Rebecca Otto, in her official capacity as State Auditor of the State of Minnesota, Appellant,
Wright County, et al., Respondents, Ramsey County, Respondent.
County District Court File No. 62-CV-16-606
T. Dixon, Joseph J. Cassioppi, Pari I. McGarraugh, Fredrikson
& Byron, P.A., Minneapolis, Minnesota (for
appellant/cross-respondent Rebecca Otto)
T. Anderson, John P. Edison, Elizabeth J. Vieira, Rupp,
Anderson, Squires & Waldspurger, P.A., Minneapolis,
Minnesota (for respondents/cross-appellants Wright County and
J. Choi, Ramsey County Attorney, Robert B. Roche, Assistant
County Attorney, John T. Kelly, First Assistant County
Attorney, St. Paul, Minnesota (for respondent/cross-appellant
William Z. Pentelovitch, Michael C. McCarthy, Melissa Muro
LaMere, Maslon LLP, Minneapolis, Minnesota; and Teresa J.
Nelson, American Civil Liberties Union of Minnesota, St.
Paul, Minnesota (for Amici Curiae American Civil Liberties
Union of Minnesota, Professor David Schultz, Growth &
Justice, Honorable Jack Davies, and Jewish Community Action)
G. Kaardal, Mohrman, Kaardal & Erickson, P.A.,
Minneapolis, Minnesota (for Amicus Curiae Association for
Considered and decided by Bjorkman, Presiding Judge; Cleary,
Chief Judge; and Peterson, Judge.
Minn. Stat. § 6.481 (2016) does not violate the
separation-of-powers requirements of Minn. Const. art. III,
Minnesota Legislature did not violate the Single Subject
Clause of the Minnesota Constitution by passing Minn. Stat.
§ 6.481 as part of the State Government Finance Omnibus
appeal is taken from a summary-judgment ruling rejecting the
constitutional challenge to Minn. Stat. § 6.481, which
requires counties to have an annual financial audit and
permits counties to hire private certified public accounting
(CPA) firms to conduct the audits. State Auditor Rebecca Otto
contends that the statute violates the Minnesota Constitution
by removing a core function from her office and that the
underlying session law was adopted in violation of the Single
Subject Clause of the Minnesota Constitution. In a related
appeal, Ramsey County asserts that the claims against it are
not justiciable. We affirm.
Rebecca Otto is the Minnesota State Auditor, a constitutional
officer serving her third four-year term. A primary function
of the Office of the State Auditor (OSA) is conducting and
overseeing annual audits of Minnesota's 87 counties,
including respondents/cross-appellants Wright County, Becker
County, and Ramsey County. According to the state auditor,
64% of the OSA employees spend their time auditing counties
or otherwise supporting the OSA's county-audit function.
And the OSA reviews the annual use by Minnesota counties of
more than $6 billion of federal, state, and local tax
recent decades, the OSA has permitted some counties to hire
private CPA firms to conduct their audits. Because of its
size and large hospital operation, Hennepin County has been
permitted to retain private auditors since 1970. Starting in
2003, in response to funding cuts, the OSA allowed other
counties to hire private CPA firms. The OSA determined which
counties to audit (and which would be permitted to have
private firms) on a three-year cycle. During the 2012-14
cycle, the OSA audited 59 counties and permitted 28 to obtain
private audits, subject to the OSA review. The OSA retained
the ultimate authority over the auditing function, including
the authority to determine whether an audit is adequate.
2015, the Minnesota Legislature passed, and Governor Dayton
signed into law, S.F. 888, the State Government Finance
Omnibus Bill. See 2015 Minn. Laws. ch. 77, at
1373-1449 (chapter 77). In addition to authorizing
appropriations for state government, chapter 77 included
provisions requiring counties to undergo annual audits and
authorizing counties to choose whether to have the OSA or a
private CPA firm perform these audits. See 2015
Minn. Laws ch. 77, art. 2, § 3, at 1390. These new
provisions were codified at Minn. Stat. § 6.481 (the
county audit statute) and became effective on August 1, 2016.
Chapter 77 repealed a predecessor statute governing county
audits, Minn. Stat. § 6.48 (2014). See 2015
Minn. Laws ch. 77, art. 2, § 88(b), at 1432 (repealer).
passage of the county audit statute, the OSA sent notices to
counties regarding the 2015-17 audit cycle, advising 61
counties that the OSA would conduct their audits. For the
first time, the OSA sent out three-year contracts with the
notices. Citing the new county audit statute, numerous
counties, including respondents, refused to commit to a
three-year contract with the OSA. Wright and Becker Counties
notified the OSA of their intent to hire private CPA firms,
but ultimately allowed the OSA to conduct their 2015 audits.
Ramsey County did not state an intent to hire a private CPA
firm, but declined to sign a three-year contract, preferring
a year-to-year approach due to concerns about rising costs of
the OSA-conducted audits if more counties elected to use
private CPA firms.
February 2016, the state auditor commenced a
declaratory-judgment action against Wright, Becker, and
Ramsey Counties. The state auditor sought declarations that
the county audit statute must be interpreted consistent with
the state auditor's exercise of her core function of
auditing counties, and, if it cannot be so interpreted, that
it violates Minn. Const. art. III, § 1, and art. V,
§ 1; and that the county audit statute is void because
it was enacted as part of chapter 77, which combined multiple
dissimilar subjects in violation of Minn. Const. art. IV,
§ 17 (the Single Subject Clause).
the district court denied the counties' motions to
dismiss on justiciability grounds, the state auditor moved
for summary judgment. The district court granted in part and
denied in part that motion, ruling that auditing counties is
a core function of the OSA but that the county audit statute
permissibly modifies that function, and ruling that chapter
77 does not violate the Single Subject Clause because the
various topics of the session law are connected by the common
thread of state government operations.
state auditor appealed, and the counties filed notices of
related appeals- Ramsey County as to the district court's
denial of its motion to dismiss on justiciability grounds and
Wright and Becker Counties as to the district court's
determination that auditing counties is a core function of
I. Does the county audit statute violate the Minnesota
Constitution by removing core functions from the state
II. Did the Minnesota Legislature violate the Single Subject
Clause of the Minnesota Constitution by including the county
audit statute in chapter 77?
III. Are the state auditor's claims against Ramsey County
appeal from summary judgment involving no dispute of material
fact, this court reviews whether the district court erred in
its application of the law. Associated Builders &
Contractors v. Ventura, 610 N.W.2d 293, 298 (Minn.
2000). We review de novo the constitutionality of statutes,
"proceed[ing] on the presumption that Minnesota statutes
are constitutional and that our power to declare a statute
unconstitutional should be exercised with extreme
caution." Id. at 298-99. A party challenging
the constitutionality of a statute "must meet the very
heavy burden of demonstrating beyond a reasonable doubt that
the statute is unconstitutional." Id. at 299.
I.The county audit statute does not violate article III
of the ...