Serving Northern St. Louis County, Minnesota

Ruling brings school district case to a close

Court of Appeals decision, in effect, restores long-standing prohibition on use of tax dollars to promote referenda

Tom Klein
Posted 4/6/16

REGIONAL – A three-judge panel from the Minnesota Court of Appeals said the Office of Administrative Hearings did not have the jurisdiction to determine if school districts can use public funds to …

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Ruling brings school district case to a close

Court of Appeals decision, in effect, restores long-standing prohibition on use of tax dollars to promote referenda

Posted

REGIONAL – A three-judge panel from the Minnesota Court of Appeals said the Office of Administrative Hearings did not have the jurisdiction to determine if school districts can use public funds to promote a referendum, undermining a state auditor’s opinion that it was legal as long as the necessary campaign finance report was filed.

The ruling, announced this week, means that the longstanding rule that prohibits the use of public dollars to promote a referendum remains in effect. That rule stems from a 1966 Minnesota attorney general’s opinion in combination with Minnesota Statute 8.07, which gives such opinions the force of law as they pertain to school districts.

“This puts the matter right back to the attorney general’s opinion, which is just fine,” said Timberjay Publisher Marshall Helmberger, who assisted Steve Abrahamson and Tim Kotzian with the appeal. “While we would have preferred that the Court of Appeals had expressly stated that promotion with tax dollars is unlawful, their actual decision serves essentially the same purpose.”

Gregg Abbott, communications director for the Minnesota School Boards Association, said the ruling helps to clarify the issue for school districts.

“MSBA’s position has been that school boards are not campaign committees,” said Abbott, who said MSBA has urged districts to abide by the 1966 attorney general’s ruling despite the state auditor’s opinion, which was issued in 2014.

The issue arose in the wake of a 2014 OAH ruling that the St. Louis County School District had promoted passage of its $78.8 million bond issue, approved in 2009, without filing a campaign finance report.

A subsequent report by the state auditor’s office cited language from the 2014 OAH ruling and claimed that, based on the ruling, schools districts could use tax dollars to promote passage of a referendum as long as they file the necessary campaign finance disclosure.

“The auditor was essentially telling school districts it was okay to promote, as long as they filed campaign finance reports,” said Helmberger.

That opinion prompted the appeal, Helmberger said. “Had the auditor not used the original OAH decision to advance a flawed legal theory, this latest appeal would have been unnecessary.”

“It is now clear that the questionable language in the original OAH decision is moot and that school districts remain subject to the prohibition on promotion established by the attorney general and state law,” Helmberger continued. “This decision re-establishes the status quo that was in place prior to the original OAH decision. The state auditor is going to be obligated to revise her legal guidance to school districts going forward.”

Although the court helped clarify the issue on the use of public dollars to promote referenda, it dismissed a secondary issue raised by complainants, that the school district should have been required to report the full cost of promotional services provided by Greenfield Communications under a contract with Johnson Controls. Greenfield had discounted some of those services, which complainants said should have been counted as an in-kind contribution, which is reportable under the state’s campaign finance rules.

The judges said the discount had not been specifically sought by the school district and the chief beneficiary of it had been Johnson Controls, which hired Greenfield as a subcontractor. The district had paid a flat fee of $58,000 to Johnson Controls for contracted campaign-related services.

Even so, judges acknowledged that such discounts could be exploited, as complainants had argued.

“An entity could, for example, attempt to circumvent its reporting obligation by entering into a fee-based contract for valuable campaign services with a service provider who is a supporter of the entity’s campaign position and who substantially undercharges the entity in order to benefit the campaign,” judges wrote.

“It’s clear that neither the OAH panel nor the Court of Appeals grasped the immense loophole they have now opened up in the state’s campaign finance rules,” Helmberger said. “My guess is this issue will come to a head once a campaign decides to try to exploit it in a significant way. I think this issue will eventually come back to bite.”

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