, Minnesota.

The county may sell, lease, or convey the property and except the aggregate material from the mineral reservation required by Minnesota Statutes, section 373.01, subdivision 1, and it may lease the aggregate material upon conditions different from those prescribed by that subdivision.

Sec. 18. [EFFECTIVE DATE.]

Section 7 is effective for production years beginning after December 31, 1996.

Section 12 is effective for Pope county the day after compliance by Pope county with the requirements of Minnesota Statutes, section 645.021, subdivision 3.

Section 12 is effective for Carlton county the day after compliance by Carlton county with the requirements of Minnesota Statutes, section 645.021, subdivision 3.

Section 12 is effective for St. Louis county the day after compliance by St. Louis county with the requirements of Minnesota Statutes, section 645.021, subdivision 3.

Sections 16 and 17 are effective the day following final enactment.

ARTICLE 9

BUDGET RESERVE

Section 1. Minnesota Statutes 1996, section 16A.152, subdivision 2, is amended to read:

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 to the budget reserve until the total amount in the account is $270,000,000. An amount equal to any additional biennial unrestricted budgetary general fund balance made available as the result of a forecast in an odd-numbered calendar year after November 1 is appropriated in January of the following year to reduce the property tax levy recognition percent under section 121.904, subdivision 4a, to zero before additional money beyond $270,000,000 is allocated to the budget reserve account. The amount appropriated is the full amount forecast to be available at the end of the biennium and is not limited to the amount forecast to be available at the end of the current fiscal year as follows:

(a) first, to the budget reserve until the total amount in the account equals $522,000,000; then

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(b) 60 percent to the property tax reform account established in section 16A.1521; and

(c) 40 percent is an unrestricted balance in the general fund.

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. [16A.1521] [PROPERTY TAX REFORM ACCOUNT.]

(a) A property tax reform account is established in the general fund.

(b) Amounts in the account are available for and may only be spent to reform the property tax system by:

(1) reducing the class rates to the target rates specified in section 273.13, subdivision 32, or to further reduce the ratio of the highest class rate to lowest class rate;

(2) increasing state education aids to reduce property taxes;

(3) increasing the state share of education funding to 70 percent;

(4) increasing the education homestead credit; or

(5) increasing the property tax refund.

As provided by section 273.13, subdivision 32, the governor shall recommend to the legislature uses of money in the account to compress class rate ratios, while mitigating the shifting of relative property tax burdens from one class to another through the mechanisms listed in clauses (2) through (5).

(c) The balance in the account does not cancel and remains in the account until appropriated for property tax reform. Investment earnings on the account are credited to the account.

Sec. 3. Minnesota Statutes 1996, 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 85 percent of the estimated entitlement during the fiscal year of the entitlement, unless a higher rate has been established according to section 121.904, subdivision 4d. 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 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. 4. Minnesota Statutes 1996, section 124.195, subdivision 10, is amended to read:

Subd. 10. [AID PAYMENT PERCENTAGE.] Except as provided in subdivisions 8, 9, and 11, each fiscal year, all education aids and credits in this chapter and chapters 121, 123, 124A, 124B, 125, 126, 134, and section 273.1392, shall be paid at 90 percent for districts operating a program under section 121.585 for grades 1 to 12 for all students in the district and 85 percent for other districts of the estimated entitlement during the fiscal year of the entitlement, unless a higher rate has been established according to section 121.904, subdivision 4d. Districts operating a program under section 121.585 for grades 1 to 12 for all students in the district shall receive 85 percent of the estimated entitlement plus an additional amount of general education aid equal to five percent of the estimated entitlement. For all districts, the final adjustment payment, according to subdivision 6, shall be the amount of the actual entitlement, after adjustment for actual data, minus the payments made during the fiscal year of the entitlement.

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Sec. 5. [APPROPRIATIONS.]

Subdivision 1. [BUDGET RESERVE.] An amount sufficient to increase the budget reserve to $522,000,000 on July 1, 1997, is appropriated from the general fund.

Subd. 2. [PROPERTY REFORM ACCOUNT.] $46,000,000 is appropriated to the property tax reform account from the general fund for fiscal year 2000.

Sec. 6. [REPEALER.]

Minnesota Statutes 1996, section 121.904, subdivision 4d, is repealed.

Sec. 7. [EFFECTIVE DATE.]

Sections 1 to 6 are effective July 1, 1997.

ARTICLE 10

TAX INCREMENT FINANCING

Section 1. Minnesota Statutes 1996, section 469.174, subdivision 10, is amended to read:

Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment district" means a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that one of the following conditions, reasonably distributed throughout the district, exists:

(1) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, or other improvements and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; or

(2) the property consists of vacant, unused, underused, inappropriately used, or infrequently used railyards, rail storage facilities, or excessive or vacated railroad rights-of-way.

(b) For purposes of this subdivision, "structurally substandard" shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance.

(c) A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. If the evidence supports a reasonable conclusion that the building is not disqualified as structurally substandard, The municipality may not make such a determination without an interior inspection or of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. Items of evidence that support such a conclusion include recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3, clause (1).

(d) A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a) if all of the following conditions are met:

(1) the parcel was occupied by a substandard building within three years of the filing of the request for certification of the parcel as part of the district with the county auditor;

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(2) the substandard building was demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority;

(3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building and that after demolition and clearance the authority intended to include the parcel within a district; and

(4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (h).

(c) (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, or other improvements unless 15 percent of the area of the parcel contains improvements.

(d) (f) For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district under paragraph (a) to be included in the district, and the entire area of the district must satisfy paragraph (a).

Sec. 2. Minnesota Statutes 1996, section 469.174, is amended by adding a subdivision to read:

Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax increment revenues," "revenues derived from tax increment," and other similar terms for a district include:

(1) taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under section 469.177;

(2) the proceeds from the sale or lease of property, tangible or intangible, purchased by the authority with tax increments;

(3) repayments of loans or other advances made by the authority with tax increments; and

(4) interest or other investment earnings on or from tax increments.

Sec. 3. Minnesota Statutes 1996, section 469.174, is amended by adding a subdivision to read:

Subd. 26. [POPULATION.] "Population" means the population established as of December 31 by the most recent of the following:

(1) the federal census;

(2) a special census conducted under contract with the United States Bureau of the Census;

(3) a population estimate made by the metropolitan council; and

(4) a population estimate made by the state demographer under section 4A.02.

The population so established applies to the following calendar year.

Sec. 4. Minnesota Statutes 1996, section 469.174, is amended by adding a subdivision to read:

Subd. 27. [SMALL CITY.] "Small city" means any home rule charter or statutory city that has a population of 5,000 or less and that is located ten miles or more from a home rule charter or statutory city, located in this state, with a population of 10,000 or more. For purposes of this definition, the distance between cities is measured by drawing a straight line from the nearest boundaries of the two cities.

Sec. 5. Minnesota Statutes 1996, section 469.175, subdivision 3, is amended to read:

Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall not certify the original net tax capacity of a tax increment financing district until the tax increment financing plan proposed for that district has been approved by the municipality in which the district is located. If an authority that proposes to establish a tax increment financing district and

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the municipality are not the same, the authority shall apply to the municipality in which the district is proposed to be located and shall obtain the approval of its tax increment financing plan by the municipality before the authority may use tax increment financing. The municipality shall approve the tax increment financing plan only after a public hearing thereon after published notice in a newspaper of general circulation in the municipality at least once not less than ten days nor more than 30 days prior to the date of the hearing. The published notice must include a map of the area of the district from which increments may be collected and, if the project area includes additional area, a map of the project area in which the increments may be expended. The hearing may be held before or after the approval or creation of the project or it may be held in conjunction with a hearing to approve the project. Before or at the time of approval of the tax increment financing plan, the municipality shall make the following findings, and shall set forth in writing the reasons and supporting facts for each determination:

(1) that the proposed tax increment financing district is a redevelopment district, a renewal or renovation district, a mined underground space development district, a housing district, a soils condition district, or an economic development district; if the proposed district is a redevelopment district or a renewal or renovation district, the reasons and supporting facts for the determination that the district meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or subdivision 10a, must be documented in writing and retained and made available to the public by the authority until the district has been terminated.

(2) that the proposed development or redevelopment, in the opinion of the municipality, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the plan. The requirements of this clause do not apply if the district is a qualified housing district, as defined in section 273.1399, subdivision 1.

(3) that the tax increment financing plan conforms to the general plan for the development or redevelopment of the municipality as a whole.

(4) that the tax increment financing plan will afford maximum opportunity, consistent with the sound needs of the municipality as a whole, for the development or redevelopment of the project by private enterprise.

(5) that the municipality elects the method of tax increment computation set forth in section 469.177, subdivision 3, clause (b), if applicable.

When the municipality and the authority are not the same, the municipality shall approve or disapprove the tax increment financing plan within 60 days of submission by the authority, or the plan shall be deemed approved. When the municipality and the authority are not the same, the municipality may not amend or modify a tax increment financing plan except as proposed by the authority pursuant to subdivision 4. Once approved, the determination of the authority to undertake the project through the use of tax increment financing and the resolution of the governing body shall be conclusive of the findings therein and of the public need for the financing.

Sec. 6. Minnesota Statutes 1996, section 469.176, subdivision 1b, is amended to read:

Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment shall in any event be paid to the authority

(1) after 25 years from date of receipt by the authority of the first tax increment for a mined underground space development district,

(2) after 15 years after receipt by the authority of the first increment for a renewal and renovation district,

(3) after 12 20 years from approval of the tax increment financing plan after receipt by the authority of the first increment for a soils condition district,

(4) after nine years from the date of the receipt, or 11 years from approval of the tax increment financing plan, whichever is less, for an economic development district,

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(5) for a housing district or a redevelopment district, after 20 years from the date of receipt by the authority of the first tax increment by the authority pursuant to section 469.175, subdivision 1, paragraph (b); or, if no provision is made under section 469.175, subdivision 1, paragraph (b), after 25 years from the date of receipt by the authority of the first increment.

(b) For purposes of determining a duration limit under this subdivision or subdivision 1e that is based on the receipt of an increment, any increments from taxes payable in the year in which the district terminates shall be paid to the authority. This paragraph does not affect a duration limit calculated from the date of approval of the tax increment financing plan or based on the recovery of costs or to a duration limit under subdivision 1c. This paragraph does not supersede the restrictions on payment of delinquent taxes in subdivision 1f.

Sec. 7. Minnesota Statutes 1996, section 469.176, subdivision 4c, is amended to read:

Subd. 4c. [ECONOMIC DEVELOPMENT DISTRICTS.] (a) Revenue derived from tax increment from an economic development district may not be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form to developments consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and facilities (determined on the basis of square footage) are used for a purpose other than:

(1) the manufacturing or production of tangible personal property, including processing resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding retail sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities; or

(6) qualified border retail facilities;

(7) space necessary for and related to the activities listed in clauses (1) to (5) (6).

(b) Notwithstanding the provisions of this subdivision, revenue derived from tax increment from an economic development district may be used to pay for site preparation and public improvements, if the following conditions are met:

(1) bedrock soils conditions are present in 80 percent or more of the acreage of the district;

(2) the estimated cost of physical preparation of the site exceeds the fair market value of the land before completion of the preparation; and

(3) revenues from tax increments are expended only for the additional costs of preparing the site because of unstable soils and the bedrock soils condition, the additional cost of installing public improvements because of unstable soils or the bedrock soils condition, and reasonable administrative costs.

(c) Notwithstanding the provisions of this subdivision, revenues derived from tax increment from an economic development district may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000 square feet of any separately owned commercial facility located within the municipal jurisdiction of a small city, if the revenues derived from increments are spent only to assist the facility directly or for administrative expenses, the assistance is necessary to develop the facility, and all of the increments, except those for administrative expenses, are spent only for activities within the district.

(d) For purposes of this subdivision, a qualified border retail facility is a development consisting of a shopping center or one or more retail stores, if the authority finds that all of the following conditions are satisfied:

(1) the district is in a small city located within one mile or less of the border of the state;

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(2) the development is not located in the seven county metropolitan area, as defined in section 473.121, subdivision 2;

(3) the development will contain new buildings or will substantially rehabilitate existing buildings that together contain at least 25,000 square feet of retail space; and

(4) without the use of tax increment financing for the development, the development or a similar competing development will instead occur in the bordering state or province.

(e) A city is a small city for purposes of this subdivision if the city was a small city in the year in which the request for certification was made and applies for the rest of the duration of the district, regardless of whether the city qualifies or ceases to qualify as a small city.

Sec. 8. Minnesota Statutes 1996, section 469.176, subdivision 4j, is amended to read:

Subd. 4j. [REDEVELOPMENT DISTRICTS.] At least 90 percent of the revenues derived from tax increments from a redevelopment district or renewal and renovation district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under section 469.174. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary to development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the authority, including the cost of preparation of the development action response plan, may be included in the qualifying costs.

Sec. 9. Minnesota Statutes 1996, section 469.176, subdivision 5, is amended to read:

Subd. 5. [REQUIREMENT FOR AGREEMENTS.] No more than 25 percent, by acreage, of the property to be acquired within a project which contains a redevelopment district, or ten percent, by acreage, of the property to be acquired within a project which contains a housing or economic development district, as set forth in the tax increment financing plan, shall at any time be owned by an authority as a result of acquisition with the proceeds of bonds issued pursuant to section 469.178 to which tax increment from the property acquired is pledged unless prior to acquisition in excess of the percentages, the authority has concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the authority should the development or redevelopment not be completed. This subdivision does not apply to a parcel of a district that is a designated hazardous substance site established under section 469.174, subdivision 16, or part of a hazardous substance subdistrict established under section 469.175, subdivision 7.

Sec. 10. Minnesota Statutes 1996, section 469.177, subdivision 1, is amended to read:

Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or after adoption of a tax increment financing plan, the auditor of any county in which the district is situated shall, upon request of the authority, certify the original net tax capacity of the tax increment financing district and that portion of the district overlying any subdistrict as described in the tax increment financing plan and shall certify in each year thereafter the amount by which the original net tax capacity has increased or decreased as a result of a change in tax exempt status of property within the district and any subdistrict, reduction or enlargement of the district or changes pursuant to subdivision 4.

(b) In the case of a mined underground space development district the county auditor shall certify the original net tax capacity as zero, plus the net tax capacity, if any, previously assigned to any subsurface area included in the mined underground space development district pursuant to section 272.04.

(c) For districts approved under section 469.175, subdivision 3, or parcels added to existing districts after May 1, 1988, if the classification under section 273.13 of property located in a district changes to a classification that has a different assessment ratio, the original net tax capacity of that property must be redetermined at the time when its use is changed as if the property had originally been classified in the same class in which it is classified after its use is changed.

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(d) The amount to be added to the original net tax capacity of the district as a result of previously tax exempt real property within the district becoming taxable equals the net tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if that assessment was made more than one year prior to the date of title transfer rendering the property taxable, the net tax capacity assessed by the assessor at the time of the transfer. If substantial taxable improvements were made to a parcel after certification of the district and if the property later becomes tax exempt, in whole or part, as a result of the authority acquiring the property through foreclosure or exercise of remedies under a lease or other revenue agreement or as a result of tax forfeiture, the amount to be added to the original net tax capacity of the district as a result of the property again becoming taxable is the amount of the parcel's value that was included in original net tax capacity when the parcel was first certified. The amount to be added to the original net tax capacity of the district as a result of enlargements equals the net tax capacity of the added real property as most recently certified by the commissioner of revenue as of the date of modification of the tax increment financing plan pursuant to section 469.175, subdivision 4.

(e) For districts approved under section 469.175, subdivision 3, or parcels added to existing districts after May 1, 1988, if the net tax capacity of a property increases because the property no longer qualifies under the Minnesota agricultural property tax law, section 273.111; the Minnesota open space property tax law, section 273.112; or the metropolitan agricultural preserves act, chapter 473H, or because platted, unimproved property is improved or three years pass after approval of the plat under section 273.11, subdivision 1, the increase in net tax capacity must be added to the original net tax capacity.

(f) Each year the auditor shall also add to the original net tax capacity of each economic development district an amount equal to the original net tax capacity for the preceding year multiplied by the average percentage increase in the market value of all property included in the economic development district during the five years prior to certification of the district. In computing the average percentage increase in market value, the auditor shall exclude the market value, as estimated by the assessor, that is attributable to new construction; extension of sewer, water, roads, or other public utilities; or platting of the land.

(g) The amount to be subtracted from the original net tax capacity of the district as a result of previously taxable real property within the district becoming tax exempt, or a reduction in the geographic area of the district, shall be the amount of original net tax capacity initially attributed to the property becoming tax exempt or being removed from the district. If the net tax capacity of property located within the tax increment financing district is reduced by reason of a court-ordered abatement, stipulation agreement, voluntary abatement made by the assessor or auditor or by order of the commissioner of revenue, the reduction shall be applied to the original net tax capacity of the district when the property upon which the abatement is made has not been improved since the date of certification of the district and to the captured net tax capacity of the district in each year thereafter when the abatement relates to improvements made after the date of certification. The county auditor may specify reasonable form and content of the request for certification of the authority and any modification thereof pursuant to section 469.175, subdivision 4.

(h) If a parcel of property contained a substandard building that was demolished or removed and if the authority elects to treat the parcel as occupied by a substandard building under section 469.174, subdivision 10, paragraph (b), the auditor shall certify the original net tax capacity of the parcel using the greater of (1) the current net tax capacity of the parcel, or (2) the estimated market value of the parcel for the year in which the building was demolished or removed, but applying the class rates for the current year.

Sec. 11. Minnesota Statutes 1996, section 469.177, subdivision 3, is amended to read:

Subd. 3. [TAX INCREMENT, RELATIONSHIP TO CHAPTERS 276A AND 473F.] (a) Unless the governing body elects pursuant to clause (b) the following method of computation shall apply to a district other than an economic development district for which the request for certification was made after June 30, 1997:

(1) The original net tax capacity and the current net tax capacity shall be determined before the application of the fiscal disparity provisions of chapter 276A or 473F. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured net tax capacity and no tax increment determination. Where the original net tax capacity is less than the current net tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority.

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(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the lesser of (A) the local taxing district tax rates or (B) the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority.

(b) The following method of computation applies to any economic development district for which the request for certification was made after June 30, 1997, and to any other district for which the governing body may, by resolution approving the tax increment financing plan pursuant to section 469.175, subdivision 3, elect the following method of computation elects:

(1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of chapter 276A or 473F. The current net tax capacity shall exclude any fiscal disparity commercial-industrial net tax capacity increase between the original year and the current year multiplied by the fiscal disparity ratio determined pursuant to section 276A.06, subdivision 7, or 473F.08, subdivision 6. Where the original net tax capacity is equal to or greater than the current net tax capacity, there is no captured net tax capacity and no tax increment determination. Where the original net tax capacity is less than the current net tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority.

(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the lesser of (A) the local taxing district tax rates or (B) the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority.

(3) An election by the governing body pursuant to paragraph (b) shall be submitted to the county auditor by the authority at the time of the request for certification pursuant to subdivision 1.

(c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election from the method of computation in paragraph (a) to the method in paragraph (b).

Sec. 12. Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by Laws 1996, chapter 471, article 7, section 21, is amended to read:

Subd. 4. [AUTHORITY.] For housing replacement projects in the city of Crystal, "authority" means the Crystal economic development authority. For housing replacement projects in the city of Fridley, "authority" means the housing and redevelopment authority in and for the city of Fridley or a successor in interest. For housing replacement projects in the city of Minneapolis, "authority" means the Minneapolis community development agency. For housing replacement projects in the city of St. Paul, "authority" means the St. Paul housing and redevelopment authority. For housing replacement projects in the city of Duluth, "authority" means the Duluth economic development authority. For housing replacement projects in the city of Richfield, "authority" is the authority as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by the governing body of the city of Richfield. For housing replacement projects in the city of Columbia Heights, "authority" is the authority as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by the governing body of the city of Columbia Heights.

Sec. 13. Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by Laws 1996, chapter 471, article 7, section 22, is amended to read:

Subdivision 1. [CREATION OF PROJECTS.] (a) An authority may create a housing replacement project under sections 44 to 47, as provided in this section.

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(b) For the cities of Crystal, Fridley, and Richfield, and Columbia Heights, the authority may designate up to 50 parcels in the city to be included in a housing replacement district. No more than ten parcels may be included in year one of the district, with up to ten additional parcels added to the district in each of the following nine years. For the cities of Minneapolis, St. Paul, and Duluth, each authority may designate up to 100 parcels in the city to be included in a housing replacement district over the life of the district. The only parcels that may be included in a district are (1) vacant sites, (2) parcels containing vacant houses, or (3) parcels containing houses that are structurally substandard, as defined in Minnesota Statutes, section 469.174, subdivision 10.

(c) The city in which the authority is located must pay at least 25 percent of the housing replacement project costs from its general fund, a property tax levy, or other unrestricted money, not including tax increments.

(d) The housing replacement district plan must have as its sole object the acquisition of parcels for the purpose of preparing the site to be sold for market rate housing. As used in this section, "market rate housing" means housing that has a market value that does not exceed 150 percent of the average market value of single-family housing in that municipality.

Sec. 14. [CITY OF BROOKLYN CENTER; USE OF TAX INCREMENT FINANCING.]

Subdivision 1. [APPLICATION OF TIME LIMIT.] For tax increment financing district number 3, established on December 19, 1994, by Brooklyn Center Resolution No. 94-273, Minnesota Statutes, section 469.1763, subdivision 3, applies to the district by permitting a period of ten years for commencement of activities within the district.

Subd. 2. [EFFECTIVE DATE.] This section is effective upon approval by the governing body of the city of Brooklyn Center and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 15. [CITY OF BUFFALO LAKE; TAX INCREMENT FINANCING DISTRICT.]

Subdivision 1. [EXTENSION OF TIME FOR CERTIFICATION.] Notwithstanding the provisions of Minnesota Statutes, section 273.1399, subdivision 6, paragraph (b), clause (2), tax increment financing district 1-1 in the city of Buffalo Lake is an exempt district under Minnesota Statutes, section 273.1399, paragraph (b), if the facility is certified by the commissioner of agriculture by December 31, 1998.

Subd. 2. [EFFECTIVE DATE.] This section is effective upon approval by the governing body of the city of Buffalo Lake and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 16. [GAYLORD.]

Subdivision 1. [TIF DISTRICT EXTENSION AND EXPANSION.]

Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 1c, the city of Gaylord may, by resolution, extend the duration of a tax increment financing district originally certified in 1978. The city may not extend the duration beyond December 31, 2008.

Subd. 2. [EFFECTIVE DATE.] This section is effective upon compliance with the requirements of Minnesota Statutes, sections 469.1782 and 645.021.

Sec. 17. [DEFINITIONS.]

Subdivision 1. [APPLICABILITY.] As used in sections 17 to 19, the terms defined in this section have the meanings given them.

Subd. 2. [AUTHORITY.] "Authority" or "authorities" means the Minneapolis public housing authority and the Minneapolis community development agency if and to the extent that the governing body has delegated to either the powers and duties hereunder pursuant to section 18, subdivision 4, paragraph (b).

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Subd. 3. [CAPTURED NET TAX CAPACITY.] "Captured net tax capacity" means the amount by which the current net tax capacity of the housing transition district exceeds the original net tax capacity, including the value of property normally taxable as personal property by reason of its location on or over property owned by a tax exempt entity.

Subd. 4. [CITY.] "City" means the city of Minneapolis, Minnesota.

Subd. 5. [CONSENT DECREE.] "Consent decree" means the order of the United States District Court issued in connection with Hollman et. al. vs. Cisneros et. al., United States District Court, Civil Case 4-92-712, as may be amended from time to time.

Subd. 6. [COUNTY AUDITOR.] "County auditor" means the county auditor of Hennepin county, Minnesota.

Subd. 7. [GOVERNING BODY.] "Governing body" means the city council of the city.

Subd. 8. [HOUSING TRANSITION DISTRICT; DISTRICT.] "Housing transition district" or "district" means a geographic area designated by the governing body within boundaries commencing at the intersection of Humboldt Avenue North and Plymouth Avenue North, thence East along Plymouth Avenue North to Seventh Street North, thence South along Seventh Street North to Lyndale Avenue, thence South along Lyndale Avenue to Glenwood Avenue North, thence West along Glenwood Avenue North to Girard Avenue North, thence North along Girard Avenue North to Girard Terrace, thence North along Girard Terrace to Olson Memorial Highway, thence West along Olson Memorial Highway to Humboldt Avenue North, thence North on Humboldt Avenue North to the point of beginning.

Subd. 9. [NONTAXABLE PARCEL.] "Nontaxable parcel" means a parcel to be included within the housing transition district which at the time of certification is not subject to property taxation by reason of public ownership.

Subd. 10. [ORIGINAL NET TAX CAPACITY.] (a) With respect to nontaxable parcels within the district, "original net tax capacity" means zero.

(b) With respect to taxable parcels within the district, "original net tax capacity" means the net tax capacity of the parcels as certified by the commissioner of revenue for the appropriate assessment year. For purposes of this subdivision, the appropriate assessment year is the previous assessment year, if a request by the authority for certification has been made to the county auditor by June 30. If the request for certification is filed after June 30, the appropriate assessment year is the current assessment year.

Subd. 11. [PARCEL.] "Parcel" means a tract or plat of land established prior to the certification of the district as a single unit for purposes of assessment.

Subd. 12. [PREEXISTING DISTRICT.] "Preexisting district" means any tax increment district within which is located a parcel proposed to be included within the housing transition district.

Subd. 13. [TAXABLE PARCEL.] "Taxable parcel" means a parcel to be included within the housing transition district which is subject to property taxation at the time of certification.

Sec. 18. [ESTABLISHMENT OF HOUSING TRANSITION DISTRICT.]

Subdivision 1. [CREATION.] The governing body may establish a housing transition district within the city. The parcels included within the district need not be contiguous but must all be designated and included at the time the district is initially established. Parcels must not be added to the district after its initial certification.

Subd. 2. [TAX INCREMENT.] (a) Upon request of the authority, the county auditor shall certify the original net tax capacity of the district and shall certify in each year thereafter the amount by which the original net tax capacity increases as a result of the conditions described in Minnesota Statutes, section 469.177, subdivision 4, or decreases as a result of the conditions described in Minnesota Statutes, section 469.177, subdivision 1, paragraph (g). No other changes shall be made in original net tax capacity once certified by the county auditor.

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(b) The provisions of Minnesota Statutes, section 469.177, subdivisions 1a and 3 to 10, apply to the computation of tax increment for the housing transition district created under sections 17 to 19.

(c) If an authority request for certification includes nontaxable parcels then within a preexisting district, the county auditor shall remove the parcels from the preexisting district. If an authority request for certification includes taxable parcels then within a preexisting district, the county auditor shall allocate all taxes derived from the captured net tax capacity attributable thereto to the preexisting district.

Subd. 3. [HOUSING TRANSITION DISTRICT PLAN.] To establish a housing transition district, the governing body shall adopt a housing transition district plan which constitutes a tax increment financing plan, as used in those provisions of Minnesota Statutes, sections 469.174 to 469.1781, made applicable by sections 17 to 20, and contains the following:

(1) a general description of the plans for development of the district;

(2) a description of the parcels to be included in the district, including such information regarding each as shall establish that the district meets the conditions described in section 17, subdivision 8;

(3) the most recent net tax capacity of each parcel included in the district;

(4) a budget containing estimated tax increment collections and expenditures as authorized or permitted by sections 17 to 19;

(5) estimates of the sources of revenue, public and private, other than tax increment to pay estimated or budgeted costs;

(6) statements of the alternate estimated impacts of the housing transition district on the net tax capacities of all taxing jurisdictions in which the housing transition district is located in whole or in part. For purposes of one statement, the statement shall assume that the estimated captured net tax capacity would be available to the taxing jurisdictions without creation of the housing transition district, and for purposes of the second statement, it shall be assumed that none of the estimated captured net tax capacity would be available to the taxing jurisdictions without creation of the housing transition district.

Subd. 4. [PROCEDURE.] (a) The provisions of Minnesota Statutes, section 469.175, subdivisions 3, 5, 6, and 6a, apply to the establishment and operation of the housing transition district created under sections 17 to 19, except the determinations required by Minnesota Statutes, section 469.175, subdivision 3, clauses (1) and (2), are not required.

(b) Upon approval of the housing transition district plan, the governing body shall delegate to one or both of the authorities the powers and duties regarding the implementation and administration of the housing transition district it determines appropriate.

Sec. 19. [LIMITATIONS.]

Subdivision 1. [DURATION.] Tax increment generated by the district must cease to be paid to the authority after 20 years from the receipt by the authority of the first tax increment from the district.

Subd. 2. [USE.] (a) All tax increment received by the authority from the district must be used in accordance with the housing transition district plan.

(b) Tax increment may be used to pay the costs of:

(1) acquiring title to or an ownership interest in any property within the district;

(2) relocating owners of or tenants in any property within the district;

(3) demolishing all or a part of any structures or other improvements within the district;

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(4) site preparation, soil correction, and infrastructure improvements within the district;

(5) rehabilitating or constructing any housing structures or other improvements within the district;

(6) constructing public improvements associated with development within the district;

(7) making loans or grants to public or private entities in order to facilitate development within the district; and

(8) administering the creation and operation of the district or the implementation of the consent decree, including reimbursement for costs previously incurred or advanced and not reimbursed.

(c) The authority may pay the costs authorized by this subdivision, directly, through the issuance and sale of obligations pursuant to Minnesota Statutes, section 469.178, by means of loans or grants to the current or future owners of property within the district, or through the exercise of any authority contained in Minnesota Statutes, sections 469.001 to 469.047.

(d) Minnesota Statutes, section 469.176, subdivision 4g, applies to the district. Minnesota Statutes, section 469.176, subdivision 3, applies to the district, except "15" is substituted for "ten" in paragraph (a) of subdivision 3.

Sec. 20. [APPLICABILITY OF OTHER LAWS.]

Minnesota Statutes, sections 469.174 to 469.179, apply to the housing transition district or tax increment generated pursuant to sections 17 to 19 only to the extent specified in sections 17 to 19. The housing transition district is a redevelopment district for purposes of Minnesota Statutes, section 273.1399. The housing transition district does not have a longer duration than permitted by general law for purposes of Minnesota Statutes, section 469.1782.

Sec. 21. [CITY OF MINNETONKA; HOUSING DEVELOPMENT ACCOUNT.]

Subdivision 1. [DEPOSITS IN ACCOUNT.] The Minnetonka economic development authority may deposit the balance of revenues derived from tax increment from housing tax increment financing district No. 1 in the housing development account of the authority. These increments may be expended for housing activities in accordance with the tax increment financing plan, if before depositing the increments or making any expenditures for housing activities under this section, the authority and city:

(1) elect, by resolution, to decertify housing tax increment financing district No. 1 as of December 31, 1997; and

(2) identify in the plan the housing activities that will be assisted by the housing development account.

The election to decertify and any necessary plan amendment may be approved before or after the effective date of this section.

Subd. 2. [PERMITTED HOUSING ACTIVITIES.] For the purposes of this section, housing activities:

(1) may include rehabilitation, acquisition, demolition, and financing of new or existing single family or multifamily housing and public improvements directly related to such activities, together with other related activities specified in the housing action plan approved by the city or the authority in compliance with Minnesota Statutes, sections 473.25 to 473.254;

(2) may be located anywhere within the city without regard to the boundaries of any tax increment financing district or project area; and

(3) for rental and owner-occupied housing, must meet the income, rent, or sales price limitations established from time to time by the metropolitan council under Minnesota Statutes, sections 473.25 to 473.254.

Subd. 3. [SEPARATE ACCOUNT REQUIRED.] Tax increment to be expended for housing activities under this section must be segregated by the authority into a special housing development account on its official books and records. The account may also receive funds from other public and private sources.

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Subd. 4. [EFFECTIVE DATE.] This section is effective upon approval by the governing body of the city of Minnetonka and compliance with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 22. [EAST GRAND FORKS]

Subdivision 1. [TIF EXTENSION.] The governing body of the city of East Grand Forks may extend the duration of tax increment financing district No. 2 (Gateway East) by up to five additional years. The district terminates no later than the end of calendar year 2005.

Subd. 2. [EFFECTIVE DATE.] This section is effective upon compliance by the governing body of the city of East Grand Forks with the provisions of Minnesota Statutes, sections 469.1782, subdivision 2; and 645.021.

Sec. 23. [TOWN OF WHITE; ECONOMIC DEVELOPMENT.]

Subdivision 1. [AUTHORIZATION.] Notwithstanding the provisions of Minnesota Statutes, section 469.176, subdivision 1b, upon approval of the governing body of the town of White by resolution, the duration of tax increment financing districts numbers 1 and 2 of the joint east range economic development authority may be extended by three additional years beyond the limit that otherwise applies under Minnesota Statutes, section 469.176, subdivision 1, to the districts.

Subd. 2. [SPECIAL RULES.] (a) Tax increment financing districts numbers 1 and 2 of the joint east range economic development authority are subject to Minnesota Statutes, sections 469.174 to 469.179, except as provided in this subdivision.

(b) Minnesota Statutes, sections 273.1399, and 469.1782, subdivision 1, do not apply.

(c) The application of Minnesota Statutes, section 469.1763, is modified to permit the use of increments from either district to be used to pay any promissory notes issued in connection with either district.

Subd. 3. [EFFECTIVE DATE.] This section is effective upon compliance by the governing bodies of the town of White, the county of St. Louis, and independent school district No. 2711 with Minnesota Statutes, sections 469.1782, subdivision 2, and 645.021, subdivision 2.

Sec. 24. [TASK FORCE; TIF 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 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.

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Sec. 25. [EFFECTIVE DATE.]

Sections 1, 3 to 6, 7, and 10, are effective for districts for which the requests for certification are made after June 30, 1997.

Section 2, clauses (1) and (4), are effective for districts for which the requests for certification were made after July 31, 1979, and for payments and investment earnings received after July 1, 1997. Section 2, clauses (2) and (3), are effective for districts for which the request for certification was made after June 30, 1982, and proceeds from sales and leases of properties purchased by the authority after June 30, 1997, and repayments of advances and loans that were made after June 30, 1997.

Sections 8 and 9 apply to all tax increment districts, whenever certified, insofar as the underlying law applies to them, and any uses of tax increment expended prior to the date of enactment of this act which are in compliance with the provisions of those sections are deemed valid.

Sections 12 and 13 are effective on the day the chief clerical officer of the city of Columbia Heights complies with Minnesota Statutes, sections 645.021, subdivision 3.

Sections 17 to 20 are effective the day following final enactment and upon compliance by the governing body with Minnesota Statutes, section 645.021, subdivision 3.

Section 24 is effective the day following final enactment.

ARTICLE 11

INTERGOVERNMENTAL RELATIONS

Section 1. [3.986] [DEFINITIONS.]

Subdivision 1. [SCOPE.] The terms used in sections 3.986 to 3.989 have the meanings given them in this section.

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, 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;

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(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.

Subd. 3. [MANDATE.] A "mandate" is a requirement imposed upon a political subdivision in a law by a state agency or by judicial authority that, if not complied with, results in:

(1) civil liability;

(2) criminal penalty; or

(3) administrative sanctions such as reduction or loss of funding.

Subd. 4. [POLITICAL SUBDIVISION.] A "political subdivision" is a county, home rule charter or statutory city, town, or other taxing district or municipal corporation.

Subd. 5. [REQUIRING AN INCREASED LEVEL OF SERVICE.] "Requiring an increased level of service" includes requiring that an existing service be provided in a shorter time.

Sec. 2. [3.987] [LOCAL IMPACT TO NOTES FOR STATE-MANDATED ACTIONS.]

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, 1998, upon request of the chair or the ranking minority member of either legislative tax committee. 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.

Subd. 2. [MANDATE EXPLANATIONS.] 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 author that gives appropriate responses to the following guidelines. It must state and list:

(1) the policy goals that are sought to be attained, the performance standards that are to be imposed, and an explanation why the goals and standards will best be served by requiring compliance by political subdivisions;

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(2) 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.

Subd. 3. [LOCAL INVOLVEMENT; LAWS.] Any bill introduced in the legislature after June 30, 1997, that seeks to impose a program or financial mandate on political subdivisions must include an attachment prepared by the author that describes the efforts put forth, if any, to involve political subdivisions in the creation or development of the proposed mandate.

Subd. 4. [NO MANDATE RESTRICTION.] Except as specifically provided by this article, nothing in this article restricts or eliminates the authority of the state to create or impose programs by law upon political subdivisions.

Sec. 3. [3.988] [EXCEPTIONS TO LOCAL IMPACT NOTES.]

Subdivision 1. [COSTS RESULTING FROM INFLATION.] A local impact note need not be prepared for increases in the cost of providing an existing service if the increases result directly from inflation. "Resulting directly from inflation" means attributable to maintaining an existing level of service rather than increasing the level of service. A cost-of-living increase in welfare benefits is an example of a cost resulting directly from inflation.

Subd. 2. [COSTS NOT THE RESULT OF A NEW PROGRAM OR INCREASED SERVICE.] A local impact note need not be prepared for increased local costs that do not result from a new program or an increased level of service.

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;

(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 for any single local government if the mandate does not apply statewide or less than $3,000,000 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;

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(9) results in savings that equal or exceed costs;

(10) requires the holding of elections;

(11) ensures due process or equal protection;

(12) provides for the notification and conduct of public meetings;

(13) establishes the procedures for administrative and judicial review of actions taken by political subdivisions;

(14) protects the public from malfeasance, misfeasance, or nonfeasance by officials of political subdivisions;

(15) relates directly to financial administration, including the levy, assessment, and collection of taxes;

(16) relates directly to the preparation and submission of financial audits necessary to the administration of state laws; or

(17) requires uniform standards to apply to public and private institutions without differentiation.

Sec. 4. [3.989] [REIMBURSEMENT TO LOCAL POLITICAL SUBDIVISIONS FOR COSTS OF STATE MANDATES.]

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 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.

Subd. 2. [REPORT.] The commissioner of finance shall prepare by September 1, 1998, and by September 1 of each even-numbered year thereafter, a report by political subdivisions of the costs of class A state mandates established after June 30, 1997.

The commissioner shall annually include the statewide total of the statement of costs of class A mandates as a notation in the state budget for the next fiscal year.

Subd. 3. [CERTAIN POLITICAL SUBDIVISIONS; REPORT.] The political subdivisions that have opted to administer class B state mandates shall report to the commissioner of finance by September 1, 1998, and by September 1 of each year thereafter, identifying each instance when revenue for a class B state mandate has fallen below 85 percent of the total cost of the program and the political subdivision intends to cease administration of the program.

The commissioner shall forward a copy of the report to the chairs of the appropriate funding committees of the senate and the house for proposed inclusion of the shortfall as a line item appropriation in the state budget for the next fiscal year.

The political subdivision may exercise its option to cease administration only if the legislature has failed to include the shortfall as an appropriation in the state budget for the next fiscal year.

Subd. 4. [EXEMPTIONS.] Laws and executive orders enumerated in section 3.988 are exempted from this section.

Sec. 5. [14.431] [PERIODIC REVIEW OF ADMINISTRATIVE RULES.]

Subdivision 1. [DEFINITIONS.] The terms defined in section 3.986, subdivision 1, apply to this section.

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Subd. 2. [SIGNIFICANT FINANCIAL IMPACT.] The commissioner of finance shall review, every five years, rules adopted after June 30, 1998, that have significant financial impact upon political subdivisions. In this section, "significant financial impact" means requiring local political subdivisions to expand existing services, employ additional personnel, or increase local expenditures. The commissioner shall determine the costs and benefits of each rulemaking and submit a report to the legislative coordinating commission with its opinion, if any, for the continuation, modification, or elimination of the rules in the rulemaking.

Sec. 6. Minnesota Statutes 1996, section 273.1398, subdivision 8, is amended to read:

Subd. 8. [APPROPRIATION.] (a) An amount sufficient to pay the aids and credits provided under this section for school districts, intermediate school districts, or any group of school districts levying as a single taxing entity, is annually appropriated from the general fund to the commissioner of children, families, and learning. An amount sufficient to pay the aids and credits provided under this section for counties, cities, towns, and special taxing districts is annually appropriated from the general fund to the commissioner of revenue. A jurisdiction's aid amount may be increased or decreased based on any prior year adjustments for homestead credit or other property tax credit or aid programs.

(b) The commissioner of finance shall bill the commissioner of revenue for the cost of preparation of local impact notes as required by section 3.987 only to the extent to which those costs exceed those costs incurred in fiscal year 1997 and for any other new costs attributable to the local impact note function required by section 3.987, not to exceed $100,000 in fiscal year 1998 and $200,000 in fiscal year 1999 and thereafter.

The commissioner of revenue shall deduct the amount billed under this paragraph from aid payments to be made to cities and counties under subdivision 2 on a pro rata basis. The amount deducted under this paragraph is appropriated to the commissioner of finance for the preparation of local impact notes.

Sec. 7. Minnesota Statutes 1996, section 477A.05, is amended to read:

477A.05 [LOCAL PERFORMANCE AID.]

Subdivision 1. [QUALIFICATION.] By May 15, 1996, and March 31 25 of each year thereafter, the commissioner shall send a local performance aid qualification form to each county and city in the state. Jurisdictions that are eligible to receive the aid must return the completed form by June 30 in order to receive aid in the following calendar year. For each determinator specified in subdivision 2, the form shall have a space for the jurisdiction to indicate that it has satisfied the conditions of the determinator. For counties, the form must be signed by the chair of the county board. For cities, the form must be signed by the mayor, if the city has a mayor, and a member the chair of the city council. Applications may be filed jointly by jurisdictions planning to spend the aid jointly.

Subd. 2. [ELIGIBILITY DETERMINATOR.] For calendar year 1997 1998 and subsequent calendar years, a jurisdiction is eligible to receive local performance aid if the jurisdiction affirms that it (1) the aid will result in a reduction in property taxes at least equal to the amount of aid received, and (2) the jurisdiction will spend the aid on programs for which it has developed a system of performance measures for the services provided by the jurisdiction, and that these measures are will allow for the measurement of continuous improvement and will be regularly compiled and presented to the county board or the city council at least once a year. The jurisdiction must identify the program or programs that are to be funded with the aid. A jurisdiction is also eligible for aid under this determinator if it affirms that it is in the process of developing and implementing a system of performance measures for the program or programs for which the aid is being sought; however, eligibility based upon being in the process of development may not be used for more than two consecutive years aid amounts under this section may not be spent on the program or programs until the performance measurement system has been instituted, unless the aid is being used to establish the performance measurement system.

Subd. 3. [DETERMINATION OF AID AMOUNT.] The commissioner shall sum the populations of all jurisdictions that have met the condition conditions specified in subdivision 2. The commissioner shall determine a per capita aid amount by dividing the aggregate aid available under subdivision 5 by the sum of the populations for all qualifying jurisdictions, separately for counties and cities. Each jurisdiction shall then be eligible for aid equal to the jurisdictions's population times the per capita aid amount. For purposes of this subdivision, population means the most recent population established under section 477A.011, subdivision 3, in the year in which the aid is determined.

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Subd. 4. [NOTIFICATION AND PAYMENT.] Jurisdictions shall be notified of their aid under this section at the same time as the notification for aid under section 477A.014, subdivision 1. Payments of aid under this section shall be made on the dates prescribed in section 477A.015.

Subd. 5. [APPROPRIATION.] (a) For payments to counties under this section, there is annually appropriated from the general fund to the commissioner of revenue an amount equal to the sum of $558,625 plus the amount by which county aids were reduced under Laws 1996, chapter 471, article 3, section 49, adjusted for inflation as provided under section 477A.03, subdivision 3. For payments to cities under this section, there is annually appropriated from the general fund to the commissioner of revenue an amount equal to the sum of $441,735 plus the amount by which city aids were reduced under Laws 1996, chapter 471, article 3, section 49, adjusted for inflation as provided under section 477A.03, subdivision 3.

(b) For aids payable in 1998 under this section, an additional amount of $560,000 for counties and $440,000 for cities is appropriated from the general fund to the commissioner of revenue.

Sec. 8. [REPEALER.]

Minnesota Statutes 1996, section 3.982, is repealed.

Sec. 9. [EFFECTIVE DATE.]

Section 7 is effective beginning with aids payable in 1998.

ARTICLE 12

REGIONAL DEVELOPMENT COMMISSIONS

Section 1. Minnesota Statutes 1996, section 462.381, is amended to read:

462.381 [TITLE.]

Sections 462.381 to 462.398 may be cited as the "regional development act of 1969."

Sec. 2. Minnesota Statutes 1996, section 462.383, is amended to read:

462.383 [PURPOSE: GOVERNMENT COOPERATION AND COORDINATION.]

Subdivision 1. [LEGISLATIVE FINDINGS.] The legislature finds that problems of growth and development in urban and rural regions of the state so transcend the boundary lines of local government units that no single unit can plan for their solution without affecting other units in the region; that various multicounty planning activities conducted under various laws of the United States are presently being conducted in an uncoordinated manner that coordination of multijurisdictional activities is essential to the development and implementation of effective policies and programs; that intergovernmental cooperation on a regional basis is an effective means of pooling the resources of local government to approach common problems; and that the assistance of the state is needed to make the most effective use of local, state, federal, and private programs in serving the citizens of such urban and rural regions.

Subd. 2. [BY CREATING REGIONAL COMMISSION.] It is the purpose of sections 462.381 to 462.398 to facilitate intergovernmental cooperation and to insure the orderly and harmonious coordination of state, federal, and local comprehensive planning and development programs for the solution of economic, social, physical, and governmental problems of the state and its citizens by providing for the creation of regional development commissions authorize the establishment of regional development commissions to work with and on behalf of local units of government to develop plans or implement programs to address economic, social, physical, and governmental concerns of each region of the state. The commissions may assist with, develop, or implement plans or programs for individual local units of government.

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Sec. 3. Minnesota Statutes 1996, section 462.384, subdivision 5, is amended to read:

Subd. 5. [DEVELOPMENT REGION, REGION.] "Development region" or "region" means a geographic region composed of a grouping of counties embodied in an executive order of the governor or as otherwise established by sections 462.381 to 462.398.

Sec. 4. Minnesota Statutes 1996, section 462.385, subdivision 1, is amended to read:

Subdivision 1. [BY GOVERNOR'S ORDER; HEARINGS.] Development regions for the state shall be those regions so designated by the governor by executive order. The order shall provide for public hearings within each proposed region after which any county may request assignment to a region other than that proposed by the order. If a request for reassignment is unacceptable to the commissioner, the county shall remain in the originally designated region until the next session of the legislature for its review and final assignment. consist of the following counties:

Region 1: Kittson, Roseau, Marshall, Pennington, Red Lake, Polk, and Norman.

Region 2: Lake of the Woods, Beltrami, Mahnomen, Clearwater, and Hubbard.

Region 3: Koochiching, Itasca, St. Louis, Lake, Cook, Aitkin, and Carlton.

Region 4: Clay, Becker, Wilkin, Otter Tail, Grant, Douglas, Traverse, Stevens, and Pope.

Region 5: Cass, Wadena, Crow Wing, Todd, and Morrison.

Region 6E: Kandiyohi, Meeker, Renville, and McLeod.

Region 6W: Big Stone, Swift, Chippewa, Lac Qui Parle, and Yellow Medicine.

Region 7E: Mille Lacs, Kanabec, Pine, Isanti, and Chisago.

Region 7W: Stearns, Benton, Sherburne, and Wright.

Region 8: Lincoln, Lyon, Redwood, Pipestone, Murray, Cottonwood, Rock, Nobles, and Jackson.

Region 9: Sibley, Nicollet, LeSueur, Brown, Blue Earth, Waseca, Watonwan, Martin, and Faribault.

Region 10: Rice, Goodhue, Wabasha, Steele, Dodge, Olmsted, Winona, Freeborn, Mower, Fillmore, and Houston.

Region 11: Anoka, Hennepin, Ramsey, Washington, Carver, Scott, and Dakota.

Sec. 5. Minnesota Statutes 1996, section 462.385, subdivision 3, is amended to read:

Subd. 3. [ONGOING BOUNDARY STUDIES; CHANGES.] The commissioner shall conduct continuous studies and analysis of the boundaries of regions and shall make recommendations for their modification where necessary. Modification of regional boundaries may be initiated by a county, a commission, or by the commissioner and will be accomplished in accordance with this section as in the case of initial designation requesting assignment to a region other than that within which it is designated. If a request for reassignment is unacceptable to the commission whose boundaries would be modified, the county requesting reassignment shall remain in the originally designated region until the legislature determines the final assignment.

Sec. 6. Minnesota Statutes 1996, section 462.386, subdivision 1, is amended to read:

Subdivision 1. [EXCEPTION, WORKING AGREEMENTS.] All coordination, planning, and development regions assisted or created by the state of Minnesota or pursuant to federal legislation shall conform to the regions designated by the executive order except where, after review and approval by the commissioner governor or designee, nonconformance is clearly justified. The commissioner governor or designee shall develop working agreements with state and federal departments and agencies to insure conformance with this subdivision.

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Sec. 7. Minnesota Statutes 1996, section 462.387, is amended to read:

462.387 [REGIONAL DEVELOPMENT COMMISSIONS; ESTABLISHMENT.]

Subdivision 1. [PETITION.] Any combination of counties or municipalities representing a majority of the population of the region for which a commission is proposed may petition the commissioner governor or designee by formal resolution setting forth its desire to establish, and the need for, the establishment of a regional development commission. For purposes of this section the population of a county does not include the population of a municipality within the county.

Subd. 1a. [OPERATING COMMISSION.] Regional development commissions shall be those organizations operating pursuant to sections 462.381 to 462.398 which were formed by formal resolution of local units of government and those which may petition by formal resolution to establish a regional development commission.

Subd. 3. [ESTABLISHMENT.] Upon receipt of a petition as provided in subdivision 1 a regional development commission shall be established by the commissioner governor or designee and the notification of all local government units within the region for which the commission is proposed shall be notified. The notification shall be made within 60 days of the commissioner's governor's receipt of a petition under subdivision 1.

Subd. 4. [SELECTION OF MEMBERSHIP.] The commissioner governor or designee shall call together each of the membership classifications except citizen groups, defined in section 462.388, within 60 days of the establishment of a regional development commission for the purpose of selecting the commission membership.

Subd. 5. [NAME OF COMMISSION.] The name of the organization shall be determined by formal resolution of the commission.

Sec. 8. Minnesota Statutes 1996, section 462.388, is amended to read:

462.388 [COMMISSION MEMBERSHIP.]

Subdivision 1. [REPRESENTATION OF VARIOUS MEMBERS.] A commission shall consist of the following members:

(1) one member from each county board of every county in the development region;

(2) one additional county board member from each county of over 100,000 population;

(3) the town clerk, town treasurer, or one member of a town board of supervisors from each county containing organized towns;

(4) one additional member selected by the county board of any county containing no townships;

(5) one mayor or council member from a municipality of under 10,000 population from each county, selected by the mayors of all such municipalities in the county;

(6) one mayor or council member from each municipality of over 10,000 in each county;

(7) two school board members elected by a majority of the chairs of school boards in the development region;

(8) one member from each council of governments;

(9) one member appointed by each native American tribal council located in each region; and

(10) citizens representing public interests within the region including members of minority groups to be selected after adoption of the bylaws of the commission; and

(10) the chair, who shall be selected by the commission.

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Subd. 2. [TERMS, SELECTION METHOD.] The terms of office and method of selection of members other than the chair shall be provided in the bylaws of the commission which shall not be inconsistent with the provisions of subdivision 1. The commission shall adopt rules setting forth its procedures.

Subd. 5. [PER DIEM; BOARD MEMBERS.] Members of the regional commission may receive a per diem of not over $35 $50, the amount to be determined by the commission, and shall be reimbursed for their reasonable expenses as determined by the commission. The commission shall may provide for the election of a board of directors, who need not be commission members, and provide, at its discretion, for a per diem of not over $35 $50 a day for meetings of the board and expenses. A member of the board of directors who is a member of the commission shall receive only the per diem payable to board members when meetings of the board of directors and the commission are held on the same day.

Sec. 9. Minnesota Statutes 1996, section 462.389, subdivision 1, is amended to read:

Subdivision 1. [CHAIR.] The chair of the commission shall have been a resident of the region for at least one year and shall be a person experienced in the field of government affairs. The chair shall preside at the meetings of the commission and board of directors, appoint all employees thereof, subject to the approval of the commission, and be responsible for carrying out all policy decisions of the commission. The chair's expense allowances shall be fixed by the commission. The term of the first chair shall be one year, and the chair shall serve until a successor is selected and qualifies. At the expiration of the term of the first chair, the chair shall be elected from the membership of the commission according to procedures established in its bylaws.

Sec. 10. Minnesota Statutes 1996, section 462.389, subdivision 3, is amended to read:

Subd. 3. [EXECUTIVE DIRECTOR.] Upon the recommendation of the chair, The commission may appoint an executive director to serve as the chief administrative officer. The director may be chosen from among the citizens of the nation at large, and shall be selected on the basis of training and experience in the field of government affairs.

Sec. 11. Minnesota Statutes 1996, section 462.389, subdivision 4, is amended to read:

Subd. 4. [EMPLOYEES.] The commission may prepare, in consultation with the state commissioner of employee relations, and may adopt a merit personnel system for its officers and employees including terms and conditions for the employment, the fixing of compensation, their classification, benefits, and the filing of performance and fidelity bonds, and such policies of insurance as it may deem advisable, the premiums for which, however, shall be paid for by the commission. Officers and employees are public employees within the meaning of chapter 353. The commission shall make the employer's contributions to pension funds of its employees.

Sec. 12. Minnesota Statutes 1996, section 462.39, subdivision 2, is amended to read:

Subd. 2. [FEDERAL REGIONAL PROGRAMS.] The commission is the authorized agency to receive state and federal grants public and private funds for regional purposes from the following programs:

(1) Section 403 of the Public Works and Economic Development Act of 1965 (economic development districts);

(2) Section 701 of the Housing Act of 1954, as amended (multicounty comprehensive planning);

(3) Omnibus Crime Control Act of 1968;

and for the following to the extent feasible as determined by the governor:

(a) Economic Opportunity Act of 1964;

(b) Comprehensive Health Planning Act of 1965;

(c) Federal regional manpower planning programs;

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(d) Resource, conservation, and development districts; or

(e) Any state and federal programs providing funds for including, but not limited to program administration, multicounty planning, coordination, and development purposes. The director shall, where consistent with state and federal statutes and regulations, review applications for all state and federal regional planning and development grants to a commission.

Sec. 13. Minnesota Statutes 1996, section 462.39, subdivision 3, is amended to read:

Subd. 3. [PLANNING.] The commission shall may prepare and adopt submit for adoption, after appropriate study and such public hearings as may be necessary, a comprehensive development plan plans for local units of government, individually or collectively, within the region. The plan shall Plans may consist of a compilation of policy statements, goals, standards, programs, and maps prescribing guides for an orderly and economic development, public and private, of the region. The comprehensive development plan within the jurisdiction subject to the plan. The plans shall recognize and incorporate planning principles which encompass physical, social, or economic needs of the region, and those future developments which will have an impact on the entire region including but not limited to such matters as land use, parks and open space land needs, access to direct sunlight for solar energy systems, the necessity for and location of airports, highways, transit facilities, public hospitals, libraries, schools, public and private, housing, and other public buildings. In preparing the development plan plans the commission shall use to the maximum extent feasible the resources studies and data available from other planning agencies within the region, including counties, municipalities, special districts, and subregional planning agencies, and it shall utilize the resources of the director state agencies to the same purpose. No development plan or portion thereof for the region shall be adopted by the commission until it has been submitted to the director for review and comment and a period of 60 days has elapsed after such submission. When a development plan has been adopted, the commission shall distribute it to all local government units within the region.

Sec. 14. Minnesota Statutes 1996, section 462.391, is amended by adding a subdivision to read:

Subd. 1a. [REVIEW OF LOCAL PLANS.] The commission may review and provide comments and recommendations on local plans or development proposals which in the judgment of the commission have a substantial effect on regional development. Local units of government may request that a regional commission review, comment, and provide advisory recommendations on local plans or development proposals.

Sec. 15. Minnesota Statutes 1996, section 462.391, is amended by adding a subdivision to read:

Subd. 2a. [STAFF SERVICES.] To avoid duplication of staff for various regional bodies assisted by federal or state government, the commission may provide basic administrative, research, and planning services for all regional planning and development bodies. The commissions may contract to obtain or perform services with state agencies, for-profit or nonprofit entities, subdistricts organized as the result of federal or state programs, councils of governments organized under section 471.59, or any other law, and with local governments.

Sec. 16. Minnesota Statutes 1996, section 462.391, is amended by adding a subdivision to read:

Subd. 3a. [DATA AND INFORMATION.] The commission may be designated as a regional data center providing data collection, storage, analysis, and dissemination to be used by it and other governmental and private users, and may accept gifts or grants to provide this service.

Sec. 17. Minnesota Statutes 1996, section 462.391, subdivision 5, is amended to read:

Subd. 5. [URBAN AND RURAL RESEARCH.] Where studies have not been otherwise authorized by law the commission may study the feasibility of programs relating including, but not limited to, water, land use, economic development, minority problems housing, demographics, cultural issues, governmental problems issues, human and services, natural resources, communication, technology, transportation, and other subjects of concern to the citizens of the region, may institute demonstration projects in connection therewith, and may enter into contracts or accept gifts or grants for such purposes as otherwise authorized in sections 462.381 to 462.398.

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Sec. 18. Minnesota Statutes 1996, section 462.391, is amended by adding a subdivision to read:

Subd. 11. [PROGRAM OPERATION.] Upon approval of the appropriate authority from local, state, and federal government units, commissions may be regarded as general purpose units of government to receive funds and operate programs on a regional or subregional basis to provide economies of scale or to enhance program efficiency.

Sec. 19. Minnesota Statutes 1996, section 462.391, is amended by adding a subdivision to read:

Subd. 12. [PROPERTY OWNERSHIP.] A commission may buy, lease, acquire, own, hold, improve, and use real or personal property or an interest in property, wherever located in the state for purposes of housing the administrative office of the regional commission.

Sec. 20. Minnesota Statutes 1996, section 462.391, is amended by adding a subdivision to read:

Subd. 13. [PROPERTY DISPOSITION.] A commission may sell, convey, mortgage, create a security interest in, lease, exchange, transfer, or dispose of all or part of its real or personal property or an interest in property, wherever located in the state.

Sec. 21. Minnesota Statutes 1996, section 462.393, is amended to read:

462.393 [ANNUAL REPORT TO UNITS, PUBLIC, GOVERNOR, LEGISLATURE.]

Subdivision 1. [CONTENTS.] On or before August September 1 of each year, the commission shall prepare a report for the governmental units, the public within the region, the legislature and the governor. The report shall include:

(1) A statement of the commission's receipts and expenditures by category since the preceding report;

(2) A detailed budget for the year in which the report is filed and a tentative budget for the following year including an outline of its program for such period;

(3) A description of any comprehensive plan adopted in whole or in part for the region;

(4) Summaries of any studies and the recommendations resulting therefrom made for the region;

(5) A listing of all applications for federal grants or loans made by governmental units within the region together with the action taken by the commission in relation thereto summary of significant accomplishments;

(6) A listing of plans of local governmental units submitted to the region, and actions taken in relationship thereto;

(7) Recommendations of the commission regarding federal and state programs, cooperation, funding, and legislative needs; and

(8) A summary of any audit report made during the previous year by the state auditor relative to the commission.

Subd. 2. [ASSESSMENT EVERY 5 YEARS.] In 1981 2001 and every five years thereafter the commission shall review its activities and issue a report assessing its performance in fulfilling the purposes of the regional development act of 1969. The report shall state address whether the existence of the commission is in the public welfare and interest. The report shall be included in the report required by subdivision 1.

Sec. 22. Minnesota Statutes 1996, section 462.394, is amended to read:

462.394 [CITIZEN PARTICIPATION AND ADVISORY COMMITTEES.]

The commission may appoint advisory committees of interested and affected citizens to assist in the review of plans, programs, and other matters referred for review by the commission. Whenever a special advisory committee is required by any federal or state regional program the commission chair shall, as far as practical, appoint such committees as advisory groups to the commission. Members of the advisory committees shall serve without compensation but shall be reimbursed for their reasonable expenses as determined by the commission.

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Sec. 23. Minnesota Statutes 1996, section 462.396, subdivision 1, is amended to read:

Subdivision 1. [GRANTMAKING, TAX LEVY.] The director governor and the legislature shall determine the amount of state assistance and designate an agency to make grants to any commission created under sections 462.381 to 462.398 from appropriations made available for those purposes, provided a work program is submitted acceptable to the director. Any regional commission may levy a tax on all taxable property in the region to provide money for the purposes of sections 462.381 to 462.398.

Sec. 24. Minnesota Statutes 1996, section 462.396, subdivision 3, is amended to read:

Subd. 3. [GIFTS, GRANTS, LOANS.] The commission is a special purpose unit of government which may accept gifts, apply for and use grants or loans of money or other property from the United States, the state, or any person, local or governmental body for any commission purpose and may enter into agreements required in connection therewith and may hold, use, and dispose of such moneys or property in accordance with the terms of the gift, grant, loan, agreement, or contract relating thereto.

For purposes of receipt of state or federal funds for community and economic development, regional commissions shall be considered general purpose units of government.

Sec. 25. Minnesota Statutes 1996, section 462.396, subdivision 4, is amended to read:

Subd. 4. [ACCOUNTING; CHECKS; ANNUAL AUDIT.] The commission shall keep an accurate account of its receipts and disbursement. Disbursements of funds of the commission shall be made by check signed by the chair or vice-chair or secretary of the commission and countersigned by the executive director or an authorized deputy thereof after such auditing and approval of the expenditure as may be provided by rules of the commission. The state auditor shall may audit the books and accounts of the commission once each year, or as often as funds and personnel of the state auditor permit. The commission shall pay to the state the total cost and expenses of such examination, including the salaries paid to the auditors while actually engaged in making such examination. The general fund shall be credited with all collections made for any such examination. In lieu of an annual audit by the state auditor, the commission may shall contract with a certified public accountant for the annual audit of the books and accounts of the commission. If a certified public accountant performs the audit, the commission shall send a copy of the audit to the state auditor.

Sec. 26. Minnesota Statutes 1996, section 462.398, is amended to read:

462.398 [TERMINATION OF COMMISSION.]

Subdivision 1. [PETITION; POPULATION.] Any combination of counties or municipalities representing a majority of the population of the region for which a commission exists may petition the director governor by formal resolution stating that the existence of the commission is no longer in the public welfare and interest and is not needed to accomplish the purposes of the regional development act of 1969. For purposes of this section the population of a county does not include the population of a municipality within the county. Any formal resolution adopted by the governing body of a county or municipality for the termination of a commission shall be effective for a period of one year for the purpose of determining the requisite population of the region needed to petition the director governor.

Subd. 2. [HEARINGS; RECOMMENDATION, TERMINATION DATE.] Within 35 days of the receipt filing of the petition, the director governor or designee shall fix a time and place within the region for a hearing. The director shall give notice of the hearing by publication once each week for two successive weeks before the date of the hearing in a legal newspaper in each of the counties which the commission represents. The hearing shall be conducted by members of the commission. If the commission determines that the existence of the commission is no longer in the public welfare and interest and that it is not needed to accomplish the purposes of the regional development act of 1969, the commission shall recommend to the director governor or designee that the director governor or designee terminate the commission. Within 60 days after receipt of the recommendation, the director governor or designee shall terminate the commission by giving notice of the termination to all government units within the region for which the commission was established. Unless otherwise provided by this subdivision, the hearing shall be in accordance with sections 14.001 to 14.69.

Subd. 3. [30 MONTHS BETWEEN PETITIONS.] The director governor or designee shall not accept a petition for termination more than once in 30 months for each regional development commission.

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Sec. 27. [REPEALER.]

Minnesota Statutes 1996, sections 462.384, subdivision 7; 462.385, subdivision 2; 462.389, subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; and 462.392, are repealed.

ARTICLE 13

WASTE MANAGEMENT TAXES

Section 1. Minnesota Statutes 1996, section 270B.01, subdivision 8, is amended to read:

Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this chapter only, "Minnesota tax laws" means the taxes administered by or paid to the commissioner under chapters 289A (except taxes imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 291, and 297A, and 297F and sections 295.50 to 295.59, or any similar Indian tribal tax administered by the commissioner pursuant to any tax agreement between the state and the Indian tribal government, and includes any laws for the assessment, collection, and enforcement of those taxes.

Sec. 2. Minnesota Statutes 1996, section 297A.01, subdivision 3, is amended to read:

Subd. 3. A "sale" and a "purchase" includes, but is not limited to, each of the following transactions:

(a) Any transfer of title or possession, or both, of tangible personal property, whether absolutely or conditionally, and the leasing of or the granting of a license to use or consume tangible personal property other than manufactured homes used for residential purposes for a continuous period of 30 days or more, for a consideration in money or by exchange or barter;

(b) The production, fabrication, printing, or processing of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the production, fabrication, printing, or processing;

(c) The furnishing, preparing, or serving for a consideration of food, meals, or drinks. "Sale" does not include:

(1) meals or drinks served to patients, inmates, or persons residing at hospitals, sanitariums, nursing homes, senior citizens homes, and correctional, detention, and detoxification facilities;

(2) meals or drinks purchased for and served exclusively to individuals who are 60 years of age or over and their spouses or to the handicapped and their spouses by governmental agencies, nonprofit organizations, agencies, or churches or pursuant to any program funded in whole or part through 42 USCA sections 3001 through 3045, wherever delivered, prepared or served; or

(3) meals and lunches served at public and private schools, universities, or colleges.

Notwithstanding section 297A.25, subdivision 2, taxable food or meals include, but are not limited to, the following:

(i) heated food or drinks;

(ii) sandwiches prepared by the retailer;

(iii) single sales of prepackaged ice cream or ice milk novelties prepared by the retailer;

(iv) hand-prepared or dispensed ice cream or ice milk products including cones, sundaes, and snow cones;

(v) soft drinks and other beverages prepared or served by the retailer;

(vi) gum;

(vii) ice;

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(viii) all food sold in vending machines;

(ix) party trays prepared by the retailers; and

(x) all meals and single servings of packaged snack food, single cans or bottles of pop, sold in restaurants and bars;

(d) The granting of the privilege of admission to places of amusement, recreational areas, or athletic events, except a world championship football game sponsored by the national football league, and the privilege of having access to and the use of amusement devices, tanning facilities, reducing salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;

(e) The furnishing for a consideration of lodging and related services by a hotel, rooming house, tourist court, motel or trailer camp and of the granting of any similar license to use real property other than the renting or leasing thereof for a continuous period of 30 days or more;

(f) The furnishing for a consideration of electricity, gas, water, or steam for use or consumption within this state, or local exchange telephone service, intrastate toll service, and interstate toll service, if that service originates from and is charged to a telephone located in this state. Telephone service includes paging services and private communication service, as defined in United States Code, title 26, section 4252(d), except for private communication service purchased by an agent acting on behalf of the state lottery. The furnishing for a consideration of access to telephone services by a hotel to its guests is a sale under this clause. Sales by municipal corporations in a proprietary capacity are included in the provisions of this clause. The furnishing of water and sewer services for residential use shall not be considered a sale. The sale of natural gas to be used as a fuel in vehicles propelled by natural gas shall not be considered a sale for the purposes of this section;

(g) The furnishing for a consideration of cable television services, including charges for basic service, charges for premium service, and any other charges for any other pay-per-view, monthly, or similar television services;

(h) The furnishing for a consideration of parking services, whether on a contractual, hourly, or other periodic basis, except for parking at a meter;

(i) The furnishing for a consideration of services listed in this paragraph:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services provided by coin-operated facilities operated by the customer, and rustproofing, undercoating, and towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting and exterminating services;

(iv) detective services, security services, burglar, fire alarm, and armored car services not including services performed within the jurisdiction they serve by off-duty licensed peace officers as defined in section 626.84, subdivision 1;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; tree, bush, shrub and stump removal; and tree trimming for public utility lines. Services performed under a construction contract for the installation of shrubbery, plants, sod, trees, bushes, and similar items are not taxable;

(vii) mixed municipal solid waste management services as described in section 297A.45;

(viii) massages, except when provided by a licensed health care facility or professional or upon written referral from a licensed health care facility or professional for treatment of illness, injury, or disease; and

(ix) (viii) the furnishing for consideration of lodging, board and care services for animals in kennels and other similar arrangements, but excluding veterinary and horse boarding services.

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The services listed in this paragraph are taxable under section 297A.02 if the service is performed wholly within Minnesota or if the service is performed partly within and partly without Minnesota and the greater proportion of the service is performed in Minnesota, based on the cost of performance. In applying the provisions of this chapter, the terms "tangible personal property" and "sales at retail" include taxable services and the provision of taxable services, unless specifically provided otherwise. Services performed by an employee for an employer are not taxable under this paragraph. Services performed by a partnership or association for another partnership or association are not taxable under this paragraph if one of the entities owns or controls more than 80 percent of the voting power of the equity interest in the other entity. Services performed between members of an affiliated group of corporations are not taxable. For purposes of this section, "affiliated group of corporations" includes those entities that would be classified as a member of an affiliated group under United States Code, title 26, section 1504, and who are eligible to file a consolidated tax return for federal income tax purposes;

(j) A "sale" and a "purchase" includes the transfer of computer software, meaning information and directions that dictate the function performed by data processing equipment. A "sale" and a "purchase" does not include the design, development, writing, translation, fabrication, lease, or transfer for a consideration of title or possession of a custom computer program; and

(k) The granting of membership in a club, association, or other organization if:

(1) the club, association, or other organization makes available for the use of its members sports and athletic facilities (without regard to whether a separate charge is assessed for use of the facilities); and

(2) use of the sports and athletic facilities is not made available to the general public on the same basis as it is made available to members.

Granting of membership includes both one-time initiation fees and periodic membership dues. Sports and athletic facilities include golf courses, tennis, racquetball, handball and squash courts, basketball and volleyball facilities, running tracks, exercise equipment, swimming pools, and other similar athletic or sports facilities. The provisions of this paragraph do not apply to camps or other recreation facilities owned and operated by an exempt organization under section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1992, for educational and social activities for young people primarily age 18 and under.

Sec. 3. Minnesota Statutes 1996, 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 school districts 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), but do not include sales under section 297A.01, subdivision 3, paragraph (j), clause (vii).

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.

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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.

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. 4. Minnesota Statutes 1996, section 297A.25, subdivision 16, is amended to read:

Subd. 16. [SALES TO NONPROFIT GROUPS.] The gross receipts from the sale of tangible personal property to, and the storage, use or other consumption of such property by, any corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, or educational purposes if the property purchased is to be used in the performance of charitable, religious, or educational functions, or any senior citizen group or association of groups that in general limits membership to persons who are either (1) age 55 or older, or (2) physically disabled, 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, are exempt. For purposes of this subdivision, charitable purpose includes the maintenance of a cemetery owned by a religious organization. Sales exempted by this subdivision include sales pursuant to section 297A.01, subdivision 3, paragraphs (d) and (f), but do not include sales under section 297A.01, subdivision 3, paragraph (j), clause (vii). 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.

Sec. 5. Minnesota Statutes 1996, section 297A.44, subdivision 1, is amended to read:

Subdivision 1. (a) Except as provided in paragraphs (b), and (c), and (d), all revenues, including interest and penalties, derived from the excise and use taxes imposed by sections 297A.01 to 297A.44 shall be deposited by the commissioner in the state treasury and credited to the general fund.

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(b) All excise and use taxes derived from sales and use of property and services purchased for the construction and operation of an agricultural resource project, from and after the date on which a conditional commitment for a loan guaranty for the project is made pursuant to section 41A.04, subdivision 3, shall be deposited in the Minnesota agricultural and economic account in the special revenue fund. The commissioner of finance shall certify to the commissioner the date on which the project received the conditional commitment. The amount deposited in the loan guaranty account shall be reduced by any refunds and by the costs incurred by the department of revenue to administer and enforce the assessment and collection of the taxes.

(c) All revenues, including interest and penalties, derived from the excise and use taxes imposed on sales and purchases included in section 297A.01, subdivision 3, paragraphs (d) and (l), clauses (1) and (2), must be deposited by the commissioner in the state treasury, and credited as follows:

(1) first to the general obligation special tax bond debt service account in each fiscal year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance must be credited to the general fund.

(d) The revenues, including interest and penalties, derived from the taxes imposed on solid waste collection services as described in section 297A.45, shall be deposited by the commissioner in the state treasury and credited to the general fund to be used for funding solid waste reduction and recycling programs.

Sec. 6. [297F.01] [SOLID WASTE MANAGEMENT TAX DEFINITIONS.]

Subdivision 1. [SCOPE.] When used in this chapter, the following terms have the meanings given to them in this section. For terms not defined in this section, the definitions contained in chapter 115A are incorporated into this chapter.

Subd. 2. [COMMERCIAL GENERATOR.] "Commercial generator" means any of the following:

(1) an owner or operator of a business, including a home-operated business, industry, church, nursing home, nonprofit organization, school, or any other commercial or institutional enterprise that generates mixed municipal solid waste or non-mixed-municipal solid waste; or

(2) any other generator of taxable waste that is not a residential generator defined in subdivision 8. A commercial generator does not include a self-hauler.

Subd. 3. [CUBIC YARD.] "Cubic yard" means a cubic yard of non-mixed-municipal solid waste that is not compacted.

Subd. 4. [MARKET PRICE.] "Market price" means the lowest price available in the area, assuming transactions between separate parties that are willing buyers and willing sellers in a market.

Subd. 5. [MIXED MUNICIPAL SOLID WASTE.] "Mixed municipal solid waste" means mixed municipal solid waste as defined in section 115A.03, subdivision 21.

Subd. 6. [NON-MIXED-MUNICIPAL SOLID WASTE.] "Non-mixed-municipal solid waste" means:

(1) infectious waste as defined in section 116.76, subdivision 12;

(2) pathological waste as defined in section 116.76, subdivision 14;

(3) industrial waste as defined in section 115A.03, subdivision 13a; and

(4) construction debris as defined in section 115A.03, subdivision 7.

Subd. 7. [PERIODIC WASTE COLLECTION.] "Periodic waste collection" means each time a waste container is emptied by the person that collects the non-mixed-municipal solid waste at the point that the waste has been aggregated for collection by the generator.

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Subd. 8. [RESIDENTIAL GENERATOR.] "Residential generator" means any of the following:

(1) a detached single family residence that generates mixed municipal solid waste or non-mixed-municipal solid waste;

(2) a person residing in a building or site containing multiple residences that generates mixed municipal solid waste, including apartment buildings, condominiums, manufactured home parks, or townhomes, where each residence is separately billed by the waste service provider;

(3) an owner of a building or site containing multiple residences or an association representing residences that generate mixed municipal solid waste or non-mixed-municipal solid waste, including apartment buildings, condominiums, manufactured home parks, or townhomes where no residence is separately billed for such service by the waste management service provider and the owner or association is billed directly for the waste management services. A residential generator does not include a self-hauler.

Subd. 9. [SALES PRICE.] "Sales price" means total consideration valued in money for waste management services, excluding separately stated charges for exemptions listed under section 297F.06.

Subd. 10. [SELF-HAULER.] "Self-hauler" means a person who transports mixed municipal solid waste or non-mixed-municipal solid waste generated by that person or another person without compensation.

Subd. 11. [WASTE MANAGEMENT SERVICE PROVIDER.] "Waste management service provider" means the person who directly bills the generator or self-hauler for waste management services, and includes, but is not limited to, waste-haulers, waste management facilities, utility services, and political subdivisions, to the extent they directly bill for waste management services.

Subd. 12. [WASTE MANAGEMENT SERVICES.] "Waste management services" means waste collection, transportation, processing, and disposal.

Sec. 7. [297F.02] [RESIDENTIAL GENERATORS.]

Subdivision 1. [IMPOSITION.] (a) A tax is imposed upon the sales price of mixed municipal solid waste management services received by a residential generator.

(b) The tax is imposed upon the difference between the market price and the tip fee at a processing or disposal facility where the tip fee is less than the market price and the political subdivision subsidizes the cost of service at the facility. The political subdivision is liable for the tax.

(c) The tax is imposed upon the market price of waste management services where a political subdivision directly bills on a property tax statement for organized collection of mixed municipal solid waste. The political subdivision is liable for the tax.

(d) The political subdivision shall, by resolution, identify the market price. The political subdivision shall submit the market price to the director of the office of environmental assistance for review by October 1 of the year prior to the calendar year in which the market price will be in effect. The prices that the state pays for waste management services in that jurisdiction or the county where the jurisdiction is located must be a guideline in determining the market price. The director shall consult with the commissioner of the pollution control agency in reviewing the market price and shall inform the political subdivisions of any necessary changes to market price by November 15 of that year. The market price shall be effective as of January 1 of the next calendar year following review. The director may consider adjustment to the market price if a political subdivision submits a resolution for adjustment by May 1 of any year. The effective date of the adjustment shall be July 1.

If the commissioner of revenue believes a market price declared by resolution is not accurate, the commissioner may request that the office of environmental assistance advise the political subdivision to identify by resolution an updated market price and submit the updated market price to the office of environmental assistance for review.

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Subd. 2. [RATES.] The rate of tax under this section is 9.75 percent.

Subd. 3. [SALES PRICE OF BAGS, STICKERS, OR OTHER INDICIA.] When the sales price of a bag, sticker, or other indicia includes mixed municipal solid waste management services for residential generators, the tax on the bag, sticker, and other indicia sold by vendors on behalf of a political subdivision or waste hauler shall be collected when the bag, sticker, or other indicia are sold to the vendor by the political subdivision or waste hauler, and shall be taxed at the rate imposed under subdivision 2. The solid waste management service and the solid waste management tax shall be included in the sales price of the bag, sticker, or other indicia.

Sec. 8. [297F.03] [MIXED MUNICIPAL SOLID WASTE COMMERCIAL GENERATORS.]

Subdivision 1. [IMPOSITION.] (a) A tax is imposed upon the sales price of mixed municipal solid waste management services received by a commercial generator.

(b) The tax is imposed upon the difference between the market price and the tip fee at a processing or disposal facility where the tip fee is less than the market price and the political subdivision subsidizes the cost of service at the facility. The political subdivision is liable for the tax.

(c) The tax is imposed upon the market price of waste management services where a political subdivision directly bills on a property tax statement for organized collection of mixed municipal solid waste. The political subdivision is liable for the tax.

(d) Section 297F.02, subdivision 1, paragraph (d), applies to paragraphs (b) and (c) of this subdivision.

Subd. 2. [RATE.] The rate of the tax under this section is 17 percent.

Subd. 3. [SALES PRICE OF BAGS, STICKERS, OR OTHER INDICIA.] When the sales price of a bag, sticker, or other indicia includes mixed municipal solid waste management services for commercial generators, the tax on the bag, sticker, and other indicia sold by vendors on behalf of a political subdivision or waste hauler shall be collected when the bag, sticker, or other indicia are sold to the vendor by the political subdivision or waste hauler, and shall be taxed at the rate imposed under subdivision 2. The solid waste management service and the solid waste management tax shall be included in the sales price of the bag, sticker, or other indicia.

Sec. 9. [297F.04] [NON-MIXED-MUNICIPAL SOLID WASTE.]

Subdivision 1. [IMPOSITION.] A tax is imposed upon the volume of non-mixed-municipal solid waste that is managed.

Subd. 2. [RATE.] (a) Commercial generators that generate non-mixed-municipal solid waste shall pay a solid waste management tax of 60 cents per noncompacted cubic yard of periodic waste collection capacity purchased by the generator, based on the size of the container for the non-mixed-municipal solid waste, the actual volume, or the weight-to-volume conversion schedule in paragraph (c). However, the tax must be calculated by the waste management service provider using the same method for calculating the waste management service fee so that both are calculated according to container capacity, actual volume, or weight.

(b) Notwithstanding section 297F.02, a residential generator that generates non-mixed-municipal solid waste shall pay a solid waste management tax in the same manner as provided in paragraph (a).

(c) The weight-to-volume conversion schedule for:

(1) construction debris as defined in section 115A.03, subdivision 7, is one ton equals 3.33 cubic yards, or $2 per ton;

(2) industrial waste as defined in section 115A.03, subdivision 13a, is equal to 60 cents per cubic yard. The commissioner of revenue after consultation with the commissioner of the pollution control agency, shall determine, and may publish by notice, a conversion schedule for various industrial wastes; and

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(3) infectious waste as defined in section 116.76, subdivision 12, and pathological waste as defined in section 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 60 cents per 150 pounds.

Sec. 10. [297F.05] [SELF-HAULERS.]

(a) A self-hauler of mixed municipal solid waste shall pay the tax to the operator of the waste management facility to which the waste is delivered at the rate imposed under section 297F.03, based on the sales price of the waste management services.

(b) A self-hauler of non-mixed-municipal solid waste shall pay the tax to the operator of the waste management facility to which the waste is delivered at the rate imposed under section 297F.04.

(c) The tax imposed on the self-hauler of non-mixed-municipal solid waste may be based either on the capacity of the container, the actual volume, or the weight-to-volume conversion schedule in paragraph (d). However, the tax must be calculated by the operator using the same method for calculating the tipping fee so that both are calculated according to container capacity, actual volume, or weight.

(d) The weight-to-volume conversion schedule for:

(1) construction debris as defined in section 115A.03, subdivision 7, is one ton equals 3.33 cubic yards, or $2 per ton;

(2) industrial waste as defined in section 115A.03, subdivision 13a, is equal to 60 cents per cubic yard. The commissioner of revenue, after consultation with the commissioner of the pollution control agency, shall determine, and may publish by notice, a conversion schedule for various industrial wastes; and

(3) infectious waste as defined in section 116.76, subdivision 12, and pathological waste as defined in section 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 60 cents per 150 pounds.

Sec. 11. [297F.06] [EXEMPTIONS.]

Subdivision 1. [CERTAIN SURCHARGES OR FEES.] The amount of a surcharge, fee, or charge established pursuant to section 115A.919, 115A.921, 115A.923, or 473.843 is exempt from the solid waste management tax. The amount shown on a property tax statement as a county charge for solid waste management service or as a surcharge, fee, or charge established pursuant to section 400.08, subdivision 3, or section 473.811, subdivision 3a, is exempt from the solid waste management tax. The exemption does not apply to the tax imposed on market price under section 297F.02, subdivision 1, paragraphs (b) and (c), or section 297F.03, subdivision 1, paragraphs (b) and (c).

Subd. 2. [MATERIALS.] The tax is not imposed upon charges to generators of mixed municipal solid waste or upon the volume of non-mixed-municipal solid waste for waste management services to manage the following materials:

(1) mixed municipal solid waste and non-mixed-municipal solid waste generated outside of Minnesota;

(2) recyclable materials that are separated for recycling by the generator, collected separately from other waste, and recycled, to the extent the price of the service for handling recyclable material is separately itemized;

(3) recyclable non-mixed-municipal solid waste that is separated for recycling by the generator, collected separately from other waste, delivered to a waste facility for the purpose of recycling, and recycled;

(4) industrial waste, when it is transported to a facility owned and operated by the same person that generated it;

(5) mixed municipal solid waste from a recycling facility that separates or processes recyclable materials and reduces the volume of the waste by at least 85 percent, provided that the exempted waste is managed separately from other waste;

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(6) recyclable materials that are separated from mixed municipal solid waste by the generator, collected and delivered to a waste facility that recycles at least 85 percent of its waste, and are collected with mixed municipal solid waste that is segregated in leakproof bags, provided that the mixed municipal solid waste does not exceed five percent of the total weight of the materials delivered to the facility and is ultimately delivered to a waste facility identified as a preferred waste management facility in county solid waste plans under section 115A.46;

(7) through December 31, 2002, source-separated compostable waste, if the waste is delivered to a facility exempted as described in this clause. To initially qualify for an exemption, a facility must apply for an exemption in its application for a new or amended solid waste permit to the pollution control agency. The first time a facility applies to the agency it must certify in its application that it will comply with the criteria in items (i) to (v) and the commissioner of the agency shall so certify to the commissioner of revenue who must grant the exemption. For each subsequent calendar year, by October 1 of the preceding year, the facility must apply to the agency for certification to renew its exemption for the following year. The application must be filed according to the procedures of, and contain the information required by, the agency. The commissioner of revenue shall grant the exemption if the commissioner of the pollution control agency finds and certifies to the commissioner of revenue that based on an evaluation of the composition of incoming waste and residuals and the quality and use of the product:

(i) generators separate materials at the source;

(ii) the separation is performed in a manner appropriate to the technology specific to the facility that:

(A) maximizes the quality of the product;

(B) minimizes the toxicity and quantity of residuals; and

(C) provides an opportunity for significant improvement in the environmental efficiency of the operation;

(iii) the operator of the facility educates generators, in coordination with each county using the facility, about separating the waste to maximize the quality of the waste stream for technology specific to the facility;

(iv) process residuals do not exceed 15 percent of the weight of the total material delivered to the facility; and

(v) the final product is accepted for use; and

(8) waste and waste by-products for which the tax has been paid.

Sec. 12. [297F.07] [BILLING.]

The amount of the tax imposed under this chapter shall be itemized separately on the generator's bill, and shall be designated as the "solid waste management tax."

Sec. 13. [297F.08] [PAYMENT; REPORTING.]

(a) The waste management service provider, or a political subdivision specified in section 297F.02, subdivision 1, and section 297F.03, subdivision 1, shall report the tax on a return prescribed by the commissioner of revenue, and shall remit the tax with the return. The return and the tax must be filed using the filing cycle and due dates provided for taxes imposed under chapter 297A.

(b) The waste hauler or political subdivision that sells bags, stickers, or other indicia to vendors must report and remit the tax imposed by section 297F.02, subdivision 3, and section 297F.03, subdivision 3, on a return prescribed by the commissioner of revenue, and shall remit the tax with the return. The return and the tax must be filed using the filing cycle provided for taxes imposed under chapter 297A.

(c) Any partial payments received by waste management service providers for waste management services shall be prorated between the tax imposed under section 297F.02, 297F.03, or 297F.04 and the service.

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Sec. 14. [297F.09] [BAD DEBTS.]

The remitter of the solid waste management tax may offset against the tax payable, with respect to any reporting period, the amount of tax imposed by this chapter previously remitted to the commissioner of revenue which qualified as a bad debt under section 166(a) of the Internal Revenue Code, as amended through December 31, 1993, during such reporting period, but only in proportion to the portion of such debt which became uncollectable. This section applies only to accrual basis remitters that remit tax before it is collected and to the extent they are unable to collect the tax.

Sec. 15. [297F.10] [ADMINISTRATION; ENFORCEMENT; PENALTY.]

Subdivision 1. [ADMINISTRATION AND ENFORCEMENT.] The audit, assessment, refund, penalty, interest, enforcement, collection remedies, appeal, and administrative provisions of chapters 270 and 289A that are applicable to taxes imposed under chapter 297A apply to this chapter.

Subd. 2. [PENALTY.] If the form prescribed by the commissioner of revenue for remitting the tax is the sales tax return, a penalty is imposed on a person or political subdivision who fails to separately report the amount of tax due under this chapter. The specified penalties are ten percent for the first violation and 20 percent for the second and subsequent violations. The penalty applies only to that portion of the tax that should have been reported on the separate lines for the tax due under this chapter and that was included on other lines of the sales tax return.

Sec. 16. [297F.11] [REQUIREMENTS AND POTENTIAL LIABILITY OF WASTE MANAGEMENT SERVICE PROVIDERS.]

Subdivision 1. [REQUIREMENTS.] Waste management service providers are required to:

(1) separately and accurately state the amount of the tax in the appropriate statement of charges for waste management services, or other statement if there are no charges for waste management services, and in any action to enforce payment on delinquent accounts;

(2) accurately account for and remit tax received; and

(3) work with the commissioner of revenue to ensure that generators pay the tax.

Subd. 2. [LIABILITY.] A waste management service provider is liable for an amount equal to the solid waste management tax that was either:

(1) received by the waste management service provider but not timely remitted to the commissioner of revenue; or

(2) not received by the waste management service provider and the waste management service provider failed to separately and accurately state the amount of the tax in the appropriate statement of charges for waste management services and in any action to enforce payment on delinquent accounts.

Subd. 3. [RECOVERY.] A person who is liable under subdivision 2 is not prohibited from recovering from the generator or self-hauler the amount of the liability paid to the commissioner of revenue that is equal to the solid waste management tax owed by the generator or self-hauler.

Sec. 17. [297F.12] [INFORMATION REGARDING THE SOLID WASTE MANAGEMENT TAX.]

The director of the office of environmental assistance, after consulting with the commissioner of revenue, the commissioner of the pollution control agency, and waste management service providers, shall develop information regarding the solid waste management tax for distribution to waste generators in the state. The information shall include facts about the substitution of the solid waste management tax for the sales tax on solid waste services and the solid waste generator assessment and the purposes for which revenue from the tax will be spent.

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Sec. 18. [297F.13] [DEPOSIT OF REVENUES; USE OF PROCEEDS; FUNDING SHORTFALLS; REPORT ON RECEIPTS.]

Subdivision 1. [DEPOSIT OF REVENUES.] The revenues derived from the taxes imposed on waste management services under this chapter, less the costs to the department of revenue for administering the tax under this chapter, shall be deposited by the commissioner of revenue in the state treasury.

The amounts retained by the department of revenue shall be deposited in a separate revenue department fund which is hereby created. Money in this fund is hereby appropriated, up to a maximum annual amount of $200,000, to the commissioner of revenue for the costs incurred in administration of the solid waste management tax under this chapter.

Subd. 2. [ALLOCATION OF REVENUES.] (a) $22,000,000, or 50 percent, whichever is greater, of the amounts remitted under this chapter must be credited to the solid waste fund established in section 115B.42.

(b) The remainder must be deposited into the general fund.

Subd. 3. [FUNDING SHORTFALLS.] If less than $22,000,000 is projected to be available for new encumbrances in any fiscal year after fiscal year 1999 from all existing dedicated revenue sources for landfill cleanup and reimbursement costs under sections 115B.39 to 115B.445, by October 1 before the next fiscal year in which the shortfall is projected, the commissioner of the pollution control agency shall certify to the commissioner of revenue the amount of the shortfall and notify persons required to collect and remit the tax. To provide for the shortfall, the commissioner of revenue shall increase the tax under sections 297F.03, 297F.04, and 297F.05, proportionately for both mixed municipal solid waste and non-mixed-municipal solid waste, by an amount sufficient to generate revenue equal to the amount of the shortfall effective the following January 1 and shall provide notice of the increased assessment by November 1 following certification to persons who are required to collect and remit the tax under this chapter.

Subd. 4. [EXCESS REVENUE ADJUSTMENT.] If the total tax revenues collected from the taxes imposed under this chapter in fiscal year 1999 is projected to exceed $44,500,000, the commissioner of revenue shall decrease proportionately the amount of the tax under sections 297F.02, 297F.03, 297F.04, and 297F.05, by an amount sufficient to eliminate the excess effective October 1, 1999, and shall provide notice of the decreased tax by August 1, 1999, to waste management service providers.

Subd. 5. [REPORT ON RECEIPTS.] The commissioner of revenue shall report to the chairs of the house and senate environment and natural resources committees; the house environment and natural resources finance division; the senate environment and agriculture budget division; the house tax committee and the senate taxes and tax laws committee; the commissioner of the pollution control agency; and the director of the office of environmental assistance on the total tax revenues received from the taxes imposed under this chapter. The reports shall be made as follows:

(1) a report by May 31, 1998, based on amounts received by the commissioner of revenue from January 1, 1998, through April 30, 1998;

(2) a report by September 30, 1998, based on amounts received by the commissioner of revenue from May 1, 1998, through August 31, 1998; and

(3) a report by January 31, 1999, based on amounts received by the commissioner of revenue from September 1, 1998, through December 31, 1998.

Subd. 6. [ORGANIZED COLLECTION BILLING PRACTICES.] In preparing the report required under section 115A.981, including the duty to consider information filed by political subdivisions under section 115A.929, the commissioner of the pollution control agency shall report the extent, if any, to which the solid waste management tax is not being collected on the full cost of organized collection service because of billings that do not reflect the full cost of service.

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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 use taxes on solid waste management services under Minnesota Statutes, section 297A.45, for the period from January 1, 1990, through December 31, 1996.

Sec. 20. [REPEALER.]

Minnesota Statutes 1996, sections 116.07, subdivision 10; 297A.01, subdivision 21; and 297A.45, as amended by Laws 1997, chapter 84, article 3, section 8, are repealed.

Sec. 21. [EFFECTIVE DATES.]

Sections 1 to 18 and 20 are effective January 1, 1998.

Section 19 is effective the day following final enactment.

ARTICLE 14

SENIOR CITIZENS PROPERTY TAX DEFERRAL

Section 1. Minnesota Statutes 1996, section 270B.12, is amended by adding a subdivision to read:

Subd. 12. [PROPERTY TAX DEFERRAL.] The commissioner may disclose to a county auditor and treasurer, and to their designated agents or employees, the annual deferral amounts and the cumulative deferral and interest as determined by the commissioner under chapter 290B for each parcel of homestead property in the county that is enrolled in the senior citizen property tax deferral program under chapter 290B.

Sec. 2. Minnesota Statutes 1996, 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 and, in the case of a town, final 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 other than a town proposes to collect for taxes payable the following year and, for a town, the amount of its final levy. It 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; 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) by county, city or town, school district excess referenda levy, remaining school district levy, regional library district, if in existence, the total of the metropolitan special taxing districts as defined in paragraph (i) and the sum of the remaining special taxing districts, and as a total of the taxing authorities, including all special taxing districts, the proposed or, for a

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town, final net tax on the property for taxes payable the following year and the actual tax for taxes payable the current year. 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. For the purposes of this subdivision, "school district excess referenda levy" means school district taxes for operating purposes approved at referendums, including those taxes based on net tax capacity as well as those based on market value. "School district excess referenda levy" does not include school district taxes for capital expenditures approved at referendums or school district taxes to pay for the debt service on bonds approved at referenda. 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 in the amounts in clause (2) from taxes payable in the current year to proposed or, for a town, final taxes payable the following year, expressed as a dollar amount and 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.

(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 the homeowner provides satisfactory documentation to the county assessor that the property is owned and used as the owner's homestead, 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;

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(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) For taxes levied in 1996, payable in 1997 only, in the case of a statutory or home rule charter city or town that exercises the local levy option provided in section 473.388, subdivision 7, the notice of its proposed taxes may include a statement of the amount by which its proposed tax increase for taxes payable in 1997 is attributable to its exercise of that option, together with a statement that the levy of the metropolitan council was decreased by a similar amount because of the exercise of that option.

Sec. 3. Minnesota Statutes 1996, 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 from the parcel of real property for which a particular tax statement is prepared. The dollar amounts due the county, township or municipality, the total of the metropolitan special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), school district excess referenda levy, remaining school district levy, and the total of other voter approved referenda levies based on market value under section 275.61 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. For the purposes of this subdivision, "school district excess referenda levy" means school district taxes for operating purposes approved at referenda, including those taxes based on net tax capacity as well as those based on market value. "School district excess referenda levy" does not include school district taxes for capital expenditures approved at referendums or school district taxes to pay for the debt service on bonds approved at referenda. 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 sentence, printed in upper case letters in boldface print: "THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX REVENUES. 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.

(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 multiplying the property's gross tax capacity times the total local tax rate and adding to the result 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;

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

(iii) disparity reduction aid under section 273.1398;

(5) for homestead residential and agricultural properties, the homestead and agricultural credit aid apportioned to the property. This amount is obtained by multiplying the total local tax rate by the difference between the property's gross and net tax capacities under section 273.13. This amount must be separately stated and identified as "homestead and agricultural credit." For purposes of comparison with the previous year's amount for the statement for taxes payable in 1990, the statement must show the homestead credit for taxes payable in 1989 under section 273.13, and the agricultural credit under section 273.132 for taxes payable in 1989;

(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 clauses (3) and (4) that local governments will receive in the following year. In the case of a county containing a city of the first class, for taxes levied in 1991, and for all counties for taxes levied in 1992 and thereafter, the commissioner must certify this amount by September 1.

Sec. 4. [290B.01] [PURPOSE.]

Minnesota's system of ad valorem property taxation does not adequately recognize the unique financial circumstances of homestead property owned and occupied by low-income senior citizens. It is therefore declared to be in the public interest of this state to stabilize tax burdens on homestead property owned by qualifying low-income senior citizens through a deferral of certain property taxes.

Sec. 5. [290B.02] [CITATION.]

This program shall be named the "senior citizens' property tax deferral program."

Sec. 6. [290B.03] [DEFERRAL OF PROPERTY TAXES.]

Subdivision 1. [PROGRAM QUALIFICATIONS.] The qualifications for the senior citizens' property tax deferral program are as follows:

(1) the property must be owned and occupied as a homestead by a person 65 years of age or older. In the case of a married couple, both of the spouses must be at least 65 years old at the time the first property tax deferral is granted, regardless of whether the property is titled in the name of one spouse or both spouses, or titled in another way that permits the property to have homestead status;

(2) the total household income of the qualifying homeowners, as defined in section 290A.03, subdivision 5, for the calendar year preceding the year of the initial application may not exceed $30,000;

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(3) the homestead must have been owned and occupied as the homestead of at least one of the qualifying homeowners for at least 15 years prior to the year the initial application is filed;

(4) there are no delinquent property taxes, penalties, or interest on the homesteaded property;

(5) there are no delinquent special assessments on the homesteaded property;

(6) there are no state or federal tax liens or judgment liens on the homesteaded property;

(7) there are no mortgages or other liens on the property that secure future advances, except for those subject to credit limits that result in compliance with clause (8); and

(8) the total unpaid balances of debts secured by mortgages and other liens on the property, including unpaid special assessments, but not including property taxes payable during the year, does not exceed 30 percent of the assessor's estimated market value for the year.

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. The homestead may be part of a multidwelling building and the land on which it is built.

Sec. 7. [290B.04] [APPLICATION FOR DEFERRAL.]

Subdivision 1. [INITIAL APPLICATION.] 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 deferred amount for each year and the cumulative deferral and interest to appear on each year's property tax statement as public data.

Subd. 2. [APPROVAL; RECORDING.] The commissioner shall approve all initial applications that qualify under this chapter and shall notify qualifying homeowners on or before December 1. The commissioner may investigate the facts or require confirmation in regard to an application. The commissioner shall record or file a notice of qualification for deferral, including the names of the qualifying homeowners and a legal description of the property, in the office of the county recorder, or registrar of titles, whichever is applicable, in the county where the qualifying property is located. The notice must state that it serves as a notice of lien and that it includes deferrals under this section for future years. The homeowner shall pay the recording or filing fees.

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Subd. 3. [ANNUAL 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 the commissioner of revenue. 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.

Sec. 8. [290B.05] [MAXIMUM PROPERTY TAX AMOUNT AND DEFERRED PROPERTY TAX AMOUNT.]

Subdivision 1. [DETERMINATION BY COMMISSIONER.] The commissioner shall 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 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.

Subd. 2. [CERTIFICATION BY COMMISSIONER.] On or before December 1, the commissioner shall certify to the county auditor of the county in which the qualifying homestead is located (1) the maximum property tax amount; (2) the maximum allowable deferral for the year; and (3) the cumulative deferral and interest for all years preceding the next taxes payable year.

Subd. 3. [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] When final property tax amounts for the following year have been determined, the county auditor shall calculate the "deferred property tax amount." The deferred property tax amount is equal to the lesser of (1) the maximum allowable deferral for the year; or (2) the difference between the total amount of property taxes levied upon the qualifying homestead by all taxing jurisdictions and the maximum property tax amount. Any special assessments levied by any local unit of government must not be included in the total tax used to calculate the deferred tax amount. No deferral of the current year's property taxes is allowed if there are any delinquent property taxes or delinquent special assessments for any previous year. Any tax attributable to new improvements made to the property after the initial application has been approved under section 290B.04, subdivision 2, must be excluded when determining any subsequent deferred property tax amount. The county auditor shall annually, on or before April 15, certify to the commissioner of revenue the property tax deferral amounts determined under this subdivision by property and by owner.

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. 9. [290B.06] [PROPERTY TAX REFUNDS.]

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 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.

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Sec. 10. [290B.07] [LIEN; DEFERRED PORTION.]

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. 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.

Sec. 11. [290B.08] [TERMINATION OF DEFERRAL; PAYMENT OF DEFERRED TAXES.]

Subdivision 1. [TERMINATION.] (a) The deferral of taxes granted under this chapter terminates when one of the following occurs:

(1) the property is sold or transferred;

(2) the death of the qualifying homeowner(s);

(3) the homeowner notifies the commissioner in writing that the homeowner desires to discontinue the deferral; or

(4) the property no longer qualifies as a homestead.

(b) A property is not terminated from the program because no deferred property tax amount is determined on the homestead for any given year after the homestead's initial enrollment into the program.

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. 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.

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Sec. 12. [290B.09] [STATE REIMBURSEMENT.]

Subdivision 1. [DETERMINATION; PAYMENT.] The commissioner of revenue shall determine the deferred amount of property tax in each county, basing determinations on a review of 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.

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.

Subd. 2. [APPROPRIATION.] An amount sufficient to pay the total amount of property tax determined under subdivision 1 is annually appropriated from the general fund to the commissioner of revenue.

Sec. 13. [DEPARTMENT OF REVENUE APPROPRIATION.]

There is appropriated to the commissioner of revenue $33,000 for fiscal year 1999 for the purposes of administering the provisions of this article.

Sec. 14. [EFFECTIVE DATE.]

Sections 1 to 12 are effective for deferral of property taxes payable in 1999, and thereafter.

ARTICLE 15

INSURANCE PROVISIONS

Section 1. Minnesota Statutes 1996, section 60A.075, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section, the terms in this subdivision have the meanings given them.

(a) "Eligible member" means a policyholder whose policy is in force as of the record date, which is the date that the mutual company's board of directors adopts a plan of conversion or some other date specified as the record date in the plan of conversion and approved by the commissioner. Unless otherwise provided in the plan, a person insured under a group policy is not an eligible member, unless on the record date:

(1) the person is insured or covered under a group life policy or group annuity contract under which funds are accumulated and allocated to the respective covered persons;

(2) the person has the right to direct the application of the funds so allocated;

(3) the group policyholder makes no contribution to the premiums or deposits for the policy or contract; and

(4) the converting mutual company has the names and addresses of the persons covered under the group life policy or group annuity contract.

(b) "Reorganized company" means a Minnesota domestic stock insurance company that has converted from a Minnesota domestic mutual insurance company according to this section.

(c) "Plan of conversion" or "plan" means a plan adopted by a Minnesota domestic mutual insurance company's board of directors under this section to convert the mutual company into a Minnesota domestic stock insurance company.

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(d) "Policy" means a policy or contract of insurance issued by a converting mutual company, including an annuity contract.

(e) "Commissioner" means the commissioner of commerce.

(f) "Converting mutual company" means a Minnesota domestic mutual insurance company seeking to convert to a Minnesota domestic stock insurance company according to this section.

(g) "Effective date of a conversion" means the date determined according to subdivision 6.

(h) "Membership interests" means all policyholders' rights as members of the converting mutual company, including but not limited to, rights to vote and to participate in any distributions of surplus, whether or not incident to the company's liquidation.

(i) "Equitable surplus" means the converting mutual company's surplus as regards policyholders as of the effective record date of the conversion or other date approved by the commissioner determined in a manner that is not unfair or inequitable to policyholders.

(j) "Permitted issuer" means: (1) a corporation organized and owned by the converting mutual company or by any other insurance company or insurance holding company for the purpose of purchasing and holding all of the stock securities representing a majority of voting control of the reorganized company; (2) a stock insurance company owned by the converting mutual company or by any other insurance company or insurance holding company into which the converting mutual company will be merged; or (3) any other corporation approved by the commissioner.

Sec. 2. Minnesota Statutes 1996, section 60A.075, subdivision 8, is amended to read:

Subd. 8. [SHARE CONVERSION.] A plan of conversion under this subdivision shall provide for exchange of policyholders' membership interests in return for shares in the reorganized company, according to paragraphs (a) to (c).

(a) The policyholders' membership interests shall be exchanged, in a manner that takes into account the estimated proportionate contribution of equitable surplus of each class of participating policies and contracts, for all of the common shares of the reorganized company or common shares of its parent company or a permitted issuer, or for a combination of the common shares of the reorganized company or common shares of its parent company or a permitted issuer.

(b) Unless the anticipated issuance within a shorter period is disclosed in the plan of conversion, the issuer of common shares shall not, within two years after the effective date of reorganization, issue either of the following:

(1) any of its common shares or any securities convertible with or without consideration into the common shares or carrying any warrant to subscribe to or purchase common shares; and

(2) any warrant, right, or option to subscribe to or purchase the common shares or other securities described in paragraph (a), except for the issue of common shares to or for the benefit of policyholders according to the plan of conversion and the issue of options nontransferable subscription rights for the purchase of common shares being granted to officers, directors, or employees a tax qualified employee benefit plan of the reorganized company or its parent company, if any, or a permitted issuer, according to this section subdivision 11.

(c) Unless the common shares have a public market when issued, the issuer shall use its best efforts to encourage and assist in the establishment of a public market for the common shares within two years of the effective date of the conversion or a longer period as disclosed in the plan of conversion. Within one year after any offering of stock other than the initial distribution, but no later than six years after the effective date of the conversion, the reorganized company shall offer to make available to policyholders who received and retained shares of common stock or securities described in paragraph (b), clause (1), a procedure to dispose of those shares of stock at market value without brokerage commissions or similar fees.

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Sec. 3. Minnesota Statutes 1996, section 60A.075, subdivision 9, is amended to read:

Subd. 9. [SURPLUS DISTRIBUTION.] A plan of conversion under this subdivision shall provide for the exchange of the policyholders' membership interests in return for the operation of the converting mutual company's participating policies as a closed block of business and for the distribution of the company's equitable surplus to policyholders, and shall provide for the issuance of new shares of the reorganized company or its parent corporation, each according to paragraphs (a) to (i).

(a) The converting mutual company's participating business, comprised of its participating policies and contracts in force on the effective date of the conversion or other reasonable date as provided in the plan, shall be operated by the reorganized company as a closed block of participating business. However, at the option of the converting mutual company, group policies and group contracts may be omitted from the closed block.

(b) Assets of the converting mutual company must be allocated to the closed block of participating business in an amount equal to the reserves and liabilities for the converting mutual life insurer's participating policies and contracts in force on the effective date of the conversion. The plan must be accompanied by an opinion of an independent qualified actuary who meets the standards set forth in the insurance laws or regulations for the submission of actuarial opinions as to the adequacy of reserves or assets. The opinion must relate to the adequacy of the assets allocated to support the closed block of business. The actuarial opinion must be based on methods of analysis considered appropriate for those purposes by the Actuarial Standards Board.

(c) The reorganized company shall keep a separate accounting for the closed block and shall make and include in the annual statement to be filed with the commissioner each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block.

(d) Notwithstanding the establishment of a closed block, the entire assets of the reorganized company shall be available for the payment of benefits to policyholders. Payment must first be made from the assets supporting the closed block until exhausted, and then from the general assets of the reorganized company.

(e) The converting mutual company's equitable surplus shall be distributed to eligible participating policyholders in a form or forms selected by the converting mutual company. The form of distribution may consist of cash, securities of the reorganized company, securities of another institution, a certificate of contribution, additional life insurance, annuity benefits, increased dividends, reduced premiums, or other equitable consideration or any combination of forms of consideration. The consideration, if any, given to a class or category of policyholders may differ from the consideration given to another class or category of policyholders. A certificate of contribution must be repayable in ten years, be equal to 100 percent of the value of the policyholders' membership interest, and bear interest at the highest rate charged by the reorganized company for policy loans on the effective date of the conversion.

(f) The consideration must be allocated among the policyholders in a manner that is fair and equitable to the policyholders.

(g) The reorganized company or its parent corporation shall issue and sell shares of one or more classes having a total price equal to the estimated value in the market of the shares on the initial offering date. The estimated value must take into account all of the following:

(1) the pro forma market value of the reorganized company;

(2) the consideration to be given to policyholders according to paragraph (e);

(3) the proceeds of the sale of the shares; and

(4) any additional value attributable to the shares as a result of a purchaser or a group of purchasers who acted in concert to obtain shares in the initial offering, attaining, through such purchase, control of the reorganized company or its parent corporation.

(h) If a purchaser or a group of purchasers acting in concert is to attain control in the initial offering, the mutual company shall not, directly or indirectly, pay for any of the costs or expenses of conversion of the mutual company, whether or not the conversion is effected, except with permission of the commissioner.

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(i) Periodically, with the commissioner's approval, the reorganized company may share in the profits of the closed block of participating business for the benefit of stockholders if the assets allocated to the closed block are in excess of those necessary to support the closed block.

Sec. 4. Minnesota Statutes 1996, section 60A.077, subdivision 1, is amended to read:

Subdivision 1. [FORMATION.] (a) A domestic mutual insurance company, upon approval of the commissioner, may reorganize by forming an insurance holding company based upon a mutual plan and continuing the corporate existence of the reorganizing insurance company as a stock insurance company. The commissioner, if satisfied that the interests of the policyholders are properly protected and that the plan of reorganization is fair and equitable to the policyholders, may approve the proposed plan of reorganization and may require as a condition of approval the modifications of the proposed plan of reorganization as the commissioner finds necessary for the protection of the policyholders' interests. The commissioner shall retain jurisdiction over the mutual insurance holding company according to this section and chapter 60D to assure that policyholder and member interests are protected.

(b) All of the initial voting shares of the capital stock of the reorganized insurance company must be issued to the mutual insurance holding company or to an intermediate stock holding company that is wholly owned by the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company become membership interests in the mutual insurance holding company. "Membership interests" means those interests described in section 60A.075, subdivision 1, paragraph (h). Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company and their voting rights must be determined in accordance with the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall, at all times, directly or through an one or more intermediate stock holding company companies, control a majority of the voting shares of the capital stock of the reorganized insurance company, taking into account any potential dilution resulting from convertible securities.

(c) A majority of the board of directors of a mutual insurance holding company must be disinterested directors. For purposes of this section, a director is disinterested if (i) the director is not or has not within the past two years been an officer or employee of the mutual insurance holding company or any subsidiary or predecessor corporation, and (ii) the director does not hold, directly or indirectly, a material ownership interest in any subsidiary of the mutual insurance holding company. An ownership interest is material if it represents more than one-half of one percent of the voting securities of the issuer, or a larger percentage as the commissioner may approve.

Sec. 5. Minnesota Statutes 1996, section 60A.077, subdivision 2, is amended to read:

Subd. 2. [MERGER.] (a) A domestic or foreign mutual insurance company, upon the approval of the commissioner, may reorganize by merging its policyholders' membership interests into a mutual insurance holding company formed according to subdivision 1 and continuing the corporate existence of the reorganizing insurance company as a stock insurance company subsidiary of the mutual insurance holding company or of an intermediate stock holding company. "Membership interests" means those interests described in section 60A.075, subdivision 1, paragraph (h). The commissioner, if satisfied that the interests of the policyholder policyholders of the reorganizing company and the interests of the existing members of the mutual insurance holding company are properly protected and that the merger is fair and equitable to the policyholders those parties, may approve the proposed merger and may require as a condition of approval the modifications of the proposed merger as the commissioner finds necessary for the protection of the policyholders' or members' interests. The commissioner shall retain jurisdiction, under chapter 60D, over the mutual insurance holding company organized according to this section to assure that policyholder and member interests are protected.

(b) All of the initial voting shares of the capital stock of the reorganized insurance company must be issued to the mutual insurance holding company, or to an intermediate stock holding company that is wholly owned by the mutual insurance holding company. The membership interests of the policyholders of the reorganized insurance company become membership interests in the mutual insurance holding company. Policyholders of the reorganized insurance company shall be members of the mutual insurance holding company and their voting rights must be determined according to the articles of incorporation and bylaws of the mutual insurance holding company. The mutual insurance holding company shall, at all times, directly or through one or more intermediate stock holding companies, control a majority of the voting shares of the capital stock of the reorganized insurance company, taking into account any potential dilution resulting from convertible securities.

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(c) A domestic mutual insurance holding company may merge with a domestic or foreign mutual insurance holding company in the manner prescribed for the merger of insurance companies set forth in section 60A.16, with any exceptions or modifications the commissioner may approve.

Sec. 6. Minnesota Statutes 1996, section 60A.077, subdivision 3, is amended to read:

Subd. 3. [PLAN OF REORGANIZATION; APPROVAL BY COMMISSIONER.] (a) The A reorganizing or merging insurer or a merging mutual insurance holding company shall file a plan of reorganization, approved, by the affirmative vote of a majority of its board of directors, for review and approval by the commissioner adopt a plan of reorganization or merger consistent with the requirements of this section and file the plan with the commissioner. At any time before the approval of a plan by the commissioner, the company, by the affirmative vote of a majority of its directors, may amend or withdraw the plan. The plan must provide for the following:

(1) in the case of a reorganization under subdivision 1, establishing a mutual insurance holding company with at least one stock insurance company subsidiary, the majority of shares of which must be owned, either directly or through an intermediate stock holding company, by the mutual insurance holding company or in the case of a reorganization under subdivision 2, a description of the terms and conditions of the proposed merger;

(2) analyzing the benefits and risks attendant to the proposed reorganization, including the rationale for the reorganization and analysis of the comparative benefits and risks of a demutualization under section 60A.075;

(3) protecting the immediate and long-term interests of existing policyholders;

(4) ensuring immediate membership in the mutual insurance holding company of all existing policyholders of the reorganizing domestic insurance company;

(5) describing a plan providing for membership interests of future policyholders;

(6) describing the number of members of the board of directors of the mutual insurance holding company required to be policyholders;

(7) ensuring that, in the event of proceedings under chapter 60B involving a stock insurance company subsidiary of the mutual insurance holding company that resulted from the reorganization of a domestic mutual insurance company, the assets of the mutual insurance holding company will be available to satisfy the policyholder obligations of the stock insurance company;

(8) for periodic distribution of accumulated holding company earnings to members describing the mutual insurance holding company's plan for distributions to members or other uses of accumulated mutual holding company earnings;

(9) (8) describing the nature and content of the annual report and financial statement to be sent to each member;

(10) (9) a copy of the proposed mutual insurance holding company's articles of incorporation and bylaws specifying all membership rights;

(11) (10) the names, addresses, and occupational information of all corporate officers and members of the proposed mutual insurance holding company board of directors;

(12) (11) information sufficient to demonstrate that the financial condition of the reorganizing or merging company will not be materially diminished upon reorganization, including information concerning any subsidiaries of the reorganizing or merging insurers that will become subsidiaries of the mutual insurance holding company or an intermediate holding company as part of the reorganization;

(13) (12) a copy of the articles of incorporation and bylaws for any proposed insurance company subsidiary or intermediate holding company subsidiary;

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(14) (13) describing any plans for the an initial sale or subscription of stock for or other securities of the reorganized insurance company or any intermediate holding company; and

(15) (14) any other information requested by the commissioner or required by rule.

(b) The commissioner may approve the plan upon finding that the requirements of this section have been fully met and the plan will protect the immediate and long-term interests of policyholders.

(c) The commissioner may retain, at the reorganizing or merging mutual company's expense, any qualified experts not otherwise a part of the commissioner's staff to assist in reviewing the plan.

(d) The commissioner may, but need not, conduct a public hearing regarding the proposed plan. The hearing must be held within 30 days after submission of a completed plan of reorganization to the commissioner. The commissioner shall give the reorganizing mutual company at least 20 days' notice of the hearing. At the hearing, the reorganizing mutual company, its policyholders, and any other person whose interest may be affected by the proposed reorganization, may present evidence, examine and cross-examine witnesses, and offer oral and written arguments or comments according to the procedure for contested cases under chapter 14. The persons participating may conduct discovery proceedings in the same manner as prescribed for the district courts of this state. All discovery proceedings must be concluded no later than three days before the scheduled commencement of the public hearing.

Sec. 7. Minnesota Statutes 1996, section 60A.077, subdivision 5, is amended to read:

Subd. 5. [APPROVAL BY MEMBERS.] The plan shall be approved by the members as provided in section 60A.075, subdivision 5. by the eligible members described in paragraphs (a) to (c).

(a) In the case of a formation under subdivision 1, the plan must be approved by the eligible members of the reorganizing insurance company.

(b) In the case of a merger under subdivision 2, paragraph (a), the plan must be approved by the eligible members of the merging insurance company and by the eligible members of the mutual insurance holding company into which the policyholders' membership interests are to be merged. The vote of the eligible members of the mutual insurance holding company is not required if the commissioner determines that the merger would not be material to the financial condition of the mutual insurance holding company.

(c) In the case of a merger of two mutual insurance holding companies under subdivision 2, paragraph (c), the plan must be approved by the eligible members of both companies. The vote of the eligible members of the surviving mutual holding company is not required if the commissioner determines that the merger would not be material to the financial condition of the surviving company.

Sec. 8. Minnesota Statutes 1996, section 60A.077, subdivision 6, is amended to read:

Subd. 6. [INCORPORATION.] A mutual insurance holding company resulting from the reorganization of a domestic mutual insurance company organized under chapter 300 shall be incorporated pursuant to chapter 300. The articles of incorporation and any amendments to the articles of the mutual insurance holding company are subject to approval of the commissioner in the same manner as those of an insurance company. Members of a mutual insurance holding company shall be entitled to vote on all matters required to be submitted to members under chapter 300 and shall additionally be treated as shareholders for purposes of the voting approval requirements of section 300.09.

Sec. 9. Minnesota Statutes 1996, section 60A.077, subdivision 7, is amended to read:

Subd. 7. [APPLICABILITY OF CERTAIN PROVISIONS.] (a) A In the event of the insolvency of a mutual insurance holding company, the mutual insurance holding company is considered to be an insurer subject to chapter 60B. and shall automatically be a party to any proceeding under chapter 60B involving an insurance company that, as a result of a reorganization according to subdivision 1 or 2, is a subsidiary of the mutual insurance holding company. In any proceeding under chapter 60B involving the reorganized insurance company, the assets of the mutual insurance holding company are

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considered to be assets of the estate of the reorganized insurance company for purposes of satisfying the claims of the reorganized insurance company's policyholders. A mutual insurance holding company shall not dissolve or liquidate without the approval of the commissioner or as ordered by the district a court according to chapter 60B of competent jurisdiction.

(b) A mutual insurance holding company is subject to chapter 60D to the extent consistent with this section.

(c) As a condition to approval of the plan, the commissioner may require the mutual insurance holding company to comply with any provision of the insurance laws necessary to protect the interests of the policyholders as if the mutual insurance holding company were a domestic mutual insurance company.

(d) No person or group of persons other than the chief executive officer of a mutual insurance holding company, or the chief executive officer's designee, shall seek to obtain proxies from the members of the mutual insurance holding company for the purposes of affecting a change of control of the mutual insurance holding company unless that person or persons have filed with the commissioner and have sent to the mutual insurance holding company a statement containing the information required by section 60D.17. Section 60D.17, subdivisions 2 to 7, apply in the event of a proxy solicitation regulated by this paragraph.

(e) For purposes of this subdivision, the term "control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through membership voting interests, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with, corporate office held by, or court appointment of, the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, ten percent or more of the membership voting interests of the mutual insurance holding company. This presumption may be rebutted by a showing made in the manner provided by section 60D.19, subdivision 11, that control does not exist in fact. The commissioner may determine after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

Sec. 10. Minnesota Statutes 1996, section 60A.077, subdivision 8, is amended to read:

Subd. 8. [APPLICABILITY OF DEMUTUALIZATION PROVISIONS.] (a) Except as otherwise provided, section 60A.075 is not applicable to a reorganization or merger according to this section, except for section 60A.075, subdivisions 14 to 16.

(b) Section 60A.075 is applicable to demutualization of a mutual insurance holding company that resulted from the reorganization of a domestic mutual insurance company organized under chapter 300 as if it were a mutual insurance company.

(c) Section 60A.075, subdivisions 14 to 16, are applicable to a reorganization or merger under this section.

Sec. 11. Minnesota Statutes 1996, section 60A.077, subdivision 9, is amended to read:

Subd. 9. [MEMBERSHIP INTERESTS.] A membership interest in a domestic mutual insurance holding company does not constitute a security as defined in section 80A.14, subdivision 18. No member of a mutual insurance holding company may transfer or pledge membership in the mutual insurance holding company or any right arising from the membership except as attendant to the valid transfer or assignment of the member's policy in any reorganized company that gave rise to the member's membership interest. A member of a mutual insurance holding company is not, as a member, personally liable for the acts, debts, liabilities, or obligations of the company. No assessments of any kind may be imposed upon the members of a mutual insurance holding company by the directors or members, or because of any liability of any company owned or controlled by the mutual insurance holding company or because of any act, debt, or liability of the mutual insurance holding company. A member's interest in the mutual insurance holding company shall automatically terminate upon cancellation, nonrenewal, expiration, or termination of the member's policy in any insurance company that gave rise to the member's membership interest.

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Sec. 12. Minnesota Statutes 1996, section 60A.077, subdivision 10, is amended to read:

Subd. 10. [FINANCIAL STATEMENT REQUIREMENTS.] (a) In addition to any items required under chapter 60D, each mutual insurance holding company shall file with the commissioner, by April 1 of each year, an annual statement consisting of the following:

(1) an income statement, balance sheet, and cashflow statement prepared in accordance with generally accepted accounting principles;

(2) complete information on the status of any closed block formed as part of a plan of reorganization;

(3) an investment plan covering all assets; and

(4) a statement disclosing any intention to pledge, borrow against, alienate, hypothecate, or in any way encumber the assets of the mutual insurance holding company or an intermediate stock holding company. Action taken according to the statement is subject to the commissioner's prior written approval.

(b) The aggregate pledges and encumbrances of a mutual insurance holding company's assets shall not affect more than 49 percent of the company's stock in ownership of any subsidiary insurance holding company or subsidiary insurance company that resulted from a reorganization or merger.

(c) At least 50 percent of the generally accepted accounting principles (GAAP) net worth of a mutual insurance holding company must be invested in insurance company subsidiaries.

Sec. 13. Minnesota Statutes 1996, section 60A.077, subdivision 11, is amended to read:

Subd. 11. [SALE OF STOCK AND PAYMENT OF DIVIDENDS.] (a) A reorganized insurance company and an intermediate stock holding company may issue subscription rights and may issue or grant any other securities, rights, options, and similar items to the same extent as any business corporation organized under chapter 302A. However, except as provided in paragraphs (b) to (d), no solicitation for the sale of the stock securities of the reorganized insurance company, or of an intermediate stock holding company of the mutual insurance holding company, that directly or indirectly controls a majority of voting shares of the reorganized insurance company, may be made without the commissioner's prior written approval.

(b) A registration statement covering securities that has been approved by the commissioner and filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933 pursuant to any provision of that statute or rule that allows registration of securities to be sold on a delayed or continuous basis may be sold without further approval.

(c) Unless the commissioner has granted the mutual insurance holding company a written exemption from the requirements of this paragraph, any securities which are regularly traded on the New York Stock Exchange, the American Stock Exchange, or another exchange approved by the commissioner, or designated on the National Association of Securities Dealers automated quotations (NASDAQ) national market system, shall be sold according to the procedure in this paragraph. If the mutual insurance holding company, an intermediate holding company, or a reorganized insurance company intends to offer securities that are governed by this paragraph, that entity shall deliver to the commissioner, not less than ten days before the offering, a notice of the planned offering and information regarding: (1) the approximate number of shares intended to be offered; (2) the target date of sale; (3) evidence the security is regularly traded on one of the public exchanges noted above; and (4) the recent history of the trading price and trading volume of the security. The commissioner is considered to have approved the sale unless within ten days following receipt of the notice, the commissioner issues an objection to the sale. If the commissioner issues an objection to the sale, the security may not be sold until the commissioner issues an order approving the sale.

(d) A reorganized insurance company or intermediate holding company that has issued securities that are regularly traded on one of the exchanges or markets described in paragraph (c), may establish stock option, incentive, and share ownership plans customary for publicly traded companies in the same or similar industries. If the reorganized insurance company or

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intermediate holding company intends to establish a stock option, incentive or share ownership plan, that entity shall deliver to the commissioner, not less than 30 days before the establishment of the plan, a notice of the proposed plan along with any information about the proposed plan the commissioner requires. The commissioner is considered to have approved the plan unless within 30 days following receipt of the notice, the commissioner issues an objection to the proposed plan. If the commissioner issues an objection to the proposed plan, the plan may not be established until the commissioner issues an order approving the plan. If the commissioner approves the establishment of the stock option, incentive, or share ownership plan, the reorganized insurance company or the intermediate holding company that obtained the approval may sell or issue securities according to the approved plan without further approval.

(e) The total number of shares of capital stock issued by the reorganized insurance company or an intermediate holding company that may be held by directors and officers of the mutual insurance holding company, any intermediate holding company, and of any reorganized insurance company, and acquired according to subscription rights or stock option, incentive, and share ownership plans, may not exceed the percentage limits set forth in section 60A.075, subdivision 11, paragraph (b). Subject to the requirements of subdivision 1, paragraph (c), nothing in this section prohibits the acquisition of any securities of a reorganized insurance company or intermediate stock holding company through a licensed securities broker-dealer by any officer or director of the reorganized company, an intermediate stock holding company, or the mutual insurance holding company.

(f) Dividends and other distributions to the shareholders of the reorganized stock insurance company or of an intermediate stock holding company shall not be made except in compliance must comply with section 60D.20. Any dividends and other distributions to the members of the mutual insurance holding company must comply with section 60D.20 and any other approval requirements contained in the mutual insurance holding company's articles of incorporation.

(g) Unless previously approved as part of the plan of reorganization, the initial offering of any voting shares to the public by a reorganized company, a stock insurance company subsidiary, or an intermediate holding company which holds a majority of the voting shares of a reorganized insurance company or stock insurance company subsidiary, must be approved by a majority of votes cast at a regular or special meeting of the members of the mutual insurance holding company. Any issuer repurchase program, plan of exchange, recapitalization, or offering of capital securities to the public, shall, in addition to any other approvals required by law or by the issuer's articles of incorporation, be approved by a majority of the board of directors of the mutual insurance holding company and by a majority of the disinterested members of the board of directors of the mutual insurance holding company.

Sec. 14. Minnesota Statutes 1996, section 60A.077, is amended by adding a subdivision to read:

Subd. 12. [PROVISIONS IN THE EVENT OF INSURER INSOLVENCY.] (a) In the event of any insolvency proceeding involving an insolvent stock subsidiary, the assets of the mutual insurance holding company, together with any assets of any intermediate holding company that directly or indirectly controls the insolvent stock subsidiary, must be available to satisfy the policyholder obligations of the insolvent stock subsidiary in an amount determined by the commissioner, but in no event more than the total amount of nonpolicyholder dividends paid by the insolvent stock subsidiary to the mutual insurance holding company, or any intermediate holding company that controls the insolvent stock subsidiary, during the ten-year period immediately preceding the date of insolvency.

(b) In determining the required contribution by the mutual insurance holding company or any intermediate stock holding company which controls the insolvent stock subsidiary, the commissioner shall take into account among other factors:

(1) the possible direct or indirect negative effects of any required contribution on any insurance company affiliate of the insolvent stock subsidiary; and

(2) the possible direct or indirect, long-term, or short-term negative effects on the members of the mutual insurance holding company, other than those members who, are, or were policyholders of the insolvent stock subsidiary.

Nothing in this subdivision limits the powers of the commissioner or the liquidator under chapter 60B.

(c) For purposes of this subdivision, the following terms have the meanings given:

(1) "date of insolvency" means, as to an insolvent stock subsidiary, the date established in accordance with chapter 60B or comparable statute of another state governing the rehabilitation or liquidation of a foreign insolvent stock subsidiary;

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(2) "insolvency proceeding" means any proceeding under chapter 60B or comparable statute of another state governing the rehabilitation and liquidation of a foreign insolvent stock subsidiary;

(3) "insolvent stock subsidiary" means any stock insurance company subsidiary of a mutual insurance holding company that resulted from the reorganization of a domestic or foreign mutual insurance company according to subdivision 1 or 2, or any other stock insurance company subsidiary that is subject to an insolvency proceeding, which on the date of insolvency has in force policies that have given rise to membership interests in the mutual insurance holding company;

(4) "control" has the meaning given in section 60D.15, subdivision 4; and

(5) "dividends" include distributions of cash or any other assets.

Sec. 15. Minnesota Statutes 1996, section 290.01, is amended by adding a subdivision to read:

Subd. 4c. [MUTUAL INSURANCE HOLDING COMPANIES.] A "mutual insurance holding company" is not an insurance company for purposes of this chapter.

Sec. 16. Minnesota Statutes 1996, section 290.17, subdivision 4, is amended to read:

Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or business conducted wholly within this state or partly within and partly without this state is part of a unitary business, the entire income of the unitary business is subject to apportionment pursuant to section 290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary business is considered to be derived from any particular source and none may be allocated to a particular place except as provided by the applicable apportionment formula. The provisions of this subdivision do not apply to farm income subject to subdivision 5, paragraph (a), business income subject to subdivision 5, paragraph (b) or (c), income of an insurance company determined under section 290.35, or income of an investment company determined under section 290.36.

(b) The term "unitary business" means business activities or operations which are of mutual benefit, dependent upon, or contributory to one another, individually or as a group. The term may be applied within a single legal entity or between multiple entities and without regard to whether each entity is a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced by centralized management or executive force, centralized purchasing, advertising, accounting, or other controlled interaction, but the absence of these centralized activities will not necessarily evidence a nonunitary business.

(d) Where a business operation conducted in Minnesota is owned by a business entity that carries on business activity outside the state different in kind from that conducted within this state, and the other business is conducted entirely outside the state, it is presumed that the two business operations are unitary in nature, interrelated, connected, and interdependent unless it can be shown to the contrary.

(e) Unity of ownership is not deemed to exist when a corporation is involved unless that corporation is a member of a group of two or more business entities and more than 50 percent of the voting stock of each member of the group is directly or indirectly owned by a common owner or by common owners, either corporate or noncorporate, or by one or more of the member corporations of the group. For this purpose, the term "voting stock" shall include membership interests of mutual insurance holding companies formed under section 60A.077.

(f) The net income and apportionment factors under section 290.191 or 290.20 of foreign corporations and other foreign entities which are part of a unitary business shall not be included in the net income or the apportionment factors of the unitary business. A foreign corporation or other foreign entity which is required to file a return under this chapter shall file on a separate return basis. The net income and apportionment factors under section 290.191 or 290.20 of foreign operating corporations shall not be included in the net income or the apportionment factors of the unitary business except as provided in paragraph (g).

(g) The adjusted net income of a foreign operating corporation shall be deemed to be paid as a dividend on the last day of its taxable year to each shareholder thereof, in proportion to each shareholder's ownership, with which such corporation is engaged in a unitary business. Such deemed dividend shall be treated as a dividend under section 290.21, subdivision 4.

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Dividends actually paid by a foreign operating corporation to a corporate shareholder which is a member of the same unitary business as the foreign operating corporation shall be eliminated from the net income of the unitary business in preparing a combined report for the unitary business. The adjusted net income of a foreign operating corporation shall be its net income adjusted as follows:

(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto Rico, or a United States possession or political subdivision of any of the foregoing shall be a deduction; and

(2) the subtraction from federal taxable income for payments received from foreign corporations or foreign operating corporations under section 290.01, subdivision 19d, clause (11), shall not be allowed.

If a foreign operating corporation incurs a net loss, neither income nor deduction from that corporation shall be included in determining the net income of the unitary business.

(h) For purposes of determining the net income of a unitary business and the factors to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there must be included only the income and apportionment factors of domestic corporations or other domestic entities other than foreign operating corporations that are determined to be part of the unitary business pursuant to this subdivision, notwithstanding that foreign corporations or other foreign entities might be included in the unitary business.

(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter that are connected with or allocable against dividends, deemed dividends described in paragraph (g), or royalties, fees, or other like income described in section 290.01, subdivision 19d, clause (11), shall not be disallowed.

(j) Each corporation or other entity that is part of a unitary business must file combined reports as the commissioner determines. On the reports, all intercompany transactions between entities included pursuant to paragraph (h) must be eliminated and the entire net income of the unitary business determined in accordance with this subdivision is apportioned among the entities by using each entity's Minnesota factors for apportionment purposes in the numerators of the apportionment formula and the total factors for apportionment purposes of all entities included pursuant to paragraph (h) in the denominators of the apportionment formula.

(k) If a corporation has been divested from a unitary business and is included in a combined report for a fractional part of the common accounting period of the combined report:

(1) its income includable in the combined report is its income incurred for that part of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must be prorated or accounted for separately.

ARTICLE 16

MISCELLANEOUS

Section 1. Minnesota Statutes 1996, section 6.76, is amended to read:

6.76 [LOCAL GOVERNMENTAL EXPENDITURES FOR LOBBYISTS.]

(a) On or before January 31, 1990, and of each year thereafter, all counties, cities, school districts, metropolitan agencies, regional railroad authorities, and the metropolitan council shall report to the state auditor, on forms prescribed by the auditor, their estimated expenditures paid for the previous calendar year to a lobbyist as defined in section 10A.01, subdivision 11, except payments to associations of local governments that are reported under paragraph (b), and to any staff person not registered as a lobbyist, over 25 percent of whose time is spent during the legislative session on legislative matters.

(b) Associations of local governments subject to this section shall report annually, on or before January 31, to the state auditor and the association's members the proportionate amount of each member's dues spent for lobbying purposes.

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Sec. 2. Minnesota Statutes 1996, section 115A.554, is amended to read:

115A.554 [AUTHORITY OF SANITARY DISTRICTS.]

A sanitary district has the authorities and duties of counties within the district's boundary for purposes of sections 115A.0716; 115A.46, subdivisions 4 and 5; 115A.48; 115A.551; 115A.552; 115A.553; 115A.919; 115A.929; 115A.93; 115A.96, subdivision 6; 115A.961; 116.072; 375.18, subdivision 14; 400.08, except subdivision 4, paragraph (b); 400.16; and 400.161.

Sec. 3. Minnesota Statutes 1996, section 117.155, is amended to read:

117.155 [PAYMENTS; PARTIAL PAYMENT PENDING APPEAL.]

Except as otherwise provided herein payment of damages awarded may be made or tendered at any time after the filing of the report; and the duty of the petitioner to pay the amount of any award or final judgment upon appeal shall, for all purposes, be held and construed to be full and just compensation to the respective owners or the persons interested in the lands. If either the petitioner or any respondent appeals from an award, the respondent or respondents, if there is more than one, except encumbrancers having an interest in the award which has been appealed, may demand of the petitioner a partial payment of the award pending the final determination thereof, and it shall be the duty of the petitioner to comply with such demand and to promptly pay the amount demanded but not in excess of an amount equal to three-fourths of the award of damages for the parcel which has been appealed, less any payments made by petitioner pursuant to section 117.042; provided, however, that the petitioner may by motion after due notice to all interested parties request, and the court may order, reduction in the amount of the partial payment for cause shown. If an appeal is taken from an award the petitioner may, but it cannot be compelled to, pay the entire amount of the award pending the final determination thereof. If any respondent or respondents having an interest in the award refuses to accept such payment the petitioner may pay the amount thereof to the court administrator of district court to be paid out under direction of the court. A partial or full payment as herein provided shall not draw interest from the condemner from the date of payment or deposit, and upon final determination of any appeal the total award of damages shall be reduced by the amount of the partial or full payment. If any partial or full payment exceeds the amount of the award of compensation as finally determined, the petitioner shall have a claim against the respondents receiving such payment for the amount thereof, to be recoverable in the same manner as in any civil action upon petitioner's motion, final judgment must be entered in the condemnation action in favor of the petitioner in the amount of the balance owed to the petitioner and is recoverable within the original condemnation action.

Sec. 4. Minnesota Statutes 1996, section 121.15, is amended by adding a subdivision to read:

Subd. 1a. [PROJECT.] The construction, remodeling, or improvement of a building or site of an educational facility at an estimated cost exceeding $100,000 is a project under section 177.42, subdivision 2.

Sec. 5. Minnesota Statutes 1996, section 161.45, is amended by adding a subdivision to read:

Subd. 3. [UTILITY INTERESTS WHEN REAL PROPERTY CONVEYED.] In proceedings to vacate, transfer, turn back, or otherwise convey an interest in real property owned or controlled by the department, when the property is owned in fee by the state, the commissioner may specify that the conveyance of the department's interest does not affect a prior, existing utility easement in the property or use of the property granted to a utility under permit issued by the department. In addition, the commissioner may convey interests in real property, including an easement, subject to the right of a utility to enter upon the right-of-way to maintain, repair, replace, reconstruct, improve, remove, or otherwise attend to its equipment. Where the utility had no preexisting easement over the real property, this subdivision does not prohibit a political subdivision, government agency, or private entity from negotiating or contracting with a utility with regard to the utility's easement or other interest in the property, but the utility shall continue to hold the interest in the property and the right of reasonable entry unless and until the utility agrees in writing to relinquish its interests.

Sec. 6. Minnesota Statutes 1996, section 270.60, is amended by adding a subdivision 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.

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(b) A county qualifies for payments 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) To make the payments authorized by this subdivision, $1,100,000 is annually appropriated from the general fund to the commissioner. If the authorized payments exceed the amount of the appropriation, the commissioner shall proportionately reduce the rate so that the total amount equals the appropriation.

Sec. 7. Minnesota Statutes 1996, section 271.19, is amended to read:

271.19 [COSTS AND DISBURSEMENTS.]

Upon the determination of any appeal under this chapter before the tax court, or of any review hereunder by the supreme court, the costs and disbursements shall be taxed and allowed in favor of the prevailing party and against the losing party as in civil actions or, if there has been an offer of judgment or settlement by a party prior to ten days before the court hears the appeal, pursuant to Minnesota Rules of Civil Procedure, rule 68. In any case where a person liable for a tax or other obligation has lost an appeal or review instituted by the person, and the tax court or court shall determine that the person instituted the same merely for the purposes of delay, or that the taxpayer's position in the proceedings is frivolous, additional costs, commensurate with the expense incurred and services performed by the agencies of the state in connection with the appeal, but not exceeding $5,000 in any case, may be allowed against the taxpayer, in the discretion of the tax court or court. Costs and disbursements allowed against any such person shall be added to the tax or other obligation determined to be due, and shall be payable therewith. To the extent described in section 15.471, where an award of costs and attorney fees is authorized under section 15.472, the costs and fees shall be allowed against the state, including expenses incurred by the taxpayer to administratively protest or appeal to the department of revenue the order, decision, or report of the commissioner that is the subject of the tax court proceedings. Costs and disbursements allowed against the state or other public agencies shall be paid out of funds received from taxes or other obligations of the kind involved in the proceeding, or other funds of the agency concerned appropriated and available therefor. Witnesses in proceedings under this chapter shall receive like fees as in the district court, to be paid in the first instance by the parties by whom the witnesses were called, and to be taxed and allowed as herein provided.

Sec. 8. Minnesota Statutes 1996, section 278.07, is amended to read:

278.07 [JUDGMENT; AMOUNT; COSTS.]

Judgment shall be for the amount of the taxes for the year as the court shall determine the same, less the amount paid thereon, if any. If the tax is sustained in the full amount levied or increased, costs and disbursements may, in the discretion of the court, be taxed and allowed as in delinquent tax proceedings and shall be included in the judgment. If the tax so determined shall be less than is decreased from the amount thereof as originally levied, the court may, in its discretion, award disbursements to the petitioner, which shall be taxed and allowed and be deducted from the amount of the taxes as determined unless there has been a previous offer of reduced taxes that was rejected by the petitioner, in which case the award of costs and disbursements is governed by Minnesota Rules of Civil Procedure, rule 68. If there be no judgment for taxes, a judgment may be entered determining the right of the parties and for the costs and disbursements as taxed and allowed.

Sec. 9. Minnesota Statutes 1996, section 287.22, is amended to read:

287.22 [EXCEPTIONS.]

The tax imposed by section 287.21 shall not apply to:

A. Any executory contract for the sale of land under which the vendee is entitled to or does take possession thereof, or any assignment or cancellation thereof.

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B. Any mortgage or any assignment, extension, partial release, or satisfaction thereof.

C. Any will.

D. Any plat.

E. Any lease.

F. Any deed, instrument, or writing in which the United States or any agency or instrumentality thereof is the grantor, assignor, transferor, conveyor, grantee or assignee.

G. Deeds for cemetery lots.

H. Deeds of distribution by personal representatives.

I. Deeds to or from coowners partitioning undivided interests in the same piece of property.

J. Any deed or other instrument of conveyance issued pursuant to a land exchange under section 92.121 and related laws.

K. A referee's or sheriff's certificate of sale in a mortgage or lien foreclosure sale.

L. A referee's or sheriff's certificate of redemption from a mortgage or lien foreclosure sale issued to the redeeming mortgagor or lienee.

M. A decree of marriage dissolution, as defined in section 287.01, subdivision 4, or any deed or other instrument between the parties to the dissolution made pursuant to the terms of the decree.

Sec. 10. [287.221] [NEW RESIDENTIAL CONSTRUCTION.]

The commissioner of revenue may not enforce a deed tax assessment on the consideration paid for an improvement in the case of new residential construction if, at or before the time the first residential owners of the improvement take possession, the deed tax has been paid on the consideration paid for the improvement.

Sec. 11. Minnesota Statutes 1996, section 308A.705, subdivision 1, is amended to read:

Subdivision 1. [DISTRIBUTION OF NET INCOME.] Net income in excess of dividends on capital stock 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. 12. Minnesota Statutes 1996, section 325D.33, subdivision 3, is amended to read:

Subd. 3. [REBATES OR CONCESSIONS.] It is unlawful for a wholesaler to offer a rebate in price, to give a rebate in price, to offer a concession of any kind, or to give a concession of any kind in connection with the sale of cigarettes. For purposes of this chapter, the term "discount" is included in the definition of a rebate. For purposes of this subdivision, the term "wholesaler" does not include a manufacturer or manufacturer's representative.

Sec. 13. [383A.80] [RAMSEY COUNTY DEED AND MORTGAGE TAX.]

Subdivision 1. [AUTHORITY TO IMPOSE; RATE.] (a) The governing body of Ramsey county may impose a mortgage registry and deed tax.

(b) The rate of the mortgage registry tax equals one cent for each $100 or fraction of the principal.

(c) The rate of the deed tax equals five cents for each $500 or fraction of the amount.

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Subd. 2. [GENERAL LAW PROVISIONS APPLY.] The taxes under this section apply to the same base and must be imposed, collected, administered, and enforced in the same manner as provided under chapter 287 for the state mortgage registry and deed taxes. All the provisions of chapter 287 apply to these taxes, except the rate is as specified in subdivision 1, the term "Ramsey county" must be substituted for "the state," and the revenue must be deposited as provided in subdivision 3.

Subd. 3. [DEPOSIT OF REVENUES.] All revenues from the tax are for the use of the Ramsey county board of commissioners and must be deposited in the county's environmental response fund under section 383B.81.

Subd. 4. [EXPIRATION.] The authority to impose the tax under this section expires January 1, 2003.

Sec. 14. [383A.81] [ENVIRONMENTAL RESPONSE FUND.]

Subdivision 1. [CREATION.] An environmental response fund is created for the purposes specified in this section. The taxes imposed by section 383B.80 must be deposited in the fund. The board of county commissioners shall administer the fund either as a county board, a housing and redevelopment authority, or a regional rail authority.

Subd. 2. [USES OF FUND.] The fund created in subdivision 1 must be used for the following purposes:

(1) acquisition through purchase or condemnation of lands or property which are polluted or contaminated with hazardous substances;

(2) paying the costs associated with indemnifying or holding harmless the entity taking title to lands or property from any liability arising out of the ownership, remediation, or use of the land or property;

(3) paying for the costs of remediating the acquired land or property;

(4) paying the costs associated with remediating lands or property which are polluted or contaminated with hazardous substances; or

(5) paying for the costs associated with improving the property for economic development, recreational, housing, transportation or rail traffic.

Subd. 3. [MATCHING FUNDS.] In expending funds under this section, the county shall seek matching funds from contamination clean up funds administered by the commissioner of the department of trade and economic development, the metropolitan council, the federal government, the private sector, and any other source.

Subd. 4. [BONDS.] The county may pledge the proceeds from the taxes imposed by section 383B.80 to bonds issued under this chapter and chapters 398A, 462, 469, and 475.

Subd. 5. [PRIORITIES.] The first priority for the use of the environmental response fund created in this section is to clean up the site located in the city of St. Paul known as the Dale Street Shops and Maxson Steel site or other sites at or near rail lines that are blighted and the clean up of which will lead to living wage jobs, and to improve the land for economic development.

Subd. 6. [LAND SALES.] Land or property acquired under this section may be resold at fair market value. Proceeds from the sale of the land must be deposited in the environmental response fund.

Subd. 7. [DOT ASSISTANCE.] The commissioner of transportation shall collaborate with the county and any affected municipality by providing technical assistance and support in cleaning up a contaminated site related to a trunk highway or railroad improvement.

Sec. 15. [383B.80] [HENNEPIN COUNTY DEED AND MORTGAGE TAX.]

Subdivision 1. [AUTHORITY TO IMPOSE; RATE.] (a) The governing body of Hennepin county may impose a mortgage registry and deed tax.

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(b) The rate of the mortgage registry tax equals one cent for each $100 or fraction of the principal.

(c) The rate of the deed tax equals five cents for each $500 or fraction of the amount.

Subd. 2. [GENERAL LAW PROVISIONS APPLY.] The taxes under this section apply to the same base and must be imposed, collected, administered, and enforced in the same manner as provided under Minnesota Statutes, chapter 287 for the state mortgage registry and deed taxes. All the provisions of chapter 287 apply to these taxes, except the rate is as specified in subdivision 1, the term "Hennepin county" must be substituted for the "state," and the revenue must be deposited as provided in subdivision 3.

Subd. 3. [DEPOSIT OF REVENUES.] All revenues from the tax are for the use of the Hennepin county board of commissioners and must be deposited in the county's environmental response fund under section 383B.81.

Subd. 4. [EXPIRATION.] The authority to impose the tax under this section expires January 1, 2003.

Sec. 16. [383B.81] [ENVIRONMENTAL RESPONSE FUND.]

Subdivision 1. [CREATION.] An environmental response fund is created for the purposes specified in this section. The taxes imposed by section 383B.80 must be deposited in the fund. The board of county commissioners shall administer the fund either as a county board, a housing and redevelopment authority, or a regional rail authority.

Subd. 2. [USES OF FUND.] The fund created in subdivision 1 must be used for the following purposes:

(1) acquisition through purchase or condemnation of lands or property which are polluted or contaminated with hazardous substances;

(2) paying the costs associated with indemnifying or holding harmless the entity taking title to lands or property from any liability arising out of the ownership, remediation, or use of the land or property;

(3) paying for the costs of remediating the acquired land or property;

(4) paying the costs associated with remediating lands or property which are polluted or contaminated with hazardous substances; or

(5) paying for the costs associated with improving the property for economic development, recreational, housing, transportation or rail traffic.

Subd. 3. [MATCHING FUNDS.] In expending funds under this section the county shall seek matching funds from contamination cleanup funds administered by the commissioners of the department of trade and economic development, the metropolitan council, the federal government, the private sector and any other source.

Subd. 4. [CITY APPROVAL.] The county may not expend funds under this section unless the governing body of the city in which the site is located approves the project.

Subd. 5. [BONDS.] The county may pledge the proceeds from the taxes imposed by section 383B.80 to bonds issued under this chapter and chapters 398A, 462, 469, and 475.

Subd. 6. [PRIORITIES.] The first priority for the use of the the environmental response fund created in this section is to clean up the site located in the city of St. Louis Park known as NL Industries/Tarce Corporation/Golden Auto, EPA I.D. No. MND097891634 and to provide adequate right-of-way for a portion of the rail line to replace the 29th street line in the city of Minneapolis, including making rail improvements, changing the curve of the railroad track and eliminating a switching facility, and improving the land for economic development. No money from the environmental response fund may be expended for remediating the site until the site has been acquired through purchase or condemnation.

Subd. 7. [LAND SALES.] Land or property acquired under this section may be resold at fair market value. Proceeds from the sale of the land must be deposited in the environmental response fund.

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Subd. 8. [DOT ASSISTANCE.] With respect to the site described in subdivision 6, the commissioner of transportation shall collaborate with the county and any affected municipality by providing technical assistance and support in facilitating the railroad improvement and testing at that portion of the site to be used for the railroad improvement.

Sec. 17. Minnesota Statutes 1996, section 398A.04, subdivision 1, is amended to read:

Subdivision 1. [GENERAL.] An authority may exercise all the powers necessary or desirable to implement the powers specifically granted in this section, and in exercising the powers is deemed to be performing an essential governmental function and exercising a part of the sovereign power of the state, and is a local government unit and political subdivision of the state. Without limiting the generality of the foregoing, the authority may:

(a) Sue and be sued, have a seal, which may but need not be affixed to documents as directed by the board, make and perform contracts, and have perpetual succession;

(b) Acquire real and personal property within or outside its taxing jurisdiction, by purchase, gift, devise, condemnation, conditional sale, lease, lease purchase, or otherwise; or for purposes, including the facilitation of an economic development project pursuant to section 383B.81 or 469.091 or 469.175, subdivision 7, that also improve rail service; and

(c) Hold, manage, control, sell, convey, lease, mortgage, or otherwise dispose of real or personal property.

Sec. 18. [458D.111] [COLLECTION OF SOLID WASTE MANAGEMENT SERVICE CHARGES.]

Subdivision 1. [AUTHORITY.] The board shall have the powers of a county as specified in section 400.08.

Subd. 2. [METHOD OF COLLECTING CERTAIN SERVICE CHARGES.] The board shall determine the method of collecting service charges in a service area by resolution.

Subd. 3. [SERVICE CHARGES ON REAL ESTATE INCLUDING EXEMPT PROPERTY.] In addition to any methods provided in section 400.08, the board may assess and collect service charges as follows. On or before October 15 of each year, the board shall certify to each county auditor an itemized list of solid waste management service charges and a description of parcels of lands against which the charges arise. It shall be the duty of the county auditors to include the charges upon the tax rolls of the county for the taxes due and payable for the following year. The solid waste management service charge shall be enforced and collected in the manner provided for the enforcement and collection of real property taxes. The service charges shall be subject to the same penalties, interest, and other conditions provided for the collection of property taxes. The board shall reimburse each county auditor for the costs of collection of the service charge.

Sec. 19. [465.715] [POLITICAL SUBDIVISIONS; LEASE PURCHASE AGREEMENTS.]

Subdivision 1. [STATUTORY AUTHORIZATION REQUIRED.] A county, home rule charter city, statutory city, town, school district, or other political subdivision may not create a corporation, whether for profit or not for profit, unless explicitly authorized to do so by law.

Subd. 2. [PRE-DECEMBER 1, 1996, LEASE PURCHASE AGREEMENTS.] The validity of any lease purchase agreement entered into prior to December 1, 1996, and subsequent refinancings are not affected by either the amount of consideration paid by a lessor for an interest in real property or, in the case of lessors organized by or on behalf of the city, county, town, or school district, any defect in or lack of authority to organize such entity. A nonprofit corporation organized by or on behalf of a city, county, town, or school district, for the purpose of a lease purchase agreement, may continue in existence until the end of any lease agreement in effect on December 1, 1996, but thereafter is dissolved. During its existence, the nonprofit corporation shall conduct only business that is necessary and directly related to the lease agreement. The nonprofit corporation is a public corporation for purposes of section 465.035 and is subject to all laws as if it were a part of the city, county, town, or school district.

Sec. 20. Minnesota Statutes 1996, section 469.169, is amended by adding a subdivision 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

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

Subd. 1d. [OBLIGATIONS; 1998-2000.] In addition to the authority in subdivisions 1a, 1b, and 1c, the council may issue certificates of indebtedness, bonds, or other obligations under this section in an amount not exceeding $30,000,000, 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.

Sec. 22. [PUBLIC SAFETY TRAINING FACILITY.]

Subdivision 1. [JOINT POWERS AGREEMENT; BONDS.] Each of the cities of Bloomington, Chanhassen, Eden Prairie, Edina, Minnetonka, and Richfield may issue general obligation bonds of the city in an amount not to exceed $1,000,000 for its share of the cost of the acquisition, construction, and equipping of a public safety training facility to be jointly operated by a joint powers association consisting of two or more municipal or public corporations of which that city is a member. The issuance of the bonds is subject to Minnesota Statutes, chapter 475, except that no election shall be required except as provided in subdivision 2.

Subd. 2. [REVERSE REFERENDUM.] Before the adoption by the governing body of a city of any resolution authorizing the issuance of any bonds authorized by subdivision 1, the city shall publish a notice in the official newspaper of the city stating that the governing body of the city intends to consider the authorization of the issuance of the bonds, stating the amount, purpose, and, in general, the security and source of payment for the bonds. The resolution authorizing the issuance of the bonds shall not be adopted by the governing body of the city for at least 15 days after publication of the notice of intention. If within 15 days after publication of the notice of intention a petition asking for an election on the proposition that the city issue the bonds signed by the voters equal to at least ten percent of the registered voters in the city is filed with the clerk, no bonds may be issued by the city unless approved by a majority of the voters of the city voting on the question of the issuance at a regular or special election.

Subd. 3. [EFFECTIVE DATE; LOCAL APPROVAL.] This section is effective with respect to any of the cities of Bloomington, Chanhassen, Eden Prairie, Edina, Minnetonka, and Richfield the day after compliance by that city with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 23. [CONTAMINATION CLEANUP AND RAIL IMPROVEMENT.]

Subdivision 1. [CONTAMINATION CLEANUP FUNDS.] The commissioner of the department of trade and economic development, pursuant to Minnesota Statutes, section 116J.555, subdivision 1, and the metropolitan council, pursuant to Minnesota Statutes, section 473.252, subdivision 3, paragraph (b), clause (1), shall designate the site located in the city of St. Louis Park and known as NL Industries/Tara Corp./Golden Auto, EPA ID. No. MND 097891634 to be an eligible site for receipt of contamination cleanup funds from the contaminated site cleanup and development account in the general fund and from the tax base revitalization account in the metropolitan livable communities fund. Grants from these accounts shall be available only upon confirmation from the commissioner of transportation that Hennepin county and the city of St. Louis Park have entered into an agreement as described in subdivision 2.

Subd. 2. [AGREEMENT BETWEEN HENNEPIN COUNTY AND CITY OF ST. LOUIS PARK.] To qualify for receipt of funds under subdivision 1, or from the environmental response fund established in Minnesota Statutes, section 383B.81, which funds are to be used for the site described in subdivision 1, Hennepin county and the city of St. Louis Park must, after consultation and negotiation with representatives of affected neighborhoods along the impacted and proposed rail lines, enter into an agreement with respect to the following:

(1) acquisition through purchase or condemnation of the entire site described in subdivision 1. A portion of the site must be used to provide adequate rights-of-way for transferring railroad traffic from the Canadian Pacific railroad line from Louisiana Avenue in St. Louis Park easterly to trunk highway 55/Hiawatha Avenue, commonly referred to as the 29th street

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depression, to the Canadian Pacific railroad line from the 29th street rail line northerly to the Burlington Northern connection, entirely within the city of St. Louis Park;

(2) responsibility for the costs of the railroad improvement, including changing the curve of the railroad track and eliminating a switching facility;

(3) obtaining by Hennepin county and the city of St. Louis Park of all applicable assurances, including, but not limited to, letters of assurance, certificates of completion, and no association determinations available from the United States Environmental Protection Agency and the Minnesota pollution control agency;

(4) respective responsibilities of the parties in remediating the acquired property and in assuming responsibility for any required matching funds; and

(5) entitlement to proceeds from any ultimate disposition of the property consistent with any statutory restrictions applicable to the source of the acquisition funds.

Subd. 3. [COMMISSIONER OF TRANSPORTATION.] The commissioner of transportation shall confirm that St. Louis Park and Hennepin county have entered into an agreement. The commissioner of transportation shall collaborate with the city and county by providing technical assistance and support in facilitating the railroad improvement and testing at that portion of the site to be used for the railroad improvement. The project shall proceed only if the city of St. Louis Park, Hennepin county, and the commissioner have entered into an agreement regarding responsibility for safety and noise mitigation measures to be implemented or constructed on or adjacent to the Canadian Pacific railroad line from the 29th street rail line northerly to the Burlington Northern connection, entirely within the city of St. Louis Park.

Sec. 24. [CITY OF ST. PAUL; RAINLEADER DISCONNECTION AND SEWER CONNECTION PROGRAM.]

Subdivision 1. [PUBLIC PURPOSE.] The legislature finds that the disconnection of rainleaders and the repair of defective sanitary sewer connections is a public purpose and that providing financing to owners of residences and businesses to disconnect rainleaders and repair defective sanitary sewer connections located on their private property is a public purpose.

Subd. 2. [PROGRAM AUTHORIZED.] The city of Saint Paul may undertake a program to disconnect rainleaders, connect buildings to storm sewers, or correct defective sanitary sewer connections located on private property at the written request of the owner of the property. The city may contract for the disconnection of rainleaders, the connection of buildings to storm sewers, and the repair of defective sanitary sewer connections, or may pay or reimburse the cost for disconnection of rainleaders, the connection of buildings to storm sewers, and the repair of defective sanitary sewer connections for which the owner of the property has entered into contracts. As part of the program, the city may identify criteria for private contractors and may limit the payment or reimbursement of costs to those situations in which the work has been performed by contractors whose participation in the program has been approved by the city in advance. The city need not hold any hearing in connection with the request of individual property owners for participation in the program.

Subd. 3. [CHARGES AUTHORIZED.] The city may charge the cost of the program to the owners who have requested the disconnection of their rainleaders, the connection of buildings to storm sewers, or the repair of their sanitary sewer connections. The amount charged may include the full amount paid or reimbursed, the cost of administration, and the cost of financing. The amount charged may be made payable with interest at a rate determined by the city in installments over a period determined by the city not to exceed 20 years and the installments may be certified, added to, and collected in the same manner as municipal taxes by the county department of property taxation or similar department and paid over to the city in the same manner as are municipal taxes. The city may certify due and unpaid installments to the county auditor along with taxes against the benefited property for collection as other real property taxes are collected, in which event the installments may be enforced in the manner required for enforcement of real property taxes in accordance with state law.

Subd. 4. [CHARGES TO PROPERTY OWNERS.] Instead of charging the cost of the program as provided above, the city may charge the cost of the program to the owners who have requested the disconnection of their rainleaders, the connection of buildings to storm sewers, or the repair of their defective sanitary sewer connections. The amount charged may include the full amount paid or reimbursed, the cost of administration, and the cost of financing. The amount charged

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must be payable with interest at a rate determined by the city in installments over a period determined by the city not to exceed 20 years. All charges for the program are valid and enforceable without regard to valuation of the property or the benefit conferred. After the amount to be charged has been determined, whether or not the work has been performed, the city must hold a public hearing on the charges after notice mailed to the owner of the property to be charged not less than 14 days before the published hearing. Notice of the hearing is not required. The city shall select Minnesota Statutes, chapter 429, or the city charter to govern the procedure for the levy and collection of the charges, and except as a different procedure is provided in this section, proceedings for the imposition, appeal, repeal, supplementation, and collection of the charges must conform to the procedures selected.

Subd. 5. [NATURE OF CHARGES.] The charges, with accruing interest, are a lien upon all private and public property included in the charges, from the date of the resolution adopting the charges, concurrent with general taxes. All charges and interest on them must be collected and paid over in the same manner as municipal taxes.

Subd. 6. [OBLIGATIONS AUTHORIZED.] To pay the costs of the program, the city may issue general or special obligations in one or more series without an election and without being subject to limits on net debt, but otherwise in accordance with Minnesota Statutes, chapter 475. To the payment of the obligations, the city must pledge receipts of the charges, and may in addition pledge revenues or net revenues of the city's sewer service fund. The city may pledge its full faith, credit, and taxing powers to pay the obligations, and may levy taxes to pay the obligations.

Subd. 7. [LOCAL APPROVAL.] This section is effective the day after the governing body of the city of Saint Paul complies with Minnesota Statutes, section 645.021, subdivision 3.

Sec. 25. [MINNESOTA INVESTMENT FUND; CITY OF WORTHINGTON.]

Notwithstanding the grant limit contained in Minnesota Statutes, section 116J.8731, subdivision 5, a grant of up to $1,000,000 may be made to the city of Worthington to offset severe job losses due to plant closings.

Sec. 26. [DESIGNATION OF KOOCHICHING COUNTY AS AN ENTERPRISE ZONE.]

Notwithstanding the limitation in Minnesota Statutes, section 469.167, subdivision 3, the commissioner of trade and economic development shall designate Koochiching county as an enterprise zone under Minnesota Statutes, sections 469.166 to 469.173.

Sec. 27. [YEAR 2000 READY.]

Any computer software or hardware that is purchased by the state or a political subdivision with money appropriated in this bill must be year 2000 ready.

Sec. 28. [APPROPRIATION; PAYMENT OF CLAIMS.]

$16,600,000 is appropriated in fiscal year 1998 from the general fund to the commissioner of revenue to pay claims filed under the Cambridge Bank Judgment.

Sec. 29. [APPROPRIATION; ADMINISTRATION OF ACT.]

$2,132,000 is appropriated from the general fund for fiscal year 1998 and $48,000 is appropriated for fiscal year 1999 to the commissioner of revenue to pay the costs of administering the provisions of this act.

Sec. 30. [REPEALER.]

1997 H. F. 2158, article 1, section 25, if enacted, is repealed. This section repeals 1997 H. F. 2158, article 1, section 25, without regard to order of final enactment.

Sec. 31. [EFFECTIVE DATE.]

Section 9 is effective for decrees of marriage dissolution, deeds, or other instruments executed and delivered after July 1, 1997.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5249

Section 10 is effective for assessments made on or after the effective date of laws 1996, chapter 471, article 2, section 32.

Section 19 is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to the financing and operation of state and local government; providing property tax class rate reform; dedicating future state revenues to property tax reform; providing a property tax rebate; providing for calculation of rent constituting property taxes; changing truth-in-taxation requirements; imposing levy limits on cities and counties for taxes levied in 1997 and 1998; authorizing deferral of property taxes by senior citizens; changing fiscal note requirements for state mandates; requiring periodic review of administrative rules; making miscellaneous property, income, and sales tax changes; changing and modifying the application of tax increment financing provisions; authorizing certain local governments to exercise certain powers; authorizing local tax levies, abatements, and assessments; modifying certain local aids; conforming certain income tax laws with changes in federal law; modifying certain income tax definitions and formulas; providing income tax credits; modifying the application of sales and excise taxes; exempting certain purchases from the sales tax; modifying waste management tax and minerals tax provisions; increasing the budget reserve; revising the law governing regional development commissions; modifying certain provisions relating to insurance companies; requiring studies; requiring reports; appropriating money; repealing an appropriation; amending Minnesota Statutes 1996, sections 6.76; 16A.152, subdivision 2; 60A.075, subdivisions 1, 8, and 9; 60A.077, subdivisions 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, and by adding a subdivision; 69.021, subdivision 7; 93.41; 103D.905, subdivisions 4, 5, and by adding a subdivision; 115A.554; 117.155; 121.15, by adding a subdivision; 124.195, subdivisions 7 and 10; 124.239, subdivision 5, and by adding subdivisions; 161.45, by adding a subdivision; 216B.16, by adding a subdivision; 270.60, by adding a subdivision; 270B.01, subdivision 8; 270B.02, by adding a subdivision; 270B.12, by adding a subdivision; 271.01, subdivision 5; 271.19; 272.02, subdivision 1, and by adding a subdivision; 272.115; 273.11, subdivisions 1, 1a, and 16; 273.111, subdivisions 3 and 6; 273.112, subdivisions 2, 3, and 4; 273.12; 273.121; 273.124, subdivision 1, and by adding a subdivision; 273.13, subdivisions 22, 23, 24, 25, 31, 32, and by adding a subdivision; 273.1393; 273.1398, subdivision 8; 273.18; 274.01; 274.13, by adding subdivisions; 275.065, subdivisions 1, 3, 5a, 6, 8, and by adding subdivisions; 275.07, subdivision 4; 275.16; 275.62, subdivision 1; 276.04, subdivision 2; 278.07; 281.13; 281.23, subdivision 6, and by adding a subdivision; 281.273; 281.276; 282.01, subdivision 8; 282.04, subdivision 1; 287.22; 289A.02, subdivision 7; 289A.56, subdivision 4; 290.01, subdivisions 19, 19a, 19b, 19c, 19d, 19f, 19g, 31, and by adding a subdivision; 290.014, subdivisions 2 and 3; 290.015, subdivisions 3 and 5; 290.06, subdivision 22, and by adding a subdivision; 290.067, subdivision 1; 290.068, subdivision 1; 290.0922, subdivision 1; 290.17, subdivisions 1 and 4; 290.191, subdivision 4; 290.371, subdivision 2; 290.92, by adding a subdivision; 290.9725; 290.9727, subdivision 1; 290.9728, subdivision 1; 290A.03, subdivisions 7, 11, and 13; 290A.04, by adding a subdivision; 290A.19; 291.005, subdivision 1; 296.141, subdivision 4; 296.18, subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, and 16; 297A.09; 297A.15, subdivision 7; 297A.211, subdivision 1; 297A.25, subdivisions 2, 3, 5, 7, 11, 16, 56, 59, and by adding subdivisions; 297A.44, subdivision 1; 297B.01, subdivisions 7 and 8; 298.24, subdivision 1; 298.28, subdivision 9a, and by adding a subdivision; 298.296, subdivision 4; 298.2961, subdivision 1; 298.75, subdivisions 1, 4, and by adding a subdivision; 308A.705, subdivision 1; 325D.33, subdivision 3; 349.154, subdivision 2; 349.19, subdivision 2a; 349.191, subdivision 1b; 373.40, subdivision 7; 375.192, subdivision 2; 383A.75, subdivision 3; 398A.04, subdivision 1; 462.381; 462.383; 462.384, subdivision 5; 462.385, subdivisions 1 and 3; 462.386, subdivision 1; 462.387; 462.388; 462.389, subdivisions 1, 3, and 4; 462.39, subdivisions 2 and 3; 462.391, subdivision 5, and by adding subdivisions; 462.393; 462.394; 462.396, subdivisions 1, 3, and 4; 462.398; 465.71; 465.81, subdivisions 1 and 3; 465.82, subdivisions 1, 2, and by adding a subdivision; 465.87, subdivisions 1a and 2; 465.88; 469.012, subdivision 1; 469.033, subdivision 6; 469.040, subdivision 3; 469.169, by adding a subdivision; 469.174, subdivision 10, and by adding subdivisions; 469.175, subdivision 3; 469.176, subdivisions 1b, 4c, 4j, and 5; 469.177, subdivisions 1 and 3; 473.39, by adding a subdivision; 477A.011, subdivision 36; 477A.05; Laws 1992, chapter 511, article 2, section 52; Laws 1993, chapter 375, articles 7, section 29, and 9, sections 45, subdivisions 2, 3, 4, and by adding a subdivision, and 46, subdivision 2; Laws 1995, chapters 255, article 3, section 2, subdivision 1, as amended, and 264, article 5, sections 44, subdivision 4, as amended, and 45, subdivision 1, as amended; and Laws 1997, chapters 34, section 2, and 75, section 2; proposing coding for new law in Minnesota Statutes, chapters 3; 14; 16A; 273; 275; 287; 290; 297A; 383A; 383B; 458D; 462A; 465; and 469; proposing coding for new law as Minnesota Statutes, chapters 290B; and 297F; repealing Minnesota Statutes 1996, sections 3.982; 116.07, subdivision 10; 121.904, subdivision 4d; 124.2134; 270B.12, subdivision 11; 273.1317; 273.1318; 276.012; 276.20; 276.21; 290A.03, subdivisions 12a and 14; 290A.055; 290A.26; 297A.01, subdivisions 20 and 21; 297A.02, subdivision 5; 297A.45, as amended; 462.384, subdivision 7; 462.385, subdivision 2; 462.389, subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; 462.392; 469.181; Laws 1995, chapter 264, article 4, as amended; and H. F. 2158, article 1, section 25, if enacted."

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5250

We request adoption of this report and repassage of the bill.

House Conferees: Dee Long, Ted Winter, Edgar Olson, Andy Dawkins and Ron Abrams.

Senate Conferees: Douglas J. Johnson, Sandra L. Pappas, John C. Hottinger, William V. Belanger, Jr., and Jim Vickerman.

Sviggum moved that the House refuse to adopt the Conference Committee report on H. F. No. 2163, and that the bill be returned to the Conference Committee.

A roll call was requested and properly seconded.

The question was taken on the Sviggum motion and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 45 yeas and 87 nays as follows:

Those who voted in the affirmative were:

Anderson, B. Erhardt Knight Mulder Seifert Vickerman
Bettermann Finseth Knoblach Nornes Stang Weaver
Boudreau Goodno Koppendrayer Olson, M. Sviggum Westfall
Bradley Gunther Krinkie Osskopp Swenson, H. Westrom
Broecker Haas Kuisle Paulsen Sykora Workman
Commers Harder Lindner Pawlenty Tompkins
Daggett Holsten Macklin Rifenberg Tuma
Dehler Kielkucki Molnau Seagren Van Dellen

Those who voted in the negative were:

Abrams Folliard Kalis Marko Paymar Stanek
Bakk Garcia Kelso McCollum Pelowski Swenson, D.
Biernat Greenfield Kinkel McElroy Peterson Tingelstad
Bishop Greiling Koskinen McGuire Pugh Tomassoni
Carlson Hasskamp Kraus Milbert Rest Trimble
Chaudhary Hausman Kubly Mullery Rhodes Tunheim
Clark Hilty Larsen Munger Rostberg Wagenius
Davids Huntley Leighton Murphy Rukavina Wejcman
Dawkins Jaros Leppik Ness Schumacher Wenzel
Delmont Jefferson Lieder Olson, E. Sekhon Winter
Dempsey Jennings Long Opatz Skare Wolf
Dorn Johnson, A. Luther Orfield Skoglund Spk. Carruthers
Entenza Johnson, R. Mahon Osthoff Slawik
Evans Juhnke Mares Otremba Smith
Farrell Kahn Mariani Ozment Solberg

The motion did not prevail.

Long moved that the report of the Conference Committee on H. F. No. 2163 be adopted and that the bill be repassed as amended by the Conference Committee.

A roll call was requested and properly seconded.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5251

The question was taken on the Long motion and the roll was called. There were 124 yeas and 9 nays as follows:

Those who voted in the affirmative were:

Abrams Farrell Kahn McCollum Pelowski Sykora
Anderson, I. Finseth Kalis McElroy Peterson Tingelstad
Bakk Folliard Kelso McGuire Pugh Tomassoni
Bettermann Garcia Kielkucki Milbert Rest Tompkins
Biernat Goodno Kinkel Molnau Rhodes Trimble
Bishop Greenfield Koppendrayer Mulder Rifenberg Tuma
Boudreau Greiling Koskinen Mullery Rostberg Tunheim
Bradley Gunther Kraus Munger Rukavina Van Dellen
Broecker Haas Kubly Murphy Schumacher Vickerman
Carlson Harder Kuisle Ness Seagren Wagenius
Chaudhary Hasskamp Larsen Nornes Seifert Weaver
Clark Hausman Leighton Olson, E. Sekhon Wejcman
Daggett Hilty Leppik Opatz Skare Wenzel
Davids Holsten Lieder Orfield Skoglund Westfall
Dawkins Huntley Long Osskopp Slawik Westrom
Delmont Jaros Luther Osthoff Smith Winter
Dempsey Jefferson Macklin Otremba Solberg Wolf
Dorn Jennings Mahon Ozment Stanek Workman
Entenza Johnson, A. Mares Paulsen Stang Spk. Carruthers
Erhardt Johnson, R. Mariani Pawlenty Swenson, D.
Evans Juhnke Marko Paymar Swenson, H.

Those who voted in the negative were:

Anderson, B. Dehler Knoblach Lindner Sviggum
Commers Knight Krinkie Olson, M.

The motion prevailed.

H. F. No. 2163, A bill for an act relating to the financing and operation of state and local government; providing for property tax reform; providing for education financing; limiting education revenue referenda for 1997; changing property tax refunds for homeowners and renters; changing truth-in-taxation requirements; providing for joint truth-in-taxation hearings; imposing levy limits on cities and counties; changing fiscal note requirements for state mandates; providing for reimbursement for costs of state mandates; providing for certain property tax exemptions; establishing a property tax reform account; providing a refundable credit for 1997 property taxes; making miscellaneous property tax changes; providing a senior citizens property tax deferral program; changing aids to local governments; changing tax increment financing provisions; authorizing certain tax increment districts; exempting certain tax increment districts from certain requirements; authorizing local taxes, levies, and abatements; conforming certain income tax laws with changes in federal law; providing income tax credits; modifying the application of sales and excise taxes; exempting certain purchases from the sales tax; modifying waste management tax and taconite tax provisions; increasing the budget reserve; revising the law governing regional development commissions; providing for certain payments to counties; making miscellaneous technical changes and corrections; requiring studies; appropriating money; amending Minnesota Statutes 1996, sections 6.76; 16A.152, subdivision 2; 69.021, subdivision 7; 93.41; 103D.905, subdivisions 4, 5, and by adding a subdivision; 115A.554; 116.07, subdivision 10; 117.155; 121.15, by adding a subdivision; 122.247, subdivision 3; 122.45, subdivision 3a; 122.531, subdivisions 4a and 9; 122.533; 122.535, subdivision 6; 124.2131, subdivision 1; 124.239, subdivision 5, and by adding subdivisions; 124.2601, subdivisions 2 and 3; 124.2711, subdivisions 1 and 5; 124.2713, subdivision 1; 124.2714; 124.2715, subdivision 1; 124.2716, subdivision 2; 124.2725, subdivisions 2, 6, 13, and 14; 124.2726, subdivisions 1 and 3; 124.2727, subdivision 6a; 124.312, subdivision 5; 124.313; 124.4945; 124.83, subdivision 3; 124.91, subdivisions 1, 2, 5, and 7; 124.912, subdivisions 1, 3, 6, and 7; 124.914, subdivisions 1, 2, 3, and 4; 124.916, subdivisions 1, 3, and 4; 124.918, subdivision 8; 124.95, subdivision 1; 124A.03, subdivision 1g; 124A.23, subdivision 1; 124A.292, subdivision 2; 161.45, by adding a subdivision; 216B.16, by adding subdivisions; 270.60, by adding a subdivision; 270B.02, by adding

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5252

a subdivision; 270B.12, by adding a subdivision; 271.01, subdivision 5; 271.19; 272.02, subdivision 1, and by adding a subdivision; 272.115; 273.11, subdivisions 1a, 16, and by adding a subdivision; 273.111, subdivisions 3 and 6; 273.112, by adding a subdivision; 273.121; 273.124, subdivisions 1, 14, and by adding a subdivision; 273.13, subdivisions 1, 22, 23, 24, 25, 31, and by adding subdivisions; 273.135, subdivision 2; 273.1391, subdivision 2; 273.1398, subdivisions 1, 1a, 6, 8, and by adding subdivisions; 273.18; 274.01; 274.13, by adding subdivisions; 275.065, subdivisions 1, 3, 5a, 6, 8, and by adding subdivisions; 275.07, subdivision 4; 275.08, subdivision 1b; 276.04, subdivision 2; 276A.04; 276A.05, subdivisions 1 and 5; 276A.06, subdivisions 2, 3, 5, and 9; 278.07; 281.13; 281.23, subdivision 6; 281.273; 281.276; 282.01, subdivision 8; 282.04, subdivision 1; 287.22; 289A.02, subdivision 7; 289A.26, subdivisions 2, 3, 6, and 7; 289A.56, subdivision 4; 290.01, subdivisions 19, 19a, 19b, 19c, 19d, 19g, and 31; 290.014, subdivisions 2 and 3; 290.015, subdivision 5; 290.06, subdivision 22, and by adding subdivisions; 290.067, subdivision 1; 290.068, subdivision 1; 290.0922, subdivision 1; 290.17, subdivision 1; 290.371, subdivision 2; 290.92, by adding a subdivision; 290.9725; 290.9727, subdivision 1; 290.9728, subdivision 1; 290A.03, subdivisions 6, 7, 11, and 13; 290A.04, subdivisions 1, 2, 6, and by adding a subdivision; 290A.19; 291.005, subdivision 1; 295.50, subdivision 6; 295.58; 296.141, subdivision 4; 296.18, subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, 15, and 16; 297A.02, subdivision 2; 297A.14, subdivision 4; 297A.211, subdivision 1; 297A.25, subdivisions 2, 3, 7, 11, 56, 59, and by adding subdivisions; 297A.45; 297B.01, subdivisions 7 and 8; 297E.02, subdivision 6; 297E.04, subdivision 3; 298.24, subdivision 1; 298.28, subdivisions 2, 3, 4, 5, 9a, and by adding subdivisions; 298.2961, subdivision 1; 298.75, subdivisions 1, 4, and by adding a subdivision; 325D.33, subdivision 3; 349.12, subdivision 26a; 349.154, subdivision 2; 349.163, subdivision 8; 349.19, subdivision 2a; 349.191, subdivision 1b; 373.40, subdivision 7; 398A.04, subdivision 1; 462.381; 462.383; 462.384, subdivision 5; 462.385; 462.386, subdivision 1; 462.387; 462.388; 462.389, subdivisions 1, 3, and 4; 462.39, subdivisions 2 and 3; 462.391, subdivision 5, and by adding subdivisions; 462.393; 462.394; 462.396; 462.398; 469.012, subdivision 1; 469.033, subdivision 6; 469.040, subdivision 3, and by adding a subdivision; 469.174, subdivisions 10, 19, and by adding subdivisions; 469.175, subdivision 3, and by adding subdivisions; 469.176, subdivisions 1b, 2, 4c, 4g, 4j, and 6; 469.177, subdivisions 1, 3, and 4; 473F.06; 473F.07, subdivisions 1 and 5; 473F.08, subdivisions 2, 3, 5, and 8a; 477A.011, subdivisions 20, 34, 35, 36, 37, and by adding subdivisions; 477A.013, subdivisions 1 and 9; 477A.03, subdivision 2; and 477A.05; Laws 1992, chapter 511, article 2, section 52; Laws 1993, chapter 375, article 9, section 45, subdivisions 2, 3, 4, and by adding a subdivision; Laws 1995, chapter 264, article 5, sections 44, subdivision 4, as amended; and 45, subdivision 1, as amended; Laws 1997, chapter 34, section 2; proposing coding for new law in Minnesota Statutes, chapters 3; 14; 16A; 124; 124A; 270; 273; 275; 290; 297A; 383A; 383B; 458D; 462A; 469; 477A; proposing coding for new law as Minnesota Statutes, chapter 290B; repealing Minnesota Statutes 1996, sections 3.982; 124.2131, subdivision 3a; 124.2134; 124.225, subdivisions 1, 3a, 7a, 7b, 7d, 7e, 7f, 8a, 8k, 8l, 8m, 9, 10, 13, 14, 15, 16, and 17; 124.226; 124.2442; 124.2601, subdivisions 4, 5, and 6; 124.2711, subdivisions 2a and 3; 124.2713, subdivisions 6, 6a, 6b, and 7; 124.2715, subdivisions 2 and 3; 124.2716, subdivisions 3 and 4; 124.2725, subdivisions 3, 4, 5, and 7; 124.2727, subdivisions 6b, 6c, and 9; 124.314, subdivision 2; 124.321; 124.91, subdivisions 2, 4, and 7; 124.912, subdivision 2; 124A.029; 124A.03, subdivisions 2a and 3b; 124A.0311; 124A.22, subdivisions 4a, 4b, 8a, 8b, 13d, and 13e; 124A.23, subdivisions 1, 2, 3, and 4; 124A.26, subdivisions 2 and 3; 124A.292, subdivisions 3 and 4; 270B.12, subdivision 11; 273.13, subdivisions 21a and 32; 273.1315; 273.1317; 273.1318; 273.1398, subdivisions 2, 2c, 2d, 3, and 3a; 273.1399; 273.166; 275.08, subdivisions 1c and 1d; 275.61; 276.012; 276A.06, subdivision 9; 290A.03, subdivisions 12a and 14; 290A.055; 290A.26; 297A.01, subdivisions 20 and 21; 297A.02, subdivision 5; 297A.25, subdivision 29; 462.384, subdivision 7; 462.385, subdivision 2; 462.389, subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; 462.392; 469.176, subdivisions 1a and 5; 469.1782, subdivision 1; 469.181; 473F.08, subdivision 8a; and 645.34; Laws 1995, chapter 264, article 4, 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. There were 127 yeas and 6 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Peterson Tomassoni
Anderson, B. Finseth Kelso McCollum Pugh Tompkins
Anderson, I. Folliard Kielkucki McElroy Rest Trimble
Bakk Garcia Kinkel McGuire Rhodes Tuma
Bettermann Goodno Knoblach Milbert Rifenberg Tunheim
Biernat Greenfield Koppendrayer Molnau Rostberg Van Dellen
Bishop Greiling Koskinen Mulder Rukavina Vickerman
Boudreau Gunther Kraus Mullery Schumacher Wagenius
Bradley Haas Krinkie Munger Seagren Weaver
Broecker Harder Kubly Murphy Seifert Wejcman
Carlson Hasskamp Kuisle Ness Sekhon Wenzel
Chaudhary Hausman Larsen Nornes Skare Westfall
Clark Hilty Leighton Olson, E. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5253
Davids Huntley Lieder Osskopp Smith Wolf
Dawkins Jaros Lindner Osthoff Solberg Workman
Dehler Jefferson Long Otremba Stanek Spk. Carruthers
Delmont Jennings Luther Ozment Stang
Dempsey Johnson, A. Macklin Paulsen Swenson, D.
Dorn Johnson, R. Mahon Pawlenty Swenson, H.
Entenza Juhnke Mares Paymar Sykora
Erhardt Kahn Mariani Pelowski Tingelstad

Those who voted in the negative were:

Commers Farrell Knight Olson, M. Orfield Sviggum

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:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 1208.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 1208

A bill for an act relating to MinnesotaCare; eliminating the health care commission; modifying the regional coordinating boards; eliminating integrated service networks; modifying the health technology advisory committee; expanding the eligibility of the MinnesotaCare program; modifying general assistance medical care; modifying the enforcement mechanisms for the provider tax pass-through; modifying mandatory Medicare assignment; making technical, policy, and administrative changes and connections to MinnesotaCare taxes; providing grants for MinnesotaCare outreach; regulating community purchasing arrangements; requiring certain studies; appropriating money; amending Minnesota Statutes 1996, sections 60A.15, subdivision 1; 60A.951, subdivision 5; 62A.61; 62J.017; 62J.06; 62J.07, subdivisions 1 and 3; 62J.09, subdivision 1; 62J.15, subdivision 1; 62J.152, subdivisions 1, 2, 4, 5, and by adding a subdivision; 62J.17, subdivision 6a; 62J.22; 62J.25; 62J.2914, subdivision 1; 62J.2915; 62J.2916, subdivision 1; 62J.2917, subdivision 2; 62J.2921, subdivision 2; 62J.451, subdivision 6b; 62M.02, subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 62Q.45, subdivision 2; 136A.1355; 144.147, subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1;

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5254

256.01, subdivision 2; 256.045, subdivision 3a; 256.9352, subdivision 3; 256.9353, subdivisions 1, 3, and 7; 256.9354, subdivisions 4, 5, 6, 7, and by adding a subdivision; 256.9355, subdivisions 1, 4, and by adding a subdivision; 256.9357, subdivision 3; 256.9358, subdivision 4; 256.9359, subdivision 2; 256.9363, subdivisions 1 and 5; 256.9657, subdivision 3; 256B.0625, subdivision 13; 256D.03, subdivision 3; 295.50, subdivisions 3, 4, 6, 7, 9b, 13, 14, and by adding a subdivision; 295.51, subdivision 1; 295.52, subdivisions 1, 1a, 2, 4, and by adding subdivisions; 295.53, subdivisions 1, 3, and 4; 295.54, subdivisions 1 and 2; 295.55, subdivision 2; and 295.582; proposing coding for new law in Minnesota Statutes, chapters 16A; 144; and 256; proposing coding for new law as Minnesota Statutes, chapter 62S; repealing Minnesota Statutes 1996, sections 62E.11, subdivision 12; 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; 147.01, subdivision 6; 295.52, subdivision 1b; and 295.53, subdivision 5; Laws 1993, chapter 247, article 4, section 8; Laws 1994, chapter 625, article 5, section 5, as amended; Laws 1995, chapter 96, section 2; and Laws 1995, First Special Session chapter 3, article 13, section 2.

May 17, 1997

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. 1208, 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. 1208 be further amended as follows:

Delete everything after the enacting clause and insert:

"ARTICLE 1

MINNESOTACARE PROGRAM/GAMC

Section 1. Minnesota Statutes 1996, section 256.9353, 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 256.9354, subdivisions 1 to 5, or 256.9366, 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.

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Sec. 2. Minnesota Statutes 1996, section 256.9353, 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 256.9354, subdivision 5, or who qualify under section 256.9354, subdivisions 1 to 4a, or section 256.9366 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.

(b) Enrollees who qualify under section 256.9354, subdivision 5, or who qualify under section 256.9354, subdivisions 1 to 4a, or section 256.9366 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 256.9362, 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 256.9362, 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. 3. Minnesota Statutes 1996, section 256.9353, subdivision 7, is amended to read:

Subd. 7. [COPAYMENTS AND COINSURANCE.] The MinnesotaCare benefit plan shall include the following copayments and coinsurance requirements:

(1) ten percent of the paid charges submitted 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; and

(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 256.9354, subdivisions 1 to 5, or 256.9366, 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. MinnesotaCare shall be financially responsible for the spenddown amount up to the $10,000 benefit limit for enrollees who are eligible for medical assistance with a spenddown; enrollees who are eligible for medical assistance with a spenddown are financially responsible for amounts which exceed the $10,000 benefit limit. Effective July 1, 1997, adult enrollees who qualify under

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section 256.9354, subdivision 5, or who qualify under section 256.9354, subdivisions 1 to 4a, or section 256.9366 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.

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. 4. Minnesota Statutes 1996, section 256.9354, subdivision 4, is amended to read:

Subd. 4. [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning January 1, 1993, "eligible persons" means children, parents, and dependent siblings residing in the same household who are not eligible for medical assistance without a spenddown under chapter 256B. Children who meet the criteria in subdivision 1 or 4a shall continue to be enrolled pursuant to those subdivisions. Persons who are eligible under this subdivision or subdivision 2, 3, or 5 must pay a premium as determined under sections 256.9357 and 256.9358, and children eligible under subdivision 1 must pay the premium required under section 256.9356, subdivision 1. Individuals and families whose income is greater than the limits established under section 256.9358 may not enroll in MinnesotaCare.

Sec. 5. Minnesota Statutes 1996, section 256.9354, subdivision 5, is amended to read:

Subd. 5. [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) After October 1, 1995, the commissioner of human services may expand the definition of "eligible persons" to include all individuals and households with no children who have gross family incomes that are equal to or less than 135 percent of federal poverty guidelines and are not eligible for medical assistance without a spenddown under chapter 256B. This expansion may occur only if the financial management requirements of section 256.9352, subdivision 3, can be met.

(c) The commissioners of health and human services, in consultation with the legislative commission on health care access, shall make preliminary recommendations to the legislature by October 1, 1995, and final recommendations to the legislature by February 1, 1996, on whether a further expansion of the definition of "eligible persons" to include all individuals and households with no children who have gross family incomes that are equal to or less than 150 percent of federal poverty guidelines and are not eligible for medical assistance without a spenddown under chapter 256B would be allowed under the financial management constraints outlined in section 256.9352, subdivision 3.

(d) (b) Beginning July 1, 1997, 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 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 256.9357 and 256.9358. Individuals and families whose income is greater than the limits established under section 256.9358 may not enroll in the MinnesotaCare program.

Sec. 6. Minnesota Statutes 1996, section 256.9354, subdivision 6, is amended to read:

Subd. 6. [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL ASSISTANCE.] Individuals who apply for MinnesotaCare who qualify under section 256.9354, subdivision 5, 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 such individuals to their county social service agency. The enrollee must cooperate with the county social service agency in determining medical assistance eligibility

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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. 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. 7. Minnesota Statutes 1996, section 256.9354, subdivision 7, is amended to read:

Subd. 7. [GENERAL ASSISTANCE MEDICAL CARE.] A person cannot have coverage under both MinnesotaCare and general assistance medical care in the same month, except that a MinnesotaCare enrollee may be eligible for retroactive general assistance medical care according to section 256D.03, subdivision 3, paragraph (b).

Sec. 8. Minnesota Statutes 1996, section 256.9354, is amended by adding a subdivision to read:

Subd. 8. [MINNESOTACARE OUTREACH.] (a) The commissioner shall award grants to public or private organizations to provide information on the importance of maintaining insurance coverage and on how to obtain coverage through the MinnesotaCare program in areas of the state with high uninsured populations.

(b) In awarding the grants, the commissioner shall consider the following:

(1) geographic areas and populations with high uninsured rates;

(2) the ability to raise matching funds; and

(3) the ability to contact or serve eligible populations.

The commissioner shall monitor the grants and may terminate a grant if the outreach effort does not increase the MinnesotaCare program enrollment.

Sec. 9. Minnesota Statutes 1996, section 256.9355, subdivision 1, is amended to read:

Subdivision 1. [APPLICATION AND INFORMATION AVAILABILITY.] Applications and other information must be made available to provider offices, local human services agencies, school districts, public and private elementary schools in which 25 percent or more of the students receive free or reduced price lunches, community health offices, and Women, Infants and Children (WIC) program sites. These sites may accept applications, collect the enrollment fee or initial premium fee, and forward the forms and fees to the commissioner. Otherwise, applicants may apply directly to the commissioner. Beginning January 1, 2000, MinnesotaCare enrollment sites will be expanded to include local county human services agencies which choose to participate.

Sec. 10. Minnesota Statutes 1996, section 256.9355, 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. This requirement shall be suspended for four months following the dates in which single adults and families without children become eligible for the program. Beginning July 1, 2000, this requirement also applies to local county human services agencies that determine eligibility for MinnesotaCare.

Sec. 11. Minnesota Statutes 1996, section 256.9355, is amended by adding a subdivision to read:

Subd. 5. [AVAILABILITY OF PRIVATE INSURANCE.] The commissioner, in consultation with the commissioners of health and commerce, shall provide information regarding the availability of private health insurance coverage to all families and individuals enrolled in the MinnesotaCare program whose gross family income is equal to or more than 200 percent of the federal poverty guidelines. This information must be provided upon initial enrollment and annually thereafter.

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Sec. 12. Minnesota Statutes 1996, section 256.9357, subdivision 3, is amended to read:

Subd. 3. [PERIOD UNINSURED.] To be eligible for subsidized premium payments based on a sliding scale, families and individuals initially enrolled in the MinnesotaCare program under section 256.9354, subdivisions 4 and 5, must have had no health coverage for at least four months prior to application. The commissioner may change this eligibility criterion for sliding scale premiums without complying with rulemaking requirements 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:

(1) families, children, and individuals who want to 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 256.9354, subdivisions 1, paragraph (a), and 2;

(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.

Sec. 13. Minnesota Statutes 1996, section 256.9358, subdivision 4, is amended to read:

Subd. 4. [INELIGIBILITY.] Families with children whose gross monthly income is above the amount specified in subdivision 3 are not eligible for the plan. Beginning October 1, 1994, An individual or households with no children whose gross family income is greater than 125 percent of the federal poverty guidelines the amount specified in section 256.9354, subdivision 5, are ineligible for the plan.

Sec. 14. Minnesota Statutes 1996, section 256.9359, 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, 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. 15. Minnesota Statutes 1996, section 256.9362, 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 256.9354, subdivision 5, or who qualify under section 256.9354, subdivisions 1 to 4a, or section 256.9366 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 256.9354, subdivisions 1 to 4a, or section 256.9366, 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 256.9353, subdivision 6, is less than or equal to the amount remaining in the enrollee's benefit limit under section 256.9353, subdivision 3, payment must be the medical assistance rate minus any copayment required under section 256.9353, subdivision 6. 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.

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(b) If the medical assistance rate minus any copayment required under section 256.9353, subdivision 6, is greater than the amount remaining in the enrollee's benefit limit under section 256.9353, 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 256.9353, subdivision 6.

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 256.9353, subdivision 3, paragraph (c), 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 256.9354, subdivisions 1 to 4a, or 256.9366, 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. 16. Minnesota Statutes 1996, section 256.9363, 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.

Sec. 17. [256.937] [ASSET REQUIREMENT FOR MINNESOTACARE.]

Subdivision 1. [DEFINITIONS.] For purposes of this section, the following definitions apply.

(a) "Asset" means cash and other personal property, as well as any real property, that a family or individual owns which has monetary value.

(b) "Homestead" means the home that is owned by, and is the usual residence of, the family or individual, together with the surrounding property which is not separated from the home by intervening property owned by others. Public rights-of-way, such as roads that run through the surrounding property and separate it from the home, will not affect the exemption of the property. "Usual residence" includes the home from which the family or individual is temporarily absent due to illness, employment, or education, or because the home is temporarily not habitable due to casualty or natural disaster.

(c) "Net asset" means the asset's fair market value minus any encumbrances including, but not limited to, liens and mortgages.

Subd. 2. [LIMIT ON TOTAL ASSETS.] (a) Effective April 1, 1997, or upon federal approval, whichever is later, in order to be eligible for the MinnesotaCare program, a household of two or more persons must not own more than $30,000 in total net assets, and a household of one person must not own more than $15,000 in total net assets.

(b) For purposes of this subdivision, total net assets include all assets, with the following exceptions:

(1) a homestead is not considered;

(2) household goods and personal effects are not considered;

(3) any assets owned by children;

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(4) vehicles used for employment;

(5) court ordered settlements up to $10,000;

(6) individual retirement accounts; and

(7) capital and operating assets of a trade or business up to $200,000 in net assets are not considered.

(c) If an asset excluded under paragraph (b) has a negative value, the negative value shall be subtracted from the total net assets under paragraph (a).

Subd. 3. [DOCUMENTATION.] (a) The commissioner of human services shall require individuals and families, at the time of application or renewal, to indicate on a checkoff form developed by the commissioner whether they satisfy the MinnesotaCare asset requirement. This form must include the following or similar language: "To be eligible for MinnesotaCare, individuals and families must not own net assets in excess of $30,000 for a household of two or more persons or $15,000 for a household of one person, not including a homestead, household goods and personal effects, assets owned by children, vehicles used for employment, court ordered settlements up to $10,000, individual retirement accounts, and capital and operating assets of a trade or business up to $200,000. Do you and your household own net assets in excess of these limits?"

(b) The commissioner may require individuals and families to provide any information the commissioner determines necessary to verify compliance with the asset requirement, if the commissioner determines that there is reason to believe that an individual or family has assets that exceed the program limit.

Subd. 4. [PENALTIES.] Individuals or families who are found to have knowingly misreported the amount of their assets as described in this section shall be subject to the penalties in section 256.98. The commissioner shall present recommendations on additional penalties to the 1998 legislature.

Subd. 5. [EXEMPTION.] This section does not apply to pregnant women. For purposes of this subdivision, a woman is considered pregnant for 60 days postpartum.

Sec. 18. [256.9371] [PENALTIES.]

Whoever obtains or attempts to obtain, or aids or abets any person to obtain by means of a willfully false statement or representation, or by the intentional withholding or concealment of a material fact, or by impersonation, or other fraudulent device:

(1) benefits under the MinnesotaCare program to which the person is not entitled; or

(2) benefits under the MinnesotaCare program greater than that to which the person is reasonably entitled;

shall be considered to have violated section 256.98, and shall be subject to both the criminal and civil penalties provided under that section.

Sec. 19. Minnesota Statutes 1996, 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), except as provided in paragraph (b); and:

(1) who is receiving assistance under section 256D.05, or 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

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(2)(i) who is a resident of Minnesota; and whose equity in assets is not in excess of $1,000 per assistance unit. No asset test shall be applied to children and their parents living in the same household. 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 pursuant to section 256B.056, subdivision 5, using a six-month budget period, except that a one-month budget period must be used for recipients residing in a long-term care facility. The method for calculating earned income disregards and deductions for a person who resides with a dependent child under age 21 shall be as specified in section 256.74, subdivision 1 follow section 256B.056, subdivision 1a. However, if a disregard of $30 and one-third of the remainder described in section 256.74, subdivision 1, clause (4), 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 assistance, or aid to families with dependent children 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.

(4) Beginning July 1, 1998, applicants or recipients who meet all eligibility requirements of MinnesotaCare as defined in sections 256.9351 to 256.9363 and 256.9366 to 256.9369, 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 256.9354, subdivision 5, shall be terminated from general assistance medical care upon enrollment in MinnesotaCare.

(b) Eligibility is available for the month of application, and for three months prior to application if the person was eligible in those prior months. 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, Minnesota health care program applications completed by recipients and applicants who are persons described in paragraph (a), 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).

(c) 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) 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.

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(c) (e) 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.

(d) (f) 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), clause (4), whose MinnesotaCare coverage is denied or terminated for nonpayment of premiums as required by sections 256.9356 to 256.9358.

(e) (g) 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.

(f)(1) (h) Beginning October 1, 1993, an undocumented alien 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 alien is an individual who resides in the United States without the approval or acquiescence of the Immigration and Naturalization Service.

(2) (i) This subdivision 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 an alien who is aged, blind, or disabled as defined in United States Code, title 42, section 1382c(a)(1).

(3) (j) For purposes of paragraph paragraphs (f) and (h), "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.

Sec. 20. [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.]

(a) The commissioner of human services, in consultation with the legislative commission on health care access and the commissioners of employee relations, health, and commerce, shall develop an implementation plan to transition higher-income MinnesotaCare enrollees to private sector or other nonsubsidized coverage. In developing the plan, the commissioner shall examine the feasibility of using the health insurance program for state employees administered by the commissioner of employee relations as a source of coverage, and shall also examine methods to increase the affordability of private sector coverage for individuals and families transitioning off MinnesotaCare. The commissioner shall submit the implementation plan to the legislature by December 15, 1997.

(b) The commissioner of human services shall report to the legislature by January 15, 1998, on the impact of the outreach efforts for the MinnesotaCare program, and on the reasons why enrollees are leaving the MinnesotaCare program, and make recommendations on:

(1) the affordability of the MinnesotaCare premium schedule;

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(2) the eligibility income level for the MinnesotaCare program that will result in the greatest number of individuals having health coverage;

(3) what will encourage greater availability of health coverage in the private market;

(4) steps to increase the availability of health coverage in the small employer market;

(5) the need, if any, and the feasibility of increasing the MinnesotaCare program income eligibility level for individuals and households without children; and

(6) the possibility of alternative premium payments and of waiving the premiums for the MinnesotaCare program for certain low-income enrollees.

Sec. 21. [INPATIENT BENEFIT LIMIT PILOT PROJECT.]

The commissioner of human services shall develop a pilot project in a designated area of the state to determine whether the presence of the $10,000 inpatient hospital benefit limit prevents erosion of the private health insurance market by eliminating the $10,000 inpatient benefit limit for that area of the state. The commissioner shall work with the legislative commission on health care access in designing the elements of the pilot project.

Sec. 22. [EFFECTIVE DATE.]

Section 3, subdivision 7, clause (1), is effective July 1, 1998.

ARTICLE 2

MISCELLANEOUS CHANGES TO HEALTH CARE REFORM

Section 1. Minnesota Statutes 1996, section 60A.951, subdivision 5, is amended to read:

Subd. 5. [INSURER.] "Insurer" means insurance company, risk retention group as defined in section 60E.02, service plan corporation as defined in section 62C.02, health maintenance organization as defined in section 62D.02, community integrated service network as defined in section 62N.02, fraternal benefit society regulated under chapter 64B, township mutual company regulated under chapter 67A, joint self-insurance plan or multiple employer trust regulated under chapter 60F, 62H, or section 471.617, subdivision 2, persons administering a self-insurance plan as defined in section 60A.23, subdivision 8, clause (2), paragraphs (a) and (d), and the workers' compensation reinsurance association established in section 79.34.

Sec. 2. Minnesota Statutes 1996, section 62A.021, subdivision 1, is amended to read:

Subdivision 1. [LOSS RATIO STANDARDS.] (a) Notwithstanding section 62A.02, subdivision 3, relating to loss ratios, health care policies or certificates shall not be delivered or issued for delivery to an individual or to a small employer as defined in section 62L.02, unless the policies or certificates can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to Minnesota policyholders and certificate holders in the form of aggregate benefits not including anticipated refunds or credits, provided under the policies or certificates, (1) at least 75 percent of the aggregate amount of premiums earned in the case of policies issued in the small employer market, as defined in section 62L.02, subdivision 27, calculated on an aggregate basis; and (2) at least 65 percent of the aggregate amount of premiums earned in the case of each policy form or certificate form issued in the individual market; calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for the period and according to accepted actuarial principles and practices. Assessments by the reinsurance association created in chapter 62L and any all types of taxes, surcharges, or assessments created by Laws 1992, chapter 549, or created on or after April 23, 1992, are included in the calculation of incurred claims experience or incurred health care expenses. The applicable percentage for policies and certificates issued in the small employer market, as defined in section 62L.02, increases by one percentage point on July 1 of each year, beginning on July 1, 1994, until an 82 percent loss ratio is reached on July 1, 2000. The applicable percentage for policy

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forms and certificate forms issued in the individual market increases by one percentage point on July 1 of each year, beginning on July 1, 1994, until a 72 percent loss ratio is reached on July 1, 2000. A health carrier that enters a market after July 1, 1993, does not start at the beginning of the phase-in schedule and must instead comply with the loss ratio requirements applicable to other health carriers in that market for each time period. Premiums earned and claims incurred in markets other than the small employer and individual markets are not relevant for purposes of this section.

Notwithstanding section 645.26, any act enacted at the 1992 regular legislative session that amends or repeals section 62A.135 or that otherwise changes the loss ratios provided in that section is void.

(b) All filings of rates and rating schedules shall demonstrate that actual expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards, and aggregate loss ratio from inception of the policy form or certificate form shall equal or exceed the appropriate loss ratio standards.

(c) A health carrier that issues health care policies and certificates to individuals or to small employers, as defined in section 62L.02, in this state shall file annually its rates, rating schedule, and supporting documentation including ratios of incurred losses to earned premiums by policy form or certificate form duration for approval by the commissioner according to the filing requirements and procedures prescribed by the commissioner. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. If the data submitted does not confirm that the health carrier has satisfied the loss ratio requirements of this section, the commissioner shall notify the health carrier in writing of the deficiency. The health carrier shall have 30 days from the date of the commissioner's notice to file amended rates that comply with this section. If the health carrier fails to file amended rates within the prescribed time, the commissioner shall order that the health carrier's filed rates for the nonconforming policy form or certificate form be reduced to an amount that would have resulted in a loss ratio that complied with this section had it been in effect for the reporting period of the supplement. The health carrier's failure to file amended rates within the specified time or the issuance of the commissioner's order amending the rates does not preclude the health carrier from filing an amendment of its rates at a later time. The commissioner shall annually make the submitted data available to the public at a cost not to exceed the cost of copying. The data must be compiled in a form useful for consumers who wish to compare premium charges and loss ratios.

(d) Each sale of a policy or certificate that does not comply with the loss ratio requirements of this section is an unfair or deceptive act or practice in the business of insurance and is subject to the penalties in sections 72A.17 to 72A.32.

(e)(1) For purposes of this section, health care policies issued as a result of solicitations of individuals through the mail or mass media advertising, including both print and broadcast advertising, shall be treated as individual policies.

(2) For purposes of this section, (1) (i) "health care policy" or "health care certificate" is a health plan as defined in section 62A.011; and (2) (ii) "health carrier" has the meaning given in section 62A.011 and includes all health carriers delivering or issuing for delivery health care policies or certificates in this state or offering these policies or certificates to residents of this state.

(f) The loss ratio phase-in as described in paragraph (a) does not apply to individual policies and small employer policies issued by a health plan company that is assessed less than three percent of the total annual amount assessed by the Minnesota comprehensive health association. These policies must meet a 68 percent loss ratio for individual policies, a 71 percent loss ratio for small employer policies with fewer than ten employees, and a 75 percent loss ratio for all other small employer policies.

(g) The commissioners of commerce and health shall each annually issue a public report listing, by health plan company, the actual loss ratios experienced in the individual and small employer markets in this state by the health plan companies that the commissioners respectively regulate. The commissioners shall coordinate release of these reports so as to release them as a joint report or as separate reports issued the same day. The report or reports shall be released no later than June 1 for loss ratios experienced for the preceding calendar year. Health plan companies shall provide to the commissioners any information requested by the commissioners for purposes of this paragraph.

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Sec. 3. Minnesota Statutes 1996, section 62A.021, is amended by adding a subdivision to read:

Subd. 3. [LOSS RATIO DISCLOSURE.] (a) Each health care policy form or health care certificate form for which subdivision 1 requires compliance with a loss ratio requirement shall prominently display the disclosure provided in paragraph (b) on its declarations sheet if it has one and, if not, on its front page. The disclosure must also be prominently displayed in any marketing materials used in connection with it.

(b) The disclosure must be in the following format:

Notice: This disclosure is required by Minnesota law. This policy or certificate is expected to return on average (fill in anticipated loss ratio approved by the commissioner) percent of your premium dollar for health care. The lowest percentage permitted by state law for this policy or certificate is (fill in applicable minimum loss ratio).

(c) This subdivision applies to policies and certificates issued on or after January 1, 1998.

Sec. 4. Minnesota Statutes 1996, section 62A.316, is amended to read:

62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.]

(a) The basic Medicare supplement plan must have a level of coverage that will provide:

(1) coverage for all of the Medicare part A inpatient hospital coinsurance amounts, and 100 percent of all Medicare part A eligible expenses for hospitalization not covered by Medicare, after satisfying the Medicare part A deductible;

(2) coverage for the daily copayment amount of Medicare part A eligible expenses for the calendar year incurred for skilled nursing facility care;

(3) coverage for the copayment amount of Medicare eligible expenses under Medicare part B regardless of hospital confinement, subject to the Medicare part B deductible amount;

(4) 80 percent of the hospital and medical expenses and supplies incurred during travel outside the United States as a result of a medical emergency;

(5) coverage for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells as defined under federal regulations under Medicare parts A and B, unless replaced in accordance with federal regulations; and

(6) 100 percent of the cost of immunizations and routine screening procedures for cancer screening including mammograms and pap smears.

(b) Only the following optional benefit riders may be added to this plan:

(1) coverage for all of the Medicare part A inpatient hospital deductible amount;

(2) a minimum of 80 percent of eligible medical expenses and supplies not covered by Medicare part B, not to exceed any charge limitation established by the Medicare program or state law;

(3) coverage for all of the Medicare part B annual deductible;

(4) coverage for at least 50 percent, or the equivalent of 50 percent, of usual and customary prescription drug expenses;

(5) coverage for the following preventive health services:

(i) an annual clinical preventive medical history and physical examination that may include tests and services from clause (ii) and patient education to address preventive health care measures;

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(ii) any one or a combination of the following preventive screening tests or preventive services, the frequency of which is considered medically appropriate:

(A) fecal occult blood test and/or digital rectal examination;

(B) dipstick urinalysis for hematuria, bacteriuria, and proteinuria;

(C) pure tone (air only) hearing screening test, administered or ordered by a physician;

(D) serum cholesterol screening every five years;

(E) thyroid function test;

(F) diabetes screening;

(iii) any other tests or preventive measures determined appropriate by the attending physician.

Reimbursement shall be for the actual charges up to 100 percent of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association current procedural terminology (AMA CPT) codes, to a maximum of $120 annually under this benefit. This benefit shall not include payment for a procedure covered by Medicare;

(6) coverage for services to provide short-term at-home assistance with activities of daily living for those recovering from an illness, injury, or surgery:

(i) For purposes of this benefit, the following definitions apply:

(A) "activities of daily living" include, but are not limited to, bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings;

(B) "care provider" means a duly qualified or licensed home health aide/homemaker, personal care aid, or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses registry;

(C) "home" means a place used by the insured as a place of residence, provided that the place would qualify as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility shall not be considered the insured's place of residence;

(D) "at-home recovery visit" means the period of a visit required to provide at-home recovery care, without limit on the duration of the visit, except each consecutive four hours in a 24-hour period of services provided by a care provider is one visit;

(ii) Coverage requirements and limitations:

(A) at-home recovery services provided must be primarily services that assist in activities of daily living;

(B) the insured's attending physician must certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare;

(C) coverage is limited to:

(I) no more than the number and type of at-home recovery visits certified as necessary by the insured's attending physician. The total number of at-home recovery visits shall not exceed the number of Medicare-approved home care visits under a Medicare-approved home care plan of treatment;

(II) the actual charges for each visit up to a maximum reimbursement of $40 per visit;

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(III) $1,600 per calendar year;

(IV) seven visits in any one week;

(V) care furnished on a visiting basis in the insured's home;

(VI) services provided by a care provider as defined in this section;

(VII) at-home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded;

(VIII) at-home recovery visits received during the period the insured is receiving Medicare-approved home care services or no more than eight weeks after the service date of the last Medicare-approved home health care visit;

(iii) Coverage is excluded for:

(A) home care visits paid for by Medicare or other government programs; and

(B) care provided by family members, unpaid volunteers, or providers who are not care providers.;

(7) coverage for at least 50 percent, or the equivalent of 50 percent, of usual and customary prescription drug expenses to a maximum of $1,200 paid by the issuer annually under this benefit. An issuer of Medicare supplement insurance policies that elects to offer this benefit rider shall also make available coverage that contains the rider specified in clause (4).

Sec. 5. Minnesota Statutes 1996, section 62A.61, is amended to read:

62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO DETERMINE USUAL AND CUSTOMARY FEES.]

(a) A health carrier that bases reimbursement to health care providers upon a usual and customary fee must maintain in its office a copy of a description of the methodology used to calculate fees including at least the following:

(1) the frequency of the determination of usual and customary fees;

(2) a general description of the methodology used to determine usual and customary fees; and

(3) the percentile of usual and customary fees that determines the maximum allowable reimbursement.

(b) A health carrier must provide a copy of the information described in paragraph (a) to the Minnesota health care commission, the commissioner of health, or the commissioner of commerce, upon request.

(c) The commissioner of health or the commissioner of commerce, as appropriate, may use to enforce this section any enforcement powers otherwise available to the commissioner with respect to the health carrier. The appropriate commissioner shall enforce compliance with a request made under this section by the Minnesota health care commission, at the request of the commissioner. The commissioner of health or commerce, as appropriate, may require health carriers to provide the information required under this section and may use any powers granted under other laws relating to the regulation of health carriers to enforce compliance.

(d) For purposes of this section, "health carrier" has the meaning given in section 62A.011.

Sec. 6. Minnesota Statutes 1996, section 62D.02, subdivision 5, is amended to read:

Subd. 5. "Evidence of coverage" means any certificate, agreement or contract, and amendments thereto, issued to an enrollee which sets out the coverage to which the enrollee is entitled under the health maintenance contract which covers the enrollee.

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Sec. 7. Minnesota Statutes 1996, section 62D.09, subdivision 3, is amended to read:

Subd. 3. Every health maintenance organization or its representative shall annually, before June 1, provide to its enrollees the following: (1) a summary of its most recent annual financial statement including a balance sheet and statement of receipts and disbursements; (2) a description of the health maintenance organization, its health care plan or plans, its facilities and personnel, any material changes therein since the last report; (3) the current evidence of coverage, or contract amendments thereto; and (4) a statement of consumer information and rights as described in section 62D.07, subdivision 3, paragraph (c). Under clause (3), a health maintenance organization may annually alternate between providing enrollees with amendments and providing current evidence of coverage.

Sec. 8. Minnesota Statutes 1996, section 62E.11, subdivision 5, is amended to read:

Subd. 5. Each contributing member of the association shall share the losses due to claims expenses of the comprehensive health insurance plan for plans issued or approved for issuance by the association, and shall share in the operating and administrative expenses incurred or estimated to be incurred by the association incident to the conduct of its affairs. Claims expenses of the state plan which exceed the premium payments allocated to the payment of benefits shall be the liability of the contributing members. Contributing members shall share in the claims expense of the state plan and operating and administrative expenses of the association in an amount equal to the ratio of the contributing member's total accident and health insurance premium, received from or on behalf of Minnesota residents as divided by the total accident and health insurance premium, received by all contributing members from or on behalf of Minnesota residents, as determined by the commissioner. Payments made by the state to a contributing member for medical assistance, MinnesotaCare, or general assistance medical care services according to chapters 256, 256B, and 256D shall be excluded when determining a contributing member's total premium.

Sec. 9. Minnesota Statutes 1996, section 62J.017, is amended to read:

62J.017 [IMPLEMENTATION TIMETABLE.]

The state seeks to complete the restructuring of the health care delivery and financing system. Beginning July 1, 1994, measures will be taken to increase the public accountability of existing health plan companies, to promote the development of small, community-based integrated service networks, and to reduce administrative costs by standardizing third-party billing forms and procedures and utilization review requirements. Voluntary formation of other integrated service networks will begin after rules have been adopted, but not before July 1, 1996. Statutes and rules for the restructured health care financing and delivery system must be enacted or adopted by January 1, 1996.

Sec. 10. Minnesota Statutes 1996, section 62J.06, is amended to read:

62J.06 [IMMUNITY FROM LIABILITY.]

No member of the Minnesota health care commission established under section 62J.05, regional coordinating boards established under section 62J.09, or the health technology advisory committee established under section 62J.15, shall be held civilly or criminally liable for an act or omission by that person if the act or omission was in good faith and within the scope of the member's responsibilities under this chapter.

Sec. 11. Minnesota Statutes 1996, section 62J.07, subdivision 1, is amended to read:

Subdivision 1. [LEGISLATIVE OVERSIGHT.] The legislative commission on health care access reviews the activities of the commissioner of health, the state health care commission regional coordinating boards, the health technology advisory committee, and all other state agencies involved in the implementation and administration of this chapter, including efforts to obtain federal approval through waivers and other means.

Sec. 12. Minnesota Statutes 1996, section 62J.07, subdivision 3, is amended to read:

Subd. 3. [REPORTS TO THE COMMISSION.] The commissioner of health and the Minnesota health care commission, the regional coordinating boards, and the health technology advisory committee shall report on their activities and the activities of the regional boards annually and at other times at the request of the legislative commission on health care access.

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The commissioners of health, commerce, and human services shall provide periodic reports to the legislative commission on the progress of rulemaking that is authorized or required under this act and shall notify members of the commission when a draft of a proposed rule has been completed and scheduled for publication in the State Register. At the request of a member of the commission, a commissioner shall provide a description and a copy of a proposed rule.

Sec. 13. Minnesota Statutes 1996, section 62J.09, subdivision 1, is amended to read:

Subdivision 1. [GENERAL DUTIES.] (a) The commissioner shall divide the state into six regions, one of these regions being the seven-county metropolitan area.

The (b) Each region shall establish a locally controlled regional coordinating boards are locally controlled boards board consisting of providers, health plan companies, employers, consumers, and elected officials. Regional coordinating boards may:

(1) undertake voluntary activities to educate consumers, providers, and purchasers about community plans and projects promoting health care cost containment, consumer accountability, access, and quality and efforts to achieve public health goals;

(2) make recommendations to the commissioner regarding ways of improving affordability, accessibility, and quality of health care in the region and throughout the state;

(3) provide technical assistance to parties interested in establishing or operating a community integrated service network or integrated service network within the region. This assistance must complement assistance provided by the commissioner under section 62N.23;

(4) advise the commissioner on public health goals, taking into consideration the relevant portions of the community health service plans, plans required by the Minnesota comprehensive adult mental health act, the Minnesota comprehensive children's mental health act, and the community social service act plans developed by county boards or community health boards in the region under chapters 145A, 245, and 256E;

(5) prepare an annual regional education plan that is consistent with and supportive of public health goals identified by community health boards in the region; and

(6) serve as advisory bodies to identify potential applicants for federal Health Professional Shortage Area and federal Medically Underserved Area designation as requested by the commissioner.

Sec. 14. Minnesota Statutes 1996, section 62J.15, subdivision 1, is amended to read:

Subdivision 1. [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The Minnesota health care commission shall convene legislative commission on health care access may convene or authorize the commissioner of health to convene an advisory committee to conduct evaluations of existing research and technology assessments conducted by other entities of new and existing health care technologies as designated by the legislative commission on health care access, the commissioner, or the advisory committee. The advisory committee may include members of the state commission and other persons appointed by the commission. The advisory committee must include at least one person representing physicians, at least one person representing hospitals, and at least one person representing the health care technology industry. Health care technologies include high-cost drugs, devices, procedures, or processes applied to human health care, such as high-cost transplants and expensive scanners and imagers. The advisory committee is governed by section 15.0575, subdivision 3, except that members do not receive per diem payments.

Sec. 15. Minnesota Statutes 1996, section 62J.152, subdivision 1, is amended to read:

Subdivision 1. [GENERALLY.] The health technology advisory committee established in section 62J.15 shall:

(1) develop criteria and processes for evaluating health care technology assessments made by other entities;

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(2) conduct evaluations of specific technologies and their specific use and application;

(3) provide the legislature with scientific evaluations of proposed benefit mandates that utilize health care technologies for a specific use and application;

(4) report the results of the evaluations to the commissioner and the Minnesota health care commission legislative commission on health care access; and

(4) (5) carry out other duties relating to health technology assigned by the commission legislature or the legislative commission on health care access.

Sec. 16. Minnesota Statutes 1996, section 62J.152, is amended by adding a subdivision to read:

Subd. 1a. [LEGISLATIVE ACTION.] Nothing in subdivision 1 shall be construed to:

(1) require the legislature to postpone hearings or legislative action on a proposed benefit mandate; or

(2) require the legislature to act in accordance with any recommendations of the health technology advisory committee.

Sec. 17. Minnesota Statutes 1996, section 62J.152, subdivision 2, is amended to read:

Subd. 2. [PRIORITIES FOR DESIGNATING TECHNOLOGIES CRITERIA FOR ASSESSMENT EVALUATION.] The health technology advisory committee shall consider the following criteria in designating assessing or evaluating technologies for evaluation:

(1) the level of controversy within the medical or scientific community, including questionable or undetermined efficacy;

(2) the cost implications;

(3) the potential for rapid diffusion;

(4) the impact on a substantial patient population;

(5) the existence of alternative technologies;

(6) the impact on patient safety and health outcome;

(7) the public health importance;

(8) the level of public and professional demand;

(9) the social, ethical, and legal concerns; and

(10) the prevalence of the disease or condition.

