MINNESOTA STATE AUDITOR'S OFFICE MEMORANDUM

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1 MINNESOTA STATE AUDITOR'S OFFICE MEMORANDUM Rebecca Otto M.Kerr Date: May 26,205 Re: Serious Problems/Defects- S.F.888 Conf. Committee Report; 205 Minn. Laws, ch. 77. I. County Audit Privatization The State Government Finance Omnibus bill has a county audit privatization provision affecting the Office of the State Auditor, and the bill has been signed into law. In the bill, Minn. Stat is repealed and a new section oflaw, Minn. Stat. 6.48, replaces it. The new provision contains the county audit privatization provision. Minn. Stat is the cornerstone of the State Auditor's authority to perform its constitutional duties in the public interest. First, this section describes the State Auditor's audit and examination authority and applies it to counties. This section oflaw also includes the State Auditor's authority to conduct investigations and to review financial concerns reported to the office. Then, the subsequent statutory sections carry this authority over to the other political subdivisions by reference: First Class Cities ( 6.49); Relief Associations ( 6.495); Cities of the Second, Third or Fourth Class( 6.50); and Other Political Subdivisions( 6.5). II. Problems:,and Defects A. Effective Dates. 205 Minn. Laws, ch. 77 would repeal Minn. Stat entirely on July, 205, effectively repealing all of the State Auditor's powers set forth in the statutes listed above. The repeal ofminn. Stat. 6.48, would be effective July, 205, by operation of Minn. Stat The very flawed (see below) new section Minn. Stat would become effective on August, 206. This would eliminate the State Auditor's statutory authority to act under See S.F. 888, page 74, line 8; 205 Minn. Laws, ch. 77, art. 2, 88.

2 the above-cited statutes for 3 months. The effective date of the new section Minn. Stat is stated in the law ("This section is effective August, 206")? 2. Minn. Stat is the state statute that requires Minnesota counties to have annual audits. The effective date problem will write this requirement out of state law for 3 months. This problem will destroy county financial transparency and accountability for over a year statewide. The repeal would also not allow the office to complete a large number of county audits that the office will be in the middle of conducting and that are due by the Single Audit deadline of September 30. The federal government does not issue extensions for Single Audits. 3. This effective date mismatch causes confusion regarding the newly mandated Office of the Legislative Auditor report. By the time the OLA report would be due (January 5, 206), the statute on which it would be repmiing, Minn. Stat. 6.48, will have been / repealed for five-and-one-half months. B. Section The new Minn. Stat would encroach on the independence of the State Auditor to act in the public interest by restricting or eliminating the State Auditor's discretion to choose which audits and examinations to perform in the public interest. This discretion is especially important for counties - subordinate agencies of state government that should play a leadership role in carrying out legislative policy The new Minn. Stat will reduce efficiencies and cause confusion. The existing language in 6.48 is intended to facilitate efficiencies in the audit of county social welfare funds. These efficiencies are eliminated in the new language and replaced with a flawed ("human service funds") reference that may create confusion. The existing (Minn. Stat. 6.48) language allows acceptance of the Department ofhuman Services records and audit of the "county social welfare funds." However, the new (Minn. Stat. 6.48) language would change this to instead allow acceptance of the Department of Human Services records and audit of the "county human service funds." Ill. Solution The most efficient solution to all of the problems identified above is to restore the existing language ofminn. Stat. 6.48, and repeal the new, gravely flawed, Minn. Stat Minn. Stat has been effective for many years and there is no reason to change it. The result will be restoring the Office of the State Auditor's oversight authority which includes audits, investigations, and review of financial concerns reported to the office. It will also 2 See S.F. 888, page 25, line 8; 205 Minn. Laws, ch. 77, art. 2, 3. 3 Kasch v. Clearwater County, 289 N.W.2d 48 (Minn. 980). 4 Compare Minn. Stat ("The state auditor may accept the records and audit, or any part thereof, of the Department ofhuman Services in lieu of examination of the county social welfare funds... ") with S.F. 888, page24, lines 3-4 ("The state auditor or a CPA firm may accept the records and audit of the Department ofhuman Services instead of examining county human service funds....'') Emphasis added.

