Still sweeping Red under the Rug

Shielding Johnson Controls from public scrutiny is an old habit that just won’t die. Perhaps a few of my readers read the piece my colleague Art Johnston wrote for the Trib a few days back.

Here’s the gist: JCI got a change order for millions of dollars that was never presented to the School Board for a vote. Tsk, tsk, tsk. Art has written to the State Attorney General about it. I wrote to the State Auditor about it. Here’s my letter to Becky Otto.

April, 25, 2014
Rebecca Otto
Minnesota State Auditor
525 Park Street, Suite 500
St. Paul, Minnesota 55103

Dear Ms. Otto,
I am a newly elected member of the Duluth School Board as well as a past member with eight year’s service. During my previous experience our School Board adopted a policy to have audits performed by the State Auditor’s Office once every five years . Although this is still our policy we have not asked for such an audit for well over a decade.
In recent years a Duluth citizen, Loren Martell, acquired the requisite number of signatures to compel your office to conduct an audit over issues of some concern. I am led to believe that your office has recently completed such an audit and is waiting to bring the results to the public. One of the issues is of particular importance to me and I was heartened to read it mentioned in your statewide email to local officials dated February 28th of this year. It contained the following warning:
3. Avoiding Pitfalls: Claim Approval by the Governing Body
Generally, the governing body of a public entity, as a whole, must approve the expenditure of public funds. The decision to expend public funds should be based upon a formal vote of the governing body that is memorialized in the meeting minutes.
On occasion, an elected official will authorize a payment on behalf of their public entity without first obtaining approval from the governing body. A public official who individually agrees to a payment of public funds runs the risk that the governing body will disagree. When that happens, the public official may be personally liable for the payment.
This has happened in Duluth numerous times in recent years as our School District’s Business Office has paid millions of dollars to a Construction manager, Johnson Controls Inc. on the signature of lone School Board members with no public vote or discussion. A fellow Board member and I confirmed this state of affairs recently but only after your newsletter prompted me to send a question to our District’s Finance Director, William C. Hanson.
I’m enclosing copies of the complete emails but this is my critical question and the reply from Mr. Hanson.

From: Harry R Welty
Sent: Saturday, March 01, 2014 4:24 PM
To: William C Hanson
Subject: FW: State Auditor’s E-Update — February 28, 2014
Have there been any occasions that you can recall that might put current or past school board members at risk under the State Auditor’s Point three on this email?
From: William C Hanson
Sent: Wednesday, March 05, 2014 9:06 AM
To: School Board
Cc: William L Gronseth; Jody D Leblanc
Subject: FW: State Auditor’s E-Update — February 28, 2014

I am enclosing a chronological list of change orders and payments approved in this fashion through the course of the building project in question of which no record can be found in ISD 709’s school board minutes. The change orders will also be provided.
If this has not been a part of your audit in response to the “citizens petition” I request that you and your staff investigate this matter now.

Harry Welty
Duluth School Board
2101 E 4th St.
Duluth, MN 55812
cell 218-340-5197

Copies to: Sen. Thomas Bakk, Sen. Roger Reinert, Sen. David Hann, Rep. Paul Thissen, Rep. Kurt Daudt

I hope Becky follows up. My Grandfather, George Robb, was the Kansas State Auditor for 24 years. He was a stickler for financial integrity.

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