Bill Text: MN HF681 | 2011-2012 | 87th Legislature | Engrossed
Bill Title: Minnesota pay for performance pilot program established, funding provided, bonds issued, and money appropriated.
Sponsorship: Bipartisan Bill
Status: (Introduced - Dead) 2012-01-24 - Author added Scott [HF681 Detail]
Download: Minnesota-2011-HF681-Engrossed.html
1.2relating to state government; authorizing issuance of state appropriation bonds;
1.3appropriating money; establishing the Minnesota pay for performance pilot
1.4program;proposing coding for new law in Minnesota Statutes, chapter 16A.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [16A.90] MINNESOTA PAY FOR PERFORMANCE ACT.
1.7Sections 16A.90 to 16A.96 may be cited as the "Minnesota Pay for Performance
1.8Act of 2011."
1.9EFFECTIVE DATE.This section is effective the day following final enactment.
1.10 Sec. 2. [16A.94] PROGRAM.
1.11 Subdivision 1. Pilot program established. The commissioner shall implement a
1.12pilot program to demonstrate the feasibility and desirability of using state appropriation
1.13bonds to pay for certain services based on performance and outcomes for the people served.
1.14 Subd. 2. Oversight committee. (a) The commissioner shall appoint an oversight
1.15committee to:
1.16(1) identify criteria to select one or more services to be included in the pilot program;
1.17(2) identify the conditions of performance and desired outcomes for the people
1.18served by each service selected;
1.19(3) identify criteria to evaluate whether a service has met the performance
1.20conditions; and
1.21(4) provide any other advice or assistance requested by the commissioner.
1.22(b) The oversight committee must include the commissioners of the Departments
1.23of Human Services, Employment and Economic Development, and Administration, or
2.1their designees; a representative of a nonprofit organization that has participated in a
2.2pay-for-performance program; and any other person or organization that the commissioner
2.3determines would be of assistance in developing and implementing the pilot program.
2.4 Subd. 3. Contracts. The commissioner and the commissioner of the agency with
2.5a service to be provided through the pilot program shall enter into a contract with the
2.6selected provider. The contract must specify the service to be provided, the time frame in
2.7which it is to be provided, the outcome required for payment, and any other terms deemed
2.8necessary or convenient for implementation of the pilot program. The commissioner
2.9shall pay a provider that has met the terms and conditions of a contract with money
2.10appropriated to the commissioner from the special appropriation bond proceeds account
2.11established in section 16A.96. At a minimum, before the commissioner pays a provider,
2.12the commissioner must determine that the state's return on investment is positive.
2.13 Subd. 4. Return on investment calculation. The commissioner, in consultation
2.14with the oversight committee, must establish the method and data required for calculating
2.15the state's return on investment. The data at a minimum must include:
2.16(1) state income taxes and any other revenues collected in the year after the service
2.17was provided that would not have been collected without the service; and
2.18(2) costs avoided by the state by providing the service.
2.19A positive return on investment for the state will cover the state's costs in financing
2.20and administering the pilot program through documented increased state tax revenue
2.21or cost avoidance.
2.22 Subd. 5. Report to governor and legislature. The commissioner must report to the
2.23governor and legislative committees with jurisdiction over capital investment, finance, and
2.24ways and means, and the services included in the pilot program, by January 15 of each
2.25year following a year in which the pilot program is operating. The report must describe
2.26and discuss the criteria for selection and evaluation of services to be provided through
2.27the program, the net benefits to the state of the program, the state's return on investment,
2.28the cost of the services provided by other means in the most recent past, the time frame
2.29for payment for the services, and the timing and costs for sale and issuance of the bonds
2.30authorized in section 16A.96.
2.31EFFECTIVE DATE.This section is effective the day following final enactment.
2.32 Sec. 3. [16A.96] MINNESOTA PAY FOR PERFORMANCE PROGRAM;
2.33APPROPRIATION BONDS.
2.34 Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this
2.35section.
