Five years of school litigation: What was spent? What was achieved?

REGIONAL—With the conclusion of five years of litigation over various aspects of the St. Louis County School District’s 2009 restructuring plan, those who led the effort under the banner of the ad hoc group, Coalition for Community Schools (CCS), want to offer an accounting of the funds donated for the effort, as well as an assessment of the progress made as a result.

More than 220 individuals donated a total of $16,818.92 to help fund the litigation, for an average contribution of $75, while the single largest contribution was $1,000. The funds were maintained at a local financial institution to ensure full accountability. All withdrawals came through cashier’s checks and required dual signatures and supported the school district litigation or related cases, including separate cases against the St. Louis County Schools teachers union and Johnson Controls, Inc.

The funds raised went to the following:

• $10,900 to Mohrman and Kaardal, the law firm that handled the litigation against the school district and the teachers union.

• $1,000 to Mark Anfinson, for expenses related to the public information case against Johnson Controls.

• $1,000 to St. Louis County Auditor.

• $112 to Steve Sallee as a witness fee

• $112 to Kimberly Johnson as a witness fee

• $1,000 to the Office of Administrative Hearings (OAH) for appellate filing fees.

• $79.22 to Marshall Helmberger for travel expenses.

• $79.26 to Steve Abrahamson for travel expenses.

• $500 to the OAH for appellate filing fees.

• $1,486.44 for trial-related fees from the final appeal.

• $50 to the OAH for administrative level filing fee.

• $500 to Douglas Erickson in partial reimbursement for legal fees paid by Mr. Erickson from the teachers union case.

Total expenditures

$16,818.92

Cases pursued

Teachers union case

May 2010- False campaigning case against Education Minnesota Local 1406, filed by Doug Erickson, of Lake Vermilion. At issue was an ad run by the teachers union in several publications urging voters to “Vote Yes for Lower Taxes.” The Office of Administrative Hearings found probable cause to believe the ad violated Minn. Stat. 211B.06, which makes it a crime to disseminate campaign material or information with a reckless disregard for the truth. As the school district acknowledged, a Yes vote in the Dec. 8, 2009, referendum had the effect of raising property taxes, not lowering them.

Yet a three-judge panel ultimately dismissed the claim, accepting the teachers union’s argument that failure to pass the referendum could have eventually led to higher taxes if the district was forced to dissolve. That was an argument that school district officials made themselves, as OAH judges noted, but subsequent litigation revealed that the school district’s financial circumstances were not nearly as dire as school officials and the teachers union had stated. CCS members felt that had the OAH panel had all the facts, they would likely have ruled differently.

School district promotion case

November 2010- The primary case involving the school district was filed at the OAH nearly a year after the referendum vote that narrowly approved the $78.8 million bond measure. The complaint alleged that the school district had improperly spent thousands of tax dollars on a campaign to promote passage of the bond measure and failed to report its spending, as required by campaign disclosure laws. The complaint cited one-sided, misleading, and outright false information presented by the school district that had the effect of urging passage of the measure.

The OAH immediately dismissed the case based on the assumption that campaign spending laws did not apply to school districts. CCS appealed the dismissal to the Court of Appeals.

On Aug. 1, 2011, the appellate court reversed much of the OAH’s ruling, finding that school districts are subject to campaign disclosure laws if they act to promote a ballot measure and they remanded the case to the OAH for further proceedings. The court was highly critical of the school district, finding that the district’s materials appeared to be promotional and that campaigning with public funds was “not authorized by law.” This was an important and precedent-setting decision and it could have ended the litigation if the school district had acknowledged its wrongdoing and filed the appropriate campaign finance reports.

Instead, the school district chose to appeal the decision to the Minnesota Supreme Court.

On Aug. 12, 2012, the Supreme Court affirmed the Court of Appeals’ determination that school districts are subject to campaign finance reporting if they expend public funds to promote passage of a ballot measure. The Supreme Court stated that the school district’s campaign materials “by their very nature ‘urge[d]’ the passage of the ballot measure,” and remanded the case back to the OAH for an evidentiary hearing to determine whether the materials constituted campaigning, versus purely information material that school districts are allowed to disseminate to voters.

After two courts had found that the district’s campaign materials were “promotional” in nature, the school district had the option to acknowledge its wrongdoing and file the campaign finance report.

Instead, the school district attempted to defend itself during three days of evidentiary testimony before a three-judge panel of the OAH in January 2014. In May 2014, the OAH panel ruled that the school district had, in fact, promoted passage of the referendum through a “misleading” and “one-sided” campaign that “exaggerated” the district’s financial woes, misled voters on the tax implications of a Yes vote, and that overstated the benefits of the proposed restructuring. Because it was the first such case in Minnesota history, the OAH panel determined that the school district’s failure to file a campaign finance disclosure was inadvertent and they issued only a reprimand.

