a fiscal review of the 2001 legislative session · fiscal review of the 2001 legislative session...

A

Fiscal Review

of the

2001 Legislative Session

Prepared byMinnesota State Senate

Office of Senate Counsel & ResearchG-17 State Capitol

75 Constitution AvenueSt. Paul, MN 55155-1606

Edited byGregory C. Knopff

January 2002

Dates of the 2001 Legislative Session

Regular Session: January 3 to May 21, 2001

First Special Session: June 11 to June 29, 2001

Printed on Recycled Paper

Minimum 30% Post-Consumer Fiber

This publication was developed by the staff of Senate Counsel & Research and wasedited by Gregory Knopff. Special recognition is due Dan Mueller, who complied thetables, Renee Rose for the preparation, design, and layout of the manuscript and thetables within the articles, and Dave Giel, who assisted with the editing. OtherCounsel & Research staff who contributed are: Matthew Grosser, Pat McCormack,George McCormick, Jack Paulson, Chris Turner, Amy Vennewitz, Peter Wattson,and Maja Weidmann.

The cover and the photographs in the articles were done by David Oakes. Specialthanks to Melissa Graf, Pat Hemming, Sandy Keene, Heather Linehan, RobynRumpca, Carolee Stock, and Diane Vogelgesang, who assisted in copyreading andproofreading.

The Fiscal Review was printed by the Secretary of the Senate’s Office, SenateDuplicating, Dan Olson, Supervisor.

Thanks to Linda Schmitt, the Fiscal Review can also be accessed at the followingWeb site address: http://www.senate.leg.state.mn.us/departments/scr/freview/

fr2001.pdf

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Fiscal Review 2000

INTRODUCTION ........................................................................................................................ 3

HIGHLIGHTS.............................................................................................................................. 4

REVENUES.................................................................................................................................. 6

State Taxes ............................................................................................................................. 7

FUNCTIONS OF STATE GOVERNMENT............................................................................. 13

Elementary and Secondary Education................................................................................. 14Higher Education .................................................................................................................. 18Family and Early Childhood Education ............................................................................... 20Human Services .................................................................................................................... 22Housing.................................................................................................................................. 37Commerce............................................................................................................................. 39Economic Development ........................................................................................................ 40Transportation ...................................................................................................................... 43Agriculture ............................................................................................................................ 47Natural Resources ................................................................................................................ 50Environment .......................................................................................................................... 54Regulated Industries ............................................................................................................ 57Public Safety and Judiciary.................................................................................................. 60Local and Metropolican Affairs and State Government ................................................... 63Ethics in Government...........................................................................................................65Pensions and Retirement ..................................................................................................... 66Vetoes.................................................................................................................................... 67

STATE DEBT AND CAPITAL EXPENDITURES .................................................................. 69Capital Expenditures............................................................................................................ 70

STATISTICS ...............................................................................................................................72CHART - State Appropriations by Functional Area, 2001-03 Biennium ................... 73TABLE A - Summary of Biennial Appropriations by Fund

1999-2001 and 2001-2003 Bieniums ............................................................ 74TABLE B - General Fund

Resources and Uses, 1999-2001 and 2001-2003 Bienniums ...................... 75TABLE C - Detailed Appropriations by Function, All Funds,

1999-2001Compared to 2001-2003 Biennium............................................. 77TABLE D - 2002 and 2003 Direct Appropriations by Fund, by Chapter ...................... 91TABLE E - Open and Statutory Appropriations, Fiscal Years 2002 and 2003............. 93TABLE F - Biennial Appropriations of Federal Funds,

Fiscal Years 2002 and 2003 .......................................................................... 95Appendix A - Tax Reference Information.......................................................................... 96

Table of Contents

Introduction

The Fiscal Review is a report of actions takenby the 2001 regular session and one special ses-sion of the Minnesota Legislature.

The Fiscal Review is not an accounting of alllegislative actions. It covers those actions withsignificant fiscal impact and significant policyimpact..

The tables in the Fiscal Review are all-inclu-sive and can be reconciled with fund statementsprepared by the Department of Finance.

The report is on appropriations, not actual spend-ing. Spending is affected by many factors, in-cluding accounting practices, program partici-pation, etc. Appropriations are basically autho-rizations for expenditures.

Some appropriations are open-ended and deter-mined by formula or participation rates speci-fied by statute. These are called open appro-priations. Some appropriations allow for ac-cess to specified funds for specific purposesbased on the amount available. These are calledstatutory appropriations. The Review uses theestimates of open and statutory appropriationsmade through the Department of Finance at thetime the budget was enacted. The Fiscal Re-

view includes open and statutory appropriationsfrom all funds. Open and statutory appropria-tions from funds other than the General Fund areincluded based on the level of spending reportedby the Department of Finance in the ConsolidatedFund Statement.

Direct appropriations essentially are the limitson spending put into the session laws.

The report handles open and statutory appropria-tions as direct appropriations when the appro-priation amount is specified in the session law.(For example, education aids are based on openauthority to comply with the funding formulas,but the Legislature actually uses the estimate ofthe cost in the session law.)

This report is organized by functional groupingsof appropriations which are most comprehen-sive on Table C of the statistical section.

There are also tables of appropriations by fund(Table A); a table of appropriations by fund andlaw (chapter) (Table D); a General Fund bal-ance statement (Table B); a listing of open andstanding appropriations (Table E); and a tableof federal funds (Table F).

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Highlights

The 2001 session of the Minnesota Legislaturepassed and the Governor signed appropriations,including federal funds and open and statutoryappropriations, of more than $43 billion for the2001-2003 biennium. Net state-generatedappropriations totaled approximately $34 bil-lion. The largest source of state-generatedappropriations is the General Fund with morethan $27 billion approved.

The largest General Fund appropriations wentfor education, with almost $8.8 billion forelementary and secondary education, almost$2.9 billion for higher education, and over $544million for early childhood and familyeducation.

The largest program area appropriations,counting both state-generated and federal funds,were for health and human services. The totalappropriations for this purpose are almost $13.7billion. Of this amount, almost $6.3 billion isfrom federal funds.

Other program areas exceeding $1 billion instate and federal appropriations are:

• Transportation (over $4.3 billion);

• Aids and credits to local government unitsand individuals (almost $3.3 billion);

• Crime Prevention and Judiciary including thecourts, the Department of Public Safety, theDepartment of Corrections, and other relatedagencies (almost $1.6 billion); and

• Environment and Agriculture (almost $1.2 bil-lion).

Sales Tax RebateThe 2001 Legislature authorized payment of thethird sales tax rebate in three years. The salestax rebate is based on the estimated amount ofMinnesota sales tax paid by taxpayers withrespect to their income tax filing status andincome category. The total amount of the rebatewas set at $852 million for fiscal year 2001. TheCommissioner of Revenue was authorized toproportionately reduce rebate amounts for allrecipients to remain within the actual surplusavailable for fiscal year 2001. The amountactually available for the rebate was determinedto be $791.3 million. As adjusted, the rebate formarried couples filing joint returns and head ofhousehold returns ranged from a minimum of$213 to a maximum of $2,967. For single filersand married couples filing separately, theminimum rebate was $108 and the maximumrebate was $1,484.

State-Local Finance ReformThe Legislature enacted a major reform of thestate-local finance system, including a statetakeover of the general education levy,restructuring of the property tax class rates, anew property tax levy by the state, replacementof the education homestead and agriculturalcredits with new market value-based credits, astate takeover of property tax levies for transit,and the completion of the state funding of thedistrict court system.

Prior to the 2001 legislative session, theLegislature set the dollar amount to be raisedeach year from the general educationproper ty tax levy. For fiscal year 2002, theamount to be raised from the general education

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property tax levy was $1.33 billion. Thisamount was raised using a constant tax rateacross all school districts applied to the taxableproperty value of each district as adjusted forlocal assessment practices. Beginning withfiscal year 2003, the general education levy waseliminated and the amount formerly leviedbecomes an obligation of the state general fund.The cost of the state takeover of the generaleducation levy is $1.2 billion in the 2001-2003biennium and $2.7 billion in the 2003-2005biennium.

K-12 EducationThe 2001 Legislature instituted some majoreducation funding and local property taxreforms that were designed to have the stateassume a greater portion of education costs fromlocal school property tax levies. Total K-12education state appropriations, not including thestate takeover of the general education levy,increased from $8.16 billion for the 1999-2001biennium to $8.82 billion for the 2001-2003biennium. Compared to the base budget for the2001-2003 biennium, total state appro-priationswere increased by $393 million for newspending when adjusted for pupil enrollment.The majority of the increase is due to theincrease in the general education formula of$104 per year, or roughly 2.6 percent in eachyear of the new biennium.

Human ServicesThe state-generated total for human services isover $7.4 billion. The largest portion of thistotal over $4.6 billion, goes for health careprograms (medical assistance, general assistancemedical, and health care management). Inaddition to this amount, $575.3 million wasappropriated for MinnesotaCare and almost$418.5 million went for regional treatmentcenters.

TransportationThe 2001 Legislature appro-priated over $3.5billion in direct appropriations for the 2001-2003 biennium for transportation purposes. TheMinnesota Department of Transportation willreceive the majority of the transportation funds— over $3.2 billion in direct appropriations.The Department of Public Safety will receiveapproximately $230 million in directappropriations for transportation-relatedactivities and the Metropolitan Council willreceive approximately $136 million formetropolitan area transit planning and operations.

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Revenues

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Sales Tax RebateThe 2001 Legislature authorizedpayment of the third sales taxrebate in three years. The salestax rebate is based on theestimated amount of Minnesotasales tax paid by taxpayersaccording to their income taxfiling status and income cat-egory. The total amount of therebate was set at $852 million forfiscal year 2001. The Commis-sioner of Revenue was autho-rized to proportionately reducerebate amounts for all recipientsto remain within the actualsurplus available for fiscal year2001. The amount actuallyavailable for the rebate wasdetermined to be $791.3 million.As adjusted, the rebate formarried couples filing jointreturns and head of householdreturns ranged from a minimumof $213 to a maximum of $2,967.For single filers and marriedcouples filing separately, theminimum rebate was $108 andthe maximum rebate was $1,484.

Income TaxFederal law changes enactedthrough June 15, 2001, wereadopted for Minnesota incometax purposes. A number of

changes were made to federal taxprovisions concerning educationand retirement savings thataffect the taxable income ofMinnesota taxpayers. The con-tribution limit for the educationIndividual Retirement Account(IRA) was increased from $500to $2,000 beginning with taxyear 2002. The definition ofqualifying expenses that may bepaid from an education IRA wasexpanded to include elementaryand secondary school expenses.The contribution limit for theRoth IRA and the deductibleIRA were increased to $3,000 fortax years from 2002 through2004, to $4,000 from 2005through 2007, and to $5,000 for2008 through 2010. Themaximum contribution limits to401(k) and 457 retirement planswere increased to $11,000 for2002 and increased by anadditional $1,000 per year toreach $15,000 in 2006 through2010. The phase-out of thestandard deduction and personalexemption for high incomeindividuals is eliminated overfive years beginning in tax year2006. The modified incomephase-out for the federal earnedincome credit was adopted for

purposes of the Minnesota Work-ing Family Credit. The percent-age of expenses qualifying forthe federal dependent care creditwas increased from 30 to 35percent. This will result in anincrease in the state dependentcare credit, which is based onfederal qualifying expenses. Theupdate to federal law changes isestimated to cost $64 million inthe 2001-2003 biennium and$109.3 million in the 2003-2005biennium.

The corporate franchise tax thatapplied to financial institutionsthat elected Subchapter S statusfor federal tax purposes wasrepealed. The credit againstindividual income tax liabilitiesthat could be claimed for aportion of this franchise taxliability was also repealed.These changes brought the stateinto full conformity with thefederal treatment of SubchapterS financial institutions. Therepeal of the franchise tax cost$55.9 million in corporate fran-chise tax collections, and therepeal of the franchise tax creditagainst individual income taxliabilities resulted in an increaseof $44.7 million in individual

State Taxes

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income tax collections, for a netcost of $11.2 million in the 2001-2003 biennium and $13 millionin the 2003-2005 biennium.

The definition of “resident” waschanged for the individual in-come tax to exclude members ofthe armed forces on active dutyduring the time that they arestationed outside of Minnesota.This change has the effect ofexcluding income earned byactive duty military personnelstationed outside the state fromthe individual income tax. Thisprovision was estimated to cost$8.8 million in the 2001-2003biennium and another $8.8million in the 2003-2005 bien-nium.

The rate of the K-12 educationcredit was reduced from 100percent to 75 percent of qualify-ing education expenses. Thedefinition of qualifying expendi-tures was expanded to includepurchases of musical instru-ments. These changes areestimated to reduce the cost ofthe K-12 education credit by anet of $7.9 million for the 2001-2003 biennium and $18.3 mil-lion in the 2003-2005 biennium.The property tax reform enactedby the 2001 Legislature isprojected to increase individualand corporate income tax collec-tions by $44 million in the 2001-2003 biennium and $94.9 mil-lion in the 2003-2005 biennium,

due to a reduced level of propertytax deductions claimed by indi-viduals and businesses.

The corporate franchise tax oninsurance companies was re-pealed. The cost of this repealwas estimated to be $18.5million for the 2001-2003 bien-nium and an additional $18.5million in the 2003-2005 bien-nium.

Sales And Excise TaxesThe requirement that businessespay 62 percent of their estimatedJune sales tax before the end ofJune was repealed. The cost ofthis repeal of the acceleratedJune sales tax payment require-ment is estimated to be $154.2million in the 2001-2003 bien-nium and $17.6 million in the2003-2005 biennium.

The definition of telecommuni-cation services taxable in Minne-sota was clarified and expanded.Purchases of machinery andequipment used to providetelecommunication services wereexempted from the sales tax.These changes are estimated toresult in increased sales taxrevenue of $52.4 million in the2001-2003 biennium and $65.3million in the 2003-2005 bien-nium.

The Uniform Sales and Use TaxAdministration Act, which pro-vides for uniform definitions,

procedures, and tax rates amongstates was adopted for purposesof the Minnesota sales tax.Adoption of these provisionsallows the state of Minnesota toparticipate in the StreamlinedSales and Use Tax Agreementwith a number of other states,which are adopting similarprovisions. Adoption of theuniform sales tax provisions isestimated to increase sales taxcollections by $32.3 million inthe 2001-2003 biennium and$49.3 million in the 2003-2005biennium.

Health Care TaxesThe exemption for health main-tenance organizations, commu-nity integrated service networks,and nonprofit health servicecorporations from theMinnesotaCare insurance pre-mium tax was extended for onemore year, through calendar year2003. The rate of the health careprovider tax is maintained at 1.5percent for two additional years,through 2003. These health caretax changes are expected to costthe Health Care Access Fund$97.4 million in the 2001-2003biennium and $56.9 million inthe 2003-2005 biennium.

State-Local Finance ReformThe Legislature enacted a majorreform of the state-local financesystem, including a state take-over of the general educationlevy, restructuring of the prop-

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erty tax class rates, a newproperty tax levy by the state,replacement of the educationhomestead and agricultural cred-its with new market value-basedcredits, a state takeover ofproperty tax levies for transit,and the completion of the statefunding of the district courtsystem.

The Legislature enacted amajor reform of the state-

local finance system, includ-ing a state takeover of thegeneral education levy.

Prior to the 2001 legislativesession, the Legislature set thedollar amount to be raised eachyear from the general educationproperty tax levy. For fiscalyear 2002, the amount to beraised from the general educa-tion property tax levy was $1.33billion. This amount was raisedusing a constant tax rate acrossall school districts applied to thetaxable property value of eachdistrict as adjusted for localassessment practices. Beginningwith fiscal year 2003, the generaleducation levy was eliminatedand the amount formerly leviedbecomes an obligation of thestate general fund. The cost ofthe state takeover of the generaleducation levy is $1.2 billion in

the 2001-2003 biennium and$2.7 billion in the 2003-2005biennium.

In addition to the generaleducation levy, the property taxlevied by school districts for thefirst $415 per pupil of excessoperating referenda was alsotaken over by the state. This is aresult of a provision that trans-ferred $415 per pupil to eachdistrict’s general education for-mula allowance from its com-bined referendum, supplemen-tal, and transition revenue for-mulas. Those school districtswith referendum revenues lessthan $415 per pupil will receive amixture of property tax relief andadditional school funding.School districts having refer-enda exceeding $415 per pupilwill receive property tax relieffor the portion of the referendumfinanced by property taxes, butwill not receive additional rev-enue. Operating referendaexceeding $415 per pupil will beequalized using a two-tier for-mula. The first tier will equalizerevenues up to $126 per pupilusing a market-value tax baseequalizing factor of $476,000per pupil. The second tier willequalize revenues between $126and $837 using an equalizingfactor of $270,000 per pupil.The cost of these provisions isestimated to be $203.6 million inthe 2001-2003 biennium and

$456.4 million in the 2003-2005biennium.

Debt service referendum rev-enues were equalized using atwo-tier equalization aid for-mula. Beginning with propertytaxes payable in 2002, the firsttier of the formula will equalizerevenues between 15 and 25percent of a school district’s taxcapacity using an equalizingfactor of $3,200 per pupil. Thesecond tier will equalize rev-enues exceeding 25 percent of adistrict’s tax capacity using anequalizing factor of $8,000 perpupil. The cost of the debtservice equalization aid is esti-mated to be $13 million in the2001-2003 biennium and $24.4million in the 2003-2005 bien-nium.

Major changes were made to theproperty tax class rates that areapplied to the market value ofeach class of property in arrivingat its net tax capacity. Beginningwith taxes payable in 2002, theclass rates for most propertyclasses were significantly re-duced. Some of the class ratechanges were phased in over theperiod from taxes payable in2002 through taxes payable in2004. The table on the next pageshows the class rates in effect fortaxes payable in 2001 and thechanges for 2002 through 2004for the major types of property.

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Property Tax Class Rates from 2001 through 2004

Payable 2001 Payable 2002 Payable 2003 Payable 2004Residential Homestead:

Less than $76,000 1.00% 1.00% 1.00% 1.00%$76,000 - $500,000 1.65% 1.00% 1.00% 1.00%More than $500,000 1.65% 1.25% 1.25% 1.25%

Residential Nonhomestead:Single unit:


2-3 unit and undeveloped land 1.65% 1.50% 1.25% 1.25%

Apartments:Regular 2.40% 1.80% 1.50% 1.25%Small city 2.15% 1.80% 1.50% 1.25%Low income 1.00% 0.90% 1.00% 1.25%

Commercial/Industrial/Public Utility 1:Less than $150,000 2.40% 1.50% 1.50% 1.50%More than $150,000 3.40% 2.00% 2.00% 2.00%

Seasonal Recreational Commercial:Homestead resorts (1c) 1.00% 1.00% 1.00% 1.00%Seasonal resorts (4c)

Less than $500,000 1.65% 1.00% 1.00% 1.00%More than $500,000 1.65% 1.25% 1.25% 1.25%

Seasonal Recreational Residential1:Less than $76,000 1.20% 1.00% 1.00% 1.00%$76,000 - $500,000 1.65% 1.00% 1.00% 1.00%More than $500,000 1.65% 1.25% 1.25% 1.25%

Disabled Homestead (Less than $32,000) 0.45% 0.45% 0.45% 0.45%

Agricultural Land and Buildings:Homestead:


Nonhomestead 1.20% 1.00% 1.00% 1.00%

Education Homestead Credit:Rate (Pct. of Gen. Ed. Levy) 83% – – –Maximum $390 – – –

Education Agricultural Credit:Homestead

Less than $600,000: 70% – – –More than $600,000: 63% – – –

Nonhomestead 63% – – –

Market Value Homestead CreditRate (Pct of Market Value) – 0.40% 0.40% 0.40%Maximum2 – $304 $304 $304

Farm Land CreditRate (Pct. of Market Value) – 0.20% 0.20% 0.20%Maximum – $230 $230 $230

1 Subject to the state property tax, except for electric generation machinery2 Maximum credit is phased out for market values between $76,000 and $414,000

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Beginning with taxes payable in2002, the state will impose aproperty tax on commercial-industrial and cabin properties.The amount of the state generallevy is set at $592 million for2002. For taxes payable in 2003and subsequent years, the amountof the state levy is indexed to theimplicit price deflator for stateand local government expendi-tures. The growth in the levy isdedicated to the EducationReserve Account. Funds in theEducation Reserve Account maybe used for education aids orhigher education funding. Thestate property tax is estimated toraise $888 million in the 2001-2003 biennium and $1.2 billionin the 2003-2005 biennium.

The education homestead creditand education agricultural creditwere eliminated and replaced bynew market value-based home-stead and farm land credits. Fortaxes payable in 2001, theeducation homestead credit wasequal to 83 percent of the generaleducation levy on the propertyup to a maximum credit of $390.The education agricultural creditwas equal to 70 percent of thegeneral education levy on thefirst $600,000 of homesteadfarm land market value and 63percent on the remainder ofhomestead value and on allnonhomestead farm land value.Because these credits werecalculated as a percentage of the

general education levy that thestate has taken over, they werereplaced by credits calculated asa percentage of the property’smarket value. Beginning withtaxes payable in 2002, thehomestead credit will be 0.4percent of a homestead’s marketvalue up to $304. The credit isphased out for market valuesbetween $76,000 and $414,000.The new farm land credit is equalto 0.2 percent of land marketvalue up to a maximum of $230.The elimination of the educationhomestead credit and educationagricultural credit results in asavings of $410 million in the2001-2003 biennium and $929.2million in the 2003-2005 bien-nium. The market value-basedhomestead and farm land creditshave a cost of $328.6 million inthe 2001-2003 biennium and$698 million in the 2003-2005biennium.

Homestead and AgriculturalCredit Aid (HACA) was elimi-nated for cities, townships,school districts, and specialtaxing districts for aids payablein 2002. HACA for counties willbe used to complete the statetakeover of the cost of the districtcourt system in the remainingcounties and for paying up to 30percent of county out-of-homeplacement costs. The reductionsin HACA amount to $271.1million in the 2001-2003 bien-nium and $538.7 million in the

2003-2005 biennium.

Local Government Aid (LGA)for cities was increased by $140million for aids payable in 2002.An additional $14 million peryear was set aside in an LGAReform Reserve Account to beused for reforms of the LGAformula during future sessions.LGA was eliminated for town-ships. Beginning with taxespayable in 2003, tax basereplacement aid will be paid tocounties and cities to offset thereduction in tax base from therental housing class rate changes.The rental housing tax basereplacement aid will be added tothe permanent LGA base forcities and to HACA for counties.The increase in city LGA was$140 million in the 2001-2003biennium and $290.6 million inthe 2003-2005 biennium. Thereduction in township LGA was$3.9 million in the 2001-2003biennium and $8 million in the2003-2005 biennium. RentalHousing Tax Base ReplacementAid is estimated to cost $34.9million in the 2003-2005 bien-nium.

The authority of the Metropoli-tan Council to levy propertytaxes for transit operating costswas eliminated. To replace theproperty tax levy, 20.5 percent ofmotor vehicle sales tax (MVST)receipts was allocated to ametropolitan area Transit Fund.

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An amount equal to 1.25 percentof MVST receipts was allocatedto a Greater Minnesota TransitFund. Beginning in FY 2004, anadditional two percent of MVSTreceipts will be allocated to themetropolitan area appropriationaccount to be used for metropoli-tan transit systems by legislativeappropriation. The cost of theMVST dedication to transitaccounts is $123.7 million in the2001-2003 biennium and $282.6million in the 2003-2005 bien-nium.

Limits on local property taxlevies were reinstated afterhaving ended with taxes leviedin 1999, payable in 2000.Beginning with taxes levied in2001, payable in 2002, newlimits were placed on increasesin property tax levies by countiesand cities with more than 2,500

population. The new levy limitis the greater of the levy base in1999 adjusted for two years ofinflation growth and aid changesor the amount levied in 2000after adjusting for allowablespecial levies, state aid changes,and one year of inflation growth.

The maximum property taxrefund for homeowners wasincreased from $510 to $1,500for refunds based on taxespayable in 2002. The incomethresholds and co-payments werereduced for incomes below

$50,000. The maximum eligibleincome was increased from$71,100 to $80,000. Thehomeowner property tax refundfor farmers was limited to thehouse, garage, and one acre ofland. The changes to theproperty tax refund were esti-mated to cost $7.2 million in the

2001-2003 biennium and $14.1million in the 2003-2005 bien-nium.

Local DevelopmentAn appropriation of $91 millionfor fiscal year 2002 was made tothe Commissioner of Revenue tobe used for grant payments tocities to make up for taxincrement financing deficitscaused by the state takeover ofthe general education levy andthe changes made to the propertytax class rate structure. Anadditional $38 million annuallywas appropriated in fiscal year2003 and subsequent years. Thecost of this grant program is$129 million in the 2001-2003biennium and $76 million in the2003-2005 biennium.

Budget ReserveThe budget reserve was in-creased from $622 million to$653 million effective July 1,2001. The Commissioner ofFinance was directed to transferan additional $31 million to thebudget reserve account on July1, 2003.

Functions of State Government

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The 2001 Legislature institutedsome major education fundingand local property tax reformsthat were designed to have thestate assume a greater portion ofeducation costs from local schoolproperty tax levies. The changeswere made with both the K-12education and the tax commit-tees working together on legisla-tion that would increase K-12education appropriations by over$654 million from the previousbiennium, while also appropriat-ing about $1.4 billion in newstate aid for education-relatedproperty tax relief. Thesechanges effectively eliminatedthe general education levy,which previously financed aboutone-third of Minnesota’s basicK-12 education costs.

Total K-12 education appropria-tions increased from $8.16billion for the 1999-2001 bien-nium to $8.82 billion for the2001-2003 biennium. Com-pared to the base budget for the2001-2003 biennium, total stateappropriations were increasedby $393 million for new spend-ing when adjusted for pupilenrollment. The majority of theincrease is due to the increase in

the general education formula of$104 per year, or roughly 2.6percent in each year of the newbiennium.

These changes effectivelyeliminated the general educa-

tion levy, which previouslyfinanced about one-third of

Minnesota’s basic K-12 education costs.

GENERAL EDUCATION

Basic Formula AllowanceThe increase in the generaleducation formula allowance by$104 in each fiscal year amountsto about $285 million in newrevenue for school districts on astatewide basis. Changes madein the tax bill also added anadditional $415 dollars per pupilto the basic education formula,bringing the new basic formulaamount to $4,601 per pupil byfiscal year 2003 (see EducationProperty Tax Changes for detailson the $415 per pupil added bythe tax committee). Thesegeneral education formulaamounts will generate an addi-tional $36.9 million in compen-

satory revenue for studentseligible for free or reducedpriced lunches and will alsogenerate an additional $10.5million in school sparsity aid forrural districts.