3.1(b) "Appropriation bond" means a bond, note, or other similar instrument of the state
3.2payable during a biennium from one or more of the following sources:
3.3(1) money appropriated by law in any biennium for debt service due with respect
3.4to obligations described in subdivision 2, paragraph (b);
3.5(2) proceeds of the sale of obligations described in subdivision 2, paragraph (b);
3.6(3) payments received for that purpose under agreements and ancillary arrangements
3.7described in subdivision 2, paragraph (d); and
3.8(4) investment earnings on amounts in clauses (1) to (3).
3.9(c) "Debt service" means the amount payable in any biennium of principal, premium,
3.10if any, and interest on appropriation bonds.
3.11 Subd. 2. Authority. (a) Subject to the limitations of this subdivision, the
3.12commissioner of management and budget may sell and issue appropriation bonds of the
3.13state under this section for the purposes of the Minnesota pay for performance program
3.14established in sections 16A.90 to 16A.96. Proceeds of the bonds must be credited to
3.15a special appropriation bond proceeds account in the state treasury. Net income from
3.16investment of the proceeds, as estimated by the commissioner, must be credited to the
3.17special appropriation bond proceeds account.
3.18(b) Appropriation bonds may be sold and issued in amounts that, in the opinion of
3.19the commissioner, are necessary to provide sufficient funds for achieving the purposes
3.20authorized as provided under paragraph (a), and pay debt service, pay costs of issuance,
3.21make deposits to reserve funds, pay the costs of credit enhancement, or make payments
3.22under other agreements entered into under paragraph (d); provided, however, that bonds
3.23issued and unpaid shall not exceed $20,000,000 in principal amount, excluding refunding
3.24bonds sold and issued under subdivision 4.
3.25(c) Appropriation bonds may be issued in one or more series on the terms and
3.26conditions the commissioner determines to be in the best interests of the state, but the term
3.27on any series of bonds may not exceed 20 years.
3.28(d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any
3.29time thereafter, so long as the appropriation bonds are outstanding, the commissioner
3.30may enter into agreements and ancillary arrangements relating to the appropriation
3.31bonds, including but not limited to trust indentures, liquidity facilities, remarketing or
3.32dealer agreements, letter of credit agreements, insurance policies, guaranty agreements,
3.33reimbursement agreements, indexing agreements, or interest exchange agreements. Any
3.34payments made or received according to the agreement or ancillary arrangement shall be
3.35made from or deposited as provided in the agreement or ancillary arrangement. The
4.1determination of the commissioner included in an interest exchange agreement that the
4.2agreement relates to an appropriation bond shall be conclusive.
4.3 Subd. 3. Form; procedure. (a) Appropriation bonds may be issued in the form
4.4of bonds, notes, or other similar instruments, and in the manner provided in section
4.516A.672. In the event that any provision of section 16A.672 conflicts with this section,
4.6this section shall control.
4.7(b) Every appropriation bond shall include a conspicuous statement of the limitation
4.8established in subdivision 6.
4.9(c) Appropriation bonds may be sold at either public or private sale upon such terms
4.10as the commissioner shall determine are not inconsistent with this section and may be sold
4.11at any price or percentage of par value. Any bid received may be rejected.
4.12(d) Appropriation bonds may bear interest at a fixed or variable rate.
4.13 Subd. 4. Refunding bonds. The commissioner from time to time may issue
4.14appropriation bonds for the purpose of refunding any appropriation bonds then
4.15outstanding, including the payment of any redemption premiums on the bonds, any
4.16interest accrued or to accrue to the redemption date, and costs related to the issuance
4.17and sale of the refunding bonds. The proceeds of any refunding bonds may, in the
4.18discretion of the commissioner, be applied to the purchase or payment at maturity of the
4.19appropriation bonds to be refunded, to the redemption of the outstanding bonds on any
4.20redemption date, or to pay interest on the refunding bonds and may, pending application,
4.21be placed in escrow to be applied to the purchase, payment, retirement, or redemption.
4.22Any escrowed proceeds, pending such use, may be invested and reinvested in obligations
4.23that are authorized investments under section 11A.24. The income earned or realized on
4.24the investment may also be applied to the payment of the bonds to be refunded or interest
4.25or premiums on the refunded bonds, or to pay interest on the refunding bonds. After
4.26the terms of the escrow have been fully satisfied, any balance of the proceeds and any
4.27investment income may be returned to the general fund or, if applicable, the appropriation
4.28bond proceeds account for use in any lawful manner. All refunding bonds issued under
4.29this subdivision must be prepared, executed, delivered, and secured by appropriations in
4.30the same manner as the bonds to be refunded.