The committee may give different weights or attach different importance to each of the criteria, depending on the technology being considered. The committee shall consider any additional criteria approved by the commissioner and the Minnesota health care commission legislative commission on health care access. The committee shall present its list of technologies for evaluation to the legislative commission on health care access for review.

Sec. 18. Minnesota Statutes 1996, section 62J.152, subdivision 4, is amended to read:

Subd. 4. [TECHNOLOGY EVALUATION PROCESS.] (a) The health technology advisory committee shall collect and evaluate studies and research findings on the technologies selected for evaluation from as wide of a range of sources as needed, including, but not limited to: federal agencies or other units of government, international organizations conducting

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health care technology assessments, health carriers, insurers, manufacturers, professional and trade associations, nonprofit organizations, and academic institutions. The health technology advisory committee may use consultants or experts and solicit testimony or other input as needed to evaluate a specific technology.

(b) When the evaluation process on a specific technology has been completed, the health technology advisory committee shall submit a preliminary report to the health care commission commissioner and the legislative commission on health care access and publish a summary of the preliminary report in the State Register with a notice that written comments may be submitted. The preliminary report must include the results of the technology assessment evaluation, studies and research findings considered in conducting the evaluation, and the health technology advisory committee's summary statement about the evaluation. Any interested persons or organizations may submit to the health technology advisory committee written comments regarding the technology evaluation within 30 days from the date the preliminary report was published in the State Register. The health technology advisory committee's final report on its technology evaluation must be submitted to the health care commission commissioner, to the legislature, and to the information clearinghouse. A summary of written comments received by the health technology advisory committee within the 30-day period must be included in the final report. The health care commission shall review the final report and prepare its comments and recommendations. Before completing its final comments and recommendations, the health care commission shall provide adequate public notice that testimony will be accepted by the health care commission. The health care commission shall then forward the final report, its comments and recommendations, and a summary of the public's comments to the commissioner and information clearinghouse.

(c) The reports of the health technology advisory committee and the comments and recommendations of the health care commission should not eliminate or bar new technology, and are not rules as defined in the administrative procedure act.

Sec. 19. Minnesota Statutes 1996, section 62J.152, subdivision 5, is amended to read:

Subd. 5. [USE OF TECHNOLOGY EVALUATION.] (a) The final report on the technology evaluation and the commission's comments and recommendations may be used:

(1) by the commissioner in retrospective and prospective review of major expenditures;

(2) by integrated service networks and other group purchasers and by employers, in making coverage, contracting, purchasing, and reimbursement decisions;

(3) by organizations in the development of practice parameters;

(4) by health care providers in making decisions about adding or replacing technology and the appropriate use of technology;

(5) by consumers in making decisions about treatment;

(6) by medical device manufacturers in developing and marketing new technologies; and

(7) as otherwise needed by health care providers, health care plans, consumers, and purchasers.

(b) At the request of the commissioner, the health care commission, in consultation with the health technology advisory committee, shall submit specific recommendations relating to technologies that have been evaluated under this section for purposes of retrospective and prospective review of major expenditures and coverage, contracting, purchasing, and reimbursement decisions affecting state programs.

Sec. 20. Minnesota Statutes 1996, section 62J.152, is amended by adding a subdivision to read:

Subd. 8. [REPEALER.] This section and sections 62J.15 and 62J.156 are repealed effective July 1, 2001.

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Sec. 21. Minnesota Statutes 1996, section 62J.17, subdivision 6a, is amended to read:

Subd. 6a. [PROSPECTIVE REVIEW AND APPROVAL.] (a) [REQUIREMENT.] No health care provider subject to prospective review under this subdivision shall make a major spending commitment unless:

(1) the provider has filed an application with the commissioner to proceed with the major spending commitment and has provided all supporting documentation and evidence requested by the commissioner; and

(2) the commissioner determines, based upon this documentation and evidence, that the major spending commitment is appropriate under the criteria provided in subdivision 5a in light of the alternatives available to the provider.

(b) [APPLICATION.] A provider subject to prospective review and approval shall submit an application to the commissioner before proceeding with any major spending commitment. The application must address each item listed in subdivision 4a, paragraph (a), and must also include documentation to support the response to each item. The provider may submit information, with supporting documentation, regarding why the major spending commitment should be excepted from prospective review under subdivision 7. The submission may be made either in addition to or instead of the submission of information relating to the items listed in subdivision 4a, paragraph (a).

(c) [REVIEW.] The commissioner shall determine, based upon the information submitted, whether the major spending commitment is appropriate under the criteria provided in subdivision 5a, or whether it should be excepted from prospective review under subdivision 7. In making this determination, the commissioner may also consider relevant information from other sources. At the request of the commissioner, the Minnesota health care commission health technology advisory committee shall convene an expert review panel made up of persons with knowledge and expertise regarding medical equipment, specialized services, health care expenditures, and capital expenditures to review applications and make recommendations to the commissioner. The commissioner shall make a decision on the application within 60 days after an application is received.

(d) [PENALTIES AND REMEDIES.] The commissioner of health has the authority to issue fines, seek injunctions, and pursue other remedies as provided by law.

Sec. 22. Minnesota Statutes 1996, section 62J.22, is amended to read:

62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.]

The commissioner of health shall seek the full participation of federal health care programs under this chapter, including Medicare, medical assistance, veterans administration programs, and other federal programs. The commissioner of human services shall under the direction of the health care commission submit waiver requests and take other action necessary to obtain federal approval to allow participation of the medical assistance program. Other state agencies shall provide assistance at the request of the commission. If federal approval is not given for one or more federal programs, data on the amount of health care spending that is collected under section 62J.04 shall be adjusted so that state and regional spending limits take into account the failure of the federal program to participate.

Sec. 23. Minnesota Statutes 1996, section 62J.25, is amended to read:

62J.25 [MANDATORY MEDICARE ASSIGNMENT.]

(a) Effective January 1, 1993, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 115 percent of the Medicare-approved amount for any Medicare-covered service provided.

(b) Effective January 1, 1994, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 110 percent of the Medicare-approved amount for any Medicare-covered service provided.

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(c) Effective January 1, 1995, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 105 percent of the Medicare-approved amount for any Medicare-covered service provided.

(d) Effective January 1, 1996, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of the Medicare-approved amount for any Medicare-covered service provided.

(e) This section does not apply to ambulance services as defined in section 144.801, subdivision 4, or medical supplies and equipment.

Sec. 24. Minnesota Statutes 1996, section 62J.2914, subdivision 1, is amended to read:

Subdivision 1. [DISCLOSURE.] An application for approval must include, to the extent applicable, disclosure of the following:

(1) a descriptive title;

(2) a table of contents;

(3) exact names of each party to the application and the address of the principal business office of each party;

(4) the name, address, and telephone number of the persons authorized to receive notices and communications with respect to the application;

(5) a verified statement by a responsible officer of each party to the application attesting to the accuracy and completeness of the enclosed information;

(6) background information relating to the proposed arrangement, including:

(i) a description of the proposed arrangement, including a list of any services or products that are the subject of the proposed arrangement;

(ii) an identification of any tangential services or products associated with the services or products that are the subject of the proposed arrangement;

(iii) a description of the geographic territory involved in the proposed arrangement;

(iv) if the geographic territory described in item (iii), is different from the territory in which the applicants have engaged in the type of business at issue over the last five years, a description of how and why the geographic territory differs;

(v) identification of all products or services that a substantial share of consumers would consider substitutes for any service or product that is the subject of the proposed arrangement;

(vi) identification of whether any services or products of the proposed arrangement are currently being offered, capable of being offered, utilized, or capable of being utilized by other providers or purchasers in the geographic territory described in item (iii);

(vii) identification of the steps necessary, under current market and regulatory conditions, for other parties to enter the territory described in item (iii) and compete with the applicant;

(viii) a description of the previous history of dealings between the parties to the application;

(ix) a detailed explanation of the projected effects, including expected volume, change in price, and increased revenue, of the arrangement on each party's current businesses, both generally as well as the aspects of the business directly involved in the proposed arrangement;

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(x) the present market share of the parties to the application and of others affected by the proposed arrangement, and projected market shares after implementation of the proposed arrangement;

(xi) a statement of why the projected levels of cost, access, or quality could not be achieved in the existing market without the proposed arrangement; and

(xii) an explanation of how the arrangement relates to any Minnesota health care commission or applicable regional coordinating board plans for delivery of health care; and

(7) a detailed explanation of how the transaction will affect cost, access, and quality. The explanation must address the factors in section 62J.2917, subdivision 2, paragraphs (b) to (d), to the extent applicable.

Sec. 25. Minnesota Statutes 1996, section 62J.2915, is amended to read:

62J.2915 [NOTICE AND COMMENT.]

Subdivision 1. [NOTICE.] The commissioner shall cause the notice described in section 62J.2914, subdivision 2, to be published in the State Register and sent to the Minnesota health care commission, the regional coordinating boards for any regions that include all or part of the territory covered by the proposed arrangement, and any person who has requested to be placed on a list to receive notice of applications. The commissioner may maintain separate notice lists for different regions of the state. The commissioner may also send a copy of the notice to any person together with a request that the person comment as provided under subdivision 2. Copies of the request must be provided to the applicant.

Subd. 2. [COMMENTS.] Within 20 days after the notice is published, any person may mail to the commissioner written comments with respect to the application. Within 30 days after the notice is published, the Minnesota health care commission or any regional coordinating board may mail to the commissioner comments with respect to the application. Persons submitting comments shall provide a copy of the comments to the applicant. The applicant may mail to the commissioner written responses to any comments within ten days after the deadline for mailing such comments. The applicant shall send a copy of the response to the person submitting the comment.

Sec. 26. Minnesota Statutes 1996, section 62J.2916, subdivision 1, is amended to read:

Subdivision 1. [CHOICE OF PROCEDURES.] After the conclusion of the period provided in section 62J.2915, subdivision 2, for the applicant to respond to comments, the commissioner shall select one of the three procedures provided in subdivision 2. In determining which procedure to use, the commissioner shall consider the following criteria:

(1) the size of the proposed arrangement, in terms of number of parties and amount of money involved;

(2) the complexity of the proposed arrangement;

(3) the novelty of the proposed arrangement;

(4) the substance and quantity of the comments received;

(5) any comments received from the Minnesota health care commission or regional coordinating boards; and

(6) the presence or absence of any significant gaps in the factual record.

If the applicant demands a contested case hearing no later than the conclusion of the period provided in section 62J.2915, subdivision 2, for the applicant to respond to comments, the commissioner shall not select a procedure. Instead, the applicant shall be given a contested case proceeding as a matter of right.

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Sec. 27. Minnesota Statutes 1996, section 62J.2917, subdivision 2, is amended to read:

Subd. 2. [FACTORS.] (a) [GENERALLY APPLICABLE FACTORS.] In making a determination about cost, access, and quality, the commissioner may consider the following factors, to the extent relevant:

(1) whether the proposal is compatible with the cost containment plan or other plan of the Minnesota health care commission or the applicable regional plans of the regional coordinating boards;

(2) market structure:

(i) actual and potential sellers and buyers, or providers and purchasers;

(ii) actual and potential consumers;

(iii) geographic market area; and

(iv) entry conditions;

(3) current market conditions;

(4) the historical behavior of the market;

(5) performance of other, similar arrangements;

(6) whether the proposal unnecessarily restrains competition or restrains competition in ways not reasonably related to the purposes of this chapter; and

(7) the financial condition of the applicant.

(b) [COST.] The commissioner's analysis of cost must focus on the individual consumer of health care. Cost savings to be realized by providers, health carriers, group purchasers, or other participants in the health care system are relevant only to the extent that the savings are likely to be passed on to the consumer. However, where an application is submitted by providers or purchasers who are paid primarily by third party payers unaffiliated with the applicant, it is sufficient for the applicant to show that cost savings are likely to be passed on to the unaffiliated third party payers; the applicants do not have the burden of proving that third party payers with whom the applicants are not affiliated will pass on cost savings to individuals receiving coverage through the third party payers. In making determinations as to costs, the commissioner may consider:

(1) the cost savings likely to result to the applicant;

(2) the extent to which the cost savings are likely to be passed on to the consumer and in what form;

(3) the extent to which the proposed arrangement is likely to result in cost shifting by the applicant onto other payers or purchasers of other products or services;

(4) the extent to which the cost shifting by the applicant is likely to be followed by other persons in the market;

(5) the current and anticipated supply and demand for any products or services at issue;

(6) the representations and guarantees of the applicant and their enforceability;

(7) likely effectiveness of regulation by the commissioner;

(8) inferences to be drawn from market structure;

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(9) the cost of regulation, both for the state and for the applicant; and

(10) any other factors tending to show that the proposed arrangement is or is not likely to reduce cost.

(c) [ACCESS.] In making determinations as to access, the commissioner may consider:

(1) the extent to which the utilization of needed health care services or products by the intended targeted population is likely to increase or decrease. When a proposed arrangement is likely to increase access in one geographic area, by lowering prices or otherwise expanding supply, but limits access in another geographic area by removing service capabilities from that second area, the commissioner shall articulate the criteria employed to balance these effects;

(2) the extent to which the proposed arrangement is likely to make available a new and needed service or product to a certain geographic area; and

(3) the extent to which the proposed arrangement is likely to otherwise make health care services or products more financially or geographically available to persons who need them.

If the commissioner determines that the proposed arrangement is likely to increase access and bases that determination on a projected increase in utilization, the commissioner shall also determine and make a specific finding that the increased utilization does not reflect overutilization.

(d) [QUALITY.] In making determinations as to quality, the commissioner may consider the extent to which the proposed arrangement is likely to:

(1) decrease morbidity and mortality;

(2) result in faster convalescence;

(3) result in fewer hospital days;

(4) permit providers to attain needed experience or frequency of treatment, likely to lead to better outcomes;

(5) increase patient satisfaction; and

(6) have any other features likely to improve or reduce the quality of health care.

Sec. 28. Minnesota Statutes 1996, section 62J.2921, subdivision 2, is amended to read:

Subd. 2. [NOTICE.] The commissioner shall begin a proceeding to revoke approval by providing written notice to the applicant describing in detail the basis for the proposed revocation. Notice of the proceeding must be published in the State Register and submitted to the Minnesota health care commission and the applicable regional coordinating boards. The notice must invite the submission of comments to the commissioner.

Sec. 29. Minnesota Statutes 1996, section 62J.451, subdivision 6b, is amended to read:

Subd. 6b. [CONSUMER SURVEYS.] (a) The health data institute shall develop and implement a mechanism for collecting comparative data on consumer perceptions of the health care system, including consumer satisfaction, through adoption of a standard consumer survey. This survey shall include enrollees in community integrated service networks, integrated service networks, health maintenance organizations, preferred provider organizations, indemnity insurance plans, public programs, and other health plan companies. The health data institute, in consultation with the health care commission, shall determine a mechanism for the inclusion of the uninsured. This consumer survey may be conducted every two years. A focused survey may be conducted on the off years. Health plan companies and group purchasers shall provide to the health data institute roster data as defined in subdivision 2, including the names, addresses, and telephone numbers of enrollees and former enrollees and other data necessary for the completion of this survey. This roster data provided by the health plan companies and group purchasers is classified as provided under section 62J.452. The health data institute may analyze and

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prepare findings from the raw, unaggregated data, and the findings from this survey may be included in the health plan company performance reports specified in subdivision 6a, and in other reports developed and disseminated by the health data institute and the commissioner. The raw, unaggregated data is classified as provided under section 62J.452, and may be made available by the health data institute to the extent permitted under section 62J.452. The health data institute shall provide raw, unaggregated data to the commissioner. The survey may include information on the following subjects:

(1) enrollees' overall satisfaction with their health care plan;

(2) consumers' perception of access to emergency, urgent, routine, and preventive care, including locations, hours, waiting times, and access to care when needed;

(3) premiums and costs;

(4) technical competence of providers;

(5) communication, courtesy, respect, reassurance, and support;

(6) choice and continuity of providers;

(7) continuity of care;

(8) outcomes of care;

(9) services offered by the plan, including range of services, coverage for preventive and routine services, and coverage for illness and hospitalization;

(10) availability of information; and

(11) paperwork.

(b) The health data institute shall appoint a consumer advisory group which shall consist of 13 individuals, representing enrollees from public and private health plan companies and programs and two uninsured consumers, to advise the health data institute on issues of concern to consumers. The advisory group must have at least one member from each regional coordinating board region of the state. The advisory group expires June 30, 1996.

Sec. 30. Minnesota Statutes 1996, section 62M.02, subdivision 21, is amended to read:

Subd. 21. [UTILIZATION REVIEW ORGANIZATION.] "Utilization review organization" means an entity including but not limited to an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a health service plan licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a community integrated service network or an integrated service network licensed under chapter 62N; a fraternal benefit society operating under chapter 64B; a joint self-insurance employee health plan operating under chapter 62H; a multiple employer welfare arrangement, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended; a third party administrator licensed under section 60A.23, subdivision 8, which conducts utilization review and determines certification of an admission, extension of stay, or other health care services for a Minnesota resident; or any entity performing utilization review that is affiliated with, under contract with, or conducting utilization review on behalf of, a business entity in this state.

Sec. 31. Minnesota Statutes 1996, section 62N.01, subdivision 1, is amended to read:

Subdivision 1. [CITATION.] This chapter may be cited as the "Minnesota community integrated service network act."

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Sec. 32. Minnesota Statutes 1996, section 62N.22, is amended to read:

62N.22 [DISCLOSURE OF COMMISSIONS.]

Before selling any coverage or enrollment in a community integrated service network or an integrated service network, a person selling the coverage or enrollment shall disclose in writing to the prospective purchaser the amount of any commission or other compensation the person will receive as a direct result of the sale. The disclosure may be expressed in dollars or as a percentage of the premium. The amount disclosed need not include any anticipated renewal commissions.

Sec. 33. Minnesota Statutes 1996, section 62N.23, is amended to read:

62N.23 [TECHNICAL ASSISTANCE; LOANS.]

(a) The commissioner shall provide technical assistance to parties interested in establishing or operating a community integrated service network or an integrated service network. This shall be known as the community integrated service network technical assistance program (ISNTAP) (CISNTAP).

The technical assistance program shall offer seminars on the establishment and operation of community integrated service networks or integrated service networks in all regions of Minnesota. The commissioner shall advertise these seminars in local and regional newspapers, and attendance at these seminars shall be free.

The commissioner shall write a guide to establishing and operating a community integrated service network or an integrated service network. The guide must provide basic instructions for parties wishing to establish a community integrated service network or an integrated service network. The guide must be provided free of charge to interested parties. The commissioner shall update this guide when appropriate.

The commissioner shall establish a toll-free telephone line that interested parties may call to obtain assistance in establishing or operating a community integrated service network or an integrated service network.

(b) The commissioner shall grant loans for organizational and start-up expenses to entities forming community integrated service networks or integrated service networks, or to networks less than one year old, to the extent of any appropriation for that purpose. The commissioner shall allocate the available funds among applicants based upon the following criteria, as evaluated by the commissioner within the commissioner's discretion:

(1) the applicant's need for the loan;

(2) the likelihood that the loan will foster the formation or growth of a network; and

(3) the likelihood of repayment.

The commissioner shall determine any necessary application deadlines and forms and is exempt from rulemaking in doing so.

Sec. 34. Minnesota Statutes 1996, section 62N.25, subdivision 5, is amended to read:

Subd. 5. [BENEFITS.] Community integrated service networks must offer the health maintenance organization benefit set, as defined in chapter 62D, and other laws applicable to entities regulated under chapter 62D, except that the community integrated service network may impose a deductible, not to exceed $1,000 per person per year, provided that out-of-pocket expenses on covered services do not exceed $3,000 per person or $5,000 per family per year. The deductible must not apply to preventive health services as described in Minnesota Rules, part 4685.0801, subpart 8. Community networks and chemical dependency facilities under contract with a community network shall use the assessment criteria in Minnesota Rules, parts 9530.6600 to 9530.6660, when assessing enrollees for chemical dependency treatment.

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Sec. 35. Minnesota Statutes 1996, section 62N.26, is amended to read:

62N.26 [SHARED SERVICES COOPERATIVE.]

The commissioner of health shall establish, or assist in establishing, a shared services cooperative organized under chapter 308A to make available administrative and legal services, technical assistance, provider contracting and billing services, and other services to those community integrated service networks and integrated service networks that choose to participate in the cooperative. The commissioner shall provide, to the extent funds are appropriated, start-up loans sufficient to maintain the shared services cooperative until its operations can be maintained by fees and contributions. The cooperative must not be staffed, administered, or supervised by the commissioner of health. The cooperative shall make use of existing resources that are already available in the community, to the extent possible.

Sec. 36. Minnesota Statutes 1996, section 62N.40, is amended to read:

62N.40 [CHEMICAL DEPENDENCY SERVICES.]

Each community integrated service network and integrated service network regulated under this chapter must ensure that chemically dependent individuals have access to cost-effective treatment options that address the specific needs of individuals. These include, but are not limited to, the need for: treatment that takes into account severity of illness and comorbidities; provision of a continuum of care, including treatment and rehabilitation programs licensed under Minnesota Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; the safety of the individual's domestic and community environment; gender appropriate and culturally appropriate programs; and access to appropriate social services.

Sec. 37. Minnesota Statutes 1996, section 62Q.01, subdivision 3, is amended to read:

Subd. 3. [HEALTH PLAN.] "Health plan" means a health plan as defined in section 62A.011; a policy, contract, or certificate issued by a community integrated service network; or an integrated service network.

Sec. 38. Minnesota Statutes 1996, section 62Q.01, subdivision 4, is amended to read:

Subd. 4. [HEALTH PLAN COMPANY.] "Health plan company" means:

(1) a health carrier as defined under section 62A.011, subdivision 2; or

(2) an integrated service network as defined under section 62N.02, subdivision 8; or

(3) a community integrated service network as defined under section 62N.02, subdivision 4a.

Sec. 39. Minnesota Statutes 1996, section 62Q.01, subdivision 5, is amended to read:

Subd. 5. [MANAGED CARE ORGANIZATION.] "Managed care organization" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network as defined under section 62N.02, subdivision 4a; or (3) an integrated service network as defined under section 62N.02, subdivision 8; or (4) an insurance company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers.

Sec. 40. Minnesota Statutes 1996, section 62Q.03, subdivision 5a, is amended to read:

Subd. 5a. [PUBLIC PROGRAMS.] (a) A separate risk adjustment system must be developed for state-run public programs, including medical assistance, general assistance medical care, and MinnesotaCare. The system must be developed in accordance with the general risk adjustment methodologies described in this section, must include factors in addition to age and sex adjustment, and may include additional demographic factors, different targeted conditions, and/or different payment amounts for conditions. The risk adjustment system for public programs must attempt to reflect the special needs related to poverty, cultural, or language barriers and other needs of the public program population.

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(b) The commissioners of health and human services shall jointly convene a public programs risk adjustment work group responsible for advising the commissioners in the design of the public programs risk adjustment system. The public programs risk adjustment work group is governed by section 15.059 for purposes of membership terms and removal of members and shall terminate on June 30, 1999. The work group shall meet at the discretion of the commissioners of health and human services. The commissioner of health shall work with the risk adjustment association to ensure coordination between the risk adjustment systems for the public and private sectors. The commissioner of human services shall seek any needed federal approvals necessary for the inclusion of the medical assistance program in the public programs risk adjustment system.

(c) The public programs risk adjustment work group must be representative of the persons served by publicly paid health programs and providers and health plans that meet their needs. To the greatest extent possible, the appointing authorities shall attempt to select representatives that have historically served a significant number of persons in publicly paid health programs or the uninsured. Membership of the work group shall be as follows:

(1) one provider member appointed by the Minnesota Medical Association;

(2) two provider members appointed by the Minnesota Hospital Association, at least one of whom must represent a major disproportionate share hospital;

(3) five members appointed by the Minnesota Council of HMOs, one of whom must represent an HMO with fewer than 50,000 enrollees located outside the metropolitan area and one of whom must represent an HMO with at least 50 percent of total membership enrolled through a public program;

(4) two representatives of counties appointed by the Association of Minnesota Counties;

(5) three representatives of organizations representing the interests of families, children, childless adults, and elderly persons served by the various publicly paid health programs appointed by the governor;

(6) two representatives of persons with mental health, developmental or physical disabilities, chemical dependency, or chronic illness appointed by the governor; and

(7) three public members appointed by the governor, at least one of whom must represent a community health board. The risk adjustment association may appoint a representative, if a representative is not otherwise appointed by an appointing authority.

(d) The commissioners of health and human services, with the advice of the public programs risk adjustment work group, shall develop a work plan and time frame and shall coordinate their efforts with the private sector risk adjustment association's activities and other state initiatives related to public program managed care reimbursement. The commissioners of health and human services shall report to the health care commission and to the appropriate legislative committees on January 15, 1996, and on January 15, 1997, on any policy or legislative changes necessary to implement the public program risk adjustment system.

Sec. 41. Minnesota Statutes 1996, section 62Q.106, is amended to read:

62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.]

A complainant may at any time submit a complaint to the appropriate commissioner to investigate. After investigating a complaint, or reviewing a company's decision, the appropriate commissioner may order a remedy as authorized under section 62N.04, 62Q.30, or chapter 45, 60A, or 62D.

Sec. 42. Minnesota Statutes 1996, section 62Q.19, subdivision 1, is amended to read:

Subdivision 1. [DESIGNATION.] The commissioner shall designate essential community providers. The criteria for essential community provider designation shall be the following:

(1) a demonstrated ability to integrate applicable supportive and stabilizing services with medical care for uninsured persons and high-risk and special needs populations as defined in section 62Q.07, subdivision 2, paragraph (e), underserved, and other special needs populations; and

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(2) a commitment to serve low-income and underserved populations by meeting the following requirements:

(i) has nonprofit status in accordance with chapter 317A;

(ii) has tax exempt status in accordance with the Internal Revenue Service Code, section 501(c)(3);

(iii) charges for services on a sliding fee schedule based on current poverty income guidelines; and

(iv) does not restrict access or services because of a client's financial limitation;

(3) status as a local government unit as defined in section 62D.02, subdivision 11, a hospital district created or reorganized under sections 447.31 to 447.37, an Indian tribal government, an Indian health service unit, or a community health board as defined in chapter 145A; or

(4) a former state hospital that specializes in the treatment of cerebral palsy, spina bifida, epilepsy, closed head injuries, specialized orthopedic problems, and other disabling conditions; or

(5) a rural hospital that has qualified for a sole community hospital financial assistance grant in the past three years under section 144.1484, subdivision 1. For these rural hospitals, the essential community provider designation applies to all health services provided, including both inpatient and outpatient services.

Prior to designation, the commissioner shall publish the names of all applicants in the State Register. The public shall have 30 days from the date of publication to submit written comments to the commissioner on the application. No designation shall be made by the commissioner until the 30-day period has expired.

The commissioner may designate an eligible provider as an essential community provider for all the services offered by that provider or for specific services designated by the commissioner.

For the purpose of this subdivision, supportive and stabilizing services include at a minimum, transportation, child care, cultural, and linguistic services where appropriate.

Sec. 43. Minnesota Statutes 1996, section 62Q.33, subdivision 2, is amended to read:

Subd. 2. [REPORT ON SYSTEM DEVELOPMENT.] The commissioner of health, in consultation with the state community health services advisory committee and the commissioner of human services, and representatives of local health departments, county government, a municipal government acting as a local board of health, the Minnesota health care commission, area Indian health services, health care providers, and citizens concerned about public health, shall coordinate the process for defining implementation and financing responsibilities of the local government core public health functions. The commissioner shall submit recommendations and an initial and final report on local government core public health functions according to the timeline established in subdivision 5.

Sec. 44. Minnesota Statutes 1996, section 62Q.45, subdivision 2, is amended to read:

Subd. 2. [DEFINITION.] For purposes of this section, "managed care organization" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network as defined under section 62N.02, subdivision 4a; or (3) an integrated service network as defined under section 62N.02, subdivision 8; or (4) an insurance company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers.

Sec. 45. [62Q.52] [REFERRALS FOR RESIDENTS OF HEALTH CARE FACILITIES.]

If an enrollee is a resident of a health care facility licensed under chapter 144A or a housing with services establishment registered under chapter 144D, the enrollee's primary care physician must refer the enrollee to that facility's skilled nursing unit or that facility's appropriate care setting, provided that the health plan company and the provider can best meet the patient's needs in that setting, if the following conditions are met:

(1) the facility agrees to be reimbursed at that health plan company's contract rate negotiated with similar providers for the same services and supplies; and

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(2) the facility meets all guidelines established by the health plan company related to quality of care, utilization, referral authorization, risk assumption, use of health plan company network, and other criteria applicable to providers under contract for the same services and supplies.

Sec. 46. [62Q.65] [ACCESS TO PROVIDER DISCOUNTS.]

Subdivision 1. [REQUIREMENT.] A high deductible health plan must, when used in connection with a medical savings account, provide the enrollee access to any discounted provider fees for services covered by the high deductible health plan, regardless of whether the enrollee has satisfied the deductible for the high deductible health plan.

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

(1) "high deductible health plan" has the meaning given under the Internal Revenue Code of 1986, section 220(c)(2);

(2) "medical savings account" has the meaning given under the Internal Revenue Code of 1986, section 220(d)(1); and

(3) "discounted provider fees" means fees contained in a provider agreement entered into by the issuer of the high deductible health plan, or an affiliate of the issuer, for use in connection with the high deductible health plan.

Sec. 47. Minnesota Statutes 1996, section 136A.1355, is amended to read:

136A.1355 [RURAL PHYSICIANS.]

Subdivision 1. [CREATION OF ACCOUNT.] A rural physician education account is established in the health care access fund. The higher education services office shall use money from the account to establish a loan forgiveness program for medical students residents agreeing to practice in designated rural areas, as defined by the commissioner.

Subd. 2. [ELIGIBILITY.] To be eligible to participate in the program, a prospective physician must submit a letter of interest to the higher education services office. A student or resident who is accepted must sign a contract to agree to serve at least three of the first five years following residency in a designated rural area.

Subd. 3. [LOAN FORGIVENESS.] For fiscal years beginning on and after July 1, 1995, the higher education services office may accept up to four applicants who are fourth year medical students, three 12 applicants who are medical residents, four applicants who are pediatric residents, and four six applicants who are family practice residents, and one applicant who is an two applicants who are internal medicine resident residents, per fiscal year for participation in the loan forgiveness program. If the higher education services office does not receive enough applicants per fiscal year to fill the number of residents in the specific areas of practice, the resident applicants may be from any area of practice. The eight 12 resident applicants may be in any year of training; however, priority must be given to the following categories of residents in descending order: third year residents, second year residents, and first year residents. Applicants are responsible for securing their own loans. Applicants chosen to participate in the loan forgiveness program may designate for each year of medical school, up to a maximum of four years, an agreed amount, not to exceed $10,000, as a qualified loan. For each year that a participant serves as a physician in a designated rural area, up to a maximum of four years, the higher education services office shall annually pay an amount equal to one year of qualified loans. Participants who move their practice from one designated rural area to another remain eligible for loan repayment. In addition, if a resident participating in the loan forgiveness program serves at least four weeks during a year of residency substituting for a rural physician to temporarily relieve the rural physician of rural practice commitments to enable the rural physician to take a vacation, engage in activities outside the practice area, or otherwise be relieved of rural practice commitments, the participating resident may designate up to an additional $2,000, above the $10,000 maximum, for each year of residency during which the resident substitutes for a rural physician for four or more weeks.

Subd. 4. [PENALTY FOR NONFULFILLMENT.] If a participant does not fulfill the required three-year minimum commitment of service in a designated rural area, the higher education services office shall collect from the participant the amount paid by the commissioner under the loan forgiveness program. The higher education services office shall deposit the money collected in the rural physician education account established in subdivision 1. The commissioner shall allow waivers of all or part of the money owed the commissioner if emergency circumstances prevented fulfillment of the three-year service commitment.

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Subd. 5. [LOAN FORGIVENESS; UNDERSERVED URBAN COMMUNITIES.] For fiscal years beginning on and after July 1, 1995, the higher education services office may accept up to four applicants who are either fourth year medical students, or residents in family practice, pediatrics, or internal medicine per fiscal year for participation in the urban primary care physician loan forgiveness program. The resident applicants may be in any year of residency training; however, priority will be given to the following categories of residents in descending order: third year residents, second year residents, and first year residents. If the higher education services office does not receive enough qualified applicants per fiscal year to fill the number of slots for urban underserved communities, the slots may be allocated to students or residents who have applied for the rural physician loan forgiveness program in subdivision 1. Applicants are responsible for securing their own loans. For purposes of this provision, "qualifying educational loans" are government and commercial loans for actual costs paid for tuition, reasonable education expenses, and reasonable living expenses related to the graduate or undergraduate education of a health care professional. Applicants chosen to participate in the loan forgiveness program may designate for each year of medical school, up to a maximum of four years, an agreed amount, not to exceed $10,000, as a qualified loan. For each year that a participant serves as a physician in a designated underserved urban area, up to a maximum of four years, the higher education services office shall annually pay an amount equal to one year of qualified loans. Participants who move their practice from one designated underserved urban community to another remain eligible for loan repayment.

Sec. 48. Minnesota Statutes 1996, section 144.147, subdivision 1, is amended to read:

Subdivision 1. [DEFINITION.] "Eligible rural hospital" means any nonfederal, general acute care hospital that:

(1) is either located in a rural area, as defined in the federal Medicare regulations, Code of Federal Regulations, title 42, section 405.1041, or located in a community with a population of less than 5,000, according to United States Census Bureau statistics, outside the seven-county metropolitan area;

(2) has 100 50 or fewer beds; and

(3) is not for profit; and

(4) has not been awarded a grant under the federal rural health transition grant program, which would be received concurrently with any portion of the grant period for this program.

Sec. 49. Minnesota Statutes 1996, section 144.147, subdivision 2, is amended to read:

Subd. 2. [GRANTS AUTHORIZED.] The commissioner shall establish a program of grants to assist eligible rural hospitals. The commissioner shall award grants to hospitals and communities for the purposes set forth in paragraphs (a) and (b).

(a) Grants may be used by hospitals and their communities to develop strategic plans for preserving or enhancing access to health services. At a minimum, a strategic plan must consist of:

(1) a needs assessment to determine what health services are needed and desired by the community. The assessment must include interviews with or surveys of area health professionals, local community leaders, and public hearings;

(2) an assessment of the feasibility of providing needed health services that identifies priorities and timeliness for potential changes; and

(3) an implementation plan.

The strategic plan must be developed by a committee that includes representatives from the hospital, local public health agencies, other health providers, and consumers from the community.

(b) The grants may also be used by eligible rural hospitals that have developed strategic plans to implement transition projects to modify the type and extent of services provided, in order to reflect the needs of that plan. Grants may be used by hospitals under this paragraph to develop hospital-based physician practices that integrate hospital and existing medical practice facilities that agree to transfer their practices, equipment, staffing, and administration to the hospital. The grants may also be used by the hospital to establish a health provider cooperative, a telemedicine system, or a rural health care system. Not more than one-third of any grant shall be used to offset losses incurred by physicians agreeing to transfer their practices to hospitals.

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Sec. 50. Minnesota Statutes 1996, section 144.147, subdivision 3, is amended to read:

Subd. 3. [CONSIDERATION OF GRANTS.] In determining which hospitals will receive grants under this section, the commissioner shall take into account:

(1) improving community access to hospital or health services;

(2) changes in service populations;

(3) demand for ambulatory and emergency services;

(4) the extent that the health needs of the community are not currently being met by other providers in the service area;

(5) the need to recruit and retain health professionals;

(6) the involvement and extent of community support of the community and local health care providers; and

(7) the coordination with local community organizations, such as community development and public health agencies; and

(8) the financial condition of the hospital.

Sec. 51. Minnesota Statutes 1996, section 144.147, subdivision 4, is amended to read:

Subd. 4. [ALLOCATION OF GRANTS.] (a) Eligible hospitals must apply to the commissioner no later than September 1 of each fiscal year for grants awarded for that fiscal year. A grant may be awarded upon signing of a grant contract.

(b) The commissioner must make a final decision on the funding of each application within 60 days of the deadline for receiving applications.

(c) Each relevant community health board has 30 days in which to review and comment to the commissioner on grant applications from hospitals in their community health service area.

(d) In determining which hospitals will receive grants under this section, the commissioner shall consider the following factors:

(1) Description of the problem, description of the project, and the likelihood of successful outcome of the project. The applicant must explain clearly the nature of the health services problems in their service area, how the grant funds will be used, what will be accomplished, and the results expected. The applicant should describe achievable objectives, a timetable, and roles and capabilities of responsible individuals and organizations.

(2) The extent of community support for the hospital and this proposed project. The applicant should demonstrate support for the hospital and for the proposed project from other local health service providers and from local community and government leaders. Evidence of such support may include past commitments of financial support from local individuals, organizations, or government entities; and commitment of financial support, in-kind services or cash, for this project.

(3) The comments, if any, resulting from a review of the application by the community health board in whose community health service area the hospital is located.

(e) In evaluating applications, the commissioner shall score each application on a 100 point scale, assigning the maximum of 70 points for an applicant's understanding of the problem, description of the project, and likelihood of successful outcome of the project; and a maximum of 30 points for the extent of community support for the hospital and this project. The commissioner may also take into account other relevant factors.

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(f) A grant to a hospital, including hospitals that submit applications as consortia, may not exceed $37,500 $50,000 a year and may not exceed a term of two years. Prior to the receipt of any grant, the hospital must certify to the commissioner that at least one-half of the amount, which may include in-kind services, is available for the same purposes from nonstate sources. A hospital receiving a grant under this section may use the grant for any expenses incurred in the development of strategic plans or the implementation of transition projects with respect to which the grant is made. Project grants may not be used to retire debt incurred with respect to any capital expenditure made prior to the date on which the project is initiated.

(g) The commissioner may adopt rules to implement this section.

Sec. 52. [144.1475] [RURAL HOSPITAL DEMONSTRATION PROJECT.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of health, for the biennium ending June 30, 1999, shall establish at least three demonstration projects per fiscal year to assist rural hospitals in the planning and implementation process to either consolidate or cooperate with another existing hospital in its service area to provide better quality health care to its community. A demonstration project must include at least two eligible hospitals. For purposes of this section, an "eligible hospital" means a hospital that:

(1) is located outside the seven-county metropolitan area;

(2) has 50 or fewer licensed beds; and

(3) is located within a 25-mile radius of another hospital.

At least one of the eligible hospitals in a demonstration project must have had a negative operating margin during one of the two years prior to application.

Subd. 2. [APPLICATION.] (a) An eligible hospital seeking to be a participant in a demonstration project must submit an application to the commissioner of health detailing the hospital's efforts to consolidate health care delivery in its service area, cooperate with another hospital in the delivery of health care, or both consolidate and cooperate. Applications must be submitted by October 15 of each fiscal year for grants awarded for that fiscal year.

(b) Applications must:

(1) describe the problem that the proposed consolidation or cooperation will address, the consolidation or cooperation project, how the grant funds will be used, what will be accomplished, and the results expected;

(2) describe achievable objectives, a timetable, and the roles and capabilities of responsible individuals and organizations;

(3) include written commitments from the applicant hospital and at least one other hospital that will participate in the consolidation or cooperation demonstration project, that specify the activities the organization will undertake during the project, the resources the organization will contribute to the demonstration project, and the expected role and nature of the organization's involvement in proposed consolidation or cooperation activities; and

(4) provide evidence of support for the proposed project from other local health service providers and from local community and government leaders.

Subd. 3. [GRANTS.] The commissioner of health shall allocate a grant of up to $100,000 to the highest scoring applicants each year until available funding is expended. Grants may be used by eligible hospitals to:

(1) conduct consolidation or cooperation negotiations;

(2) develop consolidation or cooperation plans, including financial plans and architectural designs;

(3) seek community input and conduct community education on proposed or planned consolidations or cooperative activities; and

(4) implement consolidation or cooperation plans.

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Subd. 4. [CONSIDERATION OF GRANTS.] In evaluating applications, the commissioner shall score each application on a 100 point scale, assigning: a maximum of 40 points for an applicant's understanding of the problem, description of the project, and likelihood of successful outcome of the project; a maximum of 30 points for explicit and unequivocal written commitments from organizations participating in the project; a maximum of 20 points for matching funds or in-kind services committed by the applicant or others to the project; and a maximum of ten points for the extent of community support for the project. The commissioner shall consider the comments, if any, resulting from a review of the application by the community health board in whose community health service area the applicant is located. The commissioner may also take into account other relevant factors.

Subd. 5. [EVALUATION.] The commissioner of health shall evaluate the overall effectiveness of the demonstration projects and report to the legislature by September 1, 2000. The commissioner may collect, from the hospitals receiving grants, any information necessary to evaluate the demonstration project.

Sec. 53. [144.148] [RURAL HOSPITAL CAPITAL IMPROVEMENT GRANT AND LOAN PROGRAM.]

Subdivision 1. [DEFINITION.] (a) For purposes of this section, the following definitions apply.

(b) "Eligible rural hospital" means a hospital that:

(1) is located outside the seven-county metropolitan area;

(2) has 50 or fewer licensed hospital beds with a net hospital operating margin not greater than two percent in the two fiscal years prior to application; and

(3) is 25 miles or more from another hospital.

(c) "Eligible project" means a modernization project to update, remodel, or replace aging hospital facilities and equipment necessary to maintain the operations of a hospital.

Subd. 2. [PROGRAM.] The commissioner of health shall award rural hospital capital improvement grants or loans to eligible rural hospitals. A grant or loan shall not exceed $1,500,000 per hospital. Grants or loans shall be interest free. An eligible rural hospital may apply the funds retroactively to capital improvements made during the two fiscal years preceding the fiscal year in which the grant or loan was received, provided the hospital met the eligibility criteria during that time period.

Subd. 3. [APPLICATIONS.] Eligible hospitals seeking a grant or loan shall apply to the commissioner. Applications must include a description of the problem that the proposed project will address, a description of the project including construction and remodeling drawings or specifications, sources of funds for the project, uses of funds for the project, the results expected, and a plan to maintain or operate any facility or equipment included in the project. The applicant must describe achievable objectives, a timetable, and roles and capabilities of responsible individuals and organization. Applicants must submit to the commissioner evidence that competitive bidding was used to select contractors for the project.

Subd. 4. [CONSIDERATION OF APPLICATIONS.] The commissioner shall review each application to determine whether or not the hospital's application is complete and whether the hospital and the project are eligible for a grant or loan. In evaluating applications, the commissioner shall score each application on a 100 point scale, assigning: a maximum of 40 points for an applicant's clarity and thoroughness in describing the problem and the project; a maximum of 40 points for the extent to which the applicant has demonstrated that it has made adequate provisions to assure proper and efficient operation of the facility once the project is completed; and a maximum of 20 points for the extent to which the proposed project is consistent with the hospital's capital improvement plan or strategic plan. The commissioner may also take into account other relevant factors. During application review, the commissioner may request additional information about a proposed project, including information on project cost. Failure to provide the information requested disqualifies a loan applicant.

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Subd. 5. [PROGRAM OVERSIGHT.] The commissioner of health shall review audited financial information of the hospital to assess eligibility. The commissioner shall determine the amount of a grant or loan to be given to an eligible rural hospital based on the relative score of each eligible hospital's application and the funds available to the commissioner. The grant or loan shall be used to update, remodel, or replace aging facilities and equipment necessary to maintain the operations of the hospital.

Subd. 6. [LOAN PAYMENT.] Loans shall be repaid as provided in this subdivision over a period of 15 years. In those years when an eligible rural hospital experiences a positive net operating margin in excess of two percent, the eligible rural hospital shall pay to the state one-half of the excess above two percent, up to the yearly payment amount based upon a loan period of 15 years. If the amount paid back in any year is less than the yearly payment amount, or if no payment is required because the eligible rural hospital does not experience a positive net operating margin in excess of two percent, the amount unpaid for that year shall be forgiven by the state without any financial penalty. As a condition of receiving an award through this program, eligible hospitals must agree to any and all collection activities the commissioner finds necessary to collect loan payments in those years a payment is due.

Subd. 7. [ACCOUNTING TREATMENT.] The commissioner of finance shall record as grants in the state accounting system funds obligated by this section. Loan payments received under this section shall be deposited in the health care access fund.

Subd. 8. [EXPIRATION.] This section expires June 30, 1999.

Sec. 54. Minnesota Statutes 1996, section 144.1484, subdivision 1, is amended to read:

Subdivision 1. [SOLE COMMUNITY HOSPITAL FINANCIAL ASSISTANCE GRANTS.] The commissioner of health shall award financial assistance grants to rural hospitals in isolated areas of the state. To qualify for a grant, a hospital must: (1) be eligible to be classified as a sole community hospital according to the criteria in Code of Federal Regulations, title 42, section 412.92 or be located in a community with a population of less than 5,000 and located more than 25 miles from a like hospital currently providing acute short-term services; (2) have experienced net operating income losses in the two of the previous three most recent consecutive hospital fiscal years for which audited financial information is available; (3) consist of 40 or fewer licensed beds; and (4) demonstrate to the commissioner that it has obtained local support for the hospital and that any state support awarded under this program will not be used to supplant local support for the hospital. The commissioner shall review audited financial statements of the hospital to assess the extent of local support. Evidence of local support may include bonds issued by a local government entity such as a city, county, or hospital district for the purpose of financing hospital projects; and loans, grants, or donations to the hospital from local government entities, private organizations, or individuals. The commissioner shall determine the amount of the award to be given to each eligible hospital based on the hospital's operating loss margin (total operating losses as a percentage of total operating revenue) for the two of the previous three most recent consecutive fiscal years for which audited financial information is available and the total amount of funding available. For purposes of calculating a hospital's operating loss margin, total operating revenue does not include grant funding provided under this subdivision. One hundred percent of the available funds will be disbursed proportionately based on the operating loss margins of the eligible hospitals.

Sec. 55. Minnesota Statutes 1996, section 256.045, subdivision 3a, is amended to read:

Subd. 3a. [PREPAID HEALTH PLAN APPEALS.] (a) All prepaid health plans under contract to the commissioner under chapter 256B or 256D must provide for a complaint system according to section 62D.11. When a prepaid health plan denies, reduces, or terminates a health service or denies a request to authorize a previously authorized health service, the prepaid health plan must notify the recipient of the right to file a complaint or an appeal. The notice must include the name and telephone number of the ombudsman and notice of the recipient's right to request a hearing under paragraph (b). When a complaint is filed, the prepaid health plan must notify the ombudsman within three working days. Recipients may request the assistance of the ombudsman in the complaint system process. The prepaid health plan must issue a written resolution of the complaint to the recipient within 30 days after the complaint is filed with the prepaid health plan. A recipient is not required to exhaust the complaint system procedures in order to request a hearing under paragraph (b).

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(b) Recipients enrolled in a prepaid health plan under chapter 256B or 256D may contest a prepaid health plan's denial, reduction, or termination of health services, a prepaid health plan's denial of a request to authorize a previously authorized health service, or the prepaid health plan's written resolution of a complaint by submitting a written request for a hearing according to subdivision 3. A state human services referee shall conduct a hearing on the matter and shall recommend an order to the commissioner of human services. The commissioner need not grant a hearing if the sole issue raised by a recipient is the commissioner's authority to require mandatory enrollment in a prepaid health plan in a county where prepaid health plans are under contract with the commissioner. The state human services referee may order a second medical opinion from the prepaid health plan or may order a second medical opinion from a nonprepaid health plan provider at the expense of the prepaid health plan. Recipients may request the assistance of the ombudsman in the appeal process.

(c) In the written request for a hearing to appeal from a prepaid health plan's denial, reduction, or termination of a health service, a prepaid health plan's denial of a request to authorize a previously authorized service, or the prepaid health plan's written resolution to a complaint, a recipient may request an expedited hearing. If an expedited appeal is warranted, the state human services referee shall hear the appeal and render a decision within a time commensurate with the level of urgency involved, based on the individual circumstances of the case.

Sec. 56. Minnesota Statutes 1996, section 256.9363, subdivision 1, is amended to read:

Subdivision 1. [SELECTION OF VENDORS.] 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 managed care plans which may include: prepaid capitation programs, competitive bidding programs, 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. Managed care plans may include integrated service networks as defined in section 62N.02.

Sec. 57. Minnesota Statutes 1996, 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 integrated service network and 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, integrated service network, 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, integrated service network, 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, an integrated service network, 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; and

(4) medical assistance revenue, as a result of an arrangement between a health maintenance organization, integrated service network, 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, integrated service network, 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.

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(c) When a health maintenance organization or an integrated service network or community integrated service network merges or consolidates with or is acquired by another health maintenance organization, integrated service network, 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, integrated service network, 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, integrated service network, or community integrated service network.

(f) In the event a health maintenance organization, integrated service network, 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, integrated service network, 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. 58. [MEIP STUDY.]

The commissioner of employee relations shall study the current Minnesota employees insurance program (MEIP) and report to the legislature by January 15, 1998, on recommendations on whether this program provides greater accessibility to small employers for purchasing health insurance and on the continued viability of the program, including whether the program could be modified in terms of underwriting, marketing, and advertising to create a program that would provide a cost incentive for small employers to purchase health coverage through this program.

Sec. 59. [MCHA STANDARDS STUDY.]

The commissioner of commerce, in consultation with the commissioner of health, shall study and make recommendations regarding the feasibility of establishing a comprehensive set of eligibility standards for coverage under the Minnesota comprehensive health association and on guaranteed issuance in the individual market for individuals who do not meet the eligibility standards for coverage under the Minnesota comprehensive health association. The recommendations shall be reported to the legislature by January 15, 1998.

Sec. 60. [PRESCRIPTION DRUG INSURANCE PROGRAM.]

The commissioner of commerce shall study the feasibility of providing an insurance program to provide prescription drugs to Minnesotans who are 65 and older. The program shall be administered by the Minnesota comprehensive health association, but shall be separate from the health coverage programs operated by the association under Minnesota Statutes, chapter 62E. In studying the feasibility of the program, the commissioner shall incorporate, to the extent feasible, the administrative procedures and health care delivery methods used by the association under Minnesota Statutes, chapter 62E. The commissioner shall study the program based upon independent actuarial analysis, and shall present recommendations to the legislature by December 15, 1997.

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Sec. 61. [PUBLIC PROGRAMS RATE SETTING AND RISK ADJUSTMENT.]

The commissioners of health and of human services shall submit a coordinated report on rate setting and risk adjustment methods to the legislature by February 1, 1998. An interim report shall be provided to the legislative commission on health care access to facilitate a public hearing and testimony prior to the 1998 legislative session. Changes in the rate setting and risk adjustment methods shall not be implemented until after the 1998 legislative session.

Sec. 62. [REVISOR INSTRUCTIONS.]

The revisor of statutes shall delete references to "integrated service network," but not "community integrated service network," wherever it appears in Minnesota Statutes and make conforming changes as necessary.

Sec. 63. [REPEALER.]

(a) Minnesota Statutes 1996, sections 62E.11, subdivision 12; 62J.03, subdivision 3; 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41 and 147.01, subdivision 6, are repealed.

(b) Laws 1993, chapter 247, article 4, section 8; Laws 1995, chapter 96, section 2; and Laws 1995, First Special Session chapter 3, article 13, section 2, are repealed.

(c) Laws 1994, chapter 625, article 5, section 5, as amended by Laws 1995, chapter 234, article 3, section 8, is repealed.

Sec. 64. [EFFECTIVE DATE.]

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.

ARTICLE 3

MINNESOTACARE TAXES

Section 1. [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS FUND.]

Subdivision 1. [ESTABLISH RESERVE.] The federal contingency reserve is established within the health care access fund for uses necessary to preserve access to basic health care services when federal funding is significantly reduced.

Subd. 2. [RESERVE FINANCING.] The funds in reserve shall be equal to the amount of federal financial participation received since July 1, 1995, for services and administrative activities funded by the health care access fund up to a reserve limit of $150,000,000. Investment income attributed to the federal contingency reserve balances shall also be included in the total reserve amount.

Subd. 3. [PERMITTED USE.] The federal contingency reserve is established to protect access to basic health care services that are publicly funded. Funds held in the federal contingency reserve are available for appropriation in the event that federal funds for basic health care services are significantly reduced such as under federal reform or other significant changes to federal law.

Subd. 4. [LIMITS ON USE.] The federal contingency reserve is not available for supplementing reductions in federal funding resulting from application of current federal law funding formulas, for funding long-term care services, or for replacing existing general fund commitments.

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Sec. 2. Minnesota Statutes 1996, 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, integrated service networks, 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) and, (e), (g), and (h), 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.

(d) For health maintenance organizations, nonprofit health services service plan corporations, integrated service networks, and community integrated service networks, the installments must be based on an amount equal to one percent of premiums described in paragraph (b) that are paid after December 31, 1995 determined under paragraph (g) or (h).

(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) 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.

(g) 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.

(h) 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.

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(i) 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 (g) and (h) is reflected in the premium rate.

Sec. 3. Minnesota Statutes 1996, section 256.9352, 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 equal to five percent of the expected cost of state premium subsidies in accordance with section 16A.76. The commissioner must make a quarterly 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 minimum the reserve requirements described in section 16A.76, shall be compared to an estimate of the revenues that will be deposited 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.

The reserve referred to in this subdivision is appropriated to the commissioner but may only be used upon approval of the commissioner of finance, if estimated costs will exceed the forecasted amount of available revenues after all adjustments authorized under this subdivision have been made.

By February 1, 1995, the department of human services and the department of health shall develop a plan to adjust benefit levels, eligibility guidelines, or other steps necessary to ensure that expenditures for the MinnesotaCare program are contained within the two percent taxes imposed under section 295.52 and the gross premiums tax imposed under section 60A.15, subdivision 1, paragraph (e), for fiscal year 1997.

(c) Notwithstanding paragraphs (a) and (b), the commissioner shall proceed with the enrollment of single adults and households without children in accordance with section 256.9354, subdivision 5, paragraph (a), even if the expenditures do not remain within the limits of available revenues through fiscal year 1997 to allow the departments of human services and health to develop the plan required under paragraph (b).

Sec. 4. Minnesota Statutes 1996, section 295.50, subdivision 3, is amended to read:

Subd. 3. [GROSS REVENUES.] "Gross revenues" are total amounts received in money or otherwise by:

(1) a hospital for patient services;

(2) a surgical center for patient services;

(3) a health care provider, other than a staff model health carrier, for patient services;

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(4) a wholesale drug distributor for sale or distribution of legend drugs that are delivered: (i) to a Minnesota resident by a wholesale drug distributor who is a nonresident pharmacy directly, by common carrier, or by mail; or (ii) in Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at wholesale. Legend drugs do not include nutritional products as defined in Minnesota Rules, part 9505.0325; and

(5) a staff model health plan company as gross premiums for enrollees, copayments, deductibles, coinsurance, and fees for patient services covered under its contracts with groups and enrollees; and

(6) a pharmacy for medical supplies, appliances, and equipment.

Sec. 5. Minnesota Statutes 1996, section 295.50, subdivision 4, is amended to read:

Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care provider" means:

(1) a person whose health care occupation is regulated or required to be regulated by the state of Minnesota furnishing any or all of the following goods or services directly to a patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, medical supplies, medical appliances, laboratory, diagnostic or therapeutic services, or any; (2) a person who provides goods and services not listed above in clause (1) that qualify for reimbursement under the medical assistance program provided under chapter 256B. For purposes of this clause, "directly to a patient or consumer" includes goods and services provided in connection with independent medical examinations under section 65B.56 or other examinations for purposes of litigation or insurance claims;

(2) (3) a staff model health plan company; or

(3) (4) an ambulance service required to be licensed; or

(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear.

(b) Health care provider does not include hospitals,; medical supplies distributors, except as specified under paragraph (a), clause (5); nursing homes licensed under chapter 144A or licensed in any other jurisdiction,; pharmacies,; surgical centers,; bus and taxicab transportation, or any other providers of transportation services other than ambulance services required to be licensed,; supervised living facilities for persons with mental retardation or related conditions, licensed under Minnesota Rules, parts 4665.0100 to 4665.9900,; residential care homes licensed under chapter 144B,; board and lodging establishments providing only custodial services that are licensed under chapter 157 and registered under section 157.17 to provide supportive services or health supervision services,; adult foster homes as defined in Minnesota Rules, part 9555.5105,; day training and habilitation services for adults with mental retardation and related conditions as defined in section 252.41, subdivision 3,; and boarding care homes, as defined in Minnesota Rules, part 4655.0100.

(c) For purposes of this subdivision, "directly to a patient or consumer" includes goods and services provided in connection with independent medical examinations under section 65B.56 or other examinations for purposes of litigation or insurance claims.

Sec. 6. Minnesota Statutes 1996, section 295.50, subdivision 6, is amended to read:

Subd. 6. [HOME HEALTH CARE SERVICES.] "Home health care services" are services:

(1) defined under the state medical assistance program as home health agency services provided by a home health agency, personal care services and supervision of personal care services, private duty nursing services, and waivered services or services by home care providers required to be licensed under chapter 144A; and

(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility, as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with mental retardation as defined in section 256B.055, subdivision 12, paragraph (d).

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Sec. 7. Minnesota Statutes 1996, section 295.50, subdivision 7, is amended to read:

Subd. 7. [HOSPITAL.] "Hospital" means a hospital licensed under chapter 144, or a hospital licensed by any other state or province or territory of Canada jurisdiction.

Sec. 8. Minnesota Statutes 1996, section 295.50, subdivision 13, is amended to read:

Subd. 13. [SURGICAL CENTER.] "Surgical center" is an outpatient surgical center as defined in Minnesota Rules, chapter 4675 or a similar facility located in any other state or province or territory of Canada jurisdiction.

Sec. 9. Minnesota Statutes 1996, section 295.50, subdivision 14, is amended to read:

Subd. 14. [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug distributor" means a wholesale drug distributor required to be licensed under sections 151.42 to 151.51 or a nonresident pharmacy required to be registered under section 151.19.

Sec. 10. Minnesota Statutes 1996, section 295.51, subdivision 1, is amended to read:

Subdivision 1. [BUSINESS TRANSACTIONS IN MINNESOTA.] A hospital, surgical center, pharmacy, or health care provider is subject to tax under sections 295.50 to 295.59 if it is "transacting business in Minnesota." A hospital, surgical center, pharmacy, or health care provider is transacting business in Minnesota if it maintains contacts with or presence in the state of Minnesota sufficient to permit taxation of gross revenues received for patient services under the United States Constitution.

Sec. 11. Minnesota Statutes 1996, section 295.52, subdivision 4, is amended to read:

Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] 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 two percent of the price paid 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.

Sec. 12. Minnesota Statutes 1996, section 295.52, is amended by adding a subdivision to read:

Subd. 6. [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax liability of a person who meets the definition of a health care provider solely because the person sells or repairs hearing aids and related equipment or prescription eyewear is limited to the gross revenues received from the sale or repair of these items.

Sec. 13. Minnesota Statutes 1996, section 295.52, is amended by adding a subdivision to read:

Subd. 7. [TAX REDUCTION.] Notwithstanding subdivisions 1, 1a, 2, 3, and 4, the tax imposed under this section for calendar years 1998 and 1999 shall be equal to 1.5 percent of the gross revenues received on or after January 1, 1998, and before January 1, 2000. The commissioner shall extend the reduced tax rate of 1.5 percent for gross revenues received on or after January 1, 2000, and before January 1, 2002, if the commissioner of finance determines that the health care access fund structural balance projected for fiscal year 2001 will remain positive, prior to any increase of the one percent premium tax under section 60A.15, subdivision 1, paragraph (h), and prior to any tax expenditures related to the increase in the maximum tax credit for research expenses under section 295.53, subdivision 4, as amended by this act.

Sec. 14. Minnesota Statutes 1996, section 295.53, subdivision 1, is amended to read:

Subdivision 1. [EXEMPTIONS.] (a) The following payments are excluded from the gross revenues subject to the hospital, surgical center, or health care provider taxes under sections 295.50 to 295.57:

(1) payments received for services provided under the Medicare program, including payments received from the government, and organizations governed by sections 1833 and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42, section 1395, and enrollee deductibles, coinsurance, and copayments, whether paid by the Medicare enrollee or by a Medicare supplemental coverage as defined in section 62A.011, subdivision 3, clause (10). Payments for services not covered by Medicare are taxable;

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(2) medical assistance payments including payments received directly from the government or from a prepaid plan;

(3) payments received for home health care services;

(4) payments received from hospitals or surgical centers for goods and services on which liability for tax is imposed under section 295.52 or the source of funds for the payment is exempt under clause (1), (2), (7), (8), or (10);

(5) payments received from health care providers for goods and services on which liability for tax is imposed under this chapter or the source of funds for the payment is exempt under clause (1), (2), (7), (8), or (10);

(6) amounts paid for legend drugs, other than nutritional products, to a wholesale drug distributor who is subject to tax under section 295.52, subdivision 3, reduced by reimbursements received for legend drugs under clauses (1), (2), (7), and (8);

(7) payments received under the general assistance medical care program including payments received directly from the government or from a prepaid plan;

(8) payments received for providing services under the MinnesotaCare program including payments received directly from the government or from a prepaid plan and enrollee deductibles, coinsurance, and copayments. For purposes of this clause, coinsurance means the portion of payment that the enrollee is required to pay for the covered service;

(9) payments received by a health care provider or the wholly owned subsidiary of a health care provider for care provided outside Minnesota to a patient who is not domiciled in Minnesota;

(10) payments received from the chemical dependency fund under chapter 254B;

(11) payments received in the nature of charitable donations that are not designated for providing patient services to a specific individual or group;

(12) payments received for providing patient services incurred through a formal program of health care research conducted in conformity with federal regulations governing research on human subjects. Payments received from patients or from other persons paying on behalf of the patients are subject to tax;

(13) payments received from any governmental agency for services benefiting the public, not including payments made by the government in its capacity as an employer or insurer;

(14) payments received for services provided by community residential mental health facilities licensed under Minnesota Rules, parts 9520.0500 to 9520.0690, community support programs and family community support programs approved under Minnesota Rules, parts 9535.1700 to 9535.1760, and community mental health centers as defined in section 245.62, subdivision 2;

(15) government payments received by a regional treatment center;

(16) payments received for hospice care services;

(17) payments received by a health care provider for medical supplies, appliances, and equipment hearing aids and related equipment or prescription eyewear delivered outside of Minnesota;

(18) payments received by a post-secondary educational institution from student tuition, student activity fees, health care service fees, government appropriations, donations, or grants. Fee for service payments and payments for extended coverage are taxable; and

(19) payments received for services provided by: assisted living programs and congregate housing programs.

(b) Payments received by wholesale drug distributors for prescription legend drugs sold directly to veterinarians or veterinary bulk purchasing organizations are excluded from the gross revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

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Sec. 15. Minnesota Statutes 1996, section 295.53, subdivision 3, is amended to read:

Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical center, pharmacy, or health care provider must not state the tax obligation under section 295.52 in a deceptive or misleading manner. It must not separately state tax obligations on bills provided to patients, consumers, or other payers when the amount received for the services or goods is not subject to tax.

Pharmacies that separately state the tax obligations on bills provided to consumers or to other payers who purchase legend drugs may state the tax obligation as two percent of the wholesale price of the legend drugs multiplied by the tax percentage specified in section 295.52. Pharmacies must not state the tax obligation as two percent of based on the retail price.

Whenever the commissioner determines that a person has engaged in any act or practice constituting a violation of this subdivision, the commissioner may bring an action in the name of the state in the district court of the appropriate county to enjoin the act or practice and to enforce compliance with this subdivision, or the commissioner may refer the matter to the attorney general or the county attorney of the appropriate county. Upon a proper showing, a permanent or temporary injunction, restraining order, or other appropriate relief must be granted.

Sec. 16. Minnesota Statutes 1996, section 295.53, subdivision 4, is amended to read:

Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the exemptions allowed under subdivision 1, a hospital or health care provider which is exempt under section 501(c)(3) of the Internal Revenue Code of 1986 or is owned and operated under authority of a governmental unit, may deduct from its gross revenues subject to the hospital or health care provider taxes under sections 295.50 to 295.57 revenues equal to expenditures for qualifying research conducted by an allowable research programs program.

(b) For purposes of this subdivision, the following requirements apply:

(1) expenditures for allowable research programs are the direct and general must be for program costs for activities which are part of qualifying research conducted by an allowable research program;

(2) an allowable research program must be a formal program of medical and health care research approved by the governing body of the hospital or health care provider which also includes active solicitation of research funds from government and private sources. Allowable conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue Code of 1986 or is owned and operated under authority of a governmental unit;

(3) qualifying research must:

(A) be approved in writing by the governing body of the hospital or health care provider which is taking the deduction under this subdivision;

(1) (B) have as its purpose the development of new knowledge in basic or applied science relating to the diagnosis and treatment of conditions affecting the human body;

(2) (C) be subject to review by individuals with expertise in the subject matter of the proposed study but who have no financial interest in the proposed study and are not involved in the conduct of the proposed study; and

(3) (D) be subject to review and supervision by an institutional review board operating in conformity with federal regulations if the research involves human subjects or an institutional animal care and use committee operating in conformity with federal regulations if the research involves animal subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods or products used in a particular setting conducted for the purpose of making a management decision. Costs of clinical research activities paid directly for the benefit of an individual patient are excluded from this exemption. Basic research in fields including biochemistry, molecular biology, and physiology are also included if such programs are subject to a peer review process.

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(c) No deduction shall be allowed under this subdivision for any revenue received by the hospital or health care provider in the form of a grant, gift, or otherwise, whether from a government or nongovernment source, on which the tax liability under section 295.52 is not imposed or for which the tax liability under section 295.52 has been received from a third party as provided for in section 295.582.

(d) Effective beginning with calendar year 1995, the taxpayer shall not take the deduction under this section into account in determining estimated tax payments or the payment made with the annual return under section 295.55. The total deduction allowable to all taxpayers under this section for calendar years beginning after December 31, 1994, may not exceed $65,000,000. To implement this limit, each qualifying hospital and qualifying health care provider shall submit to the commissioner by March 15 its total expenditures qualifying for the deduction under this section for the previous calendar year. The commissioner shall sum the total expenditures of all taxpayers qualifying under this section for the calendar year. If the resulting amount exceeds $65,000,000, the commissioner shall allocate a part of the $65,000,000 deduction limit to each qualifying hospital and health care provider in proportion to its share of the total deductions. The commissioner shall pay a refund to each qualifying hospital or provider equal to its share of the deduction limit multiplied by two percent the tax percentage specified in section 295.52. The commissioner shall pay the refund no later than May 15 of the calendar year.

(e) This subdivision expires January 1, 2000.

Sec. 17. Minnesota Statutes 1996, section 295.53, is amended by adding a subdivision to read:

Subd. 4a. [CREDIT FOR RESEARCH.] (a) In addition to the exemptions allowed under subdivision 1, a hospital or health care provider may claim an annual credit against the total amount of tax, if any, the hospital or health care provider owes for that calendar year under sections 295.50 to 295.57. The credit shall equal 2.5 percent of revenues for patient services used to fund expenditures for qualifying research conducted by an allowable research program. The amount of the credit shall not exceed the tax liability of the hospital or health care provider under sections 295.50 to 295.57.

(b) For purposes of this subdivision, the following requirements apply:

(1) expenditures must be for program costs of qualifying research conducted by an allowable research program;

(2) an allowable research program must be a formal program of medical and health care research conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue Code of 1986 or is owned and operated under authority of a governmental unit;

(3) qualifying research must:

(A) be approved in writing by the governing body of the hospital or health care provider which is taking the deduction under this subdivision;

(B) have as its purpose the development of new knowledge in basic or applied science relating to the diagnosis and treatment of conditions affecting the human body;

(C) be subject to review by individuals with expertise in the subject matter of the proposed study but who have no financial interest in the proposed study and are not involved in the conduct of the proposed study; and

(D) be subject to review and supervision by an institutional review board operating in conformity with federal regulations if the research involves human subjects or an institutional animal care and use committee operating in conformity with federal regulations if the research involves animal subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods or products used in a particular setting conducted for the purpose of making a management decision. Costs of clinical research activities paid directly for the benefit of an individual patient are excluded from this exemption. Basic research in fields including biochemistry, molecular biology, and physiology are also included if such programs are subject to a peer review process.

(c) No credit shall be allowed under this subdivision for any revenue received by the hospital or health care provider in the form of a grant, gift, or otherwise, whether from a government or nongovernment source, on which the tax liability under section 295.52 is not imposed.

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(d) The taxpayer shall apply for the credit under this section on the annual return under section 295.55, subdivision 5.

(e) Beginning September 1, 2000, if the actual or estimated amount paid under this section for the calendar year exceeds $2,500,000, the commissioner of finance shall determine the rate of the research credit for the following calendar year to the nearest one-half percent so that refunds paid under this section will most closely equal $2,500,000. The commissioner of finance shall publish in the State Register by October 1 of each year the rate of the credit for the following calendar year. A determination under this section is not subject to the rulemaking provisions of chapter 14.

Sec. 18. Minnesota Statutes 1996, section 295.54, subdivision 1, is amended to read:

Subdivision 1. [TAXES PAID TO ANOTHER STATE.] A hospital, surgical center, pharmacy, or health care provider that has paid taxes to another state or province or territory of Canada jurisdiction measured by gross revenues and is subject to tax under sections 295.52 to 295.59 on the same gross revenues is entitled to a credit for the tax legally due and paid to another state or province or territory of Canada jurisdiction to the extent of the lesser of (1) the tax actually paid to the other state or province or territory of Canada jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross revenues subject to tax in the other taxing jurisdictions.

Sec. 19. Minnesota Statutes 1996, section 295.54, subdivision 2, is amended to read:

Subd. 2. [PHARMACY CREDIT REFUND.] A pharmacy may claim a quarterly credit an annual refund against the total amount of tax, if any, the pharmacy owes during that quarter calendar year under section 295.52, subdivision 1b, as provided in this subdivision 2. The credit refund shall equal two percent of the amount paid by the pharmacy to a wholesale drug distributor subject to tax under section 295.52, subdivision 3, for legend drugs delivered by the pharmacy outside of Minnesota, multiplied by the tax percentage specified in section 295.52. If the amount of the credit refund exceeds the tax liability of the pharmacy under section 295.52, subdivision 1b, the commissioner shall provide the pharmacy with a refund equal to the excess amount. Each qualifying pharmacy must apply for the refund on the annual return as provided under section 295.55, subdivision 5. The refund must be claimed within one year of the due date of the return. Interest on refunds paid under this subdivision will begin to accrue 60 days after the date a claim for refund is filed. For purposes of this subdivision, the date a claim is filed is the due date of the return or the date of the actual claim for refund, whichever is later.

Sec. 20. Minnesota Statutes 1996, section 295.55, subdivision 2, is amended to read:

Subd. 2. [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) Each hospital or surgical center must make estimated payments of the taxes for the calendar year in monthly installments to the commissioner within ten 15 days after the end of the month.

(b) Estimated tax payments are not required of hospitals or surgical centers if the tax for the calendar year is less than $500 or if a hospital has been allowed a grant under section 144.1484, subdivision 2, for the year.

(c) Underpayment of estimated installments bear interest at the rate specified in section 270.75, from the due date of the payment until paid or until the due date of the annual return at the rate specified in section 270.75. An underpayment of an estimated installment is the difference between the amount paid and the lesser of (1) 90 percent of one-twelfth of the tax for the calendar year or (2) the tax for the actual gross revenues received during the month.

Sec. 21. Minnesota Statutes 1996, section 295.582, is amended to read:

295.582 [AUTHORITY.]

(a) A hospital, surgical center, pharmacy, or health care provider that is subject to a tax under section 295.52, or a pharmacy that has paid additional expense transferred under this section by a wholesale drug distributor, may transfer additional expense generated by section 295.52 obligations on to all third-party contracts for the purchase of health care services on behalf of a patient or consumer. The additional expense transferred to the third-party purchaser must not exceed two percent of the tax percentage specified in section 295.52 multiplied against the gross revenues received under the third-party contract, and two percent of the tax percentage specified in section 295.52 multiplied against copayments and deductibles paid by the individual patient or consumer. The expense must not be generated on revenues derived from

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payments that are excluded from the tax under section 295.53. All third-party purchasers of health care services including, but not limited to, third-party purchasers regulated under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or under section 471.61 or 471.617, must pay the transferred expense in addition to any payments due under existing contracts with the hospital, surgical center, pharmacy, or health care provider, to the extent allowed under federal law. A third-party purchaser of health care services includes, but is not limited to, a health carrier, integrated service network, or community integrated service network that pays for health care services on behalf of patients or that reimburses, indemnifies, compensates, or otherwise insures patients for health care services. A third-party purchaser shall comply with this section regardless of whether the third-party purchaser is a for-profit, not-for-profit, or nonprofit entity. A wholesale drug distributor may transfer additional expense generated by section 295.52 obligations to entities that purchase from the wholesaler, and the entities must pay the additional expense. Nothing in this section limits the ability of a hospital, surgical center, pharmacy, wholesale drug distributor, or health care provider to recover all or part of the section 295.52 obligation by other methods, including increasing fees or charges.

(b) Each third-party purchaser regulated under any chapter cited in paragraph (a) shall include with its annual renewal for certification of authority or licensure documentation indicating compliance with paragraph (a).

(c) Any hospital, surgical center, or health care provider subject to a tax under section 295.52 or a pharmacy that has paid additional expense transferred under this section by a wholesale drug distributor may file a complaint with the commissioner responsible for regulating the third-party purchaser if at any time the third-party purchaser fails to comply with paragraph (a).

(d) If the commissioner responsible for regulating the third-party purchaser finds at any time that the third-party purchaser has not complied with paragraph (a), the commissioner may take enforcement action against a third-party purchaser which is subject to the commissioner's regulatory jurisdiction and which does not allow a hospital, surgical center, pharmacy, or provider to pass-through the tax. The commissioner may by order fine or censure the third-party purchaser or revoke or suspend the certificate of authority or license of the third-party purchaser to do business in this state if the commissioner finds that the third-party purchaser has not complied with this section. The third-party purchaser may appeal the commissioner's order through a contested case hearing in accordance with chapter 14.

Sec. 22. [MCHA ASSESSMENT OFFSET.]

In approving the premium rates as required in Minnesota Statutes, sections 62A.65, subdivision 3, and 62L.08, subdivision 8, the commissioners of health and commerce shall ensure that any appropriation to reduce the annual assessment made on the contributing members to cover the costs of the Minnesota comprehensive health insurance plan as required under Minnesota Statutes, section 62E.11, is reflected in the premium rate of each contributing member.

Sec. 23. [REPEALER.]

(a) Minnesota Statutes 1996, sections 295.52, subdivision 1b; and 295.53, subdivision 5, are repealed.

(b) Laws 1997, chapters 31, article 4; and 84, article 4, are repealed. Notwithstanding Minnesota Statutes, section 645.34, the sections of statutes amended by the laws repealed under this paragraph remain in effect as if not so amended.

Sec. 24. [EFFECTIVE DATES.]

Section 2, subdivision 1, paragraph (f), is effective for payments, revenues, and reimbursements received from the federal government on or after December 31, 1996.

Sections 1 and 3 are effective July 1, 1997.

Sections 4, 5, 6, 9 to 13, 15, and 19 are effective for gross revenues received after December 31, 1997.

Section 14, subdivision 1, paragraph (a), clause (6), and paragraph (b) are effective the day following final enactment. Section 14, paragraph (a), clause (17), is effective for gross revenues received for hearing aids and related equipment or prescription eyewear after December 31, 1997.

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Section 18 is effective January 1, 1998. Section 21, paragraph (a), is effective January 1, 1998.

Section 20 is effective for estimated payments due after July 1, 1997.

Sections 7, 8, and 21, paragraphs (c) and (d), are effective the day following final enactment.

Section 16 is effective for research expenditures incurred after December 31, 1995. Section 17 is effective for research expenditures incurred after December 31, 1999.

Section 23 is effective January 1, 1998.

ARTICLE 4

SENIOR CITIZEN DRUG PROGRAM

Section 1. Minnesota Statutes 1996, 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.

(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.

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(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.

(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 proposed comprehensive plan, including estimated project costs and the proposed order establishing the waiver, shall be filed with the secretary of the senate and chief clerk of the house of representatives at least 60 days prior to its effective date.

(b) 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.

(c) A comprehensive plan, including estimated project costs, shall be approved by the legislative advisory commission and filed with the commissioner of administration.

(13) In accordance with federal requirements, establish procedures to be followed by local welfare boards in creating citizen advisory committees, including procedures for selection of committee members.

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(14) Allocate federal fiscal disallowances or sanctions which are based on quality control error rates for the aid to families with dependent children, 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 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 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 pursuant 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.

(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.

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(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) 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. 2. [256.955] [SENIOR CITIZEN DRUG PROGRAM.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of human services shall establish and administer a senior citizen drug program. Qualified senior citizens shall be eligible for prescription drug coverage under the program beginning no later than January 1, 1999.

Subd. 2. [DEFINITIONS.] (a) For purposes of this section, the following definitions apply.

(b) "Health plan" has the meaning provided in section 62Q.01, subdivision 3.

(c) "Health plan company" has the meaning provided in section 62Q.01, subdivision 4.

(d) "Qualified senior citizen" means an individual age 65 or older who:

(1) is eligible as a qualified Medicare beneficiary according to section 256B.057, subdivision 3 or 3a, or is eligible under section 256B.057, subdivision 3 or 3a, and is also eligible for medical assistance or general assistance medical care with a spenddown as defined in section 256B.056, subdivision 5. Persons who are determined eligible for medical assistance according to section 256B.0575, who are eligible for medical assistance or general assistance medical care without a spenddown, or who are enrolled in MinnesotaCare, are not eligible for this program;

(2) is not enrolled in prescription drug coverage under a health plan;

(3) is not enrolled in prescription drug coverage under a Medicare supplement plan, as defined in sections 62A.31 to 62A.44, or policies, contracts, or certificates that supplement Medicare issued by health maintenance organizations or those policies, contracts, or certificates governed by section 1833 or 1876 of the federal Social Security Act, United States Code, title 42, section 1395, et seq., as amended;

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(4) has not had coverage described in clauses (2) and (3) for at least four months prior to application for the program; and

(5) is a permanent resident of Minnesota as defined in section 256.9359.

Subd. 3. [PRESCRIPTION DRUG COVERAGE.] Coverage under the program is limited to prescription drugs covered under the medical assistance program as described in section 256B.0625, subdivision 13, subject to a maximum deductible of $300 annually, except drugs cleared by the FDA shall be available to qualified senior citizens enrolled in the program without restriction when prescribed for medically accepted indication as defined in the federal rebate program under section 1927 of title XIX of the federal Social Security Act.

Subd. 4. [APPLICATION PROCEDURES AND COORDINATION WITH MEDICAL ASSISTANCE.] Applications and information on the program must be made available at county social service agencies, health care provider offices, and agencies and organizations serving senior citizens. Senior citizens shall submit applications and any information specified by the commissioner as being necessary to verify eligibility directly to the county social service agencies:

(1) beginning January 1, 1999, the county social service agency shall determine medical assistance spenddown eligibility of individuals who qualify for the senior citizen drug program of individuals; and

(2) program payments will be used to reduce the spenddown obligations of individuals who are determined to be eligible for medical assistance with a spenddown as defined in section 256B.056, subdivision 5.

Seniors who are eligible for medical assistance with a spenddown shall be financially responsible for the deductible amount up to the satisfaction of the spenddown. No deductible applies once the spenddown has been met. Payments to providers for prescription drugs for persons eligible under this subdivision shall be reduced by the deductible.

County social service agencies shall determine an applicant's eligibility for the program within 30 days from the date the application is received.

Subd. 5. [DRUG UTILIZATION REVIEW PROGRAM.] The commissioner shall utilize the drug utilization review program as described in section 256B.0625, subdivision 13a.

Subd. 6. [PHARMACY REIMBURSEMENT.] The commissioner shall reimburse participating pharmacies for drug and dispensing costs at the medical assistance reimbursement level, minus the deductible required under subdivision 7.

Subd. 7. [COST SHARING.] (a) Enrollees shall pay an annual premium of $120.

(b) Program enrollees must satisfy a $300 annual deductible, based upon expenditures for prescription drugs, to be paid as follows:

(1) $25 monthly deductible for persons with a monthly spenddown; or

(2) $150 biannual deductible for persons with a six-month spenddown.

The commissioner may adjust the annual deductible amount to stay within the program's appropriation.

Subd. 8. [REPORT.] The commissioner shall annually report to the legislature on the senior citizen drug program. The report must include demographic information on enrollees, per-prescription expenditures, total program expenditures, hospital and nursing home costs avoided by enrollees, any savings to medical assistance and Medicare resulting from the provision of prescription drug coverage under Medicare by health maintenance organizations, other public and private options for drug assistance to the senior population, any hardships caused by the annual premium and deductible, and any recommendations for changes in the senior drug program.

Subd. 9. [PROGRAM LIMITATION.] This section shall be repealed upon federal approval of the waiver to allow the commissioner to provide prescription drug coverage for qualified Medicare beneficiaries whose income is less than 150 percent of the federal poverty guidelines.

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Sec. 3. Minnesota Statutes 1996, section 256B.0625, subdivision 13, is amended to read:

Subd. 13. [DRUGS.] (a) Medical assistance covers drugs, except for fertility drugs when specifically used to enhance fertility, if prescribed by a licensed practitioner and dispensed by a licensed pharmacist, by a physician enrolled in the medical assistance program as a dispensing physician, or by a physician or a nurse practitioner employed by or under contract with a community health board as defined in section 145A.02, subdivision 5, for the purposes of communicable disease control. The commissioner, after receiving recommendations from professional medical associations and professional pharmacist associations, shall designate a formulary committee to advise the commissioner on the names of drugs for which payment is made, recommend a system for reimbursing providers on a set fee or charge basis rather than the present system, and develop methods encouraging use of generic drugs when they are less expensive and equally effective as trademark drugs. The formulary committee shall consist of nine members, four of whom shall be physicians who are not employed by the department of human services, and a majority of whose practice is for persons paying privately or through health insurance, three of whom shall be pharmacists who are not employed by the department of human services, and a majority of whose practice is for persons paying privately or through health insurance, a consumer representative, and a nursing home representative. Committee members shall serve three-year terms and shall serve without compensation. Members may be reappointed once.

(b) The commissioner shall establish a drug formulary. Its establishment and publication shall not be subject to the requirements of the administrative procedure act, but the formulary committee shall review and comment on the formulary contents. The formulary committee shall review and recommend drugs which require prior authorization. The formulary committee may recommend drugs for prior authorization directly to the commissioner, as long as opportunity for public input is provided. Prior authorization may be requested by the commissioner based on medical and clinical criteria before certain drugs are eligible for payment. Before a drug may be considered for prior authorization at the request of the commissioner:

(1) the drug formulary committee must develop criteria to be used for identifying drugs; the development of these criteria is not subject to the requirements of chapter 14, but the formulary committee shall provide opportunity for public input in developing criteria;

(2) the drug formulary committee must hold a public forum and receive public comment for an additional 15 days; and

(3) the commissioner must provide information to the formulary committee on the impact that placing the drug on prior authorization will have on the quality of patient care and information regarding whether the drug is subject to clinical abuse or misuse. Prior authorization may be required by the commissioner before certain formulary drugs are eligible for payment. The formulary shall not include:

(i) drugs or products for which there is no federal funding;

(ii) over-the-counter drugs, except for antacids, acetaminophen, family planning products, aspirin, insulin, products for the treatment of lice, vitamins for adults with documented vitamin deficiencies, and vitamins for children under the age of seven and pregnant or nursing women;

(iii) any other over-the-counter drug identified by the commissioner, in consultation with the drug formulary committee, as necessary, appropriate, and cost-effective for the treatment of certain specified chronic diseases, conditions or disorders, and this determination shall not be subject to the requirements of chapter 14;

(iv) anorectics; and

(v) drugs for which medical value has not been established; and

(vi) drugs from manufacturers who have not signed a rebate agreement with the Department of Health and Human Services pursuant to section 1927 of title XIX of the Social Security Act and who have not signed an agreement with the state for drugs purchased pursuant to the senior citizen drug program established under section 256.955.

The commissioner shall publish conditions for prohibiting payment for specific drugs after considering the formulary committee's recommendations.

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(c) The basis for determining the amount of payment shall be the lower of the actual acquisition costs of the drugs plus a fixed dispensing fee; the maximum allowable cost set by the federal government or by the commissioner plus the fixed dispensing fee; or the usual and customary price charged to the public. The pharmacy dispensing fee shall be $3.85. Actual acquisition cost includes quantity and other special discounts except time and cash discounts. The actual acquisition cost of a drug shall be estimated by the commissioner, at average wholesale price minus nine percent. The maximum allowable cost of a multisource drug may be set by the commissioner and it shall be comparable to, but no higher than, the maximum amount paid by other third-party payors in this state who have maximum allowable cost programs. Establishment of the amount of payment for drugs shall not be subject to the requirements of the administrative procedure act. An additional dispensing fee of $.30 may be added to the dispensing fee paid to pharmacists for legend drug prescriptions dispensed to residents of long-term care facilities when a unit dose blister card system, approved by the department, is used. Under this type of dispensing system, the pharmacist must dispense a 30-day supply of drug. The National Drug Code (NDC) from the drug container used to fill the blister card must be identified on the claim to the department. The unit dose blister card containing the drug must meet the packaging standards set forth in Minnesota Rules, part 6800.2700, that govern the return of unused drugs to the pharmacy for reuse. The pharmacy provider will be required to credit the department for the actual acquisition cost of all unused drugs that are eligible for reuse. Over-the-counter medications must be dispensed in the manufacturer's unopened package. The commissioner may permit the drug clozapine to be dispensed in a quantity that is less than a 30-day supply. Whenever a generically equivalent product is available, payment shall be on the basis of the actual acquisition cost of the generic drug, unless the prescriber specifically indicates "dispense as written - brand necessary" on the prescription as required by section 151.21, subdivision 2.

Sec. 4. [SENIOR DRUG PROGRAM.]

The commissioner shall administer the senior drug program so that the costs to the state total no more than $4,000,000 plus the amount of the rebate. The commissioner is authorized to discontinue enrollment in order to meet this level of funding.

The commissioner shall report to the legislature the estimated costs of the senior drug program without funding caps. The report shall be included as part of the November and February forecasts.

The commissioner of finance shall annually reimburse the general fund with health care access funds for the estimated increased costs in the QMB/SLMB program directly associated with the senior drug program. This reimbursement shall sunset June 30, 2001.

Sec. 5. [STUDY ON DUAL PRESCRIPTION DRUG COVERAGE.]

The commissioner of human services shall study the implications to the senior citizen drug program if a health plan company offers within the state a product that provides a prescription drug benefit as part of the standard coverage for Medicare enrollees and shall make recommendations on how to address this issue to the legislature by January 15, 1998.

ARTICLE 5

COMMUNITY PURCHASING ARRANGEMENTS

Section 1. [62S.01] [DEFINITIONS.]

Subdivision 1. [SCOPE.] For purposes of this chapter, the terms in this section have the meanings given.

Subd. 2. [HEALTH CARE PURCHASING ALLIANCE.] "Health care purchasing alliance" means a business organization created under this chapter to negotiate the purchase of health care services for employers. Nothing in this chapter shall be deemed to regulate or impose any requirements on a self-insured employer or labor union. A health care purchasing alliance may include a grouping of:

(1) businesses, including small businesses with one employee. The businesses may or may not be organized under section 62Q.17, as a purchasing pool;

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(2) trade association members or church organizations under section 60A.02, or union members who are not in a self-insured benefit plan;

(3) multiple employer welfare associations under chapter 62H;

(4) municipalities, townships, or counties;

(5) other government entities; or

(6) any combination of clauses (1) to (5).

The alliance may determine the definition of a business of one employee, but must adhere to its definition and show no bias in selection of members, based on that definition.

Subd. 3. [ACCOUNTABLE PROVIDER NETWORK.] "Accountable provider network" means a group of health care providers organized to market health care services on a risk-sharing or nonrisk-sharing basis with a health care purchasing alliance. Accountable provider networks shall operate as not-for-profit entities or as health care cooperatives, as allowed under chapter 62R. This chapter applies only when an accountable provider network is marketing and selling services and benefits to the employees of businesses as authorized in section 62S.04.

Subd. 4. [COMMISSIONER.] "Commissioner" means the commissioner of health.

Sec. 2. [62S.015] [PURCHASING ALLIANCES.]

Subdivision 1. [REGISTRATION.] Purchasing alliances must register prior to offering coverage, and annually on July 1 thereafter, with the commissioner on a form prescribed by the commissioner.

Subd. 2. [COMMON FACTORS.] All participants in a purchasing alliance must live within a common geographic region, be employed in a similar occupation, or share some other common factor as approved by the commissioner. The membership criteria must not be designed to include disproportionately employers, groups, or individuals likely to have low costs of health coverage, or to exclude disproportionately employers, groups, or individuals likely to have high costs of health coverage.

Sec. 3. [62S.02] [APPLICATION OF OTHER LAWS.]

An accountable provider network is subject to all requirements applicable to a health plan company licensed in the state, except as otherwise noted in this chapter. An accountable provider network and a health care purchasing alliance must comply with all requirements of chapter 62L. A contracting arrangement between a health care purchasing alliance and an accountable provider network for provision of health care benefits must provide consumer protection functions comparable to those currently required of a health plan company licensed under section 62N.25, and other statutes referenced in that section, except for modifications and waivers permitted under this chapter.

Sec. 4. [62S.03] [COMPLAINT SYSTEM.]

Accountable provider networks must establish and maintain an enrollee complaint system as required under section 62Q.105. The accountable provider network may contract with the health care purchasing alliance or a vendor for operation of this system.

Sec. 5. [62S.04] [BENEFITS.]

An accountable provider network may offer and sell any benefits permitted to be offered and sold by health plan companies under Minnesota law.

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Sec. 6. [62S.05] [WAIVERS.]

Subdivision 1. [AUTHORIZATION.] The commissioner may grant waivers from the requirements of law for the contracting arrangement between a health care purchasing alliance and an accountable provider network in the areas listed in subdivisions 2 to 4. The commissioner may not waive the following state consumer protection and quality assurance laws:

(1) laws requiring that enrollees be informed of any restrictions, requirements, or limitations on coverage, services, or access to specialists and other providers;

(2) laws allowing consumers to complain to or appeal to a state regulatory agency if denied benefits or services;

(3) laws prohibiting gag clauses and other restrictions on communication between a patient and their physician or provider;

(4) laws allowing consumers to obtain information on provider financial incentives, which may affect treatment;

(5) laws requiring the submission of information needed to monitor quality of care and enrollee rights;

(6) laws protecting enrollee privacy and confidentiality of records;

(7) minimum standards for adequate provider network capacity and geographic access to services;

(8) laws assuring continuity of care when a patient must change providers;

(9) laws governing coverage of emergency services;

(10) laws prohibiting excessive or unreasonable administrative fees or expenses; and

(11) other laws or rules that are directly related to quality of care, consumer protection, and due process rights.

Subd. 2. [SOLVENCY PROTECTION.] (a) The commissioner may waive the requirements of sections 62N.27 to 62N.32, and may substitute capital and surplus requirements that are reduced from the levels required of other risk-bearing entities in order to reflect its reduced risk exposure. If risk is being underwritten, the underwriter cannot have more than 25 percent of the representation on the governing board of the accountable provider network. The reduced requirements must include at least the following levels of capital and surplus: (i) a deposit of $500,000 plus (ii) the greater of an estimated 15 percent of gross premium revenues or twice the net retained annual risk up to $750,000 on a single enrollee. Net retained annual risk may be, for example, the lowest annual deductible under a provider stop-loss insurance policy that covers all costs above the deductible. Assets supporting the deposit must meet the standards for deposits referenced in section 62N.32. Assets supporting the capital must meet the investment guidelines referenced in section 62N.27.

(b) An accountable provider network may propose a method of reporting income, expenses, claims payments, and other financial information in a manner which adequately demonstrates ongoing compliance with the standards for capital, surplus, and claims reserves agreed to under this waiver.

(c) An accountable provider network may demonstrate ability to continue to deliver the contracted health care services to the purchasing alliance through arrangements which ensure that, subject to 60 days' notice of intent to discontinue the contracting arrangement, provider participants will continue to meet their obligation to provide health care services to enrollees for a period of 60 days.

Subd. 3. [MARKETING AND DISCLOSURE.] The accountable provider network, in conjunction with the health care purchasing alliance, may propose alternative methods to present marketing and disclosure information which assure the accountability to consumers who are offered and who receive their services.

Subd. 4. [QUALITY ASSURANCE.] The accountable provider network may propose an alternative quality assurance program which incorporates effective methods for reviewing and evaluating data related to quality of care and ways to identify and correct quality problems.

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Sec. 7. [62S.06] [CRITERIA FOR GRANTING WAIVERS.]

The commissioner may approve a request for waiver under section 62S.05 if the applicant demonstrates that the contracting arrangement between a health care purchasing alliance and an accountable provider network will meet the following criteria:

(a) The arrangement would be likely to result in:

(1) more choice in benefits and prices;

(2) lower costs;

(3) increased access to health care coverage by small businesses;

(4) increased access to providers who have demonstrated a long-term commitment to the community being serviced; or

(5) increased quality of health care than would otherwise occur under the existing market conditions. In the event that a proposed arrangement appears likely to improve one or two of the criteria at the expense of another one or two of the criteria, the commissioner shall not approve the waiver.

(b) The proposed alternative methods would provide equal or improved results in consumer protection than would result under the existing consumer protections requirements.

Sec. 8. [62S.07] [SUPERVISION AND REVOCATION OF WAIVERS.]

(a) The commissioner shall appropriately supervise and monitor approved waivers.

(b) The commissioner may revoke approval of a waiver if the contracting arrangement no longer satisfies the criteria in section 62S.06, paragraphs (a) and (b).

Sec. 9. [62S.08] [MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION.]

A health care purchasing alliance must pay the assessment required of contributing members pursuant to section 62E.11.

Sec. 10. [62S.09] [MINNESOTACARE TAX.]

An accountable provider network is subject to the premium tax established in section 60A.15 and must pay installments as described in section 60A.15, subdivision 1, paragraph (d).

Sec. 11. [62S.10] [DUTIES OF COMMISSIONER.]

(a) By July 1, 1997, the commissioner shall make available application forms for licensure as an accountable provider network. The accountable provider network may begin doing business after application has been approved.

(b) Upon receipt of an application for a certificate of authority, the commissioner shall grant or deny licensure and waivers requested within 90 days of receipt of a complete application if all requirements are substantially met. For a period of one year after the effective date of this chapter, the commissioner may approve up to five applications, none of which may be from health plan companies. If no written response has been received within 90 days, the application is approved. When the commissioner denies an application or waiver request, the commissioner shall notify the applicant in writing specifically stating the grounds for the denial and specific suggestions for how to remedy the denial. The commissioner will entertain reconsiderations. Within 90 days after the denial, the applicant may file a written request for an administrative hearing and review of the commissioner's determination. The hearing is subject to judicial review as provided by chapter 14.

(c) All monitoring, enforcement, and rulemaking powers available under chapter 62N are granted to the commissioner to assure continued compliance with provisions of this chapter.

(d) The commissioner may contract with other entities as necessary to carry out the responsibilities in this chapter.

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Sec. 12. [62S.11] [FEES.]

Every accountable provider network subject to this chapter shall pay to the commissioner fees as prescribed by the commissioner pursuant to section 144.122. The initial fees are:

(1) filing an application for licensure, $500;

(2) filing an amendment to a license, $90;

(3) filing an annual report, $200;

(4) filing of renewal of licensure based on a fee of $1,000 per 1,000 enrollees, with renewal every three years; and

(5) other filing fees as specified by rule.

Sec. 13. [62S.12] [ENROLLMENT.]

An accountable provider network created under this chapter is limited to a maximum enrollment of 30,000 persons.

ARTICLE 6

MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION

Section 1. Minnesota Statutes 1996, section 62E.02, subdivision 13, is amended to read:

Subd. 13. [ELIGIBLE PERSON.] (a) "Eligible person" means an individual who:

(1) is currently and has been a resident of Minnesota for the six months immediately preceding the date of receipt by the association or its writing carrier of a completed certificate of eligibility and who;

(2) meets the enrollment requirements of section 62E.14; and

(3) is not otherwise ineligible under this subdivision.

(b) No individual is eligible for coverage under a qualified or a Medicare supplement plan issued by the association for whom a premium is paid or reimbursed by the medical assistance program or general assistance medical care program as of the first day of any term for which a premium amount is paid or reimbursed.

Sec. 2. Minnesota Statutes 1996, section 62E.02, subdivision 18, is amended to read:

Subd. 18. [WRITING CARRIER.] "Writing carrier" means the insurer or insurers, health maintenance organization or organizations, integrated service network or networks, and community integrated service network or networks, or other entity selected by the association and approved by the commissioner to administer the comprehensive health insurance plan.

Sec. 3. Minnesota Statutes 1996, section 62E.13, subdivision 2, is amended to read:

Subd. 2. The association may select policies and contracts, or parts thereof, submitted by a member or members of the association, or by the association or others, to develop specifications for bids from any members entity which wish wishes to be selected as a writing carrier to administer the state plan. The selection of the writing carrier shall be based upon criteria including established by the board of directors of the association and approved by the commissioner. The criteria shall outline specific qualifications that an entity must satisfy in order to be selected and, at a minimum, shall include the member's entity's proven ability to handle large group accident and health insurance cases, efficient claim paying capacity, and the estimate of total charges for administering the plan. The association may select separate writing carriers for the two types of qualified plans, the qualified medicare supplement plan, and the health maintenance organization contract.

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Sec. 4. Minnesota Statutes 1996, section 256B.056, subdivision 8, is amended to read:

Subd. 8. [COOPERATION.] To be eligible for medical assistance, applicants and recipients must cooperate with the state and local agency to identify potentially liable third-party payers and assist the state in obtaining third party payments, unless good cause for noncooperation is determined according to Code of Federal Regulations, title 42, part 433.147. "Cooperation" includes identifying any third party who may be liable for care and services provided under this chapter to the applicant, recipient, or any other family member for whom application is made and providing relevant information to assist the state in pursuing a potentially liable third party. Cooperation also includes providing information about a group health plan for which the person may be eligible and if the plan is determined cost-effective by the state agency and premiums are paid by the local agency or there is no cost to the recipient, they must enroll or remain enrolled with the group. For purposes of this subdivision, coverage provided by the Minnesota comprehensive health association under chapter 62E shall not be considered group health plan coverage or cost-effective by the state and local agency. Cost-effective insurance premiums approved for payment by the state agency and paid by the local agency are eligible for reimbursement according to section 256B.19.

Sec. 5. Minnesota Statutes 1996, section 256B.0625, subdivision 15, is amended to read:

Subd. 15. [HEALTH PLAN PREMIUMS AND COPAYMENTS.] (a) Medical assistance covers health care prepayment plan premiums, insurance premiums, and copayments if determined to be cost-effective by the commissioner. For purposes of obtaining Medicare part A and part B, and copayments, expenditures may be made even if federal funding is not available.

(b) Effective for all premiums due on or after June 30, 1997, medical assistance does not cover premiums that a recipient is required to pay under a qualified or Medicare supplement plan issued by the Minnesota comprehensive health association. Medical assistance shall continue to cover premiums for recipients who are covered under a plan issued by the Minnesota comprehensive health association on June 30, 1997, for a period of six months following receipt of the notice of termination or until December 31, 1997, whichever is later.

Sec. 6. Minnesota Statutes 1996, section 256D.03, subdivision 3b, is amended to read:

Subd. 3b. [COOPERATION.] (a) General assistance or general assistance medical care applicants and recipients must cooperate with the state and local agency to identify potentially liable third-party payors and assist the state in obtaining third-party payments. Cooperation includes identifying any third party who may be liable for care and services provided under this chapter to the applicant, recipient, or any other family member for whom application is made and providing relevant information to assist the state in pursuing a potentially liable third party. General assistance medical care applicants and recipients must cooperate by providing information about any group health plan in which they may be eligible to enroll. They must cooperate with the state and local agency in determining if the plan is cost-effective. For purposes of this subdivision, coverage provided by the Minnesota comprehensive health association under chapter 62E shall not be considered group health plan coverage or cost-effective by the state and local agency. If the plan is determined cost-effective and the premium will be paid by the state or local agency or is available at no cost to the person, they must enroll or remain enrolled in the group health plan. Cost-effective insurance premiums approved for payment by the state agency and paid by the local agency are eligible for reimbursement according to subdivision 6.

(b) Effective for all premiums due on or after June 30, 1997, general assistance medical care does not cover premiums that a recipient is required to pay under a qualified or Medicare supplement plan issued by the Minnesota comprehensive health association. General assistance medical care shall continue to cover premiums for recipients who are covered under a plan issued by the Minnesota comprehensive health association on June 30, 1997, for a period of six months following receipt of the notice of termination or until December 31, 1997, whichever is later.

Sec. 7. [MCHA TERMINATION NOTICE.]

The Minnesota comprehensive health association, in consultation with the commissioner of human services, shall provide written notice to all persons whose coverage under the comprehensive health insurance plan terminates due to the change in policy described in Minnesota Statutes, sections 256B.056, subdivision 15, and 256D.03, subdivision 3b.

The notice must include the following information:

(1) the reason for termination;

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(2) a description of the eligibility requirements for the comprehensive health insurance plan;

(3) a description of medical assistance and general assistance medical care eligibility categories;

(4) a description of the participation requirement to the prepaid medical assistance program, prepaid general assistance medical care, and exemptions from participation due to disability as determined by the social security administration; and

(5) a telephone number for the department of human services for specific questions regarding the medical assistance and general assistance medical care program.

Notice must be given at least six months before coverage is terminated.

The commissioner of human services shall release to the association any data necessary to provide the notice required in this section.

Sec. 8. [SUNSET.]

The amendments made in this article to Minnesota Statutes, sections 62E.02, subdivision 13; 256B.056, subdivision 8; 256B.0625, subdivision 15; and 256D.03, subdivision 3b, expire June 30, 1999.

Sec. 9. [EFFECTIVE DATE.]

Sections 2 to 8 are effective the day following final enactment. Section 1 is effective for coverage provided by the comprehensive health association on or after January 1, 1998, subject to the right to retain coverage for six months after receipt of notice of termination under sections 5 and 6.

ARTICLE 7

APPROPRIATIONS

Section 1. [APPROPRIATIONS; SUMMARY.]

Except as otherwise provided in this act, the sums set forth in the columns designated "fiscal year 1998" and "fiscal year 1999" are appropriated from the general fund, or other named fund, to the agencies for the purposes specified in this act for the fiscal years ending June 30, 1998, and June 30, 1999.

Sec. 2. APPROPRIATIONS

SUMMARY BY FUND

1998 1999 TOTAL

Health Care Access Fund $130,613,000 $161,364,000 $291,977,000

General Fund 1,357,000 6,127,0007,484,000

State Government Special Revenue Fund 21,000 37,000 58,000

Subdivision 1. Department of Human Services

Health Care Access Fund 99,052,000 129,761,000 228,813,000

General Fund 1,357,000 6,127,000 7,484,000

[MEDICAL EDUCATION.] Of the fiscal year 1998 health care access fund appropriation, $3,500,000 is for medical education research costs. This appropriation, plus the federal financial participation amount shall

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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. Any unspent funds in this appropriation do not cancel but may carry forward and be available in fiscal year 1999.

[GENERAL FUND APPROPRIATION.] The general fund appropriation is for costs associated with the senior drug program, the QMB/SLMB cost increases resulting from the senior drug program, and the discontinuation of the MCHA premium payments for MA and GAMC recipients. The health care access fund shall reimburse the general fund for the QMB/SLMB cost and the GAMC and MA costs.

[ADMINISTRATIVE COSTS.] Of the health care access appropriation, $342,000 in fiscal year 1998 and $1,536,000 in fiscal year 1999 is for administrative costs associated with moving parents and working adults GAMC into the MinnesotaCare program. Of this appropriation, only $300,000 shall become part of the base for the fiscal 2000-2001 biennium.

[SERVICE CHARGES.] For fiscal years 1998 and 1999, the department of human services is exempt from service charges imposed by other state agencies when those charges exceed the base appropriation provided to the department for the particular service.

[DENTAL SERVICES REIMBURSEMENT INCREASE.] Notwithstanding statutory provisions to the contrary, the commissioner shall increase reimbursement rates by 15 percent for dental services covered under the MinnesotaCare program and rendered on or after July 1, 1997. The commissioner shall increase the prepaid capitation rates as appropriate to reflect this rate increase. Notwithstanding section 5, this paragraph does not expire.

[FEDERAL RECEIPTS FOR ADMINISTRATION.] Receipts received as a result of federal participation pertaining to administrative costs of the Minnesota Health Care Reform Waiver shall be deposited as a nondedicated revenue to the Health Care Access Fund, while receipts received as a result of federal participation pertaining to grants shall be deposited to the federal fund and shall offset health care access funds for payments to providers.

[MINNESOTA OUTREACH.] Of the health care access fund appropriation, $750,000 each year shall be disbursed for grants to public and private organizations to provide outreach for the MinnesotaCare program in areas of the state with high uninsured populations.

Subd. 2. Department of Health

Health Care Access Fund 10,653,000 12,248,000 22,901,000

State Government Special Revenue Fund 21,000 37,000 58,000

Health care access fund appropriations for student loan forgiveness programs for health care providers are available for either year of the biennium.

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[RURAL HOSPITAL CAPITAL GRANTS.] Of this appropriation, $3,000,000 in fiscal year 1998 and $4,500,000 in fiscal year 1999 shall be disbursed for rural hospital capital improvement grants or loans. Any unspent funds may be used for rural hospital planning and transition grant programs. This appropriation shall not become part of the base for the fiscal year 2000-2001 biennium.

[RURAL HOSPITAL DEMONSTRATION PROJECTS.] Of this appropriation, $300,000 in each fiscal year shall be disbursed for rural hospital demonstration projects. This appropriation shall not become part of the base for the fiscal year 2000-2001 biennium.

[ADMINISTRATIVE COSTS.] The base for administrative costs shall be reduced by $450,000 for fiscal years 2000 and 2001. The commissioner shall examine general fund resources to replace this reduction.

Subd. 3. University of Minnesota

Health Care Access Fund 2,537,000 2,537,000 5,074,000

[PRIMARY CARE EDUCATION INITIATIVES.] Of this appropriation, $180,000 in each fiscal year shall be disbursed to the board of regents for primary care physician education and training under Minnesota Statutes, sections 137.38 to 137.40. This appropriation is available only if matched by $1 for each $1 of the appropriation. This appropriation is in addition to the current base appropriation for these activities and shall become part of the base appropriation for the fiscal year 2000-2001 biennium.

Subd. 4. Department of Revenue

Health Care Access Fund 3,121,000 1,668,000 4,789,000

[RESEARCH DEDUCTION.] Of this appropriation, $1,500,000 shall be disbursed in fiscal year 1998 to be used for research deduction claims filed by hospitals and health care providers under Minnesota Statutes, section 295.53, subdivision 4, for research expenditures incurred in calendar year 1996. These claims must be filed by August 1, 1997, and the commissioner must pay the refund no later than October 1, 1997.

Subd. 5. Department of Commerce

Health Care Access Fund 15,100,000 15,000,000 30,100,000

[MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION ASSESSMENT OFFSET.] Of this appropriation, $15,000,000 in fiscal year 1998 and $15,000,000 in fiscal year 1999 is for a grant to the Minnesota Comprehensive Health Association and shall be made available on January 1 of each fiscal year to be used to offset the annual assessments for calendar years 1998 and 1999 that are required to be paid by each contributing member in accordance with Minnesota Statutes, section 62E.11. This appropriation shall not become part of the base for the fiscal year 2000-2001 biennium.

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Subd. 6. Legislative Coordinating Commission

Health Care Access Fund 150,000 150,000 300,000

Sec. 3. TRANSFERS

$4,112,000 in fiscal year 1998 and $4,104,000 in fiscal year 1999 are transferred from the health care access fund to the general fund to replace the revenue lost due to the repeal of the $400 physician surcharge.

Sec. 4. CARRYOVER

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. 5. SUNSET

All uncodified language contained in this article expires on June 30, 1999, unless a different expiration is explicit.

ARTICLE 8

HEALTH AND HUMAN SERVICES TECHNICAL CORRECTIONS

Section 1. S. F. No. 1908, article 1, section 2, if enacted, is amended by adding a subdivision to read:

Subd. 10a. Visitation Access Funds

[FEDERAL FUNDS FOR VISITATION ACCESS.] The commissioner may accept on behalf of the state any federal funding for the purpose of financing visitation access programs, and may expend these funds on services described in Public Law Number 104-193.

Sec. 2. S. F. No. 1908, article 1, section 3, subdivision 2, if enacted, is amended to read:

Subd. 2. Health Systems and Special Populations 48,517,000 48,233,000

Summary by Fund

General 39,295,000 38,998,000

State Government Special Revenue 9,222,000 9,235,000

[FEES; DRUG AND ALCOHOL COUNSELOR LICENSE.] When setting fees for the drug and alcohol counselor license, the department is exempt from Minnesota Statutes, section 16A.1285, subdivision 2.

[STATE VITAL STATISTICS REDESIGN PROJECT ACCOUNT.] The amount appropriated from the state government special revenue fund for the vital records redesign project shall be available until expended for development and implementation.

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[WIC PROGRAM.] Of this appropriation, $650,000 in 1998 is provided to maintain services of the program, $700,000 in 1998 and $700,000 in 1999 is added to the base level funding for the WIC food program in order to maintain the existing level of the program, and $100,000 in 1998 is for the commissioner to develop and implement an outreach program to apprise potential recipients of the WIC food program of the importance of good nutrition and the availability of the program.

[WIC TRANSFERS.] General fund appropriations for the women, infants, and children (WIC) food supplement program are available for either year of the biennium. Transfers of appropriations between fiscal years must be for the purpose of maximizing federal funds or minimizing fluctuations in the number of participants.

[LOCAL PUBLIC HEALTH FINANCING.] Of the general fund appropriation, $5,000,000 each year shall be disbursed for local public health financing and shall be distributed according to the community health service subsidy formula in Minnesota Statutes, section 145A.13.

[MINNESOTA CHILDREN WITH SPECIAL HEALTH NEEDS CARRYOVER.] General fund appropriations for treatment services in the services for children with special health care needs program are available for either year of the biennium.

[HEALTH CARE ASSISTANCE FOR DISABLED CHILDREN INELIGIBLE FOR SSI.] Notwithstanding the requirements of Minnesota Rules, part 4705.0100, subpart 14, children who: (a) are eligible for medical assistance as of June 30, 1997, and become ineligible for medical assistance due to changes in supplemental security income disability standards for children enacted in (PRWORA) Public Law Number 104-193; and (b) are not eligible for MinnesotaCare, are eligible for health care services through Minnesota services for children with special health care needs under Minnesota Rules, parts 4705.0100 to 4705.1600 for the fiscal year ending June 30, 1998, until eligibility for medical assistance is reestablished. The commissioner of health shall report to the legislature by March 1, 1998, on the number of children eligible under this provision, their health care needs, family income as a percentage of the federal poverty level, the extent to which families have employer-based health coverage, and recommendations on how to meet the future needs of children eligible under this provision.

[AMERICAN INDIAN DIABETES.] Of this appropriation, $90,000 each year shall be disbursed for a comprehensive school-based intervention program designed to reduce the risk factors associated with diabetes among American Indian school children in grades 1 through 4. The appropriation for 1998 may be carried forward to 1999. The appropriation for fiscal year 1999 is available only if matched by $1 of nonstate money for each $1 of the appropriation and may be expended in either year of the biennium. The commissioner shall convene an American Indian diabetes prevention advisory task force. The task force must include representatives from the American Indian tribes located in the state and urban American Indian representatives. The task force shall advise the commissioner on the adaptation of curricula

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and the dissemination of information designed to reduce the risk factors associated with diabetes among American Indian school children in grades 1 through 4. The curricula and information must be sensitive to traditional American Indian values and culture and must encourage full participation by the American Indian community.

[HOME VISITING PROGRAMS.] (a) Of this appropriation, $140,000 in 1998 and $870,000 in 1999 is for the home visiting programs for infant care under Minnesota Statutes, section 145A.16. These amounts are available until June 30, 1999.

(b) Of this appropriation, $225,000 in 1998 and $180,000 in 1999 is to continue funding the home visiting programs that received one-year funding under Laws 1995, chapter 480, article 1, section 9. This amount is available until expended.

[FETAL ALCOHOL SYNDROME.] Of the general fund appropriation, $625,000 each year of the biennium shall be disbursed to prevent and reduce harm from fetal alcohol syndrome and fetal alcohol effect.

[COMPLAINT INVESTIGATIONS.] Of the appropriation, $127,000 each year from the state government special revenue fund, and $75,000 each year from the general fund, is for the commissioner to conduct complaint investigations of nursing facilities, hospitals and home health care providers.

[COMPLEMENTARY MEDICINE STUDY.] (a) Of the general fund appropriation, $20,000 in fiscal year 1998 shall be disbursed for the commissioner of health, in consultation with the commissioner of commerce, to conduct a study based on existing literature, information, and data on the scope of complementary medicine offered in this state. The commissioner shall:

(1) include the types of complementary medicine therapies available in this state;

(2) contact national and state complementary medicine associations for literature, information, and data;

(3) conduct a general literary review for information and data on complementary medicine;

(4) contact the departments of commerce and human services for information on existing registrations, licenses, certificates, credentials, policies, and regulations; and

(5) determine by sample, if complementary medicine is currently covered by health plan companies and the extent of the coverage.

In conducting this review, the commissioner shall consult with the office of alternative medicine through the National Institute of Health.

(b) The commissioner shall, in consultation with the advisory committee, report the study findings to the legislature by January 15, 1998. As part of the report, the commissioner shall make recommendations on whether the state should credential or regulate any of the complementary medicine providers.

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(c) The commissioner shall appoint an advisory committee to provide expertise and advice on the study. The committee must include representation from the following groups: health care providers, including providers of complementary medicine; health plan companies; and consumers. The advisory committee is governed by Minnesota Statutes, section 15.059, for membership terms and removal of members.

(d) For purposes of this study, the term "complementary medicine" includes, but is not limited to, acupuncture, homeopathy, manual healing, macrobiotics, naturopathy, biofeedback, mind/body control therapies, traditional and ethnomedicine therapies, structural manipulations and energetic therapies, bioelectromagnetic therapies, and herbal medicine.

[DOWN'S DOWN SYNDROME.] Of the general fund appropriation, $15,000 in fiscal year 1998 shall be disbursed for a grant to a nonprofit organization that provides support to individuals with Down's Down Syndrome and their families, for the purpose of providing all obstetricians, certified nurse-midwives, and family physicians licensed to practice in this state with informational packets on Down's Down Syndrome. The packets must include, at a minimum, a fact sheet on Down's Down Syndrome, a list of counseling and support groups for families with children with Down's Down Syndrome, and a list of special needs adoption resources. The informational packets must be made available to any pregnant patient who has tested positive for Down's Down Syndrome, either through a screening test or amniocentesis.

[NEWBORN SCREENING FOR HEARING LOSS PROGRAM IMPLEMENTATION PLAN.] (a) Of the general fund appropriation, $18,000 in fiscal year 1998 shall be disbursed to pay the costs of coordinating with hospitals, the medical community, audiologists, insurance companies, parents, and deaf and hard-of-hearing citizens to establish and implement a voluntary plan for hospitals and other health care facilities to screen all infants for hearing loss.

(b) The plan to achieve universal screening of infants for hearing loss on a voluntary basis shall be formulated by a department work group, including the following representatives:

(1) a representative of the health insurance industry designated by the health insurance industry;

(2) a representative of the Minnesota Hospital and Healthcare Partnership;

(3) a total of two representatives from the following physician groups designated by the Minnesota Medical Association: pediatrics, family practice, and ENT;

(4) two audiologists designated by the Minnesota Speech-Language-Hearing Association and the Minnesota Academy of Audiology;

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(5) a representative of hospital neonatal nurseries;

(6) a representative of part H (IDEA) early childhood special education;

(7) the commissioner of health or a designee;

(8) a representative of the department of human services;

(9) a public health nurse;

(10) a parent of a deaf or hard-of-hearing child;

(11) a deaf or hard-of-hearing person; and

(12) a representative of the Minnesota commission serving deaf and hard-of-hearing people.

Members of the work group shall not collect a per diem or compensation as provided in Minnesota Statutes, section 15.0575.

(c) The plan shall include measurable goals and timetables for the achievement of universal screening of infants for hearing loss throughout the state and shall include the design and implementation of needed training to assist hospitals and other health care facilities screen infants for hearing loss according to recognized standards of care.

(d) The work group shall report to the legislature by January 15, 1998, concerning progress toward the achievement of universal screening of infants in Minnesota for the purpose of assisting the legislature to determine whether this goal can be accomplished on a voluntary basis.

[INFANT HEARING SCREENING PROGRAM.] Of the general fund appropriation, $25,000 in fiscal year 1998 shall be disbursed for a grant to a hospital in Staples, Minnesota, for the infant hearing screening program.

[NURSING HOMES DAMAGED BY FLOODS.] The commissioner shall conduct an expedited process under Minnesota Statutes, section 144A.073, solely to review nursing home moratorium exceptions necessary to repair or replace nursing facilities damaged by spring flooding in 1997. The commissioner may not issue a request for proposals for moratorium projects not related to spring flooding until this expedited process is completed. For facilities that require total replacement and the relocation of residents to other facilities during construction, the operating cost payment rates for the new facility shall be determined using the interim and settle-up payment provisions of Minnesota Rules, part 9549.0057, and the reimbursement provisions of Minnesota Statutes, section 256B.431, except that subdivision 25 26, paragraphs (a) and (b), clause (3), and (d), shall not apply until the second rate year after the settle-up cost report is filed. Property-related reimbursement rates shall be determined under Minnesota Rules, chapter 9549 Statutes, section 256B.431, taking into account any federal or state flood-related loans or grants provided to a facility. The medical assistance costs of this paragraph shall be paid from the amount made available in section 2 of this article for moratorium exceptions. This paragraph is effective the day following final enactment and is not subject to section 13 of this article.

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Sec. 3. Minnesota Statutes 1996, section 256B.0913, subdivision 16, as added by S. F. No. 1908, article 4, section 39, if enacted, is amended to read:

Subd. 16. [CONVERSION OF ENROLLMENT.] Upon approval of the elderly waiver amendments described in section 42 41, persons currently receiving services shall have their eligibility for the elderly waiver program determined under section 256B.0915. Persons currently receiving alternative care services whose income is under the special income standard according to Code of Federal Regulations, title 42, section 435.236, who are eligible for the elderly waiver program shall be transferred to that program and shall receive priority access to elderly waiver slots for six months after implementation of this subdivision. Persons currently enrolled in the alternative care program who are not eligible for the elderly waiver program shall continue to be eligible for the alternative care program as long as continuous eligibility is maintained. Continued eligibility for the alternative care program shall be reviewed every six months. Persons who apply for the alternative care program after approval of the elderly waiver amendments in section 42 41 are not eligible for alternative care if they would qualify for the elderly waiver, with or without a spenddown.

Sec. 4. S. F. No. 1908, article 4, section 70, if enacted, is amended to read:

Sec. 70. [WAIVER MODIFICATION.]

The commissioner of human services shall seek federal approval for any modifications to the health care reform waiver necessary to implement the asset standard changes in sections 21 to 23 22 to 24, and 28 73, paragraph (a).

Sec. 5. S. F. No. 1908, article 4, section 73, if enacted, is amended to read:

Sec. 73. [REPEALER.]

(a) Minnesota Statutes 1996, sections 256B.057, subdivisions 2a and 2b; and 469.154, subdivision 6, are repealed.

(b) Minnesota Statutes 1996, section 256B.0625, subdivision 13b, is repealed the day following final enactment.

(c) Minnesota Rules, part parts 9505.1000 to 9505.1040, is are repealed.

Sec. 6. Minnesota Statutes 1996, section 256B.0911, subdivision 2, as amended by S. F. No. 1908, article 9, section 10, if enacted, 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, 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

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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. 7. S. F. No. 1908, article 9, section 24, if enacted, is amended to read:

Sec. 24. [EFFECTIVE DATE.]

Section Sections 14 and 16, amending Minnesota Statutes 1996, section 518.17, subdivision 1, is are effective the day following final enactment.

Sec. 8. [EFFECTIVE DATE.]

Section 7 is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to health; modifying the MinnesotaCare program; modifying general assistance medical care provisions; modifying loss ratio provisions for health care policies; modifying Medicare supplement plan provisions; modifying the regional coordinating boards; modifying the health technology advisory committee; eliminating the health care commission; modifying mandatory Medicare assignment; modifying MinnesotaCare tax provisions; regulating community purchasing arrangements; modifying disclosure provisions; eliminating integrated service networks; modifying community integrated service network provisions; modifying provisions of the public programs risk adjustment work group; modifying essential community provider provisions; modifying requirements for health plan companies; modifying provisions of the rural physician education account; modifying rural hospital provisions; modifying medical assistance provisions; establishing a senior citizen drug proram; modifying Minnesota comprehensive health association provisions; requiring studies; making technical changes; appropriating money; providing criminal penalties; amending Minnesota Statutes 1996, sections 60A.15, subdivision 1; 60A.951, subdivision 5; 62A.021, subdivision 1, and by adding a subdivision; 62A.316; 62A.61; 62D.02, subdivision 5; 62D.09, subdivision 3; 62E.02, subdivisions 13 and 18; 62E.11, subdivision 5; 62E.13, subdivision 2; 62J.017; 62J.06; 62J.07, subdivisions 1 and 3; 62J.09, subdivision 1; 62J.15, subdivision 1; 62J.152, subdivisions 1, 2, 4, 5, and by adding subdivisions; 62J.17, subdivision 6a; 62J.22; 62J.25; 62J.2914, subdivision 1; 62J.2915; 62J.2916, subdivision 1; 62J.2917, subdivision 2; 62J.2921, subdivision 2; 62J.451, subdivision 6b; 62M.02, subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 62Q.45, subdivision 2; 136A.1355; 144.147, subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1; 256.01, subdivision 2; 256.045, subdivision 3a; 256.9352, subdivision 3; 256.9353, subdivisions 1, 3, and 7; 256.9354, subdivisions 4, 5, 6, 7, and by adding a subdivision; 256.9355, subdivisions 1, 4, and by adding a subdivision; 256.9357, subdivision 3; 256.9358, subdivision 4; 256.9359, subdivision 2; 256.9362, subdivision 6; 256.9363, subdivisions 1 and 5; 256.9657, subdivision 3; 256B.056, subdivision 8; 256B.0625, subdivisions 13 and 15; 256B.0911, subdivision 2, as amended; 256B.0913, subdivision 16, as added; 256D.03, subdivisions 3 and 3b; 295.50, subdivisions 3, 4, 6, 7, 13, and 14; 295.51, subdivision 1; 295.52, subdivision 4, and by adding subdivisions; 295.53, subdivisions 1, 3, 4, and by adding a subdivision; 295.54, subdivisions 1 and 2; 295.55, subdivision 2; 295.582; S. F. No. 1908, article 1, sections 2; 3, subdivision 2; article 4, sections 70 and 73; and article 9, section 24; proposing coding for new law in Minnesota Statutes, chapters 16A; 62Q; 144; and 256; proposing coding for

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new law as Minnesota Statutes, chapter 62S; repealing Minnesota Statutes 1996, sections 62E.11, subdivision 12; 62J.03, subdivision 3; 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; 147.01, subdivision 6; 295.52, subdivision 1b; and 295.53, subdivision 5; Laws 1993, chapter 247, article 4, section 8; Laws 1994, chapter 625, article 5, section 5, as amended; Laws 1995, chapter 96, section 2; Laws 1995, First Special Session chapter 3, article 13, section 2; Laws 1997, chapters 31, article 4; and 84, article 4."

We request adoption of this report and repassage of the bill.

Senate Conferees: Linda Berglin, Pat Piper, Dallas C. Sams, Sheila M. Kiscaden and Becky Lourey.

House Conferees: Lee Greenfield, Thomas Huntley, John Dorn, Luanne Koskinen and Kevin Goodno.

Greenfield moved that the report of the Conference Committee on S. F. No. 1208 be adopted and that the bill be repassed as amended by the Conference Committee.

A roll call was requested and properly seconded.

The Speaker called Wejcman to the Chair.

Haas moved that the House refuse to adopt the Conference Committee report on S. F. No. 1208, and that the bill be returned to the Conference Committee.

A roll call was requested and properly seconded.

The question was taken on the Haas motion and the roll was called.

Marko moved that those not voting be excused from voting. The motion prevailed.

There were 61 yeas and 72 nays as follows:

Those who voted in the affirmative were:

Abrams Dempsey Kraus Nornes Smith Vickerman
Anderson, B. Erhardt Krinkie Olson, M. Stanek Weaver
Bettermann Farrell Kuisle Osskopp Stang Westfall
Bishop Gunther Larsen Ozment Sviggum Westrom
Boudreau Haas Leppik Paulsen Swenson, D. Wolf
Bradley Harder Lindner Pawlenty Swenson, H. Workman
Broecker Holsten Macklin Rhodes Sykora
Commers Kielkucki Mares Rifenberg Tingelstad
Daggett Knight McElroy Rostberg Tompkins
Davids Knoblach Molnau Seagren Tuma
Dehler Koppendrayer Mulder Seifert Van Dellen

Those who voted in the negative were:

Anderson, I. Folliard Johnson, A. Luther Opatz Skare
Bakk Garcia Johnson, R. Mahon Orfield Skoglund
Biernat Goodno Juhnke Mariani Osthoff Slawik
Carlson Greenfield Kahn Marko Otremba Solberg
Chaudhary Greiling Kalis McCollum Paymar Tomassoni
Clark Hasskamp Kelso McGuire Pelowski Trimble
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Dawkins Hausman Kinkel Milbert Peterson Tunheim
Delmont Hilty Koskinen Mullery Pugh Wagenius
Dorn Huntley Kubly Munger Rest Wejcman
Entenza Jaros Leighton Murphy Rukavina Wenzel
Evans Jefferson Lieder Ness Schumacher Winter
Finseth Jennings Long Olson, E. Sekhon Spk. Carruthers

The motion did not prevail.

The question recurred on the Greenfield motion and the roll was called. There were 116 yeas and 17 nays as follows:

Those who voted in the affirmative were:

Anderson, I. Folliard Kelso Milbert Pugh Tingelstad
Bakk Garcia Kinkel Molnau Rest Tomassoni
Bettermann Goodno Knoblach Mulder Rhodes Trimble
Biernat Greenfield Koskinen Mullery Rifenberg Tuma
Boudreau Greiling Kubly Munger Rostberg Tunheim
Broecker Haas Kuisle Murphy Rukavina Van Dellen
Carlson Harder Larsen Ness Schumacher Vickerman
Chaudhary Hasskamp Leighton Nornes Seagren Wagenius
Clark Hausman Leppik Olson, E. Seifert Weaver
Commers Hilty Lieder Opatz Sekhon Wejcman
Daggett Holsten Long Orfield Skare Wenzel
Davids Huntley Luther Osskopp Skoglund Westfall
Dawkins Jaros Macklin Osthoff Slawik Westrom
Delmont Jefferson Mahon Otremba Smith Winter
Dempsey Jennings Mares Ozment Solberg Wolf
Dorn Johnson, A. Mariani Paulsen Stanek Spk. Carruthers
Entenza Johnson, R. Marko Pawlenty Stang
Evans Juhnke McCollum Paymar Sviggum
Farrell Kahn McElroy Pelowski Swenson, D.
Finseth Kalis McGuire Peterson Sykora

Those who voted in the negative were:

Abrams Bradley Gunther Koppendrayer Lindner Tompkins
Anderson, B. Dehler Kielkucki Kraus Olson, M. Workman
Bishop Erhardt Knight Krinkie Swenson, H.

The motion prevailed.

S. F. No. 1208, A bill for an act relating to MinnesotaCare; eliminating the health care commission; modifying the regional coordinating boards; eliminating integrated service networks; modifying the health technology advisory committee; expanding the eligibility of the MinnesotaCare program; modifying general assistance medical care; modifying the enforcement mechanisms for the provider tax pass-through; modifying mandatory Medicare assignment; making technical, policy, and administrative changes and connections to MinnesotaCare taxes; providing grants for MinnesotaCare outreach; regulating community purchasing arrangements; requiring certain studies; appropriating money; amending Minnesota Statutes 1996, sections 60A.15, subdivision 1; 60A.951, subdivision 5; 62A.61; 62J.017; 62J.06; 62J.07, subdivisions 1 and 3; 62J.09, subdivision 1; 62J.15, subdivision 1; 62J.152, subdivisions 1, 2, 4, 5, and by adding a subdivision; 62J.17,

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subdivision 6a; 62J.22; 62J.25; 62J.2914, subdivision 1; 62J.2915; 62J.2916, subdivision 1; 62J.2917, subdivision 2; 62J.2921, subdivision 2; 62J.451, subdivision 6b; 62M.02, subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 62Q.45, subdivision 2; 136A.1355; 144.147, subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1; 256.01, subdivision 2; 256.045, subdivision 3a; 256.9352, subdivision 3; 256.9353, subdivisions 1, 3, and 7; 256.9354, subdivisions 4, 5, 6, 7, and by adding a subdivision; 256.9355, subdivisions 1, 4, and by adding a subdivision; 256.9357, subdivision 3; 256.9358, subdivision 4; 256.9359, subdivision 2; 256.9363, subdivisions 1 and 5; 256.9657, subdivision 3; 256B.0625, subdivision 13; 256D.03, subdivision 3; 295.50, subdivisions 3, 4, 6, 7, 9b, 13, 14, and by adding a subdivision; 295.51, subdivision 1; 295.52, subdivisions 1, 1a, 2, 4, and by adding subdivisions; 295.53, subdivisions 1, 3, and 4; 295.54, subdivisions 1 and 2; 295.55, subdivision 2; and 295.582; proposing coding for new law in Minnesota Statutes, chapters 16A; 144; and 256; proposing coding for new law as Minnesota Statutes, chapter 62S; repealing Minnesota Statutes 1996, sections 62E.11, subdivision 12; 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; 147.01, subdivision 6; 295.52, subdivision 1b; and 295.53, subdivision 5; Laws 1993, chapter 247, article 4, section 8; Laws 1994, chapter 625, article 5, section 5, as amended; Laws 1995, chapter 96, section 2; and Laws 1995, First Special Session chapter 3, article 13, section 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 115 yeas and 18 nays as follows:

Those who voted in the affirmative were:

Anderson, I. Folliard Kinkel Molnau Rest Tomassoni
Bakk Garcia Knoblach Mulder Rhodes Trimble
Bettermann Goodno Koppendrayer Mullery Rifenberg Tuma
Biernat Greenfield Koskinen Munger Rostberg Tunheim
Bishop Greiling Kubly Murphy Rukavina Van Dellen
Broecker Haas Kuisle Ness Schumacher Vickerman
Carlson Harder Larsen Nornes Seagren Wagenius
Chaudhary Hasskamp Leighton Olson, E. Seifert Weaver
Clark Hausman Leppik Opatz Sekhon Wejcman
Commers Hilty Lieder Orfield Skare Wenzel
Daggett Huntley Long Osskopp Skoglund Westfall
Davids Jaros Luther Osthoff Slawik Westrom
Dawkins Jefferson Mahon Otremba Smith Winter
Delmont Jennings Mares Ozment Solberg Wolf
Dempsey Johnson, A. Mariani Paulsen Stanek Spk. Carruthers
Dorn Johnson, R. Marko Pawlenty Stang
Entenza Juhnke McCollum Paymar Sviggum
Erhardt Kahn McElroy Pelowski Swenson, D.
Evans Kalis McGuire Peterson Sykora
Finseth Kelso Milbert Pugh Tingelstad

Those who voted in the negative were:

Abrams Bradley Gunther Knight Lindner Swenson, H.
Anderson, B. Dehler Holsten Kraus Macklin Tompkins
Boudreau Farrell Kielkucki Krinkie Olson, M. Workman

The bill was repassed, as amended by Conference, and its title agreed to.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5325

The following Conference Committee Report was received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 299

A bill for an act relating to state parks; adding to state parks; renaming O.L. Kipp state park; permitting liquor sales in certain parks; authorizing the commissioner to contract out certain restaurant services; modifying state park permit exemptions; amending Minnesota Statutes 1996, sections 85.012, by adding a subdivision; 85.0505; and 85.054, by adding a subdivision; repealing Minnesota Statutes 1996, section 85.012, subdivision 46.

May 17, 1997

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. 299, report that we have agreed upon the items in dispute and recommend as follows:

That the House concur in the Senate amendments

We request adoption of this report and repassage of the bill.

House Conferees: Thomas Bakk, Anthony G. "Tony" Kinkel and Gregory M. Davids.

Senate Conferees: Steven Morse, Leonard R. Price and Gary W. Laidig.

Bakk moved that the report of the Conference Committee on H. F. No. 299 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 299, A bill for an act relating to state parks; adding to state parks; renaming O.L. Kipp state park; permitting liquor sales in certain parks; authorizing the commissioner to contract out certain restaurant services; modifying state park permit exemptions; amending Minnesota Statutes 1996, sections 85.012, by adding a subdivision; 85.0505; and 85.054, by adding a subdivision; repealing Minnesota Statutes 1996, section 85.012, subdivision 46.

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 124 yeas and 9 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Kahn McCollum Pelowski Sykora
Anderson, I. Evans Kalis McElroy Peterson Tingelstad
Bakk Farrell Kelso McGuire Pugh Tomassoni
Bettermann Folliard Kielkucki Milbert Rest Tompkins
Biernat Garcia Kinkel Molnau Rhodes Trimble
Bishop Goodno Knoblach Mulder Rifenberg Tuma
Boudreau Greenfield Koppendrayer Mullery Rostberg Tunheim
Bradley Greiling Koskinen Munger Rukavina Van Dellen
Broecker Gunther Kraus Murphy Schumacher Vickerman
Carlson Haas Kubly Ness Seagren Wagenius
Chaudhary Hasskamp Larsen Nornes Sekhon Weaver
Clark Hausman Leighton Olson, E. Skare Wejcman
Commers Hilty Leppik Opatz Skoglund Wenzel
Daggett Holsten Lieder Orfield Slawik Westfall
Davids Huntley Long Osskopp Smith Westrom
Dawkins Jaros Luther Osthoff Solberg Winter
Dehler Jefferson Macklin Otremba Stanek Wolf
Delmont Jennings Mahon Ozment Stang Workman
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5326
Dempsey Johnson, A. Mares Paulsen Sviggum Spk. Carruthers
Dorn Johnson, R. Mariani Pawlenty Swenson, D.
Entenza Juhnke Marko Paymar Swenson, H.

Those who voted in the negative were:

Anderson, B. Harder Krinkie Lindner Seifert
Finseth Knight Kuisle Olson, M.

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:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 254.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 254

A bill for an act relating to natural resources; modifying certain fish habitat and propagation provisions; authorizing the commissioner to establish special hunts for youth; permitting youth residents to hunt deer without a license tag; authorizing rules to restrict airboats; modifying provisions relating to taking minnows; authorizing the commissioner to sell merchandise; providing purposes for the game and fish fund; modifying stamp provisions; modifying the procedure for vacating or modifying a state game refuge; defining terms; prohibiting airboats on certain lakes; permitting persons 65 years of age or older to take certain game with a crossbow; establishing shooting hours for migratory game birds; modifying license provisions; modifying personal watercraft provisions; requiring personal watercraft safety certificate; requiring snowmobile state trail permit; requiring snowmobile safety certificate; modifying recreational motor vehicle provisions; modifying special license plate provisions; establishing firearms safety pilot program; requiring reports; providing criminal penalties; appropriating money; amending Minnesota Statutes 1996, sections 17.4982, by adding subdivisions; 17.4983, by adding a subdivision; 17.4998; 84.0855; 84.82, subdivisions 2 and 3; 84.87, subdivision 2; 84.872, by adding a subdivision; 84.873; 86B.313, subdivisions 1, 3, 4, and by adding a subdivision; 97A.015, subdivisions 49, 53, and by adding a subdivision; 97A.045, subdivision 7; 97A.055, subdivision 1; 97A.075, subdivision 3; 97A.085, subdivision 8; 97A.101, by adding a subdivision; 97A.411, subdivisions 1 and 3; 97A.421, subdivision 1; 97A.465, subdivision 4; 97A.485, subdivision 9, and by adding a subdivision; 97B.035, subdivision 1; 97B.075; 97B.106; 97B.301, subdivision 6; 97B.655,

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subdivision 1; 97B.805, subdivision 2; 97C.035, subdivision 1; 97C.211, subdivision 1, and by adding a subdivision; 97C.505, by adding a subdivision; 168.1291; 168.1296, subdivision 1; 296.16, subdivision 1; and 609.487, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 84; and 97B; repealing Minnesota Statutes 1996, section 97A.111.

May 18, 1997

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. 254, 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. 254 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 17.4982, is amended by adding a subdivision to read:

Subd. 18a. [NONINDIGENOUS SPECIES.] "Nonindigenous species" means a species of fish or other aquatic life that is:

(1) not known to have been historically present in the state;

(2) not known to be naturally occurring in a particular part of the state; or

(3) designated by rule as a prohibited or restricted exotic species.

Sec. 2. Minnesota Statutes 1996, section 17.4982, is amended by adding a subdivision to read:

Subd. 18b. [NONINDIGENOUS STRAIN.] "Nonindigenous strain" means a species of fish or other aquatic life that:

(1) has an original source outside of this state and contiguous states;

(2) is an unnaturally occurring hybrid or genetically engineered species; or

(3) in areas north of marked state highway 210, is a walleye, the original source of which is from south of marked state highway 210 or from outside the state.

Sec. 3. Minnesota Statutes 1996, section 17.4982, is amended by adding a subdivision to read:

Subd. 18c. [PROCESSING.] "Processing" means rendering a species of aquatic life for food, bait, or other purposes so that it is no longer alive.

Sec. 4. Minnesota Statutes 1996, section 17.4983, is amended by adding a subdivision to read:

Subd. 8. [INTERFERENCE PROHIBITED.] A person may not knowingly damage, disturb, or interfere with legal aquatic farm operations.

Sec. 5. Minnesota Statutes 1996, section 17.4998, is amended to read:

17.4998 [VIOLATIONS; PENALTY.]

Subdivision 1. [MISDEMEANOR.] Unless a different penalty is prescribed, a violation of a provision of sections 17.4981 to 17.4997 or a rule of the commissioner governing the operation of an aquatic farm, private fish hatchery, or quarantine facility is a misdemeanor.

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Subd. 2. [PETTY MISDEMEANOR.] A first and second violation, within a three-year period, of sections 17.4981 to 17.4997 or a rule of the commissioner governing the operation of an aquatic farm, private fish hatchery, or quarantine facility is a petty misdemeanor if it does not involve intentionally falsifying records and does not put public waters or other fish hatchery facilities at risk from harmful nonindigenous species, nonindigenous strains, or emergency fish diseases.

Subd. 3. [LICENSE VOID.] The license of a person convicted of a violation of sections 17.4981 to 17.4997 or a rule of the commissioner governing the operation of an aquatic farm, private fish hatchery, or quarantine facility is void for a period of one year after the conviction if the person is convicted of two or more misdemeanors within a three-year period. If the commissioner determines that the public welfare will not be injured, the commissioner may reinstate a license voided under this subdivision.

Sec. 6. Minnesota Statutes 1996, section 84.0855, is amended to read:

84.0855 [SPECIAL SALES; RECEIPTS; APPROPRIATION.]

Subdivision 1. [SALES AUTHORIZED; GIFT CERTIFICATES.] The commissioner may sell natural resources-related publications and maps; federal migratory waterfowl, junior duck, and other federal stamps; and other nature-related merchandise, and may rent or sell items for the convenience of persons using department of natural resources facilities or services. The commissioner may sell gift certificates for any items rented or sold. Notwithstanding section 16A.1285, a fee charged by the commissioner under this section may include a reasonable amount in excess of the actual cost to support department of natural resources programs. The commissioner may advertise the availability of a program or item offered under this section.

Subd. 2. [RECEIPTS; APPROPRIATION.] Money received by the commissioner of natural resources as fees for seminars or workshops, from the sale of publications and maps, from the sale of other natural resource related merchandise, under this section or to buy supplies for the use of volunteers, may be credited to one or more special accounts in the state treasury and is appropriated to the commissioner for the purposes for which the money was received. Money received from sales at the state fair shall be available for state fair related costs.

Sec. 7. Minnesota Statutes 1996, section 84.82, subdivision 2, is amended to read:

Subd. 2. [APPLICATION, ISSUANCE, REPORTS, ADDITIONAL FEE.] (a) Application for registration or reregistration shall be made to the commissioner of natural resources, or the commissioner of public safety or an authorized deputy registrar of motor vehicles in such form as the commissioner of public safety shall prescribe, and shall state the legal name and address of every owner of the snowmobile and be signed by at least one owner.

(b) A person who purchases a snowmobile from a retail dealer shall make application for registration to the dealer at the point of sale. The dealer shall issue a temporary registration permit to each purchaser who applies to the dealer for registration. The temporary registration is valid for 60 days from the date of issue. Each retail dealer shall submit completed registration and fees to the deputy registrar at least once a week. Upon receipt of the application and the appropriate fee as hereinafter provided, such snowmobile shall be registered and a registration number assigned which shall be affixed to the snowmobile in such a clearly visible and permanent manner for enforcement purposes as the commissioner of natural resources shall prescribe.

(c) Each deputy registrar of motor vehicles acting pursuant to section 168.33, shall also be a deputy registrar of snowmobiles. The commissioner of natural resources in agreement with the commissioner of public safety may prescribe the accounting and procedural requirements necessary to assure efficient handling of registrations and registration fees. Deputy registrars shall strictly comply with these accounting and procedural requirements.

(d) A fee of $2 in addition to that otherwise prescribed by law shall be charged for:

(1) each snowmobile registered by the registrar or a deputy registrar and the additional fee shall be disposed of in the manner provided in section 168.33, subdivision 2; or

(2) each snowmobile registered by the commissioner and the additional fee shall be deposited in the state treasury and credited to the snowmobile trails and enforcement account in the natural resources fund.

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Sec. 8. Minnesota Statutes 1996, section 84.87, subdivision 2, is amended to read:

Subd. 2. [OPERATION GENERALLY.] It shall be unlawful for any person to drive or operate any snowmobile in the following unsafe or harassing ways:

(a) (1) at a rate of speed greater than reasonable or proper under all the surrounding circumstances;

(b) (2) in a careless, reckless or negligent manner so as to endanger the person or property of another or to cause injury or damage thereto;

(c) (3) without a lighted head and taillight when required for safety; or

(d) (4) in any tree nursery or planting in a manner which damages or destroys growing stock.

Sec. 9. Minnesota Statutes 1996, section 84.872, is amended by adding a subdivision to read:

Subd. 1a. [HELMET REQUIRED.] (a) No person under the age of 18 shall operate or ride a snowmobile in this state without wearing protective headgear that complies with standards established by the commissioner of public safety.

(b) The provisions of this subdivision shall not apply to persons during their participation in a parade that has been granted a permit or other official authorization by a local unit of government or to a person operating a snowmobile on land that is owned by the person or the person's parents, grandparents, siblings, uncles, or aunts.

Sec. 10. Minnesota Statutes 1996, section 84.873, is amended to read:

84.873 [SIGNAL FROM OFFICER TO STOP.]

It is unlawful for a snowmobile operator, after having received a visual or audible signal from any law enforcement officer to come to a stop, to (a) (1) operate a snowmobile in willful or wanton disregard of such signal, or (b) (2) interfere with or endanger the law enforcement officer or any other person or vehicle, or (c) increase speed or attempt to flee or elude the officer.

Sec. 11. Minnesota Statutes 1996, section 86B.201, is amended by adding a subdivision to read:

Subd. 3. [NONMOTORIZED CARRY-ON ACCESS.] A person may access any public waters through public land with a hand-carried nonmotorized watercraft.

Sec. 12. Minnesota Statutes 1996, section 97A.015, is amended by adding a subdivision to read:

Subd. 37a. [PROCESSING.] "Processing" means rendering a species of aquatic life for food, bait, or other purposes so that it is no longer alive.

Sec. 13. Minnesota Statutes 1996, section 97A.015, subdivision 49, is amended to read:

Subd. 49. [UNDRESSED BIRD.] "Undressed bird" means:

(1) a bird, excluding migratory waterfowl, pheasant, Hungarian partridge, or grouse, with feet and feathered head intact;

(2) a migratory waterfowl, excluding geese, with a fully feathered wing and head attached; or

(3) a pheasant, Hungarian partridge, or grouse with one leg and foot or the fully feathered head or wing intact; or

(4) a goose with a fully feathered wing attached.

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Sec. 14. Minnesota Statutes 1996, section 97A.015, subdivision 53, is amended to read:

Subd. 53. [UNPROTECTED WILD ANIMALS.] "Unprotected wild animals" means wild animals that are not protected wild animals including weasel, coyote (brush wolf), gopher, porcupine, striped skunk, civet cat, and unprotected birds.

Sec. 15. Minnesota Statutes 1996, section 97A.045, subdivision 7, is amended to read:

Subd. 7. [DUTY TO ENCOURAGE STAMP DESIGN AND PURCHASES.] (a) The commissioner shall encourage the purchase of:

(1) Minnesota migratory waterfowl stamps by nonhunters interested in the migratory waterfowl preservation and habitat development;

(2) pheasant stamps by persons interested in pheasant habitat improvement; and

(3) trout and salmon stamps by persons interested in trout and salmon stream and lake improvement; and

(4) turkey stamps by persons interested in wild turkey management and habitat improvement.

(b) The commissioner shall make rules governing contests for selecting a design for each stamp.

Sec. 16. Minnesota Statutes 1996, section 97A.075, subdivision 3, is amended to read:

Subd. 3. [TROUT AND SALMON STAMP.] (a) Ninety percent of the revenue from trout and salmon stamps must be credited to the trout and salmon management account. Money in the account may be used only for:

(1) the development, restoration, maintenance, and preservation of trout streams and lakes; and

(2) rearing and stocking of trout and salmon and stocking of trout and salmon in trout streams and lakes and Lake Superior;

(3) acquisition of easements and fee title along trout waters;

(4) identifying easement and fee title areas along trout waters; and

(5) research and special management projects on Lake Superior and the anadromous portions of its tributaries.

(b) Money in the account may not be used for costs unless they are directly related to a specific parcel of land or body of water under paragraph (a) or to specific fish rearing activities under paragraph (a), clause (2).

Sec. 17. Minnesota Statutes 1996, section 97A.085, subdivision 8, is amended to read:

Subd. 8. [MODIFICATION OR ABANDONMENT.] A state game refuge may be vacated or modified by the commissioner under the same procedures required for establishment of the refuge, except that a refuge established or modified under subdivision 2 or 3 may be vacated or modified following a public hearing as specified in subdivision 4a.

Sec. 18. Minnesota Statutes 1996, section 97A.101, is amended by adding a subdivision to read:

Subd. 4. [RESTRICTIONS ON AIRBOATS, WATERCRAFT, AND RECREATIONAL VEHICLES.] (a) The use of airboats is prohibited at all times on lakes designated for wildlife management purposes under this section unless otherwise authorized by the commissioner.

(b) The commissioner may restrict the use of motorized watercraft and recreational vehicles on lakes designated for wildlife management purposes by posting all public access points on the designated lake.

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Sec. 19. Minnesota Statutes 1996, section 97A.411, subdivision 1, is amended to read:

Subdivision 1. [LICENSE PERIOD.] (a) Except as provided in paragraph (b), a license is valid during the lawful time within the license year that the licensed activity may be performed. A license year begins on the first day of March and ends on the last day of February.

(b) A license issued under section 97A.475, subdivision 6, clause (5), or section 97A.475, subdivision 7, clause (2), (3), (5), or (6), or 97A.475, subdivision 12, clause (2), is valid for the full license period even if this period extends into the next license year, provided that the license period selected by the licensee begins at the time of issuance.

Sec. 20. Minnesota Statutes 1996, section 97A.411, subdivision 3, is amended to read:

Subd. 3. [ARCHERY DEER LICENSE.] (a) Except as provided in paragraph paragraphs (b) and c, a license to take deer by archery, firearms, or muzzleloader issued after the opening of the related archery, firearms, or muzzleloader deer season, respectively, is not valid until the fifth second day after it is issued.

(b) The commissioner may issue a license to take a second additional deer by archery under section 97B.301, subdivision 4, that is valid immediately upon issuance.

(c) Paragraph (a) does not apply to deer licenses for discharged military personnel under section 97A.465, subdivision 4.

Sec. 21. Minnesota Statutes 1996, section 97A.421, subdivision 1, is amended to read:

Subdivision 1. [GENERAL.] (a) The license of a person convicted of a violation of the game and fish laws relating to the license or wild animals covered by the license is void when:

(1) a second conviction occurs within three years under a license to take small game or to take fish by angling or spearing;

(2) a third conviction occurs within one year under a minnow dealer's license;

(3) a second conviction occurs within three years for violations of section 97A.425 that do not involve falsifications or intentional omissions of information required to be recorded, or attempts to conceal unlawful acts within the records; or

(4) two or more misdemeanor convictions occur within a three-year period under a private fish hatchery license; or

(5) the conviction occurs under a license not described in clause (1) or, (2), or (4) or is for a violation of section 97A.425 not described in clause (3).

(b) Except for big game licenses and as otherwise provided in this section, for one year after the conviction the person may not obtain the kind of license relating to the game and fish law violation.

Sec. 22. Minnesota Statutes 1996, section 97A.465, subdivision 4, is amended to read:

Subd. 4. [DISCHARGED RESIDENT; OBTAINING DEER LICENSE DURING SEASON.] Notwithstanding section 97A.485, subdivision 9, A resident who is discharged from the United States armed forces during, or within ten days before, the firearms deer season may, upon showing the official discharge paper, obtain a firearm deer license during the season that is valid immediately upon issuance.

Sec. 23. Minnesota Statutes 1996, section 97A.475, subdivision 2, is amended to read:

Subd. 2. [RESIDENT HUNTING.] Fees for the following licenses, to be issued to residents only, are:

(1) for persons under age 65 to take small game, $10;

(2) for persons age 65 or over, $5;

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(3) to take turkey, $16;

(4) to take deer with firearms, $22;

(5) to take deer by archery, $22;

(6) to take moose, for a party of not more than six persons, $275;

(7) to take bear, $33;

(8) to take elk, for a party of not more than two persons, $220; and

(9) to take antlered deer in more than one zone, $44; and

(10) to take Canada geese during a special season, $3.

Sec. 24. Minnesota Statutes 1996, section 97A.475, subdivision 3, is amended to read:

Subd. 3. [NONRESIDENT HUNTING.] Fees for the following licenses, to be issued to nonresidents, are:

(1) to take small game, $56;

(2) to take deer with firearms, $110;

(3) to take deer by archery, $110;

(4) to take bear, $165;

(5) to take turkey, $56;

(6) to take raccoon, bobcat, fox, coyote, or lynx, $137.50; and

(7) to take antlered deer in more than one zone, $220; and

(8) to take Canada geese during a special season, $3.

Sec. 25. Minnesota Statutes 1996, section 97A.485, subdivision 6, is amended to read:

Subd. 6. [LICENSES TO BE SOLD AND ISSUING FEES.] (a) Persons authorized to sell licenses under this section must sell the following licenses for the license fee and the following issuing fees:

(1) to take deer or bear with firearms and by archery, the issuing fee is $1;

(2) Minnesota sporting, the issuing fee is $1; and

(3) to take small game, for a person under age 65 to take fish by angling or for a person of any age to take fish by spearing, and to trap fur-bearing animals, the issuing fee is $1;

(4) for a trout and salmon stamp that is not issued simultaneously with an angling or sporting license, an issuing fee of 50 cents may be charged at the discretion of the authorized seller; and

(5) for stamps other than a trout and salmon stamp, and for a special season Canada goose license, there is no fee.

(b) An issuing fee may not be collected for issuance of a trout and salmon stamp if a stamp is issued simultaneously with the related angling or sporting license. Only one issuing fee may be collected when selling more than one trout and salmon stamp in the same transaction after the end of the season for which the stamp was issued.

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(c) The auditor or subagent shall keep the issuing fee as a commission for selling the licenses.

(d) The commissioner shall collect the issuing fee on licenses sold by the commissioner.

(e) A license, except stamps, must state the amount of the issuing fee and that the issuing fee is kept by the seller as a commission for selling the licenses.

(f) For duplicate licenses, the issuing fees are:

(1) for licenses to take big game, 75 cents; and

(2) for other licenses, 50 cents.

Sec. 26. Minnesota Statutes 1996, section 97A.485, subdivision 9, is amended to read:

Subd. 9. [CERTAIN LICENSES NOT TO BE ISSUED AFTER SEASON OPENS.] (a) The following licenses may not be issued after the day before the opening of the related firearms season:

(1) to take deer with firearms, except a license to take more than one deer under section 97B.301, subdivision 4;

(2) to guide bear hunters; and

(3) (2) to guide turkey hunters.

(b) Paragraph (a) does not apply to deer licenses for discharged military personnel under section 97A.465, subdivision 4.

(c) A nonresident license or tag to take and possess raccoon, bobcat, Canada lynx, or fox may not be issued after the fifth day of the open season.

Sec. 27. Minnesota Statutes 1996, section 97A.485, is amended by adding a subdivision to read:

Subd. 12. [YOUTH DEER LICENSE.] The commissioner may, for a fee of $5, issue to a resident under the age of 16 a license, without a tag, to take deer with firearms. A youth holding a license issued under this subdivision may hunt under the license only if accompanied by a licensed hunter who is at least 18 years of age and possesses a valid tag. A deer taken by a youth holding a license issued under this subdivision must be promptly tagged by the licensed hunter accompanying the youth. Section 97B.301, subdivision 6, does not apply to a youth holding a license issued under this subdivision.

Sec. 28. Minnesota Statutes 1996, section 97B.055, subdivision 2, is amended to read:

Subd. 2. [RESTRICTIONS RELATED TO MOTOR VEHICLE.] A person may not take a wild animal with a firearm or by archery from a motor vehicle except as permitted in this section. An archer in a permitted bow fishing tournament may transport the bow uncased while in an electric motor-powered boat.

Sec. 29. Minnesota Statutes 1996, section 97B.075, is amended to read:

97B.075 [HUNTING RESTRICTED BETWEEN EVENING AND MORNING.]

A person may not take protected wild animals, except raccoon and fox, with a firearm between the evening and morning times established by commissioner's rule, except big game may be taken from one-half hour before sunrise until one-half hour after sunset, and, except as otherwise prescribed by the commissioner during the first eight days of the season, until January 1, 2001, waterfowl may be taken from one-half hour before sunrise until sunset during the entire season prescribed by the commissioner.

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Sec. 30. [97B.112] [SPECIAL HUNTS FOR YOUTH.]

The commissioner may by rule establish criteria, special seasons, and limits for youth hunters to take big game and small game by firearms or archery in designated areas or times. The criteria may also include provisions for an unlicensed adult to assist a youth hunter during a special season or special hunt established under this section.

Sec. 31. Minnesota Statutes 1996, section 97B.211, subdivision 1, is amended to read:

Subdivision 1. [POSSESSION OF FIREARMS PROHIBITED.] (a) Except as provided in paragraph (b) when hunting bear, a person may not take big game by archery while in possession of a firearm.

(b) A person may take bear by archery while in possession of a handgun specified in section 97B.031, subdivision 1.

Sec. 32. Minnesota Statutes 1996, section 97B.301, subdivision 6, is amended to read:

Subd. 6. [RESIDENTS UNDER AGE 16 MAY TAKE DEER OF EITHER SEX.] A resident under the age of 16 may take a deer of either sex except in those antlerless permit areas and seasons where no antlerless permits are offered. In antlerless permit areas where no antlerless permits are offered, the commissioner may provide a limited number of youth either sex permits to residents under age 16, under the procedures provided in section 97B.305, and may give preference to residents under the age of 16 that have not previously been selected. This subdivision does not authorize the taking of an antlerless deer by another member of a party under subdivision 3.

Sec. 33. Minnesota Statutes 1996, section 97B.655, subdivision 1, is amended to read:

Subdivision 1. [OWNERS AND OCCUPANTS MAY TAKE CERTAIN ANIMALS.] A person may take mink, squirrel, rabbit, hare, raccoon, lynx, bobcat, fox, opossum, muskrat, or beaver on land owned or occupied by the person where the animal is causing damage. The person may take the animal without a license and in any manner except by poison, or artificial lights in the closed season. Raccoons may be taken under this subdivision with artificial lights during open season. A person that kills mink, raccoon, lynx, bobcat, fox, opossum, muskrat, or beaver under this subdivision must bring the entire animal to notify a conservation officer or employee of the division within 24 hours after the animal is killed.

Sec. 34. [97B.802] [SPECIAL CANADA GOOSE SEASON LICENSE REQUIRED.]

Except as provided in this section, a person required to possess a small game license may not take Canada geese during a special season without a valid special season Canada goose license in possession. Residents under age 18 or over age 65 and persons hunting on their own property are not required to possess the license.

Sec. 35. [97B.926] [PINE MARTEN AND FISHER ZONE.]

Where a combined pine marten and fisher trapping zone exists, the commissioner must provide an option of a combined limit of fisher and marten.

Sec. 36. Minnesota Statutes 1996, section 97C.035, subdivision 1, is amended to read:

Subdivision 1. [CONDITIONS.] If the commissioner determines that fish in shallow waters are endangered by lack of oxygen in the winter in danger of dying, or if waters will be restored with the use of piscicides, the commissioner shall may rescue the fish under subdivision 2 or allow taking of the fish under subdivision 3.

Sec. 37. Minnesota Statutes 1996, section 97C.211, subdivision 1, is amended to read:

Subdivision 1. [LICENSE REQUIRED.] A person may not operate a private fish hatchery without a private fish hatchery license. A private fish hatchery is a facility for raising fish, including minnows, for sale, stocking waters, angling, or processing. A private fish hatchery license is valid for five years but must be renewed annually.

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Sec. 38. Minnesota Statutes 1996, section 97C.211, is amended by adding a subdivision to read:

Subd. 6. [NONPUBLIC RECORDS.] Information on production, harvest, and sales of aquatic life by a private fish hatchery is nonpublic information.

Sec. 39. Minnesota Statutes 1996, section 97C.321, subdivision 1, is amended to read:

Subdivision 1. [GENERAL PROHIBITION.] A person may not take fish by angling with a set line or an unattended line except as provided in this section and section 97C.801 rules adopted under the game and fish laws.

Sec. 40. Minnesota Statutes 1996, section 97C.505, is amended by adding a subdivision to read:

Subd. 7. [INTERFERENCE PROHIBITED.] A person may not knowingly damage, disturb, or interfere with legal commercial minnow harvest operations.

Sec. 41. Minnesota Statutes 1996, section 97C.801, subdivision 2, is amended to read:

Subd. 2. [COMMERCIAL FISH NETTING AND SET LINES ON MISSISSIPPI RIVER.] (a) A license is required to commercially take rough fish with seines and set lines in the Mississippi river from the St. Croix river junction to St. Anthony Falls.

(b) A person may take rough fish in the Mississippi river, from the St. Croix river junction to St. Anthony Falls, only with the following equipment and methods:

(1) operations shall be conducted only in the flowing waters of the river and in tributary backwaters prescribed by the commissioner;

(2) only one set line may be used that has an identification tag and not more than 100 hooks;

(3) seines may be used only as prescribed by this section and rules adopted by the commissioner;

(4) (3) seines must be hauled to a landing immediately after being placed;

(5) (4) two seines may not be joined together in the water; and

(6) (5) a net seine may not be raised, laid out, or landed, between sunset and sunrise; and

(7) the location of a net or seine may not be changed from the place specified in the license application without notifying the commissioner of the proposed change.

Sec. 42. Minnesota Statutes 1996, section 168.1291, is amended to read:

168.1291 [SPECIAL LICENSE PLATES; DESIGN.]

Subdivision 1. [DEFINITION.] For purposes of this section "special license plates" means license plates issued under sections 168.12, subdivisions 2b to 2e; 168.123; 168.129; and 168.1292; and 168.1296.

Subd. 2. [DESIGN OF SPECIAL LICENSE PLATES.] The commissioner shall design a single special license plate that will contain a unique number and a space for a unique symbol. The commissioner shall design a unique symbol related to the purpose of each special license plate. Any provision of sections 168.12, subdivisions 2b to 2e; 168.123; 168.129; and 168.1292; and 168.1296 that requires the placement of a specified letter or letters on a special license plate applies to those license plates only to the extent that the commissioner includes the letter or letters in the design. Where a law authorizing a special license plate contains a specific requirement for graphic design of that license plate, that requirement applies to the appropriate unique symbol the commissioner designs.

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Subd. 3. [ISSUANCE OF SPECIAL LICENSE PLATES WITH UNIQUE SYMBOLS.] Notwithstanding section 168.12, subdivisions 2b to 2e; 168.123; 168.129; or 168.1292; or 168.1296, beginning with special license plates issued in calendar year 1996 the commissioner shall issue each class of special license plates permanently marked with specific designs under those laws only until the commissioner's supply of those license plates is exhausted. Thereafter the commissioner shall issue under those laws only the license plate authorized under subdivision 2, with the appropriate unique symbol attached.

Subd. 4. [FEES.] Notwithstanding section 168.12, subdivisions 2b to 2e; 168.123; 168.129; or 168.1292; or 168.1296, the commissioner shall charge a fee of $10 for each set of license plates issued under this section.

Subd. 5. [APPLICATION.] This section does not apply to a special motorcycle license plate designed by the registrar under section 168.123, subdivision 1, clause (2).

Sec. 43. Minnesota Statutes 1996, section 168.1296, subdivision 1, is amended to read:

Subdivision 1. [GENERAL REQUIREMENTS AND PROCEDURES.] (a) The registrar shall issue special critical habitat license plates to an applicant who:

(1) is an owner or joint owner of a passenger automobile, pickup truck, or van;

(2) pays a fee of $10 to cover the costs of handling and manufacturing the plates;

(3) pays the registration tax required under section 168.013;

(4) pays the fees required under this chapter;

(5) contributes at least a minimum of $30 annually to the Minnesota critical habitat private sector matching account established in section 84.943; and

(6) complies with laws and rules governing registration and licensing of vehicles and drivers.

(b) The critical habitat license application form must clearly indicate that the annual contribution specified under paragraph (a), clause (5), is a minimum contribution to receive the license plate and that the applicant may make an additional contribution to the account.

Sec. 44. Minnesota Statutes 1996, section 609.487, is amended by adding a subdivision to read:

Subd. 2a. [MOTOR VEHICLE; DEFINITION.] For the purposes of this section, "motor vehicle" has the meaning given it in section 169.01, subdivision 3, and includes a snowmobile, as defined in section 84.81.

Sec. 45. Laws 1993, chapter 273, section 1, as amended by Laws 1994, chapter 623, article 1, section 41, and Laws 1995, chapter 186, section 110, is amended to read:

Section 1. [AUTHORIZATION TO TAKE TWO DEER IN CERTAIN COUNTIES.]

Notwithstanding Minnesota Statutes, section 97B.301, subdivision 2, during the 1994, 1995, and 1996 1997 and 1998 hunting seasons in Kittson, Lake of the Woods, Marshall, Pennington, and Roseau counties a person may obtain one firearms deer license and one archery deer license in the same license year and may take one deer under each license.

Sec. 46. Laws 1996, chapter 410, section 56, is amended to read:

Sec. 56. [PERSONAL FLOTATION DEVICE RULES; VIOLATIONS.]

A violation prior to May 1, 1997 1999, of requirements added in the proposed rule published in the State Register, Volume 19, Number 45, pages 2207 to 2210, May 8, 1995, and subsequently adopted on October 2, 1995, shall not result in a penalty, but is punishable only by a safety warning.

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Sec. 47. [STUDY.]

The commissioner of natural resources must survey and identify, with the cooperation of local grant-in-aid trail groups, possible one-way circular trail systems for snowmobile use. A recommendation must be made to the 1998 legislature.

Sec. 48. [GAME AND FISH FUND REPORT; 1997.]

(a) In the 1997 report required under Minnesota Statutes, section 97A.055, subdivision 4, paragraph (a), clause (3), the commissioner must include:

(1) an analysis and discussion of the appropriate level of expenditure from the game and fish fund for field operations support, administrative management, statewide indirect costs, fleet management, ecological services, office rent, statewide communications, unemployment compensation, regional indirect costs, and workers' compensation;

(2) a comparison of expenditures for each of the purposes listed in clause (1) from all funds and accounts used by the department; and

(3) recommendations for changes in the allocation of funding from the game and fish fund for the purposes listed in clause (1).

(b) The commissioner must establish a citizens advisory committee of 20 members to recommend to the commissioner and the house and senate natural resources policy committees actions that are necessary to promote Minnesota's hunting, trapping, and fishing heritage and to ensure the continuation of the heritage. Upon request, the commissioner may provide information and staff support to the committee. The committee members may not be compensated for their expenses in serving on the committee.

The committee also must evaluate the 1984 report entitled, the Governor's Citizen Commission to Promote Hunting and Fishing in Minnesota, and make any recommendations to complete the eleven-point reinvestment program mentioned in the report and to achieve the goals of the reinvest in Minnesota resources program.

Sec. 49. [FIREARMS SAFETY PILOT PROGRAM.]

The commissioner of natural resources is authorized to establish a two-year firearms safety pilot demonstration program promoting awareness and understanding of the safe use and storage of firearms that is value-neutral concerning firearms ownership. The demonstration program shall be conducted in two school districts, one of which shall be located in the metropolitan area and one of which shall be conducted in outstate Minnesota. The commissioner shall submit a report to the legislature by January 15, 1999, regarding the efficacy of the program and recommending whether the commissioner should continue and expand the program.

Sec. 50. [APPROPRIATION.]

Notwithstanding Minnesota Statutes, section 84.943, subdivision 3, $65,000 is appropriated from the Minnesota critical habitat private sector matching account to the commissioner of public safety for costs of handling and manufacturing 10,000 special critical habitat license plates. Notwithstanding Minnesota Statutes, section 168.1296, subdivision 5, $65,000 of the fees collected from applicants for the license plates must be deposited in the state treasury and credited to the Minnesota critical habitat private sector matching account. Fees collected in excess of $65,000 must be deposited in the highway user tax distribution fund. This appropriation is available until expended.

Sec. 51. [REPEALER.]

Minnesota Statutes 1996, sections 97A.111; and 97C.801, subdivision 1, are repealed.

Sec. 52. [EFFECTIVE DATE.]

Sections 6, 28, and 46 are effective the day following final enactment."

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Delete the title and insert:

"A bill for an act relating to natural resources; modifying fish habitat, harvest, and propagation provisions; authorizing the commissioner to establish special hunts for youth; permitting youth residents to hunt deer without a license tag; authorizing the commissioner to sell merchandise; modifying watercraft provisions; modifying trapping provisions; modifying stamp provisions; modifying the procedure for vacating or modifying a state game refuge; defining terms; modifying hunting provisions; modifying license provisions; modifying recreational motor vehicle provisions; modifying special license plate provisions; modifying provisions relating to personal flotation devices; establishing firearms safety pilot program; requiring reports; providing civil penalties; appropriating money; amending Minnesota Statutes 1996, sections 17.4982, by adding subdivisions; 17.4983, by adding a subdivision; 17.4998; 84.0855; 84.82, subdivision 2; 84.87, subdivision 2; 84.872, by adding a subdivision; 84.873; 86B.201, by adding a subdivision; 97A.015, subdivisions 49, 53, and by adding a subdivision; 97A.045, subdivision 7; 97A.075, subdivision 3; 97A.085, subdivision 8; 97A.101, by adding a subdivision; 97A.411, subdivisions 1 and 3; 97A.421, subdivision 1; 97A.465, subdivision 4; 97A.475, subdivisions 2 and 3; 97A.485, subdivisions 6, 9, and by adding a subdivision; 97B.055, subdivision 2; 97B.075; 97B.211, subdivision 1; 97B.301, subdivision 6; 97B.655, subdivision 1; 97C.035, subdivision 1; 97C.211, subdivision 1, and by adding a subdivision; 97C.321, subdivision 1; 97C.505, by adding a subdivision; 97C.801, subdivision 2; 168.1291; 168.1296, subdivision 1; and 609.487, by adding a subdivision; Laws 1993, chapter 273, as amended; Laws 1996, chapter 410, section 56; proposing coding for new law in Minnesota Statutes, chapter 97B; repealing Minnesota Statutes 1996, sections 97A.111; and 97C.801, subdivision 1."

We request adoption of this report and repassage of the bill.

Senate Conferees: Dennis R. Frederickson, Bob Lessard, LeRoy A. Stumpf, Pat Pariseau and Jane Krentz.

House Conferees: Bob Milbert, Tom Osthoff, Doug Peterson, Mark Holsten and Thomas Bakk.

Milbert moved that the report of the Conference Committee on S. F. No. 254 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Speaker pro tempore Wejcman called Opatz to the Chair.

S. F. No. 254, A bill for an act relating to natural resources; modifying certain fish habitat and propagation provisions; authorizing the commissioner to establish special hunts for youth; permitting youth residents to hunt deer without a license tag; authorizing rules to restrict airboats; modifying provisions relating to taking minnows; authorizing the commissioner to sell merchandise; providing purposes for the game and fish fund; modifying stamp provisions; modifying the procedure for vacating or modifying a state game refuge; defining terms; prohibiting airboats on certain lakes; permitting persons 65 years of age or older to take certain game with a crossbow; establishing shooting hours for migratory game birds; modifying license provisions; modifying personal watercraft provisions; requiring personal watercraft safety certificate; requiring snowmobile state trail permit; requiring snowmobile safety certificate; modifying recreational motor vehicle provisions; modifying special license plate provisions; establishing firearms safety pilot program; requiring reports; providing criminal penalties; appropriating money; amending Minnesota Statutes 1996, sections 17.4982, by adding subdivisions; 17.4983, by adding a subdivision; 17.4998; 84.0855; 84.82, subdivisions 2 and 3; 84.87, subdivision 2; 84.872, by adding a subdivision; 84.873; 86B.313, subdivisions 1, 3, 4, and by adding a subdivision; 97A.015, subdivisions 49, 53, and by adding a subdivision; 97A.045, subdivision 7; 97A.055, subdivision 1; 97A.075, subdivision 3; 97A.085, subdivision 8; 97A.101, by adding a subdivision; 97A.411, subdivisions 1 and 3; 97A.421, subdivision 1; 97A.465, subdivision 4; 97A.485, subdivision 9, and by adding a subdivision; 97B.035, subdivision 1; 97B.075; 97B.106; 97B.301, subdivision 6; 97B.655, subdivision 1; 97B.805, subdivision 2; 97C.035, subdivision 1; 97C.211, subdivision 1, and by adding a subdivision; 97C.505, by adding a subdivision; 168.1291; 168.1296, subdivision 1; 296.16, subdivision 1; and 609.487, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 84; and 97B; repealing Minnesota Statutes 1996, section 97A.111.

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 133 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Tingelstad
Anderson, B. Farrell Kelso McCollum Peterson Tomassoni
Anderson, I. Finseth Kielkucki McElroy Pugh Tompkins
Bakk Folliard Kinkel McGuire Rest Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Otremba Stang
Dempsey Johnson, A. Macklin Ozment Sviggum
Dorn Johnson, R. Mahon Paulsen Swenson, D.
Entenza Juhnke Mares Pawlenty Swenson, H.
Erhardt Kahn Mariani Paymar Sykora

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. 244

May 19, 1997

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. 244, 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. 244 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 115.55, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] (a) The definitions in this subdivision apply to this section and section 115.56.

(b) "Advisory committee" means the advisory committee on individual sewage treatment systems established under the individual sewage treatment system rules. The advisory committee must be appointed to ensure geographic representation of the state and include elected public officials.

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(c) "Applicable requirements" means:

(1) local ordinances that comply with the individual sewage treatment system rules, as required in subdivision 2; or

(2) in areas not subject to the ordinances described in clause (1), the individual sewage treatment system rules.

(d) "City" means a statutory or home rule charter city.

(e) "Commissioner" means the commissioner of the pollution control agency.

(f) "Dwelling" means a building or place used or intended to be used by human occupants as a single-family or two-family unit.

(g) "Individual sewage treatment system" or "system" means a sewage treatment system, or part thereof, serving a dwelling, other establishment, or group thereof, that uses subsurface soil treatment and disposal.

(h) "Individual sewage treatment system professional" means an inspector, installer, site evaluator or designer, or pumper.

(i) "Individual sewage treatment system rules" means rules adopted by the agency that establish minimum standards and criteria for the design, location, installation, use, and maintenance of individual sewage treatment systems.

(j) "Inspector" means a person who inspects individual sewage treatment systems for compliance with the applicable requirements.

(k) "Installer" means a person who constructs or repairs individual sewage treatment systems.

(l) "Local unit of government" means a township, city, or county.

(m) "Pumper" means a person who maintains components of individual sewage treatment systems including, but not limited to, septic, aerobic, and holding tanks.

(n) "Seasonal dwelling" means a dwelling that is occupied or used for less than 180 days per year and less than 120 consecutive days.

(o) "Site evaluator or designer" means a person who:

(1) investigates soils and site characteristics to determine suitability, limitations, and sizing requirements; and

(2) designs individual sewage treatment systems.

Sec. 2. Minnesota Statutes 1996, section 115.55, subdivision 2, is amended to read:

Subd. 2. [LOCAL ORDINANCES.] (a) All counties that did not adopt ordinances by May 7, 1994, or that do not have ordinances, must adopt ordinances that comply with individual sewage treatment system rules by January 1, 1999, unless all towns and cities in the county have adopted such ordinances. County ordinances must apply to all areas of the county other than cities or towns that have adopted ordinances that comply with this section and are as strict as the applicable county ordinances. Any ordinance adopted by a local unit of government before May 7, 1994, to regulate individual sewage treatment systems must be in compliance with the individual sewage treatment system rules by January 1, 1998.

(b) A copy of each ordinance adopted under this subdivision must be submitted to the commissioner upon adoption.

(c) A local unit of government must make available to the public upon request a written list of any differences between its ordinances and rules adopted under this section.

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Sec. 3. Minnesota Statutes 1996, section 115.55, subdivision 3, is amended to read:

Subd. 3. [RULES.] (a) The agency shall adopt rules containing minimum standards and criteria for the design, location, installation, use, and maintenance of individual sewage treatment systems. The rules must include:

(1) how the agency will ensure compliance under subdivision 2;

(2) how local units of government shall enforce ordinances under subdivision 2, including requirements for permits and inspection programs;

(3) how the advisory committee will participate in review and implementation of the rules;

(4) provisions for alternative systems;

(5) provisions for handling and disposal of effluent;

(6) provisions for system abandonment;

(7) provisions allowing local units of government to adopt alternative standards and criteria, provided that:

(i) the alternative standards and criteria may not apply to new construction or replacement of systems, as defined by the agency; and

(ii) the commissioner must certify that the alternative standards and criteria adequately protect public health and the environment; and procedures for the commissioner to approve new individual sewage treatment system technologies; and

(8) procedures for variances, including the consideration of variances based on cost and variances that take into account proximity of a system to other systems.

(b) The agency shall consult with the advisory committee before adopting rules under this subdivision.

Sec. 4. Minnesota Statutes 1996, section 115.55, subdivision 5, is amended to read:

Subd. 5. [INSPECTION.] (a) An inspection shall be required for all new construction or replacement of a system to determine compliance with agency rule or local standards. The manner and timing of inspection may be determined by the applicable local ordinance. The inspection requirement may be satisfied by a review by the designated local official of video, electronic, photographic, and other evidence of compliance provided by the installer.

(b) Except as provided in subdivision 5b, paragraph (e) (b), a local unit of government may not issue a building permit or variance for the addition of a bedroom on property served by a system unless the system is in compliance with the applicable requirements, as evidenced by a certificate of compliance issued by a licensed inspector or site evaluator or designer. A local unit of government may temporarily waive the certificate of compliance requirement for a building permit or variance for which application is made during the period from November 1 to April 30, provided that an inspection of the system is performed by the following June 1 and the applicant submits a certificate of compliance by the following September 30. This paragraph does not apply if the local unit of government does not have an ordinance requiring a building permit to add a bedroom.

(b) A compliance inspection under this subdivision is required for all new construction or replacement of a system, as defined by agency rule.

(c) A certificate of compliance for an existing system is valid for three years from the date of issuance unless the local unit of government finds evidence of an imminent threat to public health or safety requiring removal and abatement under section 145A.04, subdivision 8.

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(d) A certificate of compliance for a new system is valid for five years from the date of issuance unless the local unit of government finds evidence of an imminent threat to public health or safety requiring removal and abatement under section 145A.04, subdivision 8.

(e) A licensed inspector who inspects an existing system may subsequently design and install a new system for that property, provided the inspector is licensed to install individual sewage treatment systems.

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;

(3) sewage backup;

(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, 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).

(c) Subd. 5b. [COMPLIANCE NOTICE.] (a) If a system inspected under this subdivision 5 is not in compliance with the applicable requirements required to be upgraded, replaced, or its use discontinued under subdivision 5a, the inspector or site evaluator or designer must issue a notice of noncompliance to the property owner and must provide a copy of the notice to the local unit of government to which application for the building permit or variance was made with jurisdiction. The notice of noncompliance must specify why the system must be upgraded, replaced, or its use discontinued. A local unit of government must specify the upgrade time period in its ordinance.

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(d) If the inspector or site evaluator or designer finds that the system presents an imminent threat to public health or safety, the inspector or site evaluator or designer must include a statement to this effect in the notice and the property owner must upgrade, replace, or discontinue use of the system within ten months of receipt of the notice.

(e) (b) Except as provided in paragraph (d) subdivision 5a, paragraphs (b) to (d), if a system installed between May 27, 1989, and January 23, 1996, does not comply with applicable requirements, the property owner has five years from the date of the bedroom building permit to bring the system into compliance.

Sec. 5. Minnesota Statutes 1996, section 115.55, subdivision 6, is amended to read:

Subd. 6. [DISCLOSURE OF INDIVIDUAL SEWAGE TREATMENT SYSTEM TO BUYER.] After August 31, 1994, (a) Before signing an agreement to sell or transfer real property, the seller or transferor must disclose in writing to the buyer or transferee information about the status and location of individual on how sewage treatment systems on the property or serving the property generated at the property is managed. The disclosure must be made by delivering a statement to the buyer or transferee that either:

(1) a statement by the seller that there is no individual sewage treatment system on or serving the property or a disclosure statement describing the system and indicating the sewage goes to a facility permitted by the agency; or

(2) the sewage does not go to a permitted facility, is therefore subject to applicable requirements, and describes the system in use, including the legal description of the property, the county in which the property is located, and a map drawn from available information showing the location of the system on the property to the extent practicable. If the seller or transferor has knowledge that an abandoned individual sewage treatment system exists on the property, the disclosure must include a map showing its location. In the disclosure statement the seller must indicate whether the individual sewage treatment system is in use and, to the seller's knowledge, in compliance with applicable sewage treatment laws and rules. Unless the buyer and seller agree to the contrary in writing before the closing of the sale, a seller who fails to disclose the existence or known status of an individual sewage treatment system at the time of sale, and who knew or had reason to know of the existence or known status of the system,.

(b) A seller or transferor who fails to meet the requirements of this section is liable to the buyer for costs relating to bringing the system into compliance with the individual sewage treatment system rules and for reasonable attorney fees for collection of costs from the seller. An action under this subdivision must be commenced within two years after the date on which the buyer closed the purchase or transfer of the real property where the system is located.

Sec. 6. Minnesota Statutes 1996, section 115.55, subdivision 7, is amended to read:

Subd. 7. [LOCAL ORDINANCE MAY BE MORE RESTRICTIVE STANDARDS.] (a) [EXISTING SYSTEMS.] Counties may adopt by ordinance local standards that are less restrictive than the agency's rules in order to define an acceptable existing system. The local standards may include soil separation, soil classification, vegetation, system use, localized well placement and construction, localized density of systems and wells, extent of area to be covered by local standards, groundwater flow patterns, and existing natural or artificial drainage systems. The local standards and criteria shall be submitted to the commissioner for comment prior to adoption to demonstrate that, based on local circumstances in that jurisdiction, they adequately protect public health and the environment.

(b) [NEW OR REPLACEMENT SYSTEMS.] Counties, after providing documentation of conditions listed in this paragraph to the commissioner, may adopt by ordinance local standards that are less restrictive than the agency's rules for new system construction or replacement in areas of sustained and projected low population density where conditions render conformance to applicable requirements difficult or otherwise inappropriate. Documentation may include a map delineating the area of the county to be served by the local standards, a description of the hardship that would result from strict adherence to the agency's rules, and evidence of sustained and projected low population density. The local standards must protect human health and the environment and be based on considerations that may include, but need not be limited to, soil separation, soil classification, vegetation, system use, localized well placement and construction, localized density of systems and wells, extent of area to be covered by local standards, groundwater flow patterns, and existing natural or artificial drainage systems. The local standards must provide cost-effective and long-term treatment alternatives. The draft ordinance incorporating the local standards must be submitted to the local water planning advisory committee, created under section 103B.321, subdivision 3, and then submitted with justification to the commissioner 30 days before adoption for review and comment.

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(c) [NEW OR REPLACEMENT SYSTEMS; LOCAL ORDINANCES.] A local unit of government may adopt and enforce ordinances or rules affecting new or replacement individual sewage treatment systems that are more restrictive than the agency's rules.

(b) If standards are adopted that are more restrictive than the agency's rules, the local unit of government must submit the more restrictive standards to the commissioner along with an explanation of the more restrictive provisions.

(d) [LOCAL STANDARDS; CONFLICT WITH STATE LAW.] Local standards adopted under paragraph (a) or (b) must not conflict with any requirements under other state laws or rules or local ordinances, including, but not limited to, requirements for:

(1) systems in shoreland areas, regulated under sections 103F.201 to 103F.221;

(2) well construction and location, regulated under chapter 103I; and

(3) systems used in connection with food, beverage, and lodging establishments, regulated under chapter 157.

The local standards must include references to applicable requirements under other state laws or rules or local ordinances.

Sec. 7. Minnesota Statutes 1996, section 115.55, is amended by adding a subdivision to read:

Subd. 8. [NEW TECHNOLOGIES.] New individual sewage treatment system technologies may be installed as warrantied systems if not specifically prohibited in local ordinance, provided however that the manufacturer or designer provides to the commissioner documentation of the following:

(1) how the technology must be used and installed, how it is expected to perform under those conditions, the anticipated design life, and the period to be warrantied under clause (4);

(2) pertinent existing data, including in-field testing data, that the system will perform as expected;

(3) financial assurance or documentation of the manufacturer's or designer's financial ability to cover potential replacement and upgrades necessitated by the system failing to meet the performance expectations of clause (1) for the duration of the warranty period; and

(4) a full warranty effective for the designated warranty period in clause (1), which must be at least five years from the time of installation, covering design, labor, and material costs to remedy failure to meet performance expectations in clause (1) for systems used and installed in accordance with the manufacturer's or designer's instructions.

The commissioner must make available a list of warrantied systems for which documentation has been provided to the commissioner under this subdivision.

Sec. 8. Minnesota Statutes 1996, section 115.57, subdivision 7, is amended to read:

Subd. 7. [ORDINANCES; CONSTRUCTION STANDARDS.] A municipality may not establish an individual sewage treatment system loan program unless ordinances pursuant to rules adopted under in compliance with section 115.55, subdivision 3, are in full force and effect. All repairs and improvements made to individual sewage treatment systems under this section shall be performed by a licensed individual sewage treatment system professional and shall comply with agency rules adopted pursuant to section 115.55, subdivision 3, and other applicable requirements. All improvements to wells under this section must be made by a well contractor or a limited well contractor, as appropriate, licensed under chapter 103I.

Sec. 9. [LOCAL STANDARDS STUDY.]

The commissioner of the pollution control agency shall conduct a study on the local standards established under Minnesota Statutes, section 115.55, subdivision 7, in protecting public health and the environment. By February 15, 1999, the commissioner must report on the study to the house and senate committees with jurisdiction over environmental policy.

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Sec. 10. [EFFECTIVE DATE.]

This act is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to the environment; modifying requirements relating to individual sewage treatment systems; amending Minnesota Statutes 1996, sections 115.55, subdivisions 1, 2, 3, 5, 6, 7, and by adding a subdivision; and 115.57, subdivision 7."

We request adoption of this report and repassage of the bill.

House Conferees: Dave Bishop, Henry J. Kalis and Kathleen Sekhon.

Senate Conferees: Leonard R. Price, LeRoy A. Stumpf and Steve Dille.

Bishop moved that the report of the Conference Committee on H. F. No. 244 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Speaker pro tempore Opatz called Wejcman to the Chair.

H. F. No. 244, A bill for an act relating to the environment; modifying requirements relating to individual sewage treatment systems; amending Minnesota Statutes 1996, section 115.55, subdivisions 2, 3, 5, 6, 7, and 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. There were 132 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mahon Paulsen Sviggum
Anderson, B. Evans Kahn Mares Pawlenty Swenson, D.
Anderson, I. Farrell Kalis Mariani Paymar Swenson, H.
Bakk Finseth Kelso Marko Pelowski Sykora
Bettermann Folliard Kielkucki McCollum Peterson Tingelstad
Biernat Garcia Kinkel McElroy Pugh Tomassoni
Bishop Goodno Knight McGuire Rest Tompkins
Boudreau Greenfield Knoblach Milbert Rhodes Trimble
Bradley Greiling Koppendrayer Molnau Rifenberg Tuma
Broecker Gunther Koskinen Mulder Rostberg Tunheim
Carlson Haas Kraus Mullery Rukavina Van Dellen
Chaudhary Harder Krinkie Murphy Schumacher Vickerman
Clark Hasskamp Kubly Ness Seagren Wagenius
Commers Hausman Kuisle Nornes Seifert Weaver
Daggett Hilty Larsen Olson, E. Sekhon Wejcman
Davids Holsten Leighton Olson, M. Skare Wenzel
Dawkins Huntley Leppik Opatz Skoglund Westfall
Dehler Jaros Lieder Orfield Slawik Westrom
Delmont Jefferson Lindner Osskopp Smith Winter
Dempsey Jennings Long Osthoff Solberg Wolf
Dorn Johnson, A. Luther Otremba Stanek Workman
Entenza Johnson, R. Macklin Ozment Stang Spk. Carruthers

The bill was repassed, as amended by Conference, and its title agreed to.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5346
MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 1419.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 1419

A bill for an act relating to utilities; authorizing a municipal and cooperative utility to form joint ventures for the provision of utility services; amending Laws 1996, chapter 300, section 1.

May 17, 1997

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. 1419, 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. 1419 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Laws 1996, chapter 300, section 1, is amended to read:

Section 1. [JOINT VENTURE.]

Subdivision 1. [AUTHORIZATION.] The city of Willmar is authorized to allow On behalf of their respective cities: (1) the Willmar municipal utilities commission is authorized to enter into a joint venture with the Kandiyohi cooperative electric power association; and (2) the Jackson municipal utilities commission is authorized to enter into a joint venture with the Federated rural electric association. These joint ventures shall be for the provision of utility services including retail electric service within the boundaries of each utility's exclusive electric service territory, as shown on the map of service territories maintained by the department of public service and as may otherwise be provided by law. The terms and conditions of the a joint venture authorized by this subdivision are subject to ratification by both the municipal utilities commission of the city of Willmar and the board of the Kandiyohi cooperative electric power association and participating in the joint venture. These terms and conditions may include the formation of a corporate or other separate legal entity with an administrative and governance structure independent of the two participating utilities. A corporate entity formed under this section shall be subject to all laws and rules applicable to municipal utilities and cooperative electric associations. The corporate or other separate legal entity, if formed:

(1) has the authority and legal capacity, and in the exercise of joint venture powers the privileges, responsibilities, and duties authorized by this section;

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(2) is subject to the law generally applicable to the organization, internal governance, and activities of the entity formed;

(3) may exercise in connection with its property and affairs, and in connection with property within its control, any and all powers that may be exercised by a natural person or a private corporation or other private legal entity in connection with similar property and affairs; and

(4) is not a public body or authority, government entity, municipal corporation, or political subdivision.

A joint venture, including any separate legal entity, if formed, may elect to be deemed a municipal utility or a cooperative association for purposes of Minnesota Statutes, chapter 216B, or other federal or state law regulating utility operations.

Subd. 2. [POWERS.] (a) The A joint venture formed under this section, if any, shall have such has the powers, privileges, responsibilities, and duties of the separate utilities entering into the joint venture as the joint venture agreement may provide, except that, upon formation of the joint venture, neither the joint venture nor the Willmar municipal utilities commission shall have the power of eminent domain or the authority under section 216B.44 to and the powers provided under paragraph (b), except that the joint venture, with respect to retail electric utility services, may not enlarge the service territory served by the joint venture under Minnesota Statutes, sections 216B.44 and 216B.47, unless it receives the written consent of the retail electric utility serving the area under consideration.

(b) Such powers include, but are not limited to, the authority to:

(1) finance, acquire, own, construct, and operate facilities necessary for the provision of electric power to wholesale or retail customers, including generation, transmission, and distribution facilities;

(2) combine retail electric service territories, in whole or in part, upon notice and hearing to do so with the public utilities commission;

(3) serve electric customers in the two utilities' retail electric service territories or in the combined service territory and as provided in Minnesota Statutes, chapter 216B;

(4) combine, share, or employ administrative, managerial, operational, or other staff which combining or sharing will not degrade safety, reliability, or customer service standards;

(5) provide for joint administrative functions, such as meter reading and billing;

(6) purchase or sell power utility services at wholesale for resale to customers;

(7) provide energy conservation programs, other utility programs, and public interest programs, such as cold weather shutoff protection, and energy conservation spending programs as required by law and rule; and

(8) participate as the parties deem necessary or appropriate in the provision of wholesale electric power utility services with other municipal utilities, rural electric cooperative utilities associations, investor-owned utilities, or other entities, public or private.

Subd. 3. [MONITOR AND REPORT.] The Kandiyohi cooperative electric power association and the Willmar municipal utilities commission shall monitor the progress and operation of the joint venture, and shall issue a report to the public utilities commission and legislative committees with jurisdiction over utility regulation and operation outlining the progress of the joint venture. The report required by this subdivision must be submitted not later than January 1 15, 1998.

Subd. 4. [CITY AUTHORITY.] This section shall be construed liberally to effectuate its legislative intent and purpose of allowing the municipal utilities commissions and the cooperative power associations named in subdivision 1 to operate joint ventures with the powers granted by this section. No additional authority is necessary to authorize the cities of Willmar and Jackson to form and operate joint ventures as provided in this section. The powers conferred by this section shall be in addition and supplemental to the powers conferred by any other law or charter. Any joint venture under this section, and the Willmar and Jackson municipal utilities commissions relative to any joint venture under this section, has all powers,

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5348

privileges, responsibilities, and duties necessary or appropriate to effectuate the intent and purpose of this section, including but not limited to the expenditure of public funds and the transfer of real or personal property in accordance with the terms and conditions of the joint venture and the joint venture agreement. Nothing in this section shall be construed to supersede or modify any powers, privileges, or authority of the Willmar or Jackson municipal utilities commissions or the Kandiyohi or Federated cooperative electric power associations. The power of the Willmar city council or the Jackson city council to overrule or override an action of their respective municipal utilities commission as provided in the relevant city charter is not superseded but that power shall not extend to the actions of the joint venture. If there is a conflict or inconsistency between this section and any other law or any other charter provision, the provisions of this section shall prevail.

Subd. 5. [TELEPHONE EXCHANGE REQUIREMENT.] Nothing in this section shall permit the city of Willmar or the city of Jackson to establish a telephone exchange within the city unless it complies with the referendum requirements of section 237.19.

Sec. 2. [EFFECTIVE DATE.]

This act is effective the day following final enactment, except, that the authority granted to the Jackson municipal utilities commission and the Federated rural electric association by this act is effective February 1, 1998."

Delete the title and insert:

"A bill for an act relating to utilities; authorizing a municipal and cooperative utility to form joint ventures for the provision of utility services; amending Laws 1996, chapter 300, section 1."

We request adoption of this report and repassage of the bill.

Senate Conferees: Dean E. Johnson, Steven G. Novak and James P. Metzen.

House Conferees: Al Juhnke, Loren Jennings and Elaine Harder.

Juhnke moved that the report of the Conference Committee on S. F. No. 1419 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 1419, A bill for an act relating to utilities; authorizing a municipal and cooperative utility to form joint ventures for the provision of utility services; amending Laws 1996, chapter 300, section 1.

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 133 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Tingelstad
Anderson, B. Farrell Kelso McCollum Peterson Tomassoni
Anderson, I. Finseth Kielkucki McElroy Pugh Tompkins
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5349
Bakk Folliard Kinkel McGuire Rest Trimble
Bettermann Garcia Knight Milbert Rhodes Tuma
Biernat Goodno Knoblach Molnau Rifenberg Tunheim
Bishop Greenfield Koppendrayer Mulder Rostberg Van Dellen
Boudreau Greiling Koskinen Mullery Rukavina Vickerman
Bradley Gunther Kraus Munger Schumacher Wagenius
Broecker Haas Krinkie Murphy Seagren Weaver
Carlson Harder Kubly Ness Seifert Wejcman
Chaudhary Hasskamp Kuisle Nornes Sekhon Wenzel
Clark Hausman Larsen Olson, E. Skare Westfall
Commers Hilty Leighton Olson, M. Skoglund Westrom
Daggett Holsten Leppik Opatz Slawik Winter
Davids Huntley Lieder Orfield Smith Wolf
Dawkins Jaros Lindner Osskopp Solberg Workman
Dehler Jefferson Long Osthoff Stanek Spk. Carruthers
Delmont Jennings Luther Otremba Stang
Dempsey Johnson, A. Macklin Ozment Sviggum
Dorn Johnson, R. Mahon Paulsen Swenson, D.
Entenza Juhnke Mares Pawlenty Swenson, H.
Erhardt Kahn Mariani Paymar Sykora

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 637.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 637

A bill for an act relating to retirement; increasing pension benefit accrual rates; adjusting financing for pension plans; adding supplemental financial conditions information for pension funds; reducing appropriations; modifying or establishing various pension aids; appropriating money; amending Minnesota Statutes 1996, sections 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 and 4; 3A.03, subdivision 1; 3A.07; 11A.18, subdivision 9; 69.011, subdivisions 1, 2, and by adding a subdivision; 69.021, subdivisions 7a and 10; 69.031, subdivision 5; 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 352.115, subdivision 3; 352.72, subdivision 2; 352.92, subdivisions 1 and 2; 352.93, subdivisions 2, 3, and by adding a subdivision; 352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a subdivision; 352C.031, subdivision 4; 352C.033; 352D.02, subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 353.29, subdivision 3; 353.651, subdivision 3; 353.656, subdivision 1; 353.71, subdivision 2; 353A.08, subdivisions 1 and 2; 353A.083, by adding a subdivision; 354.05, subdivision 38; 354.42, subdivisions 2, 3, and 5; 354.44, subdivision 6, and by adding a subdivision; 354.53, subdivision 1; 354.55, subdivision 11; 354A.011, subdivision 15a; 354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, subdivisions 2, 4d, and 4g; 356.217; 356.30, subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, subdivision 8; 422A.151; 423B.01, subdivision 9, and by adding a subdivision; 423B.06, by adding a subdivision; 423B.07; 423B.09, subdivision 1, and by adding a subdivision; 423B.10, subdivision 1; 423B.15, subdivisions 2, 3, 6, and by adding a subdivision; 490.123, subdivisions 1a and 1b; and 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, section 1, as amended; Laws 1979, chapter 109, section 1, as amended; Laws 1989, chapter 319, article 19, section 7, subdivisions 1, as amended, 3, 4, as amended, and 7; and Laws 1993, chapter 125, article 1, section 1; proposing coding for new law in Minnesota Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 356; repealing Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 356.88, subdivision 2; and Laws 1985, chapter 259, section 3; and Laws 1993, chapter 336, article 3, section 1.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5350

May 18, 1997

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. 637, 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. 637 be further amended as follows:

Delete everything after the enacting clause and insert:

"ARTICLE 1

PENSION UNIFORMITY PROVISIONS

Section 1. Minnesota Statutes 1996, 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; and

(14) the public employees local government correctional service retirement plan, public employees retirement association, if there are any participants in that plan.

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(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;

(2) rate of return on investments based on current asset value;

(3) payroll growth;

(4) mortality;

(5) retirement age;

(6) withdrawal; and

(7) disablement.

(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), or (14), 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 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 1996, section 3.85, subdivision 12, is amended to read:

Subd. 12. [ALLOCATION OF ACTUARIAL COST.] (a) The commission shall assess each retirement plan specified in subdivision 11, paragraph (b), the compensation paid to the actuary retained by the commission for the actuarial valuation calculations, quadrennial projection valuations, and quadrennial experience studies. The assessment is 100 percent of the amount of contract compensation for the actuarial consulting firm retained by the commission for actuarial valuation calculations, including the public employees police and fire plan consolidation accounts of the public employees retirement association, annual experience data collection and processing, and quadrennial experience studies.

The portion of the total assessment payable by each retirement system or pension plan must be determined as follows:

(1) Each pension plan specified in subdivision 11, paragraph (b), clauses (1) to (14) (13), must pay the following indexed amount based on its total active, deferred, inactive, and benefit recipient membership:

up to 2,000 members, inclusive $2.55 per member

2,001 through 10,000 members $1.13 per member

over 10,000 members $0.11 per member

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The amount specified is applicable for the assessment of the July 1, 1991, to June 30, 1992, fiscal year actuarial compensation amounts. For the July 1, 1992, to June 30, 1993, fiscal year and subsequent fiscal year actuarial compensation amounts, the amount specified must be increased at the same percentage increase rate as the implicit price deflator for state and local government purchases of goods and services for the 12-month period ending with the first quarter of the calendar year following the completion date for the actuarial valuation calculations, as published by the federal Department of Commerce, and rounded upward to the nearest full cent.

(2) The total per-member portion of the allocation must be determined, and that total per-member amount must be subtracted from the total amount for allocation. Of the remainder dollar amount, the following per-retirement system and per-pension plan charges must be determined and the charges must be paid by the system or plan:

(i) 37.87 percent is the total additional per-retirement system charge, of which one-seventh must be paid by each retirement system specified in subdivision 11, paragraph (b), clauses (1), (2), (6), (7), (9), (10), and (11).

(ii) 62.13 percent is the total additional per-pension plan charge, of which one-thirteenth must be paid by each pension plan specified in subdivision 11, paragraph (b), clauses (1) to (13), if there are not any participants in the plan specified in subdivision 11, paragraph (b), clause (14), or of which one-fourteenth must be paid by each pension plan specified in subdivision 11, paragraph (b), clauses (1) to (14), if there are participants in the plan specified in subdivision 11, paragraph (b), clause (14).

(b) The assessment must be made following the completion of the actuarial valuation calculations and the experience analysis. The amount of the assessment is appropriated from the retirement fund applicable to the retirement plan. Receipts from assessments must be deposited in the state treasury and credited to the general fund.

Sec. 3. Minnesota Statutes 1996, section 3A.02, subdivision 1, is amended to read:

Subdivision 1. [QUALIFICATIONS.] (a) A former legislator is entitled, upon written application to the director, to receive a retirement allowance monthly, if the person:

(1) has served at least six full years, without regard to the application of section 3A.10, subdivision 2, or has served during all or part of four regular sessions as a member of the legislature, which service need not be continuous;

(2) has attained the normal retirement age;

(3) has retired as a member of the legislature; and

(4) has made all contributions provided for in section 3A.03, has made payments for past service under subdivision 2, or has made payments in lieu of contributions under Minnesota Statutes 1992, section 3A.031, prior to July 1, 1994.

(b) This paragraph applies to members of the legislature who terminate service as a legislator before July 1, 1997. For service rendered before the beginning of the 1979 legislative session, but not to exceed eight years of service, the retirement allowance is an amount equal to five percent per year of service of that member's average monthly salary. For service in excess of eight years rendered before the beginning of the 1979 legislative session, and for service rendered after the beginning of the 1979 legislative session, the retirement allowance is an amount equal to 2-1/2 percent per year of service of that member's average monthly salary.

(c) This paragraph applies to members of the legislature who terminate service as a legislator after June 30, 1997. The retirement allowance is an amount equal to the applicable rate or rates under paragraph (b) per year of service of the member's average monthly salary adjusted for that person on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent. The adjustment must be calculated by or, alternatively, the adjustment procedure must be specified by, the actuary retained by the legislative commission on pensions and retirement. The purpose of this adjustment is to ensure that the total amount of benefits that the actuary predicts an individual member will receive over the member's lifetime under this paragraph will be the same as the total amount of benefits the actuary predicts the individual member would receive over the member's lifetime under the law in effect before enactment of this paragraph.

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(d) The retirement allowance accrues beginning with the first day of the month of receipt of the application, but not before age 60, and for the remainder of the former legislator's life, if the former legislator is not serving as a member of the legislature or as a constitutional officer or commissioner as defined in section 352C.021, subdivisions 2 and 3. The annuity shall does not begin to accrue prior to retirement as a legislator. No annuity payment shall may be made retroactive for more than 180 days before the date the annuity application is filed with the director.

(d) (e) Any member who has served during all or part of four regular sessions is considered to have served eight years as a member of the legislature.

(e) (f) The retirement allowance ceases with the last payment that accrued to the retired legislator during the retired legislator's lifetime, except that the surviving spouse, if any, is entitled to the retirement allowance for the calendar month in which the retired legislator died.

Sec. 4. Minnesota Statutes 1996, section 3A.02, subdivision 4, is amended to read:

Subd. 4. [DEFERRED ANNUITIES AUGMENTATION.] (a) The deferred annuity of any former legislator shall must be augmented as provided herein. The required reserves applicable to the deferred annuity, determined as of the date the benefit begins to accrue using an appropriate mortality table and an interest assumption of five six percent, shall must be augmented from the first of the month following termination of service, or July 1, 1973, whichever is later, to the first day of the month in which the annuity begins to accrue, at the rate of five percent per annum compounded annually until January 1, 1981, and thereafter at the rate of three percent per annum compounded annually until January 1 of the year in which the former legislator attains age 55. From that date to the effective date of retirement, the rate is five percent compounded annually.

(b) The retirement allowance of, or the survivor benefit payable on behalf of, a former member of the legislature who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board of directors of the Minnesota state retirement system and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 5. Minnesota Statutes 1996, section 11A.18, subdivision 9, is amended to read:

Subd. 9. [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) Annually, following June 30, the state board shall use the procedures in paragraphs (b), (c), and (d) to determine whether a postretirement adjustment is payable and to determine the amount of any postretirement adjustment.

(b) If the Consumer Price Index for urban wage earners and clerical workers all items index published by the Bureau of Labor Statistics of the United States Department of Labor increases from June 30 of the preceding year to June 30 of the current year, the state board shall certify the percentage increase. The amount certified may must not exceed the lesser of the difference between the preretirement interest assumption and postretirement interest assumption in section 356.215, subdivision 4d, paragraph (a), or 3.5 2.5 percent. For the Minneapolis employees retirement fund, the amount certified must not exceed 3.5 percent.

(c) In addition to any percentage increase certified under paragraph (b), the board shall use the following procedures to determine if a postretirement adjustment is payable under this paragraph:

(1) The state board shall determine the market value of the fund on June 30 of that year;

(2) The amount of reserves required for the annuity or benefit payable to an annuitant and benefit recipient of the participating public pension plans or funds shall must be determined by the commission-retained actuary as of the current June 30. An annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the current June 30 is eligible to receive a full postretirement adjustment. An annuitant or benefit recipient who has been receiving an annuity or benefit for at least one full month, but less than 12 full months as of the current June 30, is eligible to receive a partial postretirement adjustment. Each fund shall report separately the amount of the reserves for those

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annuitants and benefit recipients who are eligible to receive a full postretirement benefit adjustment. This amount is known as "eligible reserves." Each fund shall also report separately the amount of the reserves for those annuitants and benefit recipients who are not eligible to receive a postretirement adjustment. This amount is known as "noneligible reserves." For an annuitant or benefit recipient who is eligible to receive a partial postretirement adjustment, each fund shall report separately as additional "eligible reserves" an amount that bears the same ratio to the total reserves required for the annuitant or benefit recipient as the number of full months of annuity or benefit receipt as of the current June 30 bears to 12 full months. The remainder of the annuitant's or benefit recipient's reserves shall must be separately reported as additional "noneligible reserves." The amount of "eligible" and "noneligible" required reserves shall must be certified to the board by the commission-retained actuary as soon as is practical following the current June 30;

(3) The state board shall determine the percentage increase certified under paragraph (b) multiplied by the eligible required reserves, as adjusted for mortality gains and losses under subdivision 11, determined under clause (2);

(4) The state board shall add the amount of reserves required for the annuities or benefits payable to annuitants and benefit recipients of the participating public pension plans or funds as of the current June 30 to the amount determined under clause (3);

(5) The state board shall subtract the amount determined under clause (4) from the market value of the fund determined under clause (1);

(6) The state board shall adjust the amount determined under clause (5) by the cumulative current balance determined pursuant to clause (8) and any negative balance carried forward under clause (9);

(7) A positive amount resulting from the calculations in clauses (1) to (6) is the excess market value. A negative amount is the negative balance;

(8) The state board shall allocate one-fifth of the excess market value or one-fifth of the negative balance to each of five consecutive years, beginning with the fiscal year ending the current June 30; and

(9) To calculate the postretirement adjustment under this paragraph based on investment performance for a fiscal year, the state board shall add together all excess market value allocated to that year and subtract from the sum all negative balances allocated to that year. If this calculation results in a negative number, the entire negative balance must be carried forward and allocated to the next year. If the resulting amount is positive, a postretirement adjustment is payable under this paragraph. The board shall express a positive amount as a percentage of the total eligible required reserves certified to the board under clause (2).

(d) The state board shall determine the amount of any postretirement adjustment which is payable using the following procedure:

(1) The total "eligible" required reserves as of the first of January next following the end of the fiscal year for the annuitants and benefit recipients eligible to receive a full or partial postretirement adjustment as determined by clause (2) shall must be certified to the state board by the commission-retained actuary. The total "eligible" required reserves shall must be determined by the commission-retained actuary on the assumption that all annuitants and benefit recipients eligible to receive a full or partial postretirement adjustment will be alive on the January 1 in question; and

(2) The state board shall add the percentage certified under paragraph (b) to any positive percentage calculated under paragraph (c). The board shall not subtract from the percentage certified under paragraph (b) any negative amount calculated under paragraph (c). The sum of these percentages shall must be carried to five decimal places and shall must be certified to each participating public pension fund or plan as the full postretirement adjustment percentage.

(e) A retirement annuity payable in the event of retirement before becoming eligible for social security benefits as provided in section 352.116, subdivision 3; 353.29, subdivision 6; or 354.35 must be treated as the sum of a period certain retirement annuity and a life retirement annuity for the purposes of any postretirement adjustment. The period certain retirement annuity plus the life retirement annuity shall must be the annuity amount payable until age 62 or 65, whichever applies. A postretirement adjustment granted on the period certain retirement annuity must terminate when the period certain retirement annuity terminates.

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Sec. 6. Minnesota Statutes 1996, section 69.011, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] Unless the language or context clearly indicates that a different meaning is intended, the following words and terms shall for the purposes of this chapter and chapters 423, 423A, 424 and 424A have the meanings ascribed to them:

(a) "Commissioner" means the commissioner of revenue.

(b) "Municipality" means any home rule charter or statutory city, organized town or park district subject to chapter 398, the University of Minnesota, and, for purposes of the fire state aid program only, an American Indian tribal government entity located within a federally recognized American Indian reservation, and, for purposes of the police state aid program only, the metropolitan airports commission, with respect to employees peace officers covered under chapter 422A, or the department of natural resources and the department of public safety with respect to peace officers covered under chapter 352B.

(c) "Minnesota Firetown Premium Report" means a form prescribed by the commissioner containing space for reporting by insurers of fire, lightning, sprinkler leakage and extended coverage premiums received upon risks located or to be performed in this state less return premiums and dividends.

(d) "Firetown" means the area serviced by any municipality having a qualified fire department or a qualified incorporated fire department having a subsidiary volunteer firefighters' relief association.

(e) "Market value" means latest available market value of all property in a taxing jurisdiction, whether the property is subject to taxation, or exempt from ad valorem taxation obtained from information which appears on abstracts filed with the commissioner of revenue or equalized by the state board of equalization.

(f) "Minnesota Aid to Police Premium Report" means a form prescribed by the commissioner for reporting by each fire and casualty insurer of all premiums received upon direct business received by it in this state, or by its agents for it, in cash or otherwise, during the preceding calendar year, with reference to insurance written for insuring against the perils contained in auto insurance coverages as reported in the Minnesota business schedule of the annual financial statement which each insurer is required to file with the commissioner in accordance with the governing laws or rules less return premiums and dividends.

(g) "Peace officer" means any person:

(1) whose primary source of income derived from wages is from direct employment by a municipality or county as a law enforcement officer on a full-time basis of not less than 30 hours per week;

(2) who has been employed for a minimum of six months prior to December 31 preceding the date of the current year's certification under subdivision 2, clause (b);

(3) who is sworn to enforce the general criminal laws of the state and local ordinances;

(4) who is licensed by the peace officers standards and training board and is authorized to arrest with a warrant; and

(5) who is a member of a local police relief association to which section 69.77 applies, the state patrol retirement plan, the public employees police and fire fund, or the Minneapolis employees retirement fund.

(h) "Full-time equivalent number of peace officers providing contract service" means the integral or fractional number of peace officers which would be necessary to provide the contract service if all peace officers providing service were employed on a full-time basis as defined by the employing unit and the municipality receiving the contract service.

(i) "Retirement benefits other than a service pension" means any disbursement authorized under section 424A.05, subdivision 3, clauses (2), (3) and (4).

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(j) "Municipal clerk, municipal clerk-treasurer or county auditor" means the person who was elected or appointed to the specified position or, in the absence of the person, another person who is designated by the applicable governing body. In a park district the clerk is the secretary of the board of park district commissioners. In the case of the University of Minnesota, the clerk is that official designated by the board of regents. For the metropolitan airports commission, the clerk is the person designated by the commission. For the department of natural resources or the department of public safety, the clerk is the respective commissioner.

Sec. 7. Minnesota Statutes 1996, section 69.011, subdivision 2, is amended to read:

Subd. 2. [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a) In order to qualify to receive fire state aid, on or before March 15 annually, in conjunction with the financial report required pursuant to section 69.051, the clerk of each municipality having a duly organized fire department as provided in subdivision 4, or the secretary of each independent nonprofit firefighting corporation having a subsidiary incorporated firefighters' relief association whichever is applicable, and the fire chief, shall jointly certify the existence of the municipal fire department or of the independent nonprofit firefighting corporation, whichever is applicable, which meets the minimum qualification requirements set forth in this subdivision, and the fire personnel and equipment of the municipal fire department or the independent nonprofit firefighting corporation as of the preceding December 31. Certification shall be made to the commissioner on a form prescribed by the commissioner and shall include any other facts the commissioner may require. The certification shall be made to the commissioner in duplicate. Each copy of the certificate shall be duly executed and deemed an original. The commissioner shall forward one copy to the auditor of the county wherein the fire department is located and retain one copy.

(b) On or before March 15 annually the clerk of each municipality having a duly organized police department and having a duly incorporated relief association shall certify that fact to the county auditor of the county where the police department is located and to the commissioner on a form prescribed by the commissioner together with the other facts the commissioner or auditor may require.

Except as provided in subdivision 2b, on or before March 15 annually, the clerk of each municipality and the auditor of each county employing one or more peace officers as defined in subdivision 1, clause (h) (g), shall certify the number of such peace officers to the commissioner on forms prescribed by the commissioner. Credit for officers employed less than a full year shall be apportioned. Each full month of employment of a qualifying officer during the calendar year shall entitle the employing municipality or county to credit for 1/12 of the payment for employment of a peace officer for the entire year. For purposes of sections 69.011 to 69.051, employment of a peace officer shall commence when the peace officer is entered on the payroll of the respective municipal police department or county sheriff's department. No peace officer shall be included in the certification of the number of peace officers by more than one municipality or county for the same month.

Sec. 8. Minnesota Statutes 1996, section 69.011, is amended by adding a subdivision to read:

Subd. 2b. [DEPARTMENTS OF NATURAL RESOURCES AND PUBLIC SAFETY.] (a) On or before July 1, 1997, the commissioner of natural resources shall certify one-half of the number of peace officers as defined in subdivision 1, clause (g), employed by the enforcement division during calendar year 1996 and the commissioner of public safety shall certify one-half of the number of peace officers as defined in subdivision 1, clause (g), employed by the bureau of criminal apprehension, the gambling enforcement division, and the state patrol division during calendar year 1996.

(b) On or before March 15, 1998, the commissioner of natural resources shall certify seven-tenths of the number of peace officers as defined in subdivision 1, clause (g), employed by the enforcement division and the commissioner of public safety shall certify seven-tenths of the number of peace officers as defined in subdivision 1, clause (g), employed by the bureau of criminal apprehension, the gambling enforcement division, and the state patrol division.

(c) On or before March 15, 1999, and annually on or before March 15, thereafter, the commissioner of natural resources shall certify the number of peace officers as defined in subdivision 1, clause (g), employed by the enforcement division and the commissioner of public safety shall certify the number of peace officers as defined in subdivision 1, clause (g), employed by the bureau of criminal apprehension, the gambling enforcement division, and the state patrol division.

(d) The certification must be on a form prescribed by the commissioner. Peace officers certified under this paragraph must be included in the total certifications under subdivision 2.

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Sec. 9. Minnesota Statutes 1996, section 69.021, subdivision 5, is amended to read:

Subd. 5. [CALCULATION OF STATE AID.] (a) The amount of fire state aid available for apportionment shall be equal to 107 percent of the amount of premium taxes paid to the state upon the fire, lightning, sprinkler leakage, and extended coverage premiums reported to the commissioner by insurers on the Minnesota Firetown Premium Report. This amount shall be reduced by the amount required to pay the state auditor's costs and expenses of the audits or exams of the firefighters relief associations.

(b) The total amount for apportionment in respect to peace officer state aid is equal to 104 percent of the amount of premium taxes paid to the state upon the premiums reported to the commissioner by insurers on the Minnesota Aid to Police Premium Report, plus the payment amounts received under section 60A.152 since the last aid apportionment, and reduced by the amount required to pay the state auditor's costs and expenses of the audits or exams of the police relief associations. The total amount for apportionment in respect to firefighters state aid shall not be less than two percent of the premiums reported to the commissioner by insurers on the Minnesota Firetown Premium Report after subtracting (1) the amount required to pay the state auditor's costs and expenses of the audits or exams of the firefighters relief associations, and (2) one percent of the premiums reported by town and farmers' mutual insurance companies and mutual property and casualty companies with total assets of $5,000,000 or less. The total amount for apportionment in respect to the police state aid program shall not be less than two percent of the amount of premiums reported to the commissioner by insurers on the Minnesota Aid to Police Premium Report after subtracting the amount required to pay the state auditor's cost and expenses of the audits or exams of the police relief associations. The commissioner shall calculate the percentage of increase or decrease reflected in the apportionment over or under the previous year's available state aid using the same premiums as a basis for comparison.

(c) The amount for apportionment in respect to peace officer state aid under paragraph (b) must be further reduced by $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, and $2,404,000 in fiscal year 2001. These reductions in this paragraph cancel to the general fund.

Sec. 10. Minnesota Statutes 1996, section 69.021, subdivision 7a, is amended to read:

Subd. 7a. [APPORTIONMENT OF POLICE STATE AID.] (a) The commissioner shall apportion the state peace officer aid to each municipality and to the county in the following manner:

(1) for all municipalities maintaining police departments and the county, counties, the department of natural resources, and the department of public safety, the police state aid must be distributed in proportion to the total number of peace officers, as determined under section 69.011, subdivision 1, clause (g), and subdivision 2, clause (b), employed by each municipality and by the county employing unit for 12 calendar months and the proportional or fractional number who were employed less than 12 months;

(2) for each municipality which contracts with the county for police service, a proportionate amount of the state aid distributed to the county based on the full-time equivalent number of peace officers providing contract service must be credited against the municipality's contract obligation; and

(3) for each municipality which contracts with another municipality for police service, a proportionate amount of the state aid distributed to the municipality providing contract service based on the full-time equivalent number of peace officers providing contract service on a full-time equivalent basis must be credited against the contract obligation of the municipality receiving contract service.

(b) No municipality entitled to receive state peace officer aid may be apportioned less state peace officer aid for any year under Laws 1976, chapter 315, than the amount which was apportioned to it for calendar year 1975 based on premiums reported to the commissioner for calendar year 1974; provided, the amount of state peace officer aid to other municipalities within the county and to the county must be adjusted in proportion to the total number of peace officers in the municipalities and the county, so that the amount of state peace officer aid apportioned does not exceed the amount of state peace officer aid available for apportionment.

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Sec. 11. Minnesota Statutes 1996, section 69.021, subdivision 10, is amended to read:

Subd. 10. [REDUCTION IN POLICE STATE AID APPORTIONMENT.] (a) The commissioner of revenue shall reduce the apportionment of police state aid under subdivisions 5, paragraph (b), 6, and 7 7a, for eligible employer units by any excess police state aid.