Equity RevenueThe Legislature made furthermodifications in the state equityrevenue funding formula. Schooldistricts are eligible for equityrevenue based on how muchrevenue they receive comparedto other districts in their region(there are two regions; metro-politan area and outstate area).The changes made in the equityformula will begin in fiscal year2002 and will cost the state about$23.8 million in additionalrevenue for the 2001-2003biennium.

EDUCATION PROPERTYTAX CHANGES

Repeal of the General Educa-tion LevyThe 2001 tax bill repeals thegeneral education levy begin-ning in fiscal year 2003 andreplaces the levy with anadditional $1.2 billion of stateaid for education. The additional

Elementary andSecondary Education

15

state aid does not result inadditional revenue for schooldistricts, but represents a stateGeneral Fund takeover of thepreviously state-mandated gen-eral education levy. TheLegislature also repealed theeducation homestead credit, theeducation agricultural credit,and school Homestead andAgricultural Credit Aid (HACA)which provided property taxrelief related to the generaleducation levy. The repeal ofthese property tax relief compo-nents saved $681 million infiscal year 2003.

$415 TransferBeginning in the 2002-2003school year, $415 per pupil willbe transferred to each district’sgeneral education formula al-lowance from its combinedreferendum, supplemental, andtransition formulas. Districtscurrently receiving less than$415 per pupil unit in thesecategories will receive a netincrease in revenue per pupil unitequal to the difference between$415 and their current revenue-per-pupil unit. The effect of thistransfer is to: (a) reducedistricts’ reliance on voter ap-proved referendums to financeregular operations of schooldistricts; (b) eliminate the supple-mental and transition categoricalfunding formulas; and (c) helpequalize the distribution of stateaid across all school districts.

The state appropriated about$62.9 million in the K-12Education Finance Bill and anadditional $180 million in theOmnibus Tax Bill to cover thecosts of the $415 transfer.

Changes to Local Referen-dumsIn addition to the changesbrought on by the $415 transfer,other changes were made to localvoter-approved referendums.Certain districts that were lim-ited by a restriction on how muchrevenue they could raise withvoter-approved referendumswere allowed to raise additionalrevenue due to a provision whichadjusted the referendum cap forinflation back to 1994. TheLegislature also instituted arevised equalization program fordistrict referendums. Afteradjusting referendums for the$415 transfer, the remainingportion of district referendumswill be equalized by the stateusing a new two-tiered formula.This additional equalization isessentially a property tax reliefinitiative. However, it mayencourage more districts to seekhigher voter-approved referen-dums that will result in morerevenue for school districts.Another major change in localschool referendums is that be-ginning with taxes payable in2002, agricultural land andseasonal recreational residentialproperties (cabins) will be ex-

cluded from local school refer-endums.

OTHER EDUCATION

Additional Statewide TestingThe 2001 Legislature appropri-ated an additional $2.5 million infiscal year 2003 for the develop-ment of a new seventh grade testto comply with federal Title Irequirements. When combinedwith the appropriation for theexisting tests at the third, fifth,and eighth grade levels, theadditional amount brings thetotal state appropriation fortesting up to $15.5 million forthe biennium.

Charter School Building LeaseAidThe appropriation for charterschool building lease aid morethan doubled from $16.8 millionin the 1999-2001 biennium to$41.7 million in the 2001-2003biennium. This large increase isdue to the increased number ofnew charter schools and toincreased building lease costs.The 2001 Legislature addedsome additional restrictions andincreased state oversight sur-rounding charter school buildinglease aid costs, including aprohibition on charter schoolsusing lease aid for custodial,maintenance service, utility, orother operating costs.

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Integration AidIn response to an expandingnumber of minority students inareas outside of the urban corecities, the Legislature modifiedthe current program that pro-vides additional aid to districtsthat are part of an integrationplan determined by state rules.The modifications include: low-ering the per pupil amount forthe Minneapolis school districtfrom $536 to $446 per pupil tomake that district equal with theper pupil amount for the St.Paul school district; increas-ing the per-pupil amount from$93 to $130 per pupil for districtsthat have an enrollment ofprotected students, as defined byMinnesota Rules, exceeding 15percent; and allowing moredistricts to be eligible to receiveintegration aid if they file anintegration plan with the state.With these changes, the totalappropriation for integration aidgrew from $93.4 million in theprevious biennium to $117.5million in the 2001-2003 bien-nium.

New Accountability ProgramsTwo new accountability pro-grams were approved by theLegislature and signed into lawby the Governor. The firstprogram is funded by an $8million biennial appropriationfor grants to school districts thatdevelop an educational improve-ment plan and an alternative

teacher compensation system.The alternative teacher compen-sation system is intended tomove participating districts intoa system based on teacherperformance rather than years ofservice. The second programprovides the state with a $2.5million biennial appropriation tocontract with an independentschool evaluation service toassess and report on schooldistricts’ academic and financialperformance.

Structurally Balanced Bud-getsA new law was put into placerequiring school districts, priorto approving a new teachercontract, to determine that theproposed contract will not causestructural imbalance in thedistrict’s budget during theperiod of the agreement. Inaddition, each school board mustalso project revenues, expendi-tures, and fund balances for oneyear following the teacher con-tract. Districts must report thisinformation to the public and tothe state.

Special EducationAlthough the Legislature did notpropose any major changes inspecial education funding, previ-ous years’ changes and thegrowth of special educationcosts led to an approximate $134million increase in the appro-priations for regular special

education aid, excess cost aid,and other special educationprograms. In order to urge thefederal government to take overa larger portion of specialeducation costs, the Legislatureand the Governor have for-warded a resolution urgingCongress to fulfill its promise tofund 40 percent of specialeducation costs.

Career and Technical Pro-gramsThe Legislature allowed thecareer and technical aid programto expire at the end of the 2000-2001 school year. The previousbiennial appropriation for thisprogram had been about $24.8million. However, the Legisla-ture gave districts the authorityto make a one-time levy for the2001-2002 school year equal tothe amount of state aid itreceived in 2000-2001. Othercareer and technical programswere also reduced from $5.5million in the previous bienniumto $1.55 million in the 2001-2003 biennium.

Education and Funding-Re-lated StudiesA number of education funding-related studies were requested bythe 2001 Legislature and will beconsidered by the 2002 Legisla-ture for potential major fundingchanges in the next few years. ALegislative Task Force on Re-ducing the Complexity and

17

Inequities of K-12 Educationwill report to the 2002 Legisla-ture any changes in statutes andrules needed to improve equityand quality and reduce thecomplexity of K-12 educationfunding. The task force will alsolook at the compensatory rev-enue program and how toequitably distribute integrationrevenue based on the level ofservices provided under theintegration plan. Other studieswill look at funding for telecom-munication access, on-line learn-ing, and school transportationcosts.

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HIGHER EDUCATION

The Omnibus Higher EducationFunding Bill increased funding forhigher education by approxi-mately eight percent over theprevious biennium. Key provi-sions were as follows:

Student Financial Aid, Librar-ies, and Technology

Funding for student financial aid,libraries, and technology wasincreased. Specific provisions in-cluded:

• Several changes were made tothe state grant program: stu-dents will be eligible to receivethe grant for ten semesters orthe equivalent; beginning in2002, independent studentswill experience a reduction inthe proportion of the cost oftheir education that they willbe responsible for under theformula; and the actual tuitionand fees paid by each studentwill be used in the calculationof the grant award amount.

• The proportion of a student’sliving expenses that is recog-nized in the calculation of astudent’s state grant award wasincreased.

• Students will be eligible to re-

ceive a child care grant for tensemesters or the equivalent.

• Language was adopted tocomplete implementation ofthe Edvest Program, a pro-gram established in 1997 toencourage individuals to savefor college. The Edvest pro-gram: (1) provides a qualifiedstate tuition program underfederal tax law; (2) providesmatching grants for contribu-tions to the program by low-and middle-income families;and (3) encourages individu-als, foundations, and busi-nesses to provide additionalgrants to participating stu-dents.

• Money was appropriated fora variety of programs de-signed to support a student’seducation, including expand-ing the ability of librariesstatewide to share books andother materials electronically,and improving the statewideelectronic network that con-nects postsecondary educationinstitutions.

• The Higher Education Ser-vices Office, which overseesstudent financial aid pro-grams, was directed to collectdata on each campus’ dis-bursement of state financialaid.

University of MinnesotaFunding for the University ofMinnesota was increased byapproximately nine percent overthe previous biennium.

Several measures were enacteddirecting the Board of Regentsto provide the Legislature andthe Governor with informationon: (1) the allocation of stateappropriations; (2) the tuition andfee rates set by the board; (3)revenue received from fundingsources other than the state; (4)the undergraduate programs de-termined to be of highest priorityto the system; (5) the reallocationof money and curricular andstaffing changes made to advancethe system’s priorities; (6) firstgeneration students; (7) progresstowards increasing graduationrates; (8) progress towards in-creasing revenue for research;and (9) enhancements in thetraining of health care workers.

The Legislature established theAcademic Health Center ac-count, which will provide theuniversity with an additionalsource of revenue for the instruc-tional costs of health professionalprograms at the Academic HealthCenter. The money deposited inthis account is from the tobaccosettlement.

Higher Education

19

The Legislature also adoptedlegislation to establish the Com-mission on University of Minne-sota Excellence. The commis-sion is directed to examine abroad range of mission, fiscal,and programmatic issues sur-rounding the university’s activi-ties.

Minnesota State Colleges andUniversitiesFunding for the Minnesota StateColleges and Universities(MnSCU) increased by approxi-mately ten percent over theprevious biennium.

The Board of Trustees mustreport to the Legislature and theGovernor on the following: (1)the allocation of state appropria-tions; (2) the tuition and fee ratesset by the board; (3) revenuereceived from other fundingsources; (4) the undergraduateprograms determined to be ofhighest priority to the system;(5) the reallocation of money andcurricular and staffing changesmade to advance the system’spriorities; (6) first generationstudents; (7) progress towardsincreasing graduation rates; and(8) progress towards increasingcustomized training revenue.

The Chancellor of MnSCU isdirected to consult with theCommissioner of Children,Families and Learning anddesignate at least one statecollege or university, and aminimum of four school dis-

tricts, to implement a compre-hensive demonstration projectdesigned to increase the numberof high school graduates who areacademically prepared to enrollin college level courses.

The Legislature alsoadopted legislation

to establishthe Commission on University of

Minnesota Excellence.

Mayo Medical FoundationApproximately $3.2 million wasappropriated to the Mayo Medi-cal Foundation for grants tosupport the education of medicalstudents who are residents ofMinnesota and students in theFamily Practice and GraduateResidency Programs.

Miscellaneous ProvisionsThe Board of Regents and theBoard of Trustees must provideinformation to the Legislature onthe progress they are making inimplementing the master aca-demic plan for the Twin Citiesmetropolitan area.

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While state appropriations forearly childhood and familyeducation programs increasedby about $88.6 million, or 19percent, compared to the previ-ous biennium, this representedno increase over the base budgetfor the 2001-2003 biennium.The increased state appropria-tions are attributed mostly toincreased child care costs, adecrease in federal TemporaryAssistance for Needy Families(TANF) funds for child care, andincreased Adult Basic Education(ABE) costs. The only “new”money the 2001 Legislature hadto work with in the earlychildhood and family educationarea was $9 million of newTANF money that was appropri-ated for child care.

Child Care ProgramDespite having child care con-solidation programs proposed bythe Governor and by both housesof the Legislature, an agreementon a program that would consoli-date the state’s basic sliding feeand Minnesota Family Invest-ment Program (MFIP) child careprograms was not reached. Thestate appropriation for child careprograms increased by $80.9million from the 1999-2001

biennium to the 2001-2003biennium. The increased spend-ing is due to increased demand,not the result of any legislativechange in the program. Whilestate appropriations for childcare increased, total federalTANF appropriations for childcare programs declined by $38.1million from the 1999-2001biennium to the 2001-2003biennium.

Community Education andAfter-School ProgramsThe Legislature increased theamount a school district maylevy for community educationfor districts operating a youthafter-school enrichment pro-gram. This will result in an $5million annual increase in thecommunity education levy state-wide. The appropriation forafter-school enrichment pro-grams increased from $10.5million to $11 million, althoughthe increase was already builtinto the budget forecast.

Reserve Account LimitsA new law will limit the averageyear-end balance in a district’searly childhood family educa-tion (ECFE) reserve account andschool readiness reserve ac-

count. The new law will limit theyear end balance in each ac-count, over the prior three yearsadjusted for inflation, to 25percent of the district’s revenuefor that account. A district’srevenue will be reduced by anyamount in excess of the limit.

Guard Our YouthThe Legislature took some one-time savings from the adults

Family and EarlyChildhood Education

21

with disabilities program andfrom violence prevention grantsand reallocated the revenue tofund the Guard Our Youthprogram through the Depart-ment of Military Affairs for$191,000. The program makesarmories available for youth,after-school, and communityeducation programs.

Adult Education ProgramsThe appropriations for adulteducation programs increasedby about $15.9 million, whichreflects the increase in theforecasted amount for the adultbasic education program. Newlegislation requires that twopercent of the state total adultbasic education aid must be setaside for supplemental andinnovative grants.

LibrariesAppropriations for county li-braries were contained in theearly childhood and familyeducation bill for the first time in2001. In previous years, theappropriations for libraries werecarried in the K-12 educationfunding bill. Appropriations forlibraries for the 2001-2003biennium remained at the fore-casted level. The biennium-to-

biennium difference in the ap-propriation for regional librarytelecommunications aid shows a$2.9 million drop which in-cludes about $2.4 million in one-time money that was appropri-ated in the previous bienniumbut not included in the forecastfor the 2001-2003 biennium.

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DEPARTMENT OF HUMANSERVICES

The 2001 Legislature (FirstSpecial Session Chapter 9)appropriated over $7.3 billionfor the department from a varietyof funds, as follows: GeneralFund, almost $6.3 billion; StateGovernment Special Revenue(SGSR) fund, about $1 million;Health Care Access Fund(HCAF), over $484 million;federal Temporary Assistancefor Need Families (TANF)funds, almost $564 million; andlottery cash flow funds, over$2.9 million.

An important funding initiativeinvolved significant investmentsto downsize the nursing homeindustry, improve the commu-nity-based service system for thestate’s elderly population, andprovide rate increases for nurs-ing facilities and a wide varietyof other service providers. Othersignificant funding efforts in-cluded expansion of the inter-governmental transfers the statecollects from certain nonstateentities in order to generateadditional federal revenuethrough the Medical Assistance

(MA) program, and establish-ment of parameters for extend-ing welfare benefits beyond thefive-year limit prescribed infederal law as recipients begin toreach that limit. Some of themost significant initiatives aredescribed below.

Long-Term Care InitiativeFaced with a severe shortage ofnursing facility employees, in-creasing numbers of emptynursing facility beds, and grow-ing concerns about the economicviability of the nursing facilityindustry, the Legislature appro-priated over $62.9 million as partof a long-term care initiative toclose unneeded beds, improvequality, and expand community-based options. This expenditurewas almost completely offset byanticipated reductions of almost$60.5 million as the result of bedclosures and reduced caseloads.

Almost $1.6 million was madeavailable to expand the SeniorLinkAge Line to help olderMinnesotans and their familiesmake informed choices aboutlong-term care options andhealth care benefits through astatewide toll-free number and

through the Internet. Another $2million was appropriated forgrants to county boards and AreaAgencies on Aging for planningand development of expandedcommunity-based long-term careservices. A $5 million appro-priation was made available forgrants to public and privatenonprofit agencies to establishservices that strengthen thehome and community-based ser-vices system for elderly persons.An additional $5 million wasappropriated for grants to com-munities, service providers, andproviders’ consortiums to estab-lish older adult services. Over$6.9 million was appropriatedfor the anticipated increases inElderly Waiver (EW) expendi-tures as a result of nursingfacility bed closures. Almost$2.4 million was provided tosimplify administration of theEW and Alternative Care Grant(ACG) programs by equalizingrates paid for these servicesacross the state and by creating acommon menu of reimbursableservices. EW provides servicesto elderly persons who are MAeligible, and ACG providesservices to persons who are atrisk of institutional placement

Human Services

23

but who have incomes or assetssomewhat in excess of MAlimits. Almost $9.7 million wasprovided to pay for the expectedcaseload growth in the ACGprogram as a result of nursingfacility bed closures. This is inaddition to over $23.5 millionprovided to pay for ACGprogram growth otherwise an-ticipated. The Legislature pro-vided $500,000 to DHS todevelop a new nursing facilityreimbursement system by Janu-ary 15, 2003, and $1 million toconduct or contract for a study todetermine the staff time spent onvarious case mix categories anddetermine whether current staff-ing standards are adequate. Thelong-term care initiative alsoincluded a number of smallerexpenditures.

Savings of about $44.5 millionare anticipated in this programthrough an authorization to DHSto approve planned closures ofup to 5,140 nursing facility bedsduring the 2001-2003 biennium.An additional savings of about$16 million in facility costs andrelated costs is anticipated fromthe expansion of the ACGprogram.

Comprehensive Rate Adjust-ment and Employee Cost ofLiving Adjustments (COLA)InitiativeClosely related to the long-termcare initiative was a comprehen-sive rate adjustment for a widevariety of service providers,including nursing facilities andcommunity-based providers ofservices for the elderly, withmuch of the additional rateincreases earmarked for em-ployee compensation.

Almost $107.5 million wasprovided for a rate adjustment ofthree percent per year for nursingfacilities, MA long-term carewaiver programs and home careprograms, and a variety of othercommunity-based programs, andrate increases of 3.5 percent forintermediate care facilities forpersons with mental retardation(ICFs/MR) and for day trainingand habilitation services thatprovide nonresidential programsfor persons with developmentaldisabilities. For all of these rateincreases, providers are requiredto use two-thirds of the addi-tional money to increase em-ployee wages and benefits.

Welfare Time Limits InitiativeUnder the federal welfare reformlegislation approved by Con-gress in 1996, persons arelimited to 60 months of benefitsthrough the federally supportedTemporary Assistance for Needy

Families (TANF) program, calledMinnesota Family InvestmentProgram (MFIP) in Minnesota.The 2001 Legislature took stepsto deal with the issue of servingrecipients who will begin reach-ing the 60-month limit duringthe 2001-2003 biennium. Al-most $11.9 million in federalfunds was provided for hardshipextensions to the 60-month limiton MFIP assistance. Hardshipswere made available for recipi-ents who are seriously ill orcaring for a seriously ill familymember and for employed re-cipients who satisfy new workrequirements. Recipients mustbe in compliance with programrequirements in order to seek ahardship extension. About $6.3million was provided fromfederal TANF funds to pay theadded child care costs associatedwith extending benefits to thosewho qualify. The extensionswill allow about 52 percent ofthe 5,200 families expected toreach the 60-month limit beforeJuly 1, 2003, to keep theirbenefits. Families that loseMFIP benefits may still beeligible for MA and otherprograms for which they qualify.

Health Coverage Initiative forFamilies and ChildrenThe Legislature debated a majorexpansion of health care cover-age designed to provide insur-ance for all Minnesota children,but finally settled on a modest

The Legislature debateda major expansion of

health care coverage ...

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initiative designed to cover anadditional 20,000 children by2005. Over $10 million wasprovided in the second year ofthe biennium to raise MAincome standards for children to170 percent of federal povertyguidelines, to raise incomestandards for adults to 100percent of federal poverty guide-lines, and to raise the asset limitsfor families to $30,000. TheLegislature also increased theMA income disregard for fami-lies, which is in effect for the firstfour months of MA eligibility.This appropriation was partiallyoffset by a decision to beginpaying the costs ofMinnesotaCare coverage forpregnant women and childrenunder age two out of the HCAF,effective January 1, 2003, in-stead of out of MA, resulting inan MA savings of about $7.7mill ion. Another feature ofthis initiative eliminatesMinnesotaCare premiums forthe first 12 months for childrenin families with gross incomebelow 217 percent of federalpoverty guidelines who areterminated from MA butimmediately eligible forMinnesotaCare. Persons whodo not pay a premium arerequired to pay a $5 copay fornonpreventive services. TheseMinnesotaCare changes are ef-fective from July 1, 2002, to June30, 2006.

Intergovernmental Transfers/Uncompensated Care Initia-tiveThe Legislature wrestled withthe issue of hospital uncompen-sated care and finally agreed on amultifaceted response to thatissue and several related hospitaland public health clinic fundingproblems.

In order to finance this initiative,the Legislature required annualintergovernmental transfer pay-ments of $24 million fromHennepin County and $12 mil-lion from Ramsey County.However, 71 percent of theseamounts were directed back tothe large public hospital in eachcounty. When matched withfederal MA funds, the net resultwas expected to make available$10 milllion each year foruncompensated care costs forHennepin County Medical Cen-ter and $5 million each year forRegions Hospital. The remain-ing 29 percent of the annualpayments were allocated asfollows for the 2001-2003 bien-nium: (1) about $6.1 million toincrease prepaid MA rates athospitals outside the seven-county metro area to 90 percentof the metro rate for 16 commondiagnoses; (2) about $2.2 mil-lion to forgive payments due toDHS from rural hospitals be-cause of overpayments made tothose hospitals between 1994

and 1997; (3) almost $4.6million for grants from theMinnesota Department of Health(MDH) to community clinics;and (4) about $4.6 million forrural hospital capital improve-ment grants from MDH.

In a related decision, the Legisla-ture repealed a $3.4 millionannual intergovernmental trans-fer paid by Hennepin County,but increased another transferpayment by a like amount andincreased payment rates to theMetropolitan Health Plan, anHMO operated by HennepinCounty, so that the net effect isbudget neutral to the state andthe county receives an additional$3.4 million annually.

Dental Access InitiativeThe Legislature adopted a num-ber of measures designed toaddress the growing problemfacing clients of public programswho need dental services. Anappropriation of $274,000 fromthe HCAF and $906,000 fromthe General Fund will enable anincrease in dental payment ratesfor diagnostic examinations andx-rays for children. An addi-tional $600,000 from the HCAFand $2.5 million from theGeneral Fund was provided toincrease rates by up to 50percent, within the limits of theavailable appropriation, for “criti-cal access” dental providers. An

25

$800,000 one-time appropria-tion from the HCAF will fundDHS dental access grants toclinics, other nonprofits, politi-cal subdivisions, professionalassociations, and others whodemonstrate that they can effec-tively provide dental services toclients of public programs. TheLegislature made about $1.9million available for DHS grantsto teaching institutions to im-prove dental access forunderserved populations and toprovide innovative dental train-ing. Another $26,000 wasappropriated to pay for malprac-tice insurance and licensing feesfor retired dentists who provideat least 100 hours of volunteerservice in a 12-month period.The Legislature approved anumber of other dental programsthat did not involve appropria-tions, as follows: (1) dentalhygienists working in healthcare facilities were authorized toperform cleanings, polishing,and other dental services withoutthe patient being seen first by adentist, if certain conditions aremet; (2) DHS will facilitatedonations of dental practices byretiring dentists to nonprofitorganizations, who in turn willtransfer the practices to otherdentists who agree to provideservices to underserved popula-tions for five years; (3) a five-county dental services demon-stration project was authorized

to provide services under acapitated or fee-for-servicemodel; and (4) the Board ofDentistry was directed to de-velop expanded duties for dentalassistants and dental hygienists.

Agency ProgramsThe following is a program-by-program description of theagency’s budget.

Agency ManagementChapter 9 provided about $84.9million for agency managementactivities, including about $76.3million from the general fundand over $8.6 million from avariety of other funds. TheLegislature provided over $2million to add 14 licensingpositions in order to allow moretimely completion of licensingreviews, responses to com-plaints, and processing of countylicensing recommendations andvariance requests. The Legisla-ture also approved over $6.5million for an electronic govern-ment services (EGS) initiativewithin DHS. Eventually EGSwill offer state residents, pro-gram clients, and policy makersdirect, immediate, and secureaccess to DHS programs, includ-ing on-line application for spe-cific programs. An appropria-tion of almost $6.5 million wasalso approved to enable DHS tocomply with new data privacystandards established in the

federal Health Insurance Port-ability and Accountability Act(HIPPA).

Administrative Reimburse-ment and Pass-ThroughAbout $112.6 million wasappropriated from federal TANFfunds for reimbursement ofcounty costs associated withMFIP administration. Thisrepresents a $10 million reduc-tion from the adjusted basespending level. The appropria-tion was reduced because countyadministrative costs have beenlower than anticipated.

Children’s GrantsOver $132 million was appro-priated from the General Fundand about $12.6 million fromTANF for this activity. Majorinitiatives in this area includedover $10.9 million for adoptionassistance and over $6.8 millionfor relative custody assistance.These programs provide monthlysupport to adoptive parents andlegal custodians who assumeparenting responsibility for chil-dren who may have multipleemotional, physical, and medi-cal problems. The major TANFinitiative in this activity was anappropriation of $9.3 million tocontinue the concurrent perma-nency planning initiative underwhich counties are required tosimultaneously plan to reunite

26

children in foster care with theirparents and to provide forpermanent placement elsewhereif reunification is not possible.

Children’s Services Manage-mentThe Legislature appropriatedalmost $9.6 million for thisactivity. The most significantnew initiative was an appropria-tion of $1.8 million to correct aprojected structural base deficitin the social services informa-tion system (SSIS), a county-based information system thatsupports the delivery of childwelfare services and collectsdata needed to assess thoseservices.

Basic Health Care GrantsThe Legislature approved al-most $2.9 billion for basic healthcare grants, including over $2.4billion from the General Fundand almost $442 million fromthe HCAF. The major budgetactivities within this program areMinnesotaCare, MA for Fami-lies and Children, MA forElderly and Disabled, GeneralAssistance Medical Care(GAMC), and other health careassistance.

For the MinnesotaCare program,the Legislature appropriated over$439 million from the HCAF, ofwhich almost $433 million wasfor adjusted base spending and

forecast growth, and about $6.8million was for new initiatives.The most significant programchange was to move paymentsfor pregnant women and chil-dren on MinnesotaCare from thegeneral fund to the HCAF, at acost of over $7.7 million. Thisexpenditure was partially offsetby requiring prepayment ofMinnesotaCare premiums, elimi-nating the one-month graceperiod for nonpayment of premi-ums, saving almost $1.6 million,and by anticipated savings ofalmost $1.1 million expected asMA enrollment of childrenexpands and some childrentransfer from MinnesotaCare toMA. In an innovative attempt tocapture federal money for medi-cal education, the Legislaturetransferred to DHS an HCAFappropriation of about $5.1

The Legislature approvedalmost $2.9 billion for basic

health care grants...

million that the University ofMinnesota receives for educat-ing and training primary carephysicians. DHS was directed toincrease capitated MA rates withthis appropriation. These MArate enhancements, including thefederal match they generate, aretransferred to the Commissionerof Health for the following

purposes: (1) a grant to theUniversity of Minnesota toreplace its original HCAF allo-cation; (2) a grant of more than$1.2 million to the HennepinCounty Medical Center formedical education; and (3) about$3.8 million for grants toteaching institutions for dentalaccess and dental training projects(discussed under the dentalinitiative).