The panel also ordered the district to prepare a campaign finance report by Aug. 30, 2014.

Second complaint

The school district’s initial campaign finance report, prepared by Business Manager Kim Johnson, failed to include tens of thousands of dollars in reportable campaign expenditures and its filing with the OAH prompted CCS representatives to note the missing expenditures in emails and a letter to the school district that urged the district to amend the report in order to prevent the filing of another complaint.

The school district refused to amend its report and CCS filed a new complaint in late 2014 alleging that the school district had failed to report all of its campaign-related expenditures.

In February 2015, a three-judge panel at the OAH heard evidence in the case and ruled for CCS in May 2015, finding that the school district had, in fact, failed to report thousands of dollars in campaign expenditures. The OAH panel fined the district $200 and ordered the production of a complete campaign finance report. The original report, filed by Johnson, included just $12,000 in campaign expenses. The subsequent report topped $65,000 in reported expenses.

A separate issue also arose late in the proceedings. In order to clarify the effect of some wording in the decision of the OAH panel that heard the original CCS case against the school district, CCS attorney Erick Kaardal asked the second OAH panel to ruled definitively whether school districts can expend funds to promote ballot measures. While the issue had previously been considered settled, based on a 1966 Attorney General’s opinion combined with state statutes, the original OAH panel had inserted language in their opinion that some, including the State Auditor, erroneously interpreted as authorizing school district expenditures to promote passage of ballot measures.

The second OAH panel declined to weigh in on the question, stating that the issue was not subject to their jurisdiction. CCS appealed the decision to the Court of Appeals, in hopes that the higher court would offer a definitive ruling to clarify the situation. Yet the appellate court affirmed that the OAH had no authority over the issue.

That decision, nonetheless, helped to clarify the matter since it confirmed that the controversial language in the original OAH ruling, suggesting that school districts have the right to promote ballot measures, has no legal force and does not overturn state law and an Attorney General’s opinion, as the State Auditor had purported.

Johnson Controls case

As construction of the new school facilities began to proceed in 2010, a number of issues arose about some of the claims made and work done by Johnson Controls, Inc., the company that initially drafted the school district’s strategic plan and subsequently contracted for construction oversight of the project, netting the company over $11 million.

In order to learn more, the Timberjay made a public information request, under the Minnesota Government Data Practices Act, to get access to the architectural contract for the school project. When the school district acknowledged they didn’t have a copy of the contract, the Timberjay sought the document from JCI, which as a public contractor, was obligated under the law to make the contract available.

When the company refused to make the contract availabe, the Timberjay sought an advisory opinion from the Department of Administration, which found in favor of the Timberjay, stating that the document should be public under the law.

When JCI still refused to provide the document, the Timberjay, in July 2011, filed a complaint with the OAH seeking an order to produce the contract.

The OAH eventually dismissed the Timberjay’s claim, but the paper, by then represented by Mark Anfinson, attorney for the Minnesota Newspaper Association, successfully appealed. On Oct. 9, 2012, the Court of Appeals found that the architect’s contract was public information.

JCI still refused to comply, and took the case to the state Supreme Court. On Nov. 20, 2013, the Supreme Court ruled in favor of JCI on a technicality. Under the law, public contracts in Minnesota are supposed to include an advisory clause that the contract is subject to public disclosure. But JCI, which prepared the contracts for the St. Louis County School District, never included that advisory clause, and because of that, the court found that the law didn’t apply.

Lower courts had previously found that the Legislature’s intent was clear enough and that even in the absence of an advisory clause, the public has the right to examine all public contracts.

The Legislature, just five months later, let the Supreme Court know they agreed with the lower court interpretations. Both the House and Senate voted unanimously in 2014 to amend the state’s public information law to specifically state that the law applies with or without an advisory notice in public contracts. Gov. Mark Dayton subsequently signed the new law, known as the Timberjay Law, into effect.

Summary

A total of $16,818 in donations enabled CCS to pursue these cases that led to precedent-setting legal decisions and new law. School districts are now on notice that the public is watching and that they can be held liable if they promote passage of school district ballot measures and fail to file campaign finance reports. This puts tight controls on school districts because, in filing a campaign finance report, school districts are essentially acknowledging that they are spending funds not authorized by law, which leaves them subject to additional legal claims by taxpayers.

Overall, given the relatively small amount of funds available, CCS was able to achieve significant legal victories for school district accountability and the public’s right to know.