3 restore efficiencies in social welfare fund auditing that should be preserved, and eliminate the audit gap for counties.

4 Blake, Cumah (GOV) Cc: Patrick, Shannon (GOV) Monday, May 8, 205 9:45 AM Rebecca Otto Tincher, Jaime (GOV) RE: Issue Auditor Otto- Our understanding is that the OLA is to study the issue but thatthe audits are still to be done by your office. Sent from Samsung Mobile Original message Rebecca Otto Date:05/8/205 8:5AM (GMT-06:00) "Patrick, Shannon (GOV)" RE: Issue They voted to privatize county audits last night. Sincerely, Rebecca Otto State Auditor (65) (fax) 525 Park St. Suite 500 St. Paul, MN 5503 >>>"Patrick, Shannon (GOV)" 05/7/5 0:3 PM>>> Will do. What is it? Shannon Patrick J Senior Policy Advisor 6 Veterans Service Building 20 W 2th Street Saint Paul, MN 5555 Web J Twitter/ Facebook DISCLAIMER: This is intended to be read only by the intended recipient. It iuay contain confidential and/or privileged information, and may be protected from disclosure by law. If you are not the intended recipient, any review, dissemination, retransmission, distribution or copying of this (or its attachments) is strictly prohibited. If you received this in error, please notify the sender immediately and delete this and any attachments Original Message----- Rebecca Otto [mailto:rebecca.otto@ Sunday, May 7,205 0:29 PM Patrick, Shannon (GOV) Issue

5 Blake, Cumah {GOV) Cc: Sen, Katy (GOV) Tuesday, May 26, 205 8:50 PM Rebecca Otto Patrick, Shannon (GOV); Tincher, Jaime (GOV) RE: Memo Sorry for the delay in responding, I had meetings at the Residence all afternoon. You can send the memo to Jaime, Tincher, Shannon Patrick (policy advisor for State Gov) and me. Thanks! Katy Katy Sen I Deputy Chief of Staff 6 Veterans Service Building 20 W 2 Street Saint Paul, MN 5555 Web I Twitter! Facebook DISCLAIMER: This is intended to be read only by the intended recipient. It may contain confidential and/or privileged information, and may be protected from disclosure by law. If you are not the intended recipient, any review, dissemination, retransmission, distribution or copying of this (or its attachments) is strictly prohibited. If you received this in error, please notify the sender immediately and delete this and any attachments Original Message----- Rebecca Otto [mailto:rebecca.otto@ Tuesday, May 26, 205 4:04 PM Sen, Katy (GOV} Memo My staff has been compiling a memo to get to Governor Dayton regarding the county audit privatization language. The Governor has pledged to fix the language as a precondition to a special session. They are drafting the memo to identify the issues that arise from the new law and to present the easiest solution for a special session. I let him know that we were putting one together. Now I need to know who I should send it to. I will wait to hear back. Thank you. Sincerely, Rebecca Otto State Auditor (65} (fax) 525 Park St. Suite 500 St. Paul, MN 5503

6 Blak~. Cumah (GOV) Cc: Patrick, Shannon (GOV) Tuesday, June 09, 205 8:4AM Tincher, Jaime (GOV) Sen, Katy (GOV) RE:'Memory Saw the article. You may have asked about it before we walked to Senate. I remember a conversation over in Senate hallway but essentially same exchange I thought. About the time Matt M took the Auditor's phone call. Sent from Samsung Mobile, Original message "Tincher, Jaime (GOV)" Date:06/09/205 7:42AM (GMT-06:00) "Patrick, Shannon (GOV)", "Sen, Katy (GOV)" Memory I know I never told anyone what the Gov would or would not do on any specific bill Fighting that fight with those liars, But, Shannon - do you remember/were you there when I asked Kelly Hansen about the auditor stuff? My recollection is she told me it was just an OLA study, I may have said we are okay with that because we would have been (which is different than saying the Gov is going to sign or veto a bill). I feel like it was after the meeting in the House retiring room and we were getting ready to go to the Senate. Sent from my iphone