For MA for Families andChildren, the Legislature pro-vided over $964 million, ofwhich almost $951 million wasfor adjusted base spending andforecast spending increases andjust over $13 million was fornew initiatives, including theexpansion of health care cover-age for families and childrendiscussed above. Savings ofover $5.2 million resulted fromdisallowing the MA surcharge asa directly reimbursable costwithin MA hospital paymentrates. Hospitals recently won aMedicare appeal that wouldallow the cost of the surcharge tobe included in a hospital’sMedicare cost report. Thechange in state law maintains thestatus quo by not buildingsurcharge reimbursement di-rectly into MA rates as well. Asavings of almost $3.4 millionoccurred when the Legislaturedecided not to implement afederal waiver that would allow

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MFIP families who lose MFIPeligibility due to increasedearnings to remain on MA for 12additional months. The decisionmaintains current policy underwhich these families may qualifyfor six months of extended MA.An additional savings of $3.8million is anticipated through aninitiative designed to reduceunnecessary use of pharmaceuti-cal drugs. The other significantinitiatives in this activity arediscussed elsewhere in relation tointergovernmental transfers.

For MA for Elderly and DisabledPersons, the Legislature providedover $1.12 billion, of whichalmost $1.1 billion was foradjusted base spending andforecast increases, and about $28million was for new initiatives.The Legislature made availableover $16.1 million to increase theMA income standard for elderly,blind, and disabled persons to100 percent of the federal povertyguidelines (FPG), up from lessthan 70 percent of FPG. As partof this initiative, persons enrolledin the MA for employed personswith disabilities (MA-EPD) op-tion who have incomes under 100percent of FPG will be trans-ferred to regular MA. TheLegislature liberalized eligibilityfor MA-EPD by allowing eligiblepersons who are temporarily outof work due to a medicalcondition to remain on theprogram for up to four months,

which will increase programcosts by about $1.1 million. Inaddition, premiums for enrolleesin the MA-EPD program will beincreased, resulting in a savingsof almost $1.6 million. TheLegislature also provided almost$6.8 million to improve commu-nity-based mental health servicesunder the MA rehabilitationoption. This spending is partiallyoffset by anticipated savings ofalmost $2.3 million throughreduced spending for traditionalMA services, including emer-gency room use and inpatientpsychiatric admissions. Mentalhealth payment rates were alsorebased at a cost of over $3.3million.

For GAMC the Legislatureprovided over $335 million, ofwhich almost $329 million wasfor adjusted base spending andforecast increases and about $6.3million was for new initiatives.The Legislature appropriated al-most $3 million to pay theGAMC costs of modifications inthe federal Systematic AlienVerification for Entitlements(SAVE) program, which is de-signed to prevent illegal immi-grants from accessing welfareprograms to which they are notentitled. The added costs areexpected as a result of amodification in the requirementsfor reporting to the Immigrationand Naturalization Service (INS)undocumented persons who ap-

ply for welfare benefits. Therequirement modified by the2001 Legislature was scheduledto take effect July 1, 2001, andwould have required DHS toreport to INS any undocumentedperson identified through theapplication verification processor by self admission. The newrequirement simply requires DHSto comply with federal reportingrequirements, which are lessstringent.

For other health care assistance,the Legislature provided over$22.7 million from the generalfund and $2.3 million from theHCAF. The adjusted generalfund base for this activity wasabout $33.6 million, but it wasreduced by almost $17.5 millionthrough the initiative to raise theincome standard for the aged,blind, and disabled under MA,thereby reducing spending in theprescription drug program. How-ever, increasing income eligibil-ity for the prescription drugprogram resulted in added spend-ing in this activity of about $5.3million. Eligibility was modifiedas follows: (1) the incomestandard for the elderly wasraised to 135 percent of FPGfrom 120 percent, effectiveJanuary 1, 2002; and (2) theincome standard for disabledpersons will be 120 percent,rather than 100 percent, whenthose persons become eligible forthe program on July 1, 2002. The

28

HCAF appropriation included an$800,000 increase over the baselevel to pay for dental accessgrants, which are discussed underthe dental initiative.

Health Care ManagementThe Legislature appropriatedabout $69.3 million for thisactivity, of which about $36.6million was from the generalfund and almost $32.7 millionwas from the HCAF. TheLegislature made a one-time $7million reduction in funding forthe Minnesota Medicaid Infor-mation System (MMIS), thecomputer system for state medi-cal programs, because of asurplus in the systemsaccount. The Legisla-ture appropriated over$4.6 million from theHCAF to hire 45 addi-tional MinnesotaCareeligibility workers inorder to reduce caseloadsizes that have grownas a result of programenrollment increases.

State-Operated Ser-vicesThe Legislature appro-priated about $418.5million for state-operated ser-vices, including regional treat-ment centers, the MinnesotaSex Offenders Program, adoles-cent services, and other pro-grams. This amount is about

$12.4 million less than theadjusted base funding level forthese services. A savings ofabout $1.1 million was achievedthrough an administrative re-structuring of the sex offenderprogram that eliminated 13 staffpositions. An additional sav-ings of over $5.3 million wasrealized by shifting adolescentservices to the self-supportingenterprise funding model. ForAdult Services Grants, theLegislature appropriated about$29.6 million, an increase ofmore than $14.5 million abovethe adjusted base. The signifi-cant spending increases in thisarea are related to the long-term

care initiative which is dis-cussed elsewhere.

For Deaf and Hard-of-HearingGrants, about $3.7 million was

provided, an increase of$256,000 over the adjustedspending base.

For Mental Health Grants, theLegislature provided almost$103 million from the GeneralFund, an increase of more than$6 million over the adjustedbase. The major initiative was arate adjustment which is dis-cussed elsewhere. An addi-tional appropriation of about$2.6 million was provided fromthe lottery fund, a $300,000increase over the base level.

For Community Support Grants,almost $26 millionwas appropriated, anincrease of about $1million over the base.A $748,000 appro-priation for the Region10 Quality Assuranceproject and a $654,000appropriation for a rateadjustment were par-tially offset by a$394,000 reduction indisability projectgrants, a demonstra-tion project that nolonger exists.

For MA Long-Term Care Waiv-ers and Home Care, the Legisla-ture provided over $984 million,an increase of about $44.8million over the adjusted base

29

and forecast spending increases.A net increase of about $7.5million was approved for aninitiative to relocate 1,300 dis-abled nursing home residentsunder age 65 back to theircommunities and to divert addi-tional persons at risk of place-ment. Savings of over $10.8million were anticipated from adecision to limit enrollment inthe state-funded consumer sup-port grant program and makeconsumer-directed home careavailable through a new federalwaiver program. The othermajor spending items in thisactivity were a number of long-term care initiatives and rateadjustments, which are dis-cussed elsewhere.

For MA Long-Term Care Facili-ties, almost $1.16 billion wasappropriated, an increase ofabout $9.7 million over baselevel funding and forecast spend-ing increases. Many of thespending initiatives in this activ-ity relate to the long-term careinitiative or to rate adjustments,which are discussed elsewhere.A savings of almost $7.9 millionwas anticipated in this activityfrom the initiative to relocate anddivert disabled persons underage 65 from nursing facilities.About $14.3 million was appro-priated for a staged reduction inrate disparities directed at nurs-ing facilities statewide with

operating rates below a “ratetarget” established in law. Morethan $4.9 million was madeavailable to increase MA pay-ments during the first 90 days ofa nursing facility admission inorder to help offset the highercosts facilities face with newresidents. For the first 30 days,the rate is 120 percent of the MArate, and for the next 60 days therate is 110 percent of the rate.Facilities must devote to em-ployee wages and benefits atleast one-half of the revenue theyreceive from a rate disparitiesadjustment and from the rateincrease for the first 90 days.Over $2.1 million was appropri-ated to enable nursing facilitiesto provide scholarships to em-ployees to encourage careers inlong-term care or to provide job-related training in English as asecond language.

For Alternative Care Grants,almost $166 million was pro-vided, an increase of about $40.9million above base funding. Allthe major spending changes inthis activity were part of thelong-term care initiative or thecomprehensive rate adjustment,which is discussed elsewhere.

For Group Residential Housing(GRH), the Legislature appro-priated over $166.6 million, anincrease of about $5 million overthe base funding level and

spending forecast. The initiativeto discharge disabled personsunder age 65 from nursingfacilities is expected to increaseGRH costs by $949,000. Inaddition to spending associatedwith the broad rate adjustment,which is discussed elsewhere,the Legislature provided $2.1million for separate rate in-creases for board and lodgingfacilities that offer special ser-vices and for noncertified boardand care homes.

For chemical dependency treat-ment programs, over $85 millionwas appropriated for the entitle-ment portion of the treatmentfund, which is set aside forclients entitled to treatmentunder program eligibility guide-lines. This amount is about $3million less than adjusted basefunding and forecast spendingincreases for this program.Savings of over $1 million weretaken by limiting vendor rateincreases to three percent peryear, a reduction from the fourpercent increases assumed in thebudget forecast. Another $2million was saved by reallocat-ing federal chemical dependencyfunding from specific grants tothe fund that supports chemicaldependency services for so-called “Tier II’ clients. Theseclients are eligible for servicesonly to the extent of availablefunding.

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Continuing Care and Commu-nity Support ManagementThe Legislature appropriatedabout $46.4 million for thisactivity, including about $45.9million from the General Fund,$236,000 from the SGSR, and$293,000 from the lottery. Thisrepresents an increase of about$8.4 million over adjusted basespending. The most significantincrease was an appropriation ofmore than $4.4 million for theadministrative costs, includingstaff, studies, and consultants,related to the long-term careinitiative, which is discussedelsewhere. In addition, $925,000was provided for administrationof the initiative to relocate anddivert disabled persons underage 65 from nursing facilities. A$1.4 million appropriation wasprovided to evaluate the antici-pated federal consumer directedhome care waiver. The appro-priations from the SGSR and thelottery were equal to adjustedbase spending from those fundsfor this activity.

Economic Support GrantsThe Legislature appropriatedalmost $624 million for thisactivity, including about $189.3million from the General Fundand about $434.6 million fromfederal TANF funds.

For Assistance to FamiliesGrants, about $345.4 millionwas provided, with about $59.3

million appropriated from theGeneral Fund and over $286million from the state’s federalTANF grant. The General Fundamount is almost $8.8 millionbelow the adjusted base andspending forecast for this pro-gram. Most of this reductionwas the result of a reduction inthe state’s “maintenance ofeffort” spending for the Minne-sota Family Investment Program(MFIP) to 75 percent of itshistorical base from 80 percent.The state was permitted to makethis reduction because it satis-fied federal requirements regard-ing percentage of adults onMFIP who are engaged inemployment activities. Thefederal TANF appropriation forthis program represented anincrease of more than $58million over the base fundinglevel. Almost $5 million infederal funds was appropriatedto pay the additional benefitsexpected to be distributed as aresult of a modification in therequirements for reporting to theImmigration and NaturalizationService undocumented personswho apply for welfare benefits.The requirement modified by the2001 Legislature was scheduledto take effect July 1, 2001, andwould have required DHS toreport to INS any undocumentedperson identified through theapplication verification processor by self admission. The newrequirement simply requires DHS

to comply with federal reportingrequirements, which are lessstringent. Almost $11.9 millionin federal funds was provided forhardship extensions to the 60-month limit on MFIP assistance.These policy changes are dis-cussed under the welfare timelimits initiative. The Legislatureprovided $725,000 in federalfunds to increase MFIP benefitsso that the MFIP exit levelremains at 120 percent of federalpoverty guidelines. About $3.8million in federal funds wasprovided to allow post-second-ary education and training forMFIP recipients for up to 24months. The previous limit was12 months. Almost $7.3 millionin federal funds was provided tocontinue providing MFIP cashand food assistance to certainnoncitizens not eligible underregular program guidelines. Thereduction in the state mainte-nance of effort to 75 percent ofbase year expenditures resultedin an increase in spending fromthe federal TANF grant of $8.5million. Over $21.7 million wasprovided to delay for two yearsthe requirement that MFIPrecipients count as income thefirst $100 of public housingassistance they receive. The neteffect of this requirement wouldbe to reduce MFIP grants forrecipients who live in publichousing.

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For Work Grants, over $156.3million was provided, withabout $19.7 million comingfrom the General Fund andalmost $136.7 million comingfrom federal TANF funds. TheGeneral Fund appropriation was$874,000 below the adjustedbase funding level as a result ofminor base reductions in theFood Stamp employment andtraining program relating to startwork grants, literacy trainingfunds, and transportation funds.The federal TANF appropriationis about $14.9 million higher thanthe base level. The Legislatureappropriated an additional $10million for employment andtraining programs and about $4.9million for supportive workgrants from the federal TANFfund.

For Other Economic Assistance,the Legislature provided over $18million, including about $6.7million from the General Fundand almost $11.4 million fromfederal TANF funds. TheGeneral Fund appropriation rep-resented an increase of more than$2 million, due mostly to a $2million appropriation for a sup-portive housing and managedcare pilot project. The federalTANF appropriation was almost$9.4 million in excess of the basefunding level. This funding isdevoted to providing child care to

support other MFIP initiatives,including extensions beyond the60-month limit and the extensionof post-secondary education ben-efits to 24 months from 12months.

For Child Support Enforcement,about $8.9 million was provided,including almost $8.5 millionfrom the General Fund, a$100,000 increase over the ad-justed base level, and $520,000 infederal TANF funds, an amountequal to the base level.

For General Assistance (GA), theLegislature appropriated over$33.6 million, an increase of$781,000 over the adjusted baseplus forecasted spending in-creases. The new funding is topay added benefits associatedwith another delay in implemen-tation of a policy to makenoncitizens who lost eligibilityfor the federal SupplementalSecurity Income (SSI) programunder federal welfare reformlegislation also ineligible for stateprograms. That policy changehas now been delayed until July1, 2003.

For Minnesota SupplementalAid, about $61 million wasprovided. The only spendingincrease was $338,000 to pay theadded costs anticipated in thisprogram from the initiative to

relocate and divert disabledpersons under age 65 fromnursing facilities.

For Refugee Services, $500,000was provided. This amount isequal to base level funding forthis program.

Economic Support Manage-mentAlmost $75.1 million was appro-priated for this activity, includingabout $69 million from theGeneral Fund, about $2.7 millionfrom the HCAF, and over $3.4million from federal TANFfunds.

For Economic Support PolicyAdministration, about $19.6 mil-lion was appropriated. TheGeneral Fund appropriation forthis program was almost $16.2million, an increase of more than$3 million above the adjustedbase spending level. Almost $3.4million was provided for aninitiative to improve access tohuman services programs fornon-English-speaking persons incompliance with federal equalaccess requirements. The initia-tive will include the establish-ment of phone lines that accom-modate persons with limitedEnglish skills, translation ofimportant documents into otherlanguages, reimbursement fortranslator services used by health

32

care providers, assessment ofcounty policies and procedures,and staff training. This appro-priation was partially offset by a$384,000 administrative fundingreduction. Over $3.4 million wasappropriated from federal TANFfunds for Economic SupportPolicy Administration, an in-crease of over $1.9 million. Theincrease was provided to pay theDHS share of a collaborativeeffort with the Department ofEconomic Security to develop anaccurate employment servicestracking system for MFIPrecipients.

For Economic Support Opera-tions, the Legislature provided$52.8 million from the GeneralFund, a reduction of $8.2 millionover the adjusted base spendinglevel. The major reduction wasan $8 million reduction infunding for the PRISM andMAXIS computer systems thatsupport the child support en-forcement and support paymentprograms operated by DHS. Thereduction does not reduce spend-ing but is in response to a surplusthat developed in the computersystems fund. An additionalappropriation of almost $2.7million was provided for Eco-nomic Support Operations fromthe HCAF. This amount is equalto the adjusted base spendinglevel from the HCAF for thisprogram.

HEALTH

Minnesota Department ofHealthFirst Special Session Chapter 9appropriated almost $266.2 mil-lion to the Minnesota Depart-ment of Health (MDH), includ-ing about $158.4 million fromthe General Fund, over $55.5million from the SGSR Fund,more than $20 million from theHCAF, and $32 million infederal TANF funds. In addi-tion, MDH received almost$59.3 million in open appropria-tions, the most significant ofwhich is more than $58 millionfrom the Medical Education andResearch Fund to support medi-cal education and research ac-tivities around the state.

Health Systems and SpecialPopulationsMore than $136.1 million wasprovided for this activity, includ-ing about $93.8 million from theGeneral Fund, more than $2.9million from the SGSR fund,almost $7.4 million from theHCAF, and $32 million fromfederal TANF funds.

For Community Health Servicesactivities, about $53.1 millionwas appropriated, includingabout $43.1 million from theGeneral Fund, about $2.7 mil-lion from the SGSR Fund, andalmost $7.4 million from the

HCAF. The General Fundappropriation represented anincrease of about $1.1 millionover the adjusted base fundinglevel for this activity. A dentalstudent loan forgiveness programwas established and funded at$420,000 for dental students whoagree that at least 25 percent oftheir patient encounters for atleast three years will be withpersons on public programs orwho receive a discount on asliding fee basis. The summerhealth care internship programreceived $400,000 to expandinternships to include nursingfacilities and home care provid-ers in addition to hospitals andclinics, and to eliminate the $6per-hour cap on interns’ hourlywages. Another $295,000 wasprovided for grants to encouragemiddle and high school studentsto work and volunteer in long-term care settings. The SGSRFund appropriation for Commu-nity Health Services was $1million more than the adjustedbase funding level. This increasewas provided for ongoing main-tenance and administration of thevital records system, which is acomputerized database of birthand death records. The HCAFappropriation for CommunityHealth Services was identical tothe base funding level.

For the Family Health program,about $82.6 million was pro-

33

vided, including about $50.3million from the General Fund,$254,000 from the SGSR Fund,and $32 million from federalTANF funds. The General Fundappropriation was an increase ofmore than $12.9 million over theadjusted base funding level. Themajor new activity in this areawas a $9.9 million healthdisparities initiative to improvethe health status of the state’sminority populations. WhileMinnesota ranks as one of thehealthiest states in the nation onan overall basis, it has some ofthe widest gaps between themajority white population andthe state’s racial and ethnicminorities on health status mea-surements. The $9.9 million wasallocated as follows: $1 millionfor formula-based grants toAmerican Indian tribal govern-ments to implement culturalinterventions to reduce dispari-ties; $1.2 million for stateadministrative costs; $2.8 mil-

lion for efforts to reduce dispari-ties in infant mortality and childimmunization rates; $500,000for grants to community healthboards to improve access tohealth screening and follow-upservices for foreign-born popu-lations; and $4.4 million forcompetitive grants to reducedisparities in breast and cervicalcancer screening rates, HIV/AIDS and sexually-transmitteddisease infections rates, cardio-vascular disease rates, diabetesrates, and rates of accidentalinjuries and violence. TheLegislature also appropriatedover $2.7 million for the Minne-sota Poison Control System.The base funding for the teenpregnancy prevention programcalled ENABL was reduced by$684,000. About $2.1 millionwas provided for suicide preven-tion grants. Base funding forfamily planning special grantswas reduced by $690,000 in FY2003. Family health programsreceived $254,000 from theSGSR Fund, which was theadjusted base funding level fromthat source. Family healthprograms received $32 millionfrom federal TANF funds, an$18 million increase over theadjusted base. From TANF, $8million was provided for thefamily home visiting programdesigned to foster a healthybeginning for children in fami-lies at or below 200 percent ofthe federal poverty guidelines,

prevent child abuse and neglect,reduce juvenile delinquency,promote positive parenting andresiliency in children, and pro-mote family health and eco-nomic self-sufficiency; $2 mil-lion was allocated for theENABL program, more thanoffsetting the General Fundreduction; $4 million was setaside for efforts to reduce riskybehaviors by youth; and $4million was provided for effortsto reduce infant mortality.

For the Minority Health Pro-gram, $412,000 was providedfrom the General Fund. Thisamount is equal to the program’sadjusted base spending level.

Access and Quality Improve-mentThe Legislature provided almost$56.6 million for this program,including about $26.4 millionfrom the General Fund, about$17.4 million from the SGSRFund, and over $12.8 millionfrom the HCAF.

For Health Policy and SystemsCompliance, over $41.7 millionwas allocated, of which about$23.5 million was from theGeneral Fund, almost $5.4million was from the SGSRFund, and more than $12.8million was from the HCAF.The General Fund appropriationrepresented an increase of al-most $12.5 million over the

34

adjusted base. These increaseswere funded through the inter-governmental transfer mecha-nism, which is explained in theDepartment of Human Servicessection of this document. Theincreases were more than $7.9million for grants to communityclinics and almost $4.6 millionin rural hospital capital improve-ment grants. The SGSR Fundappropriation for Health Policyand Systems Compliance wasequal to adjusted base spending.The HCAF appropriation repre-sented an increase of more than$6.3 million over the adjustedbase. The major increase herewas an allocation of more than$5.4 million for additional ruralhospital capital improvementgrants. In addition, $656,000was provided to extend theHealth Technology AdvisoryCommittee.

For Facility and Provider Com-pliance, about $14.9 million wasprovided, of which about $2.9million was from the GeneralFund and nearly $12 million wasfrom the SGSR Fund. TheGeneral Fund appropriation rep-resents an increase over the baseof almost $2.8 million, all ofwhich was allocated to MDHfunctions tied to the long-termcare initiative. The initiative isdesigned to reduce the state’sreliance on nursing facilities andencourage development of com-munity-based options. MDH

received $1 million for transitionplanning grants to nursing facili-ties to assist them to developstrategic plans that identify theappropriate institutional and non-institutional settings needed tomeet the service needs of olderadults. Another $120,000 wasprovided for grant administra-tion. The Legislature provided$300,000 for MDH to developan alternative nursing homesurvey schedule that focusesinspections on lower-qualityhomes and reduces inspectionsat homes with a good compli-ance record. MDH was directedto seek federal law changesneeded to implement a newinspection process. MDH alsoreceived $1 million for innova-tions in quality demonstrationgrants, plus $120,000 for grantadministration. These grants arefor providers of direct services orhousing to elderly persons forprojects that demonstrate inno-vations and measurable im-provement in resident care,quality of life, use of technology,or customer satisfaction. MDHalso received $120,000 for itscosts in developing a newnursing home reimbursementsystem and $99,000 for its costsin the conduct of a study of thetime spent by nursing facilitystaff with residents in each casemix class. The SGSR Fundappropriation for Facility andProvider Compliance representedan increase of almost $1.6

million over the adjusted base.The agency received $820,000to provide training and consulta-tion to home care providers,especially providers of assistedliving services. The Legislatureauthorized $485,000 for theregulation of supplemental nurs-ing services agencies that supplytemporary staff to nursing facili-ties. The Legislature requiredthese agencies to be registeredwith MDH, established mini-mum standards for agencies, andset a cap on the maximum theycan charge a nursing facility forproviding temporary employeesto the facility. MDH alsoreceived $270,000 to conductinitial Medicare certificationsurveys of health care and homeservice providers that wish toprovide Medicare services. Dueto a lack of federal funding,MDH has been unable toconduct these surveys and alarge backlog of certificationrequests has developed. Theappropriation must be recoveredthrough fees charged for thesurveys.

Health ProtectionThe Legislature provided about$62.1 million for this activity,including almost $27.2 millionfrom the General Fund and over$34.9 million from the SGSR.

For Environmental Health, al-most $5 million was providedfrom the General Fund, an

35

amount equal to the adjustedbase funding level. Almost $28million was provided from theSGSR Fund, an increase of about$3.7 million. MDH received$920,000 to increase testing ofpublic water supplies to ensuresafe drinking water. A $1.3

million increase was approvedfor food, beverage, and lodginginspections. This will allowMDH to increase the frequencyof inspections at food establish-ments and pay for the additionalstaff needed because MDH hasassumed from Cook Countyresponsibility for inspections inthat county. Over $1 million wasprovided for water well manage-ment activities, which includelicensing and training of welldrillers and inspection of wellconstruction.

For Infectious Disease Preven-tion and Control, almost $10

million was provided from theGeneral Fund and $311,000from the SGSR Fund. TheGeneral Fund appropriation rep-resented a reduction of morethan $900,000 from the base.The base was reduced by morethan $1.1 million through a

transfer to DHS of case manage-ment services for persons withHIV. DHS spending wasincreased by a like amount. Thisreduction was partially offset bya $200,000 appropriation toMinneapolis for a community-based health education andpromotion program on foodsafety in the Latino, Somali, andSoutheast Asian communities.The SGSR Fund appropriationfor Infectious Disease Preven-tion and Control represented nochange from the adjusted base.

For the Public Health Labora-tory, over $6 million was

provided from the General Fundand over $3 million from theSGSR Fund. The General Fundappropriation represented a $3.4million increase over the ad-justed base, all of which wasdedicated to an initiative torespond to emerging healththreats, including disease out-breaks, terrorism threats, natu-ral disasters, the spread ofantibiotic-resistant diseases, andcontamination from clandes-tine methamphetamine labs.The SGSR Fund appropriationrepresents a $218,000 basereduction. This reflects adecision to finance core publiclaboratory services from theGeneral Fund rather thanthrough fees, reducing SGSRFund contributions by$368,000. This was somewhat

offset by an appropriation of$150,000 from the SGSR Fundto cover the current costs of thestate’s environmental laboratorycertification program.

Chronic Disease Preventionand ControlAlmost $6.3 million was pro-vided from the General Fund forthis activity, an amount equal toadjusted base-level funding.

Management and Support Ser-vicesOver $11.3 million was providedfor this activity, including about

36

$11 million from the GeneralFund and $306,000 from theSGSR Fund. The only changefrom base-level funding was a$100,000 reduction in Financeand Administration achieved byeliminating one support staffposition in a field office inGreater Minnesota.

Health-Related RegulatoryBoardsFirst Special Session Chapter 9appropriated about $22.6 mil-lion from the SGSR fund tooperate the boards that regulate awide variety of health-relatedservice providers. All boardrevenues are derived from feescollected from the regulatedproviders.

