I just received the entire Timberjay story from its publisher. He’d heard of my interest in it from some reader. As I said before its a joy to see serious journalism still being practiced somewhere, anywhere, in Northeastern Minnesota.
Court of Appeals raps St. Louis County School Board
By Marshall Helmberger
The Minnesota Court of Appeals has dealt a serious blow to the St. Louis County School Board as it seeks to defend itself against charges that it broke state laws in its quest to win passage of its $78.8 million bond measure.
In a precedent-setting ruling issued Monday, a three-judge panel of the Court of Appeals reversed the decision of an administrative law judge from the Office of Administrative Hearings (OAH) who had earlier dismissed a complaint filed by Mayor Steve Abrahamson and Tim Kotzian, both of Tower. That complaint alleges that the school district had illegally spent public dollars on a one-sided political campaign and that it failed to disclose its spending. The complaint further alleges that the school district knowingly disseminated information that was false or highly misleading in an effort to convince the public to support its capital bond measure.
The court of appeals found in favor of the complainants on all three primary counts, reversing the administrative law judge on each. The ruling provided, for the first time, court guidance on the lengths to which school boards can go to promote a particular side in a ballot measure. The case will now head back to the OAH for an evidentiary hearing on the issues raised in the complaint. That hearing could come as early as next month, barring an appeal by the school district.
The court’s findings will also provide guidance to the state auditor’s office as it assesses the legal implications of its own investigation into the school district’s actions. That investigation has been on hold for several weeks, pending the decision from the court of appeals.
Attorney Erick Kaardal, who is handling the case for the complainants, called this week’s ruling a “big victory.” “This opinion will change school district practices statewide. School districts won’t be spending taxpayer funds as they have been. After this opinion, it will be a lot easier to hold the school districts accountable to the law.”
Those views were echoed by Kotzian, who said the ruling begins to dismantle the St. Louis County School Board’s claim that the election was run legitimately. “They like to claim that ‘the people have spoken,’” said Kotzian, “but they spoke based on a whole lot of misinformation and spin illegally put out by the school board. Had people known the full story, this bond measure would never have passed.”
The ruling
Perhaps the most damaging portion of the decision for the district was the court’s determination that the school board had spent money to promote the referendum expenditures that the court determined are not legal.
While school districts are authorized to spend money to establish balloting procedures and inform voters of the referendum and its purpose, the court found that the St. Louis County School Board went beyond what is permissible, by spending money on newsletters, brochures and other material that promoted only one point of view on the controversial question.
“In this case,” wrote the court, “the school board’s expenditures of public funds used to promote the passage of the ballot question by presenting one-sided information on a voter issue, were not authorized by law.”
The court also reversed the OAH judge on the question of whether school boards can constitute a campaign committee and must therefore disclose campaign-related expenditures, something the St. Louis County School Board failed to do.
The school district’s attorney, Michelle Kenney, had argued that school boards are exempt from campaign disclosure laws. While the OAH judge agreed with that contention, the appeals court panel found otherwise. “We conclude that a school district falls within the unambiguous statutory definition of “committee” in chapter 211A. Accordingly, a school board is subject to campaign finance reporting requirements,” wrote the court.
Under the law, it is the responsibility of the treasurer of the campaign committee to ensure that campaign disclosure is properly done. At the time, Cherry Representative Darrell Bjerklie served as treasurer of the school board. Mr. Bjerklie did not reply to the Timberjay’s request for comment on the court’s ruling.
The court also found that plaintiffs in the case, Steve Abrahamson and Tim Kotzian, both of Tower, provided sufficient evidence for further hearings on whether or not the school district violated the state’s statutes against false campaigning. At issue were statements made in a number of school district publications that suggested the school district faced a $4.1 million budget gap and would be forced to dissolve if voters did not approve the referendum.
One school district publication in particular claimed “if the plan is not approved, the school district would enter into ‘statutory operating debt’ by June 2011, which means the State of Minnesota recognizes that the school district can no longer balance its expenditures and revenues, and would need to dissolve. Children in this school district would then go to neighboring school districts.”
While the OAH judge dismissed the claim, the appeals court said it agreed with the complainants that the statement could be construed as false.
“The statement would lead an ordinary reader to the definitive conclusion that if the bond referendum did not pass, the school district would be forced to dissolve and children in the district would be forced to attend school in other districts,” wrote the court.
The complainants argued that school board members were well aware that even had the district entered statutory operating debt, such an outcome does not require the district to dissolve. If school board members were aware of that, it could support a charge that the statement to the contrary was made with reckless disregard for the truth, a high standard that is necessary for a conviction under the false campaigning statutes.
The court found similarly on another statement, this time on the question of budget claims made by the school district. In promotional materials and in public statements, the school board stated that the district faced a $4.1 million budget gap by the 2011-12 school year if it didn’t act to cut costs through the proposed restructuring.
But complainants noted that the school district had taken steps in June 2009 to reduce its deficit, and that when the $4.1 million budget claims were repeated right up until the Dec. 8, 2009, referendum, school officials knew the claims no longer reflected the district’s actual budget situation.
“We agree,” wrote the court. “Evidence in the record shows that the 2009-10 adopted budget’s shortfall was less than the shortfall in the 2008-09 adopted budget.”
In fact, the school district’s budget ended the 2009-10 school year in surplus, not the multi-million dollar deficit the district had claimed.
The court did side with the school district on one of the false campaign claims. Complainants had cited the educational improvements promised by the school district and suggested they were highly speculative, since they were based on achieving savings that were not guaranteed. The judges found that the district’s failure to explain that the savings were speculative does not qualify as a false statement under the law.
The fallout
School officials responded in a press statement, issued on Wednesday, that downplayed the significance of the court ruling.
“Although portions of the opinion could be quoted out of context to appear to support a contrary conclusion, the fact is that neither the administrative law judge nor the Court made any finding that the School District or School Board violated the law,” stated the district release. The release noted that the district could appeal the matter to the state Supreme Court, but stated that the school board has yet to make a decision on that.
Attorney Kaardal said he was disappointed in the district’s response.
“The press release failed to speak with candor about the scale and significance of the vicitory. It was not worthy of taxpayer funding either,” he said. “The school district is insisting on a campaign of obfuscation even on this ruling. Why not just come clean and admit that their law firm has the law wrong?”
Troy Swanson, Tower-Soudan’s new school board representative, offered his own comment on the matter. Swanson said he wants to see people held accountable if the school district broke the law in its efforts to pass its bond measure. “If the district said we were going to be in a $4.1 million deficit and they knew that wasn’t true, there needs to be accountability. We lost our high school over this plan,” he said. Swanson said he’s also concerned that the promised savings from the restructuring haven’t materialized. “The taxpayers are going to want to see the savings actualized,” he said.
Mayor Steve Abraham-son said he was pleased that the ruling confirmed what he and many others have been saying for a long time. “We’ve been concerned about the information that was put out and I’m glad that the court has now established ground rules. Hopefully, there will finally be some accountability.”
George Stefanich, of Lake Vermilion, who helped raise the funds for the lawsuit, said he was pleased that the complaints of residents were “vindicated.” At the same time, he said, it’s slim comfort in the wake of the demolition of the Tower High School last week.
Kotzian agreed. “Unfortunately, it’s too little, too late for the communities up here. The damage has already been done. But hopefully this will prevent this kind of thing from happening elsewhere.”
Former superintendent Charles Rick was contacted seeking comment for this story. He did not respond prior to presstime.