4.31 Subd. 5. Appropriation bonds as legal investments. Any of the following entities
4.32may legally invest any sinking funds, money, or other funds belonging to them or under
4.33their control in any appropriation bonds issued under this section:
4.34(1) the state, the investment board, public officers, municipal corporations, political
4.35subdivisions, and public bodies;
5.1(2) banks and bankers, savings and loan associations, credit unions, trust companies,
5.2savings banks and institutions, investment companies, insurance companies, insurance
5.3associations, and other persons carrying on a banking or insurance business; and
5.4(3) personal representatives, guardians, trustees, and other fiduciaries.
5.5 Subd. 6. No full faith and credit; state not required to make appropriations.
5.6The appropriation bonds are not public debt of the state, and the full faith, credit, and
5.7taxing powers of the state are not pledged to the payment of the appropriation bonds or to
5.8any payment that the state agrees to make under this section. Appropriation bonds shall
5.9not be obligations paid directly, in whole or in part, from a tax of statewide application
5.10on any class of property, income, transaction, or privilege. Appropriation bonds shall be
5.11payable in each fiscal year only from amounts that the legislature may appropriate for debt
5.12service for any fiscal year, provided that nothing in this section shall be construed to
5.13require the state to appropriate funds sufficient to make debt service payments with respect
5.14to the bonds in any fiscal year.
5.15 Subd. 7. Appropriation of proceeds. The proceeds of appropriation bonds and
5.16interest credited to the special appropriation bond proceeds account are appropriated to the
5.17commissioner for payment of contract obligations under the pay for performance program,
5.18as permitted by state and federal law, and nonsalary expenses incurred in conjunction
5.19with the sale of the appropriation bonds.
5.20 Subd. 8. Appropriation for debt service. The amount needed to pay principal and
5.21interest on appropriation bonds issued under this section is appropriated each year to the
5.22commissioner from the general fund subject to the repeal, unallotment under section
5.2316A.152, or cancellation otherwise pursuant to subdivision 6.
5.24EFFECTIVE DATE.This section is effective the day following final enactment.
1.3appropriating money; establishing the Minnesota pay for performance pilot
1.4program;proposing coding for new law in Minnesota Statutes, chapter 16A.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [16A.90] MINNESOTA PAY FOR PERFORMANCE ACT.
1.7Sections 16A.90 to 16A.96 may be cited as the "Minnesota Pay for Performance
1.8Act of 2011."
1.9EFFECTIVE DATE.This section is effective the day following final enactment.
1.10 Sec. 2. [16A.94] PROGRAM.
1.11 Subdivision 1. Pilot program established. The commissioner shall implement a
1.12pilot program to demonstrate the feasibility and desirability of using state appropriation
1.13bonds to pay for certain services based on performance and outcomes for the people served.
1.14 Subd. 2. Oversight committee. (a) The commissioner shall appoint an oversight
1.15committee to:
1.16(1) identify criteria to select one or more services to be included in the pilot program;
1.17(2) identify the conditions of performance and desired outcomes for the people
1.18served by each service selected;
1.19(3) identify criteria to evaluate whether a service has met the performance
1.20conditions; and
1.21(4) provide any other advice or assistance requested by the commissioner.
1.22(b) The oversight committee must include the commissioners of the Departments
1.23of Human Services, Employment and Economic Development, and Administration, or
2.1their designees; a representative of a nonprofit organization that has participated in a
2.2pay-for-performance program; and any other person or organization that the commissioner
2.3determines would be of assistance in developing and implementing the pilot program.
2.4 Subd. 3. Contracts. The commissioner and the commissioner of the agency with
2.5a service to be provided through the pilot program shall enter into a contract with the
2.6selected provider. The contract must specify the service to be provided, the time frame in
2.7which it is to be provided, the outcome required for payment, and any other terms deemed
2.8necessary or convenient for implementation of the pilot program. The commissioner
2.9shall pay a provider that has met the terms and conditions of a contract with money
2.10appropriated to the commissioner from the special appropriation bond proceeds account
2.11established in section 16A.96. At a minimum, before the commissioner pays a provider,
2.12the commissioner must determine that the state's return on investment is positive.
