1.1                          A bill for an act 
  1.2             relating to state finance; modifying the debt 
  1.3             collections act; amending Minnesota Statutes 1996, 
  1.4             sections 16A.72; 16D.02, subdivision 3; 16D.04, 
  1.5             subdivisions 1 and 4; 16D.06, subdivision 2; 16D.08, 
  1.6             subdivision 2; 16D.11, as amended; 16D.14, subdivision 
  1.7             5, and by adding a subdivision; and 16D.16, 
  1.8             subdivision 1; Minnesota Statutes 1997 Supplement, 
  1.9             sections 270.063, subdivision 1; and 357.021, 
  1.10            subdivision 1a; proposing coding for new law in 
  1.11            Minnesota Statutes, chapter 16D. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1996, section 16A.72, is 
  1.14  amended to read: 
  1.15     16A.72 [INCOME CREDITED TO GENERAL FUND; EXCEPTIONS.] 
  1.16     All income, including fees or receipts of any nature, shall 
  1.17  be credited to the general fund, except:  
  1.18     (1) federal aid; 
  1.19     (2) contributions, or reimbursements received for any 
  1.20  account of any division or department for which an appropriation 
  1.21  is made by law; 
  1.22     (3) income to the University of Minnesota; 
  1.23     (4) income to revolving funds now established in 
  1.24  institutions under the control of the commissioners of 
  1.25  corrections or human services; 
  1.26     (5) investment earnings resulting from the master lease 
  1.27  program, except that the amount credited to another fund or 
  1.28  account may not exceed the amount of the additional expense 
  2.1   incurred by that fund or account through participation in the 
  2.2   master lease program; 
  2.3      (6) investment earnings resulting from any gift, donation, 
  2.4   device, endowment, trust, or court ordered or approved escrow 
  2.5   account or trust fund, which should be credited to the fund or 
  2.6   account and appropriated for the purpose for which it was 
  2.7   received; 
  2.8      (7) receipts from the operation of patients' and inmates' 
  2.9   stores and vending machines, which shall be deposited in the 
  2.10  social welfare fund in each institution for the benefit of the 
  2.11  patients and inmates; 
  2.12     (7) (8) money received in payment for services of inmate 
  2.13  labor employed in the industries carried on in the state 
  2.14  correctional facilities which receipts shall be credited to the 
  2.15  current expense fund of those facilities; 
  2.16     (8) (9) as provided in sections 16B.57 and 85.22; 
  2.17     (9) (10) income to the Minnesota historical society; 
  2.18     (10) (11) the percent of income collected by a private 
  2.19  collection agency and retained by the collection agency as its 
  2.20  collection fee; or 
  2.21     (11) (12) as otherwise provided by law. 
  2.22     Sec. 2.  Minnesota Statutes 1996, section 16D.02, 
  2.23  subdivision 3, is amended to read: 
  2.24     Subd. 3.  [DEBT.] "Debt" means an amount owed to the state 
  2.25  directly, or through a state agency, on account of a fee, duty, 
  2.26  lease, direct loan, loan insured or guaranteed by the state, 
  2.27  rent, service, sale of real or personal property, overpayment, 
  2.28  fine, assessment, penalty, restitution, damages, interest, tax, 
  2.29  bail bond, forfeiture, reimbursement, liability owed, an 
  2.30  assignment to the state including assignments under sections 
  2.31  256.72 to 256.87, the Social Security Act, or other state or 
  2.32  federal law, recovery of costs incurred by the state, or any 
  2.33  other source of indebtedness to the state.  Debt also includes 
  2.34  amounts owed to individuals as a result of civil, criminal, or 
  2.35  administrative action brought by the state or a state agency 
  2.36  pursuant to its statutory authority or for which the state or 
  3.1   state agency acts in a fiduciary capacity in providing 
  3.2   collection services in accordance with the regulations adopted 
  3.3   under the Social Security Act at Code of Federal Regulations, 
  3.4   title 45, section 302.33.  Debt also includes an amount owed to 
  3.5   the courts or University of Minnesota for which the commissioner 
  3.6   provides collection services pursuant to contract. 