(b) "Excess police state aid" is:

(1) for counties and for municipalities in which police retirement coverage is provided wholly by the public employees police and fire fund and all police officers are members of the plan governed by sections 353.63 to 353.657, the amount in excess of the employer's total prior calendar year obligation under section 353.65, as defined in paragraph (c), as certified by the executive director of the public employees retirement association.;

(2) for municipalities in which police retirement coverage is provided in part by the public employees police and fire fund governed by sections 353.63 to 353.657 and in part by a local police consolidation account governed by chapter 353A, the amount in excess of the employer's total prior calendar year obligation as defined in paragraph (c), as certified by the executive director of the public employees retirement association;

(3) for municipalities in which police retirement coverage is provided in part by the public employees police and fire fund governed by sections 353.63 to 353.657 and in part by a local police relief association governed by sections 69.77 and 423A.01, the amount in excess of the employer's total prior calendar year obligation as defined in paragraph (c), as certified by the executive director of the public employees retirement association, plus the amount of the financial requirements of the relief association certified to the applicable municipality during the prior calendar year under section 69.77, subdivisions 2b and 2c, reduced by the amount of member contributions deducted from the covered salary of the relief association during the prior calendar year under section 69.77, subdivision 2a, as certified by the chief administrative officer of the applicable municipality;

(4) for the metropolitan airports commission, if there are police officers hired before July 1, 1978, with retirement coverage by the Minneapolis employees retirement fund remaining, the amount in excess of the commission's total prior calendar year obligation as defined in paragraph (c), as certified by the executive director of the public employees retirement association, plus the amount determined by expressing the commission's total prior calendar year contribution to the Minneapolis employees retirement fund under section 422A.101, subdivisions 2 and 2a, as a percentage of the commission's total prior calendar year covered payroll for commission employees covered by the Minneapolis employees retirement fund and applying that percentage to the commission's total prior calendar year covered payroll for commission police officers covered by the Minneapolis employees retirement fund, as certified by the chief administrative officer of the metropolitan airports commission; and

(5) for the department of natural resources and for the department of public safety, the amount in excess of the employer's total prior calendar year obligation under section 352B.02, subdivision 1c, for plan members who are peace officers under section 69.011, subdivision 1, clause (g), as certified by the executive director of the Minnesota state retirement system.

(c) The employer's total prior calendar year obligation with respect to the public employees police and fire plan is the total prior calendar year obligation under section 353.65, subdivision 3, for police officers as defined in section 353.64, subdivision 2, and the actual total prior calendar year obligation under section 353.65, subdivision 3, for firefighters, as defined in section 353.64, subdivision 3, but not to exceed for those firefighters the applicable following amount:

municipality maximum amount

Albert Lea $54,157.01

Anoka 10,399.31

Apple Valley 5,442.44

Austin 49,864.73

Bemidji 27,671.38

Brooklyn Center 6,605.92

Brooklyn Park 24,002.26

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Burnsville 15,956.00

Cloquet 4,260.49

Coon Rapids 39,920.00

Cottage Grove 8,588.48

Crystal 5,855.00

East Grand Forks 51,009.88

Edina 32,251.00

Elk River 5,216.55

Ely 13,584.16

Eveleth 16,288.27

Fergus Falls 6,742.00

Fridley 33,420.64

Golden Valley 11,744.61

Hastings 16,561.00

Hopkins 4,324.23

International Falls 14,400.69

Lakeville 782.35

Lino Lakes 5,324.00

Little Falls 7,889.41

Maple Grove 6,707.54

Maplewood 8,476.69

Minnetonka 10,403.00

Montevideo 1,307.66

Moorhead 68,069.26

New Hope 6,739.72

North St. Paul 4,241.14

Northfield 770.63

Owatonna 37,292.67

Plymouth 6,754.71

Red Wing 3,504.01

Richfield 53,757.96

Rosemount 1,712.55

Roseville 9,854.51

St. Anthony 33,055.00

St. Louis Park 53,643.11

Thief River Falls 28,365.04

Virginia 31,164.46

Waseca 11,135.17

West St. Paul 15,707.20

White Bear Lake 6,521.04

Woodbury 3,613.00

any other municipality 0.00

(d) The total shall amount of excess police state aid must be deposited in a separate the excess police state-aid account in the general fund, administered and distributed as provided in subdivision 11.

Sec. 12. Minnesota Statutes 1996, section 69.021, subdivision 11, is amended to read:

Subd. 11. [EXCESS POLICE STATE-AID HOLDING ACCOUNT.] (a) An excess police state-aid holding account is established in the general fund.

(b) Excess police state aid determined according to section 69.021, subdivision 10, must be deposited in the excess police state-aid holding account.

(c) From the balance in the excess police state-aid holding account, $1,000,000 must be transferred annually to the ambulance service personnel longevity award and incentive suspense account established by section 144C.03, subdivision 2.

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(d) If a police officer stress reduction program is created by law and money is appropriated for that program, an amount equal to that appropriation must be transferred from the balance in the excess police state-aid holding account.

(e) On October 1, 1997, and annually on each October 1, on October 1, 2001, and annually on October 1 thereafter, one-half of the balance of the excess police state-aid holding account remaining after deductions under paragraphs (c) and (d) is appropriated for additional amortization aid under section 423A.02, subdivision 1b.

(f) On October 1, 1998, and annually each October 1 in 1999 and 2000, the entire balance of the excess police state-aid holding account remaining after transfers under paragraphs (c) and (d) is appropriated for additional amortization aid under section 423A.02, subdivision 1b.

(g) The remaining balance in the excess police state-aid holding account, after the deductions under paragraphs (c), (d), and (e), cancels to the general fund.

Sec. 13. Minnesota Statutes 1996, section 69.031, subdivision 5, is amended to read:

Subd. 5. [DEPOSIT OF STATE AID.] (1) (a) The municipal treasurer, on receiving the fire state aid, shall within 30 days after receipt transmit it to the treasurer of the duly incorporated firefighters' relief association if there is one organized and the association has filed a financial report with the municipality; but if there is no relief association organized, or if any association dissolve, be removed, or has heretofore dissolved, or has been removed as trustees of state aid, then the treasurer of the municipality shall keep the money in the municipal treasury as provided for in section 424A.08 and shall be disbursed only for the purposes and in the manner set forth in that section.

(2) (b) The municipal treasurer, upon receipt of the police state aid, shall disburse the police state aid in the following manner:

(a) (1) For a municipality in which a local police relief association exists and all peace officers are members of the association, the total state aid shall be transmitted to the treasurer of the relief association within 30 days of the date of receipt, and the treasurer of the relief association shall immediately deposit the total state aid in the special fund of the relief association;

(b) (2) For a municipality in which police retirement coverage is provided by the public employees police and fire fund and all peace officers are members of the fund, the total state aid shall be applied toward the municipality's employer contribution to the public employees police and fire fund pursuant to section 353.65, subdivision 3; or

(c) (3) For a municipality other than a city of the first class with a population of more than 300,000 in which both a police relief association exists and police retirement coverage is provided in part by the public employees police and fire fund, the municipality may elect at its option to transmit the total state aid to the treasurer of the relief association as provided in clause (a), to use the total state aid to apply toward the municipality's employer contribution to the public employees police and fire fund subject to all the provisions set forth in clause (b), or to allot the total state aid proportionately to be transmitted to the police relief association as provided in this subdivision and to apply toward the municipality's employer contribution to the public employees police and fire fund subject to the provisions of clause (b) on the basis of the respective number of active full-time peace officers, as defined in section 69.011, subdivision 1, clause (g).

For a city of the first class with a population of more than 300,000, in addition, the city may elect to allot the appropriate portion of the total police state aid to apply toward the employer contribution of the city to the public employees police and fire fund based on the covered salary of police officers covered by the fund each payroll period and to transmit the balance to the police relief association.

(3) (c) The county treasurer, upon receipt of the police state aid for the county, shall apply the total state aid toward the county's employer contribution to the public employees police and fire fund pursuant to section 353.65, subdivision 3.

(4) (d) The designated metropolitan airports commission official, upon receipt of the police state aid for the metropolitan airports commission, shall apply the total police state aid toward the commission's employer contribution to the Minneapolis employees retirement fund under section 422A.101, subdivision 2a.

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(e) The police state aid apportioned to the departments of public safety and natural resources under section 69.021, subdivision 7a, is appropriated to the commissioner of finance for transfer to the funds and accounts from which the salaries of peace officers certified under section 69.011, subdivision 2a, are paid. The commissioner of revenue shall certify to the commissioners of public safety, natural resources, and finance the amounts to be transferred from the appropriation for police state aid. The commissioners of public safety and natural resources shall certify to the commissioner of finance the amounts to be credited to each of the funds and accounts from which the peace officers employed by their respective departments are paid. Each commissioner must allocate the police state aid first for employer contributions for employees funded from the general fund and then for employer contributions for employees funded from other funds. For peace officers whose salaries are paid from the general fund, the amounts transferred from the appropriation for police state aid must be canceled to the general fund.

Sec. 14. [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN EMPLOYER RETIREMENT CONTRIBUTION RATES.]

Subdivision 1. [AID ADJUSTMENT.] Beginning in fiscal year 1998 and each year thereafter, the commissioner of children, families, and learning shall adjust state aid payments to school operating funds for independent school district No. 625, independent school district No. 709 and special school district No. 1, by the net amount of clauses (1) and (2) and for all other districts, including charter schools, but excluding any education organizations that are prohibited from receiving direct state aids under section 124.193 or 124.32, subdivision 12, by the net amount of clauses (1), (2) and (3):

(1) a decrease equal to each district's share of the fiscal year 1997 adjustment effected under Minnesota Statutes 1996, section 124.2139;

(2) an increase equal to one percent of the salaries paid to members of the general plan of the public employees retirement association in fiscal year 1997, multiplied by 0.35 for fiscal year 1998 and 0.70 each year thereafter;

(3) a decrease equal to 2.34 percent of the salaries paid to members of the teachers retirement association in fiscal year 1997.

Subd. 2. [APPROPRIATION AND ESTIMATED NET SAVINGS.] The amounts necessary to pay any positive net adjustments under this section to any school district are appropriated annually from the general fund to the commissioner of children, families, and learning. The estimated net general fund savings under this section is $29,819,000 in fiscal year 1998, and $26,997,000 in each fiscal year thereafter.

Subd. 3. [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] Increases to any school districts under subdivision 1, clause (2), and decreases under subdivision 1, clauses (1) and (3), are limited to the fiscal year 1999 amounts. The commissioner of children, families, and learning may permanently reduce the adjustments to school districts under subdivision 1, clauses (1) and (2), in the same manner as prescribed for nonschool jurisdictions under section 273.13985, subdivision 2. The commissioner may, from time to time, require that the most recent fiscal year payroll information be certified by the executive director of the teachers retirement association. For any school district where the newly certified teachers retirement association payroll is significantly lower than the fiscal 1997 amount as determined by the commissioner, the commissioner shall recalculate the lower reduction under subdivision 1, clause (3), and shall permanently reduce the adjustment amount in subsequent years.

Subd. 4. [EFFECT OF REORGANIZATIONS.] The commissioner of children, families, and learning shall reapportion the aid adjustments to school districts under this section to account for significant changes in boundaries or consolidations, as determined by the commissioner. If a school district is dissolved, or a school district function thereof is assumed by either the state or a nonpublic organization, adjustments for all or the appropriate fraction of the total payroll under this section must terminate.

Subd. 5. [ADJUSTMENT TERMINATION.] All adjustments under this section terminate on June 30, 2020.

Sec. 15. [273.1385] [AID FOR PUBLIC EMPLOYEES RETIREMENT ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.]

Subdivision 1. [AID TO OFFSET RATE INCREASE.] Beginning with the December 26, 1997, payment, and according to the schedule for payment of local aid under section 477A.015 thereafter, the commissioner of revenue shall pay to each city, county, town, and other nonschool jurisdiction an amount equal to 0.35 percent of the fiscal year 1997 payroll

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for employees who were members of the general plan of the public employees retirement association. Except for the December 1997 distribution under this section, the amount of aid must be certified before September 1 of the year preceding the distribution year to the affected local government. The executive director of the public employees retirement association shall certify the general plan fiscal year covered payroll and other information requested by the commissioner of revenue, on or before August 1, 1997, and in subsequent years where necessary, in order to facilitate administration of this section. The amount necessary to make these aid payments is appropriated annually from the general fund to the commissioner of revenue. Expenditures under this section are estimated to be $7,942,500 in fiscal year 1998, and $15,885,000 in each subsequent fiscal year, less any future reductions under subdivision 2.

Subd. 2. [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID REDUCTIONS.] The aid amount received by any jurisdiction in fiscal year 2000 or any year thereafter may not exceed the amount it received in fiscal year 1999. The commissioner may, from time to time, request the most recent fiscal year payroll information by jurisdiction to be certified by the executive director of the public employees retirement association. For any jurisdiction where newly certified public employees retirement association general plan payroll is significantly lower than the fiscal 1997 amount, as determined by the commissioner, the commissioner shall recalculate the aid amount based on the most recent fiscal year payroll information, certify the recalculated aid amount for the next distribution year, and permanently reduce the aid amount to that jurisdiction.

Subd. 3. [EFFECT OF REORGANIZATIONS.] The commissioner of revenue may adjust the aid amounts for separate jurisdictions to account for significant changes in boundaries or in the form of government, as determined by the commissioner. If a local government function and the associated public employees retirement association general plan payroll is assumed by either the state, or a nonpublic organization, the aid amounts attributable to the function under this section must terminate.

Subd. 4. [AID TERMINATION.] The aid provided under this section terminates on June 30, 2020.

Sec. 16. Minnesota Statutes 1996, section 352.01, subdivision 25, is amended to read:

Subd. 25. [NORMAL RETIREMENT AGE.] "Normal retirement age" means age 65 for a person who first became a covered employee or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first becomes a covered employee after June 30, 1989, normal retirement age means the higher of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66.

Sec. 17. Minnesota Statutes 1996, section 352.04, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE CONTRIBUTIONS.] The employee contribution to the fund must be equal to 4.07 4.0 percent of salary. These contributions must be made by deduction from salary as provided in subdivision 4.

Sec. 18. Minnesota Statutes 1996, section 352.04, subdivision 3, is amended to read:

Subd. 3. [EMPLOYER CONTRIBUTIONS.] (a) The employer contribution to the fund must be equal to 4.2 4.0 percent of salary.

(b) By January 1 of each year, the board of directors shall report to the legislative commission on pensions and retirement, the chair of the committee on appropriations of the house of representatives, and the chair of the committee on finance of the senate on the amount raised by the employer and employee contribution rates in effect and whether the total amount is less than, the same as, or more than the actuarial requirement determined under section 356.215.

(c) If the legislative commission on pensions and retirement, based on the most recent valuation performed by its actuary, determines that the total amount raised by the employer and employee contributions under subdivision 2 and paragraph (b) is less than the actuarial requirements determined under section 356.215, the employer and employee rates must be increased by equal amounts as necessary to meet the actuarial requirements. The employee rate may not exceed 4.15 percent of salary and the employer rate may not exceed 4.29 percent of salary. The increases are effective on the next January 1 following the determination by the commission. The executive director of the Minnesota state retirement system shall notify employing units of any increases under this paragraph.

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Sec. 19. Minnesota Statutes 1996, section 352.115, subdivision 3, is amended to read:

Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, in conjunction with section 352.116, subdivision 1, applies to a person who became a covered employee or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (b), in conjunction with section 352.116, subdivision 1a, produces a higher annuity amount, in which case paragraph (b) will apply. The employee's average salary, as defined in subdivision 2, multiplied by one the percent specified in section 356.19, subdivision 1, per year of allowable service for the first ten years and 1.5 the percent specified in section 356.19, subdivision 2, for each later year of allowable service and pro rata for completed months less than a full year shall determine the amount of the retirement annuity to which the employee is entitled.

(b) This paragraph applies to a person who has become at least 55 years old and first became a covered employee after June 30, 1989, and to any other covered employee who has become at least 55 years old and whose annuity amount, when calculated under this paragraph and in conjunction with section 352.116, subdivision 1a, is higher than it is when calculated under paragraph (a), in conjunction with section 352.116, subdivision 1. The employee's average salary, as defined in subdivision 2, multiplied by 1.5 the percent specified in section 356.19, subdivision 2, for each year of allowable service and pro rata for months less than a full year shall determine the amount of the retirement annuity to which the employee is entitled.

Sec. 20. Minnesota Statutes 1996, section 352.72, subdivision 2, is amended to read:

Subd. 2. [COMPUTATION OF DEFERRED ANNUITY.] (a) The deferred annuity, if any, accruing under subdivision 1, or section 352.22, subdivision 3, must be computed as provided in section 352.22, subdivision 3, on the basis of allowable service before termination of state service and augmented as provided herein. The required reserves applicable to a deferred annuity or to an annuity for which a former employee was eligible but had not applied or to any deferred segment of an annuity must be determined as of the date the benefit begins to accrue and augmented by interest compounded annually from the first day of the month following the month in which the employee ceased to be a state employee, or July 1, 1971, whichever is later, to the first day of the month in which the annuity begins to accrue. The rates of interest used for this purpose must be five percent compounded annually until January 1, 1981, and three percent compounded annually thereafter until January 1 of the year following the year in which the former employee attains age 55. From that date to the effective date of retirement, the rate is five percent compounded annually. If a person has more than one period of uninterrupted service, the required reserves related to each period must be augmented by interest under this subdivision. The sum of the augmented required reserves so determined is the present value of the annuity. "Uninterrupted service" for the purpose of this subdivision means periods of covered employment during which the employee has not been separated from state service for more than two years. If a person repays a refund, the service restored by the repayment must be considered continuous with the next period of service for which the employee has credit with this system. The formula percentages used for each period of uninterrupted service must be those applicable to a new employee. The mortality table and interest assumption used to compute the annuity must be those in effect when the employee files application for annuity. This section shall does not reduce the annuity otherwise payable under this chapter.

(b) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former state employee who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and the tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 21. Minnesota Statutes 1996, section 352.92, subdivision 1, is amended to read:

Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] Beginning with the first full pay period after July 1, 1984, in lieu of employee contributions payable under section 352.04, subdivision 2, Employee contributions by of covered correctional employees must be in an amount equal to 4.90 5.50 percent of salary.

Sec. 22. Minnesota Statutes 1996, section 352.92, subdivision 2, is amended to read:

Subd. 2. [EMPLOYER CONTRIBUTIONS.] In lieu of employer contributions payable under section 352.04, subdivision 3, The employer shall contribute for covered correctional employees an amount equal to 6.75 7.70 percent of salary.

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Sec. 23. Minnesota Statutes 1996, section 352.93, subdivision 2, is amended to read:

Subd. 2. [CALCULATING MONTHLY ANNUITY.] The monthly annuity under this section must be determined by multiplying the average monthly salary by the number of years, or completed months, of covered correctional service by 2.5 the percent specified in section 356.19, subdivision 5. However, the monthly annuity must not exceed 75 percent of the average monthly salary.

Sec. 24. Minnesota Statutes 1996, section 352.93, subdivision 3, is amended to read:

Subd. 3. [PAYMENTS; DURATION AND AMOUNT ANNUITY ACCRUAL.] The annuity under this section shall must begin to accrue as provided in section 352.115, subdivision 8., and must be paid for an additional 84 full calendar months or to the first of the month following the month in which the employee attains normal retirement age, whichever occurs first, except that payment must not cease before the first of the month following the month in which the employee becomes 62. It must then be reduced to the amount as calculated at normal retirement age under section 352.115, except that if this amount, when added to that portion of the social security benefit based on state service the employee would be eligible to receive at the time, is less than the benefit payable under subdivision 2, the retired employee shall receive an amount that when added to the social security benefit will equal the amount payable under subdivision 2. If the employee retired prior to age 55, the reduced benefit as calculated under section 352.115 must be actuarially reduced as provided in subdivision 2a.

When an annuity is reduced under this subdivision, the percentage adjustments, if any, that have been applied to the original annuity under section 11A.18, before the reduction, must be compounded and applied to the reduced annuity. A former correctional employee employed by the state in a position covered by the regular plan or the unclassified employees retirement program between the age of 58 and normal retirement age shall receive a partial return of correctional contributions at retirement with six percent interest based on the following formula:

Employee contributions Years and complete

contributed as a months of regular

correctional employee service between

in excess of the age 58 and the

contributions the normal retirement age

employee would have X .....................

contributed as a number of years between

regular employee age 58 and normal

retirement age

Sec. 25. Minnesota Statutes 1996, section 352.93, is amended by adding a subdivision to read:

Subd. 3a. [OPTIONAL ANNUITIES.] The board may establish optional annuity forms to pay a higher amount from the date of retirement until an employee is first eligible to draw social security benefits or up to the age the employee is eligible to receive unreduced social security benefits, at which time the monthly benefits must be reduced. The optional annuity forms must be actuarially equivalent to the normal single life annuity form provided in subdivision 2. The optional annuity forms must be approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 26. [352.931] [SURVIVOR BENEFITS.]

Subdivision 1. [SURVIVING SPOUSE BENEFIT.] (a) If the correctional employee was at least age 50, has credit for at least three years allowable service, and dies before an annuity or disability benefit has become payable, notwithstanding any designation of beneficiary to the contrary, the surviving spouse of the employee may elect to receive, in lieu of the refund under section 352.12, subdivision 1, an annuity for life equal to the joint and 100 percent survivor annuity which the employee could have qualified for had the employee terminated service on the date of death. The election may be made at any time after the date of death of the employee. The surviving spouse benefit begins to accrue as of the first of the month next following the date on which the application for the benefit was filed.

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(b) If the employee was under age 50, dies, and had credit for at least three years of allowable service credit on the date of death but did not yet qualify for retirement, the surviving spouse may elect to receive a 100 percent joint and survivor annuity based on the age of the employee and surviving spouse at the time of death. The annuity is payable using the early retirement reduction under section 352.93, subdivision 2a, to age 50, and one-half of the early retirement reduction from age 50 to the age payment begins. The surviving spouse eligible for surviving spouse benefits under this paragraph may apply for the annuity at any time after the employee's death. Sections 352.22, subdivision 3, and 352.72, subdivision 2, apply to a deferred annuity or surviving spouse benefit payable under this subdivision.

(c) The annuity must cease with the last payment received by the surviving spouse in the lifetime of the surviving spouse. Any employee may request in writing that this subdivision not apply and that payment be made only to a designated beneficiary as otherwise provided by this chapter.

Subd. 2. [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In lieu of the 100 percent optional annuity under subdivision 1, the surviving spouse of a deceased employee may elect to receive survivor coverage in a term certain of ten, 15, or 20 years. The monthly term certain annuity must be actuarially equivalent to the 100 percent optional annuity under subdivision 1 and must be approved by the actuary retained by the legislative commission on pensions and retirement. The optional annuity ceases upon the expiration of the term certain period. If a survivor elects a term certain annuity and dies before the expiration of the specified term certain period, the commuted value of the remaining annuity payments must be paid in a lump sum to the survivor's estate.

Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is no surviving spouse eligible for benefits under subdivision 1, a dependent child as defined in section 352.01, subdivision 26, is eligible for a dependent child survivor benefit. Benefits to a dependent child must be paid from the date of the employee's death to the date the dependent child attains age 20 if the child is under age 15 on the date of death. If the child is 15 years or older on the date of death, the benefit is payable for five years. The payment to a dependent child is an amount actuarially equivalent to the value of a 100 percent joint and survivor optional annuity using the age of the employee and age of the dependent child at the date of death in lieu of the age of the surviving spouse. If there is more than one dependent child, each dependent child shall receive a proportionate share of the actuarial value of the employee's account, with the amount of the benefit payable to each child to be determined based on the portion of the total eligibility period that each child is eligible. The process for calculating the dependent child survivor benefit must be approved by the actuary retained by the legislative commission on pensions and retirement.

Subd. 4. [DEATH REFUND.] An amount equal to the excess, if any, of the accumulated contributions credited to the account of the deceased employee in excess of the total of the benefits paid to the surviving spouse and surviving child or children must be paid to the deceased employee's last designated beneficiary or, if none, as specified under section 352.12, subdivision 1.

Subd. 5. [APPLICATION.] The benefit elections under this section must be made on an application form prescribed by the executive director and must be filed with the executive director.

Sec. 27. Minnesota Statutes 1996, section 352.95, subdivision 1, is amended to read:

Subdivision 1. [JOB-RELATED DISABILITY.] A covered correctional employee who becomes disabled and physically 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 makes the employee physically or mentally unable to perform the duties, is entitled to a disability benefit based on covered correctional service only. The benefit amount must equal 50 percent of the average salary defined in section 352.93, plus an additional 2-1/2 percent equal to that specified in section 356.19, subdivision 5, for each year of covered correctional service in excess of 20 years, ten months, prorated for completed months.

Sec. 28. Minnesota Statutes 1996, section 352.95, subdivision 5, is amended to read:

Subd. 5. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The disability benefit paid to a disabled correctional employee under this section shall terminate at the end of the month in which the employee reaches age 62. If the disabled correctional employee is still disabled when the employee reaches age 62, the employee shall be deemed to be a retired employee. If the employee had elected an optional annuity under subdivision 1a, the employee shall receive an

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annuity in accordance with the terms of the optional annuity previously elected. If the employee had not elected an optional annuity under subdivision 1a, the employee may within 90 days of attaining age 65 or reaching the five-year anniversary of the effective date of the disability benefit, whichever is later, either elect to receive a normal retirement annuity computed in the manner provided in section 352.115 352.93 or elect to receive an optional annuity as provided in section 352.116, subdivision 3, based on the same length of service as used in the calculation of the disability benefit. Election of an optional annuity must be made within 90 days before attaining age 65 or reaching the five-year anniversary of the effective date of the disability benefit, whichever is later. The reduction for retirement before normal retirement age as provided in section 352.116, subdivision 1 or 1a, does not apply. The savings clause provision of section 352.93, subdivision 3, applies. If an optional annuity is elected, the optional annuity shall begin to accrue on the first of the month following the month in which the employee reaches age 65 or the five-year anniversary of the effective date of the disability benefit, whichever is later.

Sec. 29. Minnesota Statutes 1996, section 352B.02, subdivision 1a, is amended to read:

Subd. 1a. [MEMBER CONTRIBUTIONS.] Each member shall pay a sum equal to 8.92 8.40 percent of the member's salary, which shall constitute the member contribution to the fund.

Sec. 30. Minnesota Statutes 1996, section 352B.02, subdivision 1c, is amended to read:

Subd. 1c. [EMPLOYER CONTRIBUTIONS.] (a) In addition to member contributions, department heads shall pay a sum equal to 14.88 12.60 percent of the salary upon which deductions were made, which shall constitute the employer contribution to the fund. Department contributions must be paid out of money appropriated to departments for this purpose.

(b) By January 1 of each year, the board of directors shall report to the legislative commission on pensions and retirement, the chair of the committee on appropriations of the house of representatives, and the chair of the committee on finance of the senate on the amount raised by the employer and employee contribution rates in effect and whether the total amount is less than, the same as, or more than the actuarial requirement determined under section 356.215.

Sec. 31. Minnesota Statutes 1996, section 352B.08, subdivision 2, is amended to read:

Subd. 2. [NORMAL RETIREMENT ANNUITY.] The annuity must be paid in monthly installments. The annuity shall be equal to the amount determined by multiplying the average monthly salary of the member by 2.65 the percent specified in section 356.19, subdivision 6, for each year and pro rata for completed months of service.

Sec. 32. Minnesota Statutes 1996, section 352B.08, subdivision 2a, is amended to read:

Subd. 2a. [EARLY RETIREMENT.] Any member who has become at least 50 years old, or former member if service ended after June 30, 1989, and who has at least three years of allowable service is entitled upon application to a reduced retirement annuity equal to the annuity calculated under subdivision 2, reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable if the member deferred receipt of the annuity from the day the annuity begins to accrue to age 55 by two-tenths of one percent for each month that the member is under age 55 at the time of retirement.

Sec. 33. Minnesota Statutes 1996, section 352B.10, subdivision 1, is amended to read:

Subdivision 1. [INJURIES, PAYMENT AMOUNTS.] Any member who becomes disabled and physically or mentally unfit to perform duties as a direct result of an injury, sickness, or other disability incurred in or arising out of any act of duty, shall receive disability benefits while disabled. The benefits must be paid in monthly installments equal to the member's average monthly salary multiplied by 53 60 percent, plus an additional 2.65 percent equal to that specified in section 356.19, subdivision 6, for each year and pro rata for completed months of service in excess of 20 years, if any.

Sec. 34. Minnesota Statutes 1996, section 352B.30, is amended by adding a subdivision to read:

Subd. 4. [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

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Sec. 35. Minnesota Statutes 1996, section 352C.031, subdivision 4, is amended to read:

Subd. 4. [RETIREMENT ALLOWANCE FORMULA.] (a) This paragraph applies to constitutional officers who terminate that service before July 1, 1997. The average salary multiplied by 2-1/2 percent for each year of allowable service and pro rata for completed months less than a full year shall determine the amount of the normal retirement allowance.

(b) This paragraph applies to constitutional officers who terminate that service after June 30, 1997. The retirement allowance is an amount equal to the rate under paragraph (a) per year of service of the constitutional officer's average monthly salary adjusted for that person on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent. The adjustment must be calculated by or, alternatively, the adjustment procedure must be specified by the actuary retained by the legislative commission on pensions and retirement.

Sec. 36. Minnesota Statutes 1996, section 352C.033, is amended to read:

352C.033 [DEFERRED ANNUITIES AUGMENTATION.]

(a) The deferred retirement allowance for any former constitutional officer shall must be augmented as provided in this section. The required reserves applicable to the deferred retirement allowance, determined as of the date the retirement allowance begins to accrue using the appropriate mortality table and an interest assumption of five six percent, shall be augmented from the first of the month following termination of service as a constitutional officer, or January 1, 1979, whichever is later, to the first day of the month in which the annuity begins to accrue, at the rate of five percent per annum compounded annually until January 1, 1981, and thereafter at the rate of three percent per annum compounded annually until January 1 of the year in which the former constitutional officer attains age 55. From that date to the effective date of retirement, the rate is five percent compounded annually.

(b) The retirement allowance of, or the survivor benefit payable on behalf of, a former constitutional officer who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 37. Minnesota Statutes 1996, section 353.01, subdivision 37, is amended to read:

Subd. 37. [NORMAL RETIREMENT AGE.] "Normal retirement age" means age 65 for a person who first became a public employee or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first becomes a public employee after June 30, 1989, "normal retirement age" means the higher of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66.

Sec. 38. Minnesota Statutes 1996, section 353.27, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE CONTRIBUTION.] The employee contribution shall be an amount (a) for a "basic member" equal to 8.23 8.75 percent of total salary; and (b) for a "coordinated member" equal to 4.23 4.75 percent of total salary. These contributions shall 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 shall must be based on the total salary received from all sources.

Sec. 39. Minnesota Statutes 1996, section 353.27, subdivision 3a, is amended to read:

Subd. 3a. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An additional employer contribution shall must be made equal to (a) 2-1/2 2.68 percent of the total salary of each "basic member"; and (b) one-quarter of one .43 percent of the total salary of each "coordinated member." These contributions shall must be made from funds available to the employing subdivision by the means and in the manner provided in section 353.28.

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(b) This subdivision is repealed once the actuarial value of the assets of the plan equal or exceed the actuarial accrued liability of the plan as determined by the actuary retained by the legislative commission on pensions and retirement under section 356.215. The repeal is effective on the first day of the first full pay period occurring after March 31 of the calendar year following the issuance of the actuarial valuation upon which the repeal is based.

Sec. 40. Minnesota Statutes 1996, section 353.29, subdivision 3, is amended to read:

Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 1c, applies to any member who first became a public employee or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (b), in conjunction with section 353.30, subdivision 5, produces a higher annuity amount, in which case paragraph (b) will apply. The average salary as defined in subdivision 2, multiplied by two the percent specified in section 356.19, subdivision 3, for each year of allowable service for the first ten years and thereafter by 2.5 the percent specified in section 356.19, subdivision 4, per year of allowable service and completed months less than a full year for the "basic member," and one the percent specified in section 356.19, subdivision 1, for each year of allowable service for the first ten years and thereafter by 1.5 the percent specified in section 356.19, subdivision 2, per year of allowable service and completed months less than a full year for the "coordinated member," shall determine the amount of the "normal" retirement annuity.

(b) This paragraph applies to a member who has become at least 55 years old and first became a public employee after June 30, 1989, and to any other member whose annuity amount, when calculated under this paragraph and in conjunction with section 353.30, subdivision 5, is higher than it is when calculated under paragraph (a), in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 1c. The average salary, as defined in subdivision 2, multiplied by 2.5 the percent specified in section 356.19, subdivision 4, for each year of allowable service and completed months less than a full year for a basic member and 1.5 the percent specified in section 356.19, subdivision 2, per year of allowable service and completed months less than a full year for a coordinated member, shall determine the amount of the normal retirement annuity.

Sec. 41. Minnesota Statutes 1996, section 353.651, subdivision 3, is amended to read:

Subd. 3. [RETIREMENT ANNUITY FORMULA.] The average salary as defined in subdivision 2, multiplied by 2.65 the percent specified in section 356.19, subdivision 6, per year of allowable service determines the amount of the normal retirement annuity. If the member has earned allowable service for performing services other than those of a police officer or firefighter, the annuity representing such service is computed under sections 353.29 and 353.30.

Sec. 42. Minnesota Statutes 1996, section 353.656, subdivision 1, is amended to read:

Subdivision 1. [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] A member of the police and fire fund who becomes disabled and physically unfit to perform duties as a police officer or firefighter subsequent to June 30, 1973, as a direct result of an injury, sickness, or other disability incurred in or arising out of any act of duty, which has or is expected to render the member physically or mentally unable to perform duties as a police officer or firefighter for a period of at least one year, shall receive disability benefits during the period of such disability. The benefits must be in an amount equal to 53 60 percent of the "average salary" under subdivision 3, plus an additional 2.65 percent specified in section 356.19, subdivision 6, of said average salary for each year of service in excess of 20 years. Should disability under this subdivision occur before the member has at least five years of allowable service credit in the police and fire fund, the disability benefit must be computed on the "average salary" from which deductions were made for contribution to the police and fire fund.

Sec. 43. Minnesota Statutes 1996, section 353.71, subdivision 2, is amended to read:

Subd. 2. [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) The deferred annuity, if any, accruing under subdivision 1, or sections 353.34, subdivision 3, and 353.68, subdivision 4, shall must be computed in the manner provided in said sections, on the basis of allowable service prior to termination of public service and augmented as provided herein. The required reserves applicable to a deferred annuity, or to an annuity for which a former member was eligible but had not applied, or to any deferred segment of an annuity shall be determined as of the date the annuity begins to accrue and shall be augmented from the first day of the month following the month in which the former member ceased to be a public employee, or July 1, 1971, whichever is later, to the first day of the month in which the annuity begins to accrue, at the rate of five percent per annum compounded annually until January 1, 1981, and at the rate of three percent thereafter until

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January 1 of the year following the year in which the former member attains age 55. From that date to the effective date of retirement, the rate is five percent per annum compounded annually. If a person has more than one period of uninterrupted service, the required reserves related to each period shall be augmented by interest pursuant to this subdivision. The sum of the augmented required reserves so determined shall be the present value of the annuity. Uninterrupted service for the purpose of this subdivision shall mean periods of covered employment during which the employee has not been separated from public service for more than two years. If a person repays a refund, the service restored thereby shall be considered as continuous with the next period of service for which the employee has credit with this association. The formula percentages used for each period of uninterrupted service shall be those as would be applicable to a new employee. This section shall not reduce the annuity otherwise payable under this chapter. This subdivision shall apply to deferred annuitants of record on July 1, 1971, and to employees who thereafter become deferred annuitants; it shall also apply from July 1, 1971, to former members who make application for an annuity after July 1, 1973.

(b) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 44. Minnesota Statutes 1996, section 353A.08, subdivision 1, is amended to read:

Subdivision 1. [ELECTION OF COVERAGE BY CURRENT RETIREES.] A person who is receiving a service pension, disability benefit, or survivorship survivor benefit is eligible to elect benefit coverage provided under the relevant provisions of the public employees police and fire fund benefit plan or to retain benefit coverage provided under the relief association benefit plan in effect on the effective date of the consolidation. The relevant provisions of the public employees police and fire fund benefit plan for the person electing that benefit coverage are limited to participation in the Minnesota postretirement investment fund for any future postretirement adjustments based on the amount of the benefit or pension payable on December 31, if December 31 is the effective date of consolidation, or on the December 1 following the effective date of the consolidation, if other than December 31. The survivorship survivor benefit payable on behalf of any service pension or disability benefit recipient who elects benefit coverage under the public employees police and fire fund benefit plan must be calculated under the relief association benefit plan and is subject to participation in the Minnesota postretirement investment fund for any future postretirement adjustments based on the amount of the survivorship survivor benefit payable.

A survivor benefit calculated under the relief association benefit plan which is first payable after June 30, 1997, to the surviving spouse of a retired member of a consolidation account who, before July 1, 1997, chose to participate in the Minnesota postretirement investment fund as provided under this subdivision must be increased on the effective date of the survivor benefit on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

By electing the public employees police and fire fund benefit plan, a current service pension or disability benefit recipient who, as of the first January 1 occurring after the effective date of consolidation, has been receiving the pension or benefit for at least seven months, or any survivor benefit recipient who, as of the first January 1 occurring after the effective date of consolidation, has been receiving the benefit on the person's own behalf or in combination with a prior applicable service pension or disability benefit for at least seven months is eligible to receive a partial adjustment payable from the Minnesota postretirement investment fund under section 11A.18, subdivision 9.

The election by any pension or benefit recipient must be made on or before the deadline established by the board of the public employees retirement association in a manner that recognizes the number of persons eligible to make the election and the anticipated time required to conduct any required benefit counseling.

Sec. 45. Minnesota Statutes 1996, section 353A.08, subdivision 2, is amended to read:

Subd. 2. [ELECTION OF COVERAGE BY CURRENT DEFERRED RETIREES.] (a) Any person who has terminated active employment as a police officer or firefighter, whichever applies, with the municipality, has sufficient credit for service to entitle the person to an eventual service pension and has not taken a refund of accumulated member contributions, if

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applicable, shall have the option to elect to have benefit coverage provided under the relevant provisions of the public employees police and fire fund benefit plan or to retain benefit coverage provided by the relief association benefit plan in effect on the effective date of consolidation. The relevant provisions of the public employees police and fire fund benefit plan for the person electing that benefit coverage shall be the provisions specified in subdivision 1.

The election shall be made when the person files an application for receipt of the deferred service pension and shall accompany that application.

(b) The retirement annuity for a deferred member of a consolidated local relief association which consolidated before July 1, 1997, who elected the relevant provisions of the public employees police and fire fund benefit plan under subdivision 1 must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board of trustees of the public employees retirement association and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 46. Minnesota Statutes 1996, section 353A.083, is amended by adding a subdivision to read:

Subd. 3. [PRE-1997 CONSOLIDATION.] (a) For any consolidation plan account in effect on July 1, 1997, the applicable benefit plan coverage defined in paragraph (b) or (c) applies unless the consolidation account's city approves the extension of the post-June 30, 1997, public employees police and fire fund benefit plan to the consolidation account members.

(b) If the applicable municipality has approved the July 1, 1993, public employees police and fire fund benefit provisions, but has not approved the extension of the post-June 30, 1997, public employees police and fire fund benefit provisions:

(1) the benefit accrual rate for calculating retirement annuities that apply to consolidation account members who have elected or elect coverage under the provisions of the public employees police and fire fund benefit plan is 2.9 percent of average salary under section 353.651, subdivision 2, per year of allowable service;

(2) the optional survivor annuities payable to the survivors of these consolidated members who elected coverage under the provisions of the public employees police and fire fund benefit plan must be determined using a benefit accrual rate of 2.9 percent of average salary under section 353.651, subdivision 2, per year of the member's allowable service;

(3) the disability benefit payable for these consolidated members who elected or elect coverage under the provisions of the public employees police and fire fund benefit plan and:

(i) who become disabled in the line of duty, as defined under section 353.656, subdivision 1, is an amount equal to 58 percent of average salary under section 353.651, subdivision 2, plus an additional 2.9 percent of that average salary for each year of service in excess of 20 years; or

(ii) who become disabled because of sickness or injury occurring while not on duty, as defined under section 353.656, subdivision 3, is an amount equal to 43.50 percent of average salary under section 353.651, subdivision 2, plus an additional 2.9 percent of that average salary for each year of service in excess of 15 years.

(c) If the applicable municipality has not approved the July 1, 1993, public employees police and fire fund benefit provisions, and has not approved the extension of the post-June 30, 1997, public employees police and fire fund benefit provisions:

(1) the benefit accrual rate for calculating retirement annuities that apply to consolidation account members who have elected or elect coverage under the provisions of the public employees police and fire fund benefit plan is 2.74 percent of average salary under section 353.651, subdivision 2, per year of allowable service;

(2) the optional survivor annuities payable to the survivors of these consolidated members who elected coverage under the provisions of the public employees police and fire fund benefit plan must be determined using a benefit accrual rate of 2.74 percent of average salary under section 353.651, subdivision 2, per year of the member's allowable service;

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(3) the disability benefit payable for consolidated members who elected or elect the coverage under the provisions of the public employees police and fire fund benefit plan and:

(i) who become disabled in the line of duty, as defined under section 353.656, subdivision 1, is an amount equal to 54.80 percent of the average salary under section 353.651, subdivision 2, plus an additional 2.74 percent of that average salary for each year of service in excess of 20 years; or

(ii) who become disabled because of sickness or injury occurring while not on duty, as defined under section 353.656, subdivision 3, is an amount equal to 41.10 percent of the average salary under section 353.651, subdivision 2, plus an additional 2.74 percent of that average salary for each year of service in excess of 15 years.

Sec. 47. Minnesota Statutes 1996, section 354.05, subdivision 38, is amended to read:

Subd. 38. [NORMAL RETIREMENT AGE.] "Normal retirement age" means age 65 for a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first becomes a member of the association after June 30, 1989, normal retirement age means the higher of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66.

Sec. 48. Minnesota Statutes 1996, section 354.42, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE.] The employee contribution to the fund shall be is an amount equal to 6.5 5.0 percent of the salary of every coordinated member and 10.5 9.0 percent of the salary of every basic member. This contribution shall must be made by deduction from salary. Where any portion of a member's salary is paid from other than public funds, such the member's employee contribution shall must be based on the entire salary received.

Sec. 49. Minnesota Statutes 1996, section 354.42, subdivision 3, is amended to read:

Subd. 3. [EMPLOYER.] The employer contribution to the fund shall be is an amount equal to 4-1/2 5.0 percent of the salary of each coordinated member and 8-1/2 9.0 percent of the salary of each basic member.

Sec. 50. Minnesota Statutes 1996, section 354.42, subdivision 5, is amended to read:

Subd. 5. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To amortize the unfunded actuarial accrued liability computed under the entry age actuarial cost method and disclosed under the annual actuarial valuations prepared by the commission-retained actuary under section 356.215, an additional employer contribution shall must be made in the amount of 3.64 1.64 percent of the salary of each member.

(b) This contribution must be made in the manner provided in section 354.52, subdivision 4.

(c) This subdivision is repealed once the actuarial value of the assets of the plan equal or exceed the actuarial accrued liability of the plan as determined by the actuary retained by the legislative commission on pensions and retirement under section 356.215. The repeal is effective on the first day of the first full pay period occurring after March 31 of the calendar year following the issuance of the actuarial valuation upon which the repeal is based.

By January 1 of each year, the board of directors shall report to the legislative commission on pensions and retirement, the chair of the committee on appropriations of the house of representatives, and the chair of the committee on finance of the senate on the amount raised by the additional employer contribution rate in effect and whether that amount is less than, the same as, or more than the required amortization contribution determined under section 356.215.

Sec. 51. Minnesota Statutes 1996, section 354.44, subdivision 6, is amended to read:

Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT ANNUITY.] (1) The formula retirement annuity hereunder shall must be computed in accordance with the applicable provisions of the formulas stated in clause (2) or (4) on the basis of each member's average salary for the period of the member's formula service credit.

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For all years of formula service credit, "average salary," for the purpose of determining the member's retirement annuity, means the average salary upon which contributions were made and upon which payments were made to increase the salary limitation provided in Minnesota Statutes 1971, section 354.511, for the highest five successive years of formula service credit provided, however, that such "average salary" shall not include any more than the equivalent of 60 monthly salary payments. Average salary must be based upon all years of formula service credit if this service credit is less than five years

(2) This clause, in conjunction with clause (3), applies to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless clause (4), in conjunction with clause (5), produces a higher annuity amount, in which case clause (4) applies. The average salary as defined in clause (1), multiplied by the following percentages per year of formula service credit shall determine the amount of the annuity to which the member qualifying therefor is entitled:

Coordinated Member BasicMember

Each year of service 1.13 the 2.13 the

during first ten percent percent

specified in specified in

section 356.19, section 356.19,

subdivision 1, subdivision 3,

per year per year

Each year of service 1.63 the 2.63 the

thereafter percent percent

specified in specified in

section 356.19, section 356.19,

subdivision 2, subdivision 4,

per year per year

(3)(i) This clause applies only to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and whose annuity is higher when calculated under clause (2), in conjunction with this clause than when calculated under clause (4), in conjunction with clause (5).

(ii) Where any member retires prior to normal retirement age under a formula annuity, the member shall be paid a retirement annuity in an amount equal to the normal annuity provided in clause (2) reduced by one-quarter of one percent for each month that the member is under normal retirement age at the time of retirement except that for any member who has 30 or more years of allowable service credit, the reduction shall be applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable service totals 90 years is entitled, upon application, to a retirement annuity in an amount equal to the normal annuity provided in clause (2), without any reduction by reason of early retirement.

(4) This clause applies to a member who has become at least 55 years old and first became a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount when calculated under this clause and in conjunction with clause (5), is higher than it is when calculated under clause (2), in conjunction with clause (3). The average salary, as defined in clause (1) multiplied by 2.63 the percent specified by section 356.19, subdivision 4, for each year of service for a basic member and by 1.63 the percent specified in section 356.19, subdivision 2, for each year of service for a coordinated member shall determine the amount of the retirement annuity to which the member is entitled.

(5) This clause applies to a person who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under clause (4) in conjunction with this clause than when calculated under clause (2), in conjunction with clause (3). An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity provided in clause (4) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age.

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Sec. 52. Minnesota Statutes 1996, section 354.44, is amended by adding a subdivision to read:

Subd. 6a. [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A percentage of the permanent increase for benefit recipients effective July 1, 1997, under section 71, as specified in paragraph (b), is payable to:

(1) a member who terminates service after June 30, 1997, and whose benefit begins to accrue during the period of July 2, 1997, to July 1, 2002, based on the member's age at retirement.

(2) a member who is determined to be totally and permanently disabled under section 354.05, subdivision 14, after June 30, 1997, and whose benefit begins to accrue during the period of July 2, 1997, to July 1, 2002, based on the member's age at disability.

(3) the survivor of a member who terminates service and dies after June 30, 1997, and whose benefit begins to accrue during the period of July 2, 1997, to July 1, 2002.

(b) The percentage of the permanent increase is the amount designated for the applicable beginning benefit accrual date, as follows:

Beginning Benefit Percentage of

Accrual Date Permanent Increase

July 2, 1997 to July 1, 1998 50 percent

July 2, 1998 to July 1, 1999 40 percent

July 2, 1999 to July 1, 2000 30 percent

July 2, 2000 to July 1, 2001 20 percent

July 2, 2001 to July 1, 2002 10 percent

Sec. 53. Minnesota Statutes 1996, section 354.53, subdivision 1, is amended to read:

Subdivision 1. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any employee given a leave of absence to enter military service and who returns to teaching service upon discharge from military service as provided in section 192.262, shall may obtain credit for the period of military service but shall not receive credit for any voluntary extension of military service at the instance of the member beyond the initial period of enlistment, induction or call to active duty. The member shall obtain credit by paying into the fund an employee contribution based upon the salary of the member at the date of return from military service. The amount of this contribution shall be as follows:

Period Basic Member Coordinated Member

July 1, 1973 8 percent 4 percent

thru

June 30, 1979

July 1, 1979

and 8.5 percent 4.5 percent

thereafter

The contributions specified in this subdivision shall be contribution rates in effect at the time that the military service was performed multiplied by the annual salary rate of the member for the year beginning with the date of return from military service and the number of years of military service together with interest thereon at an annual rate of 8.5 percent compounded annually from the time the military service was rendered to the first date of payment. The employer contribution and additional contribution provided in section 354.42 shall must be paid by the employing unit at the rates in effect at the time that the military service was performed, applied to the annual salary rate of the member for the year beginning with the date of return from military service, in the manner provided in section 354.52, subdivision 4.

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Sec. 54. Minnesota Statutes 1996, section 354.55, subdivision 11, is amended to read:

Subd. 11. [DEFERRED ANNUITY; AUGMENTATION.] (a) Any person covered under section 354.44, subdivision 6, who ceases to render teaching service, may leave the person's accumulated deductions in the fund for the purpose of receiving a deferred annuity at retirement. Eligibility for an annuity under this subdivision shall be is governed pursuant to section 354.44, subdivision 1, or 354.60.

(b) The amount of the deferred retirement annuity shall be is determined by section 354.44, subdivision 6, and augmented as provided in this subdivision. The required reserves related to that portion of the annuity which had accrued when the member ceased to render teaching service shall must be augmented by interest compounded annually from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement. There shall be no augmentation if this period is less than three months or if this period commences prior to July 1, 1971. The rates of interest used for this purpose shall must be five percent compounded annually commencing July 1, 1971, until January 1, 1981, and three percent compounded annually thereafter until January 1 of the year following the year in which the former member attains age 55. From that date to the effective date of retirement, the rate is five percent compounded annually. If a person has more than one period of uninterrupted service, a separate average salary determined under section 354.44, subdivision 6, must be used for each period and the required reserves related to each period shall must be augmented by interest pursuant to this subdivision. The sum of the augmented required reserves so determined shall be the basis for purchasing the deferred annuity. If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has credit with this fund. If a person does not render teaching service in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of the resumption of teaching service shall must be those applicable to new members. The mortality table and interest assumption used to compute the annuity shall must be the applicable mortality table established by the board under section 354.07, subdivision 1, and the interest rate assumption under section 356.215 in effect when the member retires. A period of uninterrupted service for the purposes of this subdivision means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.

(c) In no case shall the annuity payable under this subdivision be less than the amount of annuity payable pursuant to section 354.44, subdivision 6.

(d) The requirements and provisions for retirement before normal retirement age contained in section 354.44, subdivision 6, clause (3) or (5), shall also apply to an employee fulfilling the requirements with a combination of service as provided in section 354.60.

(e) The augmentation provided by this subdivision applies to the benefit provided in section 354.46, subdivision 2.

(f) The augmentation provided by this subdivision shall not apply to any period in which a person is on an approved leave of absence from an employer unit covered by the provisions of this chapter.

(g) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former teacher who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 55. [356.19] [RETIREMENT BENEFIT FORMULA PERCENTAGES.]

Subdivision 1. [COORDINATED PLAN MEMBERS.] The applicable benefit accrual rate is 1.2 percent.

Subd. 2. [COORDINATED PLAN MEMBERS.] The applicable benefit accrual rate is 1.7 percent.

Subd. 3. [BASIC PLAN MEMBERS.] The applicable benefit accrual rate is 2.2 percent.

Subd. 4. [BASIC PLAN MEMBERS.] The applicable benefit accrual rate is 2.7 percent.

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Subd. 5. [CORRECTIONAL PLAN MEMBERS.] The applicable benefit accrual rate is 2.4 percent.

Subd. 6. [STATE TROOPERS PLAN AND POLICE/FIRE PLAN MEMBERS.] The applicable benefit accrual rate is 3.0 percent.

Subd. 7. [JUDGES PLAN.] The applicable benefit accrual rate is 2.7 percent.

Subd. 8. [JUDGES PLAN.] The applicable benefit accrual rate is 3.2 percent.

Subd. 9. [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After January 2, 1998, benefit accrual rate increases under this section must apply only to allowable service or formula service rendered after the effective date of the benefit accrual rate increase.

Sec. 56. Minnesota Statutes 1996, section 356.20, subdivision 2, is amended to read:

Subd. 2. [COVERED PUBLIC PENSION FUNDS.] This section applies to the following public pension plans:

(1) State employees retirement fund.

(2) Public employees retirement fund.

(3) Teachers retirement association.

(4) State patrol retirement fund.

(5) Minneapolis teachers retirement fund association.

(6) St. Paul teachers retirement fund association.

(7) Duluth teachers retirement fund association.

(8) Minneapolis employees retirement fund.

(9) University of Minnesota faculty retirement plan.

(10) University of Minnesota faculty supplemental retirement plan.

(11) Judges retirement fund.

(12) Any police or firefighter's relief association enumerated in section 69.77, subdivision 1a or 69.771, subdivision 1.

(13) Public employees police and fire fund.

(14) Minnesota state retirement system correctional officers retirement fund.

(15) Public employees local government correctional service retirement plan.

Sec. 57. Minnesota Statutes 1996, 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), and 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 the

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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 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 quadrennial projection valuations required under paragraph (a) are 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, 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.

Sec. 58. Minnesota Statutes 1996, section 356.215, subdivision 4d, is amended to read:

Subd. 4d. [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds governed by chapters chapter 352B, 353C, and by sections 352.90 through 352.951 and 353.63 through 353.68, the actuarial valuation must use a preretirement interest assumption of 8.5 percent, a postretirement interest assumption of five six percent, and a future salary increase assumption of 6.5 percent.

(b) For funds governed by chapter 354A, the actuarial valuation must use preretirement and postretirement assumptions of 8.5 percent and a future salary increase assumption of 6.5 percent, but the actuarial valuation must reflect the payment of postretirement adjustments to retirees, based on the methods specified in the bylaws of the fund as approved by the legislature. For a fund governed by chapter 422A, the actuarial valuation shall use a preretirement interest assumption of six percent, a postretirement interest assumption of five percent, and an assumption that in each future year the salary on which a retirement or other benefit is based is 1.04 multiplied by the salary for the preceding year.

(c) For all other funds not specified in paragraph (a), (b), (d), or (e), the actuarial valuation must use a preretirement interest assumption of five percent, a postretirement interest assumption of five percent, and a future salary increase assumption of 3.5 percent.

(d) For funds governed by chapters 3A, 352C, and 490, the actuarial valuation must use a preretirement interest assumption of 8.5 percent, a postretirement interest assumption of five six percent, and a future salary increase assumption of 6.5 percent in each future year in which the salary amount payable is not determinable from section 3.099, 15A.081, subdivision 6, or 15A.083, subdivision 1, whichever applies, or from applicable compensation council recommendations under section 15A.082.

(e) For funds governed by sections 352.01 through 352.86, 353.01 through 353.46, and chapter 354, the actuarial valuation must use a preretirement interest assumption of 8.5, a postretirement interest assumption of five six percent, and a graded rate future salary increase assumption as follows:

General stateGeneral public

employees employees Teachers

retirement retirement retirement

Age plan plan plan

16 7.2500% 8.71% 7.25%

17 7.2500 8.71 7.25

18 7.2500 8.70 7.25

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19 7.2500 8.70 7.25

20 7.2500 7.70 7.25

21 7.1454 7.70 7.25

22 7.1094 7.70 7.25

23 7.0725 7.70 7.20

24 7.0363 7.70 7.15

25 7.0000 7.60 7.10

26 7.0000 7.51 7.05

27 7.0000 7.39 7.00

28 7.0000 7.30 7.00

29 7.0000 7.20 7.00

30 7.0000 7.20 7.00

31 7.0000 7.10 7.00

32 7.0000 7.10 7.00

33 7.0000 7.00 7.00

34 7.0000 7.00 7.00

35 7.0000 6.90 7.00

36 6.9019 6.80 7.00

37 6.8074 6.70 7.00

38 6.7125 6.60 6.90

39 6.6054 6.50 6.80

40 6.5000 6.40 6.70

41 6.3540 6.30 6.60

42 6.2087 6.30 6.50

43 6.0622 6.30 6.35

44 5.9048 6.20 6.20

45 5.7500 6.20 6.05

46 5.6940 6.09 5.90

47 5.6375 6.00 5.75

48 5.5822 5.90 5.70

49 5.5405 5.80 5.65

50 5.5000 5.70 5.60

51 5.4384 5.70 5.55

52 5.3776 5.70 5.50

53 5.3167 5.70 5.45

54 5.2826 5.70 5.40

55 5.2500 5.70 5.35

56 5.2500 5.70 5.30

57 5.2500 5.70 5.25

58 5.2500 5.70 5.25

59 5.2500 5.70 5.25

60 5.2500 5.00 5.25

61 5.2500 5.00 5.25

62 5.2500 5.00 5.25

63 5.2500 5.00 5.25

64 5.2500 5.00 5.25

65 5.2500 5.00 5.25

66 5.2500 5.00 5.25

67 5.2500 5.00 5.25

68 5.2500 5.00 5.25

69 5.2500 5.00 5.25

70 5.2500 5.00 5.25

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Sec. 59. Minnesota Statutes 1996, section 356.215, subdivision 4g, is amended to read:

Subd. 4g. [AMORTIZATION CONTRIBUTIONS.] (a) In addition to the exhibit indicating the level normal cost, the actuarial valuation must contain an exhibit indicating the additional annual contribution sufficient to amortize the unfunded actuarial accrued liability. For funds governed by chapters 3A, 352, 352B, 352C, 353, 353C, 354, 354A, and 490, the additional contribution must be calculated on a level percentage of covered payroll basis by the established date for full funding in effect when the valuation is prepared. For funds governed by chapter 3A, sections 352.90 through 352.951, chapters 352B, 352C, sections 353.63 through 353.68, and chapters 353C, 354A, and 490, the level percent additional contribution must be calculated assuming annual payroll growth of 6.5 percent. For funds governed by sections 352.01 through 352.86 and chapter 354, the level percent additional contribution must be calculated assuming an annual payroll growth of five percent. For the fund governed by sections 353.01 through 353.46, the level percent additional contribution must be calculated assuming an annual payroll growth of six percent. For all other funds, the additional annual contribution must be calculated on a level annual dollar amount basis.

(b) For any fund other than the Minneapolis employees retirement fund, after the first actuarial valuation date occurring after June 1, 1989, if there has not been a change in the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, which change or changes by themselves without inclusion of any other items of increase or decrease produce a net increase in the unfunded actuarial accrued liability of the fund, the established date for full funding for the first actuarial valuation made after June 1, 1989, and each successive actuarial valuation is the first actuarial valuation date occurring after June 1, 2020.

(c) For any fund or plan other than the Minneapolis employees retirement fund, after the first actuarial valuation date occurring after June 1, 1989, if there has been a change in any or all of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, and the change or changes, by themselves and without inclusion of any other items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the established date for full funding must be determined using the following procedure:

(i) the unfunded actuarial accrued liability of the fund must be determined in accordance with the plan provisions governing annuities and retirement benefits and the actuarial assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the unfunded actuarial accrued liability amount determined under item (i) by the established date for full funding in effect before the change must be calculated using the interest assumption specified in subdivision 4d in effect before the change;

(iii) the unfunded actuarial accrued liability of the fund must be determined in accordance with any new plan provisions governing annuities and benefits payable from the fund and any new actuarial assumptions and the remaining plan provisions governing annuities and benefits payable from the fund and actuarial assumptions in effect before the change;

(iv) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the difference between the unfunded actuarial accrued liability amount calculated under item (i) and the unfunded actuarial accrued liability amount calculated under item (iii) over a period of 30 years from the end of the plan year in which the applicable change is effective must be calculated using the applicable interest assumption specified in subdivision 4d in effect after any applicable change;

(v) the level annual dollar or level percentage amortization contribution under item (iv) must be added to the level annual dollar amortization contribution or level percentage calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued liability amount determined in item (iii) is amortized by the total level annual dollar or level percentage amortization contribution computed under item (v) must be calculated using the interest assumption specified in subdivision 4d in effect after any applicable change, rounded to the nearest integral number of years, but not to exceed 30 years from the end of the plan year in which the determination of the established date for full

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funding using the procedure set forth in this clause is made and not to be less than the period of years beginning in the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and ending by the date for full funding in effect before the change; and

(vii) the period determined under item (vi) must be added to the date as of which the actuarial valuation was prepared and the date obtained is the new established date for full funding.

(d) For the Minneapolis employees retirement fund, the established date for full funding is June 30, 2020.

(e) For the public employees retirement association police and fire fund plan, the correctional employees retirement plan of the Minnesota state retirement system, and the state patrol retirement plan, an excess of valuation assets over actuarial accrued liability will must be amortized in the same manner over the same period as an unfunded actuarial accrued liability but will must serve to reduce the required contribution instead of increasing it.

Sec. 60. Minnesota Statutes 1996, section 356.217, is amended to read:

356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.]

(a) The actuary retained by the legislative commission on pensions and retirement is not required to prepare actuarial valuations of the public employees local government correctional employees retirement plan unless the plan is implemented by a county under section 353C.04.

(b) The cost of any requested benefit projections by the commission-retained actuary relating to the Minnesota postretirement investment fund for the state board of investment is payable by the state board of investment.

(c) (b) Actuarial valuations under section 356.215, for July 1, 1991, and thereafter, are not required to have an individual commentary section. The commentary section, if omitted from the individual plan actuarial valuation, must be included in an appropriate generalized format as part of the report to the legislature under section 3.85, subdivision 11.

(d) (c) Actuarial valuations under section 356.215, for July 1, 1991, and thereafter, are not required to contain separate actuarial valuation results for basic and coordinated programs unless each program has a membership of at least ten percent of the total membership of the fund. Actuarial valuations under section 356.215, for July 1, 1991, and thereafter, are not required to contain cash flow forecasts.

(e) (d) Actuarial valuations of the public employees police and fire fund local consolidation accounts for July 1, 1991, and thereafter, are not required to contain separate tabulations or summaries of active member, service retirement, disability retirement, and survivor data for each local consolidation account.

(f) (e) The commission-retained actuary is:

(1) required to publish experience findings for plans for which experience findings are required only on a quadrennial basis for the four-year period ending June 30, 1992, and every four years thereafter;

(2) not required to prepare a separate experience analysis or publish separate experience findings for basic and coordinated programs if separate actuarial valuation results for the programs are not required; and

(3) not required to calculate investment rate of return experience results on any basis other than current asset value as defined in section 356.215, subdivision 1, clause (6).

Sec. 61. Minnesota Statutes 1996, section 356.30, subdivision 1, is amended to read:

Subdivision 1. [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) Notwithstanding any provisions to the contrary of the laws governing the funds enumerated in subdivision 3, a person who has met the qualifications of clause (2) may elect to receive a retirement annuity from each fund in which the person has at least six months allowable service, based on the allowable service in each fund, subject to the provisions of clause (3).

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(2) A person may receive upon retirement a retirement annuity from each fund in which the person has at least six months allowable service, and augmentation of a deferred annuity calculated under the laws governing each public pension plan or fund named in subdivision 3, from the date the person terminated all public service if:

(a) the person has allowable service totaling an amount that allows the person to receive an annuity in any two or more of the enumerated funds; and

(b) the person has not begun to receive an annuity from any enumerated fund or the person has made application for benefits from all funds and the effective dates of the retirement annuity with each fund under which the person chooses to receive an annuity are within a one-year period.

(3) The retirement annuity from each fund must be based upon the allowable service in each fund, except that:

(a) The laws governing annuities must be the law in effect on the date of termination from the last period of public service under a covered fund with which the person earned a minimum of one-half year of allowable service credit during that employment.

(b) The "average salary" on which the annuity from each covered fund in which the employee has credit in a formula plan shall be based on the employee's highest five successive years of covered salary during the entire service in covered funds.

(c) The formula percentages to be used by each fund must be those percentages prescribed by each fund's formula as continued for the respective years of allowable service from one fund to the next, recognizing all previous allowable service with the other covered funds.

(d) Allowable service in all the funds must be combined in determining eligibility for and the application of each fund's provisions in respect to actuarial reduction in the annuity amount for retirement prior to normal retirement.

(e) The annuity amount payable for any allowable service under a nonformula plan of a covered fund must not be affected but such service and covered salary must be used in the above calculation.

(f) This section shall not apply to any person whose final termination from the last public service under a covered fund is prior to May 1, 1975.

(g) For the purpose of computing annuities under this section the formula percentages used by any covered fund, except the basic program of the teachers retirement association, the public employees police and fire fund, and the state patrol retirement fund, must not exceed 2-1/2 the percent specified in section 356.19, subdivision 4, per year of service for any year of service or fraction thereof. The formula percentage used by the public employees police and fire fund and the state patrol retirement fund must not exceed 2.65 the percent specified in section 356.19, subdivision 6, per year of service for any year of service or fraction thereof. The formula percentage used by the teachers retirement association must not exceed 2.63 percent per year of basic program service for any year of basic program service or fraction thereof. The formula percentage used by the legislators retirement plan and the elective state officers retirement must not exceed 2.5 percent, but this limit does not apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c), or 352C.031, paragraph (b).

(h) Any period of time for which a person has credit in more than one of the covered funds must be used only once for the purpose of determining total allowable service.

(i) If the period of duplicated service credit is more than six months, or the person has credit for more than six months with each of the funds, each fund shall apply its formula to a prorated service credit for the period of duplicated service based on a fraction of the salary on which deductions were paid to that fund for the period divided by the total salary on which deductions were paid to all funds for the period.

(j) If the period of duplicated service credit is less than six months, or when added to other service credit with that fund is less than six months, the service credit must be ignored and a refund of contributions made to the person in accord with that fund's refund provisions.

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Sec. 62. Minnesota Statutes 1996, section 356.30, subdivision 3, is amended to read:

Subd. 3. [COVERED FUNDS.] This section applies to the following retirement funds:

(1) state employees retirement fund, established pursuant to chapter 352;

(2) correctional employees retirement program, established pursuant to chapter 352;

(3) unclassified employees retirement plan, established pursuant to chapter 352D;

(4) state patrol retirement fund, established pursuant to chapter 352B;

(5) legislators' retirement plan, established pursuant to chapter 3A;

(6) elective state officers' retirement plan, established pursuant to chapter 352C;

(7) public employees retirement association, established pursuant to chapter 353;

(8) public employees police and fire fund, established pursuant to chapter 353;

(9) teachers retirement association, established pursuant to chapter 354;

(10) Minneapolis employees retirement fund, established pursuant to chapter 422A;

(11) Minneapolis teachers retirement fund association, established pursuant to chapter 354A;

(12) St. Paul teachers retirement fund association, established pursuant to chapter 354A;

(13) Duluth teachers retirement fund association, established pursuant to chapter 354A;

(14) public employees local government correctional service retirement plan established by sections 353C.01 to 353C.10; and

(15) (14) judges' retirement fund, established by sections 490.121 to 490.132.

Sec. 63. Minnesota Statutes 1996, section 356.32, subdivision 2, is amended to read:

Subd. 2. [COVERED FUNDS.] The provisions of this section shall apply to the following retirement funds:

(1) state employees retirement fund, established pursuant to chapter 352;

(2) correctional employees retirement program, established pursuant to chapter 352;

(3) state patrol retirement fund, established pursuant to chapter 352B;

(4) public employees retirement fund, established pursuant to chapter 353;

(5) public employees police and fire fund, established pursuant to chapter 353;

(6) teachers retirement association, established pursuant to chapter 354;

(7) Minneapolis employees retirement fund, established pursuant to chapter 422A;

(8) Duluth teachers retirement fund association, established pursuant to chapter 354A;

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(9) Minneapolis teachers retirement fund association, established pursuant to chapter 354A; and

(10) St. Paul teachers retirement fund association, established pursuant to chapter 354A;

(11) public employees local government correctional service retirement plan established by sections 353B.01 to 353B.10.

Sec. 64. Minnesota Statutes 1996, section 422A.06, subdivision 8, is amended to read:

Subd. 8. [RETIREMENT BENEFIT FUND.] (a) The retirement benefit fund shall consist of amounts held for payment of retirement allowances for members retired pursuant to this chapter.

(b) Assets equal to the required reserves for retirement allowances pursuant to this chapter determined in accordance with the appropriate mortality table adopted by the board of trustees based on the experience of the fund as recommended by the commission-retained actuary shall be transferred from the deposit accumulation fund to the retirement benefit fund as of the last business day of the month in which the retirement allowance begins. The income from investments of these assets shall be allocated to this fund. There shall be paid from this fund the retirement annuities authorized by law. A required reserve calculation for the retirement benefit fund must be made by the actuary retained by the legislative commission on pensions and retirement and must be certified to the retirement board by the commission-retained actuary.

(c) The retirement benefit fund shall be governed by the applicable laws governing the accounting and audit procedures, investment, actuarial requirements, calculation and payment of postretirement benefit adjustments, discharge of any deficiency in the assets of the fund when compared to the actuarially determined required reserves, and other applicable operations and procedures regarding the Minnesota postretirement investment fund in effect on June 30, 1997, established pursuant to under Minnesota Statutes 1996, section 11A.18, and any legal or administrative interpretations of those laws of the state board of investment, the legal advisor to the board of investment and the executive director of the state board of investment in effect on June 30, 1997. If a deferred yield adjustment account is established for the Minnesota postretirement investment fund before June 30, 1997, under Minnesota Statutes 1996, section 11A.18, subdivision 5, the retirement board shall also establish and maintain a deferred yield adjustment account within this fund.

(d) Annually, following the calculation of any postretirement adjustment payable from the retirement benefit fund, the board of trustees shall submit a report to the executive director of the legislative commission on pensions and retirement and to the commissioner of finance indicating the amount of any postretirement adjustment and the underlying calculations on which that postretirement adjustment amount is based, including the amount of dividends, the amount of interest, and the amount of net realized capital gains or losses utilized in the calculations.

(e) With respect to a former contributing member who began receiving a retirement annuity or disability benefit under section 422A.151, paragraph (a), clause (2), after June 30, 1997, or with respect to a survivor of a former contributing member who began receiving a survivor benefit under section 422A.151, paragraph (a), clause (2), after June 30, 1997, the reserves attributable to the one percent lower amount of the cost-of-living adjustment payable to those annuity or benefit recipients annually must be transferred back to the deposit accumulation fund to the credit of the metropolitan airports commission. The calculation of this annual reduced cost-of-living adjustment reserve transfer must be reviewed by the actuary retained by the legislative commission on pensions and retirement.

Sec. 65. Minnesota Statutes 1996, section 422A.151, is amended to read:

422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.]

(a) In the case of a contributing member of the Minneapolis employees retirement fund who is employed as a licensed peace officer or firefighter with the metropolitan airports commission and who retires, becomes disabled within the meaning of section 422A.18, or dies, the retirement, disability, or survivor allowance is equal to the higher of the following:

(1) the retirement, disability, or survivor allowance calculated for the person under the applicable provisions of the Minneapolis employees retirement fund; or

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(2) the retirement, disability, or survivor benefit that the person would be entitled to upon meeting the applicable age and allowable service requirements of section 353.651, 353.656, or 353.657 if all employment as a licensed peace officer or firefighter with the metropolitan airports commission had been allowable service under the public employees retirement association police and fire fund, instead of being covered by the Minneapolis employees retirement fund. In computing the alternative benefit under section 353.651, 353.656, or 353.657, the applicable definitions and related provisions of chapter 353 must be used.

A firefighter or licensed peace officer terminating employment by the metropolitan airports commission after June 30, 1997, or the survivor of a deceased firefighter or licensed peace officer terminating employment by the metropolitan airports commission after June 30, 1997, under section 353.651, 353.656, or 353.657, shall receive a one percent lower cost-of-living adjustment than otherwise payable under section 422A.06, subdivision 5. If the cost-of-living adjustment payable under section 422A.06, subdivision 5, is less than one percent, the firefighter or licensed peace officer who retired after June 30, 1997, must not have a reduction in the previously received annuity or benefit amount, but future cost-of-living adjustments must be modified equal to the percentage the benefit would have been reduced below the person's current annuity or benefit amount to reflect the one percent lower cost-of-living adjustment under section 422A.06, subdivision 5.

(b) If a contributing member under paragraph (a) has periods of coverage by the Minneapolis employees retirement fund that include service other than employment as a licensed peace officer or firefighter as well as employment as a licensed peace officer or firefighter, the calculation of the benefit under paragraph (a), clause (2), may only utilize service as a licensed peace officer or firefighter employed by the metropolitan airports commission.

Sec. 66. Minnesota Statutes 1996, section 490.124, subdivision 1, is amended to read:

Subdivision 1. [BASIC RETIREMENT ANNUITY.] Except as qualified hereinafter from and after mandatory retirement date, normal retirement date, early retirement date, or one year from the disability retirement date, as the case may be, a retirement annuity shall be payable to a retiring judge from the judges' retirement fund in an amount equal to: (1) 2-1/2 the percent of specified in section 356.19, subdivision 7, multiplied by the judge's final average compensation multiplied by the number of years and fractions of years of allowable service rendered prior to July 1, 1980; plus (2) three the percent of specified in section 356.19, subdivision 8, multiplied by the judge's final average compensation multiplied by the number of years and fractions of years of allowable service rendered after June 30, 1980; provided that the annuity shall must not exceed 65 70 percent of the judge's annual salary for the 12 months immediately preceding retirement.

Sec. 67. Minnesota Statutes 1996, section 490.124, subdivision 5, is amended to read:

Subd. 5. [DEFERRED BENEFITS.] (a) Any benefit to which a judge is entitled under this section may be deferred until early or normal retirement date, notwithstanding termination of such judge's service prior thereto.

(b) The retirement annuity of, or the survivor benefit payable on behalf of, a former judge, who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board of directors of the Minnesota state retirement system and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 68. Laws 1996, chapter 448, article 1, section 3, is amended to read:

Sec. 3. [EFFECTIVE DATE.]

(a) Sections 1 and 2 are effective on the day following approval by the Itasca county board and compliance with Minnesota Statutes, section 645.021.

(b) Notwithstanding Minnesota Statutes, section 645.021, the approval and compliance required by paragraph (a) is effective if accomplished before January 1, 1999.

Sec. 69. [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.]

(a) $900,000 in fiscal year 1998 and $900,000 in fiscal year 1999 is appropriated from the general fund to the commissioner of corrections. The commissioner of finance shall include this amount in the base budget for the agency when developing the governor's budget recommendations for the biennium ending June 30, 2001.

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(b) For fiscal year 1999, $50,000 is appropriated to the legislative coordinating commission for allocation to the legislative commission on pensions and retirement.

Sec. 70. [APPROPRIATION REDUCTION.]

Subdivision 1. [REDUCTIONS BY RETIREMENT PLAN AND EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of finance shall reduce allotments and cancel to the general fund the amounts determined by multiplying the general fund supported salaries of employees who are members of the teachers retirement association according to clauses (1) and (2), and for employees who are members of the general state employees retirement plan of the Minnesota state retirement system according to clauses (3), (4), and (5):

(1) 0.90 percent for the Minnesota state colleges and universities;

(2) 1.50 percent for all agencies other than the Minnesota state colleges and universities

(3) 0.20 percent for all agencies other than the Minnesota state colleges and universities and the university of Minnesota;

(4) 0.12 percent for the Minnesota state colleges and universities;

(5) 0.0728 percent for the university of Minnesota.

Subd. 2. [APPROPRIATION REDUCTIONS APPLIED TO BASE BUDGETS.] The commissioner of finance shall include the reductions under subdivision 1 when developing the base budgets for all affected organizations as submitted with the governor's recommended budget for the biennium ending June 30, 2001.

Subd. 3. [PROJECTED SAVINGS.] For the biennium ending June 30, 1999, the projected general fund savings attributable to the reductions under subdivision 1 are as follows:

fiscal year

1998 1999

subdivision 1, clauses (1) and (2) $1,937,000 $2,053,000

subdivision 1, clauses (3) $1,162,000 $1,233,000

subdivision 1, clauses (4) and (5) $ 480,000 $ 509,000

Sec. 71. [APPROPRIATION]

For the fiscal years ending June 30, 1998, and June 30, 1999, the amounts transferred under section 13 to funds and accounts from which the salaries of peace officers employed by the department of natural resources are paid are appropriated from those funds and accounts to the commissioner of natural resources to assist in making the employer contributions to the state patrol retirement plan under Minnesota Statutes, section 352B.02, subdivision 1c. Notwithstanding section 13, for fiscal years 1998 and 1999, amounts transferred to the general fund for peace officers employed by the department of natural resources do not cancel but are appropriated to the commissioner of natural resources to assist in making employer contributions to the state patrol retirement plan. The amounts appropriated in this section must be included in the department's budgetary base for the next biennium.

Sec. 72. [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.]

A monthly survivor, disability, or retirement benefit paid under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 353, 353A, 354, and 490 on June 30, 1997, is permanently increased effective July 1, 1997, to reflect the change in the postretirement fund interest assumption from five percent to six percent. The benefit payable under the six percent postretirement interest assumption must be actuarially equivalent to the benefit payable under the five percent interest assumption and must be based on tables adopted by the applicable board and approved by the actuary retained by the legislative commission on pensions and retirement.

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Sec. 73. [ALTERNATIVE BENEFIT ADJUSTMENTS.]

If the permanent increase under section 71, along with the annual cost-of-living adjustments paid during the ten years after the effective date of this section averages less than inflation as measured by the Consumer Price Index or 3.5 percent, whichever is lower, the executive directors of the teachers retirement association, public employees retirement association, and the Minnesota state retirement system shall suggest alternative benefit adjustments for retirees receiving benefits on June 30, 1997, who exceed their life expectancy by three or more years.

Sec. 74. [MANDATED PENSION COMMISSION STUDY; DISPOSITION OF PERA-P&F CONSOLIDATION ACCOUNTS.]

(a) The legislative commission on pensions and retirement, in consultation with the affected constituencies, shall study the advantages and disadvantages of the blending of some or all local police and salaried firefighter consolidation accounts into the public employees police and fire retirement plan established under Minnesota Statutes, sections 353.63 to 353.68.

(b) The report must be transmitted on or before January 31, 1998, to the chair of the committee on governmental operations and veterans of the senate, the chair of the governmental operations budget division of the senate, the chair of the committee on governmental operations of the house of representatives, and the chair of the state government finance division of the house of representatives.

Sec. 75. [MANDATED PENSION COMMISSION STUDY; FIRST CLASS CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.]

(a) The legislative commission on pensions and retirement, in consultation with the affected constituencies, shall study the advantages and disadvantages of the restructuring or the consolidation of the first class city teacher retirement fund associations and the statewide teachers retirement association. In its deliberations, the commission shall review the future state funding needs of the Minneapolis employees retirement fund and other applicable state pension funding resources.

(b) The report must be transmitted on or before January 31, 1998, to the chair of the committee on governmental operations and veterans of the senate, the chair of the governmental operations budget division of the senate, the chair of the committee on governmental operations of the house of representatives, and the chair of the state governmental finance division of the house of representatives.

Sec. 76. [TERMINATION DATE; CERTAIN TEACHERS.]

Notwithstanding Minnesota Statutes, section 354.44, subdivision 4, for purposes of eligibility for retirement benefits from the teachers retirement association, the termination date of a teacher terminating active teaching service at the end of the school year in a school where the school year was disrupted or extended by flooding during the first half of calendar year 1997 or by fire damage or fire loss to school buildings or facilities during the 1996-1997 school year must be determined by the closing date of the school calendar in effect immediately before the flooding or in effect immediately before the fire.

Sec. 77. [POLICE STATE AID ADJUSTMENT.]

The legislature determines that the total employer contributions paid to the public employees police and fire fund for calendar year 1995, as certified to the commissioner of revenue by the public employees retirement association in August 1996 for determining the amount of police state aid to be distributed in September 1996, were overstated for some of the counties and cities and understated for other counties and cities. The executive director of the public employees retirement association shall certify to the commissioner of revenue the amount of the overstated or understated 1995 calendar year employer contributions paid to the public employees police and fire fund by each county and city; and the commissioner of revenue shall adjust the October 1997 police state aid distributions by the applicable amount of overpaid or underpaid police state aid distributed in September 1996.

The estimated net adjustment for police state aid in the fiscal year ending June 30, 1998, is $1,835,000. The expected net reduction to future police state aid expenditures resulting from this adjustment is 6.5 percent less each year.

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Sec. 78. [REPEALER.]

(a) Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed.

(b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; and 353C.10, are repealed.

Sec. 79. [EFFECTIVE DATES.]

Sections 38 and 39 are effective the first full pay period after December 31, 1997. Sections 17, 18, 21, 22, 29, and 30 are effective the first full pay period after June 30, 1997. Sections 48, 49, and 50 are effective for all salary paid July 1, 1997, or later. Sections 1 to 16, 19, 20, 23 to 28, 31 to 36, 37, 40 to 47, 51 to 67, 69 to 75, 77, and 78 are effective July 1, 1997. Sections 68 and 76 are effective the day following final enactment.

ARTICLE 2

LEGISLATORS AND CONSTITUTIONAL OFFICERS

Section 1. Minnesota Statutes 1996, section 3A.07, is amended to read:

3A.07 [APPLICATION.]

(a) Except as provided in paragraph (b), this chapter applies to members of the legislature in service upon after July 1, 1965, or thereafter, who otherwise meet the requirements of this chapter.

(b) Members of the legislature who were elected for the first time after June 30, 1997, or members of the legislature who were elected before July 1, 1997, and who, after July 1, 1998, elect not to be members of the plan established by this chapter are covered by the unclassified employees retirement program governed by chapter 352D.

(c) The post-July 1, 1998, coverage election under paragraph (b) is irrevocable and must be made on a form prescribed by the director.

Sec. 2. [352C.011] [APPLICABILITY.]

(a) Except as provided in paragraph (b), this chapter applies only to constitutional officers first elected before July 1, 1997, to a constitutional office.

(b) Constitutional officers elected for the first time to a constitutional office after June 30, 1997, or constitutional officers who were elected before July 1, 1997, and who, after July 1, 1998, elect not to be members of the plan established by this chapter are covered by the unclassified employees retirement program governed by chapter 352D.

(c) The post-July 1, 1998, coverage election under paragraph (b) is irrevocable and must be made on a form prescribed by the executive director of the Minnesota state retirement system.

Sec. 3. Minnesota Statutes 1996, section 352D.02, subdivision 1, is amended to read:

Subdivision 1. [COVERAGE.] (a) Employees enumerated in paragraph (b) (c), clauses 2, 3, 4, and 6 to 15, if they are in the unclassified service of the state or metropolitan council and are eligible for coverage under the general state employees retirement plan under chapter 352, are participants in the unclassified program under this chapter unless the employee gives notice to the executive director of the Minnesota state retirement system within one year following the commencement of employment in the unclassified service that the employee desires coverage under the general state employees retirement plan. For the purposes of this chapter, an employee who does not file notice with the executive director is deemed to have exercised the option to participate in the unclassified plan.

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(b) Persons referenced in paragraph (c), clauses (1) and (5), are participants in the unclassified program under this chapter unless the person is eligible to elect different coverage under section 3A.07 or 352C.011 and, after July 1, 1998, elects retirement coverage by the applicable alternative retirement plan.

(c) Enumerated employees and referenced persons are:

(1) the governor, the lieutenant governor, the secretary of state, the state auditor, the state treasurer, and the attorney general;

(2) an employee in the office of the governor, lieutenant governor, secretary of state, state auditor, state treasurer, attorney general, or;

(3) an employee of the state board of investment;

(2) (4) the head of a department, division, or agency created by statute in the unclassified service, an acting department head subsequently appointed to the position, or an employee enumerated in section 15A.081, subdivision 1 or 15A.083, subdivision 4;

(3) (5) a member of the legislature;

(6) a permanent, full-time unclassified employee of the legislature or a commission or agency of the legislature or a temporary legislative employee having shares in the supplemental retirement fund as a result of former employment covered by this chapter, whether or not eligible for coverage under the Minnesota state retirement system;

(4) (7) a person who is employed in a position established under section 43A.08, subdivision 1, clause (3), or in a position authorized under a statute creating or establishing a department or agency of the state, which is at the deputy or assistant head of department or agency or director level;

(5) (8) the regional administrator, or executive director of the metropolitan council, general counsel, division directors, operations managers, and other positions as designated by the council, all of which may not exceed 27 positions at the council and the chair, provided that upon initial designation of all positions provided for in this clause, no further designations or redesignations may be made without approval of the board of directors of the Minnesota state retirement system;

(6) (9) the executive director, associate executive director, and not to exceed nine positions of the higher education services office in the unclassified service, as designated by the higher education services office before January 1, 1992, or subsequently redesignated with the approval of the board of directors of the Minnesota state retirement system, unless the person has elected coverage by the individual retirement account plan under chapter 354B;

(7) (10) the clerk of the appellate courts appointed under article VI, section 2, of the Constitution of the state of Minnesota;

(8) (11) the chief executive officers of correctional facilities operated by the department of corrections and of hospitals and nursing homes operated by the department of human services;

(9) (12) an employee whose principal employment is at the state ceremonial house;

(10) (13) an employee of the Minnesota educational computing corporation;

(11) (14) an employee of the world trade center board; and

(12) (15) an employee of the state lottery board who is covered by the managerial plan established under section 43A.18, subdivision 3.

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Sec. 4. Minnesota Statutes 1996, section 352D.02, subdivision 2, is amended to read:

Subd. 2. [COVERAGE UPON EMPLOYMENT CHANGE.] A person becoming a participant in the unclassified program by virtue of employment in a position specified in subdivision 1, clause (2) (4) and remaining in the unclassified service shall remain a participant in the program even though the position the person occupies is deleted from any of the sections referenced in subdivision 1, clause (2) (4) by subsequent amendment, except that a person shall not be eligible to elect the unclassified program after separation from unclassified service if on the return of the person to service, that position is not specified in subdivision 1, clause (2) (4). Any person employed in a position specified in subdivision 1 shall cease to participate in the unclassified program in the event the position is placed in the classified service.

Sec. 5. Minnesota Statutes 1996, section 352D.04, subdivision 1, is amended to read:

Subdivision 1. [INVESTMENT OPTIONS.] (a) An employee A person exercising an option to participate in the retirement program provided by this chapter may elect to purchase shares in one or a combination of the income share account, the growth share account, the international share account, the money market account, the bond market account, the fixed interest account, or the common stock index account established in section 11A.17. The employee person may elect to participate in one or more of the investment accounts in the fund by specifying, on a form provided by the executive director, the percentage of the employee's person's contributions provided in subdivision 2 to be used to purchase shares in each of the accounts.

(b) A participant may indicate in writing on forms provided by the Minnesota state retirement system a choice of options for subsequent purchases of shares. Until a different written indication is made by the participant, the executive director shall purchase shares in the supplemental fund as selected by the participant. If no initial option is chosen, 100 percent income shares must be purchased for a participant. A change in choice of investment option is effective no later than the first pay date first occurring after 30 days following the receipt of the request for a change.

(c) Shares in the fixed interest account attributable to any guaranteed investment contract as of July 1, 1994, may not be withdrawn from the fund or transferred to another account until the guaranteed investment contract has expired, unless the participant qualifies for withdrawal under section 352D.05 or for benefit payments under sections 352D.06 to 352D.075.

(d) A participant or former participant may also change the investment options selected for all or a portion of the participant's shares previously purchased in accounts, subject to the provisions of paragraph (c) concerning the fixed interest account. Changes in investment options for the participant's shares must be effected as soon as cash flow to an account practically permits, but not later than six months after the requested change.

Sec. 6. Minnesota Statutes 1996, section 352D.04, subdivision 2, is amended to read:

Subd. 2. [CONTRIBUTION RATES.] (a) The moneys money used to purchase shares under this section shall be is the employee and employer contributions provided in this subdivision.

(a) (b) The employee contribution shall be is an amount equal to the employee contribution specified in section 352.04, subdivision 2.

(b) (c) The employer contribution shall be is an amount equal to six percent of salary.

(d) These contributions shall must be made by deduction from salary in the manner provided in section 352.04, subdivisions 4, 5, and 6.

(e) For members of the legislature, the contributions under this subdivision also must be made on per diem payments received during a regular or special legislative session, but may not be made on per diem payments received outside of a regular or special legislative session, on the additional compensation attributable to a leadership position under section 3.099, subdivision 3, living expense payments under section 3.101, or special session living expense payments under section 3.103.

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Sec. 7. [355.621] [LEGISLATORS AND CONSTITUTIONAL OFFICERS; SOCIAL SECURITY COVERAGE REFERENDUM.]

Subdivision 1. [DEFINITIONS GENERALLY.] For the purposes of sections 7 to 14, each of the terms defined in this section has the indicated meaning.

Subd. 2. [ENABLING ACT.] "Enabling act" means sections 355.01 to 355.07.

Subd. 3. [LEGISLATOR.] "Legislator" means a member of the legislature duly elected and sworn into office.

Subd. 4. [CONSTITUTIONAL OFFICER.] "Constitutional officer" means the governor, the lieutenant governor, the attorney general, the secretary of state, the state auditor, and the state treasurer duly elected and sworn into office.

Subd. 5. [ADDITIONAL TERMS.] The terms "social security act," "state agency," "employment," "wages," "contribution fund," "federal insurance contributions act," and "political subdivision" each have the meaning ascribed in the enabling act.

Sec. 8. [355.622] [REFERENDUM.]

Under the enabling act, the governor shall designate an agency or individual to supervise a referendum to be held after July 1, 1998, in accordance with provisions of section 218(d)(6)(c) of the Social Security Act, for legislators and for constitutional officers.

Sec. 9. [355.623] [NOTICE OF REFERENDUM.]

The notice of referendum required by section 218(d) of the Social Security Act that is to be provided to legislators and to constitutional officers must contain a statement of the rights which accrue under the Social Security Act. The statement must be in the form that the agency or individual designated to supervise the referendum deems necessary and sufficient to inform legislators and constitutional officers of their Social Security Act rights. The statement must also inform the legislators and constitutional officers of the effect that social security coverage will have on their future public retirement coverage.

Sec. 10. [355.624] [DIVISION OF THE LEGISLATORS RETIREMENT PLAN AND THE ELECTIVE STATE OFFICERS RETIREMENT PLAN.]

(a) In accord with section 218(d)(6)(c) of the Social Security Act, the state agency shall divide the legislators retirement plan into two parts or divisions and shall divide the elective state officers retirement plan into two parts or divisions.

(b) One division or part of the legislators retirement plan must be composed of legislators who desire coverage under an agreement under section 218(d) of the Social Security Act, and those legislators must have their future public pension plan coverage under chapter 352D. Also included in this division or part are legislators who are elected after July 1, 1997. The other division or part of the legislators retirement plan must be composed of legislators who do not desire coverage under an agreement under section 218(d) of the Social Security Act, and those legislators must have their future public pension plan coverage under chapter 3A.

(c) One division or part of the elective state officers retirement plan must be composed of constitutional officers who desire coverage under an agreement under section 218(d) of the Social Security Act, and those constitutional officers must have their future public pension plan coverage under chapter 352D. Also included in this division or part are constitutional officers who are elected after July 1, 1997. The other division or part of the elective state officers retirement plan must be composed of constitutional officers who do not desire coverage under an agreement under section 218(d) of the Social Security Act, and those constitutional officers must have their future public pension plan coverage under chapter 352C.

Sec. 11. [355.625] [TRANSFER OF MEMBERS.]

In accord with section 218(d)(6)(f) of the Social Security Act and when the legislators retirement plan or the elective state officers retirement plan, whichever applies, is divided into two parts or divisions, a legislator or constitutional officer who does not desire coverage under an agreement under section 218(d) of the Social Security Act may be transferred to the other part or division if the agreement with the federal Department of Health and Human Services so provides and if the legislator or constitutional officer files with the state agency a written request for the transfer.

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Sec. 12. [355.626] [CERTIFICATION BY GOVERNOR.]

If the governor receives satisfactory evidence that the conditions specified in section 218(d)(7) of the Social Security Act have been met with respect to the legislators retirement plan or the elective state officers retirement plan, whichever applies, the governor shall so certify to the secretary of the federal Department of Health and Human Services.

Sec. 13. [355.627] [AGREEMENTS WITH FEDERAL AGENCY.]

Upon the governor's certification under section 12, the state agency, with the approval of the governor, is authorized after June 30, 1998, to enter into or modify an agreement with the secretary of the federal Department of Health and Human Services with respect to legislators or constitutional officers, whichever applies.

Sec. 14. [355.628] [SOCIAL SECURITY CONTRIBUTIONS.]

Subdivision 1. [EMPLOYER CONTRIBUTIONS.] Employer contributions required under the agreement or modification under section 13 and payments required by section 355.49 must be paid by the senate, the house of representatives, or the relevant constitutional office, whichever applies.

Subd. 2. [EMPLOYEE CONTRIBUTIONS; DEDUCTION FROM WAGES.] (a) After the date on which the agreement or modification under section 13 is executed, there must be paid as a deduction from wages an employee contribution by legislators or constitutional officers in an amount equal to the tax that would be imposed by the Federal Insurance Contribution Act if the service constituted employment within the meaning of the act.

(b) Contributions made under this subdivision must be paid into the contribution fund in partial discharge of the employer liability for social security coverage.

(c) A failure to deduct employee contributions does not relieve the legislator or constitutional officer or the senate, the house of representatives, or the relevant constitutional office of the liability to make the contribution.

Sec. 15. [COVERAGE ELECTION.]

(a) Members of the legislature who were members of the legislators retirement plan on the effective date of this section and constitutional officers who were members of the elective state officers retirement plan on the effective date of this section may elect coverage by the unclassified employees retirement program governed by Minnesota Statutes, chapter 352D, instead of the prior retirement coverage, as part of the social security referendum under section 10.

(b) The election of a retirement coverage change applies only to prospective service as a member of the legislature or a constitutional officer. The election must be made in conjunction with the referendum selection under section 10. A member of the legislature or a constitutional officer who elects a retirement coverage change under this section is entitled to an augmented deferred retirement annuity under Minnesota Statutes, section 3A.02, subdivisions 1 and 4, or Minnesota Statutes, sections 352C.031 and 352C.033, whichever applies, notwithstanding any provision of law to the contrary.

(c) A member of the legislature or a constitutional officer who elects a retirement coverage change under this section is not entitled to a refund under Minnesota Statutes, section 3A.03, subdivision 2, or 352C.09, subdivision 2, whichever applies, until the person terminates service as a member of the legislature or a constitutional officer.

Sec. 16. [STUDY OF LEGISLATORS AND CONSTITUTIONAL OFFICER PENSION COVERAGE.]

Subdivision 1. [STUDY MANDATE.] The legislative commission on pensions and retirement shall study the issue of the appropriate pension coverage for legislators and for constitutional officers during the 1997-1998 interim.

Subd. 2. [STUDY CONTENTS.] At a minimum, the commission must study the following:

(1) the appropriate member contribution rates to the legislators retirement plan and the elective state officers retirement plan and their adequacy in funding the normal cost and administrative expenses of the applicable plan in comparison to other public pension plans;

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(2) the appropriateness of including new legislators and constitutional officers and of including current legislators and constitutional officers in coverage by the social security program and the necessary adaptations to the defined contribution plan coverage established in section 3 and the legislators retirement plan established in Minnesota Statutes, chapter 3A, or the elective state officers retirement plan established in Minnesota Statutes, chapter 352C, to supplement that coverage; and

(3) the appropriateness of permitting current legislators and current constitutional officers to elect the defined contribution plan coverage established in section 3 for future service and the impact of the election on past service credit under Minnesota Statutes, chapter 3A, or Minnesota Statutes, chapter 352C.

Subd. 3. [STUDY PRINCIPLES.] The study must reflect the following principles:

(1) to the extent practicable, the public pension plan coverage to be provided to legislators and constitutional officers should match or parallel the pension coverage provided to legislative employees and agency heads;

(2) the public pension plan coverage to be provided to legislators and constitutional officers may appropriately reflect the part-time nature of legislative service for many legislators and the unique character of elected public service for other legislators and for constitutional officers; and

(3) the public pension coverage ultimately provided to legislators and constitutional officers should conform with the applicable provisions of the principles of pension policy of the commission.

Subd. 4. [STUDY RESULTS.] The results of the study should include any applicable proposed legislation, including, but not limited to, amending or repealing, in whole or in part, sections 1 to 15.

Subd. 5. [REPORT.] The study and any recommended proposed legislation must be reported to the 1998 legislative session.

Sec. 17. [EFFECTIVE DATE.]

Sections 1 to 6 and 16 are effective July 1, 1997. Sections 7 to 15 are effective July 1, 1998.

ARTICLE 3

FIRST CLASS CITY TEACHER RETIREMENT FUNDS

Section 1. Minnesota Statutes 1996, section 354A.011, subdivision 15a, is amended to read:

Subd. 15a. [NORMAL RETIREMENT AGE.] "Normal retirement age" means age 65 for a person who first became a member of the coordinated program of the Minneapolis or St. Paul teachers retirement fund association or the new law coordinated program of the Duluth teachers retirement fund association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first became a member of the coordinated program of the Minneapolis or St. Paul teachers retirement fund association or the new law coordinated program of the Duluth teachers retirement fund association after June 30, 1989, normal retirement age means the higher of age 65 or retirement age, as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66. For a person who is a member of the basic program of the Minneapolis or St. Paul teachers retirement fund association or the old law coordinated program of the Duluth teachers retirement fund association, normal retirement age means the age at which a teacher becomes eligible for a normal retirement annuity computed upon meeting the age and service requirements specified in the applicable provisions of the articles of incorporation or bylaws of the respective teachers retirement fund association.

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Sec. 2. Minnesota Statutes 1996, section 354A.12, subdivision 1, is amended to read:

Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] The contribution required to be paid by each member of a teachers retirement fund association shall not be less than the percentage of total salary specified below for the applicable association and program:

Association and Program Percentage of

Total Salary

Duluth teachers retirement association

old law and new law

coordinated programs 5.5 percent

Minneapolis teachers retirement association

basic program 8.5 percent

coordinated program 4.5 5.5 percent

St. Paul teachers retirement association

basic program 8 percent

coordinated program 4.5 5.5 percent

Contributions shall be made by deduction from salary and must be remitted directly to the respective teachers retirement fund association at least once each month.

Sec. 3. Minnesota Statutes 1996, section 354A.12, subdivision 2a, is amended to read:

Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION RATES.] (a) The employing units shall make the following employer contributions to teachers retirement fund associations:

(1) for any coordinated member of a teachers retirement fund association in a city of the first class, the employing unit shall pay the employer social security taxes in accordance with section 355.46, subdivision 3, clause (b);

(2) for any coordinated member of one of the following teachers retirement fund associations in a city of the first class, the employing unit shall make a regular employer contribution to the respective retirement fund association in an amount equal to the designated percentage of the salary of the coordinated member as provided below:

Duluth teachers retirement fund association 4.50 percent

Minneapolis teachers retirement fund association 4.50 percent

St. Paul teachers retirement fund association 4.50 percent;

(3) for any basic member of one of the following teachers retirement fund associations in a city of the first class, the employing unit shall make a regular employer contribution to the respective retirement fund in an amount equal to the designated percentage of the salary of the basic member as provided below:

Minneapolis teachers retirement fund association 8.50 percent

St. Paul teachers retirement fund association 8.00 percent

(4) for a basic member of a teachers retirement fund association in a city of the first class, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to the designated percentage of the salary of the basic member, as provided below:

Minneapolis teachers retirement fund association

July 1, 1993 - June 30, 1994 4.85 percent

July 1, 1994, and thereafter 3.64 percent

St. Paul teachers retirement fund association

July 1, 1993 - June 30, 1995 4.63 percent

July 1, 1995, and thereafter 3.64 percent

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(5) for a coordinated member of a teachers retirement fund association in a city of the first class, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to the applicable percentage of the coordinated member's salary, as provided below:

Duluth teachers retirement fund association 1.29 percent

Minneapolis teachers retirement fund association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994, and thereafter 3.64 percent

St. Paul teachers retirement fund association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994 - June 30, 1995 1.50 percent

July 1, 1995 1997, and thereafter 3.64

3.84 percent

(b) The regular and additional employer contributions must be remitted directly to the respective teachers retirement fund association at least once each month. Delinquent amounts are payable with interest under the procedure in subdivision 1a.

(c) Payments of regular and additional employer contributions for school district or technical college employees who are paid from normal operating funds must be made from the appropriate fund of the district or technical college.

Sec. 4. Minnesota Statutes 1996, section 354A.12, subdivision 3a, is amended to read:

Subd. 3a. [SPECIAL DIRECT STATE AID TO ST. PAUL FIRST CLASS CITY TEACHERS RETIREMENT FUND ASSOCIATION ASSOCIATIONS.] (a) In fiscal year 1998, the state shall pay $4,827,000 to the St. Paul teachers retirement fund association $500,000 in fiscal year 1994, $17,954,000 to the Minneapolis teachers retirement fund association, and $486,000 to the Duluth teachers retirement fund association. In each subsequent fiscal year, the payment these payments to the St. Paul first class city teachers retirement fund association associations must be increased at the same rate as the increase in the general education revenue formula allowance under section 124A.22, subdivision 2, in subsequent fiscal years $2,827,000 for St. Paul, $12,954,000 for Minneapolis, and $486,000 for Duluth.

(b) The direct state aid is aids under this subdivision are payable October 1 annually. The commissioner of finance shall pay the direct state aid. The amount required under this subdivision is appropriated annually from the general fund to the commissioner of finance.

Sec. 5. Minnesota Statutes 1996, section 354A.12, subdivision 3b, is amended to read:

Subd. 3b. [SPECIAL DIRECT STATE MATCHING AID TO THE MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special school district No. 1 may make an additional employer contribution to the Minneapolis teachers retirement fund association. The city of Minneapolis may make a contribution to the Minneapolis teachers retirement fund association. This contribution may be made by a levy of the board of estimate and taxation of the city of Minneapolis, and the levy, if made, is classified as that of a special taxing district for purposes of sections 275.065 and 276.04, and for all other property tax purposes.

(b) For every $1,000 contributed in equal proportion by special school district No. 1 and by the city of Minneapolis to the Minneapolis teachers retirement fund association under paragraph (a), the state shall pay to the Minneapolis teachers retirement fund association $1,000, but not to exceed $2,500,000 in total in fiscal year 1994. The total amount available for each subsequent fiscal year must be increased at the same rate as the increase in the general education revenue formula allowance under section 124A.22, subdivision 2, in subsequent fiscal years. The superintendent of special school district No. 1, the mayor of the city of Minneapolis, and the executive director of the Minneapolis teachers retirement fund association shall jointly certify to the commissioner of finance the total amount that has been contributed by special school district No. 1 and by the city of Minneapolis to the Minneapolis teachers retirement fund association. Any certification to the commissioner of children, families, and learning must be made quarterly. If the total certifications for a fiscal year exceed the maximum annual direct state matching aid amount in any quarter, the amount of direct state matching aid payable to the Minneapolis teachers retirement fund association must be limited to the balance of the maximum annual direct state matching aid amount available. The amount required under this paragraph, subject to the maximum direct state matching aid amount, is appropriated annually to the commissioner of finance.

(c) The commissioner of finance may prescribe the form of the certifications required under paragraph (b).

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Sec. 6. Minnesota Statutes 1996, section 354A.12, subdivision 3c, is amended to read:

Subd. 3c. [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND DIRECT MATCHING AND STATE AID.] (a) The supplemental contributions payable to the Minneapolis teachers retirement fund association by special school district No. 1 and the city of Minneapolis under section 423A.02, subdivision 3, or to the St. Paul teachers retirement fund association by independent school district No. 625 under section 423A.02, subdivision 3, or the direct state aid aids under subdivision 3a to the St. Paul first class city teachers retirement association associations, and the direct matching and state aid under subdivision 3b to the Minneapolis teachers retirement fund association terminates terminate for the respective fund at the end of the fiscal year in which the accrued liability funding ratio for that fund, as determined in the most recent actuarial report for that fund by the actuary retained by the legislative commission on pensions and retirement, equals or exceeds the accrued liability funding ratio for the teachers retirement association, as determined in the most recent actuarial report for the teachers retirement association by the actuary retained by the legislative commission on pensions and retirement.

(b) If the state direct matching, state supplemental, or state aid is terminated for the St. Paul a first class city teachers retirement fund association or the Minneapolis teachers retirement fund association under paragraph (a), it may not again be received by that fund.

(c) If either the Minneapolis teachers retirement fund association, or the St. Paul teachers retirement fund association, or the Duluth teachers retirement fund association remain funded at less than the funding ratio applicable to the teachers retirement association when the provisions of paragraph (b) become effective, then any state aid not distributed to that association must be immediately transferred to the other association associations in proportion to the relative sizes of their unfunded actuarial accrued liabilities.

Sec. 7. [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION POSTRETIREMENT ADJUSTMENT.]

Subdivision 1. [ARTICLES OF INCORPORATION AND BYLAWS.] Permission is granted for the St. Paul teachers retirement fund association under Minnesota Statutes, section 354A.12, subdivision 4, to amend its articles of incorporation and bylaws to provide postretirement adjustments under this section.

Subd. 2. [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT ADJUSTMENT MECHANISM.] As a condition precedent to the implementation of subdivisions 3 through 6, the lump sum postretirement adjustment mechanism in effect on the date of enactment of this section must be eliminated and the articles of incorporation and bylaws of the association must be amended accordingly.

Subd. 3. [POSTRETIREMENT ADJUSTMENT.] (a) The postretirement adjustment described in the articles and bylaws of the St. Paul teachers retirement fund association must be determined by the board annually after June 30 using the procedures under this section.

(b) Each eligible person who has been receiving an annuity or benefit under the articles of incorporation, the bylaws, or this chapter for at least 12 months as of the end of the fiscal year is eligible to receive a postretirement adjustment of 2.0 percent that is payable each January 1.

Subd. 4. [ADDITIONAL INVESTMENT PERCENTAGE ADJUSTMENT.] (a) An excess investment earnings percentage adjustment must be computed and paid under this subdivision to those annuitants and eligible benefit recipients who have been receiving an annuity or benefit for at least 12 months as determined each June 30 by the board of trustees.

(b) The board shall also determine the five-year annualized rate of return attributable to the assets of the St. Paul teachers retirement fund association under the formula specified in section 11A.04, clause (11), and the amount of the excess five-year annualized rate of return over the preretirement interest assumption specified in Minnesota Statutes, section 356.215.

(c) The excess investment percentage adjustment must be determined by multiplying the quantity one minus the rate of contribution deficiency, as specified in the most recent actuarial report of the actuary retained by the legislative commission on pensions and retirement under section 356.215, by the rate of return excess as determined in paragraph (b).

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(d) The excess investment percentage adjustment is payable to all annuitants and benefit recipients on the following January 1.

Subd. 5. [EFFECT ON ANNUITY.] The adjustments calculated under subdivisions 3 and 4 must be included in all annuities or benefits paid to the recipient after the adjustments take effect.

Subd. 6. [LUMP SUM POSTRETIREMENT ADJUSTMENT TRANSITION.] This subdivision applies to all annuitants and beneficiaries of the association who received a lump sum postretirement adjustment before the calculation of the first postretirement adjustment under subdivisions 3 and 4. Before the calculation of the first postretirement adjustment under subdivisions 3 and 4, the annual retirement annuity must be increased by the amount of the lump sum postretirement adjustment described in the association bylaws and paid to the annuitant or beneficiary in 1997 before the effective date of this section or if the annuitant or beneficiary was not eligible for a lump sum postretirement adjustment, then the annual benefit paid to that annuitant or benefit recipient must be increased by the cumulative percentage increase in the Consumer Price Index for urban wage earners and clerical workers All Items Index published by the United States Department of Labor, Bureau of Labor Statistics, from the date of the initial receipt of a retirement annuity or benefit of the person whose service is the basis of the benefit to June 30, 1997.

Sec. 8. Minnesota Statutes 1996, section 354A.31, subdivision 4, is amended to read:

Subd. 4. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision applies to the coordinated programs of the Minneapolis teachers retirement fund association and the St. Paul teachers retirement fund association.

(b) The normal coordinated retirement annuity shall be an amount equal to a retiring coordinated member's average salary multiplied by the retirement annuity formula percentage. Average salary for purposes of this section shall mean an amount equal to the average salary upon which contributions were made for the highest five successive years of service credit, but which shall not in any event include any more than the equivalent of 60 monthly salary payments. Average salary must be based upon all years of service credit if this service credit is less than five years.

(c) This paragraph, in conjunction with subdivision 6, applies to a person who first became a member or a member in a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a higher annuity amount, in which case paragraph (d) will apply. The retirement annuity formula percentage for purposes of this paragraph is one the percent specified in section 356.19, subdivision 1, per year for each year of coordinated service for the first ten years and 1.5 the percent specified in section 356.19, subdivision 2, for each year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at least 55 years old and who first becomes a member after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount, when calculated under this paragraph and in conjunction with subdivision 7 is higher than it is when calculated under paragraph (c), in conjunction with the provisions of subdivision 6. The retirement annuity formula percentage for purposes of this paragraph is 1.5 the percent specified in section 356.19, subdivision 2, for each year of coordinated service.

Sec. 9. Minnesota Statutes 1996, section 354A.31, subdivision 4a, is amended to read:

Subd. 4a. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies to the new law coordinated program of the Duluth teachers retirement fund association.

(b) The normal coordinated retirement annuity is an amount equal to a retiring coordinated member's average salary multiplied by the retirement annuity formula percentage. Average salary for purposes of this section means an amount equal to the average salary upon which contributions were made for the highest five successive years of service credit, but may not in any event include any more than the equivalent of 60 monthly salary payments. Average salary must be based upon all years of service credit if this service credit is less than five years.

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(c) This paragraph, in conjunction with subdivision 6, applies to a person who first became a member or a member in a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a higher annuity amount, in which case paragraph (d) applies. The retirement annuity formula percentage for purposes of this paragraph is 1.13 the percent specified in section 356.19, subdivision 1, per year for each year of coordinated service for the first ten years and 1.63 the percent specified in section 356.19, subdivision 2, for each subsequent year of coordinated service.

(d) This paragraph applies to a person who is at least 55 years old and who first becomes a member after June 30, 1989, and to any other member who is at least 55 years old and whose annuity amount, when calculated under this paragraph and in conjunction with subdivision 7, is higher than it is when calculated under paragraph (c) in conjunction with subdivision 6. The retirement annuity formula percentage for purposes of this paragraph is 1.63 the percent specified in section 356.19, subdivision 2, for each year of coordinated service.

Sec. 10. Laws 1979, chapter 109, section 1, as amended by Laws 1981, chapter 157, section 1, is amended to read:

Section 1. Authorization is hereby granted in accordance with Minnesota Statutes, Section 354A.12, for the St. Paul teachers retirement fund association to amend its bylaws as follows:

(1) Paragraph 9 of Section 3 of Article IV of the bylaws may be amended to provide a lump sum payment to annuitants and survivor benefit recipients who have been receiving annuities or benefits for at least three years, payable three months following the end of a fiscal year. The payments shall only be made if the investment income of the fund during the preceding fiscal year was in excess of 5-1/2 percent of the asset value of the fund at the end of that fiscal year. The amount that each eligible annuitant or benefit recipient shall be entitled to receive shall be determined as follows:

(a) The years of service of each annuitant as credited by the fund and the years of service of each person on behalf of whom a survivor benefit is paid as credited by the fund shall be totaled;

(b) The dollar amount equal to one-half of one percent of the asset value of the fund at the end of the previous fiscal year shall be determined;

(c) The dollar amount determined pursuant to clause (b) shall be divided by the aggregate years of credited service totaled pursuant to clause (a), the result to be considered the bonus figure per year of service credit;

(d) For each eligible annuitant and benefit recipient, the payment shall be equal to the bonus figure per year of service credit determined pursuant to clause (c) multiplied by each year of service credited for that person by the fund.

(2) A new paragraph may be added to Section 2 of Article IV of the bylaws to provide that any active member of the fund with service credit prior to July 1, 1978 who elects in the social security referendum to become a coordinated member shall be entitled to a retirement annuity when otherwise qualified, the calculation of which shall utilize the formula specified in Laws 1977, Chapter 429, Section 61 for that portion of credited service which was served prior to July 1, 1978 and the new coordinated formula specified in the bylaws for the remainder of credited service, both applied to the average salary as specified in Paragraph 2 of Section 1 of Article IX. The formula percentages to be used in calculating the coordinated portion of a retirement annuity on coordinated service shall recognize the coordinated service as a continuation of any service prior to July 1, 1978.

(3) (2) Paragraph 5 of Section 3 of Article IV of the bylaws in effect on June 1, 1978 may be amended to provide that the recomputation of a disability benefit in an amount equal to a service pension shall occur when the member attains the age of 60 years and shall be recomputed without any reduction for early retirement, and that if the disability terminates prior to age 60 the member shall be eligible for benefits as provided in Paragraph 1 of Section 3 of Article IV and the years of service and final average salary accrued to disability termination date would be used as provided in Paragraph 5 of Section 3 of Article IV of the bylaws in effect June 1, 1978 and that Paragraph 3 of Section 4 of Article IV be amended to conform to this provision.

(4) (3) Article VIII of the bylaws in effect July 1, 1978 may be amended by adding a new section 5 providing augmentation of benefits in the same manner as Minnesota Statutes 1978, Section 354.55, Subdivision 11.

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Sec. 11. [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO INCREASE FORMULAS.]

In accordance with Minnesota Statutes, section 354A.12, subdivision 4, approval is granted for the Duluth teachers retirement fund association to amend its articles of incorporation or bylaws by increasing the formula percentage used in computing annuities for old law coordinated program members in the Duluth teachers retirement fund association to 1.45 percent for each year of credited service.

Sec. 12. [REPEALER.]

(a) Minnesota Statutes 1996, section 354A.12, subdivision 2b, is repealed.

(b) Laws 1985, chapter 259, section 3; and Laws 1993, chapter 336, article 3, section 1, are repealed.

Sec. 13. [EFFECTIVE DATES.]

Sections 2 and 3 are effective for all salary paid on or after July 1, 1997. Sections 1 and 4 to 12 are effective July 1, 1997.

ARTICLE 4

MINNEAPOLIS POLICE AND FIREFIGHTERS

Section 1. Minnesota Statutes 1996, section 423B.01, subdivision 9, is amended to read:

Subd. 9. [EXCESS INVESTMENT INCOME.] "Excess investment income" means the amount, if any, by which the average time weighted total rate of return earned by the fund in the most recent prior five fiscal years has exceeded the actual average percentage increase in the current monthly salary of a first grade patrol officer in the most recent prior five fiscal years plus two percent, and must be expressed as a dollar amount and. The amount may not exceed one percent of the total assets of the fund, except when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, in which case the amount must not exceed 1-1/2 percent of the total assets of the fund, and does not exist unless the yearly average percentage increase of the time weighted total rate of return of the fund for the previous five years exceeds by two percent the yearly average percentage increase in monthly salary of a first grade patrol officer during the previous five calendar years.

Sec. 2. Minnesota Statutes 1996, section 423B.01 is amended by adding a new subdivision to read:

Subd. 15. [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" or "actuarially equivalent" means the condition of one annuity or benefit having an equal actuarial present value as another annuity or benefit, determined as of a given date at a specified age with each actuarial present value based on the appropriate mortality table adopted by the board of directors based on the experience of the fund and approved by the actuary retained by the legislative commission on pensions and retirement and using the applicable preretirement or postretirement interest rate assumptions specified in section 356.216.

Sec. 3. Minnesota Statutes 1996, section 423B.06, is amended by adding a subdivision to read:

Subd. 5. [TAX LEVY.] Notwithstanding any provision of section 69.77 to the contrary, if in any year after the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of the actuarial accrued liabilities of the fund and subsequently the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities, the city of Minneapolis is not required to levy a property tax to amortize any unfunded actuarial accrued liability unless the fund experiences two successive years when the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216.

Sec. 4. Minnesota Statutes 1996, section 423B.07, is amended to read:

423B.07 [AUTHORIZED FUND DISBURSEMENTS.]

The police pension fund may be used only for the payment of:

(1) service, disability, or dependency pensions;

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(2) notwithstanding a contrary provision of section 69.80, the salary of the secretary of the association in an amount not to exceed 30 percent of the base salary of a first grade patrol officer, the salary of the president of the association in an amount not to exceed ten percent of the base salary of a first grade patrol officer, and the salaries of the other elected members of the board of trustees in an amount not to exceed three units;

(3) expenses of officers and employees of the association in connection with the protection of the fund;

(4) expenses of operating and maintaining the association, including the administrative expenses related to the administration of the insurance plan authorized in section 423B.08;

(5) support for hospital and medical insurance for pensioners who have completed 20 years or more of service or permanent disabilitants and surviving spouses of deceased active members, disabilitants, or service pensioners who have completed 20 years or more of service in an amount equal to one unit per month, to be added to the pension otherwise provided;

(6) health and welfare benefits of one unit per month in addition to other benefits for members who retired after July 1, 1980, and have completed 20 years or more of service or for members who are permanent disabilitants; and

(7) (5) other expenses authorized by section 69.80, or other applicable law.

Sec. 5. Minnesota Statutes 1996, section 423B.09, subdivision 1, is amended to read:

Subdivision 1. [MINNEAPOLIS POLICE; PERSONS ENTITLED TO RECEIVE PENSIONS.] The association shall grant pensions payable from the police pension fund in monthly installments to persons entitled to pensions in the manner and for the following purposes.

(a) When the actuarial value of assets of the fund according to the most recent annual actuarial valuation performed in accordance with sections 356.215 and 356.216 is less than 90 percent of the actuarial accrued liabilities, an active member or a deferred pensioner who has performed duty as a member of the police department of the city for five years or more, upon written application after retiring from duty and reaching at least age 50, is entitled to be paid monthly for life a service pension equal to eight units. For full years of service beyond five years, the service pension increases by 1.6 units for each full year, to a maximum of 40 units. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 90 percent of actuarial accrued liabilities, active members, deferred members, and service pensioners are entitled to a service pension according to the following schedule:

5 years 8.0 units

6 years 9.6 units

7 years 11.2 units

8 years 12.8 units

9 years 14.4 units

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 34.0 units

21 years 35.6 units

22 years 37.2 units

23 years 38.8 units

24 years 40.4 units

25 years 42.0 units

Fractional years of service may not be used in computing pensions.

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(b) An active member who after five years' service but less than 20 years' service with the police department of the city, becomes superannuated so as to be permanently unable to perform the person's assigned duties, is entitled to be paid monthly for life a superannuation pension equal to two four units for five years of service and an additional two units for each full year of service over five years and less than 20 years.

(c) An active member who is not eligible for a service pension and who, while a member of the police department of the city, becomes diseased or sustains an injury while in the service that permanently unfits the member for the performance of police duties is entitled to be paid monthly for life a pension equal to 32 34 units while so disabled.

Sec. 6. Minnesota Statutes 1996, section 423B.09, is amended by adding a subdivision to read:

Subd. 6. [OPTIONAL ANNUITIES.] A member who is retired or disabled on the effective date of this subdivision may elect an optional retirement annuity within 60 days of the effective date instead of the normal retirement annuity. A member who retires or becomes disabled after the effective date of this subdivision may elect an optional retirement annuity prior to the receipt of any benefits. The optional retirement annuity may be a 50 percent, a 75 percent, or a 100 percent joint and survivor annuity without reinstatement in the event of the designated beneficiary predeceasing the member or a 50 percent, a 75 percent, or a 100 percent joint and survivor annuity with reinstatement in the event of the designated beneficiary predeceasing the member. Optional retirement annuity forms must be actuarially equivalent to the service pension and automatic survivor coverage otherwise payable to the retiring member and the member's beneficiaries. Once selected, the optional annuity is irrevocable.

Sec. 7. Minnesota Statutes 1996, section 423B.10, subdivision 1, is amended to read:

Subdivision 1. [ENTITLEMENT; BENEFIT AMOUNT.] (a) The surviving spouse of a deceased service pensioner, disability pensioner, deferred pensioner, superannuation pensioner, or active member, who was the legally married spouse of the decedent, residing with the decedent, and who was married while or before the time the decedent was on the payroll of the police department, and who, if the deceased member was a service or deferred pensioner, was legally married to the member for a period of at least one year before retirement from the police department, is entitled to a surviving spouse benefit. The surviving spouse benefit is equal to 21 22 units per month if the person is the surviving spouse of a deceased active member or disabilitant. The surviving spouse benefit is equal to six units per month, plus an additional one unit for each year of service to the credit of the decedent in excess of five years, to a maximum of 21 22 units per month, if the person is the surviving spouse of a deceased service pensioner, deferred pensioner, or superannuation pensioner. The surviving spouse benefit is payable for the life of the surviving spouse.

(b) A surviving child of a deceased service pensioner, disability pensioner, deferred pensioner, superannuation pensioner, or active member, who was living while the decedent was an active member of the police department or was born within nine months after the decedent terminated active service in the police department, is entitled to a surviving child benefit. The surviving child benefit is equal to eight units per month if the person is the surviving child of a deceased active member or disabilitant. The surviving child benefit is equal to two units per month, plus an additional four-tenths of one unit per month for each year of service to the credit of the decedent in excess of five years, to a maximum of eight units, if the person is the surviving child of a deceased service pensioner, deferred pensioner, or superannuation pensioner. The surviving child benefit is payable until the person attains age 18, or, if in full-time attendance during the normal school year, in a school approved by the board of directors, until the person receives a bachelor's degree or attains the age of 22 years, whichever occurs first. In the event of the death of both parents leaving a surviving child or children entitled to a surviving child benefit as determined in this paragraph, the surviving child is, or the surviving children are, entitled to a surviving child benefit in such sums as determined by the board of directors to be necessary for the care and education of such surviving child or children, but not to exceed the family maximum benefit per month, to the children of any one family.

(c) The surviving spouse and surviving child benefits are subject to a family maximum benefit. The family maximum benefit is 40 41 units per month.

(d) A surviving spouse who is otherwise not qualified may receive a benefit if the surviving spouse was married to the decedent for a period of five years and was residing with the decedent at the time of death. The surviving spouse benefit is the same as that provided in paragraph (a), except that if the surviving spouse is younger than the decedent, the surviving spouse benefit must be actuarially equivalent to a surviving spouse benefit that would have been paid to the member's spouse had the member been married to a person of the same age or a greater age than the member's age before retirement.

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Sec. 8. Minnesota Statutes 1996, section 423B.15, subdivision 2, is amended to read:

Subd. 2. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The board of trustees of the relief association shall determine by May 1 of each year whether or not the fund has excess investment income. The amount of excess investment income, if any, must be stated as a dollar amount and reported by the chief administrative officer of the relief association to the mayor and governing body of the city, the state auditor, the commissioner of finance, and the executive director of the legislative commission on pensions and retirement. The dollar amount of excess investment income up to one percent of the assets of the fund, except when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities in which case the amount may not exceed 1-1/2 percent of the assets of the fund, must be applied for the purpose specified in subdivision 3. Excess investment income must not be considered as income to or assets of the fund for actuarial valuations of the fund for that year under sections 69.77, 356.215, and 356.216 and the provisions of this section except to offset the annual postretirement payment. Additional investment income is any realized or unrealized investment income other than the excess investment income and must be included in the actuarial valuations performed under sections 69.77, 356.215, and 356.216 and the provisions of this section.

Sec. 9. Minnesota Statutes 1996, section 423B.15, subdivision 3, is amended to read:

Subd. 3. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The amount determined under subdivision 2 must be applied in accordance with this subdivision. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent of its total actuarial liabilities, the relief association shall apply the first one-half of excess investment income to the payment of an annual postretirement payment as specified in this subdivision. and the second one-half of excess investment income up to one-half of one percent of the assets of the fund must be applied to reduce the state amortization state aid or supplementary amortization state aid payments otherwise due to the relief association under section 423A.02 for the current calendar year. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent funded and other conditions are met, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed one-half of one percent of the assets of the fund. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed 1-1/2 percent of the assets of the fund. Payment of the annual postretirement payment must be in a lump sum amount on June 1 following the determination date in any year. Payment of the annual postretirement payment may be made only if the average time weighted total rate of return for the most recent prior five years exceeds by two percent the actual average percentage increase in the current monthly salary of a top grade patrol officer in the most recent prior five fiscal years. The total amount of all payments to members may not exceed the amount determined under this subdivision. Payment to each eligible member must be calculated by dividing the total number of pension units to which eligible members are entitled into the excess investment income available for distribution to members, and then multiplying that result by the number of units to which each eligible member is entitled to determine each eligible member's annual postretirement payment. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, payment to each eligible member may not exceed an amount equal to the total monthly benefit that the eligible member was entitled to in the prior year under the terms of the benefit plan of the relief association or each eligible member's proportionate share of the excess investment income, whichever is less. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, payment to each eligible member must not exceed the member's proportionate share of 1-1/2 percent of the assets of the fund.

A person who received a pension or benefit for the entire 12 months before the determination date is eligible for a full annual postretirement payment. A person who received a pension or benefit for less than 12 months before the determination date is eligible for a prorated annual postretirement payment.

Sec. 10. Minnesota Statutes 1996, section 423B.15, subdivision 6, is amended to read:

Subd. 6. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] No provision of or payment made under this section may be interpreted or relied upon by any member of the relief association to guarantee or entitle a member to annual postretirement payments for a period when no excess investment income is earned by the fund. If the actuarial

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value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, the distribution of assets under this section must not exceed one-half of one percent.

Sec. 11. Minnesota Statutes 1996, section 423B.15, is amended by adding a subdivision to read:

Subd. 7. [ANNUAL ACTUARIAL VALUATION DATE.] Notwithstanding any provision of section 69.77, subdivision 2h, 356.215 or 356.216 to the contrary, the annual actuarial valuation of the fund must be completed by May 1 of each year.

Sec. 12. Laws 1965, chapter 519, section 1, as amended by Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 164, section 2; Laws 1990, chapter 589, article 1, section 5; Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, article 1, section 1, is amended to read:

Section 1. [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding the provisions of Minnesota Statutes 1965, Section 69.48, to the contrary, when a service pensioner, disability pensioner, or deferred pensioner, or an active member of a relief association dies, leaving:

(1) A surviving spouse who was a legally married spouse, residing with the decedent, and who was married while or prior to the time the decedent was on the payroll of the fire department in the case of a deceased active member; and who, in case the deceased member was a service or deferred pensioner was legally married to the member at least five years before death; or

(2) A child or children who were living while the deceased was on the payroll of the fire department, or born within nine months after the decedent was withdrawn from the payroll of the fire department, the surviving spouse and the child or children shall be entitled to a pension or pensions, as follows:

(a) To the surviving spouse, a pension of not less than 17 units, and not to exceed the total of 22 units per month, as the bylaws of the association provide, for life; provided, that if the spouse shall remarry then the pension shall cease and terminate as of the date of remarriage; provided, further, if the remarriage terminates for any reason, the surviving spouse shall again be entitled to a pension as the bylaws of the association provide;

(b) To the child or children, if their other parent is living, a pension of not to exceed eight units per month for each child up to the time each child reaches the age of not less than 16 years and not to exceed an age of 18 years; provided, however, upon approval by the board of trustees, such a child who is a full-time student, upon proof of compliance with the provisions of this act, may be entitled to such pension so long as the child is a full-time student and has not reached 22 years of age, all in conformity with the bylaws of the association; provided, further, the total pensions hereunder for the surviving spouse and children of the deceased member shall not exceed the sum of 41 units per month;

(c) A child or children of a deceased member after the death of their other parent, or in the event their other parent predeceases the member, be entitled to receive a pension or pensions in such amount as the board of trustees of the association shall deem necessary to properly support the child or children until they reach the age of not less than 16 and not more than 18 years; provided, however, upon approval by the board of trustees, such a child who is a full-time student, upon proof of compliance with the provisions of this act, may be entitled to such pension so long as the child is a full-time student and has not reached 22 years of age, as the bylaws of the association may provide; but the total amount of the pension or pensions hereunder for any child or children shall not exceed the sum of 41 units per month;

(d) For the purposes of this act, a full-time student is defined as an individual who is in full-time attendance as a student at an educational institution. Whether or not the student was in full-time attendance would be determined by the board of trustees of the association in the light of the standards and practices of the school involved. Specifically excluded is a person who is paid by the person's employer while attending school at the request of the person's employer. Benefits may continue during any period of four calendar months or less in any 12 month period in which a person does not attend school if the person shows to the satisfaction of the board of trustees that the person intends to continue in full-time school attendance immediately after the end of the period. An educational institution is defined so as to permit the payment of benefits to students taking vocational or academic courses in all approved, accredited or licensed schools, colleges, and universities. The board of trustees shall make the final determination of eligibility for benefits if any question arises concerning the approved status of the educational institution which the student attends or proposes to attend;

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(e) In the event that a child who is receiving a pension as provided above shall marry before the age of 22 years, the pension shall cease as of the date of the marriage.; and

(f) A surviving spouse of a deceased service pensioner, disability pensioner, deferred pensioner, or service pensioner who is otherwise not qualified may receive a benefit if the surviving spouse was legally married to the decedent for a period of five years and was residing with the decedent at the time of death. The surviving spouse benefit is the same as that provided under paragraph (a), except that if the surviving spouse is younger than the decedent, the surviving spouse benefit must be actuarially equivalent to a surviving spouse benefit that would have been paid to the member's spouse had the member been married to a person of the same age or a greater age than the member's age prior to retirement. A benefit paid under this paragraph may be less than 17 units, notwithstanding the 17 unit minimum established under paragraph (a).

Sec. 13. Laws 1989, chapter 319, article 19, section 7, subdivision 1, as amended by Laws 1992, chapter 471, article 2, section 5, and Laws 1996, chapter 438, article 4, section 12, is amended to read:

Subdivision 1. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; DEFINITIONS.] For the purposes of this section, each of the terms in this subdivision have the meanings given them in paragraphs (a) to (h).

(a) "Annual postretirement payment" means the payment of a lump sum postretirement benefit to an eligible member on June 1 following the determination date in any year.

(b) "City" means the city of Minneapolis.

(c) "Determination date" means December 31 of each year.

(d) "Eligible member" means a person, including a service pensioner, a disability pensioner, a survivor, or dependent of a deceased active member, service pensioner, or disability pensioner, who received a pension or benefit from the relief association during the 12 months before the determination date. A person who received a pension or benefit for the entire 12 months before the determination date is eligible for a full annual postretirement payment. A person who received a pension or benefit for less than 12 months before the determination date is eligible for a prorated annual postretirement payment.

(e) "Excess investment income" means the amount by which the average time weighted total rate of return earned by the fund in the most recent prior five fiscal years has exceeded the actual average percentage increase in the current monthly salary of a top grade firefighter in the most recent prior five fiscal years plus two percent. The excess investment income must be expressed as a dollar amount and may not exceed one percent of the total assets of the fund, except when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities in which case the amount must not exceed 1-1/2 percent of the assets of the funds.

(f) "Fund" means the Minneapolis fire department relief association.

(g) "Relief association" means the Minneapolis fire department relief association.

(h) "Time weighted total rate of return" means the percentage amount determined by using the formula or formulas established by the state board of investment under Minnesota Statutes, section 11A.04, clause (11), and in effect on January 1, 1987.

Sec. 14. Laws 1989, chapter 319, article 19, section 7, subdivision 3, is amended to read:

Subd. 3. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The board of trustees of the relief association shall determine by May 1 of each year whether or not the relief association has excess investment income. The amount of excess investment income, if any, must be stated as a dollar amount and reported by the chief administrative officer of the relief association to the mayor and governing body of the city, the state auditor, the commissioner of finance, and the executive director of the legislative commission on pensions and retirement. The dollar amount of excess investment income up to one percent of the assets of the fund, except if the actuarial value of assets of the fund according to the most recent

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annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, must be applied for the purpose specified in subdivision 4. Excess investment income must not be considered as income to or assets of the fund for actuarial valuations of the fund for that year under sections 69.77, 356.215, and 356.216 and the provisions of this section except to offset the annual postretirement payment. Additional investment income is any realized or unrealized investment income other than the excess investment income and must be included in the actuarial valuations performed under sections 69.77, 356.215, and 356.216 and the provisions of this section.

Sec. 15. Laws 1989, chapter 319, article 19, section 7, subdivision 4, as amended by Laws 1990, chapter 570, article 12, section 63, Laws 1992, chapter 471, article 2, section 6, and Laws 1996, chapter 438, article 4, section 13, is amended to read:

Subd. 4. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The amount determined under subdivision 3 must be applied in accordance with this subdivision. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, the relief association shall apply the first one-half of one percent of assets which constitute excess investment income to the payment of an annual postretirement payment as specified in this subdivision. and the second one-half of one percent of assets which constitute excess investment income shall be applied to reduce the state amortization state aid or supplementary amortization state aid payments otherwise due to the relief association under section 423A.02 for the current calendar year. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed one-half of one percent of the assets of the fund. Payment of the annual postretirement payment must be in a lump sum amount on June 1 following the determination date in any year. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed 1-1/2 percent of the assets of the fund. Payment of the annual postretirement payment may be made only if the average time weighted total rate of return in the most recent prior five fiscal years exceeds by two percent the actual average percentage increase in the current monthly salary of a top grade firefighter in the most recent prior five fiscal years. The total amount of all payments to members may not exceed the amount determined under subdivision 3. Payment to each eligible member must be calculated by dividing the total number of pension units to which eligible members are entitled into the excess investment income available for distribution to members, and then multiplying that result by the number of units to which each eligible member is entitled to determine each eligible member's annual postretirement payment. When the fund actuarial value of assets according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, payment to each eligible member may not exceed an amount equal to the total monthly benefit that the eligible member was entitled to in the prior year under the terms of the benefit plan of the relief association or each eligible member's proportionate share of the excess investment income, whichever is less. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, payment to each eligible member may not exceed the member's proportionate share of 1-1/2 percent of assets of the fund.

Sec. 16. Laws 1989, chapter 319, article 19, section 7, subdivision 7, is amended to read:

Subd. 7. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] No provision of or payment made under this section may be interpreted or relied upon by any member of the relief association to guarantee or entitle a member to annual postretirement payments for a period when no excess investment income is earned by the fund. If the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, a distribution of the fund assets must not exceed one-half of one percent.

Sec. 17. Laws 1993, chapter 125, article 1, section 1, is amended to read:

Section 1. [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.]

Notwithstanding the provisions of Minnesota Statutes, section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, chapter 607, article XV, section 9, to the contrary, when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 90

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percent of its actuarial accrued liabilities, the service pensions payable by the Minneapolis fire department relief association for members terminating active service as a Minneapolis firefighter after June 1, 1993, must be computed as follows:

length of service

credited service pension payable

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 33.0 units

21 years 34.6 units

22 years 36.2 units

23 years 37.8 units

24 years 39.4 units

25 years 41.0 units

When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is of greater than 90 percent of actuarial accrued liabilities, the following schedule applies to all active members and retired service pensioners who otherwise met the then existing requirements to receive a benefit:

length of service

credited service pension payable

5 years 8.0 units

6 years 9.6 units

7 years 11.2 units

8 years 12.8 units

9 years 14.4 units

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 33.0 33.5 units

21 years 34.6 35.1 units

22 years 36.2 37.7 units

23 years 37.8 38.3 units

24 years 39.4 39.9 units

25 years 41.0 41.5 units

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When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is of greater than 92.5 percent of actuarial accrued liabilities, the following schedule applies to all active members and retired service pensioners who otherwise met the then existing requirements to receive a benefit:

length of service

credited service pension payable

5 years 8.0 units

6 years 9.6 units

7 years 11.2 units

8 years 12.8 units

9 years 14.4 units

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 34.0 units

21 years 35.6 units

22 years 37.2 units

23 years 38.8 units

24 years 40.4 units

25 years 42.0 units

Sec. 18. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; OPTIONAL ANNUITIES.]

A member of the Minneapolis fire department relief association who is retired or disabled on the effective date of this section may elect an optional retirement annuity within 60 days of the effective date instead of the normal retirement pension. A member who retires or becomes disabled after the effective date of this section may elect an optional retirement annuity prior to the receipt of any benefits. The optional retirement annuity may be a 50 percent, a 75 percent, or a 100 percent joint and survivor annuity without reinstatement in the event of the designated beneficiary predeceasing the member or a joint and survivor annuity with reinstatement in the event of the designated beneficiary predeceasing the member. An optional retirement annuity must be actuarially equivalent to the service pension and automatic survivor coverage otherwise payable to the retiring member and the member's beneficiaries. Once selected, the optional annuity is irrevocable.

Sec. 19. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION TAX LEVY.]

If in any year after the Minneapolis fire department relief actuarial value of assets of the association according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of the actuarial accrued liabilities of the fund and subsequently the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216, the city of Minneapolis is not required to levy a property tax to fund any deficit unless the fund has two successive years when the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216.

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Sec. 20. [ACTUARIAL VALUATION DATE.]

Notwithstanding Minnesota Statutes, section 69.77, subdivision 2h, 356.215 or 356.216, the annual actuarial valuation of the Minneapolis fire department relief association must be completed by May 1 of each year.

Sec. 21. [ACTUARIAL EQUIVALENT.]

For the purposes of the Minneapolis fire department relief association, "actuarial equivalent" or "actuarially equivalent" means the condition of one annuity or benefit having an equal actuarial present value as another annuity or benefit, determined as of a given date at a specified age with each actuarial present value based on the appropriate mortality table adopted by the board of directors based on the experience of the fund and approved by the actuary retained by the legislative commission on pensions and retirement and using the applicable preretirement or postretirement interest rate assumptions specified in Minnesota Statutes, section 356.216.

Sec. 22. [BENEFIT EXCHANGE.]

The one unit health and welfare benefit granted to members of the Minneapolis fire department relief association in Laws 1980, chapter 667, article XV, section 9, who retired after July 1, 1980, must be reduced by one-half unit upon the implementation of the benefit improvement in section 17 when the actuarial value of assets of the fund according to the most recent annual actuarial valuation report under Minnesota Statutes, sections 356.215 and 356.216 exceeds 90 percent of its actuarial accrued liabilities and the benefit must be eliminated when the actuarial value of assets of the fund exceeds 92.5 percent of its actuarial accrued liabilities and the benefit in section 15 is fully implemented.

Sec. 23. [EFFECTIVE DATE.]

The sections of this article are effective on the day after compliance by the governing body of the city of Minneapolis with Minnesota Statutes, section 645.021, subdivision 2. Section 4 is effective when the provisions of section 5 take effect. The disability pension and superannuation pension unit amount change in section 5 is effective only when section 4 takes effect. Sections 7 and 12 are effective retroactive to July 1, 1996 and apply to all current spouses of members, except that the unit increases for surviving spouses in section 7 shall not otherwise increase the surviving spouse benefit beyond 22 units."

Delete the title and insert:

"A bill for an act relating to retirement; increasing pension benefit accrual rates; adjusting financing for pension plans; adding supplemental financial conditions information for pension funds; reducing appropriations; modifying or establishing various pension aids; appropriating money; amending Minnesota Statutes 1996, sections 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 and 4; 3A.07; 11A.18, subdivision 9; 69.011, subdivisions 1, 2, and by adding a subdivision; 69.021, subdivisions 5, 7a, 10, and 11; 69.031, subdivision 5; 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 352.115, subdivision 3; 352.72, subdivision 2; 352.92, subdivisions 1 and 2; 352.93, subdivisions 2, 3, and by adding a subdivision; 352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a subdivision; 352C.031, subdivision 4; 352C.033; 352D.02, subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 353.29, subdivision 3; 353.651, subdivision 3; 353.656, subdivision 1; 353.71, subdivision 2; 353A.08, subdivisions 1 and 2; 353A.083, by adding a subdivision; 354.05, subdivision 38; 354.42, subdivisions 2, 3, and 5; 354.44, subdivision 6, and by adding a subdivision; 354.53, subdivision 1; 354.55, subdivision 11; 354A.011, subdivision 15a; 354A.12, subdivisions 1, 2a, 3a, 3b, and 3c; 354A.31, subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, subdivisions 2, 4d, and 4g; 356.217; 356.30, subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, subdivision 8; 422A.151; 423B.01, subdivision 9, and by adding a subdivision; 423B.06, by adding a subdivision; 423B.07; 423B.09, subdivision 1, and by adding a subdivision; 423B.10, subdivision 1; 423B.15, subdivisions 2, 3, 6, and by adding a subdivision; and 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, section 1, as amended; Laws 1979, chapter 109, section 1, as amended; Laws 1989, chapter 319, article 19, section 7, subdivisions 1, as amended, 3, 4, as amended, and 7; Laws 1993, chapter 125, article 1, section 1; and Laws 1996, chapter 448, article 1, section 3; proposing coding for new law in Minnesota Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 356; repealing Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 356.88, subdivision 2; Laws 1985, chapter 259, section 3; and Laws 1993, chapter 336, article 3, section 1."

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We request adoption of this report and repassage of the bill.

Senate Conferees: Steven Morse, Don Betzold, Roy W. Terwilliger, Dan Stevens and Lawrence J. Pogemiller.

House Conferees: Richard H. Jefferson, Phyllis Kahn, Mary Murphy, Harry Mares and Steve Smith.

Jefferson moved that the report of the Conference Committee on S. F. No. 637 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 637, A bill for an act relating to retirement; increasing pension benefit accrual rates; adjusting financing for pension plans; adding supplemental financial conditions information for pension funds; reducing appropriations; modifying or establishing various pension aids; appropriating money; amending Minnesota Statutes 1996, sections 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 and 4; 3A.03, subdivision 1; 3A.07; 11A.18, subdivision 9; 69.011, subdivisions 1, 2, and by adding a subdivision; 69.021, subdivisions 7a and 10; 69.031, subdivision 5; 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 352.115, subdivision 3; 352.72, subdivision 2; 352.92, subdivisions 1 and 2; 352.93, subdivisions 2, 3, and by adding a subdivision; 352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a subdivision; 352C.031, subdivision 4; 352C.033; 352D.02, subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 353.29, subdivision 3; 353.651, subdivision 3; 353.656, subdivision 1; 353.71, subdivision 2; 353A.08, subdivisions 1 and 2; 353A.083, by adding a subdivision; 354.05, subdivision 38; 354.42, subdivisions 2, 3, and 5; 354.44, subdivision 6, and by adding a subdivision; 354.53, subdivision 1; 354.55, subdivision 11; 354A.011, subdivision 15a; 354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, subdivisions 2, 4d, and 4g; 356.217; 356.30, subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, subdivision 8; 422A.151; 423B.01, subdivision 9, and by adding a subdivision; 423B.06, by adding a subdivision; 423B.07; 423B.09, subdivision 1, and by adding a subdivision; 423B.10, subdivision 1; 423B.15, subdivisions 2, 3, 6, and by adding a subdivision; 490.123, subdivisions 1a and 1b; and 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, section 1, as amended; Laws 1979, chapter 109, section 1, as amended; Laws 1989, chapter 319, article 19, section 7, subdivisions 1, as amended, 3, 4, as amended, and 7; and Laws 1993, chapter 125, article 1, section 1; proposing coding for new law in Minnesota Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 356; repealing Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 356.88, subdivision 2; and Laws 1985, chapter 259, section 3; and Laws 1993, chapter 336, article 3, section 1.

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.

Pursuant to rule 2.05, Speaker pro tempore Wejcman excused Ozment and Pawlenty from voting on S. F. No. 637, as amended by Conference.

There were 131 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mahon Paulsen Swenson, D.
Anderson, B. Evans Kahn Mares Paymar Swenson, H.
Anderson, I. Farrell Kalis Mariani Pelowski Sykora
Bakk Finseth Kelso Marko Peterson Tingelstad
Bettermann Folliard Kielkucki McCollum Pugh Tomassoni
Biernat Garcia Kinkel McElroy Rest Tompkins
Bishop Goodno Knight McGuire Rhodes Trimble
Boudreau Greenfield Knoblach Milbert Rifenberg Tuma
Bradley Greiling Koppendrayer Molnau Rostberg Tunheim
Broecker Gunther Koskinen Mulder Rukavina Van Dellen
Carlson Haas Kraus Mullery Schumacher Vickerman
Chaudhary Harder Krinkie Munger Seagren Wagenius
Clark Hasskamp Kubly Murphy Seifert Weaver
Commers Hausman Kuisle Ness Sekhon Wejcman
Daggett Hilty Larsen Nornes Skare Wenzel
Davids Holsten Leighton Olson, E. Skoglund Westfall
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5408
Dawkins Huntley Leppik Olson, M. Slawik Westrom
Dehler Jaros Lieder Opatz Smith Winter
Delmont Jefferson Lindner Orfield Solberg Wolf
Dempsey Jennings Long Osskopp Stanek Workman
Dorn Johnson, A. Luther Osthoff Stang Spk. Carruthers
Entenza Johnson, R. Macklin Otremba Sviggum

The bill was repassed, as amended by Conference, and its title agreed to.

Speaker pro tempore Wejcman called Opatz to the Chair.

CONSIDERATION UNDER RULE 1.10

Pursuant to rule 1.10, Solberg requested immediate consideration of S. F. No. 740.

S. F. No. 740 was reported to the House.

Clark moved to amend S. F. No. 740 as follows:

Delete everything after the enacting clause and insert the following language of H. F. No. 2193:

"Section 1. Minnesota Statutes 1996, section 237.70, subdivision 4a, is amended to read:

Subd. 4a. [HOUSEHOLDS ELIGIBLE FOR CREDITS.] The telephone assistance plan must provide telephone assistance credit for a residential household in Minnesota that meets each of the following criteria:

(1) has a household member who:

(i) subscribes to local exchange service; and

(ii) (i) has at least one member who is either disabled or 65 years of age or older; or

(ii) has at least one member who is 18 years of age or under; and

(2) whose household income is 150 percent or less of federal poverty guidelines or is currently eligible for:

(i) aid to families with dependent children;

(ii) medical assistance;

(iii) general assistance;

(iv) Minnesota supplemental aid;

(v) food stamps;

(vi) refugee cash assistance or refugee medical assistance;

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(vii) energy assistance; or

(viii) supplemental security income; and

(3) who has been certified as eligible for telephone assistance plan credits.

Sec. 2. Minnesota Statutes 1996, section 237.70, subdivision 6, is amended to read:

Subd. 6. [FUNDING.] The commission shall provide for the funding of the telephone assistance plan by assessing a uniform recurring monthly surcharge sufficient to provide for the projected demand and eligibility for assistance under the program, not to exceed ten 14 cents per access line, applicable to all classes and grades of access lines provided by each telephone company in the state.

Sec. 3. Minnesota Statutes 1996, section 237.701, subdivision 1, is amended to read:

Subdivision 1. [FUND CREATED; AUTHORIZED EXPENDITURES.] The telephone assistance fund is created as a separate account in the state treasury to consist of amounts received by the department of administration representing the surcharge authorized by section 237.70, subdivision 6, and amounts earned on the fund assets. Money in the fund may be used only for:

(1) reimbursement to telephone companies for expenses and credits allowed in section 237.70, subdivision 7, paragraph (d), clause (5);

(2) reimbursement of the administrative expenses of the department of human services to implement sections 237.69 to 237.71, not to exceed $314,000 annually $475,000 in fiscal year 1998 and $414,000 annually thereafter;

(3) reimbursement of the administrative expenses of the commission not to exceed $25,000 annually; and

(4) reimbursement of the statewide indirect cost of the commission.

Sec. 4. [COMMUNITY VOICE MAIL; PILOT PROGRAMS.]

(a) The commissioner of the department of human services shall develop and implement, by July 1, 1997, three pilot programs to provide voice mail services for individuals who do not have a telephone and who meet the income criteria in Minnesota Statutes 1996, section 237.70, subdivision 4a. One pilot program should be in the metropolitan area and one in greater Minnesota. The commissioner shall contract with a nonprofit, community-based voice mail provider for the provision of these services, and shall report to the legislature by December 31, 1998, regarding the demand for these services, the impact of the availability of voice mail on the individuals receiving voice mail services, and legislative recommendations regarding the continued provision of such services.

(b) The public utilities commission shall provide up to $2 per month per active voice mail account from the telephone assistance fund established in Minnesota Statutes 1996, section 237.701, up to a total of $50,000 for these pilot programs, and shall consider this additional use of the fund in establishing the uniform statewide surcharge for the telephone assistance plan."

The motion prevailed and the amendment was adopted.

Clark, Rostberg, Jennings, Rhodes, Dempsey, Greenfield, Leppik, Ozment, Winter, Jefferson, Goodno, Koppendrayer and Olson, E., moved to amend S. F. No. 740, as amended, as follows:

Delete sections 1, 2, and 3 and insert:

"Section 1. [TELEPHONE ASSISTANCE PROGRAM; REVIEW AND RECOMMENDATIONS.]

The commissioner of human services, in consultation with the public utilities commission and the commissioner of public service, shall convene a working group to review the state telephone assistance program, Minnesota Statutes, sections 237.69 to 237.711. The working group shall develop and submit recommendations to the legislature by January 15, 1998, which

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conform the state program to the federal report and order on universal service issued May 8, 1997, by the federal communications commission, and which provide the best package of assistance to needy telecommunications consumers. Members of the working group shall include representatives of the office of the attorney general, telecommunications providers, and consumer organizations representing the interests of seniors, children, the disabled, and low-income utility consumers. The public utilities commission and the commissioner of public service shall take all steps necessary to preserve the eligibility of current telephone assistance program participants."

Page 2, line 35, delete "MAIL" and insert "MESSAGING"

Page 3, line 1, delete "three" and insert "two"

Page 3, lines 2, 7, 10, 11, and 14, delete "mail" and insert "messaging"

Page 3, after line 19, insert:

"Sec. 3. [EFFECTIVE DATE.]

Sections 1 and 2 are effective the day following final enactment."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

S. F. No. 740, A bill for an act relating to utilities; expanding the telephone assistance program to provide assistance to low-income families with children; amending Minnesota Statutes 1996, section 237.70, subdivisions 4a, 6, and 7.

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 88 yeas and 45 nays as follows:

Those who voted in the affirmative were:

Anderson, I. Folliard Juhnke Mares Osthoff Slawik
Bakk Garcia Kahn Mariani Otremba Solberg
Bettermann Goodno Kelso Marko Ozment Swenson, D.
Biernat Greenfield Kinkel McCollum Paymar Tingelstad
Bishop Greiling Knoblach McGuire Pelowski Tomassoni
Carlson Gunther Koppendrayer Milbert Peterson Trimble
Chaudhary Hasskamp Koskinen Mullery Pugh Tunheim
Clark Hausman Kubly Munger Rest Vickerman
Dawkins Hilty Larsen Murphy Rhodes Wagenius
Delmont Huntley Leighton Ness Rostberg Wejcman
Dempsey Jaros Leppik Nornes Rukavina Wenzel
Dorn Jefferson Lieder Olson, E. Schumacher Winter
Entenza Jennings Long Opatz Sekhon Spk. Carruthers
Evans Johnson, A. Luther Orfield Skare
Farrell Johnson, R. Mahon Osskopp Skoglund

Those who voted in the negative were:

Abrams Dehler Knight Mulder Stanek Weaver
Anderson, B. Erhardt Kraus Olson, M. Stang Westfall
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5411
Boudreau Finseth Krinkie Paulsen Sviggum Westrom
Bradley Haas Kuisle Pawlenty Swenson, H. Wolf
Broecker Harder Lindner Rifenberg Sykora Workman
Commers Holsten Macklin Seagren Tompkins
Daggett Kalis McElroy Seifert Tuma
Davids Kielkucki Molnau Smith Van Dellen

The bill was passed, as amended, and its title agreed to.

MESSAGES FROM THE SENATE, Continued

The following messages were received from the Senate:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 960.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 960

A bill for an act relating to health care; prohibiting contracts that restrict communication between providers and their patients; requiring certain disclosures; requiring health plan companies to provide continuity of care and access to specialty care for certain enrollees; prohibiting certain exclusive arrangements; modifying dispute resolution provisions; requiring identification of health care providers; requiring emergency services coverage; establishing a consumer advisory board; amending Minnesota Statutes 1996, sections 62Q.105, subdivision 1; 62Q.30; 181.932, subdivision 1; and 214.16, subdivisions 1 and 3; proposing coding for new law in Minnesota Statutes, chapters 62J; 62Q; and 144.

May 15, 1997

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. 960, 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. 960 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. [62J.695] [CITATION.]

Sections 62J.695 to 62J.76 may be cited as the "Patient Protection Act."

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Sec. 2. [62J.70] [DEFINITIONS.]

Subdivision 1. [APPLICABILITY.] For purposes of sections 62J.70 to 62J.76, the terms defined in this section have the meanings given them.

Subd. 2. [HEALTH CARE PROVIDER OR PROVIDER.] "Health care provider" or "provider" means:

(1) a physician, nurse, or other provider as defined under section 62J.03;

(2) a hospital as defined under section 144.696, subdivision 3;

(3) an individual or entity that provides health care services under the medical assistance, general assistance medical care, MinnesotaCare, or state employee group insurance program; and

(4) an association, partnership, corporation, limited liability corporation, or other organization of persons or entities described in clause (1) or (2) organized for the purposes of providing, arranging, or administering health care services or treatment.

This section does not apply to trade associations, membership associations of health care professionals, or other organizations that do not directly provide, arrange, or administer health care services or treatment.

Subd. 3. [HEALTH PLAN COMPANY.] "Health plan company" means health plan company as defined in section 62Q.01, subdivision 4.

Subd. 4. [ENROLLEE.] "Enrollee" means an individual covered by a health plan company or health insurance or health coverage plan and includes an insured policyholder, subscriber, contract holder, member, covered person, or certificate holder.

Sec. 3. [62J.71] [PROHIBITED PROVIDER CONTRACTS.]

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 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.

Subd. 2. [PERSONS AND ENTITIES AFFECTED.] The following persons and entities shall not enter into any agreement or directive that is prohibited under this section:

(1) a health plan company;

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(2) a health care network cooperative as defined under section 62R.04, subdivision 3; or

(3) a health care provider as defined in section 62J.70, subdivision 2.

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) 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 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.

Subd. 4. [EXCLUSION.] (a) Nothing in this section prohibits a health plan from taking action against a provider if the health plan has evidence that the provider's actions are illegal, constitute medical malpractice, or are contrary to accepted medical practices.

(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.

Sec. 4. [62J.72] [DISCLOSURE OF HEALTH CARE PROVIDER INFORMATION.]

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. 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 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.

(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 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.

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(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.

Subd. 2. [ADDITIONAL WRITTEN DISCLOSURE OF PROVIDER INFORMATION.] In the event a health plan company prepares a written disclosure as specified in subdivision 1, in a manner that explicitly makes a comparison of the financial incentives between the providers with whom it contracts, it must describe the incentives that occur at the provider level.

Subd. 3. [INFORMATION ON PATIENTS' MEDICAL BILLS.] A health plan company and health care provider shall provide patients and enrollees with a copy of an explicit and intelligible bill whenever the patient or enrollee is sent a bill and is responsible for paying any portion of that bill. The bills must contain descriptive language sufficient to be understood by the average patient or enrollee. This subdivision does not apply to a flat co-pay paid by the patient or enrollee at the time the service is required.

Subd. 4. [NONAPPLICABILITY.] Health care providers as defined in section 62J.70, subdivision 2, clause (1), need not individually provide information required under this section if it has been provided by another individual or entity that is subject to this section.

Sec. 5. [62J.73] [PROHIBITION ON EXCLUSIVE ARRANGEMENTS.]

Subdivision 1. [PROHIBITION ON EXCLUSIVE RELATIONSHIPS.] No provider, group of providers, or health plan company shall restrict a person's right to provide health services or procedures to another provider, group of providers, or health plan company, unless the person is an employee.

Subd. 2. [PROHIBITION ON RESTRICTIVE CONTRACT TERMS.] No provider, group of providers, or person providing goods or health services to a provider shall enter into a contract or subcontract with a health plan company or group of providers on terms that require the provider, group of providers, or person not to contract with another health plan company, unless the provider or person is an employee.

Subd. 3. [PROHIBITION REGARDING ESSENTIAL FACILITIES AND SERVICES.] (a) No health plan company, provider, or group of providers may withhold from its competitors health care services, which are essential for competition between health care providers within the meaning of the essential facilities doctrine as interpreted by the federal courts.

(b) This subdivision should be construed as an instruction to state court in interpreting federal law.

Subd. 4. [VIOLATIONS.] Any provider or other individual who believes provisions of this section may have been violated may file a complaint with the attorney general's office regarding a possible violation of this section.

Sec. 6. [62J.74] [ENFORCEMENT.]

Subdivision 1. [AUTHORITY.] The commissioners of health and commerce shall each periodically review contracts and arrangements among health care providing entities and health plan companies they regulate to determine compliance with sections 62J.70 to 62J.73. Any person may submit a contract or arrangement to the relevant commissioner for review if the person believes sections 62J.70 to 62J.73 have been violated. Any provision of a contract or arrangement found by the relevant commissioner to violate this section is null and void, and the relevant commissioner may assess civil penalties against the health plan company in an amount not to exceed $2,500 for each day the contract or arrangement is in effect, and may use the enforcement procedures otherwise available to the commissioner. All due process rights afforded under chapter 14 apply to this section.

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Subd. 2. [ASSISTANCE TO LICENSING BOARDS.] A health-related licensing board as defined under section 214.01, subdivision 2, shall submit a contract or arrangement to the relevant commissioner for review if the board believes sections 62J.70 to 62J.73 have been violated. If the commissioner determines that any provision of a contract or arrangement violates those sections, the board may take disciplinary action against any person who is licensed or regulated by the board who entered into the contract arrangement.

Sec. 7. [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;

(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 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.

(c) The board shall advise the commissioners of health and commerce on the following: (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. 8. [62J.76] [NONPREEMPTION.]

Nothing in the Patient Protection Act preempts or replaces requirements related to patient protections that are more protective of patient rights than the requirements established by the Patient Protection Act.

Sec. 9. Minnesota Statutes 1996, 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, 1997 1998, 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. 10. Minnesota Statutes 1996, 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, 1997 1998. The commissioner may order an integrated service network or an all-payer insurer to provide or pay for a service that is within the standard health

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5416

coverage. If the disputed issue relates to whether a service is appropriate and necessary, the commissioner shall issue an order only after consulting 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. 11. [62Q.53] [EMERGENCY SERVICES.]

(a) Enrollees have the right to available and accessible emergency services, 24 hours a day and seven days a week. The health plan company shall inform its enrollees how to obtain emergency care and, if prior authorization for emergency services is required, shall make available a toll-free number, which is answered 24 hours a day, to answer questions about emergency services and to receive reports and provide authorizations, where appropriate, for treatment of emergency medical conditions. Emergency services shall be covered whether provided by participating or nonparticipating providers and whether provided within or outside the health plan company's service area. In reviewing a denial for coverage of emergency services, the health plan company shall take the following factors into consideration:

(1) a reasonable layperson's belief that the circumstances required immediate medical care that could not wait until the next working day or next available clinic appointment;

(2) the time of day and day of the week the care was provided;

(3) the presenting symptoms, including, but not limited to, severe pain, to ensure that the decision to reimburse the emergency care is not made solely on the basis of the actual diagnosis;

(4) the enrollee's efforts to follow the health plan company's established procedures for obtaining emergency care; and

(5) any circumstances that precluded use of the health plan company's established procedures for obtaining emergency care.

(b) The health plan company may require enrollees to notify the health plan company of nonreferred emergency care as soon as possible, but not later than 48 hours, after the emergency care is initially provided. However, emergency care which would have been covered under the contract had notice been provided within the set time frame must be covered.

(c) Notwithstanding paragraphs (a) and (b), a health plan company, health insurer, or health coverage plan that is in compliance with the rules regarding accessibility of services adopted under section 62D.20 is in compliance with this section.

Sec. 12. [62Q.56] [CONTINUITY OF CARE.]

Subdivision 1. [CHANGE IN HEALTH CARE PROVIDER.] (a) If enrollees are required to access services through selected primary care providers for coverage, the health plan company shall prepare a written plan that provides for continuity of care in the event of contract termination between the health plan company and any of the contracted primary care providers or general hospital providers. The written plan must explain:

(1) how the health plan company will inform affected enrollees, insureds, or beneficiaries about termination at least 30 days before the termination is effective, if the health plan company or health care network cooperative has received at least 120 days' prior notice;

(2) how the health plan company will inform the affected enrollees about what other participating providers are available to assume care and how it will facilitate an orderly transfer of its enrollees from the terminating provider to the new provider to maintain continuity of care;

(3) the procedures by which enrollees will be transferred to other participating providers, when special medical needs, special risks, or other special circumstances, such as cultural or language barriers, require them to have a longer transition period or be transferred to nonparticipating providers;

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(4) who will identify enrollees with special medical needs or at special risk and what criteria will be used for this determination; and

(5) how continuity of care will be provided for enrollees identified as having special needs or at special risk, and whether the health plan company has assigned this responsibility to its contracted primary care providers.

(b) If the contract termination was not for cause, enrollees can request a referral to the terminating provider for up to 120 days if they have special medical needs or have other special circumstances, such as cultural or language barriers. The health plan company can require medical records and other supporting documentation in support of the requested referral. Each request for referral to a terminating provider shall be considered by the health plan company on a case-by-case basis.

(c) If the contract termination was for cause, enrollees must be notified of the change and transferred to participating providers in a timely manner so that health care services remain available and accessible to the affected enrollees. The health plan company is not required to refer an enrollee back to the terminating provider if the termination was for cause.

Subd. 2. [CHANGE IN HEALTH PLANS.] (a) The health plan company shall prepare a written plan that provides a process for coverage determinations for continuity of care for new enrollees with special needs, special risks, or other special circumstances, such as cultural or language barriers, who request continuity of care with their former provider for up to 120 days. The written plan must explain the criteria that will be used for determining special needs cases, and how continuity of care will be provided.

(b) This subdivision applies only to group coverage and continuation and conversion coverage, and applies only to changes in health plans made by the employer.

Subd. 3. [DISCLOSURES.] The written plans required under this section must be made available upon request to enrollees or prospective enrollees.

Sec. 13. [62Q.58] [ACCESS TO SPECIALTY CARE.]

Subdivision 1. [STANDING REFERRAL.] A health plan company shall establish a procedure by which an enrollee may apply for a standing referral to a health care provider who is a specialist if a referral to a specialist is required for coverage. This procedure for a standing referral must specify the necessary criteria and conditions, which must be met in order for an enrollee to obtain a standing referral.

Subd. 2. [COORDINATION OF SERVICES.] A primary care provider or primary care group shall remain responsible for coordinating the care of an enrollee who has received a standing referral to a specialist. The specialist shall not make any secondary referrals related to primary care services without prior approval by the primary care provider or primary care group. However, an enrollee with a standing referral to a specialist may request primary care services from that specialist. The specialist, in agreement with the enrollee and primary care provider or primary care group, may elect to provide primary care services to that enrollee according to procedures established by the health plan company.

Subd. 3. [DISCLOSURE.] Information regarding referral procedures must be included in member contracts or certificates of coverage and must be provided to an enrollee or prospective enrollee by a health plan company upon request.

Sec. 14. [62Q.64] [DISCLOSURE OF EXECUTIVE COMPENSATION.]

(a) Each health plan company doing business in this state shall annually file with the consumer advisory board created in section 62J.75:

(1) a copy of the health plan company's form 990 filed with the federal Internal Revenue Service; or

(2) if the health plan company did not file a form 990 with the federal Internal Revenue Service, a list of the amount and recipients of the health plan company's five highest salaries, including all types of compensation, in excess of $50,000.

(b) A filing under this section is public data under section 13.03.

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Sec. 15. [144.6585] [IDENTIFICATION OF HEALTH CARE PROVIDERS.]

Any health care provider who is licensed, credentialed, or registered by a health-related licensing board as defined under section 214.01, subdivision 2, must wear a name tag that indicates by words, letters, abbreviations, or insignia the profession or occupation of the individual. The name tag must be worn whenever the health care provider is rendering health services to a patient, unless wearing the name tag would create a safety or health risk to the patient. The failure to wear a name tag is not reportable under chapter 214.

Sec. 16. Minnesota Statutes 1996, section 181.932, subdivision 1, is amended to read:

Subdivision 1. [PROHIBITED ACTION.] An employer shall not discharge, discipline, threaten, otherwise discriminate against, or penalize an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because:

(a) the employee, or a person acting on behalf of an employee, in good faith, reports a violation or suspected violation of any federal or state law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official;

(b) the employee is requested by a public body or office to participate in an investigation, hearing, inquiry; or

(c) the employee refuses an employer's order to perform an action that the employee has an objective basis in fact to believe violates any state or federal law or rule or regulation adopted pursuant to law, and the employee informs the employer that the order is being refused for that reason; or

(d) the employee, in good faith, reports a situation in which the quality of health care services provided by a health care facility, organization, or health care provider violates a standard established by federal or state law or a professionally recognized national clinical or ethical standard and potentially places the public at risk of harm.

Sec. 17. Minnesota Statutes 1996, section 214.16, subdivision 1, is amended to read:

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

(a) "Board" means the boards of medical practice, chiropractic examiners, nursing, optometry, dentistry, pharmacy, psychology, social work, marriage and family therapy, and podiatry.

(b) "Regulated person" means a licensed physician, chiropractor, nurse, optometrist, dentist, pharmacist, psychologist, social worker, marriage and family therapist, or podiatrist.

Sec. 18. Minnesota Statutes 1996, section 214.16, subdivision 3, is amended to read:

Subd. 3. [GROUNDS FOR DISCIPLINARY ACTION.] The board shall take disciplinary action, which may include license revocation, against a regulated person for:

(1) intentional failure to provide the commissioner of health with the data required under chapter 62J;

(2) intentional failure to provide the commissioner of revenue with data on gross revenue and other information required for the commissioner to implement sections 295.50 to 295.58; and

(3) intentional failure to pay the health care provider tax required under section 295.52; and

(4) entering into a contract or arrangement that is prohibited under sections 62J.70 to 62J.73.

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Sec. 19. [CONSOLIDATION AND COORDINATION OF CONSUMER ASSISTANCE AND ADVOCACY OFFICES.]

The commissioners of health and commerce, in consultation with the commissioners of human services and employee relations, shall study the feasibility and desirability of consolidating and improving coordination of some or all existing state consumer assistance, ombudsperson, and advocacy activities. The commissioners shall submit a report with recommendations, and draft legislation to the legislature by January 15, 1998.

Sec. 20. [COMPLAINT PROCESS STUDY.]

The commissioners of health and commerce, in consultation with the consumer advisory board and other affected parties, shall make recommendations to the legislature by January 15, 1998, on developing a complaint resolution process for health plan companies to make available for enrollees.

Sec. 21. [CONSIDERATION.]

The consumer advisory board shall consider the use of physicians by utilization review organizations, including whether only Minnesota licensed physicians should be used for utilization review, whether appropriate types of medical practitioners are being used for utilization review, and whether Minnesota's utilization review statutes afford adequate consumer protection. The consumer advisory board may report findings to the legislature prior to the 1998 legislative session.

Sec. 22. [REPEALER; ANTITRUST EXEMPTION PROCESS.]

Minnesota Statutes 1996, sections 62J.2911, 62J.2912, 62J.2913, 62J.2914, 62J.2915, 62J.2916, 62J.2917, 62J.2918, 62J.2919, 62J.2920, and 62J.2921 are repealed.

Sec. 23. [EFFECTIVE DATE.]

Sections 3, 17, and 18 are effective January 1, 1998, and apply to contracts entered into or renewed on or after the effective date. Sections 1, 7 to 10, 16, 20, and 22 are effective the day following final enactment. Sections 4, 11, 12, and 13 are effective January 1, 1998, and apply to contracts or coverage issued or renewed on or after the effective date."

Delete the title and insert:

"A bill for an act relating to health care; providing for patient protection; requiring certain disclosures; prohibiting certain provider contracts; providing for continuity of care and specialty care; prohibiting certain exclusive arrangements; modifying dispute resolution provisions; requiring identification of health care providers; requiring studies; requiring emergency services coverage; establishing a consumer advisory board; providing civil penalties; amending Minnesota Statutes 1996, sections 62Q.105, subdivision 1; 62Q.30; 181.932, subdivision 1; and 214.16, subdivisions 1 and 3; proposing coding for new law in Minnesota Statutes, chapters 62J; 62Q; and 144; repealing Minnesota Statutes 1996, sections 62J.2911; 62J.2912; 62J.2913; 62J.2914; 62J.2915; 62J.2916; 62J.2917; 62J.2918; 62J.2919; 62J.2920; and 62J.2921."

We request adoption of this report and repassage of the bill.

Senate Conferees: Linda Berglin, Steven Morse, Sheila M. Kiscaden, Deanna L. Wiener and Roy W. Terwilliger.

House Conferees: Linda Wejcman, John Dorn and Thomas Huntley.

Wejcman moved that the report of the Conference Committee on S. F. No. 960 be adopted and that the bill be repassed as amended by the Conference Committee.

A roll call was requested and properly seconded.

Speaker pro tempore Opatz called Trimble to the Chair.

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Abrams moved that the House refuse to adopt the Conference Committee report on S. F. No. 960, and that the bill be returned to the Conference Committee.

A roll call was requested and properly seconded.

The question was taken on the Abrams motion and the roll was called. There were 66 yeas and 67 nays as follows:

Those who voted in the affirmative were:

Abrams Dehler Knight Milbert Rhodes Tingelstad
Anderson, B. Dempsey Knoblach Molnau Rifenberg Tompkins
Anderson, I. Erhardt Koppendrayer Mulder Seagren Tuma
Bettermann Farrell Kraus Mullery Seifert Van Dellen
Bishop Finseth Krinkie Nornes Smith Vickerman
Boudreau Gunther Kuisle Olson, M. Stanek Weaver
Bradley Haas Larsen Orfield Stang Wenzel
Broecker Harder Leighton Osskopp Sviggum Westfall
Commers Holsten Leppik Paulsen Swenson, D. Westrom
Daggett Kalis Lindner Pawlenty Swenson, H. Wolf
Davids Kielkucki Macklin Peterson Sykora Workman

Those who voted in the negative were:

Bakk Goodno Juhnke Marko Paymar Tomassoni
Biernat Greenfield Kahn McCollum Pelowski Trimble
Carlson Greiling Kelso McElroy Pugh Tunheim
Chaudhary Hasskamp Kinkel McGuire Rest Wagenius
Clark Hausman Koskinen Munger Rostberg Wejcman
Dawkins Hilty Kubly Murphy Rukavina Winter
Delmont Huntley Lieder Ness Schumacher Spk. Carruthers
Dorn Jaros Long Olson, E. Sekhon
Entenza Jefferson Luther Opatz Skare
Evans Jennings Mahon Osthoff Skoglund
Folliard Johnson, A. Mares Otremba Slawik
Garcia Johnson, R. Mariani Ozment Solberg

The motion did not prevail.

The question recurred on the Wejcman motion and the roll was called. There were 131 yeas and 2 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mariani Pawlenty Swenson, D.
Anderson, B. Evans Kahn Marko Paymar Swenson, H.
Anderson, I. Farrell Kalis McCollum Pelowski Sykora
Bakk Finseth Kelso McElroy Peterson Tingelstad
Bettermann Folliard Kielkucki McGuire Pugh Tomassoni
Biernat Garcia Kinkel Milbert Rest Tompkins
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Bishop Goodno Knoblach Molnau Rhodes Trimble
Boudreau Greenfield Koppendrayer Mulder Rifenberg Tuma
Bradley Greiling Koskinen Mullery Rostberg Tunheim
Broecker Gunther Kraus Munger Rukavina Van Dellen
Carlson Haas Kubly Murphy Schumacher Vickerman
Chaudhary Harder Kuisle Ness Seagren Wagenius
Clark Hasskamp Larsen Nornes Seifert Weaver
Commers Hausman Leighton Olson, E. Sekhon Wejcman
Daggett Hilty Leppik Olson, M. Skare Wenzel
Davids Holsten Lieder Opatz Skoglund Westfall
Dawkins Huntley Lindner Orfield Slawik Westrom
Dehler Jaros Long Osskopp Smith Winter
Delmont Jefferson Luther Osthoff Solberg Wolf
Dempsey Jennings Macklin Otremba Stanek Workman
Dorn Johnson, A. Mahon Ozment Stang Spk. Carruthers
Entenza Johnson, R. Mares Paulsen Sviggum

Those who voted in the negative were:

KnightKrinkie

The motion prevailed.

S. F. No. 960, A bill for an act relating to health care; prohibiting contracts that restrict communication between providers and their patients; requiring certain disclosures; requiring health plan companies to provide continuity of care and access to specialty care for certain enrollees; prohibiting certain exclusive arrangements; modifying dispute resolution provisions; requiring identification of health care providers; requiring emergency services coverage; establishing a consumer advisory board; amending Minnesota Statutes 1996, sections 62Q.105, subdivision 1; 62Q.30; 181.932, subdivision 1; and 214.16, subdivisions 1 and 3; proposing coding for new law in Minnesota Statutes, chapters 62J; 62Q; and 144.

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 130 yeas and 3 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mariani Paymar Swenson, H.
Anderson, B. Evans Kahn Marko Pelowski Sykora
Anderson, I. Farrell Kalis McCollum Peterson Tingelstad
Bakk Finseth Kelso McElroy Pugh Tomassoni
Bettermann Folliard Kielkucki McGuire Rest Tompkins
Biernat Garcia Kinkel Milbert Rhodes Trimble
Bishop Goodno Knoblach Molnau Rifenberg Tuma
Boudreau Greenfield Koppendrayer Mulder Rostberg Tunheim
Bradley Greiling Koskinen Mullery Rukavina Van Dellen
Broecker Gunther Kraus Munger Schumacher Vickerman
Carlson Haas Kubly Murphy Seagren Wagenius
Chaudhary Harder Kuisle Ness Seifert Weaver
Clark Hasskamp Larsen Nornes Sekhon Wejcman
Commers Hausman Leighton Olson, E. Skare Wenzel
Daggett Hilty Leppik Opatz Skoglund Westfall
Davids Holsten Lieder Orfield Slawik Westrom
Dawkins Huntley Lindner Osskopp Smith Winter
Dehler Jaros Long Osthoff Solberg Wolf
Delmont Jefferson Luther Otremba Stanek Workman
Dempsey Jennings Macklin Ozment Stang Spk. Carruthers
Dorn Johnson, A. Mahon Paulsen Sviggum
Entenza Johnson, R. Mares Pawlenty Swenson, D.

Those who voted in the negative were:

Knight Krinkie Olson, M.

The bill was repassed, as amended by Conference, and its title agreed to.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5422

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 241, A bill for an act relating to motor carriers; allowing personnel of departments of transportation and public safety to conduct joint or combined audits of motor carrier records; requiring commissioner of public safety to provide commissioner of transportation information on traffic accidents involving commercial motor vehicles; providing for enforcement authority of personnel of departments of transportation and public safety relating to motor carriers; conforming state statutes to federal motor carrier safety regulations; providing for the reauthorization of the uniform hazardous materials registration and permit program for an additional year; authorizing commissioner of transportation to accept electronic signatures for electronically transmitted motor carrier documents; amending Minnesota Statutes 1996, sections 168.187, subdivision 20; 169.09, subdivision 13; 169.85; 169.871, subdivisions 1 and 1a; 221.0314, subdivisions 2, 6, 7, 9, 10, and 11; 221.0355, subdivisions 5 and 15; 221.221, subdivisions 2 and 4; 296.17, subdivision 18; 296.171, subdivision 4; and 299D.06; Laws 1994, chapter 589, section 8, as amended; proposing coding for new law in Minnesota Statutes, chapter 221.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 556, A bill for an act relating to health; permitting health data institute access to certain data; defining terms for vital statistics; modifying lead inspection provisions; modifying provisions for unique identifiers for health care providers, group purchasers, and patients; modifying birth data provisions; limiting access to certified copies of birth and death certificates; requiring standardized format for birth and death certificates; providing for recording and reporting of abortion data; amending Minnesota Statutes 1996, sections 62J.451, subdivision 6c; 62J.54; 144.212, by adding subdivisions; 144.215, by adding subdivisions; 144.225, by adding subdivisions; 144.9504, subdivision 2; and 145.411, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 145.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 1460, A bill for an act relating to government data practices; making certain welfare and housing data available to law enforcement agencies; requiring certain criminal conviction data to be available through the Internet; eliminating the requirement that government agencies pay a fee for commissioner's opinions; modifying school immunization and health record provisions; modifying patient consent to release of records for research; authorizing destruction of records of deceased patients; allowing certain voters to prevent public dissemination of their residence addresses; requiring notice of investigations to health board licensees; providing for retention of juvenile history records; providing for misdemeanor offense reports and access to certain adult criminal history data; providing for disclosure or inspection of certain tax data or return information; limiting disclosure of certain tax data under subpoena; providing criminal penalties; amending Minnesota Statutes 1996, sections 13.41, by adding a subdivision; 13.46, subdivision 2; 13.54, by adding a subdivision; 13.65,

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subdivision 2; 13.87, subdivision 2; 13.99, subdivision 53b, and by adding subdivisions; 123.70, subdivisions 5, 7, and 10; 144.29; 144.335, subdivision 3a, and by adding a subdivision; 201.091, subdivision 4; 214.10, subdivision 1; 260.161, subdivision 1a; 270.66, subdivision 3; 270B.01, subdivision 8; 270B.03, subdivisions 1, 3, and 4; 270B.08, subdivision 1; 270B.085, subdivision 1; 270B.09; 270B.12, subdivision 7; 270B.14, subdivision 1, and by adding subdivisions; 270B.16; 287.34; 299C.095; 299C.10, subdivision 1; and 299C.13; proposing coding for new law in Minnesota Statutes, chapters 214; and 270B; repealing Minnesota Statutes 1996, sections 13.072, subdivision 3; 13.71, subdivisions 18, 19, 20, and 21; and 13.99, subdivision 21d.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 2163, A bill for an act relating to the financing and operation of state and local government; providing for property tax reform; providing for education financing; limiting education revenue referenda for 1997; changing property tax refunds for homeowners and renters; changing truth-in-taxation requirements; providing for joint truth-in-taxation hearings; imposing levy limits on cities and counties; changing fiscal note requirements for state mandates; providing for reimbursement for costs of state mandates; providing for certain property tax exemptions; establishing a property tax reform account; providing a refundable credit for 1997 property taxes; making miscellaneous property tax changes; providing a senior citizens property tax deferral program; changing aids to local governments; changing tax increment financing provisions; authorizing certain tax increment districts; exempting certain tax increment districts from certain requirements; authorizing local taxes, levies, and abatements; conforming certain income tax laws with changes in federal law; providing income tax credits; modifying the application of sales and excise taxes; exempting certain purchases from the sales tax; modifying waste management tax and taconite tax provisions; increasing the budget reserve; revising the law governing regional development commissions; providing for certain payments to counties; making miscellaneous technical changes and corrections; requiring studies; appropriating money; amending Minnesota Statutes 1996, sections 6.76; 16A.152, subdivision 2; 69.021, subdivision 7; 93.41; 103D.905, subdivisions 4, 5, and by adding a subdivision; 115A.554; 116.07, subdivision 10; 117.155; 121.15, by adding a subdivision; 122.247, subdivision 3; 122.45, subdivision 3a; 122.531, subdivisions 4a and 9; 122.533; 122.535, subdivision 6; 124.2131, subdivision 1; 124.239, subdivision 5, and by adding subdivisions; 124.2601, subdivisions 2 and 3; 124.2711, subdivisions 1 and 5; 124.2713, subdivision 1; 124.2714; 124.2715, subdivision 1; 124.2716, subdivision 2; 124.2725, subdivisions 2, 6, 13, and 14; 124.2726, subdivisions 1 and 3; 124.2727, subdivision 6a; 124.312, subdivision 5; 124.313; 124.4945; 124.83, subdivision 3; 124.91, subdivisions 1, 2, 5, and 7; 124.912, subdivisions 1, 3, 6, and 7; 124.914, subdivisions 1, 2, 3, and 4; 124.916, subdivisions 1, 3, and 4; 124.918, subdivision 8; 124.95, subdivision 1; 124A.03, subdivision 1g; 124A.23, subdivision 1; 124A.292, subdivision 2; 161.45, by adding a subdivision; 216B.16, by adding subdivisions; 270.60, by adding a subdivision; 270B.02, by adding a subdivision; 270B.12, by adding a subdivision; 271.01, subdivision 5; 271.19; 272.02, subdivision 1, and by adding a subdivision; 272.115; 273.11, subdivisions 1a, 16, and by adding a subdivision; 273.111, subdivisions 3 and 6; 273.112, by adding a subdivision; 273.121; 273.124, subdivisions 1, 14, and by adding a subdivision; 273.13, subdivisions 1, 22, 23, 24, 25, 31, and by adding subdivisions; 273.135, subdivision 2; 273.1391, subdivision 2; 273.1398, subdivisions 1, 1a, 6, 8, and by adding subdivisions; 273.18; 274.01; 274.13, by adding subdivisions; 275.065, subdivisions 1, 3, 5a, 6, 8, and by adding subdivisions; 275.07, subdivision 4; 275.08, subdivision 1b; 276.04, subdivision 2; 276A.04; 276A.05, subdivisions 1 and 5; 276A.06, subdivisions 2, 3, 5, and 9; 278.07; 281.13; 281.23, subdivision 6; 281.273; 281.276; 282.01, subdivision 8; 282.04, subdivision 1; 287.22; 289A.02, subdivision 7; 289A.26, subdivisions 2, 3, 6, and 7; 289A.56, subdivision 4; 290.01, subdivisions 19, 19a, 19b, 19c, 19d, 19g, and 31; 290.014, subdivisions 2 and 3; 290.015, subdivision 5; 290.06, subdivision 22, and by adding subdivisions; 290.067, subdivision 1; 290.068, subdivision 1; 290.0922, subdivision 1; 290.17, subdivision 1; 290.371, subdivision 2; 290.92, by adding a subdivision; 290.9725; 290.9727, subdivision 1; 290.9728, subdivision 1; 290A.03, subdivisions 6, 7, 11, and 13; 290A.04, subdivisions 1, 2, 6, and by adding a subdivision; 290A.19; 291.005, subdivision 1; 295.50, subdivision 6; 295.58; 296.141, subdivision 4; 296.18, subdivision 1; 297A.01, subdivisions 3, 4, 7, 11, 15, and 16; 297A.02, subdivision 2; 297A.14, subdivision 4;

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297A.211, subdivision 1; 297A.25, subdivisions 2, 3, 7, 11, 56, 59, and by adding subdivisions; 297A.45; 297B.01, subdivisions 7 and 8; 297E.02, subdivision 6; 297E.04, subdivision 3; 298.24, subdivision 1; 298.28, subdivisions 2, 3, 4, 5, 9a, and by adding subdivisions; 298.2961, subdivision 1; 298.75, subdivisions 1, 4, and by adding a subdivision; 325D.33, subdivision 3; 349.12, subdivision 26a; 349.154, subdivision 2; 349.163, subdivision 8; 349.19, subdivision 2a; 349.191, subdivision 1b; 373.40, subdivision 7; 398A.04, subdivision 1; 462.381; 462.383; 462.384, subdivision 5; 462.385; 462.386, subdivision 1; 462.387; 462.388; 462.389, subdivisions 1, 3, and 4; 462.39, subdivisions 2 and 3; 462.391, subdivision 5, and by adding subdivisions; 462.393; 462.394; 462.396; 462.398; 469.012, subdivision 1; 469.033, subdivision 6; 469.040, subdivision 3, and by adding a subdivision; 469.174, subdivisions 10, 19, and by adding subdivisions; 469.175, subdivision 3, and by adding subdivisions; 469.176, subdivisions 1b, 2, 4c, 4g, 4j, and 6; 469.177, subdivisions 1, 3, and 4; 473F.06; 473F.07, subdivisions 1 and 5; 473F.08, subdivisions 2, 3, 5, and 8a; 477A.011, subdivisions 20, 34, 35, 36, 37, and by adding subdivisions; 477A.013, subdivisions 1 and 9; 477A.03, subdivision 2; and 477A.05; Laws 1992, chapter 511, article 2, section 52; Laws 1993, chapter 375, article 9, section 45, subdivisions 2, 3, 4, and by adding a subdivision; Laws 1995, chapter 264, article 5, sections 44, subdivision 4, as amended; and 45, subdivision 1, as amended; Laws 1997, chapter 34, section 2; proposing coding for new law in Minnesota Statutes, chapters 3; 14; 16A; 124; 124A; 270; 273; 275; 290; 297A; 383A; 383B; 458D; 462A; 469; 477A; proposing coding for new law as Minnesota Statutes, chapter 290B; repealing Minnesota Statutes 1996, sections 3.982; 124.2131, subdivision 3a; 124.2134; 124.225, subdivisions 1, 3a, 7a, 7b, 7d, 7e, 7f, 8a, 8k, 8l, 8m, 9, 10, 13, 14, 15, 16, and 17; 124.226; 124.2442; 124.2601, subdivisions 4, 5, and 6; 124.2711, subdivisions 2a and 3; 124.2713, subdivisions 6, 6a, 6b, and 7; 124.2715, subdivisions 2 and 3; 124.2716, subdivisions 3 and 4; 124.2725, subdivisions 3, 4, 5, and 7; 124.2727, subdivisions 6b, 6c, and 9; 124.314, subdivision 2; 124.321; 124.91, subdivisions 2, 4, and 7; 124.912, subdivision 2; 124A.029; 124A.03, subdivisions 2a and 3b; 124A.0311; 124A.22, subdivisions 4a, 4b, 8a, 8b, 13d, and 13e; 124A.23, subdivisions 1, 2, 3, and 4; 124A.26, subdivisions 2 and 3; 124A.292, subdivisions 3 and 4; 270B.12, subdivision 11; 273.13, subdivisions 21a and 32; 273.1315; 273.1317; 273.1318; 273.1398, subdivisions 2, 2c, 2d, 3, and 3a; 273.1399; 273.166; 275.08, subdivisions 1c and 1d; 275.61; 276.012; 276A.06, subdivision 9; 290A.03, subdivisions 12a and 14; 290A.055; 290A.26; 297A.01, subdivisions 20 and 21; 297A.02, subdivision 5; 297A.25, subdivision 29; 462.384, subdivision 7; 462.385, subdivision 2; 462.389, subdivision 5; 462.391, subdivisions 1, 2, 3, 4, 6, 7, 8, and 9; 462.392; 469.176, subdivisions 1a and 5; 469.1782, subdivision 1; 469.181; 473F.08, subdivision 8a; and 645.34; Laws 1995, chapter 264, article 4, as amended.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 1880.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 1880

A bill for an act relating to the organization and operation of state government; appropriating money for the judicial branch, public safety, public defense, corrections, criminal justice, crime prevention programs, and other related purposes; implementing, clarifying, and modifying certain criminal and juvenile provisions; prescribing, clarifying, and modifying certain penalty provisions; modifying and enacting various arson provisions; making various changes to the data privacy laws; establishing, modifying, and expanding permanent programs, pilot programs, grant programs, studies, offices, strike forces, task forces, councils, committees, and working groups; requiring reports; providing for an adjustment to the soft body

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5425

armor reimbursement fund; authorizing the board on judicial standards to award attorneys fees; changing the name of the "superintendent" of the bureau of criminal apprehension to the "director" of the bureau of criminal apprehension; authorizing testing for HIV or Hepatitis B under certain circumstances; requiring employers of law enforcement officers to adopt a protocol; permitting the sale of ten or fewer unused hypodermic needles or syringes without a prescription; requiring employers of disabled or killed peace officers or firefighters to continue health benefits in certain instances; requiring the state to reimburse those employers; providing for statewide arson training courses; creating a criminal gang investigative data system; requiring the department of corrections to submit an annual performance report; expanding the commissioner of corrections' authority to release inmates on conditional medical release and the commissioner's authority related to rules and guidelines; requiring the department of corrections to amend a rule; ending the state's operation of the Minnesota correctional facility-Sauk Centre; requiring the commissioner of administration to issue a request for proposals and select a vendor to operate the facility; requiring the commissioner of corrections to charge counties for juveniles placed at the Minnesota correctional facility-Red Wing and to develop admissions criteria for the facility; striking the requirement that the Minnesota correctional facility-Red Wing accept all juveniles; establishing a state policy discouraging the out-of-state placement of juveniles; lowering the per se standard for alcohol concentration from 0.10 to 0.08 for driving motor vehicles, snowmobiles, all-terrain vehicles, and motorboats while impaired, as well as for criminal vehicular operation and hunting; providing orders for protection in the case of domestic abuse perpetrated by a minor; amending Minnesota Statutes 1996, sections 13.99, by adding a subdivision; 84.91, subdivision 1; 84.911, subdivision 1; 86B.331, subdivisions 1 and 4; 86B.335, subdivision 1; 97B.065, subdivision 1; 97B.066, subdivision 1; 119A.31, subdivision 1; 144.761, subdivisions 5 and 7; 144.762, subdivision 2, and by adding a subdivision; 144.765; 144.767, subdivision 1; 151.40; 152.01, subdivision 18; 152.021, subdivisions 1 and 2; 152.022, subdivisions 1 and 2; 152.023, subdivision 2; 169.121, subdivisions 1, 2, and 3; 169.123, subdivisions 1, 2, 4, 5a, and 6; 169.129; 171.29, subdivision 2; 241.01, subdivision 3b; 241.271; 242.19, subdivision 2; 242.32, by adding a subdivision; 242.55; 244.05, subdivision 8; 244.17, subdivision 2; 256E.03, subdivision 2; 257.071, subdivisions 3, 4, and by adding subdivisions; 257.072, subdivision 1; 259.41; 259.59, by adding a subdivision; 259.67, subdivision 2; 260.012; 260.015, subdivisions 2a and 29; 260.131, subdivisions 1 and 2; 260.155, subdivisions 1a, 2, 3, 4, and 8; 260.161, subdivisions 1, 1a, and by adding a subdivision; 260.165, subdivisions 1 and 3; 260.171, subdivision 2; 260.191, subdivisions 1, 3a, 3b, and 4; 260.192; 260.221, subdivisions 1 and 5; 260.241, subdivisions 1 and 3; 299A.38, subdivision 2, and by adding a subdivision; 299A.61, subdivision 1; 299C.065, subdivision 1; 299C.095; 299C.10, subdivisions 1 and 4; 299C.13; 299F.051; 299F.06, subdivisions 1 and 3; 326.3321, subdivision 1; 326.3386, subdivision 3, and by adding subdivisions; 357.021, subdivision 1a; 363.073, subdivision 1, and by adding a subdivision; 401.13; 609.035, subdivision 1, and by adding a subdivision; 609.10; 609.101, subdivision 5; 609.115, subdivision 1; 609.125; 609.135, subdivision 1; 609.152, subdivision 2a, and by adding a subdivision; 609.21; 609.221; 609.684, subdivision 4; 609.748, subdivision 1; 609.902, subdivision 4; 611A.038; 611A.675; 611A.71, subdivision 5; 611A.74, subdivisions 1, 3, and by adding a subdivision; 611A.75; 626.843, subdivision 1; Laws 1995, chapter 226, article 2, section 37, subdivision 2; article 3, section 60, subdivision 4, and by adding a subdivision; and Laws 1996, chapter 408, article 8, sections 21; 22, subdivision 1; and 24; proposing coding for new law in Minnesota Statutes, chapters 16A; 241; 242; 243; 257; 259; 299A; 299C; 299F; 609; 611A; and 626; repealing Minnesota Statutes 1996, sections 119A.30; 145.406; 242.51; 244.09, subdivision 11a; 259.33; 299F.07; and 609.684, subdivision 2.

May 18, 1997

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. 1880, 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. 1880 be further amended as follows:

Delete everything after the enacting clause and insert:

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5426

"ARTICLE 1

APPROPRIATIONS

Section 1. [CRIMINAL JUSTICE APPROPRIATIONS.]

The sums shown in the columns marked "APPROPRIATIONS" are appropriated from the general fund, or another fund named, to the agencies and for the purposes specified in this act, to be available for the fiscal years indicated for each purpose. The figures "1997," "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, 1997, June 30, 1998, or June 30, 1999, respectively.

SUMMARY BY FUND

1997 1998 1999 TOTAL

General $ 1,393,000 $ 481,929,000 $ 496,133,000$ 979,455,000

Special Revenue 7,254,000 7,479,00014,733,000

State Government

Special Revenue 7,000 7,000 14,000

Environmental 42,000 43,000 85,000

Trunk Highway 1,557,000 1,587,0003,144,000

TOTAL $ 1,393,000 $ 490,789,000 $ 500,249,000 $ 997,431,000

APPROPRIATIONS

Available for the Year

Ending June 30

1998 1999

Sec. 2. SUPREME COURT

Subdivision 1. Total Appropriation $ 21,730,000 $ 21,642,000

The amounts that may be spent from this appropriation for each program are specified in the following subdivisions.

Subd. 2. Supreme Court Operations

4,052,000 4,141,000

$2,500 the first year and $2,500 the second year are for a contingent account for expenses necessary for the normal operation of the court for which no other reimbursement is provided.

Subd. 3. Civil Legal Services

5,607,000 5,607,000

This appropriation is for legal services to low-income clients and for family farm legal assistance under Minnesota Statutes, section 480.242. Any unencumbered balance remaining in the first year does not cancel but is available for the second year of the biennium. A qualified legal services program, as defined in Minnesota Statutes, section 480.24, subdivision 3, may provide legal services to persons eligible for family farm legal assistance under Minnesota Statutes, section 480.242.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5427

Subd. 4. Family Law Legal Services

877,000 877,000

This appropriation is to improve the access of low-income clients to legal representation in family law matters and must be distributed under Minnesota Statutes, section 480.242, to the qualified legal services programs described in Minnesota Statutes, section 480.242, subdivision 2, paragraph (a). Any unencumbered balance remaining in the first year does not cancel and is available for the second year of the biennium.

Subd. 5. State Court Administration

9,191,000 8,993,000

$120,000 the first year is for grants to develop projects that use innovative and cost-effective means of providing services to children within the child protection system, including legal counsel, guardians ad litem, and other child and welfare services. Projects may include those that facilitate the coordination of public and private resources and the use of volunteers and existing community programs and services to reduce the cost of services. This sum is available until June 30, 1999. This is a one-time appropriation.

$180,000 the first year is to develop and provide training programs and materials for guardians ad litem. This sum is available until June 30, 1999. This is a one-time appropriation.

$1,386,000 the first year and $1,386,000 the second year are to begin development and implementation of the infrastructure for a coordinated and integrated statewide criminal and juvenile justice information system; and for implementation of the judicial branch justice information network. This appropriation must be included in the budget base for the 2000-2001 biennium.

Subd. 6. Community Dispute Resolution

110,000 110,000

Subd. 7. Victim Offender Mediation Grants

170,000 170,000

Subd. 8. Law Library Operations

1,723,000 1,744,000

$20,000 the first year and $20,000 the second year are to supplement law library resources.

Sec. 3. COURT OF APPEALS 6,088,000 6,180,000

$60,000 the first year and $40,000 the second year are for a staff attorney, a photocopier, and ergonomic chairs.

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In purchasing ergonomic chairs, reasonable efforts shall be made to purchase chairs that were made as part of an industrial and commercial activity authorized under Minnesota Statutes, section 241.27.

$70,000 the first year and $30,000 the second year are to implement a video hearing project.

Sec. 4. DISTRICT COURTS 71,038,000 72,184,000

$75,000 the second year is for increased administrative support.

$374,000 the first year and $374,000 the second year are for increased judicial support through (1) increased salaries for existing law clerks and (2) the hiring of additional law clerks.

$450,000 the first year and $450,000 the second year are for operational overhead in the Eighth Judicial District. Of this appropriation, $46,000 the first year and $47,000 the second year must be used to hire a Spanish interpreter.

$741,000 the first year and $30,000 the second year are for a video hearing pilot project in the Ninth Judicial District.

Sec. 5. BOARD ON JUDICIAL STANDARDS 303,000 228,000

$80,000 the first year is to award costs and attorney fees to eligible judges. This sum is available until June 30, 1999.

Sec. 6. TAX COURT 974,000 645,000

Sec. 7. PUBLIC SAFETY

Subdivision 1. Total Appropriation 40,957,000 38,755,000

Summary by Fund

1998 1999

General 37,543,000 35,309,000

Special Revenue 1,808,000 1,809,000

Trunk Highway 1,557,000 1,587,000

Environmental 42,000 43,000

State Government

Special Revenue 7,000 7,000

The amounts that may be spent from this appropriation for each program are specified in the following subdivisions.

Subd. 2. Emergency Management

Summary by Fund

General 3,372,000 3,396,000

Environmental 42,000 43,000

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5429

Subd. 3. Criminal Apprehension

Summary by Fund

General 23,596,000 21,768,000

Special Revenue 1,808,000 1,809,000

State Government

Special Revenue 7,000 7,000

Trunk Highway 1,557,000 1,587,000

The commissioner of finance shall reduce the appropriations for the division of the Bureau of Criminal Apprehension from the general fund as necessary to reflect legislation enacted in 1997 that (1) reduces state contributions for pensions for employees under the division of the Bureau of Criminal Apprehension from the general fund, or (2) provides money for those pensions from police state aid.

$4,494,000 the first year and $2,560,000 the second year are to begin development and implementation of the infrastructure for a coordinated and integrated statewide criminal and juvenile justice information system. Of this appropriation, $1,554,000 the first year and $1,350,000 the second year are to be transferred to the supreme court for the judicial branch justice network. This transfer appropriation must be included in the budget base for the 2000-2001 biennium.

$100,000 the first year and $100,000 the second year from the Bureau of Criminal Apprehension account in the special revenue fund are for grants to local officials for the cooperative investigation of cross-jurisdictional criminal activity. Any unencumbered balance remaining in the first year does not cancel but is available for the second year.

$408,000 the first year and $409,000 the second year from the Bureau of Criminal Apprehension account in the special revenue fund are for laboratory activities.

$50,000 the first year and $50,000 the second year are for the Bureau of Criminal Apprehension to hire an additional forensic scientist.

$75,000 the first year is for a grant to Hennepin county and $75,000 the first year is for a grant to the city of Minneapolis. These appropriations must be used for costs associated with the drugfire program.

$3,936,000 the first year and $3,936,000 the second year are:

(1) for grants under Minnesota Statutes, section 299C.065, subdivisions 1 and 1a;

(2) for the grants authorized in Minnesota Statutes, section 299A.627, subdivisions 1 and 2, and to fund the organization and operation of the criminal gang oversight council and strike force described in Minnesota Statutes, section 299A.625;

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5430

(3) to hire five new agents to replace those assigned to the criminal gang strike force;

(4) to develop the criminal gang investigative data system;

(5) to hire ten new agents to fill existing vacancies statewide; and

(6) for overtime expenses for the Bureau of Criminal Apprehension.

Money expended for the purposes described in clauses (1) to (4) and (6), shall not be included in the agency's base budget for the 2000-2001 biennium.

The commissioner may use part of the appropriation described in clause (2) to procure necessary equipment and pay other expenses deemed necessary by the criminal gang oversight council. However, the commissioner shall seek to minimize expenses related to equipment by encouraging local entities to contribute equipment and other support to the strike force.

The appropriation to hire additional agents under clause (3) may not be used to purchase or lease vehicles.

If new agents are hired under clause (5), the superintendent shall cooperate with the department of corrections in capturing fugitives.

Subd. 4. Fire Marshal

2,969,000 2,979,000

$225,000 the first year and $125,000 the second year may be used to:

(1) hire an additional fire investigator to be assigned to northern Minnesota;

(2) retain mechanical, electrical, engineering, or technical experts to assist with determining the cause of fires;

(3) reimburse members of the arson strike force for their overtime, travel, subsistence, and related costs and to obtain professional expert services or technical equipment that are beyond the capabilities of the strike force members;

(4) establish the arson training unit;

(5) establish the standardized arson training curriculum;

(6) develop a fire scene preservation video for distribution to fire departments statewide;

(7) purchase an arson training trailer equipped for use in training events and available as a resource to the arson strike force at major fires;

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(8) develop and maintain an arson resource library collection;

(9) communicate the importance of arson training to law enforcement, fire service, and prosecuting agencies;

(10) provide financial incentives to encourage firefighters and peace officers to participate in arson training;

(11) establish and staff the statewide juvenile firesetter intervention network;

(12) develop and distribute the comprehensive injury prevention education curriculum;

(13) provide initial funding for the annual training forum on juvenile firesetting behavior and intervention strategies;

(14) assist local fire departments in collecting relevant data on juvenile-related fire incidents for inclusion in the fire incident reporting system;

(15) provide the laboratory instruments and training needed to process arson evidence samples; and

(16) provide the supporting equipment and services needed to use arson evidence sample processing instruments.

By February 15, 1999, the fire marshal shall report to the chairs of the senate and house divisions having jurisdiction over criminal justice funding on how this appropriation was spent.

Subd. 5. Alcohol and Gambling Enforcement

Summary by Fund

General 1,682,000 1,716,000

Subd. 6. Crime Victims Services

2,147,000 2,155,000

$100,000 the first year and $100,000 the second year are for grants to the crime victim and witness advisory council to be used by the council for the purposes specified in Minnesota Statutes, section 611A.675.

Subd. 7. Crime Victims Ombudsman

374,000 375,000

Subd. 8. Law Enforcement and Community Grants

3,260,000 2,745,000

The appropriations in this subdivision are one-time appropriations.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5432

$2,250,000 each year is to provide funding for:

(1) grants under Minnesota Statutes, section 299A.62, subdivision 1, clause (2), to enable local law enforcement agencies to assign overtime officers to high crime areas within their jurisdictions. These grants shall be distributed as provided in subdivision 2 of that section. Up to $23,000 may be used to administer grants awarded under this clause; and

(2) weed and seed grants under Minnesota Statutes, section 299A.63.

This appropriation shall be divided in equal parts between the two programs.

Money not expended in the first year is available for grants during the second year.

By February 1, 1998, the commissioner shall report to the chairs of the senate and house divisions having jurisdiction over criminal justice funding, on grants made under clauses (1) and (2).

$50,000 the first year is for Ramsey county to continue the special unit enforcing the state nuisance laws.

$50,000 the first year is for one or more grants to community-based programs to conduct research on street gang culture and, based on this research, develop effective prevention and intervention techniques to help youth avoid or end their street gang involvement. Each program receiving a grant shall provide a report to the criminal gang oversight council that contains the following information:

(1) the results of the program's research on street gang culture;

(2) the program's plans for additional research on street gang culture, if any; and

(3) the prevention and intervention techniques developed by the program.

An interim report must be provided to the council six months after a program is awarded a grant. A final report must be provided to the council by February 1, 1999. A copy of each report also must be provided to the commissioner of public safety.

Each program receiving a grant also must provide information and recommendations on gang culture to the criminal gang oversight council and criminal gang strike force, as requested by the council or strike force.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5433

$40,000 the first year shall be transferred as a grant to a nonprofit organization to be used to meet one-half of the state match requirement if the organization receives federal funding to: (1) acquire interactive multimedia equipment for courtroom presentations to aid in the prosecution of complex homicide and child fatality cases; and (2) retain a forensic pathologist skilled in making such presentations to serve as a consultant to prosecutors statewide for one year. This grant is available only if the organization obtains funds for the remainder of the state match from other sources.

$175,000 the first year is for grants to the Council on Black Minnesotans to continue the program established in Laws 1996, chapter 408, article 2, section 13.

$250,000 each year is for grants to local governmental units that have incurred costs implementing Minnesota Statutes, section 244.052 or 244.10, subdivision 2a. Local governmental units shall detail the costs they have incurred along with any other information required by the commissioner. The commissioner shall award grants in a manner that reimburses local governmental units demonstrating the greatest need. Of this appropriation, up to $40,000 may be used for educational equipment and training to be used for sex offender notification meetings by law enforcement agencies around the state.

$120,000 each year is for a grant to the northwest Hennepin human services council to administer the northwest community law enforcement project, to be available until June 30, 1999.

$75,000 each year is for grants to Hennepin and Ramsey counties to administer the community service grant pilot project program.

$100,000 the first year is for grants to the city of St. Paul to be used by the city to acquire and renovate a building for a joint use police storefront and youth activity center in the north end area of St. Paul.

$25,000 the first year is for the criminal alert network to disseminate data regarding the use of fraudulent checks and the coordination of security and antiterrorism efforts with the Federal Bureau of Investigation. This money is available only if the commissioner determines the expansion is feasible. If the commissioner determines that one or both of the uses are not feasible, the commissioner shall reduce the amount spent accordingly.

$75,000 the first year is for a grant to the Fourth Judicial District to plan for a family violence coordinating council.

Subd. 9. Administration and Related Services

143,000 175,000

This appropriation is to be deposited in the public safety officer's benefit account. This money is available for reimbursements under Minnesota Statutes, section 299A.465.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5434

$40,000 the first year is for purposes of the firefighter training study committee. This is a one-time appropriation.

Sec. 8. BOARD OF PRIVATE DETECTIVE AND PROTECTIVE

AGENT SERVICES 130,000 132,000

Sec. 9. BOARD OF PEACE OFFICER STANDARDS AND

TRAINING 3,581,000 3,801,000

This appropriation is from the peace officers training account in the special revenue fund. Any receipts credited to the peace officer training account in the special revenue fund in the first year in excess of $3,581,000 must be transferred and credited to the general fund. Any receipts credited to the peace officer training account in the special revenue fund in the second year in excess of $3,801,000 must be transferred and credited to the general fund.

$30,000 the first year is from the special revenue fund for DARE officer training.

$312,000 the second year shall be expended as follows: (1) up to $30,000 for administrative law judge costs; (2) up to $16,000 for minority recruitment; (3) up to $10,000 for computer training and support; (4) up to $30,000 for DARE officer training; (5) $100,000 for a law enforcement library at metropolitan state university; (6) up to $25,000 for hiring a consultant to develop a screening examination for admission to a law enforcement skills program. If there are sufficient funds remaining after developing the screening examination, the consultant may develop a new reciprocity examination; and (7) up to $101,000 for increased reimbursements to local law enforcement for the cost of administering board-approved continuing education to peace officers.

By July 1, 1998, and each July 1 thereafter, the board shall report to the chairs of the senate and house divisions having jurisdiction over criminal justice funding on the activities of the minority recruiter and the outcomes attributable to that position.

The commissioner of finance shall ensure that the base budget for the 2000-2001 fiscal biennium for the POST board includes the $850,000 each year that was transferred in fiscal year 1997 from the POST board to the Minnesota state colleges and universities system.

The board shall provide education and training to peace officers and other criminal justice personnel on early intervention and reduction of possible HIV seroconversion for persons who have experienced a significant exposure, as defined in Minnesota Statutes, section 144.761. The POST board shall work in cooperation with the commissioners of public safety and corrections in providing this training. A portion of this appropriation shall be awarded as grants to professional employers of emergency medical services personnel as defined in Minnesota

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Statutes, section 144.761, subdivision 5, clause (2), to demonstrate effective education and training services and procedures for implementing the protocol described in Minnesota Statutes, section 144.762.

Sec. 10. BOARD OF PUBLIC DEFENSE

Subdivision 1. Total Appropriation 41,658,000 41,972,000

None of this appropriation shall be used to pay for lawsuits against public agencies or public officials to change social or public policy.

The amounts that may be spent from this appropriation for each program are specified in the following subdivisions.

Subd. 2. State Public Defender

3,250,000 3,315,000

Subd. 3. Board of Public Defense

900,000 915,000

Subd. 4. District Public Defense

37,508,000 37,742,000

$969,000 the first year and $969,000 the second year are for grants to the five existing public defense corporations under Minnesota Statutes, section 611.216.

Sec. 11. AUTO THEFT PREVENTION BOARD

Subdivision 1. Total Appropriation 1,865,000 1,869,000

This appropriation is from the automobile theft prevention account in the special revenue fund.

The board is encouraged to use a portion of this appropriation to (1) design intervention measures to prevent and combat automobile theft activity by gangs; and (2) implement strategies to increase apprehension of gang members involved in automobile theft activity.

Sec. 12. CORRECTIONS

Subdivision 1. Total Appropriation 296,892,000 312,215,000

The amounts that may be spent from this appropriation for each program are specified in the following subdivisions.

Any unencumbered balances remaining in the first year do not cancel but are available for the second year of the biennium.

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Positions and administrative money may be transferred within the department of corrections as the commissioner considers necessary, upon the advance approval of the commissioner of finance.

For the biennium ending June 30, 1999, the commissioner of corrections may, with the approval of the commissioner of finance, transfer funds to or from salaries.

The department may use up to $320,000 of dedicated receipts to design, construct, furnish, and equip a new building for Thistledew Camp's new wilderness endeavors program. The building must provide a ten bed training and juvenile dorm area, plus storage.

Subd. 2. Correctional Institutions

179,965,000 189,823,000

The commissioner may expend federal grant money in an amount up to $1,000,000 to supplement the renovation of the buildings at the Brainerd regional center for use as a correctional facility.

The commissioner may open the Brainerd facility on or after May 1, 1999.

If the commissioner deems it necessary to reduce staff positions during the biennium ending June 30, 1999, the commissioner must reduce at least the same percentage of management and supervisory personnel as line and support personnel in order to ensure employee safety, inmate safety, and facility security.

During the biennium ending June 30, 1999, if it is necessary to reduce services or staffing within a correctional facility, the commissioner or the commissioner's designee shall meet with affected exclusive representatives. The commissioner shall make every reasonable effort to retain correctional officer and prison industry employees should reductions be necessary.

During the biennium ending June 30, 1999, the commissioner must consider ways to reduce the per diem in adult correctional facilities. As part of this consideration, the commissioner must consider reduction in management and supervisory personnel levels in addition to line staff levels within adult correctional institutions, provided this objective can be accomplished without compromising safety and security.

The commissioner shall develop criteria to designate geriatric and disabled inmates eligible for transfer to nursing facilities, including state-operated facilities. Upon certification by the commissioner that a nursing facility can meet necessary security requirements, the commissioner may contract with the facility for the placement and housing of eligible geriatric and disabled inmates. Inmates placed in a nursing facility must meet the criteria specified in Minnesota Statutes, section 244.05, subdivision 8, and are considered to be on conditional medical release.

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$700,000 the first year and $1,500,000 the second year are to operate a work program at Camp Ripley under Minnesota Statutes, section 241.277.

Subd. 3. Juvenile Services

17,070,000 17,790,000

$500,000 each year is to plan for and establish a weekend camp program at Camp Ripley designed for first- or second-time male juvenile offenders ages 11 to 14. The commissioner shall develop eligibility standards for the program. The camp shall be a highly structured program and teach work skills, such as responsibility, organization, time management, and follow-through. The juvenile offenders will each develop a community service plan that will be implemented upon return to the community. The program shall receive referrals from youth service agencies, police, school officials, parents, and the courts. By January 15, 1998, the commissioner shall report to the chairs of the house and senate criminal justice funding divisions a proposed budget for this camp program for the second year of the fiscal biennium and shall include a description of the proposed outcomes for the program.

$100,000 the first year is to conduct planning for and evaluation of additional camp programs and aftercare services for juvenile offenders, including, but not limited to, the Vision Quest program and a three-week work camp.

$500,000 the first year is to renovate two cottages at the Minnesota correctional facility-Red Wing.

$1,021,000 the second year is to transfer the sex offender program from the Minnesota correctional facility-Sauk Centre and operate it at the Minnesota correctional facility-Red Wing.

$333,000 the second year is for housing and programming for female juvenile offenders committed to the commissioner of corrections.

$130,000 the first year and $130,000 the second year are to improve aftercare services for juveniles released from correctional facilities by adding two professional and one clerical positions.

The commissioner shall design the juvenile support network to provide aftercare services for these offenders. The network must coordinate support services in the community for returning juveniles. Counties, communities, and schools must develop and implement the network. The commissioner shall require aftercare programs to be incorporated into Community Corrections Act plans.

Subd. 4. Community Services

80,387,000 84,824,000

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$225,000 each year is for school-based probation pilot programs. Of this amount, $150,000 each year is for Dakota county and $75,000 each year is for Anoka county. This is a one-time appropriation.

$50,000 each year is for the Ramsey county enhanced probation pilot project. The appropriation may not be used to supplant law enforcement or county probation officer positions, or correctional services or programs. This is a one-time appropriation.

$200,000 the first year is for the gang intervention pilot project. This is a one-time appropriation.

$50,000 the first year and $50,000 the second year are for grants to local communities to establish and implement pilot project restorative justice programs.

$95,000 the first year is for the Dakota county family group conferencing pilot project established in Laws 1996, chapter 408, article 2, section 9. This is a one-time appropriation.

All money received by the commissioner of corrections pursuant to the domestic abuse investigation fee under Minnesota Statutes, section 609.2244, is available for use by the commissioner and is appropriated annually to the commissioner of corrections for costs related to conducting the investigations.

$750,000 each year is for an increase in community corrections act subsidy funding. The funding shall be distributed according to the community corrections aid formula in Minnesota Statutes, section 401.10.

$4,000,000 the second year is for juvenile residential treatment grants to counties to defray the cost of juvenile residential treatment. Eighty percent of this appropriation must be distributed to noncommunity corrections act counties and 20 percent must be distributed to community corrections act counties. The commissioner shall distribute the money according to the formula contained in Minnesota Statutes, section 401.10. By January 15, counties must submit a report to the commissioner describing the purposes for which the grants were used.

$60,000 the first year and $60,000 the second year are for the electronic alcohol monitoring of DWI and domestic abuse offenders pilot program.

$123,000 each year shall be distributed to the Dodge-Fillmore-Olmsted community corrections agency and $124,000 each year shall be distributed to the Arrowhead regional corrections agency for use in a pilot project to expand the agencies' productive day initiative programs, as defined in Minnesota Statutes, section 241.275, to include juvenile offenders who are 16 years of age and older. This is a one-time appropriation.

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$2,000,000 the first year and $2,000,000 the second year are for a statewide probation and supervised release caseload and workload reduction grant program. Counties that deliver correctional services through Minnesota Statutes, chapter 260, and that qualify for new probation officers under this program shall receive full reimbursement for the officers' salaries and reimbursement for the officers' benefits and support as set forth in the probations standards task force report, not to exceed $70,000 per officer annually. Positions funded by this appropriation may not supplant existing services. Position control numbers for these positions must be annually reported to the commissioner of corrections.

The commissioner shall distribute money appropriated for state and county probation officer caseload and workload reduction, increased intensive supervised release and probation services, and county probation officer reimbursement according to the formula contained in Minnesota Statutes, section 401.10. These appropriations may not be used to supplant existing state or county probation officer positions or existing correctional services or programs. The money appropriated under this provision is intended to reduce state and county probation officer caseload and workload overcrowding and to increase supervision of individuals sentenced to probation at the county level. This increased supervision may be accomplished through a variety of methods, including but not limited to: (1) innovative technology services, such as automated probation reporting systems and electronic monitoring; (2) prevention and diversion programs; (3) intergovernmental cooperation agreements between local governments and appropriate community resources; and (4) traditional probation program services.

$700,000 the first year and $700,000 the second year are for grants to judicial districts for the implementation of innovative projects to improve the administration of justice, including, but not limited to, drug courts, night courts, community courts, family courts, and projects emphasizing early intervention and coordination of justice system resources in the resolution of cases. Of this amount, up to $25,000 may be used to develop a gun education curriculum under article 2. This is a one-time appropriation.

During fiscal year 1998, up to $500,000 of unobligated funds available under Minnesota Statutes, section 401.10, subdivision 2, from fiscal year 1997 may be used for a court services tracking system for the counties. Notwithstanding Minnesota Statutes, section 401.10, subdivision 2, these funds are available for use in any county using the court services tracking system.

Before the commissioner uses money that would otherwise cancel to the general fund for the court services tracking system, the proposal for the system must be reviewed by the criminal and juvenile justice information policy group.

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$52,500 of the amount appropriated to the commissioner in Laws 1995, chapter 226, article 1, section 11, subdivision 3, for the criterion-related cross-validation study is available until January 1, 1998. The study must be completed by January 1, 1998.

Subd. 5. Crime Victim and Prevention Services

10,199,000 10,319,000

$50,000 the first year is to make grants, with the assistance of the crime victim prevention division, to organizations or local units of government providing support services to women leaving systems of prostitution. Grantees must provide an equal funding match. This is a one-time appropriation.

$103,000 the second year is to provide funding for one existing battered women's shelter in Washington county that currently is not funded; and $104,000 the second year is for one existing battered women's shelter in Goodhue county that currently is not funded.

During the biennium ending June 30, 1999, when awarding grants for victim's programs and services, the commissioner shall give priority to geographic areas that are unserved or underserved by programs or services.

$30,000 each year is for grants to the city of St. Paul to provide support services to the surviving family members of homicide, suicide, and accidental death victims. This is a one-time appropriation.

$55,000 the first year is for grants to the Hennepin and Ramsey county attorneys' offices to improve the education of landlords and tenants on best practices in the rental market. This is a one-time appropriation.

The commissioner of corrections shall use dedicated receipts to implement a victim notification system designed to reduce the probability of further harassment of the victim. The system must allow the victim to make toll-free calls to a call center and obtain information about inmates regarding their current status and location.

Subd. 6. Management Services

9,271,000 9,459,000

Sec. 13. CORRECTIONS OMBUDSMAN 565,000 580,000

Sec. 14. SENTENCING GUIDELINES COMMISSION 435,000 445,000

Sec. 15. HUMAN RIGHTS

Subdivision 1. Total Appropriation 3,763,000 3,790,000

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By July 1, 1997, and every six months thereafter, the commissioner shall report the following information to the chairs of the senate and house divisions having jurisdiction over criminal justice funding and the chairs of the senate judiciary committee and the house civil and family law division:

(1) the number of cases filed and the percentage still open;

(2) the distribution of filed cases by alleged area and basis of discrimination;

(3) the number of open cases in the department's inventory and an inventory breakdown by case age;

(4) the average caseload per full-time enforcement officer;

(5) the number of cases closed during the preceding six months;

(6) the breakdown of closed cases, including the percentages that were dismissed, withdrawn, closed after a probable cause determination, closed after no probable cause was found, or settled;

(7) the average length of time to dismiss a case;

(8) the average length of time to issue a probable cause determination;

(9) the number and percentage of filed cases in the preceding six months recommended for ADR;

(10) the number of cases resolved in ADR and the average length of time in ADR; and

(11) the number of cases returned from ADR for department investigation.

Subd. 2. Contract Compliance

386,000 395,000

Subd. 3. Complaint Processing

2,675,000 2,679,000

$50,000 the first year is for a program for testing whether the Human Rights Act, Minnesota Statutes, chapter 363, is being complied with in the area of rental housing. The program must include tests to determine the frequency of incidents of racial discrimination. The department shall report to the chairs of the senate and house divisions having jurisdiction over criminal justice funding and the chairs of the senate judiciary committee and house civil and family law division by January 1, 1998, on the results and effectiveness of the program. This is a one-time appropriation.

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Subd. 4. Management Services and Administration

702,000 716,000

Sec. 16. UNIFORM LAWS COMMISSION 35,000 36,000

Sec. 17. ECONOMIC SECURITY 650,000 650,000

$650,000 the first year and $650,000 the second year are for grants to cities of the first class and to cities that are contiguous to cities of the first class in greater Minnesota, that demonstrate a need for creating and expanding curfew enforcement, truancy prevention, and pretrial diversion programs. Programs funded under this provision must have clearly established neighborhood, community, and family outcome measures of success and must report to the commissioner on the achievement of these outcomes on or before June 30, 1999. This appropriation may not be added to the department's budget base for the 2000-2001 biennium.

