An Equal Opportunity Employer

REBECCA OTTO STATE AUDITOR

STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR

SUITE 500

525 PARK STREET SAINT PAUL, MN 55103-2139

(651) 296-2551 (Voice) (651) 296-4755 (Fax)

state.auditor@state.mn.us (E-mail) 1-800-627-3529 (Relay Service)

August 18, 2015

The Honorable Sarah Anderson, Chair VIA EMAIL AND US MAIL State Government Finance Committee 583 State Office Building 100 Rev. Dr. Martin Luther King Jr. Boulevard St. Paul, Minnesota 55155–1298 Dear Representative Anderson: I am writing in response to your letter dated August 11, 2015, which states that the House State Government Finance Committee would be holding a hearing on August 18, 2015 to discuss the Office of the State Auditor’s (“OSA”) auditing of Minnesota counties. As a former State Representative, I understand and respect the Legislature’s discretion to hold hearings. I also have a responsibility to the people of Minnesota to protect their tax dollars, and both myself and the OSA are busy fulfilling that constitutional responsibility. The Office of the State Auditor is currently in the middle of planning for the next three-year audit cycle and is in communications with counties. The Office has made preliminary determinations that the public interest requires an OSA audit for certain counties for the 2015 to 2017 three-year cycle. As it has in past years, the OSA also made preliminary determinations, based on staffing limitations and individualized county considerations, to permit certain counties to use CPA firms to conduct their audit for the three-year cycle. The Office has continued its prior practice of operating in three-year planning cycles for county audits, which promotes efficiency and consistency and allows for planning for both the Office of the State Auditor and for the counties, which in turn serves the taxpayers’ best interests. The only change this cycle is a three-year contract for the three-year cycle rather than three single-year contracts. This not only allows counties and the OSA to plan for the future, it is consistent with Minnesota law. The three-year contract is important due to the uncertainty created by the Legislature last session regarding county audits. Some counties signed the three-year contracts. Some counties declined to sign the contracts based on their belief that they have the authority to refuse an OSA audit because of the new legislation, or for other reasons.

Page 2 The Honorable Sarah Anderson, Chair State Government Finance Committee 583 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. Saint Paul, Minnesota 55155-1298 As I have repeatedly stated, I have serious concerns about the constitutionality of any efforts to limit the authority of a core executive Executive Branch function, particularly a core function that has been vested in the State Auditor and Executive Branch since Minnesota was a territory. We are reviewing the implications of the counties’ decisions to refuse to sign contracts with the OSA and the potential impact on Minnesota taxpayers. The process we have implemented allows counties and the OSA to plan for the future. The Office of the State Auditor will continue to provide independent oversight of billions in tax dollars on behalf of Minnesotans. Please add this letter to the record for the hearing in lieu of my testimony. Sincerely, /s/Rebecca Otto Rebecca Otto State Auditor CC: Representative Jeff Howe Representative Sheldon Johnson Representative Tony Albright Representative Mark Anderson Representative Lyndon Carlson, Sr. Representative Bob Dettmer Representative Ron Erhardt Representative Phyllis Kahn Representative Carolyn Laine Representative Bob Loonan Representative Jim Nash Representative Michael V. Nelson Representative John Petersburg Representative Cindy Pugh Representative Linda Runbeck Representative Jennifer Schultz Representative Jim Knoblach