HF4808

Purpose

• Establish and fund a path to modernize and replace outdated information technology (IT) used by state and local governments to administer state programs.
• Use positive general fund surplus to strengthen state finances, support schools, and improve IT infrastructure.

Main Provisions

• Priority use of any positive unrestricted general fund balance at the end of the fiscal biennium:
  • 1) Fill cash flow needs up to 350,000,000 dollars.
  • 2) Build the budget reserve up to 2,852,098,000 dollars.
  • 3) Increase school aid payments (section 127A.45) to not more than 90% of the target, rounded to the nearest tenth, while staying within available funds; any remaining funds go to the budget reserve.
  • 4) Restore all or part of net aid reductions (section 127A.441) and reduce the property tax revenue recognition shift (section 123B.75, subdivision 5) by the same amount.
  • 5) Fund the technology obsolescence reduction keystone account (section 16A.627) up to 80,000,000 dollars.
• Funding timing and mechanics:
  • The amounts identified above are appropriated from the general fund within two weeks after the forecast is released; transfers under the 3 and 4 items are done as needed to meet statutory appropriation schedules.
  • The total reductions under items 3 and 4 must be certified to the Commissioner of Education, who will increase the school aid payment percentage and reduce the property tax shift percentage by those amounts, applying them to the current fiscal year and thereafter.

Significant Changes to Existing Law

• Section 16A.152, subdivision 2 amended to add a formal priority order for allocating surplus general fund balance in the event of a positive forecast.
• Creation of a new dedicated funding mechanism:
  • Section 16A.627 establishes the Technology Obsolescence Reduction Keystone Account in the special revenue fund to support IT modernization or replacement.
• New reporting and planning requirements:
  • The Minnesota Information Technology Services (IT Services) commissioner must develop and submit an IT modernization plan identifying and ranking IT systems most in need of modernization or replacement, with priority to those used by local governments to administer state programs.
• One-time transfer provision:
  • A one-time transfer of 30,000,000 dollars from the general fund to the technology obsolescence reduction keystone account (FY 2027).

IT Modernization Plan and Implementation

• By February 1, 2027, the IT Services commissioner must deliver the modernization plan to relevant legislators.
• The plan must list projects, estimated costs, and recommendations on whether to modernize or replace each system or infrastructure component.
• Priority is given to systems that are outdated or inadequate and used by local units of government to administer state programs.

Financial and Administrative Details

• One-time transfer:
  • 30,000,000 dollars in FY 2027 to the technology obsolescence reduction keystone account from the general fund.
• Administrative flow:
  • Funds reserved for IT modernization are managed through the new keystone account (special revenue fund) and are available for legislative appropriation to support modernization projects.

Summary Outcome

• The bill directs how any future general fund surplus should be allocated in a prioritized way, creates a dedicated account to fund IT modernization, requires a formal modernization plan, and authorizes a one-time transfer to kick-start IT upgrades for state and local programs.

Relevant Terms - general fund, unrestricted budget balance, cash flow account, budget reserve account, school district aids and credits, aid payment percentage, 127A.45, 127A.441, 123B.75, property tax revenue recognition shift, technology obsolescence reduction keystone account, 16A.627, Minnesota Information Technology Services, information technology modernization plan, special revenue fund, IT modernization, outdated IT infrastructure, local units of government, appropriation, onetime transfer, FY 2027.