Because of the uncertainty about whether or not Lutsen Township could donate to Birch Grove Community School, a dilemma also facing Schroeder and Tofte townships, Lutsen hired Minneapolis attorney Kyle Hartnett to give them a legal opinion on the matter.
On September 25 Hartnett emailed the township with his response.
“After reviewing the information received from the Minnesota Office of the State Auditor (“OSA”), relevant statutes, and conversations with representatives of Birch Grove, it appears clear that the Town cannot simply donate funds to Birch Grove. The Town may be able to contract with Birch Grove for certain services provided to the Town,” wrote Hartnett.
In April 2017, Birch Grove approached Lutsen supervisors asking the township to appropriate $20,000 to its youth programs. Birch Grove provides various programs to youth including pre-school programs, summer programs and before and after-school programs.
These programs are run by Birch Grove as a charter school as part of its community education program.
“While the funds for these programs come out of its ‘Fund 4’ they are still a part of the overall nonprofit entity of Birch Grove,” Hartnett wrote to the township.
Birch Grove requested that Lutsen township appropriate $20,000 to it as a youth center under Minnesota Statutes section 471.935. But Harnett noted, “A ‘youth center’ is not defined in the statutes. Federal statute 21 USC § 860 (e), sets out a youth center as ‘any recreational facility and gymnasium… intended primarily for use by persons under 18 years of age, which regularly provides athletic, civic, or cultural activities.’” Birch Grove has defined a youth center as “a place or organization providing leisure activities for young people.”
In October of 2016, the Office of State Auditor (OSA) issued an opinion to Lutsen that it could not donate funds to Birch Grove because there is no authority in Minnesota law for a town to give funds to such a nonprofit.
In most circumstances, wrote Hartnett, “public entities have no authority to give away public funds as donations. Generally, to spend money, a public body must have authority to do so. Authority for an expenditure may be specifically stated in a statute or charter, or it may be implied as necessary to do what an express power authorizes. Also, the expenditure must be for a ‘public purpose.’”
“Minnesota Statute, section 471.935 provides that a Town may ‘appropriate money to support the facilities, programs, and services of a . . . not-for-profit senior citizen center or youth center.”
“Neither Minnesota Statute nor the courts have defined a ‘youth center.’ Birch Grove is requesting the Town appropriate funds to it under this statute.
“Birch Grove is a nonprofit, charter elementary school. Birch Grove is not a public corporation but rather a separate nonprofit entity and a public school pursuant to Minnesota Statutes.”
Further, it was Hartnett’s opinion that, “Although Birch Grove does provide services to young people, it is ultimately doing so as a charter school under Minnesota Statute. The programs Birch Grove is providing are authorized as community education pursuant to Minnesota Statutes, sections 124D.18- 124D.21. These programs are not a ‘youth center’ but rather a part of the educational function of the charter school. It is my opinion, therefore, that Birch Grove is not a youth center as required by statute.”
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