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The legislative effort to privatize the state auditor’s office is foolhardy and probably unconstitutional

MinnPost file photo by Terry Gydesen
State Auditor Rebecca Otto

Resolution of the budget standoff in Minnesota has come down to the status of legislation that guts the state auditor’s office. Whatever the final resolution of this dispute, one thing is clear: The legislation is foolhardy and probably violates the Minnesota Constitution.

The state auditor is an officer provided for in the Minnesota Constitution and its primary responsibility is to audit local governments in the state to make sure that they are spending their money appropriately. It is an important position in the state that promotes accountability to ensure that tax dollars are spent the way they should be. Yet the Legislature voted to privatize the audit functions, giving local governments the option to hire private audit firms. The governor signed this bill, but now seems to want the Legislature to undo this.

The governor should never have signed a bill that allowed for this. Nothing against private auditors, but this is a duty for the state auditor. The privatization will cost taxpayers more in the long run – as is typically the case with many privatizations. I pointed this out in a MinnPost op-ed back in 2011.

Conflicts with two articles in the Constitution

But in many ways, it probably does not matter whether the governor wins to get this privatization overturned – the provision is probably unconstitutional, conflicting with both Article V, section 1 of the Constitution creating the office of the auditor, and Article III, section 1, the separation of powers clause of the Constitution.

There is a rich jurisprudence in Minnesota that carefully protects and respects separation of powers. One of the best cases on this issue is State ex rel. Mattson v. Kiedrowski, 391 N.W.2d 777 (1986). In that case, at issue was a 1985 law enacted by the Legislature, in special session, which transferred most of the responsibilities of the state treasurer, an executive officer, to the commissioner of finance. The reason for the transfer of responsibility was that the treasurer, then a constitutional officer, essentially abandoned the state and was no longer performing his duties. The Supreme Court rejected this transfer of duties.

schultz portrait
David Schultz

The court reasoned that even though the duties of the treasurer were prescribed by the Legislature, that “does not allow a state legislature to transfer inherent or core functions of executive officers to appointed officials.” One branch of government, or even another part of the executive branch, cannot act in such a way either to undermine the core functions of another constitutional part or make it impossible for it to perform its constitutional duties.

Other Minnesota cases have reinforced that point. In In re Marriage of Sandra Lee Holmberg at issue was whether a law regarding child support giving administrative law judges power to modify district court orders and to assume duties of district court judges violated the state separation of powers clause. The Supreme Court said yes, arguing that the transfer of power violated separation of powers. In supporting its decision, the court referred to precedents and decisions in other states reaching the same conclusion.

More separation of powers rulings

In State v. Baker the Minnesota Supreme Court voided a state-enhanced gross misdemeanor statute as unconstitutional because it allowed for local imprisonment without a 12-person jury trial. Here the court said that the law sought to redefine crimes to avoid the constitutional mandate. In State ex rel Birkland v. Christianson, the court declared that the Legislature cannot change form of government which would change separation of powers. In In re Temporary Funding of the Judicial Branch, a case involving funding for the judicial branch as a result of a government shutdown in Minnesota, the Supreme Court ruled that it had the authority to require the Legislature and governor to fund the courts, for failure to do so would prevent the judiciary from performing its constitutional duties and therefore it would be a separation of powers violation.

Similar conclusions were reached regarding separation of powers and constitution in clerk of court’s compensation for Lyon County v. Lyon County Commissioners. Other state courts have reached similar conclusions regarding separation of powers and legislative efforts to strip constitutional offices of their powers.

The constitutionality of the legislation to privatize some of the auditor’s functions resides in how far the Legislature may act to prescribe the functions of that office. This issue must be considered in light of the question: To what extent does this law impede the core duties of the auditor? Given past precedent, there is good reason to conclude that this privatization is unconstitutional and in a lawsuit the auditor would likely prevail. 

David Schultz is a Hamline University professor of political science and the author of “Election Law and Democratic Theory” (Ashgate, 2014) and “American Politics in the Age of Ignorance” (Macmillan, 2013). He blogs at Schultz’s Take, where a version of this piece first appeared. 

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Comments (18)

  1. Submitted by Henk Tobias on 06/08/2015 - 12:15 pm.

    Odd how no one wants to take…

    ..Responsibility for this being in the final bill. Lots of denying and finger pointing going on. If they felt so strongly that it needed to be added to the bill at the last minute, you’d think that someone, anyone, would have the guts to stand up and say why it was so important. But no, we got a bunch of rats scurrying for cover as soon as this particular light was turned on.

  2. Submitted by jason myron on 06/08/2015 - 01:24 pm.

    Let’s just call it what it really is…

    Vindictiveness by the GOP.