  3.7      Sec. 3.  Minnesota Statutes 1996, section 16D.04, 
  3.8   subdivision 1, is amended to read: 
  3.9      Subdivision 1.  [DUTIES.] The commissioner shall provide 
  3.10  services to the state and its agencies to collect debts owed the 
  3.11  state.  The commissioner is not a collection agency as defined 
  3.12  by section 332.31, subdivision 3, and is not licensed, bonded, 
  3.13  or regulated by the commissioner of commerce under sections 
  3.14  332.31 to 332.35 or 332.38 to 332.45.  The commissioner is 
  3.15  subject to section 332.37, except clause (9) or, (10), (12), or 
  3.16  (19).  Debts referred to the commissioner for collection under 
  3.17  section 256.9792 may in turn be referred by the commissioner to 
  3.18  the enterprise.  An audited financial statement may not be 
  3.19  required as a condition of debt placement with a private agency 
  3.20  if the private agency:  (1) has errors and omissions coverage 
  3.21  under a professional liability policy in an amount of at least 
  3.22  $1,000,000; or (2) has a fidelity bond to cover actions of its 
  3.23  employees, in an amount of at least $100,000.  In cases of debts 
  3.24  referred under section 256.9792, the provisions of this chapter 
  3.25  and section 256.9792 apply to the extent they are not in 
  3.26  conflict.  If they are in conflict, the provisions of section 
  3.27  256.9792 control.  For purposes of this chapter, the referring 
  3.28  agency for such debts remains the department of human services. 
  3.29     Sec. 4.  Minnesota Statutes 1996, section 16D.04, 
  3.30  subdivision 4, is amended to read: 
  3.31     Subd. 4.  [AUTHORITY TO CONTRACT.] The 
  3.32  commissioner commissioners of revenue and finance may contract 
  3.33  with credit bureaus, private collection agencies, and other 
  3.34  entities as necessary for the collection of debts.  A private 
  3.35  collection agency acting under a contract with the 
  3.36  commissioner commissioners of revenue and finance is subject to 
  4.1   sections 332.31 to 332.45, except that the private collection 
  4.2   agency may indicate that it is acting under a contract with 
  4.3   the commissioner state.  The commissioner may not delegate the 
  4.4   powers provided under section 16D.08 to any nongovernmental 
  4.5   entity. 
  4.6      Sec. 5.  Minnesota Statutes 1996, section 16D.06, 
  4.7   subdivision 2, is amended to read: 
  4.8      Subd. 2.  [DISCLOSURE OF DATA.] Data received, collected, 
  4.9   created, or maintained by the commissioner or the attorney 
  4.10  general to collect debts are classified as private data on 
  4.11  individuals under section 13.02, subdivision 12, or nonpublic 
  4.12  data under section 13.02, subdivision 9.  The commissioner or 
  4.13  the attorney general may disclose not public data: 
  4.14     (1) under section 13.05; 
  4.15     (2) under court order; 
  4.16     (3) under a statute specifically authorizing access to the 
  4.17  not public data; 
  4.18     (4) to provide notices required or permitted by statute; 
  4.19     (5) to an agent of the commissioner or the attorney 
  4.20  general, including a law enforcement person, attorney, or 
  4.21  investigator acting for the commissioner or the attorney general 
  4.22  in the investigation or prosecution of a criminal or civil 
  4.23  proceeding relating to collection of a debt; 
  4.24     (6) to report names of debtors, amount of debt, date of 
  4.25  debt, and the agency to whom debt is owed to credit bureaus and 
  4.26  private collection agencies under contract with the 
  4.27  commissioner; 
  4.28     (7) when necessary to locate the debtor, locate the assets 
  4.29  of the debtor, or to enforce or implement the collection of a 
  4.30  debt; and 
  4.31     (8) to the commissioner of revenue for tax administration 
  4.32  purposes. 