Sec. 18. ATTORNEY GENERAL 125,000 125,000

$125,000 each year is for a grant to the DARE advisory council to be used to continue existing education programs in elementary schools and to expand the program into junior and senior high schools. This is a one-time appropriation.

Sec. 19. DEFICIENCY APPROPRIATION

Fiscal Year 1997

General 1,393,000

This appropriation for fiscal year 1997 is added to the appropriation in Laws 1995, chapter 226, article 1, section 7, subdivision 2, to provide matching funds for federal emergency management assistance funds received for natural disaster assistance payments.

Sec. 20. [PLAN FOR FUNDING CRIME VICTIM SERVICES.]

The commissioners of the departments of corrections and public safety will provide a report to the chairs of the house judiciary finance division and the senate crime prevention and judiciary finance division by February 1, 1998. The report will contain a comprehensive coordinated plan for establishing and funding statewide services for battered women, sexual assault, and general crime victims.

Sec. 21. [YEAR 2000 READY.]

Any computer software or hardware that is purchased with money appropriated in this article must be year 2000 ready.

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ARTICLE 2

CRIME PREVENTION AND COMMUNITY SAFETY PROGRAMS

Section 1. Minnesota Statutes 1996, section 299C.065, subdivision 1, is amended to read:

Subdivision 1. [GRANTS.] The commissioner of public safety shall make grants to local officials for the following purposes:

(1) the cooperative investigation of cross jurisdictional criminal activity relating to the possession and sale of controlled substances;

(2) receiving or selling stolen goods;

(3) participating in gambling activities in violation of section 609.76;

(4) violations of section 609.322, 609.323, or any other state or federal law prohibiting the recruitment, transportation, or use of juveniles for purposes of prostitution; and

(5) for partial reimbursement of local costs associated with unanticipated, intensive, long-term, multijurisdictional criminal investigations that exhaust available local resources, except that the commissioner may not reimburse the costs of a local investigation involving a child who is reported to be missing and endangered unless the law enforcement agency complies with section 299C.53 and the agency's own investigative policy; and

(6) for partial reimbursement of local costs associated with criminal investigations into the activities of violent criminal gangs and gang members.

Sec. 2. Laws 1995, chapter 226, article 2, section 37, subdivision 2, is amended to read:

Subd. 2. [PILOT PROGRAM ESTABLISHED.] In cooperation with the conference of chief judges, the state court administrator, and the commissioner of public safety, the commissioner of corrections shall establish a three-year pilot program to evaluate the effectiveness of using breath analyzer units to monitor DWI and domestic abuse offenders who are ordered to abstain from alcohol use as a condition of pretrial release, supervised release, or probation. The pilot program must include procedures ensuring that violators of this condition of release receive swift consequences for the violation.

The commissioner of corrections shall select at least two judicial districts to participate in the pilot program. Offenders who are ordered to use a breath analyzer unit shall also be ordered to pay the per diem cost of the monitoring unless the offender is indigent. The commissioner of corrections shall reimburse the judicial districts for any costs the districts incur in participating in the program.

After three years, the commissioner of corrections shall evaluate the effectiveness of the program and shall report the results of this evaluation to the conference of chief judges, the state court administrator, the commissioner of public safety, and the chairs of the house of representatives and senate committees having jurisdiction over criminal justice policy and finance.

Sec. 3. [GANG INTERVENTION SERVICES; PILOT GRANT PROGRAM.]

Subdivision 1. [GANG INTERVENTION.] The commissioner of corrections shall develop and administer a gang intervention pilot grant program to provide services to young persons who are interested in terminating their gang affiliation. This program shall assist local organizations engaged in helping gang members separate themselves from their gang affiliation by providing services to former members of criminal gangs. The commissioner shall develop a grant application that specifies the eligibility criteria for receiving grants and sets a formula for the match requirement.

Subd. 2. [ELIGIBILITY FOR GRANTS.] A local organization must meet the following criteria to be eligible for a grant under the program:

(1) it must be a private, nonprofit organization or a local public agency;

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(2) it must offer and provide to clients of the program services to help gang members terminate their affiliation with gangs, including educational opportunities, job skill development, life skills, community service, medical services, and counseling; and

(3) it must provide matching funds or in-kind services in compliance with the formula set by the commissioner of corrections.

Subd. 3. [ELIGIBILITY FOR SERVICES.] A person who seeks to receive services under this section must meet the following criteria:

(1) at the time the person is accepted into the program, the person must not be older than 25 years of age or be under the custody of the commissioner of corrections;

(2) the person must not have received substantially similar services previously from the grant program or any other publicly funded program;

(3) the person must be employable, as determined by the grantee organization; and

(4) the person must agree to comply with all of the program participation requirements established by the grantee organization, including performing any required community service.

Subd. 4. [REPORT TO LEGISLATURE.] On or before January 15, 1999, the commissioner of corrections shall submit a report to the chairs of the senate and house divisions having jurisdiction over criminal justice funding evaluating the operating of the pilot grant program established in this section.

Sec. 4. [ENHANCED PROBATION PILOT PROJECT; RAMSEY COUNTY.]

Subdivision 1. [ESTABLISHMENT.] A pilot project is created in Ramsey county to establish and implement an enhanced probation law enforcement community partnership program. This program will provide intensive monitoring and coordination between juvenile probation officers, local law enforcement personnel, and culturally specific community nonprofit agencies to best deal with juvenile probationers who have committed or who are at risk to commit violent crimes, especially likely to involve weapons, and who are associated with gang and drug activities in Ramsey county.

Subd. 2. [PILOT PROJECT.] (a) The pilot project is a local Ramsey county community-based program designed to discourage young people from involvement in unlawful drug or street gang activities usually involving violence and weapons. It will provide a bridge among the law enforcement, corrections, and culturally-specific, community-based programs designed to provide a more intensive intervention effort, including during evenings and weekends, with juvenile offenders on probation who are identified as likely to engage in repeated criminal activity in the future unless intervention is undertaken through intensive surveillance, accountable consequences for probation violations, and the use of culturally-sensitive treatment programs that are innovative and that encourage substantial involvement by members of the community served by the program.

(b) This is a pilot project for Ramsey county, the city of St. Paul, and other local law enforcement agencies along with nonprofit community-based entities who may apply for a grant by submitting an application to Ramsey county for a portion of the state funding.

(c) The applicant nonprofit community-based entities must specify the following in their applications:

(1) a description of each program for which funding is sought;

(2) intended outcomes and performance indicators for the program;

(3) a description of the planning process that identifies local community needs, surveys existing programs, provides for coordination with existing programs, and involves all affected sectors of the community;

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(4) the geographical area to be served by the program; and

(5) the culturally-specific group to be served.

Subd. 3. [REPORT ON PILOT PROJECT.] Ramsey county shall provide a summary of how the grant funds are spent and the extent to which the objectives of the program are achieved. The summary is to be submitted to the chairs of the committees of the senate and house of representatives with jurisdiction over criminal justice policy and funding of crime prevention programs, by March 1 each year, based on the information provided by applicants under this section and the results of the enforcement efforts of the joint police-probation officer teams.

Sec. 5. [PILOT PROJECT FOR SCHOOL-BASED PROBATION IN DAKOTA AND ANOKA COUNTIES.]

Subdivision 1. [PILOT PROJECT ESTABLISHED.] By July 1, 1997, the commissioner of corrections shall establish school-based probation pilot projects in Dakota and Anoka counties.

Subd. 2. [PROGRAM DESIGN AND IMPLEMENTATION.] Dakota and Anoka counties shall each select one middle or junior high school and one high school to participate in the school-based probation pilot project. Each county may select one additional middle, junior high, or high school for a total of no more than three schools in each county. Each county shall select as participating schools those schools which are able to provide necessary support for the program, such as office space, access to the building during nonschool hours, and a willingness to develop alternative disciplinary responses. Each school-based probation program established shall contain a probation officer located at the school who is available to help the school address behavioral incidents in the school by probationers. The probation officer shall help in:

(1) conducting cognitive/behavioral group sessions along with school personnel providing cofacilitation assistance;

(2) developing and administering alternatives to school discipline actions such as suspension, which may include mediation, community service, or home confinement;

(3) working more closely with the school and communicating with and engaging the family's support of the juvenile's school work and behavior; and

(4) referring and brokering with other schools' services to align the probationer and the probationer's family with needed services.

Subd. 3. [DATA PRACTICES.] Data created, collected, used, or maintained by school-based probation officers and school officials participating in this pilot project are private data on individuals as defined in Minnesota Statutes, section 13.02, subdivision 12, and may be disseminated among personnel working with the school-based probation project and as follows:

(1) pursuant to Minnesota Statutes, section 13.05;

(2) pursuant to a valid court order;

(3) pursuant to a statute specifically authorizing access to the private data;

(4) as allowed in Code of Federal Regulations, title 34, part 99; or

(5) within the participating school district or educational entity as necessary to protect persons or property or to address the educational and other needs of students.

Subd. 4. [REPORT REQUIRED.] By January 15, 1999, the commissioner of corrections shall report to the chairs of the senate and house of representatives committees having jurisdiction over criminal justice policy on the effectiveness of the pilot project and any school-based probation programs created under this section. The report shall address the effectiveness of the pilot project by measuring reduction in school suspensions, improvement in grades, reduction of truant behavior, reduction in number and severity of delinquent behaviors, increase in number who return to school, and increase in number who succeed in school.

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Sec. 6. [WORKING GROUP ON RESTITUTION.]

Subdivision 1. [CREATION; DUTIES.] A working group is created to study methods to improve the collection of restitution and the enforcement of restitution orders for repeat offenders. The working group must consider the feasibility of:

(1) incarcerating offenders who have been convicted two or more times of committing an offense for which restitution to a victim, as defined in Minnesota Statutes, section 611A.01, or to society is owed or should be paid, including but not limited to violations of Minnesota Statutes, sections 169.121 (DWI) or 169.129 (aggravated DWI); 609.375 (nonpayment of child support); 609.52 (theft); 609.561 to 609.563 (arson); or 609.582 (burglary);

(2) requiring these inmates to work at a fair market wage; and

(3) enabling inmates to first pay restitution to their victims, after satisfying any outstanding or ongoing child support or spousal maintenance obligations, and secondly, to pay the operating costs of their confinement, including the costs of any privileges, treatment, or services received by the inmates in the facility.

Subd. 2. [MEMBERSHIP.] The working group consists of the following 14 members:

(1) the commissioner of corrections or the commissioner's designee;

(2) two district court judges appointed by the chief justice, one from the metropolitan area, and one from outside the metropolitan area;

(3) the ombudsman for crime victims;

(4) the ombudsman for corrections;

(5) a representative of the Minnesota association of community corrections act counties appointed by the president of the association;

(6) a representative of the Minnesota association of county probation officers appointed by the president of the association;

(7) two members of the house of representatives appointed by the speaker, and two members of the senate appointed by the subcommittee on committees. These appointments must be made in a manner that ensures a fair representation of viewpoints on business and labor issues;

(8) one crime victim appointed by the crime victim and witness advisory council;

(9) one representative of the business community appointed by the commissioner of corrections after consultation with the Minnesota business partnership and the Minnesota chamber of commerce; and

(10) one representative of labor unions appointed by the commissioner of corrections after consultation with public and private labor organizations from the affiliated membership of the Minnesota AFL-CIO.

The commissioner of corrections or the commissioner's designee shall chair and provide necessary staff support to the working group.

Subd. 3. [ADDITIONAL DUTIES.] (a) The working group shall study the feasibility of and develop recommendations concerning guidelines for sentencing courts to use when sentencing offenders to incarceration and when ordering offenders to pay restitution to crime victims or to the public.

(b) The working group shall investigate whether it would be feasible for the state to enter into a long-term contract with one or more business entities under which the business entity would employ inmates at a fair market wage. The commissioner of corrections would ensure that inmates use the wages they earn to pay restitution to their victims according to restitution guidelines approved by the chairs of the house and senate committees and divisions having jurisdiction over

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criminal justice funding and policy, and to pay the costs of their confinement. Based on this investigation, the working group shall make recommendations to the legislature by February 1, 1998, regarding the type of business entity or entities with which the state could contract to operate an industry program.

(c) The working group shall examine current methods of collecting restitution and determine whether there are better ways of collecting restitution and enforcing restitution orders within the current criminal justice system.

Sec. 7. [PILOT PROGRAM; JUVENILE GUN OFFENDERS.]

A pilot program is established in Hennepin county for juveniles who are found delinquent for illegally possessing a pistol. Under this pilot program, judges may order that these juveniles be committed to a local county correctional facility for not less than 30 days, and that 23 days of this commitment be stayed on condition that the juvenile reside in a juvenile correctional facility for at least seven days and successfully complete a 40-hour course on gun education provided by the facility. The court must revoke the stay of commitment if the juvenile fails to complete the gun education course. The county shall submit a report to the legislature by January 1, 1999, evaluating the pilot program.

Sec. 8. [HENNEPIN AND RAMSEY COUNTIES COMMUNITY SERVICE GRANT PROGRAM PILOT PROJECTS.]

Subdivision 1. [GRANT PROGRAM.] Hennepin and Ramsey counties shall each establish and administer a pilot project grant program to fund community-based programs in high-crime areas that provide opportunities for children under age 16 to volunteer for and perform community service. Programs qualifying for grants must encourage responsibility and good citizenship on the part of participating children and discourage them from engaging in illegal activities or associating with criminal gangs. Programs receiving grants may provide children who perform community service with appropriate nonmonetary rewards including, but not limited to, partial scholarships for post-secondary education, gift certificates, tickets for entertainment, parties, and group outings.

Subd. 2. [ELIGIBILITY CRITERIA.] Hennepin and Ramsey counties shall establish criteria for determining the community-based programs eligible for grants under subdivision 1. Eligible programs must:

(1) have a broad network of established economic and social relationships within the community and with local governmental units;

(2) represent a broad range of diversity;

(3) have demonstrated an ability to administer community-based programs and have a history of successful community organizing;

(4) have a proven history of properly supervising and successfully interacting with juveniles; and

(5) have demonstrated an ability to work with parents of juveniles and schools.

Sec. 9. [FIREFIGHTER TRAINING STUDY COMMITTEE.]

Subdivision 1. [MEMBERSHIP; CHAIR.] (a) The firefighter training study committee consists of:

(1) two representatives of the Minnesota state fire chiefs association, appointed by the president of the association;

(2) two representatives of the Minnesota professional firefighters, appointed by the president of the organization;

(3) four representatives of the Minnesota state fire department association, at least two of whom are volunteer firefighters serving a city or area with a population under 10,000 outside the seven-county metropolitan area, appointed by the president of the organization;

(4) two representatives of the league of Minnesota cities, appointed by the president of the league;

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(5) the director of the Minnesota state colleges and universities FIRE/EMS center, or the director's designee;

(6) a public member, appointed by the governor;

(7) an employee of the department of labor and industry whose responsibilities include fire-related occupational safety and health activities, appointed by the commissioner of labor and industry;

(8) the commissioner of public safety or the commissioner's designee;

(9) two members of the house of representatives, one from each caucus; one representing a district within the metropolitan area as defined in Minnesota Statutes, section 473.121, subdivision 2, and the other representing a district outside the metropolitan area, appointed by the speaker; and

(10) two members of the senate, one from each caucus; one representing a district within the metropolitan area as defined in Minnesota Statutes, section 473.121, subdivision 2, and the other representing a district outside the metropolitan area, appointed by the subcommittee on committees of the committee on rules and administration.

(b) The committee shall elect a chair from the members.

Subd. 2. [ADMINISTRATIVE SUPPORT.] The commissioner of public safety shall provide necessary administrative and staff support to the committee.

Subd. 3. [COMPENSATION.] Committee members who are not public officials or employees are entitled to reimbursement for expenses in accordance with Minnesota Statutes, section 15.059, subdivision 6. Legislative members are entitled to compensation in accordance with rules of the house of representatives and the senate.

Subd. 4. [DUTIES.] (a) The committee shall:

(1) review findings and recommendations of the joint advisory training committee formed by the Minnesota state fire department association, the Minnesota state fire chiefs association, and the Minnesota professional firefighters;

(2) conduct further study of firefighter training needs and options;

(3) consider current funding for firefighter training, determine any need for additional funding, and recommend possible sources of the funding;

(4) consider the current delivery system for firefighter training, including statewide coordinating of training, and any needed improvements;

(5) consider the selection and evaluation of training instructors and any needed improvements;

(6) study levels of service delivery and any need for standardized training;

(7) consider federal and state laws and standards that affect firefighter training;

(8) determine a fair system for reimbursing local jurisdictions for training programs; and

(9) consider the need for centralized administrative direction of training programs.

(b) The committee shall conduct at least three, but no more than five, public meetings around the state to gather public input relevant to paragraph (a). Before submitting the report required by subdivision 5, the committee shall prepare and disseminate a draft report and seek public comment on it. A record of comment received must be kept and submitted along with the report required by subdivision 5. At least one-half of the meetings must take place outside the seven-county metropolitan area.

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Subd. 5. [REPORT.] The committee shall submit a report and its recommendations to the chairs of the senate and house committees or divisions having jurisdiction over criminal justice policy and funding by February 1, 1998. The report must identify any changes in statutes required to implement the committee's recommendations. The committee expires upon submission of the report.

Subd. 6. [LOCAL COOPERATION.] Local government units shall cooperate with the committee in the preparation of the report required by subdivision 5.

Sec. 10. [BOARD ON JUDICIAL STANDARDS; AWARD OF COSTS AND ATTORNEY FEES.]

Subdivision 1. [AWARD.] The board on judicial standards may award reasonable costs and attorney fees to a judge if:

(1) a formal hearing under the Minnesota Rules of the Board on Judicial Standards, rule 10, was held on the charges against the judge;

(2) the findings and recommendations of the panel concluded that the judge did not use the judicial office to advance a personal or private goal and that the judge was acting on matters of concern to the judge in the judge's official capacity;

(3) the findings and recommendations of the panel concluded that the case served a public purpose by increasing public awareness of the judicial system and the problems with which it is faced; and

(4) the board dismissed the charges and found that the judge did not violate the rules of judicial conduct, judicial standards, or professional conduct.

Subd. 2. [APPLICATION.] A judge against whom charges have previously been dismissed may apply to the board on judicial standards for an award of costs and attorney fees under subdivision 1.

Sec. 11. [RESTORATIVE JUSTICE PROGRAMS.]

A local governmental unit may establish a restorative justice program. A restorative justice program is a program that provides forums that may be an alternative to prosecution where certain individuals charged with having committed a crime meet with the victim; the victim's family members or other supportive persons, if appropriate; the offender's family members or other supportive persons, if appropriate; a law enforcement official or prosecutor when appropriate; and members of the community, in order to:

(1) discuss the impact of the offense on the victim and the community;

(2) assign an appropriate sanction to the offender; and

(3) provide methods for reintegrating the offender into the community when the offender is from the community.

Sec. 12. [FAMILY VIOLENCE COORDINATING COUNCILS.]

Subdivision 1. [ESTABLISHMENT; PURPOSE.] A judicial district may establish a family violence coordinating council for the purpose of promoting innovative efforts to deal with family violence issues. A coordinating council shall establish and promote interdisciplinary programs and initiatives to coordinate public and private legal and social services and law enforcement, prosecutorial, and judicial activities.

Subd. 2. [MEMBERSHIP.] The chief judge shall appoint the members of a family violence coordinating council. Members must include representatives of the following groups:

(1) judges, court administrators, and probation authorities;

(2) domestic abuse advocates and others who provide social services to adult and child victims of domestic abuse and perpetrators of domestic abuse;

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(3) health care and mental health care providers;

(4) law enforcement and prosecutors;

(5) public defenders and legal aid;

(6) educators and child protection workers; and

(7) public officials and other public organizations.

Subd. 3. [PLAN.] A family violence coordinating council shall develop a plan for coordinating activities of its membership relating to family violence issues and improving activities and services, including:

(1) interdisciplinary training and systemic approaches to family violence issues;

(2) identification of current weaknesses in the system and areas where additional resources are needed, and ways to improve those components;

(3) promoting public and private partnerships in the delivery of services and the use of volunteer services;

(4) identification of differences in approaches and needs in different demographic populations;

(5) developing protocols for investigation and prosecution of domestic abuse, including issues related to victim cooperation and interviewing and investigative techniques;

(6) coordination of city and county prosecutorial efforts, including standards for referral of cases, coordinated prosecutions, and cross-deputization of prosecutors;

(7) evaluation of dismissal, conviction, and sentencing levels and practices and relationship to reported incidents of domestic abuse, cases investigated and prosecuted, and severity of abuse; and

(8) coordination of family, juvenile, and criminal court proceedings involving family violence issues.

Subd. 4. [EVALUATION.] A family violence coordinating council shall develop a system for evaluating the effectiveness of its initiatives and programs in improving the coordination of activities and delivery of services and shall focus on identifiable goals and outcomes. An evaluation must include data components as well as input from individuals involved in family violence activities and services, victims, and perpetrators.

Sec. 13. [FOURTH JUDICIAL DISTRICT FAMILY VIOLENCE COORDINATING COUNCIL PILOT PROGRAM.]

The commissioner of public safety shall make a grant to the fourth judicial district for the planning of a family violence coordinating council under section 12. The grant may be made to develop a plan and evaluation system under section 12, subdivisions 3 and 4. By July 1 of each year, the district shall report on the activities of the council to the commissioner. By January 15, 2000, the commissioner shall report to the chairs of the senate and house divisions having jurisdiction over criminal justice funding on the pilot program, including recommendations for legislation.

ARTICLE 3

GENERAL CRIME PROVISIONS

Section 1. Minnesota Statutes 1996, section 169.20, subdivision 5, is amended to read:

Subd. 5. [EMERGENCY VEHICLE.] (a) Upon the immediate approach of an authorized emergency vehicle equipped with at least one lighted lamp exhibiting red light visible under normal atmospheric conditions from a distance of 500 feet to the front of such vehicle and, except where otherwise not required by law, when the driver is giving audible signal by

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siren, the driver of each other vehicle shall yield the right-of-way and shall immediately drive to a position parallel to and as close as possible to the right-hand edge or curb of the highway clear of any intersection, and shall stop and remain in this position until the authorized emergency vehicle has passed, except when otherwise directed by a police officer. The driver of another vehicle on a one-way roadway shall drive to the closest edge or curb and stop. The driver of an authorized emergency vehicle escorting the movement of a vehicle or load which is oversize or overweight need not sound an audible signal by siren but shall exhibit the light required by this paragraph. The driver of each other vehicle then shall yield the right-of-way, as required by this paragraph, to the emergency vehicle escorting the vehicle or load which is oversize or overweight.

(b) Upon the approach of an authorized emergency vehicle the driver of each street car and the operator of each trackless trolley car shall immediately stop such car clear of any intersection and keep it in this position and keep the doors and gates of the street car or trackless trolley car closed until the authorized emergency vehicle has passed, except when otherwise directed by a police officer.

(c) A peace officer may arrest the driver of a motor vehicle if the peace officer has probable cause to believe that the driver has operated the vehicle in violation of paragraph (a) within the four-hour period following the termination of the emergency incident.

(d) This subdivision shall not operate to relieve the driver of an authorized emergency vehicle from the duty to drive with due regard for the safety of persons using the highways.

Sec. 2. Minnesota Statutes 1996, section 169.797, subdivision 3, is amended to read:

Subd. 3. [VIOLATION BY DRIVER.] Any other person who operates a vehicle upon a public highway, street, or road in this state who knows or has reason to know that the owner does not have security complying with the terms of section 65B.48 in full force and effect is guilty of a crime and shall be sentenced as provided in subdivision 4.

Sec. 3. Minnesota Statutes 1996, section 388.23, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY.] The county attorney, or any deputy or assistant county attorney whom the county attorney authorizes in writing, has the authority to subpoena and require the production of any records of telephone companies, cellular phone companies, paging companies, the names and addresses of subscribers of private computer networks including Internet service providers or computer bulletin board systems, electric companies, gas companies, water utilities, chemical suppliers, hotels and motels, pawn shops, airlines, buses, taxis, and other entities engaged in the business of transporting people, and freight companies, warehousing companies, self-service storage facilities, package delivery companies, and other entities engaged in the businesses of transport, storage, or delivery, and records of the existence of safe deposit box account numbers and customer savings and checking account numbers maintained by financial institutions and safe deposit companies, insurance records relating to the monetary payment or settlement of claims, and wage and employment records of an applicant or recipient of public assistance who is the subject of a welfare fraud investigation relating to eligibility information for public assistance programs. Subpoenas may only be issued for records that are relevant to an ongoing legitimate law enforcement investigation. Administrative subpoenas may only be issued in welfare fraud cases if there is probable cause to believe a crime has been committed. This provision applies only to the records of business entities and does not extend to private individuals or their dwellings. Subpoenas may only be served by peace officers as defined by section 626.84, subdivision 1, paragraph (c).

Sec. 4. Minnesota Statutes 1996, section 609.101, subdivision 5, is amended to read:

Subd. 5. [WAIVER PROHIBITED; REDUCTION AND INSTALLMENT PAYMENTS.] (a) The court may not waive payment of the minimum fine, surcharge, or assessment required by this section. The court may reduce the amount of the minimum fine, surcharge, or assessment

(b) If the defendant qualifies for the services of a public defender or the court makes written findings finds on the record that the convicted person is indigent or that immediate payment of the fine, surcharge, or assessment would create undue hardship for the convicted person or that person's immediate family, the court may reduce the amount of the minimum fine to not less than $50.

(c) The court also may authorize payment of the fine, surcharge, or assessment in installments.

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Sec. 5. [609.113] [SENTENCE TO WORK PROGRAM FOR CERTAIN OFFENDERS.]

Subdivision 1. [MANDATORY SENTENCE.] (a) Except as provided in paragraph (b), if a court stays the imposition or execution of sentence under section 609.135 for an adult male who is convicted of a first- or second-time nonviolent felony offense, and who has never been previously convicted of or adjudicated for committing an offense against the person, the court, in addition to any other intermediate sanctions ordered and as a condition of probation, shall order the person to satisfactorily complete the work program for the period of time specified in subdivision 4, paragraph (a).

If the work program is full at the time of sentencing, the court may sentence the person to any sentence authorized in section 609.10 or 609.135. The court may sentence the person to the program and require that the person be placed in the program when an opening occurs.

(b) If the court determines, based on substantial and compelling reasons, that a person described in paragraph (a) would receive a more appropriate sanction and level of care through an alternative disposition using local correctional resources, the court may sentence the person to a disposition not involving the work program notwithstanding paragraph (a). This sentence must include a sanction of equivalent or greater severity as the work program.

If a court sentences a person under this paragraph, the court shall make written findings as to the reasons for not using the work program. The court shall forward these findings, including the alternative sentence imposed, to the sentencing guidelines commission.

Subd. 2. [PERMISSIVE SENTENCE.] A court may sentence a person who has never previously been convicted of or adjudicated for committing an offense against the person to satisfactorily complete the work program for a period of time authorized in subdivision 4, paragraph (b), if the person:

(1) is convicted of a nonviolent felony offense other than a first- or second-time nonviolent felony offense and the court is staying the imposition or execution of sentence under section 609.135; or

(2) is convicted of a nonviolent gross misdemeanor offense.

This sentence may be in addition to any other sanctions ordered by the court.

Subd. 3. [OFFENDERS INELIGIBLE FOR PROGRAM.] A person is ineligible to be sentenced to the work program if:

(1) the court determines that the person has a debilitating chemical dependency or serious mental health problem; or

(2) the person has been convicted of a nonviolent felony or gross misdemeanor offense after having initially been charged with committing a crime against the person.

Subd. 4. [LENGTH OF SENTENCE.] (a) If the court determines that the offense is the person's first nonviolent felony offense, the court shall sentence the person to the work program for 60 days. If the court determines that the offense is the person's second nonviolent felony offense, the court shall sentence the person to the work program for 90 days.

(b) The court may sentence a person described in subdivision 2 as follows:

(1) if the person is convicted of a nonviolent felony offense, the court may sentence the person to the work program for up to 90 days; or

(2) if the person is convicted of a nonviolent gross misdemeanor offense, the court may sentence the person to the work program for up to 30 days.

(c) The person shall be placed in the work program as soon as possible after the sentencing to ensure swift consequences for the offense.

Subd. 5. [REPORT.] By January 15, 1999, and each year thereafter, the sentencing guidelines commission shall issue a report to the chairs of the senate and house committees and divisions having jurisdiction over criminal justice policy and funding summarizing the information received from courts under subdivision 1, paragraph (b).

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Subd. 6. [DEFINITIONS.] For purposes of this section, "nonviolent felony offense" and "nonviolent gross misdemeanor offense" do not include crimes against the person.

Sec. 6. Minnesota Statutes 1996, section 609.125, is amended to read:

609.125 [SENTENCE FOR MISDEMEANOR OR GROSS MISDEMEANOR.]

Upon conviction of a misdemeanor or gross misdemeanor the court, if sentence is imposed, may, to the extent authorized by law, sentence the defendant:

(1) to imprisonment for a definite term; or

(2) to payment of a fine, or to imprisonment for a specified term if the fine is not paid; or

(3) to both imprisonment for a definite term and payment of a fine; or

(4) to payment of court-ordered restitution in addition to either imprisonment or payment of a fine, or both; or

(5) to payment of a local correctional fee as authorized under section 609.102 in addition to any other sentence imposed by the court; or

(6) to perform work service in a restorative justice program in addition to any other sentence imposed by the court.

As used in this section, "restitution" includes:

(i) payment of compensation to the victim or the victim's family; and

(ii) if the victim is deceased or already has been fully compensated, payment of money to a victim assistance program or other program directed by the court.

In controlled substance crime cases, "restitution" also includes payment of compensation to a government entity that incurs loss as a direct result of the controlled substance crime.

Sec. 7. Minnesota Statutes 1996, section 609.135, subdivision 1, is amended to read:

Subdivision 1. [TERMS AND CONDITIONS.] (a) Except when a sentence of life imprisonment is required by law, or when a mandatory minimum sentence is required by section 609.11, any court may stay imposition or execution of sentence and:

(a) (1) may order intermediate sanctions without placing the defendant on probation,; or

(b) (2) may place the defendant on probation with or without supervision and on the terms the court prescribes, including intermediate sanctions when practicable. The court may order the supervision to be under the probation officer of the court, or, if there is none and the conviction is for a felony or gross misdemeanor, by the commissioner of corrections, or in any case by some other suitable and consenting person. No intermediate sanction may be ordered performed at a location that fails to observe applicable requirements or standards of chapter 181A or 182, or any rule promulgated under them.

(b) For purposes of this subdivision, subdivision 6, and section 609.14, the term "intermediate sanctions" includes but is not limited to incarceration in a local jail or workhouse, home detention, electronic monitoring, intensive probation, sentencing to service, reporting to a day reporting center, chemical dependency or mental health treatment or counseling, restitution, fines, day-fines, community work service, work service in a restorative justice program, work in lieu of or to work off fines and, with the victim's consent, work in lieu of or to work off restitution.

(c) A court may not stay the revocation of the driver's license of a person convicted of violating the provisions of section 169.121.

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Sec. 8. Minnesota Statutes 1996, section 609.15, subdivision 1, is amended to read:

Subdivision 1. [CONCURRENT, CONSECUTIVE SENTENCES; SPECIFICATION REQUIREMENT.] (a) When separate sentences of imprisonment are imposed on a defendant for two or more crimes, whether charged in a single indictment or information or separately, or when a person who is under sentence of imprisonment in this state is being sentenced to imprisonment for another crime committed prior to or while subject to such former sentence, the court in the later sentences shall specify whether the sentences shall run concurrently or consecutively. If the court does not so specify, the sentences shall run concurrently.

(b) When a court imposes sentence for a misdemeanor or gross misdemeanor offense and specifies that the sentence shall run consecutively to any other sentence, the court may order the defendant to serve time in custody for the consecutive sentence in addition to any time in custody the defendant may be serving for any other offense, including probationary jail time or imprisonment for any felony offense.

Sec. 9. [609.153] [INCREASED PENALTIES FOR CERTAIN MISDEMEANORS.]

Subdivision 1. [APPLICATION.] This section applies to the following misdemeanor-level crimes: sections 609.324 (prostitution); 609.546 (motor vehicle tampering); 609.595 (damage to property); and 609.66 (dangerous weapons); and violations of local ordinances prohibiting the unlawful sale or possession of controlled substances.

Subd. 2. [CUSTODIAL ARREST.] Notwithstanding Rule 6.01 of the Rules of Criminal Procedure, a peace officer acting without a warrant who has decided to proceed with the prosecution of a person for committing a crime described in subdivision 1, may arrest and take the person into custody if the officer has reason to believe the person has a prior conviction for any crime described in subdivision 1.

Subd. 3. [INCREASED PENALTY.] Notwithstanding the statutory maximum penalty otherwise applicable to the offense, a person who commits a misdemeanor-level crime described in subdivision 1 is guilty of a gross misdemeanor if the court determines at the time of sentencing that the person has two or more prior convictions in this or any other state for any of the crimes described in subdivision 1.

Subd. 4. [NOTICE TO COMPLAINING WITNESS.] A prosecuting authority who is responsible for filing charges against or prosecuting a person arrested under the circumstances described in subdivision 2 shall make reasonable efforts to notify the complaining witness of the final outcome of the criminal proceeding that resulted from the arrest including, where appropriate, the decision to dismiss or not file charges against the arrested person.

Sec. 10. Minnesota Statutes 1996, section 609.221, is amended to read:

609.221 [ASSAULT IN THE FIRST DEGREE.]

Subdivision 1. [GREAT BODILY HARM.] Whoever assaults another and inflicts great bodily harm may be sentenced to imprisonment for not more than 20 years or to payment of a fine of not more than $30,000, or both.

Subd. 2. [USE OF DEADLY FORCE AGAINST PEACE OFFICER OR CORRECTIONAL EMPLOYEE.] (a) Whoever assaults a peace officer or correctional employee by using or attempting to use deadly force against the officer or employee while the officer or employee is engaged in the performance of a duty imposed by law, policy, or rule, may be sentenced to imprisonment for not more than 20 years or to payment of a fine of not more than $30,000, or both.

(b) A person convicted of assaulting a peace officer or correctional employee as described in paragraph (a) shall be committed to the commissioner of corrections for not less than ten years, nor more than 20 years. A defendant convicted and sentenced as required by this paragraph is not eligible for probation, parole, discharge, work release, or supervised release, until that person has served the full term of imprisonment as provided by law, notwithstanding the provisions of sections 241.26, 242.19, 243.05, 244.04, 609.12, and 609.135. Notwithstanding section 609.135, the court may not stay the imposition or execution of this sentence.

(c) As used in this subdivision:

(1) "correctional employee" means an employee of a public or private prison, jail, or workhouse;

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(2) "deadly force" has the meaning given in section 609.066, subdivision 1; and

(3) "peace officer" has the meaning given in section 626.84, subdivision 1.

Sec. 11. Minnesota Statutes 1996, section 609.2245, subdivision 2, is amended to read:

Subd. 2. [PERMITTED ACTIVITIES.] A surgical procedure is not a violation of subdivision 1 if the procedure:

(1) is necessary to the health of the person on whom it is performed and is performed by: (i) a physician licensed under chapter 147 or; (ii) a physician in training under the supervision of a licensed physician; or (iii) a certified nurse midwife practicing within the nurse midwife's legal scope of practice; or

(2) is performed on a person who is in labor or who has just given birth and is performed for medical purposes connected with that labor or birth: (i) by a physician licensed under chapter 147 or; (ii) a physician in training under the supervision of a licensed physician; or (iii) a certified nurse midwife practicing within the nurse midwife's legal scope of practice.

Sec. 12. [609.2336] [DECEPTIVE OR UNFAIR TRADE PRACTICES; ELDERLY OR HANDICAPPED VICTIMS.]

Subdivision 1. [DEFINITIONS.] As used in this section:

(1) "charitable solicitation law violation" means a violation of sections 309.50 to 309.61;

(2) "consumer fraud law violation" means a violation of sections 325F.68 to 325F.70;

(3) "deceptive trade practices law violation" means a violation of sections 325D.43 to 325D.48;

(4) "false advertising law violation" means a violation of section 325F.67;

(5) "handicapped person" means a person who has an impairment of physical or mental function or emotional status that substantially limits one or more major life activities;

(6) "major life activities" means functions such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working; and

(7) "senior citizen" means a person who is 65 years of age or older.

Subd. 2. [CRIME.] It is a gross misdemeanor for any person to commit a charitable solicitation law violation, a consumer fraud law violation, a deceptive trade practices law violation, or a false advertising law violation if the person knows or has reason to know that the person's conduct:

(1) is directed at one or more handicapped persons or senior citizens; and

(2) will cause or is likely to cause a handicapped person or a senior citizen to suffer loss or encumbrance of a primary residence, principal employment or other major source of income, substantial loss of property set aside for retirement or for personal or family care and maintenance, substantial loss of pension, retirement plan, or government benefits, or substantial loss of other assets essential to the victim's health or welfare.

Subd. 3. [PROSECUTORIAL JURISDICTION.] The attorney general has statewide jurisdiction to prosecute violations of this section. This jurisdiction is concurrent with that of the local prosecuting authority responsible for prosecuting gross misdemeanors in the place where the violation was committed.

Sec. 13. Minnesota Statutes 1996, section 609.487, subdivision 3, is amended to read:

Subd. 3. [FLEEING AN OFFICER.] Whoever by means of a motor vehicle flees or attempts to flee a peace officer who is acting in the lawful discharge of an official duty, and the perpetrator knows or should reasonably know the same to be a peace officer, may be sentenced to imprisonment for not more than one year or to payment of a fine of not more than $3,000,

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or both. Whoever violates this subdivision a second or subsequent time is guilty of a felony and may be sentenced to imprisonment for not more than one year three years and one day or to payment of a fine of not more than $3,000 $5,000, or both.

Sec. 14. Minnesota Statutes 1996, section 609.495, subdivision 1, is amended to read:

Subdivision 1. (a) Whoever harbors, conceals, or aids another known by the actor to have committed a felony under the laws of this or another state or of the United States with intent that such offender shall avoid or escape from arrest, trial, conviction, or punishment, may be sentenced to imprisonment for not more than three years or to payment of a fine of not more than $5,000, or both.

(b) Whoever knowingly harbors, conceals, or aids a person who is on probation, parole, or supervised release because of a felony level conviction and for whom an arrest and detention order has been issued, with intent that the person evade or escape being taken into custody under the order, may be sentenced to imprisonment for not more than three years or to payment of a fine of not more than $5,000, or both. As used in this paragraph, "arrest and detention order" means a written order to take and detain a probationer, parolee, or supervised releasee that is issued under section 243.05, subdivision 1; 260.311, subdivision 3a; or 401.02, subdivision 4.

Sec. 15. Minnesota Statutes 1996, section 609.498, is amended by adding a subdivision to read:

Subd. 1b. [AGGRAVATED FIRST-DEGREE WITNESS TAMPERING.] (a) A person is guilty of aggravated first-degree witness tampering if the person causes or, by means of an implicit or explicit credible threat, threatens to cause great bodily harm or death to another in the course of committing any of the following acts intentionally:

(1) preventing or dissuading or attempting to prevent or dissuade a person who is or may become a witness from attending or testifying at any criminal trial or proceeding;

(2) coercing or attempting to coerce a person who is or may become a witness to testify falsely at any criminal trial or proceeding;

(3) retaliating against a person who was summoned as a witness at any criminal trial or proceeding within a year following that trial or proceeding or within a year following the actor's release from incarceration, whichever is later;

(4) preventing or dissuading or attempting to prevent or dissuade a person from providing information to law enforcement authorities concerning a crime;

(5) coercing or attempting to coerce a person to provide false information concerning a crime to law enforcement authorities; or

(6) retaliating against any person who has provided information to law enforcement authorities concerning a crime within a year of that person providing the information or within a year of the actor's release from incarceration, whichever is later.

(b) A person convicted of committing any act prohibited by paragraph (a) may be sentenced to imprisonment for not more than 20 years or to payment of a fine of not more than $30,000, or both.

Sec. 16. Minnesota Statutes 1996, section 609.498, is amended by adding a subdivision to read:

Subd. 4. [NO BAR TO CONVICTION.] Notwithstanding sections 609.035 or 609.04, a prosecution for or conviction of the crime of aggravated first-degree witness tampering is not a bar to conviction of or punishment for any other crime.

Sec. 17. Minnesota Statutes 1996, section 609.52, subdivision 2, is amended to read:

Subd. 2. [ACTS CONSTITUTING THEFT.] Whoever does any of the following commits theft and may be sentenced as provided in subdivision 3:

(1) intentionally and without claim of right takes, uses, transfers, conceals or retains possession of movable property of another without the other's consent and with intent to deprive the owner permanently of possession of the property; or

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(2) having a legal interest in movable property, intentionally and without consent, takes the property out of the possession of a pledgee or other person having a superior right of possession, with intent thereby to deprive the pledgee or other person permanently of the possession of the property; or

(3) obtains for the actor or another the possession, custody, or title to property of or performance of services by a third person by intentionally deceiving the third person with a false representation which is known to be false, made with intent to defraud, and which does defraud the person to whom it is made. "False representation" includes without limitation:

(a) (i) the issuance of a check, draft, or order for the payment of money, except a forged check as defined in section 609.631, or the delivery of property knowing that the actor is not entitled to draw upon the drawee therefor or to order the payment or delivery thereof; or

(b) (ii) a promise made with intent not to perform. Failure to perform is not evidence of intent not to perform unless corroborated by other substantial evidence; or

(c) (iii) the preparation or filing of a claim for reimbursement, a rate application, or a cost report used to establish a rate or claim for payment for medical care provided to a recipient of medical assistance under chapter 256B, which intentionally and falsely states the costs of or actual services provided by a vendor of medical care; or

(d) (iv) the preparation or filing of a claim for reimbursement for providing treatment or supplies required to be furnished to an employee under section 176.135 which intentionally and falsely states the costs of or actual treatment or supplies provided; or

(e) (v) the preparation or filing of a claim for reimbursement for providing treatment or supplies required to be furnished to an employee under section 176.135 for treatment or supplies that the provider knew were medically unnecessary, inappropriate, or excessive; or

(4) by swindling, whether by artifice, trick, device, or any other means, obtains property or services from another person; or

(5) intentionally commits any of the acts listed in this subdivision but with intent to exercise temporary control only and:

(a) (i) the control exercised manifests an indifference to the rights of the owner or the restoration of the property to the owner; or

(b) (ii) the actor pledges or otherwise attempts to subject the property to an adverse claim; or

(c) (iii) the actor intends to restore the property only on condition that the owner pay a reward or buy back or make other compensation; or

(6) finds lost property and, knowing or having reasonable means of ascertaining the true owner, appropriates it to the finder's own use or to that of another not entitled thereto without first having made reasonable effort to find the owner and offer and surrender the property to the owner; or

(7) intentionally obtains property or services, offered upon the deposit of a sum of money or tokens in a coin or token operated machine or other receptacle, without making the required deposit or otherwise obtaining the consent of the owner; or

(8) intentionally and without claim of right converts any article representing a trade secret, knowing it to be such, to the actor's own use or that of another person or makes a copy of an article representing a trade secret, knowing it to be such, and intentionally and without claim of right converts the same to the actor's own use or that of another person. It shall be a complete defense to any prosecution under this clause for the defendant to show that information comprising the trade secret was rightfully known or available to the defendant from a source other than the owner of the trade secret; or

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(9) leases or rents personal property under a written instrument and who with intent to place the property beyond the control of the lessor conceals or aids or abets the concealment of the property or any part thereof, or any lessee of the property who sells, conveys, or encumbers the property or any part thereof without the written consent of the lessor, without informing the person to whom the lessee sells, conveys, or encumbers that the same is subject to such lease and with intent to deprive the lessor of possession thereof. Evidence that a lessee used a false or fictitious name or address in obtaining the property or fails or refuses to return the property to lessor within five days after written demand for the return has been served personally in the manner provided for service of process of a civil action or sent by certified mail to the last known address of the lessee, whichever shall occur later, shall be evidence of intent to violate this clause. Service by certified mail shall be deemed to be complete upon deposit in the United States mail of such demand, postpaid and addressed to the person at the address for the person set forth in the lease or rental agreement, or, in the absence of the address, to the person's last known place of residence; or

(10) alters, removes, or obliterates numbers or symbols placed on movable property for purpose of identification by the owner or person who has legal custody or right to possession thereof with the intent to prevent identification, if the person who alters, removes, or obliterates the numbers or symbols is not the owner and does not have the permission of the owner to make the alteration, removal, or obliteration; or

(11) with the intent to prevent the identification of property involved, so as to deprive the rightful owner of possession thereof, alters or removes any permanent serial number, permanent distinguishing number or manufacturer's identification number on personal property or possesses, sells or buys any personal property knowing or having reason to know that the permanent serial number, permanent distinguishing number or manufacturer's identification number has been removed or altered; or

(12) intentionally deprives another of a lawful charge for cable television service by:

(i) making or using or attempting to make or use an unauthorized external connection outside the individual dwelling unit whether physical, electrical, acoustical, inductive, or other connection, or by

(ii) attaching any unauthorized device to any cable, wire, microwave, or other component of a licensed cable communications system as defined in chapter 238. Nothing herein shall be construed to prohibit the electronic video rerecording of program material transmitted on the cable communications system by a subscriber for fair use as defined by Public Law Number 94-553, section 107; or

(13) except as provided in paragraphs (12) and (14), obtains the services of another with the intention of receiving those services without making the agreed or reasonably expected payment of money or other consideration; or

(14) intentionally deprives another of a lawful charge for telecommunications service by:

(i) making, using, or attempting to make or use an unauthorized connection whether physical, electrical, by wire, microwave, radio, or other means to a component of a local telecommunication system as provided in chapter 237; or

(ii) attaching an unauthorized device to a cable, wire, microwave, radio, or other component of a local telecommunication system as provided in chapter 237.

The existence of an unauthorized connection is prima facie evidence that the occupier of the premises:

(i) made or was aware of the connection; and

(ii) was aware that the connection was unauthorized; or

(15) with intent to defraud, diverts corporate property other than in accordance with general business purposes or for purposes other than those specified in the corporation's articles of incorporation; or

(16) with intent to defraud, authorizes or causes a corporation to make a distribution in violation of section 302A.551, or any other state law in conformity with it; or

(17) intentionally takes or drives a motor vehicle without the consent of the owner or an authorized agent of the owner, knowing or having reason to know that the owner or an authorized agent of the owner did not give consent.

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Sec. 18. Minnesota Statutes 1996, section 609.684, subdivision 4, is amended to read:

Subd. 4. [NOTICE REQUIRED.] (a) A business establishment that offers for sale at retail any toxic substance must display a conspicuous sign that contains the following, or substantially similar, language:

"NOTICE

It is unlawful for a person to sell glue, cement, or aerosol paint containing intoxicating substances, to a person under 18 years of age, except as provided by law. This offense is a misdemeanor. It is also a misdemeanor for a person to use or possess glue, cement, aerosol paint, with the intent of inducing intoxication, excitement, or stupefaction of the central nervous system. This use can be harmful or fatal."

(b) A business establishment may omit from the required notice references to any toxic substance that is not offered for sale by that business establishment.

(c) A business establishment that does not sell any toxic substance listed in subdivision 1 other than butane or butane lighters shall post a sign stating that it is illegal to sell butane or butane lighters to anyone under the age of 18. This sign shall fulfill the requirements under this subdivision is not required to post a notice under paragraph (a).

Sec. 19. Minnesota Statutes 1996, section 609.78, is amended to read:

609.78 [EMERGENCY TELEPHONE CALLS AND COMMUNICATIONS.]

Subdivision 1. [MISDEMEANOR OFFENSES.] Whoever does the following is guilty of a misdemeanor:

(1) Refuses to relinquish immediately a coin-operated telephone or a telephone line consisting of two or more stations when informed that the line is needed to make an emergency call for medical or ambulance service or for assistance from a police or fire department or for other service needed in an emergency to avoid serious harm to person or property, and an emergency exists;

(2) Secures a relinquishment of a coin-operated telephone or a telephone line consisting of two or more stations by falsely stating that the line is needed for an emergency;

(3) Publishes telephone directories to be used for telephones or telephone lines and the directories do not contain a copy of this section;

(4) Makes an emergency call for medical or ambulance service, knowing that no medical emergency exists; or

(5) Interrupts, disrupts, impedes, or otherwise interferes with the transmission of a citizen's band radio channel communication the purpose of which is to inform or inquire about a medical emergency or an emergency in which property is or is reasonably believed to be in imminent danger of damage or destruction.

Subd. 2. [INTERFERENCE WITH A 911 CALL; GROSS MISDEMEANOR OFFENSE.] A person who intentionally interrupts, disrupts, impedes, or otherwise interferes with a 911 call or who prevents or hinders another from placing a 911 call, and whose conduct does not result in a violation of section 609.498, is guilty of a gross misdemeanor and may be sentenced to imprisonment for not more than one year or to payment of a fine of not more than $3,000, or both.

Sec. 20. Minnesota Statutes 1996, section 609.902, subdivision 4, is amended to read:

Subd. 4. [CRIMINAL ACT.] "Criminal act" means conduct constituting, or a conspiracy or attempt to commit, a felony violation of chapter 152, or a felony violation of section 297D.09; 299F.79; 299F.80; 299F.82; 609.185; 609.19; 609.195; 609.20; 609.205; 609.221; 609.222; 609.223; 609.2231; 609.228; 609.235; 609.245; 609.25; 609.27; 609.322; 609.323; 609.342; 609.343; 609.344; 609.345; 609.42; 609.48; 609.485; 609.495; 609.496; 609.497; 609.498; 609.52, subdivision 2, if the offense is punishable under subdivision 3, clause (3)(b) or clause 3(d)(v) or (vi); section 609.52, subdivision 2, clause (4); 609.53; 609.561; 609.562; 609.582, subdivision 1 or 2; 609.668, subdivision 6, paragraph (a);

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609.67; 609.687; 609.713; 609.86; 609.894, subdivision 3 or 4; 624.713; or 624.74; or 626A.02, subdivision 1, if the offense is punishable under section 626A.02, subdivision 4, paragraph (a). "Criminal act" also includes conduct constituting, or a conspiracy or attempt to commit, a felony violation of section 609.52, subdivision 2, clause (3), (4), (15), or (16), if the violation involves an insurance company as defined in section 60A.02, subdivision 4, a nonprofit health service plan corporation regulated under chapter 62C, a health maintenance organization regulated under chapter 62D, or a fraternal benefit society regulated under chapter 64B.

Sec. 21. Minnesota Statutes 1996, section 631.07, is amended to read:

631.07 [ORDER OF FINAL ARGUMENT.]

When the giving of evidence is concluded in a criminal trial, unless the case is submitted on both sides without argument, the prosecution may make a closing argument to the jury. The defense may then make its closing argument to the jury. On the motion of the prosecution, The court may shall permit the prosecution to reply in rebuttal if the court determines that the defense has made in its closing argument a, which shall be limited to a response to any misstatement of law or fact or a statement that is inflammatory or prejudicial made by the defense in its closing argument. The rebuttal must be limited to a direct response to the misstatement of law or fact or the inflammatory or prejudicial statement.

Sec. 22. [RULE SUPERSEDED.]

Minnesota Rules of Criminal Procedure, rule 26.03, subdivision 11, is superseded to the extent it conflicts with Minnesota Statutes, section 631.07.

Sec. 23. [REPORT.]

By January 15, 1999, and each year thereafter, the supreme court is requested to report to the chairs of the senate and house committees having jurisdiction over criminal justice policy on prosecutorial rebuttals under Minnesota Statutes, section 631.07. The report must contain information on:

(1) the number of rebuttals requested by prosecutors;

(2) the number of rebuttals permitted by courts; and

(3) the circumstances involving instances in which rebuttals were not permitted.

Sec. 24. [COST OF CRIME STUDY.]

The legislative audit commission is requested to direct the legislative auditor to conduct a study of the costs that criminal activity places on the state and local communities. The study shall include not only the direct costs to state and local governments of responding to, prosecuting, and punishing criminal offenders, but also the indirect economic and social costs that criminal activity places on local communities and their residents.

If the commission directs the auditor to conduct this study, the auditor shall report findings to the chairs of the senate crime prevention and house judiciary committees by February 15, 1998.

Sec. 25. [REPEALER.]

Minnesota Statutes 1996, sections 119A.30; 145.406; 244.09, subdivision 11a; and 609.684, subdivision 2, are repealed.

Sec. 26. [EFFECTIVE DATE.]

Sections 1 to 20, and 25 are effective August 1, 1997, and apply to crimes committed on or after that date. Sections 21 to 23 are effective August 1, 1997, and apply to proceedings conducted on or after that date. Section 24 is effective July 1, 1997.

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ARTICLE 4

CONTROLLED SUBSTANCES

Section 1. Minnesota Statutes 1996, section 152.01, subdivision 18, is amended to read:

Subd. 18. [DRUG PARAPHERNALIA.] (a) Except as otherwise provided in paragraph (b), "drug paraphernalia" means all equipment, products, and materials of any kind, except those items used in conjunction with permitted uses of controlled substances under this chapter or the Uniform Controlled Substances Act, which are knowingly or intentionally used primarily in (1) manufacturing a controlled substance, (2) injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, (3) testing the strength, effectiveness, or purity of a controlled substance, or (4) enhancing the effect of a controlled substance.

(b) "Drug paraphernalia" does not include the possession, manufacture, delivery, or sale of hypodermic needles or syringes in accordance with section 151.40, subdivision 2.

Sec. 2. Minnesota Statutes 1996, section 152.01, is amended by adding a subdivision to read:

Subd. 22. [DRUG TREATMENT FACILITY.] "Drug treatment facility" means any facility in which a residential rehabilitation program licensed under Minnesota Rules, parts 9530.4100 to 9530.4450, is located, and includes any property owned, leased, or controlled by the facility.

Sec. 3. Minnesota Statutes 1996, section 152.02, subdivision 2, is amended to read:

Subd. 2. The following items are listed in Schedule I:

(1) Any of the following substances, including their isomers, esters, ethers, salts, and salts of isomers, esters, and ethers, unless specifically excepted, whenever the existence of such isomers, esters, ethers and salts is possible within the specific chemical designation: Acetylmethadol; Allylprodine; Alphacetylmethadol; Alphameprodine; Alphamethadol; Benzethidine; Betacetylmethadol; Betameprodine; Betamethadol; Betaprodine; Clonitazene; Dextromoramide; Dextrorphan; Diampromide; Diethyliambutene; Dimenoxadol; Dimepheptanol; Dimethyliambutene; Dioxaphetyl butyrate; Dipipanone; Ethylmethylthiambutene; Etonitazene; Etoxeridine; Furethidine; Hydroxypethidine; Ketobemidone; Levomoramide; Levophenacylmorphan; Morpheridine; Noracymethadol; Norlevorphanol; Normethadone; Norpipanone; Phenadoxone; Phenampromide; Phenomorphan; Phenoperidine; Piritramide; Proheptazine; Properidine; Racemoramide; Trimeperidine.

(2) Any of the following opium derivatives, their salts, isomers and salts of isomers, unless specifically excepted, whenever the existence of such salts, isomers and salts of isomers is possible within the specific chemical designation: Acetorphine; Acetyldihydrocodeine; Acetylcodone; Benzylmorphine; Codeine methylbromide; Codeine-N-Oxide; Cyprenorphine; Desomorphine; Dihydromorphine; Etorphine; Heroin; Hydromorphinol; Methyldesorphine; Methylhydromorphine; Morphine methylbromide; Morphine methylsulfonate; Morphine-N-Oxide; Myrophine; Nicocodeine; Nicomorphine; Normorphine; Pholcodine; Thebacon.

(3) Any material, compound, mixture or preparation which contains any quantity of the following hallucinogenic substances, their salts, isomers and salts of isomers, unless specifically excepted, whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical designation: 3,4-methylenedioxy amphetamine; 4-bromo-2.5-dimethoxyamphetamine; 2.5-dimethoxyamphetamine; 4-methoxyamphetamine; 5-methoxy-3, 4-methylenedioxy amphetamine; Bufotenine; Diethyltryptamine; Dimethyltryptamine; 3,4,5-trimethoxy amphetamine; 4-methyl-2, 5-dimethoxyamphetamine; Ibogaine; Lysergic acid diethylamide; marijuana; Mescaline; N-ethyl-3-piperidyl benzilate; N-methyl-3-piperidyl benzilate; Psilocybin; Psilocyn; Tetrahydrocannabinols; 1-(1-(2-thienyl) cyclohexyl) piperidine; n-ethyl-1-phenyl-cyclohexylamine; 1-(1-phenylcyclohexyl) pyrrolidine.

(4) Peyote, providing the listing of peyote as a controlled substance in schedule I does not apply to the nondrug use of peyote in bona fide religious ceremonies of the American Indian Church, and members of the American Indian Church are exempt from registration. Any person who manufactures peyote for or distributes peyote to the American Indian Church, however, is required to obtain federal registration annually and to comply with all other requirements of law.

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(5) Unless specifically excepted or unless listed in another schedule, any material compound, mixture, or preparation which contains any quantity of the following substances having a depressant effect on the central nervous system, including its salts, isomers, and salts of isomers whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical designation:

Mecloqualone;

Flunitrazepam.

(6) Unless specifically excepted or unless listed in another schedule, any material compound, mixture, or preparation which contains any quantity of the following substances having a stimulant effect on the central nervous system, including its salts, isomers, and salts of isomers whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical designation:

Cathinone;

Methcathinone.

Sec. 4. Minnesota Statutes 1996, section 152.02, subdivision 5, is amended to read:

Subd. 5. (a) The following items are listed in Schedule IV: Anabolic substances; Barbital; Butorphanol; Carisoprodol; Chloral betaine; Chloral hydrate; Chlordiazepoxide; Clonazepam; Clorazepate; Diazepam; Diethylpropion; Ethchlorvynol; Ethinamate; Fenfluramine; Flurazepam; Mebutamate; Methohexital; Meprobamate except when in combination with the following drugs in the following or lower concentrations: conjugated estrogens, 0.4 mg; tridihexethyl chloride, 25mg; pentaerythritol tetranitrate, 20 mg; Methylphenobarbital; Oxazepam; Paraldehyde; Pemoline; Petrichloral; Phenobarbital; and Phentermine.

(b) For purposes of this subdivision, "anabolic substances" means the naturally occurring androgens or derivatives of androstane (androsterone and testosterone); testosterone and its esters, including, but not limited to, testosterone propionate, and its derivatives, including, but not limited to, methyltestosterone and growth hormones, except that anabolic substances are not included if they are: (1) expressly intended for administration through implants to cattle or other nonhuman species; and (2) approved by the United States Food and Drug Administration for that use.

Sec. 5. Minnesota Statutes 1996, section 152.021, subdivision 1, is amended to read:

Subdivision 1. [SALE CRIMES.] A person is guilty of controlled substance crime in the first degree if:

(1) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of ten grams or more containing cocaine or heroin;

(2) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of 50 grams or more containing a narcotic drug other than cocaine or heroin;

(3) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of 50 grams or more containing methamphetamine, amphetamine, phencyclidine, or hallucinogen or, if the controlled substance is packaged in dosage units, equaling 200 or more dosage units; or

(4) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of 50 kilograms or more containing marijuana or Tetrahydrocannabinols, or one or more mixtures of a total weight of 25 kilograms or more containing marijuana or Tetrahydrocannabinols in a school zone, a park zone, or a public housing zone, or a drug treatment facility.

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Sec. 6. Minnesota Statutes 1996, section 152.021, subdivision 2, is amended to read:

Subd. 2. [POSSESSION CRIMES.] A person is guilty of a controlled substance crime in the first degree if:

(1) the person unlawfully possesses one or more mixtures of a total weight of 25 grams or more containing cocaine or heroin;

(2) the person unlawfully possesses one or more mixtures of a total weight of 500 grams or more containing a narcotic drug other than cocaine or heroin;

(3) the person unlawfully possesses one or more mixtures of a total weight of 500 grams or more containing methamphetamine, amphetamine, phencyclidine, or hallucinogen or, if the controlled substance is packaged in dosage units, equaling 500 or more dosage units; or

(4) the person unlawfully possesses one or more mixtures of a total weight of 100 kilograms or more containing marijuana or Tetrahydrocannabinols.

Sec. 7. Minnesota Statutes 1996, section 152.022, subdivision 1, is amended to read:

Subdivision 1. [SALE CRIMES.] A person is guilty of controlled substance crime in the second degree if:

(1) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of three grams or more containing cocaine or heroin;

(2) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of ten grams or more containing a narcotic drug other than cocaine or heroin;

(3) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of ten grams or more containing methamphetamine, amphetamine, phencyclidine, or hallucinogen or, if the controlled substance is packaged in dosage units, equaling 50 or more dosage units;

(4) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of 25 kilograms or more containing marijuana or Tetrahydrocannabinols;

(5) the person unlawfully sells any amount of a schedule I or II narcotic drug to a person under the age of 18, or conspires with or employs a person under the age of 18 to unlawfully sell the substance; or

(6) the person unlawfully sells any of the following in a school zone, a park zone, or a public housing zone, or a drug treatment facility:

(i) any amount of a schedule I or II narcotic drug, or lysergic acid diethylamide (LSD);

(ii) one or more mixtures containing methamphetamine or amphetamine; or

(iii) one or more mixtures of a total weight of five kilograms or more containing marijuana or Tetrahydrocannabinols.

Sec. 8. Minnesota Statutes 1996, section 152.022, subdivision 2, is amended to read:

Subd. 2. [POSSESSION CRIMES.] A person is guilty of controlled substance crime in the second degree if:

(1) the person unlawfully possesses one or more mixtures of a total weight of six grams or more containing cocaine or heroin;

(2) the person unlawfully possesses one or more mixtures of a total weight of 50 grams or more containing a narcotic drug other than cocaine or heroin;

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(3) the person unlawfully possesses one or more mixtures of a total weight of 50 grams or more containing methamphetamine, amphetamine, phencyclidine, or hallucinogen or, if the controlled substance is packaged in dosage units, equaling 100 or more dosage units; or

(4) the person unlawfully possesses one or more mixtures of a total weight of 50 kilograms or more containing marijuana or Tetrahydrocannabinols.

Sec. 9. Minnesota Statutes 1996, section 152.023, subdivision 1, is amended to read:

Subdivision 1. [SALE CRIMES.] A person is guilty of controlled substance crime in the third degree if:

(1) the person unlawfully sells one or more mixtures containing a narcotic drug;

(2) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures containing phencyclidine or hallucinogen, it is packaged in dosage units, and equals ten or more dosage units;

(3) the person unlawfully sells one or more mixtures containing a controlled substance classified in schedule I, II, or III, except a schedule I or II narcotic drug, to a person under the age of 18;

(4) the person conspires with or employs a person under the age of 18 to unlawfully sell one or more mixtures containing a controlled substance listed in schedule I, II, or III, except a schedule I or II narcotic drug; or

(5) on one or more occasions within a 90-day period the person unlawfully sells one or more mixtures of a total weight of five kilograms or more containing marijuana or Tetrahydrocannabinols.

Sec. 10. Minnesota Statutes 1996, section 152.023, subdivision 2, is amended to read:

Subd. 2. [POSSESSION CRIMES.] A person is guilty of controlled substance crime in the third degree if:

(1) on one or more occasions within a 90-day period the person unlawfully possesses one or more mixtures of a total weight of three grams or more containing cocaine or heroin;

(2) on one or more occasions within a 90-day period the person unlawfully possesses one or more mixtures of a total weight of ten grams or more containing a narcotic drug other than cocaine or heroin;

(3) on one or more occasions within a 90-day period the person unlawfully possesses one or more mixtures containing a narcotic drug, it is packaged in dosage units, and equals 50 or more dosage units;

(4) on one or more occasions within a 90-day period the person unlawfully possesses any amount of a schedule I or II narcotic drug or five or more dosage units of lysergic acid diethylamide (LSD) in a school zone, a park zone, or a public housing zone, or a drug treatment facility;

(5) on one or more occasions within a 90-day period the person unlawfully possesses one or more mixtures of a total weight of ten kilograms or more containing marijuana or Tetrahydrocannabinols; or

(6) the person unlawfully possesses one or more mixtures containing methamphetamine or amphetamine in a school zone, a park zone, or a public housing zone, or a drug treatment facility.

Sec. 11. Minnesota Statutes 1996, section 152.023, subdivision 3, is amended to read:

Subd. 3. [PENALTY.] (a) A person convicted under subdivision 1 or 2 may be sentenced to imprisonment for not more than 20 years or to payment of a fine of not more than $250,000, or both.

(b) If the conviction is a subsequent controlled substance conviction, a person convicted under subdivision 1 or 2 shall be committed to the commissioner of corrections for not less than two years nor more than 30 years and, in addition, may be sentenced to payment of a fine of not more than $250,000.

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(c) In a prosecution under subdivision 1 or 2 involving sales or acts of possession by the same person in two or more counties within a 90-day period, the person may be prosecuted in any county in which one of the sales or acts of possession occurred.

Sec. 12. Minnesota Statutes 1996, section 152.024, subdivision 1, is amended to read:

Subdivision 1. [SALE CRIMES.] A person is guilty of controlled substance crime in the fourth degree if:

(1) the person unlawfully sells one or more mixtures containing a controlled substance classified in schedule I, II, or III, except marijuana or Tetrahydrocannabinols;

(2) the person unlawfully sells one or more mixtures containing a controlled substance classified in schedule IV or V to a person under the age of 18;

(3) the person conspires with or employs a person under the age of 18 to unlawfully sell a controlled substance classified in schedule IV or V; or

(4) the person unlawfully sells any amount of marijuana or Tetrahydrocannabinols in a school zone, a park zone, or a public housing zone, or a drug treatment facility, except a small amount for no remuneration.

Sec. 13. Minnesota Statutes 1996, section 152.029, is amended to read:

152.029 [PUBLIC INFORMATION: SCHOOL ZONES, PARK ZONES, AND PUBLIC HOUSING ZONES, AND DRUG TREATMENT FACILITIES.]

The attorney general shall disseminate information to the public relating to the penalties for committing controlled substance crimes in park zones, school zones, and public housing zones, and drug treatment facilities. The attorney general shall draft a plain language version of sections 152.022 and 152.023 and relevant provisions of the sentencing guidelines, that describes in a clear and coherent manner using words with common and everyday meanings the content of those provisions. The attorney general shall publicize and disseminate the plain language version as widely as practicable, including distributing the version to school boards, local governments, and administrators and occupants of drug treatment facilities and public housing.

Sec. 14. [EXTENSION OF EXPIRATION DATE.]

Notwithstanding Minnesota Statutes, section 15.059, the advisory council on drug abuse resistance education expires on June 30, 2001.

Sec. 15. [EFFECTIVE DATE.]

Section 4 is effective August 1, 1998, and applies to acts committed on or after that date. Sections 1 to 3 and 5 to 13 are effective August 1, 1997, and apply to acts committed on or after that date. Section 14 is effective the day following final enactment.

ARTICLE 5

SEX OFFENDERS

Section 1. Minnesota Statutes 1996, section 243.166, subdivision 2, is amended to read:

Subd. 2. [NOTICE.] When a person who is required to register under subdivision 1, paragraph (a), is sentenced or becomes subject to a juvenile court disposition order, the court shall tell the person of the duty to register under this section. The court shall require the person to read and sign a form stating that the duty of the person to register under this section has been explained. If a person required to register under subdivision 1, paragraph (a), was not notified by the court of the registration requirement at the time of sentencing or disposition, the assigned corrections agent shall notify the person of the

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requirements of this section. When a person who is required to register under subdivision 1, paragraph (c), is released from commitment, the treatment facility shall notify the person of the requirements of this section. The treatment facility shall also obtain the registration information required under this section and forward it to the bureau of criminal apprehension.

Sec. 2. Minnesota Statutes 1996, section 243.166, subdivision 3, is amended to read:

Subd. 3. [REGISTRATION PROCEDURE.] (a) A person required to register under this section shall register with the corrections agent as soon as the agent is assigned to the person. If the person does not have an assigned corrections agent or is unable to locate the assigned corrections agent, the person shall register with the law enforcement agency that has jurisdiction in the area of the person's residence.

(b) At least five days before the person changes residence starts living at a new address, including changing residence to living in another state, the person shall give written notice of the address of the new residence new living address to the assigned corrections agent or to the law enforcement authority with which the person currently is registered. An offender is deemed to change residence when the offender remains at a new address for longer than three days and evinces an intent to take up residence there. If the person will be living in a new state and that state has a registration requirement, the person shall also give written notice of the new address to the designated registration agency in the new state. The corrections agent or law enforcement authority shall, within two business days after receipt of this information, forward it to the bureau of criminal apprehension. The bureau of criminal apprehension shall, if it has not already been done, notify the law enforcement authority having primary jurisdiction in the community where the person will live of the new address. If the person is leaving the state, the bureau of criminal apprehension shall notify the registration authority in the new state of the new address.

Sec. 3. Minnesota Statutes 1996, section 243.166, subdivision 4, is amended to read:

Subd. 4. [CONTENTS OF REGISTRATION.] (a) The registration provided to the corrections agent or law enforcement authority, must consist of a statement in writing signed by the person, giving information required by the bureau of criminal apprehension, a fingerprint card, and photograph of the person taken at the time of the person's release from incarceration or, if the person was not incarcerated, at the time the person initially registered under this section.

(b) Within three days, the corrections agent or law enforcement authority shall forward the statement, fingerprint card, and photograph to the bureau of criminal apprehension. The bureau shall ascertain whether the person has registered with the law enforcement authority where the person resides. If the person has not registered with the law enforcement authority, the bureau shall send one copy to that authority.

(c) During the period a person is required to register under this section, the following shall apply:

(1) Each year, within 30 days of the anniversary date of the person's initial registration, the bureau of criminal apprehension shall mail a verification form to the last reported address of the person.

(2) The person shall mail the signed verification form back to the bureau of criminal apprehension within ten days after receipt of the form, stating on the form the current and last address of the person.

(3) If the person fails to mail the completed and signed verification form to the bureau of criminal apprehension within ten days after receipt of the form, the person shall be in violation of this section.

Sec. 4. Minnesota Statutes 1996, 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.

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(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 victim's services unit.

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) 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 shall be notified of the time and place of the committee's meeting and has a right to be present and be heard at the meeting. 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.

(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. The committee also shall inform the offender of the availability of review under subdivision 6.

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(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;

(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 or agent shall list the facts and circumstances arising after the initial assignment under paragraph (e) which support the request for a reassessment. 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.

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(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.

Sec. 5. Minnesota Statutes 1996, 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, is authorized to shall disclose information 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.

(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 the following 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 head of the facility shall notify the law enforcement agency before the end of the offender's placement or residence in the facility. Upon receiving this notification, commissioner of corrections or the commissioner of 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.

(c) As used in paragraph (b), clauses (2) and (3), "likely to encounter" means that:

(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

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(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. 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 make a good faith effort to conceal not disclose the identity of the victim or victims of or witnesses to the offender's offense 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.

Sec. 6. Minnesota Statutes 1996, 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 provide give to the appropriate 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.

Sec. 7. Minnesota Statutes 1996, section 244.052, subdivision 6, is amended to read:

Subd. 6. [ADMINISTRATIVE REVIEW.] (a) An offender assigned or reassigned to risk level II or III under subdivision 3, paragraph (e) or (h), has the right to seek administrative review of an end-of-confinement review committee's risk assessment determination. The offender must exercise this right within 14 days of receiving notice of the committee's decision by notifying the chair of the committee. Upon receiving the request for administrative review, the chair shall notify: (1) the offender,; (2) the victim or victims of the offender's offense who have requested disclosure or their designee,; (3) 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; (4) the law enforcement agency having jurisdiction where the offender expects to reside, providing that the release plan has been approved by the office of adult release of the department of corrections; (5) and any other individuals the chair may select, of. The notice shall state the time and place of the hearing. A request for a review hearing shall not interfere with or delay the notification process under subdivision 4 or 5, unless the administrative law judge orders otherwise for good cause shown.

(b) An offender who requests a review hearing must be given a reasonable opportunity to prepare for the hearing. The review hearing shall be conducted on the record before an administrative law judge. The review hearing shall be conducted at the correctional facility in which the offender is currently confined. If the offender no longer is incarcerated, the administrative law judge shall determine the place where the review hearing will be conducted. The offender has the burden of proof to show, by a preponderance of the evidence, that the end-of-confinement review committee's risk assessment determination was erroneous. The attorney general or a designee shall defend the end-of-confinement review committee's determination. The offender has the right to be present and be represented by counsel at the hearing, to present evidence in support of the offender's position, to call supporting witnesses and to cross-examine witnesses testifying in support of the committee's determination. Counsel for indigent offenders shall be provided by the Legal Advocacy Project of the state public defender's office.

(c) After the hearing is concluded, the administrative law judge shall decide whether the end-of-confinement review committee's risk assessment determination was erroneous and, based on this decision, shall either uphold or modify the review committee's determination. The judge's decision shall be in writing and shall include the judge's reasons for the decision. The judge's decision shall be final and a copy of it shall be given to the offender, the victim, the law enforcement agency, and the chair of the end-of-confinement review committee.

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(d) The review hearing is subject to the contested case provisions of chapter 14.

(e) The administrative law judge may seal any portion of the record of the administrative review hearing to the extent necessary to protect the identity of a victim of or witness to the offender's offense.

Sec. 8. Minnesota Statutes 1996, section 609.135, is amended by adding a subdivision to read:

Subd. 1c. [FAILURE TO COMPLETE COURT-ORDERED TREATMENT.] If the court orders a defendant to undergo treatment as a condition of probation and if the defendant fails to successfully complete treatment at least 60 days before the term of probation expires, the prosecutor or the defendant's probation officer may ask the court to hold a hearing to determine whether the conditions of probation should be changed or probation should be revoked. The court shall schedule and hold this hearing and take appropriate action, including action under subdivision 2, paragraph (h), before the defendant's term of probation expires.

Sec. 9. Minnesota Statutes 1996, section 609.135, subdivision 2, is amended to read:

Subd. 2. (a) If the conviction is for a felony the stay shall be for not more than four years or the maximum period for which the sentence of imprisonment might have been imposed, whichever is longer.

(b) If the conviction is for a gross misdemeanor violation of section 169.121 or 169.129, the stay shall be for not more than four years. The court shall provide for unsupervised probation for the last one year of the stay unless the court finds that the defendant needs supervised probation for all or part of the last one year.

(c) If the conviction is for a gross misdemeanor not specified in paragraph (b), the stay shall be for not more than two years.

(d) If the conviction is for any misdemeanor under section 169.121; 609.746, subdivision 1; 609.79; or 617.23; or for a misdemeanor under section 609.2242 or 609.224, subdivision 1, in which the victim of the crime was a family or household member as defined in section 518B.01, the stay shall be for not more than two years. The court shall provide for unsupervised probation for the second year of the stay unless the court finds that the defendant needs supervised probation for all or part of the second year.

(e) If the conviction is for a misdemeanor not specified in paragraph (d), the stay shall be for not more than one year.

(f) The defendant shall be discharged six months after the term of the stay expires, unless the stay has been revoked or extended under paragraph (g) or (h), or the defendant has already been discharged.

(g) Notwithstanding the maximum periods specified for stays of sentences under paragraphs (a) to (f), a court may extend a defendant's term of probation for up to one year if it finds, at a hearing conducted under subdivision 1a, that:

(1) the defendant has not paid court-ordered restitution or a fine in accordance with the payment schedule or structure; and

(2) the defendant is likely to not pay the restitution or fine the defendant owes before the term of probation expires.

This one-year extension of probation for failure to pay restitution or a fine may be extended by the court for up to one additional year if the court finds, at another hearing conducted under subdivision 1a, that the defendant still has not paid the court-ordered restitution or fine that the defendant owes.

(h) Notwithstanding the maximum periods specified for stays of sentences under paragraphs (a) to (f), a court may extend a defendant's term of probation for up to three years if it finds, at a hearing conducted under subdivision 1c, that:

(1) the defendant has failed to complete court-ordered treatment successfully; and

(2) the defendant is likely not to complete court-ordered treatment before the term of probation expires.

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Sec. 10. Minnesota Statutes 1996, section 609.347, subdivision 7, is amended to read:

Subd. 7. [EFFECT OF STATUTE ON RULES.] Rule 404, paragraph (c) 412 of the Rules of Evidence is superseded to the extent of its conflict with this section.

Sec. 11. Minnesota Statutes 1996, section 609.746, subdivision 1, is amended to read:

Subdivision 1. [SURREPTITIOUS INTRUSION; OBSERVATION DEVICE.] (a) A person is guilty of a misdemeanor who:

(1) enters upon another's property;

(2) surreptitiously gazes, stares, or peeps in the window or any other aperture of a house or place of dwelling of another; and

(3) does so with intent to intrude upon or interfere with the privacy of a member of the household.

(b) A person is guilty of a misdemeanor who:

(1) enters upon another's property;

(2) surreptitiously installs or uses any device for observing, photographing, recording, amplifying, or broadcasting sounds or events through the window or any other aperture of a house or place of dwelling of another; and

(3) does so with intent to intrude upon or interfere with the privacy of a member of the household.

(c) A person is guilty of a misdemeanor who:

(1) surreptitiously gazes, stares, or peeps in the window or other aperture of a sleeping room in a hotel, as defined in section 327.70, subdivision 3, a tanning booth, or other place where a reasonable person would have an expectation of privacy and has exposed or is likely to expose their intimate parts, as defined in section 609.341, subdivision 5, or the clothing covering the immediate area of the intimate parts; and

(2) does so with intent to intrude upon or interfere with the privacy of the occupant.

(d) A person is guilty of a misdemeanor who:

(1) surreptitiously installs or uses any device for observing, photographing, recording, amplifying, or broadcasting sounds or events through the window or other aperture of a sleeping room in a hotel, as defined in section 327.70, subdivision 3, a tanning booth, or other place where a reasonable person would have an expectation of privacy and has exposed or is likely to expose their intimate parts, as defined in section 609.341, subdivision 5, or the clothing covering the immediate area of the intimate parts; and

(2) does so with intent to intrude upon or interfere with the privacy of the occupant.

(e) A person is guilty of a gross misdemeanor if the person:

(1) violates this subdivision after a previous conviction under this subdivision or section 609.749; or

(2) violates this subdivision against a minor under the age of 16, knowing or having reason to know that the minor is present.

(f) Paragraphs (b) and (d) do not apply to law enforcement officers or corrections investigators, or to those acting under their direction, while engaged in the performance of their lawful duties. Paragraphs (c) and (d) do not apply to conduct in: (1) a medical facility; or (2) a commercial establishment if the owner of the establishment has posted conspicuous signs warning that the premises are under surveillance by the owner or the owner's employees.

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Sec. 12. [COMMUNITY NOTIFICATION CONCERNING SEX OFFENDERS CONFINED IN FEDERAL PRISONS; PLAN AND REPORT REQUIRED.]

Subdivision 1. [DEFINITIONS.] As used in this section:

(1) "community notification" means the public disclosure of information about sex offenders by local law enforcement agencies under Minnesota Statutes, section 244.052;

(2) "federal prison" means a correctional facility administered by the federal Bureau of Prisons in which sex offenders are or may be confined; and

(3) "sex offender" means a person who has been convicted of a federal offense for which registration under Minnesota Statutes, section 243.166, is required.

Subd. 2. [DEVELOPMENT OF PLAN.] The commissioner of corrections shall collaborate with the federal Bureau of Prisons and the chief executive officer of any federal prison located in this state in developing a community notification plan concerning sex offenders confined in federal prisons in Minnesota who intend to reside in this state upon release. The plan shall address the following matters:

(1) the membership and operation of the end-of-confinement review committees that will operate in the federal prisons to conduct risk assessments on sex offenders who intend to reside in Minnesota upon release;

(2) the classification and use of data on sex offenders that are collected or maintained by the committees;

(3) the procedures governing the sex offender's participation in the committee's meetings;

(4) the process for a sex offender to seek review of the committee's risk assessment determination; and

(5) any other matters deemed important by the commissioner and the federal authorities.

Subd. 3. [REPORT TO LEGISLATURE.] On or before February 1, 1998, the commissioner of corrections shall file a report with the chairs of the house judiciary committee and the senate crime prevention committee. The report shall summarize the community notification plan agreed to by the commissioner and the federal Bureau of Prisons and shall specify the statutory changes needed to accomplish that plan.

Sec. 13. [EFFECTIVE DATE.]

Sections 1 to 3 are effective August 1, 1997, and apply to persons who are released from prison on or after that date, who are under supervision as of that date, or who enter this state on or after that date. Sections 4 to 7 are effective the day following final enactment and apply to offenders sentenced or released from confinement on or after that date. Sections 8, 9, and 11 are effective August 1, 1997, and apply to crimes committed on or after that date.

ARTICLE 6

CHILD PROTECTION PROVISIONS

Section 1. Minnesota Statutes 1996, section 256E.03, subdivision 2, is amended to read:

Subd. 2. (a) "Community social services" means services provided or arranged for by county boards to fulfill the responsibilities prescribed in section 256E.08, subdivision 1, to the following groups of persons:

(1) families with children under age 18, who are experiencing child dependency, neglect or abuse, and also pregnant adolescents, adolescent parents under the age of 18, and their children, and other adolescents;

(2) persons, including adolescents, who are under the guardianship of the commissioner of human services as dependent and neglected wards;

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(3) adults who are in need of protection and vulnerable as defined in section 626.5572;

(4) persons age 60 and over who are experiencing difficulty living independently and are unable to provide for their own needs;

(5) emotionally disturbed children and adolescents, chronically and acutely mentally ill persons who are unable to provide for their own needs or to independently engage in ordinary community activities;

(6) persons with mental retardation as defined in section 252A.02, subdivision 2, or with related conditions as defined in section 252.27, subdivision 1a, who are unable to provide for their own needs or to independently engage in ordinary community activities;

(7) drug dependent and intoxicated persons, including adolescents, as defined in section 254A.02, subdivisions 5 and 7, and persons, including adolescents, at risk of harm to self or others due to the ingestion of alcohol or other drugs;

(8) parents whose income is at or below 70 percent of the state median income and who are in need of child care services in order to secure or retain employment or to obtain the training or education necessary to secure employment; and

(9) children and adolescents involved in or at risk of involvement with criminal activity; and

(10) other groups of persons who, in the judgment of the county board, are in need of social services.

(b) Except as provided in section 256E.08, subdivision 5, community social services do not include public assistance programs known as aid to families with dependent children, Minnesota supplemental aid, medical assistance, general assistance, general assistance medical care, or community health services authorized by sections 145A.09 to 145A.13.

Sec. 2. [257.069] [INFORMATION FOR CHILD PLACEMENT.]

Subdivision 1. [AGENCY WITH PLACEMENT AUTHORITY.] An agency with legal responsibility for the placement of a child may request and shall receive all information pertaining to the child that it considers necessary to appropriately carry out its duties. That information must include educational, medical, psychological, psychiatric, and social or family history data retained in any form by any individual or entity. The agency may gather appropriate data regarding the child's parents in order to develop and implement a case plan required by section 257.071. Upon request of the court responsible for overseeing the provision of services to the child and family and for implementing orders that are in the best interest of the child, the responsible local social service agency or tribal social service agency shall provide appropriate written or oral reports from any individual or entity that has provided services to the child or family. The reports must include the nature of the services being provided the child or family; the reason for the services; the nature, extent, and quality of the child's or parent's participation in the services, where appropriate; and recommendations for continued services, where appropriate. The individual or entity shall report all observations and information upon which it bases its report as well as its conclusions. If necessary to facilitate the receipt of the reports, the court may issue appropriate orders.

Subd. 2. [ACCESS TO SPECIFIC DATA.] A social service agency responsible for the residential placement of a child under this section and the residential facility in which the child is placed shall have access to the following data on the child:

(1) medical data under section 13.42;

(2) corrections and detention data under section 13.85;

(3) juvenile court data under section 260.161; and

(4) health records under section 144.335.

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Sec. 3. Minnesota Statutes 1996, section 257.071, is amended by adding a subdivision to read:

Subd. 1c. [NOTICE BEFORE VOLUNTARY PLACEMENT.] The local social service agency shall inform a parent considering voluntary placement of a child who is not developmentally disabled or emotionally handicapped of the following:

(1) the parent and the child each has a right to separate legal counsel before signing a voluntary placement agreement, but not to counsel appointed at public expense;

(2) the parent is not required to agree to the voluntary placement, and a parent who enters a voluntary placement agreement may at any time request that the agency return the child. If the parent so requests, the child must be returned within 24 hours of the receipt of the request;

(3) evidence gathered during the time the child is voluntarily placed may be used at a later time as the basis for a petition alleging that the child is in need of protection or services or as the basis for a petition seeking termination of parental rights;

(4) if the local social service agency files a petition alleging that the child is in need of protection or services or a petition seeking the termination of parental rights, the parent would have the right to appointment of separate legal counsel and the child would have a right to the appointment of counsel and a guardian ad litem as provided by law, and that counsel will be appointed at public expense if they are unable to afford counsel; and

(5) the timelines and procedures for review of voluntary placements under subdivision 3, and the effect the time spent in voluntary placement on the scheduling of a permanent placement determination hearing under section 260.191, subdivision 3b.

Sec. 4. Minnesota Statutes 1996, section 257.071, is amended by adding a subdivision 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 possibility of a permanent out-of-home placement of the child, and that a decision not to be a placement resource at the beginning of the case may affect the relative's right to have 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 permanent placement hearing. A relative who fails to provide a current address to the local social service agency forfeits the right to notice of permanent placement.

(b) 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.

Sec. 5. Minnesota Statutes 1996, section 257.071, is amended by adding a subdivision to read:

Subd. 1e. [CHANGE IN PLACEMENT.] If a child is removed from a permanent placement disposition authorized under section 260.191, subdivision 3b, within one year after the placement was made:

(1) the child must be returned to the residential facility where the child was placed immediately preceding the permanent placement; or

(2) the court shall hold a hearing within ten days after the child is taken into custody to determine where the child is to be placed. A guardian ad litem must be appointed for the child for this hearing.

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Sec. 6. Minnesota Statutes 1996, section 257.071, subdivision 3, is amended to read:

Subd. 3. [REVIEW OF VOLUNTARY PLACEMENTS.] Except as provided in subdivision 4, if the child has been placed in a residential facility pursuant to a voluntary release by the parent or parents, and is not returned home within six months 90 days after initial placement in the residential facility, the social service agency responsible for the placement shall:

(1) return the child to the home of the parent or parents; or

(2) file an appropriate a petition pursuant to section 260.131 or 260.231 to extend the placement for 90 days.

The case plan must be updated when a petition is filed and must include a specific plan for permanency.

If the court approves the extension, at the end of the second 90-day period, the child must be returned to the parent's home, unless a petition is filed for a child in need of protection or services.

Sec. 7. Minnesota Statutes 1996, section 257.071, subdivision 4, is amended to read:

Subd. 4. [REVIEW OF DEVELOPMENTALLY DISABLED AND EMOTIONALLY HANDICAPPED CHILD PLACEMENTS.] If a developmentally disabled child, as that term is defined in United States Code, title 42, section 6001 (7), as amended through December 31, 1979, or a child diagnosed with an emotional handicap as defined in section 252.27, subdivision 1a, has been placed in a residential facility pursuant to a voluntary release by the child's parent or parents because of the child's handicapping conditions or need for long-term residential treatment or supervision, the social service agency responsible for the placement shall bring a petition for review of the child's foster care status, pursuant to section 260.131, subdivision 1a, rather than a petition as required by subdivision 3, clause (b) section 260.191, subdivision 3b, after the child has been in foster care for 18 six months or, in the case of a child with an emotional handicap, after the child has been in a residential facility for six months. Whenever a petition for review is brought pursuant to this subdivision, a guardian ad litem shall be appointed for the child.

Sec. 8. Minnesota Statutes 1996, section 257.072, subdivision 1, is amended to read:

Subdivision 1. [RECRUITMENT OF FOSTER FAMILIES.] Each authorized child-placing agency shall make special efforts to recruit a foster family from among the child's relatives, except as authorized in section 260.181, subdivision 3. Each agency shall provide for diligent recruitment of potential foster families that reflect the ethnic and racial diversity of the children in the state for whom foster homes are needed. Special efforts include contacting and working with community organizations and religious organizations and may include contracting with these organizations, utilizing local media and other local resources, conducting outreach activities, and increasing the number of minority recruitment staff employed by the agency. The requirement of special efforts to locate relatives in this section is satisfied if on the earlier of the following occasions:

(1) when the child is placed with a relative who is interested in providing a permanent placement for the child; or

(2) when the responsible child-placing agency has made appropriate special efforts for six months following the child's placement in a residential facility and the court approves the agency's efforts pursuant to section 260.191, subdivision 3a. The agency may accept any gifts, grants, offers of services, and other contributions to use in making special recruitment efforts.

Sec. 9. Minnesota Statutes 1996, section 259.41, is amended to read:

259.41 [ADOPTION STUDY.]

An adoption study and written report must be completed before the child is placed in a prospective adoptive home under this chapter and the study must be completed and filed with the court at the time the adoption petition is filed. In a direct adoptive placement, the report must be filed with the court in support of a motion for temporary preadoptive custody under section 259.47, subdivision 3. The study and report shall be completed by a licensed child-placing agency and must be thorough and comprehensive. The study and report shall be paid for by the prospective adoptive parent, except as otherwise required under section 259.67 or 259.73.

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A stepparent adoption is not subject to this section.

In the case of a licensed foster parent seeking to adopt a child who is in the foster parent's care, any portions of the foster care licensing process that duplicate requirements of the home study may be submitted in satisfaction of the relevant requirements of this section.

At a minimum, the study must include the following about the prospective adoptive parent:

(1) a check of criminal conviction data, data on substantiated maltreatment of a child under section 626.556, and domestic violence data of each person over the age of 13 living in the home. The prospective adoptive parents, the bureau of criminal apprehension, and other state, county, and local agencies, after written notice to the subject of the study, shall give the agency completing the adoption study substantiated criminal conviction data and reports about maltreatment of minors and vulnerable adults and domestic violence. The adoption study must also include a check of the juvenile court records of each person over the age of 13 living in the home. Notwithstanding provisions of section 260.161 to the contrary, the juvenile court shall release the requested information to the agency completing the adoption study. The study must include an evaluation of the effect of a conviction or finding of substantiated maltreatment on the ability to care for a child;

(2) medical and social history and current health;

(3) assessment of potential parenting skills;

(4) ability to provide adequate financial support for a child; and

(5) the level of knowledge and awareness of adoption issues including where appropriate matters relating to interracial, cross-cultural, and special needs adoptions.

The adoption study must include at least one in-home visit with the prospective adoptive parent. The adoption study is the basis for completion of a written report. The report must be in a format specified by the commissioner and must contain recommendations regarding the suitability of the subject of the study to be an adoptive parent. An adoption study report is valid for 12 months following its date of completion.

A prospective adoptive parent seeking a study under this section must authorize access by the agency to any private data needed to complete the study, must disclose any names used previously other than the name used at the time of the study, and must provide a set of fingerprints, which shall be forwarded to the bureau of criminal apprehension to facilitate the criminal conviction background check required under clause (1).

Sec. 10. Laws 1997, chapter 112, section 3, is amended to read:

Sec. 3. [259.58] [COMMUNICATION OR CONTACT AGREEMENTS.]

If an adoptee has resided with a birth relative before being adopted, adoptive parents and that relative may enter an agreement under this section regarding communication with or contact between a minor adoptee, adoptive parents, and a birth relative. 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 relative with whom the child resided before being adopted; or

(2) 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.

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(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 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 parent or parents relative; or

(2) exceptional circumstances have arisen since the agreed order was entered that justify modification of the order.

Sec. 11. Minnesota Statutes 1996, section 259.59, is amended by adding a subdivision to read:

Subd. 3. [COMMUNICATION OR CONTACT AGREEMENTS.] This section does not prohibit birth parents and adoptive parents from entering a communication or contact agreement under section 259.58.

Sec. 12. Minnesota Statutes 1996, section 259.67, subdivision 2, is amended to read:

Subd. 2. [ADOPTION ASSISTANCE AGREEMENT.] The placing agency shall certify a child as eligible for adoption assistance according to rules promulgated by the commissioner. When Not later than 30 days after a parent or parents are found and approved for adoptive placement of a child certified as eligible for adoption assistance, and before the final decree of adoption is issued, a written agreement must be entered into by the commissioner, the adoptive parent or parents, and the placing agency. The written agreement must be in the form prescribed by the commissioner and must set forth the responsibilities of all parties, the anticipated duration of the adoption assistance payments, and the payment terms. The adoption assistance agreement shall be subject to the commissioner's approval, which must be granted or denied not later than 15 days after the agreement is entered.

The amount of adoption assistance is subject to the availability of state and federal funds and shall be determined through agreement with the adoptive parents. The agreement shall take into consideration the circumstances of the adopting parent or parents, the needs of the child being adopted and may provide ongoing monthly assistance, supplemental maintenance expenses related to the adopted person's special needs, nonmedical expenses periodically necessary for purchase of services, items, or equipment related to the special needs, and medical expenses. The placing agency or the adoptive parent or parents shall provide written documentation to support the need for adoption assistance payments. The commissioner may require periodic reevaluation of adoption assistance payments. The amount of ongoing monthly adoption assistance granted may in no case exceed that which would be allowable for the child under foster family care and is subject to the availability of state and federal funds.

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Sec. 13. Minnesota Statutes 1996, 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 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.

(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.

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Sec. 14. Minnesota Statutes 1996, 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, or (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 committed a delinquent act before becoming ten years old;

(11) is a runaway;

(12) is an habitual truant; or

(13) 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; or

(14) is one whose custodial parent's parental rights to another child have been involuntarily terminated within the past five years.

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Sec. 15. Minnesota Statutes 1996, 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 the United States or 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; or

(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 United States Code, title 18, section 1111(a) or 1112(a).

Sec. 16. Minnesota Statutes 1996, section 260.131, subdivision 1, is amended to read:

Subdivision 1. [WHO MAY FILE; REQUIRED FORM.] (a) Any reputable person, including but not limited to any agent of the commissioner of human services, having knowledge of a child in this state or of a child who is a resident of this state, who appears to be delinquent, in need of protection or services, or neglected and in foster care, may petition the juvenile court in the manner provided in this section.

(b) A petition for a child in need of protection filed by an individual who is not a county attorney or an agent of the commissioner of human services shall be filed on a form developed by the state court administrator and provided to court administrators. Copies of the form may be obtained from the court administrator in each county. The court administrator shall review the petition before it is filed to determine that it is completed. The court administrator may reject the petition if it does not indicate that the petitioner has contacted the local social service agency.

An individual may file a petition under this subdivision without seeking internal review of the local social service agency's decision. The court shall determine whether there is probable cause to believe that a need for protection or services exists before the matter is set for hearing. If the matter is set for hearing, the court administrator shall notify the local social service agency by sending notice to the county attorney.

The petition must contain:

(1) a statement of facts that would establish, if proven, that there is a need for protection or services for the child named in the petition;

(2) a statement that petitioner has reported the circumstances underlying the petition to the local social service agency, and protection or services were not provided to the child;

(3) a statement whether there are existing juvenile or family court custody orders or pending proceedings in juvenile or family court concerning the child; and

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(4) a statement of the relationship of the petitioner to the child and any other parties.

The court may not allow a petition to proceed under this paragraph if it appears that the sole purpose of the petition is to modify custody between the parents.

Sec. 17. Minnesota Statutes 1996, section 260.131, subdivision 2, is amended to read:

Subd. 2. The petition shall be verified by the person having knowledge of the facts and may be on information and belief. Unless otherwise provided by this section or by rule or order of the court, the county attorney shall draft the petition upon the showing of reasonable grounds to support the petition.

Sec. 18. Minnesota Statutes 1996, section 260.155, subdivision 1a, is amended to read:

Subd. 1a. [RIGHT TO PARTICIPATE IN PROCEEDINGS.] A child who is the subject of a petition, and the parents, guardian, or lawful legal custodian of the child have the right to participate in all proceedings on a petition. Official tribal representatives have the right to participate in any proceeding that is subject to the Indian Child Welfare Act of 1978, United States Code, title 25, sections 1901 to 1963.

Any grandparent of the child has a right to participate in the proceedings to the same extent as a parent, if the child has lived with the grandparent within the two years preceding the filing of the petition. At the first hearing following the filing of a petition, the court shall ask whether the child has lived with a grandparent within the last two years, except that the court need not make this inquiry if the petition states that the child did not live with a grandparent during this time period. Failure to notify a grandparent of the proceedings is not a jurisdictional defect.

If, in a proceeding involving a child in need of protection or services, the local social service agency recommends transfer of permanent legal and physical custody to a relative, the relative has a right to participate as a party, and thereafter shall receive notice of any hearing in the proceedings.

Sec. 19. Minnesota Statutes 1996, section 260.155, subdivision 2, is amended to read:

Subd. 2. [APPOINTMENT OF COUNSEL.] (a) The child, parent, guardian or custodian has the right to effective assistance of counsel in connection with a proceeding in juvenile court. This right does not apply to a child who is charged with a juvenile petty offense as defined in section 260.015, subdivision 21, unless the child is charged with a third or subsequent juvenile alcohol or controlled substance offense and may be subject to the alternative disposition described in section 260.195, subdivision 4.

(b) The court shall appoint counsel, or stand-by counsel if the child waives the right to counsel, for a child who is:

(1) charged by delinquency petition with a gross misdemeanor or felony offense; or

(2) the subject of a delinquency proceeding in which out-of-home placement has been proposed.

(c) If they desire counsel but are unable to employ it, the court shall appoint counsel to represent the child or the parents or guardian in any case in which it feels that such an appointment is desirable appropriate, except a juvenile petty offender who does not have the right to counsel under paragraph (a).

(d) Counsel for the child shall not also act as the child's guardian ad litem.

(e) In any proceeding where the subject of a petition for a child in need of protection or services is not represented by an attorney, the court shall determine the child's preferences regarding the proceedings, if the child is of suitable age to express a preference.

Sec. 20. Minnesota Statutes 1996, section 260.155, subdivision 3, is amended to read:

Subd. 3. [COUNTY ATTORNEY.] Except in adoption proceedings, the county attorney shall present the evidence upon request of the court. In representing the agency, the county attorney shall also have the responsibility for advancing the public interest in the welfare of the child.

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Sec. 21. Minnesota Statutes 1996, section 260.155, subdivision 4, is amended to read:

Subd. 4. [GUARDIAN AD LITEM.] (a) The court shall appoint a guardian ad litem to protect the interests of the minor when it appears, at any stage of the proceedings, that the minor is without a parent or guardian, or that the minor's parent is a minor or incompetent, or that the parent or guardian is indifferent or hostile to the minor's interests, and in every proceeding alleging a child's need for protection or services under section 260.015, subdivision 2a, clauses (1) to (10). In any other case the court may appoint a guardian ad litem to protect the interests of the minor when the court feels that such an appointment is desirable. The court shall appoint the guardian ad litem on its own motion or in the manner provided for the appointment of a guardian ad litem in the district court. The court may appoint separate counsel for the guardian ad litem if necessary.

(b) A guardian ad litem shall carry out the following responsibilities:

(1) conduct an independent investigation to determine the facts relevant to the situation of the child and the family, which must include, unless specifically excluded by the court, reviewing relevant documents; meeting with and observing the child in the home setting and considering the child's wishes, as appropriate; and interviewing parents, caregivers, and others with knowledge relevant to the case;

(2) advocate for the child's best interests by participating in appropriate aspects of the case and advocating for appropriate community services when necessary;

(3) maintain the confidentiality of information related to a case, with the exception of sharing information as permitted by law to promote cooperative solutions that are in the best interests of the child;

(4) monitor the child's best interests throughout the judicial proceeding; and

(5) present written reports on the child's best interests that include conclusions and recommendations and the facts upon which they are based.

(c) The court may waive the appointment of a guardian ad litem pursuant to clause (a), whenever counsel has been appointed pursuant to subdivision 2 or is retained otherwise, and the court is satisfied that the interests of the minor are protected.

(d) In appointing a guardian ad litem pursuant to clause (a), the court shall not appoint the party, or any agent or employee thereof, filing a petition pursuant to section 260.131.

(e) The following factors shall be considered when appointing a guardian ad litem in a case involving an Indian or minority child:

(1) whether a person is available who is the same racial or ethnic heritage as the child or, if that is not possible;

(2) whether a person is available who knows and appreciates the child's racial or ethnic heritage.

Sec. 22. Minnesota Statutes 1996, section 260.155, subdivision 8, is amended to read:

Subd. 8. [WAIVER.] (a) Waiver of any right which a child has under this chapter must be an express waiver voluntarily and intelligently made by the child after the child has been fully and effectively informed of the right being waived. If a child is under 12 years of age, the child's parent, guardian or custodian shall give any waiver or offer any objection contemplated by this chapter not represented by counsel, any waiver must be given or any objection must be offered by the child's guardian ad litem.

(b) Waiver of a child's right to be represented by counsel provided under the juvenile court rules must be an express waiver voluntarily and intelligently made by the child after the child has been fully and effectively informed of the right being waived. In determining whether a child has voluntarily and intelligently waived the right to counsel, the court shall look to the totality of the circumstances which includes but is not limited to the child's age, maturity, intelligence, education,

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experience, and ability to comprehend, and the presence and competence of the child's parents, guardian, or guardian ad litem. If the court accepts the child's waiver, it shall state on the record the findings and conclusions that form the basis for its decision to accept the waiver.

Sec. 23. Minnesota Statutes 1996, section 260.161, is amended by adding a subdivision to read:

Subd. 3a. [ATTORNEY ACCESS TO RECORDS.] An attorney representing a child, parent, or guardian ad litem in a proceeding under this chapter shall be given access to records, local social service agency files, and reports which form the basis of any recommendation made to the court. An attorney does not have access under this subdivision to the identity of a person who made a report under section 626.556. The court may issue protective orders to prohibit an attorney from sharing a specified record or portion of a record with a client other than a guardian ad litem.

Sec. 24. Minnesota Statutes 1996, section 260.165, subdivision 3, is amended to read:

Subd. 3. [NOTICE TO PARENT OR CUSTODIAN.] Whenever a peace officer takes a child into custody for shelter care or relative placement pursuant to subdivision 1; section 260.135, subdivision 5; or section 260.145, the officer shall notify the parent or custodian that under section 260.173, subdivision 2, the parent or custodian may request that the child be placed with a relative or a designated caregiver under chapter 257A instead of in a shelter care facility. The officer also shall give the parent or custodian of the child a list of names, addresses, and telephone numbers of social service agencies that offer child welfare services. If the parent or custodian was not present when the child was removed from the residence, the list shall be left with an adult on the premises or left in a conspicuous place on the premises if no adult is present. If the officer has reason to believe the parent or custodian is not able to read and understand English, the officer must provide a list that is written in the language of the parent or custodian. The list shall be prepared by the commissioner of human services. The commissioner shall prepare lists for each county and provide each county with copies of the list without charge. The list shall be reviewed annually by the commissioner and updated if it is no longer accurate. Neither the commissioner nor any peace officer or the officer's employer shall be liable to any person for mistakes or omissions in the list. The list does not constitute a promise that any agency listed will in fact assist the parent or custodian.

Sec. 25. Minnesota Statutes 1996, 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.

Sec. 26. Minnesota Statutes 1996, section 260.191, subdivision 3b, as amended by Laws 1997, chapter 112, section 5, is amended to read:

Subd. 3b. [REVIEW OF COURT ORDERED PLACEMENTS; PERMANENT PLACEMENT DETERMINATION.] (a) If the court places a child in a residential facility, as defined in section 257.071, subdivision 1, The court shall conduct a hearing to determine the permanent status of the a child not later than 12 months after the child was is placed out of the home of the parent.

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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.

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 planning determination, no hearing need be conducted under this section 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) 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 pursuant to 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. 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 ordered 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

(b) The court may extend the time period for determination of permanent placement to 18 months after the child was placed in a residential facility if:

(1) there is a substantial probability that the child will be returned home within the next six months;

(2) the agency has not made reasonable, or, in the case of an Indian child, active efforts, to correct the conditions that form the basis of the out-of-home placement; or

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(3) extraordinary circumstances exist precluding a permanent placement determination, in which case the court shall make written findings documenting the extraordinary circumstances and order one subsequent review after six months to determine permanent placement. A court finding that extraordinary circumstances exist precluding a permanent placement determination must be supported by detailed factual findings regarding those circumstances.

(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.

(c) (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.

(d) (e) Once a permanent placement determination has been made and permanent placement has been established, further reviews 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. If required, reviews must take place no less frequently than every six months.

(e) (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.

(f) (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. 27. Minnesota Statutes 1996, section 260.191, subdivision 4, is amended to read:

Subd. 4. [CONTINUANCE OF CASE.] When If it is in the best interests of the child or the child's parents to do so and when either if the allegations contained in the petition have been admitted, or when a hearing has been held as provided in section 260.155 and the allegations contained in the petition have been duly proven, before the entry of a finding of need for protection or services or a finding that a child is neglected and in foster care has been entered, the court may continue the case for a period not to exceed 90 days on any one order. Such a continuance may be extended for one additional successive period not to exceed 90 days and only after the court has reviewed the case and entered its order for an additional continuance without a finding that the child is in need of protection or services or neglected and in foster care. During this continuance the court may enter any order otherwise permitted under the provisions of this section. Following the 90-day continuance:

(1) if both the parent and child have complied with the terms of the continuance, the case must be dismissed without an adjudication that the child is in need of protection or services or that the child is neglected and in foster care; or

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(2) if either the parent or child has not complied with the terms of the continuance, the court shall adjudicate the child in need of protection or services or neglected and in foster care.

Sec. 28. Minnesota Statutes 1996, section 260.192, is amended to read:

260.192 [DISPOSITIONS; VOLUNTARY FOSTER CARE PLACEMENTS.]

Upon a petition for review of the foster care status of a child, the court may:

(a) In the case of a petition required to be filed under section 257.071, subdivision 3, find that the child's needs are being met, that the child's placement in foster care is in the best interests of the child, and that the child will be returned home in the next six months, in which case the court shall approve the voluntary arrangement and continue the matter for six months to assure the child returns to the parent's home.

(b) In the case of a petition required to be filed under section 257.071, subdivision 4, find that the child's needs are being met and that the child's placement in foster care is in the best interests of the child, in which case the court shall approve the voluntary arrangement. The court shall order the social service agency responsible for the placement to bring a petition under section 260.131, subdivision 1 or 1a, as appropriate, within two years 12 months.

(c) Find that the child's needs are not being met, in which case the court shall order the social service agency or the parents to take whatever action is necessary and feasible to meet the child's needs, including, when appropriate, the provision by the social service agency of services to the parents which would enable the child to live at home, and order a disposition under section 260.191.

(d) Find that the child has been abandoned by parents financially or emotionally, or that the developmentally disabled child does not require out-of-home care because of the handicapping condition, in which case the court shall order the social service agency to file an appropriate petition pursuant to sections 260.131, subdivision 1, or 260.231.

Nothing in this section shall be construed to prohibit bringing a petition pursuant to section 260.131, subdivision 1 or 2, sooner than required by court order pursuant to this section.

Sec. 29. Minnesota Statutes 1996, section 260.221, subdivision 1, is amended to read:

Subdivision 1. [VOLUNTARY AND INVOLUNTARY.] The juvenile court may upon petition, terminate all rights of a parent to a child in the following cases:

(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. Abandonment is presumed when:

(i) the parent has had no contact with the child on a regular basis and no demonstrated, consistent interest in the child's well-being for six months; and

(ii) 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) 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

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(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

(ii) within the three-year period immediately prior to that adjudication, 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

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(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 either the person has not filed a notice of intent to retain parental rights under section 259.51 or that the notice has been successfully challenged; or

(8) that the child is neglected and in foster care.

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; or

(9) that the parent has been convicted of a crime listed in section 260.012, paragraph (b), clauses (1) to (3).

Sec. 30. Minnesota Statutes 1996, section 260.221, subdivision 5, is amended to read:

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 reunification is not required because the parent has been convicted of a crime listed in section 260.012, paragraph (b), clauses (1) to (3).

Sec. 31. Minnesota Statutes 1996, section 260.241, subdivision 1, is amended to read:

Subdivision 1. If, after a hearing, the court finds by clear and convincing evidence that one or more of the conditions set out in section 260.221 exist, it may terminate parental rights. Upon the termination of parental rights all rights, powers, privileges, immunities, duties, and obligations, including any rights to custody, control, visitation, or support existing between the child and parent shall be severed and terminated and the parent shall have no standing to appear at any further legal proceeding concerning the child. Provided, however, that a parent whose parental rights are terminated:

(1) shall remain liable for the unpaid balance of any support obligation owed under a court order upon the effective date of the order terminating parental rights; and

(2) may be a party to a communication or contact agreement under section 259.58.

Sec. 32. Minnesota Statutes 1996, section 260.241, subdivision 3, is amended to read:

Subd. 3. (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.

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(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. 33. [UNIFORM PRIVATE CHIPS PETITION.]

The state court administrator shall prepare and make available to court administrators in each county the private CHIPS petition form required by Minnesota Statutes, section 260.131, subdivision 1.

Sec. 34. [JUVENILE CODE RECODIFICATION.]

The revisor of statutes shall reorganize Minnesota Statutes, chapter 260, and other laws relating to child protection and child welfare services to create separate, comprehensible areas of law dealing with child protection and delinquency in the form of a bill for introduction at the 1998 regular legislative session.

Sec. 35. [ADOPTIVE AND FOSTER FAMILY RECRUITMENT.]

The commissioner of human services shall explore strategies and incentives to facilitate recruitment of foster and adoptive families. The commissioner shall report to the supreme court and the chairs of the committees on the judiciary and on health and human services in the house of representatives and the senate by February 1, 1998, on an action proposal and whether any legislation is needed to implement it.

Sec. 36. [COURT CONTINUITY AND CASE MANAGEMENT.]

The chief judges of the district courts, in consultation with the state court administrator, shall develop case management systems so that one judge hears all phases of a proceeding on a child in need of protection or services, including permanent placement or adoption, if any. The chief judges shall consider the "one judge, one family" model and the experience of the Ramsey county pilot project.

Sec. 37. [SOCIAL SERVICE CONTINUITY.]

Whenever feasible, managers and directors of local social service agencies should promote continuity and reduce delays in a case by assigning one person until it concludes in reunification or a permanent placement plan.

Sec. 38. [REPEALER.]

Minnesota Statutes 1996, section 259.33, is repealed.

Sec. 39. [EFFECTIVE DATE; APPLICATION.]

Section 26, paragraph (a), clause (2), applies to children who were first placed outside the home on or after August 1, 1995.

ARTICLE 7

CRIME VICTIMS

Section 1. Minnesota Statutes 1996, section 169.042, subdivision 1, is amended to read:

Subdivision 1. [NOTIFICATION.] A The law enforcement agency that originally received the report of a vehicle theft shall make a reasonable and good-faith effort to notify the victim of a the reported vehicle theft within 48 hours after the agency recovers the vehicle recovering the vehicle or receiving notification that the vehicle has been recovered. The notice must specify when the recovering law enforcement agency expects to release the vehicle to the owner and how where the owner may pick up the vehicle. The law enforcement agency that recovers the vehicle must promptly inform the agency that received the theft report that the vehicle is recovered, where the vehicle is located, and when the vehicle can be released to the owner.

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Sec. 2. Minnesota Statutes 1996, section 256F.09, subdivision 2, is amended to read:

Subd. 2. [FUNDING.] The commissioner may award grants to create or maintain family visitation centers.

In awarding grants to maintain a family visitation center, the commissioner may award a grant to a center that can demonstrate a 35 percent local match, provided the center is diligently exploring and pursuing all available funding options in an effort to become self-sustaining, and those efforts are reported to the commissioner.

In awarding grants to create a family visitation center, the commissioner shall give priority to:

(1) areas of the state where no other family visitation center or similar facility exists;

(2) applicants who demonstrate that private funding for the center is available and will continue; and

(3) facilities that are adapted for use to care for children, such as day care centers, religious institutions, community centers, schools, technical colleges, parenting resource centers, and child care referral services.

In awarding grants to create or maintain a family visitation center, the commissioner shall require the proposed center to meet standards developed by the commissioner to ensure the safety of the custodial parent and children.

Sec. 3. Minnesota Statutes 1996, section 256F.09, subdivision 3, is amended to read:

Subd. 3. [ADDITIONAL SERVICES.] Each family visitation center may provide parenting and child development classes, and offer support groups to participating custodial parents and hold regular classes designed to assist children who have experienced domestic violence and abuse. Each family visitation center must have available an individual knowledgeable about or experienced in the provision of services to battered women on its staff, its board of directors, or otherwise available to it for consultation.

Sec. 4. Minnesota Statutes 1996, 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 legal records arising from proceedings or portions of proceedings that are public under section 260.155, subdivision 1, 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 or, (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.

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. 5. Minnesota Statutes 1996, section 260.161, subdivision 3, is amended to read:

Subd. 3. [PEACE OFFICER RECORDS OF CHILDREN.] (a) Except for records relating to an offense where proceedings are public under section 260.155, subdivision 1, peace officers' records of children who are or may be delinquent or who may be engaged in criminal acts shall be kept separate from records of persons 18 years of age or older

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and are private data but shall be disseminated: (1) by order of the juvenile court, (2) as required by section 126.036, (3) as authorized under section 13.82, subdivision 2, (4) to the child or the child's parent or guardian unless disclosure of a record would interfere with an ongoing investigation, or (5) to the Minnesota crime victims reparations board as required by section 611A.56, subdivision 2, clause (f), for the purpose of processing claims for crime victims reparations, or (6) as otherwise provided in this subdivision. Except as provided in paragraph (c), no photographs of a child taken into custody may be taken without the consent of the juvenile court unless the child is alleged to have violated section 169.121 or 169.129. Peace officers' records containing data about children who are victims of crimes or witnesses to crimes must be administered consistent with section 13.82, subdivisions 2, 3, 4, and 10. Any person violating any of the provisions of this subdivision shall be guilty of a misdemeanor.

In the case of computerized records maintained about juveniles by peace officers, the requirement of this subdivision that records about juveniles must be kept separate from adult records does not mean that a law enforcement agency must keep its records concerning juveniles on a separate computer system. Law enforcement agencies may keep juvenile records on the same computer as adult records and may use a common index to access both juvenile and adult records so long as the agency has in place procedures that keep juvenile records in a separate place in computer storage and that comply with the special data retention and other requirements associated with protecting data on juveniles.

(b) Nothing in this subdivision prohibits the exchange of information by law enforcement agencies if the exchanged information is pertinent and necessary to the requesting agency in initiating, furthering, or completing a criminal investigation.

(c) A photograph may be taken of a child taken into custody pursuant to section 260.165, subdivision 1, clause (b), provided that the photograph must be destroyed when the child reaches the age of 19 years. The commissioner of corrections may photograph juveniles whose legal custody is transferred to the commissioner. Photographs of juveniles authorized by this paragraph may be used only for institution management purposes, case supervision by parole agents, and to assist law enforcement agencies to apprehend juvenile offenders. The commissioner shall maintain photographs of juveniles in the same manner as juvenile court records and names under this section.

(d) Traffic investigation reports are open to inspection by a person who has sustained physical harm or economic loss as a result of the traffic accident. Identifying information on juveniles who are parties to traffic accidents may be disclosed as authorized under section 13.82, subdivision 4, and accident reports required under section 169.09 may be released under section 169.09, subdivision 13, unless the information would identify a juvenile who was taken into custody or who is suspected of committing an offense that would be a crime if committed by an adult, or would associate a juvenile with the offense, and the offense is not a minor traffic offense under section 260.193.

(e) A law enforcement agency shall notify the principal or chief administrative officer of a juvenile's school of an incident occurring within the agency's jurisdiction if:

(1) the agency has probable cause to believe that the juvenile has committed an offense that would be a crime if committed as an adult, that the victim of the offense is a student or staff member of the school, and that notice to the school is reasonably necessary for the protection of the victim; or

(2) the agency has probable cause to believe that the juvenile has committed an offense described in subdivision 1b, paragraph (a), clauses (1) to (3), that would be a crime if committed by an adult, regardless of whether the victim is a student or staff member of the school.

A law enforcement agency is not required to notify the school under this paragraph if the agency determines that notice would jeopardize an ongoing investigation. Notwithstanding section 138.17, data from a notice received from a law enforcement agency under this paragraph must be destroyed when the juvenile graduates from the school or at the end of the academic year when the juvenile reaches age 23, whichever date is earlier. For purposes of this paragraph, "school" means a public or private elementary, middle, or secondary school.

(f) In any county in which the county attorney operates or authorizes the operation of a juvenile prepetition or pretrial diversion program, a law enforcement agency or county attorney's office may provide the juvenile diversion program with data concerning a juvenile who is a participant in or is being considered for participation in the program.

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(g) Upon request of a local social service agency, peace officer records of children who are or may be delinquent or who may be engaged in criminal acts may be disseminated to the agency to promote the best interests of the subject of the data.

(h) Upon written request, the prosecuting authority shall release investigative data collected by a law enforcement agency to the victim of a criminal act or alleged criminal act or to the victim's legal representative, except as otherwise provided by this paragraph. Data shall not be released if:

(1) the release to the individual subject of the data would be prohibited under section 13.391; or

(2) the prosecuting authority reasonably believes:

(i) that the release of that data will interfere with the investigation; or

(ii) that the request is prompted by a desire on the part of the requester to engage in unlawful activities.

Sec. 6. Minnesota Statutes 1996, section 480.30, subdivision 1, is amended to read:

Subdivision 1. [CHILD ABUSE; DOMESTIC ABUSE; HARASSMENT.] The supreme court's judicial education program must include ongoing training for district court judges on child and adolescent sexual abuse, domestic abuse, harassment, stalking, and related civil and criminal court issues. The program must include the following:

(1) information about the specific needs of victims. The program must include;

(2) education on the causes of sexual abuse and family violence and;

(3) education on culturally responsive approaches to serving victims;

(4) education on the impacts of domestic abuse and domestic abuse allegations on children and the importance of considering these impacts when making visitation and child custody decisions under chapter 518; and

(5) information on alleged and substantiated reports of domestic abuse, including, but not limited to, department of human services survey data.

The program also must emphasize the need for the coordination of court and legal victim advocacy services and include education on sexual abuse and domestic abuse programs and policies within law enforcement agencies and prosecuting authorities as well as the court system.

Sec. 7. Minnesota Statutes 1996, section 518.10, is amended to read:

518.10 [REQUISITES OF PETITION.]

The petition for dissolution of marriage or legal separation shall state and allege:

(a) The name and address of the petitioner and any prior or other name used by the petitioner;

(b) The name and, if known, the address of the respondent and any prior or other name used by the respondent and known to the petitioner;

(c) The place and date of the marriage of the parties;

(d) In the case of a petition for dissolution, that either the petitioner or the respondent or both:

(1) Has resided in this state for not less than 180 days immediately preceding the commencement of the proceeding, or

(2) Has been a member of the armed services and has been stationed in this state for not less than 180 days immediately preceding the commencement of the proceeding, or

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(3) Has been a domiciliary of this state for not less than 180 days immediately preceding the commencement of the proceeding;

(e) The name at the time of the petition and any prior or other name, age and date of birth of each living minor or dependent child of the parties born before the marriage or born or adopted during the marriage and a reference to, and the expected date of birth of, a child of the parties conceived during the marriage but not born;

(f) Whether or not a separate proceeding for dissolution, legal separation, or custody is pending in a court in this state or elsewhere;

(g) In the case of a petition for dissolution, that there has been an irretrievable breakdown of the marriage relationship;

(h) In the case of a petition for legal separation, that there is a need for a decree of legal separation; and

(i) Any temporary or permanent maintenance, child support, child custody, disposition of property, attorneys' fees, costs and disbursements applied for without setting forth the amounts; and

(j) Whether an order for protection under chapter 518B or a similar law of another state that governs the parties or a party and a minor child of the parties is in effect and, if so, the district court or similar jurisdiction in which it was entered.

The petition shall be verified by the petitioner or petitioners, and its allegations established by competent evidence.

Sec. 8. Minnesota Statutes 1996, section 518.175, is amended by adding a subdivision to read:

Subd. 1a. [DOMESTIC ABUSE; SUPERVISED VISITATION.] (a) If a custodial parent requests supervised visitation under subdivision 1 or 5 and an order for protection under chapter 518B or a similar law of another state is in effect against the noncustodial parent to protect the custodial parent or the child, the judge or judicial officer must consider the order for protection in making a decision regarding visitation.

(b) The state court administrator, in consultation with representatives of custodial and noncustodial parents and other interested persons, shall develop standards to be met by persons who are responsible for supervising visitation. Either parent may challenge the appropriateness of an individual chosen by the court to supervise visitation.

Sec. 9. Minnesota Statutes 1996, section 518.175, subdivision 5, is amended to read:

Subd. 5. The court shall modify an order granting or denying visitation rights whenever modification would serve the best interests of the child. Except as provided in section 631.52, the court may not restrict visitation rights unless it finds that:

(1) the visitation is likely to endanger the child's physical or emotional health or impair the child's emotional development; or

(2) the noncustodial parent has chronically and unreasonably failed to comply with court-ordered visitation.

If the custodial parent makes specific allegations that visitation places the custodial parent or child in danger of harm, the court shall hold a hearing at the earliest possible time to determine the need to modify the order granting visitation rights. Consistent with subdivision 1a, the court may require a third party, including the local social services agency, to supervise the visitation or may restrict a parent's visitation rights if necessary to protect the custodial parent or child from harm.

Sec. 10. Minnesota Statutes 1996, section 518.179, subdivision 2, is amended to read:

Subd. 2. [APPLICABLE CRIMES.] This section applies to the following crimes or similar crimes under the laws of the United States, or any other state:

(1) murder in the first, second, or third degree under section 609.185, 609.19, or 609.195;

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(2) manslaughter in the first degree under section 609.20;

(3) assault in the first, second, or third degree under section 609.221, 609.222, or 609.223;

(4) kidnapping under section 609.25;

(5) depriving another of custodial or parental rights under section 609.26;

(6) soliciting, inducing, or promoting prostitution involving a minor under section 609.322;

(7) receiving profit from prostitution involving a minor under section 609.323;

(8) criminal sexual conduct in the first degree under section 609.342;

(9) criminal sexual conduct in the second degree under section 609.343;

(10) criminal sexual conduct in the third degree under section 609.344, subdivision 1, paragraph (c), (f), or (g);

(11) solicitation of a child to engage in sexual conduct under section 609.352;

(12) incest under section 609.365;

(13) malicious punishment of a child under section 609.377; or

(14) neglect of a child under section 609.378;

(15) terroristic threats under section 609.713; or

(16) felony harassment or stalking under section 609.749, subdivision 4.

Sec. 11. Minnesota Statutes 1996, section 518B.01, subdivision 4, is amended to read:

Subd. 4. [ORDER FOR PROTECTION.] There shall exist an action known as a petition for an order for protection in cases of domestic abuse.

(a) A petition for relief under this section may be made by any family or household member personally or by a family or household member, a guardian as defined in section 524.1-201, clause (20), or, if the court finds that it is in the best interests of the minor, by a reputable adult age 25 or older on behalf of minor family or household members. A minor age 16 or older may make a petition on the minor's own behalf against a spouse or former spouse, or a person with whom the minor has a child in common, if the court determines that the minor has sufficient maturity and judgment and that it is in the best interests of the minor.

(b) A petition for relief shall allege the existence of domestic abuse, and shall be accompanied by an affidavit made under oath stating the specific facts and circumstances from which relief is sought.

(c) A petition for relief must state whether the petitioner has ever had an order for protection in effect against the respondent.

(d) A petition for relief must state whether there is an existing order for protection in effect under this chapter governing both the parties and whether there is a pending lawsuit, complaint, petition or other action between the parties under chapter 257, 518, 518A, 518B, or 518C. The court administrator shall verify the terms of any existing order governing the parties. The court may not delay granting relief because of the existence of a pending action between the parties or the necessity of verifying the terms of an existing order. A subsequent order in a separate action under this chapter may modify only the provision of an existing order that grants relief authorized under subdivision 6, paragraph (a), clause (1). A petition for relief may be granted, regardless of whether there is a pending action between the parties.

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(e) The court shall provide simplified forms and clerical assistance to help with the writing and filing of a petition under this section.

(f) The court shall advise a petitioner under paragraph (e) of the right to file a motion and affidavit and to sue in forma pauperis pursuant to section 563.01 and shall assist with the writing and filing of the motion and affidavit.

(g) The court shall advise a petitioner under paragraph (e) of the right to serve the respondent by published notice under subdivision 5, paragraph (b), if the respondent is avoiding personal service by concealment or otherwise, and shall assist with the writing and filing of the affidavit.

(h) The court shall advise the petitioner of the right to seek restitution under the petition for relief.

(i) The court shall advise the petitioner of the right to request a hearing under subdivision 7, paragraph (c). If the petitioner does not request a hearing, the court shall advise the petitioner that the respondent may request a hearing and that notice of the hearing date and time will be provided to the petitioner by mail at least five days before the hearing.

(j) The court shall advise the petitioner of the right to request supervised visitation, as provided in section 518.175, subdivision 1a.

Sec. 12. Minnesota Statutes 1996, section 518B.01, subdivision 8, is amended to read:

Subd. 8. [SERVICE; ALTERNATE SERVICE; PUBLICATION; NOTICE.] (a) The petition and any order issued under this section shall be served on the respondent personally.

(b) When service is made out of this state and in the United States, it may be proved by the affidavit of the person making the service. When service is made outside the United States, it may be proved by the affidavit of the person making the service, taken before and certified by any United States minister, charge d'affaires, commissioner, consul, or commercial agent, or other consular or diplomatic officer of the United States appointed to reside in the other country, including all deputies or other representatives of the officer authorized to perform their duties; or before an office authorized to administer an oath with the certificate of an officer of a court of record of the country in which the affidavit is taken as to the identity and authority of the officer taking the affidavit.

(c) If personal service cannot be made, the court may order service of the petition and any order issued under this section by alternate means, or by publication, which publication must be made as in other actions. The application for alternate service must include the last known location of the respondent; the petitioner's most recent contacts with the respondent; the last known location of the respondent's employment; the names and locations of the respondent's parents, siblings, children, and other close relatives; the names and locations of other persons who are likely to know the respondent's whereabouts; and a description of efforts to locate those persons.

The court shall consider the length of time the respondent's location has been unknown, the likelihood that the respondent's location will become known, the nature of the relief sought, and the nature of efforts made to locate the respondent. The court shall order service by first class mail, forwarding address requested, to any addresses where there is a reasonable possibility that mail or information will be forwarded or communicated to the respondent.

The court may also order publication, within or without the state, but only if it might reasonably succeed in notifying the respondent of the proceeding. Service shall be deemed complete 14 days after mailing or 14 days after court-ordered publication.

(d) A petition and any order issued under this section must include a notice to the respondent that if an order for protection is issued to protect the petitioner or a child of the parties, upon request of the petitioner in any visitation proceeding, the court shall consider the order for protection in making a decision regarding visitation.

Sec. 13. Minnesota Statutes 1996, section 518B.01, subdivision 14, is amended to read:

Subd. 14. [VIOLATION OF AN ORDER FOR PROTECTION.] (a) Whenever an order for protection is granted pursuant to this section or a similar law of another state, and the respondent or person to be restrained knows of the order, violation of the order for protection is a misdemeanor. Upon conviction, the defendant must be sentenced to a minimum of

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three days imprisonment and must be ordered to participate in counseling or other appropriate programs selected by the court. If the court stays imposition or execution of the jail sentence and the defendant refuses or fails to comply with the court's treatment order, the court must impose and execute the stayed jail sentence. A person is guilty of a gross misdemeanor who violates this paragraph during the time period between a previous conviction under this paragraph; sections 609.221 to 609.224; 609.2242; 609.713, subdivision 1 or 3; 609.748, subdivision 6; 609.749; or a similar law of another state and the end of the five years following discharge from sentence for that conviction. Upon conviction, the defendant must be sentenced to a minimum of ten days imprisonment and must be ordered to participate in counseling or other appropriate programs selected by the court. Notwithstanding section 609.135, the court must impose and execute the minimum sentence provided in this paragraph for gross misdemeanor convictions.

(b) A peace officer shall arrest without a warrant and take into custody a person whom the peace officer has probable cause to believe has violated an order granted pursuant to this section or a similar law of another state restraining the person or excluding the person from the residence or the petitioner's place of employment, even if the violation of the order did not take place in the presence of the peace officer, if the existence of the order can be verified by the officer. The person shall be held in custody for at least 36 hours, excluding the day of arrest, Sundays, and holidays, unless the person is released earlier by a judge or judicial officer. A peace officer acting in good faith and exercising due care in making an arrest pursuant to this paragraph is immune from civil liability that might result from the officer's actions.

(c) A violation of an order for protection shall also constitute contempt of court and be subject to the penalties therefor.

(d) If the court finds that the respondent has violated an order for protection and that there is reason to believe that the respondent will commit a further violation of the provisions of the order restraining the respondent from committing acts of domestic abuse or excluding the respondent from the petitioner's residence, the court may require the respondent to acknowledge an obligation to comply with the order on the record. The court may require a bond sufficient to deter the respondent from committing further violations of the order for protection, considering the financial resources of the respondent, and not to exceed $10,000. If the respondent refuses to comply with an order to acknowledge the obligation or post a bond under this paragraph, the court shall commit the respondent to the county jail during the term of the order for protection or until the respondent complies with the order under this paragraph. The warrant must state the cause of commitment, with the sum and time for which any bond is required. If an order is issued under this paragraph, the court may order the costs of the contempt action, or any part of them, to be paid by the respondent. An order under this paragraph is appealable.

(e) Upon the filing of an affidavit by the petitioner, any peace officer, or an interested party designated by the court, alleging that the respondent has violated any order for protection granted pursuant to this section or a similar law of another state, the court may issue an order to the respondent, requiring the respondent to appear and show cause within 14 days why the respondent should not be found in contempt of court and punished therefor. The hearing may be held by the court in any county in which the petitioner or respondent temporarily or permanently resides at the time of the alleged violation, or in the county in which the alleged violation occurred, if the petitioner and respondent do not reside in this state. The court also shall refer the violation of the order for protection to the appropriate prosecuting authority for possible prosecution under paragraph (a).

(f) If it is alleged that the respondent has violated an order for protection issued under subdivision 6 or a similar law of another state and the court finds that the order has expired between the time of the alleged violation and the court's hearing on the violation, the court may grant a new order for protection under subdivision 6 based solely on the respondent's alleged violation of the prior order, to be effective until the hearing on the alleged violation of the prior order. If the court finds that the respondent has violated the prior order, the relief granted in the new order for protection shall be extended for a fixed period, not to exceed one year, except when the court determines a longer fixed period is appropriate.

(g) The admittance into petitioner's dwelling of an abusing party excluded from the dwelling under an order for protection is not a violation by the petitioner of the order for protection.

A peace officer is not liable under section 609.43, clause (1), for a failure to perform a duty required by paragraph (b).

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(h) When a person is convicted under paragraph (a) of violating an order for protection under this section and the court determines that the person used a firearm in any way during commission of the violation, the court may order that the person is prohibited from possessing any type of firearm for any period longer than three years or for the remainder of the person's life. A person who violates this paragraph is guilty of a gross misdemeanor. At the time of the conviction, the court shall inform the defendant whether and for how long the defendant is prohibited from possessing a firearm and that it is a gross misdemeanor to violate this paragraph. The failure of the court to provide this information to a defendant does not affect the applicability of the firearm possession prohibition or the gross misdemeanor penalty to that defendant.

(i) Except as otherwise provided in paragraph (h), when a person is convicted under paragraph (a) of violating an order for protection under this section, the court shall inform the defendant that the defendant is prohibited from possessing a pistol for three years from the date of conviction and that it is a gross misdemeanor offense to violate this prohibition. The failure of the court to provide this information to a defendant does not affect the applicability of the pistol possession prohibition or the gross misdemeanor penalty to that defendant.

(j) Except as otherwise provided in paragraph (h), a person is not entitled to possess a pistol if the person has been convicted under paragraph (a) after August 1, 1996, of violating an order for protection under this section, unless three years have elapsed from the date of conviction and, during that time, the person has not been convicted of any other violation of this section. Property rights may not be abated but access may be restricted by the courts. A person who possesses a pistol in violation of this paragraph is guilty of a gross misdemeanor.

(k) If the court determines that a person convicted under paragraph (a) of violating an order for protection under this section owns or possesses a firearm and used it in any way during the commission of the violation, it shall order that the firearm be summarily forfeited under section 609.5316, subdivision 3.

Sec. 14. Minnesota Statutes 1996, section 518B.01, subdivision 17, is amended to read:

Subd. 17. [EFFECT ON CUSTODY PROCEEDINGS.] In a subsequent custody proceeding the court may must consider, but is not bound by, a finding in a proceeding under this chapter or under a similar law of another state that domestic abuse has occurred between the parties.

Sec. 15. Minnesota Statutes 1996, section 518B.01, subdivision 18, is amended to read:

Subd. 18. [NOTICES.] Each order for protection granted under this chapter must contain a conspicuous notice to the respondent or person to be restrained that:

(1) violation of an order for protection is a misdemeanor punishable by imprisonment for up to 90 days or a fine of up to $700 or both;

(2) the respondent is forbidden to enter or stay at the petitioner's residence, even if invited to do so by the petitioner or any other person; in no event is the order for protection voided; and

(3) a peace officer must arrest without warrant and take into custody a person whom the peace officer has probable cause to believe has violated an order for protection restraining the person or excluding the person from a residence; and

(4) pursuant to the Violence Against Women Act of 1994, United States Code, title 18, section 2265, the order is enforceable in all 50 states, the District of Columbia, tribal lands, and United States territories, that violation of the order may also subject the respondent to federal charges and punishment under United States Code, title 18, sections 2261 and 2262, and that if a final order is entered against the respondent after the hearing, the respondent may be prohibited from possessing, transporting, or accepting a firearm under the 1994 amendment to the Gun Control Act, United States Code, title 18, section 922(g)(8).

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Sec. 16. Minnesota Statutes 1996, section 609.10, is amended to read:

609.10 [SENTENCES AVAILABLE.]

Subdivision 1. [SENTENCES AVAILABLE.] Upon conviction of a felony and compliance with the other provisions of this chapter the court, if it imposes sentence, may sentence the defendant to the extent authorized by law as follows:

(1) to life imprisonment; or

(2) to imprisonment for a fixed term of years set by the court; or

(3) to both imprisonment for a fixed term of years and payment of a fine; or

(4) to payment of a fine without imprisonment or to imprisonment for a fixed term of years if the fine is not paid; or

(5) to payment of court-ordered restitution in addition to either imprisonment or payment of a fine, or both; or

(6) to payment of a local correctional fee as authorized under section 609.102 in addition to any other sentence imposed by the court.

Subd. 2. [RESTITUTION.] (a) As used in this section, "restitution" includes:

(i) (1) payment of compensation to the victim or the victim's family; and

(ii) (2) if the victim is deceased or already has been fully compensated, payment of money to a victim assistance program or other program directed by the court.

In controlled substance crime cases, "restitution" also includes payment of compensation to a government entity that incurs loss as a direct result of the controlled substance crime.

"Restitution" includes payment of compensation to a government entity that incurs loss as a direct result of a crime.

(b) When the defendant does not pay the entire amount of court-ordered restitution and the fine at the same time, the court may order that all restitution shall be paid before the fine is paid.

Sec. 17. Minnesota Statutes 1996, section 609.125, is amended to read:

609.125 [SENTENCE FOR MISDEMEANOR OR GROSS MISDEMEANOR.]

Subdivision 1. [SENTENCES AVAILABLE.] Upon conviction of a misdemeanor or gross misdemeanor the court, if sentence is imposed, may, to the extent authorized by law, sentence the defendant:

(1) to imprisonment for a definite term; or

(2) to payment of a fine, or to imprisonment for a specified term if the fine is not paid; or

(3) to both imprisonment for a definite term and payment of a fine; or

(4) to payment of court-ordered restitution in addition to either imprisonment or payment of a fine, or both; or

(5) to payment of a local correctional fee as authorized under section 609.102 in addition to any other sentence imposed by the court.

Subd. 2. [RESTITUTION.] (a) As used in this section, "restitution" includes:

(i) (1) payment of compensation to the victim or the victim's family; and

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(ii) (2) if the victim is deceased or already has been fully compensated, payment of money to a victim assistance program or other program directed by the court.

In controlled substance crime cases, "restitution" also includes payment of compensation to a government entity that incurs loss as a direct result of the controlled substance crime.

"Restitution" includes payment of compensation to a government entity that incurs loss as a direct result of a crime.

(b) When the defendant does not pay the entire amount of court-ordered restitution and the fine at the same time, the court may order that all restitution shall be paid before the fine is paid.

Sec. 18. Minnesota Statutes 1996, section 609.2244, is amended to read:

609.2244 [PRESENTENCE DOMESTIC ABUSE ASSESSMENTS INVESTIGATIONS.]

Subdivision 1. [DOMESTIC ABUSE ASSESSMENT INVESTIGATION.] A presentence domestic abuse assessment investigation must be conducted and an assessment a report submitted to the court by the county corrections agency responsible for administering the assessment conducting the investigation when:

(1) a defendant is convicted of an offense described in section 518B.01, subdivision 2; or

(2) a defendant is arrested for committing an offense described in section 518B.01, subdivision 2, but is convicted of another offense arising out of the same circumstances surrounding the arrest.

Subd. 2. [REPORT.] (a) The assessment report must contain an evaluation of the convicted defendant department of corrections shall establish minimum standards for the report, including the circumstances of the offense, impact on the victim, the defendant's prior record, characteristics and history of alcohol and chemical use problems, and amenability to domestic abuse counseling programs. The report is classified as private data on individuals as defined in section 13.02, subdivision 12. Victim impact statements are confidential.

(b) The assessment report must include:

(1) a recommendation on any limitations on contact with the victim and other measures to ensure the victim's safety;

(2) a recommendation for the defendant to enter and successfully complete domestic abuse counseling programming and any aftercare found necessary by the assessment investigation;

(3) a recommendation for chemical dependency evaluation and treatment as determined by the evaluation whenever alcohol or drugs were found to be a contributing factor to the offense;

(4) recommendations for other appropriate remedial action or care, which may consist of educational programs, one-on-one counseling, a program or type of treatment that addresses mental health concerns, or a specific explanation why no level of care or action is recommended; and

(5) consequences for failure to abide by conditions set up by the court.

Subd. 3. [ASSESSOR CORRECTIONS AGENTS STANDARDS; RULES; ASSESSMENT INVESTIGATION TIME LIMITS.] A domestic abuse assessment investigation required by this section must be conducted by an assessor approved by the court, the local corrections department, or the commissioner of corrections. The assessor corrections agent shall have access to any police reports or other law enforcement data relating to the current offense or previous offenses that are necessary to complete the evaluation. An assessor providing A corrections agent conducting an assessment investigation under this section may not have any direct or shared financial interest or referral relationship resulting in shared financial gain with a treatment provider. An appointment for the defendant to undergo the assessment shall investigation must be made by the court, a court services probation officer, or court administrator as soon as possible but in no case more than one week after the defendant's court appearance. The assessment must be completed no later than three weeks after the defendant's court date.

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Subd. 4. [DOMESTIC ABUSE ASSESSMENT INVESTIGATION FEE.] When the court sentences a person convicted of an offense described in section 518B.01, subdivision 2, the court shall impose a domestic abuse assessment investigation fee of at least $50 but not more than $125. This fee must be imposed whether the sentence is executed, stayed, or suspended. The court may not waive payment or authorize payment of the fee in installments unless it makes written findings on the record that the convicted person is indigent or that the fee would create undue hardship for the convicted person or that person's immediate family. The person convicted of the offense and ordered to pay the fee shall pay the fee to the county corrections department or other designated agencies conducting the assessment investigation.

Sec. 19. Minnesota Statutes 1996, section 611A.01, is amended to read:

611A.01 [DEFINITIONS.]

For the purposes of sections 611A.01 to 611A.06:

(a) "Crime" means conduct that is prohibited by local ordinance and results in bodily harm to an individual; or conduct that is included within the definition of "crime" in section 609.02, subdivision 1, or would be included within that definition but for the fact that (i) the person engaging in the conduct lacked capacity to commit the crime under the laws of this state, or (ii) the act was alleged or found to have been committed by a juvenile;

(b) "Victim" means a natural person who incurs loss or harm as a result of a crime, including a good faith effort to prevent a crime, and for purposes of sections 611A.04 and 611A.045, also includes (i) a corporation that incurs loss or harm as a result of a crime, and (ii) a government entity that incurs loss or harm as a result of a crime, and (iii) any other entity authorized to receive restitution under section 609.10 or 609.125. If the victim is a natural person and is deceased, "victim" means the deceased's surviving spouse or next of kin; and

(c) "Juvenile" has the same meaning as given to the term "child" in section 260.015, subdivision 2.

Sec. 20. Minnesota Statutes 1996, section 611A.035, is amended to read:

611A.035 [CONFIDENTIALITY OF VICTIM'S ADDRESS.]

Subdivision 1. [DISCRETION OF PROSECUTOR NOT TO DISCLOSE.] A prosecutor may elect not to disclose a victim's or witness's home or employment address or telephone number if the prosecutor certifies to the trial court that:

(1) the defendant or respondent has been charged with or alleged to have committed a crime;

(2) the nondisclosure is needed to address the victim's or witness's concerns about safety or security; and

(3) the victim's or witness's home or employment address or telephone number is not relevant to the prosecution's case.

If such a certification is made, the prosecutor must move at a contested hearing for the court's permission to continue to withhold this information.

The court shall either:

(1) order the information disclosed to defense counsel, but order it not disclosed to the defendant; or

(2) order the prosecutor to arrange a confidential meeting between defense counsel, or his or her agent, and the victim or witness, at a neutral location.

This subdivision shall not be construed to compel a victim or witness to give any statement to or attend any meeting with defense counsel or defense counsel's agent.

Subd. 2. [WITNESS TESTIMONY IN COURT.] No victim or witness providing testimony in court proceedings may be compelled to state a home or employment address on the record in open court unless the court finds that the testimony would be relevant evidence.

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Sec. 21. Minnesota Statutes 1996, section 611A.038, is amended to read:

611A.038 [RIGHT TO SUBMIT STATEMENT AT SENTENCING.]

(a) A victim has the right to submit an impact statement to the court at the time of sentencing or disposition hearing. The impact statement may be presented to the court orally or in writing, at the victim's option. If the victim requests, the prosecutor must orally present the statement to the court.

Statements may include the following, subject to reasonable limitations as to time and length:

(1) a summary of the harm or trauma suffered by the victim as a result of the crime;

(2) a summary of the economic loss or damage suffered by the victim as a result of the crime; and

(3) a victim's reaction to the proposed sentence or disposition.

(b) A representative of the community affected by the crime may submit an impact statement in the same manner that a victim may as provided in paragraph (a). This impact statement shall describe the adverse social or economic effects the offense has had on persons residing and businesses operating in the community where the offense occurred.

(c) If the court permits the defendant or anyone speaking on the defendant's behalf to present a statement to the court, the court shall limit the response to factual issues which are relevant to sentencing.

(d) Nothing in this section shall be construed to extend the defendant's right to address the court under section 631.20.

Sec. 22. Minnesota Statutes 1996, section 611A.039, subdivision 1, is amended to read:

Subdivision 1. [NOTICE REQUIRED.] Except as otherwise provided in subdivision 2, within 15 working days after a conviction, acquittal, or dismissal in a criminal case in which there is an identifiable crime victim, the prosecutor shall make reasonable good faith efforts to provide to each affected crime victim oral or written notice of the final disposition of the case. When the court is considering modifying the sentence for a felony or a crime of violence or an attempted crime of violence, the court or its designee shall make a reasonable and good faith effort to notify the victim of the crime. If the victim is incapacitated or deceased, notice must be given to the victim's family. If the victim is a minor, notice must be given to the victim's parent or guardian. The notice must include:

(1) the date and approximate time of the review;

(2) the location where the review will occur;

(3) the name and telephone number of a person to contact for additional information; and

(4) a statement that the victim and victim's family may provide input to the court concerning the sentence modification.

As used in this section, "crime of violence" has the meaning given in section 624.712, subdivision 5, and also includes gross misdemeanor violations of section 609.224, and nonfelony violations of sections 518B.01, 609.2231, 609.3451, 609.748, and 609.749.

Sec. 23. [611A.0395] [RIGHT TO INFORMATION REGARDING DEFENDANT'S APPEAL.]

Subdivision 1. [PROSECUTING ATTORNEY TO NOTIFY VICTIMS.] (a) The prosecuting attorney shall make a reasonable and good faith effort to provide to each affected victim oral or written notice of a pending appeal. This notice must be provided within 30 days of filing of the respondent's brief. The notice must contain a brief explanation of the contested issues or a copy of the brief, an explanation of the applicable process, information about scheduled oral arguments or hearings, a statement that the victim and the victim's family may attend the argument or hearing, and the name and telephone number of a person that may be contacted for additional information.

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(b) In a criminal case in which there is an identifiable crime victim, within 15 working days of a final decision on an appeal, the prosecuting attorney shall make a reasonable and good faith effort to provide to each affected victim oral or written notice of the decision. This notice must include a brief explanation of what effect, if any, the decision has upon the judgment of the trial court and the name and telephone number of a person that may be contacted for additional information.

Subd. 2. [EXCEPTION.] The notices described in subdivision 1 do not have to be given to victims who have previously indicated a desire not to be notified.

Sec. 24. Minnesota Statutes 1996, section 611A.04, is amended by adding a subdivision to read:

Subd. 4. [PAYMENT OF RESTITUTION.] When the court orders both the payment of restitution and the payment of a fine and the defendant does not pay the entire amount of court-ordered restitution and the fine at the same time, the court may order that all restitution shall be paid before the fine is paid.

Sec. 25. Minnesota Statutes 1996, section 611A.045, subdivision 1, is amended to read:

Subdivision 1. [CRITERIA.] (a) The court, in determining whether to order restitution and the amount of the restitution, shall consider the following factors:

(1) the amount of economic loss sustained by the victim as a result of the offense; and

(2) the income, resources, and obligations of the defendant.

(b) If there is more than one victim of a crime, the court shall give priority to victims who are not governmental entities when ordering restitution.

Sec. 26. Minnesota Statutes 1996, section 611A.25, subdivision 3, is amended to read:

Subd. 3. [TERMS; VACANCIES; EXPENSES.] Section 15.059 governs the filling of vacancies and removal of members of the sexual assault advisory council. The terms of the members of the advisory council shall be two years. No member may serve on the advisory council for more than two consecutive terms. The council expires on June 30, 2001. Council members shall receive expense reimbursement as specified in section 15.059.

Sec. 27. Minnesota Statutes 1996, section 611A.361, subdivision 3, is amended to read:

Subd. 3. [TERMS; VACANCIES; EXPENSES.] Section 15.059 governs the filling of vacancies and removal of members of the general crime victims advisory council. The terms of the members of the advisory council shall be two years. No member may serve on the advisory council for more than two consecutive terms. The council expires on June 30, 2001. Council members shall receive expense reimbursement as specified in section 15.059.

Sec. 28. Minnesota Statutes 1996, section 611A.52, subdivision 6, is amended to read:

Subd. 6. [CRIME.] (a) "Crime" means conduct that:

(1) occurs or is attempted anywhere within the geographical boundaries of this state, including Indian reservations and other trust lands;

(2) poses a substantial threat of personal injury or death; and

(3) is included within the definition of "crime" in section 609.02, subdivision 1, or would be included within that definition but for the fact that (i) the person engaging in the conduct lacked capacity to commit the crime under the laws of this state; or (ii) the act was alleged or found to have been committed by a juvenile.

(b) A crime occurs whether or not any person is prosecuted or convicted but the conviction of a person whose acts give rise to the claim is conclusive evidence that a crime was committed unless an application for rehearing, appeal, or petition for certiorari is pending or a new trial or rehearing has been ordered.

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(c) "Crime" does not include an act involving the operation of a motor vehicle, aircraft, or watercraft that results in injury or death, except that a crime includes any of the following:

(1) injury or death intentionally inflicted through the use of a motor vehicle, aircraft, or watercraft;

(2) injury or death caused by a driver in violation of section 169.09, subdivision 1; 169.121; or 609.21; and

(3) injury or death caused by a driver of a motor vehicle in the immediate act of fleeing the scene of a crime in which the driver knowingly and willingly participated.

(d) Notwithstanding paragraph (a), "crime" includes an act of international terrorism as defined in United States Code, title 18, section 2331, committed outside of the United States against a resident of this state.

Sec. 29. Minnesota Statutes 1996, section 611A.52, subdivision 8, is amended to read:

Subd. 8. [ECONOMIC LOSS.] "Economic loss" means actual economic detriment incurred as a direct result of injury or death.

(a) In the case of injury the term is limited to:

(1) reasonable expenses incurred for necessary medical, chiropractic, hospital, rehabilitative, and dental products, services, or accommodations, including ambulance services, drugs, appliances, and prosthetic devices;

(2) reasonable expenses associated with recreational therapy where a claimant has suffered amputation of a limb;

(3) reasonable expenses incurred for psychological or psychiatric products, services, or accommodations, not to exceed an amount to be set by the board, where the nature of the injury or the circumstances of the crime are such that the treatment is necessary to the rehabilitation of the victim;

(4) loss of income that the victim would have earned had the victim not been injured;

(5) reasonable expenses incurred for substitute child care or household services to replace those the victim or claimant would have performed had the victim or the claimant's child not been injured. As used in this clause, "child care services" means services provided by facilities licensed under and in compliance with either Minnesota Rules, parts 9502.0315 to 9502.0445, or 9545.0510 to 9545.0670, or exempted from licensing requirements pursuant to section 245A.03. Licensed facilities must be paid at a rate not to exceed their standard rate of payment. Facilities exempted from licensing requirements must be paid at a rate not to exceed $3 an hour per child for daytime child care or $4 an hour per child for evening child care; and

(6) reasonable expenses actually incurred to return a child who was a victim of a crime under section 609.25 or 609.26 to the child's parents or lawful custodian. These expenses are limited to transportation costs, meals, and lodging from the time the child was located until the child was returned home.

(b) In the case of death the term is limited to:

(1) reasonable expenses actually incurred for funeral, burial, or cremation, not to exceed an amount to be determined by the board on the first day of each fiscal year;

(2) reasonable expenses for medical, chiropractic, hospital, rehabilitative, psychological and psychiatric services, products or accommodations which were incurred prior to the victim's death and for which the victim's survivors or estate are liable;

(3) loss of support, including contributions of money, products or goods, but excluding services which the victim would have supplied to dependents if the victim had lived; and

(4) reasonable expenses incurred for substitute child care and household services to replace those which the victim or claimant would have performed for the benefit of dependents if the victim or the claimant's child had lived.

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Claims for loss of support for minor children made under clause (3) must be paid for three years or until the child reaches 18 years old, whichever is the shorter period. After three years, if the child is younger than 18 years old a claim for loss of support may be resubmitted to the board, and the board staff shall evaluate the claim giving consideration to the child's financial need and to the availability of funds to the board. Claims for loss of support for a spouse made under clause (3) shall also be reviewed at least once every three years. The board staff shall evaluate the claim giving consideration to the spouse's financial need and to the availability of funds to the board.

Claims for substitute child care services made under clause (4) must be limited to the actual care that the deceased victim would have provided to enable surviving family members to pursue economic, educational, and other activities other than recreational activities.

Sec. 30. Minnesota Statutes 1996, section 611A.53, subdivision 1b, is amended to read:

Subd. 1b. [MINNESOTA RESIDENTS INJURED ELSEWHERE.] (a) A Minnesota resident who is the victim of a crime committed outside the geographical boundaries of this state but who otherwise meets the requirements of this section shall have the same rights under this chapter as if the crime had occurred within this state upon a showing that the state, territory, or United States possession in which the crime occurred does not have a crime victim reparations law covering the resident's injury or death.

(b) Notwithstanding paragraph (a), a Minnesota resident who is the victim of a crime involving international terrorism who otherwise meets the requirements of this section, has the same rights under this chapter as if the crime had occurred within this state regardless of where the crime occurred or whether the jurisdiction has a crime victims reparations law.

Sec. 31. Minnesota Statutes 1996, section 611A.675, is amended to read:

611A.675 [FUND FOR EMERGENCY NEEDS OF CRIME VICTIMS.]

Subdivision 1. [GRANTS AUTHORIZED.] The crime victims reparations board victim and witness advisory council shall make grants to local law enforcement agencies prosecutors and victim assistance programs for the purpose of providing emergency assistance to victims. As used in this section, "emergency assistance" includes but is not limited to:

(1) replacement of necessary property that was lost, damaged, or stolen as a result of the crime;

(2) purchase and installation of necessary home security devices; and

(3) transportation to locations related to the victim's needs as a victim, such as medical facilities and facilities of the criminal justice system;

(4) cleanup of the crime scene; and

(5) reimbursement for reasonable travel and living expenses the victim incurred to attend court proceedings that were held at a location other than the place where the crime occurred due to a change of venue.

Subd. 2. [APPLICATION FOR GRANTS.] A city or county sheriff or the chief administrative officer of a municipal police department attorney's office or victim assistance program may apply to the board council for a grant for any of the purposes described in subdivision 1 or for any other emergency assistance purpose approved by the board council. The application must be on forms and pursuant to procedures developed by the board council. The application must describe the type or types of intended emergency assistance, estimate the amount of money required, and include any other information deemed necessary by the board council.

Subd. 3. [REPORTING BY LOCAL AGENCIES REQUIRED.] A city or county sheriff or chief administrative officer of a municipal police department who attorney's office or victim assistance program that receives a grant under this section shall report all expenditures to the board on a quarterly basis. The sheriff or chief administrative officer shall also file an annual report with the board council itemizing the expenditures made during the preceding year, the purpose of those expenditures, and the ultimate disposition, if any, of each assisted victim's criminal case.

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Subd. 4. [REPORT TO LEGISLATURE.] On or before February 1, 1997 1999, the board council shall report to the chairs of the senate crime prevention and house of representatives judiciary committees on the implementation, use, and administration of the grant program created under this section.

Sec. 32. Minnesota Statutes 1996, section 611A.71, subdivision 5, is amended to read:

Subd. 5. [DUTIES.] The council shall:

(1) review on a regular basis the treatment of victims by the criminal justice system and the need and availability of services to victims;

(2) advise the agency designated by the governor to apply for victim assistance program grants under chapter 14 of Public Law Number 98-473, in the coordination and allocation of federal funds for crime victims assistance programs;

(3) advocate necessary changes and monitor victim-related legislation;

(4) provide information, training, and technical assistance to state and local agencies and groups involved in victim and witness assistance;

(5) serve as a clearinghouse for information concerning victim and witness programs;

(6) develop guidelines for the implementation of victim and witness assistance programs and aid in the creation and development of programs;

(7) coordinate the development and implementation of policies and guidelines for the treatment of victims and witnesses, and the delivery of services to them; and

(8) develop ongoing public awareness efforts and programs to assist victims; and

(9) administer the grant program described in section 611A.675.

Sec. 33. Minnesota Statutes 1996, section 611A.71, subdivision 7, is amended to read:

Subd. 7. [EXPIRATION.] The council expires on June 30, 1997 2001.

Sec. 34. Minnesota Statutes 1996, section 611A.74, subdivision 1, is amended to read:

Subdivision 1. [CREATION.] The office of crime victim ombudsman for Minnesota is created. The ombudsman shall be appointed by the commissioner of public safety with the advice of the advisory council, and governor, shall serve in the unclassified service at the pleasure of the commissioner governor and shall be selected without regard to political affiliation. No person may serve as ombudsman while holding any other public office. The ombudsman is directly accountable to the commissioner of public safety and governor. The ombudsman shall have the authority to investigate decisions, acts, and other matters of the criminal justice system so as to promote the highest attainable standards of competence, efficiency, and justice for crime victims in the criminal justice system.

Sec. 35. Minnesota Statutes 1996, section 611A.74, is amended by adding a subdivision to read:

Subd. 1a. [ORGANIZATION OF OFFICE.] (a) The ombudsman may appoint employees necessary to discharge responsibilities of the office. The ombudsman may delegate to staff members any of the ombudsman's authority or duties except the duties of formally making recommendations to appropriate authorities and reports to the office of the governor or to the legislature.

(b) The commissioner of public safety shall provide office space and administrative support services to the ombudsman and the ombudsman's staff.

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Sec. 36. Minnesota Statutes 1996, section 611A.74, subdivision 3, is amended to read:

Subd. 3. [POWERS.] The crime victim ombudsman has those powers necessary to carry out the duties set out in subdivision 1 2, including:

(a) The ombudsman may investigate, with or without a complaint, any action of an element of the criminal justice system or a victim assistance program included in subdivision 2.

(b) The ombudsman may request and shall be given access to information and assistance the ombudsman considers necessary for the discharge of responsibilities. The ombudsman may inspect, examine, and be provided copies of records and documents of all elements of the criminal justice system and victim assistance programs. The ombudsman may request and shall be given access to police reports pertaining to juveniles and juvenile delinquency petitions, notwithstanding section 260.161. Any information received by the ombudsman retains its data classification under chapter 13 while in the ombudsman's possession. Juvenile records obtained under this subdivision may not be released to any person.

(c) The ombudsman may prescribe the methods by which complaints are to be made, received, and acted upon; may determine the scope and manner of investigations to be made; and subject to the requirements of sections 611A.72 to 611A.74, may determine the form, frequency, and distribution of ombudsman conclusions, recommendations, and proposals.

(d) After completing investigation of a complaint, the ombudsman shall inform in writing the complainant, the investigated person or entity, and other appropriate authorities of the action taken. If the complaint involved the conduct of an element of the criminal justice system in relation to a criminal or civil proceeding, the ombudsman's findings shall be forwarded to the court in which the proceeding occurred.

(e) Before announcing a conclusion or recommendation that expressly or impliedly criticizes an administrative agency or any person, the ombudsman shall consult with that agency or person.

Sec. 37. Minnesota Statutes 1996, section 611A.75, is amended to read:

611A.75 [REPORT TO LEGISLATURE.]

The commissioner of public safety shall report to the legislature biennially on the activities of crime victim programs under chapter 611A; except that the crime victim ombudsman shall report to the legislature biennially on the activities of the office of crime victim ombudsman.

Sec. 38. Minnesota Statutes 1996, section 629.725, is amended to read:

629.725 [NOTICE TO CRIME VICTIM REGARDING BAIL HEARING OF ARRESTED OR DETAINED PERSON.]

When a person arrested or a juvenile detained for a crime of violence or an attempted crime of violence is scheduled to be reviewed under section 629.715 for release from pretrial detention, the court shall make a reasonable and good faith effort to notify the victim of the alleged crime. If the victim is incapacitated or deceased, notice must be given to the victim's family. If the victim is a minor, notice must be given to the victim's parent or guardian. The notification must include:

(1) the date and approximate time of the review;

(2) the location where the review will occur;

(3) the name and telephone number of a person that can be contacted for additional information; and

(4) a statement that the victim and the victim's family may attend the review.

As used in this section, "crime of violence" has the meaning given it in section 624.712, subdivision 5, and also includes section 609.21, gross misdemeanor violations of section 609.224, and nonfelony violations of sections 518B.01, 609.2231, 609.3451, 609.748, and 609.749.

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Sec. 39. Minnesota Statutes 1996, section 631.52, subdivision 2, is amended to read:

Subd. 2. [APPLICATION.] Subdivision 1 applies to the following crimes or similar crimes under the laws of the United States or any other state:

(1) murder in the first, second, or third degree under section 609.185, 609.19, or 609.195;

(2) manslaughter in the first degree under section 609.20;

(3) assault in the first, second, or third degree under section 609.221, 609.222, or 609.223;

(4) kidnapping under section 609.25;

(5) depriving another of custodial or parental rights under section 609.26;

(6) soliciting, inducing, or promoting prostitution involving a minor under section 609.322;

(7) receiving profit from prostitution involving a minor under section 609.323;

(8) criminal sexual conduct in the first degree under section 609.342;

(9) criminal sexual conduct in the second degree under section 609.343;

(10) criminal sexual conduct in the third degree under section 609.344, subdivision 1, paragraph (c), (f), or (g);

(11) solicitation of a child to engage in sexual conduct under section 609.352;

(12) incest under section 609.365;

(13) malicious punishment of a child under section 609.377; or

(14) neglect of a child under section 609.378;

(15) terroristic threats under section 609.713; or

(16) felony harassment or stalking under section 609.749.

Sec. 40. [COMBINED JURISDICTION FAMILY COURT.]

(a) Notwithstanding Minnesota Statutes, sections 260.031, subdivision 4, and 484.70, subdivisions 6 and 7, paragraphs (d) and (e), the supreme court may implement pilot projects to improve the resolution of family issues, including domestic abuse, by assigning related family, probate, and juvenile court matters, other than delinquency proceedings, to a single judge. The projects must include orders for protection and related domestic abuse issues and address methods for improving continuity and consistency with respect to consideration of domestic abuse issues in different proceedings involving the same family or household members. One pilot project shall be established in the second judicial district and the other pilot project shall be established in a rural district.

(b) The supreme court is requested to report to the chairs of the senate and house judiciary committees on the effectiveness of the pilot projects in resolving family issues when the projects are completed or by January 15, 2000, whichever is earlier.

Sec. 41. [EFFECTIVE DATE; APPLICABILITY.]

Sections 2, 3, 26, 27, 31, 37, and 40 are effective July 1, 1997. Sections 1, 4 to 11, 14, 19, 20, 22, 28 to 30, and 39 are effective August 1, 1997. Sections 13, 16 to 18, 24, 25, and 38 are effective August 1, 1997, and apply to offenses committed on or after that date. Sections 12, 15, 21, and 23 are effective August 1, 1997, and apply to proceedings committed on or after that date. The individual who occupies the position of crime victim ombudsman before the effective date shall continue in that position unless replaced by the governor.

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ARTICLE 8

PUBLIC SAFETY

Section 1. Minnesota Statutes 1996, section 13.99, is amended by adding a subdivision to read:

Subd. 90b. [CRIMINAL GANG INVESTIGATIVE DATA SYSTEM.] Data in the criminal gang investigative data system are classified in section 299C.091.

Sec. 2. Minnesota Statutes 1996, 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 may be appropriated to the commissioner of children, families, and learning for programs 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 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).

(c) The $10 surcharge shall be credited to a separate account to be known as the remote electronic alcohol monitoring pilot program account. Up to $250,000 is annually appropriated from this account to the commissioner of corrections for a remote electronic alcohol monitoring pilot program. The unencumbered balance remaining in the first year of the biennium does not cancel but is available for the second year. 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. 3. Minnesota Statutes 1996, section 260.161, subdivision 3, is amended to read:

Subd. 3. [PEACE OFFICER RECORDS OF CHILDREN.] (a) Except for records relating to an offense where proceedings are public under section 260.155, subdivision 1, peace officers' records of children who are or may be delinquent or who may be engaged in criminal acts shall be kept separate from records of persons 18 years of age or older and are private data but shall be disseminated: (1) by order of the juvenile court, (2) as required by section 126.036, (3) as authorized under section 13.82, subdivision 2, (4) to the child or the child's parent or guardian unless disclosure of a record would interfere with an ongoing investigation, or (5) as otherwise provided in this subdivision. Except as provided in paragraph (c), no photographs of a child taken into custody may be taken without the consent of the juvenile court unless the child is alleged to have violated section 169.121 or 169.129. Peace officers' records containing data about children who are victims of crimes or witnesses to crimes must be administered consistent with section 13.82, subdivisions 2, 3, 4, and 10. Any person violating any of the provisions of this subdivision shall be guilty of a misdemeanor.

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In the case of computerized records maintained about juveniles by peace officers, the requirement of this subdivision that records about juveniles must be kept separate from adult records does not mean that a law enforcement agency must keep its records concerning juveniles on a separate computer system. Law enforcement agencies may keep juvenile records on the same computer as adult records and may use a common index to access both juvenile and adult records so long as the agency has in place procedures that keep juvenile records in a separate place in computer storage and that comply with the special data retention and other requirements associated with protecting data on juveniles.

(b) Nothing in this subdivision prohibits the exchange of information by law enforcement agencies if the exchanged information is pertinent and necessary to the requesting agency in initiating, furthering, or completing a criminal investigation for law enforcement purposes.

(c) A photograph may be taken of a child taken into custody pursuant to section 260.165, subdivision 1, clause (b), provided that the photograph must be destroyed when the child reaches the age of 19 years. The commissioner of corrections may photograph juveniles whose legal custody is transferred to the commissioner. Photographs of juveniles authorized by this paragraph may be used only for institution management purposes, case supervision by parole agents, and to assist law enforcement agencies to apprehend juvenile offenders. The commissioner shall maintain photographs of juveniles in the same manner as juvenile court records and names under this section.

(d) Traffic investigation reports are open to inspection by a person who has sustained physical harm or economic loss as a result of the traffic accident. Identifying information on juveniles who are parties to traffic accidents may be disclosed as authorized under section 13.82, subdivision 4, and accident reports required under section 169.09 may be released under section 169.09, subdivision 13, unless the information would identify a juvenile who was taken into custody or who is suspected of committing an offense that would be a crime if committed by an adult, or would associate a juvenile with the offense, and the offense is not a minor traffic offense under section 260.193.

(e) A law enforcement agency shall notify the principal or chief administrative officer of a juvenile's school of an incident occurring within the agency's jurisdiction if:

(1) the agency has probable cause to believe that the juvenile has committed an offense that would be a crime if committed as an adult, that the victim of the offense is a student or staff member of the school, and that notice to the school is reasonably necessary for the protection of the victim; or

(2) the agency has probable cause to believe that the juvenile has committed an offense described in subdivision 1b, paragraph (a), clauses (1) to (3), that would be a crime if committed by an adult, regardless of whether the victim is a student or staff member of the school.

A law enforcement agency is not required to notify the school under this paragraph if the agency determines that notice would jeopardize an ongoing investigation. Notwithstanding section 138.17, data from a notice received from a law enforcement agency under this paragraph must be destroyed when the juvenile graduates from the school or at the end of the academic year when the juvenile reaches age 23, whichever date is earlier. For purposes of this paragraph, "school" means a public or private elementary, middle, or secondary school.

(f) In any county in which the county attorney operates or authorizes the operation of a juvenile prepetition or pretrial diversion program, a law enforcement agency or county attorney's office may provide the juvenile diversion program with data concerning a juvenile who is a participant in or is being considered for participation in the program.

(g) Upon request of a local social service agency, peace officer records of children who are or may be delinquent or who may be engaged in criminal acts may be disseminated to the agency to promote the best interests of the subject of the data.

Sec. 4. Minnesota Statutes 1996, section 260.161, subdivision 1, is amended to read:

Subdivision 1. [RECORDS REQUIRED TO BE KEPT.] (a) The juvenile court judge shall keep such minutes and in such manner as the court deems necessary and proper. Except as provided in paragraph (b), the court shall keep and maintain records pertaining to delinquent adjudications until the person reaches the age of 28 years and shall release the records on an individual to another juvenile court that has jurisdiction of the juvenile, to a requesting adult court for purposes

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of sentencing, or to an adult court or juvenile court as required by the right of confrontation of either the United States Constitution or the Minnesota Constitution. The juvenile court shall provide, upon the request of any other juvenile court, copies of the records concerning adjudications involving the particular child. The court also may provide copies of records concerning delinquency adjudications, on request, to law enforcement agencies, probation officers, and corrections agents if the court finds that providing these records serves public safety or is in the best interests of the child. Until July 1, 1999, juvenile court delinquency proceeding records of adjudications, court transcripts, and delinquency petitions, including any probable cause attachments that have been filed or police officer reports relating to a petition, must be released to requesting law enforcement agencies and prosecuting authorities for purposes of investigating and prosecuting violations of section 609.229, provided that psychological or mental health reports may not be included with those records. The records have the same data classification in the hands of the agency receiving them as they had in the hands of the court.

The court shall also keep an index in which files pertaining to juvenile matters shall be indexed under the name of the child. After the name of each file shall be shown the file number and, if ordered by the court, the book and page of the register in which the documents pertaining to such file are listed. The court shall also keep a register properly indexed in which shall be listed under the name of the child all documents filed pertaining to the child and in the order filed. The list shall show the name of the document and the date of filing thereof. The juvenile court legal records shall be deposited in files and shall include the petition, summons, notice, findings, orders, decrees, judgments, and motions and such other matters as the court deems necessary and proper. Unless otherwise provided by law, all court records shall be open at all reasonable times to the inspection of any child to whom the records relate, and to the child's parent and guardian.

(b) The court shall retain records of the court finding that a juvenile committed an act that would be a felony or gross misdemeanor level offense until the offender reaches the age of 28. If the offender commits a felony as an adult, or the court convicts a child as an extended jurisdiction juvenile, the court shall retain the juvenile records for as long as the records would have been retained if the offender had been an adult at the time of the juvenile offense. This paragraph does not apply unless the juvenile was provided counsel as required by section 260.155, subdivision 2.

Sec. 5. Minnesota Statutes 1996, section 260.161, subdivision 1a, is amended to read:

Subd. 1a. [RECORD OF FINDINGS.] (a) The juvenile court shall forward to the bureau of criminal apprehension the following data in juvenile petitions involving felony- or gross misdemeanor-level offenses:

(1) the name and birthdate of the juvenile, including any of the juvenile's known aliases or street names;

(2) the act for which the juvenile was petitioned and date of the offense; and

(3) the date and county where the petition was filed.

(b) Upon completion of the court proceedings, the court shall forward the court's finding and case disposition to the bureau. Notwithstanding section 138.17, if the petition was dismissed or the juvenile was not found to have committed a gross misdemeanor or felony-level offense, the bureau and a person who received the data from the bureau shall destroy all data relating to the petition collected under paragraph (a). The bureau shall notify a person who received the data that the data must be destroyed.

(c) The bureau shall retain data on a juvenile found to have committed a felony- or gross misdemeanor-level offense until the offender reaches the age of 28. If the offender commits a felony violation as an adult, the bureau shall retain the data for as long as the data would have been retained if the offender had been an adult at the time of the juvenile offense. The court shall specify whether:

(1) the juvenile was referred to a diversion program;

(2) the petition was dismissed, continued for dismissal, or continued without adjudication; or

(3) the juvenile was adjudicated delinquent.

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(d) (c) The juvenile court shall forward to the bureau, the sentencing guidelines commission, and the department of corrections the following data on individuals convicted as extended jurisdiction juveniles:

(1) the name and birthdate of the offender, including any of the juvenile's known aliases or street names;

(2) the crime committed by the offender and the date of the crime;

(3) the date and county of the conviction; and

(4) the case disposition.

The court shall notify the bureau, the sentencing guidelines commission, and the department of corrections whenever it executes an extended jurisdiction juvenile's adult sentence under section 260.126, subdivision 5.

(e) (d) The bureau, sentencing guidelines commission, and the department of corrections shall retain the extended jurisdiction juvenile data for as long as the data would have been retained if the offender had been an adult at the time of the offense. Data retained on individuals under this subdivision are private data under section 13.02, except that extended jurisdiction juvenile data becomes public data under section 13.87, subdivision 2, when the juvenile court notifies the bureau that the individual's adult sentence has been executed under section 260.126, subdivision 5.

Sec. 6. [299A.465] [CONTINUED HEALTH INSURANCE COVERAGE TO DISABLED.]

Subdivision 1. [OFFICER OR FIREFIGHTER DISABLED IN LINE OF DUTY.] (a) This subdivision applies when a peace officer or firefighter suffers a disabling injury that:

(1) results in the officer's or firefighter's retirement or separation from service;

(2) occurs while the officer or firefighter is acting in the course and scope of duties as a peace officer or firefighter; and

(3) the officer or firefighter has been approved to receive the officer's or firefighter's duty-related disability pension.

(b) The officer's or firefighter's employer shall continue to provide health coverage for:

(1) the officer or firefighter; and

(2) the officer's or firefighter's dependents if the officer or firefighter was receiving dependent coverage at the time of the injury under the employer's group health plan.

(c) The employer is responsible for the continued payment of the employer's contribution for coverage of the officer or firefighter and, if applicable, the officer's or firefighter's dependents. Coverage must continue for the officer or firefighter and, if applicable, the officer's or firefighter's dependents until the officer or firefighter reaches the age of 65. However, coverage for dependents does not have to be continued after the person is no longer a dependent.

Subd. 2. [OFFICER OR FIREFIGHTER KILLED IN LINE OF DUTY.] (a) This subdivision applies when a peace officer or firefighter is killed while on duty and discharging the officer's or firefighter's duties as a peace officer or firefighter.

(b) The officer's or firefighter's employer shall continue to cover the deceased officer's or firefighter's dependents if the officer or firefighter was receiving dependent coverage at the time of the officer's or firefighter's death under the employer's group health plan.

(c) The employer is responsible for the employer's contribution for the coverage of the officer's or firefighter's dependents. Coverage must continue for a dependent of the officer or firefighter for the period of time that the person is a dependent up to the age of 65.

Subd. 3. [COORDINATION OF BENEFITS.] Health insurance benefits payable to the officer or firefighter and the officer's or firefighter's dependents from any other source provide the primary coverage, and coverage available under this section is secondary.

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Subd. 4. [PUBLIC EMPLOYER REIMBURSEMENT.] A public employer subject to this section may annually apply to the commissioner of public safety for reimbursement of its costs of complying with this section. The commissioner shall provide reimbursement to the public employer out of the public safety officer's benefit account.

Subd. 5. [DEFINITION.] For purposes of this section:

(a) "Peace officer" or "officer" has the meaning given in section 626.84, subdivision 1, paragraph (c).

(b) "Dependent" means a person who meets the definition of dependent in section 62L.02, subdivision 11, at the time of the officer's or firefighter's injury or death. A person is not a dependent for purposes of this section during the period of time the person is covered under another group health plan.

(c) "Firefighter" has the meaning given in section 424.03, but does not include volunteer firefighters.

Sec. 7. Minnesota Statutes 1996, section 299A.61, subdivision 1, is amended to read:

Subdivision 1. [ESTABLISHMENT.] The commissioner of public safety, in cooperation with the commissioner of administration, shall develop and maintain an integrated criminal alert network to facilitate the communication of crime prevention information by electronic means among state agencies, law enforcement officials, and the private sector. The network shall disseminate data regarding the commission of crimes, including information on missing and endangered children, and attempt to reduce theft and other crime by the use of electronic transmission of information. In addition, the commissioner shall evaluate the feasibility of using the network to disseminate data regarding the use of fraudulent checks and the coordination of security and antiterrorism efforts with the Federal Bureau of Investigation. If the commissioner determines that one or both of these uses are feasible, the commissioner shall ensure that the network disseminates data in the area or areas determined to be feasible.

Sec. 8. [299A.625] [CRIMINAL GANG COUNCIL AND STRIKE FORCE.]

Subdivision 1. [MEMBERSHIP OF COUNCIL.] The criminal gang oversight council consists of the following individuals or their designees: the commissioner of public safety; the commissioner of corrections; the superintendent of the bureau of criminal apprehension; the attorney general; the chief law enforcement officers for Minneapolis, St. Paul, St. Cloud, and Duluth; a chief of police selected by the president of the Minnesota chiefs of police association; two sheriffs, one from a county in the seven-county metropolitan area other than Hennepin or Ramsey county and the other from a county outside the metropolitan area, both selected by the president of the Minnesota sheriffs association; the executive director of the Minnesota police and peace officers association; and the Hennepin, Ramsey, St. Louis, and Olmsted county sheriffs. The council may select a chair from among its members.

Subd. 2. [STATEWIDE GANG STRATEGY.] (a) The council shall develop an overall strategy to eliminate the harm caused to the public by criminal gangs and their illegal activities within the state of Minnesota. In developing the strategy, the council shall consult with representatives from the community services division of the Minnesota department of corrections and federal probation officers employed by the United States district court of Minnesota. As far as practicable, the strategy must address all criminal gangs operating in the state regardless of location or the motivation or ethnicity of the gangs' members. The strategy must address criminal gangs in both the metropolitan area and greater Minnesota. The council shall consult with and take into account the needs of law enforcement agencies and prosecutorial offices in greater Minnesota in developing the strategy. The strategy must target individuals or groups based on their criminal behavior, not their physical appearance. The strategy must take into account the rights of groups and individuals that the strike force may target and protect against abuses of these rights.

(b) In addition to developing the strategy described in paragraph (a), the council shall develop criteria and identifying characteristics for use in determining whether individuals are or may be members of gangs involved in criminal activity. The council shall also develop procedures and criteria for the investigation of criminal gangs and crimes committed by those gangs throughout the state.

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Subd. 3. [CRIMINAL GANG STRIKE FORCE.] The council shall oversee the organization and deployment of a statewide criminal gang strike force. The strike force must consist of law enforcement officers, bureau of criminal apprehension agents, an assistant attorney general, and a communications and intelligence network. The council shall select the members of the strike force who shall serve at the pleasure of the council. The council shall ensure that all law enforcement officers selected to join the strike force are licensed peace officers or federal law enforcement agents found by the Minnesota board of peace officer standards and training to have equivalent qualifications. In selecting members of the strike force, the council shall consult with chiefs of local law enforcement agencies, sheriffs, and other interested parties. The council shall request these individuals to recommend willing and experienced persons under their jurisdiction who would help the strike force and to permit those persons to join it. To the greatest extent possible, entities contributing members to the strike force are encouraged to also contribute equipment and other support. The council shall attempt to ensure that these entities do so.

Subd. 4. [STRIKE FORCE DUTIES.] The strike force shall implement the strategy developed by the council and is responsible for tactical decisions regarding implementation of the strategy. In addition and upon request, the strike force shall assist and train local governmental units, law enforcement agencies, and prosecutors' offices in methods to identify criminal gangs and gang members. To the greatest extent possible, the strike force shall operate as a cohesive unit exclusively for the purposes listed in this section. If regional units are established under subdivision 7, the council shall ensure that the existence and operation of these units do not impair the overall goal of a uniform statewide strategy to combat crimes committed by gangs.

Subd. 5. [SERVICE; TRANSFERS.] To the greatest extent possible, members of the strike force shall serve on the force for the entirety of its existence. Members continue to be employed by the same entity by which they were employed before joining the strike force. While serving on the strike force, however, members are under the exclusive command of the strike force. A member who desires to be transferred back to the position the member held before joining the strike force may request a transfer from the council. The council shall approve and arrange for the requested transfer as soon as is practicable. The person in charge of the organization from which the member came also may request that a member be transferred back. In these instances, the council shall approve and arrange for the requested transfer immediately or as soon as is practicable. If a member is transferred from the strike force, the person in charge of the organization from which the member came shall arrange for an experienced individual, acceptable to the council, to replace the transferred person on the strike force. If this arrangement cannot be made, any grant received under section 299A.627, subdivision 1, must be repaid on a prorated basis.

Subd. 6. [COMMANDERS.] The council shall designate a member of the strike force to be its commander and may appoint an individual assigned to a regional unit established under subdivision 7 to be the commander of the regional unit.

Subd. 7. [REGIONAL UNITS.] If the council at any time determines that it would be more effective and efficient to have distinct units within the strike force concentrating on specific areas, it may establish regional units within the strike force and select their members. If the council chooses to do so, the other provisions of this section still apply to the individual units, and the council still has the duty and authority to develop necessary procedures and criteria for and to oversee the operation of each individual unit. The council may continue to alter the structure of the strike force and any units composing it in any way designed to further its effectiveness and to carry out the intent of this section.

Subd. 8. [ROLE OF ASSISTANT ATTORNEY GENERAL.] The assistant attorney general assigned to the strike force shall generally advise the council on any matters that the council deems appropriate. The council may seek advice from other attorneys and, if the council decides it would be appropriate, may retain outside counsel. The assistant attorney general shall train local prosecutors in prosecuting cases involving criminal gangs and in interviewing witnesses and victims and shall cooperate with other strike force members in developing and building strong cases.

Subd. 9. [ATTORNEY GENERAL; COMMUNITY LIAISON.] The attorney general or a designee shall serve as a liaison between the criminal gang oversight council and the councils created in sections 3.922, 3.9223, 3.9225, and 3.9226. The attorney general or the designee will be responsible for:

(1) informing the councils of the criminal gang oversight council's plans, activities, and decisions and hearing their reactions to those plans, activities, and decisions; and

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(2) providing the criminal gang oversight council with information about the councils' position on the oversight council's plans, activities, and decisions.

In no event is the criminal gang oversight council required to disclose the names of individuals identified by it to the councils referenced in this subdivision.

Nothing in this subdivision changes the data classification of any data held by the oversight council.

Subd. 10. [REQUIRED REPORT.] By February 1 of each year, the council shall report to the chairs of the senate and house of representatives committees and divisions having jurisdiction over criminal justice policy and funding on the activities of the council and strike force.

Sec. 9. [299A.626] [JURISDICTION AND LIABILITY.]

Subdivision 1. [STATEWIDE JURISDICTION.] Law enforcement officers who are members of the criminal gang strike force have statewide jurisdiction to conduct criminal investigations and possess the same powers of arrest as those possessed by a sheriff.

Subd. 2. [LIABILITY AND WORKERS' COMPENSATION.] While operating under the scope of this section, members of the strike force are "employees of the state" as defined in section 3.736 and are considered employees of the department of public safety for purposes of chapter 176.

Sec. 10. [299A.627] [GRANT PROGRAMS.]

Subdivision 1. [REIMBURSEMENT GRANTS AUTHORIZED.] The commissioner of public safety, upon recommendation of the council, may award grants to local law enforcement agencies, sheriff's offices, and other organizations that have contributed members to the criminal gang strike force to hire new persons to replace those who have joined the force. A grant may cover a two-year period and reimburse the recipient for a maximum of 100 percent of the salary of the person contributed to the strike force. A recipient of a grant under this subdivision must use the money to hire a new person to replace the person who has joined the strike force, thus keeping its complement of employees at the same level. The money may not be used to pay for equipment or uniforms.

Subd. 2. [GRANTS TO EXPAND LOCAL CAPACITY TO COMBAT CRIMINAL GANGS.] (a) The commissioner of public safety, upon recommendation of the council, may award grants to local law enforcement agencies and city and county attorneys' offices to expand the agency's or office's capacity to successfully investigate and prosecute crimes committed by criminal gangs.

(b) Grant applicants under this subdivision shall submit to the commissioner and the council a detailed plan describing the uses for which the money will be put. The commissioner and the council shall evaluate grant applications and award grants in a manner that will best ensure positive results. The commissioner may award grants to purchase necessary equipment and to develop or upgrade computer systems if the commissioner determines that those uses would best aid the recipient's attempts to combat criminal gangs. The commissioner shall require recipients of grants to provide follow-up reports to the council detailing the success of the recipient in combating criminal gangs.

(c) The commissioner shall condition grants made under this subdivision to require that recipients agree to cooperate with the council and the bureau of criminal apprehension in establishing and expanding the criminal gang investigative data system described in section 299C.091 and in implementing the strategy developed by the council to combat criminal gangs. Grant recipients must agree to provide the council and bureau with any requested information regarding the activities and characteristics of criminal gangs and gang members operating within their jurisdictions.

Sec. 11. Minnesota Statutes 1996, section 299A.63, subdivision 4, is amended to read:

Subd. 4. [ATTORNEY GENERAL DUTIES.] (a) The attorney general may assist cities and local law enforcement officials in developing and implementing anticrime and neighborhood community revitalization strategies and may assist local prosecutors in prosecuting crimes occurring in the targeted neighborhoods that receive funding under this section.

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Upon request of the local prosecuting authority, the attorney general may appear in court in those civil and criminal cases arising as a result of this section that the attorney general deems appropriate. For the purposes of this section, the attorney general may appear in court in nuisance actions under chapter 617, and misdemeanor prosecutions under chapter 609.

(b) The attorney general shall develop may assist cities in developing appropriate applications to the United States Department of Justice for federal weed and seed grants for use in conjunction with grants awarded under this section.

Sec. 12. [299C.091] [CRIMINAL GANG INVESTIGATIVE DATA SYSTEM.]

Subdivision 1. [ESTABLISHMENT.] The bureau shall administer and maintain a computerized criminal gang investigative data system for the purpose of assisting criminal justice agencies in the investigation and prosecution of criminal activity by gang members. The system consists of data on individuals whom law enforcement agencies determine are or may be engaged in criminal gang activity. Notwithstanding section 260.161, subdivision 3, data on adults and juveniles in the system and data documenting an entry in the system may be maintained together. Data in the system must be submitted and maintained as provided in this section.

Subd. 2. [ENTRY OF DATA INTO SYSTEM.] (a) A law enforcement agency may submit data on an individual to the criminal gang investigative data system only if the agency obtains and maintains the documentation required under this subdivision. Documentation may include data obtained from other criminal justice agencies, provided that a record of all of the documentation required under paragraph (b) is maintained by the agency that submits the data to the bureau. Data maintained by a law enforcement agency to document an entry in the system are confidential data on individuals as defined in section 13.02, subdivision 3, but may be released to criminal justice agencies.

(b) A law enforcement agency may submit data on an individual to the bureau for inclusion in the system if the individual is 14 years of age or older and the agency has documented that:

(1) the individual has met at least three of the criteria or identifying characteristics of gang membership developed by the criminal gang oversight council under section 299A.626 as required by the council; and

(2) the individual has been convicted of a gross misdemeanor or felony or has been adjudicated or has a stayed adjudication as a juvenile for an offense that would be a gross misdemeanor or felony if committed by an adult.

Subd. 3. [CLASSIFICATION OF DATA IN SYSTEM.] Data in the criminal gang investigative data system are confidential data on individuals as defined in section 13.02, subdivision 3, but are accessible to law enforcement agencies and may be released to the criminal justice agencies.

Subd. 4. [AUDIT OF DATA SUBMITTED TO SYSTEM.] The bureau shall conduct periodic random audits of data under subdivision 2 that documents inclusion of an individual in the criminal gang investigative data system for the purpose of determining the validity, completeness, and accuracy of data submitted to the system. The bureau has access to the documenting data for purposes of conducting an audit.

Subd. 5. [REMOVAL OF DATA FROM SYSTEM.] Notwithstanding section 138.17, the bureau shall destroy data entered into the system when three years have elapsed since the data were entered into the system, except as otherwise provided in this subdivision. If the bureau has information that the individual has been convicted as an adult, or has been adjudicated or has a stayed adjudication as a juvenile for an offense that would be a crime if committed by an adult, since entry of the data into the system, the data must be maintained until three years have elapsed since the last record of a conviction or adjudication or stayed adjudication of the individual. Upon request of the law enforcement agency that submitted data to the system, the bureau shall destroy the data regardless of whether three years have elapsed since the data were entered into the system.

Sec. 13. Minnesota Statutes 1996, section 299C.095, is amended to read:

299C.095 [SYSTEM FOR IDENTIFICATION OF JUVENILE OFFENDERS.]

Subdivision 1. [ACCESS.] (a) The bureau shall administer and maintain the computerized juvenile history record system based on section 260.161 and other statutes requiring the reporting of data on juveniles. The data in the system are private data as defined in section 13.02, subdivision 12, but are accessible to criminal justice agencies as defined in section 13.02, subdivision 3a, to all trial courts and appellate courts, to a person who has access to the juvenile court records as provided in section 260.161 or under court rule and to criminal justice agencies in other states in the conduct of their official duties.

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(b) Except for access authorized under paragraph (a), the bureau shall only disseminate a juvenile adjudication history record in connection with a background check required by statute or rule and performed on a licensee, license applicant, or employment applicant or performed under section 624.713. A consent for release of information from an individual who is the subject of a juvenile adjudication history is not effective and the bureau shall not release a juvenile adjudication history record and shall not release information in a manner that reveals the existence of the record.

Subd. 2. [RETENTION.] (a) Notwithstanding section 138.17, the bureau shall retain juvenile history records for the time periods provided in this subdivision. Notwithstanding contrary provisions of paragraphs (b) to (e), all data in a juvenile history record must be retained for the longest time period applicable to any item in the individual juvenile history record. If, before data are destroyed under this subdivision, the subject of the data is convicted of a felony as an adult, the individual's juvenile history record must be retained for the same time period as an adult criminal history record.

(b) Juvenile history data on a child who was arrested must be destroyed six months after the arrest if the child has not been referred to a diversion program and no petition has been filed against the child by that time.

(c) Juvenile history data on a child against whom a delinquency petition was filed and subsequently dismissed must be destroyed upon receiving notice from the court that the petition was dismissed.

(d) Juvenile history data on a child who was referred to a diversion program or against whom a delinquency petition has been filed and continued for dismissal must be destroyed when the child reaches age 21.

(e) Juvenile history data on a child against whom a delinquency petition was filed and continued without adjudication, or a child who was found to have committed a felony or gross misdemeanor-level offense, must be destroyed when the child reaches age 28. If the offender commits a felony violation as an adult, the bureau shall retain the data for as long as the data would have been retained if the offender had been an adult at the time of the juvenile offense.

(f) The bureau shall retain extended jurisdiction juvenile data on an individual received under section 260.161, subdivision 1a, paragraph (c), for as long as the data would have been retained if the offender had been an adult at the time of the offense.

(g) Data retained on individuals under this subdivision are private data under section 13.02, except that extended jurisdiction juvenile data become public data under section 13.87, subdivision 2, when the juvenile court notifies the bureau that the individual's adult sentence has been executed under section 260.126, subdivision 5.

(h) A person who receives data on a juvenile under paragraphs (b) to (e) from the bureau shall destroy the data according to the schedule in this subdivision. The bureau shall include a notice of the destruction schedule with all data it disseminates on juveniles.

Sec. 14. Minnesota Statutes 1996, section 299C.10, subdivision 1, is amended to read:

Subdivision 1. [LAW ENFORCEMENT DUTY.] (a) It is hereby made the duty of the sheriffs of the respective counties, of the police officers in cities of the first, second, and third classes, under the direction of the chiefs of police in such cities, and of community corrections agencies operating secure juvenile detention facilities to take or cause to be taken immediately finger and thumb prints, photographs, distinctive physical mark identification data, and such other identification data as may be requested or required by the superintendent of the bureau;, of all the following:

(1) persons arrested for a felony, or gross misdemeanor, of all;

(2) juveniles committing arrested for or alleged to have committed felonies as distinguished from those committed by adult offenders, of all;

(3) persons reasonably believed by the arresting officer to be fugitives from justice, of all;

(4) persons in whose possession, when arrested, are found concealed firearms or other dangerous weapons, burglar tools or outfits, high-power explosives, or articles, machines, or appliances usable for an unlawful purpose and reasonably believed by the arresting officer to be intended for such purposes,; and

(5) juveniles referred by a law enforcement agency to a diversion program for a felony or gross misdemeanor offense.

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Within 24 hours thereafter to forward such the fingerprint records and other identification data specified under this paragraph must be forwarded to the bureau of criminal apprehension on such forms and in such manner as may be prescribed by the superintendent of the bureau of criminal apprehension.

(b) Effective August 1, 1997, the identification reporting requirements shall also apply to persons committing arrested for or alleged to have committed targeted misdemeanor offenses, including violent and enhanceable crimes, and juveniles committing arrested for or alleged to have committed gross misdemeanors. In addition, the reporting requirements shall include any known aliases or street names of the offenders.

For purposes of this section, a targeted misdemeanor is a misdemeanor violation of section 169.121 (driving while intoxicated), 518B.01 (order for protection violation), 609.224 (fifth degree assault), 609.2242 (domestic assault), 609.746 (interference with privacy), 609.748 (harassment or restraining order violation), or 617.23 (indecent exposure).

Sec. 15. Minnesota Statutes 1996, section 299C.10, subdivision 4, is amended to read:

Subd. 4. [FEE FOR BACKGROUND CHECK; ACCOUNT; APPROPRIATION.] The superintendent shall collect a fee in an amount to cover the expense for each background check provided for a purpose not directly related to the criminal justice system or required by section 624.7131, 624.7132, or 624.714. The proceeds of the fee must be deposited in a special account. Until July 1, 1997, Money in the account is appropriated to the commissioner to maintain and improve the quality of the criminal record system in Minnesota.

Sec. 16. Minnesota Statutes 1996, section 299C.13, is amended to read:

299C.13 [INFORMATION FURNISHED TO PEACE OFFICERS.]

Upon receipt of information data as to any arrested person, the bureau shall immediately ascertain whether the person arrested has a criminal record or is a fugitive from justice, and shall at once inform the arresting officer of the facts ascertained, including references to any adult court disposition data that are not in the criminal history system. Upon application by any sheriff, chief of police, or other peace officer in the state, or by an officer of the United States or by an officer of another state, territory, or government duly authorized to receive the same and effecting reciprocal interchange of similar information with the division, it shall be the duty of the bureau to furnish all information in its possession pertaining to the identification of any person. If the bureau has a sealed record on the arrested person, it shall notify the requesting peace officer of that fact and of the right to seek a court order to open the record for purposes of law enforcement. A criminal justice agency shall be notified, upon request, of the existence and contents of a sealed record containing conviction information about an applicant for employment. For purposes of this section a "criminal justice agency" means courts or a government agency that performs the administration of criminal justice under statutory authority.

Sec. 17. Minnesota Statutes 1996, section 299C.65, is amended by adding a subdivision to read:

Subd. 5. [REVIEW OF FUNDING REQUESTS.] The criminal and juvenile justice information policy group shall review the funding requests for criminal justice information systems from state, county, and municipal government agencies. The policy group shall review the requests for compatibility to statewide criminal justice information systems. The review shall be forwarded to the chairs of the house judiciary committee and judiciary finance division, and the chairs of the senate crime prevention committee and crime prevention and judiciary finance division.

Sec. 18. Minnesota Statutes 1996, section 299D.07, is amended to read:

299D.07 [HELICOPTERS AND FIXED WING AIRCRAFT.]

The commissioner of public safety is hereby authorized to retain, acquire, maintain and operate helicopters and fixed wing aircraft for the purposes of the highway patrol and the Bureau of Criminal Apprehension and for any other law enforcement purpose that the commissioner determines is appropriate. The commissioner also is authorized to employ state patrol officer pilots as required.

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Sec. 19. Minnesota Statutes 1996, section 299F.051, is amended to read:

299F.051 [TRAINING LOCAL FIREFIGHTERS; PROSECUTORS; AND PEACE OFFICERS.]

Subdivision 1. [CONTENT TRAINING UNIT.] An arson training unit is established within the division of fire marshal to develop and administer arson training courses throughout the state for law enforcement and fire service personnel and for prosecutors.

Subd. 1a. [CURRICULUM.] The superintendent of the arson training unit, in consultation with the bureau of criminal apprehension, after consultation with the state fire marshal, the Minnesota peace officers officer standards and training board, the county attorneys association, the attorney general, and the state advisory council on fire service education and research, shall establish the content of a standardized curriculum to be included in the training programs which shall be available to firefighters and peace officers from political subdivisions. The content standardized curriculum shall include fire scene investigation and preservation of evidence, interviewing of witnesses and suspects, constitutional limits on interrogation by sworn and nonsworn officers, and other topics deemed necessary to successful criminal investigation. and prosecution. The training program offered to peace officers shall meet the applicable preservice training requirements established by the peace officer standards and training board under section 626.8456.

Subd. 2. [TRAINING LOCATIONS, INSTRUCTORS.] The arson training unit, in cooperation with the superintendent of the bureau of criminal apprehension, the board of peace officer standards and training, the county attorneys association, and the attorney general, shall provide courses at convenient locations in the state for training firefighters and, peace officers, and prosecutors in:

(1) the conduct of investigations following the occurrence of a fire; and

(2) the prosecution of arson cases.

For this purpose, the superintendent arson training unit may use the services and employees of the bureau, the state fire marshal, and the attorney general. In addition, after consultation with the state fire marshal, the superintendent the arson training unit is authorized to establish minimum qualifications for training course instructors, and engage part-time instructors necessary and proper to furnish the best possible instruction, subject to the limitation of funds appropriated and available for expenditure. Laws 1981, chapter 210, sections 1 to 48, shall not apply to the part-time instructors.

Subd. 3. [IN-SERVICE TRAINING.] The state fire marshal and the superintendent of arson training unit, in cooperation with the bureau of criminal apprehension, in cooperation with the Minnesota board of peace officer standards and training, shall encourage the establishment of offer in-service and refresher training for firefighters and peace officers through schools administered by the state, county, school district, municipality, or joint or contractual combinations thereof. The in-service training courses offered for peace officers shall be eligible for continuing education credit from the Minnesota board of peace officers officer standards and training shall report to the governor and legislature on the progress made in this effort as provided in section 626.843.

Subd. 4. [COOPERATIVE INVESTIGATION; REIMBURSEMENT.] The state fire marshal and the superintendent of the bureau of criminal apprehension shall encourage the cooperation of local firefighters and peace officers in the investigation of violations of sections 609.561 to 609.576 or other crimes associated with reported fires in all appropriate ways, including the providing reimbursement of to political subdivisions at a rate not to exceed 50 percent of the salaries of peace officers and firefighters for time spent in attending fire investigation training courses offered by the bureau arson training unit. Volunteer firefighters from a political subdivision shall be reimbursed at the rate of $35 per day plus expenses incurred in attending fire investigation training courses offered by the bureau arson training unit. Reimbursement shall be made only in the event that both a peace officer and a firefighter from the same political subdivision attend the same training course. The reimbursement shall be subject to the limitation of funds appropriated and available for expenditure. The state fire marshal and the superintendent also shall encourage local firefighters and peace officers to seek assistance from the arson strike force established in section 299F.058.

Sec. 20. [299F.058] [ARSON STRIKE FORCE.]

Subdivision 1. [ARSON STRIKE FORCE.] A multijurisdictional arson strike force is established to provide expert investigative and prosecutorial assistance to local agencies on request in complex or serious cases involving suspected arson.

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Subd. 2. [MEMBERSHIP.] (a) The arson strike force consists of representatives from the following agencies and organizations:

(1) the division of fire marshal;

(2) the bureau of criminal apprehension;

(3) the office of attorney general;

(4) the Minnesota county attorneys association;

(5) the Bureau of Alcohol, Tobacco, and Firearms of the United States Treasury Department;

(6) the Minneapolis police and fire arson unit;

(7) the St. Paul police and fire arson unit;

(8) licensed private detectives selected by the state fire marshal or the attorney general or their designees; and

(9) any other arson experts the arson strike force deems appropriate to include.

The arson strike force, as necessary, may consult and work with representatives of property insurance agencies and organizations and any other private organizations that have expertise in arson investigations and prosecutions.

(b) Representatives from the attorney general's office and the county attorneys association who are members of the arson strike force may assist in administering the strike force.

(c) The strike force expires June 30, 2001.

Subd. 3. [INVESTIGATIVE DUTIES.] (a) The arson strike force shall be available on a statewide basis to assist local public safety agencies in investigating the following types of suspected arson cases:

(1) serial fires;

(2) multijurisdictional fires;

(3) fires causing death or serious injury to a public safety officer;

(4) fires resulting in multiple deaths or injuries; or

(5) fires causing over $1,000,000 in damage.

(b) The arson strike force shall establish a mechanism for informing local public safety agencies that it is available to assist in the investigation of the suspected arson cases described in paragraph (a).

(c) The arson strike force shall, by means of a memorandum of understanding among the involved agencies, develop and implement a protocol for the strike force's activation and operation in local cases of suspected arson.

(d) The arson strike force shall assist the arson training unit established in section 299F.051 in developing and implementing educational programs for public safety personnel on investigating arson cases.

Subd. 4. [PROSECUTION DUTIES.] (a) The arson strike force may identify and establish a team of prosecutors with experience in arson cases who will provide advice, on request, to local prosecutors who are prosecuting or preparing to prosecute arson cases. This team shall include prosecutors from the attorney general's office and county prosecutors who are identified and selected by the county attorneys association.

(b) The arson strike force shall assist the arson training unit established in section 299F.051 in developing educational programs and manuals to assist prosecutors in prosecuting arson cases.

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Sec. 21. [299F.059] [JUVENILE FIRESETTER INTERVENTION.]

Subdivision 1. [INTERVENTION NETWORK.] The state fire marshal shall establish a statewide juvenile firesetter intervention network. The network shall include a clearinghouse of resources and materials to assist fire service personnel, schools, law enforcement agencies, and mental health professionals in understanding juvenile firesetting behavior and symptoms and intervening with juveniles who engage in the behavior or display the symptoms. The state fire marshal shall include in the network the comprehensive, injury prevention education curriculum provided for in subdivision 2.

Subd. 2. [EDUCATIONAL CURRICULUM.] The state fire marshal shall ensure implementation of a comprehensive, injury prevention education curriculum that focuses on juvenile fire play intervention and injury prevention. The curriculum shall be made available to schools and other interested organizations statewide.

Subd. 3. [ANNUAL TRAINING FORUM.] The state fire marshal shall develop strategies and plans designed to reduce the number of juvenile firesetting incidents. The state fire marshal shall offer an annual training forum for fire service and law enforcement personnel and for juvenile justice, medical, educational, mental health, and other interested professionals to discuss these strategies and other issues relating to juvenile firesetter behavior and symptoms.

Subd. 4. [MEDIA CAMPAIGN; KEEPING FIRE MATERIALS AWAY FROM CHILDREN.] The state fire marshal shall develop an ongoing media awareness campaign to instruct parents, retailers, and the community on the importance of keeping fire materials away from children and on methods for accomplishing that objective.

Sec. 22. Minnesota Statutes 1996, section 299F.06, subdivision 1, is amended to read:

Subdivision 1. [SUMMON WITNESSES; PRODUCE DOCUMENTARY EVIDENCE.] (a) In order to establish if reasonable grounds exist to believe that a violation of sections 609.561 to 609.576, has occurred, or to determine compliance with the uniform fire code or corrective orders issued thereunder, the state fire marshal, chief assistant fire marshal, and deputy state fire marshals, and the staff designated by the state fire marshal shall each have the power in any county of the state to summon and compel the attendance of witnesses to testify before them, or either of them the state fire marshal, chief assistant fire marshal, or deputy state fire marshals, to testify and may require the production of any book, paper, or document deemed pertinent thereto by them, or either of them. The state fire marshal may also designate certain individuals from fire departments in cities of the first class and cities of the second class as having the powers set forth in this paragraph. These designated individuals may only exercise their powers in a manner prescribed by the state fire marshal. "Fire department" has the meaning given in section 299F.092, subdivision 6. "Cities of the first class" and "cities of the second class" have the meanings given in section 410.01.

(b) A summons issued under this subdivision shall be served in the same manner and have the same effect as subpoenas from district courts. All witnesses shall receive the same compensation as is paid to witnesses in district courts, which shall be paid out of the fire marshal fund upon vouchers signed by the state fire marshal, chief assistant fire marshal, or deputy fire marshal before whom any witnesses shall have attended and this officer shall, at the close of the investigation wherein the witness was subpoenaed, certify to the attendance and mileage of the witness, which certificate shall be filed in the office of the state fire marshal. All investigations held by or under the direction of the state fire marshal, or any subordinate, may in the state fire marshal's discretion be private and persons other than those required to be present by the provisions of this chapter may be excluded from the place where the investigation is held, and witnesses may be kept separate and apart from each other and not allowed to communicate with each other until they have been examined.

Sec. 23. Minnesota Statutes 1996, section 299F.06, subdivision 3, is amended to read:

Subd. 3. [PENALTY FOR REFUSAL TO TESTIFY OR PRODUCE EVIDENCE.] Any witness who refuses to be sworn, or who refuses to testify, or who disobeys any lawful order of the state fire marshal, chief assistant fire marshal, or deputy state fire marshal in relation to the investigation, or who fails or refuses to produce any paper, book, or document touching any matter under examination, or who is guilty of any contemptuous conduct, after being summoned to appear before them to give testimony in relation to any matter or subject under examination or investigation may be summarily punished by the state fire marshal, chief assistant state fire marshal, or deputy state fire marshals as for contempt by a fine in a sum not exceeding $100 or be committed to the county jail until such time as such person may be willing to comply with any reasonable order made by the state fire marshal, chief assistant state fire marshal, or deputy state fire marshals, as provided in this chapter any district court in the same manner as if the proceedings were pending in that court, and subject to the provisions of section 588.01.

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Sec. 24. Minnesota Statutes 1996, section 326.3321, subdivision 1, is amended to read:

Subdivision 1. [EXECUTIVE DIRECTOR.] The board commissioner of public safety shall appoint an executive director to serve in the unclassified service at the pleasure of the board commissioner. The executive director shall perform the duties as the board and commissioner shall prescribe.

Sec. 25. Minnesota Statutes 1996, section 326.3386, subdivision 3, is amended to read:

Subd. 3. [DESIGNATION FEE.] When a licensed private detective or protective agent who is a partnership or corporation, desires to designate a new qualified representative or Minnesota manager, a fee equal to one-half of the application license fee shall be submitted to the board.

Sec. 26. Minnesota Statutes 1996, section 326.3386, is amended by adding a subdivision to read:

Subd. 6a. [TRAINING COURSE CERTIFICATION FEE.] An applicant for training course certification, as specified in section 326.3361, shall pay to the board a course certification fee determined by the board.

Sec. 27. Minnesota Statutes 1996, section 326.3386, is amended by adding a subdivision to read:

Subd. 6b. [TRAINING COURSE RECERTIFICATION FEE.] An applicant for training course recertification shall pay to the board a course recertification fee determined by the board.

Sec. 28. Minnesota Statutes 1996, section 609.035, subdivision 1, is amended to read:

Subdivision 1. Except as provided in subdivision subdivisions 2, subdivision 3, and 4, and in sections 609.251, 609.585, 609.21, subdivisions 3 and 4, 609.2691, 609.486, 609.494, and 609.856, if a person's conduct constitutes more than one offense under the laws of this state, the person may be punished for only one of the offenses and a conviction or acquittal of any one of them is a bar to prosecution for any other of them. All the offenses, if prosecuted, shall be included in one prosecution which shall be stated in separate counts.

Sec. 29. Minnesota Statutes 1996, section 609.035, is amended by adding a subdivision to read:

Subd. 4. [EXCEPTION; ARSON OFFENSES.] Notwithstanding section 609.04, a prosecution for or conviction of a violation of sections 609.561 to 609.563 or 609.5641 is not a bar to conviction of or punishment for any other crime committed by the defendant as part of the same conduct when the defendant is shown to have violated sections 609.561 to 609.563 or 609.5641 for the purpose of concealing any other crime.

For purposes of the sentencing guidelines, a violation of sections 609.561 to 609.563 or 609.5641 is a crime against the person.

Sec. 30. Minnesota Statutes 1996, section 609.115, subdivision 1, is amended to read:

Subdivision 1. [PRESENTENCE INVESTIGATION.] (a) When a defendant has been convicted of a misdemeanor or gross misdemeanor, the court may, and when the defendant has been convicted of a felony, the court shall, before sentence is imposed, cause a presentence investigation and written report to be made to the court concerning the defendant's individual characteristics, circumstances, needs, potentialities, criminal record and social history, the circumstances of the offense and the harm caused by it to others and to the community. At the request of the prosecutor in a gross misdemeanor case, the court shall order that a presentence investigation and report be prepared. The investigation shall be made by a probation officer of the court, if there is one; otherwise it shall be made by the commissioner of corrections. The officer conducting the presentence or predispositional investigation shall make reasonable and good-faith efforts to contact and provide the victim with the information required under section 611A.037, subdivision 2. Presentence investigations shall be conducted and summary hearings held upon reports and upon the sentence to be imposed upon the defendant in accordance with this section, section 244.10, and the rules of criminal procedure.

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(b) When the crime is a violation of sections 609.561 to 609.563, 609.5641, or 609.576 and involves a fire, the report shall include a description of the financial and physical harm the offense has had on the public safety personnel who responded to the fire. For purposes of this paragraph, "public safety personnel" means the state fire marshal; employees of the division of the state fire marshal; firefighters, regardless of whether the firefighters receive any remuneration for providing services; peace officers, as defined in section 626.05, subdivision 2; individuals providing emergency management services; and individuals providing emergency medical services.

(c) When the crime is a felony violation of chapter 152 involving the sale or distribution of a controlled substance, the report shall include a description of any adverse social or economic effects the offense has had on persons who reside in the neighborhood where the offense was committed.

(d) The report shall also include the information relating to crime victims required under section 611A.037, subdivision 1. If the court directs, the report shall include an estimate of the prospects of the defendant's rehabilitation and recommendations as to the sentence which should be imposed. In misdemeanor cases the report may be oral.

(e) When a defendant has been convicted of a felony, and before sentencing, the court shall cause a sentencing worksheet to be completed to facilitate the application of the Minnesota sentencing guidelines. The worksheet shall be submitted as part of the presentence investigation report.

The investigation shall be made by a probation officer of the court, if there is one, otherwise by the commissioner of corrections. The officer conducting the presentence or predispositional investigation shall make reasonable and good faith efforts to contact the victim of that crime and to provide that victim with the information required under section 611A.037, subdivision 2.

(f) When a person is convicted of a felony for which the sentencing guidelines presume that the defendant will be committed to the commissioner of corrections under an executed sentence and no motion for a sentencing departure has been made by counsel, the court may, when there is no space available in the local correctional facility, commit the defendant to the custody of the commissioner of corrections, pending completion of the presentence investigation and report. When a defendant is convicted of a felony for which the sentencing guidelines do not presume that the defendant will be committed to the commissioner of corrections, or for which the sentencing guidelines presume commitment to the commissioner but counsel has moved for a sentencing departure, the court may commit the defendant to the commissioner with the consent of the commissioner, pending completion of the presentence investigation and report. The county of commitment shall return the defendant to the court when the court so orders.

Presentence investigations shall be conducted and summary hearings held upon reports and upon the sentence to be imposed upon the defendant in accordance with this section, section 244.10, and the rules of criminal procedure.

Sec. 31. Minnesota Statutes 1996, section 626.843, subdivision 1, is amended to read:

Subdivision 1. [RULES REQUIRED.] The board shall adopt rules with respect to:

(a) The certification of peace officer training schools, programs, or courses including training schools for the Minnesota state patrol. Such schools, programs and courses shall include those administered by the state, county, school district, municipality, or joint or contractual combinations thereof, and shall include preparatory instruction in law enforcement and minimum basic training courses;

(b) Minimum courses of study, attendance requirements, and equipment and facilities to be required at each certified peace officers training school located within the state;

(c) Minimum qualifications for instructors at certified peace officer training schools located within this state;

(d) Minimum standards of physical, mental, and educational fitness which shall govern the recruitment and licensing of peace officers within the state, by any state, county, municipality, or joint or contractual combination thereof, including members of the Minnesota state patrol;

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(e) Minimum standards of conduct which would affect the individual's performance of duties as a peace officer;

These standards shall be established and published. The board shall review the minimum standards of conduct described in this paragraph for possible modification in 1998 and every three years after that time.

(f) Minimum basic training which peace officers appointed to temporary or probationary terms shall complete before being eligible for permanent appointment, and the time within which such basic training must be completed following any such appointment to a temporary or probationary term;

(g) Minimum specialized training which part-time peace officers shall complete in order to be eligible for continued employment as a part-time peace officer or permanent employment as a peace officer, and the time within which the specialized training must be completed;

(h) Content of minimum basic training courses required of graduates of certified law enforcement training schools or programs. Such courses shall not duplicate the content of certified academic or general background courses completed by a student but shall concentrate on practical skills deemed essential for a peace officer. Successful completion of such a course shall be deemed satisfaction of the minimum basic training requirement;

(i) Grading, reporting, attendance and other records, and certificates of attendance or accomplishment;

(j) The procedures to be followed by a part-time peace officer for notifying the board of intent to pursue the specialized training for part-time peace officers who desire to become peace officers pursuant to clause (g), and section 626.845, subdivision 1, clause (g);

(k) The establishment and use by any political subdivision or state law enforcement agency which employs persons licensed by the board of procedures for investigation and resolution of allegations of misconduct by persons licensed by the board. The procedures shall be in writing and shall be established on or before October 1, 1984;

(l) The issues that must be considered by each political subdivision and state law enforcement agency that employs persons licensed by the board in establishing procedures under section 626.5532 to govern the conduct of peace officers who are in pursuit of a vehicle being operated in violation of section 609.487, and requirements for the training of peace officers in conducting pursuits. The adoption of specific procedures and requirements is within the authority of the political subdivision or agency;

(m) Supervision of part-time peace officers and requirements for documentation of hours worked by a part-time peace officer who is on active duty. These rules shall be adopted by December 31, 1993; and

(n) Citizenship requirements for full-time and part-time peace officers;

(o) Driver's license requirements for full-time and part-time peace officers; and

(p) Such other matters as may be necessary consistent with sections 626.84 to 626.855. Rules promulgated by the attorney general with respect to these matters may be continued in force by resolution of the board if the board finds the rules to be consistent with sections 626.84 to 626.855.

Sec. 32. [626.8456] [TRAINING IN FIRE SCENE RESPONSE AND ARSON AWARENESS.]

Subdivision 1. [TRAINING COURSE.] The board, in consultation with the division of fire marshal, shall prepare objectives for a training course to instruct peace officers in fire scene response and arson awareness.

Subd. 2. [PRESERVICE TRAINING REQUIREMENT.] An individual is not eligible to take the peace officer licensing examination after August 1, 1998, unless the individual has received the training described in subdivision 1.

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Sec. 33. [AWARD FOR EXCELLENCE IN PEACE OFFICER TRAINING.]

The board of peace officer standards and training shall establish an award for excellence in peace officer training to encourage innovation, quality, and effectiveness, and to recognize achievement in the area of peace officer training. The board may annually make awards in the categories of individual achievement, lifetime achievement, and organizational achievement. The board shall establish standards regarding award eligibility and application, evaluation, and selection procedures.

Sec. 34. [ASSIGNMENT OF BUREAU OF CRIMINAL APPREHENSION AGENTS TO STRIKE FORCE.]

The superintendent of the bureau of criminal apprehension shall assign experienced agents to the strike force described in Minnesota Statutes, section 299A.625. These agents shall operate exclusively for the purposes listed in Minnesota Statutes, section 299A.625, under the direction of the criminal gang oversight council.

Sec. 35. [ASSIGNMENT OF ASSISTANT ATTORNEY GENERAL TO STRIKE FORCE.]

The attorney general shall assign an assistant attorney general experienced in the prosecution of crimes committed by criminal gangs to the strike force described in Minnesota Statutes, section 299A.625. This attorney shall operate exclusively for the purposes listed in Minnesota Statutes, section 299A.625, under the direction of the criminal gang oversight council.

Sec. 36. [REPEALER.]

Minnesota Statutes 1996, sections 299A.01, subdivision 6; and 299F.07, are repealed. Minnesota Rules, parts 7419.0100; 7419.0200; 7419.0300; 7419.0400; 7419.0500; 7419.0600; 7419.0700; and 7419.0800, are repealed.

Sec. 37. [EFFECTIVE DATE.]

Sections 28 and 29 are effective August 1, 1997, and apply to offenses committed on or after that date.

ARTICLE 9

CORRECTIONS

Section 1. Minnesota Statutes 1996, section 144.761, subdivision 5, is amended to read:

Subd. 5. [EMERGENCY MEDICAL SERVICES PERSONNEL.] "Emergency medical services personnel" means:

(1) individuals employed to provide prehospital emergency medical services;

(2) persons employed as licensed police officers under section 626.84, subdivision 1, who experience a significant exposure in the performance of their duties;

(3) firefighters, paramedics, emergency medical technicians, licensed nurses, rescue squad personnel, or other individuals who serve as employees or volunteers of an ambulance service as defined by sections 144.801 to 144.8091, who provide prehospital emergency medical services;

(4) crime lab personnel receiving a significant exposure while involved in a criminal investigation;

(5) correctional guards, including security guards at the Minnesota security hospital, employed by the state or a local unit of government who experience employed in state and local correctional facilities and other employees of the state department of corrections, if the guard or employee experiences a significant exposure to an inmate who is transported to a facility for emergency medical care in the performance of their duties; and

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(6) employees at the Minnesota security hospital and the Minnesota sexual psychopathic personality treatment center who are employed by the state or a local unit of government and who experience a significant exposure in the performance of their duties; and

(7) other persons who render emergency care or assistance at the scene of an emergency, or while an injured person is being transported to receive medical care, and who would qualify for immunity from liability under the good samaritan law, section 604A.01.

Sec. 2. Minnesota Statutes 1996, section 144.761, subdivision 7, is amended to read:

Subd. 7. [SIGNIFICANT EXPOSURE.] "Significant exposure" means:

(1) contact, in a manner supported by contemporary epidemiological research as a method of HIV or hepatitis B transmission, of the broken skin or mucous membrane of emergency medical services personnel with a patient's blood, amniotic fluid, pericardial fluid, peritoneal fluid, pleural fluid, synovial fluid, cerebrospinal fluid, semen, vaginal secretions, or bodily fluids grossly contaminated with blood;

(2) a needle stick, scalpel or instrument wound, or other wound inflicted by an object that is contaminated with blood, and that is capable of cutting or puncturing the skin of emergency medical services personnel; or

(3) an exposure that occurs by any other method of transmission recognized by contemporary epidemiological standards as a significant exposure.

Sec. 3. Minnesota Statutes 1996, section 144.762, subdivision 2, is amended to read:

Subd. 2. [REQUIREMENTS FOR PROTOCOL.] The postexposure notification protocol must include the following:

(1) a method for emergency medical services personnel to notify the facility that they may have experienced a significant exposure from a patient that was transported to the facility. The facility shall provide to the emergency medical services personnel a significant exposure report form to be completed by the emergency medical services personnel in a timely fashion;

(2) a process to investigate and determine whether a significant exposure has occurred. This investigation must be completed within 72 hours of receipt of the exposure report, or within a time period that will enable the patient to benefit from contemporary standards of care for reducing the risk of infection;

(3) if there has been a significant exposure, a process to determine whether the patient has hepatitis B or HIV infection;

(4) if the patient has an infectious disease that could be transmitted by the type of exposure that occurred, or, if it is not possible to determine what disease the patient may have, a process for making recommendations for appropriate counseling and testing to the emergency medical services personnel;

(5) compliance with applicable state and federal laws relating to data practices, confidentiality, informed consent, and the patient bill of rights; and

(6) a process for providing counseling for the patient to be tested and for the emergency medical services personnel filing the exposure report.