    • Submitted by Kent Fralish on 06/08/2015 - 07:21 pm.

      Correctness?

      Why wouldn’t the counties simply want to be in compliance with the state laws, and hire a competent accountant or firm to ensure they don’t fail an audit. The state laws can’t/shouldn’t be too hard for a professional to follow. In that case, the state auditors office can shrink, but won’t go away.

  3. Submitted by Rachel Kahler on 06/08/2015 - 01:25 pm.

    A State Auditor by any other name…

    Would probably not have been targeted. The whole problem is that the GOP legislators don’t like who won the race. In essence, they not only upended state constitutional law, they signaled to the voters that their votes are moot if the legislators so choose.

  4. Submitted by Ron Gotzman on 06/08/2015 - 01:53 pm.

    Privatize the Auditors Office?

    “Legislators in 2003 approved a change that allowed 28 counties, including Hennepin, to hire private auditors.”

    Is this statement true? If so, why no outcry from strict constructionist like Mr. Schultz when this happened?

    Also, with fewer audits to conduct, this will allow Auditor Otto even more time to campaign for higher office during working hours at the DFL State Fair booth.

    I am even more confused by Governor shutdown. So, he was against this auditor change before he voted for it?

  5. Submitted by Frank Phelan on 06/08/2015 - 02:34 pm.

    What Do You Expect?

    They’d probably like to amend the constitution, but after 2012 it’s probably a case of once bitten twice shy.

  6. Submitted by Bill Willy on 06/08/2015 - 05:48 pm.

    But keep an eye on the Rangers too

    “State Auditor Rebecca Otto suspects political motivations led to a last-minute legislative proposal to allow counties to hire private companies to do the audits her office performs.

    “… it was an 11th hour agreement between House Republicans and Democrats who control the Senate that moved the provision through.

    “Otto alienated some members on the Iron Range when she voted against approving a handful of mining leases … Senate Majority Leader Tom Bakk and DFL Sen. Tom Saxhaug, author of the state government bill that included the auditor provision, both hail from the Iron Range.”

    http://www.minnpost.com/politics-policy/2015/05/otto-suspects-political-motivations-behind-bill-undercutting-state-auditors-

    That’s from a May 21 article on this topic, and when it comes to the “Range delegation,” I thought Rod Loper’s comment, “Hell hath no fury like the rangers,” was one of the best (of the session).

    It’s obvious Senators Bakk, Saxhaug and Tomassoni are throwing their leadership and seniority weight around, and are willing to make environmental (and other) “compromises” in order to protect Ranger’s sacred right to mine, unquestioned and unobstructed as they can arrange.

    I’ve never been clear on what, exactly, the term “triangulation” means, but if I had to guess, I’d say the Range delegation has been engaging in it. When it comes to anything having to do with mining (and environmental reg trade-offs), there are DFL legislators, GOP legislators, and Range legislators.

    I thought Mark Dayton was probably overreacting when he said Tom Bakk had stabbed him in the back. But as the Ag, Environment and Jobs/Energy bills got “finalized” and jammed under the wire, and, a few days later, it became clearer what was in them, I got a much better idea of what he meant.

    The Auditor thing is a GOP crusade, no doubt. But they can’t pull pull off things like that without at least a few DFL Senate votes. And whenever it happens it’s a good bet the names Bakk, Saxhaug and Tomassoni will have a “Y” beside them on the board.

  7. Submitted by Amy Hendrickson on 06/08/2015 - 10:46 pm.

    What if someone else was the state auditor?

    If she really loves and believes in the state auditor’s office, maybe Ms. Otto could voluntarily become the “assistant auditor” or “vice-auditor” or something and let the next-in-line be the State Auditor? That way, the discussion wouldn’t have to be about her. Everything in the legislature would probably quickly resolve itself, the auditor’s office would probably continue doing the good work she says they do, and she could still have a job in the office being one of the regular auditors.

    • Submitted by Edward Blaise on 06/09/2015 - 07:41 am.

      I can give you 221,288 reasons why that is a bad idea:

      As the voters saw it in November 2014:

      DFL Rebecca Otto 988,102 51.51%
      Republican Randy Gilbert 766,814 39.98%

    • Submitted by Pat Berg on 06/09/2015 - 07:44 am.

      Will of the voters

      Why should the will of the voters be brushed aside? As was pointed out by Rachel Kahler above, Ms. Otto was duly elected, and this effort by the GOP to disenfranchise her also then disenfranchises the will of the voters.

      A few disgruntled politicians should not be able to simply brush aside a duly-elected officer, especially one whose position is provided for by the state’s Constitution.

  8. Submitted by Michael Zalar on 06/09/2015 - 01:26 am.

    A good thing?