  4.33     The commissioner and the attorney general may not disclose 
  4.34  data that is not public to a private collection agency or other 
  4.35  entity with whom the commissioner has contracted under section 
  4.36  16D.04, subdivision 4, unless disclosure is otherwise authorized 
  5.1   by law. 
  5.2      Sec. 6.  Minnesota Statutes 1996, section 16D.08, 
  5.3   subdivision 2, is amended to read: 
  5.4      Subd. 2.  [POWERS.] In addition to the collection remedies 
  5.5   available to private collection agencies in this state, the 
  5.6   commissioner, with legal assistance from the attorney general, 
  5.7   may utilize any statutory authority granted to a referring 
  5.8   agency for purposes of collecting debt owed to that referring 
  5.9   agency.  The commissioner may also delegate to the enterprise 
  5.10  the tax collection remedies in sections 270.06, clauses (7) and 
  5.11  (17), excluding the power to subpoena witnesses; 270.66; 270.69, 
  5.12  excluding subdivisions 7 and 13; 270.70, excluding subdivision 
  5.13  14; 270.7001 to 270.72; and 290.92, subdivision 23, except that 
  5.14  a continuous wage levy under section 290.92, subdivision 23, is 
  5.15  only effective for 70 days, unless no competing wage 
  5.16  garnishments, executions, or levies are served within the 70-day 
  5.17  period, in which case a wage levy is continuous until a 
  5.18  competing garnishment, execution, or levy is served in the 
  5.19  second or a succeeding 70-day period, in which case a continuous 
  5.20  wage levy is effective for the remainder of that period.  A 
  5.21  debtor who qualifies for cancellation of the collection penalty 
  5.22  costs under section 16D.11, subdivision 3, clause (1), can apply 
  5.23  to the commissioner for reduction or release of a continuous 
  5.24  wage levy, if the debtor establishes that the debtor needs all 
  5.25  or a portion of the wages being levied upon to pay for essential 
  5.26  living expenses, such as food, clothing, shelter, medical care, 
  5.27  or expenses necessary for maintaining employment.  The 
  5.28  commissioner's determination not to reduce or release a 
  5.29  continuous wage levy is appealable to district court.  The word 
  5.30  "tax" or "taxes" when used in the tax collection statutes listed 
  5.31  in this subdivision also means debts referred under this 
  5.32  chapter.  For debts other than state taxes or child support, 
  5.33  before any of the tax collection remedies listed in this 
  5.34  subdivision can be used, except for the remedies in section 
  5.35  270.06, clauses (7) and (17), if the referring agency has not 
  5.36  already obtained a judgment or filed a lien, the commissioner 
  6.1   must first obtain a judgment against the debtor.  
  6.2      Sec. 7.  Minnesota Statutes 1996, section 16D.11, as 
  6.3   amended by Laws 1997, chapter 187, article 3, section 3, is 
  6.4   amended to read: 
  6.5      16D.11 [COLLECTION PENALTY COSTS.] 
  6.6      Subdivision 1.  [IMPOSITION.] As determined by the 
  6.7   commissioner of finance, a penalty collection costs shall be 
  6.8   added to the debts referred to the commissioner or private 
  6.9   collection agency for collection.  The penalty is Collection 
  6.10  costs are collectible by the commissioner or private agency from 
  6.11  the debtor at the same time and in the same manner as the 
  6.12  referred debt.  The referring agency shall advise the debtor of 
  6.13  the penalty collection costs under this section and the debtor's 
  6.14  right to cancellation of the penalty collection costs under 
  6.15  subdivision 3 at the time the agency sends notice to the debtor 
  6.16  under section 16D.07.  If the commissioner or private agency 
  6.17  collects an amount less than the total due, the payment is 
  6.18  applied proportionally to the penalty collection costs and the 
  6.19  underlying debt unless the commissioner of finance has waived 
  6.20  this requirement for certain categories of debt pursuant to the 
  6.21  department's internal guidelines.  Penalties Collection costs 
  6.22  collected by the commissioner under this subdivision or retained 
  6.23  under subdivision 6 shall be deposited in the general fund as 
  6.24  nondedicated receipts.  Penalties Collection costs collected by 
  6.25  private agencies are appropriated to the referring agency to pay 
  6.26  the collection fees charged by the private agency.  Penalty 
  6.27  Collections of collection costs in excess of collection agency 
  6.28  fees must be deposited in the general fund as nondedicated 
  6.29  receipts.  