2.13 Subd. 4. Return on investment calculation. The commissioner, in consultation
2.14with the oversight committee, must establish the method and data required for calculating
2.15the state's return on investment. The data at a minimum must include:
2.16(1) state income taxes and any other revenues collected in the year after the service
2.17was provided that would not have been collected without the service; and
2.18(2) costs avoided by the state by providing the service.
2.19A positive return on investment for the state will cover the state's costs in financing
2.20and administering the pilot program through documented increased state tax revenue
2.21or cost avoidance.
2.22 Subd. 5. Report to governor and legislature. The commissioner must report to the
2.23governor and legislative committees with jurisdiction over capital investment, finance, and
2.24ways and means, and the services included in the pilot program, by January 15 of each
2.25year following a year in which the pilot program is operating. The report must describe
2.26and discuss the criteria for selection and evaluation of services to be provided through
2.27the program, the net benefits to the state of the program, the state's return on investment,
2.28the cost of the services provided by other means in the most recent past, the time frame
2.29for payment for the services, and the timing and costs for sale and issuance of the bonds
2.30authorized in section 16A.96.
2.31EFFECTIVE DATE.This section is effective the day following final enactment.
2.32 Sec. 3. [16A.96] MINNESOTA PAY FOR PERFORMANCE PROGRAM;
2.33APPROPRIATION BONDS.
2.34 Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this
2.35section.
3.1(b) "Appropriation bond" means a bond, note, or other similar instrument of the state
3.2payable during a biennium from one or more of the following sources:
3.3(1) money appropriated by law in any biennium for debt service due with respect
3.4to obligations described in subdivision 2, paragraph (b);
3.5(2) proceeds of the sale of obligations described in subdivision 2, paragraph (b);
3.6(3) payments received for that purpose under agreements and ancillary arrangements
3.7described in subdivision 2, paragraph (d); and
3.8(4) investment earnings on amounts in clauses (1) to (3).
3.9(c) "Debt service" means the amount payable in any biennium of principal, premium,
3.10if any, and interest on appropriation bonds.
3.11 Subd. 2. Authority. (a) Subject to the limitations of this subdivision, the
3.12commissioner of management and budget may sell and issue appropriation bonds of the
3.13state under this section for the purposes of the Minnesota pay for performance program
3.14established in sections 16A.90 to 16A.96. Proceeds of the bonds must be credited to
3.15a special appropriation bond proceeds account in the state treasury. Net income from
3.16investment of the proceeds, as estimated by the commissioner, must be credited to the
3.17special appropriation bond proceeds account.
3.18(b) Appropriation bonds may be sold and issued in amounts that, in the opinion of
3.19the commissioner, are necessary to provide sufficient funds for achieving the purposes
3.20authorized as provided under paragraph (a), and pay debt service, pay costs of issuance,
3.21make deposits to reserve funds, pay the costs of credit enhancement, or make payments
3.22under other agreements entered into under paragraph (d); provided, however, that bonds
3.23issued and unpaid shall not exceed $20,000,000 in principal amount, excluding refunding
3.24bonds sold and issued under subdivision 4.
3.25(c) Appropriation bonds may be issued in one or more series on the terms and
3.26conditions the commissioner determines to be in the best interests of the state, but the term
3.27on any series of bonds may not exceed 20 years.
3.28(d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any
3.29time thereafter, so long as the appropriation bonds are outstanding, the commissioner
3.30may enter into agreements and ancillary arrangements relating to the appropriation
3.31bonds, including but not limited to trust indentures, liquidity facilities, remarketing or
3.32dealer agreements, letter of credit agreements, insurance policies, guaranty agreements,
3.33reimbursement agreements, indexing agreements, or interest exchange agreements. Any
3.34payments made or received according to the agreement or ancillary arrangement shall be
3.35made from or deposited as provided in the agreement or ancillary arrangement. The
4.1determination of the commissioner included in an interest exchange agreement that the
4.2agreement relates to an appropriation bond shall be conclusive.