Sec. 4. Minnesota Statutes 1996, section 144.762, is amended by adding a subdivision to read:

Subd. 2a. [ADDITIONAL PROTOCOL REQUIREMENTS.] In addition to the protocol requirements under subdivision 2, the postexposure notification protocol must provide a process for a licensed physician at the facility to conduct an immediate investigation into whether a significant exposure has occurred whenever emergency medical services personnel present themselves at a facility within six hours of a possible significant exposure. If the investigation shows that a significant exposure occurred, the protocol must provide a process for determining whether the patient has hepatitis B or HIV infection by means of mandatory reporting under section 144.765, subdivision 2, and reporting of results under sections 144.761, subdivision 2, clauses (4), (5), and (6), and 144.767.

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Sec. 5. Minnesota Statutes 1996, section 144.765, is amended to read:

144.765 [PATIENT'S RIGHT TO REFUSE TESTING.]

Subdivision 1. [VOLUNTARY TESTING.] (a) Upon notification of a significant exposure, the facility shall ask the patient to consent to blood testing to determine the presence of the HIV virus or the hepatitis B virus. The patient shall be informed that the test results without personally identifying information will be reported to the emergency medical services personnel.

(b) The patient shall be informed of the right to refuse to be tested, that refusal could result in a request for a court order to force reporting of hepatitis B or HIV infection status, and that information collected through this process is for medical purposes and cannot be used as evidence in any criminal proceedings. If the patient refuses to be tested, the patient's refusal will be forwarded to the emergency medical services agency and to the emergency medical services personnel.

Subd. 2. [MANDATORY REPORTING.] If a patient is subject to voluntary testing under section 144.762, subdivision 2a, and is either unavailable for immediate testing at the facility or refuses to submit to a blood test, the emergency medical services personnel employer shall locate and ask the patient to report and present documentation from a licensed physician of the patient's most recent known HIV and hepatitis B infection status within 24 hours. The patient shall be informed that the test results without personally identifying information will be reported to the emergency medical services personnel. The patient shall be informed that refusal could result in a request for a court order to force reporting, and that information collected through this process is for medical purposes and cannot be used as evidence in any criminal proceedings. If the patient refuses to report, the patient's refusal will be forwarded to the emergency medical services personnel.

Subd. 3. [MANDATORY TESTING.] The right to refuse a blood test under the circumstances described in this section does not apply to a prisoner who is in the custody or under the jurisdiction of the commissioner of corrections or a local correctional authority as a result of a criminal conviction.

Subd. 4. [COURT ORDER.] If a patient is subject to mandatory reporting under subdivision 2, and either is unavailable for reporting to the facility or refuses to submit a report, the emergency medical services personnel may seek a court order to compel the patient to submit to reporting. Court proceedings under this subdivision shall be given precedence over other pending matters so that the court may reach a prompt decision without delay. The court shall order the patient to submit to reporting upon proof that: (1) an investigation by a licensed physician under section 144.762, subdivision 2a, showed that the emergency medical services personnel experienced a significant exposure; and (2) the information is necessary for a decision about beginning, continuing, or discontinuing a medical intervention and will not cause undue hardship or harm to the health of the patient.

Sec. 6. Minnesota Statutes 1996, section 144.767, subdivision 1, is amended to read:

Subdivision 1. [REPORT TO EMPLOYER.] Results of tests conducted or reports received under this section shall be reported by the facility to a designated agent of the emergency medical services agency that employs or uses the emergency medical services personnel and to the emergency medical services personnel who report the significant exposure. The test results or reports shall be reported without personally identifying information and may be used only for medical purposes and may not be used as evidence in any criminal prosecution.

Sec. 7. Minnesota Statutes 1996, section 241.01, subdivision 3a, is amended to read:

Subd. 3a. [COMMISSIONER, POWERS AND DUTIES.] The commissioner of corrections has the following powers and duties:

(a) To accept persons committed to the commissioner by the courts of this state for care, custody, and rehabilitation.

(b) To determine the place of confinement of committed persons in a correctional facility or other facility of the department of corrections and to prescribe reasonable conditions and rules for their employment, conduct, instruction, and discipline within or outside the facility. Inmates shall not exercise custodial functions or have authority over other inmates. Inmates may serve on the board of directors or hold an executive position subordinate to correctional staff in any corporation, private industry or educational program located on the grounds of, or conducted within, a state correctional facility with written permission from the chief executive officer of the facility.

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(c) To administer the money and property of the department.

(d) To administer, maintain, and inspect all state correctional facilities.

(e) To transfer authorized positions and personnel between state correctional facilities as necessary to properly staff facilities and programs.

(f) To utilize state correctional facilities in the manner deemed to be most efficient and beneficial to accomplish the purposes of this section, but not to close the Minnesota correctional facility-Stillwater or the Minnesota correctional facility-St. Cloud without legislative approval. The commissioner may place juveniles and adults at the same state minimum security correctional facilities, if there is total separation of and no regular contact between juveniles and adults, except contact incidental to admission, classification, and mental and physical health care.

(g) To organize the department and employ personnel the commissioner deems necessary to discharge the functions of the department, including a chief executive officer for each facility under the commissioner's control who shall serve in the unclassified civil service and may, under the provisions of section 43A.33, be removed only for cause, and two internal affairs officers for security.

(h) To define the duties of these employees and to delegate to them any of the commissioner's powers, duties and responsibilities, subject to the commissioner's control and the conditions the commissioner prescribes.

(i) To annually develop a comprehensive set of goals and objectives designed to clearly establish the priorities of the department of corrections. This report shall be submitted to the governor and the state legislature commencing January 1, 1976. The commissioner may establish ad hoc advisory committees.

Sec. 8. Minnesota Statutes 1996, section 241.01, subdivision 3b, is amended to read:

Subd. 3b. [MISSION; EFFICIENCY.] It is part of the department's mission that within the department's resources the commissioner shall endeavor to:

(1) prevent the waste or unnecessary spending of public money;

(2) use innovative fiscal and human resource practices to manage the state's resources and operate the department as efficiently as possible;

(3) coordinate the department's activities wherever appropriate with the activities of other governmental agencies;

(4) use technology where appropriate to increase agency productivity, improve service to the public, increase public access to information about government, and increase public participation in the business of government;

(5) utilize constructive and cooperative labor-management practices to the extent otherwise required by chapters 43A and 179A;

(6) include specific objectives in the performance report required under section sections 15.91 and 241.015 to increase the efficiency of agency operations, when appropriate; and

(7) recommend to the legislature, in the performance report of the department required under section sections 15.91 and 241.015, appropriate changes in law necessary to carry out the mission of the department.

Sec. 9. [241.015] [ANNUAL PERFORMANCE REPORTS REQUIRED.]

Notwithstanding section 15.91, the department of corrections must issue a performance report by November 30 of each year. The issuance and content of the report must conform with section 15.91.

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Sec. 10. [241.277] [PILOT PROJECT WORK PROGRAM AT CAMP RIPLEY.]

Subdivision 1. [PROGRAM ESTABLISHED.] The commissioner of corrections shall establish a four-year pilot project work program at Camp Ripley. The program must serve adult male nonviolent felony and gross misdemeanor offenders who are ordered to complete the program by courts under section 609.113.

Subd. 2. [REQUEST FOR PROPOSALS.] After consulting with and considering the advice of the association of Minnesota counties, the commissioner may issue a request for proposals and select a vendor to operate the program. Section 16B.17 does not apply to the issuance of the request for proposals.

Subd. 3. [PROGRAM DESCRIBED.] The program must require offenders placed there to perform physical labor for at least eight hours a day either at the facility or in other locations in the surrounding area and must provide basic educational programming in the evening.

Subd. 4. [PROGRAM GUIDELINES.] The commissioner shall develop guidelines for the operation of the work program. These guidelines must, at a minimum, address the nature and location of the physical labor required and the extent of the educational programming offered.

Subd. 5. [STATUS OF OFFENDER.] An offender sentenced to the work program is not committed to the commissioner of corrections. Instead, the offender is under the continuing jurisdiction of the sentencing court. Offenders sentenced to the work program are not considered incarcerated for purposes of computing good time or credit for time served.

Subd. 6. [LENGTH OF STAY.] An offender sentenced by a court to the work program must serve a minimum of two-thirds of the pronounced sentence unless the offender is terminated from the program and remanded to the custody of the sentencing court as provided in subdivision 7. The offender may be required to remain at the program beyond the minimum sentence for any period up to the full sentence if the offender violates disciplinary rules.

Subd. 7. [SANCTIONS.] The commissioner shall ensure that severe and meaningful sanctions are imposed for violations of the conditions of the work program. The commissioner shall require that an offender be removed from the program and remanded to the custody of the sentencing court if the offender:

(1) commits a material violation of or repeatedly fails to follow the rules of the program;

(2) commits any misdemeanor, gross misdemeanor, or felony offense; or

(3) presents a risk to the public, based on the offender's behavior, attitude, or abuse of alcohol or controlled substances.

Subd. 8. [DISCIPLINARY RULES.] By January 1, 1998, the commissioner shall develop disciplinary rules applicable to the work program, a violation of which may result in extending an offender's stay at the program for any period of time up to the maximum sentence. These rules may address violations of program rules, refusal to work, refusal to participate in the educational program, and other matters determined by the commissioner. Extending an offender's stay shall be considered to be a disciplinary sanction imposed upon the offender, and the procedure for imposing the extension and the rights of the offender in the procedure shall be those in effect for the imposition of other disciplinary sanctions at state correctional institutions.

Subd. 9. [COSTS OF PROGRAM.] Counties sentencing offenders to the program must pay 25 percent of the per diem expenses for the offender. The commissioner is responsible for all other costs associated with the placement of offenders in the program, including, but not limited to, the remaining per diem expenses and the full cost of transporting offenders to and from the program.

Subd. 10. [REPORT.] By January 15, 2002, the commissioner shall report to the chairs of the senate and house committees and divisions having jurisdiction over criminal justice policy and funding on this program. The report must contain information on the recidivism rates for offenders sentenced to the program.

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Sec. 11. Minnesota Statutes 1996, section 241.42, subdivision 2, is amended to read:

Subd. 2. "Administrative agency" or "agency" means any division, official, or employee of the Minnesota department of corrections, the commissioner of corrections, the board of pardons, and regional correction or detention facilities or agencies for correction or detention programs including those programs or facilities operating under chapter 401, any regional or local correctional facility licensed or inspected by the commissioner of corrections, whether public or private, established and operated for the detention and confinement of adults or juveniles, including, but not limited to, programs or facilities operating under chapter 401, adult halfway homes, group foster homes, secure juvenile detention facilities, juvenile residential facilities, municipal holding facilities, juvenile temporary holdover facilities, regional or local jails, lockups, work houses, work farms, and detention and treatment facilities, but does not include:

(a) any court or judge;

(b) any member of the senate or house of representatives of the state of Minnesota;

(c) the governor or the governor's personal staff;

(d) any instrumentality of the federal government of the United States; or

(e) any political subdivision of the state of Minnesota;

(f) any interstate compact.

Sec. 12. Minnesota Statutes 1996, section 241.44, subdivision 1, is amended to read:

Subdivision 1. [POWERS.] The ombudsman may:

(a) prescribe the methods by which complaints are to be made, reviewed, and acted upon; provided, however, that the ombudsman may not levy a complaint fee;

(b) determine the scope and manner of investigations to be made;

(c) Except as otherwise provided, determine the form, frequency, and distribution of conclusions, recommendations, and proposals; provided, however, that the governor or a representative may, at any time the governor deems it necessary, request and receive information from the ombudsman. Neither the ombudsman nor any member of the ombudsman's staff member shall be compelled to testify or to produce evidence in any court judicial or administrative proceeding with respect to any matter involving the exercise of the ombudsman's official duties except as may be necessary to enforce the provisions of sections 241.41 to 241.45;

(d) investigate, upon a complaint or upon personal initiative, any action of an administrative agency;

(e) request and shall be given access to information in the possession of an administrative agency deemed necessary for the discharge of responsibilities;

(f) examine the records and documents of an administrative agency;

(g) enter and inspect, at any time, premises within the control of an administrative agency;

(h) subpoena any person to appear, give testimony, or produce documentary or other evidence which the ombudsman deems relevant to a matter under inquiry, and may petition the appropriate state court to seek enforcement with the subpoena; provided, however, that any witness at a hearing or before an investigation as herein provided, shall possess the same privileges reserved to such a witness in the courts or under the laws of this state;

(i) bring an action in an appropriate state court to provide the operation of the powers provided in this subdivision. The ombudsman may use the services of legal assistance to Minnesota prisoners for legal counsel. The provisions of sections 241.41 to 241.45 are in addition to other provisions of law under which any remedy or right of appeal or objection is

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provided for any person, or any procedure provided for inquiry or investigation concerning any matter. Nothing in sections 241.41 to 241.45 shall be construed to limit or affect any other remedy or right of appeal or objection nor shall it be deemed part of an exclusionary process; and

(j) be present at commissioner of corrections parole and parole revocation hearings and deliberations.

Sec. 13. Minnesota Statutes 1996, section 241.44, is amended by adding a subdivision to read:

Subd. 3a. [INVESTIGATION OF ADULT LOCAL JAILS AND DETENTION FACILITIES.] Either the ombudsman or the department of corrections' jail inspection unit may investigate complaints involving local adult jails and detention facilities. The ombudsman and department of corrections must enter into an arrangement with one another that ensures that they are not duplicating each other's services.

Sec. 14. [242.085] [STATE POLICY REGARDING PLACEMENT OF JUVENILES OUT OF STATE.]

It is the policy of this state that delinquent juveniles be supervised and programmed for within the state. Courts are requested, to the greatest extent possible and when in the best interests of the child, to place these juveniles within the state.

Sec. 15. Minnesota Statutes 1996, section 242.19, subdivision 3, is amended to read:

Subd. 3. [RETAKING ABSCONDING AND OTHER PERSON.] The written order of the commissioner of corrections is authority to any peace officer or parole or probation officer to take and detain any child committed to the commissioner of corrections by a juvenile court who absconds from field supervision or escapes from confinement, violates furlough conditions, or is released from court while on institution status. However, if the child has attained the age of 18 years, the commissioner shall issue a warrant directed to any peace officer or parole or probation officer requiring that the fugitive be taken into immediate custody to await the further order of the commissioner. Any person of the age of 18 years or older who is taken into custody under the provisions of this subdivision may be detained as provided in section 260.173, subdivision 4.

Sec. 16. [242.192] [CHARGES TO COUNTIES.]

The commissioner shall charge counties or other appropriate jurisdictions for the actual per diem cost of confinement of juveniles at the Minnesota correctional facility-Red Wing. This charge applies to both counties that participate in the community corrections act and those that do not. The commissioner shall annually determine costs, making necessary adjustments to reflect the actual costs of confinement. All money received under this section must be deposited in the state treasury and credited to the general fund.

Sec. 17. Minnesota Statutes 1996, section 242.32, is amended by adding a subdivision to read:

Subd. 4. [EXCEPTION.] This section does not apply to a privately operated facility licensed by the commissioner in Rock county, Minnesota. Up to 32 beds constructed and operated by a privately operated facility licensed by the commissioner in Rock County, Minnesota, for long-term residential secure programming do not count toward the 100-bed limitation in subdivision 3.

Sec. 18. [243.055] [COMPUTER RESTRICTIONS.]

Subdivision 1. [RESTRICTIONS TO USE OF ONLINE SERVICES.] If the commissioner believes a significant risk exists that a parolee, state-supervised probationer, or individual on supervised release may use an Internet service or online service to engage in criminal activity or to associate with individuals who are likely to encourage the individual to engage in criminal activity, the commissioner may impose one or more of the following conditions:

(1) prohibit the individual from possessing or using a computer with access to an Internet service or online service without the prior written approval of the commissioner;

(2) prohibit the individual from possessing or using any data encryption technique or program;

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(3) require the individual to consent to periodic unannounced examinations of the individual's computer equipment by a parole or probation agent, including the retrieval and copying of all data from the computer and any internal or external peripherals and removal of such equipment to conduct a more thorough inspection;

(4) require consent of the individual to have installed on the individual's computer, at the individual's expense, one or more hardware or software systems to monitor computer use; and

(5) any other restrictions the commissioner deems necessary.

Subd. 2. [RESTRICTIONS ON COMPUTER USE.] If the commissioner believes a significant risk exists that a parolee, state-supervised probationer, or individual on supervised release may use a computer to engage in criminal activity or to associate with individuals who are likely to encourage the individual to engage in criminal activity, the commissioner may impose one or more of the following restrictions:

(1) prohibit the individual from accessing through a computer any material, information, or data that relates to the activity involved in the offense for which the individual is on probation, parole, or supervised release;

(2) require the individual to maintain a daily log of all addresses the individual accesses through computer other than for authorized employment and to make this log available to the individual's parole or probation agent;

(3) provide all personal and business telephone records to the individual's parole or probation agent upon request, including written authorization allowing the agent to request a record of all of the individual's outgoing and incoming telephone calls from any telephone service provider;

(4) prohibit the individual from possessing or using a computer that contains an internal modem and from possessing or using an external modem without the prior written consent of the commissioner;

(5) prohibit the individual from possessing or using any computer, except that the individual may, with the prior approval of the individual's parole or probation agent, use a computer in connection with authorized employment;

(6) require the individual to consent to disclosure of the computer-related restrictions that the commissioner has imposed to any employer or potential employer; and

(7) any other restrictions the commissioner deems necessary.

Subd. 3. [LIMITS ON RESTRICTION.] In imposing restrictions, the commissioner shall take into account that computers are used for numerous, legitimate purposes and that, in imposing restrictions, the least restrictive condition appropriate to the individual shall be used.

Sec. 19. [243.161] [RESIDING IN MINNESOTA WITHOUT PERMISSION UNDER INTERSTATE COMPACT; PENALTY.]

Any person who is on parole or probation in another state who resides in this state in violation of section 243.16, may be sentenced to imprisonment for not more than five years or to payment of a fine of not more than $10,000, or both.

Sec. 20. Minnesota Statutes 1996, section 243.51, subdivision 1, is amended to read:

Subdivision 1. The commissioner of corrections is hereby authorized to contract with agencies and bureaus of the United States and with the proper officials of other states or a county of this state for the custody, care, subsistence, education, treatment and training of persons convicted of criminal offenses constituting felonies in the courts of this state, the United States, or other states of the United States. Such contracts shall provide for reimbursing the state of Minnesota for all costs or other expenses involved. Funds received under such contracts shall be deposited in the state treasury and are appropriated to the commissioner of corrections for correctional purposes, including capital improvements. Any prisoner transferred to the state of Minnesota pursuant to this subdivision shall be subject to the terms and conditions of the prisoner's original sentence as if the prisoner were serving the same within the confines of the state in which the conviction and sentence was had or in the custody of the United States. Nothing herein shall deprive such inmate of the right to parole or the rights to legal process in the courts of this state.

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Sec. 21. Minnesota Statutes 1996, section 243.51, subdivision 3, is amended to read:

Subd. 3. [TEMPORARY DETENTION.] The commissioner of corrections is authorized to contract with agencies and bureaus of the United States and with the appropriate officials of any other state or county of this state for the temporary detention of any person in custody pursuant to any process issued under the authority of the United States, other states of the United States, or the district courts of this state. The contract shall provide for reimbursement to the state of Minnesota for all costs and expenses involved. Money received under contracts shall be deposited in the state treasury and are appropriated to the commissioner of corrections for correctional purposes, including capital improvements.

Sec. 22. Minnesota Statutes 1996, section 243.51, is amended by adding a subdivision to read:

Subd. 4. [ANNUAL REPORT TO LEGISLATURE.] By February 1 of each year, the commissioner of corrections shall report to the chairs of the house and senate divisions having jurisdiction over criminal justice funding on money collected in the preceding year under contracts authorized in subdivisions 1 and 3. At a minimum, the report must describe:

(1) the amount received, including a breakdown of its source;

(2) the per diem charges under the contracts; and

(3) how the money was spent.

Sec. 23. [243.556] [RESTRICTIONS ON INMATES' COMPUTER ACCESS.]

Subdivision 1. [RESTRICTIONS TO USE OF ONLINE SERVICES.] No adult inmate in a state correctional facility may use or have access to any Internet service or online service, except for work, educational, and vocational purposes approved by the commissioner.

Subd. 2. [RESTRICTIONS ON COMPUTER USE.] The commissioner shall restrict inmates' computer use to legitimate work, educational, and vocational purposes.

Subd. 3. [MONITORING OF COMPUTER USE.] The commissioner shall monitor all computer use by inmates and perform regular inspections of computer equipment.

Sec. 24. [243.92] [CORRECTIONAL FACILITY SITE SELECTION COMMITTEE.]

Subdivision 1. [CREATION; MEMBERSHIP.] (a) An advisory task force is created to coordinate the site selection process for state correctional facilities. The task force shall convene when the legislature authorizes the planning of a new correctional facility. The task force, to be known as the site selection committee, consists of the:

(1) commissioner of corrections or the commissioner's designee;

(2) deputy commissioner of corrections who has supervision and control over correctional facilities;

(3) commissioner of transportation or the commissioner's designee;

(4) commissioner of administration or the commissioner's designee;

(5) chairs of the senate crime prevention committee and crime prevention finance division and the ranking members of that committee and division from the minority political caucus, or the chairs' and ranking members' designees; and

(6) chairs of the house judiciary committee and judiciary finance division and the ranking members of that committee and division from the minority political caucus or the chairs' and ranking members' designees.

(b) The chairs of the senate crime prevention finance division and house judiciary finance division, or the chairs' designees, shall chair the committee.

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Subd. 2. [SITE SELECTION PROCESS.] The committee shall develop a correctional site selection process that most effectively and efficiently utilizes state financial resources for construction of correctional facilities. The committee may include such other factors as the committee considers relevant as criteria for the site selection process.

Subd. 3. [RECOMMENDATIONS.] Before recommendation of an individual site for a correctional facility, the committee shall require that all costs associated with the facility and the site be identified and reported, including but not limited to construction costs, site improvement, infrastructure upgrades, and operating costs for that site. The commissioners of administration and corrections and any other agencies involved with site construction or land acquisition shall cooperate with the committee in supplying information described in this subdivision and any other information required for project budgets under section 16B.335.

Subd. 4. [REPORT.] The committee shall report its recommendations for the siting of correctional facilities to the legislature.

Subd. 5. [LEGISLATIVE AUTHORIZATION OF SITE.] Each site for a new state of Minnesota correctional facility shall be chosen in the law authorizing and providing funding for the facility.

Subd. 6. [STAFFING.] The committee may utilize employees from the legislative and executive branch entities with membership on the committee. The department of administration shall provide administrative support.

Sec. 25. Minnesota Statutes 1996, section 244.05, subdivision 8, is amended to read:

Subd. 8. [CONDITIONAL MEDICAL RELEASE.] Notwithstanding subdivisions 4 and 5, the commissioner may order that an any offender be placed on conditional medical release before the offender's scheduled supervised release date or target release date if the offender suffers from a grave illness or medical condition and the release poses no threat to the public. In making the decision to release an offender on this status, the commissioner must consider the offender's age and medical condition, the health care needs of the offender, the offender's custody classification and level of risk of violence, the appropriate level of community supervision, and alternative placements that may be available for the offender. An inmate may not be released under this provision unless the commissioner has determined that the inmate's health costs are likely to be borne by medical assistance, Medicaid, general assistance medical care, veteran's benefits, or by any other federal or state medical assistance programs or by the inmate. Conditional medical release is governed by provisions relating to supervised release except that it may be rescinded without hearing by the commissioner if the offender's medical condition improves to the extent that the continuation of the conditional medical release presents a more serious risk to the public.

Sec. 26. Minnesota Statutes 1996, section 244.17, subdivision 2, is amended to read:

Subd. 2. [ELIGIBILITY.] The commissioner must limit the challenge incarceration program to the following persons:

(1) offenders who are committed to the commissioner's custody following revocation of a stayed sentence; and

(2) offenders who are committed to the commissioner's custody, who have 36 48 months or less in or remaining in their term of imprisonment, and who did not receive a dispositional departure under the sentencing guidelines.

An eligible inmate is not entitled to participate in the program.

Sec. 27. [244.20] [PROBATION SUPERVISION.]

Notwithstanding sections 260.311, subdivision 1, and 609.135, subdivision 1, the department of corrections shall have exclusive responsibility for providing probation services for adult felons in counties that do not take part in the Community Corrections Act. In counties that do not take part in the Community Corrections Act, the responsibility for providing probation services for individuals convicted of gross misdemeanor offenses shall be discharged according to local judicial policy.

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Sec. 28. [244.21] [COLLECTION OF INFORMATION ON OFFENDERS; REPORTS REQUIRED.]

Subdivision 1. [COLLECTION OF INFORMATION BY PROBATION SERVICE PROVIDERS; REPORT REQUIRED.] By January 1, 1998, probation service providers shall begin collecting and maintaining information on offenders under supervision. The commissioner of corrections shall specify the nature and extent of the information to be collected. By April 1 of every year, each probation service provider shall report a summary of the information collected to the commissioner.

Subd. 2. [COMMISSIONER OF CORRECTIONS REPORT.] By January 15, 1998, the commissioner of corrections shall report to the chairs of the senate crime prevention and house of representatives judiciary committees on recommended methods of coordinating the exchange of information collected on offenders under subdivision 1: (1) between probation service providers; and (2) between probation service providers and the department of corrections, without requiring service providers to acquire uniform computer software.

Sec. 29. [244.22] [REVIEW OF PLANNED EXPENDITURES OF PROBATION SERVICE PROVIDERS; DISTRIBUTION OF MONEY TO MULTIPLE PROBATION SERVICE PROVIDERS WITHIN A SINGLE COUNTY.]

(a) The commissioner of corrections shall review the planned expenditures of probation service providers before allocating probation caseload reduction grants appropriated by the legislature. The review must determine whether the planned expenditures comply with applicable law.

(b) In counties where probation services are provided by both county and department of corrections employees, a collaborative plan addressing the local needs shall be developed. The commissioner of corrections shall specify the manner in which probation caseload reduction grant money shall be distributed between the providers according to the approved plan.

Sec. 30. [244.24] [CLASSIFICATION SYSTEM FOR ADULT OFFENDERS.]

By February 1, 1998, all probation agencies shall adopt written policies for classifying adult offenders. The commissioner of corrections shall assist probation agencies in locating organizations that may provide training and technical assistance to the agencies concerning methods to develop and implement effective, valid classification systems.

Sec. 31. Minnesota Statutes 1996, section 260.1735, is amended to read:

260.1735 [EXTENSION OF DETENTION PERIOD.]

Subdivision 1. [DETENTION.] Before July 1, 1997 1999, and pursuant to a request from an eight-day temporary holdover facility, as defined in section 241.0221, the commissioner of corrections, or the commissioner's designee, may grant a one-time extension per child to the eight-day limit on detention under this chapter. This extension may allow such a facility to detain a child for up to 30 days including weekends and holidays. Upon the expiration of the extension, the child may not be transferred to another eight-day temporary holdover facility. The commissioner shall develop criteria for granting extensions under this section. These criteria must ensure that the child be transferred to a long-term juvenile detention facility as soon as such a transfer is possible. Nothing in this section changes the requirements in section 260.172 regarding the necessity of detention hearings to determine whether continued detention of the child is proper.

Subd. 2. [CONTINUED DETENTION.] (a) A delay not to exceed 48 hours may be made if the facility in which the child is detained is located where conditions of distance to be traveled or other ground transportation do not allow for court appearances within 24 hours.

(b) A delay may be made if the facility is located where conditions of safety exist. Time for an appearance may be delayed until 24 hours after the time that conditions allow for reasonably safe travel. "Conditions of safety" include adverse life-threatening weather conditions that do not allow for reasonably safe travel.

The continued detention of a child under paragraph (a) or (b) must be reported to the commissioner of corrections.

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Sec. 32. Minnesota Statutes 1996, section 260.311, subdivision 1, is amended to read:

Subdivision 1. [APPOINTMENT; JOINT SERVICES; STATE SERVICES.] (a) If a county or group of counties has established a human services board pursuant to chapter 402, the district court may appoint one or more county probation officers as necessary to perform court services, and the human services board shall appoint persons as necessary to provide correctional services within the authority granted in chapter 402. In all counties of more than 200,000 population, which have not organized pursuant to chapter 402, the district court shall appoint one or more persons of good character to serve as county probation officers during the pleasure of the court. All other counties shall provide adult misdemeanant and juvenile probation services to district courts in one of the following ways:

(1) the court, with the approval of the county boards, may appoint one or more salaried county probation officers to serve during the pleasure of the court;

(2) when two or more counties offer probation services the district court through the county boards may appoint common salaried county probation officers to serve in the several counties;

(3) a county or a district court may request the commissioner of corrections to furnish probation services in accordance with the provisions of this section, and the commissioner of corrections shall furnish such services to any county or court that fails to provide its own probation officer by one of the two procedures listed above;

(4) if a county or district court providing probation services under clause (1) or (2) asks the commissioner of corrections or the legislative body for the state of Minnesota mandates the commissioner of corrections to furnish probation services to the district court, the probation officers and other employees displaced by the changeover shall be employed by the commissioner of corrections. Years of service in the county probation department are to be given full credit for future sick leave and vacation accrual purposes;

(5) all probation officers serving the juvenile courts on July 1, 1972, shall continue to serve in the county or counties they are now serving.

(b) The commissioner of employee relations shall place employees transferred to state service under paragraph (a), clause (4), in the proper classifications in the classified service. Each employee is appointed without examination at no loss in salary or accrued vacation or sick leave benefits, but no additional accrual of vacation or sick leave benefits may occur until the employee's total accrued vacation or sick leave benefits fall below the maximum permitted by the state for the employee's position. An employee appointed under paragraph (a), clause (4), shall serve a probationary period of six months. After exhausting labor contract remedies, a noncertified employee may appeal for a hearing within ten days to the commissioner of employee relations, who may uphold the decision, extend the probation period, or certify the employee. The decision of the commissioner of employee relations is final. The state shall negotiate with the exclusive representative for the bargaining unit to which the employees are transferred regarding their seniority. For purposes of computing seniority among those employees transferring from one county unit only, a transferred employee retains the same seniority position as the employee had within that county's probation office.

Sec. 33. Minnesota Statutes 1996, section 401.13, is amended to read:

401.13 [CHARGES MADE TO COUNTIES.]

Each participating county will be charged a sum equal to the actual per diem cost of confinement of those juveniles committed to the commissioner after August 1, 1973, and confined in a state correctional facility. Provided, however, that the amount charged a participating county for the costs of confinement shall not exceed the subsidy to which the county is eligible. The commissioner shall annually determine costs making necessary adjustments to reflect the actual costs of confinement. However, in no case shall the percentage increase in the amount charged to the counties exceed the percentage by which the appropriation for the purposes of sections 401.01 to 401.16 was increased over the preceding biennium. The commissioner of corrections shall bill the counties and deposit the receipts from the counties in the general fund. All charges shall be a charge upon the county of commitment.

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Sec. 34. Minnesota Statutes 1996, section 609.02, is amended by adding a subdivision to read:

Subd. 15. [PROBATION.] "Probation" means a court-ordered sanction imposed upon an offender for a period of supervision no greater than that set by statute. It is imposed as an alternative to confinement or in conjunction with confinement or intermediate sanctions. The purpose of probation is to deter further criminal behavior, punish the offender, help provide reparation to crime victims and their communities, and provide offenders with opportunities for rehabilitation.

Sec. 35. Minnesota Statutes 1996, section 609.15, subdivision 1, is amended to read:

Subdivision 1. [CONCURRENT, CONSECUTIVE SENTENCES; SPECIFICATION REQUIREMENT.] (a) Except as provided in paragraph (b), when separate sentences of imprisonment are imposed on a defendant for two or more crimes, whether charged in a single indictment or information or separately, or when a person who is under sentence of imprisonment in this state is being sentenced to imprisonment for another crime committed prior to or while subject to such former sentence, the court in the later sentences shall specify whether the sentences shall run concurrently or consecutively. If the court does not so specify, the sentences shall run concurrently.

(b) An inmate of a state prison who is convicted of committing an assault within the correctional facility is subject to the consecutive sentencing provisions of section 609.2232.

Sec. 36. Minnesota Statutes 1996, section 609.2231, subdivision 3, is amended to read:

Subd. 3. [CORRECTIONAL EMPLOYEES.] Whoever assaults commits either of the following acts against an employee of a correctional facility as defined in section 241.021, subdivision 1, clause (5), while the employee is engaged in the performance of a duty imposed by law, policy or rule, and inflicts demonstrable bodily harm, is guilty of a felony and may be sentenced to imprisonment for not more than two years or to payment of a fine of not more than $4,000, or both:

(1) assaults the employee and inflicts demonstrable bodily harm; or

(2) intentionally throws or otherwise transfers bodily fluids or feces at or onto the employee.

Sec. 37. [609.2232] [CONSECUTIVE SENTENCES FOR ASSAULTS COMMITTED BY STATE PRISON INMATES.]

If an inmate of a state correctional facility is convicted of violating section 609.221, 609.222, 609.223, 609.2231, or 609.224, while confined in the facility, the sentence imposed for the assault shall be executed and run consecutively to any unexpired portion of the offender's earlier sentence. The inmate is not entitled to credit against the sentence imposed for the assault for time served in confinement for the earlier sentence. The inmate shall serve the sentence for the assault in a state correctional facility even if the assault conviction was for a misdemeanor or gross misdemeanor.

Sec. 38. Minnesota Statutes 1996, section 641.12, is amended to read:

641.12 [COLLECTION OF FEES AND BOARD BILLS.]

Subdivision 1. [FEE.] A county board may require that each person who is booked for confinement at a county or regional jail, and not released upon completion of the booking process, pay a fee of up to $10 to the sheriff's department of the county in which the jail is located. The fee is payable immediately from any money then possessed by the person being booked, or any money deposited with the sheriff's department on the person's behalf. If the person has no funds at the time of booking or during the period of any incarceration, the sheriff shall notify the district court in the county where the charges related to the booking are pending, and shall request the assessment of the fee. Notwithstanding section 609.10 or 609.125, upon notification from the sheriff, the district court must order the fee paid to the sheriff's department as part of any sentence or disposition imposed. If the person is not charged, is acquitted, or if the charges are dismissed, the sheriff shall return the fee to the person at the last known address listed in the booking records.

Subd. 2. [BOARD.] At the end of every month the sheriff of each county shall render to the county auditor a statement showing the name of each fugitive from justice, United States prisoner, one committed from another county or one committed by virtue of any city ordinance, the amount due the county for board of each and from whom, and also of all amounts due for board of prisoners for the preceding month.

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Sec. 39. Laws 1995, chapter 226, article 3, section 60, subdivision 4, is amended to read:

Subd. 4. [TIME LINES.] By December 1, 1996, the rulemaking committee shall submit draft rule parts which address the program standards, evaluation, and auditing standards and procedures to the chairs of the senate crime prevention and house of representatives judiciary committee for review. By July 31, 1997, the licensing and programming rulemaking process shall be completed. By July 1, 1998, the licensing and programming rule draft shall be completed. Promulgation of the draft rule parts, under the provision of Minnesota Statutes, chapter 14, shall commence immediately thereafter. In addition, the commissioner of corrections and commissioner of human services may develop interpretive guidelines for the licensing and programming rule.

Sec. 40. Laws 1996, chapter 408, article 8, section 21, is amended to read:

Sec. 21. [TEMPORARY PROVISION; ELECTION TO RETAIN RETIREMENT COVERAGE.]

(a) An employee in a position specified as qualifying under sections 11, 12, 14, and 15, may elect to retain coverage under the general employees retirement plan of the Minnesota state retirement system or the teachers retirement association, or may elect to have coverage transferred to and to contribute to the correctional employees retirement plan. An employee electing to participate in the correctional employees retirement plan shall begin making contributions to the correctional plan beginning the first full pay period after January 1, 1997, or the first full pay period following filing of their election to transfer coverage to the correctional employees retirement plan, whichever is later. The election to retain coverage or to transfer coverage must be made in writing by the person on a form prescribed by the executive director of the Minnesota state retirement system and must be filed with the executive director no later than June 30 December 31, 1997.

(b) An employee failing to make an election by June 15, 1997, must be notified by certified mail by the executive director of the Minnesota state retirement system or of the teachers retirement association, whichever applies, of the deadline to make a choice. A person who does not submit an election form must continue coverage in the general employees retirement plan or the teachers retirement association, whichever applies, and forfeits all rights to transfer retirement coverage to the correctional employees retirement plan.

(c) The election to retain coverage in the general employee retirement plan or the teachers retirement association or the election to transfer retirement coverage to the correctional employees retirement plan is irrevocable once it is filed with the executive director.

Sec. 41. Laws 1996, chapter 408, article 8, section 22, subdivision 1, is amended to read:

Subdivision 1. [ELECTION OF PRIOR STATE SERVICE COVERAGE.] (a) An employee who has future retirement coverage transferred to the correctional employees retirement plan under sections 11, 12, 14, and 15, and 16, and who does not elect to retain general state employee retirement plan or teachers retirement association coverage is entitled to elect to obtain prior service credit for eligible state service performed on or after July 1, 1975, and before the first day of the first full pay period beginning after June 30 December 31, 1997, with the department of corrections or with the department of human services at the Minnesota security hospital or the Minnesota sexual psychopathic personality treatment center. All prior service credit must be purchased.

(b) Eligible state service with the department of corrections or with the department of human services is any prior period of continuous service on or after July 1, 1975, performed as an employee of the department of corrections or of the department of human services that would have been eligible for the correctional employees retirement plan coverage under sections 11, 12, 14, and 15, and 16, if that prior service had been performed after the first day of the first full pay period beginning after December 31, 1996, rather than before that date. Service is continuous if there has been no period of discontinuation of eligible state service for a period greater than 180 calendar days.

(c) The department of corrections or the department of human services, whichever applies, shall certify eligible state service to the executive director of the Minnesota state retirement system.

(d) A covered correctional plan employee employed on January 1, 1997, who has past service in a job classification covered under section 11, 12, 14, or 15, or 16, on January 1, 1997, is entitled to purchase the past service if the applicable department certifies that the employee met the eligibility requirements for coverage. The employee must make the additional employee contributions under section 17. Payments for past service must be completed by June 30, 1999.

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Sec. 42. Laws 1996, chapter 408, article 8, section 24, is amended to read:

Sec. 24. [EARLY RETIREMENT INCENTIVE.]

This section applies to an employee who has future retirement coverage transferred to the correctional employee retirement plan under sections 11, 12, 14, and 15, and 16, and who is at least 55 years old on the effective date of sections 11, 12, 14, and 15, and 16. That employee may participate in a health insurance early retirement incentive available under the terms of a collective bargaining agreement in effect on the day before the effective date of sections 11, 12, 14, and 15, and 16, notwithstanding any provision of the collective bargaining agreement that limits participation to persons who select the option during the payroll period in which their 55th birthday occurs. A person selecting the health insurance early retirement incentive under this section must retire by the later of December 31, 1997 June 30, 1998, or within the pay period following the time at which the person has at least three years of covered correctional service, including any purchased service credit. An employee meeting this criteria who wishes to extend the person's employment must do so under Minnesota Statutes, section 43A.34, subdivision 3.

Sec. 43. [OPERATION OF SAUK CENTRE AS A JUVENILE FACILITY ENDED.]

(a) After December 30, 1998, the Minnesota correctional facility-Sauk Centre may no longer confine juvenile male offenders who are committed to the commissioner's custody. By January 1, 1999, male juvenile offenders who are committed to the commissioner's custody must be transferred from Sauk Centre to the Minnesota correctional facility-Red Wing, or upon order of the juvenile court, to an appropriate county placement, notwithstanding Minnesota Statutes, section 260.185.

(b) After December 30, 1998, the commissioner of corrections may operate the facility in any manner not inconsistent with this section.

Sec. 44. [JUVENILE SEX OFFENDER TREATMENT PROGRAM.]

By January 1, 1999, the commissioner of corrections shall begin operating a juvenile sex offender treatment program at the Minnesota correctional facility-Red Wing.

Sec. 45. [ADMISSIONS CRITERIA FOR MINNESOTA CORRECTIONAL FACILITY-RED WING.]

(a) By January 1, 1999, the commissioner of corrections shall develop admissions criteria for the placement of juveniles at the Minnesota correctional facility-Red Wing. In developing these criteria, the commissioner shall seek and consider the advice of county representatives. These criteria must ensure that juveniles who commit less serious offenses or who do not need the type of supervision and programming available at Red Wing are not placed there. These criteria must ensure that to the greatest extent possible, juveniles are supervised and programmed for in the community in which they live or whose jurisdiction they are under.

(b) By February 15, 1998, the commissioner shall report to the chairs of the senate crime prevention and judiciary budget division and the house judiciary finance division on the development of the criteria required under paragraph (a). The report must include draft admissions criteria.

Sec. 46. [PLAN FOR CONTINUED OPERATION OF SAUK CENTRE FACILITY.]

By January 15, 1998, the commissioner of corrections shall report to the chairs of the house and senate committees and divisions having jurisdiction over criminal justice policy and funding on issues related to the Minnesota correctional facility-Sauk Centre. The report must include a detailed plan describing how the commissioner proposes to use the facility after it ceases to be a juvenile facility for male offenders and the costs associated with operating the facility in the manner proposed.

Sec. 47. [JUVENILE PLACEMENT STUDY.]

The legislative audit commission is requested to direct the legislative auditor to conduct a study of the placement of juvenile offenders. The study shall include:

(1) an evaluation of existing placements for juvenile offenders, including, but not limited to, the number of beds at each facility, the average number of beds occupied each day at each facility, the location of each facility, and the type of programming offered at each facility;

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(2) an estimate of the projected need for additional placements for juvenile offenders, including the locations where beds will be needed;

(3) an examination of the per diem components per offender at state, local, and private facilities providing placements for juvenile offenders;

(4) an assessment of how to best meet treatment needs for juvenile sex offenders, chemically dependent juveniles, and female offenders;

(5) an evaluation of available federal funding for placement of juvenile offenders;

(6) an evaluation of the strengths and weaknesses of state, regional, and private facilities; and

(7) any other issues that may affect juvenile placements.

If the commission directs the auditor to conduct this study, the auditor shall report findings to the chairs of the house and senate committees and divisions with jurisdiction over criminal justice policy and funding issued by January 15, 1998.

Sec. 48. [PROBATION OUTCOME MEASUREMENT WORK GROUP.]

Subdivision 1. [WORK GROUP ESTABLISHED; PURPOSE.] The commissioner of corrections shall establish a work group to develop uniform statewide probation outcome measures. The outcome measures must focus primarily on adult offenders but, to the extent possible, may also address juvenile offenders. The work group shall develop definitions that may be used by all state and local probation service providers to report outcome information for probation services. The work group shall recommend a method by which probation service providers may measure and report recidivism of adult felons in a uniform manner.

Subd. 2. [MEMBERSHIP.] The commissioner of corrections shall appoint individuals who have demonstrated experience in the probation field to serve as members of the work group. The commissioner shall ensure that community corrections act counties and noncommunity corrections act counties are equally represented on the work group. The commissioner, or the commissioner's designee, shall serve on the work group and act as its chair.

Subd. 3. [REVIEW OF OUTCOME MEASURES.] By November 1, 1997, the work group shall submit its recommendations on outcome measures to the criminal and juvenile justice information policy group for review.

Subd. 4. [REPORT REQUIRED.] The work group shall report its findings and recommendations to the chairs of the senate and house of representatives committees having jurisdiction over criminal justice policy by January 15, 1998. The report must indicate what comments or modifications, if any, were made or suggested by the criminal and juvenile justice information policy group and whether the work group altered its recommendations because of this.

Sec. 49. [DEPARTMENT OF CORRECTIONS BIENNIAL PERFORMANCE REPORT.]

The department of corrections must include in its agency performance report for the year 2000 a summary of statewide information on the reoffense rates of adult felons on probation.

Sec. 50. [AMENDMENT TO RULES DIRECTED.]

By July 1, 1998, the department of corrections shall amend Minnesota Rules, part 2940.3500, subpart 2, to require that a revocation hearing occur within 12 working days of the releasee's availability to the department. This amendment must be done in the manner specified in Minnesota Statutes, section 14.388, under authority of clause (3) of that section. This section does not restrict a hearing officer's authority to grant a continuance.

Sec. 51. [INSTRUCTION TO REVISOR.]

The revisor of statutes shall renumber Minnesota Statutes, section 260.311, as 244.19. The revisor shall also make necessary cross-reference changes consistent with the renumbering.

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Sec. 52. [REPEALER.]

Minnesota Statutes 1996, section 244.06, is repealed.

Sec. 53. [EFFECTIVE DATES.]

Sections 15, 19, and 35 to 37 are effective August 1, 1997, and apply to crimes committed on or after that date. Sections 16 and 33 are effective January 1, 1999. Sections 27, 29, 30, 32, 34, and 43 to 48 are effective the day following final enactment. Section 28 is effective January 1, 1998.

ARTICLE 10

DOMESTIC ABUSE PERPETRATED BY A MINOR

Section 1. [PILOT PROGRAM.]

Actions under sections 2 to 26 are limited to a pilot program in the 4th judicial district for the period June 1, 1998, through July 31, 1999. At the conclusion of the pilot period, the 4th judicial district shall report to the legislature on the number of petitions filed under sections 2 to 26, the relationship of the parties, and the disposition of each petition.

Sec. 2. [DEFINITIONS.]

Subdivision 1. [SCOPE.] The definitions in this section apply to sections 2 to 26.

Subd. 2. [ALTERNATIVE SAFE LIVING ARRANGEMENT.] "Alternative safe living arrangement" means a living arrangement for a minor respondent proposed by a petitioning parent or guardian if a court excludes the minor from the parent's or guardian's home under sections 2 to 26, that is separate from the victim of domestic abuse and safe for the minor respondent. A living arrangement proposed by a petitioning parent or guardian is presumed to be an alternative safe living arrangement absent information to the contrary presented to the court. In evaluating any proposed living arrangement, the court shall consider whether the arrangement provides the minor respondent with necessary food, clothing, shelter, and education in a safe environment. Any proposed living arrangement that would place the minor respondent in the care of an adult who has been physically or sexually violent is presumed unsafe. Minnesota Statutes, sections 245A.01 to 245A.16, do not apply to an alternative safe living arrangement.

Subd. 3. [DOMESTIC ABUSE PERPETRATED BY A MINOR.] "Domestic abuse perpetrated by a minor" means any of the following if committed against a family or household member by a family or household member who is a minor:

(1) physical harm, bodily injury, or assault;

(2) infliction of fear of imminent physical harm, bodily injury, or assault; or

(3) terroristic threats, within the meaning of Minnesota Statutes, section 609.713, subdivision 1, or criminal sexual conduct, within the meaning of Minnesota Statutes, section 609.342, 609.343, 609.344, or 609.345.

Subd. 4. [FAMILY OR HOUSEHOLD MEMBER.] "Family or household member" of a person means:

(1) the person's spouse;

(2) the person's former spouse;

(3) the person's parent;

(4) the person's child;

(5) a person related by blood to the person;

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(6) a person who is presently residing with the person or who has resided with the person in the past;

(7) a person who has a child in common with the person regardless of whether they have been married or have lived together at any time;

(8) two persons if one is pregnant and the other is alleged to be the father, regardless of whether they have been married or have lived together at any time; and

(9) a person involved with the person in a significant romantic or sexual relationship.

Issuance of an order for protection/minor respondent in the situation described in clause (8) does not affect a determination of paternity under Minnesota Statutes, sections 257.51 to 257.74.

Subd. 5. [MINOR.] "Minor" means a person under the age of 18.

Sec. 3. [COURT JURISDICTION.]

An application for relief under sections 2 to 26 may be filed in district court in the county of residence of either party or in the county in which the alleged domestic abuse occurred. In a jurisdiction that uses referees in dissolution actions or juvenile court, the court or judge may refer actions under this section to a referee to take and report the evidence in the action in the same manner and subject to the same limitations as provided in Minnesota Statutes, section 518.13. Actions under sections 2 to 26 must be given docket priority by the court.

Sec. 4. [FILING FEE.]

The filing fees for an order for protection/minor respondent under section 7 are waived for the petitioner. The court administrator and the sheriff of any county in this state shall perform their duties relating to service of process without charge to the petitioner. The court shall direct payment of the reasonable costs of service of process by a private process server if the sheriff is unavailable or if service is made by publication, without requiring the petitioner to make application under Minnesota Statutes, section 563.01.

Sec. 5. [INFORMATION ON PETITIONER'S LOCATION OR RESIDENCE.]

Upon the petitioner's request, information maintained by a court regarding the petitioner's location or residence is not accessible to the public and may be disclosed only to court or law enforcement personnel for purposes of service of process, conducting an investigation, or enforcing an order.

Sec. 6. [RULES.]

Actions under sections 2 to 26 are governed by the Minnesota Rules of Civil Procedure except as otherwise provided.

Sec. 7. [ORDER FOR PROTECTION/MINOR RESPONDENT.]

Subdivision 1. [NAME OF ACTION.] There is an action known as a petition for an order for protection/minor respondent in cases of domestic abuse perpetrated by a minor.

Subd. 2. [ELIGIBLE PETITIONER.] A petition for relief under sections 2 to 26 may be made by an adult family or household member personally or by a guardian as defined in Minnesota Statutes, section 524.1-201, clause (20), or, if the court finds that it is in the best interests of the minor, by a reputable adult who is at least 25 years old on behalf of a minor family or household member. A minor who is at least 16 years old may make a petition on the minor's own behalf against a spouse or former spouse who is a minor or another minor with whom the minor petitioner has a child in common if the court determines that the minor has sufficient maturity and judgment and that it is in the best interests of the minor.

Subd. 3. [CONTENTS OF PETITION.] (a) A petition for relief must allege the existence of domestic abuse perpetrated by a minor and be accompanied by a sworn affidavit stating the specific facts and circumstances from which relief is sought.

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(b) A petition for relief must state whether the petitioner has ever had an order for protection in effect against the minor respondent.

(c) A petition for relief must state whether there is an existing order for protection in effect under sections 2 to 26 or under Minnesota Statutes, chapter 518B, governing both the parties and whether there is a pending lawsuit, complaint, petition, or other action between the parties under Minnesota Statutes, chapter 257, 260, 518, 518A, 518B, or 518C.

Subd. 4. [OTHER ORDERS OR ACTIONS.] The court administrator shall verify the terms of any existing order governing the parties. The court may not delay granting relief because of the existence of a pending action between the parties or the necessity of verifying the terms of an existing order. A subsequent order in a separate action under sections 2 to 26 may modify only the provision of an existing order that grants relief authorized under section 10, paragraph (a), clause (1). A petition for relief may be granted whether or not there is a pending action between the parties.

Subd. 5. [SIMPLIFIED FORMS.] The court shall provide simplified forms and clerical assistance to help with the writing and filing of a petition under sections 2 to 26.

Subd. 6. [ADVICE ON RESTITUTION.] The court shall advise a petitioner of the right to seek restitution under the petition for relief.

Sec. 8. [HEARING ON APPLICATION; PROCEDURE AND NOTICE.]

Subdivision 1. [HEARING DATE.] Upon receipt of a petition under sections 2 to 26, the court shall order a hearing to be held not later than 14 days from the date of the order. If an ex parte order has been issued under section 12, the time periods for holding a hearing under that section apply.

Subd. 2. [SERVICE.] If an ex parte order has been issued under section 12 and an order for immediate custody has been issued under sections 2 to 26 and Minnesota Statutes, chapter 260, personal service upon the minor respondent must be made by the county sheriff or police when the order for immediate custody is executed. In all other cases, personal service of the petition and order must be made upon the minor respondent not less than five days before the hearing. Service must also be made upon the minor respondent by mailing a copy of the petition and order to the minor respondent's last known address. Service is complete upon personal receipt by the minor respondent or three days after the mailing. The court shall have notice of the pendency of the case and of the time and place of the hearing served by mail at the last known address upon any parent or guardian of the minor respondent who is not the petitioner.

Subd. 3. [CLOSED HEARING.] Upon request of either party and for good cause shown, the court may close the hearing to the public and close the records to public inspection.

Subd. 4. [DOMESTIC ABUSE ADVOCATES.] In all proceedings under sections 2 to 26, domestic abuse advocates must be allowed to attend and to sit at the counsel table, confer with the petitioner, and at the judge's discretion, address the court. Court administrators shall allow domestic abuse advocates to assist victims of domestic abuse perpetrated by a minor in the preparation of petitions for orders for protection/minor respondents. While assisting victims of domestic violence under this subdivision, domestic abuse advocates are not engaged in the unauthorized practice of law.

Sec. 9. [GUARDIAN AD LITEM.]

(a) If the petitioner requests that the minor respondent be removed from the minor respondent's parent's home, the court shall appoint a guardian ad litem on behalf of the minor respondent for the limited purpose of assuring that the minor respondent is placed in an alternative safe living arrangement. The guardian ad litem's limited responsibilities are conducting an interview to obtain the minor respondent's views on any proposed alternative safe living arrangements, reviewing any proposed alternative safe living arrangements, and appearing at the hearing on the order for protection/minor respondent. It is not within the responsibilities of the guardian ad litem to assess or comment upon whether domestic abuse occurred.

(b) In any other case brought under sections 2 to 26, the court may appoint a guardian ad litem if it appears to the court that the minor lacks the maturity to understand the proceedings.

(c) The guardian ad litem may not be held civilly or criminally liable for any act or failure to act under sections 2 to 26.

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Sec. 10. [RELIEF BY THE COURT.]

(a) Upon notice and hearing, the court may provide relief as follows:

(1) restrain the abusing party from committing acts of domestic abuse;

(2) exclude the abusing party from the dwelling which the parties share or from the residence of the petitioner;

(3) if the court excludes a minor respondent from the minor respondent's parent's home, and the parent or guardian is either unable or unwilling to provide an alternative safe living arrangement for the minor respondent, the court may find that there are reasonable grounds to believe that the minor respondent's safety and well-being are endangered because of the exclusion and the parent's or guardian's unwillingness or inability to provide an alternative living arrangement, in which case the court may order, by endorsement upon the petition, that a peace officer shall take the minor respondent into immediate custody under Minnesota Statutes, section 260.165, subdivision 1;

(4) exclude the abusing party from a specifically described reasonable area surrounding the dwelling or residence;

(5) award temporary custody or establish temporary visitation with regard to minor children of the parties on a basis that gives primary consideration to the safety of the victim and the children. Except for cases in which custody is contested, findings under Minnesota Statutes, section 257.025 or 518.175, are not required. If the court finds that the safety of the victim or the children may be jeopardized by unsupervised or unrestricted visitation, the court shall condition or restrict visitation as to time, place, duration, or supervision, or deny visitation entirely, as needed to guard the safety of the victim and the children. The court's decision on custody and visitation must not delay the issuance of an order for protection/minor respondent granting other relief provided for in this section;

(6) on the same basis as is provided in Minnesota Statutes, chapter 518, establish temporary support for minor children or a spouse and order the withholding of support from the income of the person obligated to pay the support according to Minnesota Statutes, chapter 518;

(7) provide upon request of the petitioner counseling or other social services for the parties if they are married or if there are minor children;

(8) order the abusing party to participate in treatment or counseling services;

(9) in the case of married juveniles, award temporary use and possession of property and restrain one or both parties from transferring, encumbering, concealing, or disposing of property except in the usual course of business or for the necessities of life, and require the party to account to the court for all such transfers, encumbrances, dispositions, and expenditures made after the order is served or communicated to the party restrained in open court;

(10) exclude the abusing party from the place of employment of the petitioner, or otherwise limit access to the petitioner by the abusing party at the petitioner's place of employment;

(11) order the abusing party to pay restitution to the petitioner;

(12) order the continuance of all currently available insurance coverage without change in coverage or beneficiary designation; and

(13) order, in its discretion, other relief the court considers necessary for the protection of a family or household member, including orders or directives to law enforcement personnel under sections 2 to 26.

(b) Relief granted by the order for protection/minor respondent must be for a fixed period not to exceed one year unless the court determines a longer fixed period is appropriate. If a referee presides at the hearing on the petition, the order granting relief becomes effective upon the referee's signature.

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(c) An order granting the relief authorized in paragraph (a), clause (1), may not be vacated or modified in a proceeding for dissolution of marriage or legal separation, except that the court may hear a motion for modification of an order for protection concurrently with a proceeding for dissolution of marriage upon notice of motion and motion. The notice required by court rule must not be waived. If the proceedings are consolidated and the motion to modify is granted, a separate order for modification of an order for protection must be issued.

(d) An order granting the relief authorized in paragraph (a), clause (2), is not voided by the admittance of the abusing party into the dwelling from which the abusing party is excluded.

(e) If a proceeding for dissolution of marriage or legal separation is pending between the parties, the court shall provide a copy of the order for protection/minor respondent to the court with jurisdiction over the dissolution or separation proceeding for inclusion in its file.

(f) An order for restitution issued under this subdivision is enforceable as a civil judgment.

Sec. 11. [SUBSEQUENT ORDERS AND EXTENSIONS.]

Upon application, notice to all parties, and hearing, a court may extend the relief granted in an existing order for protection/minor respondent or, if a petitioner's order for protection/minor respondent is no longer in effect when an application for subsequent relief is made, grant a new order. The court may extend the terms of an existing order or, if an order is no longer in effect, grant a new order upon a showing that:

(1) the minor respondent has violated a prior or existing order for protection issued under sections 2 to 26 or Minnesota Statutes, chapter 518B;

(2) the petitioner is reasonably in fear of physical harm from the minor respondent; or

(3) the minor respondent has engaged in acts of harassment or stalking within the meaning of Minnesota Statutes, section 609.749, subdivision 2.

A petitioner does not need to show that physical harm is imminent to obtain an extension or a subsequent order under this section.

Sec. 12. [EX PARTE ORDER.]

(a) If a petition under sections 2 to 26 alleges an immediate and present danger of domestic abuse perpetrated by a minor, the court may grant an ex parte order for protection/minor respondent and grant relief the court considers proper, including an order:

(1) restraining the abusing party from committing acts of domestic abuse;

(2) excluding any party from a shared dwelling or from the residence of the other except by further order of the court;

(3) if the court excludes a minor respondent from the minor respondent's parent's home and the parent or guardian is either unable or unwilling to provide an alternative safe living arrangement for the minor respondent, the court may find that there are reasonable grounds to believe that the minor respondent's safety and well-being are endangered because of the exclusion and the parent's or guardian's unwillingness or inability to provide an alternative safe living arrangement, in which case the court may order, by endorsement upon the petition, that a peace officer shall take the minor respondent into immediate custody under Minnesota Statutes, section 260.165, subdivision 1;

(4) excluding the abusing party from the place of employment of the petitioner or otherwise limiting access to the petitioner by the abusing party at the petitioner's place of employment; and

(5) continuing all currently available insurance coverage without change in coverage or beneficiary designation.

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(b) A finding by the court that there is a basis for issuing an ex parte order for protection/minor respondent constitutes a finding that sufficient reasons exist not to require notice under applicable court rules governing applications for ex parte relief.

(c) An ex parte order for protection/minor respondent is effective for a fixed period set by the court, as provided in section 10, paragraph (b), or until modified or vacated by the court after a hearing. A full hearing, as provided by sections 2 to 26, must be set for not later than seven days from the issuance of the ex parte order. Notwithstanding provisions of sections 2 to 26 to the contrary, if the order takes the minor respondent into custody under Minnesota Statutes, section 260.165, a full hearing must be held within 72 hours of the execution of the order for immediate custody.

(d) Nothing in this section affects the right of a party to seek modification of an order under section 16.

Sec. 13. [SERVICE; ALTERNATE SERVICE; PUBLICATION.]

Subdivision 1. [SERVICE ON MINOR RESPONDENT AND PARENT OR GUARDIAN.] If an ex parte order has been issued under section 10 and an order for immediate custody has been issued under sections 2 to 26 and Minnesota Statutes, chapter 260, personal service upon the minor respondent must be made by the county sheriff or police when the order for immediate custody is executed. Personal service of the petition and order must be made upon the minor respondent not less than five days prior to the hearing. Service must also be made upon the minor respondent by mailing a copy of the petition and order to the minor respondent's last known address. Service is complete upon personal receipt by the minor respondent or three days after the mailing. The court shall have notice of the pendency of the case and of the time and place of the hearing served by mail at the last known address upon any parent or guardian of the minor respondent who is not the petitioner.

Subd. 2. [SERVICE OUTSIDE MINNESOTA.] Service out of this state and in the United States may be proved by the affidavit of the person making the service. Service outside the United States may be proved by the affidavit of the person making the service taken before and certified by any United States minister, charge d'affaires, commissioner, consul, commercial agent, or other consular or diplomatic officer of the United States appointed to reside in the other country, including all deputies or other representatives of the officer authorized to perform their duties or before an officer authorized to administer an oath with the certificate of an officer of a court of record of the country in which the affidavit is taken as to the identity and authority of the officer taking the affidavit.

Sec. 14. [ASSISTANCE OF LAW ENFORCEMENT PERSONNEL IN SERVICE OR EXECUTION.]

If an order for protection/minor respondent is issued under sections 2 to 26, on request of the petitioner the court shall order law enforcement personnel to accompany the petitioner and assist in placing the petitioner in possession of the dwelling or residence or otherwise assist in execution or service of the order. If the application for relief is brought in a county in which the minor respondent is not present, the sheriff shall forward the pleadings necessary for service upon the minor respondent to the sheriff of the county in which the minor respondent is present. This transmittal must be expedited to allow for timely service.

Sec. 15. [RIGHT TO APPLY FOR RELIEF.]

(a) A person's right to apply for relief is not affected by the person's leaving the residence or household to avoid abuse.

(b) The court shall not require security or bond of any party unless the court considers it necessary in exceptional cases.

Sec. 16. [MODIFICATION OF ORDER.]

Upon application, notice to all parties, and hearing, the court may modify the terms of an existing order for protection.

Sec. 17. [REAL ESTATE.]

Nothing in sections 2 to 26 affects the title to real estate.

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Sec. 18. [COPY TO LAW ENFORCEMENT AGENCY.]

(a) An order for protection/minor respondent granted under sections 2 to 26 must be forwarded by the court administrator within 24 hours to the local law enforcement agency with jurisdiction over the residence of the petitioner.

Each appropriate law enforcement agency shall make available to other law enforcement officers through a system for verification information as to the existence and status of any order for protection/minor respondent issued under sections 2 to 26.

(b) If the petitioner notifies the court administrator of a change in the petitioner's residence so that a different local law enforcement agency has jurisdiction over the residence, the order for protection/minor respondent must be forwarded by the court administrator to the new law enforcement agency within 24 hours of the notice. If the petitioner notifies the new law enforcement agency that an order for protection/minor respondent has been issued under sections 2 to 26 and the petitioner has established a new residence within that agency's jurisdiction, within 24 hours the local law enforcement agency shall request a copy of the order from the court administrator in the county that issued the order.

(c) If an order for protection/minor respondent is granted, the petitioner must be told by the court that:

(1) notification of a change in residence should be given immediately to the court administrator and to the local law enforcement agency having jurisdiction over the new residence of the applicant;

(2) the reason for notification of a change in residence is to forward an order for protection/minor respondent to the proper law enforcement agency; and

(3) the order for protection/minor respondent must be forwarded to the law enforcement agency having jurisdiction over the new residence within 24 hours of notification of a change in residence, whether notification is given to the court administrator or to the local law enforcement agency having jurisdiction over the applicant's new residence.

An order for protection/minor respondent is enforceable even if the petitioner does not notify the court administrator or the appropriate law enforcement agency of a change in residence.

Sec. 19. [VIOLATION OF AN ORDER FOR PROTECTION/MINOR RESPONDENT.]

Subdivision 1. [AFFIDAVIT; ORDER TO SHOW CAUSE.] The petitioner, a peace officer, or an interested party designated by the court may file an affidavit with the court alleging that a minor respondent has violated an order for protection/minor respondent under sections 2 to 26. The court may order the minor respondent to appear and show cause within 14 days why the minor respondent should not be found in contempt of court and punished for the contempt. The court may also order the minor to participate in counseling or other appropriate programs selected by the court. The hearing may be held by the court in any county in which the petitioner or minor respondent temporarily or permanently resides at the time of the alleged violation.

Subd. 2. [EXTENSION OF PROTECTION ORDER.] If it is alleged that a minor respondent has violated an order for protection/minor respondent issued under sections 2 to 26 and the court finds that the order has expired between the time of the alleged violation and the court's hearing on the violation, the court may grant a new order for protection/minor respondent based solely on the minor respondent's alleged violation of the prior order, to be effective until the hearing on the alleged violation of the prior order. The relief granted in the new order for protection/minor respondent must be extended for a fixed period, not to exceed one year, except when the court determines a longer fixed period is appropriate.

Subd. 3. [ADMITTANCE INTO DWELLING.] Admittance into the petitioner's dwelling of an abusing party excluded from the dwelling under an order for protection/minor respondent is not a violation by the petitioner of the order.

Sec. 20. [ADMISSIBILITY OF TESTIMONY IN CRIMINAL OR DELINQUENCY PROCEEDING.]

Any testimony offered by a minor respondent in a hearing under sections 2 to 26 is inadmissible in a criminal or delinquency proceeding.

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Sec. 21. [OTHER REMEDIES AVAILABLE.]

Any proceeding under sections 2 to 26 is in addition to other civil or criminal remedies.

Sec. 22. [EFFECT ON CUSTODY PROCEEDINGS.]

In a subsequent custody proceeding the court may consider, but is not bound by, a finding in a proceeding under sections 2 to 26 that domestic abuse perpetrated by a minor has occurred.

Sec. 23. [NOTICES.]

Each order for protection/minor respondent granted under sections 2 to 26 must contain a conspicuous notice to the minor respondent that:

(1) violation of an order for protection/minor respondent could result in out-of-home placement while the respondent is a minor and constitutes contempt of court; and

(2) the minor respondent is forbidden to enter or stay at the petitioner's residence, even if invited to do so by the petitioner or any other person; in no event is the order for protection/minor respondent voided.

Sec. 24. [RECORDING REQUIRED.]

Proceedings under sections 2 to 26 must be recorded.

Sec. 25. [STATEWIDE APPLICATION.]

An order for protection/minor respondent granted under sections 2 to 26 applies throughout this state.

Sec. 26. [ORDER FOR PROTECTION/MINOR RESPONDENT FORMS.]

The state court administrator, in consultation with the advisory council on battered women, city and county attorneys, and legal advocates who work with victims, shall develop a uniform order for protection/minor respondent form that will facilitate the consistent enforcement of orders for protection/minor respondent throughout the state.

Sec. 27. [EFFECTIVE DATE.]

Sections 1 to 26 are effective June 1, 1998.

ARTICLE 11

CHANGES TO OTHER LAW

Section 1. Minnesota Statutes 1996, 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, or (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;

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(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 committed a delinquent act before becoming ten years old;

(11) is a runaway;

(12) is an habitual truant; or

(13) is one whose custodial parent's parental rights to another child have been involuntarily terminated within the past five years.; or

(14) has been found by the court to have committed domestic abuse perpetrated by a minor under 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. 2. Minnesota Statutes 1996, section 260.165, subdivision 1, is amended to read:

Subdivision 1. No child may be taken into immediate custody except:

(a) With an order issued by the court in accordance with the provisions of section 260.135, subdivision 5, or article 10, section 10, paragraph (a), clause (3), or 12, paragraph (a), clause (3), or by a warrant issued in accordance with the provisions of section 260.145; or

(b) In accordance with the laws relating to arrests; or

(c) By a peace officer

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(1) when a child has run away from a parent, guardian, or custodian, or when the peace officer reasonably believes the child has run away from a parent, guardian, or custodian; or

(2) when a child is found in surroundings or conditions which endanger the child's health or welfare or which such peace officer reasonably believes will endanger the child's health or welfare. If an Indian child is a resident of a reservation or is domiciled on a reservation but temporarily located off the reservation, the taking of the child into custody under this clause shall be consistent with the Indian Child Welfare Act of 1978, United States Code, title 25, section 1922;

(d) By a peace officer or probation or parole officer when it is reasonably believed that the child has violated the terms of probation, parole, or other field supervision; or

(e) By a peace officer or probation officer under section 260.132, subdivision 4.

Sec. 3. Minnesota Statutes 1996, section 260.171, subdivision 2, is amended to read:

Subd. 2. (a) If the child is not released as provided in subdivision 1, the person taking the child into custody shall notify the court as soon as possible of the detention of the child and the reasons for detention.

(b) No child may be detained in a juvenile secure detention facility or shelter care facility longer than 36 hours, excluding Saturdays, Sundays, and holidays, after being taken into custody for a delinquent act as defined in section 260.015, subdivision 5, unless a petition has been filed and the judge or referee determines pursuant to section 260.172 that the child shall remain in detention.

(c) No child may be detained in an adult jail or municipal lockup longer than 24 hours, excluding Saturdays, Sundays, and holidays, or longer than six hours in an adult jail or municipal lockup in a standard metropolitan statistical area, after being taken into custody for a delinquent act as defined in section 260.015, subdivision 5, unless:

(1) a petition has been filed under section 260.131; and

(2) a judge or referee has determined under section 260.172 that the child shall remain in detention.

After August 1, 1991, no child described in this paragraph may be detained in an adult jail or municipal lockup longer than 24 hours, excluding Saturdays, Sundays, and holidays, or longer than six hours in an adult jail or municipal lockup in a standard metropolitan statistical area, unless the requirements of this paragraph have been met and, in addition, a motion to refer the child for adult prosecution has been made under section 260.125. Notwithstanding this paragraph, continued detention of a child in an adult detention facility outside of a standard metropolitan statistical area county is permissible if:

(i) the facility in which the child is detained is located where conditions of distance to be traveled or other ground transportation do not allow for court appearances within 24 hours. A delay not to exceed 48 hours may be made under this clause; or

(ii) the facility is located where conditions of safety exist. Time for an appearance may be delayed until 24 hours after the time that conditions allow for reasonably safe travel. "Conditions of safety" include adverse life-threatening weather conditions that do not allow for reasonably safe travel.

The continued detention of a child under clause (i) or (ii) must be reported to the commissioner of corrections.

(d) No child taken into custody and placed in a shelter care facility or relative's home by a peace officer pursuant to section 260.165, subdivision 1, clause (a) or (c)(2) may be held in custody longer than 72 hours, excluding Saturdays, Sundays and holidays, unless a petition has been filed and the judge or referee determines pursuant to section 260.172 that the child shall remain in custody or unless the court has made a finding of domestic abuse perpetrated by a minor after a hearing under article 10, sections 2 to 26, in which case the court may extend the period of detention for an additional seven days, within which time the social service agency shall conduct an assessment and shall provide recommendations to the court regarding voluntary services or file a child in need of protection or services petition.

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(e) If a child described in paragraph (c) is to be detained in a jail beyond 24 hours, excluding Saturdays, Sundays, and holidays, the judge or referee, in accordance with rules and procedures established by the commissioner of corrections, shall notify the commissioner of the place of the detention and the reasons therefor. The commissioner shall thereupon assist the court in the relocation of the child in an appropriate juvenile secure detention facility or approved jail within the county or elsewhere in the state, or in determining suitable alternatives. The commissioner shall direct that a child detained in a jail be detained after eight days from and including the date of the original detention order in an approved juvenile secure detention facility with the approval of the administrative authority of the facility. If the court refers the matter to the prosecuting authority pursuant to section 260.125, notice to the commissioner shall not be required.

Sec. 4. Minnesota Statutes 1996, 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

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(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;

(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.

(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 article 10, section 2.

Sec. 5. Minnesota Statutes 1996, section 609.748, subdivision 1, is amended to read:

Subdivision 1. [DEFINITION.] For the purposes of this section, the following terms have the meanings given them in this subdivision.

(a) "Harassment" includes:

(1) repeated, intrusive, or unwanted acts, words, or gestures that are intended to adversely affect the safety, security, or privacy of another, regardless of the relationship between the actor and the intended target;

(2) targeted residential picketing; and

(3) a pattern of attending public events after being notified that the actor's presence at the event is harassing to another.

(b) "Respondent" includes any individuals adults or juveniles alleged to have engaged in harassment or organizations alleged to have sponsored or promoted harassment.

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(c) "Targeted residential picketing" includes the following acts when committed on more than one occasion:

(1) marching, standing, or patrolling by one or more persons directed solely at a particular residential building in a manner that adversely affects the safety, security, or privacy of an occupant of the building; or

(2) marching, standing, or patrolling by one or more persons which prevents an occupant of a residential building from gaining access to or exiting from the property on which the residential building is located.

Sec. 6. [EFFECTIVE DATE.]

Sections 1 to 5 are effective June 1, 1998.

ARTICLE 12

MISCELLANEOUS PROVISIONS

Section 1. Minnesota Statutes 1996, section 357.021, subdivision 1a, is amended to read:

Subd. 1a. (a) Every person, including the state of Minnesota and all bodies politic and corporate, who shall transact any business in the district court, shall pay to the court administrator of said court the sundry fees prescribed in subdivision 2. Except as provided in paragraph (d), the court administrator shall transmit the fees monthly to the state treasurer for deposit in the state treasury and credit to the general fund.

(b) In a county which has a screener-collector position, fees paid by a county pursuant to this subdivision shall be transmitted monthly to the county treasurer, who shall apply the fees first to reimburse the county for the amount of the salary paid for the screener-collector position. The balance of the fees collected shall then be forwarded to the state treasurer for deposit in the state treasury and credited to the general fund. In a county in the eighth judicial district which has a screener-collector position, the fees paid by a county shall be transmitted monthly to the state treasurer for deposit in the state treasury and credited to the general fund. A screener-collector position for purposes of this paragraph is an employee whose function is to increase the collection of fines and to review the incomes of potential clients of the public defender, in order to verify eligibility for that service.

(c) No fee is required under this section from the public authority or the party the public authority represents in an action for:

(1) child support enforcement or modification, medical assistance enforcement, or establishment of parentage in the district court, or child or medical support enforcement conducted by an administrative law judge in an administrative hearing under section 518.5511;

(2) civil commitment under chapter 253B;

(3) the appointment of a public conservator or public guardian or any other action under chapters 252A and 525;

(4) wrongfully obtaining public assistance under section 256.98 or 256D.07, or recovery of overpayments of public assistance;

(5) court relief under chapter 260;

(6) forfeiture of property under sections 169.1217 and 609.531 to 609.5317;

(7) recovery of amounts issued by political subdivisions or public institutions under sections 246.52, 252.27, 256.045, 256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, and 260.251, or other sections referring to other forms of public assistance; or

(8) restitution under section 611A.04.

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(d) The fees collected for child support modifications under subdivision 2, clause (13), must be transmitted to the county treasurer for deposit in the county general fund. The fees must be used by the county to pay for child support enforcement efforts by county attorneys.

Sec. 2. Minnesota Statutes 1996, section 363.02, subdivision 1, is amended to read:

Subdivision 1. [EMPLOYMENT.] The provisions of section 363.03, subdivision 1, shall not apply to:

(1) The employment of any individual:

(a) by the individual's parent, grandparent, spouse, child, or grandchild; or

(b) in the domestic service of any person;

(2) A religious or fraternal corporation, association, or society, with respect to qualifications based on religion or sexual orientation, when religion or sexual orientation shall be a bona fide occupational qualification for employment;

(3) A nonpublic service organization whose primary function is providing occasional services to minors, such as youth sports organizations, scouting organizations, boys' or girls' clubs, programs providing friends, counselors, or role models for minors, youth theater, dance, music or artistic organizations, agricultural organizations for minors, including 4-H clubs, and other youth organizations, with respect to qualifications of employees or volunteers based on sexual orientation;

(4) The employment of one person in place of another, standing by itself, shall not be evidence of an unfair discriminatory practice;

(5) The operation of a bona fide seniority system which mandates differences in such things as wages, hiring priorities, layoff priorities, vacation credit, and job assignments based on seniority, so long as the operation of the system is not a subterfuge to evade the provisions of this chapter;

(6) With respect to age discrimination, a practice by which a labor organization or employer offers or supplies varying insurance benefits or other fringe benefits to members or employees of differing ages, so long as the cost to the labor organization or employer for the benefits is reasonably equivalent for all members or employees;

(7) A restriction imposed by state statute, home rule charter, ordinance, or civil service rule, and applied uniformly and without exception to all individuals, which establishes a maximum age for entry into employment as a peace officer or firefighter;

(8) Nothing in this chapter concerning age discrimination shall be construed to validate or permit age requirements which have a disproportionate impact on persons of any class otherwise protected by section 363.03, subdivision 1 or 5;

(9) It is not an unfair employment practice for an employer, employment agency, or labor organization:

(i) to require or request a person to undergo physical examination, which may include a medical history, for the purpose of determining the person's capability to perform available employment, provided:

(a) that an offer of employment has been made on condition that the person meets the physical or mental requirements of the job, except that a law enforcement agency filling a peace officer position or part-time peace officer position may require or request an applicant to undergo psychological evaluation before a job offer is made provided that the psychological evaluation is for those job-related abilities set forth by the board of peace officer standards and training for psychological evaluations and is otherwise lawful;

(b) that the examination tests only for essential job-related abilities;

(c) that the examination except for examinations authorized under chapter 176 is required of all persons conditionally offered employment for the same position regardless of disability; and

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(d) that the information obtained regarding the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record, except that supervisors and managers may be informed regarding necessary restrictions on the work or duties of the employee and necessary accommodations; first aid safety personnel may be informed, when appropriate, if the disability might require emergency treatment; government officials investigating compliance with this chapter must be provided relevant information on request; and information may be released for purposes mandated by local, state, or federal law; provided that the results of the examination are used only in accordance with this chapter; or

(ii) with the consent of the employee, after employment has commenced, to obtain additional medical information for the purposes of assessing continuing ability to perform the job or employee health insurance eligibility; for purposes mandated by local, state, or federal law; for purposes of assessing the need to reasonably accommodate an employee or obtaining information to determine eligibility for the second injury fund under chapter 176; or pursuant to sections 181.950 to 181.957; or other legitimate business reason not otherwise prohibited by law;

(iii) to administer preemployment tests, provided that the tests (a) measure only essential job-related abilities, (b) are required of all applicants for the same position regardless of disability except for tests authorized under chapter 176, and (c) accurately measure the applicant's aptitude, achievement level, or whatever factors they purport to measure rather than reflecting the applicant's impaired sensory, manual, or speaking skills except when those skills are the factors that the tests purport to measure; or

(iv) to limit receipt of benefits payable under a fringe benefit plan for disabilities to that period of time which a licensed physician reasonably determines a person is unable to work; or

(v) to provide special safety considerations for pregnant women involved in tasks which are potentially hazardous to the health of the unborn child, as determined by medical criteria.

Information obtained under this section, regarding the medical condition or history of any employee, is subject to the requirements of subclause (i), item (d).

Sec. 3. Minnesota Statutes 1996, section 363.073, subdivision 1, is amended to read:

Subdivision 1. [SCOPE OF APPLICATION.] No department or agency of the state shall accept any bid or proposal for a contract or agreement or unless the firm or business has an affirmative action plan submitted to the commissioner of human rights for approval. No department or agency of the state shall execute any contract or agreement for goods or services in excess of $50,000 $100,000 with any business having more than 20 40 full-time employees on a single working day during the previous 12 months, unless the firm or business has an affirmative action plan for the employment of minority persons, women, and the disabled that has been approved by the commissioner of human rights. Receipt of a certificate of compliance issued by the commissioner shall signify that a firm or business has an affirmative action plan that has been approved by the commissioner. A certificate shall be valid for a period of two years. A municipality as defined in section 466.01, subdivision 1, that receives state money for any reason is encouraged to prepare and implement an affirmative action plan for the employment of minority persons, women, and the disabled and submit the plan to the commissioner of human rights.

Sec. 4. Minnesota Statutes 1996, section 504.181, subdivision 1, is amended to read:

504.181 [COVENANT OF LESSOR AND LESSEE NOT TO ALLOW DRUGS UNLAWFUL ACTIVITIES.]

Subdivision 1. [COVENANT NOT TO ALLOW DRUGS TERMS OF COVENANT.] In every lease or license of residential premises, whether in writing or parol, the lessor or licensor and the lessee or licensee covenants covenant that:

(1) the lessee or licensee neither will not:

(i) unlawfully allow controlled substances in those premises or in the common area and curtilage of the premises;

(ii) allow prostitution or prostitution-related activity as defined in section 617.80, subdivision 4, to occur on the premises or in the common area and curtilage of the premises; or

(iii) allow the unlawful use or possession of a firearm in violation of section 609.66, subdivision 1a, 609.67, or 624.713, on the premises or in the common area and curtilage of the premises; and

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(2) the common area and curtilage of the premises will not be used by either the lessor or licensor or the lessee or licensee or others acting under the lessee's or licensee's control of either to manufacture, sell, give away, barter, deliver, exchange, distribute, purchase, or possess a controlled substance in violation of any criminal provision of chapter 152.

The covenant is not violated when a person other than the lessor or licensor or the lessee or licensee possesses or allows controlled substances in the premises, common area, or curtilage, unless the lessor or licensor or the lessee or licensee knew or had reason to know of that activity.

Sec. 5. Minnesota Statutes 1996, section 566.05, is amended to read:

566.05 [COMPLAINT AND SUMMONS.]

(a) The person complaining shall file a complaint with the court, stating the full name and date of birth of the person against whom the complaint is made, unless it is not known, describing the premises of which possession is claimed, stating the facts which authorize the recovery, and praying for restitution thereof. The lack of the full name and date of birth of the person against whom the complaint is made does not deprive the court of jurisdiction or make the complaint invalid. The court shall issue a summons, commanding the person against whom the complaint is made to appear before the court on a day and at a place stated in the summons. The appearance shall be not less than seven nor more than 14 days from the day of issuing the summons. In scheduling appearances under this section, the court shall give priority to any unlawful detainer brought under section 504.181, or on the basis that the tenant is causing a nuisance or seriously endangers the safety of other residents, their property, or the landlord's property, except as provided by paragraph (b). A copy of the complaint shall be attached to the summons, which shall state that the copy is attached and that the original has been filed.

(b) In an unlawful detainer action brought under section 504.181 or on the basis that the tenant is causing a nuisance or other illegal behavior that seriously endangers the safety of other residents, their property, or the landlord's property, the person filing the complaint shall file an affidavit stating specific facts and instances in support of why an expedited hearing is required. The complaint and affidavit shall be reviewed by a referee or judge and scheduled for an expedited hearing only if sufficient supporting facts are stated and they meet the requirements of this paragraph. The appearance in an expedited hearing shall be not less than five days nor more than seven days from the date the summons is issued. The summons, in an expedited hearing, shall be served upon the tenant within 24 hours of issuance unless the court orders otherwise for good cause shown. If the court determines that the person seeking an expedited hearing did so without sufficient basis under the requirements of this paragraph, the court shall impose a civil penalty of up to $500 for abuse of the expedited hearing process.

Sec. 6. Minnesota Statutes 1996, section 566.18, subdivision 6, is amended to read:

Subd. 6. [VIOLATION.] "Violation" means:

(a) a violation of any state, county or city health, safety, housing, building, fire prevention, or housing maintenance code applicable to the building;

(b) a violation of any of the covenants set forth in section 504.18, subdivision 1, clauses (a) or (b), or in section 504.181, subdivision 1;

(c) a violation of an oral or written agreement, lease or contract for the rental of a dwelling in a building.

Sec. 7. Minnesota Statutes 1996, section 611.27, subdivision 4, is amended to read:

Subd. 4. [COUNTY PORTION OF COSTS.] That portion of subdivision 1 directing counties to pay the costs of public defense service shall not be in effect between after January 1, 1995, and July 1, 1997. This subdivision only relates to costs associated with felony, gross misdemeanor, juvenile, and misdemeanor public defense services. Notwithstanding the provisions of this subdivision, in the first, fifth, seventh, ninth, and tenth judicial districts, the cost of juvenile and misdemeanor public defense services for cases opened prior to January 1, 1995, shall remain the responsibility of the respective counties in those districts, even though the cost of these services may occur after January 1, 1995.

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Sec. 8. Minnesota Statutes 1996, section 611.27, is amended by adding a subdivision to read:

Subd. 15. [COSTS OF TRANSCRIPTS.] In appeal cases and postconviction cases where the state public defender's office does not have sufficient funds to pay for transcripts and other necessary expenses because it has spent or committed all of the transcript funds in its annual budget, the state public defender may forward to the commissioner of finance all billings for transcripts and other necessary expenses. The commissioner shall pay for these transcripts and other necessary expenses from county criminal justice aid retained by the commissioner of revenue under section 477A.0121, subdivision 4.

Sec. 9. Minnesota Statutes 1996, section 617.82, is amended to read:

617.82 [AGREED ABATEMENT PLANS; TEMPORARY ORDER.]

(a) If the recipient of a notice under section 617.81, subdivision 4, either abates the conduct constituting the nuisance or enters into an agreed abatement plan within 30 days of service of the notice and complies with the agreement within the stipulated time period, the prosecuting attorney may not file a nuisance action on the specified property regarding the nuisance activity described in the notice.

(b) If the recipient fails to comply with the agreed abatement plan, the prosecuting attorney may initiate a complaint for relief in the district court consistent with paragraph (c).

(c) Whenever a prosecuting attorney has cause to believe that a nuisance described in section 617.81, subdivision 2, exists within the jurisdiction the attorney serves, the prosecuting attorney may by verified petition seek a temporary injunction in district court in the county in which the alleged public nuisance exists, provided that at least 30 days have expired since service of the notice required under section 617.81, subdivision 4. No temporary injunction may be issued without a prior show cause notice of hearing to the respondents named in the petition and an opportunity for the respondents to be heard. Upon proof of a nuisance described in section 617.81, subdivision 2, the court shall issue a temporary injunction. Any temporary injunction issued must describe the conduct to be enjoined.

Sec. 10. Minnesota Statutes 1996, section 617.85, is amended to read:

617.85 [NUISANCE; MOTION TO CANCEL LEASE.]

Where notice is provided under section 617.81, subdivision 4, that an abatement of a nuisance is sought and the circumstances that are the basis for the requested abatement involved the acts of a commercial or residential tenant or lessee of part or all of a building, the owner of the building that is subject to the abatement proceeding may file before the court that has jurisdiction over the abatement proceeding a motion to cancel the lease or otherwise secure restitution of the premises from the tenant or lessee who has maintained or conducted the nuisance. The owner may assign to the prosecuting attorney the right to file this motion. In addition to the grounds provided in chapter 566, the maintaining or conducting of a nuisance as defined in section 617.81, subdivision 2, by a tenant or lessee, is an additional ground authorized by law for seeking the cancellation of a lease or the restitution of the premises. Service of motion brought under this section must be served in a manner that is sufficient under the Rules of Civil Procedure or chapter 566.

It is no defense to a motion under this section by the owner or the prosecuting attorney that the lease or other agreement controlling the tenancy or leasehold does not provide for eviction or cancellation of the lease upon the ground provided in this section.

Upon a finding by the court that the tenant or lessee has maintained or conducted a nuisance in any portion of the building, the court shall order cancellation of the lease or tenancy and grant restitution of the premises to the owner. The court must not order abatement of the premises if the court:

(a) cancels a lease or tenancy and grants restitution of that portion of the premises to the owner; and

(b) further finds that the acts constituting the nuisance as defined in section 617.81, subdivision 2, were committed by the tenant or lessee whose lease or tenancy has been canceled pursuant to this section and the tenant or lessee was not committing the acts in conjunction with or under the control of the owner.

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Sec. 11. [PUBLIC DEFENDER ACCESS TO CRIMINAL HISTORY DATA.]

The criminal and juvenile justice information policy group shall facilitate remote electronic access to public criminal history data by public defenders.

Sec. 12. [STUDY AND REPORT REQUIRED.]

The commissioner of public safety shall complete a study and submit a report to the legislature pursuant to Minnesota Statutes, section 3.195, by February 1, 1998, including recommendations for legislation or other action that will:

(1) decrease the sale of alcoholic beverages to, and the consumption of alcoholic beverages by pregnant women;

(2) reduce the occurrence of fetal alcohol syndrome and fetal alcohol exposure;

(3) encourage responsible alcoholic beverage sales and service to pregnant women by businesses that hold liquor licenses; and

(4) heighten awareness of the importance of responsible use of alcohol by pregnant women of the state.

Sec. 13. [EFFECTIVE DATE.]

Section 8 is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to the operation of state government; crime and crime prevention; appropriating money for the judicial branch, public safety, public defense, corrections, human rights, and related purposes; increasing and prescribing criminal penalties for a variety of offenses; increasing penalties for certain controlled substance offenses; clarifying provisions of the Community Notification Act; expanding and clarifying the sex offender registration law; clarifying and expanding crime victim rights; providing additional protections to children; providing for increased access by peace officers to juvenile records; creating a statewide criminal gang council and a criminal gang strike force to improve the investigation and prosecution of gang-related crime; increasing protections for correctional employees who are assaulted by inmates; clarifying the powers of the ombudsman for corrections; restricting certain computer uses by inmates; clarifying laws relating to probation; providing an action for an order for protection against a minor; amending Minnesota Statutes 1996, sections 13.99, by adding a subdivision; 144.761, subdivisions 5 and 7; 144.762, subdivision 2, and by adding a subdivision; 144.765; 144.767, subdivision 1; 152.01, subdivision 18, and by adding a subdivision; 152.02, subdivisions 2 and 5; 152.021, subdivisions 1 and 2; 152.022, subdivisions 1 and 2; 152.023, subdivisions 1, 2, and 3; 152.024, subdivision 1; 152.029; 169.042, subdivision 1; 169.20, subdivision 5; 169.797, subdivision 3; 171.29, subdivision 2; 241.01, subdivisions 3a and 3b; 241.42, subdivision 2; 241.44, subdivision 1, and by adding a subdivision; 242.19, subdivision 3; 242.32, by adding a subdivision; 243.166, subdivisions 2, 3, and 4; 243.51, subdivisions 1, 3, and by adding a subdivision; 244.05, subdivision 8; 244.052, subdivisions 3, 4, 5, and 6; 244.17, subdivision 2; 256E.03, subdivision 2; 256F.09, subdivisions 2 and 3; 257.071, subdivisions 3, 4, and by adding subdivisions; 257.072, subdivision 1; 259.41; 259.59, by adding a subdivision; 259.67, subdivision 2; 260.012; 260.015, subdivisions 2a and 29; 260.131, subdivisions 1 and 2; 260.155, subdivisions 1a, 2, 3, 4, and 8; 260.161, subdivisions 1, 1a, 2, 3, and by adding a subdivision; 260.165, subdivisions 1 and 3; 260.171, subdivision 2; 260.1735; 260.191, subdivisions 1, 3a, 3b, as amended, and 4; 260.192; 260.221, subdivisions 1 and 5; 260.241, subdivisions 1 and 3; 260.311, subdivision 1; 299A.61, subdivision 1; 299A.63, subdivision 4; 299C.065, subdivision 1; 299C.095; 299C.10, subdivisions 1 and 4; 299C.13; 299C.65, by adding a subdivision; 299D.07; 299F.051; 299F.06, subdivisions 1 and 3; 326.3321, subdivision 1; 326.3386, subdivision 3, and by adding subdivisions; 357.021, subdivision 1a; 363.02, subdivision 1; 363.073, subdivision 1; 388.23, subdivision 1; 401.13; 480.30, subdivision 1; 504.181, subdivision 1; 518.10; 518.175, subdivision 5, and by adding a subdivision; 518.179, subdivision 2; 518B.01, subdivisions 4, 8, 14, 17, and 18; 566.05; 566.18, subdivision 6; 609.02, by adding a subdivision; 609.035, subdivision 1, and by adding a subdivision; 609.10; 609.101, subdivision 5; 609.115, subdivision 1; 609.125; 609.135, subdivisions 1, 2, and by adding a subdivision; 609.15, subdivision 1; 609.221; 609.2231, subdivision 3; 609.2244; 609.2245, subdivision 2; 609.347, subdivision 7; 609.487, subdivision 3; 609.495, subdivision 1; 609.498, by adding subdivisions; 609.52, subdivision 2; 609.684, subdivision 4; 609.746, subdivision 1; 609.748, subdivision 1;

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609.78; 609.902, subdivision 4; 611.27, subdivision 4, and by adding a subdivision; 611A.01; 611A.035; 611A.038; 611A.039, subdivision 1; 611A.04, by adding a subdivision; 611A.045, subdivision 1; 611A.25, subdivision 3; 611A.361, subdivision 3; 611A.52, subdivisions 6 and 8; 611A.53, subdivision 1b; 611A.675; 611A.71, subdivisions 5 and 7; 611A.74, subdivisions 1, 3, and by adding a subdivision; 611A.75; 617.82; 617.85; 626.843, subdivision 1; 629.725; 631.07; 631.52, subdivision 2; and 641.12; Laws 1995, chapter 226, articles 2, section 37, subdivision 2; 3, section 60, subdivision 4; Laws 1996, chapter 408, article 8, sections 21; 22, subdivision 1; and 24; Laws 1997, chapter 112, section 3; proposing coding for new law in Minnesota Statutes, chapters 241; 242; 243; 244; 257; 299A; 299C; 299F; 609; 611A; and 626; repealing Minnesota Statutes 1996, sections 119A.30; 145.406; 244.06; 244.09, subdivision 11a; 259.33; 299A.01, subdivision 6; 299F.07; and 609.684, subdivision 2; Minnesota Rules, parts 7419.0100; 7419.0200; 7419.0300; 7419.0400; 7419.0500; 7419.0600; 7419.0700; and 7419.0800."

We request adoption of this report and repassage of the bill.

Senate Conferees: Randy C. Kelly, Allan H. Spear, Jane Krentz, Thomas M. Neuville and David L. Knutson.

House Conferees: Mary Murphy, Wesley J. "Wes" Skoglund, Thomas Pugh, Doug Swenson and Sherry Broecker.

Murphy moved that the report of the Conference Committee on S. F. No. 1880 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Speaker pro tempore Trimble called Wejcman to the Chair.

S. F. No. 1880, A bill for an act relating to the organization and operation of state government; appropriating money for the judicial branch, public safety, public defense, corrections, criminal justice, crime prevention programs, and other related purposes; implementing, clarifying, and modifying certain criminal and juvenile provisions; prescribing, clarifying, and modifying certain penalty provisions; modifying and enacting various arson provisions; making various changes to the data privacy laws; establishing, modifying, and expanding permanent programs, pilot programs, grant programs, studies, offices, strike forces, task forces, councils, committees, and working groups; requiring reports; providing for an adjustment to the soft body armor reimbursement fund; authorizing the board on judicial standards to award attorneys fees; changing the name of the "superintendent" of the bureau of criminal apprehension to the "director" of the bureau of criminal apprehension; authorizing testing for HIV or Hepatitis B under certain circumstances; requiring employers of law enforcement officers to adopt a protocol; permitting the sale of ten or fewer unused hypodermic needles or syringes without a prescription; requiring employers of disabled or killed peace officers or firefighters to continue health benefits in certain instances; requiring the state to reimburse those employers; providing for statewide arson training courses; creating a criminal gang investigative data system; requiring the department of corrections to submit an annual performance report; expanding the commissioner of corrections' authority to release inmates on conditional medical release and the commissioner's authority related to rules and guidelines; requiring the department of corrections to amend a rule; ending the state's operation of the Minnesota correctional facility-Sauk Centre; requiring the commissioner of administration to issue a request for proposals and select a vendor to operate the facility; requiring the commissioner of corrections to charge counties for juveniles placed at the Minnesota correctional facility-Red Wing and to develop admissions criteria for the facility; striking the requirement that the Minnesota correctional facility-Red Wing accept all juveniles; establishing a state policy discouraging the out-of-state placement of juveniles; lowering the per se standard for alcohol concentration from 0.10 to 0.08 for driving motor vehicles, snowmobiles, all-terrain vehicles, and motorboats while impaired, as well as for criminal vehicular operation and hunting; providing orders for protection in the case of domestic abuse perpetrated by a minor; amending Minnesota Statutes 1996, sections 13.99, by adding a subdivision; 84.91, subdivision 1; 84.911, subdivision 1; 86B.331, subdivisions 1 and 4; 86B.335, subdivision 1; 97B.065, subdivision 1; 97B.066, subdivision 1; 119A.31, subdivision 1; 144.761, subdivisions 5 and 7; 144.762, subdivision 2, and by adding a subdivision; 144.765; 144.767, subdivision 1; 151.40; 152.01, subdivision 18; 152.021, subdivisions 1 and 2; 152.022, subdivisions 1 and 2; 152.023, subdivision 2; 169.121, subdivisions 1, 2, and 3; 169.123, subdivisions 1, 2, 4, 5a, and 6; 169.129; 171.29, subdivision 2; 241.01, subdivision 3b; 241.271; 242.19, subdivision 2; 242.32, by adding a subdivision; 242.55; 244.05, subdivision 8; 244.17, subdivision 2; 256E.03, subdivision 2; 257.071, subdivisions 3, 4, and by adding subdivisions; 257.072, subdivision 1; 259.41; 259.59, by adding a subdivision; 259.67, subdivision 2; 260.012; 260.015, subdivisions 2a and 29; 260.131, subdivisions 1 and 2; 260.155, subdivisions 1a, 2, 3, 4, and 8; 260.161, subdivisions 1, 1a, and by adding a subdivision; 260.165, subdivisions 1 and 3; 260.171, subdivision 2; 260.191, subdivisions 1, 3a, 3b, and 4; 260.192; 260.221, subdivisions 1 and 5; 260.241,

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subdivisions 1 and 3; 299A.38, subdivision 2, and by adding a subdivision; 299A.61, subdivision 1; 299C.065, subdivision 1; 299C.095; 299C.10, subdivisions 1 and 4; 299C.13; 299F.051; 299F.06, subdivisions 1 and 3; 326.3321, subdivision 1; 326.3386, subdivision 3, and by adding subdivisions; 357.021, subdivision 1a; 363.073, subdivision 1, and by adding a subdivision; 401.13; 609.035, subdivision 1, and by adding a subdivision; 609.10; 609.101, subdivision 5; 609.115, subdivision 1; 609.125; 609.135, subdivision 1; 609.152, subdivision 2a, and by adding a subdivision; 609.21; 609.221; 609.684, subdivision 4; 609.748, subdivision 1; 609.902, subdivision 4; 611A.038; 611A.675; 611A.71, subdivision 5; 611A.74, subdivisions 1, 3, and by adding a subdivision; 611A.75; 626.843, subdivision 1; Laws 1995, chapter 226, article 2, section 37, subdivision 2; article 3, section 60, subdivision 4, and by adding a subdivision; and Laws 1996, chapter 408, article 8, sections 21; 22, subdivision 1; and 24; proposing coding for new law in Minnesota Statutes, chapters 16A; 241; 242; 243; 257; 259; 299A; 299C; 299F; 609; 611A; and 626; repealing Minnesota Statutes 1996, sections 119A.30; 145.406; 242.51; 244.09, subdivision 11a; 259.33; 299F.07; and 609.684, 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 130 yeas and 3 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Juhnke Mariani Pawlenty Swenson, H.
Anderson, B. Evans Kahn Marko Paymar Sykora
Anderson, I. Farrell Kalis McCollum Pelowski Tingelstad
Bakk Finseth Kelso McElroy Peterson Tomassoni
Bettermann Folliard Kielkucki McGuire Pugh Tompkins
Biernat Garcia Kinkel Milbert Rest Trimble
Bishop Goodno Knoblach Molnau Rhodes Tuma
Boudreau Greenfield Koppendrayer Mulder Rifenberg Tunheim
Bradley Greiling Koskinen Mullery Rostberg Van Dellen
Broecker Gunther Kraus Munger Schumacher Vickerman
Carlson Haas Kubly Murphy Seagren Wagenius
Chaudhary Harder Kuisle Ness Seifert Weaver
Clark Hasskamp Larsen Nornes Sekhon Wejcman
Commers Hausman Leighton Olson, E. Skare Wenzel
Daggett Hilty Leppik Olson, M. Skoglund Westfall
Davids Holsten Lieder Opatz Slawik Westrom
Dawkins Huntley Lindner Orfield Smith Winter
Dehler Jaros Long Osskopp Solberg Wolf
Delmont Jefferson Luther Osthoff Stanek Workman
Dempsey Jennings Macklin Otremba Stang Spk. Carruthers
Dorn Johnson, A. Mahon Ozment Sviggum
Entenza Johnson, R. Mares Paulsen Swenson, D.

Those who voted in the negative were:

Knight Krinkie Rukavina

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 244, A bill for an act relating to the environment; modifying requirements relating to individual sewage treatment systems; amending Minnesota Statutes 1996, section 115.55, subdivisions 2, 3, 5, 6, 7, and by adding a subdivision.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5561

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 299, A bill for an act relating to state parks; adding to state parks; renaming O.L. Kipp state park; permitting liquor sales in certain parks; authorizing the commissioner to contract out certain restaurant services; modifying state park permit exemptions; amending Minnesota Statutes 1996, sections 85.012, by adding a subdivision; 85.0505; and 85.054, by adding a subdivision; repealing Minnesota Statutes 1996, section 85.012, subdivision 46.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 268, A bill for an act relating to corrections; modifying multiple occupancy requirements applicable to state prisons; amending the appropriation to build a close-custody correctional facility of at least 800 beds; providing that the new facility shall be at level four; deleting certain construction bid requirements; amending Minnesota Statutes 1996, section 243.53, subdivision 1; Laws 1996, chapter 463, section 16, subdivision 3; repealing Minnesota Statutes 1996, section 243.53, subdivision 2.

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.

Patrick E. Flahaven, Secretary of the Senate

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 Speaker pro tempore Wejcman.

SPECIAL ORDERS

S. F. No. 737 was reported to the House.

Winter moved that S. F. No. 737 be continued on Special Orders. The motion prevailed.

S. F. No. 1486 was reported to the House.

Garcia and Mares moved to amend S. F. No. 1486 as follows:

Article 3, delete sections 11 to 17

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Page 65, line 2, after "2," insert "and" and delete ", 11, 12, 13, 14, 15, 16, and 17"

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Garcia and Mares amendment and the roll was called.

Marko moved that those not voting be excused from voting. The motion prevailed.

There were 127 yeas and 6 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Kielkucki McCollum Rest Tomassoni
Anderson, B. Evans Kinkel McElroy Reuter Tompkins
Anderson, I. Farrell Knight Milbert Rhodes Trimble
Bakk Finseth Knoblach Molnau Rifenberg Tuma
Bettermann Folliard Koppendrayer Mullery Rostberg Tunheim
Biernat Garcia Koskinen Munger Rukavina Van Dellen
Bishop Goodno Kraus Ness Schumacher Vickerman
Boudreau Greenfield Krinkie Nornes Seagren Wagenius
Bradley Gunther Kubly Olson, E. Seifert Weaver
Broecker Haas Kuisle Olson, M. Sekhon Wejcman
Carlson Harder Larsen Opatz Skare Wenzel
Chaudhary Hasskamp Leighton Orfield Skoglund Westfall
Clark Hausman Leppik Osskopp Slawik Westrom
Commers Holsten Lieder Osthoff Smith Winter
Daggett Huntley Lindner Otremba Solberg Wolf
Davids Jaros Long Ozment Stanek Workman
Dawkins Jefferson Luther Paulsen Stang Spk. Carruthers
Dehler Jennings Macklin Pawlenty Sviggum
Delmont Johnson, A. Mahon Paymar Swenson, D.
Dempsey Johnson, R. Mares Pelowski Swenson, H.
Dorn Juhnke Mariani Peterson Sykora
Entenza Kelso Marko Pugh Tingelstad

Those who voted in the negative were:

Greiling Hilty Kahn McGuire Mulder Murphy

The motion prevailed and the amendment was adopted.

S. F. No. 1486, A bill for an act relating to retirement; revising various police state aid provisions to fully implement intended 1996 modifications; ratifying the calculation of certain 1996 police state aid amounts; modifying various fire state aid provisions; authorizing the exclusion of certain pipefitters from public employee retirement association membership; authorizing benefit increases for the Richfield fire department relief association; providing postretirement adjustments for retirees and benefit recipients of the Nashwauk police pension plan and the Eveleth police and fire retirement trust fund; clarifying the benefit floor for certain benefit recipients of the St. Paul police and fire consolidation accounts; providing alternative retirement coverage for transferred employees of the Jackson medical center, the Melrose hospital, and the Tracy municipal hospital; creating a trust for the state deferred compensation program; modifying the handling of sabbatical leave

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5563

contributions by the teachers retirement association; modifying the timing of higher education supplemental retirement plan contributions; making administrative changes in the higher education individual retirement account plan and supplemental retirement plan; authorizing additional individual retirement account plans; modifying various economic actuarial assumptions; clarifying certain retirement dates; authorizing certain purchases of prior service credit; extending the volunteer firefighter flexible service pension maximums; modifying retirement coverage for transferred university academic health center employees; modifying tax-sheltered annuity programs for university and college employees; including additional classes of persons in definition of state employee; providing general statewide and local employee pension plan modifications; modifying investment reporting provisions; making miscellaneous retirement plan modifications; amending Minnesota Statutes 1996, sections 69.021, subdivisions 4, 5, 6, 7a, 8, 9, 10, and 11; 69.031, subdivisions 1, 3, and 5; 69.051, subdivisions 1, 1a, and 1b; 136F.45, by adding subdivisions; 352.01, subdivisions 2a and 2b; 352.96, subdivisions 2, 3, and 6; 352F.02, subdivisions 3, 6, and by adding subdivisions; 352F.03; 352F.04; 352F.05; 352F.06; 352F.07; 352F.08; 353.01, subdivision 2b; 353B.07, subdivision 3; 353B.08, subdivision 6; 353B.11, subdivisions 3, 4, and 5; 354.092, subdivisions 1, 3, and 4; 354B.21, subdivision 3; 354B.25, subdivision 5, and by adding a subdivision; 354C.11; 354C.12, subdivisions 1 and 4; 354D.02, subdivision 2; 354D.06; 354D.07; 354D.08, subdivisions 1, 2, 3, and 5; 356.215, subdivision 4d; 356.219; 423A.02, subdivision 2; 423B.06, subdivisions 1 and 1a; and 424A.02, subdivisions 3 and 10; Laws 1943, chapter 196, section 4, as amended; Laws 1965, chapter 705, section 1, subdivision 4; Laws 1967, chapter 798, sections 2 and 4; Laws 1992, chapter 563, section 5, as amended; and Laws 1996, chapter 408, article 8, sections 21, 22, subdivision 1, and 24; repealing Minnesota Statutes 1996, section 356.218; Laws 1995, chapter 262, article 1, sections 8, 9, 10, 11, and 12.

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 134 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Sykora
Anderson, B. Farrell Kelso McCollum Peterson Tingelstad
Anderson, I. Finseth Kielkucki McElroy Pugh Tomassoni
Bakk Folliard Kinkel McGuire Rest Tompkins
Bettermann Garcia Knight Milbert Reuter Trimble
Biernat Goodno Knoblach Molnau Rhodes Tuma
Bishop Greenfield Koppendrayer Mulder Rifenberg Tunheim
Boudreau Greiling Koskinen Mullery Rostberg Van Dellen
Bradley Gunther Kraus Munger Rukavina Vickerman
Broecker Haas Krinkie Murphy Schumacher Wagenius
Carlson Harder Kubly Ness Seagren Weaver
Chaudhary Hasskamp Kuisle Nornes Seifert Wejcman
Clark 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 Luther Otremba Stanek Spk. Carruthers
Dempsey Johnson, A. Macklin Ozment Stang
Dorn Johnson, R. Mahon Paulsen Sviggum
Entenza Juhnke Mares Pawlenty Swenson, D.
Erhardt Kahn Mariani Paymar Swenson, H.

The bill was passed, as amended, and its title agreed to.

The Speaker resumed the Chair.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5564

The following Conference Committee Report was received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 1684

A bill for an act relating to education; kindergarten through grade 12; providing for general education; special programs; lifework development; education organization, cooperation, and facilities; education excellence; academic performance; education policy issues; libraries; technology; state agencies; conforming and technical amendments; school bus safety; appropriating money; amending Minnesota Statutes 1996, sections 16A.11, by adding a subdivision; 120.062, subdivisions 7 and 9; 120.0621, subdivisions 5a, 5b, 6, and by adding a subdivision; 120.064, subdivisions 3, 4, 4a, 5, 8, 11, 20a, and by adding subdivisions; 120.101, subdivision 5c, and by adding a subdivision; 120.17, subdivision 3a; 120.181; 121.11, subdivision 7c, and by adding a subdivision; 121.1115, by adding subdivisions; 121.15, by adding subdivisions; 121.155, by adding a subdivision; 121.602, subdivisions 1, 2, and 4; 121.611; 121.615, subdivisions 2, 3, 5, 6, 7, 8, 9, and 10; 121.703, subdivision 3; 121.904, subdivision 4a; 123.34, by adding a subdivision; 123.3514, subdivisions 4, 4a, 4c, 4e, 6c, 8, and by adding subdivisions; 123.39, subdivision 6; 123.799, subdivision 1; 123.7991, subdivisions 1 and 2; 123.935, subdivision 7; 124.155, subdivision 1; 124.17, subdivision 4, and by adding a subdivision; 124.193; 124.195, subdivisions 2, 7, 10, 11, and by adding a subdivision; 124.225, subdivisions 1, 3a, 7b, 7d, 7f, 8a, 10, 13, 14, 15, and 17; 124.226, subdivisions 4, 9, and 10; 124.2445; 124.2455; 124.248, subdivisions 1 and 3; 124.2613, subdivisions 3 and 6; 124.2727, subdivisions 6a, 6c, and 6d; 124.273, subdivisions 1d, 1e, 1f, and 5; 124.312, subdivisions 4 and 5; 124.313; 124.314, subdivisions 1 and 2; 124.3201, subdivisions 1, 2, 3, and 4; 124.321, subdivision 1; 124.323, subdivisions 1 and 2; 124.42, subdivision 4; 124.431, subdivisions 2 and 11; 124.45; 124.481; 124.573, subdivision 2f; 124.574, subdivisions 1, 2d, 2f, 5, 6, and 9; 124.646, subdivision 1; 124.83, subdivisions 1 and 2; 124.86, subdivision 2, and by adding a subdivision; 124.91, subdivisions 1 and 5; 124.912, subdivisions 1, 2, and 3; 124.916, subdivisions 1, 2, and 3; 124.918, subdivision 6; 124.95, subdivision 2; 124.961; 124A.03, subdivision 1c; 124A.036, subdivisions 5 and 6; 124A.04, subdivision 2; 124A.22, subdivisions 1, 2, as amended, 3, 6, 6a, 10, 11, 13b, and by adding a subdivision; 124A.225, subdivisions 1 and 4; 124A.23, subdivisions 1 and 3; 124A.26, subdivision 1; 124A.28; 124C.45, subdivision 1a; 124C.46, subdivisions 1 and 2; 124C.498, subdivision 2; 125.05, subdivisions 1c and 2; 125.12, subdivision 14; 126.22, subdivision 2; 126.23, subdivision 1; 126.77, subdivision 1; 126.82; 127.27, subdivision 10; 127.282; 128C.02, subdivision 2; 128C.08, subdivision 5; 134.155, subdivisions 2 and 3; 134.34, subdivision 4; 136A.233, by adding a subdivision; 169.01, subdivision 6; 169.447, subdivision 6; 169.4501, subdivisions 1 and 2; 169.4502, subdivisions 2, 7, 11, and by adding subdivisions; 169.4503, subdivisions 1, 2, 10, 13, 14, 17, 19, 23, 24, and by adding a subdivision; 169.4504, subdivision 1, and by adding a subdivision; 169.452; and 171.3215, subdivision 4; Laws 1991, chapter 265, article 1, section 30, as amended; Laws 1992, chapter 499, article 7, section 31; Laws 1995, First Special Session chapter 3, article 1, section 56; article 2, section 52; article 3, section 11, subdivisions 1, 2, and 5; article 11, section 21, subdivision 3; article 12, section 7, subdivision 1; Laws 1996, chapter 412, article 4, section 34, subdivision 4; and article 12, sections 8 and 11; proposing coding for new law in Minnesota Statutes, chapters 120; 121; 124; 126; and 127; proposing coding for new law as Minnesota Statutes, chapter 256J; repealing Minnesota Statutes 1996, sections 121.904, subdivision 4d; 124.177; 124.225, subdivisions 13, 14, 15, 16, and 17; 124.226, subdivisions 1, 3, 3a, 6, and 10; 124.3201, subdivisions 2a and 2b; 124A.22, subdivisions 2a, 13, and 13a; 124A.697; 124A.698; 124A.70; 124A.71; 124A.711; 124A.72; 124A.73; 126.113; 128B.10; 134.34, subdivision 4a; 134.46; 169.4502, subdivisions 6 and 9; 169.4503, subdivisions 3, 8, 9, 11, 12, and 22; and 169.454, subdivision 11; Laws 1993, chapter 146, article 5, section 20; Laws 1994, chapter 647, article 7, section 18; and Laws 1995, First Special Session chapter 3, article 12, section 8.

May 17, 1997

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. 1684, 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. 1684 be further amended as follows:

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5565

Delete everything after the enacting clause and insert:

"ARTICLE 1

GENERAL EDUCATION

Section 1. Minnesota Statutes 1996, section 120.062, subdivision 9, is amended to read:

Subd. 9. [TRANSPORTATION.] (a) If requested by the parent of a pupil, the nonresident district shall provide transportation within the district. The state shall pay transportation aid to the district according to section 124.225.

The resident district is not required to provide or pay for transportation between the pupil's residence and the border of the nonresident district. A parent may be reimbursed by the nonresident district for the costs of transportation from the pupil's residence to the border of the nonresident district if the pupil is from a family whose income is at or below the poverty level, as determined by the federal government. The reimbursement may not exceed the pupil's actual cost of transportation or 15 cents per mile traveled, whichever is less. Reimbursement may not be paid for more than 250 miles per week.

At the time a nonresident district notifies a parent or guardian that an application has been accepted under subdivision 5 or 6, the nonresident district must provide the parent or guardian with the following information regarding the transportation of nonresident pupils under this section: 123.39, subdivision 6.

(1) a nonresident district may transport a pupil within the pupil's resident district under this section only with the approval of the resident district; and

(2) a parent or guardian of a pupil attending a nonresident district under this section may appeal under section 123.39, subdivision 6, the refusal of the resident district to allow the nonresident district to transport the pupil within the resident district.

(b) Notwithstanding paragraph (a) and section 124.225, subdivision 8l, transportation provided by a nonresident district between home and school for a pupil attending school under this section is authorized for nonregular transportation revenue under section 124.225, if the following criteria are met:

(1) the school that the pupil was attending prior to enrolling in the nonresident district under this section was closed;

(2) the distance from the closed school to the next nearest school in the district that the student could attend is at least 20 miles;

(3) the pupil's residence is at least 20 miles from any school that the pupil could attend in the resident district; and

(4) the pupil's residence is closer to the school of attendance in the nonresident district than to any school the pupil could attend in the resident district.

Sec. 2. Minnesota Statutes 1996, 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 for fiscal year 1996 and thereafter of the amount of the levy certified in the prior calendar year according to section 124A.03, subdivision 2, plus or minus auditor's adjustments, not including levy portions that are assumed by the state; or

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(3) 18.1 percent for fiscal year 1996, the percent determined under Laws 1996, chapter 461, section 3, for fiscal year 1997 and that same percent thereafter of the amount of the levy certified in the prior calendar year, plus or minus auditor's adjustments, not including levy portions that are assumed by the state, which remains after subtracting, by fund, the amounts levied for the following purposes:

(i) reducing or eliminating projected deficits in the reserved fund balance accounts for unemployment insurance and bus purchases;

(ii) statutory operating debt pursuant to section 124.914, subdivision 1;

(iii) retirement and severance pay pursuant to sections 122.531, subdivision 9, 124.2725, subdivision 15, 124.4945, 124.912, subdivision 1, and 124.916, subdivision 3, and Laws 1975, chapter 261, section 4;

(iv) amounts levied for bonds issued and interest thereon, amounts levied for debt service loans and capital loans, amounts levied for down payments under section 124.82, subdivision 3; and

(v) amounts levied under section 124.755.

Notwithstanding the foregoing, the levy recognition percentage for the referendum levy certified according to section 124A.03, subdivision 2, is 31 percent.

(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, subdivisions 2, 3, and 4; 124.912, subdivisions 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 (b), 2, and 3; 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. 3. Minnesota Statutes 1996, section 123.3514, is amended by adding a subdivision to read:

Subd. 3a. [ALTERNATIVE PUPIL.] "Alternative pupil" means an 11th or 12th grade student not enrolled in a public school district, and includes students attending nonpublic schools and students who are home schooled. An alternative pupil is considered a pupil for purposes of this section only. An alternative pupil must register with the commissioner of children, families, and learning before participating in the post-secondary enrollment options program. The commissioner shall prescribe the form and manner of the registration, in consultation with the nonpublic education council under section 123.935, subdivision 7, and may request any necessary information from the alternative pupil.

Sec. 4. Minnesota Statutes 1996, section 123.3514, subdivision 4, is amended to read:

Subd. 4. [AUTHORIZATION; NOTIFICATION.] Notwithstanding any other law to the contrary, an 11th or 12th grade pupil enrolled in a public school or an American Indian-controlled tribal contract or grant school eligible for aid under section 124.86, except a foreign exchange pupil enrolled in a district under a cultural exchange program, may apply to an

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eligible institution, as defined in subdivision 3, to enroll in nonsectarian courses offered by that post-secondary institution. If an institution accepts a secondary pupil for enrollment under this section, the institution shall send written notice to the pupil, the pupil's school or school district, and the commissioner of children, families, and learning within ten days of acceptance. The notice shall indicate the course and hours of enrollment of that pupil. If the pupil enrolls in a course for post-secondary credit, the institution shall notify the pupil about payment in the customary manner used by the institution.

Sec. 5. Minnesota Statutes 1996, section 123.3514, subdivision 4a, is amended to read:

Subd. 4a. [COUNSELING.] To the extent possible, the school or school district shall provide counseling services to pupils and their parents or guardian before the pupils enroll in courses under this section to ensure that the pupils and their parents or guardian are fully aware of the risks and possible consequences of enrolling in post-secondary courses. The school or school district shall provide information on the program including who may enroll, what institutions and courses are eligible for participation, the decision-making process for granting academic credits, financial arrangements for tuition, books and materials, eligibility criteria for transportation aid, available support services, the need to arrange an appropriate schedule, consequences of failing or not completing a course in which the pupil enrolls, the effect of enrolling in this program on the pupil's ability to complete the required high school graduation requirements, and the academic and social responsibilities that must be assumed by the pupils and their parents or guardian. The person providing counseling shall encourage pupils and their parents or guardian to also use available counseling services at the post-secondary institutions before the quarter or semester of enrollment to ensure that anticipated plans are appropriate.

Prior to enrolling in a course, the pupil and the pupil's parents or guardian must sign a form that must be provided by the school or school district and may be obtained from a post-secondary institution stating that they have received the information specified in this subdivision and that they understand the responsibilities that must be assumed in enrolling in this program. The department of children, families, and learning shall, upon request, provide technical assistance to a school or school district in developing appropriate forms and counseling guidelines.

Sec. 6. Minnesota Statutes 1996, section 123.3514, subdivision 4e, is amended to read:

Subd. 4e. [COURSES ACCORDING TO AGREEMENTS.] An eligible pupil, according to subdivision 4, may enroll in a nonsectarian course taught by a secondary teacher or a post-secondary faculty member and offered at a secondary school, or another location, according to an agreement between a public school board and the governing body of an eligible public post-secondary system or an eligible private post-secondary institution, as defined in subdivision 3. All provisions of this section shall apply to a pupil, public school board, school district, and the governing body of a post-secondary institution, except as otherwise provided.

Sec. 7. Minnesota Statutes 1996, section 123.3514, subdivision 6c, is amended to read:

Subd. 6c. [FINANCIAL ARRANGEMENTS FOR COURSES PROVIDED ACCORDING TO AGREEMENTS.] (a) The agreement between a public school board and the governing body of a public post-secondary system or private post-secondary institution shall set forth the payment amounts and arrangements, if any, from the public school board to the post-secondary institution. No payments shall be made by the department of children, families, and learning according to subdivision 6 or 6b. For the purpose of computing state aids for a school district, a pupil enrolled according to subdivision 4e shall be counted in the average daily membership of the school district as though the pupil were enrolled in a secondary course that is not offered in connection with an agreement. Nothing in this subdivision shall be construed to prohibit a public post-secondary system or private post-secondary institution from receiving additional state funding that may be available under any other law.

(b) If a course is provided under subdivision 4e, offered at a secondary school, and taught by a secondary teacher, the post-secondary system or institution must not require a payment from the school board that exceeds the cost to the post-secondary institution that is directly attributable to providing that course.

Sec. 8. Minnesota Statutes 1996, section 123.3514, is amended by adding a subdivision to read:

Subd. 6d. [ALTERNATIVE PUPILS FINANCIAL ARRANGEMENTS.] For an alternative pupil enrolled in a course or program under this section, the department of children, families, and learning shall make payments to the eligible institution according to subdivision 6. The department shall not make any payments to a school district for alternative pupils.

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Sec. 9. Minnesota Statutes 1996, section 123.3514, is amended by adding a subdivision to read:

Subd. 6e. [TUITION AT NONPUBLIC SECONDARY INSTITUTION.] A nonpublic secondary institution must proportionately adjust its tuition to accurately reflect the time an alternative pupil spends in a post-secondary enrollment course or program.

Sec. 10. Minnesota Statutes 1996, section 123.39, subdivision 6, is amended to read:

Subd. 6. For the purposes of this subdivision, a "nonresident pupil" is a pupil who resides in one district, defined as the "resident district" and attends school in another district, defined as the "nonresident district."

If requested, a nonresident district may shall transport a nonresident pupil within its borders and may transport a nonresident pupil within the pupil's resident district. A nonresident district may not transport a nonresident pupil on a school district owned or contractor operated school bus within the pupil's resident district without the approval of the resident district under section 120.062.

The parent or guardian of a nonresident pupil attending a nonresident district under section 120.062 may submit a written request to the resident district asking that the resident district allow the nonresident district to provide transportation for the pupil within the pupil's resident district. The resident district must approve or disapprove the request, in writing, within 30 days. The parent or guardian may appeal the refusal of the resident district to the commissioner of children, families, and learning. The commissioner must act on the appeal within 30 days. If a nonresident district decides to transport a nonresident pupil within the pupil's resident district, the nonresident district must notify the pupil's resident district of its decision, in writing, prior to providing transportation.

Sec. 11. Minnesota Statutes 1996, section 123.935, subdivision 7, is amended to read:

Subd. 7. [NONPUBLIC EDUCATION COUNCIL.] (a) The commissioner shall appoint a 15-member council on nonpublic education. The 15 members shall represent various areas of the state, represent various methods of providing nonpublic education, and shall be knowledgeable about nonpublic education. The compensation, removal of members, filling of vacancies, and terms are governed by section 15.0575. The council shall not expire expires June 30, 2001. The council shall advise the commissioner and the state board on issues affecting nonpublic education and nonpublic schools. The council may recognize educational accrediting agencies, for the sole purpose of sections 120.101, 120.102, and 120.103.

(b) A parent or guardian of a nonpublic school pupil or a nonpublic school may file a complaint about services provided under sections 123.931 to 123.937 with the nonpublic education council. The council may review the complaint and make a recommendation for resolution to the commissioner.

(c) The council shall provide the families of nonpublic school pupils in grades 10 and 11 and nonpublic secondary schools with information about the post-secondary enrollment options program under section 123.3514.

Sec. 12. Minnesota Statutes 1996, section 124.155, subdivision 1, is amended to read:

Subdivision 1. [AMOUNT OF ADJUSTMENT.] Each year state aids and credits enumerated in subdivision 2 payable to any school district for that fiscal year shall be adjusted, in the order listed, by an amount equal to (1) the amount the district recognized as revenue for the prior fiscal year pursuant to section 121.904, subdivision 4a, clause (b), minus (2) the amount the district recognizes as revenue for the current fiscal year pursuant to section 121.904, subdivision 4a, clause (b). For the purposes of making the aid adjustment under this subdivision, the amount the district recognizes as revenue for either the prior fiscal year or the current fiscal year pursuant to section 121.904, subdivision 4a, clause (b), shall not include any amount levied pursuant to sections 124.226, subdivision 9, 124.912, subdivisions 2 and 3, or a successor provision only for those districts affected, 124.916, subdivisions 1 and, 2, and 3, paragraphs 4, 5, and 6, 124.918, subdivision 6, and 124A.03, subdivision 2; and Laws 1992, chapter 499, articles 1, section 20, and 6, section 36. Payment from the permanent school fund shall not be adjusted pursuant to this section. The school district shall be notified of the amount of the adjustment made to each payment pursuant to this section.

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Sec. 13. Minnesota Statutes 1996, section 124.17, subdivision 1d, is amended to read:

Subd. 1d. [AFDC COMPENSATION REVENUE PUPIL UNITS.] AFDC Compensation revenue pupil units for fiscal year 1993 1998 and thereafter must be computed according to this subdivision.

(a) The AFDC compensation revenue concentration percentage for each building in a district equals the product of 100 times the ratio of:

(1) the sum of the number of pupils enrolled in the district from families receiving aid to families with dependent children according to subdivision 1e building eligible to receive free lunch plus one-half of the pupils eligible to receive reduced priced lunch on October 1 of the previous fiscal year; to

(2) the number of pupils in average daily membership according to subdivision 1e enrolled in the district the building on October 1 of the previous fiscal year.

(b) The AFDC compensation revenue pupil weighting factor for a district building equals the lesser of one or the quotient obtained by dividing the district's AFDC building's compensation revenue concentration percentage by 11.5 80.0.

(c) The AFDC compensation revenue pupil units for a district for fiscal year 1993 and thereafter building equals the product of:

(1) the sum of the number of pupils enrolled in the district from families receiving aid to families with dependent children according to subdivision 1e building eligible to receive free lunch and one-half of the pupils eligible to receive reduced priced lunch on October 1 of the previous fiscal year; times

(2) the AFDC compensation revenue pupil weighting factor for the district building; times

(3) .67 .60.

The percentages in this subdivision must be based on the count of individual pupils and not on a building average or minimum.

Sec. 14. Minnesota Statutes 1996, 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 according to under section 121.585, an area learning center according to under sections 124C.45 and 124C.46, or an alternative program approved by the commissioner, for more than 1,020 hours in a school year for a secondary student and for, 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 and of; (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.

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(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. 15. Minnesota Statutes 1996, section 124.17, is amended by adding a subdivision 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. 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.

Sec. 16. Minnesota Statutes 1996, section 124.195, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] (a) The term "other district receipts" means payments by county treasurers pursuant to section 276.10, apportionments from the school endowment fund pursuant to section 124.09, apportionments by the county auditor pursuant to section 124.10, subdivision 2, and payments to school districts by the commissioner of revenue pursuant to chapter 298.

(b) The term "cumulative amount guaranteed" means the sum of the following:

(1) one-third of the final adjustment payment according to subdivision 6; plus

(2) the product of

(i) the cumulative disbursement percentage shown in subdivision 3; times

(ii) the sum of

85 90 percent of the estimated aid and credit entitlements paid according to subdivision 10; plus

100 percent of the entitlements paid according to subdivisions 8 and 9; plus

the other district receipts; plus

the final adjustment payment according to subdivision 6.

(c) The term "payment date" means the date on which state payments to school districts are made by the electronic funds transfer method. If a payment date falls on a Saturday, a Sunday, or a weekday which is a legal holiday, the payment shall be made on the immediately following business day. The commissioner of children, families, and learning may make payments on dates other than those listed in subdivision 3, but only for portions of payments from any preceding payment dates which could not be processed by the electronic funds transfer method due to documented extenuating circumstances.

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Sec. 17. Minnesota Statutes 1996, 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 85 90 percent of the estimated entitlement during the fiscal year of the entitlement, unless a higher rate has been established according to section 121.904, subdivision 4d. 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 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. 18. Minnesota Statutes 1996, section 124.195, subdivision 10, is amended to read:

Subd. 10. [AID PAYMENT PERCENTAGE.] Except as provided in subdivisions 8, 9, and 11, each fiscal year, all education aids and credits in this chapter and chapters 121, 123, 124A, 124B, 125, 126, 134, and section 273.1392, shall be paid at 90 percent for districts operating a program under section 121.585 for grades 1 to 12 for all students in the district and 85 percent for other districts of the estimated entitlement during the fiscal year of the entitlement, unless a higher rate has been established according to section 121.904, subdivision 4d. Districts operating a program under section 121.585 for grades 1 to 12 for all students in the district shall receive 85 percent of the estimated entitlement plus an additional amount of general education aid equal to five percent of the estimated entitlement. For all districts,. The final adjustment payment, according to subdivision 6, shall be the amount of the actual entitlement, after adjustment for actual data, minus the payments made during the fiscal year of the entitlement.

Sec. 19. Minnesota Statutes 1996, section 124.195, subdivision 11, is amended to read:

Subd. 11. [NONPUBLIC AIDS.] The state shall pay aid according to sections 123.931 to 123.947 for pupils attending nonpublic schools as follows:

(1) an advance payment by November 30 equal to 85 90 percent of the estimated entitlement for the current fiscal year; and

(2) a final payment by October 31 of the following fiscal year, adjusted for actual data.

If a payment advance to meet cash flow needs is requested by a district and approved by the commissioner, the state shall pay basic nonpublic pupil transportation aid according to section 124.225 attributable to pupils attending nonpublic schools by October 31.

Sec. 20. Minnesota Statutes 1996, section 124.225, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For purposes of this section and section 124.3201, the terms defined in this subdivision have the meanings given to them.

(a) "FTE" means a full-time equivalent pupil whose transportation is authorized for aid purposes by section 124.223.

(b) "Authorized cost for regular transportation" means "Actual expenditure per pupil transported in the regular and excess transportation categories" means the quotient obtained by dividing:

(1) the sum of:

(1) (i) all expenditures for transportation in the regular category, as defined in paragraph (c) (b), clause (1), for which aid is authorized in section 124.223 and the excess category, as defined in paragraph (b), clause (2), plus

(2) (ii) an amount equal to one year's depreciation on the district's school bus fleet and mobile units computed on a straight line basis at the rate of 15 percent per year for districts operating a program under section 121.585 for grades 1 to 12 for all students in the district and 12-1/2 percent per year for other districts of the cost of the fleet, plus

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(3) an amount equal to one year's depreciation on district school buses reconditioned by the department of corrections computed on a straight line basis at the rate of 33-1/3 percent per year of the cost to the district of the reconditioning, plus

(4) (iii) an amount equal to one year's depreciation on the district's type three school buses, as defined in section 169.01, subdivision 6, clause (5), which must be used a majority of the time for the pupil transportation purposes in sections 124.223 and 124.226, subdivisions 5, 8, and 9, and were purchased after July 1, 1982, for authorized transportation of pupils, computed on a straight line basis at the rate of 20 percent per year of the cost of the type three school buses by:

(2) the number of pupils eligible for transportation in the regular category, as defined in paragraph (b), clause (1), and the excess category, as defined in paragraph (b), clause (2).

(c) (b) "Transportation category" means a category of transportation service provided to pupils as follows:

(1) Regular transportation is transportation services provided during the regular school year under section 124.223, subdivisions 1 and 2, excluding the following transportation services provided under section 124.223, subdivision 1: transportation between schools; transportation to and from service-learning programs; noon transportation to and from school for kindergarten pupils attending half-day sessions; transportation of pupils to and from schools located outside their normal attendance areas under the provisions of a plan for desegregation mandated by the state board of education or under court order; and transportation of elementary pupils to and from school within a mobility zone.:

(i) transportation to and from school during the regular school year for resident elementary pupils residing one mile or more from the public or nonpublic school they attend, and resident secondary pupils residing two miles or more from the public or nonpublic school they attend, excluding desegregation transportation and noon kindergarten transportation; but with respect to transportation of pupils to and from nonpublic schools, only to the extent permitted by sections 123.76 to 123.79;

(ii) transportation of resident pupils to and from language immersion programs;

(iii) transportation of a pupil who is a custodial parent and that pupil's child between the pupil's home and the child care provider and between the provider and the school, if the home and provider are within the attendance area of the school; and

(iv) transportation to and from or board and lodging in another district, of resident pupils of a district without a secondary school.

For the purposes of this paragraph, a district may designate a licensed day care facility, respite care facility, the residence of a relative, or the residence of a person chosen by the pupil's parent or guardian as the home of a pupil for part or all of the day, if requested by the pupil's parent or guardian, and if that facility or residence is within the attendance area of the school the pupil attends.

(2) Nonregular transportation is transportation services provided under section 124.223, subdivision 1, that are excluded from the regular category and transportation services provided under section 124.223, subdivisions 3, 4, 5, 6, 7, 8, 9, and 10.

(3) Excess transportation is transportation to and from school during the regular school year for secondary pupils residing at least one mile but less than two miles from the public school they could attend or from the nonpublic school actually attended they attend, and transportation to and from school for pupils residing less than one mile from school who are transported because of extraordinary traffic, drug, or crime hazards.

(4) (3) Desegregation transportation is transportation within and outside of the district during the regular school year of pupils to and from schools located outside their normal attendance areas under a plan for desegregation mandated by the state board or under court order.

(5) Handicapped transportation is transportation provided under section 124.223, subdivision 4, for pupils with a disability between home or a respite care facility and school or other buildings where special instruction required by sections 120.17 and 120.1701 is provided.

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(4) "Transportation services for pupils with disabilities" is:

(i) transportation of pupils with disabilities who cannot be transported on a regular school bus between home or a respite care facility and school;

(ii) necessary transportation of pupils with disabilities from home or from school to other buildings, including centers such as developmental achievement centers, hospitals, and treatment centers where special instruction or services required by sections 120.17 and 120.1701 are provided, within or outside the district where services are provided;

(iii) necessary transportation for resident pupils with disabilities required by sections 120.17, subdivision 4a, and 120.1701;

(iv) board and lodging for pupils with disabilities in a district maintaining special classes;

(v) transportation from one educational facility to another within the district for resident pupils enrolled on a shared-time basis in educational programs, and necessary transportation required by sections 120.17, subdivision 9, and 120.1701, for resident pupils with disabilities who are provided special instruction and services on a shared-time basis;

(vi) transportation for resident pupils with disabilities to and from board and lodging facilities when the pupil is boarded and lodged for educational purposes; and

(vii) services described in clauses (i) to (vi), when provided for pupils with disabilities in conjunction with a summer instructional program that relates to the pupil's individual education plan or in conjunction with a learning year program established under section 121.585.

(5) "Nonpublic nonregular transportation" is:

(i) transportation from one educational facility to another within the district for resident pupils enrolled on a shared-time basis in educational programs, excluding transportation for nonpublic pupils with disabilities under clause (4);

(ii) transportation within district boundaries between a nonpublic school and a public school or a neutral site for nonpublic school pupils who are provided pupil support services pursuant to section 123.935; and

(iii) late transportation home from school or between schools within a district for nonpublic school pupils involved in after-school activities.

(d) (c) "Mobile unit" means a vehicle or trailer designed to provide facilities for educational programs and services, including diagnostic testing, guidance and counseling services, and health services. A mobile unit located off nonpublic school premises is a neutral site as defined in section 123.932, subdivision 9.

(e) "Current year" means the school year for which aid will be paid.

(f) "Base year" means the second school year preceding the school year for which aid will be paid.

(g) "Base cost" means the ratio of:

(1) the sum of the authorized cost in the base year for regular transportation as defined in paragraph (b) plus the actual cost in the base year for excess transportation as defined in paragraph (c);

(2) to the sum of the number of weighted FTE's in the regular and excess categories in the base year.

(h) "Pupil weighting factor" for the excess transportation category for a school district means the lesser of one, or the result of the following computation:

(1) Divide the square mile area of the school district by the number of FTE's in the regular and excess categories in the base year.

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(2) Raise the result in clause (1) to the one-fifth power.

(3) Divide four-tenths by the result in clause (2).

The pupil weighting factor for the regular transportation category is one.

(i) "Weighted FTE's" means the number of FTE's in each transportation category multiplied by the pupil weighting factor for that category.

(j) "Sparsity index" for a school district means the greater of .005 or the ratio of the square mile area of the school district to the sum of the number of weighted FTE's by the district in the regular and excess categories in the base year.

(k) "Density index" for a school district means the greater of one or the result obtained by subtracting the product of the district's sparsity index times 20 from two.

(l) "Contract transportation index" for a school district means the greater of one or the result of the following computation:

(1) Multiply the district's sparsity index by 20.

(2) Select the lesser of one or the result in clause (1).

(3) Multiply the district's percentage of regular FTE's in the current year using vehicles that are not owned by the school district by the result in clause (2).

(m) "Adjusted predicted base cost" means the predicted base cost as computed in subdivision 3a as adjusted under subdivision 7a.

(n) "Regular transportation allowance" means the adjusted predicted base cost, inflated and adjusted under subdivision 7b.

Sec. 21. Minnesota Statutes 1996, section 124.225, subdivision 13, is amended to read:

Subd. 13. [TARGETED NEEDS TRANSPORTATION REVENUE.] A district's targeted needs transportation revenue for the 1996-1997 and later 1997-1998 school years equals the sum of the special programs transportation revenue according to subdivision 14, the integration transportation revenue according to subdivision 15, and the nonpublic pupil transportation revenue aid according to subdivision 16.

Sec. 22. Minnesota Statutes 1996, section 124.225, subdivision 14, is amended to read:

Subd. 14. [SPECIAL PROGRAMS TRANSPORTATION REVENUE.] A district's special programs transportation revenue for the 1996-1997 and later 1997-1998 school years equals the sum of:

(a) the district's actual cost in the base year for transportation services for children with disabilities under section 124.223, subdivisions 4, 5, 7, and 8 subdivision 1, paragraph (b), clause (4), times the ratio of the district's average daily membership for the current school year to the district's average daily membership for the base year; plus

(b) the greater of zero or 80 percent of the difference between:

(1) the district's actual cost in the current year for transportation services for children with disabilities under section 124.223, subdivisions 4, 5, 7, and 8 subdivision 1, paragraph (b), clause (4); and

(2) the amount computed in paragraph (a).

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Sec. 23. Minnesota Statutes 1996, section 124.225, subdivision 15, is amended to read:

Subd. 15. [INTEGRATION TRANSPORTATION REVENUE.] A district's integration transportation revenue for the 1996-1997 and later 1997-1998 school years equals the following amounts:

(a) for independent school district No. 709, Duluth, $4 times the actual pupil units for the school year;

(b) for independent school district No. 625, St. Paul, $73 times the actual pupil units for the school year; and

(c) for special school district No. 1, Minneapolis, $158 times the actual pupil units for the school year.

Sec. 24. Minnesota Statutes 1996, section 124.225, subdivision 16, is amended to read:

Subd. 16. [NONPUBLIC PUPIL TRANSPORTATION REVENUE AID.] (a) A district's nonpublic pupil transportation revenue aid for the 1996-1997 and later school years for transportation services for nonpublic school pupils according to sections 123.39, 123.76 to 123.78, 124.223, and 124.226 this section, equals the sum of the amounts computed in paragraphs (b) and (c). This revenue aid does not limit the obligation to transport pupils under sections 123.76 to 123.79.

(b) For regular and excess transportation according to section 124.225, subdivision 1, paragraph (c) (b), clauses (1) and (3) (2), an amount equal to the product of:

(1) the district's actual expenditure per pupil transported in the regular and excess transportation categories during the second preceding school year; times

(2) the number of nonpublic school pupils residing in the district who receive regular or excess transportation service or reimbursement for the current school year; times

(3) the ratio of the formula allowance pursuant to section 124A.22, subdivision 2, for the current school year to the formula allowance pursuant to section 124A.22, subdivision 2, for the second preceding school year.

(c) For nonpublic nonregular transportation according to section 124.225, subdivision 1, paragraph (c) (b), clause (2) (5), excluding transportation services for children with disabilities under section 124.223, subdivisions 4, 5, 7, and 8, and late activity transportation according to section 124.226, subdivision 9, an amount equal to the product of:

(1) the district's actual expenditure for nonpublic nonregular and late activity transportation for nonpublic school pupils during the second preceding school year; times

(2) the ratio of the formula allowance pursuant to section 124A.22, subdivision 2, for the current school year to the formula allowance pursuant to section 124A.22, subdivision 2, for the second preceding school year.

(d) Notwithstanding the amount of the formula allowance for fiscal years 1997 and 1998 in section 124A.22, subdivision 2, the commissioner shall use the amount of the formula allowance for the current year less $300 in determining the nonpublic pupil transportation revenue in paragraphs (b) and (c) for fiscal years 1997 and 1998.

Sec. 25. Minnesota Statutes 1996, section 124.225, subdivision 17, is amended to read:

Subd. 17. [TARGETED NEEDS TRANSPORTATION AID.] (a) For fiscal years 1997 and 1998, a district's targeted needs transportation aid is the difference between its targeted needs transportation revenue under subdivision 13 and its targeted needs transportation levy under section 124.226, subdivision 10.

(b) If a district does not levy the entire amount permitted, aid must be reduced in proportion to the actual amount levied.

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Sec. 26. Minnesota Statutes 1996, section 124.226, subdivision 10, is amended to read:

Subd. 10. [TARGETED NEEDS TRANSPORTATION LEVY.] A school district may make a levy for targeted needs transportation costs according to this subdivision. The amount of the levy shall be the result of the following computation:

(1) For fiscal year years 1997 and later 1998, targeted needs transportation levy equalization revenue equals 28 percent of the sum of the district's special programs transportation revenue under section 124.225, subdivision 14, and the district's integration transportation revenue under section 124.225, subdivision 15.

(2) The targeted needs transportation levy equals the result in clause (1) times the lesser of one or the ratio of (i) 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 school year to which the levy is attributable, to (ii) $3,540.

Sec. 27. Minnesota Statutes 1996, section 124.912, subdivision 1, is amended to read:

Subdivision 1. [STATUTORY OBLIGATIONS.] (a) A school district may levy:

(1) the amount authorized for liabilities of dissolved districts pursuant to section 122.45;

(2) the amounts necessary to pay the district's obligations under section 268.06, subdivision 25; and the amounts necessary to pay for job placement services offered to employees who may become eligible for benefits pursuant to section 268.08 for the fiscal year the levy is certified;

(3) the amounts necessary to pay the district's obligations under section 127.05;

(4) the amounts authorized by section 122.531;

(5) the amounts necessary to pay the district's obligations under section 122.533; and

(6) for severance pay required by sections 120.08, subdivision 3, and 122.535, subdivision 6.

(b) Each year, a member district of an education district that levies under this subdivision must transfer the amount of revenue certified under paragraph (b) to the education district board according to this subdivision. By June 20 and November 30 of each year, an amount must be transferred equal to:

(1) 50 percent times

(2) the amount certified in paragraph (b) minus homestead and agricultural credit aid allocated for that levy according to section 273.1398, subdivision 6.

Sec. 28. Minnesota Statutes 1996, section 124.912, subdivision 2, is amended to read:

Subd. 2. [DESEGREGATION.] Each year, special school district No. 1, Minneapolis, may levy an amount not to exceed $197 times its actual pupil units for that fiscal year; independent school district No. 625, St. Paul, may levy an amount not to exceed $197 times its actual pupil units for that fiscal year; and independent school district No. 709, Duluth, may levy an amount not to exceed the sum of $660,000 and the amount raised by a tax rate of 2.0 percent times the adjusted net tax capacity of the district. Notwithstanding section 121.904, the entire amount of this levy shall be recognized as revenue for the fiscal year in which the levy is certified. This levy shall not be considered in computing the aid reduction under section 124.155.

Sec. 29. Minnesota Statutes 1996, section 124.912, subdivision 3, is amended to read:

Subd. 3. [RULE COMPLIANCE.] Each year a district that is required to implement a plan according to the requirements of Minnesota Rules, parts 3535.0200 to 3535.2200, may levy an amount not to exceed a net tax rate of 2.0 percent times the adjusted net tax capacity of the district for taxes payable in 1991 and thereafter. A district that levies according to

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subdivision 2 may not levy according to this subdivision. Notwithstanding section 121.904, the entire amount of this levy shall be recognized as revenue for the fiscal year in which the levy is certified. This levy shall not be considered in computing the aid reduction under section 124.155.

Sec. 30. Minnesota Statutes 1996, section 124.916, subdivision 1, is amended to read:

Subdivision 1. [HEALTH INSURANCE.] (a) A school district may levy the amount necessary to make employer contributions for insurance for retired employees under this subdivision. Notwithstanding section 121.904, 50 percent of the amount levied shall be recognized as revenue for the fiscal year in which the levy is certified. This levy shall not be considered in computing the aid reduction under section 124.155.

(b) The school board of a joint vocational technical district formed under sections 136C.60 to 136C.69 and the school board of a school district may provide employer-paid hospital, medical, and dental benefits to a person who:

(1) is eligible for employer-paid insurance under collective bargaining agreements or personnel plans in effect on June 30, 1992;

(2) has at least 25 years of service credit in the public pension plan of which the person is a member on the day before retirement or, in the case of a teacher, has a total of at least 25 years of service credit in the teachers retirement association, a first-class city teacher retirement fund, or any combination of these;

(3) upon retirement is immediately eligible for a retirement annuity;

(4) is at least 55 and not yet 65 years of age; and

(5) retires on or after May 15, 1992, and before July 21, 1992.

A school board paying insurance under this subdivision may not exclude any eligible employees.

(c) An employee who is eligible both for the health insurance benefit under this subdivision and for an early retirement incentive under a collective bargaining agreement or personnel plan established by the employer must select either the early retirement incentive provided under the collective bargaining agreement personnel plan or the incentive provided under this subdivision, but may not receive both. For purposes of this subdivision, a person retires when the person terminates active employment and applies for retirement benefits. The retired employee is eligible for single and dependent coverages and employer payments to which the person was entitled immediately before retirement, subject to any changes in coverage and employer and employee payments through collective bargaining or personnel plans, for employees in positions equivalent to the position from which the employee retired. The retired employee is not eligible for employer-paid life insurance. Eligibility ceases when the retired employee attains the age of 65, or when the employee chooses not to receive the retirement benefits for which the employee has applied, or when the employee is eligible for employer-paid health insurance from a new employer. Coverages must be coordinated with relevant health insurance benefits provided through the federally sponsored Medicare program.

(d) Unilateral implementation of this section by a public employer is not an unfair labor practice for purposes of chapter 179A. The authority provided in this subdivision for an employer to pay health insurance costs for certain retired employees is not subject to the limits in section 179A.20, subdivision 2a.

(e) If a school district levies according to this subdivision, it may not also levy according to section 122.531, subdivision 9, for eligible employees.

Sec. 31. Minnesota Statutes 1996, section 124.916, subdivision 2, is amended to read:

Subd. 2. [RETIRED EMPLOYEE HEALTH BENEFITS.] For taxes payable in 1996, 1997, 1998, and 1999 only, a school district may levy an amount up to the amount the district is required by the collective bargaining agreement in effect on March 30, 1992, to pay for health insurance or unreimbursed medical expenses for licensed and nonlicensed employees who have terminated services in the employing district and withdrawn from active teaching service or other active service, as applicable, before July 1, 1992. The total amount of the levy each year may not exceed $300,000.

Notwithstanding section 121.904, 50 percent of the proceeds of this levy shall be recognized in the fiscal year in which it is certified.

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Sec. 32. Minnesota Statutes 1996, section 124.916, subdivision 3, is amended to read:

Subd. 3. [RETIREMENT LEVIES.] (1) In addition to the excess levy authorized in 1976 any district within a city of the first class which was authorized in 1975 to make a retirement levy under Minnesota Statutes 1974, section 275.127 and chapter 422A may levy an amount per pupil unit which is equal to the amount levied in 1975 payable 1976, under Minnesota Statutes 1974, section 275.127 and chapter 422A, divided by the number of pupil units in the district in 1976-1977.

(2) In 1979 and each year thereafter, any district which qualified in 1976 for an extra levy under paragraph (1) shall be allowed to levy the same amount as levied for retirement in 1978 under this clause reduced each year by ten percent of the difference between the amount levied for retirement in 1971 under Minnesota Statutes 1971, sections 275.127 and 422.01 to 422.54 and the amount levied for retirement in 1975 under Minnesota Statutes 1974, section 275.127 and chapter 422A.

(3) In 1991 and each year thereafter, a district to which this subdivision applies may levy an additional amount required for contributions to the Minneapolis employees retirement fund as a result of the maximum dollar amount limitation on state contributions to the fund imposed under section 422A.101, subdivision 3. The additional levy shall not exceed the most recent amount certified by the board of the Minneapolis employees retirement fund as the district's share of the contribution requirement in excess of the maximum state contribution under section 422A.101, subdivision 3.

(4) For taxes payable in 1994 and thereafter, special school district No. 1, Minneapolis, and independent school district No. 625, St. Paul, may levy for the increase in the employer retirement fund contributions, under Laws 1992, chapter 598, article 5, section 1. Notwithstanding section 121.904, the entire amount of this levy may be recognized as revenue for the fiscal year in which the levy is certified. This levy shall not be considered in computing the aid reduction under section 124.155.

(5) If the employer retirement fund contributions under section 354A.12, subdivision 2a, are increased for fiscal year 1994 or later fiscal years, special school district No. 1, Minneapolis, and independent school district No. 625, St. Paul, may levy in payable 1994 or later an amount equal to the amount derived by applying the net increase in the employer retirement fund contribution rate of the respective teacher retirement fund association between fiscal year 1993 and the fiscal year beginning in the year after the levy is certified to the total covered payroll of the applicable teacher retirement fund association. Notwithstanding section 121.904, the entire amount of this levy may be recognized as revenue for the fiscal year in which the levy is certified. This levy shall not be considered in computing the aid reduction under section 124.155. If an applicable school district levies under this paragraph, they may not levy under paragraph (4).

(6) In addition to the levy authorized under paragraph (5), special school district No. 1, Minneapolis, may also levy payable in 1997 or later an amount equal to the contributions under section 423A.02, subdivision 3, and may also levy in payable 1994 or later an amount equal to the state aid contribution under section 354A.12, subdivision 3b. Independent school district No. 625, St. Paul, may levy payable in 1997 or later an amount equal to the supplemental contributions under section 423A.02, subdivision 3. Notwithstanding section 121.904, the entire amount of these levies may be recognized as revenue for the fiscal year in which the levy is certified. These levies shall not be considered in computing the aid reduction under section 124.155.

Sec. 33. Minnesota Statutes 1996, section 124.918, subdivision 6, is amended to read:

Subd. 6. [ADJUSTMENTS FOR LAW CHANGES.] Whenever a change enacted in law changes the levy authority for a school district or an intermediate school district for a fiscal year after the levy for that fiscal year has been certified by the district under section 275.07, the department of children, families, and learning shall adjust the next levy certified by the district by the amount of the change in levy authority for that fiscal year resulting from the change. Notwithstanding section 121.904, the entire amount for fiscal year 1992 and 50 percent for fiscal years thereafter of the levy adjustment must be recognized as revenue in the fiscal year the levy is certified, if sufficient levy resources are available under generally accepted accounting principles in the district fund where the adjustment is to occur. School districts that do not have sufficient levy resources available in the fund where the adjustment is to occur shall recognize in the fiscal year the levy is certified an amount equal to the levy resources available. The remaining adjustment amount shall be recognized as revenue in the fiscal year after the levy is certified.

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Sec. 34. Minnesota Statutes 1996, section 124A.03, subdivision 1c, is amended to read:

Subd. 1c. [REFERENDUM ALLOWANCE LIMIT.] Notwithstanding subdivision 1b, a district's referendum allowance must not exceed the greater of:

(1) the district's referendum allowance for fiscal year 1994; or

(2) 25 percent of the formula allowance minus $300 for fiscal year 1997 and later; or

(3) for a newly reorganized district created after July 1, 1994, the sum of the referendum revenue authority for the reorganizing districts for the fiscal year preceding the reorganization, divided by the sum of the actual pupil units of the reorganizing districts for the fiscal year preceding the reorganization.

Sec. 35. Minnesota Statutes 1996, section 124A.03, subdivision 1g, is amended to read:

Subd. 1g. [REFERENDUM EQUALIZATION LEVY.] (a) For fiscal year 1996, a district's referendum equalization levy equals the district's referendum equalization revenue times the lesser of one or the ratio of the district's adjusted net tax capacity per actual pupil unit to 100 percent of the equalizing factor as defined in section 124A.02, subdivision 8.

(b) For fiscal year 1997 1999 and thereafter, a district's referendum equalization levy for a referendum levied against the referendum market value of all taxable property as defined in section 124A.02, subdivision 3b, equals the district's referendum equalization revenue times the lesser of one or the ratio of the district's referendum market value per actual pupil unit to $476,000.

(c) (b) For fiscal year 1997 1999 and thereafter, a district's referendum equalization levy for a referendum levied against the net tax capacity of all taxable property equals the district's referendum equalization revenue times the lesser of one or the ratio of the district's adjusted net tax capacity per actual pupil unit to 100 percent of the equalizing factor for that year $10,000.

Sec. 36. Minnesota Statutes 1996, section 124A.04, subdivision 2, is amended to read:

Subd. 2. [1993 1999 AND LATER.] The training and experience index for fiscal year 1999 and later must be constructed in the following manner:

(a) The department shall construct a matrix that classifies teachers by the extent of training received in accredited institutions of higher education and by the years of experience that districts take into account in determining teacher salaries.

(b) The average salary for each cell of the matrix must be computed as follows using data from the second year of the previous biennium fiscal year 1997:

(1) For each school district, multiply the salary paid to full-time equivalent teachers with that combination of training and experience according to the district's teacher salary schedule by the number of actual pupil units in that district.

(2) Add the amounts computed in clause (1) for all districts in the state and divide the resulting sum by the total number of actual pupil units in all districts in the state that employ teachers.

(c) For each cell in the matrix, compute the ratio of the average salary in that cell to the average salary for all teachers in the state during fiscal year 1997.

(d) The index for each district that employs teachers equals the sum of: (i) for teachers employed in that district during fiscal year 1997 and the current fiscal year, the ratios for each teacher computed using data for fiscal year 1997; and (ii) for teachers employed in that district during the current fiscal year but not during fiscal year 1997, the ratio for teachers who are in their first year of teaching and who have no additional credits or degrees above a bachelor's degree divided by the number of teachers in that district. The index for a district that employs no teachers is zero.

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Sec. 37. Minnesota Statutes 1996, section 124A.22, subdivision 1, is amended to read:

Subdivision 1. [GENERAL EDUCATION REVENUE.] (a) For fiscal year 1996, the general education revenue for each district equals the sum of the district's basic revenue, compensatory education revenue, training and experience revenue, secondary sparsity revenue, elementary sparsity revenue, and supplemental revenue.

(b) For fiscal year years 1997 and thereafter 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, transition revenue, and supplemental revenue.

Sec. 38. Minnesota Statutes 1996, section 124A.22, subdivision 2, as amended by Laws 1997, chapter 1, section 4, 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 1995 is $3,150. The formula allowance for fiscal year 1996 is $3,205. The formula allowance for fiscal year 1997 and subsequent fiscal years 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.

Sec. 39. Minnesota Statutes 1996, section 124A.22, subdivision 3, is amended to read:

Subd. 3. [COMPENSATORY EDUCATION REVENUE.] The compensatory education revenue for each building in the district equals the formula allowance less $300 times the AFDC compensation revenue pupil units computed according to section 124.17, subdivision 1d. Revenue shall be paid to the district and must be allocated according to section 124A.28, subdivision 1a.

Sec. 40. Minnesota Statutes 1996, section 124A.22, is amended by adding a subdivision to read:

Subd. 3a. [BASIC SKILLS REVENUE.] For fiscal year 1999 and thereafter, a school district's basic skills revenue equals the sum of:

(1) compensatory revenue under subdivision 3; plus

(2) limited English proficiency revenue according to section 124.273, subdivision 1g; plus

(3) $190 times the limited English proficiency pupil units according to section 124.17, subdivision 6; plus

(4) the lesser of: (i) $22.50 times the number of fund balance pupil units in kindergarten to grade 8; or (ii) the amount of district money provided to match basic skills revenue for the purposes described in section 124A.28.

Sec. 41. Minnesota Statutes 1996, section 124A.22, subdivision 6, is amended to read:

Subd. 6. [SECONDARY SPARSITY REVENUE.] (a) A district's secondary sparsity revenue for a school year equals the sum of the results of the following calculation for each qualifying high school in the district:

(1) the formula allowance for the school year less $300, multiplied by

(2) the secondary average daily membership of the high school, multiplied by

(3) the quotient obtained by dividing 400 minus the secondary average daily membership by 400 plus the secondary daily membership, multiplied by

(4) the lesser of 1.5 or the quotient obtained by dividing the isolation index minus 23 by ten.

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(b) A newly formed school district that is the result of districts combining under the cooperation and combination program or consolidating under section 122.23 shall receive secondary sparsity revenue equal to the greater of: (1) the amount calculated under paragraph (a) for the combined district; or (2) the sum of the amounts of secondary sparsity revenue the former school districts had in the year prior to consolidation, increased for any subsequent changes in the secondary sparsity formula.

Sec. 42. Minnesota Statutes 1996, section 124A.22, subdivision 6a, is amended to read:

Subd. 6a. [ELEMENTARY SPARSITY REVENUE.] A district's elementary sparsity revenue equals the sum of the following amounts for each qualifying elementary school in the district:

(1) the formula allowance for the year less $300, multiplied by

(2) the elementary average daily membership of the school, multiplied by

(3) the quotient obtained by dividing 140 minus the elementary average daily membership by 140 plus the average daily membership.

Sec. 43. Minnesota Statutes 1996, section 124A.22, subdivision 8a, is amended to read:

Subd. 8a. [SUPPLEMENTAL LEVY.] To obtain supplemental revenue, a district may levy an amount not more than the product of its supplemental revenue for the school year times the lesser of one or the ratio of its general education levy to its general education revenue, excluding transition revenue and supplemental revenue, for the same year adjusted net tax capacity per actual pupil unit to $10,000.

Sec. 44. Minnesota Statutes 1996, section 124A.22, subdivision 13, is amended to read:

Subd. 13. [TRANSPORTATION SPARSITY DEFINITIONS.] The definitions in this subdivision apply to subdivisions 13a and 13b.

(a) "Sparsity index" for a school district means the greater of .2 or the ratio of the square mile area of the school district to the actual pupil units of the school district.

(b) "Density index" for a school district means the ratio of the square mile area of the school district to the actual pupil units of the school district. However, the density index for a school district cannot be greater than .2 or less than .005.

(c) "Fiscal year 1996 base allowance" for a school district means the result of the following computation:

(1) sum the following amounts:

(i) the fiscal year 1996 regular transportation revenue for the school district according to section 124.225, subdivision 7d, paragraph (a), excluding the revenue attributable nonpublic school pupils and to pupils with disabilities receiving special transportation services; plus

(ii) the fiscal year 1996 nonregular transportation revenue for the school district according to section 124.225, subdivision 7d, paragraph (b), excluding the revenue for desegregation transportation according to section 124.225, subdivision 1, paragraph (c), clause (4), and the revenue attributable to nonpublic school pupils and to pupils with disabilities receiving special transportation services or board and lodging; plus

(iii) the fiscal year 1996 excess transportation levy for the school district according to section 124.226, subdivision 5, excluding the levy attributable to nonpublic school pupils; plus

(iv) the fiscal year 1996 late activity bus levy for the school district according to section 124.226, subdivision 9, excluding the levy attributable to nonpublic school pupils; plus

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(v) an amount equal to one-third of the fiscal year 1996 bus depreciation for the school district according to section 124.225, subdivision 1, paragraph (b), clauses (2), (3), and (4).

(2) divide the result in clause (1) by the school districts district's 1995-1996 actual fund balance pupil units.

Sec. 45. Minnesota Statutes 1996, section 124A.22, subdivision 13b, is amended to read:

Subd. 13b. [TRANSITION ALLOWANCE.] (a) A district's transportation transition allowance for fiscal year 1997 equals the result of the following computation:

(1) if the result in subdivision 13a, paragraph (a), clause (iii), for fiscal year 1997 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).

(2) if the result in subdivision 13a, paragraph (b), for fiscal year 1997 is greater than the fiscal year 1996 base allowance and less than 110 percent of the fiscal year 1996 base allowance, the transportation transition allowance equals zero.

(3) if the result in subdivision 13a, paragraph (b), for fiscal year 1997 is greater than 110 percent of the fiscal year 1996 base allowance, the transportation transition allowance equals 110 percent of the fiscal year 1996 base allowance minus the result in subdivision 13a, paragraph (a), clause (iii).

(b) 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.

(c) (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:

(i) (1) for fiscal year 1997, the reduction is equal to .9 times the amount initially determined;

(ii) (2) for fiscal year 1998, the reduction is equal to .75 times the amount initially determined; and

(iii) for fiscal year 1999, the reduction is equal to .50 times the amount initially determined;

(iv) for fiscal year 2000, the reduction is equal to .25 times the amount initially determined; and

(v) for fiscal year 2001 and thereafter, the transition allowance shall not be less than zero

(c) A district's transition compensatory allowance equals 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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(d) A district's transition allowance for fiscal year 1997 1999 and thereafter is equal to the sum of its transportation transition allowance and its training and experience transition compensatory allowance.

Sec. 46. Minnesota Statutes 1996, section 124A.22, subdivision 13d, is amended to read:

Subd. 13d. [TRANSITION LEVY ADJUSTMENT.] A district's general education levy shall be adjusted by an amount equal to the district's transition revenue times the lesser of 1 or the ratio of the district's general education levy to its general education revenue, excluding transition revenue and supplemental revenue its adjusted net tax capacity per actual pupil unit to $10,000.

Sec. 47. Minnesota Statutes 1996, 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 tenth 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 $1,054,000,000 for fiscal year 1996 and $1,359,000,000 for fiscal year 1997 1998 and $1,385,500,000 for fiscal year 1999 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 is changed by another law enacted during the 1997 session, the commissioner shall reduce the target in this bill by the amount of the reduction in the enacted law.

Sec. 48. Minnesota Statutes 1996, section 124A.23, subdivision 2, is amended to read:

Subd. 2. [GENERAL EDUCATION LEVY.] To obtain general education revenue, excluding transition revenue and supplemental revenue, a district may levy an amount not to exceed the general education tax rate times the adjusted net tax capacity of the district for the preceding year. If the amount of the general education levy would exceed the general education revenue, excluding supplemental revenue, the general education levy shall be determined according to subdivision 3.

Sec. 49. Minnesota Statutes 1996, section 124A.23, subdivision 3, is amended to read:

Subd. 3. [GENERAL EDUCATION LEVY; DISTRICTS OFF THE FORMULA.] If the amount of the general education levy for a district exceeds the district's general education revenue, excluding training and experience transition revenue and supplemental revenue, the amount of the general education levy shall be limited to the following:

(1) the district's general education revenue, excluding training and experience transition revenue and supplemental revenue; plus

(2) the amount of the aid reduction for the same school year according to section 124A.24; minus

(3) payments made for the same school year according to section 124A.035, subdivision 4.

For purposes of statutory cross-reference, a levy made according to this subdivision shall be construed to be the levy made according to subdivision 2.

Sec. 50. Minnesota Statutes 1996, section 124A.23, subdivision 5, is amended to read:

Subd. 5. [USES OF REVENUE.] Except as provided in section sections 124A.22, subdivision 11; 124A.225; and 124A.28, general education revenue may be used during the regular school year and the summer for general and special school purposes.

Sec. 51. Minnesota Statutes 1996, section 124A.26, subdivision 1, is amended to read:

Subdivision 1. [REVENUE REDUCTION FUND BALANCE PUPIL UNIT DEFINITION.] A district's general education revenue for a school year shall be reduced if the estimated net unappropriated operating fund balance as of June 30 in the prior school year exceeds 25 percent of the formula allowance for the current fiscal year times the fund balance pupil

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units in the prior year. For purposes of this subdivision and section 124.243, subdivision 2, Fund balance pupil units means the number of resident pupil units in average daily membership, including shared time pupils, according to section 124A.02, subdivision 20, plus

(1) pupils attending the district for which general education aid adjustments are made according to section 124A.036, subdivision 5; minus

(2) the sum of the resident pupils attending other districts for which general education aid adjustments are made according to section 124A.036, subdivision 5, plus pupils for whom payment is made according to section 126.22, subdivision 8, or 126.23. The amount of the reduction shall equal the lesser of:

(1) the amount of the excess, or

(2) $250 times the actual pupil units for the school year.

The final adjustment payments made under section 124.195, subdivision 6, must be adjusted to reflect actual net operating fund balances as of June 30 of the prior school year.

Sec. 52. Minnesota Statutes 1996, section 124A.28, is amended to read:

124A.28 [COMPENSATORY EDUCATION REVENUE.]

Subdivision 1. [USE OF THE REVENUE.] The compensatory education revenue under section 124A.22, subdivision 3, must be used to meet the educational needs of pupils whose educational achievement progress toward meeting state or local content or performance standards is below the level that is appropriate for pupils learners of their age. These needs may be met by providing the 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 124.311 124.3111;

(2) remedial instruction in reading, language arts, and mathematics, other content areas, or study skills to improve the achievement level of these pupils learners;

(3) additional teachers and teacher aides to provide more individualized instruction to these pupils learners through individual tutoring, lower instructor-to-learner ratios, or team teaching;

(4) summer programs that enable these pupils to improve their achievement or that reemphasize material taught during the regular school year 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) in-service education 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 recognize identify the needs of these pupils learners and provide appropriate responses to the pupils' needs remediation, intervention, accommodations, or modifications;

(6) for instructional material for these pupils including: textbooks, workbooks, periodicals, pamphlets, photographs, reproductions, filmstrips, prepared slides, prerecorded video programs, sound recordings, desk charts, games, study prints and pictures, desk maps, models, learning kits, blocks and cubes, flashcards, instructional computer software programs, pencils, pens, crayons, notebooks, duplicating fluids, and papers 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;

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(8) bilingual programs, bicultural programs, and programs for pupils learners of limited English proficiency;

(9) all day kindergarten;

(10) extended school day and extended school year programs; and

(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.

Subd. 1a. [BUILDING ALLOCATION.] A district must consider the concentration of children from low-income families in allocate revenue to each school building in the district when allocating compensatory revenue where the children who have generated the revenue are served.

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.

Subd. 1b. [RECOMMENDATION.] A school site decision-making team, as defined in section 123.951, subdivision 3, paragraph (a), or the instruction and curriculum advisory committee under section 123.972, if the school has no school site decision team, shall recommend how the revenue will be used to carry out the purpose of this section.

Subd. 2. [SEPARATE ACCOUNTS.] Each district that receives compensatory education revenue shall maintain separate accounts to identify expenditures for salaries and programs related to this basic skills revenue.

Subd. 3. [ANNUAL EXPENDITURE REPORT.] Each year a district that receives compensatory education revenue shall submit a report identifying the expenditures it incurred in providing compensatory education to the pupils described in to meet the needs of eligible learners under subdivision 1. The report must conform to uniform financial and reporting standards established for this purpose.

Sec. 53. Laws 1991, chapter 265, article 1, section 30, as amended by Laws 1993, chapter 224, article 8, section 19, is amended to read:

Sec. 30. [BADGER SCHOOL DISTRICT FUND BALANCE.]

If independent school district No. 676, Badger, receives payment of delinquent property taxes from one taxpayer and the payment is more than five percent of the total property taxes paid in the fiscal year in which the payment is received, general education revenue for the district shall not be reduced according to Minnesota Statutes, section 124A.26, subdivision 1, for an excess fund balance attributed to the payment for the following five ten fiscal years.

Sec. 54. Laws 1995, First Special Session chapter 3, article 1, section 56, is amended to read:

Sec. 56. [SUPPLEMENTAL REVENUE REDUCTION.]

For fiscal years 1996 1998 and 1997 1999, if a district's ratio of 1992 adjusted net tax capacity divided by 1994-1995 actual pupil units to $9,025 is less than or equal to .25, then the difference under Minnesota Statutes, section 124A.22, subdivision 9, clause (2), is equal to $25 $0 for purposes of computing the district's supplemental revenue under Minnesota Statutes, section 124A.22, subdivision 8. For purposes of computing the referendum allowance reduction under Minnesota Statutes, section 124A.03, subdivision 3b, the supplemental revenue reduction shall be computed according to Minnesota Statutes, section 124A.22, subdivision 9.

Sec. 55. Laws 1995, First Special Session chapter 3, article 2, section 52, is amended to read:

Sec. 52. [TRANSPORTATION AIDS AND LEVIES; SUSPENSION.]

Minnesota Statutes 1994, sections 124.225, subdivisions 1, 3a, 7a, 7b, 7d, 7e, 8a, 8k, and 8m, and 10; and 124.226, subdivisions 1, 2, 3a, 4, 5, 6, 7, and 8, do not apply to aids payable in fiscal years 1997 and 1998 or to levies made in 1995 and 1996 for taxes payable in 1996 and 1997.

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Sec. 56. [RESTORATION OF REVENUE LOST TO FUND BALANCE REDUCTION; MADELIA.]

Subdivision 1. [AID ADJUSTMENT.] Notwithstanding Minnesota Statutes, section 124A.26, subdivision 3, general education aid for independent school district No. 837, Madelia, shall not be reduced for fiscal year 1997.

Subd. 2. [LEVY ADJUSTMENT.] Independent school district No. 837, Madelia, may make a positive levy adjustment for taxes payable in 1998 equal to the amount of the general education levy reduction required under Minnesota Statutes, section 124A.26, subdivision 2, attributed to fiscal year 1997.

Sec. 57. [RESTORATION OF REVENUE LOST TO FUND BALANCE REDUCTION; HERMAN-NORCROSS.]

Subdivision 1. [AID ADJUSTMENT.] Notwithstanding Minnesota Statutes, section 124A.26, subdivision 3, general education aid for independent school district No. 264, Herman-Norcross, shall not be reduced for fiscal year 1997.

Subd. 2. [LEVY ADJUSTMENT.] Independent school district No. 264, Herman-Norcross, may make a positive levy adjustment for taxes payable in 1998 equal to the amount of the general education levy reduction required under Minnesota Statutes, section 124A.26, subdivision 2, attributed to fiscal year 1997.

Sec. 58. [LEVY ADJUSTMENT ATTRIBUTABLE TO THE REPEAL OF THE K-12 APPROPRIATIONS CAPS.]

Notwithstanding Minnesota Statutes, section 124.918, subdivision 6, a school district may spread any positive referendum levy adjustments for fiscal year 1998 resulting from the enactment of Laws 1997, chapter 1, over a three-year period beginning with taxes payable in 1998.

Sec. 59. [BUS PURCHASE LEVY.]

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.

Sec. 60. [LEP CONCENTRATION AID; FISCAL YEAR 1998.]

For fiscal year 1998 only, a school district's LEP revenue under Minnesota Statutes, section 124.273, subdivision 1g, is increased by $190 times the district's LEP pupil units determined according to article 2, section 3.

Sec. 61. [SHIFT SIMPLIFICATION APPROPRIATION.]

$18,700,000 is appropriated in fiscal year 1997 from the general fund to the commissioner of children, families, and learning for additional general education aid for the simplification of the property tax revenue recognition shift according to this article.

Sec. 62. [COMPENSATORY REVENUE GROWTH LIMIT.]

For fiscal years 1998 and 1999, the commissioner shall limit the growth in compensatory revenue a district receives according to this article. The commissioner shall compare the compensatory revenue a district receives under the changes in section 13 with the compensatory revenue per pupil unit a district would have received if section 13 had not been enacted. A district may not receive an increase in compensatory revenue in excess of $300 per pupil unit.

Sec. 63. [SCHOOL DISTRICT LEVY ADJUSTMENTS.]

Subdivision 1. [REVENUE CONVERSION.] The commissioner of children, families, and learning shall adjust each school district's revenue authority that is established as a rate times net tax capacity or adjusted net tax capacity under Minnesota Statutes, chapters 124 and 124A, by multiplying each revenue amount 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.

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Subd. 2. [TAX RATE ADJUSTMENT.] The commissioner shall adjust each tax rate established under Minnesota Statutes, chapters 124 and 124A, by multiplying the rate 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.

Subd. 3. [EQUALIZING FACTORS.] The commissioner shall adjust each equalizing factor established 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. 64. [APPROPRIATIONS.]

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 AND SUPPLEMENTAL EDUCATION AID.] For general and supplemental education aid:

$2,567,592,000 . . . . . 1998

$2,679,503,000 . . . . . 1999

The 1998 appropriation includes $227,499,000 for 1997 and $2,340,093,000 for 1998.

The 1999 appropriation includes $245,198,000 for 1998 and $2,434,305,000 for 1999.

Of the 1998 appropriation, the first $113,800,000 is from the education aids reserve of the general fund.

Subd. 3. [TRANSPORTATION SAFETY.] For student transportation safety aid according to Minnesota Statutes, section 124.225, subdivision 8m:

$1,430,000 . . . . . 1998

$1,458,000 . . . . . 1999

The 1998 appropriation includes $129,000 for 1997 and $1,301,000 for 1998.

The 1999 appropriation includes $144,000 for 1998 and $1,314,000 for 1999.

Subd. 4. [TRANSPORTATION AID FOR ENROLLMENT OPTIONS.] For transportation of pupils attending post-secondary institutions according to Minnesota Statutes, section 123.3514, or for transportation of pupils attending nonresident districts according to Minnesota Statutes, section 120.062:

$102,000 . . . . . 1998

$102,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 5. [WIDE AREA TRANSPORTATION SERVICE PILOT PROJECT.] To expand the wide area transportation service project:

$170,000 . . . . . 1998

$ 50,000 . . . . . 1999

Of the amount in fiscal year 1998, $70,000 is for a grant to the Minnesota river valley special education cooperative for a computerized routing system.

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The purpose is to expand the project for the computerized mapping and scheduling programs for school districts to jointly provide transportation services for low-incidence programs. The department shall work with representatives of the affected programs, transportation managers from both metropolitan and rural districts, and the metropolitan council. The department shall contract for services and provide oversight. The department must report to the education committees of the legislature by February 15, 1998, on the operation of the wide area transportation service project, including details regarding whether the project is meeting its objectives and any problems related to the service provided by the project. The project shall consider the relationship of education transportation with transportation services provided by noneducation agencies.

Any balance in the first year does not cancel but is available in the second year.

Subd. 6. [INTERDISTRICT DESEGREGATION OR INTEGRATION TRANSPORTATION GRANTS.] For interdistrict desegregation or integration transportation grants under Minnesota Statutes, section 124.227:

$800,000 . . . . . 1998

$970,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 7. [TARGETED NEEDS TRANSPORTATION AID.] For aid payments for targeted needs transportation aid under Minnesota Statutes, section 124.225, subdivision 13:

$76,195,000 . . . . . 1998

$24,303,000 . . . . . 1999

The 1998 appropriation includes $7,148,000 for 1997 and $69,047,000 for 1998.

The 1999 appropriation includes $7,671,000 for 1998 and $16,632,000 for 1999.

Subd. 8. [HEALTH AND SAFETY AID.] For health and safety aid according to Minnesota Statutes, section 124.83, subdivision 5:

$14,081,000 . . . . . 1998

$14,179,000 . . . . . 1999

The 1998 appropriation includes $1,132,000 for 1997 and $12,949,000 for 1998.

The 1999 appropriation includes $1,438,000 for 1998 and $12,741,000 for 1999.

Subd. 9. [DEBT SERVICE AID.] For debt service aid according to Minnesota Statutes, section 124.95, subdivision 5:

$35,480,000 . . . . . 1998

$38,159,000 . . . . . 1999

The 1998 appropriation includes $3,313,000 for 1997 and $32,167,000 for 1998.

The 1999 appropriation includes $3,574,000 for 1998 and $34,585,000 for 1999.

Sec. 65. [REPEALER.]

(a) Minnesota Statutes 1996, sections 121.904, subdivision 4d; 121.912, subdivision 7; and 124A.26, subdivisions 1a, 2, 3, 4, and 5, are repealed.

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(b) Minnesota Statutes 1996, sections 124.223; 124.225, subdivisions 3a, 7a, 7b, 7d, 7e, 8a, and 8k; and 124A.22, subdivisions 4a and 4b, are repealed effective July 1, 1997.

(c) Minnesota Statutes 1996, sections 124.226; and 124.912, subdivisions 2 and 3, are repealed effective for revenue for fiscal year 1999.

Sec. 66. [EFFECTIVE DATE.]

Sections 11 and 61 are effective the day following final enactment.

ARTICLE 2

SPECIAL PROGRAMS

Section 1. Minnesota Statutes 1996, 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 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, 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, 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, 1997 2001.

Sec. 2. Minnesota Statutes 1996, 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.

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(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 or guardian resides within the state and tuition has been denied, the district designated by the commissioner of children, families, and learning if neither parent nor guardian is living within the state.

(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.

(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. 3. Minnesota Statutes 1996, section 124.17, is amended by adding a subdivision to read:

Subd. 6. [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.

Sec. 4. Minnesota Statutes 1996, section 124.248, subdivision 3, is amended to read:

Subd. 3. [SPECIAL EDUCATION AND LIMITED ENGLISH PROFICIENCY AID.] Except as provided in subdivision 1a, paragraph (b), special education aid shall be paid to a charter school according to sections 124.3201 and 124.3202, as though it were a school district. The charter school may charge tuition to the district of residence as provided in section 120.17, subdivision 4. Limited English proficiency programs aid shall be paid to a charter school according to section 124.273 as though it were a school district. The charter school shall allocate its special education levy equalization revenue to the resident districts of the pupils attending the charter school. The districts of residence shall levy as though they were participating in a cooperative, as provided in section 124.321, subdivision 3.

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Sec. 5. Minnesota Statutes 1996, section 124.2613, subdivision 3, is amended to read:

Subd. 3. [QUALIFYING SCHOOL SITE.] (a) The commissioner shall rank all school sites with kindergarten programs that do not exclusively serve students under section 120.17. The ranking must be from highest to lowest based on the site's free and reduced lunch count as a percent of the fall enrollment using the preceding October 1 enrollment data. Once a school site is calculated to be eligible, it remains eligible for the duration of the pilot program. For each school site, the percentage used to calculate the ranking must be the greater of (1) the percent of the fall kindergarten enrollment receiving free and reduced lunch, or (2) the percent of the total fall enrollment receiving free and reduced lunch. The list of ranked sites must be separated into the following geographic areas: Minneapolis district, St. Paul district, suburban Twin Cities districts in the seven-county metropolitan area, and school districts in greater Minnesota.

(b) The commissioner shall establish a process and timelines to qualify school sites for the next school year. School sites must be qualified in each geographic area from the list of ranked sites until the estimated revenue available for this program has been allocated. The total estimated revenue of $3,500,000 must be distributed to qualified school sites in each geographic area as follows: 25 percent for Minneapolis sites, 25 percent for St. Paul sites, 25 percent for suburban Twin Cities sites, and 25 percent for greater Minnesota.

Sec. 6. Minnesota Statutes 1996, section 124.2613, subdivision 4, is amended to read:

Subd. 4. [PROGRAM.] A qualifying school site must develop its first-grade preparedness program in collaboration with other providers of school readiness and child development services. A school site must either offer a full-day kindergarten program to participating children who are five years of age or older for the full school day every day or a half-day, a program for participating children who are four years old, or a combination of both. The program may offer as an option to families home visits and other practices as appropriate, and may provide such services with the consent of the parent or guardian. Full-day and half-day kindergarten Program providers must ensure that the program they provide supplements existing school readiness and child development programs and complements the services provided with compensatory revenue. Where possible, individuals receiving assistance under a family assistance plan can meet the work activity requirement of the plan by participating in a first-grade preparedness program as a volunteer.

Sec. 7. Minnesota Statutes 1996, section 124.2613, subdivision 6, is amended to read:

Subd. 6. [PREPAREDNESS REVENUE.] (a) A qualifying school district is eligible for first-grade preparedness revenue equal to the basic formula allowance for that year times the number of pupil units calculated according to paragraph (b) in each qualifying school site. If the first-grade preparedness revenue is insufficient to fully fund the formula amounts, the commissioner shall prorate the revenue provided to each qualifying school site of children five years of age or older enrolled in a kindergarten program at the site on October 1 of the previous year times .53.

(b) A pupil enrolled in a half-day first-grade preparedness program under this section is counted as .53 pupil units. A pupil enrolled in a full-day first-grade preparedness program under this section is counted as a kindergarten pupil under section 124.17, subdivision 1, plus an additional .53 pupil units.

(c) This revenue must supplement and not replace compensatory revenue that the district uses for the same or similar purposes under chapter 124A.

(c) A pupil enrolled in the first grade preparedness program at a qualifying school site is eligible for transportation under section 123.39, subdivision 1.

(d) First grade preparedness revenue paid to a charter school for which a school district is providing transportation according to section 120.064, subdivision 15, shall be decreased by an amount equal to the product of $170 times the pupil units calculated according to paragraph (b). This amount shall be paid to the school district for transportation costs.

Sec. 8. Minnesota Statutes 1996, section 124.273, subdivision 1d, is amended to read:

Subd. 1d. [LEP BASE REVENUE.] (a) The limited English proficiency programs base revenue equals the sum of the following amounts, computed using base year data:

(1) 68 percent of the salary of one full-time equivalent teacher for each 40 pupils of limited English proficiency enrolled, or 68 percent of the salary of one-half of a full-time teacher in a district with 20 or fewer pupils of limited English proficiency enrolled; and

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(2) for supplies and equipment purchased or rented for use in the instruction of pupils of limited English proficiency an amount equal to 47 percent of the sum actually spent by the district but not to exceed an average of $47 in any one school year for each pupil of limited English proficiency receiving instruction.

(b) For the purposes of this subdivision, a teacher includes nonlicensed personnel who provide direct instruction to students of limited English proficiency under the supervision of a licensed teacher.

(c) If requested by a school district operating a limited English proficiency program during the base year for less than the full school 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 year.

Sec. 9. Minnesota Statutes 1996, section 124.273, subdivision 1e, is amended to read:

Subd. 1e. [AID.] A district's limited English proficiency aid for fiscal year 1996 and later 1998 equals the aid percentage factor under section 124.3201, subdivision 1, times the district's limited English proficiency revenue.

Sec. 10. Minnesota Statutes 1996, section 124.273, subdivision 1f, is amended to read:

Subd. 1f. [STATE TOTAL LEP REVENUE.] (a) The state total limited English proficiency programs revenue for fiscal year 1996 1998 equals $12,202,000 $14,629,000. The state total limited English proficiency programs revenue for fiscal year 1997 1999 equals $13,299,000 $16,092,000.

(b) The state total limited English proficiency programs revenue for later fiscal years equals:

(1) the state total limited English proficiency programs revenue for the preceding fiscal year; times

(2) the program growth factor under section 124.3201, subdivision 1; times

(3) the ratio of the state total number of pupils with limited English proficiency for the current fiscal year to the state total number of pupils with limited English proficiency for the preceding fiscal year.

Sec. 11. Minnesota Statutes 1996, section 124.273, subdivision 5, is amended to read:

Subd. 5. [NOTIFICATION; AID PAYMENTS REVENUE.] The department must promptly inform each applicant district of the amount of aid revenue it will receive pursuant to this section.

Sec. 12. [124.3111] [ASSURANCE OF MASTERY PROGRAMS.]

Subdivision 1. [ELIGIBLE DISTRICTS.] A district with a local process to review curriculum and instruction may provide an assurance of mastery program to eligible pupils.

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. 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.

Subd. 3. [ELIGIBLE SERVICES.] (a) Assurance of mastery programs may provide direct instructional services to an eligible pupil, or a group of eligible pupils, under the following conditions in paragraphs (b) to (d).

(b) Instruction may be provided at one or more grade levels from kindergarten to grade 8 and for students in grades 9 through 12 who have failed the basic skills tests. If an assessment of pupils' needs within a district demonstrates that the eligible pupils in grades kindergarten to grade 8 are being appropriately served, a district may serve eligible pupils in grades 9 to 12.

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(c) Instruction must be provided under the supervision of the eligible pupil's regular classroom teacher. Instruction may be provided by the eligible pupil's classroom teacher, by another teacher, by a team of teachers, or by an education assistant or aide. A special education teacher may provide instruction, but instruction that is provided under this section is not eligible for aid under section 124.3201.

(d) The instruction that is provided must differ from the initial instruction the pupil received in the regular classroom setting. The instruction may differ by presenting different curriculum than was initially presented in the regular classroom or by presenting the same curriculum:

(1) at a different rate or in a different sequence than it was initially presented;

(2) using different teaching methods or techniques than were used initially; or

(3) using different instructional materials than were used initially.

Sec. 13. Minnesota Statutes 1996, section 124.312, subdivision 4, is amended to read:

Subd. 4. [INTEGRATION REVENUE.] For fiscal year years 1996, 1997, and later fiscal years 1998, integration revenue equals the sum of integration aid and integration levy under section 124.912, subdivision 2.

Sec. 14. Minnesota Statutes 1996, section 124.312, subdivision 5, is amended to read:

Subd. 5. [INTEGRATION AID.] For fiscal year years 1996, 1997, and later fiscal years 1998, integration aid equals the following amounts:

(1) for independent school district No. 709, Duluth, $1,385,000;

(2) for independent school district No. 625, St. Paul, $8,090,700; and

(3) for special school district No. 1, Minneapolis, $9,368,300.

Sec. 15. Minnesota Statutes 1996, section 124.313, is amended to read:

124.313 [TARGETED NEEDS REVENUE.]

For fiscal year years 1996, 1997, and thereafter 1998, a school district's targeted needs revenue equals the sum of:

(1) assurance of mastery revenue according to section 124.311; plus

(2) the district's limited English proficiency revenue computed according to section 124.273, subdivision 1d; plus

(3) integration revenue computed according to section 124.312, subdivision 4.

Sec. 16. Minnesota Statutes 1996, section 124.314, subdivision 1, is amended to read:

Subdivision 1. [AID.] For fiscal year years 1996, 1997, and thereafter 1998, a school district's targeted needs aid equals the sum of its assurance of mastery aid according to section 124.311, its limited English proficiency aid according to section 124.273, subdivision 1e, and its integration aid according to section 124.312, subdivision 5.

Sec. 17. Minnesota Statutes 1996, section 124.314, subdivision 2, is amended to read:

Subd. 2. [LEVY.] For fiscal year years 1996, 1997, and thereafter 1998, a school district's targeted needs levy equals the sum of its integration levy under section 124.912, subdivision 2, and that portion of its special education levy attributed to the limited English proficiency program.

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Sec. 18. [124.315] [INTEGRATION REVENUE.]

Subdivision 1. [USE OF THE REVENUE.] Integration revenue under this section must be used for programs established under a desegregation plan mandated by the state board or under court order, to increase learning opportunities and reduce the learning gap between learners living in high concentrations of poverty and their peers.

Subd. 2. [SEPARATE ACCOUNT.] Integration revenue shall be maintained in a separate account to identify expenditures for salaries and programs related to this revenue.

Subd. 3. [INTEGRATION REVENUE.] For fiscal year 1999 and later fiscal years, integration revenue equals the following amounts:

(1) for independent school district No. 709, Duluth, $193 times the actual pupil units for the school year;

(2) for independent school district No. 625, St. Paul, $427 times the actual pupil units for the school year;

(3) for special school district No. 1, Minneapolis, $523 times the actual pupil units for the school year; and

(4) for a district not listed in clause (1), (2), or (3) that is required to implement a plan according to the requirements of Minnesota Rules, parts 3535.0200 to 3535.2200, the lesser of the actual cost of implementing the plan during the fiscal year or $93 times the actual pupil units for the school year.

Subd. 4. [INTEGRATION LEVY.] A district may levy an amount equal to 46 percent of the district's integration revenue as defined in subdivision 3.

Subd. 5. [INTEGRATION AID.] A district's integration aid equals 54 percent of the district's integration revenue as defined in subdivision 3.

Subd. 6. [ALTERNATIVE ATTENDANCE PROGRAMS.] (a) The integration aid under subdivision 5 must be adjusted for each pupil attending a nonresident district under sections 120.062, 120.075, 120.0751, 120.0752, and 124C.45 to 124C.48 if the enrollment of the pupil in the nonresident district contributes to desegregation or integration purposes. The adjustments must be made according to this subdivision.

(b) Aid paid to the district of the pupil's residence must be reduced by an amount equal to the revenue per actual pupil unit of the resident district times the number of actual pupil units attributable to the pupil for the time the pupil is enrolled in a nonresident district.

(c) Aid paid to a district serving nonresidents must be increased by an amount equal to the aid reduction to the resident district under paragraphs (b) and (d).

(d) If the amount of the reduction to be made from the aid of a district is greater than the amount of aid otherwise due the district, the excess reduction must be made from other state aids due the district.

Sec. 19. Minnesota Statutes 1996, section 124.3201, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] For the purposes of this section and sections 124.3202 and 124.321, the definitions in this subdivision apply.

(a) "Base year" for fiscal year 1996 and fiscal year 1997 means the 1994 summer program and the 1994-1995 school year. Base year for 1998 and later fiscal years means the second fiscal year preceding the fiscal year for which aid will be paid.

(b) "Basic revenue" has the meaning given it in section 124A.22, subdivision 2. For the purposes of computing basic revenue pursuant to this section, each child with a disability shall be counted as prescribed in section 124.17, subdivision 1.

(c) "Essential personnel" means teachers, related services, and support services staff providing direct services to students.

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(d) "Average daily membership" has the meaning given it in section 124.17.

(e) "Program growth factor" means 1.00 for fiscal year 1998 2000 and later.

(f) "Aid percentage factor" means 60 percent for fiscal year 1996, 70 percent for fiscal year 1997, 80 percent for fiscal year 1998, 90 percent for fiscal year 1999, and 100 percent for fiscal years 2000 and later.

(g) "Levy percentage factor" means 100 minus the aid percentage factor for that year.

Sec. 20. Minnesota Statutes 1996, 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 year, whether the person is employed by one or more districts;

(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;

(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 but not to exceed an average of $47 in any one school year for each child with a disability receiving instruction; and

(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 (5).

(b) If requested by a school district operating a special education program during the base year for less than the full school 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 year.

Sec. 21. Minnesota Statutes 1996, section 124.3201, subdivision 3, is amended to read:

Subd. 3. [ADJUSTED SPECIAL EDUCATION BASE REVENUE.] For fiscal year 1996 1997 and later, a district's adjusted special education base revenue equals the district's special education base revenue times the ratio of the district's average daily membership for the current school year to the district's average daily membership for the base year; plus the district's special education tuition revenue under subdivision 2a and special education court placement revenue under subdivision 2b.

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Sec. 22. Minnesota Statutes 1996, section 124.3201, subdivision 4, is amended to read:

Subd. 4. [STATE TOTAL SPECIAL EDUCATION REVENUE.] The state total special education revenue for fiscal year 1996 1998 equals $327,846,000 $358,542,000. The state total special education revenue for fiscal year 1997 1999 equals $347,810,000 $435,322,000. The state total special education revenue for later fiscal years equals:

(1) the state total special education revenue for the preceding fiscal year; times

(2) the program growth factor; times

(3) the ratio of the state total average daily membership for the current fiscal year to the state total average daily membership for the preceding fiscal year.

Sec. 23. Minnesota Statutes 1996, section 124.321, subdivision 1, is amended to read:

Subdivision 1. [LEVY EQUALIZATION REVENUE.] (a) For fiscal years 1996 and later year 1999, special education levy equalization revenue for a school district, excluding an intermediate school district, equals the sum of the following amounts:

(1) the levy percentage factor for that year times the district's special education revenue under section 124.3201; plus

(2) the levy percentage factor for that year times the district's special education summer program revenue under section 124.3202; plus

(3) the levy percentage factor for that year times the district's special education excess cost revenue under section 124.323; plus

(4) the levy percentage factor for that year times the district's secondary vocational education for children with a disability revenue under section 124.574; plus

(5) the levy percentage factor for that year times the district's limited English proficiency programs revenue under section 124.273.

Sec. 24. Minnesota Statutes 1996, section 124.323, subdivision 1, is amended to read:

Subdivision 1. [DEFINITIONS.] In this section, the definitions in this subdivision apply.

(a) "Unreimbursed special education cost" means the sum of the following:

(1) expenditures for teachers' salaries, contracted services, supplies, and equipment, and transportation services eligible for revenue under sections 124.3201 and 124.3202; plus

(2) expenditures for tuition bills received under section 120.17 for services eligible for revenue under sections 124.3201, subdivision 2, and 124.3202, subdivision 1; minus

(3) revenue for teachers' salaries, contracted services, supplies, and equipment under sections 124.3201 and 124.3202; minus

(4) tuition receipts under section 120.17 for services eligible for revenue under sections 124.3201, subdivision 2, and 124.3202, subdivision 1.

(b) "General revenue," for fiscal year 1996, means the sum of the general education revenue according to section 124A.22, subdivision 1, as adjusted according to section 124A.036, subdivision 5, plus the total referendum revenue according to section 124A.03, subdivision 1e. For fiscal years 1997 and later, "general revenue" means the sum of the general education revenue according to section 124A.22, subdivision 1, as adjusted according to section 124A.036, subdivision 5, plus the total referendum revenue minus transportation sparsity revenue minus total operating capital revenue.

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Sec. 25. Minnesota Statutes 1996, section 124.323, subdivision 2, is amended to read:

Subd. 2. [EXCESS COST REVENUE.] For 1996 1997 and later fiscal years, a district's special education excess cost revenue equals 70 the greatest of:

(a) 70 percent of the difference between (1) the district's unreimbursed special education cost and (2) six percent for fiscal year 1996 and 5.7 percent for fiscal year 1997 and later years of the district's general revenue;

(b) 70 percent of the difference between (1) the increase in the district's unreimbursed special education cost between the base year as defined in section 124.3201, subdivision 1, and the current year and (2) 1.6 percent of the district's general revenue; or

(c) zero.

Sec. 26. Minnesota Statutes 1996, section 124.481, is amended to read:

124.481 [INDIAN POST-SECONDARY PREPARATION GRANTS.]

The state board of education, with the advice of the Minnesota Indian scholarship committee, may make grants to school districts or tribal grant or contract schools to support post-secondary preparation for secondary pupils who are of one-fourth or more Indian ancestry and who, in the opinion of the superintendent, have the capabilities to benefit from higher education. Distribution of the grants must be in accordance with a plan prepared by the state board, with the advice of the Minnesota Indian scholarship committee, that describes the objectives and methods of implementing the grant program, including the manner in which grants will be distributed in proportion to the geographical distribution of the Indian population of the state.

Sec. 27. Minnesota Statutes 1996, section 124.574, subdivision 2d, is amended to read:

Subd. 2d. [BASE REVENUE.] (a) The secondary vocational school-to-work program-disabled program base revenue equals the sum of the following amounts computed using base year data:

(1) 68 percent of the salary of each essential licensed person who provides direct instructional services to students employed during that fiscal year for services rendered in that district's secondary vocational education programs school-to-work program for children with a disability;

(2) 47 percent of the costs of necessary equipment for secondary vocational education programs school-to-work programs for children with a disability;

(3) 47 percent of the costs of necessary travel between instructional sites by secondary vocational education school-to-work program teachers of children with a disability but not including travel to and from local, regional, district, state, or national vocational student organization meetings;

(4) 47 percent of the costs of necessary supplies for secondary vocational education programs school-to-work programs for children with a disability but not to exceed an average of $47 in any one school year for each child with a disability receiving these services;

(5) for secondary vocational education programs school-to-work programs for children with disabilities provided by a contract approved by the commissioner with public, private, or voluntary agencies other than a Minnesota school district or cooperative center, in place of programs 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;

(6) for secondary vocational education programs school-to-work programs for children with disabilities provided by a contract approved by the commissioner with public, private, or voluntary agencies other than a Minnesota school district or cooperative center, that are supplementary to a full educational program provided by the school district, 52 percent of the amount of the contract; and

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(7) for a contract approved by the commissioner with another Minnesota school district or cooperative center for vocational evaluation services for children with a disability for children that are not yet enrolled in grade 12, 52 percent of the amount of the contract.

(b) If requested by a school district for school-to-work programs during the base year for less than the full school 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 year.

Sec. 28. Minnesota Statutes 1996, section 124.574, subdivision 2f, is amended to read:

Subd. 2f. [STATE TOTAL SECONDARY VOCATIONAL-DISABLED SCHOOL-TO-WORK PROGRAM-DISABLED REVENUE.] The state total secondary vocational-disabled school-to-work program-disabled revenue for fiscal year 1996 1998 equals $8,520,000 $8,924,000. The state total secondary vocational-disabled school-to-work program-disabled revenue for fiscal year 1997 1999 equals $8,830,000 $8,976,000. The state total secondary vocational-disabled school-to-work program-disabled revenue for later fiscal years equals:

(1) the state total secondary vocational-disabled school-to-work program-disabled revenue for the preceding fiscal year; times

(2) the program growth factor; times

(3) the ratio of the state total average daily membership for the current fiscal year to the state total average daily membership for the preceding fiscal year.

Sec. 29. Minnesota Statutes 1996, section 124.86, subdivision 2, is amended to read:

Subd. 2. [REVENUE AMOUNT.] An American Indian-controlled tribal contract or grant school that is located on a reservation within the state and that complies with the requirements in subdivision 1 is eligible to receive tribal contract or grant school aid. The amount of aid is derived by:

(1) multiplying the formula allowance under section 124A.22, subdivision 2, less $170, times the difference between (a) the actual pupil units as defined in section 124A.02, subdivision 15, in average daily membership, excluding section 124.17, subdivision 2f, and (b) the number of pupils for the current school year, weighted according to section 124.17, subdivision 1, receiving benefits under section 123.933 or 123.935 or for which the school is receiving reimbursement under section 126.23;

(2) adding to the result in clause (1) an amount equal to the product of the formula allowance under section 124A.22, subdivision 2, less $300 times the tribal contract compensation revenue pupil units;

(3) subtracting from the result in clause (1) (2) the amount of money allotted to the school by the federal government through Indian School Equalization Program of the Bureau of Indian Affairs, according to Code of Federal Regulations, title 25, part 39, subparts A to E, for the basic program as defined by section 39.11, paragraph (b), for the base rate as applied to kindergarten through twelfth grade, excluding small school adjustments and additional weighting, but not money allotted through subparts F to L for contingency funds, school board training, student training, interim maintenance and minor repair, interim administration cost, prekindergarten, and operation and maintenance, and the amount of money that is received according to section 126.23;

(3) (4) dividing the result in clause (2) (3) by the sum of the actual pupil units in average daily membership, excluding section 124.17, subdivision 2f, plus the tribal contract compensation revenue pupil units; and

(4) (5) multiplying the sum of the actual pupil units, including section 124.17, subdivision 2f, in average daily membership plus the tribal contract compensation revenue pupil units by the lesser of $1,500 or the sum of the result in clause (3) plus $300 (4).

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Sec. 30. Minnesota Statutes 1996, section 124.86, is amended by adding a subdivision to read:

Subd. 5. [TRIBAL CONTRACT PUPIL UNITS.] Pupil units for pupils enrolled in tribal contract schools shall be used only for the purpose of computing tribal contract aid according to this section.

Sec. 31. Minnesota Statutes 1996, section 124.912, subdivision 6, is amended to read:

Subd. 6. [CRIME RELATED COSTS.] For taxes levied in 1991 and subsequent years, payable in 1992 and subsequent years, each school district may make a levy on all taxable property located within the school district for the purposes specified in this subdivision. The maximum amount which may be levied for all costs under this subdivision shall be equal to $1 $1.50 multiplied by the population of the school district. For purposes of this subdivision, "population" of the school district means the same as contained in section 275.14. The proceeds of the levy must be used for reimbursing the cities and counties who contract with the school district for the following purposes: (1) to pay the costs incurred for the salaries, benefits, and transportation costs of peace officers and sheriffs for liaison services in the district's middle and secondary schools; (2) to pay the costs for a drug abuse prevention program as defined in Minnesota Statutes 1991 Supplement, section 609.101, subdivision 3, paragraph (f), in the elementary schools; or (3) to pay the costs for a gang resistance education training curriculum in the middle schools. The school district must initially attempt to contract for these services with the police department of each city or the sheriff's department of the county within the school district containing the school receiving the services. If a local police department or a county sheriff's department does not wish to provide the necessary services, the district may contract for these services with any other police or sheriff's department located entirely or partially within the school district's boundaries. The levy authorized under this subdivision is not included in determining the school district's levy limitations.

Sec. 32. Minnesota Statutes 1996, section 124C.45, subdivision 1a, is amended to read:

Subd. 1a. [RESERVE REVENUE.] Each school district that is a member of an area learning center must reserve revenue in an amount equal to at least 90 percent of the basic district average general education revenue generated by each student less compensatory revenue unit times the number of pupil units attending an area learning center program under this section. The amount of reserved revenue under this subdivision may only be spent on program costs associated with the area learning center.

Sec. 33. Minnesota Statutes 1996, section 124C.498, subdivision 3, is amended to read:

Subd. 3. [GRANT APPLICATION PROCESS.] (a) Any group of school districts that meets the criteria required under paragraph (b)(i) may apply for a magnet school grant in an amount not to exceed $10,000,000 $15,000,000 for the approved costs or expansion of a magnet school facility.

(b)(i) Any group of districts that submits an application for a grant shall submit a proposal to the commissioner for review and comment under section 121.15, and the commissioner shall prepare a review and comment on the proposed magnet school facility, regardless of the amount of the capital expenditure required to design, acquire, construct, remodel, improve, furnish, or equip the facility. The commissioner must not approve an application for a magnet school grant for any facility unless the facility receives a favorable review and comment under section 121.15 and the participating districts:

(1) establish a joint powers board under section 471.59 to represent all participating districts and govern the magnet school facility;

(2) design the planned magnet school facility to meet the applicable requirements contained in Minnesota Rules, chapter 3535;

(3) submit a statement of need, including reasons why the magnet school will facilitate integration and improve learning;

(4) prepare an educational plan that includes input from both community and professional staff; and

(5) develop an education program that will improve learning opportunities for students attending the magnet school.

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(ii) The districts may develop a plan that permits social service, health, and other programs serving students and community residents to be located within the magnet school facility. The commissioner shall consider this plan when preparing a review and comment on the proposed facility.

(c) When two or more districts enter into an agreement establishing a joint powers board to govern the magnet school facility, all member districts shall have the same powers.

(d) A joint powers board of participating school districts established under paragraphs (b) and (c) that intends to apply for a grant shall adopt a resolution stating the costs of the proposed project, the purpose for which the debt is to be incurred, and an estimate of the dates when the contracts for the proposed project will be completed. A copy of the resolution must accompany any application for a state grant under this section.

(e)(i) The commissioner shall examine and consider all grant applications. If the commissioner finds that any joint powers district is not a qualified grant applicant, the commissioner shall promptly notify that joint powers board. The commissioner shall make awards to no more than two qualified applicants whose applications have been on file with the commissioner more than 30 days.

(ii) A grant award is subject to verification by the joint powers board under paragraph (f). A grant award must not be made until the participating districts determine the site of the magnet school facility. If the total amount of the approved applications exceeds the amount of grant funding that is or can be made available, the commissioner shall allot the available amount equally between the approved applicant districts. The commissioner shall promptly certify to each qualified joint powers board the amount, if any, of the grant awarded to it.

(f) Each grant must be evidenced by a contract between the joint powers board and the state acting through the commissioner. The contract obligates the state to pay to the joint powers board an amount computed according to paragraph (e)(ii) and a schedule, and terms and conditions acceptable to the commissioner of finance.

Sec. 34. Minnesota Statutes 1996, section 126.22, subdivision 8, is amended to read:

Subd. 8. [ENROLLMENT VERIFICATION.] (a) For a pupil attending an eligible program full time under subdivision 3, paragraph (d), the department of children, families, and learning shall pay 90 percent of the basic average general education revenue less compensatory revenue of the district to the eligible program and ten percent of the basic average general education revenue less compensatory revenue to the resident district within 30 days after the eligible program verifies enrollment using the form provided by the department. For a pupil attending an eligible program part time, basic revenue shall be reduced proportionately, according to the amount of time the pupil attends the program, and the payments to the eligible program and the resident district shall be reduced accordingly. A pupil for whom payment is made according to this section may not be counted by any district for any purpose other than computation of basic general education revenue, according to section 124A.22, subdivision 2. If payment is made for a pupil under this subdivision, a school district shall not reimburse a program under section 126.23 for the same pupil. Compensatory revenue shall be paid according to section 124A.28.

(b) The department of children, families, and learning shall pay up to 100 percent of the basic revenue to the eligible program if there is an agreement to that effect between the school district and the eligible program.

Sec. 35. [126.225] [ADDITIONAL REVENUE FOR HOMELESS STUDENTS.]

In addition to revenue received under section 126.22, subdivisions 7 and 8, and section 126.23, subdivision 1, a district shall receive additional revenue for homeless pupils who are eligible to participate in the graduation incentives program according to section 126.22, subdivision 1, paragraph (a), clause (9), equal to $100 per pupil unit. The revenue received under this section shall be used for expanding education services to include preschool, after-school, or summer school programs to provide transition and follow-up services to homeless pupils who are placed or mainstreamed in a district school, or to provide parent education and support services. The additional revenue shall be paid to the public or nonprofit school program providing services to homeless pupils. A student shall not be considered homeless under this section if the student was displaced from home as a result of a natural disaster.

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Sec. 36. Minnesota Statutes 1996, section 126.23, subdivision 1, is amended to read:

Subdivision 1. [AID.] If a pupil enrolls in an alternative program, eligible under section 126.22, subdivision 3, paragraph (d), or subdivision 3a, operated by a private organization that has contracted with a school district to provide educational services for eligible pupils under section 126.22, subdivision 2, the district contracting with the private organization must reimburse the provider an amount equal to at least 90 percent of the basic district's average general education less compensatory revenue of the district for each pupil attending the program full time per pupil unit times the number of pupil units for pupils attending the program. Compensatory revenue must be allocated according to section 124A.28, subdivision 1a. For a pupil attending the program part time, basic the revenue paid to the program shall be reduced proportionately, according to the amount of time the pupil attends the program, and basic revenue paid to the district shall be reduced accordingly. Pupils for whom a district provides reimbursement may not be counted by the district for any purpose other than computation of basic revenue, according to section 124A.22, subdivision 2 general education revenue. If payment is made to a district or program for a pupil under this section, the department of children, families, and learning shall not make a payment for the same pupil under section 126.22, subdivision 8.

Sec. 37. [126.256] [AMERICAN SIGN LANGUAGE.]

Satisfactory completion of courses in American sign language in a public elementary or secondary school shall be accorded equal standing with satisfactory completion of courses in any world language.

Sec. 38. [126.79] [LEARN AND EARN GRADUATION ACHIEVEMENT PROGRAM.]

Subdivision 1. [GRANT PROGRAM ESTABLISHED.] A learn and earn graduation achievement grant program is established under the administration of the commissioner of children, families, and learning. The purpose of the program is to aid local communities in their efforts to decrease youth crime by improving the secondary educational success and increasing the post-secondary educational opportunities of low-income high school students who reside in and attend schools in communities that have a high level of poverty and juvenile crime. The commissioner shall make grants under this section to applicants to establish local learn and earn programs that are school-centered and that use a community-based approach that provides eligible youth in grades 9 through 12 with individually tailored opportunities for academic enrichment, community service, and personal development that lead to a high school diploma and post-secondary education.

Subd. 2. [PROGRAM OUTCOME MEASURES.] The goals of the learn and earn graduation achievement program are to:

(1) increase school attendance;

(2) decrease school suspensions and dropouts;

(3) increase youth academic achievement, measured by graduation rates and post-secondary enrollment; and

(4) decrease juvenile crime.

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.

Subd. 4. [GRANT ELIGIBILITY.] An applicant for a grant must be a public secondary school, a nonprofit community-based agency cooperating with a secondary school, area learning center, or alternative learning program approved by the commissioner. Grant applicants must meet all of the following criteria:

(1) at least 20 percent of the students at the participating school or program are eligible to receive a free school lunch;

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(2) the area which the participating school or program serves has a high juvenile crime rate or has experienced a significant increase in juvenile crime over the past three school years;

(3) the applicant has a designated program coordinator who will coordinate school and community resources to provide students with sufficient support and continuity to realize program goals; and

(4) the applicant has established an advisory committee that includes representatives of the students and families served by the program and community organizations serving youth and families. The applicant may use an existing advisory committee that includes this representation.

At least 80 percent of a local learn and earn program's participating students at the inception of the program must reside in households with incomes at or below the federal poverty level adjusted for family size.

The commissioner shall give priority to funding local learn and earn programs that serve those communities that have the highest juvenile crime rates and the largest concentrations of economically disadvantaged youth.

Subd. 5. [STUDENT ELIGIBILITY.] A student is eligible to participate in a local learn and earn program if the student:

(1) is enrolled in the participating school;

(2) is entering or is in the ninth grade at the inception of the program; and

(3) resides in a household whose income is at or below the federal poverty level adjusted for family size, has been recommended for the program by a teacher or other community member, has requested to participate, or whose participation has been requested by a family member, according to a procedure to be developed by the applicant.

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 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.

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 of attending a Minnesota post-secondary institution or participating in a Minnesota post-secondary 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.

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 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.

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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 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, 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.

Sec. 39. Minnesota Statutes 1996, section 245.493, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENTS TO QUALIFY AS A LOCAL CHILDREN'S MENTAL HEALTH COLLABORATIVE.] In order to qualify as a local children's mental health collaborative and be eligible to receive start-up funds, the representatives of the local system of care, or at a minimum one county, one school district or special education cooperative, and one mental health entity must agree to the following:

(1) to establish a local children's mental health collaborative and develop an integrated service system; and

(2) to commit resources to providing services through the local children's mental health collaborative; and

(3) develop a plan to contribute funds to the children's mental health collaborative.

Sec. 40. Minnesota Statutes 1996, section 260A.02, subdivision 3, is amended to read:

Subd. 3. [CONTINUING TRUANT.] "Continuing truant" means a child who is subject to the compulsory instruction requirements of section 120.101 and is absent from instruction in a school, as defined in section 120.05, without valid excuse within a single school year for:

(1) three days if the child is in elementary school; or

(2) three or more class periods on three days if the child is in middle school, junior high school, or high school.

A child is not a continuing truant if the child is withdrawn from school by the child's parents because of a dispute with the school concerning the provision of special education services under the Individuals with Disabilities Education Act or accommodations and modifications under the Americans with Disabilities Act, if the parent makes good faith efforts to provide the child educational services from any other source. No parent who withdraws a child from school during a dispute with the school concerning the provision of special education services or accommodations and modifications is required to file home school papers, if the parent provides written notice to the department of children, families, and learning or the district of the plan for the child's education.

Nothing in this section shall prevent a school district from notifying a truant child's parent or legal guardian of the child's truancy or otherwise addressing a child's attendance problems prior to the child becoming a continuing truant.

Sec. 41. Laws 1994, chapter 647, article 7, section 18, subdivision 2, is amended to read:

Subd. 2. [ELIGIBILITY; APPLICATION.] A school district or a group of school districts that have entered into a joint powers agreement under Minnesota Statutes, section 471.59, to provide for a magnet school or magnet program is eligible to apply for an educational performance improvement grant. The application shall be on a form approved by the commissioner of education. The commissioner shall make recommendations to the state board of education on which districts should be considered for a grant contract. The commissioner shall give priority to school districts:

(1) in which at least one school has received a school improvement incentive grant under Minnesota Statutes 1993 Supplement, section 121.602, subdivision 5; and

(2) that demonstrate a commitment to increasing accountability by using a results-oriented system for measuring student achievement.

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Sec. 42. Laws 1994, chapter 647, article 7, section 18, subdivision 3, is amended to read:

Subd. 3. [CONTRACT.] The state board of education may enter into a one-year contract with a school district or group of school districts for the purpose of awarding an educational performance improvement grant. The state board shall award a grant only for measurable gains in student achievement. The terms of the contract shall at minimum address:

(1) the criteria and assessments to be used in measuring student achievement;

(2) the district's baseline level of student achievement for the district or group of districts;

(3) the level of student achievement, desegregation or diversity, or improved operations to be reached under the contract;

(4) a timeline for determining whether the contract goals have been met; and

(5) at the discretion of the state board, provisions governing the award of a partial grant to the district or group of districts if the contract goals are not fully met.

Sec. 43. Laws 1995, First Special Session chapter 3, article 3, section 11, subdivision 1, is amended to read:

Subdivision 1. [PURPOSE.] A pilot program is established to support general education classroom teachers who teach children with specific learning disabilities. The goals of the pilot program are to:

(1) increase participation of these children in noncategorical programming designed to encourage their maximum potential and maintain their self-esteem;

(2) demonstrate results in measurable educational outcomes;

(3) provide alternatives to special education that focus on children's educational progress and results, respond to the individual child, are efficient and cost-effective, and ensure the rights of eligible children and their families to due process;

(4) increase general education's ability to educate in a manner that decreases the need for pull-out programs for students with specific learning disabilities; and

(5) implement alternative approaches to conflict resolution; and

(6) provide assistive technology to make individualized student accommodations.

Sec. 44. Laws 1995, First Special Session chapter 3, article 3, section 11, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] For the purposes of this section the terms defined in this subdivision have the meanings given them.

(a) "Accommodation" means any technique that alters the educational setting to enable the child to reach the child's maximum potential and to demonstrate more accurately the child's knowledge and educational progress. Accommodations may include, but are not limited to: preferential seating, paraphrasing of information, instructions, practice activities and directions provided in a manner consistent with the child's learning style, opportunity for increased response time, more frequent opportunity for review, extended time to complete assignments and tests, larger print for assignments or tests, special study sheets, extended or untimed tests, oral testing and answering, and use of assistive technology within and outside the educational environment.

(b) "Assistive technology device" means any item, piece of equipment, or product system, whether acquired commercially off the shelf, modified, or customized, that is used to increase, maintain, or improve functional capabilities is as defined in Minnesota Statutes, section 120.187.

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(c) "Competency" means a documented and demonstrated attitude, skill, or knowledge base resulting in an ability of general education personnel to provide accommodations, modifications, and personalized instruction, according to the eligible child's individual learning styles, within general education environments.

(d) "Consistently available" means that education personnel who demonstrate competency are site-based and designated as a resource for the development and use of accommodations, modifications, and personalized instruction in general education.

(e) "Eligible children" means those children who have specific learning disabilities or conditions related to these disabilities according to recognized professional standards and documented by appropriately licensed personnel.

(f) "Learner plan" means a concise written plan that is based on the eligible child's documented specific learning disabilities and needs; includes the eligible child's strengths that may compensate for those differences and needs; provides the child, the child's parent, and all general education personnel responsible for direct instruction with information that results in clear understanding and subsequent use of accommodations, modifications, and personalized instruction; and includes methods of evaluating the child's progress that are consistent with learning differences, needs, strengths, modifications, and accommodations, and are at intervals identical to the student population of the school in which the child participating in Options Plus is enrolled.

(g) "Modification" means any technique that alters the school work required, makes it different from the school work required or other students in the same course, and encourages the eligible child to reach the child's maximum potential and facilitate educational success. Modifications may include, but are not limited to: copies of teacher notes and lesson plans, assisted note taking, reduced or altered assignments, increased assignments in areas of strength, alternative test formats, modified testing, peer assistance, cooperative learning, and modified grading such as documentation of progress and results.

(h) "Parent" means a parent, guardian, or person acting as a parent of a child.

(i) "Personalized instruction" means direct instruction designed with knowledge of the child's learning style, strengths, and differences, to assist the child to gain in skill areas, so the child demonstrates progress toward and outcomes necessary to become a successful citizen.

Sec. 45. Laws 1995, First Special Session chapter 3, article 3, section 11, subdivision 5, is amended to read:

Subd. 5. [USE OF FUNDS.] Options Plus pilot program grants shall be used to supplement staff development funding under Minnesota Statutes, section 124A.29, to train general education classroom teachers to meet the needs of children with specific learning disabilities and provide assistive technology devices in a general education setting. The training shall result in each participating teacher achieving the following competencies:

(1) understanding and communicating to the parents of the child the options available for instruction;

(2) the ability to assess the learning environment and provide the necessary accommodations, modifications, and personalized instruction necessary to meet the needs of the child; and

(3) the ability to work collaboratively and in teams with other teachers and support and related services staff; and

(4) the ability to teach children to use the assistive technology devices.

Sec. 46. Laws 1995, First Special Session chapter 3, article 8, section 25, subdivision 12, is amended to read:

Subd. 12. [NETT LAKE.] For grants to independent school district No. 707, Nett Lake:

$62,000 . . . . . 1996

$62,000 . . . . . 1997

$32,000 in 1996 and $32,000 in 1997 are for grants to independent school district No. 707, Nett Lake, to pay property insurance and boiler insurance premiums, and insurance premiums under Minnesota Statutes, section 466.06.

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$30,000 in 1996 and $30,000 in 1997 are for grants to independent school district No. 707, Nett Lake, for the payment of obligations of the school district for unemployment compensation. The appropriation must be paid to the appropriate state agency for such purposes in the name of the school district.

Sec. 47. [AMERICAN SIGN LANGUAGE RECOGNIZED AS A WORLD LANGUAGE.]

The Minnesota state legislature recognizes American sign language as a fully developed, autonomous, natural language with distinct grammar, syntax, vocabulary, and cultural heritage which is used by a variety of deaf, hard-of-hearing, deaf-blind and hearing individuals in the United States, and hereby determines that American sign language should be accorded equal status with other linguistic systems in the state's public elementary and secondary and higher education systems.

Sec. 48. [MATCHING GRANTS FOR EDUCATION PROGRAMS SERVING HOMELESS CHILDREN.]

A school district or a nonprofit entity contracting with a school district to provide education and transition services for homeless children is eligible for a matching grant for capital facilities which serve homeless children and their families. Grant proceeds may be used to design, furnish, equip, acquire, repair, or construct a facility for providing education and transition services for homeless pupils. To obtain a grant, a school district or nonprofit entity must submit an application to the commissioner of children, families, and learning in the form and manner the commissioner establishes. Grants must be matched by $1 of nonstate money for every $1 of grant money received. The commissioner shall take into consideration the number of concentration of homeless children served by a school district when awarding grants. The commissioner may award matching grants of up to $500,000 per school district.

Sec. 49. [OSSEO LEVY.]

For levies payable in 1998 only, independent school district No. 279, Osseo, may levy a tax in an amount not to exceed $800,000. The proceeds of this levy must be used to provide instructional services for at-risk children.

Sec. 50. [APPROPRIATIONS.]

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. [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 . . . . . 1999

The 1998 appropriation includes $59,000 for 1997 and $532,000 for 1998.