7 Blake, Cumah (GOV) Patrick, Shannon (GOV) Monday, May 8, 205 2:47 PM Furness, Brennan (GOV) RE: State Auditor Provision in State Gov Finance Bill Thank you. Shannon Patrick I Senior Policy Advisor 6 Veterans Service Building 20 W 2th Street Saint Paul, MN 5555 Web I Twitter! Facebook DISCLAIMER: This is intended to be read only by the intended recipient. It may contain confidential and/or privileged information, and may be protected from disclosure by law. If you are not the intended recipient, any review, dissemination, retransmission, distribution or copying of this (or its attachments) is strictly prohibited. If you received this in error, please notify the sender immediately and delete this and any attachments. Furness, Brennan (GOV) Monday, May 8, 205 2:45 PM Patrick, Shannon (GOV) FW: State Auditor Provision in State Gov Finance Bill FYI Brennan Furness I Policy Advisor 6 Veterans Service Building 20 W 2 Street Saint Paul, MN 5555 Fax: Web I Twitter! Facebook DISCLAIMER: This is intended to be read only by the intended recipient. It may contain confidential and/or privileged information, and may be protected from disclosure by law. If you are not the intended recipient, any review, dissemination, retransmission, distribution or copying of this (or its attachments) is strictly prohibited. If you received this in error, please notify the sender immediately and delete this and any attachments. Hilgart, Matthew [inailto:mhilgart@ Monday, May 8, 205 2:29 PM Furness, Brennan (GOV)

8 Blake, Cumah (GOV) Cc: Patrick, Shannon (GOY) Monday, June 08, 205 2:07 PM Mark Dayton Piper, Emily (GOY) Sen, Katy (GOY); Tincher, Jaime (GOY) Timing of state auditor provision Governor- Jaime asked that I send you the following. August, Under current law (Article 2, section 88) Minnesota Statutes 204, sections 6-48 is repealed effective August, 205. The statute provides that the state auditor may visit, without previous notice, each county and make a thorough examination of all accounts and records relating to the receipt and disbursement of the public funds and the custody of the public funds and other property. The timing of the repeal has been described as an error. A repeal of the repealer should take effect the day following final enactment. August, The new provision, M.S. 6-48, which allows counties the discretion to decide whether to use a private CPA firm or the State Auditor takes effect. This creates a one-year gap when there is no requirement for, a county audit. August, The first date counties could notify the State Auditor of a change to a private CPA firm. Calendar year 207'- The first year of records that would be available to be audited. January The first audits could be conducted by the private CPA firm after notice was provided to the State Auditor August, 206. Shannon Patrick I Senior Policy Advisor 6 Veterans Service Building 20 W 2th Street Saint Paul, MN 5555 Web I Twitter! Facebook DISCLAIMER: This is intended to be read only by the intended recipient. It may contain confidential and/or privileged information, and may be protected from disclosure by law. If you are not the intended recipient, any review, dissemination, retransmission, distribution or copying of this (or its attachments) is strictly prohibited. If you received this in error, please notify the sender immediately and delete this and any attachments.

Re: Request for Access to Data (Minn. Stat , subd. 3) Law Enforcement Mobile Biometric Technologies

Re: Request for Access to Data (Minn. Stat , subd. 3) Law Enforcement Mobile Biometric Technologies Tony Webster +1 612-255-5905 tony@tonywebster.com VIA EMAIL AND FAX Kristi Lahti-Johnson Hennepin County Sheriff s Office Hennepin County carrie.hill@hennepin.us, tracey.martin@hennepin.us, hcdatarequest@hennepin.us