MN judge: Counties not required to hire Otto’s office for audits

UPDATED 4:30 p.m.. with Otto's intention to appeal.

A Minnesota judge upheld a new state law giving counties greater ability to hire outside auditors to conduct required financial reviews, turning back the core of a challenge by State Auditor Rebecca Otto in her bid to overturn the measure.

But Ramsey County District Judge Lezlie Ott Marek's ruling, issued Friday but not publicly released until Tuesday, preserved the auditor's ultimate jurisdiction to conduct reviews in certain circumstances at county expense. The 17-page ruling says that the law merely modifies Otto's existing duties and doesn't abolish them entirely.

"The county audit statute does not divest the OSA [Office of State Auditor] of its core function of auditing counties. While the county audit statute allows counties to initially decide who performs the audit, the OSA retains supervision and ultimate authority over all such audits," the judge wrote. "Plaintiff has not carried her heavy burden to show that the challenged legislation is unconstitutional."

Otto also highlighted the portion of Marek's ruling that recognized the power vested in her constitutional office to oversee audits by setting the standards for such reviews or declaring the audits insufficient if they don't go far enough

But the ruling won't necessarily end the legal fight because Otto, a third-term Democrat, said she will ask a higher court to step in.

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Otto said the decision as a whole "will result in an unacceptable diminishment of the protection this constitutional office provides on behalf of the taxpayers of this state. As a result, to fulfill my oath of Office and duty to both current and future taxpayers, I will appeal the court's decision."

State Rep. Sarah Anderson, R-Plymouth, spearheaded the law change that gave counties more room to opt out of the state-conducted audits and enter into contracts with private firms. Many counties have given notice they will got that route, with 50 refusing to agree to a new contract with Otto's office.

"I'm glad to see this law upheld as constitutional, and know it will mean meaningful savings for counties and property taxpayers throughout Minnesota," Anderson said in a written statement.

Anderson criticized Otto for spending more than $200,000 in legal fees to an outside law firm to fight the law.

The law was passed in 2015 as part of a new state budget that was signed into law by Democratic Gov. Mark Dayton. The opt-out ability granted to counties didn't kick in until this summer.

Attorney Scott Anderson, who isn't related to the lawmaker, represented two counties named as defendants in Otto's lawsuit. He said the counties looking to make the switch wouldn't do so until 2018.

But, Anderson said, "I think those counties yes can take some solace in the fact that the statute they've opted to operate under has been declared constitutional by the court."