Many of the boards were fundedat the adjusted base level, and theothers received mostly modestfunding increases. The Board ofNursing received the largestincrease of $626,000, whichincluded $266,000 for a staffincrease for the health profes-sionals services program. Thisprogram, which serves all theboards, provides early interven-tion, treatment, and monitoringof health professionals withchemical dependency problemsand other issues that may affecttheir performance. The Board ofNursing also received $360,000in additional funding for itsongoing operational expenses.

Emergency Medical ServicesBoardFirst Special Session Chapter 9provided more than $5.5 millionfrom the General Fund for theEmergency Medical Services(EMS) Board, which regulatesand supports statewide emer-gency medical care. Thisrepresents a General Fund in-crease of almost $4.2 million.However, about $3.7 million ofthat increase simply allocatedGeneral Fund dollars to replaceTrunk Highway Fund appropria-tions previously used to supportthe board. The 2000 Legislatureseverely restricted the use ofTrunk Highway Funds andappropriated General Fund dol-lars as a replacement, but onlyfor fiscal year 2001. In order tomaintain agency services in the2001-2003 biennium, this Gen-eral Fund appropriation wasrequired. The board alsoreceived $600,000 to operate theComprehensive Advanced LifeSupport System (CALS), aprogram that trains rural healthcare providers in a team ap-proach to anticipate, recognize,and treat life-threatening emer-gencies. The board also receivedan open General Fund appropria-tion of about $2.1 million.

Council on DisabilityFirst Special Session Chapter 9provided about $1.4 million forthe operations of the Council on

Disability. Base level fundingfor the council was zero becauseit was scheduled to sunset onJune 30, 2001. However, thesunset date was extended andfunding was restored to theprevious base funding level.

Ombudsman for MentalHealth and Mental Retarda-tionFirst Special Session Chapter 9provided about $2.9 million tooperate the ombudsman’s office.This amount was equal to theoffice’s base funding level.

Ombudsperson for FamiliesFirst Special Session Chapter 9provided $481,000 to operatethis agency, an increase of$124,000 over base level fund-ing. The increase was necessarybecause base level funding didnot cover all expected salary andfringe benefit costs.

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Housing Finance AgencyFirst Special Session Chapter 4,article 1, appropriated more than$129 million to the MinnesotaHousing Finance Agency(MHFA) for housing purposes.Of this amount, about $105.3million was from the GeneralFund and almost $24.3 million isfederal Temporary Assistancefor Needy Families (TANF)funds. This appropriation repre-sents approximately a sevenpercent increase over the previ-ous biennium. This tableprovides a breakdown of majorspending areas for the housingfunds. Other program specificsincluded:

• The Challenge grant fundsmust be used to discount theinterest rate on home improve-ment loans and be matched byfunds from a local unit of gov-ernment or nonprofit organiza-tion, and the loans must be tar-geted to households based onneed.

• $250,000 of the funds forhome ownership educationmust be used to provide ser-vices to non-English speaking

persons, recent immigrants,and historically underservedpopulations.

• $20 million of the funds in theAffordable Rental Investmentfund must be used to finance

acquisition, rehabilitation, anddebt restructuring of federallyassisted rental property.

• $24 million of the funds in theAffordable Rental Investmentfund must be used to finance

MINNESOTA HOUSING FINANCE AGENCYBiennial Appropriations by Program

Program 2001-2003

Challenge Grant $ 24,008,000 Rental Assistance for Mentally Ill 3,400,000 Family Homeless & Prevention 7,500,000 Home Ownership Education 1,966,000 Housing Trust Fund 9,246,000 Affordable Rental Investment Fund 68,000,000 Urban Indian Housing Program 374,000 Tribal Indian Housing Program 3,366,000 Nonprofit Capacity Building Grant 680,000 Housing Rehabilitation & Accessibility Program 8,574,000 Home Ownership Assistance Fund 1,800,000 Manufactured Home Park Redevelopment 400,000 Rental Housing Pilot Program 100,000 Supportive Housing Grants 100,000

Total $ 129,514,000

Housing

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permanent and supportiverental housing units and to pro-vide rental assistance.

• The rental housing pilot pro-gram is a new one-time pro-gram to encourage landlords torent to high-risk tenants withpoor rental histories. TheMHFA must report to the Leg-

islature by January 15, 2003,on the effectiveness of the pi-lot program.

The MHFA appropriations sec-tion also contained cancellationsof the unobligated balances of1997 and 1998 appropriations tothe Affordable Rental Invest-ment fund. These balances were

transferred to the Housing De-velopment fund and appropri-ated as follows: $257,000 to therental housing pilot program;$250,000 for administrative costsof agencies administering thefederal section 8 housing pro-gram; and $420,000 for housingloans and grants for veterans.

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Department of CommerceIn Laws 2001, First SpecialSession Chapter 4, theLegislature appropriated justunder $54.8 million to theDepartment of Commercefor the 2001-03 Biennium.The Department also re-ceived a $1 million appro-priation for fair housingeducation from the RealEstate Education, Research,and Recovery Fund in Laws2001, Chapter 208. Thetable on the right provides alist of funds along with theamounts and percentage oftotal direct appropriations.

DEPARTMENT OF COMMERCE

Biennial Appropriations by Fund

Fund Biennium % of Total

General $51,427,000 92.2%Petroleum Tank 2,148,000 3.9%Workers’ Compensation 1,214,000 2.2%Real Estate Education, Research, and Recovery 1,000,000 1.8%

Total $55,789,000 100.0%

The three largest purpose cat-egories of direct appropriationsto the Department of Commerceare Financial Examinations (23.2percent), Administrative Ser-vices (21.2 percent), and En-forcement and Compliance (20.7percent). The table on the leftprovides a list of appropriationsalong with the amounts andpercentage of total direct appro-priations for each purpose.

DEPARTMENT OF COMMERCE

Biennial Appropriations by Purpose

Purpose Biennium % of Total

Financial Examinations $12,934,000 23.2%Petroleum Tank Release Cleanup Board 2,148,000 3.9%Administrative Services 11,855,000 21.2%Enforcement and Compliance 11,521,000 20.7%Energy 7,693,000 13.8%Telecommunications 1,994,000 3.6%Weights and Measures 6,644,000 11.9%Fair Housing Education 1,000,000 1.8%

Total $55,789,000 100.0%

Commerce

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Department Of TradeAnd Economic DevelopmentChapter 4, article 1, of the FirstSpecial Session appropriatedmore than $80 million to theDepartment of Trade and Eco-nomic Development (DTED).This represents more than a 20percent decrease from thedepartment’s appropriation inthe previous biennium. Thisreduction is primarily due to aone-time appropriation of $20million to the Jobs SkillsPartnership Program during the1999-2001 biennium.

Most of the department’s fund-ing comes from the GeneralFund (93 percent). DTED’sappropriations by fund andpercentage of total funding areshown in the table below. The

three largest areas of spendingfor DTED are business andcommunity development (29.1percent), workforce develop-ment (26.5 percent) and tourism

(25 percent). The table aboveprovides a list of appropriations ,along with the amounts andpercentages of total appropria-tions for each purpose.

Biennial Appropriations by Purpose

Purpose 2001-2003 % o Total

Business and Community Development $23,416,000 29.1% Tourism 20,130,000 25.0% Workforce Development 21,340,000 26.5% Administration 7,191,000 9.0% Trade Office 5,080,000 6.3% Information and Analysis 3,299,000 4.1%

Total $80,456,000 100.0%

DEPARTMENT OF TRADE AND ECONOMIC SECURITY

DEPARTMENT OFTRADE AND ECONOMIC DEVELOPMENT


Fund 2001-2003 % of Total

General $ 74,779,000 93.0%Temporary Assistance to Needy Families 2,750,000 3.4%Environmental Fund 1,400,000 1.7%Special Revenue Fund 1,527,000 1.9%

Total $ 80,456,000 100.0%

Economic Development

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Business and CommunityDevelopment GrantsOf the more than $23 millionappropriated for Business andCommunity DevelopmentGrants, $7.7 million was fortransfer to the Minnesota In-vestment Fund – a decrease ofapproximately $1.3 million fromthe previous biennium. Otherone-time grants included:

• $300,000 to the Rural Policyand Development Center atMinnesota State University atMankato for research andpolicy analysis on emergingeconomic and social issues inrural Minnesota;

• $310,000 to the MetropolitanEconomic Development Asso-ciation for minority businessdevelopment;

• $300,000 for grants to non-profit organizations to provideassistance to self-employmentand microenterprise busi-nesses;

• $35,000 for the Blue Earth ru-ral advanced business facilita-tion program;

• $50,000 for the MinnesotaRural Summit;

• $1 million to a political subdi-vision selected as a site for a

soybean oilseed processingfacility;

• $500,000 to the city of Duluthfor the Duluth TechnologyVillage;

• $75,000 for the West CentralGrowth Alliance to establish aregional marketing pilot pro-gram;

• $150,000 to the city of Irontonfor the Cuyuna Range technol-ogy center; and

• $97,000 for the NeighborhoodDevelopment Center.

In addition, the Governor line-item vetoed th ree one-timegrants, including: $500,000 tothe city of St. Paul for the de-sign of the new Roy Wilkinsauditorium; $100,000 to theAlbert Lea Port Authority toremodel Northaire IndustrialPark; and $300,000 to the St.Paul Port Authority to pur-chase the Trillium site as partof the Trout Brook greenwaycorridor.

Workforce DevelopmentThe $21 million appropriationfor Workforce Developmentincluded: $8.5 million eachyear for the Jobs SkillsPartnership and Pathways

programs; $450,000 each yearfor one-time grants toimmigrant/refugee programs;$330,000 each year for TwinCities Rise; $265,000 eachyear for women’s businessdevelopment programs; and$750,000 for a voucher programto reimburse entities that provideemployment training to low-income individuals.

Office of TourismThe Office of Tourism receivedover $20 million for thebiennium. However, of theamount appropriated formarketing activities, $3.5million each year is contingentupon receipt of an equalcontribution from nonstatesources for joint venturemarketing. The Minnesota filmboard received $829,000 eachyear, of which $500,000 eachyear must be used to reimbursefilm and television producersfor documented wages paid toMinnesotans. The Governorl i n e-i t e m v e toed t woappropriations for tourism,including $150,000 to plan andpromote the 2004 GrandExcursion and $50,000 for theconstruction of a NorthAmerican bear center.

Minnesota TechnologyInc. (MTI)T h e 2 0 0 1 L e g i s l a t u re

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appropriated over $12 millionto MTI, about a 12 percentreduction from the previousbiennial appropriation of $13.7million. Of this appropriation,$5.0 million the first year and$6.1 million the second year arefor the Minnesota TechnologyFund, $875,000 is for MinnesotaProject Innovation, and $50,000is for the Minnesota InventorsCongress.

Department ofEconomic SecurityThe Department of EconomicSecurity (DES) received morethan $80 million for the 2001-2003 biennium. The primaryareas of spending for DESinclude Workplace Services,rehabilitation Services, and StateServices for the Blind. DESreceived almost $24 million forthe biennium for WorkplaceServices for programs, includingthe Displaced HomemakerProgram, youth violenceprevention, the OpportunitiesIndustrialization Center, andyouth intervention programs.Rehab i l i t a t i on Servicesreceived $46.4 million for thebiennium, of which $23.8million is for extendedemployment services forpersons with severe disabilitiesand other programs, includingthe centers for independent

living, employment services forindividuals with mental illness,and vocational rehabilitation.The appropriation for StateServices for the Blind wasapproximately $10 million forthe biennium.

DES was also required toprepare a report for theLegislature on the costs andbenefits of providing paid orinsured wage replacementduring parental leave. Thereport must include estimates ofthe number of employees whocan take parental leave, theimpact on employers of offeringpaid parental leave, and anestimate of the public healthcosts of not providing wagereplacement during parentalleave.

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The appropriations for trans-portation purposes are con-tained in Article 1 of theTransportation, Public Safetyand Judicial AppropriationsOmnibus Bill (First SpecialSession Chapter 8). This billappropriated over $3.5 billionfor the 2001-2003 biennium fortransportation purposes. Thistotal is about a 9.5 percentincrease over the 1999-2001biennium (excluding the one-time transportation capital ap-propriations of $566 millionmade in the 2000 session). Thetotal transportation appropria-tions by fund and the percent-age of funding are shown in thetable on the right.

The Minnesota Department ofTransportation (MnDOT) willreceive the majority of thetransportation funds — over$3.2 billion. The Departmentof Public Safety will receiveapproximately $230 million fortransportation-related activitiesand the Metropolitan Councilwill receive approximately $136million for metropolitan areatransit planning and operations.

Minnesota Department ofTransportationMnDOT will receive $3.2billion for the biennium. Themajority of this funding, about$2.2 billion, is from the TrunkHighway Fund. This fundreceives 62 percent of therevenues generated by thestate’s vehicle registration tax,the state’s 20 cent per gallongas tax , and a percentage of thesales tax on motor vehicles. Italso receives federal highwayaid for road construction. Forthe 2001-2003 biennium, the

federal highway aid is esti-mated to be $550 million, orapproximately 24 percent ofMnDOT’s total Trunk High-way Fund appropriation.

The table on the next pageprovides a breakdown ofMnDOT’s total appropriationand the corresponding percent-age of the total for thedepartment’s primary activi-ties. The amounts shown forcounty state-aids ($732 mil-lion) and municipal state-aids

DEPARTMENT OF TRANSPORTATION



General $ 197,078,000 5.5%Airports 41,355,000 1.1%Highway User 24,014,000 .7%County State Aid Highway 823,443,000 23.0%Municipal State Aid Street 216,296,000 6.1%Trunk Highway 2,272,010,000 63.5%Special Revenue 1,973,000 .1%

Total $ 3,576,169,000 100.00% .

Transportation

44

($213 million) are pass-throughfunds distributed by MnDOTon a formula basis to the state’s87 counties and cities with apopulation over 5,000 for expen-

diture on local road systems.MnDOT also received supple-mentary appropriations from theGeneral Fund for FY 2001,

including $1.0 million for therail service improvement pro-gram and $1.0 for port develop-ment assistance.

DEPARTMENT OF TRANSPORTATIONBiennial Appropriations by Purpose

Purpose 2001-2003 % of Total

Aeronautics $ 41,237,000 1.3%Greater MN Transit 36,699,000 1.1%Railroads & Waterways 3,562,000 .1%Motor Carrier Regulation 8,147,000 .3%State Road Construction 1,129,414,000 35.2%Highway Debt Service 43,463,000 1.4%Research & Investment Management 24,398,000 .8%Central Engineering Services 131,369,000 4.1%Design & Construction Engineering 180,381,000 5.6%State Road Operations 444,465,000 13.9%Electronic Communications 11,363,000 .3%General Support 104,635,000 3.3%Buildings 7,716,000 .2%

MnDOT Total $ 2,166,849,000 67.6%

County State Aids 823,443,000 25.7%Municipal State Aids 216,296,000 6.7%

Total $ 3,206,588,000 100.0%

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MnDOT’s major area of expen-diture, excluding the local roadprogram, is for state roadconstruction, which accounts forover one-half of MnDOT’s totalappropriation. The 2001-2003state road construction appro-priation of $1.13 billion repre-sents the largest constructionprogram in the state’s historyand is an approximate increaseof $92 million, or 9 percent overthe 1999-2001 biennium. Inaddition, during the 2000 legis-lative session, MnDOT receiveda one-time appropriation of $359million for state road construc-tion ($277.5 million from theGeneral Fund and $76.5 millionfrom the Trunk Highway Fund).This appropriation was meant tobe spent over a three-year periodand approximately $270 millionwill be spent during the 2001-2003 biennium, bringing thetotal appropriation for roadconstruction to over $1.4 billion.

The Omnibus Bill also includeda number of transportationpolicy changes related to MnDOToperations. These policy changesinclude:

• The commissioner is prohib-ited until July 1, 2002, fromcanceling or removing fromthe statewide transportationimprovement program theproject that would construct a

new bridge across the St. Croixriver on trunk highway No. 36.

• The commissioner was appro-priated $100,000 to study thefeasibility and desirability ofallowing all vehicles to uselanes on I-394 and I-35W pres-ently restricted to high occu-pancy vehicles.

• The commissioner is prohib-ited from spending state fundson light rail or commuter railunless the funds are specifi-cally appropriated in legisla-tion that identifies the route,including its origin and desti-nation.

• The commissioner is also pro-hibited from contracting forreconstruction of the I-35W/trunk highway No. 62 inter-change until after May 1,2002. The commissioner mustcontract with a consultant toprepare a report and recom-mendations on issues sur-rounding the project and sub-mit a report to the House andSenate Transportation Com-mittees by January 15, 2002.

Metropolitan Council TransitThe Legislature appropriated$136.2 million from the GeneralFund to the Metropolitan Councilfor metropolitan transit planningand operations. This is an

increase of about $23 million, or21 percent, over the previousbiennium. The legislationspecifies that the agency’s budgetbase for the next biennium willbe $131.6 million, a $5 millionreduction from this biennium.This appropriation will allow thecouncil to preserve existinglevels of transit service, providefor very limited serviceexpansion, and will provide acontingency fund for increasesin fuel costs. The legislationprohibits the Council fromspending more than $42.2 millionfor the operation of MetroMobility. The Governor alsorecommended an increase of 25cents in base-level transit fares.This increase took place in Julyof 2001 and is predicted to raiseapproximately $16 million forthe biennium.

Department of Public SafetyThe Omnibus Transportation,Public Safety, and JudicialAppropria tions Bill includedapproximately $230 million forthe Department of Public Safety(DPS) for transportation-relatedactivities. The breakdown ofDPS’s appropriation andpercentage of the totalappropriation by major activityis shown in the table below.

The appropriation for the statepatrol was an approximate $10.2

46

million, or nine percent, increaseover the previous biennium. Thebill specifies that, of thisappropriation, $1.2 million thefirst year and $3.1 million thesecond year are for hiring 65 newstate troopers and for theTrooper Recruit TrainingAcademy.

The appropriation for Driver and

DEPARTMENT OF PUBLIC SAFETY

Biennial Transportation-Related Appropriations by Purpose


Administration & Related Services $ 26,534,000 11.5%State Patrol 124,192,000 54.2%Driver & Vehicle Services (1) 76,050,000 33.1%Traffic Safety 641,000 .3%Pipeline Safety 1,973,000 .9%

Total $ 230,109,000 100.0%

NOTES: (1) Reduction is due to an appropriation of $11.8 million being changedfrom a direct to an open appropriation.

Vehicle Services of $76 millionappears to be a decrease ofapproximately $1.8 from theprevious biennium. However,this is due to the removal of an$11.8 million appropriation formotor vehicle license plateproduction from a directlegislative appropriation to anopen appropriation. When thisopen appropriation is included,

Driver and Vehicle Servicesactually received about a 12.8percent increase over the previousbiennium. Driver and VehicleServices also received FY 2001supplementary appropriations of$875,000 for increased licenseplate costs and $445,000 forincreased costs of producingdrivers’ license cards.

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DEPARTMENT OF AGRICULTURE Biennial Appropriations by Purpose


Protection Service $23,894,000 53.3% Agricultural Marketing and Development 11,155,000 24.9%

Administration and FInancial Assistance 9,801,000 21.9%

Total $44,850,000 100.0%

Department ofAgricultureIn Laws 2001, First SpecialSession Chapter 2, the 2001Legislature directly appro-priated almost $44.9 millionto the Department of Agri-culture for the 2001-2003biennium, which is a 6.4percent reduction over theprevious biennium. Themajor reason for the reduc-tion was a number of one-time appropriations by the

1999 and 2000 Legislatures tothe department that did notcarry forward to the currentbiennium.

The table below provides a listof funds along with the amountsand percentage of total directappropriations.

DEPARTMENT OF AGRICULTURE Biennial Appropriations by Fund


General $44,150,000 98.4%Environmental 700,000 1.6%

Total $44,850,000 100.0%

Agriculture

The largest area of spending by the Deparment of Agriculture is for the AgriculturalProtection Service (53.3 percent). The table above provides a list of appropriations,along with the amounts and percentage of total direct appropriations for each purpose.

48

Two areas of significant in-creases in General Fund appro-priations to the department arefor expansion of the DairyDiagnostics Program and for theMinnesota Certification Pro-gram. The 2001 Legislaturedoubled the amount of fundingfor the Dairy Diagnostics Pro-gram from $1 million to $2million for the biennium. Thenewly created Minnesota Certi-fication Program received$250,000 for the biennium. TheMinnesota Certification Pro-gram was established as a pilotprogram by the 2000 Legislatureand extended by the 2001Legislature until 2007. Theprogram provides certificationfor agricultural production meth-ods to provide assurance forclaims made by participatingbusinesses. The Legislature alsoappropriated $192,000 from theGeneral Fund for a grant for afeedlot EIS (environmental im-pact statement) that was orderedby a district court.

The Legislature increased anumber of fees charged by thedepartment that will lead toincreased statutory appropria-tions from those accounts. Theone significant change is the feesystem for the dairy inspectionprogram. The Legislature estab-lished a new milk procurementfee of 0.71 cents per hundred

weight of all milk purchased bydairy processors. The new feewill raise over $1.3 million for

the biennium and will be used tooffset an administrative reduc-tion in the fluid milk processorassessment that was paid byfluid milk processors only.

Ethanol DevelopmentThe 2001 Legislature did notmake changes to the ethanolproducer payment program toallow additional producers in theprogram. The level of appropria-tion from the open appropriationfor the 2001-2003 biennium isestimated to be just under $70.9million, which is a 1.7 percentreduction in payments under theprogram. The reduction is due toreduced ethanol producer pay-ments at several existing ethanol

plants due to the ten-yearlimitation on payments under theprogram.

Board of Animal HealthIn First Special Session Chapter2, the Legislature appropriatedjust over $5.8 million from theGeneral Fund to the Board ofAnimal Health for the 2001-2003 biennium, which is a 10.1percent reduction over the previ-ous biennium. The reduction isdue to the additional one-timeappropriations made to the boardin the previous biennium forcontrol of pseudorabies. TheLegislature also increased theappropriation to the board forJohne’s disease ($250,000) andfor the avian pneumovirus pro-gram ($80,000).

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Agricu ltural Utilization Re-search InstituteIn First Special Session Chapter2, the 2001 Legislature appropri-ated just over $8.4 million fromthe General Fund to the Agricul-tural Utilization Research Insti-tute (AURI) for the 2001-2003biennium, which is a 3.1 percentincrease over the previous bien-nium. The reason for theincrease was some one-time cutsin appropriations to AURI in theprevious biennium. Of theamount appropriated, approxi-mately $8 million is from theGeneral Fund and includes$400,000 for hybrid tree man-agement research. The remain-ing $400,000 is from thepesticide regulatory account inthe Agricultural Fund for re-search on pesticide use reduc-tion.

Emergency Livestock DiseaseControlIn Chapter 192, the 2001Legislature established emer-gency measures to control live-stock diseases that provide asubstantial and imminent threatto Minnesota’s domestic animalpopulation. If the Governordeclares a livestock diseaseemergency, the law allows theBoard of Animal Health, itsexecutive director, or a desig-nated veterinarian to issue orderstemporarily restricting the move-ment of people, livestock,machinery, and personal prop-erty out of quarantine zones.The law allows the Governor tocommandeer private propertyfor disposal of diseased ani-mals where adequate land inthe area that is necessary to

dispose of the animals cannotbe obtained voluntarily. Live-stock owners with destroyedlivestock and landownerswhose property has been tem-porarily commandeered areeligible for compensation forlosses and damages. Themotivation for the emergencymeasures was the concern overthe potential threat of foot andmouth disease.

Minnesota HorticulturalSocietyIn First Special Session Chapter2, the 2001 Legislatureapproriated $164,000 to theMinnesota Horticultural Societyfor the 2001-2003 biennium,which is the same level of fund-ing as the previous biennium.

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Department ofNatural ResourcesIn Laws 2001, First SpecialSession Chapter 2, the 2001Legislature appropriated justover $472.5 million to theDepartment of Natural Re-sources (DNR) for the 2001-2003 biennium, which is a 6.3percent increase in direct appro-priations over the last biennium.In addition to a three percentbudget increase for inflation, theother major reason for theincrease over the previous bien-nium was the full two-yearfunding to the DNR for the 2001-

2003 biennium from the lotteryin lieu of sales tax money thatwas newly dedicated to the DNRby the 2000 Legislature andrevenue from game and fishlicense increases enacted by the2000 Legislature. The previousbiennium only included fundingfrom these sources in the secondyear of the biennium.

The two largest direct appropria-tion sources for the DNR are theGeneral Fund (47.3 percent) andthe Game and Fish Fund (33.6percent). One change worthy of

note is that revenue from statepark vehicle entry permits andcamping fees is now deposited inthe Natural Resources Fundinstead of the General Fund.With this shift of almost $14million in fee revenue to theNatural Resources Fund, thepercentage of overall funding tothe DNR from the General Fundis substantially lower than theprevious biennium. The tablebelow provides a list of fundsalong with the amounts andpercentage of total direct appro-priations.

DEPARTMENT OF NATURAL RESOURCES Biennial Appropriations by Fund


General $223,347,000 47.3% Natural Resources 90,091,000 19.1% Game and Fish 158,882,000 33.6% Solid Waste 200,000 0.0%

Total $472,520,000 100.0%

Natural Resources

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The three largest purpose catego-ries of direct appropriations to theDNR are park and recreation areamanagement (17.2 percent), forestmanagement (15.6 percent), andoperations support (14.2 per-cent). In previous biennia, thelargest purpose category ofappropriation was fish andwildlife. Under the DNR’sreorganization, the Fish andWildlife Division was split intothree divisions. If the percentageof total for the fish management(12 percent), wildlife manage-ment (9.8 percent), and ecologi-cal services (four percent) is

added together, the total of 25.8percent is still the largest overallspending area of the DNR. Thetable below provides a list of

appropriations along with theamounts and percentage of totaldirect appropriations for eachpurpose.

DEPARTMENT OF NATURAL RESOURCESBiennial Appropriations by Purpose


Land and Mineral Resources Management $14,352,000 3.0%Water Resources Management 24,955,000 5.3%Forest Management 73,896,000 15.6%Parks and Recreation Management 81,463,000 17.2%Trails and Waterways Management 38,879,000 8.2%Fish Management 56,640,000 12.0%Wildlife Management 46,469,000 9.8%Ecological Services 18,940,000 4.0%Enforcement 49,960,000 10.6%Operations Support 66,966,000 14.2%

Total $472,520,000 100.0%

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Included in the General Fundappropriations to the DNR are:

• a $2 million increase (to $8 mil-lion from $6 million for the bi-ennium) in base appropriationsfor metropolitan park mainte-nance and operation funding;

• a $2 million increase in forestmanagement activities; and

• a $749,000 increase for hiringnew conservation officers.