  6.30     Subd. 2.  [COMPUTATION.] Beginning July 1, 1995, At the 
  6.31  time a debt is referred, the amount of the penalty collection 
  6.32  costs is equal to 15 percent of the debt, or 25 percent of the 
  6.33  debt remaining unpaid if the commissioner or private collection 
  6.34  agency has to take enforced collection action by serving a 
  6.35  summons and complaint on or entering judgment against the 
  6.36  debtor, or by utilizing any of the remedies authorized under 
  7.1   section 16D.08, subdivision 2, except for the remedies in 
  7.2   sections 270.06, clause (7), and 270.66 or when referred by the 
  7.3   commissioner for additional collection activity by a private 
  7.4   collection agency.  If, after referral of a debt to a private 
  7.5   collection agency, the debtor requests cancellation of the 
  7.6   penalty collection costs under subdivision 3, the debt must be 
  7.7   returned to the commissioner for resolution of the request. 
  7.8      Subd. 3.  [CANCELLATION.] The penalty Collection costs 
  7.9   imposed under subdivision 1 shall be canceled and subtracted 
  7.10  from the amount due if: 
  7.11     (1) the debtor's household income as defined in section 
  7.12  290A.03, subdivision 5, excluding the exemption subtractions in 
  7.13  subdivision 3, paragraph (3) of that section, for the 12 months 
  7.14  preceding the date of referral is less than twice the annual 
  7.15  federal poverty guideline under United States Code, title 42, 
  7.16  section 9902, subsection (2); 
  7.17     (2) within 60 days after the first contact with the debtor 
  7.18  by the enterprise or collection agency, the debtor establishes 
  7.19  reasonable cause for the failure to pay the debt prior to 
  7.20  referral of the debt to the enterprise; 
  7.21     (3) a good faith dispute as to the legitimacy or the amount 
  7.22  of the debt is made, and payment is remitted or a payment 
  7.23  agreement is entered into within 30 days after resolution of the 
  7.24  dispute; 
  7.25     (4) good faith litigation occurs and the debtor's position 
  7.26  is substantially justified, and if the debtor does not totally 
  7.27  prevail, the debt is paid or a payment agreement is entered into 
  7.28  within 30 days after the judgment becomes final and 
  7.29  nonappealable; or 
  7.30     (5) penalties collection costs have been added by the 
  7.31  referring agency and are included in the amount of the referred 
  7.32  debt. 
  7.33     Subd. 4.  [APPEAL.] Decisions of the commissioner denying 
  7.34  an application to cancel the penalty collection costs under 
  7.35  subdivision 3 are subject to the contested case procedure under 
  7.36  chapter 14. 
  8.1      Subd. 5.  [REFUND.] If a penalty is collection costs are 
  8.2   collected and then canceled, the amount of the penalty 
  8.3   collection costs shall be refunded to the debtor within 30 
  8.4   days.  The amount necessary to pay the refunds is annually 
  8.5   appropriated to the commissioner. 
  8.6      Subd. 6.  [CHARGE TO REFERRING AGENCY.] If the penalty 
  8.7   is collection costs are canceled under subdivision 3, an amount 
  8.8   equal to the penalty is retained by the commissioner from the 
  8.9   debt collected, and is accounted for and subject to the same 
  8.10  provisions of this chapter as if the penalty had been collected 
  8.11  from the debtor. 
