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Minnesota State Auditor sues over private county audits

ST. PAUL -- Minnesota State Auditor Rebecca Otto is taking the state and three counties to court, claiming in a Thursday lawsuit that a 2015 law letting counties hire private firms instead of paying her office for financial audits is unconstituti...

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Minnesota State Auditor Rebecca Otto



ST. PAUL -- Minnesota State Auditor Rebecca Otto is taking the state and three counties to court, claiming in a Thursday lawsuit that a 2015 law letting counties hire private firms instead of paying her office for financial audits is unconstitutional.

"Counties have now challenged the constitutional authority of this office, and I have been forced to defend the Minnesota Constitution and the taxpayers through legal action," Otto said in a statement.

Otto fought fiercely against that provision after it was added to legislation in the final days of the 2015 legislative session. Once it passed and Gov. Mark Dayton reluctantly signed the bill containing it into law, Otto ran up more than $100,000 in legal fees as she weighed a possible constitutional challenge.


Her office is suing the state and Wright, Becker and Ramsey counties, three of what Otto said are 50 counties that refused to commit to using her office for audits. There are 87 Minnesota counties.

The lawsuit asks a judge to find that the 2015 law still lets the auditor’s office audit county finances at their expense, even if county officials want to hire private firms. If the judge won’t do that, Otto said, she wants the law struck down as unconstitutional.

"Conducting and overseeing county audits is not only a core function of the OSA (Office of the State Auditor), it is the OSA’s primary core function," Otto’s lawsuit reads.

She said letting counties hire their own auditors would "eviscerate" her office, which receives much of its revenue as reimbursements for county audits.

Becker County Administrator Jack Ingstad said that the county has been audited by a private firm for years, but Otto's office has decided whether to allow private auditors to go over the books. He said private auditors cost much less than if Otto's people do the work.

“Where we’re a little baffled is that we are audited, we did get a good audit, and it’s considerably less expensive for our taxpayers, and why she would proceed this way against the state Legislature and just name three counties when I think 47 counties are in agreement with us that they would like to go with a private auditor,” Ingstad said.

He said that Becker County will "vigorously" fight the lawsuit.

Rep. Sarah Anderson, R-Plymouth and chairwoman of the House State Government Finance Committee, called Otto’s lawsuit "frivolous" and a "waste of taxpayer dollars."


“The Legislature acted in a bipartisan manner last session to expand the options counties have for their audits to save local "governments and taxpayers' money, as well as expedite the audit process," Anderson said. "This lawsuit has no merit, and I am disappointed it will come at the expense of hardworking Minnesota taxpayers."

Dayton, who signed the bill into law despite public misgivings, said he supports Otto’s lawsuit.

"I believe the Minnesota Legislature unwisely and improperly encroached upon the state auditor’s constitutional responsibilities to audit local governments, and I support the state auditor’s lawful efforts to regain that authority,” said Dayton, a former state auditor himself.

A review by the Office of the Legislative Auditor, a different agency than the state auditor, released Wednesday found that some counties save money by using private firms, but it could not say whether those savings were justified. The review said the new law is an opportunity for Otto’s office to compare itself with external auditors and improve.

That same review rejected Otto’s claim that it is unconstitutional for the Legislature to change the state auditor’s duties.

“The Legislature has always defined the duties and authority of the state auditor,” the OLA report found. “The Minnesota Constitution created the office of auditor in 1857, but the authors of the Constitution left it for the Legislature to assign duties and authority to the auditor.”

Otto disagreed, saying that legal judgment was "inaccurate and incomplete" and outside of legislative auditor’s purview. She said she believes she has a duty to audit county governments.



The Pioneer Press is a Forum News Service Media partner. Pippi Mayfield of Forum News Service contributed to this story.

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