State combines federal and state dollars to accelerate lead service line replacements, agencies say

Deputy Director Kim Burkholtz of the Minnesota Public Facilities Authority and Corey Matheson, lead service line replacement program manager at the Minnesota Department of Health, updated the Senate Capital Investment Committee on March 25 about the state’s program created by 2023 legislation to identify and replace lead service lines.

“We administer this program very closely,” Kim Burkholtz said, adding that the state paired its general fund appropriation with federal dollars to cover public- and private-side costs so replacements can occur at no cost to homeowners or municipalities.

Corey Matheson said the Minnesota Department of Health received initial service-line inventories in 2024 from 100% of the nearly 1,000 community water systems covered by the federal Safe Drinking Water Act. He said those inventories have identified about 90,000 service lines that need replacement and left roughly 280,000 service lines that still require additional identification work.

Minnesota contracted 18 engineering firms to help systems complete inventories and developed an online lead inventory tracking tool, Matheson said. He said the state provided technical assistance to 405 water systems in 2024 and used about $14,800,000 of program funds for the inventory effort. The department is accepting new applications this inventory phase; the application window as reported to the committee was open through March 28, 2025.

Matheson described program prioritization requirements: applicants must submit phased replacement plans and prioritize replacements by factors including elevated blood-lead levels in children, areas with many children under 5 and lower-income residents. Systems that serve at least 15,000 connections must submit workforce plans to maximize registered apprentices and participation by underrepresented construction workers; the Department of Health has approved workforce plans for Minneapolis, Saint Paul, Duluth and St. Cloud.

Burkholtz said federal Infrastructure Investment and Jobs Act (IIJA) funds initially allocated to Minnesota totaled about $171,400,000 but the state has benefited from reallocation of unused funds from other states and now estimates federal funds closer to $350,000,000. She said that includes both loan authority and principal forgiveness (grant) components.

“As a result of reallocation, our federal dollars are much closer to 350,000,000,” Burkholtz told the committee.

Burkholtz said the 2025 intended-use plan (IUP) lists 85 projects from 78 applicants requesting $178,000,000; estimated private-side project costs sum to about $115,000,000 and public-side costs about $63,000,000. She said program awards to date include $55,600,000 in appropriated dollars, roughly 2,500 lines identified in awards, and about 1,755 actual replacements completed so far. She also cited an estimated overall need of approximately $1,500,000,000 (from a Department of Health 2023 report).

Burkholtz and Matheson told senators the demand for funding is rising: projects requesting funds grew 74% between the 2024 and 2025 IUPs and requested amounts rose about 90% in the same comparison. Burkholtz said Minneapolis, Saint Paul and Duluth estimated a combined potential request in the 2026 IUP of about $130,000,000, which could exhaust the state appropriation to date.

Both presenters said the program is designed to do full replacements (no partial replacements) and that the PFA routes all lead-service-line funding through the drinking water revolving fund. Burkholtz said the program intended-use plan includes 85 fundable projects in 2025 and that the next IUP will be finalized in fall 2025; the next statutory report to the legislature is due September 15, 2025.

The committee heard senators’ questions about the 2023 appropriation’s origin; staff said the $240,000,000 appropriation was enacted in a separate bill outside the capital investment bill.