Not included was $50,000 for agrant to the City of Taylors Fallsfor fire and rescue operations atInterstate State Park that wasvetoed by the Governor.

In First Special Session Chapter12, the Legislature appropriated$2 million from bond funds tothe DNR for flood hazardmitigation grants.

Board of Water and SoilResourcesIn Laws 2001, First SpecialSession Chapter 2, the 2001Legislature appropriated almost$38 million to the Board ofWater and Soil Resources for the2001-2003 biennium, which is a6.2 percent decrease in directappropriations over the lastbiennium. The decrease inappropriations to the board ismostly due to several one-timeappropriations made by the 2000Legislature, including over $2.6million for an agricultural landset-aside program.

Included in the appropriations tothe board are base increases forfeedlot cost-share grants (over$1.2 million) and general servicesgrants to soil and waterconservation districts ($270,000).The Legislature also provided anadditional $100,000 to the boardfor reimbursement to the town ofWest Newton for excessive costsof a wastewater treatment system.

In First Special Session Chapter12 (the capital budget), theLegislature appropriated justunder $53.5 mi l l ion to theboard from the bond proceeds.Of this amount, just under$51.5 mi l l ion is for theCo ns e r vat ion

R e s e r v e

Enhancement Program (CREP)and $2 million for restoration ofwetlands necessary because oflocal road projects. Theadditional money for CREP,along with 2000 appropriations,will fully fund the state portionnecessary to leverage $163million in federal funds topurchase perpetual easements ofmarginal agricultural lands in theMinnesota River Valley.

Zoological BoardIn First Special Session Chapter2, the 2001 Legislatureappropriated just over $15.4million to the Zoological Boardfor the 2001-2003 biennium,which is a 6.8 percent increase indirect appropriations over the lastbiennium. The increase is due todirect funding of the MinnesotaZoological Garden from theportion of the lottery in lieu of

sales tax revenue dedicated to theMinnesota Zoological Garden.

M i n n e s o t a - W i s c o n s i nBoundary Area CommissionIn Laws 2001, First SpecialSession Chapter 2, the 2001Legislature appropriated$393,000 to the Minnesota-Wisconsin Boundary AreaCommission for the 2001-2003biennium, which is a 5.9 percentincrease over the last biennium.Of this amount, $322,000 isfrom the General Fund and$71,000 is from the NaturalResources Fund.

Because Minneso ta’s ap-propriation is cont ingent onan equa l appropr i at ion fromthe s ta te of Wisconsin andthe Wisconsin Legislaturediscontinued funding theM i n n e s o t a - W i s c o n s i nBoundary Area Commission,the commission will bediscontinuing its activities andmost of the money appropriatedto the commission under thislaw will not be expended.

Science Museum of MinnesotaIn First Special Session Chapter 2,the 2001 Legislature appropriated$2.6 mill ion to the ScienceMuseum of Minnesota for the2001-2003 biennium, which is an11.7 percent increase over the lastbiennium. The increase is due tothe decision by the 2001Legislature to increase the stateappropriation for operatingexpenditures at the ScienceMuseum.

53

Minnesota ResourcesIn First Special Session Chapter 2,the 2001 Legislature appropriatedjust over $49.5 million from fourfunds used for natural resourcesprojects that are based onrecommendations of the LegislativeCommission on MinnesotaResources. The level of fundingfor the 2001-2003 biennium is a22.3 percent increase over theprevious biennium and is mostlydue to the increased balance of theprincipal amount in the MinnesotaEnvironment and NaturalResources Trust Fund. TheMinnesota Constitution providesthat the Legislature may annuallyspend 5.5 percent of the principalamount in the Trust Fund beforethe beginning of the biennium.With 40 percent of the netproceeds from the State Lotterydedicated to the Trust Fund, theprincipal balance in the fund hasbeen increasing.

The two major sources of fundingfor Minnesota Resources projectsare the Minnesota Environmentand Natural Resources Trust Fund(69 percent) and the MinnesotaFuture Resources Fund (30.5percent). The table above aboveprovides a list of funds along withthe amounts and percentages oftotal funding.

The two areas of spendingreceiving the largest appropriationswere recreation (46.8 percent) and

fish and wildlife habitat (36.9percent). The table below providesa list of appropriations along withthe appropriation amounts andpercentage of total funding foreach of the categories.

Not included in the appropriationtotals are $275,000 from the

MINNESOTA RESOURCES Biennial Appropriations by Fund


Minnesota Future Resources $15,110,000 30.5%Environment and Natural Resources Trust 34,165,000 69.0%Oil Overcharge 180,000 0.4%Great Lakes Protection 87,000 0.2%

Total $49,542,000 100.0%

Minnesota Future Resources Fundfor green building infrastructuredesign strategies and $455,000from the Minnesota Environmentand Natural Resources TrustFund for a television series on thehistory of Minnesota’s naturallandscapes that were vetoed bythe Governor.

MINNESOTA RESOURCES Biennial Appropriations by Purpose


Administration $ 1,535,000 3.1%Fish and Wildlife Habitat 18,280,000 36.9%Recreation 23,180,000 46.8%Water Resources 1,970,000 4.0%Land Use and Natural Resource Information 1,777,000 3.6%Agriculture and Natural Resource Industries 740,000 1.5%Energy 90,000 0.2%Environmental Education 1,970,000 4.0%

Total $49,542,000 100.0%

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Pollution Control AgencyIn Laws 2001, First SpecialSession Chapter 2, the 2001Legislature appropriated almost$104.4 million in direct appro-

priations to the Pollution ControlAgency (PCA) for the 2001-2003 biennium, which is a 7.8percent increase over the lastbiennium. In addition to a threepercent base increase for infla-tion, the Legislature appropri-

ated money for new budgetinitiatives for feedlot permitting($1.45 million), county feedlotadministrative grants ($1 mil-lion), Empire Building site

remediation ($1 million), and airmonitoring ($250,000).

The two largest sources ofappropriations for the PCA arethe Environmental Fund (42.6percent) and the General Fund

(35.6 percent). The table belowprovides a list of the funds alongwith the amounts and percentageof total direct appropriations tothe PCA.

The three largest purpose cat-egories of direct appropriationsto the PCA are protection of thewater (31.4 percent), integratedenvironmental programs (30percent), and protection of theland (19.5 percent).

POLLUTION CONTROL AGENCY Biennial Appropriations by Fund


General $37,115,000 3 5.6% Petroleum Tank 7,127,000 6.8% State Government Special Revenue 95,000 42.6% Solid Waste 14,623,000 14.0% Metro Landfill Contingency Action Trust 1,000,000 1.0%

Total $104,396,000 100.0%

Environment

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The table below provides a listof appropriations along with theamounts and percentage of totaldirect appropriations for eachpurpose.

The 2001 Legislature also pro-vided for the repayment ofmoney transferred in 1994 fromthe Metropolitan Landfill Con-tingency Action Trust (MLCAT)Fund to the Solid Waste Fund(formerly called the LandfillCleanup Account). The moneywas transferred in 1994 to helpwith cash flow needs of thenewly created Closed LandfillCleanup Program. The 2001Legislature provided for theimmediate repayment of theoriginal amount transferred (justover $9.5 million) and for theeventual transfer, as cash flow

permits, of the interest accumu-lated on the original transfer(almost $3.7 million). TheLegislature also authorized theuse of the MLCAT Fund for

cleanup of the Pig’s Eye dump inSt. Paul. The total cost to cleanthe dump over the next fouryears is estimated to be around$7.1 million.

In First Special Session Chapter12, the Legislature appropriated$20.5 million from the BondProceeds Fund for the ClosedLandfill Cleanup Program. Themoney appropriated will par-tially offset the cancellation ofthe remaining balance in the1994 bond authorization. The1994 bond authorization wascanceled by the Commissioner

of Finance, based on a generallaw requiring the cancellation ofunused bonding authority afterfour years.

Office of Environmental AssistanceIn First Special Session Chapter2, the 2001 Legislature appropri-ated just over $55.4 million tothe Office of EnvironmentalAssistance (OEA) for the 2001-2003 biennium, which is a 28percent increase over the previ-ous biennium. The reason for thelarge increase was the appropria-tion of $12 million from theSolid Waste Fund for paymentsunder the newly created MixedMunicipal Solid Waste (MMSW)Processing Payment Program.Of the total appropriations to the

POLLUTION CONTROL AGENCY Biennial Appropriations by Purpose

Purpose 2001-2003 % of Totalund FY 2002 FY 2003 Biennium % of Total

Protection of the Water $ 32,741,000 31.4% Protection of the Air 15,592,000 14.9% Protection of the Land 20,380,000 19.5% Integrated Env. Programs 31,368,000 30.0% Administrative Support 4,315,000 4.1%

Total $104,396,000 100.0%

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OEA, just over $40.8 million isfrom the General Fund (73.7percent of the total appropria-tions to the OEA); $12 millionfor the new MMSW ProcessingPayment Program is from theSolid Waste Fund (21.6 percentof the total); and just over $2.6million from the EnvironmentalFund (4.7 percent of the total).Within the General Fund appro-priation is $28 million forrecycling grants to countiesbased on population. Therecycling grants program wasestablished as part of 1989recycling legislation commonlyreferred to as SCORE (SelectCommittee on Recycling and theEnvironment).

The newly created MMSWProcessing Payment Program isa grant program to countiesbased on the amount of MMSWgenerated in the county that isprocessed into energy or com-post. The payment is $5 for eachton of the county’s MMSW thatis processed from July 1, 2001,to June 30, 2005. As mentionedabove, the Legislature appropri-ated $12 million ($6 million peryear) for the program for the2001-2003 biennium.

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Minnesota Energy Securityand Reliability ActThe 2001 Legislature enactedsignificant, comprehensive en-ergy legislation in Chapter 212,entitled the Minnesota EnergySecurity and Reliability Act.The Act, responding to aprojected shortage in regionalelectric energy generation ca-pacity over the next decade,contains several provisions in-tended to ensure that the state hasthe essential energy infrastruc-ture necessary to meet theprojected increase in demand.The major provisions of theMinnesota Energy Security andReliability act are outlinedbelow.

Sustainable Building Guide-linesThe Minnesota Energy Securityand Reliability Act authorizesthe Commissioner of Commerceto transfer up to $500,000, asneeded annually, to the Commis-sioner of Administration for theDepartment of Administration todevelop, in conjunction withother agencies, sustainable build-ing guidelines which are to be

mandatory for all new buildingsreceiving funding from the BondProceeds Fund after January2004. The primary objectives ofthe sustainable building guide-lines are to ensure that all newbuildings built with bond pro-ceeds initially exceed by at least30 percent the existing Minne-sota Energy Code, as establishedin Minnesota Rules, Chapter7676, and focus on achieving thelowest lifetime cost for newbuildings while creating andmaintaining a healthy environ-ment.

Energy Efficiency BenchmarksThe Minnesota Energy Securityand Reliability Act requires theDepartment of Administration tocollect and maintain informationon energy usage in all existingpublic buildings for the purposeof establishing energy efficiencybenchmarks and energy conser-vation goals. The department isalso required, under Chapter212, to develop a comprehensiveplan by 2003 to maximizeelectrical and thermal energyefficiency in existing publicbuildings through conservation

measures.

Joint Ventures by UtilitiesThe Minnesota Energy Securityand Reliability Act authorizedmunicipal utilities to enter intojoint ventures with other munici-pal utilities, municipal poweragencies, cooperative associa-tions or investor-owned utilitiesto provide retail electric service,subject to ratification by thegoverning bodies of the respec-tive utilities.

Distributed GenerationThe act also addressed theemerging issue of on-site distrib-uted generations. The act directsthe Public Utilities Commission(PUC) to establish standards forutility tariffs for interconnectionand parallel operation of distrib-uted generation of no more thanten megawatts fueled by clean orrenewable fuels.

Consumer ProtectionThe act modified the rulesgoverning the disconnection ofresidential utility customers whoare unable to pay their utilitybills during cold weather to

Regulated Industries

58

include all households whoseincome is less than 50 percent ofthe state median income. The actalso requires utilities to offerbudget billing plans. Municipalutilities serving less than 3,000customers are exempt from thisrequirement, while municipalutilities serving more than 3,000are required to comply withintwo years. The Legislature alsoprovided additional disconnec-tion protections for customerswith medically necessary elec-tric devices in their homes.

Incentive PaymentsThe act extended the eligibilityfor payments under the renew-able energy production incentiveprogram for qualified hydro-electric facilities, and providedeligibility for wind energy con-version systems meeting certainconditions.

Distribution ReliabilityIn addition to the projectedelectric generation capacity short-age, the Legislature addressedthe other critical issue facing thestate’s power grid, namely thereliability of the state’s existingelectric energy distribution in-frastructure. The Legislaturedirected the PUC and eachcooperative electrical associa-tion and municipal utility toadopt standards for safety, reli-ability, and service quality fordistribution utilities. The Legis-

lature also directed the Commis-sioner of Commerce to provide acost benefit analysis of thesestandards.

Power Plant Siting and Trans-mission Line RoutingCiting the lengthy process re-quired in gaining approval ofproposed power plant sites andtransmission line routes, theLegislature streamlined the ap-proval process for certain pro-posed projects. The act extendedthe Environmental QualityBoard’s (EQB) jurisdiction totransmission lines of 100 kilo-volts and above, but required theEQB to incorporate into oneproceeding the route selectionfor high voltage transmissionlines directly associated withand necessary to connect aproposed large electric generat-ing plant to the transmissionsystem. Additionally, the actspecifies that when the PublicUtility Commission has deter-mined the need for a project, theEQB may not consider issuesof need in the siting or routingof the project. The act alsoprovided for EQB issuance ofemergency permits for the con-struction of large generatingplants or high voltage transmis-sion lines due to major unfore-seen events, and shortened thetime allowed for the EQB tomake its final decision onprojects that are subject to the

full permitting process. The actestablished an even shorter timelimit in the permitting process,allowing only 90 days to finaldecision for small generationfacilities, facilities fueled bynatural gas, transmission linesbetween 100 and 200 kilovolts,and upgrades to existing trans-mission lines.

Conservation and RenewableEnergy ObjectivesThe act tightened the definitionof what constitutes an eligibleenergy conservation improve-ment for the purpose of thestate’s Conservation Improve-ment Plan. The act alsoincreased the conservation ex-penditure requirement on mu-nicipal utilities to 1.5 percent oftheir gross operating revenuesfrom the sale of electricity andrequired similar expenditure lev-els in cooperative electric asso-ciations to be phased in by 2005.The act also required each utilityto use five percent of its requiredconservation expenditures ondistributed generation or renew-able energy projects until thisrequirement expires on May 30,2006. The Legislature alsorequired each electric utility tomake a good faith effort toensure that ten percent of theelectricity it provides to retailcustomers be derived fromrenewable energy by 2015.

59

OTHERENERGY-RELATED

LEGISLATION

Bio-Diesel Emissions StudyIn Chapter 2 of the 2001 FirstSpecial Session, the Legislatureappropriated $90,000 in FY2001 from Oil OverchargeMoney to the Commissioner ofAdministration for an agreementwith the University of Minne-sota to evaluate the impact on airquality of emissions from the useof bio-diesel fuel in diesel-powered generators. Addition-ally, the Legislature extendeduntil June 30, 2004, the avail-ability of the appropriation inMinnesota Laws 1999, chapter231, section 16, subdivision 9,paragraph (c), to evaluate bio-diesel made from waste fats andoils.

Energy ConservationIn Chapter 4 of the 2001 FirstSpecial Session, the Legislatureappropriated $1.2 million overthe biennium to the Energy andConservation Account for pro-grams administered by the Com-missioner of Economic Securityto improve the energy efficiencyof residential oil-fired heatingplants in low income house-holds.

Energy Loan Program Exten-sionThe 2001 Legislature, in Chap-

ter 147, authorized the exten-sion of the rental energy revolv-ing loan program funds, asappropriated in Minnesota Laws1993, chapter 369, section 11,subdivision 6, from the OilOvercharge Fund, to owner-occupied residential housing,and eliminated the metropolitanarea eligibility restriction.

Propane Education and Re-search CouncilMinnesota Laws 2001, Chapter130, allows for the creation of apropane education and researchcouncil for the purpose ofestablishing, supporting, or con-ducting research, training, andeducation programs concerningthe safe and efficient use ofpropane, to be funded by duescollected from propane produc-ers and propane retail marketers.The law also contains a provi-sion to repeal the legislationauthorizing the creation of thecouncil by August 1, 2009, orAugust 1, 2004, if no propaneeducation and research councilhas been established by that date.

Energy AssistanceIn Chapter 2, the 2001 Legisla-ture authorized the Commis-sioner of Economic Security toexpend $12.2 million in federalfunds allocated to the state forthe energy assistance programunder Minnesota Statutes, sec-tion 119A.42.

TELECOMMUNICATIONS

Enhanced Wireless 911In Chapter 10 of the First SpecialSession 2001, the Legislatureappropriated nearly $4 millionfor FY 2002 from the 911 Fundfor increased costs associatedwith wireless-enhanced 911 andfor reimbursements to providersfor prior period services not yetcertified by the PUC. Theappropriation from the specialrevenue fund is for recurringcosts of 911 emergency tele-phone service.

911 Service FeeAdditionally, in the First SpecialSession 2001, Chapter 10, theLegislature established a univer-sal emergency telephone servicefee of 27 cents for each customeraccess line to cover the costs ofongoing maintenance and re-lated improvements for trunkingand central office switchingequipment for minimum 911emergency telephone service,plus administrative and staffingcosts of the Department ofAdministration related to man-aging the 911 emergency tele-phone service program.

60

Public Safety and Judiciary ap-propriations are contained in twoacts. Funding for the Departmentof Corrections, the Board ofPublic Defense, the Ombudsmanfor Corrections, and the Sentenc-ing Guidelines Commission arepart of First Special SessionChapter 9, the Health, HumanServices, and Corrections Appro-priations Act. The General Fundtotal of this is about $842.2million. Funding for the courts,the Department of Public Safety,and related agencies is containedin First Special Session Chapter 8,the Transportation and PublicSafety Appropriations Act. TheGeneral Fund total of this is about$519.4 million. Combined, thetotal appropriations for PublicSafety and Judiciary are approxi-mately $1.4 billion.

DEPARTMENT OFCORRECTIONS

The Health, Human Services andCorrections Appropriation Actprovided approximately $735million for the Department ofCorrections. The biennial appro-priation of $458 million for adultcorrectional institutions includesbase budget reductions of ap-proximately $18.4 million, whichwere the result of the department’s

per diem cost reduction plan.Caseload increases accounted foran additional $16.3 million, andsalary and health benefit in-creases accounted for a $14.9million increase. The Legislatureappropriated $2 million for capi-tal cost efficiencies (mainlyincreased security measures) and$2.1 million for increased costsrelated to the new felony DrivingWhile Intoxicated (DWI) Lawadopted in 2001.

Juvenile Services were funded atapproximately $28.3 million, withthe only increase being a salaryand health benefit increase of$879,000.

Approximately $223 million wasappropriated to Community Ser-vices. Of thisamount, $15million is foran increase inthe CommunityCorrections Act(CCA) subsidy.The Legislatureappropr iated$3.7 million forthe supervisionof released sexoffenders, and$1.9 millionand $960,000

were appropriated for the reim-bursement of county (non-CCA)and state probation officers re-spectively. Program cuts, particu-larly a reduction in the extendedjurisdiction juvenile grant pro-gram, saved approximately $2.9million. Finally, $600,000 wasappropriated for restorative jus-tice programs at the county level.

Management Services was fundedat $25.9 million. This appropria-tion does not include an additional$1.5 million to ManagementServices for the Department ofCorrections component of theCriminal Justice Information Sys-tem (CRIMNET), which wasfunded in the Transportation andPublic Safety Bill.

Public Safety and Judiciary

61

Ombudsman for CorrectionsThe 2001 Legislature appropri-ated $659,000 from the GeneralFund to the Ombudsman forCorrections. This represents a$211,000 cut in the agency’sbase funding.

Sentencing GuidelinesThe Legislature appropriatedapproximately $1.1 million fromthe General Fund to the Sentenc-ing Guidelines Commission.

Public DefenseThe 2001 Legislature appropri-ated approximately $105.4 mil-lion to the Board of PublicDefense. This appropriationincluded over $9.2 million insalary and benefit increases,

$325,000 for an increase inPublic Defense Corporationfunding, and $125,000 for in-creased costs related to thefelony DWI offense created bythe Legislature.

CourtsThe Legislature appropriated$77.5 million to the SupremeCourt, including salary andbenefit increases of approxi-mately $3.4 million. In addition,the Legislature appropriated $3million to increase nonjudicialcourt employment to enhanceSupreme Court infrastructureand increased state spending onCivil Legal Services by $2.5million. Finally, the Legislatureappropriated $15 million for the


Criminal Justice Biennial Appropriations

Division 2001-2002

Bureau of Criminal Apprehension $ 67,186,000 Crime Victims Services Center 64,488,000 Law Enforcement and Community Grants 13,078,000 Emergency Management 11,033,000 Fire Marshal 6,643,000 Alcohol and Gambling Enforcement 3,686,000

Minnesota Criminal In-formation System(MNCIS), which is thecourt component of thestatewide CRIMNET.

The Court of Appealsreceived a biennial ap-propriation of approxi-mately $15.7 million,$1.8 million of which isfor salary and benefitincreases.

The District Courts re-ceived $247.3 millionfor the biennium, includ-ing $2.3 million for fivenew judgeships, $29.2

million for court salary andbenefit increases statewide, $12.2million for the state takeover ofthe District Courts, and $1.6million for court initiatives, suchas community courts in Hennepinand Ramsey counties, and courtfine screener-collectors state-wide. The latter will ensureincreased collections of criminalfines imposed by the courts.

Tax CourtThe Legislature appropriatedapproximately $1.5 million tothe Tax Court.

Board of Judicial StandardsThe Legislature appropriated$497,000 to the Board ofJudicial Standards.

62

Peace Officer Standards andTraining BoardThe Legislature appropriatedapproximately $9.4 million fromthe Special Revenue Fund to thePeace Officer Standards andTraining Board.

Private Detectives BoardThe Legislature appropriated$292,000 from the General Fundto the Private Detectives Boardfor the biennium.

Human RightsA biennial appropriation ofapproximately $8.2 million wasmade to the Department ofHuman Rights.

Uniform Laws CommissionThe Legislature appropriated$79,000 from the General Fundto the Uniform Laws Commis-sion.

Crime Victims OmbudsmanThe Legislature appropriated$811,000 from the General Fundto the Crime VictimsOmbusdman.


The Legislature appropriatedapproximately $166 million fromthe General Fund to the Depart-ment of Public Safety forcriminal justice purposes.

The major initiative in theBureau of Criminal Apprehen-sion (BCA) appropriation ofover $67 million was $10.5mill ion for the Departmentof Public Safety CriminalJustice Information System(CRIMNET). Of that amount,$4 million is for creating theinformation system infrastruc-ture, $3 million is for grants tocounties to integrate with thestate system, $2 million is foreliminating the current backlogof criminal files at the BCA, and$1.5 million is for increasedstaffing. In addition, the Legis-lature appropriated $300,000 forovertime compensation of BCAinvestigators. Finally, the Legis-lature approved the Governor’sproposal to permanently fund 14existing forensic scientist posi-tions with General Fund monies,and four positions with Trunk

Highway Fund monies.

Other major initiatives in theDepartment of Public Safetybudget included a $2 millionincrease for battered women’sshelters, a $1.5 million increasein Gang Strike Force grants,$800,000 for overtime compen-sation grants to local policedepartments, and $471,000 forthe detection and destruction ofmethamphetamine labs.

Finally, the Legislature appro-priated $4.3 million for anti-racial profiling initiatives, in-cluding cameras in squad carsand training for law enforce-ment. To pay for the anti-racialprofiling initiatives, the Legisla-ture increased the Criminal andTraffic Fine Surcharge (Minne-sota Statutes, section 357.021)from $25 to $28.

63

State DepartmentsFirst Special Session Chapter 10funded state agencies, the Legis-lature, and constitutional officesfor the 2001-2003 biennium.The law spent $774.6 million forthe two-year budget.

LegislatureThe Legislature was appropri-ated roughly $67.8 million in2002 and $68.8 million in 2003,with all but $150,000 in healthcare access funds coming fromthe state’s General Fund. Ofthese funds, $24 million in 2002and $22.9 million in 2003 is forthe Senate, $28 million in 2002and $30.3 million in 2003 is forthe House, and $10.2 million in2002 and $10.06 million in 2003is for the Legislative Coordinat-ing Commission.

Constitutional OfficesThe Governor and LieutenantGovernor were appropriatedabout $4.6 million in 2002 andabout $4.7 million in 2003 foroperations of those offices.

The State Auditor was appropri-ated about $10.1 million in 2002and about 10.3 million in 2003for operations of that office. The

State Treasurer was appropriatedabout $2.3 million each year.The Attorney General was ap-propriated about $29.3 million in2002 and about $30 million in2003 for operations; the bulk ofthese funds came from theGeneral Fund, with small appro-priations from the Special Rev-enue, Environmental, and SolidWaste Funds. The Secretary ofState was appropriated about$7.4 million in 2002 and about$7.5 million in 2003, whichincludes additional funds fornew duties related to the Uni-form Commercial Code.

State Agencies and BoardsThe Campaign Finance andPublic Disclosure Board wasappropriated $674,000 in 2002and $702,000 in 2003. The StateInvestment Board received about$2.4 million in 2002 and about$2.5 million in 2003. The Officeof Administrative Hearings wasappropriated about $7.4 millionin 2002 and about $7.9 million in2003. The Office of Strategicand Long-Range Planning re-ceived about $5.6 million in2003 and about $5.0 million in2003, including amounts forgrants to regional development

commissions, environmental im-pact statements on animal agri-culture, and I-35W corridorplanning.

The Department of Administra-tion was appropriated about$67.6 million in 2002 and about$47 million in 2003, which wentfor agency operations, the Officeof Technology, the Inter-Tech-nologies Group, the FacilitiesManagement Division, and theManagement Services Division.Portions of the budget are alsofor public broadcasting, includ-ing approximately $7.8 millionin the first year for grants topublic television to assist withdigital conversion.

The Capitol Area Architecturaland Planning Board was appro-priated $315,000 in 2002 and$323,000 in 2003. The Depart-ment of Finance received about$18.2 million in 2002 and about$18.6 million in 2003. TheDepartment of Employee Rela-tions was appropriated about$8.2 million in 2002 and about$8.5 million in 2003.

