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Auditors find conflict of interest in OHS project

Owatonna High School, conflict of interest
By
Kay Fate, Staff Writer

Every year, all school districts in Minnesota are required to have an independent financial audit, which is then submitted to the Minnesota Department of Education and the Office of the State Auditor.

It’s designed, of course, to prevent mishandling of public funds.

This year, in typical fashion, Owatonna Public Schools received a “clean” audit report, according to the auditing firm of CliftonLarsonAllen.

There were, however, two compliance issues related to Minnesota state law.

Not only was it unusual – it was a complete about-face from previous reviews of the books.

It was enough to prompt Owatonna School Board Chairman Mark Sebring to make a statement following the presentation of audit results.

“This year there were two findings, and both have been addressed,” he said. “Every year, the district has been involved with Mohs Contracting, and three things have happened. Both our business manager and board member Jolayne Mohs – who is married to (owner) Scott Mohs – have clearly indicated a potential conflict of interest to the public and to the auditor.

“In the past, our auditor, CliftonLarsonAllen, has not identified the conflict as an issue to be addressed, and Jolayne has abstained from voting on any relevant contracts,” Sebring said.

But this year CLA changed its interpretation of the state statute and identified the potential conflict as an issue.

“We immediately addressed this with Mohs Contracting, and mutually agreed that Mohs should resign from further work with Owatonna Public Schools while Jolayne continues to serve on the board,” Sebring said.

That includes its work on the construction of the new high school; Mohs Contracting was hired to do the finish carpentry and exterior outbuildings.

“Kraus Anderson, our construction manager on the high school, has reassigned the work, and is confident the work will be completed with fidelity and within budget,” he said.

“We’re confused about why the auditor changed their prior interpretation of the statute, we’re happy to comply, and with this new finding, we appreciate the outside review to ensure we’re on track, in compliance and transparent with the community,” Sebring continued.

“We look forward to completing and celebrating the opening of our new high school in the fall of 2023,” he said.

Mohs did not address the issue or the board.

As the new building nears completion, the future of the existing high school will get a closer look this week.

 

The community group tasked with making a recommendation on how best to use the site once all operations are moved to the new school was scheduled to meet Wednesday.

“Our hope is to get through the proposal and really have some earnest discussion with our community members that are serving on the task force, to provide some guidance and advice,” said Superintendent Jeff Elstad.

In late October, an East Coast development company submitted a proposal for review. Now it’s up to the local task force to ensure any ideas presented meet the criteria already established for any potential uses – including it being beneficial for the community and the neighborhood, among other requirements.

Elstad said the eventual recommendation will be made in early 2023.

Also in 2023, he will likely be testifying before the Minnesota Legislature in its upcoming session.

“Sen. (John) Jasinski has already tapped me on the shoulder to potentially present on our bond request that will be looking to partner with Riverland Community College for a mechatronics lab on Riverland campus,” Elstad said.

Jasinski, R-Faribault, has been named deputy minority leader in the Minnesota Senate, “so that’s very helpful and good representation for our area,” he said.

In a final order of business at Monday night’s meeting, school board members approved gifts to the district, including $50,000 from the ISD 761 Foundation.

It’s the annual installment for a pledge of $250,000 – a number that’s being matched by the Owatonna Foundation.

“About two years, the ISD 761 Foundation and the Owatonna Foundation came together to provide funding for a community room space at the new high school, which will be named the Foundation Room,” Elstad said.

The 2,400-square-foot room will be on the east side of the building, near the new high school’s activities entrance. There will also be access to the outdoor courtyard between the school and the football stadium.

The Foundation Room may be used for community gatherings of all kinds, as well as a classroom. It will feature a dividing wall, designed to maximize its usefulness and flexibility, as well as provide collaborative opportunities.

“It’s a great partnership,” Elstad said. “I talk with other districts and communities around the state, and this level of commitment from both foundations in our community” is uncommon.

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