State auditor: SPUC interpretation of salary cap law ‘absurd and unreasonable’

The Office of the State Auditor on Friday informed the Shakopee Public Utilities Commission it does not agree with SPUC’s interpretation of the local government salary cap law, stating SPUC’s view leads to an “absurd and unreasonable result.”

The salary cap is set by the Minnesota Legislature to be equal to 110 percent of the governor’s salary. For the year 2020, the cap is $178,782. Public records obtained by The Shakopean show Utilities Manager John Crooks’ yearly pay is at least $200,000.

Crooks told The Shakopean in a March 10 interview that his salary doesn’t exceed the cap under the statutory definition because vacation and sick leave allowances are excluded from factoring into an employee’s total compensation. The value of Crooks’ five weeks of vacation and 12 days of sick leave are thus subtracted from his gross salary of $200,000 to remain below the salary cap limit, per SPUC’s interpretation of the statute.

“It is our conclusion that neither of these amounts (vacation or sick leave) should be subtracted from an employee’s salary when applying the compensation limit calculation under Minn. Stat. Section 43A.17,” Assistant Legal Counsel David Kenney wrote on behalf of the State Auditor’s Office.

Kenney goes on to explain: “The salary an employee receives while using vacation leave should not be viewed as anything other than a component of the employee’s salary. Using vacation leave does not increase or reduce the employee’s annual rate of pay. Since using vacation leave does not change one’s annual salary, the approach of subtracting a portion of the actual annual salary just because it was received when an employee was on vacation would result in using a figure that does not fit the definition of ‘salary’ under Section 43A.17.”

Kenney compelled SPUC to consider the implications of subtracting vacation leave from salary. By this logic, Kenney said, a public employee could have a salary double that of the cap and simply earn six months of vacation.

“At the end of the year, the employee would have collected salary twice the amount permitted by law without violating a statute enacted specifically to restrict the compensation of public employees,” he wrote. “Minnesota Statutes, Section 645.17 requires statutes be interpreted in a manner that does not produce absurd or unreasonable results; this would appear to be an absurd and unreasonable result.”

In response to Kenney’s letter, SPUC on Monday evening voted 3-2 in favor of adopting the state auditor’s interpretation of the salary cap as Shakopee Public Utilities policy. Commissioners Jody Brennan, Kathi Mocol, and Kayden Fox voted in favor of the motion, while Commissioners Mathew Meyer and Deb Amundson voted against adopting the state auditor’s interpretation.

Meyer said he felt the move was hasty because the Attorney General’s Office was also notified of the salary cap concerns and theoretically could issue a conflicting opinion. He also noted Kenney’s claim that the State Auditor’s Office was not presenting a legal opinion or legal advice.

“This is not legal advice. This is not legal opinion. It is merely a description of how they internally have interpreted it,” Meyer said of the State Auditor’s guidance. “Quite frankly I have some problems with the analysis, but being a litigator I know that just one person’s … interpretation of a statute is not definitive.”

In voting to adopt the state auditor’s opinion on the salary cap statute, the commission also directed its third-party legal counsel to review Shakopee Public Utilities employee salaries and begin taking steps to adjust the pay scale to meet state requirements and decipher what method of payback is necessary.

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  1. Thanks Amanda. Great article. And to be clear, I do not agree with Mr. Kenney’s interpretation of that statute. Nevertheless, as the video of our meeting revealed, I was willing to adopt the interpretation of the statute by the State Auditor’s office (subject to any contrary interpretation by the Attorney General’s office, which does give legal “advice”), but the motion in question required reduction of Mr. Crooks’ salary without legal interpretation of relevant employment contracts or opinion by our retained outside counsel warranting such a drastic adverse employment action. In my opinion, the Shakopee Public Utilities Commission and the individual Commissioners could face individual tort claims for authorizing such action without the proper due process, legally and factually.

  2. Amanda, Sorry for the lack of registrants on your blog. Apparently many of your readers aren’t interested in registering to comment here. Nevertheless, I am always open for comments if you want to contact me regarding these issues. The questionable politics occurring “in the shadows” of Shakopee deserve to be revealed. This isn’t about SPU mismanagement or malfeasance, this is about the attempt to deprive Shakopee’s citizens of an independent public utilities–whether by taking away the referendum (as sought by the City Administrator) or by making salacious, but false, accusations against an honorable member of our Shakopee Community–John Crooks! I am not a politician–Never have been. I agreed to an appointment to the Commission to serve my community. And what I got in return is slanderous and libelous statements against me personally and professionally as part of the Shakopee City Council’s campaign to dissolve the SPU Commission. As for myself, I have tough skin and am only a Commissioner whose term is expiring in less than a year. However, when public officials attack a respected employee, without due process, seeking to terminate his employment contract and ruin his reputation, any fair-minded citizen would fully expect that he will seek vindication for those wrongs. I suspect that at some point we will know the real political machinations that brought us to this point–and it won’t be pretty!

    • To be clear, this IS about SPU mismanagement. This entire series of events is centered around SPUC’s mismanagement in regards to salary limits. There have been no false accusations leveled against John Crooks; in fact, it is abundantly clear that SPUC has been violating the salary limit statute and overpaying Crooks by tens of thousands of dollars. No slander, no libel, just facts. A state statute has been repeatedly violated, regardless of intent or your feelings about the city.

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