The Department of Revenue wasappropriated about $95.3 mil-

Local and Metropolitan Affairsand State Government

64

lion in 2002 and about $96.5million in 2003. The bulk ofthese funds are from the GeneralFund with additional smalleramounts from the Health CareAccess, Highway User TaxDistribution, Environmental, andSolid Waste funds.

The Department of MilitaryAffairs was appropriated about$14.1 million in 2002 and about$14 million in 2003.

The Board of Arts was appropri-ated about $13.1 million eachyear. The Minnesota Humani-ties Commission received about$1 million each year. TheMinnesota State Retirement Sys-tem was appropriated about $9.3million in 2002 and about $9.9million in 2003. The State Boardof Government Innovation andCooperation received $512,000in 2002 and $518,000 in 2003.

The Commissioner of HumanServices was appropriated$750,000 from state lottery prizefunds for a grant to ProjectTurnabout in Granite Falls for afacility that was destroyed by theGranite Falls tornado.

The Amateur Sports Commis-sion was appropriated about $1.3million in 2002 and $677,000 in2003. The Legislature appropri-ated $3.5 million each year fromthe General Fund to the General

Contingent accounts to pay forclaims against the state.

Legislative ProvisionsIn addition to these appropria-tions, the State GovernmentOmnibus Bill included provi-sions to increase the salaries ofconstitutional officers, with theexception of the Governor.These increases will take effectJanuary 6, 2003. The act alsocontained a provision requiring acost-benefit analysis that showsa positive benefit for the ap-proval of any public transitproject. The law allows legisla-tive employees to work inexecutive agencies during theinterim between legislative ses-sions. The law reduces marriagelicense fees for couples whohave undergone premarital coun-seling. The law increases tuitionand textbook reimbursementgrant amounts for NationalGuard students. A $1.9 millionappropriation was made to theCommissioner of Administra-tion for upgrading electionequipment.

The law increases tuition and textbookreimbursement grant

amounts forNational Guard

students.

65

Campaign FinanceLaws 2001, First Special Sessionchapter 10, article 18, section 2,provides for earlier payment ofpublic campaign money tocandidates who survive the stateprimary. Under the former law,candidates were paid moneyfrom their party account imme-diately following the state pri-mary but were not paid moneyfrom the general account untilafter the general election inNovember. Payments from thegeneral account were made onlyto statewide candidates who hadreceived at least five percent ofthe vote in the general electionand legislative candidates whohad received at least ten percentof the vote. That provisionforced candidates, like JesseVentura in 1998, to borrowmoney in anticipation of receiv-ing the public subsidy after thegeneral election. The new lawpays money from both the partyaccount and the general accountto candidates as soon as theresults of the state primary areknown. Instead of limiting thepayment of general accountmoney to candidates who re-ceive a certain percentage of thevote in the general election, the

new law limits the payment tocandidates of a major politicalparty; that is, a party whosecandidate has received at leastfive percent of the vote at the lastelection for constitutional of-ficer, U.S. Senator, or President.In addition, the new law requiresa candidate to agree to spend orpromise to spend 50 percent ofthe money from the generalaccount no later than 17 daysbefore the general election.

Laws 2001, First SpecialSession chapter 10, article18, section 26, creates avoting equipment grant

account ...

Voting EquipmentLaws 2001, First Special Sessionchapter 10, article 18, section 26,creates a voting equipment grantaccount to provide grants topolitical subdivisions to pur-chase precinct-based optical scanballot tabulation equipment. Theequipment must permit the voterto verify and correct any errors

on the ballot, including bothundervotes and overvotes. Thegrants will be made by theCommissioner of Administra-tion after receiving recommen-dations from the Secretary ofState. The political subdivisionmust match the state grant withan equal amount, which may notcome from state or federalmoney. $1.9 million wasappropriated from the GeneralFund for the grant account.

Ethics in Government

66

Post-Retirement Health CostsState and local governmentemployees will be able to savefor post-retirement health carecosts under a program autho-rized by the Legislature this year.The legislation, Laws 2001, FirstSpecial Session Chapter 10,article 7, section 1, was part ofthis year’s Omnibus PensionAct.

The new law authorizes theMinnesota State Retirement Sys-tem (MSRS) to establish one ormore trusts into which savingswill be deposited. Each partici-pating employee will have aseparate account structured inaccordance with the InternalRevenue Code to provide tax-preferred or tax-free treatment ofcontributions, earnings, and dis-tributions. MSRS may contractwith outside public or privateentities to administer the ac-counts.

Contributions will be deter-mined through collective bar-gaining agreements or personnelpolicies. The law provides,however, that public employersare not required to bargain with

employee representatives overemployer contributions to thesavings accounts, and that it isnot the Legislature’s intent toauthorize the state to incur newfinancial obligations for retireehealth care costs or plan admin-istration.

Covered employees may drawfrom their account assets tocover health-related costs afterretirement. If a retiree dies withassets remaining in an account,the retiree’s surviving spouse ordependents may use the balancefor their health-related costs.

Long-Term Care InsuranceProgramEligibility for participation inthe recently enacted long-termcare insurance program wasexpanded during the regularsession. Laws 2001, Chapter 94,Section 1, extends eligibility toretired or terminated state em-ployees so long as they wereeligible for participation at thetime of their separation fromemployment. Previously, par-ticipation was limited to activeemployees, their spouses, andtheir parents.

Public Employee RetirementAssociationThe Omnibus Pension Act con-tains two provisions aimed atreducing the shortfall in thePublic Employee RetirementAssociation (PERA) fund. Laws2001, First Special SessionChapter 10, Article 11, Sections15 and 16, increase employerand employee contribution ratesfrom 8.75 percent of pay to 9.10percent for basic members andfrom 4.75 to 5.1 percent forcoordinated members. Thechange is effective January 1,2002. In addition, Section 18extended the full funding datefor the PERA general fund fromJune 30, 2024, to June 30, 2031.The Legislature, however, didnot approve a requested generalfund appropriation to PERA tomake up part of the shortfall.

Pensions and Retirement

State and local governmentemployees will be able tosave for post-retirement

health care costs...

67

The Governor vetoed 11 bills andexercised line-item veto authorityon five bills. The total amountvetoed through line-item vetoauthority was just over $4million. Of this amount, over$2.2 million was from theGeneral Fund and almost $1.8million was from other funds,including $1 million from the

Bond Proceeds Fund. Notincluded in these amounts arevetoes by the Governor of twoOmnibus Appropriation Billsthat were later enacted in the2001 First Special Session and aTransitional Financing Bill thatwas passed by the Legislature tokeep certain functions of govern-ment financed if the Legislature

and Governor could not resolvethe Omnibus Spending Bills intime. The Transitional FinancingBill was not necessary becausethe Omnibus Spending Bills werepassed and signed in time to keepstate government from shuttingdown. The line-item vetoedappropriations are listed in thetable on the next page.

• Extension of rulemaking authority for the Edvest higher education program – Chapter 58;

• Authorization for Edina to restrict the operation of recreational motor vehicles – Chapter 114;

• Omnibus Health, Human Services, and Corrections Finance – Chapter 118;

• Modification of utility facilityregulation – Chapter 122;

• Regulation of public workscontracts – Chapter 126;

• Exemption from architectrequirement for certain localgovernment building projects –

Chapter 172;

• Regulation of medical malpractice expertreview certification and clarification ofthe statute of limitations – Chapter 189;

• Patient protection provision modifications – Chapter 196;

• Omnibus Family and Early Childhood Finance – Chapter 217;

• Reclassification of customized trainer positions for the Minnesota State

Colleges and Universities System – Chapter 218; and

• Transitional financing of certain governmental functions – First Special Session Chapter 11.

Bills Vetoed by the Governor

Vetoes

68

LINE ITEM VETOES - 2001Item AmountGeneral Fund

Environment and Agriculture - 1st Special Session, Chapter 2

Taylors Falls fire and rescue operations $ 50,000

Jobs, Housing, and Economic Dev. - 1st Special Session Chapter 4

Roy Wilkins Auditorium predesign $ 500,000Albert Lea Port Authority building remodel 50,000Trout Brook Greenway corridor in St. Paul 300,000Big Bear Education and Logging Center 50,0002004 Grand Excursion planning and promotion 150,000Minnesota-based business start-up investment 200,000

Total Jobs, Housing, and Economic Development $ 1,250,000

Transportation, Public Safety, and Judiciary - 1st Special Session Chapter 8

Investigation Unit Grants to local agencies $ 300,000

State Government Finance - 1st Special Session Chapter 10

Longville city hall ambulance building $ 35,000Amateur sports grants 600,000

Total State Government Finance $ 635,000

Total General Fund $ 2,235,000

Other Funds

Environment and Agriculture - 1st Special Session Chapter 2

Green building infrastructure design strategies - Minnesota Future Resources Fund $ 275,000TV series on the history of Minnesota’s natural landscapes -

Environment and Natural Resources Trust Fund 455,000

Total Environment and Agriculture Other Funds $ 730,000

Capital Budget Bill - 1st Special Session Chapter 12

Acquisition of the Trillium site in St. Paul - Bond Proceeds Fund $ 1,000,000

Jobs, Housing, and Economic Dev. - 1st Special Session Chapter 4

Albert Lea Port Authority building remodel - Minnesota Investment Fund $ 50,000

Total Other Funds $ 1,780,000

Total All Funds $ 4,015,000

State Debt and CapitalExpenditures

69

70

2001 Capital Projects The 2001 Legislature adopted a capital budget bill totaling approximately $118 million. The following table delineates project amounts.

CAPITAL EXPENDITURES AUTHORIZED BY THE 2001 LEGISLATURE

BONDING AUTHORITY

Item Project Total

BOARD OF WATER AND SOIL RESOURCES $53,487,000Minnesota River Basin Conservation Reserve

Enhancement Program 51,487,000Wetland replacement due to public road project 2,000,000

DEPARTMENT OF ADMINISTRATION $ 3,400,000Repairs on state office building 2,200,000Electrical utility infrastructure 1,200,000

DEPARTMENT OF CHILDREN, FAMILIES AND LEARNING $20,700,000Maximum Effort Capital Loans 19,000,000Metropolitan Magnet Schools, East Metro, complete construction of middle school 1,700,000

Capital Expenditures

(continued)

71

Item Project Total

DEPARTMENT OF NATURAL RESOURCES $ 2,000,000 Flood Hazard Mitigation Grants 2,000,000

DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT $ 8,000,000Payment of costs not covered by federal disaster programs: 7,000,000 $5,000,000 to Eagan; $2,000,000 to AustinAcquisition of Trillium site 1,000,000

DEPARTMENT OF TRANSPORTATION $ 10,000,000Local bridge replacement and rehabilitation 10,000,000

POLLUTION CONTROL AGENCY $20,500,000Closed Landfill Cleanup Program 20,500,000

BOND SALE EXPENSES $118,000

TOTAL $118,205,000

The Governor used his line-item veto authority to eliminate funding for the Trillium project.

BONDING AUTHORITY

Statistics

72

2001·2003 BienniumTotal Appropriations (1): $33,853,177,000

Higher Education8.6%

Health & Human Services21.5%

Natural Resources & Agriculture3.2%

Economic Developmenta1% J

Transportation11.4%

K-12 Education26.0%

Debt Service/Direct Capital2.2%

Rebates and Tax Relief4.4%

Aids and Credits9.6%

Governance/Other/Misc.3.7%

Crime Prevention, Judiciary, and Courts4.5%

Note:(1) Total does not include dedicated general fund appropriations and cancellations.

73

Table A

Summary of Biennial Appropriations by Fund1999-2001 and 2001-2003 Bienniums

Fund

1999-2001

Biennium

2001-2003

Biennium Difference

County-State Aid Highway

Environmental

Environmental Trust Fund

Game and Fish, State Sources

GC!meand Fish, Federal Sources

General Fund (includes rebates)

Dedicated General Fund

Health Care Access Fund

Highway User Tax Distribution

Solid Waste Fund

Minnesota Future Resources

Municipal-State Aid Street

Natural Resources

Endowment School

Petroleum Tank Release Cleanup

Special Revenue, State Sources

Special Revenue, Federal Sources

State Airports, State Sources

State Airports, Federal Sources

State Govt. Special.Revenue, State Sources

State Govt. Special Revenue, Federal Sources

State Lottery Fund (1)

Trunk Highway, State Sources

Trunk Highway, Federal Sources

Workforce Development

Workers' Compensation

Minnesota Technology, Inc., State Sources

Minnesota Technology, Inc., Federal Sources

Agriculture Fund

Cambridge Debt ServiCe

IRRRB Fund

Medical Education & Research Fund

Medical Education & Research Fund, Federal Sources

Tobacco Use Prevention Fund

NE Minnesota Economic Protection

Gifts

Endowment Fund

Metropolitan Area Transit

Greater Minnesota Transit

Metro Landfill Contingent

Debt Service (General Fund & Other Funds)

$ 755,487,000 $

64,095,000

25,460,000

111,788,000

32,000,000

24,057,511,000

282,346,000

394,805,000

35,357,000

74,915,000

14,840,000

219,143,000

68,136,000

39,755,000

68,327,000

633,937,000

55,550,000

41,718,000

500,000

111,062,000

706,000

106,743,000

1,594,928,000

605,000,000

31,825,000

261,098,000

19,174,000

4,326,000

37,697,000

110,280,000

64,314,000

26,632,000

o18,881,000

20,444,000

25,993,000

34,000

ooo

681 ,879,000

840,462,000 $

63,987,000

34,165,000

165,038,000

o26,417,040,000

284,062,000

575,300,000

40,714,000

78,002,000

15,110,000

220,786,000

92,111,000

43,000,000

72,535,000

967,064,000

21,329,000

44,051,000

500,000

143,312,000

o117,617,000

1,696,129,000

647,000,000

o374,640,000

16,173,000

4,000,000

39,158,000

o62,593,000

56,476,000

36,000,000

49,123,000

8,978,000

25,197,000

10,000

116,621 ,000

6,475,000

5,000,000

757,481,000

84,975,000

(108,000)

8,705,000

53,250,000

(32,000,000)

2,359,529,000

1,716,000

180,495,000

5,357,000

3,087,000

270,000

1,643,000

23,975,000

3,245,000

4,208,000

333,127,000

(34,221,000)

2,333,000

o32,250,000

(706,000)

10,874,000

101,201 ,000

42,000,000

(31,825,000)

113,542,000

(3,001,000)

(326,000)

1,461,000

(110,280,000)

(1,721 ,000)

29,844,000

36,000,000

30,242,000

(11,466,000)

(796,000)

(24,000)

116,621 ,000

6,475,000

5,000,000

75,602,000

Total State Appropriations (2): $

Federal Funds: $

TOTAL APPROPRIATIONS: $

NOTES:

30,696,686,000 $

8,021,349,000 $

38,718,035,000 $

34,137,239,000 $

8,982,104,000 $

43,119,343,000 $

3,440,553,000

960,755,000

4,401,308,000

(1) This item represents the statutory maximum of 15 percent of lottery gross revenues thatmay be annually credited to the lottery operations account.

i?\ Th.:. tnt~1 c:.hdg ~nnrnnrij:ltinnc:.finllrA tiru:u::. nnt in~h .riA t""~n"'J:aIl~tinnc:.

74

Table BGeneral Fund

Resources and Uses1999-2001 and 2001-2003 Bienniums

1999-2001 2001-2003Biennium Biennium Difference

I. RESOURCESA. Balance Forward $ 1,109,357,000

B. Taxes & Receipts (before 2000 Law Changes)Ihdividuallncome Taxes 12,653,852,000 14,460,300,000 1,806,448,000Corporate Franchise Tax 1,725,825,000 2,000,600,000 274,775,000Sales Tax 7,984,281,000 8,786,553,000 802,272,000Motor \1ehicle Tax 1,057,350,000 913,472,000 (143,878,000)Inheritance & Estate Tax 155,000,000 140,000,000 (15,000,000)Uquor, Wine, Beer 118,926,000 118,931,000 5,000Cigarette and Tobacco Products Tax 352,227,000 341,078,000 (11,149,000)Iron Ore Occupation 300,000 0 (300,000)Taconite Occupation & Production 3,946,000 4,250,000 304,000Deed and Mortgage Tax 263,100,000 310,800,000 47,700,000Insurance Gross Premiums 349,300,000 377,700,000 28,400,000Telephone, Telegraph, & Other Gross 90,000 92,000 2,000Lawful Gambling Tax 124,202,000 122,184,000. (2,018,000)Health Care Provider Tax 253,035,000 262,466,000 9,431,000Controlled Substance 195,000 100,000 (95,000)Investment Income 244,347,000 175,000,000 (69,347,000)Income Tax Reciprocity 85,144,000 92,704,000 7,560,000Lottery Revenue 0 63,482,000 63,482,000Departmental Earnings 0 346,000,000 346,000,000Tobacco Settlements 222,067,000 657,121,000 435,054,000Other Non-Dedicated Receipts 246,988,000 150,190,000 (96,798,000)

Total Taxes & Receipts (Before Law Changes): $ 25,840,175,000 $ 29,323,023,000 $ 3,482,848,000

C. Revenue RefundsIndividual Income Tax (1,624,300,000) (1,434,000,000) 190,300,000Corporate Franchise Tax (243,800,000) (280,000,000) (36,200,000)Sales Tax (395,485,000) (411,847,000) (16,362,000)Other Agencies' Refunds (200,000) (20,000,000) (19,800,000)Other Refunds (46,578,000) (48,305,000) (1,727,000)

Total Refunds: $ (2,310,363,000) $ (2,194,152,000) $ 116,211,000

D. Transfers from Other FundsOther Special Revenue Funds 10,325,000 10,093,000 (232,000)Cambridge Bank Special Fund 347,165,000 0 (347,165,000)All Other Transfers 95,575,000 50,126,000 (45,449,000)New Legislation Transfers 130,752,000 29,809,000 (100,943,000)

Total Transfers: $ 583,817,000 $ 90,028,000 $ (493,789,000)

E. 2001 Law ChangesIndividual Income Taxes 0 37,838,000 37,838,000Corporate Income Taxes 0 (48,720,000) (48,720,000)Sales Tax 0 (51,785,000) (51,785,000)Motor Vehicle Tax 0 (287,325,000) (287,325,000)Statewide Property Tax 0 888,000,000 888,000,000Deed and Mortgage Tax 0 2,720,000 2,720,000Insurance Gross Premiums 0 (720,000) (720,000)Departmental Earnings 0 33,640,000 33,640,000Tobacco Settlements 0 (343,413,000) (343,413,000)Miscellaneous Non-Dedicated Revenues 0 443,000 443,000

Law Changes: $ 0 $ 230,678,000 $ 230,678,000

F. Prior Year Adjustments $ 20,200,000 $ 20,200,000 $ 0

G. Total Dedicated Revenues $ 313,571,000 $ 284,062,000 $ (29,509,000)

TOTAL REVENUES $ 24,447,400,000 $ 28,863,196,000 $ 3,306,439,000

75

1999-2001 2001-2003

Biennium Biennium Difference

II. APPROPRIATIONS

A. BUdget Divisions

Elementary and Secondary Education 8,136,233,000 8,758,502,000 622,269,000

Family and Early Childhood Education 438,306,000 544,042,000 105,736,000

Hi~er Education 2,641,402,000 2,854,253,000 212,851,000

Health and Family Security 5,331,379,000 6,273,586,000 942,207,000

Environment and Agriculture 436,280,000 415,616,000 (20,664,000)

Economic Development 454,718,000 371,981,000 (82,737,000)

Transportation 531,863,000 216,744,000 (315,119,000)

Crime Prevention and Judiciary 1,171,433,000 1,369,908,000 198,475,000

State Govemment and Departments 676,655,000 650,850,000 (25,805,000)

Capital Projects and Other Changes 113,850,000 6,550,000 (107,300,000)

Tax Rebates and Property Tax Changes (2) 1,536,192,000 1,367,041,000 (169,151,000)

Total Budget Divisions: $ 21,468,311,000 $ 22,829,073,000 $ 1,360,762,000

B. Open and Standing Appropriations

Aids and Credits 3,042,403,000 3,264,657,000 222,254,000

Debt Service 578,681,000 629,739,000 51,058,000

Other Open and Standing 509,801,000 506,835,000 (2,966,000)

Total Open and Standing Appropriations: $ 4,130,885,000 $ 4,401,231,000 $ 270,346,000

C. Transfer to Other Funds $ 326,902,000 $ 163,120,000 $ (163,782,000)

TOTAL APPROPRIATIONS $ 25,926,098,000 $ 27,393,424,000 $ 1,467,326,000

TOTAL REVENUES AND RECEIPTS $ 24,447,400,000 $ 28,863,196,000 $ 3,306,439,000

TOTAL APPROPRIATIONS - GROSS $ 25,926,098,000 $ 27,393,424,000 $ 1,467,326,000

Dedicated Expenditures 282,346,000 284,062,000 1,716,000

Dept. of Human Services RTC Collections (1) (45,560,000) (130,328,000) (84,768,000)

Indirect Cost Receipts (46,491,000) (53,197,000) (6,706,000)

Less Cancellations (34,340,000) (20,000,000) 14,340,000

TOTAL APPROPRIATIONS - NET $ 26,082,053,000 $ 27,473,961,000 $ 1,391,908,000

ReservesCash Flow Account 350,000,000 350,000,000 0

Budget Reserve 622,000,000 653,000,000 31,000,000

Dedicated Reserves 145,272,000 151,357,000 6,085,000

Total Reserves: $ 1,117,272,000 $ 1,154,357,000 $ 37,085,000

UNRESTRICTED BUDGETARY BALANCE $ 234,878,000

NOTES:(1) Dept. of Human Services RTC receipts already counted in the appropriation for MAl

GAMC federal funds.(2) Contains FY2001 Sales Tax Rebate from appropriated dUring the 2001 Legislative Session.

76

1999-2001 2001-2003 Increase Percent

Biennium Biennium (Decrease) Change

Tax Rebates and Property Tax Reform

Tax Rebates

Agricultural Disaster Relief $ 18,000,000 $ 0 $ (18,000,000)Sales Tax Rebate (2000 Session) 647,420,000 100,000 (647,320,000)FY2001 Sales Tax Rebate (2001 Session) 839,880,000 0 (839,880,000)

Education Finance Property Tax Reform

Gen~ral Education Levy Takeover 0 1,198,087,000 1,198,087,000Referendum Tax Base Replacement Aid 0 7,850,000 7,850,000Eliminate Education Property Tax Credits 0 (681,113,000) (681,113,000)School District Referendum Aid 0 203,642,000 203,642,000Debt Service Equalization Aid 0 12,955,000 12,955,000

Property Tax Aids and Rate Reforms

Reduce Disparity Aid and Credit 0 (6,645,000) (6,645,000)Market Value Homestead Credit 0 328,620,000 328,620,000TIF Grant Aid/Penalties 0 134,400,000 134,400,000Local Govemment Aid 0 136,131,000 136,131,000Property Tax Refunds 0 4,906,000 4,906,000Replace Taconite Production Tax 0 25,200,000 25,200,000Met Council Trans. Funding and DOT Owned Lands 0 5,009,000 5,009,000Eliminate RTB Levy Reduction 0 (2,101 ,000) (2,101,000)Metropolitan Area Transit Fund 0 116,621,000 116,621,000Greater Minnesota Transit Fund 0 6,475,000 6,475,000

Total Aids and Credits: $ 1,505,300,000 $ 1,490,137,000 $ (15,163,000) -1.01%

Elementary and Secondary Education

General Education Aid 6,313,801 ,000 6,882,707,000 568,906,000

Transp. Aid for Post-Sec. Enrollment Options 140,000 150,000 10,000Abatement Aid 17,856,000 14,790,000 (3,066,000)Nonpublic Pupil Aid 24,444,000 30,571,000 6,127,000Nonpublic Transportation 41,691,000 45,290,000 3,599,000Consolidation Transition Aid 1,018,000 1,344,000 326,000Other Local General Education 300,000 480,000 180,000Endowment Fund 39,755,000 43,000,000 3,245,000Gift Fund 100,000 902,000 802,000Disaster Relief Grants & Aid 5,586,000 1,649,000 (3,937,000)General Education One-Time Revenue 32,339,000 0 (32,339,000)School Bus Safety 144,000 0 (144;000)District Cooperation Revenue 6,437,000 0 (6,437,000)

Subtotal General Education: 6,483,611,000 7,020,883,000 537,272,000 8.29%

Special ProgramsSpecial Education Aid 955,194,000 1,038,929,000 83,735,000Excess Cost Aid 155,301,000 207,438,000 52,137,000Other Special Education 25,379,000 23,101,000 (2,278,000)HIV Training Sites 458,000 350,000 (108,000)Web-Based Interagency Plan 0 500,000 500,000Center for Torture Victims 150,000 0 (150,000)

Subtotal Special Programs: 1,136,482,000 1,270,318,000 133,836,000 11.78%

78


Biennium Biennium (Decrease) ChangeEducation Excellence

Advanced Placement/IB $ 3,750,000 $ 4,000,000 $ 250,000Statewide Testing 18,000,000 15,500,000 (2,500,000)Charter School Building Lease Aid 16,788,000 41,730,000 24,942,000Charter School Start-Up Grants & Integration Aid 4,981,000 '5,976,000 995,000Best Practice Seminars 5,000,000 8,740,000 3,740,000Metro Magnet School Grants & Aid 3,725,000 2,308,000 (1,417,000)Integration Aid 93,438,000 117,474,000 24,036,000Integration Grants 2,000,000 2,000,000 °Inter-District Desegregation 1,940,000 2,932,000 992,000Indian Education Programs 7,904,000 8,404,000 500,000Tribal Contract Schools 3,689,000 5,423,000 1,734,000First Grade Preparedness Program 14,000,000 14,400,000 400,000Secondary Vocational Education Aid 24,830,000 1,242,000 (23,588,000)Education Employment Transition 5,539,000 1,550,000 (3,989,000)Youthworks Program 3,576,000 3,576,000 °MN School-to-Work Student Organizations 1,250,000 1,250,000 °Learn & Eam Program 1,450,000 725,000 (725,000)Urban Educator Program 2,600,000 2,600,000 °Other Local Programs and Grants 941,000 230,000 (711,000)Altemative Teacher Compensation ° 8,000,000 8,000,000Education Accountability Audits ° 2,500,000 2,500,000Special Revenue Fund Open Approps, 540,000 ° (540,000)Community-Based Charter School Grant 3,000,000 ° (3,000,000)Graduation Rule Resource Grants 600,000 ° (600,000)Special Education Staff Development 1,500,000 ° (1,500,000)Magnet School Facility Grants 1,300,000 ° (1,300,000)Partners for Quality School Improvement 500,000 ° (500,000)Professional Teaching Standards 550,000 ° (550,000)MN Learning Resource Center/New Visions 450,000 ° (450,000)Homeless Student Programs 1,015,000 ° (1,015,000)Sober School Grants 500,000 ° (500,000)Assistance for Immigrant Families 500,000 ° (500,000)