The 1999 appropriation includes $59,000 for 1998 and $532,000 for 1999.

Any balance in the first year does not cancel but is available in the second year.

Subd. 3. [AMERICAN INDIAN EDUCATION.] (a) For certain American Indian education programs in school districts:

$175,000 . . . . . 1998

$175,000 . . . . . 1999

The 1998 appropriation includes $17,000 for 1997 and $158,000 for 1998.

The 1999 appropriation includes $17,000 for 1998 and $158,000 for 1999.

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(b) These appropriations are available for expenditure with the approval of the commissioner of the department of children, families, and learning.

(c) The commissioner must not approve the payment of any amount to a school district or school under this subdivision unless that school district or school is in compliance with all applicable laws of this state.

(d) Up to the following amounts may be distributed to the following schools and school districts for each fiscal year: $54,800, Pine Point School; $9,800 to independent school district No. 166, Cook county; $14,900 to independent school district No. 432, Mahnomen; $14,200 to independent school district No. 435, Waubun; $42,200 to independent school district No. 707, Nett Lake; and $39,100 to independent school district No. 38, Red Lake. These amounts must be spent only for the benefit of American Indian pupils and to meet established state educational standards or statewide requirements.

(e) Before a district or school can receive money under this subdivision, the district or school must submit, to the commissioner, evidence that it has complied with the uniform financial accounting and reporting standards act, Minnesota Statutes, sections 121.904 to 121.917.

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 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 5. [AMERICAN INDIAN SCHOLARSHIPS.] For American Indian scholarships according to Minnesota Statutes, section 124.48:

$1,600,000 . . . . . 1998

$1,600,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 6. [INDIAN TEACHER PREPARATION GRANTS.] (a) For joint grants to assist Indian people to become teachers:

$190,000 . . . . . 1998

$190,000 . . . . . 1999

(b) Up to $70,000 each year is for a joint grant to the University of Minnesota at Duluth and the Duluth school district.

(c) Up to $40,000 each year is for a joint grant to each of the following:

(1) Bemidji state university and the Red Lake school district;

(2) Moorhead state university and a school district located within the White Earth reservation; and

(3) Augsburg college, independent school district No. 625, St. Paul, and the Minneapolis school district.

(d) Money not used for students at one location may be transferred for use at another location.

(e) Any balance in the first year does not cancel but is available in the second year.

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Subd. 7. [TRIBAL CONTRACT SCHOOLS.] For tribal contract school aid according to Minnesota Statutes, section 124.86:

$2,287,000 . . . . . 1998

$2,797,000 . . . . . 1999

The 1998 appropriation includes $91,000 for 1997 and $2,196,000 for 1998.

The 1999 appropriation includes $244,000 for 1998 and $2,553,000 for 1999.

Subd. 8. [EARLY CHILDHOOD PROGRAMS AT TRIBAL SCHOOLS.] For early childhood family education programs at tribal contract schools:

$68,000 . . . . . 1998

$68,000 . . . . . 1999

Subd. 9. [AMERICAN SIGN LANGUAGE; TEACHER EDUCATION HEARING.] To assist school districts in educating teachers in American sign language:

$13,000 . . . . . 1998

$12,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 10. [MEXICAN ORIGIN EDUCATION GRANTS.] For grants for a Mexican origin education pilot grant program:

$50,000 . . . . . 1998

$25,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 11. [LAY ADVOCATES.] To pay or reimburse lay advocates for their time and expense as provided in Minnesota Statutes, section 120.17:

$10,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 12. [OPTIONS PLUS PILOT GRANTS.] For grants to school districts for options plus pilot programs:

$150,000 . . . . . 1998

Each grant shall not exceed $50,000.

This appropriation is available until June 30, 1999.

Subd. 13. [MAGNET SCHOOL GRANTS.] For magnet school and program grants:

$5,750,000 . . . . . 1998

$1,750,000 . . . . . 1999

These amounts may be used for magnet school programs and acquisition and betterment of magnet school facilities according to Minnesota Statutes, section 124C.498.

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Subd. 14. [INTEGRATION PROGRAMS.] For grants according to: minority fellowship grants according to Laws 1994, chapter 647, article 8, section 29; minority teacher incentives according to Minnesota Statutes, section 124.278; teachers of color grants according to Minnesota Statutes, section 125.623; and cultural exchange grants according to Minnesota Statutes, section 126.43:

$1,000,000 . . . . . 1998

$1,000,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

In awarding teacher of color grants, priority must be given to districts that have students who are currently in the process of completing their academic program.

Subd. 15. [SPECIAL EDUCATION AID.] For special education aid according to Minnesota Statutes, section 124.32:

$282,505,000 . . . . . 1998

$382,519,000 . . . . . 1999

The 1998 appropriation includes $24,346,000 for 1997 and $258,159,000 for 1998.

The 1999 appropriation includes $28,684,000 for 1998 and $353,835,000 for 1999.

Subd. 16. [AID FOR CHILDREN WITH A DISABILITY.] For aid according to Minnesota Statutes, section 124.32, subdivision 6, for children with a disability placed in residential facilities within the district boundaries for whom no district of residence can be determined:

$586,000 . . . . . 1998

$644,000 . . . . . 1999

If the appropriation for either year is insufficient, the appropriation for the other year is available. Any balance in the first year does not cancel but is available in the second year.

Subd. 17. [TRAVEL FOR HOME-BASED SERVICES.] For aid for teacher travel for home-based services according to Minnesota Statutes, section 124.32, subdivision 2b:

$107,000 . . . . . 1998

$111,000 . . . . . 1999

The 1998 appropriation includes $8,000 for 1997 and $99,000 for 1998.

The 1999 appropriation includes $10,000 for 1998 and $101,000 for 1999.

Subd. 18. [SPECIAL EDUCATION EXCESS COST AID.] For excess cost aid:

$25,974,000 . . . . . 1998

$44,984,000 . . . . . 1999

The 1998 appropriation includes $1,242,000 for 1997 and $24,732,000 for 1998.

The 1999 appropriation includes $2,748,000 for 1998 and $42,236,000 for 1999.

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Subd. 19. [TARGETED NEEDS AID.] For targeted needs aid:

$47,225,000 . . . . . 1998

$ 2,852,000 . . . . . 1999

(a) Of the 1998 amount, $930,000 is for 1997 limited English proficiency aid and $13,322,000 is for 1998 limited English proficiency aid. Of the 1998 amount, $1,364,000 is for 1997 assurance of mastery aid and $12,393,000 is for 1998 assurance of mastery aid. Of the 1998 amount, $18,844,000 is for 1998 integration aid.

(b) Of the 1999 amount, $1,475,000 is for 1998 limited English proficiency aid and $0 is for 1999 limited English proficiency aid. Of the 1999 amount, $1,377,000 is for 1998 assurance of mastery aid and $0 is for 1999 assurance of mastery aid.

(c) As a condition of receiving a grant, each district must continue to report its costs according to the uniform financial accounting and reporting system. As a further condition of receiving a grant, each district must submit a report to the chairs of the education committees of the legislature about the actual expenditures it made for integration using the grant money including achievement results. These grants may be used to transport students attending a nonresident district under Minnesota Statutes, section 120.062, to the border of the resident district. A district may allocate a part of the grant to the transportation fund for this purpose.

Subd. 20. [SCHOOL-TO-WORK PROGRAMS; STUDENTS WITH DISABILITIES.] For aid for school-to-work programs for pupils with disabilities according to Minnesota Statutes, section 124.574:

$7,044,000 . . . . . 1998

$7,985,000 . . . . . 1999

The 1998 appropriation includes $618,000 for 1997 and $6,426,000 for 1998.

The 1999 appropriation includes $713,000 for 1998 and $7,272,000 for 1999.

Subd. 21. [SPECIAL PROGRAMS EQUALIZATION AID.] For special education levy equalization aid according to Minnesota Statutes, section 124.321:

$11,195,000 . . . . . 1998

$ 5,780,000 . . . . . 1999

The 1998 appropriation includes $1,783,000 for 1997 and $9,412,000 for 1998.

The 1999 appropriation includes $1,045,000 for 1998 and $4,735,000 for 1999.

Subd. 22. [INTEGRATION AID.] For integration aid:

$26,124,000 . . . . . 1999

This appropriation is based on an entitlement of $29,026,000.

Subd. 23. [CENTRAL MINNESOTA AREA LEARNING CENTER.] For a grant to two or more of the following school districts, independent school district Nos. 47, Sauk Rapids; 51, Foley; 738, Holdingford; 739, Kimball; 742, St. Cloud; 748, Sartell; and 750, Cold Spring, that form a joint powers agreement under Minnesota Statutes, section 471.59, to establish the central Minnesota area learning center:

$130,000 . . . . . 1998

This appropriation is available until June 30, 1999.

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Subd. 24. [ADDITIONAL REVENUE FOR HOMELESS STUDENTS.] For additional revenue for homeless students according to Minnesota Statutes, section 126.225:

$200,000 . . . . . 1998

$200,000 . . . . . 1999

The 1998 appropriation includes $20,000 for 1997 and $180,000 for 1998.

The 1999 appropriation includes $20,000 for 1997 and $180,000 for 1999.

Subd. 25. [MATCHING GRANTS FOR EDUCATION PROGRAMS SERVING HOMELESS CHILDREN.] For matching grants for education programs for homeless children:

$400,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 26. [LOW-INCOME CONCENTRATION GRANTS.] For low-income concentration grants under Laws 1994, chapter 647, article 8, section 43:

$1,000,000 . . . . . 1998

The commissioner shall also award a grant to a school building that has at least 20 percent students of color and where at least 20 percent of the students are eligible for free or reduced-price lunch if that school building is located in a city where all the school buildings in that city are eligible for low-income concentration grants.

Subd. 27. [NETT LAKE.] For grants to independent school district No. 707, Nett Lake:

$79,000 . . . . . 1998

$60,000 . . . . . 1999

$19,000 in 1998 is for a grant to independent school district No. 707, Nett Lake, to reimburse the district for property and boiler insurance premiums paid in fiscal year 1996.

$30,000 in 1998 and $30,000 in 1999 are for grants to independent school district No. 707, Nett Lake, to pay property insurance and boiler insurance premiums, and insurance premiums under Minnesota Statutes, section 466.06.

$30,000 in 1998 and $30,000 in 1999 are for grants to independent school district No. 707, Nett Lake, for the payment of obligations of the school district for unemployment compensation. The appropriation must be paid to the appropriate state agency for such purposes in the name of the school district.

Subd. 28. [NETT LAKE MEDIA SPECIALIST.] For a grant to independent school district No. 707, Nett Lake, for a media specialist for preschool through grade 6:

$35,000 . . . . . 1998

Subd. 29. [FIRST GRADE PREPAREDNESS.] 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 . . . . . 1999

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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.

This appropriation is in addition to appropriations for the program under this act and Laws 1996, chapter 412, article 1, section 34, subdivision 2, and must be used to expand the number of sites providing first grade preparedness. The commissioner shall make grants to eligible sites within the limits of the appropriation.

Subd. 30. [EDUCATION PERFORMANCE IMPROVEMENT GRANTS.] For additional grants under Laws 1994, chapter 647, article 7, section 18, as amended:

$1,100,000 . . . . . 1998

Consistent with the provisions of Laws 1994, chapter 647, article 7, section 18, as amended, a grant recipient that is a group of school districts that have entered into a joint powers agreement may use the grant proceeds to enhance student achievement and metropolitan desegregation. Grant recipients must comply with the achievement plan according to Minnesota Statutes, section 123.951, subdivision 4.

This appropriation is available until June 30, 1999.

Subd. 31. [CENTER FOR THE VICTIMS OF TORTURE.] For the center for victims of torture to hire a full-time psychologist to address behavioral problems exhibited by students in the public schools who are survivors of war traumas:

$60,000 . . . . . 1998

$60,000 . . . . . 1999

Subd. 32. [ADOLESCENT PARENT PROGRAM GRANTS.] For adolescent parent program grants:

$500,000 . . . . . 1998

Up to 2-1/2 percent of the appropriation may be used for evaluation of the programs.

Any balance in the first year does not cancel but is available in the second year.

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.

Subd. 34. [ONE ROOM SCHOOLHOUSE.] For a grant to independent school district No. 690, Warroad, to operate the Angle Inlet School:

$25,000 . . . . . 1998

$25,000 . . . . . 1999

Sec. 51. [REPEALER.]

Minnesota Statutes 1996, sections 124.3201, subdivisions 2a and 2b; and 128B.10, are repealed.

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Sec. 52. [EFFECTIVE DATE.]

Sections 4 and 23 are effective for fiscal year 1999. Sections 7, 21, 25, and 51 are effective retroactively to July 1, 1996. Sections 32 and 36 are effective for the 1997-1998 school year and thereafter. Sections 1 and 46 are effective the day following final enactment.

ARTICLE 3

LIFEWORK DEVELOPMENT

Section 1. [121.498] [MINNESOTA CAREER INFORMATION SYSTEM.]

(a) The department of children, families, and learning, through the Minnesota career information system (MCIS), may provide career information to, including, but not limited to, school districts and other educational organizations, employment and training services, human service agencies, libraries, and families. The department shall collect fees necessary to recover all expenditures related to the operation of the Minnesota career information system.

(b) Grants and other legislative funds may be accepted and used for the improvement or operation of the Minnesota career information system. All receipts shall be deposited in a special account in the special revenue fund that shall be carried over at the end of each fiscal year. The money in the account, along with any interest earned, is appropriated to the commissioner of children, families, and learning for the Minnesota career information system and must be for the sole use and benefit of the system. The department shall recognize that the Minnesota career information system operates under a self-supporting directive, and accordingly, must provide sufficient administrative latitude within the confines of law to enable the system to operate effectively.

Sec. 2. Minnesota Statutes 1996, section 121.615, subdivision 2, is amended to read:

Subd. 2. [CREATION OF FOUNDATION.] There is created the Minnesota school-to-work student organization foundation. The purpose of the foundation shall be to promote vocational student organizations and applied leadership opportunities in Minnesota public and nonpublic schools through public-private partnerships. The foundation shall be a nonprofit organization. The board of directors of the foundation and activities of the foundation are under the direction of the department of children, families, and learning state board of education.

Sec. 3. Minnesota Statutes 1996, section 121.615, subdivision 3, is amended to read:

Subd. 3. [BOARD OF DIRECTORS.] The board of directors of the school-to-work student organization foundation shall consist of:

(1) chairs or designees from the board of directors of FFA (formerly Future Farmers of America), Future Leaders of America/Future Homemakers of America, post-secondary agriculture students, home economics related occupations, Health Occupations Student Association, Distributive Education Clubs of America, Delta Upsilon Chi, Secondary Vocational Industrial Clubs of America, Post-secondary Vocational Industrial Clubs of America, Secondary Business Professionals of America, and Post-secondary Business Professionals of America;

(2) four members from business and industry appointed by the governor; and

(3) five students representing diverse vocational areas, three of whom are appointed by the commissioner of the department of children, families, and learning and two of whom are appointed by the chancellor of the Minnesota state colleges and universities with the advice of the executive councils of each vocational education student organization.

(1) seven members appointed by the board of directors of the school-to-work student organizations and chosen so that each represents one of the following career areas: agriculture, family and consumer sciences, service occupations, health occupations, marketing, business, and technical/industrial;

(2) seven members from business, industry, and labor appointed by the governor to staggered terms and chosen so that each represents one of the following career areas: agriculture, family and consumer sciences, service occupations, health occupations, marketing, business, and technical/industrial;

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(3) five students or alumni of school-to-work student organizations representing diverse career areas, three from secondary student organizations, and two from post-secondary student organizations. The students or alumni shall be appointed by the criteria and process agreed upon by the executive directors of the student-to-work organizations; and

(4) four members from education appointed by the governor to staggered terms and chosen so that each represents one of the following groups: school district level administrators, secondary school administrators, middle school administrators, and post-secondary administrators.

Executive directors of vocational education student organizations are ex officio, nonvoting members of the board.

Sec. 4. Minnesota Statutes 1996, section 121.615, subdivision 5, is amended to read:

Subd. 5. [POWERS AND DUTIES.] The foundation may:

(1) identify and plan common goals and priorities for the various school-to-work student organizations in Minnesota;

(2) publish brochures or booklets relating to the purposes of the foundation and collect reasonable fees for the publications;

(3) seek and receive public and private money, grants, and in-kind services and goods from nonstate sources for the purposes of the foundation, without complying with section 7.09, subdivision 1;

(4) contract with consultants on behalf of the school-to-work student organizations; and

(5) plan, implement, and expend money for awards and other forms of recognition for school-to-work student activities programs; and

(6) identifying an appropriate name for the foundation.

Sec. 5. Minnesota Statutes 1996, section 121.615, subdivision 6, is amended to read:

Subd. 6. [CONTRACTS.] The foundation board of directors shall review and approve foundation personnel and programming contracts each contract of the board. Each contract of the foundation board shall be subject to the same review and approval procedures as a contract of the state board of education.

Sec. 6. Minnesota Statutes 1996, section 121.615, subdivision 7, is amended to read:

Subd. 7. [FOUNDATION STAFF.] The commissioner of the department of children, families, and learning state board of education shall appoint the executive director of the foundation from three candidates nominated and submitted by the foundation board of directors and, as necessary, other staff who shall perform duties and have responsibilities solely related to the foundation. The employees appointed are not state employees under chapter 43A, but are covered under section 3.736. The employees may participate in the state health and state insurance plans for employees in unclassified service. The employees shall be supervised by the executive director.

The commissioner shall appoint from the office of lifework development a liaison to the foundation board.

Sec. 7. Minnesota Statutes 1996, section 121.615, subdivision 8, is amended to read:

Subd. 8. [PUBLIC FUNDING.] The commissioner of the department of children, families, and learning state shall identify and secure appropriate sources of state and federal funding from various state agencies, including, but not limited to, Minnesota state colleges and universities, for the operation and development of basic staffing of the foundation and individual student school-to-work student organizations at the state level.

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Sec. 8. Minnesota Statutes 1996, section 121.615, subdivision 9, is amended to read:

Subd. 9. [PRIVATE FUNDING.] The foundation shall seek private resources to supplement the allocated state and federal available public money. Individuals, businesses, and other organizations may contribute to the foundation in any manner specified by the board of directors. All money received shall be administered by the board of directors.

Sec. 9. Minnesota Statutes 1996, section 121.615, subdivision 10, is amended to read:

Subd. 10. [REPORT.] The board of directors of the foundation shall submit an annual report and assessment to the office of lifework development and on the progress of its activities to the state board of education and to the board of trustees of the Minnesota state colleges and universities. The annual report shall contain a financial report for the preceding year. The foundation shall submit a biennium report to the legislature before February 15, in the odd-numbered year.

Sec. 10. Minnesota Statutes 1996, section 121.703, subdivision 3, is amended to read:

Subd. 3. [DUTIES.] (a) The commission shall:

(1) develop, with the assistance of the governor, the commissioner of children, families, and learning, and affected state agencies, a comprehensive state plan to provide services under sections 121.701 to 121.710 and federal law;

(2) actively pursue public and private funding sources for services, including funding available under federal law;

(3) coordinate volunteer service-learning programs within the state;

(4) develop, in cooperation with the workforce development council and the commissioner of children, families, and learning, volunteer service-learning programs, including curriculum, materials, and methods of instruction;

(5) work collaboratively with the workforce development council, the commissioner of children, families, and learning, schools, public and private agencies, for-profit and nonprofit employers, and labor unions to identify mentoring and service-learning opportunities, solicit and recruit participants for these programs, and disseminate information on the programs;

(6) administer the youth works grant program under sections 121.704 to 121.709, with assistance from the commissioner of children, families, and learning and the executive director of the higher education services office, including soliciting and approving grant applications from eligible organizations, and administering individual postservice benefits;

(7) establish an evaluation plan for programs developed and services provided under sections 121.701 to 121.710;

(8) report to the governor, commissioner of children, families, and learning, and legislature;

(9) provide oversight and support for school, campus, and community-based service programs; and

(10) administer the federal AmeriCorps program.

(b) Nothing in sections 121.701 to 121.710 precludes an organization from independently seeking public or private funding to accomplish purposes similar to those described in paragraph (a).

(c) The commissioner of children, families, and learning shall consult with commission members before the commissioner selects the executive director for the commission, who shall serve in the unclassified service.

Sec. 11. Minnesota Statutes 1996, section 124.193, is amended to read:

124.193 [PROHIBITED AID AND LEVIES.]

Subdivision 1. [GENERAL PROHIBITION.] Unless specifically permitted in the provision authorizing an aid or a levy, cooperative units of government defined in section 123.35, subdivision 19b, paragraph (d), are prohibited from making a property tax levy or qualifying for or receiving any form of state aid except that a cooperative unit may apply for and receive a grant on behalf of its members as provided in subdivisions 2 and 3.

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Subd. 2. [GRANTS.] A cooperative unit may apply for and receive a grant on behalf of its members.

Subd. 3. [ALLOCATION FROM MEMBERS.] By July 15 of each year, a school district may, by board resolution, request the department to make a payment to a third party. The total sum of the payments for the year may not exceed the lesser of (a) the district's general education aid for the fiscal year beginning July 1, according to sections 124A.036, subdivision 5, and 124A.23, subdivision 4, or (b) an amount equal to $100 times the fund balance pupil units for the fiscal year beginning July 1. By July 30 of each year, the school district must report to the commissioner the amount allocated. The amount shall be paid to the third party according to section 124.195, subdivision 15. Amounts paid to third parties under this subdivision shall be recognized and reported as revenues and expenditures on the school district's books of account under sections 121.904 and 121.906.

Sec. 12. Minnesota Statutes 1996, section 124.195, is amended by adding a subdivision to read:

Subd. 15. [PAYMENTS TO THIRD PARTIES.] Notwithstanding subdivision 3, 90 percent of the amounts under section 124.193, subdivision 3, shall be paid in equal installments on August 30, December 30, and March 30, with a ten percent final adjustment payment on October 30 of the next fiscal year.

Sec. 13. Minnesota Statutes 1996, section 124.574, subdivision 1, is amended to read:

Subdivision 1. The purpose of this section is to provide a method to fund programs for secondary vocational education school-to-work programs for children with a disability. As used in this section, the term "children with a disability" shall have the meaning ascribed to it in section 120.03.

Sec. 14. Minnesota Statutes 1996, section 124.574, subdivision 5, is amended to read:

Subd. 5. The aid provided pursuant to this section shall be paid only for services rendered as designated in subdivision 2 or for the costs designated in subdivision 3 which are incurred in secondary vocational education programs school-to-work programs for children with a disability which are approved by the commissioner of children, families, and learning and operated in accordance with rules promulgated by the state board. These rules shall be subject to the restrictions provided in section 124.573, subdivision 3. The procedure for application for approval of these programs shall be as provided in section 124.32, subdivisions 7 and 10, and the application review process shall be conducted by the vocational education section of the state office of lifework development in the department.

Sec. 15. Minnesota Statutes 1996, section 124.574, subdivision 6, is amended to read:

Subd. 6. All aid pursuant to this section shall be paid to the district or cooperative center providing the services. All aid received by a district or center from any source for secondary vocational education school-to-work programs for children with a disability shall be utilized solely for that purpose.

Sec. 16. Minnesota Statutes 1996, section 124.574, subdivision 9, is amended to read:

Subd. 9. [REVENUE ALLOCATION FROM COOPERATIVE CENTERS AND INTERMEDIATE DISTRICTS.] For purposes of this section and section 124.321, a cooperative center or an intermediate district shall allocate its approved expenditures for secondary vocational programs school-to-work programs for children with a disability among participating school districts. Aid for secondary vocational programs school-to-work programs for children with a disability for services provided by a cooperative or intermediate district shall be paid to the participating school districts.

Sec. 17. Minnesota Statutes 1996, section 124C.46, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM FOCUS.] 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, social services, health services, and post-secondary institutions in the community and services area.

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Sec. 18. [126.685] [LIFEWORK DEVELOPMENT PLAN.]

A school district may require students to develop and maintain a record of all students' lifework development activities and work toward achieving the profile of learning. This record includes, but is not limited to, student's goals, skills, abilities, and interests, as well as information on service learning experiences, out-of-school learning experiences, and career-related experiences, such as job shadowing, career mentoring, internships, apprenticeships, entrepreneurship, and other work-based learning activities that may be used to fulfill the profile of learning. The ongoing record assists students in choosing their school-based courses, researching and exploring career options, and realizing their role as citizens and their goals as lifelong learners. Each school year, the student, the student's parent or guardian, school and career counselors, and other appropriately trained school personnel shall review the student's plan to ensure that the plan is updated and reflects the student's changing life goals and aspirations. The plan serves as a continuous record of future education and training options necessary to achieve the student's lifework goal.

Sec. 19. Minnesota Statutes 1996, section 268.665, subdivision 2, is amended to read:

Subd. 2. [MEMBERSHIP.] The governor's workforce development council is composed of 32 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 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

(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.

(c) Organized labor: six individuals shall represent labor organizations 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: five 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; and

(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.

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(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. 20. Laws 1993, chapter 146, article 5, section 20, is amended to read:

Sec. 20. [REPEALER.]

Sections 6 to 12 are repealed June 30, 1998 2001.

Sec. 21. Laws 1995, First Special Session chapter 3, article 4, section 29, subdivision 8, is amended to read:

Subd. 8. [EDUCATION AND EMPLOYMENT TRANSITIONS PROGRAM GRANTS.] For local education and employment transitions program grants:

$2,500,000 . . . . . 1996

$2,500,000 . . . . . 1997

$600,000 each year is for development of a labor-management information system to support education to employment transitions programs.

$575,000 each year is for youth apprenticeship program grants. Youth apprenticeship program grants may only be awarded to local education and employment transitions partnerships or to a youth apprenticeship program that previously received a youth apprenticeship demonstration program grant according to Laws 1993, chapter 335, section 7.

$1,000,000 each year is for local program grants, of which $100,000 must be used for youth entrepreneurship grants under Minnesota Statutes, section 116J.655, and $100,000 must be used for youth employer grants under section 28.

$325,000 each year is for state-level activities, including the governor's workforce development council.

Any unexpended balance remaining in the first year does not cancel but is available in the second year.

Grants to the Minnesota Historical Society under this subdivision are available during the fiscal year ending June 30, 1998.

Sec. 22. [DAWSON-BOYD ADULT FARM MANAGEMENT LEVY.]

In addition to other levies, independent school district No. 378, Dawson-Boyd, may levy an amount up to $132,000 for the unreimbursed costs of an adult farm management program. This amount may be levied over a period of three years.

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Sec. 23. [SOUTHWEST STAR CONCEPT SCHOOL.]

Subdivision 1. [PILOT PROJECT.] The Southwest Star Concept School pilot project is created. The purpose of the project is to serve as a model for the state of Minnesota demonstrating the capability of a small school district to provide a curriculum focusing on applied learning and teaching methodology allowing students to reach high levels of performance on the state graduation standards.

Subd. 2. [ACTIVITIES.] The school board of independent school district No. 330, Heron Lake-Okabena, must develop the Southwest Star Concept School, including its academic framework, goals, and delivery system in consultation with community members, teachers, and parents.

Subd. 3. [REPORT.] Independent school district No. 330, Heron Lake-Okabena, shall conduct an ongoing study of the pilot project. The ongoing study shall evaluate and compare outcomes and student performance to other similarly situated school districts and measure changes in outcomes and student performance within the school over time. The school district shall annually report its results to the legislature by February 15 of each year. A final report must be issued by February 15, 2002.

Sec. 24. [MODEL LIFEWORK LEARNING SITES.]

Subdivision 1. [PURPOSE.] Lifework learning sites are established to develop and model practices of lifework learning. Lifework learning includes vocational education, preparation for work, family and community responsibilities, and lifelong learning.

Subd. 2. [DEFINITION; ELIGIBILITY.] A "lifework learning site" means a site that focuses on lifework learning and models school-to-work practices. A lifework learning site may include, but is not limited to, a site that is:

(1) a public school, including a charter school, an alternative program, or a post-secondary institution;

(2) located in or connected to a school; or

(3) colocated with an education, commercial, government, or community enterprise.

Subd. 3. [DESIGNATION.] To be designated a "lifework learning site," a site must:

(1) develop, implement, and model practices and techniques consistent with lifework learning and school-to-work performance indicators;

(2) train school and nonschool staff on lifework learning and school-to-work practices and methodologies;

(3) provide real world, school-based, work-based, and service-based learning experiences, integrated with academic studies that meet Minnesota's graduation standards;

(4) assess and evaluate lifework learning and school-to-work practices; and

(5) disseminate materials and information about lifework learning site activities using the state's information clearinghouse on lifework learning and school-to-work.

Subd. 4. [APPLICATION.] (a) A lifework learning site applicant must be a partner in a local/regional school-to-work partnership. To be designated a lifework learning site and eligible for a grant, the applicant must submit an application to the governor's workforce council in the form and manner the council prescribes.

(b) With the advice and recommendation of the vocational high school planning committee appointed under Laws 1995, First Special Session chapter 3, article 3, section 12, the council must select lifework learning sites that:

(1) are committed to lifework learning and school-to-work practices and methodologies;

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(2) are capable and willing to work with the local/regional school-to-work partnership, and make resources available for the ongoing function of the site;

(3) implement reaching and learning strategies that support the graduation standards and innovative teaching and learning practices;

(4) develop and provide ongoing training for school and nonschool partners;

(5) use existing education, commercial, government, or community facilities;

(6) demonstrate how the lifework learning site will serve all kindergarten through grade 12 students within the community; and

(7) demonstrate a long-term financial plan to sustain the lifework learning site.

Subd. 5. [START-UP GRANT AWARDS,] In order for the site to receive a start-up grant, the site must match the grant amount with an equal amount of funding or in-kind contributions from federal, local, or private sources. The grant award shall not exceed $200,000 for a site. The site shall use the grant for the start-up costs of the lifework learning site.

Subd. 6. [REPORT.] A grant recipient shall report annually for three years to the commissioner of children, families, and learning on implementation of the lifework learning site and the site's ability to deliver model school-to-work instruction and learning.

Sec. 25. [APPROPRIATIONS.]

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. [SECONDARY VOCATIONAL EDUCATION AID.] For secondary vocational education aid according to Minnesota Statutes, section 124.573:

$11,617,000 . . . . . 1998

$11,596,000 . . . . . 1999

The 1998 appropriation includes $1,180,000 for 1997 and $10,437,000 for 1998.

The 1999 appropriation includes $1,159,000 for 1998 and $10,437,000 for 1999.

Subd. 3. [YOUTHWORKS PROGRAM.] For funding youthworks programs according to Minnesota Statutes, sections 121.701 to 121.710:

$1,838,000 . . . . . 1998

$1,838,000 . . . . . 1999

The commissioner may allocate up to $50,000 of the appropriation for the cost of administering the program.

A grantee organization may provide health and child care coverage to the dependents of each participant enrolled in a full-time youth works program to the extent such coverage is not otherwise available.

Any balance in the first year does not cancel but is available in the second year.

Subd. 3. [EDUCATION AND EMPLOYMENT TRANSITIONS PROGRAM GRANTS.] For education and employment transitions program:

$4,725,000 . . . . . 1998

$4,750,000 . . . . . 1999

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$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.

$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 private 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 appropriated for agricultural school-to-work grants.

Subd. 6. [MINNESOTA SCHOOL-TO-WORK STUDENT ORGANIZATION FOUNDATION.] For the Minnesota school-to-work student organization foundation under Minnesota Statutes, section 121.615:

$375,000 . . . . . 1998

$375,000 . . . . . 1999

This appropriation is available until June 30, 1999.

Subd. 8. [SOUTHWEST STAR CONCEPT SCHOOL.] For a grant to independent school district No. 330, Heron Lake-Okabena, to establish the Southwest Star Concept School:

$193,000 . . . . . 1998

This appropriation may be used for equipment, activities beyond the classroom walls, professional planning assistance, monitoring, evaluating, and reporting activities related to the case study prepared in section 23.

Subd. 8. [WORKSTUDY STUDENT COMPENSATION.] For enabling school districts to pay the employer's share of work study students compensation under Minnesota Statutes, section 136A.233, subdivision 3:

$50,000 . . . . . 1998

$50,000 . . . . . 1999

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Money shall be available to districts upon request until the appropriation is exhausted. The commissioner may establish an application procedure for allocating the money to districts.

Subd. 5. [LIFEWORK LEARNING SITES.] For lifework learning sites according to section 24:

$500,000 . . . . . 1998

$500,000 . . . . . 1999

Of this amount, $150,000 shall be awarded for a start-up grant to the Mid-State education district No. 6979 for a job shadowing program and internships at Camp Ripley.

Any balance remaining in the first year does not cancel but is available in the second year.

Sec. 26. [EFFECTIVE DATE.]

Sections 11 and 12 are effective for revenue for fiscal years 1998 and later.

Section 21 is effective the day following final enactment.

ARTICLE 4

EDUCATION ORGANIZATION, COOPERATION, AND FACILITIES

Section 1. Minnesota Statutes 1996, section 120.0621, subdivision 5a, is amended to read:

Subd. 5a. [TUITION PAYMENTS.] In each odd-numbered year, before March 1, the state board of education commissioner shall agree to rates of tuition for Minnesota elementary and secondary pupils attending in other states for the next two fiscal years when the other state agrees to negotiate tuition rates. The board commissioner shall negotiate equal, reciprocal rates with the designated authority in each state for pupils who reside in an adjoining state and enroll in a Minnesota school district. The rates must be at least equal to the tuition specified in section 120.08, subdivision 1. If the other state does not agree to negotiate a general tuition rate, a Minnesota school district may negotiate a tuition rate with the school district in the other state that sends a pupil to or receives a pupil from the Minnesota school district. The tuition rate for a pupil with a disability must be equal to the actual cost of instruction and services provided. The resident district of a Minnesota pupil attending in another state under this section must pay the amount of tuition agreed upon in this section to the district of attendance, prorated on the basis of the proportion of the school year attended.

Sec. 2. Minnesota Statutes 1996, section 120.0621, subdivision 6, is amended to read:

Subd. 6. [EFFECTIVE IF RECIPROCAL.] This section is effective with respect to South Dakota upon enactment of provisions by South Dakota that the commissioner determines are essentially similar to the provisions for Minnesota pupils in this section. After July 1, 1993, this section is effective with respect to any other bordering state upon enactment of provisions by the bordering state that the commissioner determines are essentially similar to the provisions for Minnesota pupils in this section.

Sec. 3. Minnesota Statutes 1996, section 120.0621, is amended by adding a subdivision to read:

Subd. 7. [APPEAL TO THE COMMISSIONER.] If a Minnesota school district cannot agree with an adjoining state on a tuition rate for a Minnesota student attending school in that state and that state has met the requirements in subdivision 6, then the student's parent or guardian may request that the commissioner agree on a tuition rate for the student. The Minnesota school district must pay the amount of tuition the commissioner agrees upon.

Sec. 4. Minnesota Statutes 1996, section 121.15, is amended by adding a subdivision to read:

Subd. 1a. [INDOOR AIR QUALITY RESOURCES; COMMISSIONER'S ROLE.] As part of the consultation under subdivision 1, the commissioner shall provide each school district with information concerning indoor air quality.

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Sec. 5. Minnesota Statutes 1996, 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. A school board shall not separate portions of a single project into components to avoid the requirements of this subdivision.

Sec. 6. Minnesota Statutes 1996, section 121.15, subdivision 7, is amended to read:

Subd. 7. [INFORMATION REQUIRED.] A school board proposing to construct a facility described in subdivision 6 shall submit to the commissioner a proposal containing information including at least the following:

(a) the geographic area proposed to be served, whether within or outside the boundaries of the school district;

(b) the people proposed to be served, including census findings and projections for the next ten years of the number of preschool and school-aged people in the area;

(c) the reasonably anticipated need for the facility or service to be provided;

(d) a description of the construction in reasonable detail, including: the expenditures contemplated; the estimated annual operating cost, including the anticipated salary and number of new staff necessitated by the proposal; and an evaluation of the energy efficiency and effectiveness of the construction, including estimated annual energy costs; and a description of the telephone capabilities of the facility and its classrooms;

(e) a description of existing facilities within the area to be served and within school districts adjacent to the area to be served; the extent to which existing facilities or services are used; the extent to which alternate space is available, including other school districts, post-secondary institutions, other public or private buildings, or other noneducation community resources; and the anticipated effect that the facility will have on existing facilities and services;

(f) the anticipated benefit of the facility to the area;

(g) if known, the relationship of the proposed construction to any priorities that have been established for the area to be served;

(h) the availability and manner of financing the facility and the estimated date to begin and complete the facility;

(i) desegregation requirements that cannot be met by any other reasonable means;

(j) the relationship of the proposed facility to the cooperative integrated learning needs of the area; and

(k) the effects of the proposed facility on the district's operating budget;

(l) the level of collaboration at the facility between the district and other governmental or nonprofit entities; and

(m) the extent to which the district has minimized administrative overhead among facilities.

Sec. 7. Minnesota Statutes 1996, section 121.15, is amended by adding a subdivision to read:

Subd. 7a. [INDOOR AIR QUALITY.] A school board seeking a review and comment under this section must submit information demonstrating to the commissioner's satisfaction that:

(1) indoor air quality issues have been considered; and

(2) the architects and engineers designing the facility will have professional liability insurance.

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Sec. 8. [121.1501] [SCHOOL FACILITY COMMISSIONING.]

Subdivision 1. [APPLICATION.] This section applies to the installation or retrofitting of heating, ventilation, and air conditioning systems for which review and comment of the project under section 121.15 has been requested after July 1, 1997.

Subd. 2. [SYSTEM INSPECTOR.] For purposes of this section, system inspector means:

(1) a Minnesota-licensed architect or engineer; or

(2) properly qualified testing and balancing agency or individual.

Subd. 3. [CERTIFICATION.] Prior to occupying or reoccupying a school facility affected by this section, a school board or its designee shall submit a document prepared by a system inspector to the building official or to the commissioner, verifying that the facility's heating, ventilation, and air conditioning system has been installed and operates according to design specifications.

Subd. 4. [OCCUPANCY.] If the document submitted by the school board to the local building official or the commissioner does not demonstrate to that official's satisfaction that the heating, ventilation, and air conditioning system has been installed correctly or that the system is not operating at a level to meet design specifications, the official or commissioner may allow up to one year of occupancy while the heating, ventilation, and air conditioning system is improved to a level that is considered satisfactory by the system inspector.

Sec. 9. Minnesota Statutes 1996, section 124.2445, is amended to read:

124.2445 [PURCHASE OF CERTAIN EQUIPMENT.]

The board of a school district may issue general obligation certificates of indebtedness or capital notes subject to the school district debt limits to purchase: (a) vehicles, computers, telephone systems, cable equipment, photocopy and office equipment, technological equipment for instruction, and other capital equipment having an expected useful life at least as long as the terms of the certificates or notes; and (b) computer hardware and software, without regard to its expected useful life, whether bundled with machinery or equipment or unbundled, together with application development services and training related to the use of the computer. The certificates or notes must be payable in not more than five years and must be issued on the terms and in the manner determined by the board. The certificates or notes may be issued by resolution and without the requirement for an election. The certificates or notes are general obligation bonds for purposes of section 124.755. A tax levy must be made for the payment of the principal and interest on the certificates or notes, in accordance with section 475.61, as in the case of bonds. The sum of the tax levies under this section and section 124.2455 for each year must not exceed the amount of the district's total operating capital revenue for the year the initial debt service levies are certified. The district's general education levy for each year must be reduced by the sum of (1) the amount of the tax levies for debt service certified for each year for payment of the principal and interest on the certificates or notes as required by section 475.61., and (2) any excess amount in the debt redemption fund used to retire certificates or notes issued after April 1, 1997, other than amounts used to pay capitalized interest. A district using an excess amount in the debt redemption fund to retire the certificates or notes shall report the amount used for this purpose to the commissioner by July 15 of the following fiscal year. A district having an outstanding capital loan under section 124.431 or an outstanding debt service loan under section 124.42 must not use an excess amount in the debt redemption fund to retire the certificates or notes.

Sec. 10. Minnesota Statutes 1996, section 124.2455, is amended to read:

124.2455 [BONDS FOR CERTAIN CAPITAL FACILITIES.]

(a) In addition to other bonding authority, with approval of the commissioner, a school district may issue general obligation bonds for certain capital projects under this section. The bonds must be used only to make capital improvements including:

(1) under section 124A.22, subdivision 11, total operating capital revenue uses specified in clauses (4), (6), (7), (8), (9), and (10);

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(2) the cost of energy modifications;

(3) improving handicap accessibility to school buildings; and

(4) bringing school buildings into compliance with life and safety codes and fire codes.

(b) Before a district issues bonds under this subdivision, it must publish notice of the intended projects, the amount of the bond issue, and the total amount of district indebtedness.

(c) A bond issue tentatively authorized by the board under this subdivision becomes finally authorized unless a petition signed by more than 15 percent of the registered voters of the school district is filed with the school board within 30 days of the board's adoption of a resolution stating the board's intention to issue bonds. The percentage is to be determined with reference to the number of registered voters in the school district on the last day before the petition is filed with the school board. The petition must call for a referendum on the question of whether to issue the bonds for the projects under this section. The approval of 50 percent plus one of those voting on the question is required to pass a referendum authorized by this section.

(d) The bonds must be paid off within ten years of issuance. The bonds must be issued in compliance with chapter 475, except as otherwise provided in this section. A tax levy must be made for the payment of principal and interest on the bonds in accordance with section 475.61. The sum of the tax levies under this section and section 124.2455 for each year must not exceed the amount of the district's total operating capital revenue for the year the initial debt service levies are certified. The district's general education levy for each year must be reduced by the sum of (1) the amount of the tax levies for debt service certified for each year for payment of the principal and interest on the bonds., and (2) any excess amount in the debt redemption fund used to retire bonds issued after April 1, 1997, other than amounts used to pay capitalized interest. A district using an excess amount in the debt redemption fund to retire the bonds shall report the amount used for this purpose to the commissioner by July 15 of the following fiscal year. A district having an outstanding capital loan under section 124.431 or an outstanding debt service loan under section 124.42 must not use an excess amount in the debt redemption fund to retire the bonds.

(e) Notwithstanding paragraph (d), bonds issued by a district within the first five years following voter approval of a combination according to section 122.243, subdivision 2, must be paid off within 20 years of issuance. All the other provisions and limitation of paragraph (d) apply.

Sec. 11. Minnesota Statutes 1996, section 124.2727, subdivision 6d, is amended to read:

Subd. 6d. [REVENUE USES.] (a) A district must place its district cooperation revenue in a reserved account and may only use the revenue to purchase goods and services from entities formed for cooperative purposes or to otherwise provide educational services in a cooperative manner.

(b) A district that was a member of an intermediate school district organized pursuant to chapter 136D on July 1, 1994 July 1, 1996, must place its district cooperation revenue in a reserved account and must allocate a portion of the reserved revenue for instructional services from entities formed for cooperative services for special education programs and secondary vocational programs. The allocated amount is equal to the levy made according to 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 service 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.

(c) A district that was not a member of an intermediate district organized under chapter 136D on July 1, 1994, must spend at least $9 per pupil unit of its district cooperation revenue on secondary vocational programs.

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Sec. 12. Minnesota Statutes 1996, section 124.42, subdivision 4, is amended to read:

Subd. 4. Each district receiving a debt service loan shall levy for debt service in that year and each year thereafter, until all its debts to the fund are paid, (a) the amount of its maximum effort debt service levy, or (b) the amount of its required debt service levy less the amount of any debt service loan in that year, whichever is greater. Whenever the maximum effort debt service levy is greater the district shall remit to the commissioner, within ten days after its receipt of the last regular tax distribution in the year in which it is collected, that portion of the maximum effort debt service tax collections, including penalties and interest, which exceeds the required debt service levy. The district shall remit payments to the commissioner according to section 124.45. On or before September 1 30 in each year the commissioner shall notify the county auditor of each county containing taxable property situated within the school district of the amount of the maximum effort debt service levy of the district for that year, and said county auditor or auditors shall extend upon the tax rolls an ad valorem tax upon all taxable property within the district in the aggregate amount so certified.

Sec. 13. Minnesota Statutes 1996, section 124.431, subdivision 2, is amended to read:

Subd. 2. [DISTRICT REQUEST FOR REVIEW AND COMMENT.] A school district or a joint powers district that intends to apply for a capital loan must submit a proposal to the commissioner for review and comment according to section 121.15 on or before July 1 of an odd-numbered year. The commissioner must prepare a review and comment on the proposed facility, regardless of the amount of the capital expenditure required to construct the facility. In addition to the information provided under section 121.15, subdivision 7, the commissioner shall require that predesign packages comparable to those required under section 16B.335 be prepared by the applicant school district. The predesign packages must be sufficient to define the scope, cost, and schedule of the project and must demonstrate that the project has been analyzed according to appropriate space needs standards and also consider the following criteria in determining whether to make a positive review and comment.

(a) To grant a positive review and comment the commissioner must determine that all of the following conditions are met:

(1) the facilities are needed for pupils for whom no adequate facilities exist or will exist;

(2) the district will serve, on average, at least 80 pupils per grade or is eligible for elementary or secondary sparsity revenue;

(3) no form of cooperation with another district would provide the necessary facilities;

(4) the facilities are comparable in size and quality to facilities recently constructed in other districts that have similar enrollments;

(5) the facilities are comparable in size and quality to facilities recently constructed in other districts that are financed without a capital loan;

(6) the district is projected to maintain or increase its average daily membership over the next five years or is eligible for elementary or secondary sparsity revenue;

(7) the current facility poses a threat to the life, health, and safety of pupils, and cannot reasonably be brought into compliance with fire, health, or life safety codes;

(8) the district has made a good faith effort, as evidenced by its maintenance expenditures, to adequately maintain the existing facility during the previous ten years and to comply with fire, health, and life safety codes and state and federal requirements for handicapped accessibility;

(9) the district has made a good faith effort to encourage integration of social service programs within the new facility; and

(10) evaluations by school boards of adjacent districts have been received.

(b) The commissioner may grant a negative review and comment if:

(1) the state demographer has examined the population of the communities to be served by the facility and determined that the communities have not grown during the previous five years;

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(2) the state demographer determines that the economic and population bases of the communities to be served by the facility are not likely to grow or to remain at a level sufficient, during the next ten years, to ensure use of the entire facility;

(3) the need for facilities could be met within the district or adjacent districts at a comparable cost by leasing, repairing, remodeling, or sharing existing facilities or by using temporary facilities;

(4) the district plans do not include cooperation and collaboration with health and human services agencies and other political subdivisions; or

(5) if the application is for new construction, an existing facility that would meet the district's needs could be purchased at a comparable cost from any other source within the area.

Sec. 14. Minnesota Statutes 1996, section 124.431, subdivision 11, is amended to read:

Subd. 11. [CONTRACT.] (a) Each capital loan must be evidenced by a contract between the school district and the state acting through the commissioner. The contract must obligate the state to reimburse the district, from the maximum effort school loan fund, for eligible capital expenses for construction of the facility for which the loan is granted, an amount computed as provided in subdivision 8. The commissioner must receive from the school district a certified resolution of the school board estimating the costs of construction and reciting that contracts for construction of the facilities for which the loan is granted have been awarded and that bonds of the district have been issued and sold in the amount necessary to pay all estimated costs of construction in excess of the amount of the loan. The contract must obligate the district to repay the loan out of the excesses of its maximum effort debt service levy over its required debt service levy, including interest at a rate equal to the weighted average annual rate payable on Minnesota state school loan bonds issued for the project and disbursed to the districts on a reimbursement basis, but in no event less than 3-1/2 percent per year on the principal amount from time to time unpaid.

(b) The district shall each year, as long as it is indebted to the state, levy for debt service (a) (i) the amount of its maximum effort debt service levy or (b) (ii) the amount of its required debt service levy, whichever is greater, except as the required debt service levy may be reduced by a loan under section 124.42. On November 20 of each year each district having an outstanding capital loan shall compute the excess amount in the debt redemption fund. The commissioner shall prescribe the form and calculation to be used in computing the excess amount. A completed copy of this form shall be sent to the commissioner before December 1 of each year. The commissioner may recompute the excess amount and shall promptly notify the district of the recomputed amount. On December 15 of each year, the district shall remit to the commissioner an amount equal to the excess amount in the debt redemption fund. When the maximum effort debt service levy is greater, the district shall remit to the commissioner within ten days after its receipt of the last regular tax distribution in each year, that part of the debt service tax collections, including penalties and interest that exceeded the required debt service levy. The district shall remit payments to the commissioner according to section 124.45.

(c) The commissioner shall supervise the collection of outstanding accounts due the fund and may, by notice to the proper county auditor, require the maximum levy to be made as required in this subdivision. Interest on capital loans must be paid on December 15 of the year after the year the loan is granted and annually in later years. On or before September 1 30 in each year the commissioner shall notify the county auditor of each county containing taxable property situated within the school district of the amount of the maximum effort debt service levy of the district for that year. The county auditor or auditors shall extend upon the tax rolls an ad valorem tax upon all taxable property within the district in the aggregate amount so certified.

Sec. 15. Minnesota Statutes 1996, section 124.45, is amended to read:

124.45 [PAYMENT AND APPLICATIONS OF PAYMENT.]

Subdivision 1. [PAYMENT.] (a) On November 20 of each year, each district having an outstanding capital loan or debt service loan shall compute the excess amount in the debt redemption fund. The commissioner shall prescribe the form and calculation to be used in computing the excess amount. A completed copy of this form shall be sent to the commissioner before December 1 of each year. The commissioner may recompute the excess amount and shall promptly notify the district of the recomputed amount.

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(b) On December 15 of each year, the district shall remit to the commissioner an amount equal to the greater of:

(i) the excess amount in the debt redemption fund; or

(ii) the amount by which the maximum effort debt service levy exceeds the required debt service levy for that calendar year.

Any late payments shall be assessed an interest charge using the interest rates specified for the debt service notes and capital loan contracts.

(c) If a payment required under the maximum effort school aid law is not made within 30 days, the commissioner may reduce any subsequent payments due the district under chapters 124 and 124A by the amount due, after providing written notice to the district.

Subd. 2. [APPLICATION OF PAYMENTS.] The commissioner shall apply payments received from collections of maximum effort debt service levies in excess of required debt service levies of a district on its debt service notes and capital loan contracts under the maximum effort school aid law and aids withheld according to subdivision 1, paragraph (b), as follows: First, to payment of interest accrued on its notes, if any; second, to interest on its contracts, if any; third, toward principal of its notes, if any; and last, toward principal of its contracts, if any. While more than one note or more than one contract is held, priority of payment of interest shall be given to the one of earliest date, and after interest accrued on all notes is paid, similar priority shall be given in the application of any remaining amount to the payment of principal. In any year when the receipts from a district are not sufficient to pay the interest accrued on any of its notes or contracts, the deficiency shall be added to the principal, and the commissioner shall notify the district and each county auditor concerned of the new amount of principal of the note or contract.

Sec. 16. [124.825] [HISTORIC BUILDING REVENUE.]

Subdivision 1. [ELIGIBILITY.] A district that maintains a school building listed on the National Register of Historic Places is eligible for historic building revenue.

Subd. 2. [REVENUE.] A district's historic building revenue is equal to $100 times the number of actual pupil units served in the school building.

Subd. 3. [LEVY.] To obtain historic building revenue, a district may levy an amount, not to exceed the district's revenue, equal to the district's revenue authority for that year times the lesser of one or the ratio of the adjusted net tax capacity divided by its actual pupil units for that school year to the equalizing factor.

Subd. 4. [AID.] A district's historic building aid is equal to the difference between the district's revenue minus the levy. If a district does not levy the entire amount permitted, the district's aid must be reduced in proportion to the amount levied.

Sec. 17. Minnesota Statutes 1996, section 124.83, subdivision 1, is amended to read:

Subdivision 1. [HEALTH AND SAFETY PROGRAM.] To receive health and safety revenue for any fiscal year a district must submit to the commissioner of children, families, and learning an application for aid and levy by the date determined by the commissioner. The application may be for hazardous substance removal, fire and life safety code repairs, labor and industry regulated facility and equipment violations, and health, safety, and environmental management, including indoor air quality management. The application must include a health and safety program adopted by the school district board. The program must include the estimated cost, per building, of the program by fiscal year.

Sec. 18. Minnesota Statutes 1996, section 124.83, subdivision 2, is amended to read:

Subd. 2. [CONTENTS OF PROGRAM.] A district must adopt a health and safety program. The program must include plans, where applicable, for hazardous substance removal, fire and life safety code repairs, regulated facility and equipment violations, and health, safety, and environmental management, including indoor air quality management.

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(a) A hazardous substance plan must contain provisions for the removal or encapsulation of asbestos from school buildings or property, asbestos-related repairs, cleanup and disposal of polychlorinated biphenyls found in school buildings or property, and cleanup, removal, disposal, and repairs related to storing heating fuel or transportation fuels such as alcohol, gasoline, fuel, oil, and special fuel, as defined in section 296.01. If a district has already developed a plan for the removal or encapsulation of asbestos as required by the federal Asbestos Hazard Emergency Response Act of 1986, the district may use a summary of that plan, which includes a description and schedule of response actions, for purposes of this section. The plan must also contain provisions to make modifications to existing facilities and equipment necessary to limit personal exposure to hazardous substances, as regulated by the federal Occupational Safety and Health Administration under Code of Federal Regulations, title 29, part 1910, subpart Z; or is determined by the commissioner to present a significant risk to district staff or student health and safety as a result of foreseeable use, handling, accidental spill, exposure, or contamination.

(b) A fire and life safety plan must contain a description of the current fire and life safety code violations, a plan for the removal or repair of the fire and life safety hazard, and a description of safety preparation and awareness procedures to be followed until the hazard is fully corrected.

(c) A facilities and equipment violation plan must contain provisions to correct health and safety hazards as provided in department of labor and industry standards pursuant to section 182.655.

(d) A health, safety, and environmental management plan must contain a description of training, record keeping, hazard assessment, and program management as defined in section 124.829.

(e) A plan to test for and mitigate radon produced hazards.

(f) A plan to monitor and improve indoor air quality.

Sec. 19. Minnesota Statutes 1996, 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 expenditure facilities revenues revenue authorized under sections 124.243 and section 124A.22, subdivision 10, are 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 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.

Sec. 20. Minnesota Statutes 1996, section 124.95, subdivision 2, is amended to read:

Subd. 2. [ELIGIBILITY.] (a) The following portions of a district's debt service levy qualify for debt service equalization:

(1) debt service for repayment of principal and interest on bonds issued before July 2, 1992;

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(2) debt service for bonds refinanced after July 1, 1992, if the bond schedule has been approved by the commissioner and, if necessary, adjusted to reflect a 20-year maturity schedule; and

(3) debt service for bonds issued after July 1, 1992, for construction projects that have received a positive review and comment according to section 121.15, if the commissioner has determined that the district has met the criteria under section 124.431, subdivision 2, and if the bond schedule has been approved by the commissioner and, if necessary, adjusted to reflect a 20-year maturity schedule.

(b) The criterion in section 124.431, subdivision 2, paragraph (a), clause (2), shall be considered to have been met if the district in the fiscal year in which the bonds are authorized at an election conducted under chapter 475:

(i) serves an average of at least 66 pupils per grade in the grades to be served by the facility if grades 9 through 12 are to be served by the facility, and an average of at least 66 pupils per grade in these grades are served; or

(ii) is eligible for elementary or secondary sparsity revenue.

(c) The criterion in section 124.431, subdivision 2, paragraph (a), clause (2), shall also be considered to have been met if the construction project under review serves students in kindergarten to grade 8. Only the debt service levy for that portion of the facility serving students in prekindergarten to grade 8, as determined by the commissioner, shall be eligible for debt service equalization under this paragraph.

(d) The criterion described in section 124.431, subdivision 2, paragraph (a), clause (9), does not apply to bonds authorized by elections held before July 1, 1992.

(e) For the purpose of this subdivision the department shall determine the eligibility for sparsity at the location of the new facility, or the site of the new facility closest to the nearest operating school if there is more than one new facility.

(f) Notwithstanding paragraphs (a) to (e), debt service for repayment of principal and interest on bonds issued after July 1, 1997, does not qualify for debt service equalization aid unless the primary purpose of the facility is to serve students in kindergarten through grade 12.

Sec. 21. Minnesota Statutes 1996, section 124.961, is amended to read:

124.961 [DEBT SERVICE APPROPRIATION.]

(a) $30,054,000 $35,480,000 in fiscal year 1996 1998, $28,162,000 $38,159,000 in fiscal year 1997 1999, and $33,948,000 $38,390,000 in fiscal year 1998 2000 and each year thereafter is appropriated from the general fund to the commissioner of children, families, and learning for payment of debt service equalization aid under section 124.95. The 1998 2000 appropriation includes $4,970,000 $3,842,000 for 1997 1999 and $28,978,000 $34,548,000 for 1998 2000.

(b) The appropriations 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. 22. Minnesota Statutes 1996, section 124A.22, subdivision 10, is amended to read:

Subd. 10. [TOTAL OPERATING CAPITAL REVENUE.] (a) For fiscal year 1997 1999 and thereafter, total operating capital revenue for a district equals the amount determined under paragraph (b), or (c), (d), (e), or (f), plus $68 times the actual pupil units for the school year. The revenue must be placed in a reserved account in the general fund and may only be used according to subdivision 11.

(b) For fiscal years 1996 1999 and later, capital revenue for a district equals $100 times the district's maintenance cost index times its actual pupil units for the school year.

(c) For 1996 and later fiscal years, the previous formula revenue for a district equals $128 times its actual pupil units for fiscal year 1995.

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(d) Notwithstanding paragraph (b), for fiscal year 1996, the revenue for each district equals 25 percent of the amount determined in paragraph (b) plus 75 percent of the previous formula revenue.

(e) Notwithstanding paragraph (b), for fiscal year 1997, the revenue for each district equals 50 percent of the amount determined in paragraph (b) plus 50 percent of the previous formula revenue.

(f) Notwithstanding paragraph (b), for fiscal year 1998, the revenue for each district equals 75 percent of the amount determined in paragraph (b) plus 25 percent of the previous formula revenue.

(g) The revenue for a district that operates a program under section 121.585, is increased by an amount equal to $15 $30 times the number of actual pupil units at the site where the program is implemented.

Sec. 23. Minnesota Statutes 1996, 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;

(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;

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(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.

Sec. 24. Minnesota Statutes 1996, section 136D.72, subdivision 2, is amended to read:

Subd. 2. [TERMS.] The terms of the members of the first school board shall, as nearly as possible, consist of one-third of the members for one year, one-third of the members for two years, and one-third of the members for three years. The members of the first board shall determine by lot which length of term each member of the first board shall be assigned. Terms of office of the members of the board shall expire on June 30 January 1. Thereafter the terms of office of board members shall be for three four years commencing on July 1 January 1 of each year. If a vacancy occurs on the board, it shall be filled by the appropriate school board. A person appointed to the board shall qualify as a board member by filing with the chief executive officer thereof a written certificate of appointment from the appointing school board.

Sec. 25. Minnesota Statutes 1996, section 136D.72, subdivision 3, is amended to read:

Subd. 3. [ANNUAL ORGANIZATIONAL MEETING.] The first meeting of the first school board shall be at such time mutually agreed to by the members appointed by the participating school districts. Thereafter The school board shall meet in July January of each year when notified of such meeting by the chief executive officer of the intermediate school district. At such first the organizational meeting, the officers of the intermediate school district for the current year shall be chosen and such other organizational business as may be necessary shall be conducted.

Sec. 26. [DUTIES OF THE DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.]

Subdivision 1. [DUTIES.] (a) The department of children, families, and learning, in collaboration with the departments of health and administration, school districts, and other public and private agencies, must develop the following:

(1) an indoor air quality maintenance manual;

(2) a planning and construction manual to assure indoor air quality; and

(3) a public information plan for students, parents, staff, and other members of the public.

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(b) The above manuals and plans shall include:

(1) process standards for school districts and the department of children, families, and learning to follow when addressing indoor air quality concerns;

(2) informational materials for a model school district indoor air quality program;

(3) training needs for school district employees;

(4) procedures for school districts when disseminating indoor air quality information and test results to parents, teachers, and other persons;

(5) indoor air quality considerations under the review and comment process for school buildings, specific evaluations of proposed construction standards and materials, to be included in the review and comment standards;

(6) building systems maintenance and housekeeping practices required to assure adequate indoor air quality;

(7) architectural, engineering, maintenance engineering, and other design practices to positively affect indoor air quality;

(8) regional and state resources available to assist districts with information and training needs of school staff, parents, and community;

(9) regional and state resources available to assist districts with medical evaluation relative to indoor air quality complaints; and

(10) recommended steps a district should take to attain a satisfactory level of indoor air quality.

Subd. 2. [RESOURCE MANUAL; REPORT.] The indoor air quality resource manual must be made available for distribution and training February 1, 1998, and a report regarding the status of indoor air quality in Minnesota schools will be made to the 1998 legislature.

Sec. 27. [TRANSITION.]

As a result of section 16, the terms of office of members and officers of the board shall be lengthened to expire on the January 1 following the June 30 on which they otherwise would have expired.

Sec. 28. [REVENUE USE APPROVAL.]

The use of revenue for construction in independent school district No. 561, Goodridge, authorized in Laws 1995, First Special Session chapter 3, article 8, section 23, and in independent school district No. 600, Fisher, authorized in Laws 1995, First Special Session chapter 3, article 8, section 22, subdivision 21, is approved. The department shall not make any levy or aid adjustments related to these projects.

Sec. 29. [INTERDISTRICT COOPERATION FOR SCHOOL DISTRICT NO. 638, SANBORN.]

Notwithstanding Minnesota Statutes, section 122.541, subdivision 1, or other law to the contrary, independent school district No. 638, Sanborn, may participate in an interdistrict cooperation agreement with independent school district No. 178, Storden-Jeffers, and independent school district No. 633, Lamberton, although independent school district No. 638, Sanborn, does not operate a school with at least three grades. Resident pupils of independent school district No. 638, Sanborn, may be educated in either of the other two cooperating districts.

Sec. 30. [CHISAGO LAKES AREA SCHOOLS, BONDED DEBT.]

Independent school district No. 2144, Chisago Lakes Area, may modify its plan adopted according to Minnesota Statutes, section 122.242, subdivision 9, clause (1), so that independent school district No. 2144 assumes all of the remaining debt service as of the effective date of this section for bonds that were outstanding at the time of the combination of independent school districts No. 141, Chisago Lakes and No. 140, Taylors Falls, and the tax levy for that debt service is spread on all the property in independent school district No. 2144, Chisago Lakes Area.

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Sec. 31. [TEACHER RETIREMENT DATE.]

Notwithstanding Minnesota Statutes, section 354.44, subdivision 4, teachers retiring in June 1997 from the high school in independent school district No. 701, Hibbing, shall have May 30, 1997, as their date of retirement for the purpose of receiving retirement benefits.

Sec. 32. [LEASE LEVY; NORTH ST. PAUL-MAPLEWOOD.]

Notwithstanding Minnesota Statutes, section 124.91, subdivision 1, independent school district No. 622, North St. Paul-Maplewood, annually may levy the amount necessary to pay its obligations under a lease or a lease with option to purchase agreement during the term of that agreement for the financing of capital improvements approved by its school board to the building, or any portion thereof, at 2520 East Twelfth Avenue, North St. Paul. The total payments under the terms of the lease may not exceed $4,000,000. The agreement must be executed by July 1, 1998, and may include a sale and leaseback with option to purchase with a public or private entity. The agreement is not required to include a nonappropriation clause. An election is not required in connection with the execution of the agreement and the obligation created by the agreement does not constitute debt and must not be included in the calculation of net debt for the district. Levies under this section do not qualify for debt service equalization aid.

Sec. 33. [LEVY FOR EXTENDED SCHOOL HOURS AND DAYS.]

In addition to other levies, independent school district Nos. 622, North St. Paul-Maplewood-Oakdale; 833, South Washington County; and 834, Stillwater may each levy up to $200,000 each year, in proportion to the number of district students served in the facility, for the costs of operating extended year, extended day, or all day kindergarten programs at the joint elementary facility authorized in Laws 1995, First Special Session chapter 3, article 5, section 19.

Sec. 34. [TRANSITION.]

As a result of section 16, the terms of office of members and officers of the board shall be lengthened to expire on the January 1 following the June 30 on which they otherwise would have expired.

Sec. 35. [SPECIAL EDUCATION AND SECONDARY VOCATIONAL FACILITIES.]

The commissioner shall review and report on the quality, availability, and accessibility of intermediate school district special education and secondary vocational facilities and shall make recommendations to the legislature concerning alternatives that are cost-effective and in the best interests of the students in such programs.

Sec. 36. [1996-1997 AVERAGE DAILY MEMBERSHIP.]

Notwithstanding Minnesota Statutes, section 124.17, the 1996-1997 average daily membership for a school building closed due to flooding for part of the school year and reopened before the end of the school year shall be the greater of the amount that would have been computed if the school building had not reopened or the amount computed using actual data for the entire school year.

Sec. 37. [FISCAL YEAR 1998 DECLINING PUPIL UNIT AID.]

For fiscal year 1998 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. 38. [APPROPRIATIONS.]

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.

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Subd. 2. [SPECIAL CONSOLIDATION AID.] For special consolidation aid under Minnesota Statutes, section 124.2728:

$3,000 . . . . . 1998

The 1998 appropriation includes $3,000 for 1997 and $0 for 1998.

Subd. 3. [CONSOLIDATION TRANSITION AID.] For districts consolidating under Minnesota Statutes, section 124.2726:

$1,254,000 . . . . . 1998

$1,151,000 . . . . . 1999

The 1998 appropriation includes $67,000 for 1997 and $1,187,000 for 1998.

The 1999 appropriation includes $131,000 for 1998 and $1,020,000 for 1999.

Any balance in the first year does not cancel but is available in the second year.

Subd. 4. [COOPERATION AND COMBINATION AID.] For aid for districts that cooperate and combine according to Minnesota Statutes, section 124.2725:

$562,000 . . . . . 1998

$ 42,000 . . . . . 1999

The 1998 appropriation includes $178,000 for 1997 and $384,000 for 1998.

The 1999 appropriation includes $42,000 for 1998 and $0 for 1999.

Any balance in the first year does not cancel but is available in the second year.

Subd. 5. [DISTRICT COOPERATION REVENUE.] For district cooperation revenue aid:

$9,766,000 . . . . . 1998

$8,780,000 . . . . . 1999

The 1998 appropriation includes $1,172,000 for 1997 and $8,561,000 for 1998.

The 1999 appropriation includes $951,000 for 1998 and $7,829,000 for 1999.

Subd. 6. [HISTORIC BUILDING AID.] For historic building aid under section 124.825:

$173,000 . . . . . 1998

$173,000 . . . . . 1999

Subd. 7. [HIBBING GRANT.] For a grant to independent school district No. 701, Hibbing, for expenses not covered by insurance for a fire loss at Hibbing high school:

$250,000 . . . . . 1998

Independent school district No. 701, Hibbing, shall reimburse the state general fund for any expenses covered by this appropriation that are recovered as a result of a lawsuit related to the fire loss at Hibbing high school.

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Subd. 8. [PLANNING GRANT; ISLE.] For a facilities planning grant to independent school district No. 473, Isle:

$100,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 9. [FLOOD LOSSES.] 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 . . . . . 1998

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 36 and 37.

Sec. 39. [REPEALER.]

Minnesota Statutes 1996, section 124.2728, is repealed effective for revenue for fiscal year 1999.

Sec. 40. [EFFECTIVE DATE.]

Section 14 is effective for bonds outstanding on July 1, 1997, that meet the criteria and is effective for revenue for fiscal year 1999. Section 39 is effective the day following compliance by the school board of independent school district No. 2144, Chisago Lakes Area, with Minnesota Statutes, section 645.021, and contingent upon successful passage of new bond issue under Minnesota Statutes, section 475.58. Sections 29 and 31 are effective the day following final enactment. Section 22 is effective for revenue for fiscal year 1999, except that the allowance increase in section 22 is effective for revenue for fiscal year 1998.

ARTICLE 5

EDUCATION EXCELLENCE

Section 1. Minnesota Statutes 1996, section 120.062, subdivision 3, is amended to read:

Subd. 3. [CLOSED DISTRICTS LIMITED ENROLLMENT OF NONRESIDENT PUPILS.] (a) A school board may, by resolution, determine that limit the enrollment of nonresident pupils may not attend any of in its schools or programs according to this section. to a number not less than the lesser of:

(1) one percent of the total enrollment at each grade level in the district; or

(2) the number of district residents at that grade level enrolled in a nonresident district according to this section.

(b) A district that limits enrollment of nonresident pupils under paragraph (a) shall report to the commissioner by July 15 on the number of nonresident pupils denied admission due to the limitations on the enrollment of nonresident pupils.

Sec. 2. Minnesota Statutes 1996, section 120.062, subdivision 6, is amended to read:

Subd. 6. [NONRESIDENT DISTRICT PROCEDURES.] A district that does not exclude nonresident pupils, according to subdivision 3, shall notify the parent or guardian in writing by February 15 whether the application has been accepted or rejected. If an application is rejected, the district must state in the notification the reason for rejection. The parent or guardian shall notify the nonresident district by March 1 whether the pupil intends to enroll in the nonresident district. Notice of intent to enroll in the nonresident district obligates the pupil to attend the nonresident district during the following school

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year, unless the school boards of the resident and the nonresident districts agree in writing to allow the pupil to transfer back to the resident district, or the pupil's parents or guardians change residence to another district. If a parent or guardian does not notify the nonresident district, the pupil may not enroll in that nonresident district during the following school year, unless the school boards of the resident and nonresident district agree otherwise. The nonresident district shall notify the resident district by March 15 of the pupil's intent to enroll in the nonresident district. The same procedures apply to a pupil who applies to transfer from one participating nonresident district to another participating nonresident district.

Sec. 3. Minnesota Statutes 1996, section 120.062, subdivision 7, is amended to read:

Subd. 7. [BASIS FOR DECISIONS.] The school board must adopt, by resolution, specific standards for acceptance and rejection of applications. Standards may include the capacity of a program, class, grade level, or school building. The school board may not reject applications for enrollment in a particular grade level if the nonresident enrollment at that grade level does not exceed the limit set by the board under subdivision 3. Standards may not include previous academic achievement, athletic or other extracurricular ability, disabling conditions, proficiency in the English language, or previous disciplinary proceedings, or the student's district of residence.

Sec. 4. Minnesota Statutes 1996, section 120.062, subdivision 11, is amended to read:

Subd. 11. [INFORMATION.] A district that does not exclude nonresident pupils according to subdivision 3 shall make information about the district, schools, programs, policies, and procedures available to all interested people.

Sec. 5. Minnesota Statutes 1996, section 120.064, subdivision 3, is amended to read:

Subd. 3. [SPONSOR.] A school board, private college, community college, state university, technical college, or the University of Minnesota may sponsor one or more charter schools.

No more than a total of 40 charter schools may be authorized not more than three of which may be sponsored by public post-secondary institutions. The state board of education shall advise potential sponsors when the maximum number of charter schools has been authorized.

Sec. 6. Minnesota Statutes 1996, section 120.064, subdivision 8, is amended to read:

Subd. 8. [REQUIREMENTS.] (a) A charter school shall meet all applicable state and local health and safety requirements.

(b) The A school must sponsored by a school board may be located in the sponsoring any district, unless another the school board agrees to locate a charter school sponsored by another district in its boundaries of the district of the proposed location disapproves by written resolution. If such a school board denies a request to locate within its boundaries a charter school sponsored by another district school board, the sponsoring district school board may appeal to the state board of education. If the state board authorizes the school, the state board shall sponsor the school.

(c) A charter school must be nonsectarian in its programs, admission policies, employment practices, and all other operations. A sponsor may not authorize a charter school or program that is affiliated with a nonpublic sectarian school or a religious institution.

(d) Charter schools shall not be used as a method of providing education or generating revenue for students who are being home-schooled.

(e) The primary focus of a charter school must be to provide a comprehensive program of instruction for at least one grade or age group from five through 18 years of age. Instruction may be provided to people younger than five years and older than 18 years of age.

(f) A charter school may not charge tuition.

(g) A charter school is subject to and shall comply with chapter 363 and section 126.21.

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(h) A charter school is subject to and shall comply with the pupil fair dismissal act, sections 127.26 to 127.39, and the Minnesota public school fee law, sections 120.71 to 120.76.

(i) A charter school is subject to the same financial audits, audit procedures, and audit requirements as a school district. The audit must be consistent with the requirements of sections 121.904 to 121.917, except to the extent deviations are necessary because of the program at the school. The department of children, families, and learning, state auditor, or legislative auditor may conduct financial, program, or compliance audits.

(j) A charter school is a school district for the purposes of tort liability under chapter 466.

Sec. 7. Minnesota Statutes 1996, section 120.064, subdivision 10, is amended to read:

Subd. 10. [PUPIL PERFORMANCE.] A charter school must design its programs to at least meet the outcomes adopted by the state board of education for public school students. In the absence of state board requirements, the school must meet the outcomes contained in the contract with the sponsor. The achievement levels of the outcomes contained in the contract may exceed the achievement levels of any outcomes adopted by the state board for public school students.

Sec. 8. Minnesota Statutes 1996, section 120.064, is amended by adding a subdivision to read:

Subd. 14a. [REVIEW AND COMMENT.] The department shall review and comment on the evaluation, by the chartering school district, of the performance of a charter school before the charter school's contract is renewed. The information from the review and comment shall be reported to the state board of education in a timely manner. Periodically, the state board shall report trends or suggestions based on the evaluation of charter school contracts to the education committees of the state legislature.

Sec. 9. Minnesota Statutes 1996, section 120.064, subdivision 20a, is amended to read:

Subd. 20a. [TEACHERS TEACHER AND OTHER EMPLOYEE RETIREMENT.] (a) Teachers in a charter school shall be public school teachers for the purposes of chapters 354 and 354a.

(b) Except for teachers under paragraph (a), employees in a charter school shall be public employees for the purposes of chapter 353.

Sec. 10. Minnesota Statutes 1996, section 121.611, is amended to read:

121.611 [NONLICENSED COMMUNITY EXPERTS; VARIANCE.]

Subdivision 1. [AUTHORIZATION.] Notwithstanding any law or state board of education rule to the contrary, the board of teaching may allow school districts or charter schools to hire nonlicensed community experts to teach in the public schools or charter schools on a limited basis according to this section.

Subd. 2. [APPLICATIONS; CRITERIA.] The school district or charter school shall apply to the board of teaching for approval to hire nonlicensed teaching personnel from the community. In approving or disapproving the district's application for each community expert, the board shall consider:

(1) the qualifications of the community person whom the district or charter school proposes to employ;

(2) the reasons for the district's need for a variance from the teacher licensure requirements;

(3) the district's efforts to obtain licensed teachers, who are acceptable to the school board, for the particular course or subject area or the charter school's efforts to obtain licensed teachers for the particular course or subject area;

(4) the amount of teaching time for which the community expert would be hired;

(5) the extent to which the district or charter school is utilizing other nonlicensed community experts under this section;

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(6) the nature of the community expert's proposed teaching responsibility; and

(7) the proposed level of compensation to the community expert.

Subd. 3. [APPROVAL OF PLAN.] The board of teaching shall approve or disapprove an application within 60 days of receiving it from a school district or charter school.

Sec. 11. Minnesota Statutes 1996, section 123.951, is amended to read:

123.951 [SCHOOL SITE DECISION-MAKING AGREEMENT.]

Subdivision 1. [DEFINITION.] "Education site" means a separate facility. A program within a facility is an education site if the school board recognizes it as a site.

Subd. 2. [AGREEMENT.] (a) A Either the school board or the school site decision-making team may request that the school board may enter into an agreement with a school site decision-making team concerning the governance, management, or control of any the school in the district. Upon a written request from a proposed school site decision-making team, An initial A school site decision-making team shall be appointed by the school board and may include the school principal, representatives of teachers in the school or their designee, representatives of other employees in the school, representatives of parents of pupils in the school, representatives of pupils in the school, representatives of or other members in the community, or others determined appropriate by the board. The school site decision-making team shall include the school principal or other person having general control and supervision of the school. The site decision-making team must reflect the diversity of the education site. No more than one-half of the members shall be employees of the district.

(b) School site decision-making agreements must delegate powers and, duties, and broad management responsibilities to site teams and involve staff members, students as appropriate, and parents in decision making.

(c) An agreement shall include a statement of powers, duties, responsibilities, and authority to be delegated to and within the site.

(d) An agreement may include:

(1) a mechanism to implement flexible support systems for improvement in student achievement of education outcomes an achievement contract according to subdivision 4;

(2) a decision-making structure that allows teachers to identify instructional problems and control and apply the resources needed to solve them;

(3) a mechanism to allow principals, or other persons having general control and supervision of the school, to make decisions regarding how financial and personnel resources are best allocated at the site and from whom goods or services are purchased;

(4) (3) a mechanism to implement parental involvement programs under section 126.69 and to provide for effective parental communication and feedback on this involvement at the site level;

(5) (4) a provision that would allow the team to determine who is hired into licensed and nonlicensed positions;

(6) (5) a provision that would allow teachers to choose the principal or other person having general control;

(7) direct contact with other social service providers;

(8) in-service training for site decision-making team members for financial management of school sites; and

(9) (6) an amount of revenue allocated to the site under subdivision 3; and

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(7) any other powers and duties determined appropriate by the board.

The school board of the district remains the legal employer under clauses (5) (4) and (6) (5).

(d) (e) Any powers or duties not delegated to the school site management team in the school site management agreement shall remain with the school board.

(e) (f) Approved agreements shall be filed with the commissioner. If a school board denies a request to enter into a school site management agreement, it shall provide a copy of the request and the reasons for its denial to the commissioner.

Subd. 3. [REVENUE AND COST ALLOCATION.] Revenue for a fiscal year received or receivable by the district shall be allocated to education sites based on the agreement between the school board and the site decision-making team. Revenue shall remain allocated to each site until used by the site. The site teams and the board may enter an agreement that permits the district to provide services and retain the revenue required to pay for the services provided. The district remains responsible for legally entering into contracts and expending funds. For the purposes of this subdivision, "allocation" means that the determination of the use of the revenue shall be under the control of the site. The district may charge the accounts of each site the actual costs of goods and services from the general or capital funds attributable to the site.

Subd. 4. [ACHIEVEMENT CONTRACT.] A school board may enter a written education site achievement contract with each site decision-making team for the purpose of setting learning performance expectations for that site, including the goals for improvement in each area of student performance during the next year, a plan to assist the education site if their goals are not achieved, and other performance expectations and measures determined by the board and the site decision-making team.

Subd. 5. [COMMISSIONER'S ROLE.] The commissioner of children, families, and learning, in consultation with appropriate educational organizations, shall:

(1) upon request, provide technical support for districts and sites with agreements under this section;

(2) conduct and compile research on the effectiveness of site decision making; and

(3) periodically report on and evaluate the effectiveness of site management agreements on a statewide basis.

Sec. 12. Minnesota Statutes 1996, section 123.972, subdivision 5, is amended to read:

Subd. 5. [REPORT.] (a) By October 1 of each year, the school board shall use standard statewide reporting procedures the commissioner develops and adopt a report that includes the following:

(1) student performance goals for meeting state graduation standards adopted for that year;

(2) results of local assessment data, and any additional test data;

(3) the annual school district improvement plans; and

(4) information about district and learning site progress in realizing previously adopted improvement plans; and

(5) the amount and type of revenue attributed to each education site as defined in section 123.951, subdivision 2.

(b) The school board shall publish the report in the local newspaper with the largest circulation in the district or by mail. The board shall make a copy of the report available to the public for inspection. The board shall send a copy of the report to the commissioner of children, families, and learning by October 15 of each year.

(c) The title of the report shall contain the name and number of the school district and read "Annual Report on Curriculum, Instruction, and Student Performance." The report must include at least the following information about advisory committee membership:

(1) the name of each committee member and the date when that member's term expires;

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(2) the method and criteria the school board uses to select committee members; and

(3) the date by which a community resident must apply to next serve on the committee.

Sec. 13. Minnesota Statutes 1996, section 124.248, is amended by adding a subdivision 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. The amount of building lease aid per pupil unit 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 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 for the current fiscal year.

Sec. 14. Minnesota Statutes 1996, section 124.248, subdivision 4, is amended to read:

Subd. 4. [OTHER AID, GRANTS, REVENUE.] (a) A charter school is eligible to receive other aids, grants, and revenue according to chapters 120 to 129, as though it were a school district except that, notwithstanding section 124.195, subdivision 3, the payments shall be of an equal amount on each of the 23 payment dates unless a charter school is in its first year of operation in which case it shall receive on its first payment date 15 10 percent of its cumulative amount guaranteed for the year and 22 payments of an equal amount thereafter the sum of which shall be 85 90 percent of the cumulative amount guaranteed. However, it may not receive aid, a grant, or revenue if a levy is required to obtain the money, except as otherwise provided in this section. Federal aid received by the state must be paid to the school, if it qualifies for the aid as though it were a school district.

(b) Any revenue received from any source, other than revenue that is specifically allowed for operational, maintenance, capital facilities revenue under paragraph (c), and capital expenditure equipment costs under this section, may be used only for the planning and operational start-up costs of a charter school. Any unexpended revenue from any source under this paragraph must be returned to that revenue source or conveyed to the sponsoring school district, at the discretion of the revenue source.

(c) A charter school may receive money from any source for capital facilities needs. Any unexpended capital facilities revenue must be reserved and shall be expended only for future capital facilities purposes. In the year-end report to the state board of education, the charter school shall report the total amount of funds received from grants and other outside sources.

Sec. 15. Minnesota Statutes 1996, section 124.248, is amended by adding a subdivision 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 for that year.

Sec. 16. Minnesota Statutes 1996, section 125.05, subdivision 1c, is amended to read:

Subd. 1c. [SUPERVISORY AND COACH QUALIFICATIONS; CODE OF ETHICS.] The state board of education shall issue licenses under its jurisdiction to persons the state board finds to be qualified and competent for their respective positions under the rules it adopts. The state board of education may develop, by rule, a code of ethics for supervisory personnel covering standards of professional practices, including areas of ethical conduct and professional performance and methods of enforcement.

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Sec. 17. Minnesota Statutes 1996, section 125.05, subdivision 2, is amended to read:

Subd. 2. [EXPIRATION AND RENEWAL.] (a) Each license issued the department of children, families, and learning issues through the its licensing section of the department of children, families, and learning must bear the date of issue. Licenses must expire and be renewed in accordance with according to the respective rules adopted by the board of teaching or the state board of education adopts. Requirements for renewal of renewing a license must include production of showing satisfactory evidence of successful teaching experience for at least one school year during the period covered by the license in grades or subjects for which the license is valid or completion of completing such additional preparation as the board of teaching shall prescribe prescribes. The state board of education shall establish requirements for renewal of renewing the licenses of supervisory personnel must be established by the state board of education.

(b) The board of teaching shall offer alternative continuing relicensure options for teachers who are accepted into and complete the national board for professional teaching standards certification process, and offer additional continuing relicensure options for teachers who earn national board for professional teaching standards certification. Continuing relicensure requirements for teachers who do not maintain national board for professional teaching standards certification are those the board prescribes.

Sec. 18. Minnesota Statutes 1996, section 126.22, subdivision 3, is amended to read:

Subd. 3. [ELIGIBLE PROGRAMS.] (a) A pupil who is eligible according to subdivision 2 may enroll in area learning centers under sections 124C.45 to 124C.48, or according to section 121.11, subdivision 12.

(b) A pupil who is eligible according to subdivision 2 and who is between the ages of 16 and 21 may enroll in post-secondary courses under section 123.3514.

(c) A pupil who is eligible under subdivision 2, may enroll in any public elementary or secondary education program. However, a person who is eligible according to subdivision 2, clause (b), may enroll only if the school board has adopted a resolution approving the enrollment.

(d) A pupil who is eligible under subdivision 2, may enroll in any nonprofit, nonpublic, nonsectarian school that has contracted with the serving school district to provide educational services.

(e) A pupil who is between the ages of 16 and 21 may enroll in any adult basic education programs approved under section 124.26 and operated under the community education program contained in section 121.88.

Sec. 19. Minnesota Statutes 1996, section 126.22, subdivision 3a, is amended to read:

Subd. 3a. [ADDITIONAL ELIGIBLE PROGRAM.] A pupil who is at least 16 years of age, who is eligible under subdivision 2, clause (a), and who has been enrolled only in a public school, if the pupil has been enrolled in any school, during the year immediately before transferring under this subdivision, may transfer to any nonprofit, nonpublic school that has contracted with the serving school district to provide nonsectarian educational services. Such a school must enroll every eligible pupil who seeks to transfer to the school under this program subject to available space.

Sec. 20. Laws 1995, First Special Session chapter 3, article 11, section 21, subdivision 3, is amended to read:

Subd. 3. [CHARTER SCHOOL EVALUATION.] For the state board of education to evaluate the performance of charter schools authorized according to Minnesota Statutes, section 120.064:

$75,000 . . . . . 1996

The state board must review and comment on the evaluation, by the chartering school district, of the performance of a charter school before that charter school's contract is renewed. The state board may provide assistance to a school district in evaluating a charter school that has been chartered by that school board. The board must report annually to the education committees of the legislature on the results of its evaluations. This amount is available until June 30, 1997.

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Sec. 21. Laws 1996, chapter 412, article 4, section 34, subdivision 4, is amended to read:

Subd. 4. [COMMUNITY-BASED CHARTER SCHOOL GRANT.] For a grant for community-based charter schools involving the participation of an operating foundation, the city and county, and St. Paul public schools located in independent school district No. 625, St. Paul:

$300,000 . . . . . 1997

The commissioner may establish criteria and any reporting or match requirements for the grant under this section.

Sec. 22. [GRANT PROGRAM TO PROMOTE PROFESSIONAL TEACHING STANDARDS.]

Subdivision 1. [ESTABLISHMENT.] A grant program to promote professional teaching standards through the national board for professional teaching standards for fiscal year 1998 is established to provide eligible teachers with the opportunity to receive national board for professional teaching standards certification and to reward teachers who have already received such certification.

Subd. 2. [ELIGIBILITY.] An applicant for a grant must be a licensed K-12 school teacher employed in a state school. To be eligible for a grant, the teacher must have been employed as a teacher for a minimum of five school years and demonstrate either that the national board for professional teaching standards has accepted the teacher as a candidate for board certification or that the teacher already has received board certification.

Subd. 3. [APPLICATION PROCESS.] To obtain a grant to participate in the national board for professional teaching standards certification process or to receive a reward for already completing the board certification process, a teacher must submit an application to the commissioner of children, families, and learning in the form and manner the commissioner establishes. The applicant must demonstrate either that the national board for professional teaching standards has accepted the teacher as a candidate for board certification or that the teacher already has received board certification. The commissioner shall consult with the state board of teaching when reviewing the applications.

Subd. 4. [GRANT AWARDS; PROCEEDS.] (a) The commissioner may award matching grants of $1,000 each to eligible teachers who provide a matching amount through collaboration with either a school district, professional organization, or both and are accepted as candidates for national board for professional teaching standards certification. Grant recipients shall use the grant to participate in the certification process. Within 24 months of receiving certification, a grant recipient must satisfactorily complete one year of teaching service in a state school or repay the state the amount of the grant, except if the commissioner determines that death or disability prevents the grant recipient from providing the one year of teaching service.

(b) The commissioner may award grants to eligible teachers who have earned national board for professional teaching standards certification. The amount of each grant shall not exceed $1,000 and the commissioner shall establish criteria to determine the actual amount of each grant. Grant recipients shall use the grant proceeds for educational purposes, including purchasing instructional materials, equipment, or supplies and realizing professional development opportunities.

Sec. 23. [LABORATORY SCHOOL GRANTS.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of children, families, and learning shall make grants to post-secondary institutions to establish laboratory schools that cooperate with interested school districts to develop innovative teaching techniques that enhance students' learning experiences. A laboratory school must be nonsectarian in its programs, admissions policies, employment practices, and all other operations.

Subd. 2. [GRANT APPLICATION.] A public or private post-secondary institution located in the state may submit an application for a grant. Each grant application must include:

(1) the location of the laboratory school determined in collaboration with a school district, or proposed as a charter school;

(2) a five-year fiscal plan demonstrating that the school shall operate with no additional state revenue except revenue received under Minnesota Statutes, chapters 124 and 124A, and the grant money awarded under this section; and

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(3) for an applicant seeking a grant to improve lifework learning, a description of how the applicant will use information technologies and participate in partnerships with kindergarten through grade 12 schools and post-secondary institutions, business and industry, labor, agriculture, government, and community-based organizations.

The commissioner of children, families, and learning, in consultation with interested post-secondary institutions, shall establish guidelines and an application process for the grants. In awarding a grant, the commissioner shall give priority to an eligible applicant that meets the criteria in clause (3).

Subd. 3. [GRANT MONEY.] The grant money may be used for:

(1) technology;

(2) equipment;

(3) teacher mentorships;

(4) building remodeling, renovation, or repair;

(5) disseminating innovative and effective teaching techniques;

(6) education research to develop teaching methods, assessments, and curriculum design;

(7) developing creative opportunities for parental involvement;

(8) furthering school integration efforts; and

(9) other inventive teaching and learning practices designed to implement the high school graduation standards under Minnesota Statutes, section 121.11, subdivision 7c.

Sec. 24. [GIFTED AND TALENTED GRANTS.]

Subdivision 1. [ESTABLISHMENT.] Gifted and talented grants are established to provide access to an appropriate program for students identified as gifted or talented. A school district or any group of school districts must use the grants to establish a process for identifying gifted and talented students, offer access to challenging learning experiences for students in kindergarten through grade 12, and provide for staff development in meeting the learning needs of gifted and talented students.

Subd. 2. [ELIGIBILITY; CRITERIA.] An applicant for a gifted and talented grant must be a school district or any group of school districts. The commissioner of children, families, and learning, a representative of the alliance of the Minnesota educators of the gifted and talented, a representative of the Minnesota council of the gifted and talented, and a representative of the challenge task force shall establish the criteria for awarding grants for appropriate programs.

Subd. 3. [APPLICATION.] A school district or any group of school districts must submit an application to the commissioner of children, families, and learning in the form and manner the commissioner establishes.

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 grant recipient 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.

Sec. 25. [PERFORMANCE FUNDING OPTIONS.]

Consistent with state high school graduation requirements, statewide testing requirements, and other performance indicators, the commissioner, in consultation with the state board of education and appropriate stakeholders, shall recommend to the legislature performance funding options for successful schools and for schools at risk to be implemented for the 1999-2000 school year.

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Sec. 26. [DEADLINE AND PENALTY WAIVED.]

The deadline and penalty under Minnesota Statutes, section 124A.22, subdivision 2a, do not apply for aid payments for the 1998-1999 biennium.

Sec. 27. [ST. PAUL COMMUNITY-BASED SCHOOL PROGRAM; APPROPRIATION.]

$3,000,000 in fiscal year 1998 is appropriated from the general fund to the commissioner of children, families, and learning for a grant to independent school district No. 625, St. Paul, for the establishment and operation of a community-based school program. The purpose of the program is to improve student achievement and to provide an integrated set of academic, health, social, and recreational support services year-round, and for an extended day to children, families, and the community.

Independent school district No. 625 shall collaborate with the city of St. Paul; Ramsey county; the commissioner of children, families, and learning; and a nonprofit operating foundation located in St. Paul to establish and operate the program. Before implementing the program, the district must submit the following to the commissioner:

(1) the name and address of the school or schools to be community-based schools;

(2) the grade levels and number of students to be served;

(3) general demographic characteristics of the area and students to be served;

(4) the education curriculum and other programs to be offered;

(5) the goals of the school and the means to measure student achievement;

(6) a budget and operating plan, including the governing structure, financial commitments, and program commitments by the city, county, and foundation to the program; and

(7) documentation of community support.

This money may also be used to construct, remodel, design, renovate, equip, and repair facilities used for a community-based school program. This appropriation is available until June 30, 1999.

Sec. 28. [APPROPRIATIONS.]

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. [STATEWIDE TESTING.] For implementing statewide testing and establishing a performance baseline under section 14:

$2,500,000 . . . . . 1998

$2,500,000 . . . . . 1999

The commissioner shall contract with an institution of higher education to establish an independent office of educational accountability.

Any balance in the first year does not cancel but is available in the second year.

Subd. 3. [LABORATORY SCHOOL GRANTS.] For laboratory school grants under section 24:

$2,500,000 . . . . . 1998

Any balance in the first year does not cancel but is available in the second year.

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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 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.

$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.

Subd. 5. [TEACHER EDUCATION IMPROVEMENT.] For board of teaching responsibilities relating to teacher licensure restructuring and implementation of the teaching residency program:

$450,000 . . . . . 1998

$450,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

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The board of teaching shall use the funds for further development of the results-oriented teacher licensure system, for pilot site grants and other methods of implementing the teacher residency program, and for programs relating to teacher mentoring.

Subd. 6. [SCIENCE-MATHEMATICS GRANT.] For continuation of systemic change in science and mathematics education programs:

$1,352,000 . . . . . 1998

$1,352,000 . . . . . 1999

$20,000 of the appropriation in 1998 and $20,000 in 1999 is for the south central Minnesota talented youth program.

Any balance in the first year does not cancel but is available in the second year.

Subd. 7. [MINNESOTA HOMEWORK HELPLINE; METRO HOMEWORK HOTLINE.] For the Minnesota homework helpline and the metro homework hotline:

$100,000 . . . . . 1998

$100,000 . . . . . 1999

These appropriations are available to assist students with homework by telephone or other interactive technology. The program providers must offer assistance to students five days per week. The revenue allocated to each program is contingent upon that program matching each $1 of state revenue with $2 of local or private funding or in-kind contributions.

Subd. 8. [GIFTED AND TALENTED GRANTS.] For grants for gifted and talented programs according to section 26:

$1,500,000 . . . . . 1998

$1,500,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

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

This appropriation is available until June 30, 1999.

Subd. 10. [CHARTER SCHOOL BUILDING LEASE AID.] For building lease aid according to section 124.248, subdivision 2a:

$1,078,000 . . . . . 1998

$1,577,000 . . . . . 1999

The 1999 appropriation includes $120,000 for 1998 and $1,457,000 for 1999.

Subd. 11. [CHARTER SCHOOL START-UP GRANTS.] For charter school start-up grants under Minnesota Statutes, section 124.248:

$500,000 . . . . . 1998

$1,000,000 . . . . . 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.

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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 pupil units in the district. At least 30 percent must be used for the purposes of paragraph (a).

Subd. 13. [WEST ST. PAUL-MENDOTA HEIGHTS-EAGAN GRANT.] For a grant to independent school district No. 197, West St. Paul-Mendota Heights-Eagan, for implementing multiple pathways for students to meet graduation standards:

$167,000 . . . . . 1998

The district must match the grant in an amount determined by the commissioner of children, families, and learning. The appropriation is available until June 30, 1999.

Subd. 14. [PROFESSIONAL TEACHING STANDARDS CERTIFICATION GRANTS.] For grants to teachers for professional teaching standards certification:

$400,000 . . . . . 1998

This appropriation shall be used for grants to eligible teachers accepted as candidates for national board for professional teaching standards certification; for grants to eligible teachers who have earned national board for professional teaching standards certification for purchasing instructional materials, equipment, or supplies and realizing professional development opportunities; and for the commissioner to pay for four half-time state coordinators that grants to school districts working cooperatively to establish support networks to counsel and assist teacher candidates for national board for professional teaching standards certification. The grants must be used to hire up to four half-time statewide coordinators who must be licensed kindergarten through grade 12 public school teachers. The commissioner shall determine the form and manner for grant applications. Applications must include an implementation plan that demonstrates collaboration among school districts and professional organizations in providing support activities to facilitate the work of the coordinators.

Any balance in the first year does not cancel but is available in the second year.

Subd. 15. [SCHOOL ENRICHMENT PARTNERSHIP PROGRAM.] For school enrichment partnership program aid according to Minnesota Statutes, section 124.255:

$500,000 . . . . . 1998

Any balance remaining in the first year does not cancel but is available in the second year.

Subd. 16. [EARLY INTERVENTION READING CHALLENGE GRANTS.] For early intervention reading challenge grants:

$500,000 . . . . . 1998

The commissioner of children, families, and learning shall make grants to school sites to train teachers and adopt curriculum enhancements that provide intense instruction for students with difficulty learning to read. Priority shall be given to school sites that are committed to significantly increasing the percentage of students who are able to read at grade level by the end of third grade and have high concentrations of students receiving free and reduced lunch. The grant money may be used for establishing the school site as a training site for teachers in other districts, teacher training, or other start-up costs

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related to curriculum enhancements for early intervention reading programs for children in primary grades. The grant recipients must match one local dollar for every state dollar received. The local match may include in-kind contributions. The commissioner shall consider regional balance in distributing grants.

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

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. 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. 29. [REPEALER.]

Minnesota Statutes 1996, section 121.11, subdivision 8, is repealed.

ARTICLE 6

ACADEMIC PERFORMANCE

Section 1. Minnesota Statutes 1996, section 120.101, subdivision 5, is amended to read:

Subd. 5. [AGES AND TERMS.] For the 1988-1989 school year and the school years thereafter, Every child between seven and 16 years of age shall receive instruction for at least the number of days each year required under subdivision 5b. For the 2000-2001 school year and later school years, every child between seven and 18 years of age shall receive instruction for at least the number of days each year required under subdivision 5b. 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 at least equivalent to half of each day for the number of days each year set out in subdivision 5b. Except as provided in subdivision 5a, a parent may withdraw a child under the age of seven from enrollment at any time.

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Sec. 2. Minnesota Statutes 1996, section 120.101, is amended by adding a subdivision to read:

Subd. 5d. [WITHDRAWAL FROM SCHOOL.] Any student between 16 and 18 years old who seeks to withdraw from school, and the student's parent or guardian must:

(1) attend a meeting with school personnel to discuss the educational opportunities available to the student, including alternative educational opportunities; and

(2) sign a written election to withdraw from school.

Sec. 3. [120.1015] [LENGTH OF SCHOOL YEAR; DAYS OF INSTRUCTION.]

A school board's annual school calendar shall include at least three additional days of student instruction beyond the number of days of student instruction the board formally adopted as its school calendar at the beginning of the 1996-1997 school year.

Sec. 4. Minnesota Statutes 1996, section 121.602, subdivision 1, is amended to read:

Subdivision 1. [PROGRAM OUTCOMES.] The outcomes of the educational effectiveness program are to:

(1) increase meaningful parental involvement in site-based decision making;

(2) improve results-oriented instructional educational processes;

(3) create flexible school-based organizational structures; and

(4) improve student achievement.

Sec. 5. Minnesota Statutes 1996, section 121.602, subdivision 2, is amended to read:

Subd. 2. [ADVISORY TASK FORCE; PROGRAM IMPLEMENTATION.] The commissioner of children, families, and learning shall develop and maintain a program of educational effectiveness and results-oriented instruction education. The commissioner may appoint an advisory task force to assist the department of children, families, and learning in developing an implementation program for providing staff development to school district staff in educational effectiveness. The program shall be based on established principles of instructional design and the essential elements of effective instruction as determined by educational research. The program shall take into account the diverse needs of the school districts due to such factors as district size and location.

Sec. 6. Minnesota Statutes 1996, section 121.602, subdivision 4, is amended to read:

Subd. 4. [EDUCATIONAL EFFECTIVENESS STAFF DEVELOPMENT.] The department of children, families, and learning shall provide assistance to the school districts in implementing an educational effectiveness program. In selecting an agency to provide assistance to the school districts, the department shall consider such factors as support of the proposal by the participating school districts and the extent to which the proposal provides for participation by school district staff. The department shall evaluate the performance of the service providers. The staff development shall be facilitated by building level decision-making teams. The staff development shall include clarification of individual school missions, goals, expectations, enhancement of collaborative planning and collegial relationships among the building staff, improvement of curriculum, assessment, instructional and organizational skills, improvement of financial and management skills, and planning of other staff development programs.

Sec. 7. Minnesota Statutes 1996, section 123.35, subdivision 8, is amended to read:

Subd. 8. The board may establish and maintain public evening schools and adult and continuing education programs and such evening schools and adult and continuing education programs when so maintained shall be available to all persons over 16 years of age through the 1999-2000 school year and over 18 years of age beginning with the 2000-2001 school year who, from any cause, are unable to attend the full-time elementary or secondary schools of such district.

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Sec. 8. Minnesota Statutes 1996, section 123.70, subdivision 5, is amended to read:

Subd. 5. If a person transfers from one elementary or secondary school to another, the person shall be allowed school board of a public school district or the administrator of a nonpublic school may allow the person up to a maximum of 30 days to submit one or more of the statements as specified in subdivision 1 or 3, during which time the person may enroll in and attend the school. If a person enrolls in a child care facility in which at least 75 percent of children in the facility participate on a one-time only or occasional basis to a maximum of 45 hours per child, per month, or is placed in a facility by a crisis nursery, the person shall be exempt from all requirements of this section for up to five consecutive days, starting from the first day of attendance.

Sec. 9. Minnesota Statutes 1996, section 123.70, subdivision 7, is amended to read:

Subd. 7. Each school or child care facility shall maintain on file immunization records for all persons in attendance that contain the information required by subdivisions 1, 2, and 3. The school shall maintain the records for at least five years after the person attains the age of majority. The department of health and the board of health, as defined in section 145A.02, subdivision 2, in whose jurisdiction the school or child care facility is located, shall have access to the files maintained pursuant to this subdivision. When a person transfers to another elementary or secondary school or child care facility, the administrator or other person having general control and supervision of the school or child care facility shall assist the person's parent or guardian in the transfer of the immunization file to the person's new school or child care facility within 30 days of the transfer. Upon the request of a public or private post-secondary educational institution, as defined in section 135A.14, the administrator or other person having general control or supervision of a school shall assist in the transfer of a student's immunization file to the post-secondary institution.

Sec. 10. Minnesota Statutes 1996, section 123.70, subdivision 10, 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, 8, 9, and 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, 8, 9, 10, and 12 during the 1999-2000 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.

(e) for persons enrolled in grades 7 through 12 during the 2000-2001 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.

(f) (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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Sec. 11. Minnesota Statutes 1996, section 124.26, subdivision 1b, is amended to read:

Subd. 1b. [PROGRAM REQUIREMENTS.] An adult basic education program is a day or evening program offered by a district that is for people over 16 years of age through the 1999-2000 school year and over 18 years of age beginning with the 2000-2001 school year who do not attend an elementary or secondary school. The program offers academic instruction necessary to earn a high school diploma or equivalency certificate. Tuition and fees may not be charged to a learner for instruction paid under this section, except for a security deposit to assure return of materials, supplies, and equipment.

Sec. 12. Minnesota Statutes 1996, section 124.276, is amended by adding a subdivision to read:

Subd. 2a. [AID.] A district with an approved plan shall receive $30 per pupil served at the school site with the family connections program. The district must provide a match of $15 per pupil served at the school site with the family connections program.

Sec. 13. [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 during the current school 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 during the current school 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 supplement meals the district served during the current school year.

Sec. 14. Minnesota Statutes 1996, 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, giving priority to serving persons between 16 and 21 years of age. Secondary pupils to be served are those who are chemically dependent, not likely to graduate from high school, need assistance in vocational and basic skills, can benefit from employment experiences, and need assistance in transition from school to employment. Adults to be served are dislocated homemakers and workers and others who need basic educational and social services. In addition to offering programs, the center shall coordinate the use of other available educational services, social services, and post-secondary institutions in the community. The A center may also provide programs, including work-based, service-learning, and applied learning opportunities developed in collaboration with a local education and employment transitions partnership, and services for elementary and secondary pupils who are not attending the center to assist them in completing high being successful in school. Pupils eligible to be served are those age five to adults 21 and older who qualify under the graduation incentives program in section 126.22, subdivision 2.

Sec. 15. Minnesota Statutes 1996, section 126.22, subdivision 2, is amended to read:

Subd. 2. [ELIGIBLE PUPILS.] The following pupils are eligible to participate in the education options graduation incentives program:

(a) any pupil under the age of 21 who:

(1) performs substantially below the performance level for pupils of the same age in a locally determined achievement test; or

(2) is at least one year behind in satisfactorily completing coursework or obtaining credits for graduation; or

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(3) is pregnant or is a parent; or

(4) has been assessed as chemically dependent; or

(5) has been excluded or expelled according to sections 127.26 to 127.39; or

(6) has been referred by a school district for enrollment in an eligible program or a program pursuant to section 126.23; or

(7) is a victim of physical or sexual abuse; or

(8) has experienced mental health problems; or

(9) has experienced homelessness sometime within six months before requesting a transfer to an eligible program; or

(10) speaks English as a second language or has limited English proficiency; or

(11) has withdrawn from school or has been chronically truant; or

(b) any person who is at least 21 years of age and who:

(1) has received fewer than 14 years of public or nonpublic education, beginning at age 5;

(2) has not completed the requirements for a high school diploma; and

(3) at the time of application, (i) is eligible for reemployment insurance benefits or has exhausted the benefits, (ii) is eligible for, or is receiving income maintenance and support services, as defined in section 268.0111, subdivision 5, or (iii) is eligible for services under the displaced homemaker program, state wage-subsidy program, or any programs under the federal Jobs Training Partnership Act or its successor.

Sec. 16. Minnesota Statutes 1996, section 144.29, is amended to read:

144.29 [HEALTH RECORDS; CHILDREN OF SCHOOL AGE.]

It shall be the duty of every school nurse, school physician, school attendance officer, superintendent of schools, principal, teacher, and of the persons charged with the duty of compiling and keeping the school census records, to cause a permanent public health record to be kept for each child of school age. Such record shall be kept in such form that it may be transferred with the child to any school which the child shall attend within the state and transferred to the commissioner when the child ceases to attend school. It shall contain a record of such health matters as shall be prescribed by the commissioner, and of all mental and physical defects and handicaps which might permanently cripple or handicap the child student health data as defined in section 13.32, subdivision 2, paragraph (a), and shall be classified as private data as defined in section 13.32, subdivision 3. Nothing in sections 144.29 to 144.32 shall be construed to require any child whose parent or guardian objects in writing thereto to undergo a physical or medical examination or treatment. A copy shall be forwarded to the proper department of any state to which the child shall remove. Each district shall assign a teacher, school nurse, or other professional person to review, at the beginning of each school year, the health record of all pupils under the assignee's direction. Growth, results of vision and hearing screening, and findings obtained from health assessments must be entered periodically on the pupil's health record.

Sec. 17. Minnesota Statutes 1996, section 260.185, subdivision 1, is amended to read:

Subdivision 1. [COURT ORDER, FINDINGS, REMEDIES, TREATMENT.] If the court finds that the child is delinquent, it shall enter an order making any of the following dispositions of the case which are deemed necessary to the rehabilitation of the child:

(a) Counsel the child or the parents, guardian, or custodian;

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(b) 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 child's 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, in a group foster care facility which is under the management and supervision of said commissioner;

(c) Subject to the supervision of the court, transfer legal custody of the child to one of the following:

(1) a child-placing agency; or

(2) the local social services agency; or

(3) a reputable individual of good moral character. No person may receive custody of two or more unrelated children unless licensed as a residential facility pursuant to sections 245A.01 to 245A.16; or

(4) a county home school, if the county maintains a home school or enters into an agreement with a county home school; or

(5) 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;

(d) Transfer legal custody by commitment to the commissioner of corrections;

(e) If the child is found to have violated a state or local law or ordinance which has resulted in damage to the person or property of another, the court may order the child to make reasonable restitution for such damage;

(f) Require the child to pay a fine of up to $700; the court shall order payment of the fine in accordance with a time payment schedule which shall not impose an undue financial hardship on the child;

(g) 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 to provide this treatment or care, the court may order it provided;

(h) If the court believes that it is in the best interests of the child and of public safety that the driver's license of the child be canceled until the child's 18th birthday, the court may recommend to the commissioner of public safety the cancellation of the child's license for any period up to the child's 18th birthday, and the commissioner is hereby authorized to cancel such license without a hearing. At any time before the termination of the period of cancellation, the court may, for good cause, recommend to the commissioner of public safety that the child be authorized to apply for a new license, and the commissioner may so authorize.

(i) If the court believes that it is in the best interest of the child and of public safety that the child is enrolled in school, the court may require the child to remain enrolled in a public school until the child reaches the age of 18 or completes all requirements needed to graduate from high school. Any child enrolled in a public school under this paragraph is subject to the provisions of the Pupil Fair Dismissal Act in chapter 127.

If the child is petitioned and found by the court to have committed a controlled substance offense under sections 152.021 to 152.027, the court shall determine whether the child unlawfully possessed or sold the controlled substance while driving a motor vehicle. If so, the court shall notify the commissioner of public safety of its determination and order the commissioner to revoke the child's driver's license for the applicable time period specified in section 152.0271. If the child does not have a driver's license or if the child's driver's license is suspended or revoked at the time of the delinquency finding, the commissioner shall, upon the child's application for driver's license issuance or reinstatement, delay the issuance or reinstatement of the child's driver's license for the applicable time period specified in section 152.0271. Upon receipt of the court's order, the commissioner is authorized to take the licensing action without a hearing.

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If the child is petitioned and found by the court to have committed or attempted to commit an act in violation of section 609.342; 609.343; 609.344; 609.345; 609.3451; 609.746, subdivision 1; 609.79; or 617.23, or another offense arising out of a delinquency petition based on one or more of those sections, the court shall order an independent professional assessment of the child's need for sex offender treatment. An assessor providing an assessment for the court must be experienced in the evaluation and treatment of juvenile sex offenders. If the assessment indicates that the child is in need of and amenable to sex offender treatment, the court shall include in its disposition order a requirement that the child undergo treatment. Notwithstanding section 13.42, 13.85, 144.335, 260.161, or 626.556, the assessor has access to the following private or confidential data on the child if access is relevant and necessary for the assessment:

(1) medical data under section 13.42;

(2) corrections and detention data under section 13.85;

(3) health records under section 144.335;

(4) juvenile court records under section 260.161; and

(5) local welfare agency records under section 626.556.

Data disclosed under this paragraph may be used only for purposes of the assessment and may not be further disclosed to any other person, except as authorized by law.

If the child is found delinquent due to the commission of an offense that would be a felony if committed by an adult, the court shall make a specific finding on the record regarding the juvenile's mental health and chemical dependency treatment needs.

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; and

(b) what alternative dispositions were considered by the court and why such dispositions were not appropriate in the instant case.

Sec. 18. [REGIONAL TRAINING SITES FOR HIV EDUCATION IN SCHOOLS.]

The commissioner of children, families, and learning shall establish four regional training centers in partnership with school districts outside of the cities of Minneapolis and St. Paul to implement comprehensive curriculum and program to prevent and reduce the risk of HIV/AIDS as required under Minnesota Statutes, section 121.203. The commissioner shall provide technical and financial assistance to each school district to identify policy, curriculum, and service gaps, to purchase curriculum and materials and to provide training or services to fill these gaps, to identify opportunities to coordinate HIV education with other special curriculum offerings, and to assess the effectiveness of curriculum and services. Each regional training center will provide programs and services to nearby school districts to meet the requirements of Minnesota Statutes, section 121.203. The commissioner and each school district shall work with a community advisory committee to establish and review the operation of each training center.

Sec. 19. [TARGETED BREAKFAST GRANTS.]

Subdivision 1. [ESTABLISHMENT.] A grant program is established to further explore the policy of providing nutritious breakfasts to public elementary school children, without regard to whether the children are eligible to receive free or reduced price meals, so that they can learn effectively.

Subd. 2. [ELIGIBILITY.] An applicant for a grant must be an elementary school that participates in the federal school breakfast and lunch programs. For a school to receive a grant, at least 33 percent of the lunches the school served to children during the preceding school year must have been provided free or at a reduced price.

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Subd. 3. [APPLICATION PROCESS.] To obtain a grant to receive reimbursement for providing breakfasts to all children, whether or not the children are from low-income families and eligible to receive free or reduced price meals, a public elementary school must submit an application to the commissioner of children, families, and learning in the form and manner the commissioner prescribes. The application must describe how the applicant will encourage all children in the school to participate in the breakfast program. The applicant also must demonstrate to the commissioner that the applicant will receive a $1 local match of funding or in-kind contributions for every $3 of state funding the applicant receives. The commissioner may require additional information from the applicant.

Subd. 4. [GRANT AWARDS.] The commissioner shall award grants to the four grant recipients under Laws 1994, chapter 647, article 8, section 35, and then on a first-come, first-served basis to all other schools that meet the requirements of subdivisions 2 and 3 until funding under this section is expended. The commissioner shall determine the amount of the grant using average statewide statistics and individual school statistics adjusted for other state and federal reimbursements. Grant recipients must use the proceeds to provide breakfasts to school children every day school is in session.

Sec. 20. [APPROPRIATIONS.]

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. [ABATEMENT AID.] For abatement aid according to Minnesota Statutes, section 124.214:

$13,661,000 . . . . . 1998

$13,612,000 . . . . . 1999

The 1998 appropriation includes $684,000 for 1997 and $12,977,000 for 1998.

The 1999 appropriation includes $1,441,000 for 1998 and $12,171,000 for 1999.

Subd. 3. [NONPUBLIC PUPIL AID.] For nonpublic pupil education aid according to Minnesota Statutes, sections 123.79 and 123.931 to 123.947:

$9,430,000 . . . . . 1998

$9,688,000 . . . . . 1999

The 1998 appropriation includes $900,000 for 1997 and $8,530,000 for 1998.

The 1999 appropriation includes $947,000 for 1998 and $8,741,000 for 1999.

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 . . . . . 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.

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(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.

(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.

Subd. 5. [SUMMER FOOD SERVICE.] For summer food service:

$15,000 . . . . . 1998

$15,000 . . . . . 1999

Subd. 6. [SCHOOL BREAKFAST.] To operate the school breakfast program according to Minnesota Statutes, sections 124.6469 and 124.6472:

$456,000 . . . . . 1998

$456,000 . . . . . 1999

If the appropriation amount attributable to either year is insufficient, the rate of payment for each fully paid student breakfast 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. Any unexpected balance remaining shall be used to subsidize the payments made for school lunch aid per Minnesota Statutes, section 124.646.

Up to one percent of the program funding can be used by the department of children, families, and learning for technical and administrative assistance.

Subd. 7. [SCHOOL BREAKFAST OUTREACH.] To initiate school breakfast programs under Minnesota Statutes, section 124.6469, at school sites not currently providing a school breakfast program or at schools that initiated a school breakfast program during the 1996-1997 school year:

$15,000 . . . . . 1998

$15,000 . . . . . 1999

Subd. 8. [SUMMER FOOD SERVICE REPLACEMENT AID.] For summer food service replacement aid under Minnesota Statutes, section 124.6475:

$150,000 . . . . . 1998

$150,000 . . . . . 1999

Subd. 9. [TARGETED BREAKFAST GRANTS.] For targeted breakfast grants:

$1,037,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 10. [FAMILY CONNECTIONS AID.] For family connections aid according to Minnesota Statutes, section 124.276:

$250,000 . . . . . 1998

$250,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

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Subd. 11. [NETT LAKE COMMUNITY CENTER.] For a grant to independent school district No. 707, Nett Lake, for maintenance replacement funds to cover delayed lease payments for the collaborative community center:

$70,000 . . . . . 1998

Subd. 12. [HIV EDUCATION TRAINING SITES.] For regional training sites for HIV education in schools:

$200,000 . . . . . 1998

This appropriation is contingent on a matching grant of $100,000 in federal funds.

This appropriation is available until June 30, 1999.

Subd. 13. [WILLMAR.] For a grant to independent school district No. 347, Willmar:

$200,000 . . . . . 1998

This appropriation shall be used to improve community understanding of the cultures within the community, improve communication between the district and the Latino community, improve parental involvement in the school, to use mediation to resolve conflict in the school and community, and to assist surrounding communities and districts in achieving these goals.

This appropriation is available only if the federal lawsuit against the district is dismissed for settlement.

This appropriation is available until June 30, 1999.

Subd. 14. [PSEO REPLACEMENT AID.] For PSEO replacement aid:

$12,000 . . . . . 1998

The 1998 appropriation includes $12,000 for 1997 and $-0- for 1998.

Sec. 21. [REPEALER.]

Minnesota Statutes 1996, sections 121.602, subdivisions 3 and 5; 124.177; and 124.276, subdivision 2, are repealed.

ARTICLE 7

EDUCATION POLICY ISSUES

Section 1. Minnesota Statutes 1996, section 12.21, subdivision 3, is amended to read:

Subd. 3. [SPECIFIC AUTHORITY.] In performing duties under this chapter and to effect its policy and purpose, the governor may:

(1) make, amend, and rescind the necessary orders and rules to carry out the provisions of this chapter and section 216C.15 within the limits of the authority conferred by this section, with due consideration of the plans of the federal government and without complying with sections 14.001 to 14.69, but no order or rule has the effect of law except as provided by section 12.32;

(2) ensure that a comprehensive emergency operations plan and emergency management program for this state are developed and maintained, and are integrated into and coordinated with the emergency plans of the federal government and of other states to the fullest possible extent;

(3) in accordance with the emergency operations plan and the emergency management program of this state, procure supplies and equipment, institute training programs and public information programs, and take all other preparatory steps, including the partial or full activation of emergency management organizations in advance of actual disaster to ensure the furnishing of adequately trained and equipped forces of emergency management personnel in time of need;

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(4) make studies and surveys of the industries, resources, and facilities in this state as may be necessary to ascertain the capabilities of the state for emergency management and to plan for the most efficient emergency use of those industries, resources, and facilities;

(5) on behalf of this state, enter into mutual aid arrangements or cooperative agreements with other states and with Canadian provinces, and coordinate mutual aid plans between political subdivisions of this state;

(6) delegate administrative authority vested in the governor under this chapter, except the power to make rules, and provide for the subdelegation of that authority;

(7) cooperate with the president and the heads of the armed forces, the emergency management agency of the United States and other appropriate federal officers and agencies, and with the officers and agencies of other states in matters pertaining to the emergency management of the state and nation, including the direction or control of:

(i) emergency preparedness drills and exercises;

(ii) warnings and signals for drills or actual emergencies and the mechanical devices to be used in connection with them;

(iii) shutting off water mains, gas mains, electric power connections and the suspension of all other utility services;

(iv) the conduct of persons in the state and the movement and cessation of movement of pedestrians and vehicular traffic during, prior, and subsequent to drills or actual emergencies;

(v) public meetings or gatherings; and

(vi) the evacuation, reception, and sheltering of persons;

(8) contribute to a political subdivision, within the limits of the appropriation for that purpose, not more than 25 percent of the cost of acquiring organizational equipment that meets standards established by the governor;

(9) formulate and execute, with the approval of the executive council, plans and rules for the control of traffic in order to provide for the rapid and safe movement over public highways and streets of troops, vehicles of a military nature, materials for national defense and war or for use in any war industry, for the conservation of critical materials or for emergency management purposes, and coordinate the activities of the departments or agencies of the state and its political subdivisions concerned directly or indirectly with public highways and streets, in a manner that will best effectuate those plans;

(10) alter or adjust by executive order, without complying with sections 14.01 to 14.69, the working hours, work days and work week of, and annual and sick leave provisions and payroll laws regarding all state employees in the executive branch as the governor deems necessary to minimize the impact of the disaster or emergency, conforming the alterations or adjustments to existing state laws, rules, and collective bargaining agreements to the extent practicable;

(11) authorize the commissioner of children, families, and learning to alter school schedules, curtail school activities, or order schools closed without affecting state aid to schools, as defined in section 120.05, and including charter schools under section 120.064, and elementary schools enrolling prekindergarten pupils in district programs.

Sec. 2. Minnesota Statutes 1996, section 120.0111, is amended to read:

120.0111 [MISSION STATEMENT.]

The mission of public education in Minnesota, a system for lifelong learning, is to ensure individual academic achievement, an informed citizenry, and a highly productive work force. This system focuses on the learner, promotes and values diversity, provides participatory decision-making, ensures accountability, models democratic principles, creates and sustains a climate for change, provides personalized learning environments, encourages learners to reach their maximum

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potential, and integrates and coordinates human services for learners. The public schools of this state shall serve the needs of the students by cooperating with the students' parents and legal guardians to develop the students' intellectual capabilities and life-work skills in a safe and positive environment. It is part of the department's mission that within the department's resources the commissioner shall endeavor to:

(1) prevent the waste or unnecessary spending of public money;

(2) use innovative fiscal and human resource practices to manage the state's resources and operate the department as efficiently as possible;

(3) coordinate the department's activities wherever appropriate with the activities of other governmental agencies;

(4) use technology where appropriate to increase agency productivity, improve customer service, increase public access to information about government, and increase public participation in the business of government;

(5) utilize constructive and cooperative labor-management practices to the extent otherwise required by chapters 43A and 179A;

(6) include specific objectives in the performance report required under section 15.91 to increase the efficiency of agency operations, when appropriate; and

(7) recommend to the legislature, in the performance report of the department required under section 15.91, appropriate changes in law necessary to carry out the mission of the department.

Sec. 3. Minnesota Statutes 1996, section 120.101, subdivision 5c, is amended to read:

Subd. 5c. [EDUCATION RECORDS.] (a) A school district from which a student is transferring must transmit the student's educational records, within ten business days of a request, to the school district in which the student is enrolling. School districts must make reasonable efforts to determine the school district in which a transferring student is next enrolling in order to comply with this subdivision.

(b) A school district that transmits a student's educational records to another school district or other educational entity to which the student is transferring must include in the transmitted records information about disciplinary action taken as a result of any incident in which the student possessed or used a dangerous weapon.

Sec. 4. Minnesota Statutes 1996, section 123.35, is amended by adding a subdivision to read:

Subd. 19c. [JOINTLY OWNED FACILITIES.] Notwithstanding section 123.35, subdivision 19a, if a school district and a city jointly own a building or site, the district and the city may enter into an agreement that extends beyond the end of the fiscal year to pay operating costs for that building or site.

Sec. 5. Minnesota Statutes 1996, section 123.3514, subdivision 4c, is amended to read:

Subd. 4c. [LIMIT ON PARTICIPATION.] A pupil who first enrolls in grade 11 may not enroll in post-secondary courses under this section for secondary credit for more than the equivalent of two academic years. A pupil who first enrolls in grade 12 may not enroll in post-secondary courses under this section for secondary credit for more than the equivalent of one academic year. If a pupil in grade 11 or 12 first enrolls in a post-secondary course for secondary credit during the school year, the time of participation shall be reduced proportionately. If a pupil is in a learning year or other year-round program and begins each grade in the summer session, summer sessions shall not be counted against the time of participation. A pupil who has graduated from high school cannot participate in a program under this section. A pupil who has completed course requirements for graduation but who has not received a diploma may participate in the program under this section.

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Sec. 6. Minnesota Statutes 1996, section 123.3514, subdivision 8, is amended to read:

Subd. 8. [TRANSPORTATION.] A parent or guardian of a pupil enrolled in a course for secondary credit may apply to the pupil's district of residence for reimbursement for transporting the pupil between the secondary school in which the pupil is enrolled or the pupil's home and the post-secondary institution that the pupil attends. The commissioner shall establish guidelines for providing state aid to districts to The state shall provide state aid to a district in an amount sufficient to reimburse the parent or guardian for the necessary transportation costs, which shall be based on financial need when the family's or guardian's income is at or below the poverty level, as determined by the federal government. The reimbursement may not exceed shall be the pupil's actual cost of transportation or 15 cents per mile traveled, whichever is less. Reimbursement may not be paid for more than 250 miles per week. However, if the nearest post-secondary institution is more than 25 miles from the pupil's resident secondary school, the weekly reimbursement may not exceed the reimbursement rate per mile times the actual distance between the secondary school or the pupil's home and the nearest post-secondary institution times ten. The state shall pay aid to the district according to the guidelines established under this subdivision. Chapter 14 does not apply to the guidelines.

Sec. 7. Minnesota Statutes 1996, 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, remodel, improve, furnish, or equip the building or site of a magnet school facility according to contracts entered into within 15 24 months after the date on which a grant is awarded.

Sec. 8. Minnesota Statutes 1996, section 125.12, subdivision 14, is amended to read:

Subd. 14. [RECORDS RELATING TO INDIVIDUAL TEACHER; ACCESS; EXPUNGEMENT.] All evaluations and files generated within a school district relating to each individual teacher shall be available to each individual teacher upon written request. Effective January 1, 1976, all evaluations and files, wherever generated, relating to each individual teacher shall be available to each individual teacher upon written request. The teacher shall have the right to reproduce any of the contents of the files at the teacher's expense and to submit for inclusion in the file written information in response to any material contained therein.

A school district may destroy the files as provided by law and shall expunge from the teacher's file any material found to be false or substantially inaccurate through the grievance procedure required pursuant to section 179A.20, subdivision 4; provided, the grievance procedure promulgated by the director of the bureau of mediation services, pursuant to section 179A.04, subdivision 3, clause (h), shall apply to those principals and supervisory employees not included in an appropriate unit as defined in section 179A.03. Expungement proceedings shall be commenced within the time period provided in the collective bargaining agreement for the commencement of a grievance. If no time period is provided in the bargaining agreement, the expungement proceedings shall commence within 15 days after the teacher has knowledge of the inclusion in the teacher's file of the material the teacher seeks to have expunged.

Sec. 9. Minnesota Statutes 1996, section 126.77, subdivision 1, is amended to read:

Subdivision 1. [VIOLENCE PREVENTION CURRICULUM.] (a) The commissioner of children, families, and learning, in consultation with the commissioners of health and human services, state minority councils, battered women's programs, sexual assault centers, representatives of religious communities, and the assistant commissioner of the office of drug policy and violence prevention, shall assist districts on request in developing or implementing a violence prevention program for students in kindergarten to grade 12 that can be integrated into existing curriculum. The purpose of the program is to help students learn how to resolve conflicts within their families and communities in nonviolent, effective ways.

(b) Each district is encouraged to integrate into its existing curriculum a program for violence prevention that includes at least:

(1) a comprehensive, accurate, and age appropriate curriculum on violence prevention, nonviolent conflict resolution, and sexual, racial, and cultural harassment, and student hazing that promotes equality, respect, understanding, effective communication, individual responsibility, thoughtful decision making, positive conflict resolution, useful coping skills, critical thinking, listening and watching skills, and personal safety;

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(2) planning materials, guidelines, and other accurate information on preventing physical and emotional violence, identifying and reducing the incidence of sexual, racial, and cultural harassment, and reducing child abuse and neglect;

(3) a special parent education component of early childhood family education programs to prevent child abuse and neglect and to promote positive parenting skills, giving priority to services and outreach programs for at-risk families;

(4) involvement of parents and other community members, including the clergy, business representatives, civic leaders, local elected officials, law enforcement officials, and the county attorney;

(5) collaboration with local community services, agencies, and organizations that assist in violence intervention or prevention, including family-based services, crisis services, life management skills services, case coordination services, mental health services, and early intervention services;

(6) collaboration among districts and SCs;

(7) targeting early adolescents for prevention efforts, especially early adolescents whose personal circumstances may lead to violent or harassing behavior;

(8) opportunities for teachers to receive in-service training or attend other programs on strategies or curriculum designed to assist students in intervening in or preventing violence in school and at home; and

(9) administrative policies that reflect, and a staff that models, nonviolent behaviors that do not display or condone sexual, racial, or cultural harassment or student hazing.

(c) The department may provide assistance at a neutral site to a nonpublic school participating in a district's program.

Sec. 10. Minnesota Statutes 1996, section 127.26, is amended to read:

127.26 [CITATION.]

Sections 127.26 to 127.39 may be cited as "The pupil fair dismissal act of 1974."

Sec. 11. Minnesota Statutes 1996, section 127.27, subdivision 5, is amended to read:

Subd. 5. [EXPULSION.] "Expulsion" means an action taken by a school board action to prohibit an enrolled pupil from further attendance for a period that shall not extend beyond an amount of time equal up to one school year 12 months from the date a the pupil is expelled.

Sec. 12. Minnesota Statutes 1996, section 127.27, subdivision 6, is amended to read:

Subd. 6. [PARENT.] "Parent" means (a) one of the pupil's parents, or (b) in the case of divorce or legal separation, or if the child's mother was not married to the child's father when the child was conceived nor when the child was born, the custodial parent the parent or parents with physical custody of the pupil, including a noncustodial parent with legal custody who has provided the district with a current address and telephone number, or (c) a legally appointed guardian. In the case of a pupil with a disability under the age of 18, parent may include a district-appointed surrogate parent.

Sec. 13. Minnesota Statutes 1996, section 127.27, subdivision 7, is amended to read:

Subd. 7. [PUPIL.] "Pupil" means any student with or:

(1) without a disability under 21 years of age; or

(2) with a disability until September 1 after the child with a disability becomes 22 years of age;

(3) and who remains eligible to attend a public elementary or secondary school.

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Sec. 14. Minnesota Statutes 1996, section 127.27, subdivision 8, is amended to read:

Subd. 8. [SCHOOL.] "School" means any school as defined in Minnesota Statutes 1971, section 120.05, subdivision 2.

Sec. 15. Minnesota Statutes 1996, section 127.27, subdivision 10, is amended to read:

Subd. 10. [SUSPENSION.] "Suspension" means an action taken 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. Each suspension action shall include a readmission plan. The readmission plan shall include, where appropriate, a provision for implementing alternative programs to be implemented educational services upon readmission. Suspension may not be consecutively imposed 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 initiating an expulsion, in which case the school administration may extend the suspension up to 15 days. In no event shall suspension exceed 15 school days, provided that an In the case of a pupil with a disability, a suspension may not exceed ten school days. The school administration shall implement alternative program shall be implemented educational services to the extent that suspension exceeds five days. A separate administrative conference is required for each period of suspension.

Sec. 16. Minnesota Statutes 1996, section 127.27, is amended by adding a subdivision 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, special education services as indicated by appropriate assessment, homebound instruction, or enrollment in another district or in an alternative learning center under section 124C.45.

Sec. 17. Minnesota Statutes 1996, section 127.281, is amended to read:

127.281 [EXCLUSION AND EXPULSION OF PUPILS WITH A DISABILITY.]

When a pupil who has an individual education plan is excluded or expelled under sections 127.26 to 127.39 for misbehavior that is not a manifestation of the pupil's disabling condition disability, the district shall continue to provide special education and related services after a period of suspension, if suspension is imposed. The district shall initiate a review of the pupil's individual education plan within ten five school days of the commencement of commencing an expulsion, exclusion, or a suspension of ten days or more.

Sec. 18. Minnesota Statutes 1996, section 127.29, is amended to read:

127.29 [GROUNDS FOR DISMISSAL.]

Subdivision 1. No school shall dismiss any pupil without attempting to provide alternative programs of education prior to dismissal educational services before dismissal proceedings, except where it appears that the pupil will create an immediate and substantial danger to self or to surrounding persons or property. Such programs may include special tutoring, modification of the curriculum for the pupil, placement in a special class or assistance from other agencies.

Subd. 2. A pupil may be dismissed on any of the following grounds:

(a) willful violation of any reasonable school board regulation. Such regulation must be clear and definite to provide notice to pupils that they must conform their conduct to its requirements;

(b) willful conduct which that materially and substantially disrupts the rights of others to an education; or

(c) willful conduct which that endangers the pupil or other pupils, or the surrounding persons, or property of the school.

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Sec. 19. Minnesota Statutes 1996, section 127.30, subdivision 1, is amended to read:

Subdivision 1. No suspension The school administration shall not suspend a pupil from school shall be imposed without an informal administrative conference with the pupil, except. The informal administrative conference shall take place before the suspension, except where it appears that the pupil will create an immediate and substantial danger to self or to surrounding persons or property, in which case the conference shall take place as soon as practicable following the suspension.

Sec. 20. Minnesota Statutes 1996, section 127.30, is amended by adding a subdivision to read:

Subd. 1a. At the informal administrative conference, a school administrator shall notify the pupil of the grounds for the suspension, provide an explanation of the evidence the authorities have, and the pupil may present the pupil's version of the facts.

Sec. 21. Minnesota Statutes 1996, section 127.30, subdivision 2, is amended to read:

Subd. 2. A written notice containing the grounds for suspension, a brief statement of the facts, a description of the testimony, a readmission plan, and a copy of sections 127.26 to 127.39, shall be personally served upon the pupil at or before the time the suspension is to take effect, and upon the pupil's parent or guardian by certified mail within 48 hours of the conference. The district shall make reasonable efforts to notify the parents of the suspension by telephone as soon as possible following suspension. In the event a pupil is suspended without an informal administrative conference on the grounds that the pupil will create an immediate and substantial danger to surrounding persons or property, the written notice shall be served either personally or by certified mail upon the pupil and the pupil's parent or guardian within 48 hours of the suspension. Service by certified mail is complete upon mailing.

Sec. 22. Minnesota Statutes 1996, section 127.30, subdivision 3, is amended to read:

Subd. 3. Notwithstanding the provisions of subdivisions 1 and 2, the pupil may be suspended pending the school board's decision in the expulsion or exclusion hearing; provided that an alternative program shall be educational services are implemented to the extent that suspension exceeds five days.

Sec. 23. Minnesota Statutes 1996, section 127.31, subdivision 2, is amended to read:

Subd. 2. Written notice of intent to take action shall:

(a) be served upon the pupil and the pupil's parent or guardian personally or by certified mail;

(b) contain a complete statement of the facts, a list of the witnesses and a description of their testimony;

(c) state the date, time, and place of the hearing;

(d) be accompanied by a copy of sections 127.26 to 127.39;

(e) describe alternative educational programs services accorded the pupil prior to commencement of in an attempt to avoid the expulsion or exclusion proceedings; and

(f) inform the pupil and parent or guardian of the right to:

(1) have a representative of the pupil's own choosing, including legal counsel, at the hearing. The district shall advise the pupil's parent or guardian that free or low-cost legal assistance may be available and that a legal assistance resource list is available from the department of children, families, and learning;

(2) examine the pupil's records before the hearing;

(3) present evidence; and

(4) confront and cross-examine witnesses.

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Sec. 24. Minnesota Statutes 1996, section 127.31, subdivision 7, is amended to read:

Subd. 7. The hearing shall take place before:

(a) (1) an independent hearing officer;

(b) (2) a member of the school board;

(c) (3) a committee of the school board,; or;

(d) (4) the full school board;

as determined by the school board. The hearing shall be conducted in a fair and impartial manner.

Sec. 25. Minnesota Statutes 1996, section 127.31, subdivision 8, is amended to read:

Subd. 8. The proceedings of the hearing shall be recorded and preserved, at the expense of the school district, pending ultimate disposition of the action. The school board shall record the hearing proceedings at district expense, and a party may obtain a transcript at its own expense. Testimony shall be given under oath. The hearing officer or a member of the school board shall have the power to issue subpoenas and administer oaths.

Sec. 26. Minnesota Statutes 1996, section 127.31, subdivision 13, is amended to read:

Subd. 13. The recommendation of the hearing officer or school board member or committee shall be based solely upon substantial evidence presented at the hearing and must be made to the school board and served upon the parties within two days of the end of the hearing.

Sec. 27. Minnesota Statutes 1996, section 127.31, subdivision 14, is amended to read:

Subd. 14. The decision by The school board shall be based base its decision upon the recommendation of the hearing officer or school board member or committee and shall be rendered render its decision at a special meeting held within five days after receipt of receiving the recommendation. The school board may provide the parties with the opportunity to present exceptions and comments to the hearing officer's recommendations provided that neither party presents any evidence not admitted at the hearing. The decision shall by the school board must be based on the record, must be in writing, and must state the controlling facts found upon on which the decision is made shall be stated in sufficient detail to apprise the parties and the commissioner of children, families, and learning of the basis and reason for the decision.

Sec. 28. Minnesota Statutes 1996, section 127.31, subdivision 15, is amended to read:

Subd. 15. [ADMISSION OR READMISSION PLAN.] A school board may 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. 29. Minnesota Statutes 1996, section 127.311, is amended to read:

127.311 [GOOD FAITH EXCEPTION.]

A violation of the technical provisions of the pupil fair dismissal act of 1974, made in good faith, is not a defense to a disciplinary procedure under the act unless the pupil can demonstrate actual prejudice as a result of the violation.

Sec. 30. Minnesota Statutes 1996, section 127.32, is amended to read:

127.32 [APPEAL.]

A party to an exclusion or expulsion decision made pursuant to under sections 127.26 to 127.39 may be appealed 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

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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.

In an appeal under this section, the commissioner may affirm the decision of the agency 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 a the record of evidence presented at the hearing. Such ruling shall be binding upon the parties, subject to judicial review as provided in section 127.33. 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.

Sec. 31. Minnesota Statutes 1996, section 127.33, is amended to read:

127.33 [JUDICIAL REVIEW.]

The decision of the commissioner of children, families, and learning made pursuant to under sections 127.26 to 127.39 shall be is subject to judicial review in accordance with chapter 14 under sections 14.63 to 14.69. The decision of the commissioner is stayed pending an appeal under this section.

Sec. 32. Minnesota Statutes 1996, section 127.36, is amended to read:

127.36 [REPORT TO COMMISSIONER OF CHILDREN, FAMILIES, AND LEARNING.]

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 programs of education accorded educational services given the pupil prior to the commencement of before beginning exclusion or expulsion proceedings, and the reason for, the effective date, and the duration of the exclusion or expulsion.

Subd. 2. [REPORT.] The school board must include state student identification numbers of affected pupils on all dismissal reports required by the department. The department must report annually to the commissioner summary data on the number of dismissals by age, grade, gender, race, and special education status of the affected pupils.

Sec. 33. Minnesota Statutes 1996, section 127.37, is amended to read:

127.37 [NOTICE OF RIGHT TO BE REINSTATED.]

Whenever a pupil fails to return to school within ten school days of the termination of dismissal, a school administrator shall inform the pupil and the pupil's parents shall be informed by certified mail of the pupil's right to attend and to be reinstated in the public school.

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Sec. 34. Minnesota Statutes 1996, 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 in writing to effectuate the purposes of sections 127.26 to 127.39. The policies will shall emphasize the prevention of dismissal action preventing dismissals through early detection of problems. 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 learning programs educational services 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. 35. [127.465] [HAZING POLICY.]

Subdivision 1. [DEFINITIONS.] (a) "Hazing" means committing an act against a student, or coercing a student into committing an act, that creates a substantial risk of harm to a person in order for the student to be initiated into or affiliated with a student organization.

(b) "Student organization" means a group, club, or organization having students as its primary members or participants.

Subd. 2. [MODEL POLICY.] The commissioner of children, families, and learning shall maintain and make available to school boards a model policy on student or staff hazing that addresses the requirements of subdivision 3.

Subd. 3. [SCHOOL BOARD POLICY.] Each school board shall adopt a written policy governing student or staff hazing. The policy must apply to student behavior that occurs on or off school property and during and after school hours. The policy must include reporting procedures and disciplinary consequences for violating the policy. Disciplinary consequences must be sufficiently severe to deter violations and appropriately discipline prohibited behavior. Disciplinary consequences must conform with sections 127.27 to 127.39. Each school must include the policy in the student handbook on school policies.

Sec. 36. Minnesota Statutes 1996, section 128C.02, subdivision 2, is amended to read:

Subd. 2. [SEXUAL HARASSMENT AND VIOLENCE; HAZING.] The board of the league shall adopt a policy, rules, penalties, and recommendations addressing sexual harassment and sexual violence and hazing toward and by participants in league activities.

Sec. 37. Minnesota Statutes 1996, section 128C.02, is amended by adding a subdivision to read:

Subd. 9. [BUDGET.] The league is subject to the commissioner of finance's rules and instructions governing budget preparation. The league budget must be submitted to the commissioner of finance and to the legislature in the same manner as budgets of executive branch agencies.

Sec. 38. Minnesota Statutes 1996, 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 and review any private audits done for the league. League audits must include audits of administrative regions of the league. The league and its administrative regions 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.

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Sec. 39. [128C.13] [INVESTMENT.]

The governing board of the league may request the state board of investment to invest nonretirement funds of the league, and the state board of investment may invest these funds when requested.

Sec. 40. [135A.081] [REMEDIAL INSTRUCTION; HIGH SCHOOL DIPLOMA WARRANTY.]

Subdivision 1. [CONDITIONS.] A public post-secondary institution may provide remedial instruction if within 12 months of first enrollment, the institution determines that the student's English language reading or writing ability, or the student's mathematic ability does not rise to the level that is a necessary prerequisite to minimally acceptable comprehension of entry level courses or programs at the institution.

Subd. 2. [CONFIRMATION.] The institution's determination of a student's substandard ability is confirmed if the student scores below 12th grade level in a standardized test in any of the following areas covered by the determination: English language reading comprehension, English language composition, or mathematics.

Subd. 3. [HIGH SCHOOL DIPLOMA WARRANTY COVERAGE.] (a) If a student who graduated from a public high school scores below the 8th grade level on a confirming test, the student's high school shall pay the tuition for the student for all remedial courses in the area covered by the confirming test that the student takes in the first year after the student's graduation from high school. The student's high school shall pay one-half of the tuition for the student for all remedial courses in the area covered by the confirming test that the student takes in the second year after the student's graduation from high school. This subdivision shall apply to students graduating from a public high school on or after May 1, 1999.

(b) The payment of tuition by the public high school shall be waived if the high school can demonstrate, through the results of a standardized test, that the student had attained 8th grade level performance in the area covered by the confirming test prior to graduation.

Subd. 4. [NO CREDITS; STUDENT COSTS.] A post-secondary institution providing remedial instruction under this section must not award credit to a student toward a degree or program completion for remedial instruction provided under this section.

Subd. 5. [JUST CLAIM.] A request for payment for remedial instruction to a student under this section is, under section 123.40, subdivision 1, a just claim against the school district that includes the student's high school.

Sec. 41. [135A.155] [HAZING POLICY.]

The board of trustees of the Minnesota state colleges and universities shall, and the University of Minnesota is requested to, adopt a clear, understandable written policy on student conduct, including hazing. The policy must include procedures for reporting incidents of inappropriate hazing and for disciplinary actions against individual violators and organizations. The policy must be provided to students when they register and must be posted at appropriate locations on campus. A private post-secondary institution that is an eligible institution as defined in section 136A.101, subdivision 4, must adopt a policy that meets the requirements of this section.

Sec. 42. Minnesota Statutes 1996, section 245.91, subdivision 2, is amended to read:

Subd. 2. [AGENCY.] "Agency" means the divisions, officials, or employees of the state departments of human services and, health, children, families, and learning, and of local school districts and designated county social service agencies as defined in section 256G.02, subdivision 7, that are engaged in monitoring, providing, or regulating services or treatment for mental illness, mental retardation or a related condition, chemical dependency, or emotional disturbance.

Sec. 43. [PROTECTIVE SOFTWARE.]

Subdivision 1. [SOFTWARE RECOMMENDATIONS.] The commissioner of children, families, and learning shall research, evaluate, and make recommendations to school districts on computer software products that filter, block, or otherwise prevent the use of school computers for the transmission of any comment, request, suggestion, proposal, image, or other communication which is:

(1) obscene, indecent, or sexually explicit; or

(2) intended to promote or incite violence against other living persons.

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Subd. 2. [SCHOOL DISTRICTS.] Within one year of the commissioner completing the requirements of subdivision 1, each school district must adopt a policy on Internet usage.

Sec. 44. [CONSULTATION.]

The commissioner of children, families, and learning shall consult with the Minnesota school board association in preparing the model hazing policy under Minnesota Statutes, section 127.465.

Sec. 45. [CLASS SIZE PROJECT.]

A class size project is established in independent school district No. 12, Centennial. The purpose of this project is to establish that significantly lower class size and instructor-to-learner ratios in a suburban community will result in measurable achievements for students, staff, and parents.

Sec. 46. [INSTRUCTIONAL DAY CLARIFICATION.]

(a) This section applies to any school district employee who was scheduled to work on January 16, 1997, did not work on that day, and did not receive compensation for that day.

(b) Notwithstanding any law to the contrary, a school district must either: (1) allow any school district employee under paragraph (a) the opportunity to work on another day that the school district designates and must compensate the employee working on the designated day at the employee's normal rate of pay; or (2) compensate any school district employee under paragraph (a) for that day at the employee's normal rate of pay.

Sec. 47. [PARTNERS FOR QUALITY SCHOOL IMPROVEMENT PILOT TRAINING PROGRAM.]

Subdivision 1. [ESTABLISHMENT.] The school improvement training and performance pilot program is established to accelerate school quality and performance improvement initiatives that lead to improved student achievement in both high-performing and under-performing schools.

Subd. 2. [ELIGIBILITY.] A school district is eligible to apply for a grant to establish one or more school improvement training and performance sites. The application and selection process must be developed and implemented by the Minnesota academic excellence foundation and reviewed by the commissioner of children, families, and learning. Priority for participation must be given to school districts in which:

(1) the district has received an educational performance improvement grant under Laws 1994, chapter 647, article 7, section 18, and has demonstrated improvement in student learning as a result of the grant;

(2) one school or the district has completed training in a statewide quality improvement initiative;

(3) the district has demonstrated accountability by developing and communicating an agenda to increase student learning;

(4) there are significant numbers of students with critical learning needs and gaps in learning between these students and other groups of students; and

(5) site-based management is being implemented.

Subd. 3. [PROGRAM SERVICES.] The Minnesota academic excellence foundation must provide training and technical assistance to selected districts to:

(1) create plans for the districtwide deployment of quality improvement training to all staff;

(2) create a means for identifying and providing remedial, interventive, or preventive assistance to schools in the district, based upon the schools' performances against state and local goals and standards;

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(3) accelerate school performance and student learning in high-performing and under-performing schools; and

(4) train quality program trainers at each site.

Subd. 4. [SCHOOL DISTRICT PARTICIPANTS.] Selected districts must enter into a contract to achieve increases in student learning, staff development and performance, and administrative support services to schools within the district. Additionally, each selected district must:

(1) plan and deploy quality improvement and other training to all staff in the district;

(2) establish quality and performance goals and measure results and report the achieved results at the selected school sites; and

(3) assist in duplicating successful programs in other districts by providing training to other school districts for a period of up to four years, in collaboration with the Minnesota academic excellence foundation.

Subd. 5. [REPORT.] The Minnesota academic excellence foundation must report to the commissioner of children, families, and learning on the progress of the project and annually on the results of the project.

Sec. 48. [GRANT PROGRAM FOR VIOLENCE PREVENTION THROUGH THE DEVELOPMENT OF PLAYS, WORKSHOPS, AND EDUCATIONAL RESOURCES.]

Subdivision 1. [GRANT PROGRAM.] The commissioner shall administer a grant program to fund statewide programs to create and develop theatrical plays, workshops, and educational resources based on peer education models that promote increased awareness and prevention of sexual abuse, interpersonal violence, emotional violence, and sexual harassment. Programs eligible for grants must use a combination of theater professionals and prevention specialists in the delivery of the service and use a peer education model that uses researched and proven content in training youth to perform in the plays and workshops. Programs must provide the source material, the training program, develop the educational materials, and provide technical assistance.

Subd. 2. [GRANT PROCEDURE.] Programs may apply for a grant by submitting an application to the commissioner. The commissioner may distribute grants to one or more programs meeting the criteria described in subdivision 1.

Sec. 49. [EXEMPTION TO LABOR DAY SCHOOL START RESTRICTION.]

Subdivision 1. [1998-1999 AND 1999-2000 SCHOOL YEARS.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, for the 1998-1999 and 1999-2000 school years only, a school board may begin the elementary or secondary school year on the Wednesday, Thursday, or Friday prior to Labor Day.

Subd. 2. [COLUMBIA HEIGHTS.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, independent school district No. 13, Columbia Heights, may begin the school year before Labor Day only by the number of days necessary to accommodate the district building construction and remodeling project.

Subd. 3. [CROOKSTON.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, independent school district No. 593, Crookston, may begin the 1997-1998 school year the Wednesday before Labor Day to accommodate the transition into the new high school and the renovated junior high school building.

Subd. 4. [GRAND RAPIDS.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, independent school district No. 318, Grand Rapids, may begin the 1997-1998 school year before Labor Day only by the number of days necessary to accommodate the district building construction project.

Subd. 5. [ISLE.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, for the 1997-1998 school year, independent school district No. 473, Isle, may begin the elementary and secondary school year on August 18, 1997, in order for the school district to complete its conversion of an existing elementary school to a K-12 facility before the beginning of the 1998-1999 school year.

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Subd. 6. [LAKE PARK; AUDUBON.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, for the 1997-1998 school year, independent school district Nos. 24, Lake Park, and 21, Audubon, may begin the elementary and secondary school year on August 25, 1997, in order for independent school district No. 24, Lake Park, to accommodate its building renovation schedule at the end of that school year.

Subd. 7. [NEW PRAGUE.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, independent school district No. 721, New Prague, may begin the 1997-1998 school year prior to Labor Day only by the number of days necessary to accommodate the district building and remodeling project.

Subd. 8. [WAYZATA.] Notwithstanding Minnesota Statutes, section 126.12, subdivision 1, independent school district No. 284, Wayzata, may begin the 1997-1998 school year prior to Labor Day only by the number of days necessary to accommodate the transition into the new senior high school building.

Sec. 50. [FUND TRANSFERS.]

Subdivision 1. [HILL CITY.] (a) Notwithstanding Minnesota Statutes, section 121.912 or 121.9121, before June 30, 1997, independent school district No. 2, Hill City, may permanently transfer up to $55,000 from its general fund to its debt redemption fund for the purpose of repaying the principal and any interest owed on its outstanding debt service loans. Any amount transferred but not used to repay the debt service loans must be applied to the district's outstanding capital loan balance.

(b) The commissioner of children, families, and learning shall recompute the general education fund balance reduction for fiscal year 1997 for independent school district No. 2, Hill City. For purposes of this reduction, the commissioner shall lower the district's net unappropriated operating balance as of June 30, 1996, by the amount that is transferred from the general fund to the debt redemption fund under paragraph (a).

General education aid for fiscal year 1997 for independent school district No. 2, Hill City, must be adjusted according to this subdivision.

The general education levy attributable to fiscal year 1997 for independent school district No. 2, Hill City, must be adjusted according to this subdivision.

Subd. 2. [FERGUS FALLS.] Notwithstanding Minnesota Statutes, sections 121.912, 121.9121, and 475.61, subdivision 4, on June 30, 1997, independent school district No. 544, Fergus Falls, may permanently transfer up to $202,000 from its debt redemption fund to its building construction fund without making a levy reduction.

Subd. 3. [FOSSTON.] Notwithstanding Minnesota Statutes, sections 121.912, 121.9121, and 475.61, subdivision 4, on or before June 30, 1997, independent school district No. 601, Fosston, may permanently transfer up to $105,000 from the debt redemption fund to its building construction fund without making a levy reduction.

Subd. 4. [MEDFORD.] Notwithstanding Minnesota Statutes, sections 121.912 and 121.9121, independent school district No. 763, Medford, may permanently transfer up to a total of $200,000 by June 30, 1998, from reserve accounts in the general fund to the unreserved general fund. The transfers may be made from either the bus purchase account or from the reserve for operating capital account. Transfers from the bus purchase account may be made without making a levy reduction.

Subd. 5. [BELGRADE-BROOTEN-ELROSA.] Notwithstanding Minnesota Statutes, sections 121.912 and 121.9121, on June 30, 1997, independent school district No. 2364, Belgrade-Brooten-Elrosa, may permanently transfer up to $250,000 from the bus purchase account to its general fund.

Sec. 51. [CONVEYANCE OF TRUST FUND LANDS; MCLEOD COUNTY.]

Notwithstanding Special Laws 1858, chapter 21, as amended by Special Laws 1865, chapter 7; Minnesota Statutes 1866, chapter 35, title 1; Special Laws 1868, chapter 114; or any other law to the contrary, the McLeod county board of commissioners may transfer its existing authority to appoint the trustees of the Stevens Seminary to the Glencoe-Silver Lake school board. The board may also transfer any other authority held by the board over the trustees to the school board.

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Sec. 52. [INDEPENDENT SCHOOL DISTRICT NO. 4, MCGREGOR; LEVY.]

Independent school district No. 4, McGregor, may levy, with the approval of the commissioner, to eliminate a deficit in the net unappropriated balance in the operating funds of the district, determined and adjusted and certified by the commissioner as of June 30, 1997. This amount shall be reduced by referendum revenue authorized under Minnesota Statutes, section 124A.03, pursuant to a plan filed under Minnesota Statutes, section 121.917, and any other revenue made available for this purpose. The total levy for all years it is made shall not exceed the amount of the deficit. The proceeds of this levy or other available revenue shall only be used for cash flow requirements and shall not be used to supplement district revenue or income.

Sec. 53. [HIGH SCHOOL LEAGUE COMPENSATION PLAN.]

The current total compensation plan for the executive director and for all other league employees shall be reviewed by the commissioner of employee relations. In considering total compensation for league employees, the commissioner of employee relations shall compare league compensation to the compensation of other Minnesota state employees and school district employees, taking account of the knowledge, skills, responsibilities, and working conditions of the jobs.

Sec. 54. [MODEL STUDENT BILL OF RIGHTS AND RESPONSIBILITIES.]

The commissioner of children, families, and learning shall maintain and make available to school boards a model student bill of rights and responsibilities. The commissioner shall develop the model policy, in consultation with students involved in YMCA youth in government, Project 120, governor's scholars, the student council association, and other student groups.

Sec. 55. [STATE BOARD OF EDUCATION.]

The state board of education shall amend its guidelines for approving experimental management systems to eliminate the requirement for renewal after initial approval of an experimental management arrangement.

Sec. 56. [TEACHER RETIREMENT.]

(a) Notwithstanding Minnesota Statutes, section 354.41, subdivision 4, a person who is a member of the teacher retirement association and is employed by the Minnesota federation of teachers or its affiliated branches within the state or by the Minnesota education association on July 1, 1997, may remain a coordinated member.

(b) Notwithstanding Minnesota Statutes, section 354.41, subdivision 5, payments of the applicable employee contributions, employer contributions, and additional employer contributions under Minnesota Statutes, section 354.42, subdivisions 2, 3, and 5, must be made in a lump sum to the association on or before June 30 of each fiscal year.

Sec. 57. [APPROPRIATIONS.]

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. [PARTNERS FOR QUALITY SCHOOL IMPROVEMENT.] For the school improvement pilot training program:

$500,000 . . . . . 1998

Up to $20,000 may be used by the Minnesota academic excellence foundation to deliver training, coaching, technical assistance, and other services to selected districts. Contracts shall be awarded to at least six districts, two each to rural, suburban, and urban school districts. Any portion of the appropriation not expended in the first year shall not cancel but shall be available until June 30, 1999.

Subd. 3. [PREVENTING VIOLENCE THROUGH PLAYS AND WORKSHOPS.] For administering the grant program for preventing violence through developing plays, workshops, and educational resources:

$75,000 . . . . . 1998

$75,000 . . . . . 1999

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Subd. 4. [CENTENNIAL CLASS SIZE PROJECT.] For a grant to independent school district No. 12, Centennial, for the class size project:

$180,000 . . . . . 1998

$180,000 . . . . . 1999

Any balance remaining in the first year does not cancel but is available in the second year.

Subd. 5. [MODEL SCHOOL FOR CHRONIC TRUANTS.] For the model school for chronic truants located in the law enforcement center in Mankato:

$40,000 . . . . . 1998

$40,000 . . . . . 1999

Subd. 6. [AQUILA COMMUNITY TOGETHER PROJECT.] For a grant to independent school district No. 283, St. Louis Park, for the Aquila community together project:

$30,000 . . . . . 1998

$30,000 . . . . . 1999

This appropriation must be matched from nonstate sources.

Any balance in the first year does not cancel but is available in the second year.

Subd. 7. [MINNESOTA INTERNATIONAL CENTER.] For the Minnesota International Center to encourage and foster contacts between Minnesota school children, their teachers, and people from other nations through international classroom connection:

$80,000 . . . . . 1998

$80,000 . . . . . 1999

Subd. 8. [COMMUNITY HEALTH CENTER.] For independent school district No. 99, Esko, to develop and operate a community health and physical fitness center offering district residents programs in community health and fitness, athletic training services, and physical therapy:

$30,000 . . . . . 1998

This appropriation is contingent upon the school district obtaining a $30,000 in-kind contribution of physical fitness equipment from a private nonprofit source that is made permanently available to the community health and physical fitness center.

Subd. 9. [MCGREGOR GRANT.] For a grant to independent school district No. 4, McGregor, to reduce a net operating fund deficit:

$50,000 . . . . . 1998

Sec. 58. [REPEALER.]

Minnesota Statutes 1996, sections 120.105; 120.65; and 127.31, subdivision 6, are repealed.

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Sec. 59. [EFFECTIVE DATES.]

Section 1 applies to the 1997-1998 school year and thereafter. Section 35 is effective January 1, 1998. Sections 17, 42, 49, and 50 are effective the day following final enactment. Sections 37 and 38 are effective 30 days after final enactment. Section 51 is effective the day following final enactment without local approval pursuant to Minnesota Statutes, section 645.021, subdivision 2.

ARTICLE 8

LIBRARIES

Section 1. Minnesota Statutes 1996, section 134.155, subdivision 2, is amended to read:

Subd. 2. [GRANTS.] The commissioner of children, families, and learning, in consultation with the multicultural advisory committee established in section 126.82, shall award grants for professional development programs to recruit and educate people of color in the field of library science or information management. Grant applicants must be a public library jurisdiction with a growing minority population working in collaboration with an accredited institution of higher education with a library education program in the state of Minnesota.

Sec. 2. Minnesota Statutes 1996, section 134.155, subdivision 3, is amended to read:

Subd. 3. [PROGRAM REQUIREMENTS.] (a) A grant recipient shall recruit people of color to be library staff in public libraries and provide support in linking program participants with jobs in the recipient's library jurisdiction.

(b) A grant recipient shall establish an advisory council composed of representatives of communities of color.

(c) A grant recipient, with the assistance of the advisory council, may recruit high school students, undergraduate students or other persons; support them through the higher education application and admission process; advise them while enrolled; and link them with support resources in the college or university and the community.

(d) A grant recipient shall award stipends to people of color enrolled in a library education program to help cover the costs of tuition, student fees, supplies, and books. Stipend awards must be based upon a student's financial need and students must apply for any additional financial aid for which they are eligible to supplement this program. No more than ten percent of the grant may be used for costs of administering the program. Students must agree to work in the grantee library jurisdiction for at least two years after graduation if the student acquires a master's degree and at least three years after graduation if the student acquires both a bachelor's and a master's degree while participating in the program. If no full-time position is available in the library jurisdiction, the student may fulfill the work requirement in another Minnesota public library.

(e) The commissioner of children, families, and learning shall consider the following criteria in awarding grants:

(1) whether the program is likely to increase the recruitment and retention of persons of color in librarianship;

(2) whether grant recipients will establish or have a mentoring program for persons of color; and

(3) whether grant recipients will provide a library internship for persons of color while participating in this program.

Sec. 3. Minnesota Statutes 1996, section 134.34, subdivision 4, is amended to read:

Subd. 4. A regional library basic system support grant shall not be made to a regional public library system for a participating city or county which decreases the dollar amount provided for support for operating purposes of public library service below the amount provided by it for the second preceding year. This subdivision shall not apply to participating cities or counties where the adjusted net tax capacity of that city or county has decreased, if the dollar amount of the reduction in support is not greater than the dollar amount by which support would be decreased if the reduction in support were made in direct proportion to the decrease in adjusted net tax capacity.

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Sec. 4. [LIBRARY PILOT PROJECT.]

Subdivision 1. [ESTABLISHMENT.] Notwithstanding law to the contrary and subject to approvals in subdivision 2, a public library may operate as a pilot project jointly with the school library at Nashwauk-Keewatin high school, located in the city of Nashwauk. The public library is established to serve persons within the boundaries of independent school district No. 319, except the city of Keewatin.

Subd. 2. [APPROVALS.] Operation of the public library is contingent upon a resolution approved by the governing bodies of cities, towns, and unorganized townships within the geographical boundaries of independent school district No. 319, except for the city of Keewatin. For the purposes of this subdivision, the Itasca county board is designated as the governing body for the unorganized townships.

Subd. 3. [BOARD; APPOINTMENTS.] The resolution in subdivision 2 shall provide for a library board of five 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.

Subd. 4. [BOARD TERMS; COMPENSATION.] The library board members shall serve for the term of the pilot program. An appointing authority may remove for misconduct or neglect any member it has appointed to the board and may replace that member by appointment. Board members shall receive no compensation for their services but may be reimbursed for actual and necessary travel expenses incurred in the discharge of library board duties and activities.

Subd. 5. [FUNDING.] For taxes payable in 1998 and 1999 only, the library board may levy a tax in an amount up to $25,000 annually on property located within the boundaries of independent school district No. 319, except the city of Keewatin. The Itasca county auditor shall collect the tax and distribute it to the library board. The money may be used for library staff and for the purchase of library materials, including computer software. The levy must also fund the amount necessary to receive bookmobile services from the Arrowhead regional library system. For taxes payable in 1998 and 1999 only, the county may not levy under Minnesota Statutes, section 134.07, for the areas described in this section.

Subd. 6. [BUILDING.] The school district shall provide the physical space and costs associated with operating the library including, but not limited to, heat, light, telephone service, and maintenance.

Subd. 7. [ORGANIZATION.] Immediately after appointment, the library board shall organize by electing one of its number as president and one as secretary, and it may appoint other officers it finds necessary.

Subd. 8. [DUTIES.] The library board shall adopt bylaws and regulations for the library and for the conduct of its business as may be expedient and conformable to law. It shall have exclusive control of the expenditure of all money collected for it. The library board shall appoint a qualified library director and other staff, establish the compensation of employees, and remove any of them for cause. The library board may contract with the school board, the regional library board, or the city in which the library is located to provide personnel, fiscal, or administrative services. The contract shall state the personnel, fiscal, and administrative services and payments to be provided by each party.

Subd. 9. [CRITERIA.] The library shall meet all requirements in statutes and rules applicable to public libraries and school media centers. A media supervisor licensed by the board of teaching may be the director of the library. Public parking, restrooms, drinking water, and other necessities shall be easily accessible to library patrons.

Subd. 10. [REPORT.] The library board shall report to the department of children, families, and learning by February 1, 1999, about the costs of providing the library service and the number of patrons served.

Subd. 11. [EXPIRATION.] This section expires January 31, 2000.

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 department of children, families, and learning for the fiscal years designated.

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Subd. 2. [BASIC SUPPORT GRANTS.] For basic support grants according to Minnesota Statutes, sections 134.32 to 134.35:

$7,819,000 . . . . . 1998

$7,819,000 . . . . . 1999

The 1998 appropriation includes $781,000 for 1997 and $7,038,000 for 1998.

The 1999 appropriation includes $1,032,000 for 1998 and $7,038,000 for 1999.

Subd. 3. [LIBRARIANS OF COLOR.] For the librarians of color program according to Minnesota Statutes, section 134.155:

$55,000 . . . . . 1998

$55,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 4. [CHILDREN'S LIBRARY SERVICES GRANTS.] For grants for collaborative programs to strengthen library services to children, young people, and their families:

$150,000 . . . . . 1998

$150,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

Subd. 5. [MULTICOUNTY, MULTITYPE LIBRARY SYSTEMS.] For grants according to Minnesota Statutes, sections 134.353 and 134.354, to multicounty, multitype library systems:

$865,000 . . . . . 1998

$903,000 . . . . . 1999

The 1998 appropriation includes $52,000 for 1997 and $813,000 for 1998.

The 1999 appropriation includes $90,000 for 1998 and $813,000 for 1999.

Subd. 6. [REGIONAL PUBLIC LIBRARY SYSTEMS.] For grants to regional public library systems for outreach and direct library services to children and families:

$250,000 . . . . . 1998

$250,000 . . . . . 1999

In each year $63,000 is for the Metropolitan Library Services Agency and the remainder is for $17,000 to each of the other 11 regional public library systems.

Subd. 7. [LIBRARY PILOT PROJECT.] For a grant for the library pilot project under section 4:

$25,000 . . . . . 1998

Any balance in the first year does not cancel but is available in the second year.

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Sec. 6. [REPEALER.]

Minnesota Statutes 1996, section 134.34, subdivision 4a, is repealed.

Sec. 7. [EFFECTIVE DATE.]

Section 4 is effective in the territory located within independent school district No. 319, except Keewatin, the day after compliance with Minnesota Statutes, section 645.021, subdivision 3, by the last of all the governing bodies for the cities, towns, and unorganized townships. For the unorganized townships, the governing body is the Itasca county board.

ARTICLE 9

TECHNOLOGY

Section 1. Minnesota Statutes 1996, 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 for. 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.

(c) A district's ITV aid is the difference between its ITV revenue and the ITV levy.

(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.

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(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 this act expire.

Sec. 2. Laws 1995, First Special Session chapter 3, article 12, section 7, subdivision 1, is amended to read:

Subdivision 1. [STATE COUNCIL MEMBERSHIP.] The membership of the Minnesota education telecommunications council established in Laws 1993, First Special Session chapter 2, is expanded to include representatives of elementary and secondary education. The membership shall consist of three representatives from the University of Minnesota; three representatives of the board of trustees for Minnesota state colleges and universities; one representative of the higher education services offices; one representative appointed by the private college council; eight representatives selected by the commissioner of education children, families, and learning, at least one of which must come from each of the six higher education telecommunication regions; a representative from the information policy office; one member two members each from the senate and the house of representatives selected by the subcommittee on committees of the committee on rules and administration of the senate and the speaker of the house, one member from each body must be a member of the minority party; and three representatives of libraries, one representing regional public libraries, one representing multitype libraries, and one representing community libraries, selected by the governor. The council shall:

(1) develop a statewide vision and plans for the use of distance learning technologies and provide leadership in implementing the use of such technologies;

(2) recommend to the commissioner and the legislature by December 15, 1996, a plan for long-term governance and a proposed structure for statewide and regional telecommunications;

(3) recommend educational policy relating to telecommunications;

(4) determine priorities for use;

(5) oversee coordination of networks for post-secondary campuses, K-12 education, and regional and community libraries;

(6) review application for telecommunications access grants under Minnesota Statutes, section 124C.74 and recommend to the department grants for funding; and

(7) determine priorities for grant funding proposals; and

(8) work with the information policy office to ensure consistency of the operation of the learning network with standards of an open system architecture.

The council shall consult with representatives of the telecommunication industry in implementing this section.

Sec. 3. Laws 1996, chapter 412, article 12, section 11, is amended to read:

Sec. 11. [COOPERATIVE PURCHASING.]

The department of children, families, and learning shall work with the department of administration to make available to public libraries, public and nonpublic schools, political subdivisions and state agencies, state level contracts from multiple sources, including manufacturers and software publishers, for the purchase or lease of instructional and administrative software, computers, video, and network hardware. Notwithstanding Minnesota Statutes, section 471.345, public and nonpublic schools, public libraries, and political subdivisions may participate in the contracts a negotiated or a sealed bid contract legally entered into by the state of Minnesota, if it meets their technology purchasing needs.

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Sec. 4. [SITE-BASED TECHNOLOGY TRANSFORMATION LEARNING GRANTS.]

Subdivision 1. [ESTABLISHMENT; PURPOSE.] A matching grant program is established for school districts or a group of school districts, the residential academies, and the center for arts education to fund technology projects in support of learning and to increase and enhance closer ties with the community. Projects that are eligible for grant funds include, but are not limited to, hardware and software purchases or leasing and installation, establishment or expansion of local or wide area networks, technical support, and training and staff development in the use of technology and software. Districts may use the funds for youth entrepreneurship and school-to-work activities, other collaborative efforts, or year-round open enrollment projects.

Subd. 2. [GOALS.] The goals for this grant program include the creation of projects that accomplish one or more of the following:

(1) enhance teaching and learning productivity through the use of technology;

(2) develop individual learner classroom-based teaching and learning systems that can be aggregated into site, district, and state frameworks;

(3) develop personalized learning plans designed to give learners more responsibility for their learning success and change the role of teacher to learning facilitator;

(4) match and allocate resources;

(5) create a curriculum environment that is multiplatform;

(6) provide user and contributor access to electronic libraries;

(7) schedule activities;

(8) automate progress reports;

(9) increase collaboration between school district and sites, with businesses, higher education institutions, libraries, and local government units;

(10) correlate state-defined outcomes from the graduation rule to curriculum for each student;

(11) increase accountability through a reporting system;

(12) provide technical support, project evaluation, dissemination services, and replication; and

(13) connect to the Learning Network of Minnesota.

Subd. 3. [APPLICATION; ELIGIBILITY.] The commissioner of children, families, and learning shall establish a process and application forms for grant funds. Eligible applicants must, at a minimum, identify the specific site needs that the project will address, define the project's expected outcomes, and provide the source, type, and amounts of all matching funds. To be eligible for a site-based technology learning grant, a school district must:

(1) for districts of 5,000 pupils in average daily membership or more, have each dollar of grant money matched by at least one dollar of school district money, plus at least one dollar of either nonstate or nonschool district money, or in-kind contributions;

(2) for districts under 5,000 pupils in average daily membership, indicate what attempts to provide a one-to-one match have been made prior to the filing of the application;

(3) agree to disseminate and share information about its project;

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(4) provide a benefit to the greater community; and

(5) maintain any ongoing costs of support for the technology project after the initial funding under the grant program.

Districts may count toward their match any eligible expenditures made from July 1, 1996. The residential academies and the center for arts education do not need to provide a matching amount.

Subd. 4. [COMPETITIVE TECHNOLOGY TRANSFORMATION LEARNING GRANTS.] By August 15, 1997, the department of children, families, and learning shall establish guidelines and an application process. The money must provide technology at school sites, including media centers, community education sites, the center for arts education, or at the residential academies. The department shall consider the level of comprehensiveness of a district's technology plan including integration of curriculum and graduation standards in awarding the grants.

Sec. 5. [LEARNING AND ELECTRONIC CURRICULUM RESOURCE NETWORK.]

Subdivision 1. [RESOURCE NETWORK.] (a) The commissioner of children, families, and learning shall contract with multiple vendors to develop a learning resource network that expands the electronic curriculum library under Laws 1996, chapter 412, article 12, section 15, subdivision 4, paragraph (a), and to support the statewide implementation of the graduation standards.

(b) The expansion shall include a centralized repository of curriculum that serves as a resource for teachers and not for instructional delivery software. The curriculum contained within the library must be aligned with the content standards of the graduation rule. Post-secondary institutions may apply for the electronic curriculum resource project if the institutions make curriculum available through the repository. The department of children, families, and learning shall set standards to assist in alignment of individualized learning plans systems to the centralized repository. The commissioner may require a match of local and private funds as part of the application process.

(c) The commissioner shall consult with representatives from the public and private sector in the development, use, and operation of the learning resource network. The commissioner shall compile a list of vendors of software that can be used to support implementation of the graduation standards. The commissioner shall also identify district-initiated projects and facilitate collaboration between districts to develop and adapt electronic teaching and administering tools. In addition to the electronic curriculum repository vendors, the sites in clauses (1) to (5) shall be considered as vendors eligible for grants:

(1) a project for the Gopher biology shareware at the University of Minnesota to make multimedia instructional management software available at no cost to both kindergarten through grade 12 and higher education faculty throughout the state, to train faculty and technology support staff in kindergarten through grade 12 districts both on how to use the software and database, as well as how to design curricula to take full advantage of the software, and to model how students and teachers can use computers to enhance teaching and learning;

(2) a project for the midstate educational district and independent school district No. 482, Little Falls, to demonstrate student interaction with the local business community;

(3) a project for independent school district Nos. 178, Storden-Jeffers; 633, Lamberton; and 638, Sanborn, to establish a high school program for remote access for learners to the districts' educational network of data and training, commercial access for youth entrepreneurship, and commercial access for school-to-work programs;

(4) a project for the University of Minnesota for the Bell Museum of Natural History to deliver science curriculum through distance learning methods;

(5) a project for the East Range Secondary Technical Center to purchase equipment for classroom and laboratories to demonstrate effective integration of technology into the curriculum; and

(6) a project for the Walker Art Center and the Minneapolis Institute of Arts for an arts via the Internet project. The project will connect, via the Internet, the thousands of objects in these two collections to every classroom, library, college and university, historical sites, and study centers in the state by digitizing the collections.

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Subd. 2. [FOOD SERVICE DATA MANAGEMENT.] The department of children, families, and learning shall work with districts to identify and help implement computer software to improve district's management of meal costs, meal program tracking, and government reporting of meals served. The commissioner may provide funding for this software under section 4.

Subd. 3. [INTERNET ACCESS.] The commissioner of children, families, and learning shall develop and distribute a model policy for school districts concerning appropriate access and usage of the Internet with recommended protocols for staff and students to follow in order to maximize the educational benefits of on-line access and services.

Subd. 4. [AT HOME-ACCESS FOR CURRICULUM AND TEACHING.] The Internet access for Minnesota school projects, the InforMNs project, shall be continued for the next biennium.

Sec. 6. [LEARNING ACADEMY.]

Subdivision 1. [ESTABLISHMENT.] The commissioner shall develop standards and requirements and certify courses for a Minnesota learning academy to provide training opportunities for educators, administrators, and librarians in the use of technology and its integration into learning activities for meeting the educational needs of all students. Only certified classes may be used to fulfill the requirements of the learning academy.

Subd. 2. [DEVELOPMENT OF THE LEARNING ACADEMY.] To develop the learning academy, the commissioner shall consult with representatives of public schools, higher education, teacher organizations, students, private business, state agencies, libraries, and political subdivisions to do the following:

(1) set measures for teacher training opportunities on technical skills and technology integration skills;

(2) identify and establish outcomes for a series of training courses that provide for technical skills and technology classroom integration skills;

(3) identify existing education organizations, public, or private institutions to develop and provide training courses;

(4) evaluate prerequisites for the classroom integration skills course;

(5) certify or decertify classes and courses for inclusion in or exclusion from the learning academy; and

(6) coordinate and make certified classes and courses available to eligible participants.

Subd. 3. [FUNDING.] The commissioner shall use available appropriations to provide start-up and initial operating subsidies for the learning academy sites. Appropriated funds may also be used to partially subsidize costs of attendees of the academy.

Sec. 7. [LIBRARY SITE TECHNOLOGY GRANTS.]

Subdivision 1. [ESTABLISHMENT; PURPOSE.] A matching grant program is established to fund library site technology grants. The grants are available to public or school library sites or to a partnership of library sites. Recipients shall use grant proceeds for technology projects that are consistent with technology plans and the LDS/MINITEX Joint Standards and Guidelines for Automated Library Systems. The grants shall fund projects to expand and integrate technology into library operations and increase public access to technology by:

(1) converting school media center bibliographic records into a standard format;

(2) loading school library site media records into regional, public, or multicounty, multitype library systems or other appropriate library networks;

(3) upgrading and increasing database development; and

(4) improving library staff use of networked library resources at library sites throughout the regional multitype cooperatives.

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Subd. 2. [APPLICATION; ELIGIBILITY.] The commissioner of children, families, and learning shall establish a process and application forms for library sites to apply for grant funds. Libraries must describe how they will cooperate with schools. An applicant must submit a technology plan with the application. Eligible applicants must, at a minimum, describe how the proposed project is consistent with the technology plan; describe how it ensures interoperability of hardware, software, and telecommunication; identify the specific site needs that the project will address; define the project's expected outcomes; and provide the source, type, and amounts of all matching funds. To be eligible for a site-based technology learning grant, a library site must:

(1) be a school library, a public library, or a partnership of public and school libraries;

(2) have each dollar of grant money matched by at least $1 of library site money, including in-kind contributions;

(3) agree to disseminate and share information about its project;

(4) provide a benefit to the greater community; and

(5) maintain any ongoing costs of support for the technology project after the initial funding under the grant program.

Subd. 3. [GRANT AWARD.] The commissioner shall consult with representatives of the public and private sectors in establishing criteria and awarding site-based technology learning grants.

Sec. 8. [REFURBISHED COMPUTER PROGRAM.]

The commissioner of children, families, and learning shall establish a program to refurbish donated computers to increase the number of multimedia computers in Minnesota schools. In establishing the program, the commissioner shall work with the commissioners of administration and corrections, and the office of technology. The program must be implemented in conjunction with the education technology improvement clearinghouses under Minnesota Statutes, section 121.95, and in partnership with business, nonprofit organizations, and institutions of higher education. The commissioner must consider the most cost-effective approach in allocating funds for computer recycling or refurbishing. The program must:

(1) establish the number of multimedia computers to be refurbished by July 1, 2000;

(2) establish partnerships with nonprofit or business organizations to solicit donations;

(3) develop an agreement with the commissioner of corrections to facilitate computers in Minnesota correctional institutions with procedures to minimize security risks;

(4) promote the program to public and nonpublic schools; and

(5) develop plans to equitably distribute computers to public and nonpublic schools and ensure proper recycling of unsuitable equipment.

Sec. 9. [TELECOMMUNICATIONS TECHNOLOGY PLAN.]

The department of children, families, and learning shall develop criteria for approving telecommunications technology plans developed by school sites, school districts, or libraries to enable them to obtain telecommunications discounts provided under federal law. The department shall take actions necessary to enable all Minnesota schools and libraries to apply for discounts and federal universal service support available January 1, 1998.

Sec. 10. [YEAR 2000 READY.]

The commissioner of children, families, and learning shall ensure that any computer software or hardware that is purchased with money appropriated in this bill must be year 2000 ready.

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Sec. 11. [ADDITIONAL TECHNOLOGY REVENUE.]

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), (19), (23), and (24).

Sec. 12. [APPROPRIATIONS.]

Subdivision 1. [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.] The sums indicated in this section are appropriated, unless otherwise indicated, from the general fund to the department of children, families, and learning for the fiscal years designated. The appropriations in subdivisions 6 and 7 are one-time appropriations only.

Subd. 2. [TELECOMMUNICATIONS ACCESS GRANTS.] For grants to school districts and regional public library systems to establish telecommunication connections according to Minnesota Statutes, section 124C.74:

$13,000,000 . . . . . 1998

$10,000,000 . . . . . 1999

Any balance in the first year does not cancel but is available in the second year.

This amount shall not be included as part of the base for fiscal year 2000-2001.

In allocating grant funds, the council, as appropriate, may consider expenditures by district made from July 1, 1995.

Subd. 3. [SITE-BASED TECHNOLOGY TRANSFORMATION LEARNING GRANTS.] For grants under section 4:

$14,000,000 . . . . . 1998

Of this amount $300,000 is for an open enrollment year-round technology project in independent school district No. 138, North Branch.

This appropriation is available until June 30, 1999.

Subd. 4. [LIBRARY TECHNOLOGY SITE GRANT PROGRAM.] For one-time library site grants under section 6:

$3,500,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 5. [COMPUTER REFURBISHMENT PROGRAM.] For the multimedia computer refurbishment program under section 8:

$6,000,000 . . . . . 1998

The commissioner may use up to $250,000 of this amount for the education technology improvement clearinghouses under Minnesota Statutes, section 121.95.

The commissioner may use all or part of this appropriation for an agreement with the commissioner of corrections to establish refurbishment centers at one or more correctional institutions.

These funds are available until June 30, 2000.

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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).

Subd. 7. [UNIVERSITY OF MINNESOTA; BELL MUSEUM.] For a grant to the University of Minnesota for the Bell Museum of Natural History to deliver science curriculum through distance learning methods under section 5, subdivision 1, paragraph (c), clause (3):

$500,000 . . . . . 1998

$500,000 . . . . . 1999

Subd. 8. [INTERACTIVE TELEVISION (ITV) AID.] For interactive television (ITV) aid under Minnesota Statutes, section 124.91, subdivision 5:

$4,030,000 . . . . . 1998

$4,052,000 . . . . . 1999

The 1998 appropriation includes $384,000 for 1997 and $3,646,000 for 1998.

The 1999 appropriation includes $405,000 for 1998 and $3,647,000 for 1999.

Subd. 9. [INSTRUCTIONAL TRANSFORMATION THROUGH TECHNOLOGY GRANTS.] For grants according to Laws 1995, First Special Session chapter 3, article 12, section 8:

$ 1,000,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 10. [ADDITIONAL OPERATING CAPITAL.] For a one-time increase in operating capital according to section 9:

$25,000,000 . . . . . 1998

Subd. 11. [LEARNING ACADEMY.] For training and staff development according to section 6:

$2,000,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Subd. 12. [TECHNOLOGY ENHANCEMENT; RESIDENTIAL ACADEMIES.] For technology improvements at the Minnesota state academies:

$500,000 . . . . . 1998

$500,000 . . . . . 1999

The appropriation is for implementing the Minnesota state academies' technology plan including completion of a local area network; installation of ten technology laboratories, classroom work stations, and additional hardware and software; purchases of large-screen monitors, speech synthesizers, screen-reader software, and braille display; and technology support and maintenance to assist the academies in fulfilling their educational mission.

Any balance in the first year does not cancel but is available in the second year.

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Subd. 13. [REGIONAL MANAGEMENT INFORMATION CENTERS.] The sum indicated in this subdivision is appropriated from the general fund to the office of technology for the fiscal year designated. For grants to regional management information centers under Minnesota Statutes, section 121.935, for the transition period in their technology uses and consolidation of processing needs:

$978,000 . . . . . 1998

This appropriation is available until June 30, 1999.

Sec. 13. [REPEALER.]

(a) Minnesota Statutes 1996, section 124C.74, is repealed effective July 1, 1999.

(b) Minnesota Statutes 1996, section 134.46, is repealed.

Sec. 14. [EFFECTIVE DATE.]

Section 1 is effective the day following final enactment.

ARTICLE 10

STATE AGENCIES

Section 1. Minnesota Statutes 1996, section 128A.02, is amended by adding a subdivision 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. 2. Minnesota Statutes 1996, section 129C.10, subdivision 3, is amended to read:

Subd. 3. [POWERS AND DUTIES OF BOARD.] (a) The board has the powers necessary for the care, management, and control of the Lola and Rudy Perpich Minnesota center for arts education and all its real and personal property. The powers shall include, but are not limited to, those listed in this subdivision.

(b) The board may employ and discharge necessary employees, and contract for other services to ensure the efficient operation of the center for arts education.

(c) The board may receive and award grants. The board may establish a charitable foundation and accept, in trust or otherwise, any gift, grant, bequest, or devise for educational purposes and hold, manage, invest, and dispose of them and the proceeds and income of them according to the terms and conditions of the gift, grant, bequest, or devise and its acceptance. The board shall adopt internal procedures to administer and monitor aids and grants.

(d) The board may establish or coordinate evening, continuing education, extension, and summer programs for teachers and pupils.

(e) The board may identify pupils who have artistic talent, either demonstrated or potential, in dance, literary arts, media arts, music, theater, and visual arts, or in more than one art form.

(f) The board shall educate pupils with artistic talent by providing:

(1) an interdisciplinary academic and arts program for pupils in the 11th and 12th grades. The total number of pupils accepted under this clause and clause (2) shall not exceed 300;

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(2) additional instruction to pupils for a 13th grade. Pupils eligible for this instruction are those enrolled in 12th grade who need extra instruction and who apply to the board, or pupils enrolled in the 12th grade who do not meet learner outcomes established by the board. Criteria for admission into the 13th grade shall not be subject to chapter 14;

(3) intensive arts seminars for one or two weeks for pupils in grades 9 to 12;

(4) summer arts institutes for pupils in grades 9 to 12;

(5) artist mentor and extension programs in regional sites; and

(6) teacher education programs for indirect curriculum delivery.

(g) The board may determine the location for the Lola and Rudy Perpich Minnesota center for arts education and any additional facilities related to the center, including the authority to lease a temporary facility.

(h) The board must plan for the enrollment of pupils on an equal basis from each congressional district.

(i) The board may establish task forces as needed to advise the board on policies and issues. The task forces expire as provided in section 15.059, subdivision 6.

(j) The board may request the commissioner of children, families, and learning for assistance and services.

(k) The board may enter into contracts with other public and private agencies and institutions for residential and building maintenance services if it determines that these services could be provided more efficiently and less expensively by a contractor than by the board itself. The board may also enter into contracts with public or private agencies and institutions, school districts or combinations of school districts, or service cooperatives to provide supplemental educational instruction and services.

(l) The board may provide or contract for services and programs by and for the center for arts education, including a store, operating in connection with the center; theatrical events; and other programs and services that, in the determination of the board, serve the purposes of the center.

(m) The board may provide for transportation of pupils to and from the center for arts education for all or part of the school year, as the board considers advisable and subject to its rules. Notwithstanding any other law to the contrary, the board may charge a reasonable fee for transportation of pupils. Every driver providing transportation of pupils under this paragraph must possess all qualifications required by the state board of education. The board may contract for furnishing authorized transportation under rules established by the commissioner of children, families, and learning and may purchase and furnish gasoline to a contract carrier for use in the performance of a contract with the board for transportation of pupils to and from the center for arts education. When transportation is provided, scheduling of routes, establishment of the location of bus stops, the manner and method of transportation, the control and discipline of pupils, and any other related matter is within the sole discretion, control, and management of the board.

(n) The board may provide room and board for its pupils. If the board provides room and board, it shall charge a reasonable fee for the room and board. The fee is not subject to chapter 14 and is not a prohibited fee according to sections 120.71 to 120.76.

(o) The board may establish and set fees for services and programs without regard to chapter 14. If the board sets fees not authorized or prohibited by the Minnesota public school fee law, it may do so without complying with the requirements of section 120.75, subdivision 1.

(p) The board may apply for all competitive grants administered by agencies of the state and other government or nongovernment sources.

Sec. 3. [APPROPRIATIONS; DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.]

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.

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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.

(c) $622,000 in 1998 and $627,000 in 1999 is for the academic excellence foundation.

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 each year is for litigation costs and may only be used for those purposes. These appropriations are one-time only.

(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;

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(2) assisting the commissioner of children, families, and learning in the sharing of data between state agencies relative to children's programs; and

(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. 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 . . . . . 1998

$6,054,000 . . . . . 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. 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. 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 . . . . . 1998

$8,908,000 . . . . . 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.

ARTICLE 11

TECHNICAL AND CONFORMING AMENDMENTS

Section 1. Minnesota Statutes 1996, section 124.155, subdivision 2, is amended to read:

Subd. 2. [ADJUSTMENT TO AIDS.] (a) The amount specified in subdivision 1 shall be used to adjust the following state aids and credits in the order listed:

(1) general education aid authorized in sections 124A.23 and 124B.20;

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(2) secondary vocational aid authorized in section 124.573;

(3) special education aid authorized in sections 124.32, 124.3201, and 124.3202;

(4) secondary vocational school-to-work program aid for children with a disability authorized in section 124.574;

(5) aid for pupils of limited English proficiency authorized in section 124.273;

(6) transportation aid authorized in section 124.225;

(7) community education programs aid authorized in section 124.2713;

(8) adult education aid authorized in section 124.26;

(9) early childhood family education aid authorized in section 124.2711;

(10) capital expenditure aid authorized in sections 124.243, 124.244, and 124.83;

(11) school district cooperation aid authorized in section 124.2727;

(12) assurance of mastery aid according to section 124.311;

(13) homestead and agricultural credit aid, disparity credit and aid, and changes to credits for prior year adjustments according to section 273.1398, subdivisions 2, 3, 4, and 7;

(14) attached machinery aid authorized in section 273.138, subdivision 3;

(15) alternative delivery aid authorized in section 124.322;

(16) special education equalization aid authorized in section 124.321;

(17) special education excess cost aid authorized in section 124.323;

(18) learning readiness aid authorized in section 124.2615; and

(19) cooperation-combination aid authorized in section 124.2725.

(b) The commissioner of children, families, and learning shall schedule the timing of the adjustments to state aids and credits specified in subdivision 1, as close to the end of the fiscal year as possible.

Sec. 2. Minnesota Statutes 1996, section 124.321, subdivision 1, is amended to read:

Subdivision 1. [LEVY EQUALIZATION REVENUE.] (a) For fiscal years 1996 and later, special education levy equalization revenue for a school district, excluding an intermediate school district, equals the sum of the following amounts:

(1) the levy percentage factor for that year times the district's special education revenue under section 124.3201; plus

(2) the levy percentage factor for that year times the district's special education summer program revenue under section 124.3202; plus

(3) the levy percentage factor for that year times the district's special education excess cost revenue under section 124.323; plus

(4) the levy percentage factor for that year times the district's secondary vocational education school-to-work program for children with a disability revenue under section 124.574; plus

(5) the levy percentage factor for that year times the district's limited English proficiency programs revenue under section 124.273.

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Sec. 3. Minnesota Statutes 1996, section 124A.225, subdivision 1, is amended to read:

Subdivision 1. [REVENUE.] Of a district's general education revenue an amount equal to the sum of the number of elementary fund balance pupils in average daily membership defined in section 124.17, subdivision 1h 1f, and one-half of the number of kindergarten fund balance pupils in average daily membership as defined in section 124.17, subdivision 1h 1f, times .06 for fiscal year 1995 and thereafter times the formula allowance must be reserved according to this section.

ARTICLE 12

SCHOOL BUS SAFETY

Section 1. [121.175] [ADVERTISING ON SCHOOL BUSES.]

(a) The commissioner, through a competitive process, and with the approval of the school bus safety advisory committee may contract with advertisers regarding advertising on school buses. At a minimum, the contract must prohibit advertising and advertising images that:

(1) solicit the sale of, or promote the use of, alcoholic beverages and tobacco products;

(2) are discriminatory in nature or content;

(3) imply or declare an endorsement of the product or service by the school district;

(4) contain obscene material;

(5) are false, misleading, or deceptive; or

(6) relate to an illegal activity or antisocial behavior.

(b) Advertisement must meet the following conditions:

(1) the advertising attached to the school bus does not interfere with bus identification under section 169.441; and

(2) the bus with attached advertising meets the school bus equipment standards under sections 169.4501 to 169.4504.

(c) All buses operated by school districts may be attached with advertisements under the state contract. All school district contracts shall include a provision for advertisement. Each school district shall be reimbursed by the advertiser for all costs incurred by the district and its contractors for supporting the advertising program, including, but not limited to, retrofitting buses, storing advertising, attaching advertising to the bus, and related maintenance.

(d) The commissioner shall hold harmless and indemnify each district for all liabilities arising from the advertising program. Each district must tender defense of all such claims to the commissioner within five days of receipt.

(e) All revenue from the contract shall be deposited in the general fund.

Sec. 2. Minnesota Statutes 1996, section 123.799, subdivision 1, is amended to read:

Subdivision 1. [RESERVED REVENUE USE.] A district shall use the student transportation safety reserved revenue under section 124.225, subdivision 7f, for providing student transportation safety programs to enhance student conduct and safety on the bus or when boarding and exiting the bus. A district's student transportation policy must specify the student transportation safety activities to be carried out under this section. A district's student transportation safety reserved revenue may only be used for the following purposes:

(1) to provide paid adult bus monitors, including training and salary costs;

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(2) to provide a volunteer bus monitor program, including training costs and the cost of a program coordinator;

(3) to purchase or lease optional external public address systems or video recording cameras for use on buses; and

(4) to purchase new or retrofit existing school buses with seatbelts or other occupant restraint systems after consultation with and approval by the commissioner of public safety; and

(4) (5) other activities or equipment that have been reviewed by the state school bus safety advisory committee and approved by the commissioner of public safety.

Sec. 3. Minnesota Statutes 1996, section 123.7991, subdivision 1, is amended to read:

Subdivision 1. [SCHOOL BUS SAFETY WEEK.] The first third week of school is designated as school bus safety week.

A school board may designate one day of school bus safety week as school bus driver day.

Sec. 4. Minnesota Statutes 1996, section 123.7991, subdivision 2, is amended to read:

Subd. 2. [STUDENT TRAINING.] (a) Each school district shall provide public school pupils enrolled in grades kindergarten through 10 with age-appropriate school bus safety training. The training shall be results-oriented and shall consist of both classroom instruction and practical training using a school bus. Upon completing the training, a student shall be able to demonstrate knowledge and understanding of at least the following competencies and concepts:

(1) transportation by school bus is a privilege and not a right;

(2) district policies for student conduct and school bus safety;

(3) appropriate conduct while on the school bus;

(4) the danger zones surrounding a school bus;

(5) procedures for safely boarding and leaving a school bus;

(6) procedures for safe street or road crossing; and

(7) school bus evacuation and other emergency procedures.

(b) Each nonpublic school located within the district shall provide all nonpublic school pupils enrolled in grades kindergarten through 10 who are transported by school bus at public expense and attend school within the district's boundaries with training as required in paragraph (a). The school district shall make a bus available for the practical training if the district transports the nonpublic students. Each nonpublic school shall provide the instruction.

(c) Student school bus safety training shall commence during school bus safety week. All students enrolled in grades kindergarten through 3 who are transported by school bus and are enrolled during the first or second week of school must demonstrate achievement of the school bus safety training competencies by the end of the third week of school. All students enrolled in grades 4 through 10 who are transported by school bus and are enrolled during the first or second week of school must demonstrate achievement of the competencies by the end of the sixth week of school. Students enrolled in grades kindergarten through 10 who enroll in a school after the second week of school and are transported by school bus shall undergo school bus safety training and demonstrate achievement of the school bus safety competencies within four weeks of the first day of attendance. The pupil transportation safety director in each district must certify to the commissioner of children, families, and learning annually that all students transported by school bus within the district have satisfactorily demonstrated knowledge and understanding of the school bus safety competencies according to this section or provide an explanation for a student's failure to demonstrate the competencies. The principal or other chief administrator of each nonpublic school must certify annually to the public transportation safety director of the district in which the school is located that all of the school's students transported by school bus at public expense have received training. A school district may deny transportation to a student who fails to demonstrate the competencies, unless the student is unable to achieve the competencies due to a disability, or to a student who attends a nonpublic school that fails to provide training as required by this subdivision.

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(d) A school district and a nonpublic school with students transported by school bus at public expense must, to the extent possible, provide kindergarten pupils with bus safety training before the first day of school.

(e) A school district and a nonpublic school with students transported by school bus at public expense must also provide student safety education for bicycling and pedestrian safety, for students enrolled in grades kindergarten through 5.

(f) A school district and a nonpublic school with students transported by school bus at public expense must make reasonable accommodations for the school bus, bicycle, and pedestrian safety training of pupils known to speak English as a second language and pupils with disabilities.

Sec. 5. Minnesota Statutes 1996, 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 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 compact truck or a front-section vehicle, with a gross vehicle weight rating of 10,000 pounds or less 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 having a maximum manufacturer's rated seating capacity of ten 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. 6. Minnesota Statutes 1996, section 169.435, subdivision 2, is amended to read:

Subd. 2. [SCHOOL BUS SAFETY ADVISORY COMMITTEE.] (a) The commissioner of public safety shall establish the school bus safety advisory committee. The commissioner shall provide the committee with meeting space and clerical support. The commissioner of public safety or the commissioner's designee shall chair the committee. The members of the committee also shall include:

(1) the commissioner of children, families, and learning or the commissioner's designee;

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(2) the commissioner of human rights or the commissioner's designee;

(3) a county or city attorney;

(4) a representative of the state patrol;

(5) a school board member;

(6) a school superintendent;

(7) two school bus drivers, one representing the metropolitan area and one representing greater Minnesota;

(8) two school transportation contractors, one representing the metropolitan areas and one representing greater Minnesota;

(9) two school transportation safety directors, one representing the metropolitan area and one representing greater Minnesota; and

(10) five public members, including at least four parents of children who ride a school bus, among them a parent of a child with a disability. The public members shall be geographically representative.

The commissioner of public safety, in consultation with the commissioner of children, families, and learning, shall appoint the members listed in clauses (3) to (9). The governor shall appoint the public members in clause (10). Terms, compensation, and removal of committee members shall be according to section 15.059. The committee shall meet quarterly or as required by the chair.

(b) The duties of the committee shall include:

(1) an annual report by January 15 to the governor and the education committees of the legislature, including recommendations for legislative action when needed, on student bus safety education, school bus equipment requirements and inspection, including seat belts and other occupant restraint systems, bus driver licensing, training, and qualifications, bus operation procedures, student behavior and discipline, rules of the road, school bus safety education for the public, or any other aspects of school transportation safety the committee considers appropriate;

(2) a quarterly review of all school transportation accidents, crimes, incidents of serious misconduct, incidents that result in serious personal injury or death, and bus driver dismissals for cause; and

(3) periodic review of school district comprehensive transportation safety policies.

(c) The committee expires June 30, 2001.

Sec. 7. Minnesota Statutes 1996, section 169.443, subdivision 3, is amended to read:

Subd. 3. [WHEN SIGNALS NOT USED.] School bus drivers shall not activate the prewarning flashing amber signals or flashing red signals and shall not use the stop arm signal:

(1) in special school bus loading areas where the bus is entirely off the traveled portion of the roadway and where no other motor vehicle traffic is moving or is likely to be moving within 20 feet of the bus;

(2) in residence districts or business districts, as defined in section 169.01, of home rule or statutory cities when directed not to do so, in writing, by the local school administrator board;

(3) when a school bus is being used on a street or highway for purposes other than the actual transportation of school children to or from school or a school-approved activity, except as provided in subdivision 8;

(4) at railroad grade crossings; and

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(5) when loading and unloading people while the bus is completely off the traveled portion of a separated, one-way roadway that has adequate shoulders. The driver shall drive the bus completely off the traveled portion of this roadway before loading or unloading people.

Sec. 8. Minnesota Statutes 1996, section 169.447, subdivision 6, is amended to read:

Subd. 6. [OVERHEAD BOOK RACKS; STORAGE COMPARTMENTS.] Types A, B, C, and D School buses may be equipped with padded, permanent overhead book racks that do not hang over the center aisle of the bus. School buses manufactured after January 1, 1998, may also be equipped with interior overhead storage compartments provided they meet the requirements of the 1995 "National Standards for School Buses and School Bus Operations."

Sec. 9. Minnesota Statutes 1996, section 169.4501, subdivision 1, is amended to read:

Subdivision 1. [NATIONAL STANDARDS ADOPTED.] Except as provided in sections 169.4502 and 169.4503, the construction, design, equipment, and color of types A, B, C, and D school buses used for the transportation of school children shall meet the requirements of the "bus chassis standards" and "bus body standards" in the 1990 1995 revised edition of the "National Standards for School Buses and School Bus Operations" adopted by the Eleventh Twelfth National Conference on School Transportation and published by the National Safety Council. Except as provided in section 169.4504, the construction, design, and equipment of types A, B, C, and D school buses used for the transportation of students with disabilities also shall meet the requirements of the "specially equipped school bus standards" in the 1990 1995 National Standards for School Buses and School Bus Operations. The "bus chassis standards," "bus body standards," and "specially equipped school bus standards" sections of the 1990 1995 revised edition of the "National Standards for School Buses and School Bus Operations" are incorporated by reference in this chapter.

Sec. 10. Minnesota Statutes 1996, section 169.4501, subdivision 2, is amended to read:

Subd. 2. [APPLICABILITY.] (a) The standards adopted in this section and sections 169.4502 and 169.4503, govern the construction, design, equipment, and color of school buses used for the transportation of school children, when owned and operated by a school or privately owned and operated under a contract with a school, and these standards must be made a part of that contract by reference. Each school, its officers and employees, and each person employed under the contract is subject to these standards.

(b) The standards apply to school buses manufactured after December 31, 1994 1997. Buses complying with these standards when manufactured need not comply with standards established later except as specifically provided for by law.

(c) A school bus manufactured on or before December 31, 1994 1997, must conform to the Minnesota standards in effect on the date the vehicle was manufactured except as specifically provided for in law.

(d) A new bus body may be remounted on a used chassis provided that the remounted vehicle meets state and federal standards for new buses which are current at the time of the remounting. Permission must be obtained from the commissioner of public safety before the remounting is done. A used bus body may not be remounted on a new or used chassis.

Sec. 11. Minnesota Statutes 1996, section 169.4502, subdivision 2, is amended to read:

Subd. 2. [BRAKES.] The braking system must include an emergency brake. The braking system must meet federal motor vehicle safety standards in effect at the time of manufacture. All buses manufactured with air brakes after January 1, 1995, shall have automatic slack adjusters.

Sec. 12. Minnesota Statutes 1996, section 169.4502, subdivision 7, is amended to read:

Subd. 7. [EXHAUST SYSTEM.] The tailpipe must:

(1) extend to but not more than one inch beyond the bumper and be mounted outside of the chassis frame rail; or

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(2) extend to but not more than one inch two inches beyond the left side of the bus, behind the driver's compartment. A type A bus and a type B bus with a gross vehicle weight rating under 15,000 pounds, shall comply with the manufacturer's standard. No exhaust pipe may exit beneath an emergency exit, or, on a type C or type D bus, under the fuel fill location. No exhaust pipe shall be reduced in size beyond the muffler.

Sec. 13. Minnesota Statutes 1996, section 169.4502, subdivision 9, is amended to read:

Subd. 9. [FUEL TANK.] If mounted behind the rear wheels, the fuel tank on a vehicle constructed with a power lift unit shall be between the frame rails. Fuel tanks for a type A bus and for a type B bus with a gross vehicle weight rating under 15,000 pounds may must be manufacturer manufacturer's standard and must conform with federal motor vehicle safety standard number 301, Code of Federal Regulations, title 49, part 571.

Sec. 14. Minnesota Statutes 1996, section 169.4502, subdivision 11, is amended to read:

Subd. 11. [TIRES AND RIMS.] The use of multipiece rims or tube-type tires is permitted. Radial and bias ply tires shall not be used on the same axle. Front tire tread depth shall not be less than 4/32 inch in any major tire tread groove. Rear tire tread shall not be less than 2/32 inch. Tires must be measured in three locations around the tire, in two adjoining grooves. No recapped tires shall be used on the front wheels. Recapped tires are permitted on the rear wheels.

Sec. 15. Minnesota Statutes 1996, section 169.4502, is amended by adding a subdivision to read:

Subd. 13. [AIR CLEANER.] The air intake system for diesel buses may have an air cleaner restriction indicator installed.

Sec. 16. Minnesota Statutes 1996, section 169.4502, is amended by adding a subdivision to read:

Subd. 14. [CLUTCH.] A starter interlock may be installed to prevent actuation of the starter if the clutch is not depressed.

Sec. 17. Minnesota Statutes 1996, section 169.4502, is amended by adding a subdivision to read:

Subd. 15. [OIL FILTER.] An oil filtration system may be used in lieu of an oil filter.

Sec. 18. Minnesota Statutes 1996, section 169.4503, subdivision 1, is amended to read:

Subdivision 1. [RELATION TO NATIONAL STANDARDS.] The bus body standards contained in this section are required in addition to those required by sections 169.450 169.4501 and 169.4502. When a Minnesota standard contained in this section conflicts with a national standard adopted in section 169.450 169.4501, the Minnesota standard contained in this section is controlling.

Sec. 19. Minnesota Statutes 1996, section 169.4503, subdivision 2, is amended to read:

Subd. 2. [BACKUP WARNING ALARM.] An automatic audible backup alarm may be installed. A spring-loaded button in the driver's compartment that will temporarily disable the backup alarm is allowed for usage in school bus overnight parking lots and repair facilities.

Sec. 20. Minnesota Statutes 1996, section 169.4503, subdivision 10, is amended to read:

Subd. 10. [EMERGENCY EQUIPMENT; FIRE EXTINGUISHERS.] The fire extinguisher must have at least a 10BC rating The bus must be equipped with at least one UL-approved pressurized, dry chemical fire extinguisher with a total rating of 2A10BC or greater.

Sec. 21. Minnesota Statutes 1996, section 169.4503, subdivision 13, is amended to read:

Subd. 13. [IDENTIFICATION.] (a) Each bus shall, in the beltline, identify the school district serviced, or company name, or owner of the bus. Numbers necessary for identification must appear on the sides and rear of the bus. Symbols or letters may be used on the outside of the bus near the entrance door for student identification. A manufacturer's nameplate or logo may be placed on the side of the bus near the entrance door and on the rear.

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(b) Effective December 31, 1994, all buses sold must display lettering "Unlawful to pass when red lights are flashing" on the rear of the bus. The lettering shall be in two-inch black letters on school bus yellow background. This message shall be displayed directly below the upper window of the rear door. On rear engine buses, it shall be centered at approximately the same location. Only signs and lettering approved or required by state law may be displayed.

Sec. 22. Minnesota Statutes 1996, section 169.4503, subdivision 14, is amended to read:

Subd. 14. [INSULATION.] (a) Ceilings and wall shall be insulated to a minimum of one and one-half inch fiberglass and installed so the insulation does not compact or sag. Floor insulation must be nominal 19/32 inches thick plywood, or a material of equal or greater strength and insulation R value that equals or exceeds properties of exterior-type softwood plywood, C-D grade as specified in standard issued by the United States Department of Commerce. Type A and B A-II buses with a gross vehicle weight rating under 15,000 pounds must have a minimum of one-half inch plywood. All exposed edges on plywood shall be sealed. Every school bus shall be constructed so that the noise level taken at the ear of the occupant nearest to the primary vehicle noise source shall not exceed 85 dba when tested according to procedures in the 1990 1995 National Standards for School Buses and School Bus Operations.

(b) The underside of metal floor may be undercoated with polyurethane floor insulation, foamed in place. The floor insulation must be combustion resistant. The authorization in this paragraph does not replace the plywood requirement.

Sec. 23. Minnesota Statutes 1996, section 169.4503, subdivision 17, is amended to read:

Subd. 17. [MIRRORS.] A type B bus with a gross vehicle weight rating less than 15,000 pounds shall have a minimum of six-inch by 16-inch mirror. A type B bus with a gross vehicle weight rating over 15,000 pounds shall have a minimum of a six-inch by 30-inch mirror. After January 1, 1995, all school buses must be equipped with a minimum of two crossover mirrors, mounted to the left and right sides of the bus.

Sec. 24. Minnesota Statutes 1996, section 169.4503, subdivision 19, is amended to read:

Subd. 19. [RUB RAILS.] There shall be one rub rail at the base of the skirt of the bus on all type A, excluding van conversions, B, C, and D buses.

Sec. 25. Minnesota Statutes 1996, section 169.4503, subdivision 23, is amended to read:

Subd. 23. [WINDOWS.] Windshield, entrance, and rear emergency exit doors must be of approved safety glass. Laminated or tempered glass (AS-2 or AS-3) is permitted in all other windows. All glass shall be federally approved and marked as provided in section 169.74. The windshield may be of uniform tint throughout or may have a horizontal gradient band starting slightly above the line of vision and gradually decreasing in light transmission to 20 percent or less at the top of the windshield. The use of tinted glass, as approved by section 169.71, is permitted on side windows and rear windows except for the entrance door, the first window behind the service door, and the window to the left of the driver. The window to the left of the driver, the upper service door windows, and the window immediately behind the entrance door must be thermal glass. The window to the left of the driver for type A and B buses with a gross vehicle weight rating under 15,000 pounds need not be thermal glass.

Sec. 26. Minnesota Statutes 1996, section 169.4503, subdivision 24, is amended to read:

Subd. 24. [WIRING.] If not protected by a grommet, wire that passes through holes shall be encased in an abrasive-resistant protective covering. If a master cutoff switch is used, it shall not be wired as to kill power to the electric brake system.

Sec. 27. Minnesota Statutes 1996, section 169.4503, is amended by adding a subdivision to read:

Subd. 25. [DRIVER COMPARTMENT.] The driver's seat must be a high-back seat.

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Sec. 28. Minnesota Statutes 1996, section 169.4504, subdivision 1, is amended to read:

Subdivision 1. [RELATION TO NATIONAL STANDARDS.] The specially equipped school bus standards contained in this section are required in addition to those required by section 169.450 169.4501. When a Minnesota standard contained in this section conflicts with a national standard adopted in section 169.450 169.4501, the Minnesota standard contained in this section is controlling.

Sec. 29. Minnesota Statutes 1996, section 169.4504, is amended by adding a subdivision to read:

Subd. 6. [SECUREMENT AND RESTRAINT SYSTEM.] The securement and restraint system must be located and installed so that when an occupied wheelchair or other mobility aid is secured, the installation meets the requirements of the applicable federal motor vehicle safety standard.

Sec. 30. Minnesota Statutes 1996, section 169.452, is amended to read:

169.452 [ACCIDENT AND SERIOUS INCIDENT REPORTING.]

The department of public safety shall develop uniform definitions of a school bus accident, an incident of serious misconduct, and an incident that results in personal injury or death. The department shall determine what type of information on school bus accidents and incidents, including criminal conduct, and bus driver dismissals for cause should be collected and develop a uniform accident and incident reporting form to collect those data, including data relating to type III vehicles, statewide. In addition to the form, the department shall have an alternative method of reporting that allows school districts to use computer technology to provide the required information. School districts selected by the commissioner shall report the information required by the department using either format. A school district must not be charged for reporting forms or reporting procedures under this section. Data collected under this section shall be analyzed to help develop accident, crime, and misconduct prevention programs. This section is not subject to chapter 14.

Sec. 31. Minnesota Statutes 1996, section 171.321, subdivision 3, is amended to read:

Subd. 3. [STUDY OF APPLICANT.] (a) Before issuing or renewing a school bus endorsement, the commissioner shall conduct a criminal and driver's license records check of the applicant. The commissioner may also conduct the check at any time while a person is so licensed. The check shall consist of a criminal records check of the state criminal records repository and a check of the driver's license records system. If the applicant has resided in Minnesota for less than five years, the check shall also include a criminal records check of information from the state law enforcement agencies in the states where the person resided during the five years before moving to Minnesota, and of the national criminal records repository including the criminal justice data communications network. The applicant's failure to cooperate with the commissioner in conducting the records check is reasonable cause to deny an application or cancel a school bus endorsement. The commissioner may not release the results of the records check to any person except the applicant.

(b) The commissioner may issue to an otherwise qualified applicant a temporary school bus endorsement, effective for no more than 120 180 days, upon presentation of (1) an affidavit by the applicant that the applicant has not been convicted of a disqualifying offense and (2) a criminal history check from each state of residence for the previous five years. The criminal history check may be conducted and prepared by any public or private source acceptable to the commissioner. The commissioner may reissue the temporary endorsement if the National Criminal Records Repository check is timely submitted but not completed within the 180-day period.

Sec. 32. Minnesota Statutes 1996, section 171.3215, subdivision 4, is amended to read:

Subd. 4. [WAIVER OF PERMANENT CANCELLATION.] The commissioner of public safety or the commissioner's designee, in consultation with the school bus safety advisory committee division of driver and vehicle services, may waive the permanent cancellation requirement of section 171.3215 for a person convicted of a nonfelony violation of chapter 152 or a felony that is not a violent crime under section 609.152.

Sec. 33. [APPROPRIATIONS.]

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.

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Subd. 2. [LEARNING READINESS; HEAD START PROGRAMS; ECFE.] For learning readiness programs; Head Start programs; and early childhood family education programs:

$20,000,000 . . . . . 1998

$20,000,000 . . . . . 1999

Of this amount, one-third shall be allocated to each program. This appropriation shall be proportionally reduced if the revenue in any year under Minnesota Statutes 1996, section 121.175, is less than the appropriation. The commissioner may also use part of the appropriation to reimburse districts that can demonstrate it incurred excess costs in implementing Minnesota Statutes 1996, section 121.175.

Sec. 34. [REPEALER.]

Minnesota Statutes 1996, sections 169.4502, subdivision 6; 169.4503, subdivisions 3, 8, 9, 11, 12, and 22; and 169.454, subdivision 11, are repealed."

Delete the title and insert:

"A bill for an act relating to education; kindergarten through grade 12; providing for general education; special programs; lifework development; education organization, cooperation, and facilities; education excellence; academic performance; education policy issues; libraries; technology; state agencies; conforming and technical amendments; school bus safety; appropriating money; amending Minnesota Statutes 1996, sections 12.21, subdivision 3; 120.0111; 120.062, subdivisions 3, 6, 7, 9, and 11; 120.0621, subdivisions 5a, 6, and by adding a subdivision; 120.064, subdivisions 3, 8, 10, 20a, and by adding a subdivision; 120.101, subdivisions 5, 5c, and by adding a subdivision; 120.1701, subdivision 3; 120.181; 121.15, subdivisions 6, 7, and by adding subdivisions; 121.602, subdivisions 1, 2, and 4; 121.611; 121.615, subdivisions 2, 3, 5, 6, 7, 8, 9, and 10; 121.703, subdivision 3; 121.904, subdivision 4a; 123.35, subdivision 8, and by adding a subdivision; 123.3514, subdivisions 4, 4a, 4c, 4e, 6c, 8, and by adding subdivisions; 123.39, subdivision 6; 123.70, subdivisions 5, 7, and 10; 123.799, subdivision 1; 123.7991, subdivisions 1 and 2; 123.935, subdivision 7; 123.951; 123.972, subdivision 5; 124.155, subdivisions 1 and 2; 124.17, subdivisions 1d, 4, and by adding subdivisions; 124.193; 124.195, subdivisions 2, 7, 10, 11, and by adding a subdivision; 124.225, subdivisions 1, 13, 14, 15, 16, and 17; 124.226, subdivision 10; 124.2445; 124.2455; 124.248, subdivisions 3, 4, and by adding subdivisions; 124.26, subdivision 1b; 124.2613, subdivisions 3, 4, and 6; 124.2727, subdivision 6d; 124.273, subdivisions 1d, 1e, 1f, and 5; 124.276, by adding a subdivision; 124.312, subdivisions 4 and 5; 124.313; 124.314, subdivisions 1 and 2; 124.3201, subdivisions 1, 2, 3, and 4; 124.321, subdivision 1; 124.323, subdivisions 1 and 2; 124.42, subdivision 4; 124.431, subdivisions 2 and 11; 124.45; 124.481; 124.574, subdivisions 1, 2d, 2f, 5, 6, and 9; 124.83, subdivisions 1 and 2; 124.86, subdivision 2, and by adding a subdivision; 124.91, subdivisions 1 and 5; 124.912, subdivisions 1, 2, 3, and 6; 124.916, subdivisions 1, 2, and 3; 124.918, subdivision 6; 124.95, subdivision 2; 124.961; 124A.03, subdivisions 1c and 1g; 124A.04, subdivision 2; 124A.22, subdivisions 1, 2, 3, 6, 6a, 8a, 10, 11, 13, 13b, 13d, and by adding a subdivision; 124A.225, subdivision 1; 124A.23, subdivisions 1, 2, 3, and 5; 124A.26, subdivision 1; 124A.28; 124C.45, subdivision 1a; 124C.46, subdivisions 1 and 2; 124C.498, subdivisions 2 and 3; 125.05, subdivisions 1c and 2; 125.12, subdivision 14; 126.22, subdivisions 2, 3, 3a, and 8; 126.23, subdivision 1; 126.77, subdivision 1; 127.26; 127.27, subdivisions 5, 6, 7, 8, 10, and by adding a subdivision; 127.281; 127.29; 127.30, subdivisions 1, 2, 3, and by adding a subdivision; 127.31, subdivisions 2, 7, 8, 13, 14, and 15; 127.311; 127.32; 127.33; 127.36; 127.37; 127.38; 128A.02, by adding a subdivision; 128C.02, subdivision 2, and by adding a subdivision; 128C.12, subdivision 1; 129C.10, subdivision 3; 134.155, subdivisions 2 and 3; 134.34, subdivision 4; 136D.72, subdivisions 2 and 3; 144.29; 169.01, subdivision 6; 169.435, subdivision 2; 169.443, subdivision 3; 169.447, subdivision 6; 169.4501, subdivisions 1 and 2; 169.4502, subdivisions 2, 7, 9, 11, and by adding subdivisions; 169.4503, subdivisions 1, 2, 10, 13, 14, 17, 19, 23, 24, and by adding a subdivision; 169.4504, subdivision 1, and by adding a subdivision; 169.452; 171.321, subdivision 3; 171.3215, subdivision 4; 245.493, subdivision 1; 245.91, subdivision 2; 260.185, subdivision 1; 260A.02, subdivision 3; and 268.665, subdivision 2; Laws 1991, chapter 265, article 1, section 30, as amended; Laws 1993, chapter 146, article 5, section 20; Laws 1994, chapter 647, article 7, section 18, subdivisions 2 and 3; Laws 1995 First Special Session, chapter 3, articles 1, section 56; 2, section 52; 3, section 11, subdivisions 1, 2, and 5; 4, section 29, subdivision 8; 8, section 25, subdivision 12; 11, section 21, subdivision 3; and 12, section 7, subdivision 1; Laws 1996, chapter 412, articles 4, section 34, subdivision 4; and 12, section 11; proposing coding for new law in Minnesota Statutes, chapters 120; 121; 124; 126; 127; 128C; and 135A; repealing Minnesota Statutes 1996, sections 120.105; 120.65; 121.11,

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subdivision 8; 121.602, subdivisions 3 and 5; 121.904, subdivision 4d; 121.912, subdivision 7; 124.177; 124.223; 124.225, subdivisions 3a, 7a, 7b, 7d, 7e, 8a, and 8k; 124.226; 124.2728; 124.276, subdivision 2; 124.3201, subdivisions 2a and 2b; 124.912, subdivisions 2 and 3; 124A.22, subdivisions 4a and 4b; 124A.26, subdivisions 1a, 2, 3, 4, and 5; 124C.74; 127.31, subdivision 6; 128B.10; 134.34, subdivision 4a; 134.46; 169.4502, subdivision 6; 169.4503, subdivisions 3, 8, 9, 11, 12, and 22; and 169.454, subdivision 11."

We request adoption of this report and repassage of the bill.

House Conferees: Becky Kelso, Loren A. Solberg, Matt Entenza and Mindy Greiling.

Senate Conferees: Lawrence J. Pogemiller, Jerry R. Janezich, Linda Scheid and Martha R. Robertson.

Kelso moved that the report of the Conference Committee on H. F. No. 1684 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Otremba was excused between the hours of 10:00 p.m. and 10:45 p.m.

