Answers are sometimes hard to come by. After spending more than one year, a lot of time and a great deal of energy, Schroeder supervisors learned on September 15 that they can no longer give township funds to the Birch Grove Community School (BGCS) and to the Schroeder Historical Society.
Notification came from the Minnesota Office of the State Auditor (OSA) which determined that Schroeder was violating several state statutes regarding distribution of township funds to some nonprofits who requested financial aid from the town.
Located in Tofte, Birch Grove Community School has received $32,500 from Schroeder since 2013 and the Schroeder Historical Society $28,000 since 2012.
Township donations to W.E. Connect ($12,650 since 2012) and Lutsen Junior Alpine Ski Club ($500 in 2016) were deemed legal.
Responding to Schroeder supervisors, Ramona Advani, general counsel and deputy state auditor, wrote, “The money used for Town donations comes from the Town’s revenue, which in turn, comes from various sources including but not limited to property taxes, Local Government Aid (LGA), Taconite Aid, transportation tax, highway user tax, Town Road Allotment, Town Aid, investment earnings, etc. These revenues, no matter their source of origin, are considered public funds.
“Expenditure of public funds requires that there be both authority and a public purpose. Authority may be specifically stated in a statute or implied as necessary to do something that is expressly authorized.
“A public purpose has been defined by the Minnesota Supreme Court as ‘such an activity as will serve as a benefit to the community as a body and which, at the same time, is directly related to the functions of governments.’”
The ruling will affect how all three of the West End townships can distribute funds to local nonprofits seeking donations.
When it came to giving money to W.E. Connect and the Lutsen Junior Alpine Club, Advani wrote, “All of the activities and expenditures appear consistent with Minnesota law. There is specific authority under Minnesota Statute 471.935, for the Town to appropriate money to support facilities, programs, and services of a public or private, not-for-profit senior citizen center or youth center.
“In addition, under Minnesota Statute 365.10, subd. 14, electors may approve the Town expending not more than $10,000 per year on health, social, and recreational services that are in the public interest and good for the Town.”
The state auditor’s office was notified about possible violations regarding donations to the community school by several Schroeder community members, who have raised concerns about the rising cost of donations to BGCS and other nonprofits at town meetings.
With various Minnesota statutes concerning township donations to charter schools seemingly contradicting each other, supervisors for Lutsen, Tofte and Schroeder spent the last year actively trying to get a legal opinion clarifying the matter for them.
How the donation process has worked
Donations are requested at township March annual meetings, and the citizens of each township in attendance vote for or against giving money to those who request it.
Following that public vote it is up to the supervisors to make a final decision about whether or not to give the money to the party who requested it.
Last March all three townships voted to give Birch Grove Community School $20,000 each for 2016-2017 school year, and all three township boards followed the directive of the voters.
But Advani said the whole process was flawed because, as she stated, “… Asking electors to vote on possible donations that the Town does not have the authority to make, does not legitimize or validate the expenditures.”
Cross River Heritage Center
Built in 1929, Schroeder owns the Cross River Heritage Center, which is on the National Registry of Historical Places, and is run by the Schroeder Area Historical Society (SAHS).
The center is mostly staffed by volunteers and is open to the public for free during the busy tourist season, but there are some costs associated with keeping the doors open and SAHS board members have requested funds from the township to assist them with that endeavor, which voters and supervisors agreed to do with public funds.
But Advani said state statutes governing this gift are clear.
“There does not appear to be any authority in any other statute for the Town to give the public funds to a local historical society,” wrote Advani. “Cities have been given the authority to appropriate money for the purpose of collecting, preserving, storing, housing, printing, publishing, distributing data and material pertaining to the history of the city.
“Townships, however, have not been given similar authority. It appears there is no authority for towns to make contributions to local historical societies.”
Last but not least, the six-page letter from the State Auditor’s Office concluded, “This letter will provide the Town with recommendations to comply with Minnesota law in the future.”
What this means for the future of Birch Grove Community School is uncertain at this time, but Schroeder Town Board Chair Tina McKeever said, “No one has given up on finding a solution to this. We will work with State Senator Tom Bakk, Representative Rob Ecklund and our MAT [Minnesota Association of Township] attorney Kent Slumen on getting the language changed in the law so that the townships can give to Birch Grove charter school, and we will keep hoping that more kids attend the school and the need for the school to request funds lessens in the future.”
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