  8.12     Subd. 7.  [ADJUSTMENT OF RATE.] By June 1 of each year, the 
  8.13  commissioner of finance shall determine the rate of the 
  8.14  penalty collection costs for debts referred to the enterprise 
  8.15  during the next fiscal year.  The rate is a percentage of the 
  8.16  debts in an amount that most nearly equals the costs of the 
  8.17  enterprise necessary to process and collect referred debts under 
  8.18  this chapter.  In no event shall the rate of the penalty 
  8.19  collection costs when a debt is first referred exceed 
  8.20  three-fifths of the maximum penalty collection costs, and in no 
  8.21  event shall the rate of the maximum penalty collection costs 
  8.22  exceed 25 percent of the debt.  Determination of the rate of the 
  8.23  penalty collection costs under this section is not subject to 
  8.24  the fee setting requirements of section 16A.1285. 
  8.25     Sec. 8.  Minnesota Statutes 1996, section 16D.14, is 
  8.26  amended by adding a subdivision to read: 
  8.27     Subd. 3a.  [CONCILIATION COURT, GENERALLY.] In addition to 
  8.28  the venue options of subdivisions 1, 2, and 3, the commissioner 
  8.29  or the attorney general may bring a conciliation court action 
  8.30  where the cause of action arose or where the debtor resides, at 
  8.31  the option of the state. 
  8.32     Sec. 9.  Minnesota Statutes 1996, section 16D.14, 
  8.33  subdivision 5, is amended to read: 
  8.34     Subd. 5.  [FEES.] No court filing fees, docketing fees, or 
  8.35  release of judgment fees, or any other fees or costs for court 
  8.36  services may be assessed against the state for collection 
  9.1   actions filed under this chapter by the state or a state agency 
  9.2   seeking monetary relief in favor of the state. 
  9.3      Sec. 10.  Minnesota Statutes 1996, section 16D.16, 
  9.4   subdivision 1, is amended to read: 
  9.5      Subdivision 1.  [AUTHORIZATION.] Unless prohibited by other 
  9.6   law, the state agency utilizes a more specific setoff statute, 
  9.7   or the state payments are subject to a more specific setoff 
  9.8   statute, the commissioner or a state agency may automatically 
  9.9   deduct the amount of a debt owed to the state from any state 
  9.10  payment due to the debtor, except tax refunds, earned income tax 
  9.11  credit, child care tax credit, prejudgment debts of $5,000 or 
  9.12  less, funds exempt under section 550.37, or funds owed an 
  9.13  individual who receives.  Earned income tax credit, child care 
  9.14  credit, funds exempt under section 550.37, or funds owed to an 
  9.15  individual who is receiving assistance under the provisions of 
  9.16  chapter 256 are not subject to setoff under this chapter 
  9.17  section.  If a debtor has entered into a written payment plan 
  9.18  with respect to payment of a specified debt, the right of setoff 
  9.19  may not be used to satisfy that debt.  Notwithstanding section 
  9.20  181.79, the state may deduct from the wages due or earned by a 
  9.21  state employee to collect a debt, subject to the limitations in 
  9.22  section 571.922. 
  9.23     Sec. 11.  [16D.17] [ENFORCEMENT OF STATUTORY PENALTIES.] 
  9.24     A state agency may enforce a final penalty order imposed 
  9.25  for violations of state law in the same manner as a district 
  9.26  court judgment if: 
  9.27     (1) notice and opportunity for a hearing on the penalty has 
  9.28  been provided; and 
  9.29     (2) the notice or order of the penalty states that when the 
  9.30  order becomes final, the agency may file and enforce the penalty 
  9.31  as a judgment without further notice or additional proceedings. 
  9.32     The administrative order may be filed with a district court 
  9.33  administrator along with an affidavit of identification and 
  9.34  amount owed, and the court administrator shall enter and docket 
  9.35  the administrative order as a civil judgment. 