Subtotal Education Excellence: 225,856,000 250,560,000 24,704,000 10.94%

Facilities & TechnologyDebt Service. Equalization Aid 62,541,000 49,705,000 (12,836,000)Health and Safety 28,565,000 29,530,000 965,000Alternative Facilities Aid 38,054,000 38,566,000 512,000Interactive Television Levy Aid 6,955,000 1,547,000 (5,408,000)Telecommunication Access Revenue 16,668,000 16,952,000 284,000Local Legislation &: Other Programs 1,967,000 100,000 (1,867,000)One-Time Debt Redemption Fund Adj. ° (1,744,000) (1,744,000)Electronic Library for MN ° 800,000 800,000Web-Based Courses ° 100,000 100,000Telecommunication Access Grants 5,000,000 ° (5,000,000)One-Time Facilities Aid 23,360,000 ° (23,360,000)

Subtotal Facilities & Technology: 183,110,000 135,556,000 (47,554,000) -25.97%

Nutrition ProgramsSchool Lunch and Milk Aid 16,906,000 17,660,000 754,000Summer Food Service 300,000 300,000 °School Breakfast Aid 1,426,000 1,340,000 (86,000)Fast Break to Learning 5,000,000 5,285,000 285,000

Subtotal Nutrition Programs: 23,632,000 24,585,000 953,000 4.03%

Department of Children, Families, & Learning 61,611,000 60,824,000 (787,000)

State Board of Education 165,000 ° (165,000)Board of Teaching 1,351,000 1,374,000 23,000MN Academic Excellence Foundation 1,288,000 750,000 (538,000)Board of School Administrators ° 330,000 330,000Special Revenue Fund Open/Statutory Approps. 8,151,000 10,128,000 1,9n,000

Subtotal Dept. of Children, Families, & Learning: 72,566,000 73,406,000 840,000 1.16%

79


Biennium Biennium (Decrease) ChangeLola & Rudy Perpich Center for Arts Education $ 14,639,000 $ 15,497,000 $ 858,000

Gift Fund 1,561,000 2,104,000 543,000Special Revenue Fund Open/Statutory Approps. 696,000 804,000 108,000

Subtotal Perpich Center for Arts Education: 16,896,000 18,405,000 1,509,000 8.93%

Faribault Academies 20,754,000 21,729,000 975,000Gift Fund 32,000 48,000 16,000Special Revenue Fund Open/Statutory Approps. 230,000 1,838,000 1,608,000

Subtotal Faribault Academies: 21,016,000 23,615,000 2,599,000 12.37%

State Appropriations: $ 8,163,169,000 $ 8,817,328,000 $ 654,159,000 8.01%Federal Appropriations: $ 771,498,000 $ 903,055,000 $ 131,557,000 17.05%

Total Elementary & Secondary Education: $ 8,934,667,000 $ 9,720,383,000 $ 785,716,000 8.79%

Early Childhood & Family Education

Children & Family Support ProgramsSchool Readiness 20,790,000 20,790,000 0Early Childhood Family Education (ECFE) 41,408,000 41,421,000 13,000Health & Developmental Screening Aid 5,100,000 5,322,000 222,000Way to Grow - Early Childhood Grants 950,000 950,000 0Head Start 36,750,000 36,750,000 0School-Age/Extended Day Aid 519,000 354,000 (165,000)Child Care - Basic Sliding Fee 43,998,000 108,779,000 64,781,000TANF/MFIP Child Care 145,130,000 160,859,000 15,729,000Child Care Development 3,730,000 3,730,000 0Child Care Integrity 0 350,000 350,000

Subtotal Children & Family Support Programs: 298,375,000 379,305,000 80,930,000 27.12%

PreventionFamily Collaborative 7,212,000 2,340,000 (4,872,000)Community Education Aid 29,410,000 27,320,000 (2,090,000)Adults w/Disabilities Program Aid 1,520,000 1,489,000 (31,000)Violence Prevention Education Grants 2,900,000 2,755,000 (145,000)Abused Children Programs 1,890,000 1,890,000 0Children's Trust Fund 1,950,000 1,750,000 (200,000)Family Visitation Centers 400,000 400,000 0~fter School Enrichment Grants 10,520,000 11,020,000 500,000Chemical Abuse Prevention Grants 400,000 350,000 (50,000)Meadowbrook Collaborative 25,000 50,000 25,000Guard Our Youth (Military Affairs) 0 191,000 191,000Gift Fund 728,000 114,000 (614,000)First Call Minnesota 50,000 0 (50,000)

Subtotal Community & Systems Change: 57,005,000 49,669,000 (7,336,000) -12.87%

Self-Sufficiency and Life-Long LearningMN Economic Opportunity Grants 17,028,000 17,028,000 0Transitional Housing Programs 3,975,000 3,976,000 1,000Foodshelf Programs 2,556,000 2,556,000 0Adult Education Programs 58,115,000 74,057,000 15,942,000Lead Hazard Reduction 500,000 200,000 (300,000)Emergency Services Grants 1,322,000 1,200,000 (122,000)Family Assets for Independence 500,000 500,000 0Cooperative Language Instruction 250,000 0 (250,000)Special Revenue Fund Open/Statutory Approps. 4,292,000 7,025,000 2,733,000

Subtotal Self-Sufficiency & Life-Long Learning: 88,538,000 106,542,000 18,004,000 20.33%

LibrariesBasic Support Grants 17,065,000 17,140,000 75,000Multicounty, Mutitype Library Grants 1,806,000 1,806,000 0Library for the Blind Technology 212,000 0 (212,000)Regional· Library Telecommunications Aid 5,306,000 2,400,000 (2,906,000)

Subtotal Libraries: 24,389,000 21,346,000 (3,043,000) -12.48%

State Appropriations: $ 468,307,000 $ 556,862,000 $ 88,555,000 18.91%

Federal Appropriations: $ 342,686,000 $ 237,174,000 $ (105,512,000) -30.79%

Total Early Childhood & Family Education: $ 810,993,000 $ 794,036,000 $ (16,957,000) -2.09%

80



Higher Education

Higher Education Services OfficeAgency Administration $ 6,978,000 $ 7,761,000 $ 783,000State Scholarships and Grants 246,274,000 236,266,000 (10,008,000)Interstate Tuition 9,000,000 10,500,000 1,500,000State Work-Study 24,888,000 24,888,000 0Minitex Library Program 9,916,000 11,736,000 1,820,000Learning Network of MN 10,357,000 12,158,000 1,801,000Edvest 3,040,000 3,040,000 0Special Revenue Fund Open/Statutory Approps. 370,000 324,000 (46,000)Appropriations Carried Forward (1) 11,521,000 100,000 (11,421,000)

Subtotal Higher Education Services Office: 322,344,000 306,773,000 (15,571,000) 4.83%

MN State Colleges & Universities 1,129,428,000 1,241,567,000 112,139,000Special Revenue Fund Open/Statutory Approps. 9,914,000 8,900,000 (1,014,000)Gift Fund 17,234,000 13,418,000 (3,816,000)

Subtotal MN State Colleges & Universities: 1,156,576,000 1,263,885,000 107,309,000 9.28%

University of MinnesotaOperations and Maintenance 1,041,225,000 1,145,145,000 103,920,000Health Sciences 11,635,000 11,692,000 57,000Institute of Technology 3,245,000 3,290,000 45,000System Specials 14,732,000 15,160,000 428,000Agriculture and Extension Service 115,776,000 117,676,000 1,900,000Medical Education & Research Fund 15,391,000 35,289,000 19,898,000State Govt. Special Revenue - Open/Statutory 0 90,000 90,000Duluth Child Care Start-Up 220,000 0 (220,000)

Subtotal University of Minnesota: 1,202,224,000 1,328,342,000 126,118,000 10.49%

University of MN Biomedical Investment Grant 0 10,000,000 10,000,000

Mayo Medical Foundation 3,183,000 3,274,000 91,000 2.86%State Appropriations: $ 2,684,327,000 $ 2,912,274,000 $ 227,947,000 8.49%

Federal Appropriations: $ 82,114,000 $ 79,918,000 $ (2,196,000) -2.67%Total Higher Education: $ 2,766,441,000 $ 2,992,192,000 $ 225,751,000 8.16%

Health & Human Services

Department of Human ServicesFinancial & Management Administration 57,419,000 77,117,000 19,698,000Children Grants & Services 120,359,000 142,032,000 21,673,000

Health Care ProgramsMedical Assistance Grants 1,570,086,000 2,113,800,000 543,714,000General Assistance Medical Care 274,527,000 335,314,000 60,787,000Health Care Management 46,559,000 36,627,000 (9,932,000)Medical Assistance - Long-term Care 1,834,022,000 2,142,217,000 308,195,000

State Operated Treatment Centers 417,436,000 418,455,000 1,019,000

Continuing Care & Community Support GrantsCommunity Social Services Block Grants 86,997,000 98,405,000 11,408,000Community Care & Support Grants 42,308,000 59,341,000 17,033,000

Mental Health Grants 96,091,000 105,594,000 9,503,000Alternative Care Grants 122,487,000 165,529,000 43,042,000Group Residential Housing Grants 134,718,000 166,617,000 31,899,000Chemical Dependency Grants 90,974,000 96,263,000 5,289,000Support Management 35,447,000 46,415,000 10,968,000

Economic Support GrantsAssistance to Families Grants / MFIP 190,471,000 59,337,000 (131,134,000)General Assistance Grants 46,323,000 33,637,000 (12,686,000)Work Grants 21,212,000 19,688,000 (1,524,000)

Minnesota Supplemental Aid 53,288,000 61,029,000 7,741,000

Child Support Enforcement 10,718,000 15,137,000 4,419,000Administration 81,307,000 68,968,000 (12,339,000)Refugee Service 660,000 500,000 (160,000)

81



Federal Reimbursement $ (58,588,000) $ (68,153,000) $ (9,565,000)

Special Revenue Fund Open/Statutory Approps. 95,280,000 167,124,000 71,844,000

State Govt. Special Revenue - Open/Statutory 1,282,000 2,801,000 1,519,000Gift Fund 251,000 54,000 (197,000)Claims Against the State 0 8,000 8,000

Subtotal Department of Human Services: 5,371,634,000 6,363,856,000 992,222,000 18.47%

Ombudsman for Mental Health & Retardation 2,716,000 2,881,000 165,000 6.08%

Ombudsman for Families 337,000 481,000 144,000 42.73%

MinnesotaCare/Health Care Access Fund

Department of Health 20,001,000 20,230,000 229,000

Department of Human Services 305,907,000 484,270,000 178,363,000

Department of Revenue 3,413,000 3,495,000 82,000

University of Minnesota 5,674,000 5,074,000 (600,000)

Legislative Coordinating Commission 300,000 300,000 0

HCAF Open/Statutory Appropriations 59,510,000 61,931,000 2,421,000

Subtotal MinnesotaCare: 394,805,000 575,300,000 180,495,000 45.72%

Department of Health

Health Protection 54,461,000 62,105,000 7,644,000

Health Systems 114,392,000 140,495,000 26,103,000

Health Management & Support Services 11,317,000 11,322,000 5,000

Special Revenue Fund Open/Statutory Approps. 70,713,000 63,110,000 (7,603,000)

Medical Education & Research Fund 11,241,000 57,187,000 45,946,000

Tobacco Use Prevention Fund Approps. 18,881,000 49,123,000 30,242,000

Gift Fund 130,000 512,000 382,000

State Govt. Special Rev. Open/Statutory Approps. 344,000 1,102,000 758,000

Subtotal Department of Health: 281,479,000 384,956,000 103,477,000 36.76%

Health-Related Boards 27,133,000 30,238,000 3,105,000Special Revenue Fund Open/Statutory Approps. 2,1n,000 3,126,000 949,000Gift Fund 4,000 10,000 6,000State Govt. Special Rev. Open/Statutory Approps. 505,000 632,000 127,000

Subtotal Health-Related Boards: 29,819,000 34,006,000 4,187,000 14.04%

Veterans Nursing Homes Board 53,453,000 60,978,000 7,525,000Gift Fund 974,000 1,466,000 492,000Special Revenue Fund Transfer Adjustment (7,099,000) (6,465,000) 634,000

Subtotal Veterans ~ursing Homes Board: 47,328,000 55,979,000 8,651,000 18.28%

Council on People with Disabilities 1,320,000 1,406,000 86,000 6.52%

State Appropriations: $ 6,129,438,000 $ 7,418,865,000 $ 1,289,427,000 21.04%

Federal Appropriations: $ 5,530,186,000 $ 6,268,931,000 $ 738,745,000 13.36%

Total Health & Human Services: $ 11,659,624,000 $ 13,687,796,000 $ 2,028,172,000 17.39%

Environment & AgriCUlture

Department of AgricultureProtection Service 24,734,000 23,894,000 (840,000)Agricultural Marketing and Development 11,931,000 11,155,000 (n6,000)Administration and Financial Assistance 11,485,000 9,801,000 (1,684,000)Special Revenue Fund Open/Statutory Approps. 6,711,000 7,031,000 320,000Environmental Fund Open/Statutory Approps. 762,000 936,000 174,000Gift Fund 54,000 130,000 76,000Agricultural Fund Open/Statutory Approps. 37,697,000 38,758,000 1,061,000

Subtotal Department of Agriculture: 93,374,000 91,705,000 (1,669,000) -1.79%

Agricultural Utilization Research Institute 8,160,000 8,410,000 250,000 3.06%

Board of Animal Health 6,494,000 5,836,000 (658,000) -10.13%

Ethanol Producer Payments 72,106,000 70,892,000 (1 ,214,000) -1.68%

Minnesota Horticultural Society 164,000 164,000 0 0.00%

82


Biennium Biennium (Decrease) ChangeBoard of Water & Soil Resources $ 40,498,000 $ 37,990,000 $ (2,508,000)

Special Revenue Fund Open/Statutory Approps. 42,000 310,000 ~68,000

Subtotal Board of Water & Soil Resources: 40,540,000 38,300,000 (2,240,000) -5.53%

Department of Natural ResourcesOperations Support 65,296,000 66,966,000 1,670,000Land and Water Resources Management 27,542,000 24,955,000 (2,587,000)Mineral Resources Management 10,218,000 14,352,000 4,134,000Forest Management 69,845,000 73,896,000 4,051,000Fish and Wildlife Management 97,736,000 122,049,000 24,313,000Parks and Recreation Management 65,597,000 81,463,000 15,866,000Enforcement 44,682,000 49,960,000 5,278,000Trails and Waterways 39,189,000 38,879,000 (310,000)Leech Lake and White Earth Reservation 4,119,000 4,998,000 879,0001854 Indian Treaty Settlement 8,533,000 9,857,000 1,324,000Wildlife Management Lands in Lieu of Taxes 3,050,000 172,000 (2,878,000)DNR Firefighting 14,000,000 14,358,000 358,000Lifetime Hunting & Fishing Licenses 60,000 0 (60,000)Additional Walleye Stocking 500,000 0 (500,000)Game & Fish Projects 12,304,000 0 (12,304,000)Trail Grants 6,275,000 0 (6,275,000)Zoo Grants 328,000 0 (328,000)Mille Lacs Treaty Legal Fees 4,309,000 0 (4,309,000)North Shore Wildfire Planning 1,459,000 0 (1,459,000)Game and Fish Fund Open/Statutory Approps. 5,074,000 6,156,000 1,082,000Natural Resources Fund Open/Statutory Approps. 3,594,000 1,645,000 (1,949,000)Special Revenue Fund Open/Statutory Approps. 25,183,000 29,319,000 4,136,000Gift Fund 1,950,000 2,820,000 870,000State Govt. Special Revenue Fund Open Approps. 0 233,000 233,000Environmental Fund Open/Statutory Approps. 51,000 520,000 469,000Claims Against the State 0 135,000 135,000

Subtotal Dept. of Natural Resources: 510,894,000 542,733,000 31,839,000 6.23%

Zoological Board 14,602,000 15,417,000 815,000Special Revenue Fund Open/Statutory Approps. 17,814,000 19,235,000 1,421,000Gift Fund 2,122,000 2,556,000 434,000

Subtotal Zoological Board: 34,538,000 37,208,000 2,670,000 7.73%

Minn.-Wise. Boundary Area Commission 371,000 393,000 22,000 5.93%

Minnesota ResourcesLCMR Administration 867,000 1,535,000 668,000Recreation 11,817,000 23,180,000 11,363,000Water Quality 3,000,000 1,970,000 (1,030,000)Environment & Natural Resources-Based Industries 6,100,000 740,000 (5,360,000)Urbanization Impacts 1,373,000 0 (1,373,000)Decision-Making Tools 5,585,000 1,777,000 (3,808,000)Environmental Education 2,655,000 1,970,000 (685,000)Critical Lands or Habitats 8,778,000 18,280,000 9,502,000Energy 325,000 90,000 (235,000)

Subtotal Minnesota Resources: 40,500,000 49,542,000 9,042,000 22.33%

Pollution Control AgencyProtection of the Water 32,099,000 32,741,000 642,000Protection of the Air 16,217,000 15,592,000 (625,000)Protection of the Land 33,887,000 20,380,000 (13,507,000)General Support 14,132,000 4,315,000 (9,817,000)Integrated Environmental Programs 0 31,368,000 31,368,000Solid Waste Fund Open/Statutory Approps. 59,203,000 49,318,000 (9,885,000)Special Revenue Fund Open/Statutory Approps. 14,367,000 23,599,000 9,232,000State Govt. Special Revenue Fund Open Approps. 2,000 2,000 0Environmental Fund Open/Statutory Approps. 9,606,000 7,567,000 (2,039,000)Metro Landfill Contingency Fund Open/Stat. Approps. 0 4,000,000 4,000,000Deficiency Solid Waste FY2oo1 Appropriation 0 500,000 500,000

Subtotal Pollution Control Agency: 179,513,000 189,382,000 9,869,000 5.50%

83


Biennium Biennium (Decrease) ChangeScience Museum of Minnesota $ 2,328,000 $ 2,600,000 $ 272,000 11.68%

Minnesota Academy of Science 82,000 ° (82,000) -100.00%

Dept. of Transportation - Environmental Study 200,000 ° (200,000) -100.00%

Windom Agriculture Processing Facility 250,000 ° (250,000) -100.00%

Office of Environmental Assistance 15,298,000 27,424,000 12,126,000

S,c9,RE County Block Grants 28,016,000 28,016,000 °Environmental Fund Open/Statutory Approps. 7,780,000 5,147,000 (2,633,000)Special Revenue Fund Open/Statutory Approps. 316,000 ° (316,000)

Subtotal Office of Env. Assistance: 51,410,000 60,587,000 9,177,000 17.85%

Office of Strategic & Long-Range Planning:Reorganize State Water Programs 0 75,000 75,000

State Appropriations: $ 1,040,924,000 $ 1,097,827,000 $ 56,903,000 5.47004

Federal Appropriations: $ 95,567,000 $ 89,416,000 $ (6,151,000) -6.44%Total Environment & Agriculture: $ 1,136,491,000 $ 1,187,243,000 $ 50,752,000 4.47%

Economic Development

Department of Trade & Economic DevelopmentTourism 22,136,000 20,130,000 (2,006,000)Administration 7,089,000 7,191,000 102,000Business & Community Development 40,027,000 23,856,000 (16,171,000)Minnesota Trade Office 4,593,000 5,080,000 487,000Information & Analysis 2,865,000 3,299,000 434,000Workforce Development 28,670,000 18,590,000 (10,080,000)Special Revenue Fund Open/Statutory Approps. 34,372,000 54,325,000 19,953,000IRRRB Fund Open/Statutory Appropriation 64,314,000 61,257,000 (3,057,000)IRRRB Brd.-NE MN Economic Protection Fund 20,444,000 8,978,000 (11,466,000)

. Subtotal Dept. of Trade & Economic Dev.: 224,510,000 202,706,000 (21,804,000) -9.71%

Minnesota Technology, Incorporated 13,850,000 12,035,000 (1,815,000)

Minnesota Technology Inc. Fund - Open Appropriation 12,790,000 8,138,000 (4,652,000)Special Revenue Fund Open/Statutory Approps. 862,000 35,000 (827,000)

Subtotal Minnesota Technology, Inc.: 27,502,000 20,208,000 (7,294,000) -26.52%

Department of Economic SecurityWorkforce Services 30,078,000 22,171,000 (7,907,000)Rehabilitation Services 44,888,000 46,242,000 1,354,000Services for the Blind 10,823,000 10,007,000 (816,000)Gift Fund 108,000 514,000 406,000Special Revenue Fund Open/Statutory Approps. 67,787,000 21,867,000 (45,920,000)

Subtotal Department of Economic Security: 153,684,000 100,801,000 (52,883,000) -34.41%

~ousing Finance Agency 114,040,000 105,264,000 (8,776,000) -7.70%

Department of CommerceFinancial Examinations 8,015,000 12,934,000 4,919,000Administrative Services 6,811,000 11,855,000 5,044,000Enforcement and Compliance 18,501,000 11,521,000 (6,980,000)Petroleum Tank Release Cleanup Board 2,060,000 2,148,000 88,000Telecommunications 1,942,000 1,994,000 52,000Energy 7,920,000 7,693,000 (227,000)Weights and Measurers 6,345,000 6,644,000 299,000HydrolWind Power 1,656,000 4,188,000 2,532,000Minnesota Comprehensive Health Association 15,000,000 ° (15,000,000)Department of Public Service Operations 3,211,000 ° (3,211 ,000)Special Revenue Fund Open/Statutory Approps. 23,324,000 23,590,000 266,000Petro Tank Release Fund Open/Stat. Approps. 58,991,000 63,260,000 4,269,000

Subtotal Department of Commerce: 153,776,000 145,827,000 (7,949,000) -5.17%

Non Health-Related Boards 3,367,000 3,648,000 281,000Special Revenue Fund Open/Statutory Approps. 21,845,000 29,907,000 8,062,000Appropriations Carried Forward ° 23,000 23,000

Subtotal Non Health-Related Brds.: 25,212,000 33,578,000 8,366,000 33.18%

84



AeronauticsAviation Support $ 10,446,000 $ 12,238,000 $ 1,792,000Airport Development and Assistance 27,896,000 28,596,000 700,000Air Transportation Services 365,000 273,000 (92,000)Civil Air Patrol 130,000 130,000 °State Airport Fund Open/Statutory Approps. 3,263,000 3,096,000 (167,000)

Subtotal Aeronautics: 42,100,000 44,333,000 2,233,000 5.30%

MN DOT Sales Tax Exemption ° 4,370,000 4,370,000

Federal Funds Included in Highway Operations,Technical ~ervices & Program Management 534,148,000 575,000,000 40,852,000 7.65%

Transportation Revolving Loan Fund 15,000,000 ° (15,000,000) -100.00%

MN DOT: Trunk Highway Open/Statutory Approps. 17,060,000 64,737,000 47,677,000 279.47%

MN DOT: Special Revenue Open/Statutory Approps. 9,756,000 163,564,000 153,808,000 1576.55%

Capital Projects - Direct AppropriationsTransportation Capital Projects 72,746,000 ° (72,746,000)Met Council Capital Projects 41,300,000 19,000,000 (22,300,000)State Roads Capital Projects 359,000,000 ° (359,000,000)Railroad and Waterways Capital Projects (FY2001) 2,000,000 ° (2,000,000)

Subtotal Capital Projects-Direct Approps.: 475,046,000 19,000,000 (456,046,000) -96.00%

Department of Public SafetyAdministration and Related Services 22,175,000 22,874,000 699,000State Patrol 114,689,000 124,912,000 10,223,000Driver and Vehicle Services (4) 77,891,000 77,369,000 (522,000)Pipeline Safety 1,912,000 1,973,000 61,000Traffic Safety 614,000 641,000 27,000Appropriations Carried Forward ° 56,000 56,000Trunk Highway Open/Statutory Approps. 4,255,000 2,007,000 (2,248,000)Gift Fund 90,000 123,000 33,000Highway User Tax Open/Statutory Approps. 711,000 12,272,000 11,561,000Transfer to Trunk Highway Fund 3,660,000 3,660,000 °Subtotal Dept. of Public Safety: 225,997,000 245,887,000 19,890,000 8.80%

Minnesota Safety Council 134,000 ° (134,000) -100.00%

State Appropriations: $ 3,817,295,000 $ 3,864,953,000 $ 47,658,000 1.25%Federal Appropriations: $ 501,064,000 $ 511,976,000 $ 10,912,000 2.18004

Total Transportation: $ 4,318,359,000 $ 4,376,929,000 $ 58,570,000 1.36%

Crime Prevention & JUdiciary

Supreme CourtOperations 9,059,000 10,429,000 1,370,000State Court Administrator 26,215,000 32,385,000 6,170,000State Law Library 3,717,000 4,170,000 453,000Low Income & Family Farm Legal Assistance 11,214,000 13,714,000 2,500,000Family Law Legal Assistance 1,754,000 1,754,000 °Special Revenue Fund Open/Statutory Approps. 2,382,000 2,290,000 (92,000)Gift Fund 80,000 90,000 10,000Court Information System 3,512,000 15,000,000 11,488,000

Subtotal Supreme Court: 57,933,000 79,832,000 21,899,000 37.80%

Court of Appeals 13,199,000 15,693,000 2,494,000 18.90%

District Courts 170,540,000 256,013,000 85,473,000Board on Judicial Standards 471,000 497,000 26,000Board of Public Defense 2,458,000 4,710,000 2,252,000State Public Defender 6,463,000 7,184,000 721,000District Public Defense 83,085,000 93,538,000 10,453,000Tax Court 1,331,000 1,486,000 155,000Additional FY2oo1 Appropriation 14,000 ° (14,000)Gift Fund 2,000 6,000 4,000Special Revenue Fund Open/Statutory Approps. 6,000 14,000 8,000

Subtotal District Courts: 264,370,000 363,448,000 99,078,000 37.48%

86



Department of Public SafetyEmergency Management $ 11,676,000 $ 11,029,000 $ (647,000)Criminal Apprehension 53,579,000 69,016,000 15,437,000Fire Marshal 6,302,000 6,643,000 341,000Alcohol & Gambling Enforcement 3,670,000 3,686,000 16,000Law Enforcement & Community Grants 19,809,000 17,038,000 (2,n1,000)

~pecial Revenue Fund Open/Statutory Approps. 21,895,000 29,195,000 7,300,000State Govt. Special Revenue Fund Open Appropriations 643,000 690,000 47,000Electronic Fingerprinting/Information Access 9,659,000 0 (9,659,000)Additional FY2001 Appropriation 8,600,000 0 (8,600,000)Appropnations Carried Forward 0 82,000 82,000