H. F. No. 1684, A bill for an act relating to education; kindergarten through grade 12; providing for general education; special programs; lifework development; education organization, cooperation, and facilities; education excellence; academic performance; education policy issues; libraries; technology; state agencies; conforming and technical amendments; school bus safety; appropriating money; amending Minnesota Statutes 1996, sections 16A.11, by adding a subdivision; 120.062, subdivisions 7 and 9; 120.0621, subdivisions 5a, 5b, 6, and by adding a subdivision; 120.064, subdivisions 3, 4, 4a, 5, 8, 11, 20a, and by adding subdivisions; 120.101, subdivision 5c, and by adding a subdivision; 120.17, subdivision 3a; 120.181; 121.11, subdivision 7c, and by adding a subdivision; 121.1115, by adding subdivisions; 121.15, by adding subdivisions; 121.155, by adding a subdivision; 121.602, subdivisions 1, 2, and 4; 121.611; 121.615, subdivisions 2, 3, 5, 6, 7, 8, 9, and 10; 121.703, subdivision 3; 121.904, subdivision 4a; 123.34, by adding a subdivision; 123.3514, subdivisions 4, 4a, 4c, 4e, 6c, 8, and by adding subdivisions; 123.39, subdivision 6; 123.799, subdivision 1; 123.7991, subdivisions 1 and 2; 123.935, subdivision 7; 124.155, subdivision 1; 124.17, subdivision 4, and by adding a subdivision; 124.193; 124.195, subdivisions 2, 7, 10, 11, and by adding a subdivision; 124.225, subdivisions 1, 3a, 7b, 7d, 7f, 8a, 10, 13, 14, 15, and 17; 124.226, subdivisions 4, 9, and 10; 124.2445; 124.2455; 124.248, subdivisions 1 and 3; 124.2613, subdivisions 3 and 6; 124.2727, subdivisions 6a, 6c, and 6d; 124.273, subdivisions 1d, 1e, 1f, and 5; 124.312, subdivisions 4 and 5; 124.313; 124.314, subdivisions 1 and 2; 124.3201, subdivisions 1, 2, 3, and 4; 124.321, subdivision 1; 124.323, subdivisions 1 and 2; 124.42, subdivision 4; 124.431, subdivisions 2 and 11; 124.45; 124.481; 124.573, subdivision 2f; 124.574, subdivisions 1, 2d, 2f, 5, 6, and 9; 124.646, subdivision 1; 124.83, subdivisions 1 and 2; 124.86, subdivision 2, and by adding a subdivision; 124.91, subdivisions 1 and 5; 124.912, subdivisions 1, 2, and 3; 124.916, subdivisions 1, 2, and 3; 124.918, subdivision 6; 124.95, subdivision 2; 124.961; 124A.03, subdivision 1c; 124A.036, subdivisions 5 and 6; 124A.04, subdivision 2; 124A.22, subdivisions 1, 2, as amended, 3, 6, 6a, 10, 11, 13b, and by adding a subdivision; 124A.225, subdivisions 1 and 4; 124A.23, subdivisions 1 and 3; 124A.26, subdivision 1; 124A.28; 124C.45, subdivision 1a; 124C.46, subdivisions 1 and 2; 124C.498, subdivision 2; 125.05, subdivisions 1c and 2; 125.12, subdivision 14; 126.22, subdivision 2; 126.23, subdivision 1; 126.77, subdivision 1; 126.82; 127.27, subdivision 10; 127.282; 128C.02, subdivision 2; 128C.08, subdivision 5; 134.155, subdivisions 2 and 3; 134.34, subdivision 4; 136A.233, by adding a subdivision; 169.01, subdivision 6; 169.447, subdivision 6; 169.4501, subdivisions 1 and 2; 169.4502, subdivisions 2, 7, 11, and by adding subdivisions; 169.4503, subdivisions 1, 2, 10, 13, 14, 17, 19, 23, 24, and by adding a subdivision; 169.4504, subdivision 1, and by adding a subdivision; 169.452; and 171.3215, subdivision 4; Laws 1991, chapter 265, article 1, section 30, as amended; Laws 1992, chapter 499, article 7, section 31; Laws 1995, First Special Session chapter 3, article 1, section 56; article 2, section 52; article 3, section 11, subdivisions 1, 2, and 5; article 11, section 21, subdivision 3; article 12, section 7, subdivision 1; Laws 1996, chapter 412, article 4, section 34, subdivision 4; and article 12, sections 8 and 11; proposing coding for new law in Minnesota Statutes, chapters 120; 121; 124; 126; and 127; proposing coding for new law as Minnesota Statutes, chapter 256J; repealing Minnesota Statutes 1996, sections 121.904, subdivision 4d; 124.177; 124.225, subdivisions 13, 14, 15, 16, and 17; 124.226, subdivisions 1, 3, 3a, 6, and 10; 124.3201, subdivisions 2a and 2b; 124A.22, subdivisions 2a, 13, and 13a; 124A.697; 124A.698; 124A.70; 124A.71; 124A.711; 124A.72; 124A.73; 126.113; 128B.10; 134.34, subdivision 4a; 134.46; 169.4502, subdivisions 6 and 9; 169.4503, subdivisions 3, 8, 9, 11, 12, and 22; and 169.454, subdivision 11; Laws 1993, chapter 146, article 5, section 20; Laws 1994, chapter 647, article 7, section 18; and Laws 1995, First Special Session chapter 3, article 12, section 8.

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 115 yeas and 18 nays as follows:

Those who voted in the affirmative were:

Anderson, B. Erhardt Johnson, R. Mariani Pelowski Swenson, H.
Anderson, I. Evans Juhnke Marko Peterson Sykora
Bakk Farrell Kahn McCollum Pugh Tingelstad
Bettermann Finseth Kalis McGuire Rest Tomassoni
Biernat Folliard Kelso Milbert Rhodes Trimble
Bishop Garcia Kielkucki Molnau Rifenberg Tuma
Boudreau Greenfield Kinkel Mullery Rostberg Tunheim
Broecker Greiling Knight Munger Rukavina Vickerman
Carlson Gunther Koskinen Murphy Schumacher Wagenius
Chaudhary Haas Kraus Ness Seagren Wejcman
Clark Harder Kubly Nornes Seifert Wenzel
Commers Hasskamp Larsen Olson, E. Sekhon Westfall
Daggett Hausman Leighton Opatz Skare Westrom
Davids Hilty Leppik Orfield Skoglund Winter
Dawkins Holsten Lieder Osskopp Slawik Spk. Carruthers
Dehler Huntley Long Osthoff Smith
Delmont Jaros Luther Ozment Solberg
Dempsey Jefferson Macklin Paulsen Stanek
Dorn Jennings Mahon Pawlenty Stang
Entenza Johnson, A. Mares Paymar Swenson, D.

Those who voted in the negative were:

Abrams Knoblach Kuisle Mulder Sviggum Weaver
Bradley Koppendrayer Lindner Olson, M. Tompkins Wolf
Goodno Krinkie McElroy Reuter Van Dellen Workman

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:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 985.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 985

A bill for an act relating to crimes; driving while impaired; providing criminal penalties for persons operating recreational vehicles who refuse an alcohol test; increasing criminal penalties, minimum sentences, and administrative sanctions for persons driving motor vehicles and operating recreational vehicles with an alcohol concentration of 0.20 or more; providing more severe requirements concerning conditional release and electronic alcohol monitoring pending trial, alcohol use

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assessment and treatment, driver's license revocation, license plate impoundment, and vehicle forfeiture for persons driving motor vehicles and operating recreational vehicles with an alcohol concentration of 0.20 or more; authorizing the imposition of a penalty assessment of up to $1,000 for persons driving motor vehicles with an alcohol concentration of 0.20 or more; redefining relevant evidence for operating a motorboat while under the influence of alcohol; including in the definition of prior DWI offenses, the offense of driving a commercial vehicle while impaired; authorizing peace officers to stop vehicles bearing special series license plates; enhancing criminal penalties for repeat violations involving commercial motor vehicles; clarifying the definition of commercial vehicle; clarifying that certain revocation period applies only to first-time DWI offenders; making technical correction allowing the commissioner of public safety to determine examination required for reinstatement of driving privileges; providing for petition for reinstatement of commercial driver's license following disqualification; clarifying applicable requirements for licensing commercial driver instructors; striking the requirement that a second chemical test be available to a person accused of driving while impaired; making various changes to the implied consent hearing process involving what must be stated in the petition, available discovery, and the scope of the hearing; extending the period of time that a court may place an offender on probation for certain gross misdemeanor DWI violations; broadening the permissible uses of preliminary breath test results obtained in DWI situations; broadening the scope of the DWI forfeiture law to include certain implied consent license revocations; accelerating the applicability of the forfeiture law; authorizing an administrative forfeiture process; requiring courts to notify persons convicted of DWI offenses of possible vehicle forfeiture and plate impoundment for future offenses; making various technical changes; amending Minnesota Statutes 1996, sections 84.91, subdivisions 1, 2, 5, 7, 8, and by adding a subdivision; 84.911, subdivisions 2, 3, and 6; 84.912, subdivision 1; 86B.331, subdivisions 1, 2, 4, 5, 6, 7, 8, and by adding a subdivision; 86B.335, subdivisions 2, 3, 4, and 6; 86B.337, subdivision 1; 97B.066, subdivision 6, and by adding subdivisions; 168.042, subdivisions 1, 2, 4, 9, and 11, and by adding a subdivision; 169.01, subdivision 75; 169.121, subdivisions 1, 1c, 2, 3, 3a, 3b, 4, 6, and by adding a subdivision; 169.1211, subdivision 1, and by adding subdivisions; 169.1217; 169.123, subdivisions 3, 4, and 5c; 169.126, subdivision 1; 169.1261; 171.19; 171.30, by adding a subdivision; 340A.503, subdivision 2; 364.09; 609.135, subdivision 2; and 634.15, subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 168; repealing Minnesota Statutes 1996, section 86B.335, subdivisions 11 and 12.

May 19, 1997

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. 985, 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. 985 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 84.83, subdivision 5, is amended to read:

Subd. 5. [FINES AND FORFEITED BAIL.] The disposition of fines and forfeited bail collected from prosecutions of violations of sections 84.81 to 84.91, and violations of section 169.121 that involve off-road recreational vehicles, as defined in section 169.01, subdivision 84, are governed by section 97A.065.

Sec. 2. Minnesota Statutes 1996, section 84.91, subdivision 1, is amended to read:

Subdivision 1. [ACTS PROHIBITED.] (a) No person shall operate or be in physical control of any snowmobile or all-terrain vehicle anywhere in this state or on the ice of any boundary water of this state:

(1) when the person is under the influence of alcohol;

(2) when the person is under the influence of a controlled substance, as defined in section 152.01, subdivision 4;

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(3) when the person is under the influence of a combination of any two or more of the elements named in clauses (1), (2), and (6);

(4) when the person's alcohol concentration is 0.10 or more;

(5) when the person's alcohol concentration as measured within two hours of the time of operating is 0.10 or more; or

(6) when the person is knowingly under the influence of any chemical compound or combination of chemical compounds that is listed as a hazardous substance in rules adopted under section 182.655 and that affects the nervous system, brain, or muscles of the person so as to substantially impair the person's ability to operate the snowmobile or all-terrain vehicle.

(b) No owner or other person having charge or control of any snowmobile or all-terrain vehicle shall authorize or permit any individual the person knows or has reason to believe is under the influence of alcohol or a controlled substance or other substance, as provided under paragraph (a), to operate the snowmobile or all-terrain vehicle anywhere in this state or on the ice of any boundary water of this state.

(c) (b) No owner or other person having charge or control of any snowmobile or all-terrain vehicle shall knowingly authorize or permit any person, who by reason of any physical or mental disability is incapable of operating the vehicle, to operate the snowmobile or all-terrain vehicle anywhere in this state or on the ice of any boundary water of this state.

(c) A person who operates or is in physical control of a snowmobile or all-terrain vehicle anywhere in this state or on the ice of any boundary water of this state while under the influence of alcohol, a controlled substance, or a hazardous substance, is subject to the provisions of chapter 169 relating to driving while impaired. In addition to the applicable sanctions under chapter 169, a person who is convicted of violating section 169.121 while operating a snowmobile or all-terrain vehicle, or who refuses to comply with a lawful request to submit to testing under section 169.123, shall be prohibited from operating the snowmobile or all-terrain vehicle for a period of one year. The commissioner shall notify the convicted person of the period during which the person is prohibited from operating a snowmobile or all-terrain vehicle. The court shall promptly forward to the commissioner and the department of public safety copies of all convictions and criminal and civil sanctions imposed under this section and chapter 169 relating to snowmobiles and all-terrain vehicles.

(d) A person who violates paragraph (a) or (b), or an ordinance in conformity with either of them, is guilty of a misdemeanor.

Sec. 3. Minnesota Statutes 1996, section 84.911, subdivision 7, is amended to read:

Subd. 7. [CORONER TO REPORT DEATH.] Every coroner or medical examiner shall report in writing to the department of natural resources the death of any person within the jurisdiction of the coroner or medical examiner as the result of an accident involving a an off-road recreational motor vehicle, as defined in section 84.90, subdivision 1 169.01, subdivision 84, and the circumstances of the accident. The report shall be made within 15 days after the death.

In the case of drivers killed in off-road recreational motor vehicle accidents and of the death of passengers 14 years of age or older, who die within four hours after accident, the coroner or medical examiner shall examine the body and shall make tests as are necessary to determine the presence and percentage concentration of alcohol, and drugs if feasible, in the blood of the victim. This information shall be included in each report submitted pursuant to the provisions of this subdivision and shall be tabulated by the department of natural resources. Periodically, the commissioner of natural resources must transmit a summary of the reports to the commissioner of public safety.

Sec. 4. Minnesota Statutes 1996, section 84.927, subdivision 1, is amended to read:

Subdivision 1. [REGISTRATION REVENUE.] Fees from the registration of all-terrain vehicles and the unrefunded gasoline tax attributable to all-terrain vehicle use under section 296.16, as well as the net proceeds from the sale of all-terrain vehicles forfeited pursuant to section 84.912 169.1217, shall be deposited in the state treasury and credited to the all-terrain vehicle account in the natural resources fund.

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Sec. 5. Minnesota Statutes 1996, section 86B.331, subdivision 1, is amended to read:

Subdivision 1. [ACTS PROHIBITED.] (a) A person may not operate or be in physical control of a motorboat in operation on the waters of this state:

(1) when the person is under the influence of alcohol;

(2) when the person is under the influence of a controlled substance, as defined in section 152.01, subdivision 4;

(3) when the person is under the influence of a combination of any two or more of the elements named in clauses (1), (2), and (6);

(4) when the person's alcohol concentration is 0.10 or more;

(5) when the person's alcohol concentration as measured within two hours of the time of operating is 0.10 or more; or

(6) when the person is knowingly under the influence of any chemical compound or combination of chemical compounds that is listed as a hazardous substance in rules adopted under section 182.655 and that affects the nervous system, brain, or muscles of the person so as to substantially impair the person's ability to operate the motorboat.

(b) An owner or other person having charge or control of a motorboat may not authorize or allow an individual the person knows or has reason to believe is under the influence of alcohol or a controlled or other substance, as provided under paragraph (a), to operate the motorboat in operation on the waters of this state.

(c) (b) An owner or other person having charge or control of a motorboat may not knowingly authorize or allow a person, who by reason of a physical or mental disability is incapable of operating the motorboat, to operate the motorboat in operation on the waters of this state.

(c) A person who operates or is in physical control of a motorboat on the waters of this state while under the influence of alcohol, a controlled substance, or a hazardous substance, is subject to the provisions of chapter 169 relating to driving while impaired. In addition to the applicable sanctions under chapter 169, a person who is convicted of violating section 169.121 while operating a motorboat, shall be prohibited from operating the motorboat on the waters of this state for a period of 90 days between May 1 and October 31, extending over two consecutive years if necessary. If the person operating the motorboat refuses to comply with a lawful demand to submit to testing under section 169.123, the person shall be prohibited from operating the motorboat for a period of one year. The commissioner shall notify the convicted person of the period during which the person is prohibited from operating a motorboat. The court shall promptly forward to the commissioner and the department of public safety copies of all convictions and criminal and civil sanctions imposed under this section and chapter 169 relating to motorboats.

(d) A person who violates paragraph (a) or (b), or an ordinance in conformity with either of them, is guilty of a misdemeanor.

(d) (e) For purposes of this subdivision, a motorboat "in operation" does not include a motorboat that is anchored, beached, or securely fastened to a dock or other permanent mooring, or a motorboat that is being rowed or propelled by other than mechanical means.

Sec. 6. Minnesota Statutes 1996, section 86B.705, subdivision 2, is amended to read:

Subd. 2. [FINES AND BAIL MONEY.] (a) All fines, installment payments, and forfeited bail money collected from persons convicted of violations of this chapter, or of a violation of section 169.121 involving a motorboat, shall be paid to the county treasurer of the county where the violation occurred by the court administrator or other person collecting the money within 15 days after the last day of the month the money was collected.

(b) One-half of the receipts shall be credited to the general revenue fund of the county. The other one-half of the receipts shall be transmitted by the county treasurer to the commissioner of natural resources to be deposited in the state treasury and credited to the water recreation account for the purpose of boat and water safety.

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Sec. 7. Minnesota Statutes 1996, section 97A.065, subdivision 2, is amended to read:

Subd. 2. [FINES AND FORFEITED BAIL.] (a) Fines and forfeited bail collected from prosecutions of violations of: the game and fish laws,; sections 84.091 to 84.15, and; sections 84.81 to 84.88,; section 169.121, when the violation involved an off-road recreational vehicle as defined in section 169.01, subdivision 84; chapter 348,; and any other law relating to wild animals, and or aquatic vegetation, must be paid to the treasurer of the county where the violation is prosecuted. The county treasurer shall submit one-half of the receipts to the commissioner and credit the balance to the county general revenue fund except as provided in paragraphs (b), (c), and (d).

(b) The commissioner must reimburse a county, from the game and fish fund, for the cost of keeping prisoners prosecuted for violations under this section if the county board, by resolution, directs: (1) the county treasurer to submit all fines and forfeited bail to the commissioner; and (2) the county auditor to certify and submit monthly itemized statements to the commissioner.

(c) The county treasurer shall indicate the amount of the receipts that are assessments or surcharges imposed under section 609.101 and shall submit all of those receipts to the commissioner. The receipts must be credited to the game and fish fund to provide peace officer training for persons employed by the commissioner who are licensed under section 626.84, subdivision 1, clause (c), and who possess peace officer authority for the purpose of enforcing game and fish laws.

(d) The county treasurer shall submit one-half of the receipts collected under paragraph (a) from prosecutions of violations of sections 84.81 to 84.91, and 169.121, including receipts that are assessments or surcharges imposed under section 609.101, to the commissioner and credit the balance to the county general fund. The commissioner shall credit these receipts to the snowmobile trails and enforcement account in the natural resources fund.

Sec. 8. Minnesota Statutes 1996, section 97B.065, subdivision 1, is amended to read:

Subdivision 1. [ACTS PROHIBITED.] (a) A person may not take wild animals with a firearm or by archery:

(1) when the person is under the influence of alcohol;

(2) when the person is under the influence of a controlled substance, as defined in section 152.01, subdivision 4;

(3) when the person is under the influence of a combination of any two or more of the elements in clauses (1) and, (2), and (7);

(4) when the person's alcohol concentration is 0.10 or more;

(5) when the person's alcohol concentration as measured within two hours of the time of taking is 0.10 or more; or

(6) when the person's alcohol concentration is 0.04 or more at the time of taking, or as measured within two hours of the time of taking, if the person is under the age of 19 years at the time of the violation; or

(7) when the person is knowingly under the influence of any chemical compound or combination of chemical compounds that is listed as a hazardous substance in rules adopted under section 182.655 and that affects the nervous system, brain, or muscles of the person so as to substantially impair the person's ability to operate a firearm or bow and arrow.

(b) An owner or other person having charge or control of a firearm or bow and arrow may not authorize or permit an individual the person knows or has reason to believe is under the influence of alcohol or a controlled substance, as provided under paragraph (a), to possess the firearm or bow and arrow in this state or on a boundary water of this state.

Sec. 9. Minnesota Statutes 1996, section 97B.066, subdivision 1, is amended to read:

Subdivision 1. [MANDATORY CHEMICAL TESTING.] A person who takes wild animals with a bow or firearm in this state or on a boundary water of this state is required, subject to the provisions of this section, to take or submit to a test of the person's blood, breath, or urine for the purpose of determining the presence and amount of alcohol or a controlled

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substance. The test shall be administered at the direction of an officer authorized to make arrests under section 97B.065, subdivision 2. Taking or submitting to the test is mandatory when requested by an officer who has probable cause to believe the person was hunting in violation of section 97B.065, subdivision 1, paragraph (a), and one of the following conditions exists:

(1) the person has been lawfully placed under arrest for violating section 97B.065, subdivision 1, paragraph (a);

(2) the person has been involved while hunting in an accident resulting in property damage, personal injury, or death;

(3) the person has refused to take the preliminary screening test provided for in section 97B.065, subdivision 3; or

(4) the screening test was administered and indicated an alcohol concentration of 0.10 or more; or

(5) the screening test was administered and indicated an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation.

Sec. 10. Minnesota Statutes 1996, section 97B.066, subdivision 5, is amended to read:

Subd. 5. [CHEMICAL TESTS.] Chemical tests administered under this section are governed by section 86B.335, subdivisions 8, 9, and 10 169.123, subdivisions 2b, 2c, and 3.

Sec. 11. Minnesota Statutes 1996, section 97B.066, is amended by adding a subdivision to read:

Subd. 7. [ADMINISTRATIVE REVIEW.] (a) At any time during the period of prohibition or revocation imposed under this section, the person may request in writing a review of the order imposing sanctions under this section. If the person makes a request for administrative review within 30 days following receipt of a notice and order imposing sanctions, the request shall stay imposition of the civil penalty. Upon receiving the request for review, the commissioner or the commissioner's designee shall review the order, the evidence upon which the order was based, and other material information brought to the attention of the commissioner and determine whether sufficient cause exists to sustain the order.

(b) Within 15 days after receiving the request, the commissioner shall issue a written report ordering that the prohibition, revocation, or civil penalty be either sustained or rescinded. The review provided in this subdivision is not subject to the contested case provisions of the Administrative Procedure Act under chapter 14. The availability of administrative review does not have an effect upon the availability of judicial review under this section.

Sec. 12. Minnesota Statutes 1996, section 97B.066, is amended by adding a subdivision to read:

Subd. 8. [JUDICIAL REVIEW.] (a) Within 30 days following receipt of a notice and order imposing sanctions under this section, a person may petition the court for review. The petition must be filed with the district court administrator in the county where the incident occurred giving rise to the test demand and refusal, together with proof of service of a copy on the commissioner and the prosecuting authority for misdemeanor offenses for the jurisdiction in which the incident occurred. A responsive pleading is not required of the commissioner of natural resources, and court fees may not be charged for the appearance of the representative of the commissioner in the matter.

(b) The petition must be captioned in the name of the person making the petition as petitioner and the commissioner as respondent. The petition must state specifically the grounds upon which the petitioner seeks rescission of the order imposing sanctions.

(c) The filing of the petition does not stay the revocation or prohibition against hunting. However, the filing of a petition stays imposition of the civil penalty. The judicial review shall be conducted according to the rules of civil procedure.

Sec. 13. Minnesota Statutes 1996, section 97B.066, is amended by adding a subdivision to read:

Subd. 9. [HEARING.] (a) A hearing under this section must be before a district court judge in the county where the incident occurred which gave rise to the test demand and refusal. The hearing must be to the court and may be conducted at the same time as hearings upon pretrial motions in the criminal prosecution under section 97B.065. The hearing must

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be recorded. The commissioner must be represented by the prosecuting authority for misdemeanor offenses for the jurisdiction in which the incident occurred which gave rise to the test demand and refusal.

(b) The hearing must be held at the earliest practicable date and in any event no later than 60 days following the filing of the petition for review. The reviewing court may order a temporary stay of the balance of the prohibition or revocation if the hearing has not been conducted within 60 days after filing of the petition, upon the application of the petitioner and upon terms the court deems proper.

(c) The scope of the hearing must be limited to the issues of:

(1) whether the officer had probable cause to believe that the person violated section 97B.065;

(2) whether one of the conditions in subdivision 1 existed;

(3) whether the person was informed as prescribed in subdivision 3; and

(4) whether the person refused to submit to testing.

(d) It is an affirmative defense for the petitioner to prove that, at the time of the refusal, the petitioner's refusal to permit the test was based upon reasonable grounds.

(e) The court shall order that the prohibition or revocation be either sustained or rescinded and shall either sustain or rescind the civil penalty. The court shall forward a copy of the order to the commissioner.

Sec. 14. Minnesota Statutes 1996, section 97B.066, is amended by adding a subdivision to read:

Subd. 10. [PAYMENT OF CIVIL PENALTY.] The civil penalty imposed under subdivision 2 must be paid to the political subdivision that represents the commissioner on the petition for judicial review or, in the event that a petition is not filed, to the political subdivision that would have represented the commissioner had a petition been filed. If a person does not pay the civil penalty, the prohibition against hunting is automatically extended until the political subdivision reports to the commissioner in writing that the penalty has been paid.

Sec. 15. Minnesota Statutes 1996, section 97B.066, is amended by adding a subdivision to read:

Subd. 11. [ENFORCEMENT OF CIVIL PENALTY.] (a) If a person does not pay the civil penalty imposed under subdivision 2 within 30 days of the date it was imposed, the prosecuting authority representing the commissioner may petition the district court in the county where the incident occurred to file the order imposing the civil penalty as an order of the court.

(b) Once entered, the order may be enforced in the same manner as a final judgment of the court. In addition to the penalty, attorney fees, costs, and interest may be assessed against any person who fails to pay the civil penalty.

Sec. 16. Minnesota Statutes 1996, section 168.042, subdivision 1, is amended to read:

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

(b) "Violator" means a person who was driving, operating, or in physical control of the motor vehicle when the violation occurred.

(c) "Violation" means:

(1) a violation of section 169.123 or an impaired driving conviction as defined in section 169.121, subdivision 3, that results in the revocation of a person's driver's license or driving privileges, and also includes an alcohol-related license revocation from another state;

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(2) a violation of section 169.129; and

(3) a violation of section 171.24 by a person whose driver's license or driving privileges have been canceled under section 171.04, subdivision 1, clause (8). includes:

(1) a violation of section 169.121, subdivision 1, clause (a), (b), (c), (d), (e), (f), (h), or (i), subdivision 1a, or a conforming ordinance from this state or a conforming statute or ordinance from another state:

(i) within five years of a prior impaired driving conviction or a prior license revocation; or

(ii) within 15 years 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;

(2) a violation of section 169.121, subdivision 1, clause (g), or section 169.121, subdivision 3, paragraph (c), clause (4);

(3) a violation of section 169.129; and

(4) a violation of section 171.24 by a person whose driver's license or driving privileges have been canceled under section 171.04, subdivision 1, clause (9).

(d) "Prior impaired driving conviction" has the meaning given it in section 169.121, subdivision 3.

(e) "Prior license revocation" has the meaning given it in section 169.121, subdivision 3.

Sec. 17. Minnesota Statutes 1996, section 168.042, subdivision 2, is amended to read:

Subd. 2. [VIOLATION; ISSUANCE OF IMPOUNDMENT ORDER.] The commissioner shall issue a registration plate impoundment order when:

(1) a person's driver's license or driving privileges are revoked for a third violation. , as defined in subdivision 1, paragraph (c), clause (1), within five years or a fourth or subsequent violation, as defined in subdivision 1, paragraph (c), clause (1), within 15 years;

(2) a person's driver's license or driving privileges are revoked for a violation of section 169.121, subdivision 3, paragraph (c), clause (4), within five years of one previous violation or within 15 years of two or more previous violations, as defined in subdivision 1, paragraph (c), clause (1); or

(3) a person is arrested for or charged with a violation described in subdivision 1, paragraph (c), clause (2) or (3).

The order shall require the impoundment of the registration plates of the self-propelled motor vehicle involved in the violation and all self-propelled motor vehicles owned by, registered, or leased in the name of the violator, including self-propelled motor vehicles registered jointly or leased in the name of the violator and another. An impoundment order shall not be issued for the registration plates of a rental vehicle as defined in section 168.041, subdivision 10, or a vehicle registered in another state.

Sec. 18. Minnesota Statutes 1996, section 168.042, subdivision 4, is amended to read:

Subd. 4. [PEACE OFFICER AS AGENT FOR NOTICE OF IMPOUNDMENT.] On behalf of the commissioner, a peace officer issuing a notice of intent to revoke and of revocation under section 169.123 for a violation shall also serve a notice of intent to impound and an order of impoundment if the violation is the third violation, as defined in subdivision 1, paragraph (c), clause (1), within five years or the fourth or subsequent violation, as defined in subdivision 1, paragraph (c), clause (1), within 15 years. On behalf of the commissioner, a peace officer who is arresting a person for or charging a person with a violation described in subdivision 1, paragraph (c), clause (2) or (3), shall also serve a notice of intent to impound and an order of impoundment. If the vehicle involved in the violation is accessible to the officer at the time the impoundment order is issued, the officer shall seize the registration plates subject to the impoundment order. The officer shall destroy all plates seized or impounded under this section. The officer shall send to the commissioner copies of the notice of intent to impound and the order of impoundment and a notice that registration plates impounded and seized under this section have been destroyed.

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Sec. 19. Minnesota Statutes 1996, section 168.042, subdivision 9, is amended to read:

Subd. 9. [ADMINISTRATIVE REVIEW.] At any time during the effective period of an impoundment order, a person may request in writing a review of the impoundment order by the commissioner. On receiving a request, the commissioner or the commissioner's designee shall review the order, the evidence upon which the order was based, and any other material information brought to the attention of the commissioner, and determine whether sufficient cause exists to sustain the order. The commissioner shall report in writing the results of the review within 15 days of receiving the request. The review provided in this subdivision is not subject to the contested case provisions of the administrative procedure act in sections 14.01 to 14.69. As a result of this review, the commissioner may authorize the issuance at no cost of new registration plates to the registered owner of the vehicle if the registered owner's license or driving privileges were not revoked under section 169.123 or as a result of an impaired driving conviction as defined in section 169.121, subdivision 3 the violation.

Review under this subdivision shall take place, if possible, at the same time as any administrative review of the person's license revocation under section 169.123, subdivision 5b.

Sec. 20. Minnesota Statutes 1996, section 168.042, subdivision 11, is amended to read:

Subd. 11. [RESCISSION OF REVOCATION; DISMISSAL OF CHARGES OR ACQUITTAL; ISSUANCE OF NEW PLATES.] If:

(1) the driver's license revocation that is the basis for an impoundment order is rescinded,;

(2) the charges for the violation have been dismissed with prejudice; or

(3) the violator has been acquitted of the violation;

then the registrar of motor vehicles shall issue new registration plates for the vehicle at no cost, when the registrar receives an application that includes a copy of the order rescinding the driver's license revocation, the order dismissing the charges, or the judgment of acquittal. If the impoundment order was based on a violation described in subdivision 1, paragraph (c), clause (2) or (3), and the charges have been dismissed with prejudice or the violator has been acquitted of the violation, the registrar of motor vehicles shall issue new registration plates for the vehicle at no cost, when the registrar receives an application that includes a copy of the order dismissing the charges or a copy of the judgment of acquittal.

Sec. 21. Minnesota Statutes 1996, section 168.042, is amended by adding a subdivision to read:

Subd. 11a. [CHARGE FOR REINSTATEMENT OF REGISTRATION PLATES IN CERTAIN SITUATIONS.] When the registrar of motor vehicles reinstates a person's registration plates after impoundment for reasons other than those described in subdivision 11, the registrar shall charge the person $25. Money raised under this subdivision must be paid into the state treasury and credited to the highway user tax distribution fund.

Sec. 22. [168.0422] [STOPS OF VEHICLES BEARING SPECIAL SERIES PLATES.]

A peace officer who observes the operation of a motor vehicle within this state bearing special series registration plates issued under section 168.041, subdivision 6, or 168.042, subdivision 12, may stop the vehicle for the purpose of determining whether the driver is operating the vehicle lawfully under a valid driver's license.

Sec. 23. Minnesota Statutes 1996, section 169.01, subdivision 75, is amended to read:

Subd. 75. [COMMERCIAL MOTOR VEHICLE.] (a) "Commercial motor vehicle" means a motor vehicle or combination of motor vehicles used to transport passengers or property if the motor vehicle:

(1) has a gross vehicle weight of more than 26,000 pounds;

(2) has a towed unit with a gross vehicle weight of more than 10,000 pounds and the combination of vehicles has a combined gross vehicle weight of more than 26,000 pounds;

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(3) is a bus;

(4) is of any size and is used in the transportation of hazardous materials, except for those vehicles having a gross vehicle weight of 26,000 pounds or less while carrying in bulk tanks a total of not more than 200 gallons of petroleum products and liquid fertilizer; or

(5) is outwardly equipped and identified as a school bus, except for school buses defined in subdivision 6, paragraph (c).

(b) For purposes of sections 169.1211, 169.1215, and 169.123, subdivisions 2 and 4,:

(1) a commercial motor vehicle does not include a farm truck, firefighting equipment, or recreational equipment being operated by a person within the scope of section 171.02, subdivision 2, paragraph (a); and

(2) a commercial motor vehicle includes a vehicle capable of or designed to meet the standards described in paragraph (a), clause (2), whether or not the towed unit is attached to the truck-tractor at the time of the violation or stop.

Sec. 24. Minnesota Statutes 1996, section 169.01, is amended by adding a subdivision to read:

Subd. 84. [OFF-ROAD RECREATIONAL VEHICLE.] "Off-road recreational vehicle" means an off-highway motorcycle as defined in section 84.787, subdivision 7; off-road vehicle as defined in section 84.797, subdivision 7; snowmobile as defined in section 84.81, subdivision 3; and all-terrain vehicle as defined in section 84.92, subdivision 8.

Sec. 25. Minnesota Statutes 1996, section 169.01, is amended by adding a subdivision to read:

Subd. 85. [MOTORBOAT.] "Motorboat" means a watercraft propelled in any manner by machinery, including watercraft temporarily equipped with detachable motors.

Sec. 26. Minnesota Statutes 1996, section 169.01, is amended by adding a subdivision to read:

Subd. 86. [DRUG RECOGNITION EVALUATION.] "Drug recognition evaluation" means the systematic, standardized, investigative procedure defined by the National Highway Traffic Safety Administration that is used to determine whether a driver is impaired, whether the impairment relates to drugs or a medical condition and, if drug-related, the categories of drugs likely to have caused the impairment.

Sec. 27. Minnesota Statutes 1996, section 169.01, is amended by adding a subdivision to read:

Subd. 87. [DRUG RECOGNITION EXPERT.] "Drug recognition expert" means a peace officer who is certified by the International Association of Chiefs of Police to conduct drug recognition evaluations.

Sec. 28. Minnesota Statutes 1996, section 169.121, subdivision 1, is amended to read:

Subdivision 1. [CRIME; ACTS PROHIBITED.] It is a crime for any person to drive, operate, or be in physical control of any motor vehicle within this state or upon the ice of any boundary water of this state under any of the following circumstances:

(a) when the person is under the influence of alcohol;

(b) when the person is under the influence of a controlled substance;

(c) when the person is under the influence of a combination of any two or more of the elements named in clauses (a), (b), and (f) (h);

(d) when the person's alcohol concentration is 0.10 or more but less than 0.20;

(e) when the person's alcohol concentration as measured within two hours of the time of driving, operating, or being in physical control of the motor vehicle is 0.10 or more but less than 0.20;

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(f) when the person's alcohol concentration is 0.04 or more but less than 0.20 at the time of driving, operating, or being in physical control of the motor vehicle, or as measured within two hours of the time of driving, operating, or being in physical control of the motor vehicle, if the person is under the age of 19 years at the time of the violation;

(g) when the person's alcohol concentration at the time, or as measured within two hours of the time, of driving, operating, or being in physical control of the motor vehicle is 0.20 or more;

(h) when the person is knowingly under the influence of a hazardous substance that affects the nervous system, brain, or muscles of the person so as to substantially impair the person's ability to drive or operate the motor vehicle; or

(g) (i) when the person's body contains any amount of a controlled substance listed in schedule I or II other than marijuana or tetrahydrocannabinols.

Sec. 29. Minnesota Statutes 1996, section 169.121, subdivision 1c, is amended to read:

Subd. 1c. [CONDITIONAL RELEASE.] (a) Unless maximum bail is imposed under section 629.471, subdivision 2, a person charged with a crime listed in this paragraph may be released from detention only if the person agrees to abstain from alcohol and submit to a program of electronic alcohol monitoring involving at least daily measurements of the person's alcohol concentration pending resolution of the charge. This paragraph applies only when electronic alcohol monitoring equipment is available to the court and only when a person is charged with:

(1) a violation of subdivision 1 or 1a within five years of two prior impaired driving convictions, or within ten years of three or more prior impaired driving convictions;

(2) a second or subsequent violation of subdivision 1 or 1a, if the person is under the age of 19 years;

(3) a violation of subdivision 1 or 1a, while the person's driver's license or driving privileges have been canceled under section 171.04, subdivision 1, clause (9);

(4) a violation of subdivision 1, clause (g); or

(5) a violation of section 169.129.

If the defendant is convicted of the charged offense, the court shall require partial or total reimbursement from the person for the cost of the electronic alcohol monitoring, to the extent the defendant is able to pay.

(b) Unless maximum bail is imposed under section 629.471, subdivision 2, a person charged with violating subdivision 1 or 1a within ten years of the first of three prior impaired driving convictions or within the person's lifetime after four or more prior impaired driving convictions may be released from detention only if the following conditions are imposed in addition to the condition imposed in paragraph (a), if applicable, and any other conditions of release ordered by the court:

(1) the impoundment of the registration plates of the vehicle used to commit the violation, unless already impounded;

(2) if the vehicle used to commit the violation was an off-road recreational vehicle or a motorboat, the impoundment of the off-road recreational vehicle or motorboat;

(3) a requirement that the alleged violator report weekly to a probation agent;

(3) (4) a requirement that the alleged violator abstain from consumption of alcohol and controlled substances and submit to random, weekly alcohol tests or urine analyses at least weekly; and

(4) (5) a requirement that, if convicted, the alleged violator reimburse the court or county for the total cost of these services.

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Sec. 30. Minnesota Statutes 1996, section 169.121, is amended by adding a subdivision to read:

Subd. 1d. [FIRST-TIME VIOLATORS; OFF-ROAD RECREATIONAL VEHICLES AND MOTORBOATS.] A person who violates this section while using an off-road recreational vehicle or motorboat and who does not have a prior impaired driving conviction or prior license revocation is subject only to the criminal penalty provided in subdivision 3 and loss of operating privileges as provided in section 84.91, subdivision 1, or 86B.331, subdivision 1, whichever is applicable. The person is not subject to the provisions of subdivision 1c, 3b, 3f, 4, 5b, or 8, the license revocation sanctions of section 169.123, or the plate impoundment provisions of section 168.042.

Sec. 31. Minnesota Statutes 1996, section 169.121, subdivision 2, is amended to read:

Subd. 2. [EVIDENCE.] (a) Upon the trial of any prosecution arising out of acts alleged to have been committed by any person arrested for driving, operating, or being in physical control of a motor vehicle in violation of subdivision 1, the court may admit evidence of the presence or amount of alcohol, controlled substances, or hazardous substances in the person's blood, breath, or urine as shown by an analysis of those items.

(b) For the purposes of this subdivision, evidence that there was at the time an alcohol concentration of 0.04 or more is relevant evidence in indicating whether or not the person was under the influence of alcohol.

(c) Evidence of the refusal to take a test is admissible into evidence in a prosecution under this section or an ordinance in conformity with it.

(d) If proven by a preponderance of the evidence, it shall be an affirmative defense to a violation of subdivision 1, clause (e), (f), or (g), that the defendant consumed a sufficient quantity of alcohol after the time of actual driving, operating, or being in physical control of a motor vehicle and before the administration of the evidentiary test to cause the defendant's alcohol concentration to exceed 0.10 the level specified in the applicable clause. Evidence that the defendant consumed alcohol after the time of actual driving, operating, or being in physical control of a motor vehicle may not be admitted in defense to any alleged violation of this section unless notice is given to the prosecution prior to the omnibus or pretrial hearing in the matter.

(e) If proven by a preponderance of the evidence, it shall be an affirmative defense to a violation of subdivision 1, clause (g) (i), that the defendant used the controlled substance according to the terms of a prescription issued for the defendant in accordance with sections 152.11 and 152.12.

(f) The preceding provisions do not limit the introduction of any other competent evidence bearing upon the question of whether the person violated this section, including tests obtained more than two hours after the alleged violation and results obtained from partial tests on an infrared breath-testing instrument. A result from a partial test is the measurement obtained by analyzing one adequate breath sample, as defined in section 169.123, subdivision 2b, paragraph (b).

Sec. 32. Minnesota Statutes 1996, section 169.121, subdivision 3, is amended to read:

Subd. 3. [CRIMINAL PENALTIES.] (a) As used in this subdivision section:

(1) "Prior impaired driving conviction" means a prior conviction under:

(i) this section; Minnesota Statutes 1996, section 84.91, subdivision 1, paragraph (a);, or 86B.331, subdivision 1, paragraph (a); section 169.1211; section 169.129; or section 360.0752;

(ii) section 609.21, subdivision 1, clauses (2) to (6); 609.21, subdivision 2, clauses (2) to (6); 609.21, subdivision 2a, clauses (2) to (6); 609.21, subdivision 2b, clauses (2) to (6); 609.21, subdivision 3, clauses (2) to (6); 609.21, or subdivision 4, clauses (2) to (6); or

(iii) an ordinance from this state, or a statute or ordinance from another state, in conformity with any of them provision listed in item (i) or (ii).

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; and.

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(2) "Prior license revocation" means a driver's license suspension, revocation, or cancellation, denial, or disqualification under:

(i) this section; or section 169.1211, 169.123;, 171.04;, 171.14;, 171.16;, 171.165, 171.17;, or 171.18 because of an alcohol-related incident;

(ii) section 609.21, subdivision 1, clauses (2) to (6); 609.21, subdivision 2, clauses (2) to (6); 609.21, subdivision 2a, clauses (2) to (6); 609.21, subdivision 2b, clauses (2) to (6); 609.21, subdivision 3, clauses (2) to (6); or 609.21, subdivision 4, clauses (2) to (6); or

(iii) an ordinance from this state, or a statute or ordinance from another state, in conformity with any of them provision listed in item (i) or (ii).

"Prior license revocation" also means the revocation of snowmobile or all-terrain vehicle operating privileges under section 84.911, or motorboat operating privileges under section 86B.335, for violations that occurred on or after August 1, 1995.

(b) A person who violates subdivision 1, clause (a), (b), (c), (d), (e), (f), (h), or (i), or subdivision 1a, or an ordinance in conformity with either any of them, is guilty of a misdemeanor.

(c) A person is guilty of a gross misdemeanor under any of the following circumstances:

(1) the person violates subdivision 1, clause (g);

(2) the person violates subdivision 1, clause (a), (b), (c), (d), (e), (f), (h), or (i), or subdivision 1a, within five years of a prior impaired driving conviction, or within ten years of the first of two or more prior impaired driving convictions;

(2) the person violates subdivision 1a within five years of or a prior license revocation, or within ten years of the first of two or more prior license revocations;

(3) the person violates section 169.26 while in violation of subdivision 1; or

(4) the person violates subdivision 1 or 1a while a child under the age of 16 is in the vehicle, if the child is more than 36 months younger than the violator.

A person convicted of a gross misdemeanor under this paragraph is subject to the mandatory penalties provided in subdivision 3d.

(d) A person is guilty of an enhanced gross misdemeanor under any of the following circumstances:

(1) the person violates subdivision 1, clause (g), or commits a violation described in paragraph (c), clause (3) or (4), within ten years of one or more prior impaired driving convictions or prior license revocations;

(2) the person violates subdivision 1, clause (a), (b), (c), (d), (e), (f), (h), or (i), or subdivision 1a, within ten years of the first of two or more prior impaired driving convictions, two or more prior license revocations, or any combination of two or more prior impaired driving convictions and prior license revocations, based on separate incidents.

A person convicted of an enhanced gross misdemeanor under this paragraph may be sentenced to imprisonment in a local correctional facility for not more than two years or to payment of a fine of not more than $3,000, or both. Additionally, the person is subject to the applicable mandatory penalties provided in subdivision 3e.

(e) The court shall notify a person convicted of violating subdivision 1 or 1a that the registration plates of the person's motor vehicle may be impounded under section 168.042 and the vehicle may be subject to forfeiture under section 169.1217 upon a subsequent conviction for violating this section, section 169.129, or section 171.24, or a subsequent license revocation under section 169.123. The notice must describe the conduct and the time periods within which the conduct must occur in order to result in plate impoundment or forfeiture. The failure of the court to provide this information does not affect the applicability of the plate impoundment or the forfeiture provision to that person.

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(d) (f) The attorney in the jurisdiction in which the violation occurred who is responsible for prosecution of misdemeanor violations of this section shall also be responsible for prosecution of gross misdemeanor and enhanced gross misdemeanor violations of this section.

(e) (g) The court must impose consecutive sentences when it sentences a person for a violation of this section or section 169.129 arising out of separate behavioral incidents. The court also must impose a consecutive sentence when it sentences a person for a violation of this section or section 169.129 and the person, at the time of sentencing, is on probation for, or serving, an executed sentence for a violation of this section or section 169.129 and the prior sentence involved a separate behavioral incident. The court also may order that the sentence imposed for a violation of this section or section 169.129 shall run consecutively to a previously imposed misdemeanor, gross misdemeanor or felony sentence for a violation other than this section or section 169.129.

(h) When the court stays the sentence of a person convicted under this section, the length of the stay is governed by section 609.135, subdivision 2.

(f) (i) The court may impose consecutive sentences for offenses arising out of a single course of conduct as permitted in section 609.035, subdivision 2.

(g) (j) When an attorney responsible for prosecuting gross misdemeanors or enhanced gross misdemeanors under this section requests criminal history information relating to prior impaired driving convictions from a court, the court must furnish the information without charge.

(h) (k) A violation of subdivision 1a may be prosecuted either in the jurisdiction where the arresting officer observed the defendant driving, operating, or in control of the motor vehicle or in the jurisdiction where the refusal occurred.

Sec. 33. Minnesota Statutes 1996, section 169.121, subdivision 3b, is amended to read:

Subd. 3b. [HABITUAL OFFENDERS; CHEMICAL USE ASSESSMENT.] The court must order a person to submit to the level of care recommended in the chemical use assessment if a the person has been convicted under of violating:

(1) subdivision 1, subdivision 1a, clause (g); or

(2) subdivision 1, clause (a), (b), (c), (d), (e), (f), (h), or (i), subdivision 1a, section 169.129, an ordinance in conformity with any of them, or a statute or ordinance from another state in conformity with any of them, and if the person is then convicted of violating subdivision 1, subdivision 1a, section 169.129, or an ordinance in conformity with any of them (1) once:

(i) within five years of the first a prior impaired driving conviction or (2) two or more times a prior license revocation; or

(ii) within ten years after the first conviction, the court must order the person to submit to the level of care recommended in the chemical use assessment required under section 169.126 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.

Sec. 34. Minnesota Statutes 1996, section 169.121, subdivision 3c, is amended to read:

Subd. 3c. [NOTICE OF ENHANCED PENALTIES.] When a court sentences a person for a misdemeanor or gross misdemeanor violation of this section, it shall inform the defendant of the statutory provisions that provide for enhancement of criminal penalties for repeat violators. The failure of a court to provide this information to a defendant does not affect the future applicability of these enhanced penalties to that defendant.

Sec. 35. Minnesota Statutes 1996, section 169.121, is amended by adding a subdivision to read:

Subd. 3d. [GROSS MISDEMEANORS; MANDATORY PENALTIES.] (a) The mandatory penalties in this subdivision apply to persons convicted of a gross misdemeanor under subdivision 3, paragraph (c), or section 169.129.

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(b) A person who is convicted of a gross misdemeanor under subdivision 3, paragraph (c), or is convicted of a gross misdemeanor violation of section 169.129 within five years of a prior impaired driving conviction or prior license revocation, must be sentenced to a minimum of 30 days imprisonment, at least 48 hours of which must be served consecutively, or to eight hours of community work service for each day less than 30 days that the person is ordered to serve in jail. Notwithstanding section 609.135, the above sentence must be executed, unless the court departs from the mandatory minimum sentence under paragraph (c) or (d).

(c) Prior to sentencing, the prosecutor may file a motion to have the defendant sentenced without regard to the mandatory minimum sentence established by this subdivision. The motion must be accompanied by a statement on the record of the reasons for it. When presented with the prosecutor's motion and if it finds that substantial mitigating factors exist, the court shall sentence the defendant without regard to the mandatory minimum sentence established by this subdivision.

(d) The court may, on its own motion, sentence the defendant without regard to the mandatory minimum sentence established by this subdivision if it finds that substantial mitigating factors exist and if its sentencing departure is accompanied by a statement on the record of the reasons for it. The court also may sentence the defendant without regard to the mandatory minimum sentence established by this subdivision if the defendant is sentenced to probation and ordered to participate in a program established under section 169.1265.

(e) When any portion of the sentence required by this subdivision is not executed, the court should impose a sentence that is proportional to the extent of the offender's prior criminal and moving traffic violation record. Any sentence required under this subdivision must include a mandatory sentence that is not subject to suspension or a stay of imposition or execution, and that includes incarceration for not less than 48 consecutive hours or at least 80 hours of community work service.

Sec. 36. Minnesota Statutes 1996, section 169.121, is amended by adding a subdivision to read:

Subd. 3e. [ENHANCED GROSS MISDEMEANORS; MANDATORY PENALTIES.] (a) The mandatory penalties in this subdivision apply to persons who are convicted of an enhanced gross misdemeanor under subdivision 3, paragraph (d), or section 169.129. Notwithstanding section 609.135, these penalties must be imposed and executed.

(b) A person who is convicted of an enhanced gross misdemeanor under the circumstances described in subdivision 3, paragraph (d), clause (1), shall be sentenced as follows:

(1) if the person has one prior impaired driving conviction within the past ten years, the person must be sentenced to a minimum of 90 days of incarceration, at least 30 days of which must be served consecutively in a local correctional facility. The court may order that the person serve not more than 60 days of this minimum penalty on home detention or in an intensive probation program described in section 169.1265;

(2) if the person has two prior impaired driving convictions within the past ten years, the person must be sentenced to a minimum of 180 days of incarceration, at least 30 days of which must be served consecutively in a local correctional facility. The court may order that the person serve not more than 150 days of this minimum penalty on home detention or in an intensive probation program described in section 169.1265; or

(3) if the person has three prior impaired driving convictions within the past 15 years, or four or more prior impaired driving convictions within the person's lifetime, the person must be sentenced to a minimum of one year of incarceration, at least 60 days of which must be served consecutively in a local correctional facility. The court may order that the person serve the remainder of this minimum penalty on intensive probation using an electronic monitoring system or, if such a system is unavailable, on home detention.

(c) A person who is convicted of an enhanced gross misdemeanor under the circumstances described in subdivision 3, paragraph (d), clause (2) or (3), or under section 169.129, shall be sentenced as follows:

(1) if the person has two prior impaired driving convictions, two prior license revocations, or a combination of the two, within the past ten years, the person must be sentenced to a minimum of 90 days incarceration, at least 30 days of which must be served consecutively in a local correctional facility. The court may order that the person serve not more than 60 days of this minimum penalty on home detention or in an intensive probation program described in section 169.1265;

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(2) if the person has three prior impaired driving convictions, three prior license revocations, or a combination of the two, within the past ten years, the person must be sentenced to a minimum of 180 days of incarceration, at least 30 days of which must be served consecutively in a local correctional facility. The court may order that the person serve not more than 150 days of this minimum penalty on home detention or in an intensive probation program described in section 169.1265; or

(3) if the person has: (i) four prior impaired driving convictions, four prior license revocations, or a combination of the two, within the past 15 years; or (ii) five or more prior impaired driving convictions, five or more prior license revocations, or a combination of the two, within the person's lifetime; then the person must be sentenced to a minimum of one year of incarceration, at least 60 days of which must be served consecutively in a local correctional facility. The court may order that the person serve the remainder of this minimum penalty on intensive probation using an electronic monitoring system or, if such a system is unavailable, on home detention.

Sec. 37. Minnesota Statutes 1996, section 169.121, is amended by adding a subdivision to read:

Subd. 3f. [LONG-TERM MONITORING.] (a) This subdivision applies to a person convicted of:

(1) a violation of subdivision 1 or 1a within five years of two prior impaired driving convictions, or within ten years of three or more prior impaired driving convictions;

(2) a second or subsequent violation of subdivision 1 or 1a, if the person is under the age of 19 years;

(3) a violation of subdivision 1 or 1a, while the person's driver's license or driving privileges have been canceled under section 171.04, subdivision 1, clause (9); or

(4) a violation of section 169.129.

(b) When the court sentences a person described in paragraph (a) to a stayed sentence and when electronic monitoring equipment is available to the court, the court shall require that the person participate in a program of electronic alcohol monitoring in addition to any other conditions of probation or jail time it imposes. During the first one-third of the person's probationary term, the electronic alcohol monitoring must be continuous and involve measurements of the person's alcohol at least three times a day. During the remainder of the person's probationary term, the electronic alcohol monitoring may be intermittent, as determined by the court. The court shall require partial or total reimbursement from the person for the cost of the electronic alcohol monitoring, to the extent the person is able to pay.

Sec. 38. Minnesota Statutes 1996, section 169.121, subdivision 4, is amended to read:

Subd. 4. [ADMINISTRATIVE PENALTIES.] (a) The commissioner of public safety shall revoke the driver's license of a person convicted of violating this section or an ordinance in conformity with it as follows:

(1) for an offense under subdivision 1: not less than 30 days;

(2) for an offense under subdivision 1a: not less than 90 days;

(3) for an offense occurring within five years after a prior impaired driving conviction or a prior license revocation, or any time after two or more prior impaired driving convictions or prior license revocations: (i) if the current conviction is for a violation of subdivision 1, not less than 180 days and until the court has certified that treatment or rehabilitation has been successfully completed where prescribed in accordance with section 169.126; or (ii) if the current conviction is for a violation of subdivision 1a, not less than one year and until the court has certified that treatment or rehabilitation has been successfully completed where prescribed in accordance with section 169.126;

(4) for an offense occurring within five years after the first of two prior impaired driving convictions or prior license revocations: not less than one year, together with denial under section 171.04, subdivision 1, clause (8) (9), until rehabilitation is established in accordance with standards established by the commissioner;

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(5) for an offense occurring any time after three or more prior impaired driving convictions or prior license revocations: not less than two years, together with denial under section 171.04, subdivision 1, clause (8) (9), until rehabilitation is established in accordance with standards established by the commissioner.

(b) If the person convicted of violating this section is under the age of 21 years, the commissioner of public safety shall revoke the offender's driver's license or operating privileges for a period of six months or for the appropriate period of time under paragraph (a), clauses (1) to (5), for the offense committed, whichever is the greatest period.

(c) For purposes of this subdivision, a juvenile adjudication under this section, section 169.129, an ordinance in conformity with either of them, or a statute or ordinance from another state in conformity with either of them is an offense.

(d) Whenever department records show that the violation involved personal injury or death to any person, not less than 90 additional days shall be added to the base periods provided above.

(e) If the person is convicted of violating subdivision 1, paragraph (g), the commissioner of public safety shall revoke the person's driver's license for twice the period of time otherwise provided for in this subdivision.

(f) Except for a person whose license has been revoked under paragraph (b), and except for a person who commits a violation described in subdivision 3, paragraph (c), clause (4), (child endangerment), any person whose license has been revoked pursuant to section 169.123 as the result of the same incident, and who does not have a prior impaired driving conviction or prior license revocation within the previous ten years, is subject to the mandatory revocation provisions of paragraph (a), clause (1) or (2), in lieu of the mandatory revocation provisions of section 169.123.

(f) As used in this subdivision, the terms "prior impaired driving conviction" and "prior license revocation" have the meanings given in subdivision 3, paragraph (a).

Sec. 39. Minnesota Statutes 1996, section 169.121, is amended by adding a subdivision to read:

Subd. 5b. [PENALTY ASSESSMENT.] When a court sentences a person convicted of violating subdivision 1, paragraph (g), the court may impose a penalty assessment of up to $1,000. The court may impose this assessment in addition to any other penalties or charges authorized under this section. Money collected under this subdivision must be distributed as follows:

(1) if the arresting officer is an employee of a political subdivision, the assessment must be forwarded to the treasury of the political subdivision for use in enforcement, training, and education activities related to driving while impaired; or

(2) if the arresting officer is an employee of the state, the assessment must be forwarded to the state treasury and credited to the general fund.

Sec. 40. Minnesota Statutes 1996, section 169.121, subdivision 6, is amended to read:

Subd. 6. [PRELIMINARY SCREENING TEST.] (a) When a peace officer has reason to believe from the manner in which a person is driving, operating, controlling, or acting upon departure from a motor vehicle, or has driven, operated, or controlled a motor vehicle, that the driver may be violating or has violated subdivision 1 or section 169.1211, the officer may require the driver to provide a sample of the driver's breath for a preliminary screening test using a device approved by the commissioner of public safety for this purpose.

(b) The results of this preliminary screening test shall be used for the purpose of deciding whether an arrest should be made and whether to require the tests authorized in section 169.123, but shall not be used in any court action except the following:

(1) to prove that a test was properly required of a person pursuant to section 169.123, subdivision 2;

(2) in a civil action arising out of the operation or use of the motor vehicle;

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(3) in an action for license reinstatement under section 171.19; or

(4) in a prosecution or juvenile court proceeding concerning a violation of section 169.1218 or 340A.503, subdivision 1, paragraph (a), clause (2);

(5) in a prosecution under section 169.1211, subdivision 1, paragraph (b), or 171.30; or

(6) in a prosecution for a violation of a restriction on a driver's license under section 171.09, which provides that the license holder may not use or consume any amount of alcohol or a controlled substance.

(c) Following the screening test additional tests may be required of the driver pursuant to the provisions of section 169.123.

(d) The driver who refuses to furnish a sample of the driver's breath is subject to the provisions of section 169.123 unless, in compliance with section 169.123, the driver submits to a blood, breath or urine test to determine the presence or amount of alcohol, controlled substances, or hazardous substances.

Sec. 41. Minnesota Statutes 1996, section 169.121, subdivision 11, is amended to read:

Subd. 11. [APPLICABILITY TO RECREATIONAL VEHICLES.] For purposes of this section and section 169.123, "motor vehicle" does not include a snowmobile as defined in section 84.81, or an all-terrain vehicle as defined in section 84.92. This subdivision does not prevent the commissioner of public safety from recording on driving records violations involving snowmobiles and all-terrain vehicles. includes motorboats in operation and off-road recreational vehicles. A "motorboat in operation" does not include a motorboat that is anchored, beached, or securely fastened to a dock or other permanent mooring, or a motorboat that is being rowed or propelled by other than mechanical means.

Sec. 42. Minnesota Statutes 1996, section 169.1211, subdivision 1, is amended to read:

Subdivision 1. [CRIME CRIMES.] (a) It is a misdemeanor crime for any person to drive, operate, or be in physical control of any commercial motor vehicle within this state or upon the ice of any boundary water of this state:

(1) when the person's alcohol concentration is 0.04 or more but less than 0.20; or

(2) when the person's alcohol concentration as measured within two hours of the time of driving, operating, or being in physical control of the commercial motor vehicle is 0.04 or more but less than 0.20; or

(3) when the person's alcohol concentration at the time, or as measured within two hours of the time, of driving, operating, or being in physical control of the commercial motor vehicle is 0.20 or more.

(b) It is a crime for any person to drive, operate, or be in physical control of any class of school bus or Head Start bus within this state or upon the ice of any boundary water of this state when there is physical evidence present in the person's body of the consumption of any alcohol.

Sec. 43. Minnesota Statutes 1996, section 169.1211, is amended by adding a subdivision to read:

Subd. 3a. [CRIMINAL PENALTY.] (a) A person who violates subdivision 1, paragraph (a), clause (1) or (2), or paragraph (b), or an ordinance in conformity with any of them, is guilty of a misdemeanor.

(b) A person is guilty of a gross misdemeanor under any of the following circumstances:

(1) the person violates subdivision 1, paragraph (a), clause (3);

(2) the person violates subdivision 1, paragraph (a), clause (1) or (2), or paragraph (b), within five years of a prior impaired driving conviction or a prior license revocation, or within ten years of the first of two or more prior impaired driving convictions, two or more prior license revocations, or a combination of a prior impaired driving conviction and a prior license revocation, based on separate incidents;

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(3) the person violates section 169.26 while in violation of subdivision 1; or

(4) the person violates subdivision 1 while a child under the age of 16 is in the vehicle, if the child is more than 36 months younger than the violator.

Sec. 44. Minnesota Statutes 1996, section 169.1211, is amended by adding a subdivision to read:

Subd. 5. [DEFINITIONS.] As used in this section, the terms "prior impaired driving conviction" and "prior license revocation" have the meanings given them in section 169.121, subdivision 3.

Sec. 45. Minnesota Statutes 1996, section 169.1217, is amended to read:

169.1217 [VEHICLE FORFEITURE FOR COMMISSION OF DESIGNATED OFFENSES AND LICENSE REVOCATIONS.]

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.

(c) "Designated offense" includes:

(1) a violation of section 169.121, subdivision 1, clause (a), (b), (c), (d), (e), (f), (h), or (i), subdivision 1a, an ordinance in conformity with it any of them, or section 169.129:

(1) (i) within five years of three two prior impaired driving convictions or three, two prior license revocations, or a prior impaired driving conviction and a prior license revocation, based on separate incidents; or

(2) (ii) within 15 years of the first of four three or more prior impaired driving convictions or the first of four, 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 (g), 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

(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 (8) (9); or

(4) (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.

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"Designated offense" also includes a violation of section 169.121, subdivision 3, paragraph (c), clause (4):

(1) within five years of two prior impaired driving convictions or two prior license revocations based on separate incidents; or

(2) within 15 years of the first of three or more prior impaired driving convictions or the first of three or more prior license revocations based on separate incidents.

(c) (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.

(d) (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.

(e) (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.

(f) (g) "Prior license revocation" has the meaning given it in section 169.121, subdivision 3.

(g) (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.

Subd. 2. [SEIZURE.] A motor vehicle subject to forfeiture under this section may be seized by the appropriate agency upon process issued by any court having jurisdiction over the vehicle. Property may be seized without process if:

(1) the seizure is incident to a lawful arrest or a lawful search;

(2) the vehicle subject to seizure has been the subject of a prior judgment in favor of the state in a criminal injunction or forfeiture proceeding under this section; or

(3) the appropriate agency has probable cause to believe that the delay occasioned by the necessity to obtain process would result in the removal or destruction of the vehicle. If property is seized without process under this clause (3), the prosecuting authority must institute a forfeiture action under this section as soon as is reasonably possible.

Subd. 3. [RIGHT TO POSSESSION VESTS IMMEDIATELY; CUSTODY OF SEIZED VEHICLE.] All right, title, and interest in a vehicle subject to forfeiture under this section vests in the appropriate agency upon commission of the conduct resulting in the designated offense or designated license revocation giving rise to the forfeiture. Any vehicle seized under this section is not subject to replevin, but is deemed to be in the custody of the appropriate agency subject to the orders and decrees of the court having jurisdiction over the forfeiture proceedings. When a vehicle is so seized, the appropriate agency may:

(1) place the vehicle under seal;

(2) remove the vehicle to a place designated by it;

(3) place a disabling device on the vehicle; and

(4) take other steps reasonable and necessary to secure the vehicle and prevent waste.

Subd. 4. [BOND BY OWNER FOR POSSESSION.] If the owner of a vehicle that has been seized under this section seeks possession of the vehicle before the forfeiture action is determined, the owner may, subject to the approval of the appropriate agency, give security or post bond payable to the appropriate agency in an amount equal to the retail value of the seized vehicle. On posting the security or bond, the seized vehicle may be returned to the owner only if a disabling device is attached to the vehicle. The forfeiture action shall proceed against the security as if it were the seized vehicle.

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Subd. 5. [EVIDENCE.] Certified copies of court records and motor vehicle and driver's license records concerning prior impaired driving convictions and prior license revocations are admissible as substantive evidence where necessary to prove the commission of a designated offense or the occurrence of a designated license revocation.

Subd. 6. [MOTOR VEHICLES SUBJECT TO FORFEITURE.] A motor vehicle is subject to forfeiture under this section if it was used in the commission of a designated offense or was used in conduct resulting in a designated license revocation.

Subd. 7. [LIMITATIONS ON FORFEITURE OF MOTOR VEHICLES.] (a) A vehicle is subject to forfeiture under this section only if:

(1) the driver is convicted of the designated offense upon which the forfeiture is based; or

(2) the driver fails to appear with respect to the designated offense charge in violation of section 609.49; or

(3) the driver's conduct results in a designated license revocation and the driver either fails to seek administrative or judicial review of the revocation in a timely manner as required by section 169.123, subdivision 5b or 5c, or the revocation is sustained under section 169.123, subdivision 5b or 6.

(b) A vehicle encumbered by a bona fide security interest, or subject to a lease that has a term of 180 days or more, is subject to the interest of the secured party or lessor unless the party or lessor had knowledge of or consented to the act upon which the forfeiture is based.

(c) Notwithstanding paragraph (b), the secured party's or lessor's interest in a vehicle is not subject to forfeiture based solely on the secured party's or lessor's knowledge of the act or omission upon which the forfeiture is based if the secured party or lessor took reasonable steps to terminate use of the vehicle by the offender.

(d) A motor vehicle is subject to forfeiture under this section only if its owner knew or should have known of the unlawful use or intended use.

(e) A vehicle subject to a security interest, based upon a loan or other financing arranged by a financial institution, is subject to the interest of the financial institution.

Subd. 7a. [ADMINISTRATIVE FORFEITURE PROCEDURE.] (a) A motor vehicle used to commit a designated offense or used in conduct resulting in a designated license revocation is subject to administrative forfeiture under this subdivision.

(b) When a motor vehicle is seized under subdivision 2, the appropriate agency shall serve the driver or operator of the vehicle with a notice of the seizure and intent to forfeit the vehicle. Additionally, when a motor vehicle is seized under subdivision 2, or within a reasonable time after that, all persons known to have an ownership or possessory interest in the vehicle must be notified of the seizure and the intent to forfeit the vehicle. Notice mailed by certified mail to the address shown in department of public safety records is sufficient notice to the registered owner of the vehicle. Otherwise, notice may be given in the manner provided by law for service of a summons in a civil action.

(c) The notice must be in writing and contain:

(1) a description of the vehicle seized;

(2) the date of seizure; and

(3) notice of the right to obtain judicial review of the forfeiture and of the procedure for obtaining that judicial review, printed in English, Hmong, and Spanish. Substantially the following language must appear conspicuously: "IF YOU DO NOT DEMAND JUDICIAL REVIEW EXACTLY AS PRESCRIBED IN MINNESOTA STATUTES, SECTION 169.1217, SUBDIVISION 7a, YOU LOSE THE RIGHT TO A JUDICIAL DETERMINATION OF THIS FORFEITURE AND YOU LOSE ANY RIGHT YOU MAY HAVE TO THE ABOVE DESCRIBED PROPERTY. YOU MAY NOT HAVE TO PAY THE FILING FEE FOR THE DEMAND IF DETERMINED YOU ARE UNABLE TO AFFORD THE FEE. YOU DO NOT HAVE TO PAY THE FILING FEE IF THE PROPERTY IS WORTH LESS THAN $500 AND YOU FILE YOUR CLAIM IN CONCILIATION COURT."

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(d) Within 30 days following service of a notice of seizure and forfeiture under this subdivision, a claimant may file a demand for a judicial determination of the forfeiture. The demand must be in the form of a civil complaint and must be filed with the court administrator in the county in which the seizure occurred, together with proof of service of a copy of the complaint on the prosecuting authority having jurisdiction over the forfeiture, and the standard filing fee for civil actions unless the petitioner has the right to sue in forma pauperis under section 563.01. If the value of the seized property is less than $500, the claimant may file an action in conciliation court for recovery of the seized vehicle without paying the conciliation court filing fee. No responsive pleading is required of the prosecuting authority and no court fees may be charged for the prosecuting authority's appearance in the matter. Except as provided in this section, judicial reviews and hearings are governed by section 169.123, subdivisions 5c and 6, and shall take place at the same time as any judicial review of the person's license revocation under section 169.123. The proceedings may be combined with any hearing on a petition filed under section 169.123, subdivision 5c, and are governed by the rules of civil procedure.

(e) The complaint must be captioned in the name of the claimant as plaintiff and the seized vehicle as defendant, and must state with specificity the grounds on which the claimant alleges the vehicle was improperly seized and the plaintiff's interest in the vehicle seized. Notwithstanding any law to the contrary, an action for the return of a vehicle seized under this section may not be maintained by or on behalf of any person who has been served with a notice of seizure and forfeiture unless the person has complied with this subdivision.

(f) If the claimant makes a timely demand for a judicial determination under this subdivision, the appropriate agency must conduct the forfeiture under subdivision 8.

(g) If a demand for judicial determination of an administrative forfeiture is filed under this subdivision and the court orders the return of the seized vehicle, the court shall order that filing fees be reimbursed to the person who filed the demand. In addition, the court may order the payment of reasonable costs, expenses, and attorney fees under section 549.21, subdivision 2.

Subd. 8. [JUDICIAL FORFEITURE PROCEDURE.] (a) This subdivision governs judicial determinations of the forfeiture of a motor vehicle used to commit a designated offense is subject to forfeiture under this subdivision or used in conduct resulting in a designated license revocation.

(b) A separate complaint shall be filed against the vehicle, describing it, and specifying that it was used in the commission of a designated offense or was used in conduct resulting in a designated license revocation, and specifying the time and place of its unlawful use. If the forfeiture was based on the commission of a designated offense and the person charged with a the designated offense appears in court as required and is not convicted of the offense, the court shall dismiss the complaint against the vehicle and order the property returned to the person legally entitled to it. If the forfeiture is based on a designated license revocation, and the designated license revocation is rescinded under section 169.123, subdivision 5a or 6, the court shall dismiss the complaint against the vehicle and order the property returned to the person legally entitled to it. If the lawful ownership of the vehicle used in the commission of a designated offense or used in conduct resulting in a designated license revocation can be determined and it is found the owner was not privy to commission of a designated offense or was not privy to the conduct resulting in the designated license revocation, the vehicle shall be returned immediately.

Subd. 9. [DISPOSITION OF FORFEITED VEHICLES.] (a) If the vehicle is administratively forfeited under subdivision 7a, or if the court finds under subdivision 8 that the vehicle is subject to forfeiture under subdivisions 6 and 7, it shall order the appropriate agency to shall:

(1) sell the vehicle and distribute the proceeds under paragraph (b); or

(2) keep the vehicle for official use. If the agency keeps a forfeited motor vehicle for official use, it shall make reasonable efforts to ensure that the motor vehicle is available for use by the agency's officers who participate in the drug abuse resistance education program.

(b) The proceeds from the sale of forfeited vehicles, after payment of seizure, storage, forfeiture, and sale expenses, and satisfaction of valid liens against the property, must be forwarded to the treasury of the political subdivision that employs the appropriate agency responsible for the forfeiture for use in DWI-related enforcement, training and education. If the appropriate agency is an agency of state government, the net proceeds must be forwarded to the state treasury and credited to the general fund.

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(c) The proceeds from the sale of forfeited off-road recreational vehicles and motorboats, after payment of seizure, storage, forfeiture, and sale expenses, and satisfaction of valid liens against the property, must be forwarded to the state treasury and credited to the following funds:

(1) if the forfeited vehicle is a motorboat, the net proceeds must be credited to the water recreation account in the natural resources fund;

(2) if the forfeited vehicle is a snowmobile, the net proceeds must be credited to the snowmobile trails and enforcement account in the natural resources fund;

(3) if the forfeited vehicle is an all-terrain vehicle, the net proceeds must be credited to the all-terrain vehicle account in the natural resources fund;

(4) if the forfeited vehicle is an off-highway motorcycle, the net proceeds must be credited to the off-highway motorcycle account in the natural resources fund;

(5) if the forfeited vehicle is an off-road vehicle, the net proceeds must be credited to the off-road vehicle account in the natural resources fund; and

(6) if otherwise, the net proceeds must be credited to the general fund.

Sec. 46. Minnesota Statutes 1996, section 169.1218, is amended to read:

169.1218 [UNDERAGE DRINKING AND DRIVING.]

(a) It is a misdemeanor for a person under the age of 21 years to drive or operate a motor vehicle while consuming alcoholic beverages, or after having consumed alcoholic beverages while there is physical evidence of the consumption present in the person's body.

(b) When a person is found to have committed an offense under paragraph (a), the court shall notify the commissioner of public safety of its determination. Upon receipt of the court's determination, the commissioner shall suspend the person's driver's license or operating privileges for 30 days, or for 180 days if the person has previously been found to have violated paragraph (a) or a statute or ordinance in conformity with paragraph (a).

(c) If the person's conduct violates section 169.121, subdivision 1 or 1a, or 169.1211, the penalties and license sanctions in those laws apply instead of the license sanction in paragraph (b).

(d) An offense under paragraph (a) may be prosecuted either in the jurisdiction where consumption occurs or the jurisdiction where evidence of consumption is observed.

Sec. 47. Minnesota Statutes 1996, section 169.123, subdivision 1, is amended to read:

Subdivision 1. [PEACE OFFICER DEFINED.] For purposes of this section, section 169.121, and section 169.1211, the term peace officer means (1) a state patrol officer, (2) University of Minnesota peace officer, (3) a constable as defined in section 367.40, subdivision 3, or (4) police officer of any municipality, including towns having powers under section 368.01, or county, and (5) for purposes of violations of those sections in or on an off-road recreational vehicle or motorboat, a state conservation officer.

Sec. 48. Minnesota Statutes 1996, section 169.123, subdivision 2, is amended to read:

Subd. 2. [IMPLIED CONSENT; CONDITIONS; ELECTION OF TEST.] (a) Any person who drives, operates, or is in physical control of a motor vehicle within this state or upon the ice of any boundary water of this state consents, subject to the provisions of this section and sections 169.121 and 169.1211, to a chemical test of that person's blood, breath, or urine

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for the purpose of determining the presence of alcohol, controlled substances, or hazardous substances. The test shall be administered at the direction of a peace officer. The test may be required of a person when an officer has probable cause to believe the person was driving, operating, or in physical control of a motor vehicle in violation of section 169.121 and one of the following conditions exist:

(1) the person has been lawfully placed under arrest for violation of section 169.121, or an ordinance in conformity with it;

(2) the person has been involved in a motor vehicle accident or collision resulting in property damage, personal injury, or death;

(3) the person has refused to take the screening test provided for by section 169.121, subdivision 6; or

(4) the screening test was administered and indicated an alcohol concentration of 0.10 or more; or

(5) the screening test was administered and indicated an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation.

The test may also be required of a person when an officer has probable cause to believe the person was driving, operating, or in physical control of a commercial motor vehicle with the presence of any alcohol.

(b) At the time a test is requested, the person shall be informed:

(1) that Minnesota law requires the person to take a test: (i) to determine if the person is under the influence of alcohol, controlled substances, or hazardous substances; (ii) to determine the presence of a controlled substance listed in schedule I or II, other than marijuana or tetrahydrocannabinols; and (iii) if the motor vehicle was a commercial motor vehicle, to determine the presence of alcohol;

(2) that refusal to take a test is a crime;

(3) if the peace officer has probable cause to believe the person has violated the criminal vehicular homicide and injury laws, that a test will be taken with or without the person's consent; and

(4) that the person has the right to consult with an attorney, but that this right is limited to the extent that it cannot unreasonably delay administration of the test.

(c) The peace officer who requires a test pursuant to this subdivision may direct whether the test shall be of blood, breath, or urine. Action may be taken against a person who refuses to take a blood test only if an alternative test was offered and action may be taken against a person who refuses to take a urine test only if an alternative test was offered.

Sec. 49. Minnesota Statutes 1996, section 169.123, subdivision 4, is amended to read:

Subd. 4. [REFUSAL; REVOCATION OF LICENSE.] (a) If a person refuses to permit a test, none shall be given, but the peace officer shall report the refusal to the commissioner of public safety and the authority having responsibility for prosecution of misdemeanor offenses for the jurisdiction in which the acts occurred. However, if a peace officer has probable cause to believe that the person has violated section 609.21, a test may be required and obtained despite the person's refusal. A refusal to submit to an alcohol concentration test does not constitute a violation of section 609.50, unless the refusal was accompanied by force or violence or the threat of force or violence.

(b) If a person submits to a test and, the results of that test shall be reported to the commissioner of public safety and to the authority having responsibility for prosecution of misdemeanor offenses for the jurisdiction in which the acts occurred, if the test results indicate:

(1) an alcohol concentration of 0.10 or more;

(2) an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation;

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(3) an alcohol concentration of 0.04 or more, if the person was driving, operating, or in physical control of a commercial motor vehicle at the time of the violation; or

(4) the presence of a controlled substance listed in schedule I or II, other than marijuana or tetrahydrocannabinols, or if a person was driving, operating, or in physical control of a commercial motor vehicle and the test results indicate an alcohol concentration of 0.04 or more, the results of the test shall be reported to the commissioner of public safety and to the authority having responsibility for prosecution of misdemeanor offenses for the jurisdiction in which the acts occurred.

(c) Upon certification by the peace officer that there existed probable cause to believe the person had been driving, operating, or in physical control of a motor vehicle in violation of section 169.121 and that the person refused to submit to a test, the commissioner of public safety shall revoke the person's license or permit to drive, or nonresident operating privilege, for a period of one year even if a test was obtained pursuant to this section after the person refused to submit to testing.

(d) Upon certification by the peace officer that there existed probable cause to believe the person had been driving, operating, or in physical control of a commercial motor vehicle with the presence of any alcohol in violation of section 169.121 or 169.1211, and that the person refused to submit to a test, the commissioner shall disqualify the person from operating a commercial motor vehicle for a period of one year under section 171.165 and shall revoke the person's license or permit to drive or nonresident operating privilege for a period of one year.

(e) Upon certification by the peace officer that there existed probable cause to believe the person had been driving, operating, or in physical control of a motor vehicle in violation of section 169.121 and that the person submitted to a test and the test results indicate: an alcohol concentration of 0.10 or more; an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation; or the presence of a controlled substance listed in schedule I or II, other than marijuana or tetrahydrocannabinols,

then the commissioner of public safety shall revoke the person's license or permit to drive, or nonresident operating privilege:

(1) for a period of 90 days; or

(2) if the person is under the age of 21 years, for a period of six months; or

(3) for a person with a prior impaired driving conviction or prior license revocation within the past five years, for a period of 180 days; or

(4) if the test results indicate an alcohol concentration of 0.20 or more, for twice the applicable period in clauses (1) to (3).

(f) On certification by the peace officer that there existed probable cause to believe the person had been driving, operating, or in physical control of a commercial motor vehicle with any presence of alcohol and that the person submitted to a test and the test results indicated an alcohol concentration of 0.04 or more, the commissioner of public safety shall disqualify the person from operating a commercial motor vehicle under section 171.165.

(g) If the person is a resident without a license or permit to operate a motor vehicle in this state, the commissioner of public safety shall deny to the person the issuance of a license or permit for the same period after the date of the alleged violation as provided herein for revocation, subject to review as hereinafter provided.

(h) As used in this subdivision, the terms "prior impaired driving conviction" and "prior license revocation" have the meanings given in section 169.121, subdivision 3, paragraph (a).

Sec. 50. Minnesota Statutes 1996, section 169.123, subdivision 5a, is amended to read:

Subd. 5a. [TEST REFUSAL; DRIVING PRIVILEGE LOST.] (a) On behalf of the commissioner of public safety, a peace officer requiring a test or directing the administration of a chemical test shall serve immediate notice of intention to revoke and of revocation on a person who refuses to permit a test or on a person who submits to a test the results of which indicate:

(1) an alcohol concentration of 0.10 or more; or

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(2) an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation.

(b) On behalf of the commissioner of public safety, a peace officer requiring a test or directing the administration of a chemical test of a person driving, operating, or in physical control of a commercial motor vehicle shall serve immediate notice of intention to disqualify and of disqualification on a person who refuses to permit a test, or on a person who submits to a test the results of which indicate an alcohol concentration of 0.04 or more.

(c) The officer shall either:

(1) take the driver's license or permit, if any, send it to the commissioner of public safety along with the certificate required by subdivision 4, and issue a temporary license effective only for seven days; or

(2) invalidate the driver's license or permit in such a way that no identifying information is destroyed.

Sec. 51. Minnesota Statutes 1996, section 169.123, subdivision 5c, is amended to read:

Subd. 5c. [PETITION FOR JUDICIAL REVIEW.] (a) Within 30 days following receipt of a notice and order of revocation or disqualification pursuant to this section, a person may petition the court for review. The petition shall be filed with the district court administrator in the county where the alleged offense occurred, together with proof of service of a copy on the commissioner of public safety, and accompanied by the standard filing fee for civil actions. No responsive pleading shall be required of the commissioner of public safety, and no court fees shall be charged for the appearance of the commissioner of public safety in the matter.

(b) The petition shall must:

(1) be captioned in the full name of the person making the petition as petitioner and the commissioner of public safety as respondent. The petition must;

(2) include the petitioner's date of birth, driver's license number, and date of the offense. The petition shall; and

(3) state with specificity the grounds upon which the petitioner seeks rescission of the order of revocation, disqualification, or denial and state the facts underlying each claim asserted.

(c) The filing of the petition shall not stay the revocation, disqualification, or denial. The reviewing court may order a stay of the balance of the revocation or disqualification if the hearing has not been conducted within 60 days after filing of the petition upon terms the court deems proper.

(d) Judicial reviews shall be conducted according to the rules of civil procedure except that prehearing discovery is mandatory and is limited to:

(1) the notice of revocation;

(2) the test record, or in the case of blood or urine tests, the certificate of analysis;

(3) the peace officer's certificate and any accompanying documentation submitted by the arresting officer to the commissioner of public safety; and

(4) disclosure of potential witnesses, including experts, and the basis of their testimony.

Other types of discovery are not available.

Sec. 52. Minnesota Statutes 1996, section 169.123, subdivision 6, is amended to read:

Subd. 6. [HEARING.] (a) A hearing under this section shall be before a district judge in any county in the judicial district where the alleged offense occurred. The hearing shall be to the court and may be conducted at the same time and in the same manner as hearings upon pretrial motions in the criminal prosecution under section 169.121, if any. The hearing shall be

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recorded. The commissioner of public safety shall appear and be represented by the attorney general or through the prosecuting authority for the jurisdiction involved. The hearing shall be held at the earliest practicable date, and in any event no later than 60 days following the filing of the petition for review. The judicial district administrator shall establish procedures to ensure efficient compliance with this subdivision. To accomplish this, the administrator may, whenever possible, consolidate and transfer review hearings among the county courts within the judicial district.

(b) The scope of the hearing shall be limited to the issues in clauses (1) to (9) (10):

(1) Did the peace officer have probable cause to believe the person was driving, operating, or in physical control of:

(i) a motor vehicle in violation of section 169.121; or

(ii) a commercial motor vehicle in violation of section 169.1211?

(2) Was the person lawfully placed under arrest for violation of section 169.121 or 169.1211?

(3) Was the person involved in a motor vehicle accident or collision resulting in property damage, personal injury, or death?

(4) Did the person refuse to take a screening test provided for by section 169.121, subdivision 6?

(5) If the screening test was administered, did the test indicate:

(i) an alcohol concentration of 0.10 or more; or

(ii) an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation?

(6) At the time of the request for the test, did the peace officer inform the person of the person's rights and the consequences of taking or refusing the test as required by subdivision 2?

(7) Did the person refuse to permit the test?

(8) If a test was taken:

(i) by a person driving, operating, or in physical control of a motor vehicle, did the test results indicate at the time of testing:

(i) an alcohol concentration of 0.10 or more at the time of testing;

(ii) an alcohol concentration of 0.04 or more, if the person is under the age of 19 years at the time of the violation; or

(iii) the presence of a controlled substance listed in schedule I or II, other than marijuana or tetrahydrocannabinols; or?

(ii) (9) If a test was taken by a person driving, operating, or in physical control of a commercial motor vehicle, did the test results indicate an alcohol concentration of 0.04 or more at the time of testing?

(9) (10) Was the testing method used valid and reliable and were the test results accurately evaluated?

(c) It shall be an affirmative defense for the petitioner to prove that, at the time of the refusal, the petitioner's refusal to permit the test was based upon reasonable grounds.

(d) Certified or otherwise authenticated copies of laboratory or medical personnel reports, records, documents, licenses, and certificates shall be admissible as substantive evidence.

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(e) The court shall order that the revocation or disqualification be either rescinded or sustained and forward the order to the commissioner of public safety. The court shall file its order within 14 days following the hearing. If the revocation or disqualification is sustained, the court shall also forward the person's driver's license or permit to the commissioner of public safety for further action by the commissioner of public safety if the license or permit is not already in the commissioner's possession.

Sec. 53. Minnesota Statutes 1996, section 169.126, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENT; FORM.] A chemical use assessment shall be conducted and an assessment report submitted to the court and to the department of public safety by the county agency administering the alcohol safety program when:

(a) The defendant is convicted of an offense described in section 169.121 or, 169.1211, 169.129, or 360.0752; or

(b) The defendant is arrested for committing an offense described in section 169.121 or 169.129 but is convicted of another offense arising out of the circumstances surrounding the arrest.

Sec. 54. Minnesota Statutes 1996, section 169.1261, is amended to read:

169.1261 [REINSTATEMENT OF DRIVING PRIVILEGES; NOTICE.]

Upon expiration of a period of revocation under section 169.121 or 169.123, the commissioner of public safety shall notify the person of the terms upon which driving privileges can be reinstated, and new registration plates issued, which terms are: (1) successful completion of a driving test an examination and proof of compliance with any terms of alcohol treatment or counseling previously prescribed, if any; and (2) any other requirements imposed by the commissioner and applicable to that particular case. The commissioner shall notify the owner of a motor vehicle subject to an impoundment order under section 168.041 as a result of the violation of the procedures for obtaining new registration plates, if the owner is not the violator. The commissioner shall also notify the person that if driving is resumed without reinstatement of driving privileges or without valid registration plates and registration certificate, the person will be subject to criminal penalties.

Sec. 55. Minnesota Statutes 1996, section 169.129, is amended to read:

169.129 [AGGRAVATED VIOLATIONS; PENALTY.]

Subdivision 1. [CRIME.] It is a crime for any person is guilty of a gross misdemeanor who drives, operates, or is to drive, operate, or be in physical control of a motor vehicle, the operation of which requires a driver's license, within this state or upon the ice of any boundary water of this state in violation of section 169.121 or an ordinance in conformity with it before the person's driver's license or driver's driving privilege has been reinstated following its cancellation, suspension, revocation, disqualification, or denial under any of the following:

(1) section 169.121, 169.1211, or 169.123;

(2) section 171.04, 171.14, 171.16, 171.17, or 171.18 because of an alcohol-related incident;

(3) section 609.21, subdivision 1, clauses (2) to (6); 609.21, subdivision 2, clauses (2) to (6); 609.21, subdivision 2a, clauses (2) to (6); 609.21, subdivision 2b, clauses (2) to (6); 609.21, subdivision 3, clauses (2) to (6); or 609.21, subdivision 4, clauses (2) to (6).

Subd. 2. [PENALTIES.] (a) Except as otherwise provided in paragraph (b), a person who violates subdivision 1 is guilty of a gross misdemeanor.

(b) A person is guilty of an enhanced gross misdemeanor and may be sentenced to imprisonment in a local correctional facility for not more than two years or to payment of a fine of not more than $3,000, or both, if the person violates subdivision 1 and the person's driver's license or driving privilege has been suspended, revoked, canceled, denied, or disqualified two or more times within the past ten years under any of the statutes listed in subdivision 1. A person convicted of an enhanced gross misdemeanor under this paragraph is subject to the applicable mandatory penalties provided in section 169.121, subdivision 3d.

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Subd. 3. [PROSECUTION.] The attorney in the jurisdiction in which the violation of this section occurred who is responsible for prosecution of misdemeanor violations of section 169.121 shall also be responsible for prosecution of violations of this section.

Sec. 56. Minnesota Statutes 1996, section 171.07, is amended by adding a subdivision to read:

Subd. 12. [SNOWMOBILE SAFETY CERTIFICATE.] (a) The department shall maintain in its records information transmitted electronically from the commissioner of natural resources identifying each person whom the commissioner has issued a snowmobile safety certificate.

(b) After receiving information under paragraph (a) that a person has received a snowmobile safety certificate, the department shall include, on all drivers' licenses or Minnesota identification cards subsequently issued to the person, a graphic or written indication that the person has received the certificate.

(c) If a person who has received a snowmobile safety certificate applies for a driver's license or Minnesota identification card before that information has been transmitted to the department, the department may accept a copy of the certificate as proof of its issuance and shall then follow the procedures in paragraph (b).

Sec. 57. Minnesota Statutes 1996, section 171.12, is amended by adding a subdivision to read:

Subd. 2a. [ALCOHOL CONCENTRATION ON DRIVING RECORD.] When a person's driver's license or permit to drive is revoked or suspended pursuant to section 169.123, or when a person is convicted for violating section 169.121, 169.1211, 169.1218, 169.129, 360.0752, or 609.21, and a test of the person's breath, urine, or blood has been made to determine the person's alcohol concentration, the commissioner of public safety shall record the test results on the person's driving record pertaining to that violation. The alcohol concentration is classified as public data on individuals, as defined in section 13.02, subdivision 15, and must be kept for the period of time specified in subdivision 3, clause (2).

Sec. 58. Minnesota Statutes 1996, section 171.19, is amended to read:

171.19 [PETITION FOR LICENSE REINSTATEMENT.]

Any person whose driver's license has been refused, revoked, suspended, or canceled, or disqualified by the commissioner, except where the license is revoked or disqualified under section 169.123, may file a petition for a hearing in the matter in the district court in the county wherein such person shall reside and, in the case of a nonresident, in the district court in any county, and such court is hereby vested with jurisdiction, and it shall be its duty, to set the matter for hearing upon 15 days' written notice to the commissioner, and thereupon to take testimony and examine into the facts of the case to determine whether the petitioner is entitled to a license or is subject to revocation, suspension, cancellation, disqualification, or refusal of license, and shall render judgment accordingly. The petition shall be heard by the court without a jury and may be heard in or out of term. The commissioner may appear in person, or by agents or representatives, and may present evidence upon the hearing by affidavit personally, by agents, or by representatives. The petitioner may present evidence by affidavit, except that the petitioner must be present in person at such hearing for the purpose of cross-examination. In the event the department shall be sustained in these proceedings, the petitioner shall have no further right to make further petition to any court for the purpose of obtaining a driver's license until after the expiration of one year after the date of such hearing.

Sec. 59. Minnesota Statutes 1996, section 171.20, subdivision 4, is amended to read:

Subd. 4. [REINSTATEMENT FEE.] Before the license is reinstated, a person whose driver's license has been suspended under section 171.16, subdivision 2; 171.18, except subdivision 1, clause (10); or 171.182, or who has been disqualified from holding a commercial driver's license under section 171.165 must pay a $20 fee before the license is reinstated of $25 until June 30, 1999, and $20 thereafter. When this fee is collected by a county-operated office of deputy registrar, a $3.50 handling charge is imposed. The handling charge must be deposited in the treasury of the place for which the deputy registrar was appointed and the $20 reinstatement fee must be deposited in an approved state depository as directed under section 168.33, subdivision 2. A suspension may be rescinded without fee for good cause.

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Sec. 60. Minnesota Statutes 1996, section 171.30, is amended by adding a subdivision to read:

Subd. 2c. [EXTENDED WAITING PERIOD.] If a person's license or privilege has been revoked or suspended for a violation of section 169.121 or 169.123, or a statute or ordinance from another state in conformity with either of those sections, and the person's alcohol concentration was 0.20 or greater at the time of the violation, a limited license may not be issued for a period of time equal to twice the time period specified in subdivision 2a or 2b.

Sec. 61. Minnesota Statutes 1996, section 340A.503, subdivision 2, is amended to read:

Subd. 2. [PURCHASING.] It is unlawful for any person:

(1) to sell, barter, furnish, or give alcoholic beverages to a person under 21 years of age;

(2) under the age of 21 years to purchase or attempt to purchase any alcoholic beverage unless under the supervision of a responsible person over the age of 21 for training, education, or research purposes. Prior notification of the licensing authority is required unless the supervised alcohol purchase attempt is for professional research conducted by post-secondary educational institutions or state, county, or local health departments; or

(3) to induce a person under the age of 21 years to purchase or procure any alcoholic beverage, or to lend or knowingly permit the use of the person's driver's license, permit, Minnesota identification card, or other form of identification by a person under the age of 21 years for the purpose of purchasing or attempting to purchase an alcoholic beverage.

If proven by a preponderance of the evidence, it shall be an affirmative defense to a violation of clause (1) that the defendant is the parent or guardian of the person under 21 years of age and that the defendant gave or furnished the alcoholic beverage to that person solely for consumption in the defendant's household.

Sec. 62. Minnesota Statutes 1996, section 357.021, subdivision 1a, is amended to read:

Subd. 1a. (a) Every person, including the state of Minnesota and all bodies politic and corporate, who shall transact any business in the district court, shall pay to the court administrator of said court the sundry fees prescribed in subdivision 2. Except as provided in paragraph (d), the court administrator shall transmit the fees monthly to the state treasurer for deposit in the state treasury and credit to the general fund.

(b) In a county which has a screener-collector position, fees paid by a county pursuant to this subdivision shall be transmitted monthly to the county treasurer, who shall apply the fees first to reimburse the county for the amount of the salary paid for the screener-collector position. The balance of the fees collected shall then be forwarded to the state treasurer for deposit in the state treasury and credited to the general fund. In a county in the eighth judicial district which has a screener-collector position, the fees paid by a county shall be transmitted monthly to the state treasurer for deposit in the state treasury and credited to the general fund. A screener-collector position for purposes of this paragraph is an employee whose function is to increase the collection of fines and to review the incomes of potential clients of the public defender, in order to verify eligibility for that service.

(c) No fee is required under this section from the public authority or the party the public authority represents in an action for:

(1) child support enforcement or modification, medical assistance enforcement, or establishment of parentage in the district court, or child or medical support enforcement conducted by an administrative law judge in an administrative hearing under section 518.5511;

(2) civil commitment under chapter 253B;

(3) the appointment of a public conservator or public guardian or any other action under chapters 252A and 525;

(4) wrongfully obtaining public assistance under section 256.98 or 256D.07, or recovery of overpayments of public assistance;

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(5) court relief under chapter 260;

(6) forfeiture of property under sections 169.1217 and 609.531 to 609.5317;

(7) recovery of amounts issued by political subdivisions or public institutions under sections 246.52, 252.27, 256.045, 256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, and 260.251, or other sections referring to other forms of public assistance; or

(8) restitution under section 611A.04.

(d) The fees collected for child support modifications under subdivision 2, clause (13), must be transmitted to the county treasurer for deposit in the county general fund. The fees must be used by the county to pay for child support enforcement efforts by county attorneys.

Sec. 63. Minnesota Statutes 1996, section 364.09, is amended to read:

364.09 [EXCEPTIONS.]

(a) This chapter does not apply to the licensing process for peace officers; to law enforcement agencies as defined in section 626.84, subdivision 1, paragraph (h); to fire protection agencies; to eligibility for a private detective or protective agent license; to eligibility for a family day care license, a family foster care license, or a home care provider license; to eligibility for school bus driver endorsements; or to eligibility for special transportation service endorsements; or to eligibility for a commercial driver training instructor license, which is governed by section 171.35 and rules adopted under that section. This chapter also shall not apply to eligibility for juvenile corrections employment, where the offense involved child physical or sexual abuse or criminal sexual conduct.

(b) This chapter does not apply to a school district or to eligibility for a license issued or renewed by the board of teaching or the state board of education.

(c) Nothing in this section precludes the Minnesota police and peace officers training board or the state fire marshal from recommending policies set forth in this chapter to the attorney general for adoption in the attorney general's discretion to apply to law enforcement or fire protection agencies.

(d) This chapter does not apply to a license to practice medicine that has been denied or revoked by the board of medical practice pursuant to section 147.091, subdivision 1a.

Sec. 64. Minnesota Statutes 1996, section 609.02, subdivision 2, is amended to read:

Subd. 2. [FELONY.] "Felony" means a crime, other than an enhanced gross misdemeanor, for which a sentence of imprisonment for more than one year may be imposed.

Sec. 65. Minnesota Statutes 1996, section 609.02, is amended by adding a subdivision to read:

Subd. 2a. [ENHANCED GROSS MISDEMEANOR.] "Enhanced gross misdemeanor" means a crime for which a sentence of not more than two years imprisonment in a correctional facility or a fine of not more than $3,000, or both, may be imposed.

Sec. 66. Minnesota Statutes 1996, section 609.105, is amended to read:

609.105 [SENTENCE OF IMPRISONMENT.]

Subdivision 1. Except as otherwise provided in subdivision 3, a sentence to imprisonment for more than one year shall commit the defendant to the custody of the commissioner of corrections.

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Subd. 2. The commissioner of corrections shall determine the place of confinement in a prison, reformatory, or other facility of the department of corrections established by law for the confinement of convicted persons and prescribe reasonable conditions and rules for their employment, conduct, instruction, and discipline within or without the facility.

Subd. 3. A sentence to imprisonment for an enhanced gross misdemeanor or for a period of one year or any lesser period shall be to a workhouse, work farm, county jail, or other place authorized by law.

Sec. 67. Minnesota Statutes 1996, section 609.135, subdivision 2, is amended to read:

Subd. 2. [STAY OF SENTENCE MAXIMUM PERIODS.] (a) If the conviction is for a felony the stay shall be for not more than four years or the maximum period for which the sentence of imprisonment might have been imposed, whichever is longer.

(b) If the conviction is for an enhanced gross misdemeanor violation of section 169.121 or 169.129, the stay shall be for not more than six years. The court shall provide for unsupervised probation for the last year of the stay unless the court finds that the defendant needs supervised probation for all or part of the last year.

(c) If the conviction is for a gross misdemeanor violation of section 169.121 or 169.129, the stay shall be for not more than four years. The court shall provide for unsupervised probation for the last one year of the stay unless the court finds that the defendant needs supervised probation for all or part of the last one year.

(c) (d) If the conviction is for a gross misdemeanor not specified in paragraph (b) (c), the stay shall be for not more than two years.

(d) (e) If the conviction is for any misdemeanor under section 169.121; 609.746, subdivision 1; 609.79; or 617.23; or for a misdemeanor under section 609.2242 or 609.224, subdivision 1, in which the victim of the crime was a family or household member as defined in section 518B.01, the stay shall be for not more than two years. The court shall provide for unsupervised probation for the second year of the stay unless the court finds that the defendant needs supervised probation for all or part of the second year.

(e) (f) If the conviction is for a misdemeanor not specified in paragraph (d) (e), the stay shall be for not more than one year.

(f) (g) The defendant shall be discharged six months after the term of the stay expires, unless the stay has been revoked or extended under paragraph (g) (h), or the defendant has already been discharged.

(g) (h) Notwithstanding the maximum periods specified for stays of sentences under paragraphs (a) to (f) (g), a court may extend a defendant's term of probation for up to one year if it finds, at a hearing conducted under subdivision 1a, that:

(1) the defendant has not paid court-ordered restitution or a fine in accordance with the payment schedule or structure; and

(2) the defendant is likely to not pay the restitution or fine the defendant owes before the term of probation expires.

This one-year extension of probation for failure to pay restitution or a fine may be extended by the court for up to one additional year if the court finds, at another hearing conducted under subdivision 1a, that the defendant still has not paid the court-ordered restitution or fine that the defendant owes.

Sec. 68. Minnesota Statutes 1996, section 609.15, subdivision 2, is amended to read:

Subd. 2. [LIMIT ON SENTENCES; MISDEMEANOR AND GROSS MISDEMEANOR.] If the court specifies that the sentence shall run consecutively and all of the sentences are for misdemeanors, the total of the sentences shall not exceed one year. If the sentences are for a gross misdemeanor or enhanced gross misdemeanor and one or more misdemeanors, the total of the sentences shall not exceed two years. If all of the sentences are for gross misdemeanors and enhanced gross misdemeanors, the total of the sentences shall not exceed four years.

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Sec. 69. Minnesota Statutes 1996, section 609.487, is amended by adding a subdivision to read:

Subd. 2a. [MOTOR VEHICLE; DEFINITION.] "Motor vehicle" has the meaning given in section 169.01, subdivision 3, and includes off-road recreational vehicles as defined in section 169.01, subdivision 84, and motorboats as defined in section 169.01, subdivision 85.

Sec. 70. Minnesota Statutes 1996, section 634.15, subdivision 2, is amended to read:

Subd. 2. [TESTIMONY AT TRIAL.] Except in civil proceedings, including proceedings under section 169.123, an accused person or the accused person's attorney may request, by notifying the prosecuting attorney at least ten days before the trial, that the following persons testify in person at the trial on behalf of the state:

(a) A person who performed the laboratory analysis or examination for the report described in subdivision 1, clause (a); or

(b) A person who prepared the blood sample report described in subdivision 1, clause (b).

If a petitioner in a proceeding under section 169.123 subpoenas a person described in paragraph (a) or (b) to testify at the proceeding, the petitioner is not required to pay the person witness fees under section 357.22 in excess of $100.

Sec. 71. [PUBLIC AWARENESS CAMPAIGN.]

The commissioner of public safety shall implement a public awareness campaign to educate the public on the vehicle forfeiture law under Minnesota Statutes, section 169.1217, and the administrative plate impoundment law under Minnesota Statutes, section 168.042.

This campaign must focus on increasing the public's understanding of these laws, specifically the offenses that the laws cover and the time periods in which the offenses must occur to result in impoundment or forfeiture.

The commissioner may conduct the campaign by including information in future editions of the driver's manual and using public service announcements, advertisements, and any other methods deemed appropriate by the commissioner. The commissioner shall attempt to maximize the use of innovative methods to conduct the campaign.

Sec. 72. [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

84.83 84.912 169.1217

84.927 84.912 169.1217

86B.305 86B.331 169.121

86B.811 86B.331 169.121

97B.065 86B.331, subd. 4 169.121, subd. 2

97B.066 86B.335, subds. 169.123, subds.

8, 9, and 10 2b, 2c, and 3

Sec. 73. [APPROPRIATIONS.]

Subdivision 1. [PUBLIC SAFETY.] $110,000 for the fiscal year ending June 30, 1998, and $138,000 for the fiscal year ending June 30, 1999, is appropriated from the trunk highway fund to the commissioner of public safety for costs associated with this act.

Subd. 2. [ATTORNEY GENERAL.] $57,000 for the fiscal year ending June 30, 1998 and $114,000 for the fiscal year ending June 30, 1999 is appropriated from the general fund to the attorney general for costs associated with this act.

Subd. 3. [PUBLIC DEFENSE.] $7,000 for the fiscal year ending June 30, 1998 and $15,000 for the fiscal year ending June 30, 1999 is appropriated from the general fund to the board of public defense for costs associated with this act.

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Sec. 74. [REPEALER.]

Minnesota Statutes 1996, sections 84.873; 84.91, subdivisions 2, 3, 4, 5, 5a, 6, 7, and 8; 84.911, subdivisions 1, 2, 3, 4, 5, and 6; 84.912; 84.9254; 86B.331, subdivisions 2, 3, 4, 5, 5a, 6, 7, and 8; 86B.335, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12; 86B.337; 97B.066, subdivision 6; and 169.121, subdivision 3a, are repealed.

Sec. 75. [EFFECTIVE DATE.]

Section 61 is effective August 1, 1997. Sections 1 to 20, 22 to 58, 60, 62 to 72, and 74 are effective January 1, 1998, and apply to violations occurring on or after that date. However, violations occurring before January 1, 1998, which are listed in Minnesota Statutes, section 169.121, subdivision 3, paragraph (a), are considered prior impaired driving convictions or prior license revocations for purposes of: determining conditional release, long-term monitoring, criminal penalties, sentencing, and administrative licensing sanctions for a person charged for or convicted of a violation occurring on or after January 1, 1998.

Sections 21 and 59 are effective July 1, 1997, and apply to vehicle registrations and driver's license reinstatements, respectively, occurring on or after that date.

Repeal of civil penalty payment and enforcement provisions in Minnesota Statutes, sections 84.911 and 86B.335, applies only to refusals occurring on or after January 1, 1998."

Delete the title and insert:

"A bill for an act relating to crimes; driving while impaired; reducing the legal limit for alcohol concentration from 0.10 to 0.04 for youth under age 19 for operating any kind of vehicle; creating a zero-tolerance standard for school bus drivers; advancing criminal penalties and administrative sanctions for committing a DWI crime while having an alcohol concentration of 0.20 or more; expanding DWI laws to include snowmobiles, all-terrain vehicles, and motorboats and repealing the separate DWI laws relating to those recreational vehicles; authorizing the imposition of a penalty assessment of up to $1,000 for persons driving motor vehicles with an alcohol concentration of 0.20 or more; creating an enhanced gross misdemeanor-level DWI crime and restructuring criminal penalties for DWI, including the provision of mandatory minimum periods of incarceration and home detention for repeat DWI offenders; mandating pretrial and posttrial electronic alcohol monitoring for certain offenders; advancing license plate impoundment and motor vehicle forfeiture by one offense; providing an administrative process for forfeiture and permitting it to be based on license revocation; authorizing peace officers to stop vehicles bearing special series license plates; enhancing criminal penalties for repeat violations involving commercial motor vehicles; authorizing the use of preliminary breath tests results for prosecuting certain driving offenses; making technical changes; providing enhanced criminal penalties and civil sanctions; appropriating money; amending Minnesota Statutes 1996, sections 84.83, subdivision 5; 84.91, subdivision 1; 84.911, subdivision 7; 84.927, subdivision 1; 86B.331, subdivision 1; 86B.705, subdivision 2; 97A.065, subdivision 2; 97B.065, subdivision 1; 97B.066, subdivisions 1, 5, and by adding subdivisions; 168.042, subdivisions 1, 2, 4, 9, 11, and by adding a subdivision; 169.01, subdivision 75, and by adding subdivisions; 169.121, subdivisions 1, 1c, 2, 3, 3b, 3c, 4, 6, 11, and by adding subdivisions; 169.1211, subdivision 1, and by adding subdivisions; 169.1217; 169.1218; 169.123, subdivisions 1, 2, 4, 5a, 5c, and 6; 169.126, subdivision 1; 169.1261; 169.129; 171.07, by adding a subdivision; 171.12, by adding a subdivision; 171.19; 171.20, subdivision 4; 171.30, by adding a subdivision; 340A.503, subdivision 2; 357.021, subdivision 1a; 364.09; 609.02, subdivision 2, and by adding a subdivision; 609.105; 609.135, subdivision 2; 609.15, subdivision 2; 609.487, by adding a subdivision; and 634.15, subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 168; repealing Minnesota Statutes 1996, sections 84.873; 84.91, subdivisions 2, 3, 4, 5, 5a, 6, 7, and 8; 84.911, subdivisions 1, 2, 3, 4, 5, and 6; 84.912; 84.9254; 86B.331, subdivisions 2, 3, 4, 5, 5a, 6, 7, and 8; 86B.335, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12; 86B.337; 97B.066, subdivision 6; and 169.121, subdivision 3a."

We request adoption of this report and repassage of the bill.

Senate Conferees: Leo T. Foley, Dave Kleis, Ember R. Junge, Dallas C. Sams and Thomas M. Neuville.

House Conferees: Matt Entenza, Satveer Chaudary, Mary Jo McGuire, Bill Macklin and Doug Swenson.

Entenza moved that the report of the Conference Committee on S. F. No. 985 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5734

S. F. No. 985, A bill for an act relating to crimes; driving while impaired; providing criminal penalties for persons operating recreational vehicles who refuse an alcohol test; increasing criminal penalties, minimum sentences, and administrative sanctions for persons driving motor vehicles and operating recreational vehicles with an alcohol concentration of 0.20 or more; providing more severe requirements concerning conditional release and electronic alcohol monitoring pending trial, alcohol use assessment and treatment, driver's license revocation, license plate impoundment, and vehicle forfeiture for persons driving motor vehicles and operating recreational vehicles with an alcohol concentration of 0.20 or more; authorizing the imposition of a penalty assessment of up to $1,000 for persons driving motor vehicles with an alcohol concentration of 0.20 or more; redefining relevant evidence for operating a motorboat while under the influence of alcohol; including in the definition of prior DWI offenses, the offense of driving a commercial vehicle while impaired; authorizing peace officers to stop vehicles bearing special series license plates; enhancing criminal penalties for repeat violations involving commercial motor vehicles; clarifying the definition of commercial vehicle; clarifying that certain revocation period applies only to first-time DWI offenders; making technical correction allowing the commissioner of public safety to determine examination required for reinstatement of driving privileges; providing for petition for reinstatement of commercial driver's license following disqualification; clarifying applicable requirements for licensing commercial driver instructors; striking the requirement that a second chemical test be available to a person accused of driving while impaired; making various changes to the implied consent hearing process involving what must be stated in the petition, available discovery, and the scope of the hearing; extending the period of time that a court may place an offender on probation for certain gross misdemeanor DWI violations; broadening the permissible uses of preliminary breath test results obtained in DWI situations; broadening the scope of the DWI forfeiture law to include certain implied consent license revocations; accelerating the applicability of the forfeiture law; authorizing an administrative forfeiture process; requiring courts to notify persons convicted of DWI offenses of possible vehicle forfeiture and plate impoundment for future offenses; making various technical changes; amending Minnesota Statutes 1996, sections 84.91, subdivisions 1, 2, 5, 7, 8, and by adding a subdivision; 84.911, subdivisions 2, 3, and 6; 84.912, subdivision 1; 86B.331, subdivisions 1, 2, 4, 5, 6, 7, 8, and by adding a subdivision; 86B.335, subdivisions 2, 3, 4, and 6; 86B.337, subdivision 1; 97B.066, subdivision 6, and by adding subdivisions; 168.042, subdivisions 1, 2, 4, 9, and 11, and by adding a subdivision; 169.01, subdivision 75; 169.121, subdivisions 1, 1c, 2, 3, 3a, 3b, 4, 6, and by adding a subdivision; 169.1211, subdivision 1, and by adding subdivisions; 169.1217; 169.123, subdivisions 3, 4, and 5c; 169.126, subdivision 1; 169.1261; 171.19; 171.30, by adding a subdivision; 340A.503, subdivision 2; 364.09; 609.135, subdivision 2; and 634.15, subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 168; repealing Minnesota Statutes 1996, section 86B.335, subdivisions 11 and 12.

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 85 yeas and 48 nays as follows:

Those who voted in the affirmative were:

Abrams Entenza Juhnke McGuire Rest Swenson, H.
Bettermann Erhardt Kalis Molnau Rhodes Tingelstad
Biernat Evans Kelso Mulder Rifenberg Tuma
Boudreau Finseth Knoblach Munger Schumacher Tunheim
Broecker Folliard Koskinen Murphy Seagren Vickerman
Carlson Garcia Kubly Ness Seifert Wagenius
Chaudhary Goodno Larsen Nornes Sekhon Weaver
Clark Greenfield Leppik Olson, E. Skare Wejcman
Commers Greiling Lieder Opatz Skoglund Workman
Daggett Gunther Lindner Orfield Slawik Spk. Carruthers
Davids Haas Long Osskopp Smith
Dawkins Harder Luther Ozment Stanek
Delmont Holsten Macklin Pawlenty Stang
Dempsey Johnson, A. Mahon Paymar Sviggum
Dorn Johnson, R. Mares Pelowski Swenson, D.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5735

Those who voted in the negative were:

Anderson, B. Hilty Knight McCollum Peterson Tompkins
Anderson, I. Huntley Koppendrayer McElroy Pugh Trimble
Bakk Jaros Kraus Milbert Reuter Van Dellen
Bishop Jefferson Krinkie Mullery Rostberg Wenzel
Bradley Jennings Kuisle Olson, M. Rukavina Westfall
Dehler Kahn Leighton Osthoff Solberg Westrom
Farrell Kielkucki Mariani Otremba Sykora Winter
Hasskamp Kinkel Marko Paulsen Tomassoni Wolf

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 1834.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 1834

A bill for an act relating to agriculture; suspending the dairy trade practices laws during the month of June; amending Minnesota Statutes 1996, section 32.72, subdivision 2; repealing Minnesota Statutes 1996, section 32.73.

May 19, 1997

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. 1834, report that we have agreed upon the items in dispute and recommend as follows:

That the house recede from its amendment and the S. F. No. 1834 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. [32.745] [ANNUAL SUSPENSION OF DAIRY TRADE PRACTICES ACT.]

The provisions of section 32.72 are suspended during the months of June, July, and August 1997, and for the month of June each year thereafter in honor of "Dairy Month."

Sec. 2. [INVESTIGATION OF DAIRY MARKETING PRACTICES; REPORT.]

(a) The commissioner of agriculture shall investigate the economic impacts and competitive fairness of practices used by wholesalers and distributors on small, median sized, and large milk and dairy product retailers. These practices include, but are not limited to, slotting fees, volume discounts, cents-off allowances, billbacks, promotional rebates, credit allowances, off-invoice arrangements, bulk sales discounts, and display preferences.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5736

(b) Financial and production information received by the commissioner on processors, wholesalers, and retailers during the investigation must be classified as private or nonpublic data under Minnesota Statutes, chapter 13.

(c) Not later than January 31, 1998, the commissioner shall report to the senate and house of representatives agriculture policy committees on the findings of the investigation and provide any recommendations for changes in law or rule to assure equity and competitive fairness for milk and dairy product retailers, regardless of the size of the retailer or the milk and dairy product volume of the retailer.

Sec. 3. [REPEALER.]

Minnesota Statutes 1996, section 32.73, is repealed.

Sec. 4. [EFFECTIVE DATE.]

This act is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to agriculture; annually suspending a dairy trade practices provision; requiring an investigation and report; eliminating certain obsolete language; proposing coding for new law in Minnesota Statutes, chapter 32; repealing Minnesota Statutes 1996, section 32.73."

We request adoption of this report and repassage of the bill.

Senate Conferees: Becky Lourey and Dallas C. Sams.

House Conferees: Steve Trimble, Stephen G. Wenzel and Bob Gunther.

Trimble moved that the report of the Conference Committee on S. F. No. 1834 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 1834, A bill for an act relating to agriculture; suspending the dairy trade practices laws during the month of June; amending Minnesota Statutes 1996, section 32.72, subdivision 2; repealing Minnesota Statutes 1996, section 32.73.

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 121 yeas and 13 nays as follows:

Those who voted in the affirmative were:

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5737
Abrams Farrell Kalis McElroy Rest Tomassoni
Anderson, I. Finseth Kelso McGuire Rhodes Tompkins
Bakk Folliard Kinkel Molnau Rifenberg Trimble
Bettermann Garcia Knoblach Mulder Rostberg Tuma
Biernat Greenfield Koppendrayer Mullery Rukavina Tunheim
Bishop Greiling Koskinen Munger Schumacher Van Dellen
Boudreau Gunther Krinkie Murphy Seagren Vickerman
Bradley Haas Kubly Ness Seifert Wagenius
Broecker Harder Kuisle Nornes Sekhon Weaver
Carlson Hasskamp Larsen Olson, E. Skare Wejcman
Chaudhary Hausman Leighton Opatz Skoglund Wenzel
Clark Hilty Leppik Orfield Slawik Westrom
Commers Holsten Lieder Osthoff Smith Winter
Daggett Huntley Lindner Otremba Solberg Wolf
Dawkins Jaros Long Ozment Stanek Workman
Delmont Jefferson Luther Paulsen Stang Spk. Carruthers
Dempsey Jennings Macklin Pawlenty Sviggum
Dorn Johnson, A. Mahon Paymar Swenson, D.
Entenza Johnson, R. Mares Pelowski Swenson, H.
Erhardt Juhnke Marko Peterson Sykora
Evans Kahn McCollum Pugh Tingelstad

Those who voted in the negative were:

Anderson, B. Goodno Kraus Olson, M. Westfall
Davids Kielkucki Mariani Osskopp
Dehler Knight Milbert Reuter

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 590.

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.

Patrick E. Flahaven, Secretary of the Senate

CONFERENCE COMMITTEE REPORT ON S. F. NO. 590

A bill for an act relating to public utilities; adding a high voltage transmission line that crosses the state boundary to the definition of a large energy facility; amending Minnesota Statutes 1996, section 216B.2421, subdivision 2.

May 19, 1997

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. 590, report that we have agreed upon the items in dispute and recommend as follows:

That the House recede from its amendment

We request adoption of this report and repassage of the bill.

Senate Conferees: Janet B. Johnson, Jane Krentz and Linda Runbeck.

House Conferees: Loren Jennings, Bill Hilty and Barb Vickerman.

Jennings moved that the report of the Conference Committee on S. F. No. 590 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5738

S. F. No. 590, A bill for an act relating to public utilities; adding a high voltage transmission line that crosses the state boundary to the definition of a large energy facility; amending Minnesota Statutes 1996, section 216B.2421, 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.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 23 yeas and 106 nays as follows:

Those who voted in the affirmative were:

Clark Greenfield Jaros Lieder Ozment Skoglund
Dawkins Hausman Jennings Long Paymar Wagenius
Entenza Hilty Kahn McGuire Rostberg Spk. Carruthers
Garcia Huntley Leighton Mullery Sekhon

Those who voted in the negative were:

Abrams Dorn Kielkucki Marko Rest Tingelstad
Anderson, B. Erhardt Kinkel McCollum Reuter Tomassoni
Anderson, I. Evans Knight McElroy Rhodes Tompkins
Bakk Farrell Knoblach Milbert Rifenberg Trimble
Bettermann Finseth Koppendrayer Molnau Rukavina Tuma
Biernat Folliard Koskinen Mulder Schumacher Tunheim
Bishop Goodno Kraus Nornes Seagren Van Dellen
Boudreau Greiling Krinkie Olson, E. Seifert Vickerman
Bradley Gunther Kubly Olson, M. Skare Weaver
Broecker Haas Kuisle Opatz Slawik Wejcman
Carlson Harder Larsen Osskopp Smith Wenzel
Chaudhary Hasskamp Leppik Osthoff Solberg Westfall
Commers Holsten Lindner Otremba Stanek Westrom
Daggett Jefferson Luther Paulsen Stang Winter
Davids Johnson, A. Macklin Pawlenty Sviggum Wolf
Dehler Johnson, R. Mahon Pelowski Swenson, D. Workman
Delmont Juhnke Mares Peterson Swenson, H.
Dempsey Kalis Mariani Pugh Sykora

The bill was not repassed, as amended by Conference.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 830.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5739

CONFERENCE COMMITTEE REPORT ON S. F. NO. 830

A bill for an act relating to child support enforcement; modifying provisions governing the establishment and enforcement of child support and maintenance; authorizing disclosure of certain data to the attorney general; providing for certain financial data matches; changing provisions for driver's license suspension, motor vehicle liens, payment agreements, and child support judgments; modifying provisions governing publication of names of delinquent obligors; providing for case reviewers; providing for a child support lien; regulating work release and probation violation for criminal nonsupport for certain offenders; requiring a study; specifying penalties; amending Minnesota Statutes 1996, sections 8.35; 13.46, subdivision 2; 13.99, by adding a subdivision; 168A.05, subdivision 8; 171.19; 256.87, subdivisions 1, 1a, 3, 5, and by adding a subdivision; 256.978, subdivisions 1 and 2; 256.979, subdivisions 5, 6, 7, 8, and by adding a subdivision; 256.9791, subdivision 1; 256.9792, subdivisions 1 and 2; 256.998, subdivisions 1, 6, 7, and 9; 257.62, subdivisions 1 and 2; 257.66, subdivision 3, and by adding a subdivision; 257.70; 257.75, subdivisions 1a, 2, 3, 4, 5, and 7; 299C.46, subdivision 3; 508.63; 508A.63; 518.005, by adding a subdivision; 518.10; 518.148, subdivision 2; 518.171, subdivisions 1 and 4; 518.54, subdivision 6, and by adding a subdivision; 518.551, subdivisions 5, 5b, 7, 12, 13, 14, and by adding a subdivision; 518.5511, subdivisions 1, 2, 3, 4, and by adding a subdivision; 518.5512, subdivisions 2, 3, and by adding subdivisions; 518.553; 518.575; 518.616, by adding a subdivision; 518.64, subdivision 2; 518.641, subdivision 2; 518.68, subdivision 2; 548.091, subdivisions 1a, 2a, 3a, and by adding subdivisions; 550.37, subdivision 24; and 609.375, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 13B; 256; and 518; proposing coding for new law as Minnesota Statutes, chapter 552; repealing Minnesota Statutes 1996, sections 256.74; 256.979, subdivision 9; 518.5511, subdivisions 5, 6, 7, 8, and 9; 518.611; 518.613; 518.645; 518C.502; 518C.9011; and 609.375, subdivisions 3, 4, and 6.

May 19, 1997

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. 830, 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. 830 be further amended as follows:

Delete everything after the enacting clause and insert:

"ARTICLE 1

CHILD SUPPORT

Section 1. Minnesota Statutes 1996, section 168A.05, subdivision 8, is amended to read:

Subd. 8. [LIENS FILED FOR ENFORCEMENT OF CHILD SUPPORT.] This subdivision applies if the court or a public authority responsible for child support enforcement orders or directs the commissioner to enter a lien, as provided in section 518.551, subdivision 14. If a certificate of title is applied for by the owner, the department shall enter a lien on the title in the name of the state of Minnesota or in the name of the obligee in accordance with the notice if the value of the motor vehicle determined in accordance with either the definitions of section 297B.01, subdivision 8, or the retail value described in the N.A.D.A. Official Used Car Guide, Midwest Edition, for the current year exceeds the exemption allowed in section 550.37. The lien on the title is subordinate to any bona fide purchase money security interest as defined in section 336.9-107 regardless of when the purchase money security interest is perfected. With respect to all other security interests, the lien is perfected as of the date entered on the title. The lien is subject to an exemption in the amount currently in effect under section 518.551, subdivision 14.

Sec. 2. Minnesota Statutes 1996, section 171.19, is amended to read:

171.19 [PETITION FOR LICENSE REINSTATEMENT.]

Any person whose driver's license has been refused, revoked, suspended, or canceled by the commissioner, except where the license is revoked under section 169.123 or section 171.186, may file a petition for a hearing in the matter in the district court in the county wherein such person shall reside and, in the case of a nonresident, in the district court in any county, and

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such court is hereby vested with jurisdiction, and it shall be its duty, to set the matter for hearing upon 15 days' written notice to the commissioner, and thereupon to take testimony and examine into the facts of the case to determine whether the petitioner is entitled to a license or is subject to revocation, suspension, cancellation, or refusal of license, and shall render judgment accordingly. The petition shall be heard by the court without a jury and may be heard in or out of term. The commissioner may appear in person, or by agents or representatives, and may present evidence upon the hearing by affidavit personally, by agents, or by representatives. The petitioner may present evidence by affidavit, except that the petitioner must be present in person at such hearing for the purpose of cross-examination. In the event the department shall be sustained in these proceedings, the petitioner shall have no further right to make further petition to any court for the purpose of obtaining a driver's license until after the expiration of one year after the date of such hearing.

Sec. 3. Minnesota Statutes 1996, section 256.87, is amended by adding a subdivision to read:

Subd. 9. [ARREARS FOR PARENT WHO REUNITES WITH FAMILY.] (a) A parent liable for assistance under this section may seek a suspension of collection efforts under Title IV-D of the Social Security Act or a payment agreement based on ability to pay if the parent has reunited with that parent's family and lives in the same household as the child on whose behalf the assistance was furnished.

(b) The Title IV-D agency shall consider the individual financial circumstances of each obligor in evaluating the obligor's ability to pay a proposed payment agreement and shall propose a reasonable payment agreement tailored to those individual financial circumstances.

(c) The Title IV-D agency may suspend collection of arrears owed to the state under this section for as long as the obligor continues to live in the same household as the child on whose behalf the assistance was furnished if the total gross household income of the obligor is less than 185 percent of the federal poverty level.

(d) An obligor must annually reapply for suspension of collection of arrearages under paragraph (c).

(e) The obligor must notify the Title IV-D agency if the obligor no longer resides in the same household as the child.

Sec. 4. Minnesota Statutes 1996, section 256.979, subdivision 5, is amended to read:

Subd. 5. [PATERNITY ESTABLISHMENT AND CHILD SUPPORT ORDER ESTABLISHMENT AND MODIFICATION BONUS INCENTIVES.] (a) A bonus incentive program is created to increase the number of paternity establishments and establishment and modifications of child support orders done by county child support enforcement agencies.

(b) A bonus must be awarded to a county child support agency for each child case for which the agency completes a paternity or child support order establishment or modification through judicial, or administrative, or expedited processes and for each instance in which the agency reviews a case for a modification of the child support order.

(c) The rate of bonus incentive is $100 for each paternity or child support order establishment and $50 for each review for modification of a child support order modification set in a specific dollar amount.

(d) No bonus shall be paid for a modification that is a result of a termination of child care costs according to section 518.551, subdivision 5, paragraph (b), or due solely to a reduction of child care expenses.

Sec. 5. Minnesota Statutes 1996, section 256.979, subdivision 6, is amended to read:

Subd. 6. [CLAIMS FOR BONUS INCENTIVE.] (a) The commissioner of human services and the county agency shall develop procedures for the claims process and criteria using automated systems where possible.

(b) Only one county agency may receive a bonus per paternity establishment or child support order establishment or modification for each case. The county agency making the initial preparations for the case resulting in the establishment of paternity or modification of an order is the county agency entitled to claim the bonus incentive, even if the case is transferred to another county agency prior to the time the order is established or modified. The county agency completing the action or procedure needed to establish paternity or a child support order or modify an order is the county agency entitled to claim the bonus incentive.

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(c) Disputed claims must be submitted to the commissioner of human services and the commissioner's decision is final.

(d) For purposes of this section, "case" means a family unit for whom the county agency is providing child support enforcement services.

Sec. 6. Minnesota Statutes 1996, section 256.979, subdivision 7, is amended to read:

Subd. 7. [DISTRIBUTION.] (a) Bonus incentives must be issued to the county agency quarterly, within 45 days after the last day of each quarter for which a bonus incentive is being claimed, and must be paid in the order in which claims are received.

(b) Bonus incentive funds under this section must be reinvested in the county child support enforcement program and a county may not reduce funding of the child support enforcement program by the amount of the bonus earned.

(c) The county agency shall repay any bonus erroneously issued.

(d) A county agency shall maintain a record of bonus incentives claimed and received for each quarter.

(e) Payment of bonus incentives is limited by the amount of the appropriation for this purpose. If the appropriation is insufficient to cover all claims, the commissioner of human services may prorate payments among the county agencies.

Sec. 7. Minnesota Statutes 1996, section 256.979, subdivision 8, is amended to read:

Subd. 8. [MEDICAL PROVIDER REIMBURSEMENT.] (a) A fee to the providers of medical services is created for the purpose of increasing the numbers of signed and notarized recognition of parentage forms completed in the medical setting.

(b) A fee of $25 shall be paid to each medical provider for each properly completed recognition of parentage form sent to the department of vital statistics.

(c) The office of vital statistics shall notify the department of human services quarterly of the numbers of completed forms received and the amounts paid.

(d) The department of human services shall remit quarterly to each medical provider a payment for the number of signed recognition of parentage forms completed by that medical provider and sent to the office of vital statistics.

(e) The commissioners of the department of human services and the department of health shall develop procedures for the implementation of this provision.

(f) Payments will be made to the medical provider within the limit of available appropriations.

(g) Federal matching funds received as reimbursement for the costs of the medical provider reimbursement must be retained by the commissioner of human services for educational programs dedicated to the benefits of paternity establishment.

Sec. 8. Minnesota Statutes 1996, section 256.979, is amended by adding a subdivision to read:

Subd. 10. [TRANSFERABILITY BETWEEN BONUS INCENTIVE ACCOUNTS AND GRANTS TO COUNTY AGENCIES.] The commissioner of human services may transfer money appropriated for child support enforcement county performance incentives under this section and section 256.9791 among county performance incentive accounts. Incentive funds to counties transferred under this section must be reinvested in the child support enforcement program and may not be used to supplant money now spent by counties for child support enforcement.

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Sec. 9. Minnesota Statutes 1996, section 256.9791, subdivision 1, is amended to read:

Subdivision 1. [BONUS INCENTIVE.] (a) A bonus incentive program is created to increase the identification and enforcement by county agencies of dependent health insurance coverage for persons who are receiving medical assistance under section 256B.055 and for whom the county agency is providing child support enforcement services.

(b) The bonus shall be awarded to a county child support agency for each person for whom coverage is identified and enforced by the child support enforcement program when the obligor is under a court order to provide dependent health insurance coverage.

(c) Bonus incentive funds under this section must be reinvested in the county child support enforcement program and a county may not reduce funding of the child support enforcement program by the amount of the bonus earned.

Sec. 10. Minnesota Statutes 1996, section 256.998, subdivision 9, is amended to read:

Subd. 9. [INDEPENDENT CONTRACTORS.] The state and all political subdivisions of the state, when acting in the capacity of an employer, shall report the hiring of any person as an independent contractor to the centralized work reporting system in the same manner as the hiring of an employee is reported.

The attorney general and the commissioner of human services shall work with representatives of the employment community and industries that utilize independent contractors in the regular course of business to develop a plan to include the reporting of independent contractors by all employers to the centralized work reporting system by July 1, 1996. The attorney general and the commissioner of human services shall present the resulting plan in the form of proposed legislation to the legislature by February 1, 1996. Other payors may report independent contractors to whom they make payments that require the filing of a 1099-MISC report. Payors reporting independent contractors shall report by use of the same means and provide the same information required under subdivisions 4 and 5. The commissioner of human services shall establish procedures for payors reporting under this section.

Sec. 11. Minnesota Statutes 1996, section 257.75, subdivision 1a, is amended to read:

Subd. 1a. [JOINDER IN RECOGNITION BY HUSBAND.] A man who is a presumed father under section 257.55, subdivision 1, paragraph (a), may join in a recognition of parentage that recognizes that another man is the child's biological father. The man who is the presumed father under section 257.55, subdivision 1, paragraph (a), must sign an acknowledgment under oath before a notary public that he is renouncing the presumption under section 257.55, subdivision 1, paragraph (a), and recognizing that the father who is executing the recognition under subdivision 1 is the biological father of the child. A joinder in a recognition under this subdivision must be executed within one year after the child's birth and at the same time as the recognition under subdivision 1 or within ten days following execution of the recognition. the joinder must be included in the recognition form or incorporated by reference within the recognition and attached to the form when it is filed with the state registrar of vital statistics. The joinder must be on a form prepared by the commissioner of human services. Failure to properly execute a joinder in a recognition does not affect the validity of the recognition under subdivision 1. A joinder without a corresponding recognition of parentage has no legal effect.

Sec. 12. [518.111] [SUFFICIENCY OF NOTICE.]

Automated child support notices sent by the public authority which do not require service are sufficient notice when issued and mailed by first class mail to the person's last known address.

Sec. 13. Minnesota Statutes 1996, section 518.551, subdivision 5b, is amended to read:

Subd. 5b. [DETERMINATION OF INCOME.] (a) The parties shall timely serve and file documentation of earnings and income. When there is a prehearing conference, the court must receive the documentation of income at least ten days prior to the prehearing conference. Documentation of earnings and income also includes, but is not limited to, pay stubs for the most recent three months, employer statements, or statement of receipts and expenses if self-employed. Documentation of earnings and income also includes copies of each parent's most recent federal tax returns, including W-2 forms, 1099 forms, reemployment insurance statements, workers' compensation statements, and all other documents evidencing income as received that provide verification of income over a longer period.

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(b) In addition to the requirements of paragraph (a), at any time after an action seeking child support has been commenced or when a child support order is in effect, a party or the public authority may require the other party to give them a copy of the party's most recent federal tax returns that were filed with the Internal Revenue Service. The party shall provide a copy of the tax returns within 30 days of receipt of the request unless the request is not made in good faith. A request under this paragraph may not be made more than once every two years, in the absence of good cause.

(c) If a parent under the jurisdiction of the court does not appear at a court hearing after proper notice of the time and place of the hearing, the court shall set income for that parent based on credible evidence before the court or in accordance with paragraph (d). Credible evidence may include documentation of current or recent income, testimony of the other parent concerning recent earnings and income levels, and the parent's wage reports filed with the Minnesota department of economic security under section 268.121.

(d) If the court finds that a parent is voluntarily unemployed or underemployed, child support shall be calculated based on a determination of imputed income. A parent is not considered voluntarily unemployed or underemployed upon a showing by the parent that the unemployment or underemployment: (1) is temporary and will ultimately lead to an increase in income; or (2) represents a bona fide career change that outweighs the adverse effect of that parent's diminished income on the child. Imputed income means the estimated earning ability of a parent based on the parent's prior earnings history, education, and job skills, and on availability of jobs within the community for an individual with the parent's qualifications. If the court is unable to determine or estimate the earning ability of a parent, the court may calculate child support based on full-time employment of 40 hours per week at 150 percent of the federal minimum wage or the Minnesota minimum wage, whichever is higher. If the court is unable to determine or estimate the earning ability of a parent, any medical support or child care contribution must be calculated based upon the obligor's proportionate share of the child care expenses using 40 hours per week at 150 percent of the federal minimum wage or the Minnesota minimum wage, whichever is higher. If a parent is a recipient of public assistance under sections 256.72 to 256.87 or chapter 256D section 256.741, or is physically or mentally incapacitated, it shall be presumed that the parent is not voluntarily unemployed or underemployed.

(e) Income from self employment is equal to gross receipts minus ordinary and necessary expenses. Ordinary and necessary expenses do not include amounts allowed by the Internal Revenue Service for accelerated depreciation expenses or investment tax credits or any other business expenses determined by the court to be inappropriate for determining income for purposes of child support. The person seeking to deduct an expense, including depreciation, has the burden of proving, if challenged, that the expense is ordinary and necessary. Net income under this section may be different from taxable income.

Sec. 14. Minnesota Statutes 1996, section 518.551, is amended by adding a subdivision to read:

Subd. 5e. [ADJUSTMENT TO SUPPORT ORDER.] A support order issued under this section may provide that during any period of time of 30 consecutive days or longer that the child is residing with the noncustodial parent, the amount of support otherwise due under the order may be reduced.

Sec. 15. Minnesota Statutes 1996, section 518.551, subdivision 7, is amended to read:

Subd. 7. [SERVICE FEE.] When the public agency responsible for child support enforcement provides child support collection services either to a public assistance recipient or to a party who does not receive public assistance, the public agency may upon written notice to the obligor charge a monthly collection fee equivalent to the full monthly cost to the county of providing collection services, in addition to the amount of the child support which was ordered by the court. The fee shall be deposited in the county general fund. The service fee assessed is limited to ten percent of the monthly court ordered child support and shall not be assessed to obligors who are current in payment of the monthly court ordered child support.

An application fee of $25 shall be paid by the person who applies for child support and maintenance collection services, except persons who are receiving public assistance as defined in section 256.741, persons who transfer from public assistance to nonpublic assistance status, and minor parents and parents enrolled in a public secondary school, area learning center, or alternative learning program approved by the commissioner of children, families, and learning. Fees assessed by state and federal tax agencies for collection of overdue support owed to or on behalf of a person not receiving public assistance must be imposed on the person for whom these services are provided. The public authority upon written notice

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to the obligee shall assess a fee of $25 to the person not receiving public assistance for each successful federal tax interception. The fee must be withheld prior to the release of the funds received from each interception and deposited in the general fund.

However, the limitations of this subdivision on the assessment of fees shall not apply to the extent inconsistent with the requirements of federal law for receiving funds for the programs under Title IV-A and Title IV-D of the Social Security Act, United States Code, title 42, sections 601 to 613 and United States Code, title 42, sections 651 to 662.

Sec. 16. Minnesota Statutes 1996, section 518.551, is amended by adding a subdivision to read:

Subd. 13a. [DATA ON SUSPENSIONS FOR SUPPORT ARREARS.] Notwithstanding section 13.03, subdivision 4, paragraph (c), data on an occupational license suspension under subdivision 12 or a driver's license suspension under subdivision 13 that are transferred by the department of human services to respectively the department of public safety or any state, county, or municipal occupational licensing agency must have the same classification at the department of public safety or other receiving agency under section 13.02 as other license suspension data held by the receiving agency. The transfer of the data does not affect the classification of the data in the hands of the department of human services.

Sec. 17. Minnesota Statutes 1996, section 518.551, subdivision 14, is amended to read:

Subd. 14. [MOTOR VEHICLE LIEN.] (a) Upon motion of an obligee, if a court finds that the obligor is the registered owner of a motor vehicle and the obligor is a debtor for a judgment debt resulting from nonpayment of court-ordered child support or maintenance payments, or both, in an amount equal to or greater than three times the obligor's total monthly support and maintenance payments, the court shall order the commissioner of public safety to enter a lien in the name of the obligee or in the name of the state of Minnesota, as appropriate, in accordance with section 168A.05, subdivision 8, unless the court finds that the obligor is in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority or that the obligor's interest in the motor vehicle is valued at less than $4,500. The court's order must be stayed for 90 days in order to allow the obligor to either execute a written payment agreement regarding both current support and arrearages, which agreement shall be approved by either the court or the public authority responsible for child support enforcement, or to allow the obligor to demonstrate that the ownership interest in the motor vehicle is valued at less than $4,500. If the obligor has not executed or is not in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority or has not demonstrated that the ownership interest in the motor vehicle is valued at less than $4,500 within the 90-day period, the court's order becomes effective and the commissioner of public safety shall record the lien on any motor vehicle certificate of title subsequently issued in the name of the obligor. The remedy under this subdivision is in addition to any other enforcement remedy available to the court.

(b) If a public authority responsible for child support enforcement determines that the obligor is the registered owner of a motor vehicle and the obligor is a debtor for judgment debt resulting from nonpayment of court-ordered child support or maintenance payments, or both, in an amount equal to or greater than three times the obligor's total monthly support and maintenance payments, the public authority shall direct the commissioner of public safety to enter a lien in the name of the obligee or in the name of the state of Minnesota, as appropriate, under section 168A.05, subdivision 8, on any motor vehicle certificate of title subsequently issued in the name of the obligor unless the public authority determines that the obligor is in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority or that the obligor's ownership interest in the motor vehicle is valued at less than $4,500. The remedy under this subdivision is in addition to any other enforcement remedy available to the public agency.

(c) At least 90 days prior to notifying the commissioner of public safety pursuant to paragraph (b), the public authority must mail a written notice to the obligor at the obligor's last known address, that it intends to record a lien on the obligor's any motor vehicle certificate of title subsequently issued in the name of the obligor and that the obligor must request a hearing within 30 days in order to contest the action. If the obligor makes a written request for a hearing within 30 days of the date of the notice, either a court hearing or a contested administrative proceeding must be held under section 518.5511, subdivision 4. Notwithstanding any law to the contrary, the obligor must be served with 14 days' notice in writing specifying the time and place of the hearing and the allegations against the obligor. The notice may be served personally or by mail. If the public authority does not receive a request for a hearing within 30 days of the date of the notice and the obligor does

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not execute or is not in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority or demonstrate to the public authority that the obligor's ownership interest in the motor vehicle is valued at less than $4,500 within 90 days of the date of the notice, the public authority shall direct the commissioner of public safety to record the lien under paragraph (b).

(d) At a hearing requested by the obligor under paragraph (c), and on finding that the obligor is in arrears in court-ordered child support or maintenance payments or both in an amount equal to or greater than three times the obligor's total monthly support and maintenance payments, the district court or the administrative law judge shall order the commissioner of public safety to record the lien unless the court or administrative law judge determines that:

(1) the obligor has executed and is in compliance with a written payment agreement regarding both current support and arrearages determined to be acceptable by the court, an administrative law judge, or the public authority; or

(2) the obligor has demonstrated that the ownership interest in the motor vehicle is valued at less than $4,500.

(e) An obligor who has had a lien recorded against a motor vehicle certificate of title may provide proof to the court or the public authority responsible for child support enforcement that the obligor is in compliance with all written payment agreements regarding both current support and arrearages or that the value of the motor vehicle is less than the exemption provided under section 550.37. Within 15 days of the receipt of that proof, the court or public authority shall either execute a release of security interest under section 168A.20, subdivision 4, and mail or deliver the release to the owner or other authorized person or shall direct the commissioner of public safety not to enter a lien on any motor vehicle certificate of title subsequently issued in the name of the obligor in instances where a lien has not yet been entered. The dollar amounts in this section shall change periodically in the manner provided in section 550.37, subdivision 4a.

(f) Any lien recorded against a motor vehicle certificate of title under this section and section 168A.05, subdivision 8, attaches only to the nonexempt value of the motor vehicle as determined in accordance with section 550.37. The value of a motor vehicle must be determined in accordance with the retail value described in the N.A.D.A. Official Used Car Guide, Midwest Edition, for the current year, or in accordance with the purchase price as defined in section 297B.01, subdivision 8.

Sec. 18. Minnesota Statutes 1996, section 518.5511, subdivision 1, is amended to read:

Subdivision 1. [GENERAL.] (a) An administrative process is established to obtain, modify, and enforce child and medical support orders and parentage orders and modify enforce maintenance if combined with a child support proceeding. All laws governing these actions apply insofar as they are not inconsistent with the provisions of this section and section 518.5512. Wherever other laws or rules are inconsistent with this section and section 518.5512, the provisions in this section and section 518.5512 shall apply.

(b) All proceedings for obtaining, modifying, or enforcing child and medical support orders and modifying enforcing maintenance orders if combined with a child support proceeding, are required to be conducted in the administrative process when the public authority is a party or provides services to a party or parties to the proceedings. Cases in which there is no assignment of support or in which the public authority is not providing services may not be conducted in the administrative process. At county option, the administrative process may include contempt motions or actions to establish parentage. Nothing contained herein shall prevent a party, upon timely notice to the public authority, from commencing an action or bringing a motion for the establishment, modification, or enforcement of child support or modification enforcement of maintenance orders if combined with a child support proceeding in district court, if additional issues involving domestic abuse, establishment or modification of custody or visitation, property issues, or other issues outside the jurisdiction of the administrative process, are part of the motion or action, or from proceeding with a motion or action brought by another party containing one or more of these issues if it is pending in district court.

(c) A party may make a written request to the public authority to initiate an uncontested administrative proceeding. If the public authority denies the request, the public authority shall issue a summary notice of denial which denies the request for relief within 30 days of receiving the written request, states the reasons for the denial, and notifies the party of the right to commence an action for relief proceed directly to a contested administrative proceeding according to subdivision 3a, paragraph (a). If the party commences an action or serves and files a motion proceeds directly to a contested hearing and

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files the requisite documents, as provided by the commissioner, with the court administrator within 30 days after the public authority's denial and the party's action results in a modification of a child support order, the modification may be retroactive to the date the written request was received by the public authority. If the public authority accepts the request and proceeds with the uncontested administrative process, any order or modification may be retroactive to the date the written request was received by the public authority.

(d) After August 1, 1994, all counties shall participate in the administrative process established in this section in accordance with a statewide implementation plan to be set forth by the commissioner of human services. No county shall be required to participate in the administrative process until after the county has been trained. The implementation plan shall include provisions for training the counties by region no later than July 1, 1995. The public authority may initiate actions in the administrative process.

(e) For the purpose of the administrative process, all powers, duties, and responsibilities conferred on judges of district court to obtain and enforce child and medical support and parentage and maintenance obligations, subject to the limitations of this section are conferred on administrative law judges, including the power to determine controlling interstate orders, and to issue subpoenas, orders to show cause, and bench warrants for failure to appear.

The administrative law judge has the authority to enter parentage orders in which the custody and visitation provisions are uncontested.

(f) Nonattorney employees of the public authority responsible for child support may prepare, sign, serve, and file complaints, motions, notices, summary notices, proposed orders, default orders, consent orders, orders for blood or genetic tests, and other documents related to the administrative process for obtaining, modifying, or enforcing child and medical support orders, orders establishing paternity, and related documents, and orders to enforce maintenance if combined with a child support order. The nonattorney employee may issue administrative subpoenas, conduct prehearing conferences, and participate in proceedings before an administrative law judge. This activity shall not be considered to be the unauthorized practice of law. Nonattorney employees may not represent the interests of any party other than the public authority, and may not give legal advice. The nonattorney employees may act subject to the limitations of section 518.5512.

(g) Any party may make a written request to the office of administrative hearings for a subpoena compelling the attendance of a witness or the production of books, papers, records, or other documents relevant to the administrative process. Subpoenas are enforceable through the district court. The public authority may also request a subpoena from the office of administrative hearings for the production of a witness or documents. The nonattorney employee of the public authority may issue subpoenas subject to the limitations in section 518.5512, subdivision 6, paragraph (a), clause (2).

(h) At all stages of the administrative process, the county attorney, or other attorney under contract, shall act as the legal adviser for the public authority.

(i) The commissioner of human services shall:

(1) provide training to child support officers and other persons involved in the administrative process;

(2) timely prepare simple and easy to understand forms, in consultation with the office of administrative hearings, for all notices and orders prescribed in this section, including a support order worksheet form, with the exception of orders issued by the district court or the office of administrative hearings under subdivision 4; and

(3) distribute money to cover the costs of the administrative process, including the salaries of administrative law judges. If available appropriations are insufficient to cover the costs, the commissioner shall prorate the amount among the counties.

(j) The commissioner of human services, in consultation with the office of administrative hearings, is responsible for the supervision of the administrative process.

(k) The public authority, the office of administrative hearings, court administrators, and other entities involved in the administrative process shall use the forms prepared by the commissioner.

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(l) The office of administrative hearings may reject orders that have not been prepared using the commissioner's forms or on forms that have not been approved by the commissioner.

(m) The office of administrative hearings is responsible for training and monitoring the performance of administrative law judges, maintaining records of proceedings, providing transcripts upon request, and maintaining the integrity of the district court file.

Sec. 19. Minnesota Statutes 1996, section 518.5511, subdivision 2, is amended to read:

Subd. 2. [UNCONTESTED ADMINISTRATIVE PROCEEDING.] (a) A party may petition the chief administrative law judge, the chief district court judge, or the chief family court referee to proceed immediately to a contested hearing upon good cause shown.

(b) The public authority shall give the parties written notice requesting the submission of information necessary for the public authority to prepare a proposed order. The written notice shall be sent by first class mail to the parties' last known addresses. The written notice shall describe the information requested, state the purpose of the request, state the date by which the information must be postmarked or received (which shall be at least 30 days from the date of the mailing of the written notice), state that if the information is not postmarked or received by that date, the public authority will prepare a proposed order on the basis of the information available, and identify the type of information which will be considered.

(c) Following the submission of information or following the date when the information was due the initiation of the administrative process under subdivision 1, paragraph (c) or (d), the public authority shall, on the basis of all information available, complete and sign a proposed order and notice. The public authority shall attach a support order worksheet. In preparing the proposed order, the public authority will establish child support in the highest amount permitted under section 518.551, subdivision 5. The proposed order shall include written findings in accordance with section 518.551, subdivision 5, clauses (i) and (j). If the public authority has incomplete or insufficient information upon which to prepare a proposed order, the public authority shall use the default standard established in section 518.551, subdivision 5b, paragraph (d), to prepare the proposed order. The notice shall state that the proposed order will be entered as a final and binding default order unless one of the parties requests a conference under subdivision 3 contacts the public authority regarding the proposed order within 21 30 days following the date of service of the proposed order. The method for requesting the conference shall be stated in the notice. The notice and proposed order shall be served under the rules of civil procedure on the noninitiating party and by first class mail on the initiating party. After receipt of the notice and proposed order, the court administrator shall file the documents.

For the purposes of the contested hearing administrative process, and notwithstanding any law or rule to the contrary, the service of the proposed order pursuant to under this paragraph shall be deemed to have commenced a proceeding and the judge, including an administrative law judge or a referee, shall have jurisdiction over the a contested hearing administrative proceeding.

(d) (b) If a conference under subdivision 3 is not requested the public authority is not contacted by a party within 21 30 days after the date of service of the proposed order, the public authority may submit the proposed order as the default order. The default order becomes enforceable upon signature by an administrative law judge, district court judge, or referee. The public authority may also prepare and serve a new notice and proposed order if new information is subsequently obtained. The default order shall be a final order, and shall be served under the rules of civil procedure.

(c) If the public authority obtains new information after service of the proposed order, the public authority may prepare one notice and revised proposed order. The revised order must be served by first class mail on the parties. If the public authority is not contacted within seven days after the date of service of the revised order, the public authority may submit the revised order as a default order but in no event sooner than 30 days after the service of the original proposed order.

(e) (d) The public authority shall file in the district court copies of all notices served on the parties, proof of service, the support order worksheet, and all orders.

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Sec. 20. Minnesota Statutes 1996, section 518.5511, subdivision 3, is amended to read:

Subd. 3. [ADMINISTRATIVE CONFERENCE.] (a) If a party requests a conference contacts the public authority within 21 30 days of the date of service of the proposed order, and the public authority does not choose to proceed directly to a contested administrative proceeding, the public authority shall schedule a conference, and shall serve send written notice of the date, time, and place of the conference and the date, time, and place of a contested administrative proceeding in the event the administrative conference fails to resolve all of the issues on the parties. The public authority may request any additional information necessary to establish child support. The public authority may choose to go directly to a contested administrative proceeding and is not required to conduct an administrative conference. The date of the contested administrative proceeding must be set within 31 days of the administrative conference or not more than 60 days from the date of the notice of the administrative conference. A request for a continuance must be made to the chief administrative law judge according to Minnesota Rules, part 1400.7500.

(b) The purpose of the conference is to review all available information and seek an agreement to enter a consent order. The notice shall state the purpose of the conference, and that the proposed order will be entered as a final and binding default order if the requesting party fails both parties fail to appear at the conference. The notice must also state that if only one party appears at the conference and there is no new information provided, the matter shall proceed by default. The notice shall be served on the parties by first class mail at their last known addresses, and the method of service shall be documented in the public authority file. All available and relevant information must be shared with the parties at the conference subject to the limitations of sections 256.87, subdivision 8, 257.70, and 518.005, subdivision 5. If a conference is not held, information which would have been shared at the conference by the public authority must be provided to a party or the party's attorney within 15 days of receipt of a written request.

(c) A party alleging domestic abuse by the other party shall not be required to participate in a conference. In such a case, the public authority shall meet separately with the parties in order to determine whether an agreement can be reached.

(d) If all parties appear at the conference and agree to all issues, and the public authority approves the agreement, the public authority shall prepare a consent order for the parties and the public authority to sign. The public authority shall submit the consent order to the administrative law judge. Upon signature, the order is a final order and must be served on the parties by first class mail.

(d) If the party requesting the conference does not appear and fails to provide a written excuse (with supporting documentation if relevant) to the public authority within seven days after the date of the conference which constitutes good cause (e) If only one party appears at the conference and there is no new information available, or if both of the parties fail to appear at the conference, the public authority may enter submit a default order through the uncontested administrative process. The public authority shall not enter the default order until at least seven days after the date of the conference.

For purposes of this section, misrepresentation, excusable neglect, or circumstances beyond the control of the person who requested the conference which prevented the person's appearance at the conference constitutes good cause for failure to appear. If the public authority finds good cause, the conference shall be rescheduled by the public authority and the public authority shall send notice as required under this subdivision. If only one party appears at the conference and there is new information available, the matter shall proceed directly to the scheduled contested administrative proceeding.

(e) (f) If the parties appear at the conference, the public authority shall seek and do not reach agreement of the parties to the entry of a consent order which establishes child support in accordance with applicable law., the public authority shall advise the parties that if a consent order is not entered, the matter will be remains scheduled for a hearing before an administrative law judge, or a district court judge or referee contested administrative proceeding, and that the public authority will seek the establishment of child support at the hearing proceeding in accordance with the highest amount permitted under section 518.551, subdivision 5. If an agreement to enter the consent order is not reached at the conference, the public authority shall schedule the matter for a contested hearing child support guidelines.

(f) If an agreement is reached by the parties at the conference, a consent order shall be prepared by the public authority, and shall be signed by the parties. All consent and default orders shall be signed by the nonattorney employee of the public authority and shall be submitted to an administrative law judge or the district court for approval and signature. The order is enforceable upon the signature by the administrative law judge or the district court. The consent order shall be served on the parties under the rules of civil procedure.

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(g) If one or both of the parties appear at the administrative conference and there is new information that makes the proposed order unreasonable or inappropriate, the public authority may issue a revised proposed order pursuant to subdivision 2, paragraph (c), or proceed directly to a contested administrative proceeding.

Sec. 21. Minnesota Statutes 1996, section 518.5511, is amended by adding a subdivision to read:

Subd. 3a. [ALTERNATIVE ADMINISTRATIVE RESOLUTIONS.] (a)(1) Any party may proceed directly to a contested administrative proceeding under subdivision 4 by making a written request to the public authority. After the public authority receives a written request, the public authority shall request or schedule a contested administrative proceeding and inform the requester of the date, time, and place of the hearing. The public authority shall also provide the requester with the contested administrative documents necessary for the proceeding. These documents must be completed by the requester, served on the other party and the public authority, and filed with the court administrator at least 21 days before the hearing. If the documents are not filed with the court administrator, the contested administrative proceeding must be canceled unless the public authority or a party objects.

(2) The public authority may also proceed directly to a contested administrative proceeding.

(b) At any time in the administrative process, including prior to the issuance of the proposed order, if the parties and the public authority are in agreement, the public authority shall prepare a consent order to be signed by the public authority and the parties. The parties must waive any of their rights to the notices and time frames required by this section. The public authority shall submit the order to the administrative law judge. Upon signature by the court, the order is a final order and must be filed with the court administrator and served by first class mail on the parties.

Sec. 22. Minnesota Statutes 1996, section 518.5511, subdivision 4, is amended to read:

Subd. 4. [CONTESTED ADMINISTRATIVE PROCEEDING.] (a) All counties shall participate in the contested administrative process established in this section as designated in a statewide implementation plan to be set forth by the commissioner of human services. No county shall be required to participate in the contested administrative process until after the county has been trained. The contested administrative process shall be in operation in all counties no later than July 1, 1998, with the exception of Hennepin county which shall have a pilot program in operation no later than July 1, 1996.

The Hennepin county pilot program shall be jointly planned, implemented, and evaluated by the department of human services, the office of administrative hearings, the fourth judicial district court, and Hennepin county. The pilot program shall provide that one-half of the case load use the contested administrative process. The pilot program shall include an evaluation which shall be conducted after one year of program operation. A preliminary evaluation report shall be submitted by the commissioner to the legislature by March 1, 1997. A final evaluation report shall be submitted by the commissioner to the legislature by January 15, 1998. The pilot program shall continue pending final decision by the legislature, or until the commissioner determines that the pilot program shall discontinue and that Hennepin county shall not participate in the contested administrative process.

In counties designated by the commissioner, contested hearings administrative proceedings required under this section shall be scheduled before administrative law judges, and shall be conducted in accordance with the provisions under this section. In counties not designated by the commissioner, contested hearings administrative proceedings shall be conducted in district court in accordance with the rules of civil procedure and the rules of family court.

(b) An administrative law judge may conduct hearings administrative proceedings and approve a stipulation reached on a contempt motion brought by the public authority. Any stipulation that involves a finding of contempt and a jail sentence, whether stayed or imposed, shall require the review and signature of a district court judge.

(c) A party, witness, or attorney may appear or testify by telephone, audiovisual means, or other electronic means, at the discretion of the administrative law judge.

(d) Before implementing the process in a county, the chief administrative law judge, the commissioner of human services, the director of the county human services agency, the county attorney, the county court administrator, and the county sheriff shall jointly establish procedures, and the county shall provide hearing facilities for implementing this process in the county.

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A contested administrative hearing proceeding shall be conducted in a courtroom, if one is available, or a conference or meeting room with at least two exits and of sufficient size to permit adequate physical separation of the parties. The court administrator shall, to the extent practical, provide administrative support for the contested hearing administrative proceeding. Security personnel shall either be present during the administrative hearings proceedings, or be available to respond to a request for emergency assistance.

(e) The contested administrative hearings shall be conducted under the rules of the office of administrative hearings, Minnesota Rules, parts 1400.5275, 1400.5500, 1400.6000 to 1400.6400, 1400.6600 to 1400.7000, 1400.7100 to 1400.7500, 1400.7700, 1400.7800, and 1400.8100, as adopted by the chief administrative law judge. For matters not initiated under subdivision 2, documents from the moving party shall be served and filed at least 21 14 days prior to the hearing and the opposing party shall serve and file documents raising new issues at least ten days prior to the hearing. In all contested administrative proceedings, the administrative law judge may limit the extent and timing of discovery. Except as provided under this section, other aspects of the case, including, but not limited to, discovery, shall be conducted under the rules of family court, the rules of civil procedure, and chapter 518.

(f) Pursuant to Following a contested administrative hearing, the administrative law judge shall make findings of fact, conclusions, and a final decision and issue an order. Orders issued by an administrative law judge may be enforceable by the contempt powers of the district courts.

(g) At the time the matter is scheduled for a contested hearing administrative proceeding, the public authority shall file in the district court copies of all relevant documents sent to or received from the parties that have been provided to all parties, in addition to the any documents filed under subdivision 2, paragraph (e) (d). These documents may be used as evidence by the judge in deciding the case without need for further foundation testimony. For matters scheduled for a contested hearing administrative proceeding which were not initiated under subdivision 2, the public authority shall obtain any income information available to the public authority through the department of economic security and serve this information on all parties and file the information with the court at least five days prior to the hearing.

(h) If only one party appears at the contested administrative proceeding, a hearing must be conducted. The administrative law judge shall prepare an order and file it with the district court. The court shall serve the order on the parties by first class mail at the last known address and shall provide a copy of the order to the public authority.

(i) If neither party appears at the contested administrative proceeding and no new information has been submitted or made available to the court or public authority, the public authority shall submit the default order to the administrative law judge for signature. If neither party appears and new information is available to the court or public authority, the administrative law judge shall prepare an order based on the new information. The court shall serve the order on the parties by first class mail at the last known address and shall provide a copy of the order to the public authority.

(j) The decision and order of the administrative law judge is appealable to the court of appeals in the same manner as a decision of the district court.

Sec. 23. Minnesota Statutes 1996, section 518.5512, subdivision 3, is amended to read:

Subd. 3. [COST-OF-LIVING ADJUSTMENT.] The notice of application for adjustment shall be treated as a proposed order under section 518.5511, subdivision 2, paragraph (c). The public authority shall send notice of its application for a cost-of-living adjustment on the obligor in accord with section 518.641. The public authority shall stay the adjustment of support upon receipt by the public authority of a request for an administrative conference by the obligor to proceed directly to a contested administrative proceeding under section 518.5511, subdivision 4. An obligor requesting an administrative conference shall provide all relevant information that establishes an insufficient increase in income to justify the adjustment of the support obligation. If the obligor fails to submit any evidence at the administrative conference, the cost-of-living adjustment will immediately go into effect.

Sec. 24. Minnesota Statutes 1996, section 518.5512, is amended by adding a subdivision to read:

Subd. 3a. [FORM.] The public authority shall prepare and make available to the court and obligors a form, to be submitted to the public authority by the obligor, to request to proceed directly to a contested administrative proceeding regarding a cost-of-living adjustment.

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Sec. 25. Minnesota Statutes 1996, section 518.553, is amended to read:

518.553 [PAYMENT AGREEMENTS.]

In proposing or approving proposed written payment agreements for purposes of section 518.551, the court, an administrative law judge, or the public authority shall take into consideration the amount of the arrearages, the amount of the current support order, any pending request for modification, and the earnings of the obligor. The court, administrative law judge, or public authority shall consider the individual financial circumstances of each obligor in evaluating the obligor's ability to pay any proposed payment agreement and shall propose a reasonable payment agreement tailored to the individual financial circumstances of each obligor.

Sec. 26. Minnesota Statutes 1996, section 518.5852, is amended to read:

518.5852 [CENTRAL COLLECTIONS UNIT.]

The commissioner of human services shall create and maintain a central collections unit for the purpose of receiving, processing, and disbursing payments, and for maintaining a record of payments, in all cases in which:

(1) the state or county is a party;

(2) the state or county provides child support enforcement services to a party; or

(3) payment is collected through income withholding.

The commissioner of human services may contract for services to carry out these provisions, provided that the commissioner first meets and negotiates with the affected exclusive representatives.

Sec. 27. [518.618] [CASE REVIEWER.]

The commissioner shall make a case reviewer available to obligors and obligees. The reviewer must be available to answer questions concerning the collection process and to review the collection activity taken. A reviewer who reasonably believes that a particular action being taken is unreasonable or unfair may make recommendations to the commissioner and the applicable county in regard to the collection action.

Sec. 28. [518.619] [COLLECTION; ARREARS ONLY.]

(a) Remedies available for the collection and enforcement of support in this chapter and chapters 256, 257, and 518C also apply to cases in which the child or children for whom support is owed are emancipated and the obligor owes past support or has an accumulated arrearage as of the date of the youngest child's emancipation. Child support arrearages under this section include arrearages for child support, medical support, child care, pregnancy and birth expenses, and unreimbursed medical expenses as defined in section 518.171.

(b) This section applies retroactively to any support arrearage that accrued on or before the date of enactment and to all arrearages accruing after the date of enactment.

Sec. 29. Minnesota Statutes 1996, section 518.64, subdivision 2, is amended to read:

Subd. 2. [MODIFICATION.] (a) The terms of an order respecting maintenance or support may be modified upon a showing of one or more of the following: (1) substantially increased or decreased earnings of a party; (2) substantially increased or decreased need of a party or the child or children that are the subject of these proceedings; (3) receipt of assistance under sections 256.72 to 256.87 or 256B.01 to 256B.40; (4) a change in the cost of living for either party as measured by the federal bureau of statistics, any of which makes the terms unreasonable and unfair; (5) extraordinary medical expenses of the child not provided for under section 518.171; or (6) the addition of work-related or education-related child care expenses of the obligee or a substantial increase or decrease in existing work-related or education-related child care expenses.

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(b) It is presumed that there has been a substantial change in circumstances under clause (1), (2), or (4) paragraph (a) and the terms of a current support order shall be rebuttably presumed to be unreasonable and unfair if:

(1) the application of the child support guidelines in section 518.551, subdivision 5, to the current circumstances of the parties results in a calculated court order that is at least 20 percent and at least $50 per month higher or lower than the current support order.;

(2) the medical support provisions of the order established under section 518.171 are not enforceable by the public authority or the custodial parent;

(3) health coverage ordered under section 518.171 is not available to the child for whom the order is established by the parent ordered to provide; or

(4) the existing support obligation is in the form of a statement of percentage and not a specific dollar amount.

(b) (c) On a motion for modification of maintenance, including a motion for the extension of the duration of a maintenance award, the court shall apply, in addition to all other relevant factors, the factors for an award of maintenance under section 518.552 that exist at the time of the motion. On a motion for modification of support, the court:

(1) shall apply section 518.551, subdivision 5, and shall not consider the financial circumstances of each party's spouse, if any; and

(2) shall not consider compensation received by a party for employment in excess of a 40-hour work week, provided that the party demonstrates, and the court finds, that:

(i) the excess employment began after entry of the existing support order;

(ii) the excess employment is voluntary and not a condition of employment;

(iii) the excess employment is in the nature of additional, part-time employment, or overtime employment compensable by the hour or fractions of an hour;

(iv) the party's compensation structure has not been changed for the purpose of affecting a support or maintenance obligation;

(v) in the case of an obligor, current child support payments are at least equal to the guidelines amount based on income not excluded under this clause; and

(vi) in the case of an obligor who is in arrears in child support payments to the obligee, any net income from excess employment must be used to pay the arrearages until the arrearages are paid in full.

(c) (d) A modification of support or maintenance may be made retroactive only with respect to any period during which the petitioning party has pending a motion for modification but only from the date of service of notice of the motion on the responding party and on the public authority if public assistance is being furnished or the county attorney is the attorney of record. However, modification may be applied to an earlier period if the court makes express findings that:

(1) the party seeking modification was precluded from serving a motion by reason of a significant physical or mental disability, a material misrepresentation of another party, or fraud upon the court and that the party seeking modification, when no longer precluded, promptly served a motion;

(2) the party seeking modification was a recipient of federal Supplemental Security Income (SSI), Title II Older Americans, Survivor's Disability Insurance (OASDI), other disability benefits, or public assistance based upon need during the period for which retroactive modification is sought; or

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(3) the order for which the party seeks amendment was entered by default, the party shows good cause for not appearing, and the record contains no factual evidence, or clearly erroneous evidence regarding the individual obligor's ability to pay.

The court may provide that a reduction in the amount allocated for child care expenses based on a substantial decrease in the expenses is effective as of the date the expenses decreased.

(d) (e) Except for an award of the right of occupancy of the homestead, provided in section 518.63, all divisions of real and personal property provided by section 518.58 shall be final, and may be revoked or modified only where the court finds the existence of conditions that justify reopening a judgment under the laws of this state, including motions under section 518.145, subdivision 2. The court may impose a lien or charge on the divided property at any time while the property, or subsequently acquired property, is owned by the parties or either of them, for the payment of maintenance or support money, or may sequester the property as is provided by section 518.24.

(e) (f) The court need not hold an evidentiary hearing on a motion for modification of maintenance or support.

(f) (g) Section 518.14 shall govern the award of attorney fees for motions brought under this subdivision.

Sec. 30. Minnesota Statutes 1996, section 518.641, subdivision 2, is amended to read:

Subd. 2. [CONDITIONS.] No adjustment under this section may be made unless the order provides for it and until the following conditions are met:

(a) the obligee or public authority serves notice of its the application for adjustment by mail on the obligor at the obligor's last known address at least 20 days before the effective date of the adjustment;

(b) the notice to the obligor informs the obligor of the date on which the adjustment in payments will become effective; and

(c) after receipt of notice and before the effective day of the adjustment, the obligor fails to request a hearing on the issue of whether the adjustment should take effect, and ex parte, to stay imposition of the adjustment pending outcome of the hearing; or

(d) the public authority sends notice of its application for adjustment to the obligor at the obligor's last known address at least 20 days before the effective date of the adjustment, and the notice informs the obligor of the date on which the adjustment will become effective and the procedures for contesting the adjustment according to section 518.5512.

Sec. 31. Minnesota Statutes 1996, section 609.375, is amended by adding a subdivision to read:

Subd. 7. [CONDITIONS OF WORK RELEASE; PROBATION VIOLATION.] Upon conviction under this section, a defendant may obtain work release only upon the imposition of an automatic income withholding order, and may be required to post a bond in avoidance of jail time and conditioned upon payment of all child support owed. Nonpayment of child support is a violation of any probation granted following conviction under subdivision 2a.

Sec. 32. [INDEPENDENT CONTRACTORS.]

The department of human services shall report to the chairs of the judiciary committees in the house of representatives and the senate by February 1, 1998, on the state's experience including independent contractors for the state in the work reporting system.

Sec. 33. [CHILD SUPPORT ON-TIME PERFORMANCE BONUS INCENTIVE PROGRAM.]

The commissioner shall develop a proposal for a bonus incentive program to reward timeliness of child support service delivery, including the establishment of orders, the modification of orders, and the administrative process. Special emphasis must be given to cases where timely delivery of services may divert families from public assistance or help families exit public assistance with minimal loss of time-limited public assistance benefits. The proposal must treat current federal law

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service delivery timelines as minimum standards and reward county agencies that surpass the minimum standards. Other methods to enhance timely service delivery may be considered. The commissioner shall consult with public assistance recipients and low-income nonpublic assistance recipients in developing the proposal. The commissioner shall report and make recommendations to the legislature by January 15, 1998.

Sec. 34. [REPEALER.]

Minnesota Statutes 1996, section 609.375, subdivisions 3, 4, and 6, are repealed.

Sec. 35. [EFFECTIVE DATES.]

Sections 16 and 25 are effective the day following final enactment.

ARTICLE 2

VISITATION

Section 1. Minnesota Statutes 1996, section 518.157, is amended to read:

518.157 [ORIENTATION PARENT EDUCATION PROGRAM IN PROCEEDINGS INVOLVING CHILDREN.]

Subdivision 1. [IMPLEMENTATION; ADMINISTRATION.] By January 1, 1998, the chief judge of each judicial district or a designee shall implement one or more parent education programs within the judicial district for the purpose of educating parents about the impact that divorce, the restructuring of families, and judicial proceedings have upon children and families; methods for preventing visitation conflicts; and dispute resolution options. The chief judge of each judicial district or a designee may require that children attend a separate education program designed to deal with the impact of divorce upon children as part of the parent education program. Each parent education program must enable persons to have timely and reasonable access to education sessions.

Subd. 2. [MINIMUM STANDARDS; PLAN.] The Minnesota supreme court should promulgate minimum standards for the implementation and administration of a parent education program. The chief judge of each judicial district or a designee shall submit a plan to the Minnesota conference of chief judges for their approval that is designed to implement and administer a parent education program in the judicial district. The plan must be consistent with the minimum standards promulgated by the Minnesota supreme court.

Subd. 3. [ATTENDANCE.] In a proceeding under this chapter involving custody, support, or visitation of children, the court may require the parties to or sections 257.51 to 257.75 where custody or visitation is contested, the parents of a minor child shall attend an orientation and education program regarding the proceedings and the impact on the children. that meets the minimum standards promulgated by the Minnesota supreme court. In all other proceedings involving custody, support, or visitation the court may order the parents of a minor child to attend a parent education program. The program shall provide the court with names of persons who fail to attend the parent education program as ordered by the court. Persons who are separated or contemplating involvement in a dissolution, paternity, custody, or visitation proceeding may attend a parent education program without a court order. Participation in a parent education program must occur as early as possible. Parent education programs must offer an opportunity to participate at all phases of a pending or postdecree proceeding. Upon request of a party and a showing of good cause, the court shall may excuse the party from attending the program. Parties may be required to pay a fee to cover the cost of the program, except that if a party is entitled to proceed in forma pauperis under section 563.01, the court shall waive the fee or direct its payment under section 563.01. If past or present domestic abuse, as defined in chapter 518B, is alleged, the court may shall not require the parties to attend the same orientation session parent education sessions and shall enter an order setting forth the manner in which the parties may safely participate in the program.

Subd. 4. [SANCTIONS.] The court may impose sanctions upon a parent for failure to attend or complete a parent education program as ordered.

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Subd. 5. [CONFIDENTIALITY.] Unless all parties agree in writing, statements made by a party during participation in a parent education program are inadmissible as evidence for any purpose, including impeachment. No record may be made regarding a party's participation in a parent education program, except a record of attendance at and completion of the program as required under this section. Instructors shall not disclose information regarding an individual participant obtained as a result of participation in a parent education program. Parent education instructors may not be subpoenaed or called as witnesses in court proceedings.

Subd. 6. [FEE.] Except as provided in this subdivision, each person who attends a parent education program shall pay a fee to defray the cost of the program. A party who qualifies for waiver of filing fees under section 563.01 is exempt from paying the parent education program fee and the court shall waive the fee or direct its payment under section 563.01. Program providers shall implement a sliding fee scale.

Sec. 2. Minnesota Statutes 1996, section 518.175, subdivision 6, is amended to read:

Subd. 6. [REMEDIES.] (a) The court may provide for one or more of the following remedies for denial of or interference with court-ordered visitation as provided under this subdivision. All visitation orders must include notice of the provisions of this subdivision.

(b) If the court finds that a person has been wrongfully deprived of the duly established right to court-ordered visitation, the court shall order the custodial parent to permit additional visits to compensate for the visitation of which the person was deprived or the court shall make specific findings as to why a request for compensatory visitation is denied. If compensatory visitation is awarded, additional visits must be:

(1) at least of the same type and duration as the wrongfully denied deprived visit and, at the discretion of the court, may be in excess of or of a different type than the deprived visit;

(2) taken within one year after the wrongfully denied deprived visit; and

(3) at a time acceptable to the person deprived of visitation.

(c) If the court finds that a party has wrongfully failed to comply with a visitation order or a binding agreement or decision under section 518.1751, the court may:

(1) impose a civil penalty of up to $500 on the party; or

(2) require the party to post a bond with the court for a specified period of time to secure the party's compliance.;

(3) award reasonable attorney's fees and costs;

(4) require the party who violated the visitation order or binding agreement or decision of the visitation expeditor to reimburse the other party for costs incurred as a result of the violation of the order or agreement or decision; or

(5) award any other remedy that the court finds to be in the best interests of the children involved.

A civil penalty imposed under this paragraph must be deposited in the county general fund and must be used to fund the costs of a visitation expeditor program in a county with this program. In other counties, the civil penalty must be deposited in the state general fund.

(d) If the court finds that a party has been denied visitation and has incurred expenses in connection with the denied visitation, the court may require the party who denied visitation to post a bond in favor of the other party in the amount of prepaid expenses associated with an upcoming planned visitation.

(e) Proof of an unwarranted denial of or interference with duly established visitation may constitute contempt of court and may be sufficient cause for reversal of custody.

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Sec. 3. Minnesota Statutes 1996, section 518.1751, is amended to read:

518.1751 [VISITATION DISPUTE RESOLUTION.]

Subdivision 1. [VISITATION EXPEDITOR.] (a) Upon request of either party, the parties' stipulation, or upon the court's own motion, the court may appoint a visitation expeditor to resolve visitation disputes that occur under a visitation order while a matter is pending under this chapter, chapter 257 or 518A, or after a decree is entered. Prior to appointing the visitation expeditor, the court shall give the parties notice that the costs of the visitation expeditor will be apportioned among the parties and that if the parties do not reach an agreement, the visitation expeditor will make a nonbinding decision resolving the dispute.

Subd. 1a. [EXCEPTIONS.] A party may not be required to refer a visitation dispute to a visitation expeditor under this section if:

(1) one of the parties claims to be the victim of domestic abuse by the other party;

(2) the court determines there is probable cause that one of the parties or a child of the parties has been physically abused or threatened with physical abuse by the other party; or

(3) the party is unable to pay the costs of the expeditor, as provided under subdivision 2a.

If the court is satisfied that the parties have been advised by counsel and have agreed to use the visitation expeditor process and the process does not involve face-to-face meeting of the parties, the court may direct that the visitation expeditor process be used.

Subd. 1b. [PURPOSE; DEFINITIONS.] (a) The purpose of a visitation expeditor is to resolve visitation disputes by enforcing, interpreting, clarifying, and addressing circumstances not specifically addressed by an existing visitation order and, if appropriate, to make a determination as to whether the existing visitation order has been violated. A visitation expeditor may be appointed to resolve a one-time visitation dispute or to provide ongoing visitation dispute resolution services.

(b) For purposes of this section, "visitation dispute" means a disagreement among parties about visitation with a child, including a dispute about an anticipated denial of a future scheduled visit. "Visitation dispute" includes a claim by a custodial parent that a noncustodial parent is not visiting a child as well as a claim by a noncustodial parent that a custodial parent is denying or interfering with visitation.

(c) A "visitation expeditor" is a neutral person authorized to use a mediation-arbitration process to resolve visitation disputes. A visitation expeditor shall attempt to resolve a visitation dispute by facilitating negotiations between the parties to promote settlement and, if it becomes apparent that the dispute cannot be resolved by an agreement of the parties, the visitation expeditor shall make a decision resolving the dispute.

Subd. 2. [APPOINTMENT; COSTS.] The court shall appoint the visitation expeditor and indicate the term of the appointment. If the parties cannot agree on a visitation expeditor, the court shall present a list of candidates with one more candidate than there are parties to the dispute. In developing the list of candidates, the court must give preference (a) The parties may stipulate to the appointment of a visitation expeditor or a team of two expeditors without appearing in court by submitting to the court a written agreement identifying the names of the individuals to be appointed by the court; the nature of the dispute; the responsibilities of the visitation expeditor, including whether the expeditor is appointed to resolve a specific issue or on an ongoing basis; the term of the appointment; and the apportionment of fees and costs. The court shall review the agreement of the parties.

(b) If the parties cannot agree on a visitation expeditor, the court shall provide to the parties a copy of the court administrator's roster of visitation expeditors and require the parties to exchange the names of three potential visitation expeditors by a specific date. If after exchanging names the parties are unable to agree upon a visitation expeditor, the court shall select the visitation expeditor and, in its discretion, may appoint one expeditor or a team of two visitation expeditors. In the selection process the court must give consideration to the financial circumstances of the parties and the fees of those

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being considered as visitation expeditors. Preference must be given to persons who agree to volunteer their services or who will charge a variable fee for services based on the ability of the parties to pay for them. Each party shall strike one name and the court shall appoint the remaining individual as the visitation expeditor. In its order appointing the visitation expeditor, the court shall apportion the costs of the visitation expeditor among the parties, with each party bearing the portion of costs that the court determines is just and equitable under the circumstances. If a party files a pro se motion regarding a visitation dispute and there is not a court order that provides for apportionment of the costs of an expeditor, the court administrator may require the party requesting the appointment of an expeditor to pay the costs of the expeditor in advance. Neither party may be required to submit a dispute to a visitation expeditor if the party cannot afford to pay for the costs of an expeditor and an affordable expeditor is not available, unless the other party agrees to pay the costs. After costs are incurred, a party may by motion request that the costs be reapportioned on equitable grounds. The court may consider the resources of the parties, the nature of the dispute, and whether a party acted in bad faith. The court may consider information from the expeditor in determining bad faith.

(c) An order appointing a visitation expeditor must identify the name of the individual to be appointed, the nature of the dispute, the responsibilities of the visitation expeditor including whether the expeditor is appointed to resolve a specific issue or on an ongoing basis, the term of the appointment, the apportionment of fees, and notice that if the parties are unable to reach an agreement with the assistance of the visitation expeditor, the visitation expeditor is authorized to make a decision resolving the dispute which is binding upon the parties unless modified or vacated by the court.

Subd. 2a. [FEES.] Prior to appointing the visitation expeditor, the court shall give the parties notice that the fees of the visitation expeditor will be apportioned among the parties. In its order appointing the visitation expeditor, the court shall apportion the fees of the visitation expeditor among the parties, with each party bearing the portion of fees that the court determines is just and equitable under the circumstances. If a party files a pro se motion regarding a visitation dispute and there is not a court order that provides for apportionment of the fees of an expeditor, the court administrator may require the party requesting the appointment of an expeditor to pay the fees of the expeditor in advance. Neither party may be required to submit a dispute to a visitation expeditor if the party cannot afford to pay for the fees of an expeditor and an affordable expeditor is not available, unless the other party agrees to pay the fees. After fees are incurred, a party may by motion request that the fees be reapportioned on equitable grounds. The court may consider the resources of the parties, the nature of the dispute, and whether a party acted in bad faith. The court may consider information from the expeditor in determining bad faith.

Subd. 2b. [ROSTER OF VISITATION EXPEDITORS.] Each court administrator shall maintain and make available to the public and judicial officers a roster of individuals available to serve as visitation expeditors, including each individual's name, address, telephone number, and fee charged, if any. A court administrator shall not place on the roster the name of an individual who has not completed the training required in subdivision 2c. If the use of a visitation expeditor is initiated by stipulation of the parties, the parties may agree upon a person to serve as a visitation expeditor even if that person has not completed the training described in subdivision 2c. The court may appoint a person to serve as a visitation expeditor even if the person is not on the court administrator's roster, but may not appoint a person who has not completed the training described in subdivision 2c, unless so stipulated by the parties. To maintain one's listing on a court administrator's roster of visitation expeditors, an individual shall annually submit to the court administrator proof of completion of continuing education requirements.

Subd. 2c. [TRAINING AND CONTINUING EDUCATION REQUIREMENTS.] To qualify for listing on a court administrator's roster of visitation expeditors, an individual shall complete a minimum of 40 hours of family mediation training that has been certified by the Minnesota supreme court, which must include certified training in domestic abuse issues as required under Rule 114 of the Minnesota General Rules of Practice for the District Courts. To maintain one's listing on a court administrator's roster of visitation expeditors, an individual shall annually attend three hours of continuing education about alternative dispute resolution subjects.

Subd. 3. [AGREEMENT OR DECISION.] (a) If a visitation dispute arises Within five days of notice of the appointment, or within five days of notice of a subsequent visitation dispute between the same parties, the visitation expeditor shall meet with the parties together or separately within five days and shall make a diligent effort to facilitate an agreement to resolve the visitation dispute. If a visitation dispute requires immediate resolution, the visitation expeditor may confer with the parties through a telephone conference or similar means. An expeditor may make a decision without conferring with a party if the expeditor made a good faith effort to confer with the party, but the party chose not to participate in resolution of the dispute.

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(b) If the parties do not reach an agreement, the expeditor shall make a decision resolving the dispute as soon as possible but not later than five days after receiving all information necessary to make a decision and after the final meeting or conference with the parties. Resolution of a dispute may include The visitation expeditor is authorized to award compensatory visitation under section 518.175, subdivision 6., and may recommend to the court that the noncomplying party pay attorney's fees, court costs, and other costs under section 518.175, subdivision 6, paragraph (d), if the visitation order has been violated. The visitation expeditor shall not lose authority to make a decision if circumstances beyond the visitation expeditor's control make it impracticable to meet the five-day timelines.

(c) Unless the parties mutually agree, the visitation expeditor may shall not make a decision that modifies visitation rights ordered by the court. is inconsistent with an existing visitation order, but may make decisions interpreting or clarifying a visitation order, including the development of a specific schedule when the existing court order grants "reasonable visitation."

(d) The expeditor shall put an agreement or decision in writing, and provide a copy to the parties, and file a copy with the court. The visitation expeditor may include or omit reasons for the agreement or decision. An agreement of the parties or a decision of the visitation expeditor is binding on the parties unless vacated or modified by the court. If a party does not comply with an agreement of the parties or a decision of the expeditor, any party may bring a motion with the court to resolve the dispute and shall attach a copy of the parties' written agreement or decision of the expeditor. The court may consider enforce, modify, or vacate the agreement of the parties or the decision of the expeditor, but neither is binding on the court.

Subd. 4. [OTHER AGREEMENTS.] This section does not preclude the parties from voluntarily agreeing to submit their visitation dispute to a neutral third party or from otherwise resolving visitation disputes on a voluntary basis.

Subd. 4a. [CONFIDENTIALITY.] (a) Statements made and documents produced as part of the visitation expeditor process which are not otherwise discoverable are not subject to discovery or other disclosure and are not admissible into evidence for any purpose at trial or in any other proceeding, including impeachment.

(b) Sworn testimony may be used in subsequent proceedings for any purpose for which it is admissible under the rules of evidence. Visitation expeditors, and lawyers for the parties to the extent of their participation in the visitation expeditor process, must not be subpoenaed or called as witnesses in court proceedings.

(c) Notes, records, and recollections of visitation expeditors are confidential and must not be disclosed to the parties, the public, or anyone other than the visitation expeditor unless:

(1) all parties and the visitation expeditor agree in writing to the disclosure; or

(2) disclosure is required by law or other applicable professional codes.

Notes and records of visitation expeditors must not be disclosed to the court unless after a hearing the court determines that the notes or records should be reviewed in camera. Those notes or records must not be released by the court unless it determines that they disclose information showing illegal violation of the criminal law of the state.

Subd. 5. [IMMUNITY.] A visitation expeditor is immune from civil liability for actions taken or not taken when acting under this section.

Subd. 5a. [REMOVAL.] If a visitation expeditor has been appointed on a long-term basis, a party or the visitation expeditor may file a motion seeking to have the expeditor removed for good cause shown.

Subd. 6. [MANDATORY VISITATION DISPUTE RESOLUTION.] (a) Subject to subdivision 7 1a, a judicial district may establish a mandatory visitation dispute resolution program as provided in this subdivision. In a district where a program has been established, parties may be required to submit visitation disputes to a visitation expeditor as a prerequisite to a motion on the dispute being heard by the court, or either party may submit the dispute to a visitation expeditor. A party may file a motion with the court for purposes of obtaining a court date, if necessary, but a hearing may not be held until resolution of the dispute with the visitation expeditor. The appointment of a visitation expeditor must be in accordance with subdivision 2. Visitation expeditor fees must be paid in accordance with subdivision 2a.

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(b) If a visitation expeditor has not been previously appointed for the parties under subdivision 1 and the parties cannot agree on a visitation expeditor, the court or court administrator shall appoint a visitation expeditor from a list of candidates established by the judicial district, giving preference to candidates who agree to volunteer their services or charge a variable fee based on the ability of the parties to pay.

(c) Notwithstanding subdivision 1, an agreement of the parties or decision of the visitation expeditor under this subdivision is binding on the parties unless vacated or modified by the court. The expeditor shall put the agreement or decision in writing, provide a copy to the parties, and file a copy with the court. The court may consider the agreement of the parties or the decision of the expeditor, but neither is binding on the court.

Subd. 7. [EXCEPTIONS.] A party may not be required to refer a visitation dispute to a visitation expeditor under this section if:

(1) the party has obtained an order for protection under chapter 518B against the other party; or

(2) the party is unable to pay the costs of the expeditor, as provided under subdivision 2.

Sec. 4. Minnesota Statutes 1996, section 518.179, subdivision 1, is amended to read:

Subdivision 1. [SEEKING CUSTODY OR VISITATION.] Notwithstanding any contrary provision in section 518.17 or 518.175, if a person seeking child custody or visitation has been convicted of a crime described in subdivision 2, the person seeking custody or visitation has the burden to prove that custody or visitation by that person is in the best interests of the child if:

(1) the conviction occurred within the preceding five years;

(2) the person is currently incarcerated, on probation, or under supervised release for the offense; or

(3) the victim of the crime was a family or household member as defined in section 518B.01, subdivision 2.

If this section applies, the court may not grant custody or visitation to the person unless it finds that the custody or visitation is in the best interests of the child. If the victim of the crime was a family or household member, the standard of proof is clear and convincing evidence. A guardian ad litem must be appointed in any case where this section applies.

Sec. 5. Minnesota Statutes 1996, section 518.195, is amended to read:

518.195 [PILOT PROJECT SUMMARY DISSOLUTION PROCESS.]

Subdivision 1. [CRITERIA.] In the counties selected under subdivision 4, A couple desirous of dissolving their marriage may use the streamlined procedure in this section if:

(1) no living minor children have been born to or adopted by the parties before or during the marriage, unless someone other than the husband has been adjudicated the father;

(2) the wife is not pregnant;

(3) they have been married fewer than five eight years as of the date they file their joint declaration;

(4) neither party owns any real estate;

(5) there are no unpaid debts in excess of $5,000 $8,000 incurred by either or both of the parties during the marriage, excluding encumbrances on automobiles;

(6) the total fair market value of the marital assets does not exceed $25,000, including net equity on automobiles;

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(7) neither party has nonmarital assets in excess of $25,000; and

(8) neither party has been a victim of domestic abuse by the other.

Subd. 2. [PROCEDURE.] A couple qualifying under all of the criteria in subdivision 1, may obtain a judgment and decree by:

(1) filing a sworn joint declaration, on which both of their signatures must be notarized, containing or appending the following information:

(i) the demographic data required in section 518.10;

(ii) verifying the qualifications set forth in subdivision 1;

(iii) listing each party's nonmarital property;

(iv) setting forth how the marital assets and debts will be apportioned;

(v) verifying both parties' income and preserving their rights to spousal maintenance; and

(vi) certifying that there has been no domestic abuse of one party by the other; and

(2) viewing any introductory and summary process educational videotapes, if then available from the court, and certifying that they watched any such tapes within the 30 days preceding the filing of the joint declaration.

The district court administrator shall enter a decree of dissolution 30 days after the filing of the joint declaration if the parties meet the statutory qualifications and have complied with the procedural requirements of this subdivision.

Subd. 3. [FORMS.] The state court administrator shall develop simplified forms and instructions for the summary process within 120 days of July 1, 1991. District court administrators shall make the forms for the summary process available upon request and shall accept joint declarations for filing 180 days after July 1, 1991 on and after July 1, 1997.

Subd. 4. [PILOT PROGRAM.] The state court administrator shall designate no more than five counties in at least three different judicial districts as pilot jurisdictions for testing the streamlined process. District court administrators shall make the forms for the summary process available upon request to appropriate residents of the pilot jurisdictions.

Sec. 6. Minnesota Statutes 1996, section 518.68, subdivision 2, is amended to read:

Subd. 2. [CONTENTS.] The required notices must be substantially as follows:

IMPORTANT NOTICE

1. PAYMENTS TO PUBLIC AGENCY

Pursuant to Minnesota Statutes, section 518.551, subdivision 1, payments ordered for maintenance and support must be paid to the public agency responsible for child support enforcement as long as the person entitled to receive the payments is receiving or has applied for public assistance or has applied for support and maintenance collection services. MAIL PAYMENTS TO:

2. DEPRIVING ANOTHER OF CUSTODIAL OR PARENTAL RIGHTS -- A FELONY

A person may be charged with a felony who conceals a minor child or takes, obtains, retains, or fails to return a minor child from or to the child's parent (or person with custodial or visitation rights), pursuant to Minnesota Statutes, section 609.26. A copy of that section is available from any district court clerk.

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3. RULES OF SUPPORT, MAINTENANCE, VISITATION

(a) Payment of support or spousal maintenance is to be as ordered, and the giving of gifts or making purchases of food, clothing, and the like will not fulfill the obligation.

(b) Payment of support must be made as it becomes due, and failure to secure or denial of rights of visitation is NOT an excuse for nonpayment, but the aggrieved party must seek relief through a proper motion filed with the court.

(c) Nonpayment of support is not grounds to deny visitation. The party entitled to receive support may apply for support and collection services, file a contempt motion, or obtain a judgment as provided in Minnesota Statutes, section 548.091.

(d) The payment of support or spousal maintenance takes priority over payment of debts and other obligations.

(e) A party who accepts additional obligations of support does so with the full knowledge of the party's prior obligation under this proceeding.

(f) Child support or maintenance is based on annual income, and it is the responsibility of a person with seasonal employment to budget income so that payments are made throughout the year as ordered.

(g) If there is a layoff or a pay reduction, support may be reduced as of the time of the layoff or pay reduction if a motion to reduce the support is served and filed with the court at that time, but any such reduction must be ordered by the court. The court is not permitted to reduce support retroactively, except as provided in Minnesota Statutes, section 518.64, subdivision 2, paragraph (c).

(h) Reasonable visitation guidelines are contained in Appendix B, which is available from the court administrator.

4. PARENTAL RIGHTS FROM MINNESOTA STATUTES, SECTION 518.17, SUBDIVISION 3

Unless otherwise provided by the Court:

(a) Each party has the right of access to, and to receive copies of, school, medical, dental, religious training, and other important records and information about the minor children. Each party has the right of access to information regarding health or dental insurance available to the minor children. Presentation of a copy of this order to the custodian of a record or other information about the minor children constitutes sufficient authorization for the release of the record or information to the requesting party.

(b) Each party shall keep the other informed as to the name and address of the school of attendance of the minor children. Each party has the right to be informed by school officials about the children's welfare, educational progress and status, and to attend school and parent teacher conferences. The school is not required to hold a separate conference for each party.

(c) In case of an accident or serious illness of a minor child, each party shall notify the other party of the accident or illness, and the name of the health care provider and the place of treatment.

(d) Each party has the right of reasonable access and telephone contact with the minor children.

5. WAGE AND INCOME DEDUCTION OF SUPPORT AND MAINTENANCE

Child support and/or spousal maintenance may be withheld from income, with or without notice to the person obligated to pay, when the conditions of Minnesota Statutes, sections 518.611 and 518.613, have been met. A copy of those sections is available from any district court clerk.

6. CHANGE OF ADDRESS OR RESIDENCE

Unless otherwise ordered, the person responsible to make support or maintenance payments shall notify the person entitled to receive the payment and the public authority responsible for collection, if applicable, of a change of address or residence within 60 days of the address or residence change.

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7. COST OF LIVING INCREASE OF SUPPORT AND MAINTENANCE

Child support and/or spousal maintenance may be adjusted every two years based upon a change in the cost of living (using Department of Labor Consumer Price Index .........., unless otherwise specified in this order) when the conditions of Minnesota Statutes, section 518.641, are met. Cost of living increases are compounded. A copy of Minnesota Statutes, section 518.641, and forms necessary to request or contest a cost of living increase are available from any district court clerk.

8. JUDGMENTS FOR UNPAID SUPPORT

If a person fails to make a child support payment, the payment owed becomes a judgment against the person responsible to make the payment by operation of law on or after the date the payment is due, and the person entitled to receive the payment or the public agency may obtain entry and docketing of the judgment WITHOUT NOTICE to the person responsible to make the payment under Minnesota Statutes, section 548.091. Interest begins to accrue on a payment or installment of child support whenever the unpaid amount due is greater than the current support due, pursuant to Minnesota Statutes, section 548.091, subdivision 1a.

9. JUDGMENTS FOR UNPAID MAINTENANCE

A judgment for unpaid spousal maintenance may be entered when the conditions of Minnesota Statutes, section 548.091, are met. A copy of that section is available from any district court clerk.

10. ATTORNEY FEES AND COLLECTION COSTS FOR ENFORCEMENT OF CHILD SUPPORT

A judgment for attorney fees and other collection costs incurred in enforcing a child support order will be entered against the person responsible to pay support when the conditions of section 518.14, subdivision 2, are met. A copy of section 518.14 and forms necessary to request or contest these attorney fees and collection costs are available from any district court clerk.

11. VISITATION EXPEDITOR PROCESS

On request of either party or on its own motion, the court may appoint a visitation expeditor to resolve visitation disputes under Minnesota Statutes, section 518.1751. A copy of that section and a description of the expeditor process is available from any district court clerk.

12. VISITATION REMEDIES AND PENALTIES

Remedies and penalties for the wrongful denial of visitation rights are available under Minnesota Statutes, section 518.175, subdivision 6. These include compensatory visitation; civil penalties; bond requirements; contempt; and reversal of custody. A copy of that subdivision and forms for requesting relief are available from any district court clerk.

Sec. 7. Minnesota Statutes 1996, section 519.05, is amended to read:

519.05 [LIABILITY OF HUSBAND AND WIFE.]

(a) A spouse is not liable to a creditor for any debts of the other spouse, except for necessaries furnished to the other after marriage, where the spouse would be liable at common law. Where husband and wife are living together, they shall be jointly and severally liable for all necessary household articles and supplies furnished to and used by the family. Notwithstanding this paragraph, in a proceeding under chapter 518 the court may apportion such debt between the spouses.

(b) Either spouse may close a credit card account or other unsecured consumer line of credit on which both spouses are contractually liable, by giving written notice to the creditor.

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Sec. 8. Minnesota Statutes 1996, section 626.556, subdivision 2, is amended to read:

Subd. 2. [DEFINITIONS.] As used in this section, the following terms have the meanings given them unless the specific content indicates otherwise:

(a) "Sexual abuse" means the subjection of a child by a person responsible for the child's care, by a person who has a significant relationship to the child, as defined in section 609.341, or by a person in a position of authority, as defined in section 609.341, subdivision 10, to any act which constitutes a violation of section 609.342, 609.343, 609.344, or 609.345. Sexual abuse also includes any act which involves a minor which constitutes a violation of sections 609.321 to 609.324 or 617.246. Sexual abuse includes threatened sexual abuse.

(b) "Person responsible for the child's care" means (1) an individual functioning within the family unit and having responsibilities for the care of the child such as a parent, guardian, or other person having similar care responsibilities, or (2) an individual functioning outside the family unit and having responsibilities for the care of the child such as a teacher, school administrator, or other lawful custodian of a child having either full-time or short-term care responsibilities including, but not limited to, day care, babysitting whether paid or unpaid, counseling, teaching, and coaching.

(c) "Neglect" means failure by a person responsible for a child's care to supply a child with necessary food, clothing, shelter or medical care when reasonably able to do so, failure to protect a child from conditions or actions which imminently and seriously endanger the child's physical or mental health when reasonably able to do so, or failure to take steps to ensure that a child is educated in accordance with state law. Nothing in this section shall be construed to mean that a child is neglected solely because the child's parent, guardian, or other person responsible for the child's care in good faith selects and depends upon spiritual means or prayer for treatment or care of disease or remedial care of the child in lieu of medical care; except that a parent, guardian, or caretaker, or a person mandated to report pursuant to subdivision 3, has a duty to report if a lack of medical care may cause serious danger to the child's health. This section does not impose upon persons, not otherwise legally responsible for providing a child with necessary food, clothing, shelter, education, or medical care, a duty to provide that care. Neglect includes prenatal exposure to a controlled substance, as defined in section 253B.02, subdivision 2, used by the mother for a nonmedical purpose, as evidenced by withdrawal symptoms in the child at birth, results of a toxicology test performed on the mother at delivery or the child at birth, or medical effects or developmental delays during the child's first year of life that medically indicate prenatal exposure to a controlled substance. Neglect also means "medical neglect" as defined in section 260.015, subdivision 2a, clause (5).

(d) "Physical abuse" means any physical or mental injury, or threatened injury, inflicted by a person responsible for the child's care on a child other than by accidental means, or any physical or mental injury that cannot reasonably be explained by the child's history of injuries, or any aversive and deprivation procedures that have not been authorized under section 245.825.

(e) "Report" means any report received by the local welfare agency, police department, or county sheriff pursuant to this section.

(f) "Facility" means a day care facility, residential facility, agency, hospital, sanitarium, or other facility or institution required to be licensed pursuant to sections 144.50 to 144.58, 241.021, or 245A.01 to 245A.16.

(g) "Operator" means an operator or agency as defined in section 245A.02.

(h) "Commissioner" means the commissioner of human services.

(i) "Assessment" includes authority to interview the child, the person or persons responsible for the child's care, the alleged perpetrator, and any other person with knowledge of the abuse or neglect for the purpose of gathering the facts, assessing the risk to the child, and formulating a plan.

(j) "Practice of social services," for the purposes of subdivision 3, includes but is not limited to employee assistance counseling and the provision of guardian ad litem and visitation expeditor services.

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(k) "Mental injury" means an injury to the psychological capacity or emotional stability of a child as evidenced by an observable or substantial impairment in the child's ability to function within a normal range of performance and behavior with due regard to the child's culture.

(l) "Threatened injury" means a statement, overt act, condition, or status that represents a substantial risk of physical or sexual abuse or mental injury.

Sec. 9. Minnesota Statutes 1996, section 631.52, subdivision 1, is amended to read:

Subdivision 1. [SUSPENSION OF VISITATION RIGHTS; TRANSFER OF CUSTODY.] (a) If a person who has court-ordered custody of a child or visitation rights is convicted of a crime listed in subdivision 2 and if no action is pending regarding custody or visitation, the sentencing court shall refer the matter to the appropriate family court for action under this section. The family court shall:

(1) grant temporary custody to the noncustodial parent, unless it finds that another custody arrangement is in the best interests of the child; or

(2) suspend visitation rights, unless it finds that visitation with the convicted person is in the best interests of the child.

The family court shall expedite proceedings under this section. The defendant has the burden of proving that continued custody or visitation with the defendant is in the best interests of the child. If the victim of the crime was a family or household member as defined in section 518B.01, subdivision 2, the standard of proof is clear and convincing evidence. A guardian ad litem must be appointed in any case to which this section applies.

(b) If a person who has child custody or visitation rights was convicted of a crime listed in subdivision 2 before July 1, 1990, then any interested party may petition the sentencing court for relief under paragraph (a) if:

(1) the defendant is currently incarcerated, on probation, or under supervised release for the offense; or

(2) the victim of the crime was a family or household member as defined in section 518B.01, subdivision 2.

Sec. 10. [COOPERATION FOR THE CHILDREN PROGRAM.]

Subdivision 1. [ESTABLISHMENT; PILOT PROJECT.] Within the limits of funding provided, by January 1, 1998, the state court administrator shall develop and implement a cooperation for the children program as a 24-month pilot project in at least two counties as an effort to promote parental relationships with children. The state court administrator may allow additional counties to participate in the pilot project if those counties provide their own funding or if other funding becomes available. The provisions of Minnesota Statutes, section 518.1751, subdivision 6, pertaining to mandatory visitation dispute resolution programs, do not apply to counties participating in the cooperation for the children program pilot project.

Subd. 2. [PARTICIPATION.] (a) Except as provided in this subdivision, in cases where visitation is the sole issue in conflict, the person seeking relief in regard to a visitation dispute must first seek assistance from the cooperation for the children program before filing with the court or serving upon the other party a motion requesting a court hearing.

(b) An individual who submits to the program proof that the person has used, or in good faith has attempted to use, the services of a visitation expeditor or mediator or other alternative dispute resolution process to resolve the visitation dispute may, upon request to the program, be exempted from mandatory participation in the cooperation for the children program and the person may seek assistance from the court by filing a motion requesting a hearing.

(c) In cases where visitation is not the only issue in conflict, the person seeking relief may either file with the court a motion seeking resolution of all issues or may seek resolution of the visitation issue with the cooperation for the children program and resolution of the other issues with the court. In cases where the person seeking relief chooses to proceed in court, the court may determine whether the nonvisitation issues are or are not valid. If the court determines that the nonvisitation issues are not valid or that the nonvisitation issues were raised for the purpose of avoiding participation in the cooperation for the children program, the court may order the parties to participate in the cooperation for the children program or may resolve the dispute if both parties are present.

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Subd. 3. [FEE.] Except as provided in this subdivision, a person who participates in the cooperation for the children program shall pay a fee to defray the cost of the program. A party who qualifies for waiver of filing fees under Minnesota Statutes, section 563.01, is exempt from paying the program fee and the court shall waive the fee or direct its payment under Minnesota Statutes, section 563.01. Program providers shall implement a sliding fee scale.

Subd. 4. [EVALUATION.] By December 15, 1999, the state court administrator shall submit to the legislature a report evaluating the cooperation for the children program pilot project based on at least 12 months of data from the project.

Sec. 11. [FEDERAL FUNDS FOR VISITATION AND ACCESS.]

The commissioner of human services may accept on behalf of the state any federal funding received under Public Law Number 104-193 for access and visitation programs, and shall transfer these funds to the state court administrator for the cooperation for the children pilot project and the parent education program under Minnesota Statutes, section 518.571.

Sec. 12. [REPEALER.]

Minnesota Statutes 1996, section 256.996, is repealed.

Sec. 13. [EFFECTIVE DATE.]

Section 11 is effective the day following final enactment.

ARTICLE 3

TECHNICAL AND CONFORMING AMENDMENTS

Section 1. 1997 S. F. No. 1908, article 6, section 3, subdivision 1, if enacted, is amended to read:

Subdivision 1. [DEFINITIONS.] The definitions in this subdivision apply to this section.

(a) "Account" means a demand deposit account, checking or negotiable withdraw order account, savings account, time deposit account, or money market mutual fund.

(b) "Account information" means the type of account, the account number, whether the account is singly or jointly owned, and in the case of jointly owned accounts the name and address of the nonobligor account owner if available.

(c) "Financial institution" means any of the following that do business within the state:

(1) federal or state commercial banks and federal or state savings banks, including savings and loan associations and cooperative banks;

(2) federal and state chartered credit unions;

(3) benefit associations;

(4) life insurance companies;

(5) safe deposit companies; and

(6) money market mutual funds.

(d) "Obligor" means an individual who is in arrears in court-ordered child support or maintenance payments, or both, in an amount equal to or greater than three times the obligor's total monthly support and maintenance payments, and is not in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority.

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(e) "Public authority" means the public authority responsible for child support enforcement.

Sec. 2. 1997 S. F. No. 1908, article 6, section 3, subdivision 4, if enacted, is amended to read:

Subd. 4. [METHOD TO PROVIDE DATA.] To comply with the requirements of this section, a financial institution may either:

(1) provide to the public authority a list containing only the names and other necessary personal identifying information of all account holders for the public authority to compare against its list of child support obligors for the purpose of identifying which obligors maintain an account at the financial institution; the names of the obligors who maintain an account at the institution shall then be transmitted to the financial institution which shall provide the public authority with account information on those obligors; or

(2) obtain a list of child support obligors from the public authority and compare that data to the data maintained at the financial institution to identify which of the identified obligors maintains an account at the financial institution.

A financial institution shall elect either method in writing upon written request of the public authority, and the election remains in effect unless the public authority agrees in writing to a change.

The commissioner shall keep track of the number of financial institutions that elect to report under clauses (1) and (2) respectively and shall report this information to the legislature by December 1, 1999.

Sec. 3. 1997 S. F. No. 1908, article 6, section 3, subdivision 6, if enacted, is amended to read:

Subd. 6. [ACCESS TO DATA.] (a) With regard to account information on all account holders provided by a financial institution under subdivision 4, clause (1), the commissioner of human services shall retain the reported information only until the account information is compared against the public authority's obligor database. Notwithstanding section 138.17, all account information that does not pertain to an obligor listed in the public authority's database must be immediately discarded, and no retention or publication may be made of that data by the public authority. All account information that does pertain to an obligor listed in the public authority's database must be incorporated into the public authority's database. Access to that data is governed by chapter 13. Notwithstanding section 16D.06, data collected pursuant to this chapter is available for the collection of child support debt only and is not available for other debt collection activities undertaken by the state under chapter 16D.

(b) With regard to data on obligors provided by the public authority to a financial institution under subdivision 4, clause (2), the financial institution shall retain the reported information only until the financial institution's database is compared against the public authority's database. Data that do not pertain to an account holder at the financial institution must be immediately discarded, and no retention or publication may be made of that data by the financial institution.

Sec. 4. 1997 S. F. No. 1908, article 6, section 3, subdivision 10, if enacted, is amended to read:

Subd. 10. [CIVIL ACTION FOR UNAUTHORIZED DISCLOSURE BY FINANCIAL INSTITUTION.] (a) An account holder may bring a civil action in district court against a financial institution for unauthorized disclosure of data received from the public authority under subdivision 4, clause (2). A financial institution found to have violated this subdivision shall be liable as provided in paragraph (b) or (c).

(b) Any financial institution that willfully and maliciously discloses data received from the public authority under subdivision 4 is liable to that account holder in an amount equal to the sum of:

(1) any actual damages sustained by the consumer account holder as a result of the disclosure; and

(2) in the case of any successful action to enforce any liability under this section, the costs of the action taken plus reasonable attorney's fees as determined by the court.

(c) Any financial institution that negligently discloses data received from the public authority under subdivision 4 is liable to that account holder in an amount equal to any actual damages sustained by the account holder as a result of the disclosure.

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(d) A financial institution may not be held liable in any action brought under this subdivision if the financial institution shows, by a preponderance of evidence, that the disclosure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted adopted to avoid any error.

Sec. 5. 1997 S. F. No. 1908, article 6, section 5, subdivision 4, if enacted, is amended to read:

Subd. 4. [EFFECT OF ASSIGNMENT.] Assignments in this section take effect upon a determination that the applicant is eligible for public assistance. The amount of support assigned under this subdivision may not exceed the total amount of public assistance issued or the total support obligation, whichever is less. Child care support collections made pursuant to an assignment under subdivision 2, paragraph (c), must be transferred, subject to any limitations of federal law, from the commissioner of human services to the commissioner of children, families, and learning and dedicated to the child care fund under chapter 119B. These collections are in addition to state and federal funds appropriated to the child care fund.

Sec. 6. Minnesota Statutes 1996, section 256.978, subdivision 2, as amended by 1997 S. F. No. 1908, article 6, section 12, if enacted, is amended to read:

Subd. 2. [ACCESS TO INFORMATION.] (a) A request for information by the public authority responsible for child support of this state or any other state may be made to:

(1) employers when there is reasonable cause to believe that the subject of the inquiry is or was an employee or independent contractor of the employer. Information to be released by employers of employees is limited to place of residence, employment status, wage or payment information, benefit information, and social security number. Information to be released by employers of independent contractors is limited to place of residence or address, contract status, payment information, benefit information, and social security number or identification number;

(2) utility companies when there is reasonable cause to believe that the subject of the inquiry is or was a retail customer of the utility company. Customer information to be released by utility companies is limited to place of residence, home telephone, work telephone, source of income, employer and place of employment, and social security number;

(3) insurance companies when there is reasonable cause to believe that the subject of the inquiry is or was receiving funds either in the form of a lump sum or periodic payments. Information to be released by insurance companies is limited to place of residence, home telephone, work telephone, employer, social security number, and amounts and type of payments made to the subject of the inquiry;

(4) labor organizations when there is reasonable cause to believe that the subject of the inquiry is or was a member of the labor association. Information to be released by labor associations is limited to place of residence, home telephone, work telephone, social security number, and current and past employment information; and

(5) financial institutions when there is reasonable cause to believe that the subject of the inquiry has or has had accounts, stocks, loans, certificates of deposits, treasury bills, life insurance policies, or other forms of financial dealings with the institution. Information to be released by the financial institution is limited to place of residence, home telephone, work telephone, identifying information on the type of financial relationships, social security number, current value of financial relationships, and current indebtedness of the subject with the financial institution.

(b) For purposes of this subdivision, utility companies include telephone companies, radio common carriers, and telecommunications carriers as defined in section 237.01, and companies that provide electrical, telephone, natural gas, propane gas, oil, coal, or cable television services to retail customers. The term financial institution includes banks, savings and loans, credit unions, brokerage firms, mortgage companies, insurance companies, benefit associations, safe deposit companies, money market mutual funds, or similar entities authorized to do business in the state.

Sec. 7. Minnesota Statutes 1996, section 256.998, subdivision 3, is amended to read:

Subd. 3. [DUTY TO REPORT.] Employers doing business in this state shall report to the commissioner of human services the hiring of any employee who resides or works in this state to whom the employer anticipates paying earnings. Employers shall submit reports required under this subdivision within 15 20 calendar days of the date of hiring of the employee.

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Employers are not required to report the hiring of any person who will be employed for less than two months' duration; and will have gross earnings less than $250 per month.

Sec. 8. Minnesota Statutes 1996, section 257.75, subdivision 4, is amended to read:

Subd. 4. [ACTION TO VACATE RECOGNITION.] An action to vacate a recognition of paternity may be brought by the mother, father, husband or former husband who executed a joinder, or the child. An action to vacate a recognition of parentage may be brought by the public authority. A mother, father, or husband or former husband who executed a joinder must bring the action within one year of the execution of the recognition or within six months after the person bringing the action obtains the results of blood or genetic tests that indicate that the man who executed the recognition is not the father of the child. A child must bring an action to vacate within six months after the child obtains the result of blood or genetic tests that indicate that the man who executed the recognition is not the father of the child, or within one year of reaching the age of majority, whichever is later. If the court finds a prima facie basis for vacating the recognition, the court shall order the child, mother, father, and husband or former husband who executed a joinder to submit to blood tests. If the court issues an order for the taking of blood tests, the court shall require the party seeking to vacate the recognition to make advance payment for the costs of the blood tests. If the party fails to pay for the costs of the blood tests, the court shall dismiss the action to vacate with prejudice. The court may also order the party seeking to vacate the recognition to pay the other party's reasonable attorney fees, costs, and disbursements. If the results of the blood tests establish that the man who executed the recognition is not the father, the court shall vacate the recognition. If a recognition is vacated, any joinder in the recognition under subdivision 1a is also vacated. The court shall terminate the obligation of a party to pay ongoing child support based on the recognition. A modification of child support based on a recognition may be made retroactive with respect to any period during which the moving party has pending a motion to vacate the recognition but only from the date of service of notice of the motion on the responding party.

Sec. 9. Minnesota Statutes 1996, section 518.54, subdivision 6, as amended by 1997 S. F. No. 1908, article 6, section 41, if enacted, is amended to read:

Subd. 6. [INCOME.] (a) "Income" means any form of periodic payment to an individual including, but not limited to, wages, salaries, payments to an independent contractor, workers' compensation, reemployment insurance, annuity, military and naval retirement, pension and disability payments. Benefits received under Title IV-A of the Social Security Act are not income under this section.

(b) Income also includes nonperiodic distributions of workers' compensation claims, reemployment claims, personal injury recoveries for lost wages or salary, proceeds from a lawsuit for lost wages or salary, severance pay, and bonuses.

Sec. 10. Minnesota Statutes 1996, section 518.551, subdivision 12, as amended by 1997 S. F. No. 1908, article 6, section 42, if enacted, is amended to read:

Subd. 12. [OCCUPATIONAL LICENSE SUSPENSION.] (a) Upon motion of an obligee, if the court finds that the obligor is or may be licensed by a licensing board listed in section 214.01 or other state, county, or municipal agency or board that issues an occupational license and the obligor is in arrears in court-ordered child support or maintenance payments or both in an amount equal to or greater than three times the obligor's total monthly support and maintenance payments and is not in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority, the administrative law judge, or the court shall direct the licensing board or other licensing agency to suspend the license under section 214.101. The court's order must be stayed for 90 days in order to allow the obligor to execute a written payment agreement regarding both current support and arrearages. The payment agreement must be approved by either the court or the public authority responsible for child support enforcement. If the obligor has not executed or is not in compliance with a written payment agreement regarding both current support and arrearages after the 90 days expires, the court's order becomes effective. If the obligor is a licensed attorney, the court shall report the matter to the lawyers professional responsibility board for appropriate action in accordance with the rules of professional conduct. The remedy under this subdivision is in addition to any other enforcement remedy available to the court.

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(b) If a public authority responsible for child support enforcement finds that the obligor is or may be licensed by a licensing board listed in section 214.01 or other state, county, or municipal agency or board that issues an occupational license and the obligor is in arrears in court-ordered child support or maintenance payments or both in an amount equal to or greater than three times the obligor's total monthly support and maintenance payments and is not in compliance with a written payment agreement regarding both current support and arrearages approved by the court, an administrative law judge, or the public authority, the court, an administrative law judge, or the public authority shall direct the licensing board or other licensing agency to suspend the license under section 214.101. If the obligor is a licensed attorney, the public authority may report the matter to the lawyers professional responsibility board for appropriate action in accordance with the rules of professional conduct. The remedy under this subdivision is in addition to any other enforcement remedy available to the public authority.

(c) At least 90 days before notifying a licensing authority or the lawyers professional responsibility board under paragraph (b), the public authority shall mail a written notice to the license holder addressed to the license holder's last known address that the public authority intends to seek license suspension under this subdivision and that the license holder must request a hearing within 30 days in order to contest the suspension. If the license holder makes a written request for a hearing within 30 days of the date of the notice, either a court hearing or a contested administrative proceeding must be held under section 518.5511, subdivision 4. Notwithstanding any law to the contrary, the license holder must be served with 14 days' notice in writing specifying the time and place of the hearing and the allegations against the license holder. The notice may be served personally or by mail. If the public authority does not receive a request for a hearing within 30 days of the date of the notice, and the obligor does not execute a written payment agreement regarding both current support and arrearages approved by the public authority within 90 days of the date of the notice, the public authority shall direct the licensing board or other licensing agency to suspend the obligor's license under paragraph (b), or shall report the matter to the lawyers professional responsibility board.

(d) The administrative law judge, on behalf of the public authority, or the court shall notify the lawyers professional responsibility board for appropriate action in accordance with the rules of professional responsibility conduct or order the licensing board or licensing agency to suspend the license if the judge finds that:

(1) the person is licensed by a licensing board or other state agency that issues an occupational license;

(2) the person has not made full payment of arrearages found to be due by the public authority; and

(3) the person has not executed or is not in compliance with a payment plan approved by the court, an administrative law judge, or the public authority.

(e) Within 15 days of the date on which the obligor either makes full payment of arrearages found to be due by the court or public authority or executes and initiates good faith compliance with a written payment plan approved by the court, an administrative law judge, or the public authority, the court, an administrative law judge, or the public authority responsible for child support enforcement shall notify the licensing board or licensing agency or the lawyers professional responsibility board that the obligor is no longer ineligible for license issuance, reinstatement, or renewal under this subdivision.

(f) In addition to the criteria established under this section for the suspension of an obligor's occupational license, a court, an administrative law judge, or the public authority may direct the licensing board or other licensing agency to suspend the license of a party who has failed, after receiving notice, to comply with a subpoena relating to a paternity or child support proceeding. Notice to an obligor of intent to suspend must be served by first class mail at the obligor's last known address. The notice must inform the obligor of the right to request a hearing. If the obligor makes a written request within ten days of the date of the hearing, a contested administrative proceeding must be held under section 518.5511, subdivision 4. At the hearing, the only issues to be considered are mistake of fact and whether the obligor received the subpoena.

(g) The license of an obligor who fails to remain in compliance with an approved payment agreement may be suspended. Notice to the obligor of an intent to suspend under this paragraph must be served by first class mail at the obligor's last known address and must include a notice of hearing. The notice must be served upon the obligor not less than ten days before the date of the hearing. If the obligor appears at the hearing and the judge determines that the obligor has failed to comply with an approved payment agreement, the judge shall notify the occupational licensing board or agency to suspend the obligor's license under paragraph (c). If the obligor fails to appear at the hearing, the public authority may notify the occupational or licensing board to suspend the obligor's license under paragraph (c).

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Sec. 11. Minnesota Statutes 1996, section 518.5512, subdivision 2, as amended by 1997 S. F. No. 1908, article 6, section 44, is amended to read:

Subd. 2. [PATERNITY.] (a) After service of the notice and proposed order, a nonattorney employee of the public authority may order the child, mother, or alleged father to submit to blood or genetic tests. In a case with multiple alleged fathers, a nonattorney employee of the public authority may order the child, mother, and alleged fathers to submit to blood or genetic tests after service of the notice of the parentage proceeding. The order for genetic tests must be served by personal service. The order of the public authority shall be effective unless, within 20 days of the date of the order, the child, mother, or an alleged father requests a contested administrative proceeding under section 518.5511, subdivision 3a. If a contested administrative proceeding is requested and held, any order issued by an administrative law judge supersedes the order issued by the public authority. In all other cases, the order of the public authority is controlling. Failure to comply with the order for blood or genetic tests may result in a default determination of parentage.

(b) If parentage is contested at the administrative hearing, the administrative law judge may order temporary child support under section 257.62, subdivision 5, and shall refer the case to the district court.

(c) The district court may appoint counsel for an indigent alleged father only after the return of the blood or genetic test results from the testing laboratory.

Sec. 12. Minnesota Statutes 1996, section 518C.305, is amended to read:

518C.305 [DUTIES AND POWERS OF RESPONDING TRIBUNAL.]

(a) When a responding tribunal of this state receives a petition or comparable pleading from an initiating tribunal or directly pursuant to section 518C.301, paragraph (c), it shall cause the petition or pleading to be filed and notify the petitioner by first class mail where and when it was filed.