    I am not sure I understand the argument that hiring private auditors would be a good thing. It seems like it would be an easy step from that to corruption, glad handing, creative auditing and kickbacks, that could end up destroying local governments (and end up costing taxpayers a LOT of money_
    One only has to look back on Arthur Anderson and Enron to see that a private accounting firm is not necessarily an honest or good firm. I worry a lot more about that than the Constitutionality of the Office, though I suspect that it was created just for this purpose.

  9. Submitted by joe smith on 06/09/2015 - 08:30 am.

    Michael, the reason for an independent auditor is the corruption, glad handing, kickbacks that is occurring now. Do you honestly believe our tax dollars are being spent wisely now with current system?

    • Submitted by jason myron on 06/09/2015 - 02:55 pm.

      Where’s your proof of corruption?

      That’s a pretty remarkable accusation with nothing to back it up. By virtue of that logic, one can say that the republicans real desire to bypass the state auditor and hire their own is to make sure the numbers come out in support of their own ideology….with glad handling and kickbacks. See how easy that was?

  10. Submitted by Bob Petersen on 06/09/2015 - 08:36 am.

    But What Does the Constituion Say?

    From what I read in the MN Constitution is that the office of Auditor is to be an executive position to be decided by election for the creation of the position. The separation of powers is only on who does what for the government and does not mean it the private sector can’t do anything.
    This issue has been decided for in the past and there are many local – usually cities – that don’t use the office of the auditor. So if this is the case, Mr. Shultz’s analysis is far from correct. There is much more that he is not including.
    The reason behind all of this is that the cost that is being borne by other government entities is so much more than having someone in the private sector doing the work. Dayton just does not want to lose government employees. He likes big government. I dunno, if something serious was ever found in an audit, a private firm’s findings would be more believable than listening to someone elected to their position – no matter what side of the aisle they were on.
    I would think if this whole thing was unconstitutional, that would have come up long ago.

    • Submitted by Bill Willy on 06/09/2015 - 09:33 am.

      Let’s see…

      “From what I read in the MN Constitution is that the office of Auditor is to be an executive position to be decided by election for the creation of the position.”

      So you’re saying the Constitution says the person filling that position (and, a voter would presume, handling the responsibilities of that position – like keeping an eye on their tax dollars, maybe?) has to be elected by the voters, but after that happens legislators can decide (because they were elected by voters too) that person shouldn’t do that job (because the voters didn’t really vote for that person, or didn’t know what they were doing, or didn’t really mean it?) and, in your or some legislator’s view, it costs too much and the Governor just wants to create more government jobs?

      If that’s what the Constitution says, that would mean legislators could do the same thing when it comes to the Governor’s “position,” right? If they could round up enough votes, couldn’t they just pass a law that said, “Even though the Governor was elected by the voters it doesn’t mean they want him to make the decisions or do the work a Governor does, or have the authority Governors have because private decision makers can do those things for less money if that’s what counties and cities and towns would rather do”?

      He could still go into the office every day and “be the Governor,” he just couldn’t do anything Governors do (like hire more government employees) unless counties, cities, towns (and legislators) asked him to (because it would be “optional”), right?

      Is that what you’re saying? (It wasn’t crystal clear to me.)

    • Submitted by RB Holbrook on 06/09/2015 - 10:15 am.

      The Constitution

      I suggest you read the Mattson case cited by Professor Schultz. Constitutional officers have core functions that cannot be taken away from them, even in order to delegate it to the private sector.

      “The reason behind all of this is that the cost that is being borne by other government entities is so much more than having someone in the private sector doing the work.” That strike me as a dubious assertion. The private sector is out to make a profit and will charge whatever the market will bear, or whatever their pals on the county board will pay them. The main concern is not money, anyway. It’s transparency and neutrality. How much confidence should we have in an audit commissioned and paid for by the people audited (Quis custodiet ipsos custodes, as the Tower Commission report began)?

      “Dayton just does not want to lose government employees.” I don’t know where to start with that one.

    • Submitted by Kurt Nelson on 06/09/2015 - 10:10 pm.

      Pretty simplistic

      “I would think if this whole thing was unconstitutional, that would have come up long ago.”

      If that were the case, the Supreme Court would be a vague memory, and all constitutional issues would be solved.

  11. Submitted by Tom Anderson on 06/09/2015 - 08:10 pm.

    Option

    Local governments will have the OPTION to choose a different auditor. There is no abolishing of an office, only choice (remember that term?). If local governments can save money and still fulfill their legal obligations, why shouldn’t they have that option. It sounds like there is a LOT of money to be saved which might compel the State Auditor’s office to be more competitively priced. When you’re the only airline in town you can charge what you want.

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