Felony-Level OWl Costs 0 84,000 84,000Subtotal Department of Public Safety: 135,833,000 137,463,000 1,630,000 1.20%

Crime Victims Services 46,396,000 64,338,000 17,942,000Special Revenue Fund Open/Statutory Approps. 1,189,000 0 (1,189,000)

Subtotal Crime Victims Services: 47,585,000 64,338,000 16,753,000 35.21%

Crime Victims Ombudsman 783,000 811,000 28,000 3.58%

Priv. Detective & Protective Agen. Lic. Board 275,000 292,000 17,000 6.18%

Department of CorrectionsManagement Services 23,935,000 26,529,000 2,594,000Community Services 190,981,000 223,040,000 32,059,000Correctional Institutions 439,045,000 459,666,000 20,621,000

Corrections Aid 58,894,000 62,847,000 3,953,000Juvenile Services 26,909,000 28,267,000 1,358,000Special Revenue Fund Open/Statutory Approps. 30,763,000 26,285,000 (4,478,000)Claims against the State 27,000 13,000 (14,000)Gift Fund 48,000 70,000 22,000CRIMNET 0 1,500,000 1,500,000

Subtotal Department of Corrections: nO,602,000 828,217,000 57,615,000 7.48%

Sentencing Guidelines Commission 1,215,000 1,073,000 (142,000) -11.69%

Corrections Ombudsman 780,000 659,000 (121,000) -15.51%

Board of Peace Officers Standards and Training 9,301,000 9,416,000 115,000 1.24%

Automobile Theft Prevention Board 2,2n,000 0 (2,2n,000)Special Revenue Fund Open/Statutory Approps. 20,000 0 (20,000)

Subtotal Automobile Theft Prevention Brd.: 2,297,000 0 (2,297,000) -100.00%

MN Safety Council: Crosswalk Safety 200,000 0 (200,000) -100.00%

Department of Human Rights 7,786,000 8,180,000 394,000Special Revenue Fund Open/Statutory Approps. 108,000 108,000 0

Subtotal Department of Human Rights: 7,894,000 8,288,000 394,000 4.99%

Uniform Laws Commission 75,000 79,000 4,000 5.33%

Curfew Program 1,000,000 0 (1,000,000) -100.00%

Attorney General: Felony-Level OWl Costs 0 127,000 127,000

Univ. of MN: Parent Education Curriculum 20,000 0 (20,000) -100.00%

Design & Site. for Bureau of Criminal App. Building 3,554,000 0 (3,554,000) -100.00%State Appropriations: $ 1,316,916,000 $ 1,509,736~000 $ 192,820,000 14.64%

Federal Appropriations: $ 67,374,000 $ 90,184,000 $ 22,810,000 33.86%Total Crime Prevention & JUdiciary: $ 1,384,290,000 $ 1,599,920,000 $ 215,630,000 15.580/0

87

1999..2001 2001 ..2003 Increase Percent

Biennium Biennium (Decrease) ChangeState Auditor $ 18,499,000 $ 20,348,000 $ 1,849,000

Special Revenue Fund Open/Statutory Approps. 36,000 56,000 .20,000Subtotal State Auditor. 18,535,000 20,404,000 1,869,000 10.08%

State Treasurer 7,948,000 4,682,000 (3,266,000) -41.09%

Attomey General 56,402,000 59,189,000 2,787,000

Special Revenue Fund Open/Statutory Approps. 544,000 425,000 (119,000)

Claims Against the State ° 12,000 12,000Subtotal Attomey General: 56,946,000 59,626,000 2,680,000 4.71%

Investment Board 4,686,000 5,012,000 326,000 6.96%

Board of PUblic Disclosure 1,457,000 1,376,000 (81,000)Additional FY2001 Appropriation 35,000 ° (35,000)

Special Revenue Fund Open/Statutory Approps. 4,032,000 5,258,000 1,226,000Subtotal Brd. of Public Disclosure: 5,524,000 6,634,000 1,110,000 20.09%

Office of Administrative Hearings 13,923,000 15,385,000 1,462,000 10.50%

Department of Administration

Operations Management 8,672,000 7,377,000 (1,295,000)

Technology Management 41,733,000 59,543,000 17,810,000

Facilities Management 10,013,000 7,578,000 (2,435,000)

Additional FY2oo1 Appropriation 75,000 ° (75,000)

Management Services 7,541,000 7,591,000 50,000

Public Broadcasting 6,660,000 14,460,000 7,800,000

Children's Museum 520,000 ° (520,000)

Fiscal Agent 1,260,000 1,904,000 644,000Legislative & Veterans Organizations Rent 12,175,000 16,040,000 3,865,000

Special Revenue Fund Open/Statutory Approps. 5,892,000 20,644,000 14,752,000

State Govt. Special Rev. Open/Stat. Approps. 8,300,000 11,546,000 3,246,000

Gift Fund 192,000 240,000 48,000

Appropriations Carried Forward ° 2,690,000 2,690,000Subtotal Department of Administration: 103,033,000 149,613,000 46,580,000 45.21%

Capitol Area Architectural and Planning Board 1,357,000 638,000 (719,000) -52.98%

Department of Finance 42,373,000 36,889,000 (5,484,000)

Appropriations Carried Forward ° 2,059,000 2,059,000

Special Revenue Fund Open/Statutory Approps. ° 15,040,000 15,040,000

Subtotal Department of Finance: 42,373,000 53,988,000 11,615,000 27.41%

Department of RevenueTax System Management 182,305,000 166,759,000 (15,546,000)Accounts Receivable Operations 5,043,000 21,554,000 16,511,000Outstanding CollectionS/Property 3,800,000 3,800,000 °Administration & New Tax Law Changes 2,235,000 4,924,000 2,689,000Additional FY2oo1 Appropriation 2,151,000 ° (2,151,000)Other Aids, Credits, and Payments 15,844,000 8,864,000 (6,980,000)MN Minerals 21 st Century Fund 20,000,000 ° (20,000,000)Special Revenue Fund Open/Statutory Approps. 2,494,000 5,000,000 2,506,000Claims Against the State ° 13,000 13,000Appropriations Carried Forward ° 1,400,000 1,400,000

Subtotal Department of Revenue: 233,872,000 212,314,000 (21 ,558,000) -9.22%

Office of Strategic & Long-Range Planning 12,184,000 10,609,000 (1,575,000)

Special Revenue Fund Open/Statutory Approps. 1,223,000 2,471,000 1,248,000Subtotal Strategic & Long-Range Planning: 13,407,000 13,080,000 (327,000) -2.44%

Brd. of Government Innovation and Cooperation 2,032,000 1,030,000 (1,002,000) -49.31%

Arts Board 26,158,000 26,260,000 102,000 0.39%

Minnesota Humanities·Commission 1,806,000 2,058,000 252,000 13.95%

State Appropriations: $ 1,133,937,000 $ 1,197,480~000 $ 63,543,000 5.60%Federal Appropriations: $ 90,927,000 $ 102,871,000 $ 11,944,000 13.14%

Total Government Operations: $ 1,224,864,000 $ 1,300,351,000 $ 75,487,000 6.16%

89



Miscellaneous

Debt Service & BorrowingGeneral Fund Debt Service $ 578,681,000 $ 629,739,000 $ 51,058,000Cambridge Debt Service Fund 110,280,000 0 (110,280,000)Other Debt Service 103,198,000 127,742,000 24,544,000

Total Debt Service & Borrowing: 792,159,000 757,481,000 (34,678,000) -4.38%

GeneraliContingent AccountsGeneral Fund 200,000 6,000,000 5,800,000Trunk Highway Fund 400,000 400,000 0Highway User Tax Distribution Fund 250,000 250,000 0State Govt. Special Revenue 800,000 800,000 0Airport Fund 100,000 100,000 0Workers' Compensation 200,000 200,000 0

Subtotal General Contingent Accounts: 1,950,000 7,750,000 5,800,000 297.44%

Capital Projects - Direct Appropriations 113,850,000 0 (113,850,000) -100.00%

Dedicated General Fund Appropriations 282,346,000 284,062,000 1,716,000 0.61%

Tort Claims 1,750,000 1,750,000 0 0.00%

Campaign Fund Check-Qff 3,969,000 4,242,000 273,000 6.88%

Loans to Revolving Fund 12,200,000 12,000,000 (200,000) -1.64%

Revolving Loan - Year 2000 20,000,000 0 (20,000,000) -100.00%

Finance Non-Qperating 492,000 7,448,000 6,956,000 1413.82%

Tax Refund Interest 70,000,000 60,000,000 (10,Ooo,opO) -14.29%

Motor Vehicle Tax Reduction (FY2001) 11,725,000 0 (11,725,000) -100.00%

Minnesota Minerals 21 st Centu'ry Fund 30,000,000 0 (30,000,000) -100.00%

Total Miscellaneous: $ 1,340,441,000 $ 1,134,733,000 $ (205,708,000) -15.35%

TOTALS

State Appropriations - Gross $ 31,679,090,000 $ 34,320,764,000 $ 2,641,674,000Dept. of Human Services RTC Collections (2) (45,560,000) (130,328,000) (84,768,000)Indirect Cost Receipts (46,491,000) (53,197,000) (6,706,000)Cancellations (34,340,000) (20,000,000) 14,340,000

State Appropriations - Net: $ 31,552,699,000 $ 34,117,239,000 $ 2,564,540,000Federal Funds Appropriations: $ 8,021,349,000 $ 8,982,104,000 $ 960,755,000

Total Appropriations: $ 39,574,048,000 $ 43,099,343,000 $ 3,525,295,000

General FundGash Flow Account $ 350,000,000 $ 350,000,000 0BUdget Reserves 622,000,000 653,000,000 31,000,000Dedicated Reserves 145,272,000 151,357,000 6,085,000

$ 1,117,272,000 $ 1,154,357,000 $ 37,085,000

NOTES:

(1) Appropriations carried forward are unused funds appropriated in a previous year that did not cancel but werecarried forward into the next fiscal year.

(2) Dept. of Human Services RTC receipts already counted in the appropriation for MA and GAMC federal funds.

(3) Open and statutory appropriations from non-General Fund sources are included and are based on the ConsolidatedFund Statement prepared by the Department of Finance with some minor adjustments. The amounts represent thedifference between the direct appropriations in law and the level of estimated expenditures from that fund.Prior to the 2000 issue, the Fiscal Review did not include these non-General Fund open and statutory appropriationsand comparisons of overall appropriation levels with previous biennia must be adjusted to reflect this change inreporting of open and statutory appropriations.

(4) Department of Public Safety Driver and Vehicle Services 1999..2001 biennial appropriation containsFY2oo1 appropriations from the 2001 Session.

90

8.34%

8.13%11.98%

8.91%

3.32%

°FY2oo2 FY2oo3 Biennium

Municipal State Aid Street Fund5.5. Chpt. 8 Transportation & Public Safety $ 106,469,000 $ 109,827,000 $ 216,296,000

Total Municipal State Aid Street Fund: $ 106,469,000 $ 109,827,000 $ 216,296,000

Natural Resources Fund5.5. Chpt. 2 Natural Resources, Environment, & Agriculture $ 45,028,000 $ 45,438,000 $ 90,466,000

Total Natural Resources Fund: $ 45,028,000 $ 45,438,000 $ 90,466,000

P~troleumTank Release Cleanup Fund5.5. Chpt. 2 Natural Resources, Environment, & Agriculture $ 3,511,000 $ 3,616,000 $ 7,127,0005.5. Chpt. 4 Economic Development 1,064,000 1,084,000 2,148,000

Total Petroleum Tank Release Cleanup Fund: $ 4,575,000 $ 4,700,000 $ 9,275,000

Solid Waste Fund5.5. Chpt. 2 Natural Resources, Environment, &Agriculture $ 13,794,000 $ 13,529,000 $ 27,323,0005.5. Chpt. 10 State Government Operations 677,000 684,000 1,361,000

Solid Waste Fund: $ 14,471,000 $ 14,213,000 $ 28,684,000

Special Revenue Fund5.5. Chpt. 2 Natural Resources, Environment, &Agriculture $ 267,000 $ ° $ 267,0005.5. Chpt. 3 Family & Early Childhood Education 2,641,000 2,540,000 5,181,0005.5. Chpt. 4 Economic Development 11,849,000 10,942,000 22,791,0005.5. Chpt. 8 Transportation & Public Safety 8,345,000 8,405,000 16,750,0005.5. Chpt. 9 Health, Human Services & Corrections 1,389,000 1,242,000 2,631,0005.5. Chpt. 10 State Government Operations 300,000 ° 300,000

Total.Special Revenue Fund: $ 24,791,000 $ 23,129,000 $ 47,920,000

State Government Special Revenue Fund5.5. Chpt. 2 Natural Resources, Environment, & Agriculture $ 47,000 $ 48,000 $ 95,0005.5. Chpt. 8 Transportation & Public Safety 7,000 7,000 14,0005.5. Chpt. 9 Health, Human Services & Corrections 38,529,000 40,672,000 79,201,0005.5. Chpt. 10 State Government Operations 24,261,000 22,645,000 46,906,000

Total State Government Special Revenue Fund: $ 62,844,000 $ 63,372,000 $ 126,216,000

State Lottery Fund5.5. Chpt. 9 Health, Human Services & Corrections $ 1,453,000 $ 1,456,000 $ 2,909,0005.5. Chpt. 10 State Government Operations 750,000 ° 750,000

Total State Lottery Fund: $ 2,203,000 $ 1,456,000 $ 3,659,000

Trunk Highway Fund5.5. Chpt. 8 Transportation & Public Safety $ 1,131,n3,000 $ 1,140,952,000 $ 2,272,725,000

Total Trunk Highway Fund: $ 1,131,n3,000 $ 1,140,952,000 $ 2,272,725,000

Workers' Compensation Fund5.5. Chpt. 4 Economic Development $ 23,216,000 $ 23,765,000 $ 46,981,0005.5. Chpt. 10 State Government Operations 7,544,000 8,041,000 15,585,000

Total Workers Compensation Fund: $ 30,760,000 $ 31,806,000 $ 62,566,000

Grand Total Direct Appropriations: $ 12,902,432,000 $ 14,654,648,000 $ 27,557,080,000

92

Table E

Open and Statutory AppropriationsFiscal Years 2002 and 2003

2001·2003FY2002 FY2oo3 Biennium

General Fund

Aids & Credits

Property Tax Refund $ 193,363,000 $ 204,148,000 $ 397,511,000

Homestead Credit and Agricultural Credit 488,753,000 486,858,000 975,611,000

Political Contribution Refunds 4,916,000 4,963,000 9,879,000

Disparity Aid 23,366,000 23,366,000 46,732,000

Border City Disparity Credit 5,081,000 5,337,000 10,418,000

Disaster & Flood Relief Aid 144,000 6,000 150,000

Local Government Aid 411,831,000 423,501,000 835,332,000

Attached Machinery Aid 3,218,000 3,218,000 6,436,000

Suppl. Homestead Prop. Tax Relief 570,000 596,000 1,166,000

Education Homestead Credit 451,101,000 455,535,000 906,636,000In Ueu of Taxes Payments on DNR Lands 11,618,000 11,876,000 23,494,000

Enterprise Zone Credit 4,000 4,000 8,000

Regional Transit Board Levy Reduction 2,101,000 2,101,000 4,202,000

Region 3 • Occupation Tax 561,000 561,000 1,122,000

Family Preservation Aid 22,645,000 23,315,000 45,960,000

Total Aids and Credits: $ 1,619,272,000 $ 1,645,385,000 $ 3,264,657,000

Other General Fund Open and Statutory Appropriations

Corrections Aid $ 30,954,000 $ 31,893,000 $ 62,847,000

Minneapolis Employees' Retirement Fund 3,232,000 3,232,000 6,464,000Local Police & Fire Amortization Aid 5,925,000 5,925,000 11,850,000

Aid to Police &Fire Departments 64,819,000 68,186,000 133,005,000

Judges'·Retirement 2,123,000 2,250,000 4,373,000

Legislators' & Constitutional Officers' Retirement 7,176,000 7,606,000 14,782,000

Teachers'Retirement 2,500,000 2,500,000 5,000,000

Other Pension 31,475,000 31,475,000 62,950,000

Ethanol Producer Payments 35,436,000 35,456,000 70,892,000

1854 Indian Treaty Settlement 4,670,000 5,187,000 9,857,000

DNR Firefighting 7,279,000 7,079,000 14,358,000

Leach Lake &White Earth Indian Reservation 2,493,000 2,505,000 4,998,000

Non-game Wildlife Checkoff 86,000 86,000 172,000

Tax Refund Interest 30,000,000 30,000,000 60,000,000

.Revolving Loans 6,000,000 6,000,000 12,000,000

Debt Service and Borrowing 297,087,000 332,652,000 629,739,000

Other General Fund Open and Statutory 16,171,000 17,116,000 33,287,000

Total Other Open &StatutOry Approps.: $ 547,426,000 $ 589.148,000 $ 1.136,574.000

Total General Fund Open and Statutory Appropriations: $ 2,166,698,000 $ 2,234,533,000 $ 4,401,231,000

93

2001-2003FY2002 FY2003 Biennium

Non-General Fund Open and Statutory Appropriations (1)

School Endowment Fund $ 21,000,000 $ 22,000,000 $ 43,000,000State Lottery Board 56,555,000 57,403,000 113,958,000Environmental Fund 7,085,000 7,085,000 14,170,000Game and Fish Fund 3,078,000 3,078,000 6,156,000Landfill Cleanup-Solid Waste 24,659,000 24,659,000 49,318,000Metro Landfill Contingency Fund 2,000,000 2,000,000 4,000,000Natural Resources 822,000 823,000 1,645,000

"Petroleum Tank Release Cleanup 31,630,000 31,630,000 63,260,000Special Revenue 423,308,000 371,176,000 794,484,000

State Government Special Revenue Fund 8,592,000 8,504,000 17,096,000

Health care Access Fund 30,965,000 30,966,000 61,931,000

Minnesota Technology Fund 4,069,000 4,069,000 8,138,000Agricultural Fund 19,379,000 19,379,000 38;758,000

Iron Range Resources & Rehabilitation Fund 31,218,000 31,375,000 62,593,000State Airports 1,548,000 1,548,000 3,096,000Trunk Highway Fund 33,372,000 33,372,000 66,744,000

Highway User Tax Distribution Fund 6,136,000 6,136,000 12,272,000Municipal-State Aid Street 2,245,000 2,245,000 4,490,000 .County-state Aid Highway 8,509,000 8,510,000 17,019,000

Metropolitan Area Transit Fund • 0 116,621,000 116,621 ,000Greater Minnesota Transit Fund 0 6,475,000 6,475,000Medical Education & Research Fund 41,534,000 50,942,000 92,476,000

Tobacco Use Prevention Fund 21,061,000 28,062,000 49,123,000

NE MN Economic Protection Fund 4,879,000 4,099,000 8,978,000Workers' Compensation Fund 156,037,000 156,037,000 312,074,000

Gift Fund 12,555,000 12,642,000 25,197,000Endowment Fund 5,000 5,000 10,000

Other Open and StatutOry (Non Gen Fund.Debt Service) 63,871,000 63,871,000 127,742,000Total Non-General Fund Open and Statutory.: $ 1,016,112,000 $ 1,104,712,000 $ 2,120,~24,OOO

Grand Total: All Open and Statutory: $ 3,182,810,000 $ 3,339,245,000 $ 6,522,055,000

NOTES:(1) Open and statutory appropriations from non-General Fund sources are included and are based on the Consolidated

Fund Statement pre'pared by the Department of Finance with some minor adjustments. The amounts represent thedifference between the direct appropriations in· law and the level of estimated expenditures from that fund.Prior to the 2000 issue, the Fiscal Review did not include these non-General Fund open and statutory appropriationsand comparisons of overall appropriation levels with previous biennia must be adjusted to reflect this change inreporting of open and statutory appropriations.

94

Table F

Biennial Appropriations of Federal FundsFiscal Years 2002 and 2003

FY 2002 . FY 20032001·2003Biennium

Elementary and Secondary Education $ 455,031,000 $ 448,024,000 $ 903,055,000

Early Childhood &Family Education 128,695,000 108,479,000 237,174,000

Higher Education 39,909,000 4~,009,000 79,918,000

Human Services 2,871,105,000 3,121,499,000 5,992,604,000

Health 138,703,000 137,043,000 275,746,000

Veterans Homes 289,000 292,000 581,000

Agriculture 4,528,000 4,236,000 8,764,000

Natural Resources 14,661,000 13,590,000 28,251,000

Pollution Control 27,373,000 25,028,000 52,401,000

Trade &Economic Development 94,746,000 82,756,000 177,502,000

Housing Finance Agency 236,000 125,000 361,000

Economic Security 259,854,000 260,208,000 520,062,000

Historical Society & Indian Affairs 327,000 327,000 654,000

Transportation 237,300,000 235,921,000 473,221,000

Public Safety-Transportation 17,101,000 21,654,000 38,755,000

Criminal Justice 48,884,000 35,363,000 84,247,000

Courts 3,049,000 2,888,000 5,937,000

Military Affairs 43,809,000 44,165,000 87,974,000

Attorney General 1,175,000 1,200,000 2,375,000

Other 6,336,000 6,186,000 12,522,000

Total Federal Funds: $ 4,393,111,000 $ 4,588,993,000 $ 8,982,104,000

95

IndividuafIncome Tax:

Appendix ATax Reference Infonnation

(Selected Taxes)

Sales and Use Tax:

Tax Ba,se: Federal taxable income withcertain modifications

Tax Base: Sales price of tangible personalproperty and certain services.

(Tax Year 2(01)Tax Rates:

Married Joint Returns:

$ 1- 26,48026,481 - 105,200

105,201 and over

Single

5.35%7.05%7.85%

Major Exemptions: Food (off-premise consumption)Prescription drugsClothingGasolineMotor vehicles (see tax below)Many professional servicesCapital equipmentSpecial toolingFarm machinery

Recent Collections:

$ 1 - 18,12018,121 - 59,50059,501 and over

Heads of Households:

$ 1- 22,30022,301 - 89,610 •89,611 and over

Married Separate Returns:

$ 1- 13,24013,241 - 52,60052,601 and over

5.35%7.05%7.85%

5.35%7.05%7.85%

5.35%7.05%7.85%

Tax Rates:

Recent Collections:

Disposition:

General Rateliquor and Beer:

FY2000FY2001

General Fund

6.5%9.0%

$3,715,267,0003,762,460,000

Disposition:

FY2000FY2001

General Fund

$ 5,556,371,0005,915,391,000

Motor Vehicle Sales Tax:

Corporation Franchise Tax: Tax Base: Purchase price (less .trade-in value) of any motorvehicle required to be regiStered in Minnesota.

Tax Base:

Tax Rate:

Minnesota taxable net income of thecorporation. ("Domestic Unitary"reporting method is u~)

9.8%

Major Exemptions: Purchases for resale by dealersInheritancesGratuitous transfers between individuals and betweenjoint owners.

Beginning July 1,2001:30.86% to Highway User Tax Distribution FundBalance to General Fund

6.5%$10 for cars 10 years or older and under $3,000 in value$90 for collector vehicles

Major Exemptions:

Apportionment Factors:

Nonprofit CorporationsCooperative AssociationsCredit UnionsInsurance CompaniesMining companies subject tooccupation tax.

Minnesota Property ratio weighted 12.5%Minnesota Payroll ratio weighted 12.5%Minnesota Sales ratio weighted 75.0%

Tax Rate:

Recent Collections:

Disposition:

FY2000FY2001

$ 540,300,000545,472,000

Recent Collections:

Disposition:

FY2000FY2001

General Fund

$ 800,130,000729,075,000

96

Beginning July 1, 2002:32% to Highway User Tax Distribution Fund20.5% to Metropolitan Area Transit Fund1.25% to Greater Minnesota Transit FundBalance to General Fund

Motor Fuels Tax:

Appendix ATax Reference Information

(Selected Taxes)

Cigarette Tax:

Tax Base:

Exemptions:

Gallons of gasoline or special fuelused in highway vehicles, snowmobiles, motorboats, all-terrainvehicles and aircraft.

Transit systems receiving state assistance.

Tax Base: Cigarettes sold or used in Minnesota

Credits: Distributors receive a 1.0% discount on the first$1.5 million of stamps purchased and 0.60% onadditional purchases.

Tax Rate: 48 cents per pack of 20Tax Rate: 20 cents per gallon except in certain

border areas.Aviation fuels: 5 cents per gallon, reduced byrefund based on annual purchases.

Recent Collections*:FY2000FY2oo1

$ 190,159,000185,798,000

Recent Collections:FY2000FY200l

$ 606,149,000609,382,000

* Revenue includes tobacco products which are taxed at 35% ofwholesale price.

Disposition: Highway user tax distribution fund(Aviation revenues to state airports fund)(Marine, snowmobile and all-terrain vehiclerevenues to special revenue fund)

Disposition: Debt service on specified bonds (paid first)2 cents per pack to the MinnesotaFuture Resources FundBalance to General Fund

Alcoholic Beverages Tax: Gambling Taxes:Distilled spirits, beers, malt beverages, wines andpremixed alcoholic beverages manufactured orreceived for sale in Minnesota.

Tax Base:

Tax Rate:Beer (rates per 31 gallon barrel) :3.2% or less alcohol by weight:More than 3.2 %

Distilled spirits:per gallon

$2.404.60

5.03

Lawful Gambling Tax

Tax Base: Gross receipts of a licensed organization fromlawful gambling (bingo, raffies, and paddlewheels) less prizesactually paid out.

Tax Rate: 8.5%

Pull-tab and tipboard tax

Tax Base: Ideal gross of each pull-tab or tipboard deal soldby a distributor.

Wme (alcohol by volume):14% or less14% to 21%21% to 24%More than 24%Sparkling Wme

$.30 per gallon0.95 per gallon1.82 per gallon3.52 per gallon1.82 per gallon

Tax Rate: 1.7%

Combined Receipts Tax

Tax Base: Gross receipts from pull-tabs and tipboards, at the followingrates:

Recent Collections:

Cider 0.5% to 7% alcohol

FY2000FY200l

.15 per gallon

$62,139,00060,962,000

Receipts$ 0- 500,000500,001 -700,000700,001 - 900,000900,001 and over

Rate0%

1.7%3.4%5.1%

Disposition: General Fund

97

Recent Collections:

Disposition:

FY2000FY200l

General Fund

$63,428,00057,639,000

a fiscal review of the 2001 legislative session · fiscal review of the 2001 legislative session...

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