  9.36     Sec. 12.  Minnesota Statutes 1997 Supplement, section 
 10.1   270.063, subdivision 1, is amended to read: 
 10.2      Subdivision 1.  [APPROPRIATION.] For the purpose of 
 10.3   collecting delinquent state tax liabilities or debts as defined 
 10.4   in section 16D.02, subdivision 3, there is appropriated to the 
 10.5   commissioner of revenue an amount representing the cost of 
 10.6   collection by contract with collection agencies, revenue 
 10.7   departments of other states, or attorneys to enable the 
 10.8   commissioner to reimburse these agencies, departments, or 
 10.9   attorneys for this service.  The commissioner shall report 
 10.10  quarterly on the status of this program to the chair of the 
 10.11  house tax and appropriation committees and senate tax and 
 10.12  finance committees. 
 10.13     Sec. 13.  Minnesota Statutes 1997 Supplement, section 
 10.14  357.021, subdivision 1a, is amended to read: 
 10.15     Subd. 1a.  (a) Every person, including the state of 
 10.16  Minnesota and all bodies politic and corporate, who shall 
 10.17  transact any business in the district court, shall pay to the 
 10.18  court administrator of said court the sundry fees prescribed in 
 10.19  subdivision 2.  Except as provided in paragraph (d), the court 
 10.20  administrator shall transmit the fees monthly to the state 
 10.21  treasurer for deposit in the state treasury and credit to the 
 10.22  general fund.  
 10.23     (b) In a county which has a screener-collector position, 
 10.24  fees paid by a county pursuant to this subdivision shall be 
 10.25  transmitted monthly to the county treasurer, who shall apply the 
 10.26  fees first to reimburse the county for the amount of the salary 
 10.27  paid for the screener-collector position.  The balance of the 
 10.28  fees collected shall then be forwarded to the state treasurer 
 10.29  for deposit in the state treasury and credited to the general 
 10.30  fund.  In a county in the eighth judicial district which has a 
 10.31  screener-collector position, the fees paid by a county shall be 
 10.32  transmitted monthly to the state treasurer for deposit in the 
 10.33  state treasury and credited to the general fund.  A 
 10.34  screener-collector position for purposes of this paragraph is an 
 10.35  employee whose function is to increase the collection of fines 
 10.36  and to review the incomes of potential clients of the public 
 11.1   defender, in order to verify eligibility for that service. 
 11.2      (c) No fee is required under this section from the public 
 11.3   authority or the party the public authority represents in an 
 11.4   action for: 
 11.5      (1) child support enforcement or modification, medical 
 11.6   assistance enforcement, or establishment of parentage in the 
 11.7   district court, or child or medical support enforcement 
 11.8   conducted by an administrative law judge in an administrative 
 11.9   hearing under section 518.5511; 
 11.10     (2) civil commitment under chapter 253B; 
 11.11     (3) the appointment of a public conservator or public 
 11.12  guardian or any other action under chapters 252A and 525; 
 11.13     (4) wrongfully obtaining public assistance under section 
 11.14  256.98 or 256D.07, or recovery of overpayments of public 
 11.15  assistance; 
 11.16     (5) court relief under chapter 260; 
 11.17     (6) forfeiture of property under sections 169.1217 and 
 11.18  609.531 to 609.5317; 
 11.19     (7) recovery of amounts issued by political subdivisions or 
 11.20  public institutions under sections 246.52, 252.27, 256.045, 
 11.21  256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, and 
 11.22  260.251, or other sections referring to other forms of public 
 11.23  assistance; or 
 11.24     (8) restitution under section 611A.04; or 
 11.25     (9) actions seeking monetary relief in favor of the state 
 11.26  pursuant to section 16D.14, subdivision 5. 
 11.27     (d) The fees collected for child support modifications 
 11.28  under subdivision 2, clause (13), must be transmitted to the 
 11.29  county treasurer for deposit in the county general fund.  The 
 11.30  fees must be used by the county to pay for child support 
 11.31  enforcement efforts by county attorneys.