Documents show controversy over Minnesota state auditor legislation

By Mike Kaszuba

New documents show that Minnesota Governor Mark Dayton and his staff were caught off guard last year on what was one of the legislative session’s final surprises – the attempt to curtail the duties of the state auditor.

Documents obtained by Public Record Media indicate that the governor and his staff initially underestimated the impact of a last-minute move to allow counties to have the option of hiring private firms to conduct audits, instead of having them done by the state auditor.

The documents were published by the Saint Paul Pioneer Press on February 4th – the same day that Otto filed a lawsuit which argued that the legislative change infringed on the constitutional duties of her office.

Conflicting information

The newly released documents show that early on the morning of May 18, 2015, there was confusion in the governor’s office about what was happening.  “What was done with the State Auditor’s audits of local governments?” Dayton asked his staff at 7:31 am that morning.

Forty-five minutes later, Otto herself alerted the governor’s office.  “They voted to privatize county audits last night,” she wrote in an e-mail to Dayton staffer Shannon Patrick.

Roughly an hour later, Dayton staffer Jaime Tincher told Patrick to connect with Otto.  “Write her back and tell her our understanding is it is an [Office of Legislative Auditor, OLA] study of the issue, not actually doing it,” Tincher wrote.

But less than an hour after that, the governor’s staff was having second thoughts.  “Jaime – made call this morning for clarification on this,” Patrick e-mailed Tincher.  “Told that in addition to [OLA] study, counties [can] get private audits but that ability is delayed for one year until July 1 2016.”

In another e-mail to the governor’s staff that same morning, Otto stressed that the change had, in fact, occurred. “They kept the privatization issue in the bill,” Otto wrote.  “It is still in there.”

Shortly after 11:00 am, Patrick updated the governor. “It is my understanding,” he wrote, “that in addition to authorizing the OLA to study and report on the efficiency of audits of counties of state auditor, the conference committee agreement also allows counties to have audits done by private CPA firms effective August 2016.”

A short time later, Otto was back in contact with the governor’s office.  “I need you all to communicate with [others] and Bakk on this,” Otto said in an email to Patrick, referencing Senate Majority Leader Tom Bakk.  “[Some are saying] the governor was OK with (it).  I think wires got crossed along the way, but I think it can be fixed before it hits the Senate floor.”

Standing disagreement

The language, however, was not removed, and was signed into law.  In early June, Dayton and House Speaker Kurt Daudt exchanged letters which emphasized their continuing disagreement over the legislative changes to the state auditor’s office.

“I understand you are having second thoughts about a provision you signed into law two weeks ago that gives every county the option to use peer-reviewed and heavily regulated CPA firms for their audits,” Daudt told the governor on June 8.  “As you know, 28 counties and most cities and school districts already have this option.”

Dayton replied in a letter the same day: “Regarding the State Auditor’s language, you are correct that I signed the omnibus State Government Finance bill.  As I stated at that time and have repeated to you thereafter, I decided not [to] veto the entire bill over that one unacceptable provision, because I did not want to subject an additional 7500 state employees to the uncertainties of possible layoffs on July 1st.  I had believed that we could reach a mutually acceptable resolution of our differences to supplant the House’s unwise, and possibly unconstitutional, decimation of a Constitutional Office.”

Editor’s note – Documents referenced in this story were posted by the Saint Paul Pioneer Press here.