Overall, Minnesota’s 2023 legislative session was a success for the nonprofit sector. It was a whirlwind session, with the DFL majorities in both the House and Senate moving their priorities very quickly from the get-go. Read on to learn where some of the issues facing our sector landed and be sure to review the incredible work accomplished by our colleagues at the Minnesota Budget Project too!
State Grantmaking Reform
A February 2023 report by the Office of the Legislative Auditor, “Oversight of State-Funded Grants to Nonprofit Organizations,” confirmed what MCN hears from our members: grants management staff at granting state agencies do not have the tools necessary to conduct appropriate oversight. In response, MCN advocated for legislation that would allow the state to successfully and equitably oversee its grants to nonprofits. We were successful in our goals, achieving these wins, with bipartisan support:
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A very significant increase in the state’s internal capacity for grants management. The state’s Office of Grants Management is currently a 1 FTE office, and under the new legislation it will be a 7 FTE office. Three of those positions will focus specifically on equity in grants management. (It’s a safe bet that MCN will be working with that office to influence their work and focus!)
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Funding to determine the feasibility of a grants management platform that all 27 granting state agencies would use. Currently only 13 agencies have such a technology platform, and each one is different. A unified system will reduce barriers for nonprofits in applying for state funding, relieve some administrative burdens from state agency grantmaking staff, and provide data on state grants to nonprofits that is currently unobtainable.
Financial oversight of state grants to nonprofits
In April, both bodies introduced language to increase financial oversight on the state’s grants to nonprofits. The versions had substantial differences, and some of the provisions were very problematic. MCN was able to successfully work with legislators, state agencies, and partners to create new language that would meet the state’s goal of increasing financial review of potential grantees, while making it efficient for state agencies to administer, and reasonable for potential grantees to manage.
In the wake of the Feeding Our Future scandal, MCN expected to see proposals related to the ways the state provides oversight of grant dollars to nonprofits, and we prepared to advocate for appropriate and workable changes. We were ready to advocate for the sector when this legislation was introduced that would have added barriers to accessing state funding for nonprofits, especially small, rural, and BIPOC-led and –serving nonprofits. Thank you to our colleagues and partners for sharing insights and feedback!
Capital investment
Many nonprofit capital projects around the state received funding in the 2023 capital investment package, totaling over $200 million! The projects are listed in HF 670, in Sec. 14, Subdivisions 42-106 (pages 38-55). MCN supported the capital investment committees in understanding and implementing their roles in financial oversight of capital investment funds to nonprofits.
We have had good conversations with legislators about how the process of requesting capital investment dollars from the state does not fit nonprofits well at all, since it was created for local units of government. We will continue to look at how the process can be altered or even transformed. In the meantime, we are pleased to report that the legislature funded a proposal to create capacity at Minnesota Management and Budget to assist nonprofit organizations with understanding the capital investment process.
PMFL
Paid Family and Medical Leave (PFML) was passed by both chambers and signed into law by the Governor shortly after legislative session ended. This social insurance program will allow employees to take time off to care for themselves (medical leave) and their families (family leave) with leave capped at 20 weeks in a single year.
The legislation includes job protection for employees, progressive wage replacement, and funds for outreach and education. The legislation also permits insurance carriers to offer paid family and medical leave insurance plans that can be purchased by employers in lieu of the state paid leave plan, as long as that private plan is equal to or better than the state’s plan. The final bill also includes grants for small businesses and small business wage exclusion and these provisions currently apply only to for-profit entities, and we will be working to include nonprofits when inevitable adjustments are made to the bill in 2024.
PFML is paid for by a 0.7% payroll premium based on employee’s wages and will go into a state fund, much like the current Unemployment Insurance fund, ensuring a low-risk pool which keeps costs low. The program will begin January 1st, 2026. We have curated answers to nonprofits’ questions on our PMFL webpage – check that out for details!
Democracy
Though Minnesota already has one of the highest voter turnouts in the nation, barriers to voting remain for many Minnesotans. In 2023 MCN successfully advocated with many partners for legislation to expand voting rights, including: automatic voter registration, preregistration of 16- and 17-year-olds, application for ongoing absentee ballots, multilingual voting information, and protection of voting from intimidation and interference. (Note that all of these changes are only for people who can legally vote in Minnesota.) Another democracy win was restoration of voter rights to individuals convicted of a felony which means that once a person is released from incarceration due to a felony, they can register to vote and cast a ballot. At MCN, we encourage nonprofits to participate in our democracy by encouraging voting habits, lobbying to expand voter rights, and working in coalition to build power together as nonprofits.
Construction Materials Sales Tax Exemption
Unfortunately, legislation to exempt on-going sales tax for construction materials for nonprofits, local governments, and schools did not move forward. MCN is an active member in a coalition that is advocating for a simpler process for nonprofits to exempt sales tax on construction materials. We have lobbied this issue over the last two sessions and look forward to continued advocacy on this issue.
Pay History
Starting January 1st, 2024, employers will be prohibited from asking applicants their pay history which includes salaries, earnings, benefits, or any other compensation. This does not prevent an applicant from voluntarily disclosing pay history for the purposes of negotiating wages, salary, benefits, or other compensation. MCN supported this legislation, and we believe that it will help close wage disparities for women and people of color. We require employers to provide a salary when posting on our job board as this helps our sector be a more transparent, trust-based, and equitable employment environment.
Secure Choice
The Minnesota Secure Choice Retirement Program is for employers with 5 or more employees who do not offer their own retirement plans. It will allow employees at those organizations to start a retirement savings account. The employers must enroll their eligible employees in the program and withhold payroll deduction contributions, unless the eligible employee has opted out of the program. Employers are not responsible for the administration, investment performance, plan design, or benefits paid to employees. Because it will be much simpler to implement and administer than traditional employer retirement accounts, this will be an asset to small nonprofits and others that have been unable to provide retirement accounts for their employees.