(b) A responding tribunal of this state, to the extent otherwise authorized by law, may do one or more of the following:

(1) issue or enforce a support order, modify a child support order, or render a judgment to determine parentage;

(2) order an obligor to comply with a support order, specifying the amount and the manner of compliance;

(3) order income withholding;

(4) determine the amount of any arrearages, and specify a method of payment;

(5) enforce orders by civil or criminal contempt, or both;

(6) set aside property for satisfaction of the support order;

(7) place liens and order execution on the obligor's property;

(8) order an obligor to keep the tribunal informed of the obligor's current residential address, telephone number, employer, address of employment, and telephone number at the place of employment;

(9) issue a bench warrant for an obligor who has failed after proper notice to appear at a hearing ordered by the tribunal and enter the bench warrant in any local and state computer systems for criminal warrants;

(10) order the obligor to seek appropriate employment by specified methods;

(11) award reasonable attorney's fees and other fees and costs; and

(12) grant any other available remedy.

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(c) A responding tribunal of this state shall include in a support order issued under this chapter, or in the documents accompanying the order, the calculations on which the support order is based.

(d) A responding tribunal of this state may not condition the payment of a support order issued under this chapter upon compliance by a party with provisions for visitation.

(e) If a responding tribunal of this state issues an order under this chapter, the tribunal shall send a copy of the order by first class mail to the petitioner and the respondent and to the initiating tribunal, if any.

Sec. 13. Minnesota Statutes 1996, section 518C.306, is amended to read:

518C.306 [INAPPROPRIATE TRIBUNAL.]

If a petition or comparable pleading is received by an inappropriate tribunal of this state, it shall forward the pleading and accompanying documents to an appropriate tribunal in this state or another state and notify the petitioner by first class mail where and when the pleading was sent.

Sec. 14. Minnesota Statutes 1996, section 518C.307, is amended to read:

518C.307 [DUTIES OF SUPPORT ENFORCEMENT AGENCY.]

(a) A support enforcement agency of this state, upon request, shall provide services to a petitioner in a proceeding under this chapter.

(b) A support enforcement agency that is providing services to the petitioner as appropriate shall:

(1) take all steps necessary to enable an appropriate tribunal in this state or another state to obtain jurisdiction over the respondent;

(2) request an appropriate tribunal to set a date, time, and place for a hearing;

(3) make a reasonable effort to obtain all relevant information, including information as to income and property of the parties;

(4) within two days, exclusive of Saturdays, Sundays, and legal holidays, after receipt of a written notice from an initiating, responding, or registering tribunal, send a copy of the notice by first class mail to the petitioner;

(5) within two days, exclusive of Saturdays, Sundays, and legal holidays, after receipt of a written communication from the respondent or the respondent's attorney, send a copy of the communication by first class mail to the petitioner; and

(6) notify the petitioner if jurisdiction over the respondent cannot be obtained.

(c) This chapter does not create or negate a relationship of attorney and client or other fiduciary relationship between a support enforcement agency or the attorney for the agency and the individual being assisted by the agency.

Sec. 15. Minnesota Statutes 1996, section 518C.605, is amended to read:

518C.605 [NOTICE OF REGISTRATION OF ORDER.]

(a) When a support order or income-withholding order issued in another state is registered, the registering tribunal shall notify the nonregistering party. Notice must be given by certified or registered mail or by any means of personal service authorized by the law of this state. The notice must be accompanied by a copy of the registered order and the documents and relevant information accompanying the order.

(b) The notice must inform the nonregistering party:

(1) that a registered order is enforceable as of the date of registration in the same manner as an order issued by a tribunal of this state;

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(2) that a hearing to contest the validity or enforcement of the registered order must be requested within 20 days after the date of mailing or personal service of the notice;

(3) that failure to contest the validity or enforcement of the registered order in a timely manner will result in confirmation of the order and enforcement of the order and the alleged arrearages and precludes further contest of that order with respect to any matter that could have been asserted; and

(4) of the amount of any alleged arrearages.

(c) Upon registration of an income-withholding order for enforcement, the registering tribunal shall notify the obligor's employer pursuant to section 518.611 or 518.613.

Sec. 16. Minnesota Statutes 1996, section 518C.606, is amended to read:

518C.606 [PROCEDURE TO CONTEST VALIDITY OR ENFORCEMENT OF REGISTERED ORDER.]

(a) A nonregistering party seeking to contest the validity or enforcement of a registered order in this state shall request a hearing within 20 days after the date of mailing or personal service of notice of the registration. The nonregistering party may seek to vacate the registration, to assert any defense to an allegation of noncompliance with the registered order, or to contest the remedies being sought or the amount of any alleged arrearages pursuant to section 518C.607.

(b) If the nonregistering party fails to contest the validity or enforcement of the registered order in a timely manner, the order is confirmed by operation of law.

(c) If a nonregistering party requests a hearing to contest the validity or enforcement of the registered order, the registering tribunal shall schedule the matter for hearing and give notice to the parties by first class mail of the date, time, and place of the hearing.

Sec. 17. Minnesota Statutes 1996, section 548.091, subdivision 9, as added by 1997 S. F. No. 1908, article 6, section 79, if enacted, is amended to read:

Subd. 9. [PAYOFF STATEMENT.] The public authority shall issue to the obligor, attorneys, lenders, and closers, or their agents, a payoff statement setting forth conclusively the amount necessary to satisfy the lien. Payoff statements must be issued within three business days after receipt of a request by mail, personal delivery, telefacsimile, or e-mail electronic mail transmission, and must be delivered to the requester by telefacsimile or e-mail electronic mail transmission if requested and if appropriate technology is available to the public authority.

Sec. 18. [EFFECTIVE DATES.]

1997 S. F. No. 1908, article 6, sections 44 to 46, if enacted, are effective August 1, 1997. An amendment in this article to 1997 S. F. No. 1908 takes effect at the same time that the section of law that it amends takes effect.

ARTICLE 4

TECHNICAL WELFARE REFORM AMENDMENTS

Section 1. Laws 1997, chapter 85, article 1, section 16, subdivision 1, as amended by 1997 S. F. No. 1908, article 12, section 10, if enacted, is amended to read:

Subdivision 1. [PERSON CONVICTED OF DRUG OFFENSES.] (a) Applicants or recipients 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;

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(2) the convicted applicant or recipient 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.

(b) 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. 2. Laws 1997, chapter 85, article 1, section 36, 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 required notice is given. The sanction must be in effect for a minimum of one month, and shall be removed only when the caregiver cooperates 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. 3. Laws 1997, chapter 85, article 1, section 43, 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.

(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. 4. Laws 1997, chapter 85, article 1, section 43, subdivision 5, is amended to read:

Subd. 5. [EMPLOYMENT PLAN; CONTENTS.] Based on the secondary assessment under subdivision 4, the job counselor and the participant must develop an employment plan for the participant that includes specific activities that are tied to an employment goal and a plan for long-term self-sufficiency, and that is designed to move the participant along the

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most direct path to unsubsidized employment. The employment plan must list the specific steps that will be taken to obtain employment and a timetable for completion of each of the steps. As part of the development of the participant's employment plan, the participant shall have the option of selecting from among the vendors or resources that the job counselor determines will be effective in supplying one or more of the services necessary to meet the employment goals specified in the participant's plan. In compiling the list of vendors and resources that the job counselor determines would be effective in meeting the participant's employment goals, the job counselor must determine that adequate financial resources are available for the vendors or resources ultimately selected by the participant. The job counselor and the participant must sign the developed plan to indicate agreement between the job counselor and the participant on the contents of the plan.

Sec. 5. Laws 1997, chapter 85, article 1, section 66, subdivision 2, is amended to read:

Subd. 2. [REPORT TO THE LEGISLATURE.] The plan referred to in subdivision 1 and any resulting proposal for legislation must be presented to the legislature by December 15, 1997 February 15, 1998.

Sec. 6. Laws 1997, chapter 85, article 3, is amended by adding a section to read:

Sec. 58. Minnesota Statutes 1996, section 268.0122, subdivision 5, is amended to read:

Subd. 5. [RULEMAKING.] (a) The commissioner may make emergency and permanent rules to carry out this chapter.

(b) Effective July 1, 1997, the commissioner may make rules to carry out section 256J.51.

Sec. 7. [EFFECTIVE DATE.]

An amendment in this article takes effect at the same time that the section of law that it amends takes effect."

Delete the title and insert:

"A bill for an act relating to family law; modifying provisions and procedures governing child support and maintenance, visitation, and related matters; making complying and technical changes; amending Minnesota Statutes 1996, sections 168A.05, subdivision 8; 171.19; 256.87, by adding a subdivision; 256.978, subdivision 2, as amended; 256.979, subdivisions 5, 6, 7, 8, and by adding a subdivision; 256.9791, subdivision 1; 256.998, subdivisions 3 and 9; 257.75, subdivisions 1a and 4; 518.157; 518.175, subdivision 6; 518.1751; 518.179, subdivision 1; 518.195; 518.54, subdivision 6, as amended; 518.551, subdivisions 5b, 7, 12, as amended, 14, and by adding subdivisions; 518.5511, subdivisions 1, 2, 3, 4, and by adding a subdivision; 518.5512, subdivisions 2, as amended, 3, and by adding a subdivision; 518.553; 518.5852; 518.64, subdivision 2; 518.641, subdivision 2; 518.68, subdivision 2; 518C.305; 518C.306; 518C.307; 518C.605; 518C.606; 519.05; 548.091, subdivision 9, as added; 609.375, by adding a subdivision; 626.556, subdivision 2; and 631.52, subdivision 1; Laws 1997, chapter 85, article 1, sections 16, subdivision 1, as amended; 36, subdivision 2; 43, subdivisions 4 and 5; and 66, subdivision 2; and article 3, by adding a section; S. F. No. 1908, article 6, sections 3, subdivisions 1, 4, 6, and 10; and 5, subdivision 4; proposing coding for new law in Minnesota Statutes, chapter 518; repealing Minnesota Statutes 1996, sections 256.996; and 609.375, subdivisions 3, 4, and 6."

We request adoption of this report and repassage of the bill.

Senate Conferees: Richard J. Cohen, David L. Knutson and Leo T. Foley.

House Conferees: Matt Entenza, Andy Dawkins and Sherry Broecker.

Entenza moved that the report of the Conference Committee on S. F. No. 830 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 830, A bill for an act relating to child support enforcement; modifying provisions governing the establishment and enforcement of child support and maintenance; authorizing disclosure of certain data to the attorney general; providing for certain financial data matches; changing provisions for driver's license suspension, motor vehicle liens, payment agreements, and child support judgments; modifying provisions governing publication of names of delinquent obligors;

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providing for case reviewers; providing for a child support lien; regulating work release and probation violation for criminal nonsupport for certain offenders; requiring a study; specifying penalties; amending Minnesota Statutes 1996, sections 8.35; 13.46, subdivision 2; 13.99, by adding a subdivision; 168A.05, subdivision 8; 171.19; 256.87, subdivisions 1, 1a, 3, 5, and by adding a subdivision; 256.978, subdivisions 1 and 2; 256.979, subdivisions 5, 6, 7, 8, and by adding a subdivision; 256.9791, subdivision 1; 256.9792, subdivisions 1 and 2; 256.998, subdivisions 1, 6, 7, and 9; 257.62, subdivisions 1 and 2; 257.66, subdivision 3, and by adding a subdivision; 257.70; 257.75, subdivisions 1a, 2, 3, 4, 5, and 7; 299C.46, subdivision 3; 508.63; 508A.63; 518.005, by adding a subdivision; 518.10; 518.148, subdivision 2; 518.171, subdivisions 1 and 4; 518.54, subdivision 6, and by adding a subdivision; 518.551, subdivisions 5, 5b, 7, 12, 13, 14, and by adding a subdivision; 518.5511, subdivisions 1, 2, 3, 4, and by adding a subdivision; 518.5512, subdivisions 2, 3, and by adding subdivisions; 518.553; 518.575; 518.616, by adding a subdivision; 518.64, subdivision 2; 518.641, subdivision 2; 518.68, subdivision 2; 548.091, subdivisions 1a, 2a, 3a, and by adding subdivisions; 550.37, subdivision 24; and 609.375, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 13B; 256; and 518; proposing coding for new law as Minnesota Statutes, chapter 552; repealing Minnesota Statutes 1996, sections 256.74; 256.979, subdivision 9; 518.5511, subdivisions 5, 6, 7, 8, and 9; 518.611; 518.613; 518.645; 518C.502; 518C.9011; and 609.375, subdivisions 3, 4, and 6.

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 134 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Sykora
Anderson, B. Farrell Kelso McCollum Peterson Tingelstad
Anderson, I. Finseth Kielkucki McElroy Pugh Tomassoni
Bakk Folliard Kinkel McGuire Rest Tompkins
Bettermann Garcia Knight Milbert Reuter Trimble
Biernat Goodno Knoblach Molnau Rhodes Tuma
Bishop Greenfield Koppendrayer Mulder Rifenberg Tunheim
Boudreau Greiling Koskinen Mullery Rostberg Van Dellen
Bradley Gunther Kraus Munger Rukavina Vickerman
Broecker Haas Krinkie Murphy Schumacher Wagenius
Carlson Harder Kubly Ness Seagren Weaver
Chaudhary Hasskamp Kuisle Nornes Seifert Wejcman
Clark 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 Luther Otremba Stanek Spk. Carruthers
Dempsey Johnson, A. Macklin Ozment Stang
Dorn Johnson, R. Mahon Paulsen Sviggum
Entenza Juhnke Mares Pawlenty Swenson, D.
Erhardt Kahn Mariani Paymar Swenson, H.

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 234.

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.

Patrick E. Flahaven, Secretary of the Senate

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CONFERENCE COMMITTEE REPORT ON S. F. NO. 234

A bill for an act relating to human services; adding provisions for licensing programs; imposing and modifying civil penalties; amending Minnesota Statutes 1996, sections 144.057, subdivision 1; 144A.46, subdivision 5; 245A.02, subdivisions 15, 16, and 17, and by adding subdivisions; 245A.03, subdivision 2; 245A.04, subdivisions 3, 3a, 3b, 3c, 4, 5, 6, 7, and by adding a subdivision; 245A.06, subdivisions 1, 3, 4, 5, 5a, 6, and 7; 245A.07, subdivisions 1 and 3; 245A.08, subdivisions 1 and 2; 245A.09, subdivision 7; 245A.11, subdivision 2; 245A.16, subdivision 2; 256E.115; and 364.09; proposing coding for new law in Minnesota Statutes, chapter 245A; repealing Minnesota Statutes 1996, sections 245A.091; 245A.20; 245A.21; and 252.53; Laws 1996, chapter 408, article 10, section 13; Minnesota Rules, parts 4668.0020; 9503.0170, subpart 7; 9525.0215; 9525.0225; 9525.0235; 9525.0243; 9525.0245; 9525.0255; 9525.0265; 9525.0275; 9525.0285; 9525.0295; 9525.0305; 9525.0315; 9525.0325; 9525.0335; 9525.0345; 9525.0355; 9525.0500; 9525.0510; 9525.0520; 9525.0530; 9525.0540; 9525.0550; 9525.0560; 9525.0570; 9525.0580; 9525.0590; 9525.0600; 9525.0610; 9525.0620; 9525.0630; 9525.0640; 9525.0650; 9525.0660; 9525.1240, subpart 1, item E, subitem (6); 9525.1500; 9525.1510; 9525.1520; 9525.1530; 9525.1540; 9525.1550; 9525.1560; 9525.1570; 9525.1590; 9525.1610; 9525.1620; 9525.1630; 9525.1640; 9525.1650; 9525.1660; 9525.1670; 9525.1680; 9525.1690; 9525.2000; 9525.2010; 9525.2020; 9525.2025; 9525.2030; 9525.2040; 9525.2050; 9525.2060; 9525.2070; 9525.2080; 9525.2090; 9525.2100; 9525.2110; 9525.2120; 9525.2130; 9525.2140; 9543.3070; 9555.8000; 9555.8100; 9555.8200; 9555.8300; 9555.8400; and 9555.8500.

May 18, 1997

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. 234, 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. 234 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 144.057, subdivision 1, is amended to read:

Subdivision 1. [BACKGROUND STUDIES REQUIRED.] The commissioner of health shall contract with the commissioner of human services to conduct background studies of:

(1) individuals providing services which have direct contact, as defined under section 245A.04, subdivision 3, with patients and residents in hospitals, boarding care homes, outpatient surgical centers licensed under sections 144.50 to 144.58; nursing homes and home care agencies licensed under chapter 144A; residential care homes licensed under chapter 144B, and board and lodging establishments that are registered to provide supportive or health supervision services under section 157.17.; and

(2) beginning July 1, 1999, all other employees in nursing homes licensed under chapter 144A, and boarding care homes licensed under sections 144.50 to 144.58. A disqualification of an individual in this section shall disqualify the individual from positions allowing direct contact or access to patients or residents receiving services.

If a facility or program is licensed by the department of human services and subject to the background study provisions of chapter 245A and is also licensed by the department of health, the department of human services is solely responsible for the background studies of individuals in the jointly licensed programs.

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Sec. 2. Minnesota Statutes 1996, section 144A.46, subdivision 5, is amended to read:

Subd. 5. [PRIOR CRIMINAL CONVICTIONS.] (a) Before the commissioner issues a an initial or renewal license and, as defined in the home care licensure rules promulgated by the commissioner of health, an owner or managerial official shall be required to disclose all criminal convictions. The commissioner may adopt rules that may require a person who must disclose criminal convictions under this subdivision to provide fingerprints and releases that authorize law enforcement agencies, including the bureau of criminal apprehension and the Federal Bureau of Investigation, to release information about the person's criminal convictions to the commissioner and home care providers. The bureau of criminal apprehension, county sheriffs, and local chiefs of police shall, if requested, provide the commissioner with criminal conviction data available from local, state, and national criminal record repositories, including the criminal justice data communications network complete a background study under section 144.057. No person may be involved in the management, operation, or control of a provider, if the person has been convicted of a crime that relates to the provision of home care services or to the position, duties, or responsibilities undertaken by that person in the operation of the home care provider, unless the person can provide sufficient evidence of rehabilitation. The commissioner shall adopt rules for determining whether a crime relates to home care services and what constitutes sufficient evidence of rehabilitation. The rules must require consideration of the nature and seriousness of the crime; the relationship of the crime to the purposes of home care licensure and regulation; the relationship of the crime to the ability, capacity, and fitness required to perform the duties and discharge the responsibilities of the person's position; mitigating circumstances or social conditions surrounding the commission of the crime; the length of time elapsed since the crime was committed; the seriousness of the risk to the home care client's person or property; and other factors the commissioner considers appropriate disqualified under the provisions of chapter 245A. Individuals disqualified under these provisions can request a reconsideration, and if the disqualification is set aside are then eligible to be involved in the management, operation or control of the provider. For purposes of this section, owners of a home care provider subject to the background check requirement are those individuals whose ownership interest provides sufficient authority or control to affect or change decisions related to the operation of the home care provider. An owner includes a sole proprietor, a general partner, or any other individual whose individual ownership interest can affect the management and direction of the policies of the home care provider. For the purposes of this section, managerial officials subject to the background check requirement are those individuals who provide "direct contact" as defined in section 245A.04 or those individuals who have the responsibility for the ongoing management or direction of the policies, services, or employees of the home care provider. Data collected under this subdivision shall be classified as private data under section 13.02, subdivision 12.

(b) Employees, contractors, and volunteers of a home care provider or hospice are subject to the background study required by section 144.057. These individuals shall be disqualified under the provisions of chapter 245A and Minnesota Rules, parts 9543.3000 to 9543.3090. Until October 1, 1997, grounds for disqualification shall also include the crimes specified under Minnesota Rules, part 4668.0020, subpart 14, or a comparable crime or act in another jurisdiction. Nothing in this section shall be construed to prohibit a home care provider from requiring self-disclosure of criminal conviction information; however, compliance with the provisions of section 144.057 constitutes compliance with the provisions of Minnesota Rules, part 4668.0020, subpart 8.

(c) Notwithstanding the provisions of Minnesota Rules, part 4668.0020, subparts 12, 13, and 15, disqualifications under paragraph (b), removal from a direct care position, and the process for reconsiderations shall be governed by the provisions of section 144.057.

(d) Unless superseded by the provisions of section 144.057 or this section, the provisions of Minnesota Rules, part 4668.0020, remain in effect.

(e) Termination of an employee in good faith reliance on information or records obtained under paragraph (a) or (b) regarding a confirmed conviction does not subject the home care provider to civil liability or liability for reemployment insurance benefits.

Sec. 3. Minnesota Statutes 1996, section 245A.02, is amended by adding a subdivision to read:

Subd. 6b. [EXPERIENCE.] For purposes of child care centers, "experience" includes paid or unpaid employment serving children as a teacher, assistant teacher, aide, or a student intern in a licensed child care center, in a public or nonpublic school, or in a program licensed as a family day care or group family day care provider.

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Sec. 4. Minnesota Statutes 1996, section 245A.02, subdivision 15, is amended to read:

Subd. 15. [RESPITE CARE SERVICES.] "Respite care services" means temporary services provided to a person due to the absence or need for relief of the primary caregiver, the person's family member, or legal representative who is the primary caregiver and principally responsible for the care and supervision of the person. Respite care services are those that provide the level of supervision and care that is necessary to ensure the health and safety of the person. Respite care services do not include services that are specifically directed toward the training and habilitation of the person.

Sec. 5. Minnesota Statutes 1996, section 245A.02, subdivision 16, is amended to read:

Subd. 16. [SCHOOL AGE CHILD.] "School age child," for programs licensed or required to be licensed as a child care center, 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 13 years of age.

Sec. 6. Minnesota Statutes 1996, section 245A.02, subdivision 17, is amended to read:

Subd. 17. [SCHOOL AGE CHILD CARE PROGRAM.] "School age child care program" means a nonresidential program licensed or required to be licensed as a child care center, serving more than ten children with the primary purpose of providing child care for school age children. School age child care program does not include programs such as scouting, boys clubs, girls clubs, nor sports or art programs.

Sec. 7. Minnesota Statutes 1996, section 245A.02, is amended by adding a subdivision to read:

Subd. 18. [SUPERVISION.] For purposes of child care centers, "supervision" means when a program staff person is within sight and hearing of a child at all times so that the program staff can intervene to protect the health and safety of the child. When an infant is placed in a crib room to sleep, supervision occurs when a staff person is within sight or hearing of the infant. When supervision of a crib room is provided by sight or hearing, the center must have a plan to address the other supervision component.

Sec. 8. [245A.023] [IN-SERVICE TRAINING.]

For purposes of child care centers, in-service training must be completed within the license period for which it is required. In-service training completed by staff persons as required must be transferable upon a staff person's change in employment to another child care program. License holders shall record all staff in-service training on forms prescribed by the commissioner of human services.

Sec. 9. Minnesota Statutes 1996, 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 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;

(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;

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(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;

(21) unrelated individuals who provide out-of-home respite care services to persons with mental retardation or related conditions from a single related family for no more than 90 days in a 12-month period and the respite care services are for the temporary relief of the person's family or legal representative;

(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; or

(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.

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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. 10. Minnesota Statutes 1996, section 245A.04, subdivision 3, is amended to read:

Subd. 3. [BACKGROUND STUDY OF THE APPLICANT.] (a) Before the commissioner issues a license, the commissioner shall conduct a study of the individuals specified in paragraph (c), clauses (1) to (5), according to rules of the commissioner.

Beginning January 1, 1997, the commissioner shall also conduct a study of employees providing direct contact services for nonlicensed personal care provider organizations described in paragraph (c), clause (5).

The commissioner shall recover the cost of these background studies through a fee of no more than $12 per study charged to the personal care provider organization.

Beginning August 1, 1997, the commissioner shall conduct all background studies required under this chapter for adult foster care providers who are licensed by the commissioner of human services and registered under chapter 144D. The commissioner shall conduct these background studies in accordance with this chapter. The commissioner shall initiate a pilot project to conduct up to 5,000 background studies under this chapter in programs with joint licensure as home- and community-based services and adult foster care for people with developmental disabilities when the license holder does not reside in the foster care residence.

(b) Beginning July 1, 1997 1998, the commissioner shall conduct a background study on individuals specified in paragraph (c), clauses (1) to (5), who perform direct contact services in a nursing home or a home care agency licensed under chapter 144A or a boarding care home licensed under sections 144.50 to 144.58, when the subject of the study resides outside Minnesota; the study must be at least as comprehensive as that of a Minnesota resident and include a search of information from the criminal justice data communications network in the state where the subject of the study resides.

(c) The applicant, license holder, the bureau of criminal apprehension, the commissioner of health and county agencies, after written notice to the individual who is the subject of the study, shall help with the study by giving the commissioner criminal conviction data and reports about the maltreatment of adults substantiated under section 626.557 and the maltreatment of minors in licensed programs substantiated under section 626.556. The individuals to be studied shall include:

(1) the applicant;

(2) persons over the age of 13 living in the household where the licensed program will be provided;

(3) current employees or contractors of the applicant who will have direct contact with persons served by the facility, agency, or program;

(4) volunteers or student volunteers who have direct contact with persons served by the program to provide program services, if the contact is not directly supervised by the individuals listed in clause (1) or (3); and

(5) any person who, as an individual or as a member of an organization, exclusively offers, provides, or arranges for personal care assistant services under the medical assistance program as authorized under sections 256B.04, subdivision 16, and 256B.0625, subdivision 19.

The juvenile courts shall also help with the study by giving the commissioner existing juvenile court records on individuals described in clause (2) relating to delinquency proceedings held within either the five years immediately preceding the application or the five years immediately preceding the individual's 18th birthday, whichever time period is longer. The commissioner shall destroy juvenile records obtained pursuant to this subdivision when the subject of the records reaches age 23.

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For purposes of this section and Minnesota Rules, part 9543.3070, a finding that a delinquency petition is proven in juvenile court shall be considered a conviction in state district court.

For purposes of this subdivision, "direct contact" means providing face-to-face care, training, supervision, counseling, consultation, or medication assistance to persons served by a program. For purposes of this subdivision, "directly supervised" means an individual listed in clause (1), (3), or (5) is within sight or hearing of a volunteer to the extent that the individual listed in clause (1), (3), or (5) is capable at all times of intervening to protect the health and safety of the persons served by the program who have direct contact with the volunteer.

A study of an individual in clauses (1) to (5) shall be conducted at least upon application for initial license and reapplication for a license. The commissioner is not required to conduct a study of an individual at the time of reapplication for a license or if the individual has been continuously affiliated with a foster care provider licensed by the commissioner of human services and registered under chapter 144D, other than a family day care or foster care license, if: (i) a study of the individual was conducted either at the time of initial licensure or when the individual became affiliated with the license holder; (ii) the individual has been continuously affiliated with the license holder since the last study was conducted; and (iii) the procedure described in paragraph (d) has been implemented and was in effect continuously since the last study was conducted. For the purposes of this section, a physician licensed under chapter 147 is considered to be continuously affiliated upon the license holder's receipt from the commissioner of health or human services of the physician's background study results. For individuals who are required to have background studies under clauses (1) to (5) and who have been continuously affiliated with a foster care provider that is licensed in more than one county, criminal conviction data may be shared among those counties in which the foster care programs are licensed. A county agency's receipt of criminal conviction data from another county agency shall meet the criminal data background study requirements of this section.

The commissioner may also conduct studies on individuals specified in clauses (3) and (4) when the studies are initiated by:

(i) personnel pool agencies;

(ii) temporary personnel agencies;

(iii) educational programs that train persons by providing direct contact services in licensed programs; and

(iv) professional services agencies that are not licensed and which contract with licensed programs to provide direct contact services or individuals who provide direct contact services.

Studies on individuals in items (i) to (iv) must be initiated annually by these agencies, programs, and individuals. Except for personal care provider organizations, no applicant, license holder, or individual who is the subject of the study shall pay any fees required to conduct the study.

(1) At the option of the licensed facility, rather than initiating another background study on an individual required to be studied who has indicated to the licensed facility that a background study by the commissioner was previously completed, the facility may make a request to the commissioner for documentation of the individual's background study status, provided that:

(i) the facility makes this request using a form provided by the commissioner;

(ii) in making the request the facility informs the commissioner that either:

(A) the individual has been continuously affiliated with a licensed facility since the individual's previous background study was completed, or since October 1, 1995, whichever is shorter; or

(B) the individual is affiliated only with a personnel pool agency, a temporary personnel agency, an educational program that trains persons by providing direct contact services in licensed programs, or a professional services agency that is not licensed and which contracts with licensed programs to provide direct contact services or individuals who provide direct contact services; and

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(iii) the facility provides notices to the individual as required in paragraphs (a) to (d), and that the facility is requesting written notification of the individual's background study status from the commissioner.

(2) The commissioner shall respond to each request under paragraph (1) with a written or electronic notice to the facility and the study subject. If the commissioner determines that a background study is necessary, the study shall be completed without further request from a licensed agency or notifications to the study subject.

(3) When a background study is being initiated by a licensed facility or a foster care provider that is also registered under chapter 144D, a study subject affiliated with multiple licensed facilities may attach to the background study form a cover letter indicating the additional facilities' names, addresses, and background study identification numbers. When the commissioner receives such notices, each facility identified by the background study subject shall be notified of the study results. The background study notice sent to the subsequent agencies shall satisfy those facilities' responsibilities for initiating a background study on that individual.

(d) If an individual who is affiliated with a program or facility regulated by the department of human services or department of health or who is affiliated with a nonlicensed personal care provider organization, is convicted of a crime constituting a disqualification under Minnesota Rules, parts 9543.3000 to 9543.3090 subdivision 3d, the probation officer or corrections agent shall notify the commissioner of the conviction. The commissioner, in consultation with the commissioner of corrections, shall develop forms and information necessary to implement this paragraph and shall provide the forms and information to the commissioner of corrections for distribution to local probation officers and corrections agents. The commissioner shall inform individuals subject to a background study that criminal convictions for disqualifying crimes will be reported to the commissioner by the corrections system. A probation officer, corrections agent, or corrections agency is not civilly or criminally liable for disclosing or failing to disclose the information required by this paragraph. Upon receipt of disqualifying information, the commissioner shall provide the notifications required in subdivision 3a, as appropriate to agencies on record as having initiated a background study or making a request for documentation of the background study status of the individual. This paragraph does not apply to family day care and child foster care programs.

(e) The individual who is the subject of the study must provide the applicant or license holder with sufficient information to ensure an accurate study including the individual's first, middle, and last name; home address, city, county, and state of residence for the past five years; zip code; sex; date of birth; and driver's license number. The applicant or license holder shall provide this information about an individual in paragraph (c), clauses (1) to (5), on forms prescribed by the commissioner. By January 1, 2000, for background studies conducted by the department of human services, the commissioner shall implement a system for the electronic transmission of: (1) background study information to the commissioner; and (2) background study results to the license holder. The commissioner may request additional information of the individual, which shall be optional for the individual to provide, such as the individual's social security number or race.

(f) Except for child foster care, adult foster care, and family day care homes, a study must include information related to names of substantiated perpetrators of maltreatment of vulnerable adults that has been received by the commissioner as required under section 626.557, subdivision 9c, paragraph (i), and the commissioner's records relating to the maltreatment of minors in licensed programs, information from juvenile courts as required in paragraph (c) for persons listed in paragraph (c), clause (2), and information from the bureau of criminal apprehension. For child foster care, adult foster care, and family day care homes, the study must include information from the county agency's record of substantiated maltreatment of adults, and the maltreatment of minors, information from juvenile courts as required in paragraph (c) for persons listed in paragraph (c), clause (2), and information from the bureau of criminal apprehension. The commissioner may also review arrest and investigative information from the bureau of criminal apprehension, the commissioner of health, a county attorney, county sheriff, county agency, local chief of police, other states, the courts, or the Federal Bureau of Investigation if the commissioner has reasonable cause to believe the information is pertinent to the disqualification of an individual listed in paragraph (c), clauses (1) to (5). The commissioner is not required to conduct more than one review of a subject's records from the Federal Bureau of Investigation if a review of the subject's criminal history with the Federal Bureau of Investigation has already been completed by the commissioner and there has been no break in the subject's affiliation with the license holder who initiated the background studies.

When the commissioner has reasonable cause to believe that further pertinent information may exist on the subject, the subject shall provide a set of classifiable fingerprints obtained from an authorized law enforcement agency. For purposes of requiring fingerprints, the commissioner shall be considered to have reasonable cause under, but not limited to, the following circumstances:

(1) information from the bureau of criminal apprehension indicates that the subject is a multistate offender;

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(2) information from the bureau of criminal apprehension indicates that multistate offender status is undetermined; or

(3) the commissioner has received a report from the subject or a third party indicating that the subject has a criminal history in a jurisdiction other than Minnesota.

(g) An applicant's or license holder's failure or refusal to cooperate with the commissioner is reasonable cause to disqualify a subject, deny an a license application or immediately suspend, suspend, or revoke a license. Failure or refusal of an individual to cooperate with the study is just cause for denying or terminating employment of the individual if the individual's failure or refusal to cooperate could cause the applicant's application to be denied or the license holder's license to be immediately suspended, suspended, or revoked.

(h) The commissioner shall not consider an application to be complete until all of the information required to be provided under this subdivision has been received.

(i) No person in paragraph (c), clause (1), (2), (3), (4), or (5) who is disqualified as a result of this section may be retained by the agency in a position involving direct contact with persons served by the program.

(j) Termination of persons in paragraph (c), clause (1), (2), (3), (4), or (5), made in good faith reliance on a notice of disqualification provided by the commissioner shall not subject the applicant or license holder to civil liability.

(k) The commissioner may establish records to fulfill the requirements of this section.

(l) The commissioner may not disqualify an individual subject to a study under this section because that person has, or has had, a mental illness as defined in section 245.462, subdivision 20.

(m) An individual who is subject to an applicant background study under this section and whose disqualification in connection with a license would be subject to the limitations on reconsideration set forth in subdivision 3b, paragraph (c), shall be disqualified for conviction of the crimes specified in the manner specified in subdivision 3b, paragraph (c). The commissioner of human services shall amend Minnesota Rules, part 9543.3070, to conform to this section.

(n) An individual subject to disqualification under this subdivision has the applicable rights in subdivision 3a, 3b, or 3c.

Sec. 11. Minnesota Statutes 1996, section 245A.04, subdivision 3a, is amended to read:

Subd. 3a. [NOTIFICATION TO SUBJECT AND LICENSE HOLDER OF STUDY RESULTS; DETERMINATION OF RISK OF HARM.] (a) The commissioner shall notify the applicant or license holder and the individual who is the subject of the study, in writing or by electronic transmission, of the results of the study. When the study is completed, a notice that the study was undertaken and completed shall be maintained in the personnel files of the program.

The commissioner shall notify the individual studied if the information in the study indicates the individual is disqualified from direct contact with persons served by the program. The commissioner shall disclose the information causing disqualification and instructions on how to request a reconsideration of the disqualification to the individual studied. An applicant or license holder who is not the subject of the study shall be informed that the commissioner has found information that disqualifies the subject from direct contact with persons served by the program. However, the applicant or license holder shall not be told what that information is only the individual studied must be informed of the information contained in the subject's background study unless the only basis for the disqualification is failure to cooperate, the data practices act provides for release of the information, or the individual studied authorizes the release of the information.

(b) If the commissioner determines that the individual studied has a disqualifying characteristic, the commissioner shall review the information immediately available and make a determination as to the subject's immediate risk of harm to persons served by the program where the individual studied will have direct contact. The commissioner shall consider all relevant information available, including the following factors in determining the immediate risk of harm: the recency of the disqualifying characteristic, the recency of discharge from probation for the crimes; the number of disqualifying characteristics; the intrusiveness or violence of the disqualifying characteristic; the vulnerability of the victim involved in

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the disqualifying characteristic; and the similarity of the victim to the persons served by the program where the individual studied will have direct contact. The commissioner may determine that the evaluation of the information immediately available gives the commissioner reason to believe one of the following:

(1) The individual poses an imminent risk of harm to persons served by the program where the individual studied will have direct contact. If the commissioner determines that an individual studied poses an imminent risk of harm to persons served by the program where the individual studied will have direct contact, the individual and the license holder must be sent a notice of disqualification. The commissioner shall order the license holder to immediately remove the individual studied from direct contact. The notice to the individual studied must include an explanation of the basis of this determination.

(2) The individual poses a risk of harm requiring continuous supervision while providing direct contact services during the period in which the subject may request a reconsideration. If the commissioner determines that an individual studied poses a risk of harm that requires continuous supervision, the individual and the license holder must be sent a notice of disqualification. The commissioner shall order the license holder to immediately remove the individual studied from direct contact services or assure that the individual studied is within sight or hearing of another staff person when providing direct contact services during the period in which the individual may request a reconsideration of the disqualification. If the individual studied does not submit a timely request for reconsideration, or the individual submits a timely request for reconsideration, but the disqualification is not set aside for that license holder, the license holder will be notified of the disqualification and ordered to immediately remove the individual from any position allowing direct contact with persons receiving services from the license holder.

(3) The individual does not pose an imminent risk of harm or a risk of harm requiring continuous supervision while providing direct contact services during the period in which the subject may request a reconsideration. If the commissioner determines that an individual studied does not pose a risk of harm that requires continuous supervision, only the individual must be sent a notice of disqualification. The license holder must be sent a notice that more time is needed to complete the individual's background study. If the individual studied submits a timely request for reconsideration, and if the disqualification is set aside for that license holder, the license holder will receive the same notification received by license holders in cases where the individual studied has no disqualifying characteristic. If the individual studied does not submit a timely request for reconsideration, or the individual submits a timely request for reconsideration, but the disqualification is not set aside for that license holder, the license holder will be notified of the disqualification and ordered to immediately remove the individual from any position allowing direct contact with persons receiving services from the license holder.

Sec. 12. Minnesota Statutes 1996, section 245A.04, subdivision 3b, is amended to read:

Subd. 3b. [RECONSIDERATION OF DISQUALIFICATION.] (a) Within 30 days after receiving notice of disqualification under subdivision 3a, The individual who is the subject of the study disqualification may request a reconsideration of the notice of 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 to show 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 review consider the consequences of the event or events that could 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, and 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 section 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 (felony violations of 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 in the first or second degree), 609.66 (reckless use of a gun or dangerous weapon or intentionally pointing a gun at or towards a human being), 609.665 (setting a spring gun guns), 609.67 (unlawfully owning, possessing, or operating a machine gun 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 (a gross misdemeanor offense of 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 (a felony offense of malicious punishment of a child), 609.322 (soliciting solicitation, inducement, or 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), 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 abuse 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 reconsideration of rescission or set aside a disqualification under this subdivision, or to set aside or uphold the results of the study under subdivision 3 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 action appeal taken in response to the disqualification or involving an accuracy and completeness appeal under section 13.04.

Sec. 13. Minnesota Statutes 1996, section 245A.04, subdivision 3c, is amended to read:

Subd. 3c. [CONTESTED CASE.] If a disqualification is not set aside, a person who, on or after the effective date of rules adopted under subdivision 3, paragraph (i), is an employee of an employer, as defined in section 179A.03, subdivision 15, may request a contested case hearing under chapter 14. Rules adopted under this chapter may not preclude an employee in a contested case hearing for disqualification from submitting evidence concerning information gathered under subdivision 3, paragraph (e).

Sec. 14. Minnesota Statutes 1996, section 245A.04, is amended by adding a subdivision 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); 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);

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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 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;

(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 which

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reasonably requires the care of a physician whether or not the care of a physician was sought, including: 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; 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 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. 15. Minnesota Statutes 1996, section 245A.04, subdivision 4, is amended to read:

Subd. 4. [INSPECTIONS; WAIVER.] (a) Before issuing a an initial license, the commissioner shall conduct an inspection of the program. The inspection must include but is not limited to:

(1) an inspection of the physical plant;

(2) an inspection of records and documents;

(3) an evaluation of the program by consumers of the program; and

(4) observation of the program in operation.

For the purposes of this subdivision, "consumer" means a person who receives the services of a licensed program, the person's legal guardian, or the parent or individual having legal custody of a child who receives the services of a licensed program.

(b) The evaluation required in paragraph (a), clause (3) or the observation in paragraph (a), clause (4) is not required prior to issuing a provisional an initial license under subdivision 7. If the commissioner issues a provisional an initial license under subdivision 7, these requirements must be completed within one year after the issuance of a provisional an initial license. The observation in paragraph (a), clause (4) is not required if the commissioner determines that the observation would hinder the persons receiving services in benefiting from the program.

Sec. 16. Minnesota Statutes 1996, section 245A.04, subdivision 5, is amended to read:

Subd. 5. [COMMISSIONER'S RIGHT OF ACCESS.] When the commissioner is exercising the powers conferred by sections 245A.01 to 245A.15 this chapter, the commissioner must be given access to the physical plant and grounds where the program is provided, documents, persons served by the program, and staff whenever the program is in operation and the information is relevant to inspections or investigations conducted by the commissioner. The commissioner must be given access without prior notice and as often as the commissioner considers necessary if the commissioner is conducting an investigation of allegations of abuse, neglect, maltreatment, or other violation of applicable laws or rules. In conducting inspections, the commissioner may request and shall receive assistance from other state, county, and municipal governmental agencies and departments. The applicant or license holder shall allow the commissioner to photocopy, photograph, and make audio and video tape recordings during the inspection of the program at the commissioner's expense. The commissioner shall obtain a court order or the consent of the subject of the records or the parents or legal guardian of the subject before photocopying hospital medical records.

Persons served by the program have the right to refuse to consent to be interviewed, photographed, or audio or videotaped. Failure or refusal of an applicant or license holder to fully comply with this subdivision is reasonable cause for the commissioner to deny the application or immediately suspend or revoke the license.

Sec. 17. Minnesota Statutes 1996, section 245A.04, subdivision 6, is amended to read:

Subd. 6. [COMMISSIONER'S EVALUATION.] Before granting, suspending, revoking, or making probationary conditional a license, the commissioner shall evaluate information gathered under this section. The commissioner's evaluation shall consider facts, conditions, or circumstances concerning the program's operation, the well-being of persons served by the program, available consumer evaluations of the program, and information about the qualifications of the personnel employed by the applicant or license holder.

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The commissioner shall evaluate the results of the study required in subdivision 3 and determine whether a risk of harm to the persons served by the program exists. In conducting this evaluation, the commissioner shall apply the disqualification standards set forth in rules adopted under this chapter. Prior to the adoption of rules establishing disqualification standards, the commissioner shall forward the proposed rules to the commissioner of human rights for review and recommendation concerning the protection of individual rights. The recommendation of the commissioner of human rights is not binding on the commissioner of human services.

Sec. 18. Minnesota Statutes 1996, section 245A.04, subdivision 7, is amended to read:

Subd. 7. [ISSUANCE OF A LICENSE; PROVISIONAL EXTENSION OF A LICENSE.] (a) If the commissioner determines that the program complies with all applicable rules and laws, the commissioner shall issue a license. At minimum, the license shall state:

(1) the name of the license holder;

(2) the address of the program;

(3) the effective date and expiration date of the license;

(4) the type of license;

(5) the maximum number and ages of persons that may receive services from the program; and

(6) any special conditions of licensure.

(b) The commissioner may issue a provisional an initial license for a period not to exceed one year two years if:

(1) the commissioner is unable to conduct the evaluation or observation required by subdivision 4, paragraph (a), clauses (3) and (4), because the program is not yet operational;

(2) certain records and documents are not available because persons are not yet receiving services from the program; and

(3) the applicant complies with applicable laws and rules in all other respects.

A provisional license must not be issued except at the time that a license is first issued to an applicant.

(c) A decision by the commissioner to issue a license does not guarantee that any person or persons will be placed or cared for in the licensed program. A license shall not be transferable to another individual, corporation, partnership, voluntary association, other organization, or controlling or to another location.

For purposes of reimbursement for meals only, under the Child and Adult Care Food Program, Code of Federal Regulations, title 7, subtitle B, chapter II, subchapter A, part 226, relocation within the same county by a licensed family day care provider, shall be considered an extension of the license for a period of no more than 30 calendar days or until the new license is issued, whichever occurs first, provided the county agency has determined the family day care provider meets licensure requirements at the new location.

Unless otherwise specified by statute, all licenses expire at 12:01 a.m. on the day after the expiration date stated on the license. A license holder must apply for and be granted a new license to operate the program or the program must not be operated after the expiration date.

Sec. 19. Minnesota Statutes 1996, section 245A.06, subdivision 1, is amended to read:

Subdivision 1. [CONTENTS OF CORRECTION ORDERS OR FINES.] (a) If the commissioner finds that the applicant or license holder has failed to comply with an applicable law or rule and this failure does not imminently endanger the health, safety, or rights of the persons served by the program, the commissioner may issue a correction order to or impose a fine on the applicant or license holder. The correction order or fine must state:

(1) the conditions that constitute a violation of the law or rule;

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(2) the specific law or rule violated; and

(3) the time allowed to correct each violation; and

(4) if a fine is imposed, the amount of the fine.

(b) Nothing in this section prohibits the commissioner from proposing a sanction as specified in section 245A.07, prior to issuing a correction order or fine.

Sec. 20. Minnesota Statutes 1996, section 245A.06, subdivision 3, is amended to read:

Subd. 3. [FAILURE TO COMPLY.] If upon reinspection, the commissioner finds that the applicant or license holder has not corrected the violations specified in the correction order, the commissioner may order impose a fine. If a fine was imposed and the violation was not corrected, the commissioner may impose an additional fine. This section does not prohibit the commissioner from seeking a court order, denying an application, or suspending, revoking, or making probationary conditional the license in addition to ordering imposing a fine.

Sec. 21. Minnesota Statutes 1996, section 245A.06, subdivision 4, is amended to read:

Subd. 4. [NOTICE OF FINE; APPEAL RECONSIDERATION OF FINE.] A license holder who is ordered to pay a fine must be notified of the order by certified mail. The notice must be mailed to the address shown on the application or the last known address of the license holder. The notice must state the reasons the fine was ordered and must inform the license holder of the responsibility for payment of fines in subdivision 7 and the right to a contested case hearing under chapter 14 request reconsideration of the fine. The license holder may appeal request reconsideration of the order to forfeit a fine by notifying the commissioner by certified mail within 15 20 calendar days after receiving the order. A timely appeal request for reconsideration shall stay forfeiture of the fine until the commissioner issues a final order under section 245A.08, subdivision 5 decision on the request for reconsideration. The request for reconsideration must be in writing and:

(1) specify the parts of the violation that are alleged to be in error;

(2) explain why they are in error;

(3) include documentation to support the allegation of error; and

(4) any other information relevant to the fine or the amount of the fine.

The commissioner's disposition of a request for reconsideration is final and not subject to appeal under chapter 14.

Sec. 22. Minnesota Statutes 1996, section 245A.06, subdivision 5, is amended to read:

Subd. 5. [FORFEITURE OF FINES.] The license holder shall pay the fines assessed on or before the payment date specified in the commissioner's order. If the license holder fails to fully comply with the order, the commissioner shall issue a second fine or suspend the license until the license holder complies. If the license holder receives state funds, the state, county, or municipal agencies or departments responsible for administering the funds shall withhold payments and recover any payments made while the license is suspended for failure to pay a fine.

Sec. 23. Minnesota Statutes 1996, section 245A.06, subdivision 5a, is amended to read:

Subd. 5a. [ACCRUAL OF FINES.] A license holder shall promptly notify the commissioner of human services, in writing, when a violation specified in an order to forfeit is corrected. A fine assessed for a violation shall stop accruing when the commissioner receives the written notice. The commissioner shall reinspect the program within three working days after receiving the notice. If upon reinspection the commissioner determines that a violation has not been corrected as indicated by the order to forfeit, accrual of the daily fine resumes on the date of reinspection and the amount of fines that otherwise would have accrued between the date the commissioner received the notice and date of the reinspection is added to the total assessment due from the license holder the commissioner may issue a second fine. The commissioner shall notify the license

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holder by certified mail that accrual of the a second fine has resumed been assessed. The license holder may challenge the resumption in a contested case under chapter 14 by written request within 15 days after receipt of the notice of resumption. Recovery of the resumed fine must be stayed if a controlling individual or a legal representative on behalf of the license holder makes a written request for a hearing. The request for hearing, however, may not stay accrual of the daily fine for violations that have not been corrected. The cost of reinspection conducted under this subdivision for uncorrected violations must be added to the total amount of accrued fines due from the license holder request reconsideration of the second fine under the provisions of subdivision 4.

Sec. 24. Minnesota Statutes 1996, section 245A.06, subdivision 6, is amended to read:

Subd. 6. [AMOUNT OF FINES.] Until the commissioner adopts one or more schedules of fines, Fines shall be assessed as follows:

(1) the license holder shall forfeit $1,000 for each occurrence of violation of law or rule prohibiting the maltreatment of children or the abuse, neglect, or exploitation maltreatment of vulnerable adults, including but not limited to corporal punishment, illegal or unauthorized use of physical, mechanical, or chemical restraints, and illegal or unauthorized use of aversive or deprivation procedures;

(2) the license holder shall forfeit $200 for each occurrence of a violation of law or rule governing matters of health, safety, or supervision, including but not limited to the provision of adequate staff to child or adult ratios, except that the holder of a family or group family day care license shall forfeit $100 for a violation under this clause; and

(3) the license holder shall forfeit $100 for each occurrence of a violation of law or rule other than those included in clauses (1) and (2), except that the holder of a family or group family day care license shall forfeit $50 for a violation under this clause.

For the purposes of this section, "occurrence" means each calendar day or part of a day that a violation continues to exist after the date set for correction identified in the commissioner's correction forfeiture order.

Sec. 25. Minnesota Statutes 1996, section 245A.06, subdivision 7, is amended to read:

Subd. 7. [RESPONSIBILITY FOR PAYMENT OF FINES.] When a fine has been assessed, the license holder may not avoid payment by closing, selling, or otherwise transferring the licensed program to a third party. In such an event, the license holder will be personally liable for payment. In the case of a corporation, each controlling individual is personally and jointly liable for payment.

Fines for child care centers must be assessed according to this section.

Sec. 26. Minnesota Statutes 1996, section 245A.07, subdivision 1, is amended to read:

Subdivision 1. [SANCTIONS AVAILABLE.] In addition to ordering forfeiture of fines, the commissioner may propose to suspend, revoke, or make probationary conditional the license or secure an injunction against the continuing operation of the program of a license holder who does not comply with applicable law or rule. When applying sanctions authorized under this section, the commissioner shall consider the nature, chronicity, or severity of the violation of law or rule and the effect of the violation on the health, safety, or rights of persons served by the program.

Sec. 27. Minnesota Statutes 1996, section 245A.07, subdivision 3, is amended to read:

Subd. 3. [SUSPENSION, REVOCATION, PROBATION DENIAL OF CONDITIONAL LICENSE.] The commissioner may suspend, revoke, or make probationary conditional, or deny a license if an applicant or a license holder fails to comply fully with applicable laws or rules, or knowingly withholds relevant information from or gives false or misleading information to the commissioner in connection with an application for a license or during an investigation. A license holder who has had a license suspended, revoked, or made probationary conditional must be given notice of the action by certified mail. The notice must be mailed to the address shown on the application or the last known address of the license holder. The notice must state the reasons the license was suspended, revoked, or made probationary conditional.

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(a) If the license was suspended or revoked, the notice must inform the license holder of the right to a contested case hearing under chapter 14. The license holder may appeal an order suspending or revoking a license. The appeal of an order suspending or revoking a license must be made in writing by certified mail and must be received by the commissioner within ten calendar days after the license holder receives notice that the license has been suspended or revoked.

(b) If the license was made probationary conditional, the notice must inform the license holder of the right to request a reconsideration by the commissioner. The request for reconsideration must be made in writing by certified mail and must be received by the commissioner within ten calendar days after the license holder receives notice that the license has been made probationary conditional. The license holder may submit with the request for reconsideration written argument or evidence in support of the request for reconsideration. The commissioner's disposition of a request for reconsideration is final and is not subject to appeal under chapter 14.

Sec. 28. Minnesota Statutes 1996, section 245A.08, subdivision 1, is amended to read:

Subdivision 1. [RECEIPT OF APPEAL; CONDUCT OF HEARING.] Upon receiving a timely appeal or petition pursuant to sections section 245A.05 to or 245A.07, the commissioner shall issue a notice of and order for hearing to the appellant under chapter 14.

Sec. 29. Minnesota Statutes 1996, section 245A.08, subdivision 2, is amended to read:

Subd. 2. [CONDUCT OF HEARINGS.] At any hearing provided for by sections section 245A.05 to or 245A.07, the appellant may be represented by counsel and has the right to call, examine, and cross-examine witnesses. The administrative law judge may require the presence of witnesses and evidence by subpoena on behalf of any party.

Sec. 30. Minnesota Statutes 1996, section 245A.09, subdivision 7, is amended to read:

Subd. 7. [REGULATORY METHODS.] (a) Where appropriate and feasible the commissioner shall identify and implement alternative methods of regulation and enforcement to the extent authorized in this subdivision. These methods shall include:

(1) expansion of the types and categories of licenses that may be granted;

(2) when the standards of another state or federal governmental agency or an independent accreditation body have been shown to predict compliance with the rules, the commissioner shall consider compliance with the governmental or accreditation standards to be equivalent to partial compliance with the rules; and

(3) use of an abbreviated inspection that employs key standards that have been shown to predict full compliance with the rules.

For programs and services for people with developmental disabilities, the commissioner of human services shall develop demonstration projects to use the standards of the commission on accreditation of rehabilitation facilities and the standards of the accreditation council on services to persons with disabilities during the period of July 1, 1993 to December 31, 1994, and incorporate the alternative use of these standards and methods in licensing rules where appropriate. If the commissioner determines that the methods in clause (2) or (3) can be used in licensing a program, the commissioner may reduce any fee set under section 245A.10 by up to 50 percent. The commissioner shall present a plan by January 31, 1995, to accept accreditation by either the accreditation council on services to people with disabilities or the commission on the accreditation of rehabilitation services as evidence of being in compliance where applicable with state licensing.

(b) The commissioner shall work with the commissioners of health, public safety, administration, and children, families, and learning in consolidating duplicative licensing and certification rules and standards if the commissioner determines that consolidation is administratively feasible, would significantly reduce the cost of licensing, and would not reduce the protection given to persons receiving services in licensed programs. Where administratively feasible and appropriate, the commissioner shall work with the commissioners of health, public safety, administration, and children, families, and learning in conducting joint agency inspections of programs.

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(c) The commissioner shall work with the commissioners of health, public safety, administration, and children, families, and learning in establishing a single point of application for applicants who are required to obtain concurrent licensure from more than one of the commissioners listed in this clause.

(d) The commissioner may specify in rule periods of licensure up to two years.

Sec. 31. Minnesota Statutes 1996, section 245A.11, subdivision 2, is amended to read:

Subd. 2. [PERMITTED SINGLE-FAMILY RESIDENTIAL USE.] Residential programs with a licensed capacity of six or fewer persons shall be considered a permitted single-family residential use of property for the purposes of zoning and other land use regulations, except that a residential program whose primary purpose is to treat juveniles who have violated criminal statutes relating to sex offenses or have been adjudicated delinquent on the basis of conduct in violation of criminal statutes relating to sex offenses shall not be considered a permitted use. This exception shall not apply to residential programs licensed before July 1, 1995. Programs otherwise allowed under this subdivision shall not be prohibited by operation of restrictive covenants or similar restrictions, regardless of when entered into, which cannot be met because of the nature of the licensed program, including provisions which require the home's occupants be related, and that the home must be occupied by the owner, or similar provisions.

Sec. 32. Minnesota Statutes 1996, section 245A.16, subdivision 2, is amended to read:

Subd. 2. [INVESTIGATIONS.] (a) The county or private agency shall conduct timely investigations of allegations of abuse or neglect maltreatment of children or adults in programs for which the county or private agency is the commissioner's designated representative and record a disposition of each complaint in accordance with applicable law or rule. The county or private agency shall conduct similar investigations of allegations of violations of rules governing licensure of the program.

(b) If an investigation conducted under clause (a) results in evidence that the commissioner should deny an application or suspend, revoke, or make probationary conditional a license, the county or private agency shall make that recommendation to the commissioner within ten working days.

Sec. 33. [245A.22] [INDEPENDENT LIVING ASSISTANCE FOR YOUTH.]

Subdivision 1. [INDEPENDENT LIVING ASSISTANCE FOR YOUTH.] "Independent living assistance for youth" means a nonresidential program that provides a system of services that includes training, counseling, instruction, supervision, and assistance provided to youth according to the youth's independent living plan, when the placements in the program are made by the county agency. Services may include assistance in locating housing, budgeting, meal preparation, shopping, personal appearance, counseling, and related social support services needed to meet the youth's needs and improve the youth's ability to conduct such tasks independently. Such services shall not extend to youths needing 24-hour per day supervision and services. Youths needing a 24-hour per day program of supervision and services shall not be accepted or retained in an independent living assistance program.

Subd. 2. [ADMISSION.] The license holder shall accept as clients in the independent living assistance program only individuals specified under section 256E.115.

Subd. 3. [INDEPENDENT LIVING PLAN.] Unless an independent living plan has been developed by the local agency, the license holder shall develop a plan based on the client's individual needs that specifies objectives for the client. The services provided shall include those specified in this section and the services specified under section 256E.115, subdivision 2, paragraph (a). The plan shall identify the persons responsible for implementation of each part of the plan. The plan shall be reviewed as necessary, but at least annually.

Subd. 4. [RECORDS.] The license holder shall maintain a record for each client.

(a) [REQUIRED RECORDS.] For each client the record maintained by the license holder shall document the following:

(1) admission information;

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(2) the independent living plan;

(3) delivery of the services required of the license holder in the independent living plan;

(4) the client's progress toward obtaining the objectives identified in the independent living plan; and

(5) a termination summary after service is terminated.

(b) [MONEY RECORDS.] If the license holder manages the client's money, the record maintained by the license holder shall also include the following:

(1) written permission from the client or the client's legal guardian to manage the client's money;

(2) the reasons the license holder is to manage the client's money; and

(3) a complete record of the use of the client's money and reconciliation of the account.

Subd. 5. [SERVICE TERMINATION PLAN.] The license holder, in conjunction with the county agency, shall establish a service termination plan that specifies how independent living assistance services will be terminated and the actions to be performed by the involved agencies, including necessary referrals for other ongoing services.

Subd. 6. [PLACE OF RESIDENCE PROVIDED BY PROGRAM.] When a client's place of residence is provided by the license holder as part of the independent living assistance program, the place of residence is not subject to separate licensure.

Subd. 7. [GENERAL LICENSING REQUIREMENTS APPLY.] In addition to the requirements of this section, providers of independent living assistance are subject to general licensing requirements of this chapter.

Sec. 34. [245A.65] [LICENSE HOLDER REQUIREMENTS GOVERNING MALTREATMENT OF VULNERABLE ADULTS.]

Subdivision 1. [LICENSE HOLDER INTERNAL REPORTING AND INVESTIGATION OF MALTREATMENT.] All license holders serving vulnerable adults shall establish and enforce written policies and procedures related to suspected or alleged maltreatment, and shall orient clients and mandated reporters who are under the control of the license holder to these procedures, as defined in section 626.5572, subdivision 16.

(a) License holders must establish policies and procedures allowing but not mandating the internal reporting of alleged or suspected maltreatment. License holders shall ensure that the policies and procedures on internal reporting:

(1) meet all the requirements identified for the optional internal reporting policies and procedures in section 626.557, subdivision 4a; and

(2) identify the primary and secondary person or position to whom internal reports may be made and the primary and secondary person or position responsible for forwarding internal reports to the common entry point as defined in section 626.5572, subdivision 5. The secondary person must be involved when there is reason to believe that the primary person was involved in the alleged or suspected maltreatment.

(b) The license holder shall:

(1) establish and maintain policies and procedures to ensure that an internal review is completed when the facility has reason to know that an internal or external report of alleged or suspected maltreatment has been made. The review must include an evaluation of whether related policies and procedures were followed, whether the policies and procedures were adequate, whether there is a need for additional staff training, and whether there is a need for any further action to be taken by the facility to protect the health and safety of vulnerable adults;

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(2) identify the primary and secondary person or position who will ensure that, when required, internal reviews are completed. The secondary person shall be involved when there is reason to believe that the primary person was involved in the alleged or suspected maltreatment; and

(3) document and make internal reviews accessible to the commissioner upon the commissioner's request.

(c) The license holder shall provide an orientation to the internal and external reporting procedures to all persons receiving services. The orientation shall include the telephone number for the license holder's common entry point as defined in section 626.5572, subdivision 5. If applicable, the person's legal representative must be notified of the orientation. The program shall provide this orientation for each new person within 24 hours of admission, or for persons who would benefit more from a later orientation, the orientation may take place within 72 hours.

(d) The license holder shall post a copy of the internal and external reporting policies and procedures, including the telephone number of the common entry point as defined in section 626.5572, subdivision 5, in a prominent location in the program and have it available upon request to mandated reporters, persons receiving services, and the person's legal representatives.

Subd. 2. [ABUSE PREVENTION PLANS.] All license holders shall establish and enforce ongoing written program abuse prevention plans and individual abuse prevention plans as required under section 626.557, subdivision 14.

(a) The scope of the program abuse prevention plan is limited to the population, physical plant, and environment within the control of the license holder and the location where licensed services are provided. In addition to the requirements in section 626.557, subdivision 14, the program abuse prevention plan shall meet the requirements in clauses (1) to (5).

(1) The assessment of the population shall include an evaluation of the following factors: age, gender, mental functioning, physical and emotional health or behavior of the client; the need for specialized programs of care for clients; the need for training of staff to meet identified individual needs; and the knowledge a license holder may have regarding previous abuse that is relevant to minimizing risk of abuse for clients.

(2) The assessment of the physical plant where the licensed services are provided shall include an evaluation of the following factors: the condition and design of the building as it relates to the safety of the clients; and the existence of areas in the building which are difficult to supervise.

(3) The assessment of the environment for each facility and for each site when living arrangements are provided by the agency shall include an evaluation of the following factors: the location of the program in a particular neighborhood or community; the type of grounds and terrain surrounding the building; the type of internal programming; and the program's staffing patterns.

(4) The license holder shall provide an orientation to the program abuse prevention plan for clients receiving services. If applicable, the client's legal representative must be notified of the orientation. The license holder shall provide this orientation for each new person within 24 hours of admission, or for persons who would benefit more from a later orientation, the orientation may take place within 72 hours.

(5) The license holder's governing body shall review the plan at least annually using the assessment factors in the plan and any substantiated maltreatment findings that occurred since the last review. The governing body shall revise the plan, if necessary, to reflect the review results.

(6) A copy of the program abuse prevention plan shall be posted in a prominent location in the program and be available upon request to mandated reporters, persons receiving services, and legal representatives.

(b) In addition to the requirements in section 626.557, subdivision 14, the individual abuse prevention plan shall meet the requirements in clauses (1) and (2).

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(1) The plan shall include a statement of measures that will be taken to minimize the risk of abuse to the vulnerable adult when the individual assessment required in section 626.557, subdivision 14, paragraph (b), indicates the need for measures in addition to the specific measures identified in the program abuse prevention plan. The measures shall include the specific actions the program will take to minimize the risk of abuse within the scope of the licensed services, and will identify referrals made when the vulnerable adult is susceptible to abuse outside the scope or control of the licensed services. When the assessment indicates that the vulnerable adult does not need specific risk reduction measures in addition to those identified in the program abuse prevention plan, the individual abuse prevention plan shall document this determination.

(2) An individual abuse prevention plan shall be developed for each new person as part of the initial individual program plan or service plan required under the applicable licensing rule. The review and evaluation of the individual abuse prevention plan shall be done as part of the review of the program plan or service plan. The person receiving services shall participate in the development of the individual abuse prevention plan to the full extent of the person's abilities. If applicable, the person's legal representative shall be given the opportunity to participate with or for the person in the development of the plan. The interdisciplinary team shall document the review of all abuse prevention plans at least annually, using the individual assessment and any reports of abuse relating to the person. The plan shall be revised to reflect the results of this review.

Subd. 3. [ORIENTATION OF MANDATED REPORTERS.] The license holder shall ensure that each new mandated reporter, as defined in section 626.5572, subdivision 16, who is under the control of the license holder, receives an orientation within 72 hours of first providing direct contact services as defined in section 245A.04, subdivision 3, to a vulnerable adult and annually thereafter. The orientation and annual review shall inform the mandated reporters of the reporting requirements and definitions in sections 626.557 and 626.5572, the requirements of this section, the license holder's program abuse prevention plan, and all internal policies and procedures related to the prevention and reporting of maltreatment of individuals receiving services.

Sec. 35. [245B.01] [RULE CONSOLIDATION.]

This chapter establishes new methods to ensure the quality of services to persons with mental retardation or related conditions, and streamlines and simplifies regulation of services and supports for persons with mental retardation or related conditions. Sections 245B.02 to 245B.07 establishes new standards that eliminate duplication and overlap of regulatory requirements by consolidating and replacing rule parts from four program rules. Section 245B.08 authorizes the commissioner of human services to develop and use new regulatory strategies to maintain compliance with the streamlined requirements.

Sec. 36. [245B.02] [DEFINITIONS.]

Subdivision 1. [SCOPE.] The terms used in this chapter have the meanings given them.

Subd. 2. [APPLICANT.] "Applicant" has the meaning given in section 245A.02, subdivision 3.

Subd. 3. [CASE MANAGER.] "Case manager" means the individual designated by the county board under rules of the commissioner to provide case management services as delineated in section 256B.092 or successor provisions.

Subd. 4. [CONSUMER.] "Consumer" means a person who has been determined eligible to receive and is receiving services or support for persons with mental retardation or related conditions.

Subd. 5. [COMMISSIONER.] "Commissioner" means the commissioner of the department of human services or the commissioner's designated representative.

Subd. 6. [DAY TRAINING AND HABILITATION SERVICES FOR ADULTS WITH MENTAL RETARDATION OR RELATED CONDITIONS.] "Day training and habilitation services for adults with mental retardation or related conditions" has the meaning given in sections 252.40 to 252.46.

Subd. 7. [DEPARTMENT.] "Department" means the department of human services.

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Subd. 8. [DIRECT SERVICE.] "Direct service" means, for a consumer receiving residential-based services, day training and habilitation services, or respite care services, one or more of the following: supervision, assistance, or training.

Subd. 9. [HEALTH SERVICES.] "Health services" means any service or treatment consistent with the health needs of the consumer, such as medication administration and monitoring, medical, dental, nutritional, health monitoring, wellness education, and exercise.

Subd. 10. [INCIDENT.] "Incident" means any serious injury as determined by section 245.91, subdivision 6; accident; reports of a child or vulnerable adult maltreatment; circumstances that involve a law enforcement agency; or a consumer's death.

Subd. 11. [INDIVIDUAL SERVICE PLAN.] "Individual service plan" has the meaning given in section 256B.092 or successor provisions.

Subd. 12. [INDIVIDUAL WHO IS RELATED.] "Individual who is related" has the meaning given in section 245A.02, subdivision 13.

Subd. 13. [INTERMEDIATE CARE FACILITY FOR PERSONS WITH MENTAL RETARDATION OR RELATED CONDITIONS OR ICF/MR.] "Intermediate care facility" for persons with mental retardation or related conditions or ICF/MR means a residential program licensed to provide services to persons with mental retardation or related conditions under section 252.28 and chapter 245A and a physical facility licensed as a supervised living facility under chapter 144, which together are certified by the department of health as an intermediate care facility for persons with mental retardation or related conditions.

Subd. 14. [LEAST RESTRICTIVE ENVIRONMENT.] "Least restrictive environment" means an environment where services:

(1) are delivered with minimum limitation, intrusion, disruption, or departure from typical patterns of living available to persons without disabilities;

(2) do not subject the consumer or others to unnecessary risks to health or safety; and

(3) maximize the consumer's level of independence, productivity, and inclusion in the community.

Subd. 15. [LEGAL REPRESENTATIVE.] "Legal representative" means the parent or parents of a consumer who is under 18 years of age or a guardian, conservator, or guardian ad litem authorized by the court, or other legally authorized representative to make decisions about services for a consumer.

Subd. 16. [LICENSE.] "License" has the meaning given in section 245A.02, subdivision 8.

Subd. 17. [LICENSE HOLDER.] "License holder" has the meaning given in section 245A.02, subdivision 9.

Subd. 18. [PERSON WITH MENTAL RETARDATION OR A RELATED CONDITION.] "Person with mental retardation or a related condition" means a person who has been diagnosed under section 256B.092 as having substantial limitations in present functioning, manifested as significantly subaverage intellectual functioning, existing concurrently with demonstrated deficits in adaptive behavior, and who manifests these conditions before the person's 22nd birthday. A person with a related condition means a person who meets the diagnostic definition under section 252.27, subdivision 1a.

Subd. 19. [PSYCHOTROPIC MEDICATION USE CHECKLIST.] "Psychotropic medication use checklist" means the psychotropic medication monitoring checklist and manual used to govern the administration of psychotropic medications. The commissioner may revise or update the psychotropic medication use checklist to comply with legal requirements or to meet professional standards or guidelines in the area of developmental disabilities. For purposes of this chapter, psychotropic medication means any medication prescribed to treat mental illness and associated behaviors or to control or alter behavior. The major classes of psychotropic medication are antipsychotic (neuroleptic), antidepressant, antianxiety, antimania, stimulant, and sedative or hypnotic. Other miscellaneous medications are considered to be a psychotropic medication when they are specifically prescribed to treat a mental illness or to control or alter behavior.

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Subd. 20. [RESIDENTIAL-BASED HABILITATION.] "Residential-based habilitation" means care, supervision, and training provided primarily in the consumer's own home or place of residence but also including community-integrated activities following the individual service plan. Residential habilitation services are provided in coordination with the provision of day training and habilitation services for those persons receiving day training and habilitation services under sections 252.40 to 252.46.

Subd. 21. [RESPITE CARE.] "Respite care" has the meaning given in section 245A.02, subdivision 15.

Subd. 22. [SERVICE.] "Service" means care, supervision, activities, or training designed to achieve the outcomes assigned to the license holder.

Subd. 23. [SEMI-INDEPENDENT LIVING SERVICES OR SILS] "Semi-independent living services" or "SILS" has the meaning given in section 252.275.

Subd. 24. [VOLUNTEER.] "Volunteer" means an individual who, under the direction of the license holder, provides direct services without pay to consumers served by the license holder.

Sec. 37. [245B.03] [APPLICABILITY AND EFFECT.]

Subdivision 1. [APPLICABILITY.] The standards in this chapter govern services to persons with mental retardation or related conditions receiving services from license holders providing residential-based habilitation; day training and habilitation services for adults; semi-independent living services; residential programs that serve more than four consumers, including intermediate care facilities for persons with mental retardation; and respite care provided outside the consumer's home for more than four consumers at the same time at a single site.

Subd. 2. [RELATIONSHIP TO OTHER STANDARDS GOVERNING SERVICES FOR PERSONS WITH MENTAL RETARDATION OR RELATED CONDITIONS.] (a) ICFs/MR are exempt from:

(1) section 245B.04;

(2) section 245B.06, subdivisions 4 and 6; and

(3) section 245B.07, subdivisions 4, paragraphs (b) and (c); 7; and 8, paragraphs (1), clause (iv), and (2).

(b) License holders also licensed under chapter 144 as a supervised living facility are exempt from section 245B.04.

(c) Residential service sites controlled by license holders licensed under chapter 245B for home and community-based waivered services for four or fewer adults are exempt from compliance with Minnesota Rules, parts 9543.0040, subpart 2, item C; 9555.5505; 9555.5515, items B and G; 9555.5605; 9555.5705; 9555.6125, subparts 3, item C, subitem (2), and 4 to 6; 9555.6185; 9555.6225, subpart 8; 9555.6245; 9555.6255; and 9555.6265. The commissioner may approve alternative methods of providing overnight supervision using the process and criteria for granting a variance in section 245A.04, subdivision 9. This chapter does not apply to foster care homes that do not provide residential habilitation services funded under the home and community-based waiver programs defined in section 256B.092.

(d) The commissioner may exempt license holders from applicable standards of this chapter when the license holder meets the standards under section 245A.09, subdivision 7. License holders that are accredited by an independent accreditation body shall continue to be licensed under this chapter.

(e) License holders governed by sections 245B.02 to 245B.07 must also meet the licensure requirements in chapter 245A.

(f) Nothing in this chapter prohibits license holders from concurrently serving consumers with and without mental retardation or related conditions provided this chapter's standards are met as well as other relevant standards.

(g) The documentation that sections 245B.02 to 245B.07 require of the license holder meets the individual program plan required in section 256B.092 or successor provisions.

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Sec. 38. [245B.04] [CONSUMER RIGHTS.]

Subdivision 1. [LICENSE HOLDER'S RESPONSIBILITY FOR CONSUMERS' RIGHTS.] The license holder must:

(1) provide the consumer or the consumer's legal representative a copy of the consumer's rights on the day that services are initiated and an explanation of the rights in subdivisions 2 and 3 within five working days of service initiation. Reasonable accommodations shall be made by the license holder to provide this information in other formats as needed to facilitate understanding of the rights by the consumer and the consumer's legal representative, if any;

(2) document the consumer's or the consumer's legal representative's receipt of a copy of the rights and an explanation of the rights; and

(3) ensure the exercise and protection of the consumer's rights in the services provided by the license holder and authorized in the individual service plan.

Subd. 2. [SERVICE-RELATED RIGHTS.] A consumer's service-related rights include the right to:

(1) refuse or terminate services and be informed of the consequences of refusing or terminating services;

(2) know, in advance, limits to the services available from the license holder;

(3) know conditions and terms governing the provision of services, including those related to initiation and termination;

(4) know what the charges are for services, regardless of who will be paying for the services, and be notified of changes in those charges;

(5) know, in advance, whether services are covered by insurance, government funding, or other sources, and be told of any charges the consumer or other private party may have to pay; and

(6) receive licensed services from individuals who are competent and trained, who have professional certification or licensure, as required, and who meet additional qualifications identified in the individual service plan.

Subd. 3. [PROTECTION-RELATED RIGHTS.] The consumer's protection-related rights include the right to:

(1) have personal, financial, services, and medical information kept private, and be advised of the license holder's policies and procedures regarding disclosure of such information;

(2) access records and recorded information;

(3) be free from maltreatment;

(4) be treated with courtesy and respect for the consumer's individuality, mode of communication, and culture, and receive respectful treatment of the consumer's property;

(5) voice grievances, know the contact persons responsible for addressing problems and how to contact those persons;

(6) any procedures for grievance or complaint resolution and the right to appeal under section 256.045;

(7) know the name and address of the state, county, or advocacy agency to contact for additional information or assistance;

(8) assert these rights personally, or have them asserted by the consumer's family or legal representative, without retaliation;

(9) give or withhold written informed consent to participate in any research or experimental treatment;

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(10) have daily, private access to and use of a noncoin- operated telephone for local calls and long-distance calls made collect or paid for by the resident;

(11) receive and send uncensored, unopened mail;

(12) marital privacy for visits with the consumer's spouse and, if both are residents of the site, the right to share a bedroom and bed;

(13) associate with other persons of the consumer's choice;

(14) personal privacy; and

(15) engage in chosen activities.

Sec. 39. [245B.05] [CONSUMER PROTECTION STANDARDS.]

Subdivision 1. [ENVIRONMENT.] The license holder must:

(1) ensure that services are provided in a safe and hazard-free environment when the license holder is the owner, lessor, or tenant of the service site. All other license holders shall inform the consumer or the consumer's legal representative and case manager about any environmental safety concerns in writing;

(2) lock doors only to protect the safety of consumers and not as a substitute for staff supervision or interactions with consumers;

(3) follow procedures that minimize the consumer's health risk from communicable diseases; and

(4) maintain equipment, vehicles, supplies, and materials owned or leased by the license holder in good condition.

Subd. 2. [LICENSED CAPACITY FOR FACILITY-BASED DAY TRAINING AND HABILITATION SERVICES.] Licensed capacity of day training and habilitation service sites must be determined by the amount of primary space available, the scheduling of activities at other service sites, and the space requirements of consumers receiving services. Primary space does not include hallways, stairways, closets, utility areas, bathrooms, kitchens, and floor areas beneath stationary equipment. A minimum of 40 square feet of primary space must be available for each consumer who is engaged in a day training and habilitation activity at the site for which the licensed capacity must be determined.

Subd. 3. [RESIDENTIAL SERVICE SITES FOR MORE THAN FOUR CONSUMERS; FOUR-BED ICFS/MR.] Residential service sites licensed to serve more than four consumers and four-bed ICFs/MR must meet the fire protection provisions of either the Residential Board and Care Occupancies Chapter or the Health Care Occupancies Chapter of the Life Safety Code (LSC), National Fire Protection Association, 1985 edition, or its successors. Sites meeting the definition of a residential board and care occupancy for 16 or less beds must have the emergency evacuation capability of residents evaluated in accordance with Appendix F of the LSC or its successors, except for those sites that meet the LSC Health Care Occupancies Chapter or its successors.

Subd. 4. [MEETING FIRE AND SAFETY CODES.] An applicant or license holder under sections 245A.01 to 245A.16 must document compliance with applicable building codes, fire and safety codes, health rules, and zoning ordinances, or document that an appropriate waiver has been granted.

Subd. 5. [CONSUMER HEALTH.] The license holder is responsible for meeting the health service needs assigned to the license holder in the individual service plan and for bringing health needs as discovered by the license holder promptly to the attention of the consumer, the consumer's legal representative, and the case manager. The license holder is required to maintain documentation on how the consumer's health needs will be met, including a description of procedures the license holder will follow for the consumer regarding medication monitoring and administration and seizure monitoring, if needed. The medication administration procedures are those procedures necessary to implement medication and treatment orders issued by appropriately licensed professionals, and must be established in consultation with a registered nurse, nurse practitioner, physician's assistant, or medical doctor.

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Subd. 6. [FIRST AID.] When the license holder is providing direct service and supervision to a consumer who requires a 24-hour plan of care and receives services at a site licensed under this chapter, the license holder must have available a staff person trained in first aid, and, if needed under section 245B.07, subdivision 6, paragraph (d), cardiopulmonary resuscitation from a qualified source, as determined by the commissioner.

Subd. 7. [REPORTING INCIDENTS AND EMERGENCIES.] The license holder must report the following incidents to the consumer's legal representative, caregiver, and case manager within 24 hours of the occurrence, or within 24 hours of receipt of the information:

(1) the death of a consumer;

(2) any medical emergencies, unexpected serious illnesses, or accidents that require physician treatment or hospitalization;

(3) a consumer's unauthorized absence; or

(4) any fires and incidents involving a law enforcement agency.

Death or serious injury of the consumer must also be reported to the commissioner and the ombudsman, as required under sections 245.91 and 245.94, subdivision 2a.

Sec. 40. [245B.06] [SERVICE STANDARDS.]

Subdivision 1. [OUTCOME-BASED SERVICES.] (a) The license holder must provide outcome-based services in response to the consumer's identified needs as specified in the individual service plan.

(b) Services must be based on the needs and preferences of the consumer and the consumer's personal goals and be consistent with the principles of least restrictive environment, self-determination, and consistent with:

(1) the recognition of each consumer's history, dignity, and cultural background;

(2) the affirmation and protection of each consumer's civil and legal rights;

(3) the provision of services and supports for each consumer which:

(i) promote community inclusion and self-sufficiency;

(ii) provide services in the least restrictive environment;

(iii) promote social relationships, natural supports, and participation in community life;

(iv) allow for a balance between safety and opportunities; and

(v) provide opportunities for the development and exercise of age-appropriate skills, decision making and choice, personal advocacy, and communication; and

(4) the provision of services and supports for families which address the needs of the consumer in the context of the family and support family self-sufficiency.

(c) The license holder must make available to the consumer opportunities to participate in the community, functional skill development, reduced dependency on care providers, and opportunities for development of decision-making skills. "Outcome" means the behavior, action, or status attained by the consumer that can be observed, measured, and can be determined reliable and valid. Outcomes are the equivalent of the long-range goals and short-term goals referenced in section 256B.092, and any rules promulgated under that section.

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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. 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.

Subd. 3. [ASSESSMENTS.] (a) The license holder shall assess and reassess the consumer within stated time lines and assessment areas specified in the individual service plan or as requested in writing by the case manager.

(b) For each area of assessment requested, the license holder must provide a written summary, analysis, and recommendations for use in the development of the individual service plan.

(c) All assessments must include information about the consumer that is descriptive of:

(1) the consumer's strengths and functional skills; and

(2) the level of support and supervision the consumer needs to achieve the outcomes in subdivision 1.

Subd. 4. [SUPPORTS AND METHODS.] The license holder, in coordination with other service providers, shall meet with the consumer, the consumer's legal representative, case manager, and other members of the interdisciplinary team within 45 days of service initiation. Within ten working days after the meeting, the license holder shall develop and document in writing:

(1) the methods that will be used to support the individual or accomplish the outcomes in section 245B.06, subdivision 1, including information about physical and social environments, the equipment and materials required, and techniques that are consistent with the consumer's communication mode and learning style specified as the license holder's responsibility in the individual service plan;

(2) the projected starting date for service supports and the criteria for identifying when the desired outcome has been achieved and when the service supports need to be reviewed; and

(3) the names of the staff, staff position, or contractors responsible for implementing each outcome.

Subd. 5. [PROGRESS REVIEWS.] The license holder must participate in progress review meetings following stated time lines established in the consumer's individual service plan or as requested in writing by the consumer, the consumer's legal representative, or the case manager, at a minimum of once a year. The license holder must summarize the progress toward achieving the desired outcomes and make recommendations in a written report sent to the consumer or the consumer's legal representative and case manager prior to the review meeting. For consumers under public guardianship, the license holder is required to provide quarterly written progress review reports to the consumer, designated family member, and case manager.

Subd. 6. [REPORTS.] The license holder shall provide written reports regarding the consumer's status as requested by the consumer, or the consumer's legal representative and case manager.

Subd. 7. [STAFFING REQUIREMENTS.] The license holder must provide supervision to ensure the health, safety, and protection of rights of each consumer and to be able to implement each consumer's individual service plan. Day training and habilitation programs must meet the minimum staffing requirements as specified in sections 252.40 to 252.46 and rules promulgated under those sections.

Subd. 8. [LEAVING THE RESIDENCE.] As specified in each consumer's individual service plan, each consumer requiring a 24-hour plan of care must leave the residence to participate in regular education, employment, or community activities. License holders, providing services to consumers living in a licensed site, shall ensure that they are prepared to care for consumers whenever they are at the residence during the day because of illness, work schedules, or other reasons.

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Subd. 9. [DAY TRAINING AND HABILITATION SERVICE DAYS.] Day training and habilitation services must meet a minimum of 195 available service days.

Subd. 10. [PROHIBITION.] Psychotropic medication and the use of aversive and deprivation procedures, as referenced in section 245.825 and rules promulgated under that section, cannot be used as a substitute for adequate staffing, as punishment, or for staff convenience.

Sec. 41. [245B.07] [MANAGEMENT STANDARDS.]

Subdivision 1. [CONSUMER DATA FILE.] The license holder must maintain the following information for each consumer:

(1) identifying information that includes date of birth, medications, legal representative, history, medical, and other individual-specific information, and names and telephone numbers of contacts;

(2) consumer health information, including individual medication administration and monitoring information;

(3) the consumer's individual service plan. When a consumer's case manager does not provide a current individual service plan, the license holder shall make a written request to the case manager to provide a copy of the individual service plan and inform the consumer or the consumer's legal representative of the right to an individual service plan and the right to appeal under section 256.045;

(4) copies of assessments, analyses, summaries, and recommendations;

(5) progress review reports;

(6) incident and emergency reports involving the consumer;

(7) discharge summary, when applicable;

(8) record of other license holders serving the consumer that includes a contact person and telephone numbers, services being provided, services that require coordination between two license holders, and name of staff responsible for coordination; and

(9) incidents involving verbal and physical aggression between consumers and self-abuse affecting the consumer.

Subd. 2. [ACCESS TO RECORDS.] The license holder must ensure that the following people have access to the information in subdivision 1:

(1) the consumer, the consumer's legal representative, and anyone properly authorized by the consumer or legal representative;

(2) the consumer's case manager;

(3) staff providing direct services to the consumer unless the information is not relevant to carrying out the individual service plan; and

(4) the county adult foster care licensor, when services are also licensed as an adult foster home. Adult foster home means a licensed residence operated by an operator who, for financial gain or otherwise, provides 24-hour foster care to no more than four functionally impaired residents.

Subd. 3. [RETENTION OF CONSUMER'S RECORDS.] The license holder must retain the records required for consumers for at least three years following termination of services.

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Subd. 4. [STAFF QUALIFICATIONS.] (a) The license holder must ensure that staff is competent through training, experience, and education to meet the consumer's needs and additional requirements as written in the individual service plan. Staff qualifications must be documented. Staff under 18 years of age may not perform overnight duties or administer medication.

(b) Delivery and evaluation of services provided by the license holder to a consumer must be coordinated by a designated person. The designated person or coordinator must minimally have a four-year degree in a field related to service provision, and one year work experience with consumers with mental retardation or related conditions, a two-year degree in a field related to service provision, and two years of work experience with consumers with mental retardation or related conditions, or a diploma in community-based developmental disability services from an accredited post-secondary institution and two years of work experience with consumers with mental retardation or related conditions. The coordinator must provide supervision, support, and evaluation of activities that include:

(1) oversight of the license holder's responsibilities designated in the individual service plan;

(2) instruction and assistance to staff implementing the individual service plan areas;

(3) evaluation of the effectiveness of service delivery, methodologies, and progress on consumer outcomes based on the condition set for objective change; and

(4) review of incident and emergency reports, identification of incident patterns, and implementation of corrective action as necessary to reduce occurrences.

(c) The coordinator is responsible for taking the action necessary to facilitate the accomplishment of the outcomes for each consumer as specified in the consumer's individual service plan.

(d) The license holder must provide for adequate supervision of direct care staff to ensure implementation of the individual service plan.

Subd. 5. [STAFF ORIENTATION.] (a) Within 60 days of hiring staff who provide direct service, the license holder must provide 30 hours of staff orientation. Direct care staff must complete 15 of the 30 hours orientation before providing any unsupervised direct service to a consumer. If the staff person has received orientation training from a license holder licensed under this chapter, or provides semi-independent living services only, the 15-hour requirement may be reduced to eight hours. The total orientation of 30 hours may be reduced to 15 hours if the staff person has previously received orientation training from a license holder licensed under this chapter.

(b) The 30 hours of orientation must combine supervised on-the-job training with coverage of the following material:

(1) review of the consumer's service plans and risk management plan to achieve an understanding of the consumer as a unique individual;

(2) review and instruction on the license holder's policies and procedures, including their location and access;

(3) emergency procedures;

(4) explanation of specific job functions, including implementing objectives from the consumer's individual service plan;

(5) explanation of responsibilities related to chapter 245C; sections 626.556 and 626.557, governing maltreatment reporting and service planning for children and vulnerable adults; and section 245.825, governing use of aversive and deprivation procedures;

(6) medication administration as it applies to the individual consumer, from a training curriculum developed by a health services professional described in section 245B.05, subdivision 5, and when the consumer meets the criteria of having overriding health care needs, then medication administration taught by a health services professional. Once a consumer with overriding health care needs is admitted, staff will be provided with remedial training as deemed necessary by the license holder and the health professional to meet the needs of that consumer.

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For purposes of this section, overriding health care needs means a health care condition that affects the service options available to the consumer because the condition requires:

(i) specialized or intensive medical or nursing supervision; and

(ii) nonmedical service providers to adapt their services to accommodate the health and safety needs of the consumer;

(7) consumer rights; and

(8) other topics necessary as determined by the consumer's individual service plan or other areas identified by the license holder.

(c) The license holder must document each employee's orientation received.

Subd. 6. [STAFF TRAINING.] (a) The license holder shall ensure that direct service staff annually complete hours of training equal to two percent of the number of hours the staff person worked or one percent for license holders providing semi-independent living services. If direct service staff has received training from a license holder licensed under a program rule identified in this chapter or completed course work regarding disability-related issues from a post-secondary educational institute, that training may also count toward training requirements for other services and for other license holders.

(b) The license holder must document the training completed by each employee.

(c) Training shall address staff competencies necessary to address the consumer needs as identified in the consumer's individual service plan and ensure consumer health, safety, and protection of rights. Training may also include other areas identified by the license holder.

(d) For consumers requiring a 24-hour plan of care, the license holder shall provide training in cardiopulmonary resuscitation, from a qualified source determined by the commissioner, if the consumer's health needs as determined by the consumer's physician indicate trained staff would be necessary to the consumer.

Subd. 7. [VOLUNTEERS.] The license holder must ensure that volunteers who provide direct services to consumers receive the training and orientation necessary to fulfill their responsibilities.

Subd. 8. [POLICIES AND PROCEDURES.] The license holder must develop and implement the policies and procedures in paragraphs (1) to (3).

(1) policies and procedures that promote consumer health and safety by ensuring:

(i) consumer safety in emergency situations as identified in section 245B.05, subdivision 7;

(ii) consumer health through sanitary practices;

(iii) safe transportation, when the license holder is responsible for transportation of consumers, with provisions for handling emergency situations;

(iv) a system of recordkeeping for both individuals and the organization, for review of incidents and emergencies, and corrective action if needed;

(v) a plan for responding to and reporting all emergencies, including deaths, medical emergencies, illnesses, accidents, missing consumers, fires, severe weather and natural disasters, bomb threats, and other threats;

(vi) safe medication administration as identified in section 245B.05, subdivision 5;

(vii) psychotropic medication monitoring when the consumer is prescribed a psychotropic medication, including the use of the psychotropic medication use checklist. If the responsibility for implementing the psychotropic medication use checklist has not been assigned in the individual service plan and the consumer lives in a licensed site, the residential license holder shall be designated; and

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(viii) criteria for admission or service initiation developed by the license holder;

(2) policies and procedures that protect consumer rights and privacy by ensuring:

(i) consumer data privacy, in compliance with the Minnesota Data Practices Act, chapter 13; and

(ii) that complaint procedures provide consumers with a simple process to bring grievances and consumers receive a response to the grievance within a reasonable time period. The license holder must provide a copy of the program's grievance procedure and time lines for addressing grievances. The program's grievance procedure must permit consumers served by the program and the authorized representatives to bring a grievance to the highest level of authority in the program; and

(3) policies and procedures that promote continuity and quality of consumer supports by ensuring:

(i) continuity of care and service coordination, including provisions for service termination, temporary service suspension, and efforts made by the license holder to coordinate services with other vendors who also provide support to the consumer. The policy must include the following requirements:

(A) the license holder must notify the consumer or consumer's legal representative and the consumer's case manager in writing of the intended termination or temporary service suspension and the consumer's right to seek a temporary order staying the termination or suspension of service according to the procedures in section 256.045, subdivision 4a or subdivision 6, paragraph (c);

(B) notice of the proposed termination of services must be given at least 60 days before the proposed termination is to become effective, unless services are temporarily suspended according to the license holder's written temporary service suspension procedures, in which case notice must be given as soon as possible;

(C) the license holder must provide information requested by the consumer or consumer's legal representative or case manager when services are temporarily suspended or upon notice of termination;

(D) use of temporary service suspension procedures are restricted to situations in which the consumer's behavior causes immediate and serious danger to the health and safety of the individual or others;

(E) prior to giving notice of service termination or temporary service suspension, the license holder must document actions taken to minimize or eliminate the need for service termination or temporary service suspension; and

(F) during the period of temporary service suspension, the license holder will work with the appropriate county agency to develop reasonable alternatives to protect the individual and others; and

(ii) quality services measured through a program evaluation process including regular evaluations of consumer satisfaction and sharing the results of the evaluations with the consumers and legal representatives.

Subd. 9. [AVAILABILITY OF CURRENT WRITTEN POLICIES AND PROCEDURES.] The license holder shall:

(1) review and update, as needed, the written policies and procedures in this subdivision and inform all consumers or the consumer's legal representatives, case managers, and employees of the revised policies and procedures when they affect the service provision;

(2) inform consumers or the consumer's legal representatives of the written policies and procedures in this subdivision upon service initiation. Copies must be available to consumers or the consumer's legal representatives, case managers, the county where services are located, and the commissioner upon request; and

(3) document and maintain relevant information related to the policies and procedures in this subdivision.

Subd. 10. [CONSUMER FUNDS.] (a) The license holder must ensure that consumers retain the use and availability of personal funds or property unless restrictions are justified in the consumer's individual service plan.

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(b) The license holder must ensure separation of resident funds from funds of the license holder, the residential program, or program staff.

(c) Whenever the license holder assists a consumer with the safekeeping of funds or other property, the license holder must:

(1) document receipt and disbursement of the consumer's funds or the property, and include the signature of the consumer, conservator, or payee;

(2) provide a statement at least quarterly itemizing receipts and disbursements of resident funds or other property; and

(3) return to the consumer upon the consumer's request, funds and property in the license holder's possession subject to restrictions in the consumer's individual service plan, as soon as possible, but no later than three working days after the date of the request.

(d) License holders and program staff must not:

(1) borrow money from a consumer;

(2) purchase personal items from a consumer;

(3) sell merchandise or personal services to a consumer;

(4) require a resident to purchase items for which the license holder is eligible for reimbursement; or

(5) use resident funds in a manner that would violate section 256B.04, or any rules promulgated under that section.

Subd. 11. [TRAVEL TIME TO AND FROM A DAY TRAINING AND HABILITATION SITE.] Except in unusual circumstances, the license holder must not transport a consumer receiving services for longer than one hour per one-way trip.

Subd. 12. [SEPARATE LICENSE REQUIRED FOR SEPARATE SITES.] The license holder shall apply for separate licenses for each day training and habilitation service site owned or leased by the license holder at which persons receiving services and the provider's employees who provide training and habilitation services are present for a cumulative total of more than 30 days within any 12-month period, and for each residential service site.

Subd. 13. [VARIANCE.] The commissioner may grant a variance to any of the requirements in sections 245B.02 to 245B.07 except section 245B.07, subdivision 8(1)(vii), or provisions governing data practices and information rights of consumers if the conditions in section 245A.04, subdivision 9 are met. Upon the request of the license holder, the commissioner shall continue variances from the standards in this chapter previously granted under Minnesota Rules that are repealed as a result of this chapter. The commissioner may approve variances for a license holder on a program, geographic, or organizational basis.

Sec. 42. [245B.08] [NEW REGULATORY STRATEGIES.]

Subdivision 1. [ALTERNATIVE METHODS OF DETERMINING COMPLIANCE.] (a) In addition to methods specified in chapter 245A, the commissioner may use alternative methods and new regulatory strategies to determine compliance with this section. The commissioner may use sampling techniques to ensure compliance with this section. Notwithstanding section 245A.09, subdivision 7, paragraph (d), the commissioner may also extend periods of licensure, not to exceed five years, for license holders who have demonstrated substantial and consistent compliance with sections 245B.02 to 245B.07 and have consistently maintained the health and safety of consumers and have demonstrated by alternative methods in paragraph (b) that they meet or exceed the requirements of this section. For purposes of this section, "substantial and consistent compliance" means that during the current licensing period:

(1) the license holder's license has not been made conditional, suspended, or revoked;

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(2) there have been no substantiated allegations of maltreatment against the license holder;

(3) there have been no program deficiencies that have been identified that would jeopardize the health or safety of consumers being served; and

(4) the license holder is in substantial compliance with the other requirements of chapter 245A and other applicable laws and rules.

(b) To determine the length of a license, the commissioner shall consider:

(1) information from affected consumers, and the license holder's responsiveness to consumers' concerns and recommendations;

(2) self assessments and peer reviews of the standards of this section, corrective actions taken by the license holder, and sharing the results of the inspections with consumers, the consumers' families, and others, as requested;

(3) length of accreditation by an independent accreditation body, if applicable;

(4) information from the county where the license holder is located; and

(5) information from the license holder demonstrating performance that meets or exceeds the minimum standards of this chapter.

(c) The commissioner may reduce the length of the license if the license holder fails to meet the criteria in paragraph (a) and the conditions specified in paragraph (b).

Subd. 2. [ADDITIONAL MEASURES.] The commissioner may require the license holder to implement additional measures on a time-limited basis to ensure the health and safety of consumers when the health and safety of consumers has been determined to be at risk as determined by substantiated incidents of maltreatment under sections 626.556 and 626.557. The license holder may request reconsideration of the actions taken by the commissioner under this subdivision according to section 245A.06.

Subd. 3. [SANCTIONS AVAILABLE.] Nothing in this subdivision shall be construed to limit the commissioner's authority to suspend, revoke, or make conditional at any time a license under section 245A.07; make correction orders and require fines for failure to comply with applicable laws or rules under section 245A.06; or deny an application for license under section 245A.05.

Subd. 4. [EFFICIENT APPLICATION.] The commissioner shall establish application procedures for license holders licensed under this chapter to reduce the need to submit duplicative material.

Subd. 5. [INFORMATION.] The commissioner shall make information available to consumers and interested others regarding the licensing status of a license holder.

Subd. 6. [IMPLEMENTATION.] The commissioner shall seek advice from parties affected by the implementation of this chapter.

Subd. 7. [DEEM STATUS.] The commissioner may exempt a license holder from duplicative standards if the license holder is already licensed under chapter 245A.

Sec. 43. Minnesota Statutes 1996, section 256E.115, is amended to read:

256E.115 [SAFE HOUSES AND, TRANSITIONAL HOUSING, AND INDEPENDENT LIVING ASSISTANCE SERVICES FOR HOMELESS YOUTH.]

Subdivision 1. [DEFINITIONS; COMMISSIONER DUTIES.] (a) The following definitions apply to this section:

(1) "Targeted youth" means children who are ages 16 to 21 and who are in out-of-home placement, leaving out-of-home placement, at risk of becoming homeless, or homeless.

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(2) "Safe house" means a facility providing emergency housing for homeless targeted youth with the goal of reuniting the family if appropriate and possible.

(3) "Transitional housing" means congregate or cooperative housing for targeted youth who are transitioning to independent living.

(4) "Independent living assistance" means services provided to assist targeted youth who are not living in a safe house or transitional housing to make the transition to independent living.

(b) The commissioner shall issue a request for proposals from organizations that are knowledgeable about the needs of homeless targeted youth for the purpose of providing establishing a system of safe houses and, transitional housing, and independent living assistance for homeless such youth. The commissioner shall appoint a review committee of up to eight members to evaluate the proposals. The review panel must include representation from communities of color, youth, and other community providers and agency representatives who understand the needs and problems of homeless targeted youth. The commissioner shall also assist in coordinating funding from federal and state grant programs and funding available from a variety of sources for efforts to promote a continuum of services for targeted youth through a consolidated grant application. The commissioner shall analyze the needs of homeless targeted youth and gaps in services throughout the state and determine how to best serve those needs within the available funding.

Subd. 2. [SAFE HOUSES AND TRANSITIONAL HOUSING PROGRAM SERVICE REQUIREMENTS; PARTICIPATION REQUIREMENTS; LICENSURE OF INDEPENDENT LIVING ASSISTANCE PROVIDERS.] A safe house provides emergency housing for homeless youth ranging in age from 13 to 22 with the goal of reuniting the family, if appropriate, whenever possible. Transitional housing provides housing for homeless youth ages 16 to 22 who are transitioning into independent living.

In developing both types of housing, the commissioner and the review committee shall try to create a family atmosphere in a neighborhood or community and, if possible, provide separate but cooperative homes for males and females. It may be necessary, due to licensing restrictions, to provide separate housing for different age groups. (a) The following services, or adequate access to referrals for the following services, must be made available to the homeless targeted youth participating in the programs described in subdivision 1:

(1) counseling services for the youth, and their families, if appropriate, on site, to help with problems that resulted in contributed to the homelessness or could impede making the transition to independent living;

(2) job services to help youth find employment in addition to creating jobs on site, including food service, maintenance, child care, and tutoring;

(3) health services that are confidential and provide preventive care services, crisis referrals, and other necessary health care services;

(4) living skills training to help youth learn how to care for themselves; and

(5) education services that help youth enroll in academic programs, if they are currently not in a program. Enrollment in an academic program is required for residency in transitional housing.

(b)(1) Targeted youth who have current drug or alcohol problems, a recent history of violent behaviors, or a mental health disorder or issue that is not being resolved through counseling or treatment are not eligible to receive the services described in subdivision 1.

(2) Targeted youth who are not employed, participating in employment training, or enrolled in an academic program are not eligible to receive transitional housing or independent living assistance.

(c) Providers of independent living assistance services must be licensed under section 245A.22.

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Sec. 44. Minnesota Statutes 1996, section 364.09, is amended to read:

364.09 [EXCEPTIONS.]

(a) This chapter does not apply to the licensing process for peace officers; to law enforcement agencies as defined in section 626.84, subdivision 1, paragraph (h); to fire protection agencies; to eligibility for a private detective or protective agent license; to eligibility for a family day care license, a family foster care license, or a home care provider license the licensing and background study process under chapter 245A; to eligibility for school bus driver endorsements; or to eligibility for special transportation service endorsements. This chapter also shall not apply to eligibility for juvenile corrections employment, where the offense involved child physical or sexual abuse or criminal sexual conduct.

(b) This chapter does not apply to a school district or to eligibility for a license issued or renewed by the board of teaching or the state board of education.

(c) Nothing in this section precludes the Minnesota police and peace officers training board or the state fire marshal from recommending policies set forth in this chapter to the attorney general for adoption in the attorney general's discretion to apply to law enforcement or fire protection agencies.

(d) This chapter does not apply to a license to practice medicine that has been denied or revoked by the board of medical practice pursuant to section 147.091, subdivision 1a.

Sec. 45. Laws 1995, chapter 158, section 7, is amended to read:

Sec. 7. [RECOMMENDATIONS ON REGULATING CHILD CARE PROGRAMS.]

The commissioner of human services shall review and make recommendations to the legislature regarding what programs should be regulated that provide child care for children, and the manner in which these programs should be regulated.

The commissioner shall also examine and make recommendations regarding the feasibility of permitting worksite-based nonresidential child care programs serving 14 or fewer children to be licensed under the family and group family day care standards. In developing these recommendations, the commissioner shall consult with representatives of organizations with an interest in child care services including, but not limited to, the following: large and small employers, including employers who provide child care on site; foundations; the state commissioners of economic security and children, families, and learning; not-for-profit and county agencies; and consumers of child care services.

The commissioner shall submit the recommendations by December 15, 1997, to the chairs of the house health and human services committee and the health and human services finance division, and of the senate health and family services security committee and the health care and family services finance security budget division.

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;

(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) and (2), do not apply to nonresidential programs that are provided by an unrelated individual to persons from a single related family.

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Sec. 47. [FAMILY DAY CARE LICENSURE; INTERIM EXPANSION.]

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.

Subd. 2. [COMMISSIONER'S AUTHORITY.] The commissioner may grant a variance to any of the provisions in subdivision 1, as long as the health and safety of the children served by the program are not affected. The request for a variance shall comply with the provisions of Minnesota Statutes, section 245A.04, subdivision 9.

Sec. 48. [COMMISSIONER OF HEALTH; BACKGROUND STUDIES REPORT.]

By January 15, 1998, the commissioner of health shall report to the chairs of the health and human services fiscal committees of the house and the senate on the background study costs required by Minnesota Statutes, sections 245A.04, subdivision 3, paragraphs (b) and (e) and 144.057, subdivision 1, clause (2), with recommendations for providing funding to cover the costs of these studies.

Sec. 49. [REPORT ON RULE CONSOLIDATION.]

The commissioner of human services shall report no later than March 15, 1998, to the chairs of the senate committee on health and family security, the house committee on health and human services, the senate health and family security budget division, and the house health and human services finance division on the implementation of rule consolidation authorized by Minnesota Statutes, section 245B.01. In addition, the report shall include recommendations as needed to improve the consolidated rule's effectiveness in providing safeguards for clients while streamlining the regulatory process. The commissioner shall appoint an advisory task force to assist in developing the report. The task force membership shall include, but not be limited to, representatives from provider, advocacy, and other interested groups. Department of human services staff shall not be members of the task force but shall provide technical assistance as needed.

Sec. 50. [LEGISLATIVE TASK FORCE TO REVIEW THE BACKGROUND STUDY PROCESS.]

The task force must consist of at least six legislators and other members appointed by the commissioner of human services, which may include representatives from the departments of human services, health, corrections, and public safety, the ombudsman for older Minnesotans, the ombudsman for mental health and mental retardation, representatives from the attorney general's office, and county agencies, persons receiving services in licensed facilities, families of persons receiving services in licensed facilities, representatives from consumer and advocacy groups, representatives of agencies that provide services, representatives of individuals and professionals who provide services within the agencies, and representatives of employee bargaining units.

The speaker of the house and the rules and administration subcommittee on committees in the senate shall appoint at least three members from each body to constitute a legislative task force to review the background study process for individuals providing services in facilities and programs licensed by either the department of human services or the department of health. At least one of the members from each body shall be from the minority party. Members shall be appointed before July 1, 1997, and shall convene as soon as possible during the 1997 interim at the call of the chairs.

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Members shall evaluate the current systems for background studies completed under Minnesota Statutes, section 144.057, and chapter 245A, specific to, but not limited to, the appropriateness of the authority to disqualify individuals based on a commissioner's determination that, absent a criminal conviction, there is a preponderance of evidence that the individual committed an act that meets the definition of a disqualifying crime under Minnesota Statutes, section 245A.04, the appropriateness and effectiveness of the due process available to disqualified individuals, and the appropriateness of standardizing disqualifying characteristics across all services licensed by the department of human services and the department of health.

The deliberations of the task force shall include consideration of the privacy issues related to background studies, specifically the efficient and effective dissemination of information while protecting individual privacy rights, and issues related to rehabilitation and present fitness to perform the duties of employment, and be based upon the recognition that the background study process exists to protect vulnerable children and adults receiving services in licensed programs and facilities and that the safety of these persons shall be given preeminent weight over the interests of persons subject to the background study process.

The task force shall present a report containing any recommendations for change, with draft legislation, to the legislature by February 1, 1998. The task force expires June 30, 1998.

Sec. 51. [REPEALER.]

Subdivision 1. Minnesota Rules, parts 9555.8000; 9555.8100; 9555.8200; 9555.8300; 9555.8400; and 9555.8500, are repealed.

Subd. 2. (a) Laws 1996, chapter 408, article 10, section 13, is repealed.

(b) Minnesota Rules, parts 4668.0020 and 9543.3070, are repealed.

Subd. 3. (a) Minnesota Statutes 1996, sections 245A.091; 245A.20; 245A.21; and 252.53, are repealed.

(b) Minnesota Rules, parts 9503.0170, subpart 7; 9525.0215; 9525.0225; 9525.0235; 9525.0243; 9525.0245; 9525.0255; 9525.0265; 9525.0275; 9525.0285; 9525.0295; 9525.0305; 9525.0315; 9525.0325; 9525.0335; 9525.0345; 9525.0355; 9525.0500; 9525.0510; 9525.0520; 9525.0530; 9525.0540; 9525.0550; 9525.0560; 9525.0570; 9525.0580; 9525.0590; 9525.0600; 9525.0610; 9525.0620; 9525.0630; 9525.0640; 9525.0650; 9525.0660; 9525.1240, subpart 1, item E, subitem (6); 9525.1500; 9525.1510; 9525.1520; 9525.1530; 9525.1540; 9525.1550; 9525.1560; 9525.1570, subparts 1, 2, 3, 4, 5, and 6; 9525.1590; 9525.1610; 9525.1620; 9525.1630; 9525.1640; 9525.1650; 9525.1660; 9525.1670; 9525.1680; 9525.1690; 9525.2000; 9525.2010; 9525.2020; 9525.2025; 9525.2030; 9525.2040; 9525.2050; 9525.2060; 9525.2070; 9525.2080; 9525.2090; 9525.2100; 9525.2110; 9525.2120; 9525.2130; and 9525.2140, are repealed.

Sec. 52. [EFFECTIVE DATE.]

Sections 1, 3 to 9, 12, 13, 15 to 34, 43 to 50, and 51, subdivision 1, are effective the day following final enactment. Sections 2, 10, 11, 14, and 51, subdivision 2, are effective August 1, 1997. Sections 35 to 42 and 51, subdivision 3, are effective January 1, 1998."

Delete the title and insert:

"A bill for an act relating to human services; adding provisions for licensing programs; imposing and modifying civil penalties; requiring reports on nonresidential child care programs; providing interim expansion of unlicensed child care providers; requiring reports from the commissioner of health and the commissioner of human services; creating a legislative task force to review the background study process; amending Minnesota Statutes 1996, sections 144.057, subdivision 1; 144A.46, subdivision 5; 245A.02, subdivisions 15, 16, 17, and by adding subdivisions; 245A.03, subdivision 2; 245A.04, subdivisions 3, 3a, 3b, 3c, 4, 5, 6, 7, and by adding a subdivision; 245A.06, subdivisions 1, 3, 4, 5, 5a, 6, and 7; 245A.07, subdivisions 1 and 3; 245A.08, subdivisions 1 and 2; 245A.09, subdivision 7; 245A.11, subdivision 2; 245A.16, subdivision 2; 256E.115; and 364.09; Laws 1995, chapter 158, section 7; proposing coding for new law in Minnesota

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5813

Statutes, chapter 245A; proposing coding for new law as Minnesota Statutes, chapter 245B; repealing Minnesota Statutes 1996, sections 245A.091; 245A.20; 245A.21; and 252.53; Laws 1996, chapter 408, article 10, section 13; Minnesota Rules, parts 4668.0020; 9503.0170, subpart 7; 9525.0215; 9525.0225; 9525.0235; 9525.0243; 9525.0245; 9525.0255; 9525.0265; 9525.0275; 9525.0285; 9525.0295; 9525.0305; 9525.0315; 9525.0325; 9525.0335; 9525.0345; 9525.0355; 9525.0500; 9525.0510; 9525.0520; 9525.0530; 9525.0540; 9525.0550; 9525.0560; 9525.0570; 9525.0580; 9525.0590; 9525.0600; 9525.0610; 9525.0620; 9525.0630; 9525.0640; 9525.0650; 9525.0660; 9525.1240, subpart 1, item E, subitem (6); 9525.1500; 9525.1510; 9525.1520; 9525.1530; 9525.1540; 9525.1550; 9525.1560; 9525.1570, subparts 1, 2, 3, 4, 5, and 6; 9525.1590; 9525.1610; 9525.1620; 9525.1630; 9525.1640; 9525.1650; 9525.1660; 9525.1670; 9525.1680; 9525.1690; 9525.2000; 9525.2010; 9525.2020; 9525.2025; 9525.2030; 9525.2040; 9525.2050; 9525.2060; 9525.2070; 9525.2080; 9525.2090; 9525.2100; 9525.2110; 9525.2120; 9525.2130; 9525.2140; 9543.3070; 9555.8000; 9555.8100; 9555.8200; 9555.8300; 9555.8400; and 9555.8500."

We request adoption of this report and repassage of the bill.

Senate Conferees: Steven Morse, Sheila M. Kiscaden and Don Betzold.

House Conferees: Linda Wejcman, Ruth Johnson and Fran Bradley.

Wejcman moved that the report of the Conference Committee on S. F. No. 234 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 234, A bill for an act relating to human services; adding provisions for licensing programs; imposing and modifying civil penalties; amending Minnesota Statutes 1996, sections 144.057, subdivision 1; 144A.46, subdivision 5; 245A.02, subdivisions 15, 16, and 17, and by adding subdivisions; 245A.03, subdivision 2; 245A.04, subdivisions 3, 3a, 3b, 3c, 4, 5, 6, 7, and by adding a subdivision; 245A.06, subdivisions 1, 3, 4, 5, 5a, 6, and 7; 245A.07, subdivisions 1 and 3; 245A.08, subdivisions 1 and 2; 245A.09, subdivision 7; 245A.11, subdivision 2; 245A.16, subdivision 2; 256E.115; and 364.09; proposing coding for new law in Minnesota Statutes, chapter 245A; repealing Minnesota Statutes 1996, sections 245A.091; 245A.20; 245A.21; and 252.53; Laws 1996, chapter 408, article 10, section 13; Minnesota Rules, parts 4668.0020; 9503.0170, subpart 7; 9525.0215; 9525.0225; 9525.0235; 9525.0243; 9525.0245; 9525.0255; 9525.0265; 9525.0275; 9525.0285; 9525.0295; 9525.0305; 9525.0315; 9525.0325; 9525.0335; 9525.0345; 9525.0355; 9525.0500; 9525.0510; 9525.0520; 9525.0530; 9525.0540; 9525.0550; 9525.0560; 9525.0570; 9525.0580; 9525.0590; 9525.0600; 9525.0610; 9525.0620; 9525.0630; 9525.0640; 9525.0650; 9525.0660; 9525.1240, subpart 1, item E, subitem (6); 9525.1500; 9525.1510; 9525.1520; 9525.1530; 9525.1540; 9525.1550; 9525.1560; 9525.1570; 9525.1590; 9525.1610; 9525.1620; 9525.1630; 9525.1640; 9525.1650; 9525.1660; 9525.1670; 9525.1680; 9525.1690; 9525.2000; 9525.2010; 9525.2020; 9525.2025; 9525.2030; 9525.2040; 9525.2050; 9525.2060; 9525.2070; 9525.2080; 9525.2090; 9525.2100; 9525.2110; 9525.2120; 9525.2130; 9525.2140; 9543.3070; 9555.8000; 9555.8100; 9555.8200; 9555.8300; 9555.8400; and 9555.8500.

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 134 yeas and 0 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Sykora
Anderson, B. Farrell Kelso McCollum Peterson Tingelstad
Anderson, I. Finseth Kielkucki McElroy Pugh Tomassoni
Bakk Folliard Kinkel McGuire Rest Tompkins
Bettermann Garcia Knight Milbert Reuter Trimble
Biernat Goodno Knoblach Molnau Rhodes Tuma
Bishop Greenfield Koppendrayer Mulder Rifenberg Tunheim
Boudreau Greiling Koskinen Mullery Rostberg Van Dellen
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5814
Bradley Gunther Kraus Munger Rukavina Vickerman
Broecker Haas Krinkie Murphy Schumacher Wagenius
Carlson Harder Kubly Ness Seagren Weaver
Chaudhary Hasskamp Kuisle Nornes Seifert Wejcman
Clark 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 Luther Otremba Stanek Spk. Carruthers
Dempsey Johnson, A. Macklin Ozment Stang
Dorn Johnson, R. Mahon Paulsen Sviggum
Entenza Juhnke Mares Pawlenty Swenson, D.
Erhardt Kahn Mariani Paymar Swenson, H.

The bill was repassed, as amended by Conference, and its title agreed to.

Mr. Speaker:

I hereby announce the passage by the Senate of the following House File, herewith returned:

H. F. No. 454, A bill for an act relating to motor vehicles; allowing issuance and display of single license plate for collector vehicles and vehicles that meet collector vehicle requirements but are used for general transportation purposes; amending Minnesota Statutes 1996, sections 168.10, subdivisions 1a, 1b, 1c, and 1d; and 169.79.

Patrick E. Flahaven, Secretary of the Senate

SPECIAL ORDERS

S. F. No. 1487 was reported to the House.

Anderson, I., moved that S. F. No. 1487 be re-referred to the Committee on Financial Institutions and Insurance. The motion prevailed.

S. F. No. 117, A bill for an act relating to the military; adding an exclusion to the tort claims act; amending Minnesota Statutes 1996, section 3.736, subdivision 3.

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. There were 126 yeas and 4 nays as follows:

Those who voted in the affirmative were:

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5815
Abrams Entenza Johnson, A. Mares Pawlenty Sviggum
Anderson, B. Erhardt Johnson, R. Mariani Pelowski Swenson, D.
Anderson, I. Evans Juhnke Marko Peterson Swenson, H.
Bakk Farrell Kahn McCollum Pugh Sykora
Bettermann Finseth Kalis McElroy Rest Tingelstad
Biernat Folliard Kelso Milbert Reuter Tomassoni
Bishop Garcia Kielkucki Molnau Rhodes Tompkins
Boudreau Goodno Kinkel Mulder Rifenberg Trimble
Bradley Greenfield Knoblach Mullery Rostberg Tuma
Broecker Greiling Koppendrayer Munger Rukavina Tunheim
Carlson Gunther Koskinen Murphy Schumacher Van Dellen
Chaudhary Haas Kubly Ness Seagren Vickerman
Clark Harder Kuisle Nornes Seifert Wagenius
Commers Hasskamp Larsen Olson, E. Sekhon Weaver
Daggett Hausman Leighton Olson, M. Skare Wejcman
Davids Hilty Leppik Opatz Skoglund Wenzel
Dawkins Holsten Lieder Orfield Slawik Westfall
Dehler Huntley Lindner Osthoff Smith Westrom
Delmont Jaros Long Otremba Solberg Winter
Dempsey Jefferson Luther Ozment Stanek Workman
Dorn Jennings Mahon Paulsen Stang Spk. Carruthers

Those who voted in the negative were:

Knight Krinkie Osskopp Paymar

The bill was passed and its title agreed to.

S. F. No. 1006 was reported to the House.

McGuire moved to amend S. F. No. 1006 as follows:

Delete everything after the enacting clause and insert the following language of H. F. No. 1283, the first engrossment:

"Section 1. [299F.036] [FIREFIGHTER PREVIOUS EMPLOYMENT INVESTIGATIONS.]

Subdivision 1. [PREVIOUS EMPLOYMENT INVESTIGATIONS AUTHORIZED.] The fire chief or administrative head of a fire department as defined under section 299F.092, subdivision 6, may conduct a previous employment investigation on an applicant for a fire protection service position.

Subd. 2. [DISCLOSURE OF EMPLOYMENT INFORMATION.] Upon request of a fire chief or an administrative head, an employer shall disclose or otherwise make available for inspection employment information of an employee or former employee who is the subject of an investigation under subdivision 1. The request for disclosure of employment information must be in writing, must be accompanied by an original authorization and release signed by the employee or former employee, and must be signed by the fire chief or administrative head conducting the previous employment investigation.

Subd. 3. [REFUSAL TO DISCLOSE PERSONNEL RECORD.] If an employer refuses to provide access to employment information in accordance with this section, upon request the district court may issue an ex parte order directing the disclosure of the employment information. The request must be made by the fire chief or administrative head conducting the investigation and must include a copy of the original request for disclosure made upon the employer or former employer and the authorization and release signed by the employee or former employee. The request must be signed by the fire chief or administrative head requesting the order and an attorney representing the state or the political subdivision on whose behalf the investigation is being conducted. It is not necessary for the request or the order to be filed with the court administrator. Failure to comply with the court order subjects the person who fails to comply to civil or criminal contempt of court.

Subd. 4. [IMMUNITY FROM LIABILITY.] In the absence of fraud or malice, an employer is immune from civil liability for the release of employment information to a fire department under this section, or for any subsequent publication made by the employee or former employee of employment information released to a law enforcement agency under this section.

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Subd. 5. [CONFIDENTIALITY AGREEMENTS.] If employment information is subject to a confidentiality agreement between the employee or former employee and the employer, the employer shall disclose the fact that such an agreement exists. If the employee or former employee has authorized the release of employment information without regard to any previous agreement to the contrary, the employer shall also disclose the employment information in accordance with subdivision 2. If employment information is sealed or otherwise subject to a nondisclosure order by a court of competent jurisdiction, the employer shall disclose the fact that such an order exists, along with information identifying the court and court's file number.

Subd. 6. [EMPLOYMENT INFORMATION.] For purposes of this section, "employment information" means written information in connection with job applications, performance evaluations, attendance records, disciplinary actions, and eligibility for rehire.

Subd. 7. [APPLICATION.] For purposes of this section, "employer" does not include an entity that is subject to chapter 13.

Sec. 2. Minnesota Statutes 1996, section 604A.31, is amended by adding a subdivision to read:

Subd. 4. [FIREFIGHTER PREVIOUS EMPLOYMENT INVESTIGATIONS.] Employers who provide information in conjunction with previous employment investigations of applicants for fire protection service positions are immune from civil liability as provided in section 299F.036, subdivision 4.

Sec. 3. [CITY OF ROCHESTER; PROBATIONARY PERIOD FOR NEW FIREFIGHTERS UNDER CIVIL SERVICE COMMISSION.]

Notwithstanding Minnesota Statutes, section 420.08, to the contrary, in the city of Rochester no newly appointed firefighter, after satisfactory completion of basic firefighter I and II training courses and state certification, and after a period of no longer than 12 months continuous employment thereafter, shall be removed or discharged except for cause upon written charges and after an opportunity to be heard in defense of charges as provided in Minnesota Statutes, chapter 420.

Sec. 4. [EFFECTIVE DATE.]

Sections 1 and 2 are effective the day following enactment. Section 3 is effective the day after the governing body of the city of Rochester complies with Minnesota Statutes, section 645.021, subdivision 3."

Delete the title and insert:

"A bill for an act relating to firefighters; authorizing certain background investigations; requiring disclosures of certain employment information; providing civil and criminal penalties; providing employers immunity for certain disclosures; changing the probationary period for new firefighters in the city of Rochester under the firefighters civil service commission; amending Minnesota Statutes 1996, section 604A.31, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 299F."

The motion prevailed and the amendment was adopted.

McGuire moved to amend S. F. No. 1006, as amended, as follows:

Page 2, line 2, before "If" and insert "(a)"

Page 2, after line 17, insert:

"(b) Upon request, the fire chief or administrative head shall disclose to the applicant the information obtained under this subdivision."

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Page 2, line 23, delete "law enforcement agency" and insert "fire chief or administrative head of a fire department"

The motion prevailed and the amendment was adopted.

Knoblach offered an amendment to S. F. No. 1006, as amended.

POINT OF ORDER

Skoglund raised a point of order pursuant to rule 3.10 that the Knoblach amendment was not in order. The Speaker ruled the point of order not well taken and the Knoblach amendment in order.

POINT OF ORDER

Skoglund raised a point of order pursuant to rule 3.09 that the Knoblach amendment was not in order. The Speaker ruled the point of order well taken and the Knoblach amendment out of order.

Knoblach appealed the decision of the Chair.

A roll call was requested and properly seconded.

McGuire moved that S. F. No. 1006, as amended, be continued on Special Orders. The motion prevailed.

The following Conference Committee Report was received:

CONFERENCE COMMITTEE REPORT ON H. F. NO. 632

A bill for an act relating to public administration; modifying requirements for spending to improve the capitol area and construct bridges, environmental learning centers, and community performing arts centers; appropriating money; amending Laws 1994, chapter 643, sections 3, subdivision 2; 15, subdivisions 2 and 4; and 23, subdivision 28, as amended; and Laws 1996, chapter 463, sections 13, subdivision 2; and 24, subdivision 8; repealing Laws 1996, chapter 463, section 7, subdivision 26.

May 19, 1997

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. 632, 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. 632 be further amended as follows:

Delete everything after the enacting clause and insert:

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"Section 1. [CAPITAL IMPROVEMENTS 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 to acquire and to better public land and buildings and other public improvements of a capital nature, as specified in this act.

SUMMARY

MINNESOTA STATE COLLEGES AND UNIVERSITIES $ 4,500,000

NATURAL RESOURCES 4,000,000

POLLUTION CONTROL AGENCY 7,400,000

PUBLIC FACILITIES AUTHORITY 7,000,000

AGRICULTURE 4,000,000

ADMINISTRATION 74,035,000

TRADE AND ECONOMIC DEVELOPMENT 7,000,000

TRANSPORTATION 3,000,000

BOND SALE EXPENSES 90,000

TOTAL $ 111,025,000

Bond Proceeds Fund 86,625,000

Transportation Fund 3,000,000

General Fund 13,600,000

Motor Vehicle Transfer Fund 7,800,000

APPROPRIATIONS

$

Sec. 2. MINNESOTA STATE COLLEGES AND UNIVERSITIES

Hibbing Community and Technical Colleges 4,500,000

This appropriation is to the board of trustees of the Minnesota state colleges and universities to construct additions and install related electrical and mechanical utilities at the community college site to prepare for collocation of programs.

Sec. 3. NATURAL RESOURCES

Flood Damage Reduction 4,000,000

This appropriation is to the commissioner of natural resources to fund flood damage reduction projects under Minnesota Statutes, section 103F.161, including the nonfederal portion of federal hazard mitigation grant program projects. The appropriation is available until expended.

Sec. 4. POLLUTION CONTROL AGENCY

Subdivision 1. To the commissioner of the pollution control agency

for the purposes specified in this section 7,400,000

Subd. 2. Individual Sewage Treatment Grants 1,000,000

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This one-time appropriation is from the general fund for grants to municipalities for the purposes specified in Minnesota Statutes, section 116.18, subdivision 3c.

For purposes of grants awarded under this section, the definition of "individual on-site treatment system" in Minnesota Statutes, section 116.18, subdivision 3c, paragraph (b), also includes an alternative discharging sewage system serving one or more dwellings and other establishments that discharges less than 10,000 gallons of water per day and uses any treatment and disposal methods other than subsurface soil treatment and disposal, as permitted under Minnesota Statutes, section 115.58.

Up to ten percent of this appropriation may be used for administration of the grants.

Subd. 3. Environmental Response, Compensation, and Compliance 6,400,000

This appropriation is from the motor vehicle transfer fund for transfer to the environmental response, compensation, and compliance fund and is appropriated for the purposes provided in Minnesota Statutes, chapter 115B. This amount must be included in the agency's budgetary base for the next biennium.

Sec. 5. PUBLIC FACILITIES AUTHORITY

Wastewater Infrastructure Fund Loans 7,000,000

$3,000,000 of this appropriation is from the general fund.

This appropriation is to the public facilities authority for loans to eligible municipalities under the wastewater infrastructure funding program established in Minnesota Statutes, section 446A.072.

From this appropriation, the public facilities authority shall provide supplemental assistance to a municipality that, before the first loans were made from the wastewater infrastructure fund, incurred increased project costs as a result of a wastewater discharge into outstanding resource value water. "Outstanding resource value water" is water that has high water quality, wilderness characteristics, unique scientific or ecological significance, exceptional recreational value, or other special qualities that warrant stringent protection from pollution. The amount of supplemental assistance under this paragraph is up to 100 percent of the increased project costs to comply with the applicable discharge restrictions. The agency shall determine the amount of project costs attributable to the discharge restrictions to the outstanding resource value water. A municipality may appeal the agency's determination to the public facilities authority within 60 days of notification of the determination.

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The public facilities authority, in conjunction with the pollution control agency, shall analyze and report to the legislature by January 15, 1998, the long-term financial implications to the wastewater infrastructure fund of providing supplemental assistance for increased costs incurred for projects that discharge wastewater into outstanding resource value water.

Sec. 6. AGRICULTURE

Individual Sewage Treatment Systems 4,000,000

This one-time appropriation from the general fund is to the commissioner of agriculture to provide loans to counties for loans to property owners under Minnesota Statutes, section 17.117 or 115.57.

Individual counties may elect to apply for and administer the loans under the agricultural best management loan practices program established in Minnesota Statutes, section 17.117, or under section 115.57. Regardless of the section a county applies under, the commissioner shall review and rank allocation requests from counties under the procedure and relevant criteria listed in Minnesota Statutes, section 17.117, subdivision 9. Loans made under Minnesota Statutes, section 17.117, with money appropriated under this section must be used for site evaluation, design, installation, repair, and replacement of individual sewage treatment systems only. Notwithstanding the eligibility criteria in Minnesota Statutes, section 17.117, subdivisions 1; and 4, paragraph (e), all private landowners in a county may apply for loans made under this section. Loans made under Minnesota Statutes, section 115.57, may be used for any of the purposes specified in that section. Counties receiving funds under this section must use the funds to administer loan programs on a countywide basis.

Sec. 7. TRADE AND ECONOMIC DEVELOPMENT

Contaminated Site Cleanup 7,000,000

$5,600,000 of this appropriation is from the general fund.

$1,400,000 of this appropriation is from the motor vehicle transfer fund.

This appropriation is for transfer to the contaminated site cleanup and development account and is appropriated for the purposes specified in Minnesota Statutes, section 116J.551. Of this amount, $7,000,000 must be included in the department's budget base for the next biennium.

Sec. 8. TRANSPORTATION

Local Bridge Replacement and Rehabilitation 3,000,000

This appropriation is from the transportation fund as provided in Minnesota Statutes, section 174.50, to match federal funds and to replace or rehabilitate local deficient bridges.

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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 to abandon an existing bridge that is deficient and in need of replacement, but where no replacement will be made;

(3) 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; and

(4) paying the costs of preliminary engineering and environmental studies authorized under Minnesota Statutes, section 174.50, subdivision 6a.

Sec. 9. BOND SALE EXPENSES 90,000

To the commissioner of finance for bond sale expenses under Minnesota Statutes, section 16A.641, subdivision 8.

Sec. 10. [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 $86,625,000 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.

Subd. 2. [TRANSPORTATION FUND.] To provide the money appropriated in this act from the state transportation fund, the commissioner of finance, on request of the governor, shall sell and issue general obligation bonds of the state in an amount up to $3,000,000 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. 11. Minnesota Statutes 1996, section 16B.335, subdivision 3, is amended to read:

Subd. 3. [PREDESIGN REQUIREMENT.] The definitions in paragraphs (a) and (b) apply to this section.

(a) "Predesign" means the stage in the development of a project during which the purpose, scope, cost, and schedule of the complete project are defined and instructions to design professionals are produced.

(b) "Design" means the stage in the development of a project during which schematic, design development, and contract documents are produced.

(c) A recipient to whom an appropriation is made for a project subject to review under subdivision 1 or notice under subdivision 2 shall prepare a predesign package and submit it to the commissioner for review and recommendation before proceeding with design activities. The commissioner must complete the review and recommendation within ten working days after receiving it. Failure to review and recommend within the ten days is considered a positive recommendation. The predesign package must be sufficient to define the purpose, scope, cost, and schedule of the project and must demonstrate that the project has been analyzed according to appropriate space needs standards.

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Sec. 12. Minnesota Statutes 1996, section 115C.09, is amended by adding a subdivision to read:

Subd. 3e. [REIMBURSEMENTS; SMALL GASOLINE RETAILERS.] (a) As used in this subdivision, "small gasoline retailer" means a responsible person who owns no more than one location where motor fuel was dispensed into motor vehicles or aircraft in the previous year.

(b) 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, including, but not limited to, closure in place, backfill, resurfacing, and utility service restoration costs, provided that the tank involved is a regulated underground storage tank.

(c) 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.

(d) This subdivision expires January 1, 2000.

Sec. 13. Minnesota Statutes 1996, section 116.18, subdivision 3c, is amended to read:

Subd. 3c. [INDIVIDUAL ON-SITE TREATMENT 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 authority agency to municipalities to reimburse owners of individual on-site wastewater treatment 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.

(c) Municipalities may apply yearly for grants of up to 50 percent of the cost of replacing or upgrading individual on-site treatment systems 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, were constructed prior to January 1, 1977 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 authority 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) 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) The authority shall award individual on-site wastewater treatment grants to municipalities selected by the state pollution control commissioner upon certification by the state pollution control commissioner that the municipalities' applications have been reviewed and approved in accordance with this subdivision and agency rules adopted under paragraph (f).

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(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.

(g) The commissioner of trade and economic development may adopt rules containing procedures for administration of the authority's duties as set forth in paragraph (e).

Sec. 14. Minnesota Statutes 1996, section 116J.554, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY.] (a) The commissioner may make a grant to an applicant development authority to pay for up to 75 percent of the cleanup project costs for a qualifying site, except the grant may not exceed 50 percent of the project costs.

(b) The commissioner may also make a grant to an applicant development authority to pay up to 75 percent or $50,000, whichever is less, toward the cost of performing contaminant investigations and the development of a response action plan for a qualifying site.

(c) The commissioner may also make a grant to an applicant to fill a site that would represent more than 50 percent of the remaining land in a city suitable for industrial development if it were properly filled.

(d) The determination of whether to make a grant for a qualifying site is within the sole discretion of the commissioner, subject to the process provided by this section, and available unencumbered money in the appropriation. The commissioner's decisions and application of the priorities under section 116J.555 are not subject to judicial review, except for abuse of discretion.

(e) The total amount of money provided in grants under paragraph (b) may not exceed $250,000 per fiscal year.

(f) In making grants under paragraph (b), the commissioner shall give priority to applicants that have not received a grant under paragraph (a) or section 473.252 during the year ending on the date of application.

Sec. 15. Minnesota Statutes 1996, section 116J.554, subdivision 2, is amended to read:

Subd. 2. [QUALIFYING SITES.] A site qualifies for a grant under this section, if the following criteria are met:

(1) the site is not scheduled for funding during the current or next fiscal year under the Comprehensive Environmental Response, Compensation, and Liability Act, United States Code, title 42, section 9601, et seq. or under the environmental response, and liability act under sections 115B.01 to 115B.24;

(2) the appraised value of the site after adjusting for the effect on the value of the presence or possible presence of contaminants using accepted appraisal methodology (i) is less than 50 75 percent of the estimated cleanup project costs for the site or (ii) is less than or equal to the estimated cleanup costs for the site and the cleanup costs equal or exceed $3 per square foot for the site; and

(3) if the proposed cleanup is completed, it is expected that the site will be improved with buildings or other improvements and these improvements will provide a substantial increase in the property tax base within a reasonable period of time or the site will be used for an important publicly owned or tax-exempt facility.

Sec. 16. Minnesota Statutes 1996, section 116J.556, is amended to read:

116J.556 [LOCAL MATCH REQUIREMENT.]

(a) In order to qualify for a grant under sections 116J.551 to 116J.557, the municipality must pay for at least one-half one-quarter of the project costs as a local match. The municipality shall pay an amount of the project costs equal to at least 12 percent of the cleanup costs from the municipality's general fund, a property tax levy for that purpose, or other unrestricted money available to the municipality (excluding tax increments). These unrestricted moneys may be spent for project costs,

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other than cleanup costs, and qualify for the local match payment equal to 12 percent of cleanup costs. The rest of the local match may be paid with tax increments, regional, state, or federal money available for the redevelopment of brownfields or any other money available to the municipality.

(b) If the development authority establishes a tax increment financing district or hazardous substance subdistrict on the site to pay for part of the local match requirement, the district or subdistrict is not subject to the state aid reductions under section 273.1399. In order to qualify for the exemption from the state aid reductions, the municipality must elect, by resolution, on or before the request for certification is filed that all tax increments from the district or subdistrict will be used exclusively to pay (1) for project costs for the site and (2) administrative costs for the district or subdistrict. The district or subdistrict must be decertified when an amount of tax increments equal to no more than three times the costs of implementing the response action plan for the site and the administrative costs for the district or subdistrict have been received, after deducting the amount of the state grant.

Sec. 17. [116J.57] [UNDERGROUND PETROLEUM TANK REPLACEMENT LOAN PROGRAM.]

Subdivision 1. [LOAN PROGRAM.] (a) The commissioner shall establish and implement an underground petroleum tank replacement loan program to facilitate the continued operation of small gasoline retailers, as defined in section 115C.09, subdivision 3e, paragraph (a), in this state.

(b) The commissioner may make a direct loan for the cost of a replacement tank to a small gasoline retailer who has dispensed less than 500,000 gallons of motor fuel during the previous year who demonstrates an ability to repay the loan. The interest rate on the loan shall not exceed three percent per year, and the term of the loan may not exceed seven years. Loans made under this subdivision may not exceed $10,000 or the total out-of-pocket expenses of the small gasoline retailer for tank replacement, whichever is less. Payments on the principal shall be credited to the petroleum tank fund under section 115C.08. The interest payments must be deposited in the state treasury and credited to an account in the special revenue fund. Money in this account is appropriated to the commissioner for administrative expenses of the underground petroleum tank replacement loan program.

Subd. 2. [APPROPRIATION.] An amount necessary is appropriated from the petroleum tank release cleanup fund to the commissioner of trade and economic development for the underground petroleum tank replacement loan program established under this section.

Subd. 3. [EXPIRATION.] This section expires January 1, 2000.

Sec. 18. Minnesota Statutes 1996, section 446A.072, is amended by adding a subdivision to read:

Subd. 4a. [LOAN REPAYMENT; NEW DEVELOPMENT.] (a) For the purposes of this subdivision, "loan" includes a loan that has been forgiven under this section.

(b) A municipality that receives a supplemental assistance loan under this section that, within 20 years after receiving the assistance, extends sewer service to serve a residential, industrial, or commercial development that is completed on unplatted land after March 1, 1996, or that is on a lot whose plat was recorded after that date, must repay a portion of the loan to the authority before providing the sewer connection. The commissioner shall calculate the amount to be repaid by first determining the number of households included in the extension financed by the original loan. The commissioner must then determine the present value of the original loan amount. The interest rate used to calculate the present value must be equivalent to the interest rate on the loan made to the municipality under section 446A.07 at the time of the original supplemental assistance loan under this section. The commissioner must then divide the present value of the loan by the number of households included in the original loan. For an extension to a residential development, the repayment to the authority must be equal to the per household amount calculated for the original loan multiplied by the number of households in the proposed extension. For an extension to a commercial or industrial development, the commissioner shall determine the repayment to the authority by using the per household amount calculated for the original loan to calculate a proportionally equivalent amount based on the projected wastewater discharge from the proposed development. The total repayments to the authority under this paragraph may not exceed the original amount of the supplemental assistance loan. The repayment must be processed as provided in subdivision 7.

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(c) The authority shall waive the loan repayment if the commissioner determines that the community in which the sewer extension is undertaken meets the following conditions:

(1) there is a shortage of decent, safe, and affordable housing;

(2) the housing units served by the sewer extension are located in an incorporated area; and

(3) the housing units served by the sewer extension are moderately priced.

The authority shall also waive the loan repayment if the commissioner determines that the population of the community in which the sewer extension is undertaken has declined by more than ten percent since the preceding federal decennial census.

The commissioner shall provide the determinations made under this paragraph to the authority to be included in the reports required by subdivision 11.

Sec. 19. Laws 1994, chapter 643, section 3, subdivision 2, is amended to read:

Subd. 2. Restore and Renovate Capitol Building Exterior 5,000,000

To the commissioner of administration to renovate and improve the capitol including reroofing, repair of the roof balustrade, and Quadriga restoration, and for an exterior stone testing program. No more than $35,000 of this appropriation is to the capitol area architectural and planning board for design review fees.

Sec. 20. Laws 1994, chapter 643, section 10, subdivision 10, as amended by Laws 1995, First Special Session chapter 2, article 1, section 42, is amended to read:

Subd. 10. Rochester Technical College University Center Rochester 1,200,000

This appropriation is to the board of trustees of the Minnesota state colleges and universities for predesign and design of an integrated campus in accordance with this subdivision. $600,000 of this appropriation is available immediately. The remainder is available after a master academic plan has been approved under clause (3) and the technical college has been sold., remodeling of student support facilities, remodeling of facilities for joint academic programming, and construction of roads and other infrastructure to integrate the campus for the delivery of consolidated college, state university, and University of Minnesota programs at the University Center Rochester. Planning may include consideration of codevelopment of facilities with local units of government.

(1) The board of trustees of the Minnesota state colleges and universities may enter into an agreement for the sale of the Rochester Technical College. The sale is contingent on the approval of the board of trustees and a determination by the board of trustees that the sale is consistent with its priorities. The sale price shall equal the appraised value if sold to independent school district No. 535, Rochester, or, if sold to any other party, the sale price shall not be less than the appraised value.

It is the intent of the legislature that no technical college program reduction, apart from normal program review, shall occur as a result of this sale.

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(2) The sale shall not cause the technical college to lease space or to move to any temporary site.

(3) Prior to the preparation of design documents, the post-secondary boards and the relevant campus staff shall jointly prepare a master academic plan for an integrated campus for the Rochester center facility. The boards shall consider the creation of a polytechnic university. The plan shall be submitted for review to the higher education finance divisions by January 16, 1996, and must be approved by the legislature before the remaining $600,000 of the appropriation is available.

(4) The proceeds from the sale of the technical college are appropriated for the design and construction necessary to integrate technical college programs into the Rochester center and to add or modify space where necessary. The new technical college program space must be attached to and must maximize the current services, space, and programs of the technical college, community college, state university, and University of Minnesota cooperative campus. The state board of trustees may not begin construction of this project until the legislature has approved the construction plans.

(5) The state board of trustees shall develop a plan to relocate to the Austin, Faribault, and other Southeastern Minnesota campuses all Rochester campus programs that are not essential to the integrated mission planned for the Rochester center facility. This plan must be completed prior to preparing design documents for the technical college addition to the Rochester center.

(6) The state board of trustees shall consider relocating the horticulture technology program from the Rochester campus to the Austin campus of Riverland technical college before the start of the 1995-1996 academic year.

Sec. 21. Laws 1994, chapter 643, section 15, subdivision 2, is amended to read:

Subd. 2. Bloomington Ferry Bridge 7,631,000 5,131,000

This appropriation is from the state transportation fund as provided in Minnesota Statutes, section 174.50, to match federal funds to complete construction of the Bloomington ferry bridge and approaches.

This appropriation is added to the appropriation in Laws 1993, chapter 373, section 14, subdivision 2.

Sec. 22. Laws 1994, chapter 643, section 15, subdivision 4, is amended to read:

Subd. 4. Local Bridge Replacement and Rehabilitation 12,445,000 14,945,000

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;

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(2) paying the costs to abandon an existing bridge that is deficient and in need of replacement, but where no replacement will be made;

(3) 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; and

(4) paying the costs of preliminary engineering and environmental studies authorized under Minnesota Statutes, section 174.50, subdivision 6a.

Sec. 23. Laws 1994, chapter 643, section 19, subdivision 8, as amended by Laws 1995, First Special Session chapter 2, article 1, section 45, is amended to read:

Subd. 8. Battle Point Historic Site 350,000

This appropriation is to the Indian Affairs Council for design of the Battle Point historic site, preliminary plans for which were authorized in Laws 1990, chapter 610, article 1, section 17, and Laws 1992, chapter 558, section 24, subdivision 5.

Notwithstanding Laws 1990, chapter 610, article 1, section 17, the planned educational center will be owned by independent school district No. 115, Cass Lake-Bena the state with custodial control assigned to the Indian Affairs Council, and is subject to Minnesota Statutes, section 16A.695. The center must be constructed on land leased to the school district state by the Leech Lake Band of Chippewa Indians under a ground lease having an initial term of at least 20 years and a total term of at least 40 years, including renewal options. The ground lease must be executed by the commissioner of administration under Minnesota Statutes, section 16B.24, subdivision 6, based on the recommendations of the Indian Affairs Council, provided that, notwithstanding the limitations of section 16B.24, subdivision 6, the lease must be for the initial term described in this subdivision. The ground lease must be administered by the Indian Affairs Council. The school district Indian Affairs Council must contract with the Leech Lake Band to operate the center on behalf of the council. The center and all classes and programs run by or through the center must be open to the public. Notwithstanding Minnesota Statutes, section 3.922, for the purposes of carrying out the duties assigned to it in this subdivision, the Indian Affairs Council is authorized to assume custodial control over the planned educational center, administer the ground lease, enter into the contract described in this subdivision with the Leech Lake Band to operate the center, and take any other action necessary to carry out the duties assigned to it in this subdivision and to a public officer or agency by Minnesota Statutes, section 16A.695.

Sec. 24. Laws 1994, chapter 643, section 23, subdivision 28, as amended by Laws 1995, First Special Session chapter 2, article 1, section 48, is amended to read:

Subd. 28. Environmental Learning Centers 11,500,000

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This appropriation is to the commissioner of natural resources to plan, design, and construct facilities owned by political subdivisions at residential environmental learning centers as provided in this subdivision and new Minnesota Statutes, section 84.0875.

The appropriations in items (a) through (e) and (b) are available as follows: (1) of the $7,500,000 total, $5,000,000 is available only when the commissioner has determined that matching money in the sum of $12,500,000, up to 25 percent of which may consist of loans, has been committed by nonstate sources for predesign, design, and construction of the facilities named in items (a) and (b), and the following privately owned residential environmental learning centers: Wolf Ridge Environmental Learning Center, Northwoods Audubon Center, and Southeastern Minnesota Forest Resource Center; and (2) the remaining $2,500,000 is available to the extent that matching money, which may include loans, in the amount of $2 $1 for each $1 of state money is committed by nonstate sources, as determined by the commissioner, provided that money may not be spent under this sentence until the amount available, including matching any money from nonstate sources that is allocated to a facility in item (a) or (b), is sufficient to complete a functional improvement at the facility. Up to 25 percent of the total amount of money committed by nonstate sources under this subdivision may consist of loans.

After the first $12,500,000 has been committed by nonstate sources for the Long Lake Conservation Center, the Deep Portage Conservation Reserve, the Wolf Ridge Environmental Learning Center, the Northwoods Audubon Center, and the Southeastern Minnesota Forest Resource Center, the appropriations in items (a) and (b) must be distributed and administered separately for each facility. Money from nonstate sources required for the balances of the appropriations in items (a) and (b) must be committed as required in this section for each facility separately to allow functional improvements, but work at the facilities need not proceed simultaneously. Funds raised or borrowed after January 1, 1992, and spent or committed to be spent for predesign, design, or construction of these facilities are eligible to count toward the required commitment from nonstate sources, and, upon proper application, nonstate money spent after that date for qualified capital expenditures at the Long Lake Conservation Center and the Deep Portage Conservation Reserve shall be reimbursed by the commissioner from money appropriated for these facilities, to allow the nonstate money to be used for qualified capital expenditures at the Wolf Ridge Environmental Learning Center, the Northwoods Audubon Center, and the Southeastern Minnesota Forest Resource Center.

The predesign and design requirements of Minnesota Statutes, section 16B.335, do not apply to the specific appropriations for these facilities in this section.

(a) Long Lake Conservation Center 1,200,000 3,370,000

This appropriation is for a grant to Aitkin county.

(b) Deep Portage Conservation Reserve 1,470,000 4,130,000

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This appropriation is for a grant to Cass county.

(c) Wolf Ridge Environmental Learning Center 2,100,000

This appropriation is for a grant to independent school district No. 381, Lake Superior.

(d) Northwoods Audubon Center 1,080,000

This appropriation is for a grant to independent school district No. 2580, East Central.

(e) (c) Forest Resource Eagle Bluff Environmental Learning Center 1,650,000

This appropriation is for a grant to independent school district No. 229, Lanesboro.

If land and improvements in Fillmore county that were conveyed by the state to Southern Minnesota Forest Resource Center under Laws 1990, chapter 452, section 7, are pledged as security for a loan to assist with the completion of this project provide financing for the predesign, design, or construction of environmental education facilities at the Eagle Bluff Environmental Learning Center, the right of reverter retained by the state is waived in favor of the lender.

For the purposes of this subdivision, "nonstate source" means a source of money other than a direct state appropriation for an environmental learning center.

(f) (d) Agassiz Environmental Learning Center 300,000

This appropriation is for a grant to the city of Fertile.

(g) (e) Laurentian Environmental Learning Center 450,000

This appropriation is for a grant to independent school district No. 621, Mounds View.

(h) (f) Prairie Woods Environmental Learning Center 250,000

This appropriation is for a grant to Kandiyohi county.

(i) (g) Prairie Wetlands Environmental Learning Center 3,000,000

This appropriation is for a grant to the city of Fergus Falls.

Appropriations in this subdivision must be used for qualified capital expenditures.

Sec. 25. Laws 1994, chapter 643, section 23, is amended by adding a subdivision to read:

Subd. 31. St. Croix Valley Heritage Center 150,000

To the commissioner of natural resources for a grant to the city of Taylors Falls to prepare a preliminary design for a heritage center, subject to Minnesota Statutes, section 16A.695.

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Sec. 26. Laws 1996, chapter 407, section 8, subdivision 3, is amended to read:

Subd. 3. Parks and Trails

(a) Metropolitan Regional Park System 1,000,000 850,000

This appropriation is from the future resources fund for payment by the commissioner of natural resources to the metropolitan council for subgrants to rehabilitate, develop, acquire, and retrofit the metropolitan regional park system consistent with the metropolitan council regional recreation open space capital improvement program.

This appropriation may be used for the purchase of homes only if the purchases are expressly included in the work program approved by the legislative commission on Minnesota resources.

(b) State Park and Recreation Area Acquisition 1,000,000

This appropriation is from the trust fund to the commissioner of natural resources for acquisition of land within the statutory boundaries of state parks and recreation areas.

(c) Local Grants 895,000

This appropriation is from the future resources fund to the commissioner of natural resources to provide matching grants to local units of government for local park and recreation areas; trail linkages between communities, trails, and parks; and at least $100,000 for the conservation partners program as provided in Laws 1995, chapter 220, section 19, subdivision 4, paragraph (e). In addition to the required work program, grants may not be approved until grant proposals to be funded have been submitted to the legislative commission on Minnesota resources, and the commission has either made a recommendation or allowed 60 days to pass without making a recommendation. The above appropriations are available half for the seven-county metropolitan area and half for outside the metropolitan area. For the purposes of this paragraph, match includes nonstate contributions in either cash or in-kind.

(d) Chippewa County Regional Trail 410,000

This appropriation is to the commissioner of natural resources from the future resources fund for a grant to the city of Montevideo for acquisition and development of the Chippewa county regional trail.

Sec. 27. Laws 1996, chapter 463, section 7, subdivision 9, is amended to read:

Subd. 9. Metro Regional Park Rehabilitation, Acquisition, and

Development 9,400,000 9,550,000

This appropriation is for payment by the commissioner of natural resources 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,

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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. The metropolitan council, in cooperation with the city of St. Paul, must develop a plan and fund the restoration of oak savannah remnants in two regional parks in Ramsey county. 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.

Sec. 28. Laws 1996, chapter 463, section 13, subdivision 2, is amended to read:

Subd. 2. Capital Asset Preservation and Replacement (CAPRA) 12,000,000

To be spent in accordance with Minnesota Statutes, section 16A.632.

Up to $900,000 of the money appropriated in this subdivision may be used as necessary to renovate the Governor's Residence in St. Paul for life safety, code, security, and ancillary storage facility improvements.

Up to $600,000 of the money appropriated in this subdivision may be used to continue the electrical utility infrastructure conversion of the primary feeder loop system to a primary selective system by rerouting the system around the capitol.

In accordance with Minnesota Statutes, section 16B.31, subdivision 6, the commissioner of administration shall identify the condition and suitability of all major state buildings and office space and report the commissioner's findings by June 30, 1997, to the chairs of the senate committee on finance and the house of representatives committees on ways and means and on capital investment. The report must identify the useful life, the current condition, the estimated cost of currently needed repairs, and the suitability for the current state purposes of all major state-owned buildings and office space owned or leased by the state. The legislature intends to use the report in considering future appropriations to the commissioner of administration and to state agencies for asset preservation.

Sec. 29. Laws 1996, chapter 463, section 13, subdivision 4, is amended to read:

Subd. 4. Renovate Capitol Building 7,400,000

8,435,000

$4,800,000 is to predesign, design, and reconstruct the northeast terrace and predesign and design the northwest terraces terrace of the capitol building.

$1,400,000 is to renovate the lantern and related structures on the capitol dome.

$1,200,000 $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.

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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. 30. Laws 1996, chapter 463, section 13, subdivision 8, is amended to read:

Subd. 8. Revenue Facilities Design 1,950,000

74,950,000

To design, construct, furnish, and equip new revenue department facilities, including parking to accommodate approximately 950 vehicles. $1,450,000 of this appropriation is not available until the report required by subdivision 10 has been completed.

Notwithstanding Minnesota Statutes, section 15.50, subdivision 2, paragraph (e), plans for the building need not be selected through a design competition.

The plans for the facilities for the department of revenue may provide for two or more buildings in separate locations. The principal administrative offices of the department must be located in or near the capitol area. Other operations may be located outside of the capitol area as appropriate and conveniently situated for efficient operations of the department.

The design development phase of the revenue department building project must include an analysis of the cost, benefit, and operational feasibility of relocating revenue department jobs to areas in greater Minnesota.

The commissioner of administration may use a design-build method of project development and construction for this project. The commissioner may award a design-build contract on the basis of requests for proposals or requests for qualifications without bids.

The building must be located within an eight-mile radius of the capitol, providing approximately 315,000 net square feet, and at a cost not to exceed $74,950,000, including the parking ramp, inflation adjustments, and other contingencies. Notwithstanding Minnesota Statutes, section 15.50, subdivision 2, paragraphs (c) and (e), if the building is constructed within the capitol area as defined in paragraph (a) of that subdivision, plans for the building need not conform to the comprehensive plan for the area and need not be selected through a design competition.

As an alternative to constructing a new building, the commissioner of administration may use this appropriation to purchase the building currently leased and occupied by the department of revenue as its headquarters at 10 River Park Place. This appropriation may not be used to remodel or renovate 10 River Park Place. Any appropriation for those purposes should be requested by the commissioner of administration as part of the 1998 capital budget.

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If the commissioner of administration determines that it is not feasible to construct the new facilities within the capitol area within the time allowed and within the limits of this appropriation, and that the commissioner is not able to purchase the building and land leased by the state at 10 River Park Place for $23,000,000 or less, the commissioner may locate the new facilities within the city of Inver Grove Heights. If the facilities are located within the city of Inver Grove Heights, this appropriation is reduced to $46,000,000.

Sec. 31. Laws 1996, chapter 463, section 14, subdivision 7, is amended to read:

Subd. 7. Mariucci Ice and Tennis Facility 7,000,000

To the board of regents of the University of Minnesota to predesign, design, construct, and equip a new facility adjacent to Mariucci arena on the Minneapolis campus to include an ice sheet one or more ice sheets and tennis courts.

Sec. 32. Laws 1996, chapter 463, section 22, subdivision 8, is amended to read:

Subd. 8. Pickwick Mill 150,000

For a grant to Winona county for renovation of the historic Pickwick Mill.

This appropriation is from the Minnesota future resources fund and is available until June 30, 1999.

Sec. 33. Laws 1996, chapter 463, section 24, subdivision 8, is amended to read:

Subd. 8. Lyn/Lake/Jungle Theatre Performing Arts Center 335,000

For a grant to Hennepin county to design, construct, furnish, and equip the Lyn/Lake/Jungle Theatre community performing arts center to provide a community theater and rehearsal space, offices, classrooms and meeting rooms for performing arts organizations, arts education, and arts development and outreach in a formerly tax-forfeited structure in Hennepin county. Hennepin county may contract with a nonprofit organization for operation of the center, subject to Minnesota Statutes, section 16A.695. This appropriation is not available until the commissioner has determined that at least $1,630,000 has been committed by nonstate sources to complete the Lyn/Lake/Jungle Theatre main stage in a nearby building owned and operated by the Jungle Theater and that $100,000 has been committed by nonstate sources to complete the community performing arts center. This is the final state appropriation for this project.

Sec. 34. Laws 1997, chapter 202, article 1, section 35, if enacted, 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 $545,457,000 $560,457,000 will need to be transferred from the general fund to the state bond fund to pay principal and interest due

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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 amount needed to make the debt service payments is appropriated from the general fund as provided in Minnesota Statutes, section 16A.641.

Sec. 35. [REPEALER.]

Laws 1994, chapter 643, section 19, subdivision 11; Laws 1996, chapter 463, section 7, subdivision 26; and Laws 1997, chapter 200, article 2, section 5, are repealed.

Sec. 36. [EFFECTIVE DATE.]

This act is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to capital improvements; cleaning up lands contaminated by petroleum leaks; providing for replacement of leaking underground petroleum tanks; cleaning up contaminated building sites; transferring authority to administer individual on-site sewage treatment programs to the pollution control agency; modifying sewer loan repayment provisions; appropriating money for flood damage reduction and for local bridges; modifying previous appropriations for certain capital improvements; changing the source of funds for certain projects; defining design and predesign; transferring authority to administer grants for certain projects; appropriating money; authorizing the sale of state bonds; amending Minnesota Statutes 1996, sections 16B.335, subdivision 3; 115C.09, by adding a subdivision; 116.18, subdivision 3c; 116J.554, subdivisions 1 and 2; 116J.556; and 446A.072, by adding a subdivision; Laws 1994 chapter 643, sections 3, subdivision 2; 10, subdivision 10, as amended; 15, subdivisions 2 and 4; 19, subdivision 8, as amended; and 23, subdivision 28, as amended, and by adding a subdivision; Laws 1996, chapters 407, section 8, subdivision 3; and 463, sections 7, subdivision 9; 13, subdivisions 2, 4, and 8; 14, subdivision 7; 22, subdivision 8; and 24, subdivision 8; Laws 1997, chapter 202, article 1, section 35; proposing coding for new law in Minnesota Statutes, chapter 116J; repealing Laws 1994, chapter 643, section 19, subdivision 11; Laws 1996, chapter 463, section 7, subdivision 26; and Laws 1997, chapter 200, article 2, section 5."

We request adoption of this report and repassage of the bill.

House Conferees: Henry J. Kalis, Loren A. Solberg, Dave Bishop, Loren Jennings and Steve Trimble.

Senate Conferees: Steven Morse, Richard J. Cohen, Deanna L. Wiener, Tracy L. Beckman and Dennis R. Frederickson.

Solberg moved that the report of the Conference Committee on H. F. No. 632 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

H. F. No. 632, A bill for an act relating to public administration; modifying requirements for spending to improve the capitol area and construct bridges, environmental learning centers, and community performing arts centers; appropriating money; amending Laws 1994, chapter 643, sections 3, subdivision 2; 15, subdivisions 2 and 4; and 23, subdivision 28, as amended; and Laws 1996, chapter 463, sections 13, subdivision 2; and 24, subdivision 8; repealing Laws 1996, chapter 463, section 7, subdivision 26.

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.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 110 yeas and 20 nays as follows:

Those who voted in the affirmative were:

Abrams Dorn Jennings McCollum Pugh Sykora
Anderson, B. Entenza Johnson, R. McElroy Rest Tingelstad
Anderson, I. Erhardt Juhnke McGuire Reuter Tomassoni
Bakk Evans Kahn Milbert Rhodes Tompkins
Bettermann Farrell Kalis Molnau Rifenberg Trimble
Biernat Finseth Kelso Mulder Rostberg Tunheim
Bishop Folliard Kinkel Mullery Rukavina Van Dellen
Boudreau Goodno Knoblach Munger Schumacher Vickerman
Bradley Greenfield Koppendrayer Murphy Seifert Weaver
Broecker Greiling Koskinen Ness Sekhon Wejcman
Carlson Gunther Kubly Nornes Skare Wenzel
Chaudhary Harder Kuisle Olson, E. Slawik Westfall
Clark Hasskamp Larsen Orfield Smith Winter
Commers Hausman Leighton Osthoff Solberg Wolf
Daggett Hilty Leppik Otremba Stanek Spk. Carruthers
Davids Holsten Lieder Pawlenty Stang
Dawkins Huntley Lindner Paymar Sviggum
Delmont Jaros Macklin Pelowski Swenson, D.
Dempsey Jefferson Mariani Peterson Swenson, H.

Those who voted in the negative were:

Dehler Knight Mahon Osskopp Skoglund Workman
Haas Kraus Mares Ozment Tuma
Johnson, A. Krinkie Olson, M. Paulsen Westrom
Kielkucki Luther Opatz Seagren

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:

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 412.

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.

Patrick E. Flahaven, Secretary of the Senate

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CONFERENCE COMMITTEE REPORT ON S. F. NO. 412

A bill for an act relating to employment; establishing and modifying certain salary provisions for certain public employees; amending Minnesota Statutes 1996, sections 3.855, subdivision 3; 15A.081, subdivisions 7b, 8, and 9; 15A.083, subdivisions 5, 6a, and 7; 43A.17, subdivisions 1 and 3; 43A.18, subdivisions 4 and 5; 85A.02, subdivision 5a; 298.22, subdivision 1; and 349A.02, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 15A; repealing Minnesota Statutes 1996, section 15A.081, subdivisions 1 and 7.

May 19, 1997

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. 412, 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. 412 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 3.855, subdivision 3, is amended to read:

Subd. 3. [OTHER SALARIES AND COMPENSATION PLANS.] The commission shall also:

(1) review and approve, reject, or modify a plan for compensation and terms and conditions of employment prepared and submitted by the commissioner of employee relations under section 43A.18, subdivision 2, covering all state employees who are not represented by an exclusive bargaining representative and whose compensation is not provided for by chapter 43A or other law;

(2) review and approve, reject, or modify a plan for total compensation and terms and conditions of employment for employees in positions identified as being managerial under section 43A.18, subdivision 3, whose salaries and benefits are not otherwise provided for in law or other plans established under chapter 43A;

(3) review and approve, reject, or modify recommendations for salaries submitted by the governor or other appointing authority under section 43A.18, subdivision 5, covering agency head positions listed in section 15A.081 15A.0815;

(4) review and approve, reject, or modify recommendations for salaries of officials of higher education systems under section 15A.081, subdivision 7b; and

(5) review and approve, reject, or modify plans for compensation, terms, and conditions of employment proposed under section 43A.18, subdivisions 3a and 4.

Sec. 2. Minnesota Statutes 1996, section 15A.081, subdivision 7b, is amended to read:

Subd. 7b. [HIGHER EDUCATION OFFICERS.] The board of trustees of the Minnesota state colleges and universities and the higher education services council shall set the salary rates for, respectively, the chancellor of the Minnesota state colleges and universities and the director of the higher education services office. The board or the council shall submit the proposed salary change to the legislative coordinating commission for approval, modification, or rejection in the manner provided in section 3.855. The salary rate for the chancellor of the Minnesota state colleges and universities may not exceed 95 percent of the salary of the governor under section 15A.082, subdivision 3. For purposes of this subdivision, "the salary rate of the chancellor" does not include:

(1) employee benefits that are also provided for the majority of all other full-time state employees, 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;

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(2) dues paid to organizations that are of a civic, professional, educational, or governmental nature;

(3) reimbursement for actual expenses incurred by the employee that the appointing authority determines to be directly related to the performance of job responsibilities, including any relocation expenses paid during the initial year of employment; or

(4) a housing allowance that is comparable to housing allowances provided to chancellors and university presidents in similar higher education systems nationwide.

The salary of the director of the higher education services office may not exceed the maximum of the salary range for the commissioner of administration. In deciding whether to recommend a salary increase, the governing board or council shall consider the performance of the chancellor or director, including the chancellor's or director's progress toward attaining affirmative action goals.

Sec. 3. Minnesota Statutes 1996, section 15A.081, subdivision 8, is amended to read:

Subd. 8. [EXPENSE ALLOWANCE.] Notwithstanding any law to the contrary, positions listed in subdivision 1 section 15A.0815, subdivisions 2 and 3, constitutional officers, and the commissioner of iron range resources and rehabilitation are authorized an annual expense allowance not to exceed $1,500 for necessary expenses in the normal performance of their duties for which no other reimbursement is provided. The expenditures under this subdivision are subject to any laws and rules relating to budgeting, allotment and encumbrance, preaudit and postaudit. The commissioner of finance may promulgate adopt rules to assure the proper expenditure of these funds, and to provide for reimbursement.

Sec. 4. Minnesota Statutes 1996, section 15A.081, subdivision 9, is amended to read:

Subd. 9. [TRANSFER OF VACATION AND SICK LEAVE; CERTAIN APPOINTEES.] (a) This subdivision governs transfers of accumulated vacation leave and sick leave if the governor appoints the incumbent of a position listed in this section 15A.0815 to another position listed in this section 15A.0815.

(b) An appointee moving between positions in the executive branch shall transfer all vacation leave and sick leave hours to the appointee's credit at the time of the new appointment.

(c) The governor may authorize an appointee to transfer accumulated vacation leave and sick leave hours under the following conditions:

(1) an appointee moving to a position in the executive branch from a position outside the executive branch may be permitted to transfer no more than 275 hours of accumulated unliquidated vacation leave and no more than 900 hours of accumulated unliquidated sick leave; and

(2) an appointee moving to a position outside the executive branch from a position within the executive branch may be permitted to transfer accumulated unliquidated vacation leave and sick leave hours up to the maximum accumulations permitted by the personnel policies governing the new position.

The governor shall notify the commissioner of employee relations of any transfers authorized under this paragraph.

Sec. 5. [15A.0815] [SALARY LIMITS FOR CERTAIN EMPLOYEES.]

Subdivision 1. [SALARY LIMITS.] The governor or other appropriate appointing authority shall set the salary rates for positions listed in this section within the salary limits listed in subdivisions 2 to 4, subject to approval of the legislative coordinating commission and the legislature as provided by sections 3.855, 15A.081, subdivision 7b, and 43A.18, subdivision 5.

Subd. 2. [GROUP I SALARY LIMITS.] The salaries for positions in this subdivision may not exceed 85 percent of the salary of the governor:

Commissioner of administration;

Commissioner of agriculture;

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Commissioner of children, families, and learning;

Commissioner of commerce;

Commissioner of corrections;

Commissioner of economic security;

Commissioner of employee relations;

Commissioner of finance;

Commissioner of health;

Executive director, higher education services office;

Commissioner, housing finance agency;

Commissioner of human rights;

Commissioner of human services;

Executive director, state board of investment;

Commissioner of labor and industry;

Commissioner of natural resources;

Director of office of strategic and long-range planning;

Commissioner, pollution control agency;

Commissioner of public safety;

Commissioner, department of public service;

Commissioner of revenue;

Commissioner of trade and economic development;

Commissioner of transportation; and

Commissioner of veterans affairs.

Subd. 3. [GROUP II SALARY LIMITS.] The salaries for positions in this subdivision may not exceed 75 percent of the salary of the governor:

Ombudsman for corrections;

Executive director of gambling control board;

Commissioner, bureau of mediation services;

Ombudsman for mental health and retardation;

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Chair, metropolitan council;

Executive director of pari-mutuel racing;

Executive director, public employees retirement association;

Commissioner, public utilities commission;

Executive director, state retirement system; and

Executive director, teachers retirement association.

Subd. 4. [GROUP III SALARY LIMITS.] The salary for a position in this subdivision may not exceed 25 percent of the salary of the governor:

Chair, metropolitan airports commission.

Sec. 6. Minnesota Statutes 1996, section 15A.083, subdivision 5, is amended to read:

Subd. 5. [TAX COURT.] Salaries The salary of judges a judge of the tax court are is the same as the base salary for a district judges as set under section 15A.082, subdivision 3 court judge. The salary of the chief tax court judge is the same as the salary for a chief district court judge.

Sec. 7. Minnesota Statutes 1996, section 15A.083, subdivision 6a, is amended to read:

Subd. 6a. [ADMINISTRATIVE LAW JUDGE; MAXIMUM SALARY SALARIES.] The salary of the chief administrative law judge is the same as the salary of a district court judge. The salaries of the assistant chief administrative law judge and administrative law judge supervisors are 95 percent of the salary of a district court judge. The maximum salary of an administrative law judge in the classified service or compensation judge employed by the office of administrative hearings is 90 percent of the salary of a district court judges as set under section 15A.082, subdivision 3 judge. The salary of all administrative law judges and compensation judges employed by the office of administrative hearings must be set at a uniform rate established by the chief administrative law judge.

Sec. 8. Minnesota Statutes 1996, section 15A.083, subdivision 7, is amended to read:

Subd. 7. [WORKERS' COMPENSATION COURT OF APPEALS AND COMPENSATION JUDGES.] (a) Salaries of judges of the workers' compensation court of appeals are the same as the salary for district court judges as set under section 15A.082, subdivision 3. The salary of the chief judge of the workers' compensation court of appeals is the same as the salary for a chief district court judge.

(b) Salaries of compensation judges employed by the department of labor and industry are not less than 75 percent and not more than 80 percent of the salary of district court judges. The salary of judges within this range must be set at a uniform rate by the commissioner of labor and industry. 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. 9. Minnesota Statutes 1996, section 43A.17, subdivision 1, is amended to read:

Subdivision 1. [SALARY LIMITS.] As used in subdivisions 1 to 9, "salary" means hourly, monthly, or annual rate of pay including any lump-sum payments and cost-of-living adjustment increases but excluding payments due to overtime worked, shift or equipment differentials, work out of class as required by collective bargaining agreements or plans established under section 43A.18, and back pay on reallocation or other payments related to the hours or conditions under which work is performed rather than to the salary range or rate to which a class is assigned. For presidents of state universities, "salary" does not include a housing allowance provided through a compensation plan approved under section 43A.18, subdivision 3a.

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The salary, as established in section 15A.081 15A.0815, of the head of a state agency in the executive branch is the upper limit on the salaries of individual employees in the agency. The salary of the commissioner of labor and industry is the upper limit of salaries of employees in the bureau of mediation services. However, if an agency head is assigned a salary that is lower than the current salary of another agency employee, the employee retains the salary, but may not receive an increase in salary as long as the salary is above that of the agency head. The commissioner may grant exemptions from these upper limits as provided in subdivisions 3 and 4.

Sec. 10. Minnesota Statutes 1996, section 43A.17, subdivision 3, is amended to read:

Subd. 3. [UNUSUAL EMPLOYMENT SITUATIONS.] Upon the request of the appointing authority, and when the commissioner determines that changes in employment situations create difficulties in attracting or retaining employees, the commissioner may approve an unusual employment situation increase to advance an employee within the compensation plan. Such The action will must be consistent with applicable provisions of collective bargaining agreements or plans pursuant to adopted under section 43A.18. The commissioner shall review each proposal giving due consideration to salary rates paid to other employees in the same class and agency and may approve any request which in the commissioner's judgment is in the best interest of the state. If the commissioner determines that the position requires special expertise necessitating a higher salary to attract or retain qualified persons, the commissioner may grant an exemption not to exceed 120 percent of the base salary of the head of the agency or the maximum rate established for the position, whichever is less.

Sec. 11. Minnesota Statutes 1996, section 43A.18, subdivision 4, is amended to read:

Subd. 4. [PLANS NOT ESTABLISHED BUT APPROVED BY COMMISSIONER.] (a) Notwithstanding any other law to the contrary, terms and conditions of employment for employees listed in this subdivision must be set by appointing authorities within the limits of compensation plans that have been approved by the commissioner before becoming effective. Compensation plans established under paragraphs paragraph (c) and (d), must be reviewed and approved, modified, or rejected by the legislature and the legislative coordinating commission on employee relations under section 3.855, subdivision subdivisions 2 and 3, before becoming effective.

(b) Total compensation for employees who are not covered by a collective bargaining agreement in the offices of the governor, lieutenant governor, attorney general, secretary of state, state auditor, and state treasurer must be determined by the governor, lieutenant governor, attorney general, secretary of state, state auditor, and state treasurer, respectively.

(c) Total compensation for classified administrative law judges in the office of administrative hearings must be determined by the chief administrative law judge.

(d) Total compensation for unclassified positions not covered by a collective bargaining agreement in the higher education services office must be determined by the higher education services office.

Sec. 12. Minnesota Statutes 1996, section 43A.18, subdivision 5, is amended to read:

Subd. 5. [GOVERNOR APPOINTING AUTHORITIES TO RECOMMEND CERTAIN SALARIES.] (a) The governor shall, by July 1 of each odd-numbered year, or other appropriate appointing authority, may submit to the legislative coordinating commission on employee relations recommendations for salaries within the salary range limits for the positions listed in section 15A.081, subdivisions 1 and 7 15A.0815, subdivisions 2 to 4. The governor An appointing authority may also propose additions or deletions of positions from those listed.

(b) Before submitting the recommendations, the governor appointing authority shall consult with the commissioner of administration, the commissioner of finance, and the commissioner of employee relations concerning the recommendations.

(c) In making recommendations, the governor appointing authority shall consider the criteria established in subdivision 8 and the performance of individual incumbents. The performance evaluation must include a review of an incumbent's progress toward attainment of affirmative action goals. The governor appointing authority shall establish an objective system for quantifying knowledge, abilities, duties, responsibilities, and accountabilities and in determining recommendations rate each position by this system.

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(d) Before the governor's appointing authority's recommended salaries take effect, the recommendations must be reviewed and approved, rejected, or modified by the legislative coordinating commission on employee relations and the legislature under section 3.855, subdivision subdivisions 2 and 3. The governor may also at any time propose changes in the salary rate of any positions covered by this subdivision, which must be submitted and approved in the same manner as provided in this subdivision. If, when the legislature is not in session, the commission fails to reject or modify salary recommendations of the governor within 30 calendar days of their receipt, the recommendations are deemed to be approved.

(e) The governor appointing authority shall set the initial salary of a head of a new agency or a chair of a new metropolitan board or commission whose salary is not specifically prescribed by law after consultation with the commissioner, whose recommendation is advisory only. The amount of the new salary must be comparable to the salary of an agency head or commission chair having similar duties and responsibilities.

(f) The salary of a newly appointed head of an agency or chair of a metropolitan agency listed in section 15A.081, subdivision 1 or 7 15A.0815, subdivisions 2 to 4, may be increased or decreased by the governor appointing authority from the salary previously set for that position within 30 days of the new appointment after consultation with the commissioner. If the governor appointing authority increases a salary under this paragraph, the governor appointing authority shall submit the new salary to the legislative coordinating commission on employee relations and the full legislature for approval, modification, or rejection under section 3.855, subdivision subdivisions 2 and 3. If, when the legislature is not in session, the commission fails to reject or modify salary recommendations of the governor within 30 calendar days of their receipt, the recommendations are deemed to be approved.

Sec. 13. Minnesota Statutes 1996, section 85A.02, subdivision 5a, is amended to read:

Subd. 5a. [EMPLOYEES.] (a) The board shall appoint an administrator who shall serve as the executive secretary and principal administrative officer of the board and, subject to its approval, the administrator shall operate the Minnesota zoological garden and enforce all rules and policy decisions of the board. The administrator must be chosen solely on the basis of training, experience, and other qualifications appropriate to the field of zoo management and development. The board shall set the compensation for salary of the administrator within the limits established for the commissioner of agriculture in section 15A.081, subdivision 1. The salary of the administrator may not exceed 85 percent of the salary of the governor. The administrator shall perform duties assigned by the board and shall serve serves in the unclassified service at the pleasure of the board. The administrator, with the participation of the board, shall appoint a development director in the unclassified service or contract with a development consultant to establish mechanisms to foster community participation in and community support for the Minnesota zoological garden. The board may employ other necessary professional, technical, and clerical personnel. Employees of the zoological garden are eligible for salary supplement in the same manner as employees of other state agencies. The commissioner of finance shall determine the amount of salary supplement based on available funds.

(b) The board may contract with individuals to perform professional services and may contract for the purchases of necessary species exhibits, supplies, services, and equipment. The board may also contract for the construction and operation of entertainment facilities on the zoo grounds that are not directly connected to ordinary functions of the zoological garden. The zoo board shall may not enter into any a final agreement for construction of any an entertainment facility that is not directly connected to the ordinary functions of the zoo until after final construction plans have been submitted to the chairs of the senate finance and house appropriations committees for their recommendations.

The zoo may not contract for entertainment during the period of the Minnesota state fair that would directly compete with entertainment at the Minnesota state fair.

Sec. 14. Minnesota Statutes 1996, section 177.24, subdivision 1, is amended to read:

Subdivision 1. [AMOUNT.] (a) For purposes of this subdivision, the terms defined in this paragraph have the meanings given them.

(1) "Large employer" means an enterprise whose annual gross volume of sales made or business done is not less than $362,500 $500,000 (exclusive of excise taxes at the retail level that are separately stated) and covered by the Minnesota fair labor standards act, sections 177.21 to 177.35.

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(2) "Small employer" means an enterprise whose annual gross volume of sales made or business done is less than $362,500 $500,000 (exclusive of excise taxes at the retail level that are separately stated) and covered by the Minnesota fair labor standards act, sections 177.21 to 177.35.

(b) Except as otherwise provided in sections 177.21 to 177.35, every large employer must pay each employee wages at a rate of at least $4.25 $5.15 an hour beginning September 1, 1997. Every small employer must pay each employee at a rate of at least $4 $4.90 an hour beginning September 1, 1997.

(c) A large employer must pay each employee at a rate of at least the minimum wage set by this section or federal law without the reduction for training wage or full-time student status allowed under federal law. Notwithstanding paragraph (b), during the first 90 consecutive days of employment, an employer may pay an employee under the age of 20 years a wage of $4.25 an hour. No employer may take any action to displace any employee, including a partial displacement through a reduction in hours, wages, or employment benefits, in order to hire an employee at the wage authorized in this paragraph.

Sec. 15. Minnesota Statutes 1996, section 298.22, subdivision 1, is amended to read:

Subdivision 1. (1) The office of governor shall appoint the commissioner of iron range resources and rehabilitation is created. The commissioner shall be appointed by the governor under the provisions of section 15.06.

(2) The commissioner may hold such other positions or appointments as that are not incompatible with duties as commissioner of iron range resources and rehabilitation. The commissioner may appoint a deputy commissioner. All expenses of the commissioner, including the payment of such assistance as may be necessary, shall must be paid out of the amounts appropriated by section 298.28. The compensation salary of the commissioner shall must be set by the legislative coordinating commission and may not exceed the maximum salary set for the commissioner of administration under section 15A.081, subdivision 1 75 percent of the salary of the governor.

(3) When the commissioner shall determine determines that distress and unemployment exists or may exist in the future in any county by reason of the removal of natural resources or a possibly limited use thereof of natural resources in the future and the any resulting decrease in employment resulting therefrom, now or hereafter, the commissioner may use such whatever amounts of the appropriation made to the commissioner of revenue in section 298.28 as that are determined to be necessary and proper in the development of the remaining resources of said the county and in the vocational training and rehabilitation of its residents, except that the amount needed to cover cost overruns awarded to a contractor by an arbitrator in relation to a contract awarded by the commissioner or in effect after July 1, 1985, is appropriated from the general fund. For the purposes of this section, "development of remaining resources" includes, but is not limited to, the promotion of tourism.

Sec. 16. Minnesota Statutes 1996, section 349A.02, subdivision 1, is amended to read:

Subdivision 1. [DIRECTOR.] A state lottery is established under the supervision and control of the director of the state lottery appointed by the governor with the advice and consent of the senate. The director must be qualified by experience and training in the operation of a lottery to supervise the lottery. The director serves in the unclassified service. The annual salary rate authorized for the director is equal to 80 85 percent of the salary rate prescribed for the governor as of the effective date of Laws 1993, chapter 146.

Sec. 17. [SALARIES OF CONSTITUTIONAL OFFICERS, LEGISLATORS, AND JUDGES.]

(a) The salaries of constitutional officers are increased by 2.5 percent effective September 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 September 1, 1997, and by 5.0 percent effective January 1, 1998.

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(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 weight 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. 18. [PHASE-IN OF SALARY INCREASES.]

(a) Notwithstanding Minnesota Statutes, section 15A.083, subdivision 6a, the salary of an administrative law judge employed by the office of administrative hearings may not exceed 85 percent of the salary of a district court judge before July 1, 1998. After June 30, 1998, the salary of an administrative law judge employed by the office of administrative hearings is governed by Minnesota Statutes, section 15A.083, subdivision 6a. If an employee's current salary exceeds the salary provided by this subdivision, the employee retains that salary, but may not receive a salary increase until the salary provided by this section exceeds the employee's current salary.

(b) Notwithstanding Minnesota Statutes, section 15A.083, subdivision 6a, the salary of the assistant chief administrative law judge and administrative law judge supervisors in the office of administrative hearings is 90 percent of the salary of a district court judge effective September 1, 1997. After June 30, 1998, the salary of the assistant chief administrative law judge and administrative law judge supervisors is governed by Minnesota Statutes, section 15A.083, subdivision 6a. If an employee's current salary exceeds the salary provided by this subdivision, the employee retains the salary, but may not receive a salary increase until the salary provided by this section exceeds the employee's current salary.

Sec. 19. [STUDY.]

The commissioner of employee relations shall study and report to the legislature by January 15, 1998, on recommendations for salary levels for compensation judges employed at the department of labor and industry. The study must include a comparison of salary levels for compensation judges employed at the department of labor and industry and compensation judges employed at the office of administrative hearings.

Sec. 20. [REVISOR INSTRUCTION.]

The revisor of statutes shall substitute the reference "section 15A.0815" for each reference to section 15A.081, subdivisions 1, 7, and 7b, wherever they occur in the next edition of Minnesota Statutes and Minnesota Rules.

Sec. 21. [REPEALER.]

Minnesota Statutes 1996, section 15A.081, subdivisions 1 and 7, are repealed.

Sec. 22. [NONSEVERABILITY.]

The provisions of this act are not severable. If any provision is determined to be unconstitutional or void, all of the remaining provisions are void.

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Sec. 23. [EFFECTIVE DATES.]

Sections 1 to 22 are effective September 1, 1997. However, the portions of this act providing salary increases for judges are effective only if this entire bill is enacted into law."

Delete the title and insert:

"A bill for an act relating to employment; regulating public employee and official compensation; raising the minimum wage; amending Minnesota Statutes 1996, sections 3.855, subdivision 3; 15A.081, subdivisions 7b, 8, and 9; 15A.083, subdivisions 5, 6a, and 7; 43A.17, subdivisions 1 and 3; 43A.18, subdivisions 4 and 5; 85A.02, subdivision 5a; 177.24, subdivision 1; 298.22, subdivision 1; and 349A.02, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 15A; repealing Minnesota Statutes 1996, section 15A.081, subdivisions 1 and 7."

We request adoption of this report and repassage of the bill.

Senate Conferees: Roy W. Terwilliger, Allan H. Spear and James P. Metzen.

House Conferees: Loren Jennings and Mindy Greiling.

Jennings moved that the report of the Conference Committee on S. F. No. 412 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 412, A bill for an act relating to employment; establishing and modifying certain salary provisions for certain public employees; amending Minnesota Statutes 1996, sections 3.855, subdivision 3; 15A.081, subdivisions 7b, 8, and 9; 15A.083, subdivisions 5, 6a, and 7; 43A.17, subdivisions 1 and 3; 43A.18, subdivisions 4 and 5; 85A.02, subdivision 5a; 298.22, subdivision 1; and 349A.02, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 15A; repealing Minnesota Statutes 1996, section 15A.081, subdivisions 1 and 7.

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.

Pursuant to rule 2.05, the Speaker excused Pawlenty from voting on S. F. No. 412, as amended by Conference.

There were 41 yeas and 92 nays as follows:

Those who voted in the affirmative were:

Anderson, I. Greiling Juhnke Lieder Opatz Tomassoni
Bakk Hausman Kahn Long Osthoff Tunheim
Biernat Hilty Kelso Mariani Pugh Wagenius
Bishop Huntley Kinkel McGuire Rukavina Wenzel
Carlson Jaros Kraus Munger Skoglund Winter
Dawkins Jefferson Leighton Murphy Smith Spk. Carruthers
Greenfield Jennings Leppik Olson, E. Solberg

Those who voted in the negative were:

Abrams Erhardt Knight Milbert Reuter Tingelstad
Anderson, B. Evans Knoblach Molnau Rhodes Tompkins
Bettermann Farrell Koppendrayer Mulder Rifenberg Trimble
Boudreau Finseth Koskinen Mullery Rostberg Tuma
Bradley Folliard Krinkie Ness Schumacher Van Dellen
Broecker Garcia Kubly Nornes Seagren Vickerman
Chaudhary Goodno Kuisle Olson, M. Seifert Weaver
Clark Gunther Larsen Orfield Sekhon Wejcman
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Commers Haas Lindner Osskopp Skare Westfall
Daggett Harder Luther Otremba Slawik Westrom
Davids Hasskamp Macklin Ozment Stanek Wolf
Dehler Holsten Mahon Paulsen Stang Workman
Delmont Johnson, A. Mares Paymar Sviggum
Dempsey Johnson, R. Marko Pelowski Swenson, D.
Dorn Kalis McCollum Peterson Swenson, H.
Entenza Kielkucki McElroy Rest Sykora

The bill was not repassed, as amended by Conference.

Mr. Speaker:

I hereby announce the passage by the Senate of the following Senate File, herewith transmitted:

S. F. No. 1955.

Patrick E. Flahaven, Secretary of the Senate

FIRST READING OF SENATE BILLS

S. F. No. 1955, 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 352.96, subdivision 2.

The bill was read for the first time.

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. 1955 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. 1955 be given its second and third readings and be placed upon its final passage. The motion prevailed.

S. F. No. 1955 was read for the second time.

S. F. No. 1955, 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 352.96, subdivision 2.

The bill was read for the third time and placed upon its final passage.

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The question was taken on the passage of the bill and the roll was called. There were 129 yeas and 5 nays as follows:

Those who voted in the affirmative were:

Abrams Erhardt Kahn Marko Paymar Swenson, D.
Anderson, B. Evans Kalis McCollum Pelowski Swenson, H.
Anderson, I. Farrell Kelso McElroy Peterson Sykora
Bakk Finseth Kielkucki McGuire Pugh Tingelstad
Bettermann Folliard Kinkel Milbert Rest Tomassoni
Biernat Garcia Knoblach Molnau Reuter Tompkins
Bishop Goodno Koppendrayer Mulder Rhodes Tuma
Boudreau Greenfield Koskinen Mullery Rifenberg Tunheim
Bradley Greiling Kraus Munger Rostberg Van Dellen
Broecker Gunther Kubly Murphy Rukavina Vickerman
Carlson Harder Kuisle Ness Schumacher Wagenius
Chaudhary Hasskamp Larsen Nornes Seagren Weaver
Clark Hausman Leighton Olson, E. Seifert Wejcman
Commers Hilty Leppik Olson, M. Sekhon Wenzel
Daggett Holsten Lieder Opatz Skare Westfall
Davids Huntley Lindner Orfield Skoglund Westrom
Dawkins Jaros Long Osskopp Slawik Winter
Dehler Jefferson Luther Osthoff Smith Wolf
Delmont Jennings Macklin Otremba Solberg Spk. Carruthers
Dempsey Johnson, A. Mahon Ozment Stanek
Dorn Johnson, R. Mares Paulsen Stang
Entenza Juhnke Mariani Pawlenty Sviggum

Those who voted in the negative were:

Haas Knight Krinkie Trimble Workman

The bill was passed and its title agreed to.

Mr. Speaker:

I hereby announce the passage by the Senate of the following House File, herewith returned:

H. F. No. 276, A bill for an act relating to natural resources; requiring public waters work permits for boathouses; providing authority to issue public waters work permits for boathouses to the commissioner of natural resources; amending Minnesota Statutes 1996, section 103G.245, subdivision 4.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 632, A bill for an act relating to public administration; modifying requirements for spending to improve the capitol area and construct bridges, environmental learning centers, and community performing arts centers; appropriating money; amending Laws 1994, chapter 643, sections 3, subdivision 2; 15, subdivisions 2 and 4; and 23, subdivision 28, as amended; and Laws 1996, chapter 463, sections 13, subdivision 2; and 24, subdivision 8; repealing Laws 1996, chapter 463, section 7, subdivision 26.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5847

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

H. F. No. 1684, A bill for an act relating to education; kindergarten through grade 12; providing for general education; special programs; lifework development; education organization, cooperation, and facilities; education excellence; academic performance; education policy issues; libraries; technology; state agencies; conforming and technical amendments; school bus safety; appropriating money; amending Minnesota Statutes 1996, sections 16A.11, by adding a subdivision; 120.062, subdivisions 7 and 9; 120.0621, subdivisions 5a, 5b, 6, and by adding a subdivision; 120.064, subdivisions 3, 4, 4a, 5, 8, 11, 20a, and by adding subdivisions; 120.101, subdivision 5c, and by adding a subdivision; 120.17, subdivision 3a; 120.181; 121.11, subdivision 7c, and by adding a subdivision; 121.1115, by adding subdivisions; 121.15, by adding subdivisions; 121.155, by adding a subdivision; 121.602, subdivisions 1, 2, and 4; 121.611; 121.615, subdivisions 2, 3, 5, 6, 7, 8, 9, and 10; 121.703, subdivision 3; 121.904, subdivision 4a; 123.34, by adding a subdivision; 123.3514, subdivisions 4, 4a, 4c, 4e, 6c, 8, and by adding subdivisions; 123.39, subdivision 6; 123.799, subdivision 1; 123.7991, subdivisions 1 and 2; 123.935, subdivision 7; 124.155, subdivision 1; 124.17, subdivision 4, and by adding a subdivision; 124.193; 124.195, subdivisions 2, 7, 10, 11, and by adding a subdivision; 124.225, subdivisions 1, 3a, 7b, 7d, 7f, 8a, 10, 13, 14, 15, and 17; 124.226, subdivisions 4, 9, and 10; 124.2445; 124.2455; 124.248, subdivisions 1 and 3; 124.2613, subdivisions 3 and 6; 124.2727, subdivisions 6a, 6c, and 6d; 124.273, subdivisions 1d, 1e, 1f, and 5; 124.312, subdivisions 4 and 5; 124.313; 124.314, subdivisions 1 and 2; 124.3201, subdivisions 1, 2, 3, and 4; 124.321, subdivision 1; 124.323, subdivisions 1 and 2; 124.42, subdivision 4; 124.431, subdivisions 2 and 11; 124.45; 124.481; 124.573, subdivision 2f; 124.574, subdivisions 1, 2d, 2f, 5, 6, and 9; 124.646, subdivision 1; 124.83, subdivisions 1 and 2; 124.86, subdivision 2, and by adding a subdivision; 124.91, subdivisions 1 and 5; 124.912, subdivisions 1, 2, and 3; 124.916, subdivisions 1, 2, and 3; 124.918, subdivision 6; 124.95, subdivision 2; 124.961; 124A.03, subdivision 1c; 124A.036, subdivisions 5 and 6; 124A.04, subdivision 2; 124A.22, subdivisions 1, 2, as amended, 3, 6, 6a, 10, 11, 13b, and by adding a subdivision; 124A.225, subdivisions 1 and 4; 124A.23, subdivisions 1 and 3; 124A.26, subdivision 1; 124A.28; 124C.45, subdivision 1a; 124C.46, subdivisions 1 and 2; 124C.498, subdivision 2; 125.05, subdivisions 1c and 2; 125.12, subdivision 14; 126.22, subdivision 2; 126.23, subdivision 1; 126.77, subdivision 1; 126.82; 127.27, subdivision 10; 127.282; 128C.02, subdivision 2; 128C.08, subdivision 5; 134.155, subdivisions 2 and 3; 134.34, subdivision 4; 136A.233, by adding a subdivision; 169.01, subdivision 6; 169.447, subdivision 6; 169.4501, subdivisions 1 and 2; 169.4502, subdivisions 2, 7, 11, and by adding subdivisions; 169.4503, subdivisions 1, 2, 10, 13, 14, 17, 19, 23, 24, and by adding a subdivision; 169.4504, subdivision 1, and by adding a subdivision; 169.452; and 171.3215, subdivision 4; Laws 1991, chapter 265, article 1, section 30, as amended; Laws 1992, chapter 499, article 7, section 31; Laws 1995, First Special Session chapter 3, article 1, section 56; article 2, section 52; article 3, section 11, subdivisions 1, 2, and 5; article 11, section 21, subdivision 3; article 12, section 7, subdivision 1; Laws 1996, chapter 412, article 4, section 34, subdivision 4; and article 12, sections 8 and 11; proposing coding for new law in Minnesota Statutes, chapters 120; 121; 124; 126; and 127; proposing coding for new law as Minnesota Statutes, chapter 256J; repealing Minnesota Statutes 1996, sections 121.904, subdivision 4d; 124.177; 124.225, subdivisions 13, 14, 15, 16, and 17; 124.226, subdivisions 1, 3, 3a, 6, and 10; 124.3201, subdivisions 2a and 2b; 124A.22, subdivisions 2a, 13, and 13a; 124A.697; 124A.698; 124A.70; 124A.71; 124A.711; 124A.72; 124A.73; 126.113; 128B.10; 134.34, subdivision 4a; 134.46; 169.4502, subdivisions 6 and 9; 169.4503, subdivisions 3, 8, 9, 11, 12, and 22; and 169.454, subdivision 11; Laws 1993, chapter 146, article 5, section 20; Laws 1994, chapter 647, article 7, section 18; and Laws 1995, First Special Session chapter 3, article 12, section 8.

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.

Patrick E. Flahaven, Secretary of the Senate

Mr. Speaker:

I hereby announce that the Senate has concurred in and adopted the report of the Conference Committee on:

S. F. No. 435.

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.

Patrick E. Flahaven, Secretary of the Senate

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5848

CONFERENCE COMMITTEE REPORT ON S. F. NO. 435

A bill for an act relating to motor vehicles; making technical changes to clarify that pickup truck with slip in camper may be registered depending upon its weight; eliminating authority for the appointment of corporations as deputy registrars; restricting telephonic access to certain information related to vehicle registration; allowing vehicle dealers 21 days to send purchase receipt to department of public safety if vehicle not sold; providing for display of fleet vehicle license plates; removing sunset date relating to recreational vehicle combination length; providing for appointment, duties, and discontinuance of appointment of driver's license agents; requiring adoption of rules; amending Minnesota Statutes 1996, sections 168.011, subdivision 25; 168.16; 168.33, subdivision 2; 168.345, subdivision 1; 168A.11, subdivision 2; 169.79; 169.81, subdivision 3c; 171.06, subdivision 4; 373.33; and 373.35, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 171; repealing Minnesota Statutes 1996, section 171.06, subdivision 4.

May 19, 1997

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. 435, 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. 435 be further amended as follows:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1996, section 168.011, subdivision 25, is amended to read:

Subd. 25. [RECREATIONAL EQUIPMENT.] (a) "Recreational equipment" means travel trailers including those which telescope or fold down, chassis mounted campers, house cars, motor homes, tent trailers, slip in campers, and converted buses that provide temporary human living quarters. A vehicle is considered to provide temporary living quarters if it:

(1) is not used as the residence of the owner or occupant;

(2) is used for temporary living quarters by the owner or occupant while engaged in recreational or vacation activities; and

(3) is self-propelled or towed on the public streets or highways incidental to the recreational or vacation activities.

(b) For the purposes of this subdivision, a motor home means a unit designed to provide temporary living quarters, built into as an integral part of, or permanently attached to, a self-propelled motor vehicle chassis or van. A motor home must contain permanently installed independent life support systems which meet the American National Standards Institute standard number A119.2 for recreational vehicles and provide at least four of the following facilities, two of which must be from the systems listed in clauses (1), (5), and (6): (1) cooking facility with liquid propane gas supply, (2) refrigerator, (3) self-contained toilet or a toilet connected to a plumbing system with connection for external water disposal, (4) heating or air conditioning separate from the vehicle engine, (5) a potable water supply system including a sink with faucet either self-contained or with connections for an external source, and (6) separate 110-125 volt electrical power supply. For purposes of this subdivision, "permanently installed" means built into or attached as an integral part of a chassis or van, and designed not to be removed except for repair or replacement. A system which is readily removable or held in place by clamps or tie downs is not permanently installed.

(c) Motor homes include but are not limited to, the following:

(1) Type A Motor Home -- a raw chassis upon which is built a driver's compartment and an entire body that provides temporary living quarters as defined in this paragraph;

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(2) Type B Motor Home -- a van-type vehicle that conforms to the motor home definition in this paragraph and has been completed or altered by the final stage manufacturer; and

(3) Type C Motor Home -- an incomplete vehicle upon which is permanently attached a body designed to provide temporary living quarters as defined in this paragraph.

(c) (d) Slip in campers are mounted into a vehicle commonly known as a pickup truck, in the pickup box, either by bolting through the floor of the pickup box or by firmly clamping to the side of the pickup box. The vehicle must may not be registered as a passenger automobile recreational vehicle.

Sec. 2. Minnesota Statutes 1996, section 168.16, is amended to read:

168.16 [REFUNDS; APPROPRIATION.]

After the tax upon any motor vehicle shall have been paid for any year, refund shall be made for errors made in computing the tax or fees and for the error on the part of an owner who may in error have registered a motor vehicle that was not before, nor at the time of registration, nor at any time thereafter during the current past year, subject to tax in this state as provided by section 168.012. Unless otherwise provided in this chapter, a claim for a refund of an overpayment of registration tax must be filed within 3-1/2 years from the date of payment. The refundment shall be made from any fund in possession of the registrar and shall be deducted from the registrar's monthly report to the commissioner of finance. A detailed report of the refundment shall accompany the report. The former owner of a transferred vehicle by an assignment in writing endorsed upon the registration certificate and delivered to the registrar within the time provided herein may sell and assign to the new owner thereof the right to have the tax paid by the former owner accredited to the owner who duly registers the vehicle. Any owner at the time of such occurrence, whose vehicle is declared by an insurance company to be a total loss due to flood damage, permanently destroyed, or sold to the federal government, the state, or political subdivision thereof, and any owner who sells a rental motor vehicle and transfers the license plates issued to that motor vehicle under section 168.15, subdivision 3, shall upon filing a verified claim be entitled to a refund of the unused portion of the tax paid upon the vehicle, computed as follows:

(1) if the vehicle is registered under the calendar year system of registration, the refund is computed pro rata by the month, 1/12 of the annual tax paid for each month of the year remaining after the month in which the plates and certificate were returned to the registrar;

(2) in the case of a vehicle registered under the monthly series system of registration, the amount of the refund is equal to the sum of the amounts of the license fee attributable to those months remaining in the licensing period after the month in which the plates and certificate were returned to the registrar.

There is hereby appropriated to the persons entitled to a refund, from the fund or account in the state treasury to which the money was credited, an amount sufficient to make the refund and payment. Refunds under this section to licensed motor vehicle lessors must be made annually in a manner the registrar determines.

Sec. 3. Minnesota Statutes 1996, section 168.33, subdivision 2, is amended to read:

Subd. 2. [POWERS REGARDING DEPUTY REGISTRARS.] (a) The registrar may appoint, hire, and discharge and fix the compensation of the necessary employees, in the manner provided by law, as may be required to enable the registrar to properly carry out the duties imposed by this chapter. The registrar may appoint, and for cause discontinue, a deputy registrar for any statutory or home rule charter city as the public interest and convenience may require, without regard to whether the county auditor of the county in which the city is situated has been appointed as the deputy registrar for the county or has been discontinued as the deputy registrar for the county, and without regard to whether the county in which the city is situated has established a county license bureau which issues motor vehicle licenses as provided in section 373.32.

(b) The registrar may appoint, and for cause discontinue, a deputy registrar for any statutory or home rule charter city as the public interest and convenience may require, if the auditor for the county in which the city is situated chooses not to accept appointment as the deputy registrar for the county or is discontinued as a deputy registrar, or if the county in which the city is situated has not established a county license bureau which issues motor vehicle licenses as provided in section 373.32. A person appointed by the registrar as a deputy registrar for any statutory or home rule charter city must be a resident of the county in which the city is situated.

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(c) The registrar may appoint, and for cause discontinue, the county auditor of each county as a deputy registrar. Upon approval of the county board, the auditor, with the approval of the director of motor vehicles, may appoint, and for cause discontinue, the clerk or equivalent officer of each statutory or home rule charter city or any other person as a deputy registrar as public interest and convenience may require, regardless of the appointee's county of residence. At the request of the governing body of a statutory or home rule charter city, the auditor shall appoint, and may for cause discontinue, the clerk or equivalent officer of a city, or another officer or employee of the city designated by the governing body, as a deputy registrar:

(1) if the city is a county seat or, if not, is larger than the seat of the county in which it is situated; and

(2) no office of a deputy registrar is situated within the city or within 15 miles of the city by the most direct public route.

(d) Notwithstanding any other provision, a person other than a county auditor or a director of a county license bureau, who was appointed by the registrar before August 1, 1976, as a deputy registrar for any statutory or home rule charter city, may continue to serve as deputy registrar and may be discontinued for cause only by the registrar. The county auditor who appointed the deputy registrars is responsible for the acts of deputy registrars appointed by the auditor. Each deputy, before entering upon the discharge of duties, shall take and subscribe an oath to faithfully discharge the duties and to uphold the laws of the state. If a deputy registrar appointed under this subdivision is not an officer or employee of a county or statutory or home rule charter city, the deputy shall in addition give bond to the state in the sum of $10,000, or a larger sum as may be required by the registrar, conditioned upon the faithful discharge of duties as deputy registrar.

(e) Until January 1, 2009, a corporation governed by chapter 302A may be appointed a deputy registrar. Upon application by an individual serving as a deputy registrar and the giving of the requisite bond as provided in this subdivision, personally assured by the individual or another individual approved by the commissioner of public safety, a corporation named in an application shall become the duly appointed and qualified successor to the deputy registrar. The appointment of any corporation as a deputy registrar expires January 1, 2009. A county board shall appoint, or the commissioner shall appoint if the county board declines to do so, an individual as successor to the corporation as a deputy registrar. The county board or commissioner shall appoint as the successor agent to a corporation whose appointment expires under this paragraph an officer of the corporation if the officer applies for appointment before July 1, 2009.

(f) Each deputy registrar appointed under this subdivision shall keep and maintain, in a convenient public place within or in close proximity to the place for which appointed, a registration and motor vehicle tax collection bureau, to be approved by the registrar, for the registration of motor vehicles and the collection of taxes on motor vehicles. The deputy registrar shall keep records and make reports to the registrar as the registrar, from time to time, may require. The records must be maintained at the facility of the deputy registrar. The records and facilities of the deputy registrar must at all times be open to the inspection of the registrar or the registrar's agents. The deputy registrar shall report to the registrar by the next working day following receipt all registrations made and taxes and fees collected by the deputy registrar. The filing fee imposed under subdivision 7 must be deposited in the treasury of the place for which appointed or, if not a public official, a deputy shall retain the filing fee, but the registration tax and any additional fees for delayed registration the deputy registrar has collected the deputy registrar shall deposit by the next working day following receipt in an approved state depository to the credit of the state through the state treasurer. The place for which the deputy registrar is appointed through its governing body must provide the deputy registrar with facilities and personnel to carry out the duties imposed by this subdivision if the deputy is a public official. In all other cases, the deputy shall maintain a suitable facility for serving the public.

Sec. 4. Minnesota Statutes 1996, section 168.345, subdivision 1, is amended to read:

Subdivision 1. [TELEPHONE INFORMATION.] Information concerning motor vehicle registrations shall not be furnished on the telephone to any person except the personnel of law enforcement agencies and the personnel of federal, state, and local governmental units motor vehicle and registration offices.

Sec. 5. Minnesota Statutes 1996, section 168A.11, subdivision 2, is amended to read:

Subd. 2. [PURCHASE RECEIPT.] A dealer, on buying a vehicle which is subject to an outstanding for which the seller does not present a certificate of title, shall at the time of taking delivery of the vehicle execute in triplicate a purchase receipt for the vehicle in a form designated by the department, and deliver one copy to the seller. Within 48 hours thereafter When a vehicle purchased by a dealer has not been resold after 21 days, the dealer shall mail, transmit, or deliver one copy of such the receipt to the department.

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Sec. 6. Minnesota Statutes 1996, section 169.79, is amended to read:

169.79 [VEHICLE REGISTRATION.]

No person shall operate, drive or park a motor vehicle on any highway unless the vehicle is registered in accordance with the laws of this state and has the number plates for the current year only, except as provided in section 168.12, subdivision 2f, as assigned to it by the commissioner of public safety, conspicuously displayed thereon in a manner that the view of any plate is not obstructed. If the vehicle is a semitrailer, the number plate displayed must be assigned to the registered owner and correlate to the certificate of title documentation on file with the department and shall not display a year indicator. If the vehicle is a motorcycle, motor scooter, motorized bicycle, motorcycle sidecar, trailer, semitrailer, or vehicle displaying a dealer plate, one plate shall be displayed on the rear thereof; if the vehicle is a truck-tractor, road-tractor or farm truck, as defined in section 168.011, subdivision 17, but excluding from that definition semitrailers and trailers, one plate shall be displayed on the front thereof; if it is any other kind of motor vehicle, one plate shall be displayed on the front and one on the rear thereof. All plates shall be securely fastened so as to prevent them from swinging. The person driving the motor vehicle shall keep the plate legible and unobstructed and free from grease, dust, or other blurring material so that the lettering shall be plainly visible at all times. It is unlawful to cover any assigned letters and numbers or the name of the state of origin of a license plate with any material whatever, including any clear or colorless material that affects the plate's visibility or reflectivity. License plates issued to vehicles registered under section 168.017 must display the month of expiration in the lower left corner as viewed facing the plate and the year of expiration in the lower right corner as viewed facing the plate. License plates issued to vehicles registered under section 168.127 must display either fleet registration validation stickers in the lower right corner as viewed facing the plates or distinctive license plates, issued by the registrar, with "FLEET REG" embossed on the bottom center portion of the plate.

Sec. 7. Minnesota Statutes 1996, section 169.81, subdivision 3c, is amended to read:

Subd. 3c. [RECREATIONAL VEHICLE COMBINATIONS.] Notwithstanding subdivision 3, a recreational vehicle combination may be operated without a permit if:

(1) the combination does not consist of more than three vehicles, and the towing rating of the pickup truck is equal to or greater than the total weight of all vehicles being towed;

(2) the combination does not exceed 60 feet in length;

(3) the camper-semitrailer in the combination does not exceed 28 feet in length until August 1, 1997, and 26 feet thereafter;

(4) the operator of the combination is at least 18 years of age;

(5) the trailer carrying a watercraft meets all requirements of law;

(6) the trailers in the combination are connected to the pickup truck and each other in conformity with section 169.82; and

(7) the combination is not operated within the seven-county metropolitan area, as defined in section 473.121, subdivision 2, during the hours of 6:00 a.m. to 9:00 a.m. and 4:00 p.m. to 7:00 p.m. on Mondays through Fridays.

Sec. 8. Minnesota Statutes 1996, section 171.05, subdivision 2a, is amended to read:

Subd. 2a. [PERMIT FOR SIX MONTHS.] (a) An applicant who has applied for and received an instruction permit pursuant to subdivision 2 must possess the instruction permit for not less than six months before qualifying for a driver's license.

(b) Until May 31, 1999, the commissioner may waive the six-month requirement of this subdivision for an applicant for a class D driver's license if:

(1) at least six months has elapsed since the applicant successfully completed the written examination requirement of the approved driver education program pursuant to subdivision 2; and

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(2) the applicant subsequently obtained a permit and successfully completed all of the approved driver education program requirements before applying for the class D driver's license.

This paragraph is effective the day following final enactment and expires June 1, 1999.

Sec. 9. Minnesota Statutes 1996, section 171.06, subdivision 4, is amended to read:

Subd. 4. [APPLICATION, FILING; FEE RETAINED FOR EXPENSES.] Any applicant for an instruction permit, a driver's license, restricted license, or duplicate license may file an application with a court administrator of the district court or at a state office. The administrator or state office shall receive and accept the application. To cover all expenses involved in receiving, accepting, or forwarding to the department applications and fees, the court administrator of the district court may retain a county fee of $3.50 for each application for a Minnesota identification card, instruction permit, duplicate license, driver license, or restricted license. The amount allowed to be retained by the court administrator of the district court shall be paid into the county treasury and credited to the general revenue fund of the county. Before the end of the first working day following the final day of an established reporting period, the court administrator shall forward to the department all applications and fees collected during the reporting period, less the amount herein allowed to be retained for expenses. The court administrators of the district courts may appoint agents to assist in accepting applications, but the administrators shall require every agent to forward to the administrators by whom the agent is appointed all applications accepted and fees collected by the agent, except that an agent shall retain the county fee to cover the agent's expenses involved in receiving, accepting or forwarding the applications and fees. The court administrators shall be responsible for the acts of agents appointed by them and for the forwarding to the department of all applications accepted and those fees collected by agents and by themselves as are required to be forwarded to the department. The commissioner shall suspend or revoke the appointment of a license agent or issue a correction order to a license agent who violates any requirement of this section or when grounds exist that would justify revocation or suspension of a deputy registrar appointment under Minnesota Rules, parts 7406.0800 to 7406.1000. To revoke or suspend an appointment, the commissioner shall follow procedures for suspension and revocation hearings set forth in Minnesota Rules, parts 7406.1100 to 7406.2600.

Sec. 10. [171.061] [DRIVER'S LICENSE AGENTS.]

Subdivision 1. [DEFINITIONS.] For purposes of this section:

(1) "applicant" means an individual applying for a driver's license, restricted license, duplicate license, instruction permit, Minnesota identification card, or motorized bicycle operator's permit; and

(2) "application" refers to an application for a driver's license, restricted license, duplicate license, instruction permit, Minnesota identification card, or motorized bicycle operator's permit.

Subd. 2. [APPOINTMENT AND DISCONTINUANCE.] (a) The commissioner of public safety may appoint an individual, and for cause discontinue the appointment of an agent, to serve as a driver's license agent.

(b) A county board may appoint an individual, and for cause discontinue the appointment of an agent, to serve as an agent, pursuant to sections 373.32 to 373.38, with the approval of the commissioner. If a county board does not discontinue an agent's appointment, although cause for discontinuance exists, the commissioner may discontinue the appointment. If a county board does not appoint an individual, the commissioner may establish an office and appoint an individual to accept applications as the public interest and convenience may require.

(c) The county board is responsible for the acts of an agent appointed by the board and for forwarding to the department all applications accepted and fees collected by the agent as required by the department.

Subd. 3. [APPLICATIONS.] An applicant may file an application with an agent. The agent shall receive and accept applications in accordance with the laws and rules of the department of public safety for a driver's license, restricted license, duplicate license, instruction permit, Minnesota identification card, or motorized bicycle operator's permit.

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Subd. 4. [FEE; EQUIPMENT.] (a) The agent may charge and retain a filing fee of $3.50 for each application. Except as provided in paragraph (b), the fee shall cover all expenses involved in receiving, accepting, or forwarding to the department the applications and fees required under sections 171.02, subdivision 3; 171.06, subdivisions 2 and 2a; and 171.07, subdivisions 3 and 3a.

(b) An agent with photo identification equipment provided by the department before January 1, 1999, may retain the photo identification equipment until the agent's appointment terminates. The department shall maintain the photo identification equipment for these agents. An agent appointed before January 1, 1999, who does not have photo identification equipment provided by the department, and any new agent appointed after December 31, 1998, shall procure and maintain photo identification equipment. All photo identification equipment must be compatible with standards established by the department.

(c) A filing fee retained by the agent employed by a county board must be paid into the county treasury and credited to the general revenue fund of the county. An agent who is not an employee of the county shall retain the filing fee in lieu of county employment or salary and is considered an independent contractor for pension purposes, coverage under the Minnesota state retirement system, or membership in the public employees retirement association.

(d) Before the end of the first working day following the final day of the reporting period established by the department, the agent must forward to the department all applications and fees collected during the reporting period except as provided in paragraph (c).

Subd. 5. [DISCONTINUANCE OR TRANSFER OF APPOINTMENT.] (a) An agent shall notify the department no less than 30 days before the discontinuance of service.

(b) In the event of the notice specified in paragraph (a); death or retirement of the agent; or revocation or discontinuance of the appointment of the agent by the county board or commissioner, the appointment terminates and all equipment provided by the department reverts to the department.

Subd. 6. [RULES.] The commissioner shall adopt rules that prescribe:

(1) criteria, procedures, and requirements for appointing an individual as an agent of the commissioner;

(2) criteria for establishment, operation, management, location, and movement of a license application office;

(3) standards for the uniform administration of laws and rules governing the receipt of applications and fees for applications;

(4) number of applications to be processed;

(5) standards for submitting applications including valid forms of identification, depositing funds, maintaining records, and holding proper bonds; and

(6) standards for discontinuing the individual's appointment and for enforcement action.

Sec. 11. Minnesota Statutes 1996, section 373.33, is amended to read:

373.33 [STATE LICENSES MAY BE ISSUED.]

A county license bureau may issue, process or assist in preparing an application for any license or permit issued by the state or a state official including but not limited to game and fish, trapping, wild rice harvest, motor vehicle, manufactured home, trailer, snowmobile, watercraft or drivers license or as many of the licenses as designated by the county board. The processing of driver's license applications by a county license bureau is subject to the provisions of section 171.061. This authority does not include the issuance of marriage licenses. The county board may delegate the responsibility for the issuance of any county license or permit to the county license bureau.

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Sec. 12. Minnesota Statutes 1996, section 373.35, subdivision 1, is amended to read:

Subdivision 1. [AUDITOR OR BOARD APPOINTEE.] The county auditor shall serve as the director of the county license bureau or, if the auditor chooses not to serve, the county board shall appoint any other county officer or employee, or any other person, to serve as the director upon the terms and conditions the county board deems advisable. The county board shall set the compensation of the director and may provide for the expenses of the office including the premium of any bond required to be furnished by the director. The director shall have the powers and duties imposed on the county officer who previously had the authority to issue or process the application for any license referred to in section 373.32.

Notwithstanding section 168.33, subdivision 2, the commissioner of public safety may appoint, and for cause discontinue, the director as the deputy registrar of motor vehicles in the county. If the director is a deputy registrar, all provisions of section 168.33 and Minnesota Rules, chapter 7406, apply to a county license bureau. If the director is a driver's license agent, section 171.061 and rules promulgated thereunder apply to the county license board director.

Sec. 13. [REAPPOINTMENT OF DRIVER'S LICENSE AGENTS.]

The appointment of a driver's license agent appointed before January 1, 1999, expires on January 1, 1999, unless the agent applies to the commissioner before that date for reappointment to serve as an agent under Minnesota Statutes, section 171.061, subdivision 2, paragraph (a) or (c). The commissioner shall reappoint any agent who applies under this section unless the commissioner determines that the applicant's performance as a driver's license agent would be grounds for discontinuance as an agent under the rules adopted under Minnesota Statutes, section 171.061, subdivision 6, clause (6).

Sec. 14. [TRANSITION.]

The court administrators of the district courts may not appoint an agent before January 1, 1999, under Minnesota Statutes, section 171.06, other than an agent appointed to replace or succeed an already existing agent.

Sec. 15. [APPOINTMENT BY THE COMMISSIONER.]

Notwithstanding the effective date of section 10, subdivisions 1 to 4, the commissioner shall appoint an applicant that is an individual or corporation, and may for cause discontinue the appointment of an agent, as a driver's license agent if the applicant:

(1) is a deputy registrar who is not a public official operating in Dakota county;

(2) has operated for at least nine years the office at which the applicant will carry out the functions of a driver's license agent; and

(3) procures and maintains photo identification equipment satisfactory to the commissioner.

An agent appointed under this section is subject to section 13.

Sec. 16. [STUDY OF DEPUTY REGISTRAR TRANSACTION COSTS.]

The commissioner of public safety shall investigate, survey, and report findings regarding the costs of deputy registrar transactions in Minnesota. The commissioner shall submit a written report to the legislature by January 15, 1998.

Sec. 17. [REPEALER.]

Minnesota Statutes 1996, section 171.06, subdivision 4, is repealed.

Sec. 18. [EFFECTIVE DATE.]

Sections 10, subdivisions 5 and 6; 14; and 15 are effective the day following final enactment. Sections 9; 10, subdivisions 1 to 4; 11; 12; 16; and 17 are effective January 1, 1999."

Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5855

Delete the title and insert:

"A bill for an act relating to motor vehicles; making technical change to clarify that pickup truck with slip in camper may be registered depending upon its weight; providing registration tax refund for total loss vehicle damaged by flood; eliminating in 2009 the authority for the appointment of corporations as deputy registrars; restricting telephonic access to certain information related to vehicle registration; allowing vehicle dealers 21 days to send purchase receipt to department of public safety if vehicle not sold; providing for display of fleet vehicle license plates; removing sunset date relating to recreational vehicle combination length; allowing waiver of six-month possession requirement for driver's instruction permit in limited cases; providing for driver's license agents; requiring adoption of rules; requiring study and report on deputy registrar costs; amending Minnesota Statutes 1996, sections 168.011, subdivision 25; 168.16; 168.33, subdivision 2; 168.345, subdivision 1; 168A.11, subdivision 2; 169.79; 169.81, subdivision 3c; 171.05, subdivision 2a; 171.06, subdivision 4; 373.33; and 373.35, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 171; repealing Minnesota Statutes 1996, section 171.06, subdivision 4."

We request adoption of this report and repassage of the bill.

Senate Conferees: Leo T. Foley and Dennis R. Frederickson.

House Conferees: Al Juhnke, Sharon Marko and Sherry Broecker.

Juhnke moved that the report of the Conference Committee on S. F. No. 435 be adopted and that the bill be repassed as amended by the Conference Committee. The motion prevailed.

S. F. No. 435, A bill for an act relating to motor vehicles; making technical changes to clarify that pickup truck with slip in camper may be registered depending upon its weight; eliminating authority for the appointment of corporations as deputy registrars; restricting telephonic access to certain information related to vehicle registration; allowing vehicle dealers 21 days to send purchase receipt to department of public safety if vehicle not sold; providing for display of fleet vehicle license plates; removing sunset date relating to recreational vehicle combination length; providing for appointment, duties, and discontinuance of appointment of driver's license agents; requiring adoption of rules; amending Minnesota Statutes 1996, sections 168.011, subdivision 25; 168.16; 168.33, subdivision 2; 168.345, subdivision 1; 168A.11, subdivision 2; 169.79; 169.81, subdivision 3c; 171.06, subdivision 4; 373.33; and 373.35, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 171; repealing Minnesota Statutes 1996, section 171.06, subdivision 4.

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 124 yeas and 5 nays as follows:

Those who voted in the affirmative were:

Abrams Evans Kalis Marko Pelowski Swenson, D.
Anderson, B. Farrell Kelso McCollum Peterson Swenson, H.
Anderson, I. Finseth Kielkucki McElroy Pugh Sykora
Bakk Folliard Kinkel McGuire Rest Tingelstad
Bettermann Garcia Knoblach Milbert Reuter Tompkins
Biernat Goodno Koppendrayer Molnau Rhodes Trimble
Journal of the House - 63rd Day - Monday, May 19, 1997 - Top of Page 5856
Boudreau Greenfield Koskinen Mulder Rifenberg Tuma
Bradley Greiling Kraus Mullery Rostberg Tunheim
Broecker Gunther Kubly Munger Rukavina Van Dellen
Carlson Harder Kuisle Murphy Schumacher Vickerman
Chaudhary Hasskamp Larsen Ness Seagren Wagenius
Clark Hausman Leighton Nornes Seifert Weaver
Daggett Hilty Leppik Olson, E. Sekhon Wejcman
Davids Huntley Lieder Olson, M. Skare Wenzel
Dawkins Jaros Lindner Opatz Skoglund Westfall
Dehler Jefferson Long Orfield Slawik Westrom
Delmont Jennings Luther Osskopp Smith Winter
Dempsey Johnson, A. Macklin Otremba Solberg Wolf
Dorn Johnson, R. Mahon Ozment Stanek Spk. Carruthers
Entenza Juhnke Mares Paulsen Stang
Erhardt Kahn Mariani Paymar Sviggum

Those who voted in the negative were:

Haas Holsten Knight Krinkie Workman

The bill was repassed, as amended by Conference, and its title agreed to.

ADJOURNMENT

Winter moved that when the House adjourns today it adjourn until 12:00 noon, Tuesday, January 20, 1998. The motion prevailed.

Winter moved that the House adjourn. The motion prevailed, and the Speaker declared the House stands adjourned until 12:00 noon, Tuesday, January 20, 1998.

Edward A. Burdick, Chief Clerk, House of Representatives