Auditor Wants Better Legacy Funds Oversight

Reps. Dean Urdahl, Steve Drazkowski

A new method of funding Minnesota outdoors and arts programs needs better oversight, the Minnesota legislative auditor warns.

“Things generally are OK,” Legislative Auditor Jim Nobles said in an interview. “But given the amount of money involved and the expectations, we can never be satisfied.”

Nobles’ staff Wednesday issued two audits that showed concerns about oversight of how up to $300 million a year is spent from so-called legacy funds, money raised by a three-eighths of a percent sales tax increase voters approved in 2008. Auditors also raised concerns about conflicts of interests among people recommending how money would be spent, as well questions about ensuring money is spent the way voters intended.

Nobles said the audits were “an early look” at how the legacy funding programs were working, with more specific reports to come.

Up to $300 million a year is coming in from the tax increase, with a third headed to outdoors projects to restore, protect and enhance the environment and habitat for game, wildlife and fish. Another third goes to cleaning up the state’s waters.

The rest of the money is divided between parks and trails programs and arts and culture uses.

The legacy program has been controversial since the campaign to institute it, with allegations ranging from conflicts of interest among people serving on legacy-related boards to charges that the money is not being spent how voters intended.

Auditors indicated minor problems in the first three years of the legacy program, with all agencies involved saying they will make the requested changes. Nobles said that with a possible $7 billion at stake over the 25-year life of the tax, more protections must be built into the system.

Among the auditors’ concerns was “the impact of interest groups,” Nobles said. That mostly appears when a member of a board making funding recommendations may have a conflict of interest.

For example, some have raised questions about whether an avid hunter or angler has a conflict when sitting on a committee that recommends spending to improve fishing and hunting habitats.

Another area that concerned auditors is a provision that forbids legacy money from replacing traditional funding.

“It’s not clear what constitutes a traditional source of funding,” auditor Judy Randall said, adding that the constitutional amendment voters approved does not require lawmakers to maintain current funding to any program.

Laws implementing the legacy funding program are not clear, Nobles and his staff told lawmakers, so it may be difficult to draw up specific conclusions whether money is being spent as intended.

For instance, Randall said, many arts-related projects will be criticized because “it is just a difference of opinion” about what art is.

“No one is ever going to agree” on a definition of art, said Rep. Dean Urdahl, R-Grove City, chairman of the House committee that deals with legacy funds.

If legislators picked every art project that would receive funding, it “would be quite an adventure,” he added.

Overall, the audits showed “no smoking guns,” Urdahl said, but the legacy funding effort remains “a work in progress.”

Urdahl and Rep. Denny McNamara, R-Hastings, said legislators already have discussed problems the audits outlined.

McNamara, chairman of the House natural resources committee, said that to him the conflict-of-interest question should not be that complicated: If someone sitting on a board could gain financially from a decision, that is a conflict.

Still, the chairman said, there is no bright line separating those with a conflict and those without.

Advocating for things is fine, the avid outdoorsman said. “That is why I’m here.”

McNamara’s Senate counterpart, Sen. Bill Ingebrigtsen, R-Alexandria, said that while the audits mostly were clean, they point out the need for legislative oversight.

He especially was concerned about a Minnesota Pollution Control Agency’s administration of the Clean Water Council. The audits said that the council lacks a conflict-of-interest policy.

“Last session, I introduced legislation that aimed to restructure the Clean Water Council by removing the PCA from its administration and creating independent oversight which would increase its transparency,” Ingebrigtsen said. “I will continue to look for ways to improve the transparency and accountability of the legacy funds and uphold the voters’ intent.”

Reps. Denny McNamara, Steve Drazkowski, Rick Hansen