4.3 Subd. 3. Form; procedure. (a) Appropriation bonds may be issued in the form
4.4of bonds, notes, or other similar instruments, and in the manner provided in section
4.516A.672. In the event that any provision of section 16A.672 conflicts with this section,
4.6this section shall control.
4.7(b) Every appropriation bond shall include a conspicuous statement of the limitation
4.8established in subdivision 6.
4.9(c) Appropriation bonds may be sold at either public or private sale upon such terms
4.10as the commissioner shall determine are not inconsistent with this section and may be sold
4.11at any price or percentage of par value. Any bid received may be rejected.
4.12(d) Appropriation bonds may bear interest at a fixed or variable rate.
4.13 Subd. 4. Refunding bonds. The commissioner from time to time may issue
4.14appropriation bonds for the purpose of refunding any appropriation bonds then
4.15outstanding, including the payment of any redemption premiums on the bonds, any
4.16interest accrued or to accrue to the redemption date, and costs related to the issuance
4.17and sale of the refunding bonds. The proceeds of any refunding bonds may, in the
4.18discretion of the commissioner, be applied to the purchase or payment at maturity of the
4.19appropriation bonds to be refunded, to the redemption of the outstanding bonds on any
4.20redemption date, or to pay interest on the refunding bonds and may, pending application,
4.21be placed in escrow to be applied to the purchase, payment, retirement, or redemption.
4.22Any escrowed proceeds, pending such use, may be invested and reinvested in obligations
4.23that are authorized investments under section 11A.24. The income earned or realized on
4.24the investment may also be applied to the payment of the bonds to be refunded or interest
4.25or premiums on the refunded bonds, or to pay interest on the refunding bonds. After
4.26the terms of the escrow have been fully satisfied, any balance of the proceeds and any
4.27investment income may be returned to the general fund or, if applicable, the appropriation
4.28bond proceeds account for use in any lawful manner. All refunding bonds issued under
4.29this subdivision must be prepared, executed, delivered, and secured by appropriations in
4.30the same manner as the bonds to be refunded.
4.31 Subd. 5. Appropriation bonds as legal investments. Any of the following entities
4.32may legally invest any sinking funds, money, or other funds belonging to them or under
4.33their control in any appropriation bonds issued under this section:
4.34(1) the state, the investment board, public officers, municipal corporations, political
4.35subdivisions, and public bodies;
5.1(2) banks and bankers, savings and loan associations, credit unions, trust companies,
5.2savings banks and institutions, investment companies, insurance companies, insurance
5.3associations, and other persons carrying on a banking or insurance business; and
5.4(3) personal representatives, guardians, trustees, and other fiduciaries.
5.5 Subd. 6. No full faith and credit; state not required to make appropriations.
5.6The appropriation bonds are not public debt of the state, and the full faith, credit, and
5.7taxing powers of the state are not pledged to the payment of the appropriation bonds or to
5.8any payment that the state agrees to make under this section. Appropriation bonds shall
5.9not be obligations paid directly, in whole or in part, from a tax of statewide application
5.10on any class of property, income, transaction, or privilege. Appropriation bonds shall be
5.11payable in each fiscal year only from amounts that the legislature may appropriate for debt
5.12service for any fiscal year, provided that nothing in this section shall be construed to
5.13require the state to appropriate funds sufficient to make debt service payments with respect
5.14to the bonds in any fiscal year.
5.15 Subd. 7. Appropriation of proceeds. The proceeds of appropriation bonds and
5.16interest credited to the special appropriation bond proceeds account are appropriated to the
5.17commissioner for payment of contract obligations under the pay for performance program,
5.18as permitted by state and federal law, and nonsalary expenses incurred in conjunction
5.19with the sale of the appropriation bonds.
5.20 Subd. 8. Appropriation for debt service. The amount needed to pay principal and
5.21interest on appropriation bonds issued under this section is appropriated each year to the
5.22commissioner from the general fund subject to the repeal, unallotment under section
5.2316A.152, or cancellation otherwise pursuant to subdivision 6.
5.24EFFECTIVE DATE.This section is effective the day following final enactment.
